U.S. residential solar prices increased in the first half of 2026 as installers navigated the expiration of the 30% federal residential solar tax credit, rising labor costs, and continued trade pressures, according to the latest Home Electrification Marketplace Report from EnergySage.
The report, which analyzed solar and storage quotes submitted through the EnergySage marketplace between January and June 2026, found that the median quoted residential solar price reached $2.57 per watt, a 3.2% increase from $2.49/W in the second half of 2025.
For a system at the median size of approximately 12 kW, that translates to an upfront cost of $30,712 before incentives. The average estimated payback period increased from 10.1 years to 10.9 years, although EnergySage noted that a methodology change contributed to the increase.
Median quoted residential solar prices rose 3.2% in the first half of 2026 to $2.57/W, while solar-only pricing remained flat from the previous six-month period.
The pricing trends differed between solar-only and solar-plus-storage installations. Solar-only pricing remained flat at $2.62/W compared with the previous six-month period and decreased 1% year-over-year. Meanwhile, the solar portion of solar-plus-storage quotes increased nearly 5% to $2.55/W, excluding the battery cost.
EnergySage attributed the narrowing price gap between solar-only and solar-plus-storage systems partly to increasing labor costs, as combined installations typically require additional installation time and complexity.
Third-party ownership expands following tax credit expiration
One of the most significant developments in the report was the rapid expansion of third-party ownership (TPO) financing, as installers sought alternatives to traditional solar loans and cash purchases following the expiration of the Section 25D residential tax credit at the end of 2025.
The share of installers quoting third-party ownership products through EnergySage climbed from approximately 14% to 41% between January and June 2026.
The share of installers quoting TPO options on EnergySage increased from approximately 14% in January to 41% by the end of June. EnergySage noted that some of the increase reflects the introduction of TPO products to its marketplace in mid-2025.
Unlike directly purchased residential systems, qualifying third-party-owned projects can continue to access federal commercial tax incentives through 2027, providing an alternative financing pathway for homeowners.
Pre-paid power purchase agreements (PPAs) and leases emerged as particularly competitive options. EnergySage found that pre-paid PPAs offered a 57% lower effective cost per kilowatt-hour than cash purchases, while pre-paid leases were 39% lower.
Traditional PPAs also offered a lower cost per kilowatt-hour than solar loans, although cash purchases remained approximately 33% more cost-effective than conventional PPAs over the comparison period. EnergySage cautioned that the long-term savings associated with newer pre-paid TPO offerings have not yet been established.
Financing remains a challenge for the industry. Median quoted solar loan interest rates held steady at 7.5% for the third consecutive reporting period, while median loan terms shortened from 25 to 20 years.
Pre-paid PPAs and leases offered the lowest modeled cost per kilowatt-hour among financing products quoted on EnergySage in the first half of 2026.
In EnergySage’s contractor survey, 49% of respondents expected the share of customers selecting pre-paid leases and PPAs to increase in 2026, while 37% anticipated declining loan usage and 40% expected cash purchases to decline.
Labor costs squeeze installers as pricing becomes more competitive
Despite the overall increase in median solar prices, the gap between the highest and lowest quotes offered to EnergySage shoppers narrowed.
The average spread between the lowest and highest quotes declined from $0.72/W in the second half of 2025 to $0.56/W in the first half of 2026. The average highest quote decreased to $2.94/W, while the average lowest quote increased to $2.38/W.
The findings suggest that installer pricing is becoming more concentrated following the rush to complete installations before the 2025 tax credit deadline.
At the same time, contractors continue to face higher operating costs. Nearly 74% of contractors surveyed reported increases in hourly labor rates over the previous year. Labor represented an average of 22% of total installed system costs, second only to equipment at 36%.
Affordability remains a central concern for the industry. Approximately 70% of contractors identified electricity bill savings as the primary motivation for customers purchasing solar, while 63% cited cost or pricing as the leading driver of lost sales.
Regional pricing differences also remained substantial. Among the ten largest residential solar states examined, Illinois recorded the highest median quoted price at $3.07/W, compared with $2.00/W in Texas, a 53% difference.
Qcells and Hyundai overtake REC in module marketplace share
The report also identified substantial changes in solar equipment preferences as installers responded to supply chain constraints and evolving sourcing requirements.
Qcells and Hyundai each captured 18% of quoted module share on the EnergySage marketplace in the first half of 2026, surpassing REC, which declined to 17%.
After leading EnergySage’s module marketplace for two years, REC fell to third place with a 17% share of quoted panels, down from 43% a year earlier.
Qcells and Hyundai tied for the leading position, each accounting for 18% of quoted modules. Hyundai experienced particularly rapid growth, increasing its share from 4% in the second half of 2025.
SEG Solar also gained ground, reaching a 17% share, while JA Solar and Canadian Solar saw their shares decline.
EnergySage suggested that the increasingly fragmented module market reflects installers’ efforts to diversify suppliers, manage existing inventory, and navigate restrictions involving foreign entities of concern.
The inverter market, by contrast, remained highly concentrated. Enphase increased its share of quoted inverters to 63%, up 11 percentage points from the previous six-month period. Tesla followed with 29%, giving the two manufacturers a combined 92% share of inverter quotes.
Battery interest rises despite higher costs
EnergySage also reported growing homeowner interest in energy storage, although higher prices continued to limit adoption alongside solar.
Storage interest reached 76% among EnergySage solar shoppers, but attachment rates declined to 31%.
Median quoted battery storage prices increased 5% from the previous six-month period to $1,130/kWh, representing a 9% year-over-year increase.
Despite those costs, 76% of EnergySage solar shoppers expressed interest in battery storage, up from 73% in the previous period. However, the share of solar installations quoted with storage fell from 39% to 31%.
Among contractors surveyed, 64% identified price as the primary reason customers did not add storage to their solar systems.
Tesla remained the most frequently quoted battery manufacturer, with a 52% marketplace share, although Enphase increased its share from 20% to 35%.
Installers look beyond solar for growth
As the industry adjusts to changing solar economics, contractors are increasingly pursuing opportunities beyond traditional rooftop installations.
In EnergySage’s contractor survey, 58% of respondents identified expanding into adjacent products and services as a leading growth strategy for the next three years, including EV charging, HVAC services, and electrical upgrades.
The findings point to a residential solar industry increasingly focused on flexible financing, cost management, and broader home electrification services to maintain its competitiveness in a market without the longstanding federal consumer tax credit.
EnergySage’s findings are based on quotes submitted through its online marketplace and its contractor survey, rather than a comprehensive census of U.S. residential solar installations.
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