Are Solar Panels Worth It in 2026 and Beyond?

Are Solar Panels Worth It in 2026 and Beyond? Rising Electricity Prices Say Yes

Yes, solar panels are still worth it for the vast majority of U.S. homeowners in 2026 and beyond, despite the end of the 30% federal solar tax credit for some systems. The primary financial driver is the cost of grid electricity, which is projected to rise much faster than historical averages. When combined with favorable net metering policies, solar systems provide significant long-term solar investment savings that outweigh the initial system cost.

The residential solar industry was rocked when the One Big Beautiful Bill (“OBBB”) ended the Section 25D federal tax credit (a key tax incentive) on 31 December 2025 and shortened the life of the Section 48E solar tax incentive for third-party owned (leased or PPA) residential systems. The section 48E credit will now end on 31 December 2027, rather than the previous 2032 sunset date.

For homeowners looking to install solar panels, this bill means a significant financial shift. State-specific programs and utility rebates (another solar incentive) will now play a larger role in calculating upfront savings, as will rising utility electric rates. This shift underscores the growing importance of residential solar as a key component of the nation’s renewable energy strategy and the broader move toward clean energy. Respected solar data analytics and forecasting company Ohm Analytics projects that residential solar installations will fall by 25% in 2026 compared to 2025. This is far better than the 55% drop they forecast based on an earlier draft of the OBBB that would have eliminated both 25D and 48E by the end of 2025.

 Forecasting the future is difficult, and we think the Ohm Analytics prediction is about right. What makes forecasting tricky is that there are both expansionary and contractionary forces acting on residential solar demand and on its supply cost. One key structural shift is that only leased solar systems will retain a tax credit under 48E after 2025. This will obviously be contractionary as many people prefer to buy solar systems outright and there will no longer be a federal 30% tax credit to do this. However, in this article, we explore why SolarReviews takes the view that any dips in demand for residential solar will be recovered in 2027 and that ultimately the industry will prosper.

Benefits of Solar Power: Why Going Solar Still Pays Off

At SolarReviews, we’ve been tracking residential solar extensively in both Australia and the U.S. Over decades, we’ve seen many solar incentive regimes rise and fall. What stands the test of time is this: demand for residential solar is more closely correlated with rising utility electricity costs than almost any other factor.

In practice, homeowners care about monthly savings — the difference between what their utility bill would be and what a solar lease costs. It’s also essential to note that the long-term value case hinges on favorable net metering policies, which dictate how much credit homeowners receive for the excess energy (solar energy) they send back to the electric grid. While electricity costs drive the baseline energy costs, net metering rules are the crucial regulatory variable impacting final monthly savings.

We expect average residential electricity rates to continue climbing at ~5% per year, rather than the ~3% historical average. Why? Because the U.S. electric grid requires massive capital investment just to keep pace with electrification, resiliency, integration of renewable energy generation, and expansion.

Contrary to what one might expect post-incentive change, we do not expect solar lease pricing to rise. Instead, we believe modest declines are ahead. Solar financing options must be accessible to minimize the barrier of the cost of solar panels.

 In early 2025, Solar Reviews surveyed hundreds of solar companies, finding the average cost for a first-year lease was about $22 per kilowatt (kW) per month.

Because of the domestic content and low-income adders to the Section 48E solar tax incentive (available until end-2027), we believe that figure will decline to around $18 per kW per month for many leases.

Additionally, we expect interest rates to come down through 2026–2027, lowering solar financing costs for lease providers and giving them more flexibility on margins.

As a result, the cost of a solar lease in 2026 might actually be slightly lower than in 2025, spurring demand for leased solar panel systems, even though the 25D incentives will no longer be available for purchased solar systems. A major distinction is that TPO agreements (like a PPA or lease) transfer ownership of the core components, like the inverter, to the providers, simplifying homeowner maintenance. In contrast, homeowners who get a solar loan own their systems outright.

Home Value Increases with Solar

When you go solar, you are making a home improvement that delivers guaranteed solar savings, a key selling point for future buyers. Studies consistently show that homes with owned solar system installations sell faster and at a premium compared to comparable non-solar homes, directly increasing your home value upon resale. Furthermore, the installation of a home solar panel system is often exempt from increasing property tax assessments, making the solar investment even smarter.