Loading NuWatt Energy...
We use your location to provide localized solar offers and incentives.
We serve MA, NH, CT, RI, ME, VT, NJ, PA, and TX
Loading NuWatt Energy...
NuWatt designs, installs, and manages solar, battery, heat pump, and EV charger systems across 9 states. One company, one warranty, one point of contact.
Get a Free QuoteThird-party ownership is projected to be 69% of the residential solar market in 2026. This happened because the residential tax credit expired and the commercial credit did not. Here is everything you need to know about lease, PPA, prepaid, and transitional ownership options.
Quick Answer
Solar third-party ownership (TPO) will represent roughly 69% of US residential solar installations in 2026, up from 45% in 2025. This dramatic shift happened because the Section 25D residential ITC expired, while the Section 48E commercial ITC remains active. TPO structures allow companies to claim the 30% commercial tax credit and pass savings to homeowners. The four TPO types are: solar lease (fixed monthly), solar PPA (per-kWh), prepaid lease/PPA (upfront payment), and transitional ownership like Propel (5-year TPO then ownership transfer). Construction must begin by July 4, 2026 for Section 48E eligibility.
69%
2026 TPO market share
30%
Section 48E base ITC
Jul 4
Construction deadline
4
TPO types available
The shift to third-party ownership in 2026 is not a market trend; it is a structural response to federal tax policy. Understanding why requires a brief history of the solar investment tax credit.
From 2006 through 2025, the Section 25D residential solar tax credit allowed homeowners to deduct 30% of their solar system cost from their federal income taxes. This credit made homeowner-purchased solar economically compelling. A $30,000 system effectively cost $21,000 after the credit. This drove the boom in cash and loan purchases that characterized the 2015-2025 solar market.
Section 25D expired on December 31, 2025. Homeowners who buy solar in 2026 receive zero federal tax credit. A $30,000 system costs $30,000. Period.
However, the Section 48E commercial clean energy investment tax credit is still active. This credit is available to businesses and investors who own clean energy assets. It provides a 30% base credit plus potential bonuses: 10% for domestic content (FEOC), 10% for energy communities, and 10% for low-income projects, totaling up to 70% in extreme cases but typically 30-50% for residential solar.
The math becomes obvious. If a homeowner buys solar, they get no tax credit. If a company buys the same solar system and puts it on that homeowner's roof, the company gets a 30-50% credit. The company shares some of that savings with the homeowner through lower lease/PPA/loan payments. Everyone wins compared to the homeowner buying alone.
This is why TPO jumped from approximately 45% of the residential market in 2025 to a projected 69% in 2026. It is not that leasing became better; it is that buying became worse. The economics now overwhelmingly favor letting someone else own the system, at least initially.
Fixed monthly payment to use a solar system owned by a leasing company. Payment often includes annual escalator of 1.99-2.99%.
Pay per kWh of electricity your solar system actually produces. Rate is typically below utility rate with an annual escalator.
Single upfront payment covers the full lease/PPA term. No monthly payments. Lower total cost than monthly payment models.
Prepaid ESA + 25-year loan. Third-party owns for 5 years, claims ITC, then transfers ownership to homeowner automatically.
| Factor | Lease | PPA | Prepaid | Propel |
|---|---|---|---|---|
| Upfront cost | $0 | $0 | $15K-$30K | $0 |
| Monthly payment | $130-$180+ | Varies by production | $0 | $230-$270 |
| Escalator | 1.99-2.99%/yr | 1-3%/yr | None | 0% |
| Own system | Never | Never | Never | Year 5 |
| ITC captured | 30% | 30% | 30% | 30-50% |
| Dealer fees | N/A | N/A | N/A | 0% |
| Maintenance | Full term | Full term | Full term | 5 years |
| Min credit | 580-620 | 580-620 | N/A | 660 |
| Availability | Nationwide | 30+ states | Limited | ME, TX |
| Home sale | Transfer required | Transfer required | Transfer or include | Owned after yr 5 |
| Term | 20-25 years | 20-25 years | 20-25 years | 25 years |
| 25-yr total cost | $60K-$72K | $55K-$70K | $15K-$30K | $69K + own system |
Section 48E of the Internal Revenue Code is the commercial clean energy investment tax credit. Created by the Inflation Reduction Act of 2022, it replaced the older Section 48 ITC with a technology-neutral approach. Any clean energy investment that produces zero greenhouse gas emissions qualifies, including solar.
Base Credit
Available to all qualifying projects. Requires prevailing wage and apprenticeship for projects over 1MW.
Domestic Content (FEOC) Bonus
System uses US-manufactured components meeting Foreign Entity of Concern requirements. Silfab panels qualify.
Energy Community Bonus
Installation in a census tract with closed fossil fuel facilities or high fossil fuel employment. Many areas in ME and TX qualify.
Low-Income Bonus
Project located in a low-income community or on Indian land. Additional 10% for qualified low-income residential building or economic benefit projects. Most residential TPO does not qualify.
Typical Maximum for Residential TPO
30% base + 10% FEOC + 10% energy community. The low-income bonus rarely applies to standard residential installations.
