Nine Questions to Ask Before Signing a Solar Panel Contract

The single most important fact about a residential solar contract signed in 2026 is one that many sales scripts have not been updated to reflect. The federal tax credit that homeowners used to claim is gone.

The IRS states it plainly on its Residential Clean Energy Credit page: the credit “equals 30 percent of the costs of new, qualified clean energy property for your home installed anytime from 2022 through December 31, 2025,” and “the credit is not available for any property placed in service after December 31, 2025.” The change came from Public Law 119-21, enacted 4 July 2025. The IRS’s own guidance on that law is unforgiving about timing: “if installation is completed after December 31, 2025, the expenditure will be treated as made after December 31, 2025, which will prevent the taxpayer from claiming the section 25D credit.”

One remnant survives. If you installed in 2025 and could not use the whole credit against your 2025 tax, the Form 5695 instructions permit you to “carry the unused portion of the residential clean energy credit to 2026.” That is a carryforward of an old credit, not a new one.

If a salesperson mentions a 30 percent federal credit on a system you are buying with cash or a loan today, they are describing something that no longer exists. That is the first thing to test, and everything below follows from it.

What losing the credit does to the arithmetic

The Department of Energy publishes a solar cost benchmark built on NREL modelling. For the first quarter of 2025, in 2024 dollars, it puts a residential system at 2.95 dollars per watt at the modeled market price, using 8 kilowatts as the reference size. That is about 23,600 dollars for the reference system.

The EIA reports that “the annual average retail electricity prices by major types of utility customers in 2025 were: residential 17.30 cents per kWh,” and that “in 2022, the average annual amount of electricity sold to (purchased by) a U.S. residential electric-utility customer was 10,791 kilowatthours.”

Put those three published figures together. The calculation below is ours; the inputs are DOE’s and EIA’s.

The best-case saving assumes the system offsets the entire 10,791 kWh an average household buys and that every offset kilowatt-hour is worth the full 17.30 cent retail rate. Both assumptions are generous to solar. It ignores financing costs, panel degradation, maintenance and any future rise in electricity prices, which would shorten the payback, and it ignores the fact that many utilities no longer credit exports at retail value, which would lengthen it considerably.

The point is the difference between the columns, not the absolute numbers. Removing the credit adds roughly four years to an already long payback. Nothing about the hardware changed. The deal did.

DOE itself declines to publish a typical savings figure, and the reason is worth repeating: “calculating an average amount of savings from going solar is nearly impossible.” It recommends running your own numbers with NREL’s PVWatts tool and your own utility bills. Do that before any conversation about price.

The nine questions

1. Am I buying, borrowing, leasing, or signing a power purchase agreement?

These are four different contracts with four different sets of consequences, and the salesperson may use them interchangeably. DOE’s guidance describes a lease as an arrangement where “the solar company and its financial partners own the PV system,” and under a PPA the homeowner “agrees to purchase all of the electricity that the PV system generates over some fixed period of time.” In both cases, historically, “the solar leasing company takes all the tax credits, rebates, and incentives.”

That asymmetry has now inverted in an important way. The homeowner credit is dead, but a third-party owner claims a business credit instead, and that credit has its own expiry. The IRS’s 2025 instructions for Form 3468 note that Public Law 119-21 “added a termination of the credit for wind or solar facilities placed in service after 2027 where the beginning of construction is after July 4, 2026.” If a company is pricing a lease or PPA on the assumption of a credit, ask which credit, and ask when their construction began.

2. What is the price per watt?

Total price is uncomparable across proposals with different system sizes. Price per watt is not. DOE’s advice on choosing an installer is to compare quotes, and converting each to cost per watt is how you do it. The DOE benchmark of 2.95 dollars per watt is a modelled national figure, not a target, but a quote far above it deserves an explanation.

3. What does the loan add that the cash price does not?

This is where the CFPB found the worst behaviour. Its August 2024 issue spotlight on solar financing found that “some lenders include substantial markups and fees that can increase the loan principal by 30 percent or more above the cash price,” with hidden fees that “typically range from between 10 to 30 percent of the cash price but can exceed 50 percent.”

The Bureau also documented a structure that surprises borrowers: solar loans commonly re-amortise to a higher monthly payment around month 19 unless the borrower prepays roughly 30 percent of principal first. That 30 percent was the tax credit. With the credit gone for buyers, the prepayment has to come from somewhere else, and the higher payment arrives regardless.

The CFPB noted at the time that lenders and installers “seldom if ever know the consumer’s tax situation,” yet promoted the credit “with a presumption of universality.” That was a problem when the credit existed. It is a straightforward falsehood now.

Ask for the cash price and the financed price as two separate numbers, in writing, on the same page.

4. What will my utility actually pay for the power I export?

Net metering is not a national rule. The EIA describes it as a policy that “allows electric utility customers to install qualifying renewable energy systems on their properties and to connect them to an electric utility’s distribution system,” with the customer billed for consumption “minus the electricity that their renewable energy system generates and delivers to the grid.” Rules vary by state.

