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Get a Free QuotePrepaid solar products are the fastest-growing financing category in residential solar. By paying upfront (or financing the prepayment), homeowners capture the federal ITC through third-party ownership while gaining a defined path to system ownership. This guide covers how they work, what they cost, and how they compare.
69%
TPO share of 2026 residential solar market
30-50%
ITC captured through third-party ownership
5-7 yrs
Typical ownership transfer timeline
Quick Answer
A prepaid solar lease or PPA lets you pay a reduced upfront cost (typically $18,000-$22,000 for a 10kW system instead of $30,000) while a third-party investor owns the system and claims the 30-50% Section 48E ITC. Ownership transfers to you after 5-7 years. This structure is the fastest-growing solar financing category in 2026 because the residential tax credit (25D) expired — only TPO products can still capture the ITC. The result: lower total cost than a standard lease, faster ownership than a traditional lease, and no annual escalators.
Prepaid solar products are a category of third-party ownership (TPO) financing where you pay most or all of the system cost upfront in a single payment, rather than spreading it across 20-25 years of monthly installments. The "prepaid" label distinguishes them from standard leases and PPAs that require ongoing monthly payments.
The key mechanism: a third-party investor or company legally owns the solar system during the first 5-7 years. Because they are the owner, they claim the Section 48E Investment Tax Credit — which can be worth 30-50% of the system cost. Your prepaid amount reflects this discount. After the tax credit recapture period ends (typically 5 years), ownership transfers to you.
Without Prepaid (Cash Purchase)
With Prepaid Lease/PPA
This is the core value proposition: you pay significantly less than the cash price because the TPO structure unlocks a tax credit that individual homeowners cannot access in 2026. The trade-off is that you do not own the system immediately — but you gain ownership within 5-7 years, which is far faster than a standard 20-25 year lease.
The prepaid solar category includes several product structures. While they share the core mechanism (upfront payment + TPO ITC capture + ownership transfer), the details differ in important ways.
You pay the full lease amount upfront. The leasing company owns the system, claims the ITC, and provides maintenance during the TPO period. After 5-7 years, ownership transfers.
Similar to a prepaid lease but structured as a power purchase agreement — you prepay for the electricity the system will produce rather than leasing the equipment itself.
The prepaid amount is financed through a loan, converting the single payment into monthly installments. You get the ITC benefits of prepaid TPO without needing cash upfront.
The financed prepaid model (pioneered by products like Propel) is particularly significant because it makes the ITC benefits of prepaid TPO accessible to homeowners who do not have $18,000-$22,000 in cash available. Instead of one large payment, you make fixed monthly payments on a 25-year loan at 8.49-10.49% APR (effective May 25, 2026, after Concert raised tier APRs by 0.70 percentage points), with ownership transfer at year 5. This structure has driven much of the TPO growth in 2026.
This comparison covers the four main categories of TPO solar financing to help you understand where prepaid products fit in the landscape.
| Feature | Prepaid Lease | Standard Lease | Prepaid PPA | Propel |
|---|---|---|---|---|
| Upfront Cost | High ($18K-$22K for 10kW) | $0 | High ($18K-$22K) | $0 (financed) |
| Monthly Payment | $0 | $130-$180/mo | $0 | $241-$283/mo (fixed) |
| Annual Escalator | None | 1.99-2.99% | None | None |
| ITC Captured | 30-50% | 30% | 30-50% | 30-50% |
| Ownership Transfer | Year 5-7 | Never/FMV buyout | Year 5-7 | Year 5 (automatic) |
| 25-Year Total Cost | $18K-$22K | $60K-$72K | $18K-$22K | $72K-$85K (includes loan interest) |
| Requires Cash Upfront | Yes | No | Yes | No |
| Performance Guarantee | Varies (5-7 years) | Full term | Varies | 85% kWh (5 years) |
The explosive growth of prepaid solar products is not random. Three structural changes in the solar market converged to make this the dominant financing model.
Before 2025, homeowners could claim a 30% federal tax credit directly when they bought solar. With Section 25D's expiration, individual homeowners purchasing solar (cash or loan) receive zero federal tax credit. Only commercial entities can claim the Section 48E credit. This single change made TPO products — where a commercial entity owns the system — the only path to accessing the ITC. For a $30,000 system, that is $9,000 to $15,000 in tax credits that only TPO can capture.
