The solar energy industry is experiencing an unprecedented shift as solar financing comes under pressure in the U.S. market. With headlines reporting rising defaults in solar loan-backed securities and lending criteria tightening, solar installers find themselves navigating new challenges. For both installers and homeowners, understanding these changes and adapting to the evolving financing landscape is now more important than ever.
Solar Financing Is Tightening & Installers Must Adapt
Over the past decade, the rapid growth of residential solar was fueled by easy access to low-interest loans. These loans allowed millions of homeowners to install solar panels with little or no money down, paying off systems over many years. However, recent reports indicate that defaults on these loans are increasing. According to The Wall Street Journal, several large issuers of solar loans, such as GoodLeap, have seen a notable uptick in late payments and delinquencies in the past year (Michaels, 2025). This trend is largely attributed to two factors: higher interest rates and a cooling real estate market.
When interest rates climb, monthly payments for new solar loans increase, making it harder for homeowners to afford solar. Additionally, as property values flatten or dip, homeowners have less equity to tap for major home upgrades like solar panels. The result is a solar lending market that is “seizing up,” with fewer loans being approved and stricter underwriting standards for those that are (Michaels, 2025).
The Solar Financing Impact
For homeowners, these lending changes may lead to fewer financing options or higher costs when considering a new solar energy system. Some may find they do not qualify for a loan at all, especially if they have average or below-average credit. In turn, solar installers face increased difficulty closing sales, as potential customers struggle to secure affordable financing.
Many solar companies depend on third-party loan providers to offer financing to their customers. With loan approval rates falling and some providers tightening standards or exiting the market, installers must rethink how they present solar to homeowners. According to recent coverage by The Verge and Axios, this environment is also increasing demand for battery storage and backup solutions, which can be even more expensive than solar panels alone (Vincent, 2025; Axios, 2025). This puts additional pressure on financing arrangements.
Strategies for Solar Installers: Diversification Is Key
To remain competitive and keep projects moving forward, installers must adapt. Here are several strategies that experts recommend:
1. Expand Solar Financing Partnerships
Rather than relying on a single lender, work with multiple financing companies, including local credit unions, green banks, and specialty lenders. This increases the chances that clients will find a loan program that fits their needs and credit profile.
2. Offer Leasing and Power Purchase Agreements (PPAs)
2. Offer Leasing and Power Purchase Agreements (PPAs)Leasing and PPAs remain viable options for customers who may not qualify for a traditional loan. These arrangements can lower upfront costs and transfer some risk from homeowners to third-party system owners.
3. Emphasize Cash Purchases and HELOCs
For homeowners with sufficient savings or home equity, cash purchases or home equity lines of credit (HELOCs) may be more affordable in the long run than higher-rate solar loans. Installers can educate clients on the long-term savings and security of owning their system outright.
4. Strengthen Prequalification Processes
Helping homeowners assess their credit and budget early in the sales process can prevent surprises down the line. Installers should offer clear information about available options and work proactively to set realistic expectations.
5. Educate on Incentives and Tax Credits
Remind customers that the 30% federal tax credit for solar is still available through 2025. This can be a significant factor in reducing net system costs and improving affordability for many families (Washington Post, 2025).
Looking Forward: 2025 and Beyond
The solar market is resilient, but installers must be prepared to shift with the times. As the landscape of solar lending changes, companies that diversify financing options, educate their clients, and remain flexible will be best positioned to succeed.
Homeowners, meanwhile, should take extra care to review financing offers, compare terms, and understand all the costs involved. A well-informed approach benefits both customers and installers in these challenging times.
References
Axios. (2025, July 13). Homeowners seek backup power and lower electric bills—here’s a solution. https://www.axios.com/sponsored/homeowners-seek-backup-power-and-lower-electric-bills-heres-a-solution
Michaels, D. (2025, July 9). The Wall Street machine for financing rooftop solar is seizing up. The Wall Street Journal. https://www.wsj.com/finance/the-wall-street-machine-for-financing-rooftop-solar-is-seizing-up-a0958f44
Vincent, J. (2025, July 11). EcoFlow says its new Ocean Pro is better than Tesla’s Powerwall. The Verge. https://www.theverge.com/news/707153/ecoflow-launches-ocean-pro-home-energy-system-tesla-battery-competitor
Washington Post. (2025, July 10). Why homeowners are suddenly rushing to install rooftop solar. https://www.washingtonpost.com/climate-environment/2025/07/10/rooftop-solar-budget-bill-crash