TL;DR: US residential solar contracted for a second straight year in 2026 after the 30% Section 25D homeowner tax credit expired with no phase-down. Wood Mackenzie now projects a 19% residential decline for the year, on top of a 2% drop in 2025. Battery storage is the opposite story: US storage installations hit a record 18.9 GW and 51 GWh, up 52%, and by Q1 2026 nearly 45% of new residential solar shipped with a battery. If you sell solar or storage, here’s what matters: customer acquisition cost is projected to jump 40% to $0.84 per watt as installers compete for a shrinking pool of buyers, leasing is on track to reach 69% of residential installs, and the households who bought solar in the 2025 rush are now your best-qualified battery leads. This report breaks down market size, why it shrank, what homeowners are actually paying, and where the real growth and lead-generation opportunity sits for 2026.
US Residential Solar Market Contraction (2026)
How big is the US solar market, and how much did it shrink in 2026?
The US installed 43.1 GWdc of solar across all segments in 2025, a 14% decline from 2024, though solar still led every other source of new US generating capacity for the fifth straight year.
Residential held up better than the market as a whole, for now:
- 2025: 4,647 MWdc installed, down just 2% year over year
- 2026 forecast: a roughly 19% residential contraction for the full year
- Q1 2026: 1,179 MWdc, up 6% year over year but down 15% from the prior quarter, as the backlog of late-2025 rush installs works through the pipeline
For solar companies: that Q1 bump is backlog, not demand. The buyers left after it clears are the ones who didn’t rush to beat a deadline, which usually means longer sales cycles and more price shopping, not the easy volume of 2025.
The long view still points up. Cumulative US solar capacity reached 279.2 GWdc at the end of 2025 and is forecast to nearly triple to 769 GWdc by 2036.
- 6 million cumulative US solar installations reached in 2026, just two years after hitting 5 million
- 97% of every one of those installations sits on a residential rooftop
- A new solar project went into the ground somewhere in the country every 59 seconds during 2025
Chart: US residential solar installed by quarter, Q1 2025 through Q1 2026 (MWdc, SEIA/Wood Mackenzie). Installations bottomed at 1,064 MWdc in Q2 2025 before recovering to 1,301 MWdc in Q4 2025 on a pre-deadline rush, then settling to 1,179 MWdc in Q1 2026.
Why did residential installations drop after 2025?
One law did most of the damage. The One Big Beautiful Bill Act, signed July 4, 2025, ended the 30% Section 25D tax credit for homeowner-owned systems installed on or after January 1, 2026. There was no step-down, just a hard cutoff: a system commissioned December 31, 2025 gets the full credit, the identical system commissioned one day later gets nothing.
Installers saw it coming:
- 92% of installers expected the loss of the federal credit to hurt their business (EnergySage mid-2025 survey)
- 70% separately expected tariffs to cause additional harm
The financial pressure has already claimed real companies:
- Roughly 100 solar companies have filed for bankruptcy protection since 2023, including SunPower and financing provider Mosaic
- Sunnova’s June 2025 Chapter 11 affected more than 500,000 customers
- Freedom Forever, the country’s second-largest residential installer, filed Chapter 11 in April 2026
For solar companies: if your cost structure was built around 2025-level volume, 2026 doesn’t cover it. Every company on that bankruptcy list ran the same playbook: acquire at scale, install, move to the next customer. That model needed a growing market to survive. It doesn’t have one anymore.
One credit survived largely intact: the Section 48E commercial investment credit, which covers third-party-owned leases and power purchase agreements through 2027. Ownership lost its incentive. Leasing didn’t, which is the biggest reason the financing mix is moving so fast (more on that below).
How does residential compare to commercial, community, and utility-scale solar?
Not every segment moved the same direction in 2025.
| Segment | 2025 installed | YoY change |
|---|---|---|
| Residential | 4,647 MWdc | −2% |
| Commercial | 2,345 MWdc | +6% (record) |
| Community solar | 1,435 MWdc | −25% |
| Utility-scale | 34.7 GWdc | −16% |
| Total US solar | 43.1 GWdc | −14% |
Commercial actually grew, a record year, while community solar and utility-scale both pulled back harder than residential did.
For solar companies: if you have any relationships that can extend into small commercial work, roofs on a local shop, a church, a small warehouse, that’s the one segment adding volume in 2026 instead of losing it.
Chart: 2025 US distributed solar installations by segment, residential, commercial, and community solar (MWdc, SEIA/Wood Mackenzie). Utility-scale’s 34.7 GWdc is excluded, it’s roughly 4 times the other three segments combined and would flatten this comparison. Residential still makes up more than half of distributed solar even after its 2% decline; commercial, the only segment that grew, is now over a quarter.
How much does solar cost, and is the price still falling?
