You may have seen the headlines: residential solar installations are expected to drop 33% year-over-year in 2026, according to Roth Capital Partners. Solar companies are struggling. Some installers are going bankrupt. The industry that felt unstoppable three years ago is suddenly looking shaky. So if you were thinking about going solar — should you still do it? Or wait?
I went deep on this one. Here’s what I actually think, as a homeowner who put panels on my roof 14 months ago and tracks the numbers obsessively.
Why Is Residential Solar Declining?
Let’s start with what’s actually happening. The solar market correction is real, but the reasons matter for understanding what it means for you specifically:
High Interest Rates Killed the Math for Many Buyers
The solar boom of 2021–2023 was partly fueled by cheap money. Solar loans at 1.99% made the ROI math easy — your loan payment was lower than your old electric bill. As rates rose, that math got much harder. Plenty of potential buyers ran the numbers and decided to wait. This is a real factor — but it’s a financing problem, not a “solar doesn’t work” problem.
California’s NEM 3.0 Gutted Incentives There
California has historically been the largest US solar market. In 2023, the state slashed the rate utilities pay for solar export (net metering) by about 75%. That alone crushed the economics in the state that drove much of the market. But this is a California-specific policy change — in most other states, net metering is still intact and the economics are solid.
Some States Are Reducing Incentives
A few utilities and state programs have been scaled back. This is real and worth checking for your specific state before you buy.
Installer Consolidation After the Boom
During the boom years, hundreds of undercapitalized installers sprang up. Many of them are now failing. This sounds scary but is actually market normalization — the companies that survive will be more stable and reputable.
What the Slowdown Does NOT Mean
Here’s what the headlines are getting wrong: a declining installation rate is not the same as declining economics for individual homeowners. The ROI calculation on solar is almost entirely determined by:
- Your local electricity rate (and trajectory)
- Your roof’s solar resource (hours of sun)
- Your net metering policy
- What you pay for the system (installation + equipment)
- Whether you finance and at what rate
None of those fundamentals have gotten worse for most homeowners outside California. In fact, panel prices have continued to fall as Chinese manufacturing scales up. A system that cost $35,000 in 2022 might be $28,000 today. That improves the math, not hurts it.
The Federal Tax Credit Is Still There (For Now)
The 30% federal Investment Tax Credit (ITC) is still in place. There have been legislative discussions about reducing it — following it closely is worthwhile — but as of right now, you can still claim 30% of your total system cost as a tax credit. On a $25,000 system, that’s $7,500 back. This remains one of the most significant factors in solar ROI.
Important note: If there’s genuine political risk to the ITC, that actually argues for going sooner rather than waiting. You can lock in the credit before any potential changes by having your system placed in service this calendar year.
What Has Changed That You Should Know
Be More Careful About Installer Selection
With more installers going under, choosing a stable company matters more than ever. I’d be skeptical of any installer who can’t give you 3+ years of operating history, customer references in your area, and clear information about who backs their workmanship warranty if they go out of business. Lean toward installers with strong manufacturer relationships (Enphase, SolarEdge) who handle warranty claims directly.
Get Multiple Quotes — More Than Before
Price variance is higher now as installers compete. Using a comparison platform like EnergySage is the easiest way to get 5–7 quotes without individual sales pressure. The spread between highest and lowest quote in 2026 can be $8,000–$12,000 on the same system.
Check Your Utility’s Net Metering Policy
Before you get a quote, call your utility and ask specifically: what rate do you credit me for exported solar power? Is NEM at risk of being reduced in the next year? Some states are considering California-style changes. Others have locked in favorable policies. This is the most important single factor in your payback period calculation.
My Honest Take
I put solar on my house 14 months ago and I’ve tracked every number. My payback period at current electricity rates is 7.4 years. Over the 25-year system life, I’m looking at roughly $40,000 in avoided electricity costs in net present value terms. My electric bill went from $280/month to $22/month (I pay a small utility connection fee).
Has the market turmoil affected me? Not really. My system is producing what it was projected to produce. My installer is still in business. My panels are covered by a 25-year manufacturer warranty that exists independent of my installer.
The market slowdown is real. But it mostly reflects financing and policy challenges at the macro level — not a fundamental change in whether putting solar on a sun-exposed, owner-occupied home makes financial sense. For most homeowners in most markets, it still does. Probably more so now that panel costs have come down.
Use a home energy monitoring tool to get clear on your actual consumption before you get quotes — it makes the conversations with installers much more grounded and helps you spot if a quote is oversized or undersized for your needs.
The headlines are noisy. The math is the math. Do the math for your house.
— Mike