Winning in 2026 Means Diversification, Value-Add, & Ownership Models
As of December 31, 2025, the federal residential solar tax credit under Section 25D will expire. This pivotal moment will reshape how solar installation companies operate in the years ahead. Without the 30 percent federal incentive, many homeowners will hesitate to invest in solar unless installers can present new, compelling value propositions. To stay competitive, companies must pivot their business models to focus on diversification, services, and sustainable revenue streams.
3 Key 2026 Residential Solar Market Pivots to Explore
Expand into Commercial and Industrial (C&I) Solar Projects
While the residential tax credit is ending, the commercial and industrial (C&I) solar market remains strong. Businesses can still qualify for incentives under the Section 48 Investment Tax Credit (ITC) and related provisions. Shifting focus to C&I projects, such as installations on warehouses, schools, or manufacturing facilities, helps to offset the loss of residential incentives.
New Service Opportunities with Existing Expertise
C&I projects offer higher-value contracts, predictable timelines, and opportunities for long-term partnerships. Residential solar installers can grow margins through economies of scale, leverage existing engineering expertise, and position themselves as full-service energy partners for companies pursuing sustainability goals. Expanding into this sector may also create new opportunities in demand response, grid services, and energy management consulting.
To succeed, installers should develop commercial sales capabilities, enhance project financing knowledge, and cultivate relationships with developers and property managers.
Emphasize Energy Storage & Service-Based Models
As the industry shifts from tax-driven sales to performance-driven value, energy storage and service-based business models will become critical. Homeowners are increasingly motivated by energy independence, bill savings, and resiliency rather than tax savings. This creates an opening for installers to bundle home energy storage systems (HESS) with solar, electric vehicle (EV) chargers, and load management tools.
Sol-Ark’s 18K hybrid inverter and 15K hybrid inverter, coupled with 48V battery systems, offer strong standalone value, helping customers store solar energy, reduce peak demand, and protect their homes during outages. Installers who integrate storage as a standard part of their offering will maintain competitiveness even as incentives decline.
Driving Recurring Revenue Streams with Subscription Services
Service-based models such as ongoing system monitoring, maintenance plans, and subscription services can also transform one-time sales into recurring revenue streams. Installers can offer predictive maintenance, fault detection, or grid-interaction services. This helps to build long-term customer relationships and increases retention. This shift requires investments in training, remote monitoring platforms, and customer engagement; however, in the long-term it can stabilize revenue even when new installations slow.
Adopt Third-Party Ownership (TPO), Leasing, & Grid-Service Opportunities
Adopt Third-Party Ownership (TPO), Leasing, & Grid-Service OpportunitiesWhen direct incentives fade, ownership structures become a key differentiator. Third-party ownership (TPO) and leasing models, where a certified financial institution or solar installer owns the system and homeowners pay a fixed rate for energy, will expand after 2025. TPO models also open doors for long-term revenue through power-purchase agreements (PPAs). Installers can partner with financing companies to manage ownership portfolios, maintaining steady cash flow from monthly payments rather than one-time installation fees.
Expanding into operations and maintenance (O&M), system retrofits, and virtual power plant (VPP) participation will be essential. Many early-generation systems are nearing the end of their warranty cycles, creating opportunities for upgrades, inverter replacements, and storage add-ons. Enrolling customers into VPP programs, where DERs collectively provide grid services, can further diversify income.
Why This Matters for 2026 Residential Solar Market
The end of the residential tax credit marks the end of an era for solar companies built solely on incentive-driven growth. To thrive in 2026 and beyond, installers must shift from transactional sales to sustainable, service-oriented models. Competing on value through expertise, efficiency, and long-term reliability will replace competing on price and incentives.
Reducing soft costs through streamlined permitting, digital sales tools, and better customer education will be crucial. Installers that invest now in operational efficiency and brand reputation will stand out when tax-driven demand declines. The future solar marketplace will reward adaptability. Companies that diversify into commercial projects, energy storage, and lifecycle service offerings will not only survive the 2026 transition but position themselves as leaders in the next phase of renewable energy growth.
References
Boden Energy Solutions. (2025, August 18). The residential solar tax credit is ending: What you need to know. Retrieved from https://bodenenergysolutions.com/the-residential-solar-tax-credit-is-ending-what-you-need-to-know/
GreenLancer. (2025, October 16). Residential solar tax credit going away in U.S. after 2025. Retrieved from https://www.greenlancer.com/post/solar-tax-credit-ending
Solar Topps. (2025, October 24). Updates on the solar investment tax credit (ITC) for 2025. Retrieved from https://www.solartopps.com/blog/commercial-residential-solar-tax-credit-ending-2025/
Solar Builder Magazine. (2025, October 7). What’s next for residential solar financing as 25D expires? Retrieved from https://solarbuildermag.com/news/whats-next-for-residential-solar-financing-as-25d-expires/
Utility Dive. (2025, September 4). Solar industry looks to third-party ownership as 25D tax credit winds down. Retrieved from https://www.utilitydive.com/news/residential-solar-third-party-ownership-25d-48e-trump/759078/