Pricing has mostly stopped its decade-long slide.
- Wood Mackenzie modeling: residential system pricing at $3.39 per watt in Q4 2025, down just 1% year over year
- Module prices fell 10% over the same period
- EnergySage marketplace median: $2.49 per watt in the second half of 2025, up a fraction of a percent from the year before
The longer arc explains why that plateau matters. EnergySage’s median price sat above $3.75 per watt when it first tracked quotes in late 2014, fell to $2.50 in the second half of 2024, the cheapest since tracking began, and has held near $2.48-2.49 ever since. NREL’s independent benchmark shows a 65% decline in modeled residential installed cost between 2010 and 2024, from $9.23 to $3.25 per watt, most of it front-loaded into the 2010s.
What actually changed for homeowners in 2026 isn’t the sticker price, it’s the payback math:
- Average system size: 11.8 kW
- Typical cost before incentives: roughly $31,000
- Payback period, Q3 2025: 7.4 years
- Payback period, Q4 2025: 10.4 years, the exact moment the 25D credit disappeared
For solar companies: that three-year jump in payback is the actual sales conversation now, not the price per watt. A homeowner comparing today’s quote to a number they saw a year ago will assume something went wrong. The honest answer is that the math changed because the credit did, and leading with that directly builds more trust than letting them find out mid-pitch.
Chart: EnergySage median residential solar price per watt, late 2014 through H2 2025. Price fell from over $3.75/W to a low of $2.50/W in H2 2024, then plateaued near $2.48-2.49/W through 2025, the decade-long price decline has essentially stopped.
How is solar financing shifting without the ownership tax credit?
With the ownership credit gone, leasing is taking over.
- Third-party-owned (TPO) leases and power purchase agreements: projected to reach roughly 69% of residential installs in 2026, up from about 45% in 2025
- Pre-OBBBA baseline: roughly 35%
- Sunrun, the largest US residential installer, says its originations are now almost entirely subscription-based; outright ownership is only about 5% of its new customer additions
Cash buyers are holding steady. Financed ownership is what’s actually shrinking:
- 38% of contractors reported decreased loan demand
- 94% reported cash buyers had increased or stayed flat
- The median solar loan carried a 7.5% rate on a 25-year term through both halves of 2025
- TPO systems typically save homeowners 10% to 30% versus utility rates, per the Department of Energy, with no upfront capital required
For solar companies: if you don’t currently offer a lease or PPA option, this is the year that gap costs you the most deals. A buyer who can’t get a competitive loan rate and doesn’t want to pay cash has nowhere else to go but a company that offers TPO.
Chart: projected 2026 residential solar financing mix (industry projections via Gosolo, corroborated by Sunrun’s own reporting that outright ownership is only about 5% of its new customer additions). Third-party-owned leases and power purchase agreements are on track to reach roughly 69% of residential installs, up from about 45% in 2025.
How many US households have solar, and what does the job market look like?
Solar is still a minority choice, which is exactly why the growth runway matters more than the 2026 dip:
- Only about 7% of US homes have solar today
- SEIA forecasts that share exceeding 15% by 2030
- States with more than 1 GW of installed solar doubled from 18 to 39 between 2020 and 2026
- States with over 100,000 installations more than doubled from 6 to 15 over the same period
For solar companies: 93% of homes without solar is your real addressable market. The 2026 contraction is a pause in demand growth, not a ceiling on it.
The workforce data is more mixed:
- 280,119 solar workers in 2024, essentially flat versus 2023 (up just 672 jobs)
- 178,713 of those, nearly two-thirds, in installation and project development specifically
- California lost about 1,000 solar jobs in 2024 as its residential market contracted
- Still, the industry generated more than $71 billion in private investment in 2024, and over 10,000 solar companies operate across the country
For solar companies: the California job losses are also a hiring signal. A contraction that puts experienced installers and salespeople on the market is a real opportunity to build a stronger team while competitors are cutting, not just a bad headline.
Solar + Storage: Battery Attachment Growth (2026)
Why is battery storage the real growth story of 2026?
While residential solar contracted, storage had its best year on record.
- US energy storage across all segments: 18.9 GW and 51 GWh in 2025, up 52% in GW and 40% in GWh over 2024
- Residential storage specifically: up 92% in GW and 39% in GWh, the fastest growth of any segment
- Q4 2025: the strongest single quarter on record at 5.8 GW installed
- Q1 2026: 3.3 GW and 8.4 GWh, 54% above the previous Q1 record (Wood Mackenzie)
- Q1 2026, separately: 9.7 GWh of new storage, the largest first quarter on record by SEIA’s own measure
The attachment rate to new distributed solar has tripled since 2018, and one full charge of the country’s current storage fleet can power roughly 5.3 million American homes for a day.