The Inflation Reduction Act specifies that projects must begin construction by July 4, 2026 to qualify for the Section 48E ITC under current terms. “Begin construction” can be met through either physical work of a significant nature (installing racking or panels) or the “5% safe harbor” (paying 5% of total project cost). For residential TPO, the installing company typically meets this through physical construction start.
What happens after July 4, 2026 is uncertain. Congress could extend the deadline, modify the credit, or let it expire as written. The solar industry is lobbying for extension, but legislative outcomes are unpredictable. The safe assumption is that if you want to benefit from Section 48E through a TPO structure, construction should start before July 4.
The Section 48E ITC is subject to a 5-year recapture period. If the system owner sells, transfers, or otherwise disposes of the system within 5 years, a prorated portion of the credit must be repaid to the IRS. The recapture decreases by 20% per year: 100% in year 1, 80% in year 2, 60% in year 3, 40% in year 4, 20% in year 5, and 0% after year 5. This is why Propel transfers ownership at year 5, not earlier. For lease and PPA companies that maintain ownership for the full term, recapture is not an issue under normal operations.
Acquired Vivint Solar. Offers both lease and PPA. 2.99% typical escalator.
Highest efficiency panels on the market. Higher starting lease payments reflect premium equipment.
Subscription model starts at $50/month in some markets. Powerwall integration. Limited availability.
Strong regional presence, especially Texas. Offers multiple financing paths.
Digital-first model. Competitive pricing. Rapid national expansion since 2023.
Only transitional ownership product. 0% dealer fees. Ownership at year 5.
Uses "Propel" branding but different product. Standard lease/PPA, not transitional ownership. Nationwide through Greentech distribution.
There are two different products using the “Propel” name in 2026. Concert Finance / NuWatt Propel is a transitional ownership program with automatic ownership transfer at year 5, available in ME and TX. SolSource / TriBeam Propel is a traditional lease/PPA launched in February 2026, available nationwide through Greentech Renewables with Enphase equipment. These are completely different products from different companies despite sharing a name.
Reality: Solar leases are legitimate financial products used by millions of homeowners. They are not a scam, but they have terms (escalators, no ownership) that homeowners should understand before signing. The issue is not leasing itself; it is signing without reading the contract.
Reality: In 2026, this advice is outdated. With no residential ITC, buying solar means paying full price. TPO captures 30-50% in commercial ITC. For many homeowners, TPO provides better economics than buying outright. The optimal choice depends on your specific situation.
Reality: Solar leases and PPAs typically file a UCC-1 fixture filing, not a lien. This is a notice that the solar company owns equipment on your property. It does not encumber your property like a mortgage lien. Propel uses a standard loan secured by the equipment, not the property.
Reality: You can sell a home with a solar lease. The lease transfers to the buyer, or you can buy it out before selling. While lease transfers add some friction, millions of homes have been sold with solar leases. Most real estate agents are experienced with the process.
Reality: TPO is a category, not a product. Leases, PPAs, prepaid models, and transitional ownership (Propel) have fundamentally different economics, ownership paths, and long-term outcomes. Comparing TPO products carefully is as important as comparing TPO to purchasing.
The 69% TPO projection for 2026 assumes current tax policy remains unchanged. Several factors could shift the market in either direction.
If Section 48E remains active: TPO will likely grow above 70%. More companies will launch TPO products, increasing competition and lowering homeowner costs. Propel-style transitional ownership models may become more common as a middle ground between leasing and buying.
If a new residential ITC is enacted: The market would shift back toward homeowner purchases. However, the lesson of 2025-2026 is that TPO works. Even with a restored residential credit, many homeowners may prefer the $0 down, managed experience of TPO over the complexity of tax credits.
If Section 48E is repealed or significantly modified: TPO would lose its economic advantage. Homeowner purchases would return to parity. However, complete repeal is unlikely given the solar industry's lobbying power and the jobs created by IRA-funded manufacturing.
Regardless of policy changes, homeowners who install solar before July 4, 2026 under current Section 48E terms are locked into their agreement. Future policy changes do not retroactively affect existing installations. This is why acting before the deadline has genuine financial value: it locks in the current credit structure for your system.
If you are considering solar in 2026, TPO is almost certainly the right financing approach. The math is clear: letting a third-party owner capture the Section 48E ITC and sharing the savings with you produces better economics than buying solar outright at full price.
Within the TPO category, our recommendation depends on your situation. If you qualify for Propel (660+ FICO, ME or TX), it offers the best long-term outcome: ITC capture, fixed payments, zero dealer fees, and ownership at year 5. If Propel is not available to you, a solar lease or PPA from a reputable provider still delivers excellent savings. If you have cash and want the lowest total cost with ITC benefits, a prepaid lease/PPA is the mathematically optimal choice.
The one thing we strongly advise against: doing nothing and waiting for a “better deal.” Electricity rates increase 3-5% annually. Solar equipment prices may rise with tariffs. And the Section 48E deadline of July 4, 2026 is real. Every month you wait costs money in higher utility bills and increases the risk of missing the construction deadline.
NuWatt offers Propel, standard loans, and can compare lease and PPA options. Get a personalized recommendation based on your credit, location, and goals.