Insights for Residential Solar Sales and Installation Teams
Install volumes are down overall in 2025, but Q4 is already heating up as the 25D tax credit deadline pushes homeowners to act.
Storage is no longer optional. In many markets, it’s the default system design.
Looking ahead, 2026 will be defined by third-party ownership (TPO). Teams that don’t start building financing partnerships now will fall behind.
Key Solar Market Shifts This Month
Market trends:
Q2 wrapped up with just under 1.1 GW installed capacity, about 10% lower year-over-year and down 2% from Q1. Early Q3 numbers are coming in at roughly 1,050 MWdc, a 15% YoY decline, while system prices are still running about 2% higher than last year.
But there’s also a bright spot: The long-anticipated Q4 demand surge is now materializing exactly as predicted. September permits jumped 25% month-over-month in key markets. That surge is tied directly to the looming December 31, 2025, Section 25D deadline, as homeowners rush to secure the credit.
What it means: Overall demand is soft, but urgency is very real in Q4. Clean up your pipeline and remove bottlenecks now so your team can handle the year-end wave.
Storage adoption:
California continues to lead the way, with 97% of new solar systems now paired with batteries. That trend is influencing the national picture: in 2024, about 28% of all residential solar capacity included storage, up from less than 12% in 2023.
What it means: Storage isn’t optional anymore. Treat it as standard in your pitch. Make sure every sales rep can explain the economics and that every crew member is comfortable with storage design and installation.
2026 Solar Industry Outlook:
Looking ahead, forecasts call for about 3.4 GW in residential installs for 2026. This is a 26% drop from 2025. At the same time, third-party ownership (TPO) is projected to reach 72% of the market as the 25D credit disappears.
What it means: If you’re not already building or deepening TPO partnerships, now’s the time. Waiting until January will leave you behind competitors who made the move early.
Federal Solar Policy Updates
25D expiration
The 30% Investment Tax Credit (25D) ends on December 31, 2025, with no phase-out. Come January 1, it’s gone. This hard stop is what’s fueling the Q4 rush.
What it means: Every customer conversation this fall needs to emphasize the deadline. If their project doesn’t interconnect by year-end, they lose 30% of the value.
48E advantage for TPO
While 25D is ending, the 48E credit for third-party ownership models (leases and PPAs) remains available through 2027 with a safe harbor into 2030. This creates a multi-year runway for TPO providers that customer-owned systems won’t have.
What it means: If you’re not offering TPO by Q1 2026, you’re essentially closing yourself off to most of the market. Build financing partnerships now.
FEOC compliance and supply chain risk
Starting in 2026, at least 50% of component costs must come from non-Chinese suppliers (rising to 55% in 2027) for federal credit eligibility. Documentation and supplier tracing will be required. On top of that, the Section 232 polysilicon investigation could add tariffs or quotas in early 2026, threatening more than 90% of global supply.
What it means: Work with suppliers now to confirm compliance. Don’t rely on a single source. Diversify so you’re not caught mid-project if rules tighten.
State Solar Policy Updates
State policies are shifting fast in response to rising utility rates, grid stress, and evolving regulatory priorities. For sales and install teams, this means staying plugged into local changes that can reshape homeowner economics and customer questions overnight.
California
California is still shaping national norms. Under NEM 3.0, storage attachment rates are near universal at 97%, and additional reforms for 2026 are under review, including higher fixed charges and revised export credit rules.
What it means: California has made storage essentially mandatory. Expect other states to follow within 2–3 years. Train your teams now to lead with storage.
Arizona, North Carolina, and Texas
These states are quickly catching up, with storage attachment rates approaching 60% by late 2025. Here, utility rate structures like time-of-use rates and demand charges are pushing customers toward self-consumption even without explicit storage mandates.
What it means: These are high-growth storage markets. Lead conversations with the economics of storage-first systems.
Northeast
The region is split. New York is strengthening solar’s value with utility rate hikes, making it one of the strongest current markets. In contrast, Massachusetts faces potential net metering changes in 2026 that could cut returns and create pipeline uncertainty.
What it means: Prioritize New York opportunities. Be cautious about overcommitting to Massachusetts until regulatory clarity improves.
Midwest
Illinois and Ohio are emerging as growth markets as regulators warm to distributed generation. Grid reliability concerns during extreme heat and cold are changing perspectives and opening the door for more solar + storage.
What it means: The Midwest is shifting from resistant to receptive. If you operate nearby, this could be the time to expand geographically.
Solar Financing, Pricing, and Demand Trends
From rising loan rates to new tariffs and higher utility bills, money pressures are reshaping how customers buy solar. Here’s what to watch and how to respond.
