Solar Financing in 2026: What Changed and What Options Remain

Compare cash, loan, lease and PPA options for home solar, including ownership, monthly payments and which incentives apply to each.

Sunwise TeamPublished February 24, 2026Updated September 16, 2026

In this article

What You’ll Learn

What changed with the federal solar tax credit as of January 1, 2026
How solar leases and PPAs still benefit from the commercial tax credit
What cash purchases, loans, leases, and PPAs look like financially in 2026
How to evaluate which financing option makes the most sense for your situation
What state incentives remain available regardless of how you pay

What Changed on January 1, 2026

The One Big Beautiful Bill Act, signed into law on July 4, 2025, eliminated the residential clean energy tax credit under Section 25D of the Internal Revenue Code. This means that homeowners who purchase a solar system with cash or a loan after December 31, 2025, can no longer claim the 30 percent federal tax credit on their personal tax return.

This is the single largest change to residential solar economics since the Investment Tax Credit was first introduced. For a $26,000 system, the credit was worth approximately $7,800, money that went directly back to the homeowner. That credit is no longer available for homeowner-purchased systems, which changes the comparison between the four payment paths below.

However, the law did not eliminate all federal solar incentives. The commercial Investment Tax Credit under Section 48E remains available at 30 percent for business-owned solar systems placed in service by December 31, 2027, provided they meet applicable labor requirements. This distinction is critical for understanding why solar leases and PPAs remain financially competitive in 2026.

One Big Beautiful Bill Act: What It Means for Solar

The Four Ways to Pay for Solar in 2026

Every solar installation is funded through one of four paths: cash purchase, solar loan, solar lease, or power purchase agreement (PPA). Each has different implications for upfront cost, monthly savings, long-term return, system ownership, and access to incentives. Here is how each option works in the current environment.

Cash Purchase

How it works: You pay the full system cost upfront and own the system outright from day one. You receive all electricity savings and earn SRECs directly.

What changed: Without the 30 percent federal credit, your net cost is now the full installed price. In 2025, the same system would have cost roughly 30 percent less after claiming the credit. That changes the upfront investment significantly.

The math: Your payback period is longer than it would have been with the credit. But your 25-year total return is the highest of any financing option because you own every kilowatt-hour produced and every SREC earned. With PECO rates now averaging around 20 cents per kWh and projected to keep rising, the avoided-cost value of your solar electricity compounds year over year. The total lifetime return on a purchased system in PA typically exceeds the original investment by a significant margin.

Best for: Homeowners with available capital who prioritize maximum long-term return and are comfortable with a longer payback timeline. Also ideal for homeowners who plan to stay in their home for 15 or more years.

Solar Loan

How it works: You borrow the system cost from a lender and make monthly payments over a set term (typically 10 to 25 years). You own the system and earn SRECs, but you also carry a monthly loan payment.

What changed: In 2025, many homeowners used the federal tax credit to pay down the loan balance early, reducing monthly payments. Without that credit, there is no lump sum to apply against the balance. Monthly payments are higher, and the breakeven point, where monthly savings exceed the loan payment, depends on the loan term, interest rate, and your electricity rate.

The math: With current solar loan rates in the 5 to 8 percent range, your monthly loan payment may be close to or slightly above what you currently pay for electricity, depending on the loan term and system size. In the early years of the loan, you may not see dramatic monthly savings. But as utility rates rise, the gap between your fixed loan payment and what you would have paid the utility widens in your favor. After the loan is paid off, all savings flow directly to you.

Best for: Homeowners who want ownership benefits (SRECs, maximum long-term return) but cannot pay cash upfront. Works best when paired with aggressive utility rate escalation, which increases the value of avoided grid electricity over time.

Solar Lease

How it works: A third-party company owns the solar system installed on your roof. You pay a fixed monthly lease payment for the use of the equipment. The leasing company handles maintenance, monitoring, and insurance. You benefit from the electricity the system produces, which offsets your utility bill. Because the provider owns the equipment, it records a UCC-1 filing covering the panels, which is a notice of ownership and not a lien on your home.

What changed: The lease provider, as a business entity, can still claim the Section 48E Investment Tax Credit at 30 percent. This means lease pricing in 2026 still reflects the federal incentive, even though you as a homeowner cannot claim it directly. The tax benefit flows to you indirectly through lower lease rates.

The math: A typical solar lease payment in 2026 is lower than your current monthly electricity bill. If your all-in electricity cost is $175 to $200 per month at current PECO rates, your lease payment is designed to come in below that, with your remaining grid electricity costs near zero. Your net monthly savings are modest but immediate, and your out-of-pocket risk is zero.

Best for: Homeowners who want to reduce their electricity bill with no upfront cost, no maintenance responsibility, and no financial risk. The total lifetime savings are lower than cash or loan ownership, but the simplicity and certainty are significant.

Power Purchase Agreement (PPA)

How it works: Similar to a lease, but instead of paying a fixed monthly fee for equipment use, you pay a per-kilowatt-hour rate for the electricity the system produces. The PPA rate is typically set below your current utility rate and may include a small annual escalator.

What changed: Like leases, PPA providers benefit from Section 48E. The PPA rate you are offered in 2026 reflects the provider’s ability to claim the 30 percent commercial credit. PPA pricing remains competitive with pre-2026 levels for this reason.

The math: If your current PECO total rate is around $0.20 per kWh, a PPA rate might come in meaningfully below that. You save on every kilowatt-hour the system produces. The annual escalator (typically 1 to 3 percent) means your PPA rate increases slowly over time, but it starts lower than utility rates and is designed to remain below them throughout the agreement term.