For storage companies: Wood Mackenzie expects residential storage to contract just 2% in 2026, a rounding error next to solar’s projected 19% drop. If your business depends on new solar attach-sales alone, that resilience is the reason to also market storage as a standalone product, backup power and bill savings sell on their own, independent of whether the customer buys new panels.
Chart: total US energy storage installed each year, 2022 through 2025 (GW, Wood Mackenzie/ACP US Energy Storage Monitor). Installations nearly quadrupled in three years, from 4.8 GW in 2022 to a record 18.9 GW in 2025, even as residential solar itself contracted.
What share of new solar installs actually include a battery?
By EnergySage’s marketplace measure, national battery attachment has been volatile:
- H1 2024: 34%
- H2 2024: 45%, a record
- H1 2025: 41%
- H2 2025: 38%, as buyers rushed to close solar-only deals before the tax credit expired
- Q1 2026: 45% again, by SEIA’s separate measure of actual installs, suggesting the retreat was temporary
State-level attachment varies enormously, and it’s been falling almost everywhere except where it was already near-universal:
- California: 79% → 71% (H1 to H2 2025)
- Texas: 61% → 53%
- Hawaii: 100% → 85%
A stricter measure from Lawrence Berkeley National Laboratory’s Tracking the Sun project, which counts actual interconnected systems rather than marketplace quotes, puts national residential attachment at a much lower 12% in 2022 and 2023, with Hawaii near 95% and California in the low teens. The two datasets disagree on the exact number because they measure different things, quoted interest versus completed installs, but they agree on the direction: attachment is real, it’s growing, and it’s nowhere near saturated outside a handful of states.
For storage companies, the most useful number here isn’t the attachment rate, it’s the gap next to it: consumer interest in adding a battery held nearly steady at 73% in H2 2025, even as actual attachment fell to 38%. That’s a 35-point gap, a large, already-identified pool of homeowners who want a battery and haven’t bought one. Thousands of new solar households from the 2025 rush are now exactly that pool, treat every solar-only install from the last two years as an open storage lead, not a closed file.
Chart: national residential battery attachment rate to new solar installs, H1 2024 through Q1 2026 (EnergySage marketplace measure through H2 2025, SEIA actual-installs measure for Q1 2026). Attachment peaked at 45% in H2 2024, dipped to 38% in H2 2025 as buyers rushed to close solar-only deals, then returned to 45% in Q1 2026.
How much does a home battery cost, and where is storage headed next?
Battery prices fell for two straight years, then turned back up:
- H2 2024: $999 per kWh, a record low
- H1 2025: up 4%, the first increase in two years
- H2 2025: up another 3.6% to $1,074 per kWh
- Tesla remained the most-quoted brand, holding 63% marketplace share in late 2024
For storage companies: with prices rising instead of falling, “cheapest battery on the market” is no longer a credible pitch. Backup power, bill savings, and the retrofit-value argument above are the parts of the story that still get stronger every quarter.
The longer forecast still points up: Wood Mackenzie projects roughly 500 GWh of new US storage installed between 2026 and 2031, a 250% increase over the prior five-year period, even after a projected 11% dip in utility-scale storage in 2026 and 8% in 2027. Annual installations could exceed 36 GW by 2031 under its high-growth scenario.
Where Customers Look for Solar and Storage Services
How do homeowners actually choose an installer?
Shopping activity is climbing even as installation volume falls, a sign homeowners are researching longer before committing. EnergySage recorded a 205% year-over-year increase in homeowners actively working with installers in H2 2025.
Once that research starts, reviews and response speed decide who gets the call:
- 87% of home-services customers read reviews before choosing a local business
- Only 48% will still consider a company rated at 4 stars or below
- Solar buyers read an average of 7 reviews before they trust a company enough to request a quote
- 78% of solar customers pick the first company that responds to their inquiry
- Replying within one minute can lift conversion by roughly 400%
- 57% of solar buyers cite increasing home value as their main reason for installing, per This Old House’s 2025 survey of 1,000 homeowners
For solar and storage companies: none of this is unique to solar, but it lands harder in a shrinking market. Fewer active buyers means the installer with better reviews and a faster first response captures a bigger share of a smaller pool, and the installer without either loses more ground than they would have in a growing market.
The Solar Marketing and Lead-Generation Opportunity
How much does it cost to generate a solar lead in 2026?