California shows how much they can change. Under the net billing tariff adopted in Decision D.22-12-056, the CPUC states that “since April 15, 2023, customers applying for interconnection have taken service on the new net billing tariff,” under which export compensation “is usually lower than the retail rate.” The EIA’s summary is that the new structure is “on average, less than the earlier compensation structure.”

If your proposal’s savings model assumes retail-rate credit for exports, and your utility does not offer that, the model is wrong. Ask the installer to show you which tariff they modelled.

5. What happens to my roof?

DOE is direct about sequencing: roofs “will last anywhere from 20 to 50 years depending on the materials used,” and “solar panels last about 25 to 30 years, which is similar to the lifetime of a roof.” A system installed over a roof with eight years left in it will have to come off and go back on.

DOE’s installer guidance says to ask “who is responsible if the roof gets damaged or if a roof leak develops,” and to “ask your installer to include any roof repairs and vent relocation in their proposal.” Get the answer in the contract, not in conversation.

6. What is guaranteed about production, and by whom?

An estimate is not a guarantee. NREL reports that “solar panels have a median degradation rate of about 0.5 percent per year” and that “modules are typically warrantied for 20 to 25 years, after which they can still produce electricity, but the level of actual output is no longer guaranteed.”

Ask whether the proposal contains a production guarantee with a remedy attached, or only a projection. The CPUC lists a minimum production guarantee as a feature more typical of leases and PPAs than of purchases.

7. If it is a lease or a PPA, what is the escalator?

California’s Solar Consumer Protection Guide explains that “payments for leases or PPAs will typically increase by a specified amount every year based on an escalation clause or escalator,” and that “escalators are typically in the range of a 1 percent to 3 percent increase above the rate you paid in the previous year.” A typical contract period is 20 to 25 years.

Compound 3 percent over 20 years and the final year’s payment is about 1.75 times the first year’s. Ask for the full schedule of payments in dollars, year by year, not the escalator percentage.

8. What happens when I sell the house?

This question decides whether your system is an asset or a complication. Fannie Mae’s Selling Guide treats owned panels under standard requirements, and is explicit about the alternative: for leased or third-party owned panels, “the value of the solar panels cannot be included in the appraised value of the property.” A lease or PPA must also permit the lender to “terminate the lease/agreement and require the third-party owner to remove the equipment” in a foreclosure.

The CPUC adds the buyer’s-eye view: “If you sell your house before the lease or PPA contract is over, you will have to pay the solar provider the remainder of the value of the lease or PPA or transfer the contract to the new property owner. Buying out a lease or PPA can cost thousands of dollars.”

9. What does my state require the seller to give me, and have they?

Some states have built disclosure regimes that do real work. California requires solar providers in the major utility territories to collect a signature on the state’s Solar Consumer Protection Guide, along with a standardised disclosure document containing “the total cost of the system, a one-year bill savings estimate, and the three-day right to cancel (five if the customer is over 65 years old).” Contractors must hold a CSLB C-46, C-10 or B licence.

If you are in a state that requires those documents and you have not been handed them, that alone tells you what kind of company you are dealing with.

What is actually going wrong out there

This is not a hypothetical risk. In March 2026 the New York Attorney General sued a home solar company and two lenders, alleging they “concealed the lenders’ fees by hiding them within the high prices the consumers were supposedly paying,” that consumers were “falsely claimed they would receive free roof replacements after receiving money from the government in the form of solar tax credits,” and that salespeople “pushed them to electronically sign contracts” at prices “inflated far beyond the cost of the actual work.” The complaint puts the New York revenue at roughly 275 million dollars.

In April 2026 the Texas Attorney General launched an initiative against four solar companies, citing over 100 complaints to his office and claims of misrepresented savings, system efficacy, equipment and contract terms. These are allegations, not findings. The pattern across them is consistent, and it is not about panels.

The FTC’s consumer alert on solar scams lists the warning signs: claims that “a government program will cover the whole cost of solar panels,” demands for “large upfront payments or deposits,” and pressure to sign a contract on a tablet without reviewing the documents.

The uncomfortable bottom line

Rooftop solar in 2026 is a worse financial proposition for a homeowner than it was in 2025, by roughly the size of a tax credit, and nobody selling it has an incentive to lead with that. The hardware is mature and the degradation numbers are good. The economics now depend almost entirely on your electricity rate, your export tariff and your price per watt, which means they depend on arithmetic you have to do yourself with PVWatts and your own bills.

Anyone who will not put the cash price, the financed price, the export tariff they modelled and the year-by-year payment schedule on one page is not, in the end, asking you to evaluate a solar system. They are asking you to sign before you finish reading.

General information, current as of September 2026, and not personalised financial or tax advice. Incentives, tariffs and state rules change; check the primary sources and speak to a qualified professional about your own circumstances.