10 Things to Know Before Installing Solar Panels
10 Things to Know Before Installing Solar Panels
Installing solar panels can reduce how much electricity you buy from your utility, but the financial decision is more complicated than comparing your current electric bill with a solar payment.
In 2026, one particularly important piece of older solar advice is now wrong: the federal Residential Clean Energy Credit for homeowners ended for expenditures after December 31, 2025. Utility compensation rules also vary widely, solar financing can contain substantial markups, and rooftop solar normally will not keep your house powered during an outage unless the system is specifically designed for backup.
Here are the issues worth checking before you sign.
Quick Answer
- The former 30% federal Residential Clean Energy Credit is not available for residential solar expenditures made after December 31, 2025, according to the IRS.
- Compare the cash price with every financed price. The CFPB found that some solar-specific loans included fees that increased the loan principal by 30% or more above the cash price.
- Check the roof before installing panels. Replacing a roof underneath an existing array can mean removing and reinstalling solar equipment.
- Do not calculate savings until you know your utility’s current export-credit or net-metering rules.
- Ordinary grid-connected solar usually shuts down during an outage. Backup generally requires appropriately configured equipment and energy storage.
- If you may sell your home before a solar loan, lease, or PPA ends, read the transfer and payoff provisions before signing.
1. The 30% Federal Residential Solar Tax Credit Ended After 2025
For years, one of the biggest arguments for residential solar was the federal Residential Clean Energy Credit.
That advice needs updating.
The IRS states that the credit covered 30% of qualifying residential clean-energy expenditures through December 31, 2025, but is not available for expenditures after that date.
If a 2026 solar proposal shows a 30% federal Residential Clean Energy Credit under Section 25D as money you will receive, ask the installer to identify the current IRS authority supporting it.
State, local, utility, and income-qualified programs can still exist, so this does not mean every solar incentive has disappeared.
What to do before installing
Calculate the project twice:
- Using only incentives you have independently confirmed you qualify for.
- With no incentives at all.
If the project only makes financial sense because of an incentive, verify that incentive directly with the agency or utility administering it before signing.
2. Compare the Cash Price Before Looking at the Monthly Payment
One of the easiest ways to overpay for solar is to shop by monthly payment instead of total cost.
The Consumer Financial Protection Bureau found that some solar-specific lenders incorporate substantial fees into financed systems. In its 2024 review, the CFPB said some fees increased the loan principal by 30% or more above the cash price.
You need to know the cash price, financed purchase price, loan principal, APR, interest rate, loan term, total of payments, prepayment rules, and whether lender or dealer fees are embedded in the price.
A low advertised interest rate does not necessarily mean inexpensive financing. Ask the installer for the system’s cash price in writing, then compare that amount with the proposed loan principal.
What to do before installing
Get at least three comparable proposals and require each company to provide the cash price, financed price, system size, estimated production, equipment models, warranty terms, estimated utility savings, and financing terms.
3. Your Roof May Be a Bigger Issue Than the Solar Panels
Solar equipment is designed to remain on your house for years. Your roof needs to be ready for the same commitment.
The Department of Energy recommends determining whether the roof can support solar and notes that coordinating solar installation with a roof replacement can save money.
If your roof is approaching replacement age, get an independent roofing assessment before signing a solar contract.
What to do before installing
Find out the approximate roof age, remaining expected life, existing damage, whether structural work is required, who pays for panel removal if repairs become necessary, and whether removal and reinstallation affect warranties.
4. Your Utility’s Export Rules Can Change the Economics
Producing a kilowatt-hour of electricity does not necessarily mean you save the full retail price of a kilowatt-hour.
Solar production may be consumed in your home or exported to the electric grid. What your utility pays or credits for exported electricity depends on local rules.
DOE notes that net-metering availability, eligible system sizes, rates, and bill-credit structures vary by state and utility.
What to do before installing
Verify your utility’s current solar tariff, export compensation, fixed charges, time-of-use requirements, interconnection charges, system-size restrictions, credit expiration rules, and battery-specific rules.
5. Solar Panels Alone Usually Do Not Give You Backup Power
Sunlight can be hitting your panels while your house still has no electricity during a grid outage.
DOE explains that conventional grid-connected residential solar systems generally shut down when grid power fails. Solar-plus-storage can provide backup when equipment is designed and configured appropriately.
Never assume a solar-plus-battery quote means your entire house will operate normally through an extended outage. Ask for a written list of the circuits and loads the proposed backup system is designed to support.
What to do before installing
Have the proposal identify usable battery capacity, continuous power rating, backup circuits, expected outage operation, solar recharging behavior, battery warranty, and expansion options.
6. Permits and Utility Approval Can Delay When the System Actually Operates
Solar installation is not necessarily finished when the crew leaves your roof.
DOE says rooftop systems generally go through local permitting and inspection, followed by utility interconnection before they can operate on the grid.
What to do before installing
The contract should state who obtains permits, submits interconnection paperwork, pays fees, handles utility rejection, when payments begin, and what happens when approval is delayed.
