Published June 10, 2026 · Updated June 10, 2026 · 8 min read
The short answer
In 2026 the choice hinges on ownership. Cash and loan buyers own the system but get no federal credit — §25D expired December 31, 2025. PPA, lease, and prepaid plans are financier-owned: the financier claims the commercial §48E credit and passes roughly 30% of value through as a lower price, through about 2027.
By Vinnie Curcie, Founder & CEO · Reviewed by Sean Shively, Sales Manager
Solar tax credits still exist in 2026 — so why can't you own them?
This is the single most confusing thing about going solar in California in 2026, so let's state it plainly. The federal residential tax credit (IRC §25D) — the 30% credit homeowners used to claim on a purchased system — expired December 31, 2025. Buy with cash or a loan in 2026 and there is no federal tax credit for you. But the commercial clean-electricity credit (§48E) survived, and it belongs to whoever owns the system. National coverage has framed it memorably: the tax credits are still available — you just can't own the system that gets them.
That's why third-party ownership suddenly dominates the conversation. On a PPA, lease, or prepaid plan, the financing company owns the system on your roof, claims the §48E credit on its own taxes, and passes roughly 30% of federal value through to you as a lower price — through about 2027. You file nothing; the benefit shows up in your agreement, not your tax return. We've covered the full incentive landscape in our California solar incentives guide for 2026.
How the §48E pass-through actually works
Three steps, no tax forms on your side. Step one: the financier — not you — owns the equipment, which makes it eligible for the commercial §48E investment credit that survived the 2025 expiration of the residential credit. Step two: the financier prices that credit into your agreement, so roughly 30% of federal value lands in your favor as a lower payment or prepaid price. Step three: you buy the power (PPA), pay for the system monthly (lease), or pay once up front (prepaid) — at economics the credit subsidized. To be precise: it's a price benefit, not your tax credit, and you don't need any tax liability to capture it.
The window matters: §48E supports systems placed in service through roughly 2027, with construction-start rules that apply on the financier's side. After that, this path closes the way §25D did. That's a statutory date, not a sales countdown.
The honest decision matrix
Each path is right for someone. Cash still produces the lowest lifetime cost; a loan still builds equity from day one; third-party plans are the only ones that capture federal value in 2026. Here's the side-by-side, tradeoffs included:
| Factor | PPA ($0-down) | Prepaid plan | Cash purchase |
|---|---|---|---|
| Who owns the system | The financier | The financier (with a defined path to ownership) | You, from day one |
| Up-front cost | Typically $0 down | One prepaid amount (monthly loan options exist) | Full system price |
| Federal value in 2026 | ~30% §48E value passed into your rate | ~30% §48E value passed into your price | None — §25D expired 12/31/2025 |
| Payment escalators | Some agreements include an annual escalator — get the exact percentage in writing before signing | None — paid once | None |
| At home sale | Agreement typically transfers to the buyer or is bought out — confirm the exact transfer terms in writing | Typically transfers with the home — confirm terms in writing | System conveys with the house; owned solar can add appraised value |
| Credit requirements | Underwriting criteria vary by financier | The plan we offer runs no credit check and places no lien | None |
| Maintenance during term | Financier owns and maintains | Provider owns and maintains | You own it; your installer services it |
Terms vary by financier and agreement — escalators, transfer rules, buyout schedules, and underwriting are set by each provider, not by this table. Get every number in writing before you sign; we'll walk you through yours line by line.
Who the financiers actually are
The companies behind third-party-owned solar in California include national financiers like GoodLeap, ENFIN, and LightReach, among others — and our no-credit-check prepaid plan is financed through Participate Energy. The financier sets the underwriting criteria, the escalator (if any), and the transfer terms; the installer designs and builds the system. We don't quote financiers' rates here because they change and they're set per project — any rate you rely on should come from your own written agreement, not a blog post.
What we will say: read the escalator line and the home-sale transfer terms before anything else. Those two clauses determine how the agreement feels in year 10 far more than the headline monthly payment does.
How to choose in practice
If you can deploy the capital and want the lowest lifetime cost, cash still wins — even without §25D, high California rates and NEM 3.0 battery design produce the payback math we walk through in our solar payback period guide. If monthly cash flow is the priority and you want federal value working for you, a $0-down PPA or lease captures §48E through the financier. If you want to skip lenders entirely — or your credit is thin — the no-credit-check prepaid plan captures the same ~30% §48E value with no lien and a path to ownership. And if you want all three side by side with real numbers for your home, that's exactly what our financing comparison is for.
FAQ
Often, yes. Underwriting criteria vary by financier — each sets its own approval standards — and some structures don't involve a lender at all: the prepaid plan we offer runs no credit check and places no lien on your home. Our financing and prepaid solar plan pages cover the options, and we'll confirm what your property qualifies for with a free estimate.
Incentives and rates change. This page is kept current — but always confirm specifics for your home.
Get a free, honest estimate →