EnergySage report: Solar pricing steady, storage costs rising, contractors uneasy about what comes next
Despite record-low solar prices at $2.48/W, new tariffs and looming loss of federal credits have contractors rethinking their business models
The first half of 2025 brought mixed signals for the residential solar market. Installations held at a record-low $2.48 per watt, according to EnergySage’s 21st Solar & Storage Marketplace Report, but battery prices climbed 4% after two years of declines, the result of tariffs on Chinese components.
At the same time, the financing landscape shifted. Median loan rates rose to 7.5%, with 38% of contractors reporting weaker loan demand. Nearly all installers surveyed said cash buyers were steady or increasing, while third-party ownership (TPO) models are poised for growth in 2026 because the One Big Beautiful Bill Act preserves tax credits for TPO longer than for direct purchases.
“Even as higher interest rates have made traditional loan financing less attractive, we’re seeing that demand for solar hasn’t gone away—it’s simply shifting,” said Emily Walker, director of insights at EnergySage.
Contractor outlook: profits squeezed, incentives expiring
Contractors are bracing for a more difficult future. 92% expect the loss of the federal solar tax credit to harm their business, and 70% anticipate negative impacts from equipment tariffs. Already, 36% report reduced profitability from higher interest rates and 84% cite rising labor costs. With 79% of respondents heavily dependent on solar-related revenue, the changes could force significant adjustments.
“Solar contractors across the country have voiced deep concern about what lies ahead for the industry,” Walker said. “With key incentives set to change, many are already rethinking their business models in order to adapt and remain competitive.”
A pivotal transition
EnergySage notes that while consumer demand remains strong, the market is entering a period of adjustment that could reshape how projects are financed, supplied, and built. “The solar industry is approaching a watershed moment, with homeowners eager to install solar and contractors bracing for the impact of the One Big Beautiful Bill Act,” said Josh Levine, EnergySage chief marketing officer.