7. Ownership, Loans, Leases, and PPAs Are Very Different Deals
| Arrangement | Who owns the panels? | Typical payment | Key issue before signing |
|---|---|---|---|
| Cash purchase | Homeowner | Upfront | Large initial expense |
| Solar loan | Homeowner | Loan payment | Interest, dealer fees, liens and payoff terms |
| Solar lease | Solar company/third party | Lease payment | Long contract and transfer terms |
| Power purchase agreement | Solar company/third party | Payment for generated electricity | Electricity rate, escalation and transfer terms |
The CFPB says solar leases commonly run 15 to 20 years, and some include payments that increase according to predetermined terms.
What to do before installing
For a lease or PPA, identify the initial payment or electricity rate, annual escalator, contract length, purchase option, termination rules, transfer requirements, removal obligations, and end-of-contract terms.
8. Think About Selling the House Before You Sign a Long Contract
A long solar obligation can still exist when you decide to sell.
The CFPB notes that homeowners selling before a solar loan is repaid may need either to pay off the balance or, where permitted, have the buyer assume the obligation.
“Solar adds value to your home” is not a sufficient reason to sign a contract. Ownership and financing structure can affect appraisal and mortgage treatment.
What to do before installing
Determine whether a buyer can assume the agreement, whether qualification or transfer fees apply, how payoff is calculated, whether a UCC filing or lien exists, and who handles closing paperwork.
9. Warranties Are Only as Useful as the Coverage Behind Them
A solar proposal can contain several warranties: module product, performance, inverter, battery, workmanship, roof-penetration, and production guarantees.
These are not interchangeable.
What to do before installing
Ask for actual warranty documents and check warranty length, labor and shipping coverage, service charges, roof-leak coverage, battery guarantees, transfer requirements, claims procedures, and what happens if the installer goes out of business.
10. Check Insurance, Contractor Credentials, and Every Promise Before Signing
The National Association of Insurance Commissioners advises homeowners considering solar to contact their insurer beforehand because coverage and costs can vary.
The FTC also warns consumers about sellers claiming solar is free, government programs will pay the entire cost, or immediate action is required.
Do not sign based on a salesperson’s verbal promise that solar will “eliminate your electric bill,” “pay for itself,” qualify for a particular incentive, or increase your home’s value by a specific amount. Verify the assumptions and require material promises in writing.
Before You Install Solar Panels Checklist
- Get multiple comparable solar proposals.
- Ask each installer for the cash price.
- Compare cash price with financed loan principal.
- Review APR, interest, term, fees, and total payments.
- Do not include the expired Section 25D homeowner credit in a 2026 calculation.
- Verify remaining incentives directly.
- Check roof age and condition.
- Check shading and expected annual production.
- Verify the utility’s current solar/export tariff.
- Decide whether battery backup is needed.
- Confirm exactly which loads a battery will support.
- Verify contractor license and insurance.
- Read equipment and workmanship warranties.
- Call your homeowners insurer.
- Understand permits and interconnection.
- Review home-sale and transfer provisions.
- Confirm whether any UCC filing, security interest, or lien will be recorded.
- Put important sales promises in writing.
Frequently Asked Questions
Is solar still worth installing in 2026 without the federal tax credit?
It can be. Electricity rates, sunlight, roof condition, installed price, financing costs, self-consumption, export compensation, and remaining local incentives all affect the calculation.
Is there a federal solar tax credit in 2026?
Not for a new homeowner installation under the former Residential Clean Energy Credit, Section 25D. The IRS says the credit is unavailable for expenditures after December 31, 2025.
Will solar eliminate my electric bill?
Not necessarily. Homeowners can still face utility fixed charges and electricity purchases when their system is not producing enough.
Do solar panels work during a blackout?
Ordinary grid-connected solar generally shuts off when the grid fails. Properly designed solar-plus-storage can provide backup power.
Should I replace my roof before installing solar?
If the roof is likely to need replacement well before the solar system does, doing the roof work first may avoid future panel removal and reinstallation.
Is it better to buy or lease solar panels?
Buying provides ownership but requires cash or financing. Leasing and PPAs can reduce upfront costs but create long-term contractual obligations. Compare actual contract terms.
The Bottom Line
Installing solar panels in 2026 requires a different calculation than it did only a few years ago.
The biggest change is the end of the 30% federal Residential Clean Energy Credit for homeowner expenditures after December 31, 2025. Beyond that, focus on the cash price, true financing cost, expected production, your utility’s current compensation rules, and realistic electricity savings.
Check your roof, decide whether you need battery backup, and understand what happens if you sell before a loan, lease, or PPA ends.
Sources
- IRS — Residential Clean Energy Credit
- IRS — FAQs on energy-credit changes under Public Law 119-21
- U.S. Department of Energy — Homeowner’s Guide to Solar
- U.S. Department of Energy — Permitting and Inspection for Rooftop Solar
- U.S. Department of Energy — Solar and Resilience Basics
- CFPB — Issue Spotlight: Solar Financing
- FTC — Solar Energy Scams
- Fannie Mae — Special Property Eligibility Considerations
- NAIC — Insurance and Solar