Loan financing is tightening. Median APRs climbed to 5.8% in September 2025, up from 5.49% in July, with fewer lenders in the market. At the same time, tariffs and FEOC restrictions are keeping module costs $0.12–0.17/W higher than last year and stretching lead times.
On the demand side, utilities have already requested $29 billion in rate hikes this year, with many approved. September announcements in states like New York, California, and Arizona show average increases of 6–8% annually.
And customers are split: quote requests mentioning the 25D deadline are up 40% since August, while others are holding back until 2026 to see what TPO options look like.
How you can best respond:
- Offer multiple lenders and prepare customers for stricter credit reviews.
- Lead with monthly affordability when loans don’t pencil; TPO is the better pitch for many.
- Set realistic price and timeline expectations early in the sales process.
- Use rate hikes as a talking point: even with higher costs, solar + storage still beats the bill.
- Qualify prospects by timeline. Push urgency for 2025, educate long-term planners on TPO.
Market Competition and Channel Trends
Market consolidation is picking up. Smaller installers are feeling the squeeze from tighter financing and slimmer margins, which has led to a rise in acquisitions. Larger players are picking up regional companies at 30–40% lower valuations compared to just two years ago.
What it means: If you’re a smaller installer, know your options, whether that’s joining a larger platform or doubling down on a niche. Bigger companies should view this as a chance to expand their footprint at more favorable terms.
Third-party ownership (TPO) providers like Sunrun, Palmetto, and Qcells’ EnFin are also expanding quickly, using access to capital and tax equity partnerships to secure more deals. Meanwhile, SunPower is shifting its strategy by acquiring sales organizations like Sunder to gain tighter control of customer acquisition.
What it means: The TPO players are hungry for installer partners. If you’re not in their networks yet, now’s the time to reach out. Otherwise, you risk losing pipeline as cash and loan deals shrink in 2026.
Lead costs are also up, 25–35% higher than at the start of the year. With deadline urgency driving competition, many teams are finding that direct-to-consumer leads no longer pencil out.
What it means: Rely less on paid leads. Tap into your existing database, past customers, and referral programs. Tailor your approach: urgency-driven messaging for 2025 installs, and long-term TPO education for customers planning beyond the tax credit.
Solar Technology and Supply Chain
Supply chain pressure has eased a little since 2023, but lead times are still long. Standard projects are averaging 8–12 weeks, while premium equipment often takes longer. FEOC documentation now adds 2–4 weeks of extra processing to many orders.
What it means: Communicate realistic timelines to customers and get documentation sorted early so delays don’t surprise them.
Domestic manufacturing has expanded to over 54 GW of solar capacity, but panels with U.S. content carry a $0.08–0.15/W premium. At the same time, the closure of Moses Lake polysilicon production means the industry is more exposed to trade restrictions.
What it means: Domestic panels make sense in projects that need them for incentives. Otherwise, imports will remain the cost-effective option, but be mindful of policy risks that could shift costs quickly.
Storage supply is healthier, with strong availability from Tesla, LG, Enphase, SolarEdge, and newer entrants like FranklinWH. But supply is uneven by region, and FEOC compliance could affect who’s competitive by 2026.
What it means: Offer customers a choice and diversify your suppliers. Don’t depend on one manufacturer, and stay ahead of compliance requirements.
Looking Ahead to Q4 and 2026
Q4 2025 will be the busiest stretch in residential solar’s history. Permit offices and utility interconnection teams are already backlogged, and some projects risk spilling into 2026. That means potential headaches for homeowners who miss the 25D deadline.
What it means: Get every eligible project submitted and moving as soon as possible. Don’t let bottlenecks push customers past December 31.
Beyond this year, 2026 represents a reset. With the 25D tax credit gone, residential volume is expected to fall 28–30%, and TPO will become the majority of the market. Storage, however, will hold steadier, expected to decline only slightly before resuming growth.
What it means: Treat storage as your default offering and make TPO partnerships core to your model. These two shifts will help stabilize revenue through the transition.
And keep the bigger picture in mind: solar penetration is still under 9% of suitable homes in the U.S. There’s plenty of long-term growth ahead for companies that adapt now and stay competitive in a TPO-and-storage-first world.
Sources used in this snapshot include SEIA Market Insight Q3 2025 and Research Data, Wood Mackenzie, Ohm Analytics (Q2–Q3 2025), EnergySage Market Report, U.S. Treasury/IRS guidance, Powerline, RMI, Bidirectional Energy, and Future Market Insights. This piece was partially generated and edited with AI assistance and human fact-checking.