Standard solar leases with 1.99-2.99% annual escalators have generated significant consumer backlash. Homeowners who signed leases in 2015-2020 are now experiencing substantial payment increases, and media coverage has made new customers wary. A $150/month lease with a 2.99% escalator becomes $296/month by year 25 — nearly doubling. Prepaid products eliminate this entirely: there are no ongoing payments and therefore no escalators.
The number-one complaint about standard leases is that you never own the system. After 20-25 years of payments, the leasing company still owns the panels on your roof. Prepaid products solve this by building in an automatic ownership transfer at year 5-7. This combines the ITC benefits of TPO with the ownership outcome that homeowners want. It is the best of both worlds.
Third-party ownership now accounts for approximately 69% of the residential solar market in 2026, up from approximately 35% in 2023. Within TPO, prepaid products (including financed prepaid like Propel) are the fastest-growing segment. This shift is driven entirely by the ITC access advantage — TPO is the only way to capture $9,000-$15,000 in federal tax credits on a residential solar installation.
Understanding the tax credit mechanics helps explain why prepaid products cost less than buying outright. Here is the step-by-step flow.
A tax equity investor or the financing company (like Concert Finance) is the legal owner of the solar system during the first 5 years.
As the commercial owner, they file for the 30% base ITC. If the system uses FEOC-compliant panels (like Silfab), add 10%. If located in an energy community, add another 10%. Total: 30-50%.
The ITC value is passed through to you as a lower prepaid price. On a $30,000 system with 40% ITC ($12,000), your prepaid amount is approximately $18,000-$20,000.
The IRS requires the system to remain in the TPO owner's hands for 5 years. If transferred earlier, a portion of the ITC must be recaptured (paid back to the IRS).
After the 5-year recapture period, ownership automatically transfers to you. The system is now your personal property, like a new roof or HVAC system.
The Section 48E ITC requires systems to begin construction before the One Big Beautiful Bill Act deadline of July 4, 2026. "Begin construction" generally means either physical work of a significant nature has started or the project meets the 5% safe harbor rule (5% of costs have been paid). Most prepaid solar providers recommend applications by early spring 2026 to ensure the timeline is met.
The prepaid solar market includes several notable providers with different structures, geographic coverage, and equipment choices.
Structure: Financed prepaid ESA + 25-year loan
Upfront cost: $0 (prepaid amount is financed)
APR: 8.49-10.49%
Credit requirement: 660+ FICO
Ownership transfer: Year 5 (automatic)
Equipment: Silfab 440W (FEOC compliant)
Available: ME, TX (live); MA, NH, RI, CT, NJ, VT, PA (waitlist)
Distribution: Through independent installers like NuWatt
Structure: Prepaid ESA with year 6+ buyout
Equipment: Enphase-exclusive hardware
Available: Nationwide
Distribution: Through Greentech Renewables dealers
Ownership transfer: Year 6+ (buyout option)
Note: Same "Propel" name but completely different product
Many local and regional installers are structuring prepaid deals using tax equity from financial institutions. These vary widely in terms, equipment, and availability. If you are exploring prepaid options outside of the Concert Finance or SolSource ecosystems, request the specific terms, ownership transfer timeline, and tax credit percentage being captured to compare accurately.
Prepaid solar is not the right fit for everyone. Here is a guide to matching your situation with the right product type.
Homeowners with $18,000-$22,000 available who want the lowest possible total cost. Ideal for retirees with savings, homeowners who recently sold another property, or those with investment funds to deploy. You get the ITC discount, zero monthly payments, and ownership in 5-7 years.
Homeowners with 660+ FICO who want the ITC benefits of TPO without a large cash outlay. You pay nothing upfront, make fixed monthly payments, and gain ownership at year 5. Best for homeowners in Maine or Texas (currently) or waitlist states who want ITC access plus payment predictability.
Your credit score is below 660, you want full-term maintenance coverage and performance guarantees, you prefer the lowest possible initial monthly payment (even with escalators), or prepaid/Propel products are not yet available in your state. Standard leases have wider availability and more flexible credit requirements.
NuWatt offers Propel by Concert Finance — the leading financed prepaid solar product — in Maine and Texas, with additional states coming soon. Get a free quote to see how prepaid TPO compares to other options for your home.
NuWatt provides this guide as an independent informational resource. Propel is a product of Concert Finance / SolSource.