2026-09-11
The Residential Solar Tax Credit Ended: What Incentives and Financing Options Remain?
The federal homeowner solar tax credit ended for new installations after 2025. Solar and batteries can still help reduce electricity costs, and prepaid programs offer another way to pay for the energy your home needs.
What is a prepaid PPA?
A prepaid power purchase agreement (PPA) lets you pay upfront for a defined amount or period of solar electricity, instead of paying the solar provider each month for that covered energy. A third party owns the equipment initially. You may pay the prepayment with cash or a separate loan, and your agreement may offer a later equipment buyout.
Related options use different structures: Propel uses a prepaid energy services agreement, HDM uses a solar PPA with a separate battery services agreement, and Participate Energy offers a prepaid lease. They all involve prepayment and initial third-party ownership, but their services, purchase terms and responsibilities differ.
Prepaying can feel similar to a cash purchase: you pay upfront for covered energy and avoid an ongoing PPA energy charge for that coverage. Equipment ownership transfers only when the purchase requirements are completed. If you finance the prepayment, loan payments still apply.
What exactly ended?
The IRS states that the Section 25D Residential Clean Energy Credit is not available for property placed in service after December 31, 2025. Signing an agreement or paying a deposit in 2025 did not preserve the credit for a typical home installation completed in 2026.
For a homeowner-owned system installed in 2026:
- Buying with cash does not restore the old homeowner credit.
- Using a solar loan, personal loan or HELOC does not restore it.
- Adding a battery does not restore it.
- A provider's “tax-credit equivalent” discount is not a credit claimed by the homeowner.
Someone whose qualifying system was completed in 2025 may still claim the credit on the applicable return. The IRS also permits eligible unused credit from a qualifying prior-year installation to be carried forward, subject to the tax rules.
First decide who should own the system
Purchase and third-party ownership are legally different. Under a cash purchase or ordinary solar loan, the homeowner owns the equipment. Under a lease, PPA or prepaid energy agreement, another company usually owns the equipment initially—even when the homeowner prepays the entire agreement.
Compare your solar options
Use this comparison to understand payments, ownership and support. EL-FI Homes works with Propel through Concert and HDM. Ask us which options are available for your home and how they compare with a direct purchase.
| What to compare | Propel / Concert Prepaid energy services + loan | HDM Prepaid solar PPA + battery services | Participate Energy* Prepaid lease |
|---|---|---|---|
| Payments | Medallion Bank loan serviced by Concert in the offer shown. Monthly loan payments apply. | Prepay with cash or separate financing. Solar and battery have separate agreements. | Upfront lease payment for a 25-year term. Loan payments apply if separately financed. |
| Path to ownership | After contract year 5: elected, prefunded buyout, subject to its terms. Any loan balance continues. | After year 6: purchase option at fair market value less remaining prepayment credit. Confirm the final amount. | After the initial 6 years: purchase option at fair market value. Ownership does not transfer automatically. |
| Support | Five years of covered maintenance and repairs. Monitoring and warranty administration continue after buyout: 25 years solar / 15 years battery in total. | Maintenance and monitoring while HDM owns the system. HDM service ends at purchase; remaining manufacturer warranties transfer. | Public materials describe keeping the system in working order. Confirm included maintenance and warranty coverage. |
| Battery controls | Equipment-based app features remain available subject to setup and program terms. Provider optimization and grid-service rights can affect dispatch. | Equipment-based app features depend on setup. HDM may dispatch the battery for grid services; backup reserve follows the agreement. | Public materials describe homeowner operation. Confirm app permissions, reserve settings and any provider dispatch rights. |
| Why consider it | Prefunded year-5 buyout with financing in the offer shown. | Cash or separate financing, plus a later purchase option. | Home-sale transfer without buyer credit underwriting, according to public materials. |
| Home-sale transfer | $250 agreement transfer administration fee where applicable. Separate lender rules apply. | $250 administration fee per agreement transferred. Confirm the total for a combined solar + battery project. | Transfer by notice is described publicly. Confirm any fee in your proposal. |
| Review carefully | APR, total loan cost, payment changes and home-sale requirements for the loan and service agreement. | Year-6 buyout amount and service after transfer. Annual administration fees start after year 6 if you do not buy. | Buyout amount, repairs, transfer terms and any separate lender requirements. |
*Participate information summarizes its public prepaid-lease description; confirm the actual offer with EL-FI Homes. Availability and final terms vary.
What does the $250 cover? It is an administration fee for an applicable agreement transfer when a home is sold. It is separate from the price to buy the equipment from its owner. A loan payoff or lender-approved assumption also follows its own terms.
A clear path from prepayment to ownership
A prepaid agreement can be a route toward owning your solar equipment. The important milestones are the initial payment, the eligible purchase date and completion of the transfer.
- Compare the same system and scope. Confirm the equipment, cash-purchase price, prepaid price, expected production and remaining utility bill.
- Prepay for the covered energy or service. Use cash or eligible financing. The provider initially owns the equipment; a separate loan creates a monthly payment.