Best for: Homeowners who want savings tied directly to production rather than a fixed fee. PPAs work especially well when you have high electricity consumption because you save more per kilowatt-hour produced.

How Leases and PPAs Still Access the Federal Tax Credit

This is the most important concept for homeowners to understand in 2026. The residential tax credit is gone, but the commercial tax credit is not.

When you sign a solar lease or PPA, you are not purchasing a solar system. A third-party company purchases and owns the system. That company is a business entity that qualifies for the Section 48E Investment Tax Credit at 30 percent (or higher with applicable adders for domestic content or energy community siting).

The provider factors this credit into their financial model, which is what allows them to offer lease payments or PPA rates that are competitive with, and often lower than, your current utility bill. You do not claim the credit yourself, but you benefit from it through lower pricing.

This structure is not new. Solar leases and PPAs have worked this way since their inception. What is new in 2026 is that this is now the only path to accessing any federal solar tax benefit for residential installations. For homeowners who want the financial benefit of the federal credit without owning the system themselves, leases and PPAs are the mechanism.

Solar Leasing and PPAs: How Third-Party Ownership Works in 2026

State Incentives Apply Regardless of How You Pay

Whether you buy, finance, lease, or PPA your solar system, the following state-level incentives remain available in 2026:

Pennsylvania: SRECs (earned by system owner, you if you buy, the provider if you lease), net metering at retail rate, and no separately billed sales tax on a rooftop installation, because the installer pays Pennsylvania’s 6 percent on the materials and it is built into the contract price.

New Jersey: SREC-II through the ADI program for 15 years (earned by system owner), at $77 per MWh for registrations received on or after July 27, 2026 and $85 for earlier registrations, plus net metering at full retail rate, property tax exemption for added home value, and sales tax exemption on solar equipment.

Delaware: Green Energy Program incentives (when funded), net metering, no sales tax on solar equipment.

The key distinction is who earns the SRECs. If you own the system (cash or loan), you earn and sell SRECs directly. If you lease or PPA, the system owner earns the SRECs, which is factored into their pricing model.

Solar Incentives in Pennsylvania

How to Decide Which Option Is Right for You

The right financing path depends on your financial situation, risk tolerance, and how long you plan to stay in your home.

If you have capital available and plan to stay in your home for 15 or more years, a cash purchase maximizes your total return despite the longer payback period.

If you want ownership benefits but prefer to spread the cost, a solar loan provides access to SRECs and long-term savings while preserving your cash. Compare loan rates carefully, the difference between 5 percent and 8 percent has a significant impact on total cost.

If you want immediate savings with zero upfront cost and zero maintenance responsibility, a lease or PPA is the most straightforward path. You give up some long-term upside in exchange for simplicity and risk elimination.

Financing changes the cash-flow picture but not the fundamentals, the core pros and cons of solar apply regardless of how you pay. If you are unsure, start by getting a proposal that shows you all four options side by side with your actual electricity usage and roof conditions. The numbers speak for themselves.

How Sunwise Can Help

Sunwise Energy presents every financing option: cash, loan, lease, and PPA, so you can compare them side by side with your actual usage data. Sunwise compares the available payment options using your electricity use, roof design, upfront budget and long-term goals, so you can choose the path that fits your financial goals.

If you are trying to figure out whether solar still makes sense without the federal tax credit, a conversation with our team will give you a clear, personalized answer.

Request a Solar Consultation

Solar Financing FAQs

Is there still a federal tax credit for solar in 2026?

The residential solar tax credit (Section 25D) expired December 31, 2025, for homeowner-purchased systems. However, the commercial Investment Tax Credit (Section 48E) remains available through 2027 for business-owned systems. Solar lease and PPA providers use Section 48E to lower their costs, which they pass through to homeowners as reduced monthly payments.

What is the difference between a solar lease and a PPA?

With a solar lease, you pay a fixed monthly fee for the use of the solar equipment regardless of how much electricity it produces. With a power purchase agreement (PPA), you pay a per-kilowatt-hour rate for the electricity the system generates. Both options require no upfront cost and include maintenance. The financial difference between the two is typically small.

Can I still finance a solar purchase with a loan in 2026?

Yes. Solar loans remain available from specialty lenders, credit unions, and home equity products. Without the federal tax credit to offset costs, the monthly loan payment will be higher relative to 2025 terms. Homeowners should compare the total cost of a loan against lease and PPA options to determine which path offers the best financial outcome.

Is it better to lease solar panels or buy them in 2026?

It depends on your financial priorities. Buying maximizes long-term savings because you own the system and earn SRECs directly, but the payback period is longer without the federal tax credit. Leasing or a PPA requires no upfront cost, provides immediate monthly savings, and the provider handles maintenance. Total lifetime savings are lower than ownership but the financial risk is essentially zero.

Do solar leases and PPAs still benefit from the federal tax credit?

Yes. When you choose a solar lease or PPA, the system is owned by the leasing company, which qualifies as a business entity. The business can claim the Section 48E Investment Tax Credit at 30 percent. This reduces the provider’s cost, which is passed through to homeowners in the form of lower lease payments or PPA rates.

The information in this guide is for informational and educational purposes only and does not constitute legal, financial, or tax advice. We are not licensed tax advisors or financial professionals. The tax laws and regulations discussed are complex and subject to change and interpretation. Consult with a qualified tax professional to understand how these provisions apply to your organization’s specific circumstances.