The US residential solar market hit a bumpy patch in the first half of 2025, according to the newly released 21st EnergySage Intel: Solar & Storage Marketplace Report. The semiannual report digs into millions of data points from EnergySage.com, where homeowners shop for solar panels, inverters, and batteries. This edition also includes EnergySage’s annual Electrification Contractor Survey, fielded between January and March 2025.
After a strong 2024 that drove solar and storage prices to all-time lows, the first half of 2025 shows a mix of momentum and uncertainty. Homeowners are still eager to go solar, but shifting federal policies, tariffs, and tightening trade restrictions are creating headwinds for contractors and installers. The industry continues to expand, but this transition year may change how projects are financed, supplied, and built.
Solar prices stay low, battery costs rose modestly. Solar prices stayed at their record-low median of $2.48 per watt in the first half of 2025, unchanged from H2 2024. Installers absorbed financing pressures rather than raising prices before policy changes kicked in. Meanwhile, battery storage saw a 4% price increase as new tariffs on Chinese battery components took hold, the first bump after two years of declines.
Emily Walker, EnergySage’s director of insights, explained: “Although we expect changes to federal tariffs and trade policies to affect prices in the second half of 2025, the snapshot from the first half of the year shows us that, with the right public policy, solar is accessible to many homeowners now – and will continue to be in the future.”
Financing shifts as third-party ownership gains ground. Loan rates climbed to a median of 7.5% in the first half of 2025. About 38% of contractors reported lower demand for loans, while nearly all (94%) said cash buyers held steady or increased. Because Trump’s big bill (OBBBA) protects tax credits for third-party ownership (TPO) systems longer than for purchased ones, TPO is expected to gain major ground in 2026.
Walker added, “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. We expect attractive new financing models to emerge next year, which will keep residential solar adoption moving forward.”
Contractors are worried about challenges. An overwhelming 92% of contractors said losing the federal solar tax credit would hurt their business, and 70% expect negative impacts due to new equipment tariffs. Over a third already reported reduced profitability from higher interest rates. On top of that, 84% cited rising labor costs, and 79% said their business depends heavily on solar-related revenue. Many are now rethinking how to adapt for the post-tax credit era.
“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 to adapt and remain competitive. The companies that find new ways to reach homeowners and offer value will be best positioned to weather this transition.”
Read more: H1 2025: China installs more solar than rest of the world combined
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