The Solar Tax Credit Ended
Why Are More California Homeowners Going Solar Than Ever?

When the federal government eliminated the 30 percent residential solar tax credit on January 1, 2026, many predicted that homeowner demand for solar would collapse. It did not. According to EnergySage's report on the first half of 2026, the residential solar market proved surprisingly resilient, and homeowner interest in solar and battery storage stayed strong.

What the numbers show

EnergySage found that the median cost of solar reached $2.57 per watt in the first half of 2026, only about 3 percent higher than before. Solar-only pricing stayed largely stable even with tariff pressure and rising labor costs. The biggest shift was in how homeowners are getting solar. The share of installers offering third-party ownership options, such as leases and power purchase agreements, jumped from 14 percent to 41 percent in just six months. One analyst described third-party ownership as an affordability bridge for homeowners who still want the benefits of solar. Battery storage interest also surged. EnergySage reported that 76 percent of homeowners were interested in adding a battery, driven by rising electricity rates and changing utility rate structures, even though actual battery adoption was 31 percent.

Why demand keeps growing in California

The simple answer is the electric bill. California's major utilities have some of the highest rates in the country. According to the CPUC's Public Advocates Office, average residential rates rose between 69 and 101 percent over the past 10 years at PG&E, SCE, and SDG&E. When electricity costs climb that fast, the value of producing and storing your own power grows right along with them. Time-of-use rates add to the pressure. Homeowners on SCE, SDG&E, and PG&E pay the most for electricity in the late afternoon and evening, when solar production is fading. A battery lets a home store its own midday solar and use it during those expensive hours, which is why interest in storage keeps rising.

The tax credit was never the only way in
For homeowners who planned to buy a system outright, losing the federal credit changed the math. For homeowners using third-party ownership, the change matters far less. In a TPO program, the provider owns and maintains the equipment, and qualifying homeowners get solar and battery storage installed without buying or financing equipment. The homeowner pays for the energy or service, often at a rate designed to come in below what they currently pay the utility. That is a big reason the market did not collapse. Homeowners still want lower bills, backup power during outages, and protection from future rate increases, and TPO gives them a way to get there without a large upfront purchase.

What this means for your home
If you assumed solar stopped making sense once the tax credit ended, it may be time to take another look. Rates keep rising, battery technology keeps improving, and more homeowners than ever are finding a path to solar and storage that fits their budget. The best way to know is to look at your own electric bill and usage.
To find out if your home qualifies for a TPO solar and battery program, visit myhomesolution.org/california_public_utility_commissions