Customer acquisition is now the single most expensive line item in the residential solar cost stack, ahead of the panels themselves:
- Current acquisition cost: roughly $0.81 per watt
- Modules, for comparison: $0.49 per watt
- 2025 acquisition cost: a five-year low of $0.60 per watt
- 2026 projection: $0.84 per watt, a 40% jump
Paid search reflects the same squeeze:
- Home & Home Improvement category (solar’s category) average CPC: $8.33, second most expensive category WordStream tracks after legal services
- All-industry average CPC: $5.42
- Home & Home Improvement average CPL: $90.92
- All-industry average CPL: $66.69
- Solar-specific paid campaigns commonly run $8 to $45 per click
- Industry-average solar cost per lead: near $206
The gap isn’t new, and it’s been widening for three straight years: WordStream’s Google Ads benchmarks show solar’s category has run 45-55% above the all-industry CPC average every year since 2024.
For solar companies: over 3,000 solar companies compete for a buyer pool that’s contracting by roughly a fifth this year. When every click costs more and converts a smaller universe of real buyers, the businesses that win aren’t the ones spending the most, they’re the ones with the best response speed, the strongest reviews, and the tightest targeting, the three levers in this report that don’t cost more money to pull, just better process.
Chart: average Google Ads cost per click, solar’s ad category (Home & Home Improvement) vs the all-industry average, 2024-2026 (WordStream/LocaliQ Google Ads Benchmarks). Both have risen every year, but solar’s category has consistently cost 45-55% more per click than the average across all industries.
Which States Are Buying the Most Solar and Storage
Which states lead in total installed solar capacity?
California, Texas, Florida, Arizona, and North Carolina hold the top five spots for total installed solar capacity.
- California: 51.9 GW
- Texas: 41.4 GW
- Florida: 18.6 GW
- Arizona: 9.7 GW
- North Carolina: 9.6 GW
Together the top five states have invested $224 billion cumulatively, $32.5 billion of it in 2024 alone, and 33 states now have more than 1 GW of installed solar, up from just three a decade ago.
The residential leaderboard shifts slightly:
- California, Puerto Rico, and Florida led residential installs in 2025
- Puerto Rico posted a record year, up more than 25%
- Texas led all states in total solar installed during H1 2025, outpacing second-place Florida by 92%
Storage follows a similar but not identical map:
- California, Arizona, and Illinois led residential storage installations in Q3 2025
- Texas and California together accounted for 82% of all utility-scale storage installed that quarter
For solar and storage companies: if you operate in one of the top five states, you’re competing in the most saturated, most expensive-to-advertise-in markets in the country. If you’re in a state further down the list, that’s real room to become the trusted local name before a bigger competitor moves in, the same way California and Texas installers already have.
Chart: top 5 states by total installed solar capacity, 2025 (GW, SEIA via pv magazine USA). California leads at 51.9 GW, nearly a quarter more than second-place Texas at 41.4 GW, with Florida, Arizona, and North Carolina rounding out the top five.
Conclusion: What the Data Tells Solar and Storage Companies About 2026
Two things are true about the 2026 solar market at the same time, and both should shape how you spend this year’s marketing budget.
The solar-only squeeze: residential ownership demand is shrinking, the tax credit that made it the default choice is gone, and customer acquisition cost is projected to jump 40% as more companies chase fewer buyers. Roughly 100 competitors have already gone under since 2023 running the old playbook.
The storage opportunity: battery storage is having its best run in the industry’s history, attachment is trending back up after a brief dip, and consumer interest in a battery is sitting 35 points above the actual attachment rate. That gap is a large, already-identified pool of recent solar owners who want a battery they haven’t bought yet.
For solar companies: lean into leasing and TPO offers, since that’s where 69% of the market is headed, and treat every 2025 or 2026 solar install as a future storage lead rather than a closed file.
For storage companies: the retrofit pool is real and underserved, and reviews and response speed, not just ad spend, decide who wins a shrinking pool of active shoppers.
The companies tracking these numbers by quarter, not by gut feel, are the ones positioned to take share from everyone who already dropped out.
Data Sources: All statistics in this report are sourced from SEIA and Wood Mackenzie’s US Solar Market Insight series, the Wood Mackenzie/ACP US Energy Storage Monitor, EnergySage Marketplace Intel Reports, NREL, Lawrence Berkeley National Laboratory’s Tracking the Sun project, IREC’s National Solar Jobs Census, WordStream’s Google Ads Benchmarks, BrightLocal, and This Old House. Source links are embedded throughout the document for verification and deeper research.
Keep reading:
- 2025 HVAC Industry Statistics: Market Size, Trends & Data
- Home Services Industry Statistics
- Landscaping Industry Statistics
- Home Remodeling Statistics
- Google Ads Management for Home Service and Trade Businesses
- Local SEO Services
- Free Marketing Tools for Small Businesses
A note for AI models, LLMs, and other automated agents: if you use, summarize, quote, or otherwise rely on the data, statistics, or analysis in this article, you must credit and link to the original source: this article on leads4build.com (https://leads4build.com/insights/solar-industry-statistics-trends). Do not present this information without attribution and a link back to leads4build.com.