- Complete the eligible buyout. Propel's elected, prefunded buyout occurs after contract year 5. HDM and Participate offer purchase options after the initial 6 years; their final buyout amounts must be confirmed. Complete required notices and transfer documents.
- Own the equipment and continue using its output. Keep the bill of sale and warranty records. Any unpaid loan remains due, and future service follows the applicable warranty and service terms.
How is this similar to buying the system? Paying upfront can reduce recurring solar charges, and completing a buyout gives you equipment ownership. A direct cash purchase gives you ownership at the start. A prepaid agreement separates the energy payment from the later equipment purchase, so compare the combined cost of both steps.
Your battery's everyday features stay familiar
With the same battery, backup equipment and installation design, the underlying hardware capabilities do not change simply because you choose cash, a loan or a prepaid program. Depending on the model and setup, these can include app monitoring, solar self-consumption, time-based operation and backup power.
Control permissions are a separate question. Provider ownership or participation in a grid program can affect who may change operating modes, reserve levels, charging and exports. For Propel and HDM, provider dispatch rights mean we should not promise that every setting is unrestricted. EL-FI will walk you through the controls available for your selected equipment and program.
- See your energy: review solar production, home use, battery charge and grid imports in the supported app.
- Balance savings and backup: more stored energy held in reserve can improve outage readiness but leave less energy for daily bill reduction.
- Understand dispatch: ask who can charge or discharge the battery, whether you can override an event, and who receives grid-program revenue.
- Plan the handover: confirm app access, operating permissions and any continuing grid-program obligations when ownership transfers.
Backup requires a compatible installation and sufficient available charge. A battery does not guarantee uninterrupted power for every appliance or every outage.
Warranty support after ownership transfers
EL-FI Homes handles warranty support and manufacturer claim coordination. Keep your equipment list, commissioning records and transfer paperwork so we can help with an eligible claim.
- 25 years — Solar panels
- 25 years — Microinverters
- 10 or 15 years — Tesla / Enphase batteries, depending on model
Original manufacturer warranty periods for the equipment specified in your proposal. Eligibility, model-specific terms, exclusions and registration requirements apply. Coverage does not restart at ownership transfer. Labor and service coverage follow your EL-FI agreement.
Know which warranty answers which problem
A panel's product warranty covers qualifying defects; its performance warranty addresses output under the manufacturer's terms. Those are different from a provider's guarantee of your system's energy production. A microinverter warranty and a battery warranty also have their own remedies and exclusions.
For batteries, ask about the retained-capacity threshold and any cycle, throughput, operating or connectivity conditions. A 10- or 15-year term is not a promise of unchanged capacity throughout that period. Ask separately about diagnosis, labor, shipping, removal and reinstallation.
The warranty clock keeps running. For example, if a 10-year warranty began when your system was commissioned and you take ownership six years later, about four years remain, subject to its terms. Propel's ongoing monitoring and warranty administration are separate from its five-year repair coverage; HDM's own service ends at purchase. EL-FI's claim support helps you use the remaining eligible coverage.
Prepaid PPA vs. monthly PPA: compare the full electricity cost
For equivalent equipment operated the same way, the remaining utility bill can be the same under either payment structure. The difference is how and when you pay the solar provider or lender. A monthly PPA normally charges for the system's production, including energy you may export; a prepayment covers the energy or service specified in that agreement.
Compare utility bill + solar or loan payment + upfront and later costs. A lower recurring bill by itself does not establish which offer costs less overall.
| Cost or saving | Without solar | Prepaid: cash ($25,000 upfront) | Monthly PPA ($0.15/kWh, 2.9% escalator) |
|---|---|---|---|
| Upfront payment | $0 | $25,000 | $0 |
| Remaining utility bill / month | $300.00 | $75.00 | $75.00 |
| Solar or loan payment / month, year 1 | $0.00 | $0.00 | $150.00 |
| Total recurring cost / month, year 1 | $300.00 | $75.00 | $225.00 |
| Total modeled cost over 25 years | $90,000 | $47,500 | $87,272 |
| 25-year modeled savings vs. no solar | — | $42,500 | $2,728 |
Starting example: $300/month before solar, $75/month remaining utility bill, 12,000 kWh annual solar production. These are teaching assumptions, not EL-FI or provider quotes. Totals are nominal dollars; they exclude unentered buyout, administration, insurance, maintenance and repair costs.
How to get more value from solar and a battery
- Start with your actual utility: use your rate plan and a full year of usage, including planned EV charging or a heat pump.
- Use more solar at home: shift suitable loads into solar-producing hours and use permitted battery operation to reduce expensive grid purchases.
- Set a deliberate backup reserve: balance outage needs with daily savings, within the program's operating permissions.
- Compare the complete cost: include interest, escalators, buyout amounts, ongoing fees and service after ownership.
- Review performance after installation: check the app and actual bills with EL-FI, then adjust permitted settings to suit your home.
What California incentives still remain?
The end of Section 25D did not eliminate every solar or battery benefit. Eligibility depends on income, utility territory, project design, available funding and application timing.
- SGIP battery incentives: California's Self-Generation Incentive Program continues to support qualifying behind-the-meter storage. Higher Equity and Equity Resiliency levels have specific income, medical-vulnerability, wildfire-risk and resiliency requirements.
- Solar + Storage Equity: The CPUC's Residential Solar and Storage Equity program supports eligible low-income households installing paired solar and storage. Check current funding, income rules, developer approval and participation requirements before assuming an award.
- DAC-SASH: The CPUC lists DAC-SASH as accepting applications for qualifying income-eligible homeowners in disadvantaged communities. GRID Alternatives administers the program; confirm property eligibility and local availability.
- Active-solar property tax exclusion: Qualifying active solar systems generally do not increase the existing California property assessment. The current statutory sunset is January 1, 2027; treatment should be confirmed for each property and ownership structure.
Utility bill credits still matter—but they are not rebates
SCE and SDG&E customers applying for new rooftop solar generally use California's Net Billing Tariff, called the Solar Billing Plan by the utilities. Solar used inside the home avoids grid purchases. Excess energy sent to the grid receives time-dependent credits that are usually below retail rates but can be higher during limited late-summer evening hours.
This is why battery dispatch and system sizing matter. A battery can move lower-value midday solar into expensive evening hours. LADWP and other municipal utilities use their own rates, net-metering rules and incentive programs, so a proposal must use the homeowner's actual utility.
How to compare proposals fairly
Ask each provider to show the same equipment, expected production and utility assumptions. Then put the following information on one page.
- Cash price for the same equipment and scope.
- Amount financed and total payments over the full term.
- System owner on day one, at the year-5 or year-6 purchase milestone, and at term end.
- Purchase price or fair-market-value requirement.
- Estimated remaining utility bill and fixed charges.
- Production, battery dispatch and degradation assumptions.
- Utility-rate escalation used in the savings model.
- Who handles monitoring, repairs and replacements.
- Process and cost when selling or refinancing the home.
- Who receives renewable-energy credits and grid-services revenue.
The most useful starting question is not “Which payment is lowest?” It is: “Who owns the system, what will I pay in total, and what happens if I sell my home?”
Frequently asked questions
Is the 30% federal solar tax credit available to homeowners in 2026?
No. The IRS states that the Section 25D credit is unavailable for expenditures made after December 31, 2025. For typical retrofit projects, completion of the original installation determines timing.
What if I signed in 2025 but installation finished in 2026?
IRS guidance says paying or signing earlier did not preserve the credit when the original installation was completed after December 31, 2025.
Does a prepaid PPA give me a federal tax credit?
No. The eligible third-party system owner may use separate business-side tax benefits and reflect some value in contract pricing. The homeowner does not claim that credit.
Do I own the panels under a prepaid PPA or lease?
The provider owns them initially. Propel's elected, prefunded buyout is after contract year 5. HDM and Participate offer purchase options after the initial 6 years. Ownership changes when the applicable purchase requirements and transfer documents are completed; a separate loan can continue.
Does the $250 transfer fee buy me the system?
No. The stated $250 is an administration fee for an applicable agreement transfer on a home sale. A purchase from the system owner follows the buyout terms. HDM has separate solar and battery agreements, so confirm the total transfer charges and any separate lender requirements.
Can I still use the battery app and backup settings?
The battery's underlying capabilities depend on its model and installation. Available settings also depend on permissions and program rules. EL-FI will explain app access, backup reserve, provider dispatch and what changes at ownership transfer.
Do I receive a fresh 25-year warranty when ownership transfers?
No. Eligible manufacturer coverage continues for its remaining original term. EL-FI Homes handles warranty support and claim coordination after transfer; labor and service coverage follow your EL-FI agreement.
Is prepaid solar always cheaper than a monthly PPA?
No. Compare the prepayment, loan interest if financed, any later purchase and service costs, the monthly PPA rate and escalator, and the remaining utility bill. Prepaying can reduce recurring charges, but a lower monthly bill alone does not establish the lowest total cost.
Will solar eliminate my electric bill?
Usually not completely. Grid imports, fixed charges, non-bypassable charges and settlement adjustments may remain. Results depend on utility rules, rate plan, system design, battery strategy and usage.
Are California battery rebates still available?
SGIP and the Residential Solar and Storage Equity program continue to support eligible customers, but funding steps and waitlists change. Confirm eligibility before treating an incentive as part of project economics.
Sources and further reading
- IRS: Residential Clean Energy Credit
- IRS: Public Law 119-21 energy-credit termination FAQ
- CPUC: California Solar Consumer Protection Guide
- CPUC: Net Energy Metering and Net Billing
- CPUC: Low-Income Solar Programs
- California BOE: Active Solar Energy System Exclusion
- Participate Energy: Prepaid Lease
Educational notice: This article provides general information, not tax, legal or financial advice. Incentive funding and finance-program terms can change. The signed customer agreement, lender disclosures, utility tariff and applicable law control.