Third-party ownership and strong market fundamentals drive ‘new shape of solar’ in US residential sector

Published today, the report notes that the Trump administration’s removal of many of the Biden-era tax credits available for renewable energy developers, such as those introduced by the Inflation Reduction Act (IRA), has significantly shifted the market dynamics underpinning US solar, with many residential customers looking for “flexible financing [and] soft cost reduction” from the market.

For instance, 55% of installers now say that third-party ownership (TPO) models, such as power purchase agreements (PPAs) or leases of solar installations built on residential properties, are now their most popular financing option for new residential solar installations. This is more popular than both loans and cash transactions, and almost two-thirds of installers say that TPO models will account for more than half of their 2026 sales volume.

This shift towards TPO models contrasts to financing trends in European solar. A report from SolarPower Europe, published earlier this month, found that 2025 was a record year for solar PV capacity awarded through government auctions, with capacity contracted through private PPAs falling below 2023 levels. The following week, the report’s authors told PV Tech Premium that a “complimentary” relationship between government support and private investment would help deliver new solar capacity the most effectively in the years to come.

While European auctions largely cover utility-scale solar projects, comparison with the US residential sector shows a broad political and financial divergence between the two markets. The US residential sector has clearly moved away from federal tax rebates and towards ownership models that minimise up-front costs. This is significant, as cutting energy bills remains a priority for most residential customers. The graph below shows how often each of five motivating factors were named as the most important by residential customers eager to install a solar system.

The Aurora Solar report splits the results by political affiliation, and while there are variations in the priorities of some installers based on party lines, the overall trend is clear. Utility bill savings are, by far, the most common motivating factor behind installing a residential solar system, with Democrats, Republicans and independent voters all naming this the most important factor more than 40% of the time.

Survey respondents were also asked to name their top three motivating factors, from the same list of five factors, for a different part of the report; more than 80% of voters for all three political parties named utility bill savings in their top three factors, demonstrating the overwhelming support for cutting energy bills through residential solar installations.

Elsewhere, there is a clear correlation between political affiliation and motivation; Democrat voters are more likely to consider reducing environmental impact a key motivating factor, while independents and Republicans are more likely to prioritise energy independence.

Battery storage to drive grid resilience

The Aurora Solar report also notes that energy storage—and, more broadly, grid resilience mechanisms—are becoming increasingly important for residential solar installers. Of the respondents asked, 53% said that US grids have been impacted by climate change, down from 55% last year but up considerably from 33% in 2024, suggesting diminishing confidence in the US’ conventional grid infrastructure.

This is reflected in increasing levels of curtailment in many of the US’ grids. Between 2023 and 2024, CAISO, ERCOT, MISO and PJM all reported increasing levels of curtailment, while PJM saw more curtailment in the first nine months of 2025 than in the entirety of 2024.

These grids reported phenomenal curtailment costs of US$5.4 billion in 2024, the last year for which there is complete data, and a lack of available grid infrastructure is likely to remain a challenge for renewable energy developers in the US for some time as appetite for new clean energy capacity grows at a faster rate than new transmission infrastructure additions.

Battery energy storage systems (BESS) are often touted as a means of delivering grid resilience, that are faster, cheaper and easier to deploy than building thousand of miles of conventional grid infrastructure. This is reflected in the Aurora Solar survey, where almost one-third of residential solar installers now expect more than three-quarters of their 2026 projects to include battery storage alongside a solar system.

Indeed, more than half of sales professionals surveyed by the report say that backup power and outage protection is “the primary reason” that homeowners purchase BESS. The report also asked the homeowners themselves, and 72% of those asked, who were in the process of buying or interested in installing solar projects, said that energy independence was in the top three motivating factors for buying a home power system. The Aurora Solar report notes that now, energy resilience has become “a mainstream solar driver” and is no longer “a niche add-on”.

This is one area in which the US residential sector mirrors the European solar sector. Earlier this month, attendees at Solar Media’s Solar Finance & Investment Europe event highlighted the importance of co-locating solar PV systems with BESS, in order to create a more robust business case for the project.

Making solar ‘policy-proof’

The Aurora Solar report describes “making solar ‘policy-proof’” as the “ultimate market catalyst”. Considering the significant upheaval brought about by the second Trump administration, with his ‘One Big, Beautiful Bill’ slashing renewable energy tax credits more severely than many commentators anticipated, ensuring that residential solar has strong market fundamentals would be to the long-term benefit of the industry.

“The past year tested the solar industry in new ways,” said Chris Hopper, co-founder and executive chairman of Aurora Solar. “This year’s Aurora Solar Snapshot shows demand for solar remains strong, but the path to adoption is changing.

“The companies that win in this next chapter will be the ones that make solar simpler to buy and easier to understand, while building businesses that remain resilient even with policy changes.”

While solar remains the form of electricity generation with the lowest levelised cost of electricity (LCOE), the global solar sector saw a 6% increase in LCOE between 2024 and 2025, according to Bloomberg New Energy Finance. While this trend was described as “anomalous” by Bloomberg solar analyst Jenny Chase, fluctuations in the cost of solar highlight the value that a supportive policy framework can bring to an industry.

Indeed, despite Aurora Solar highlighting the importance of strong market fundamentals outside of a policy framework, the respondents to its survey show that policy remains a vital part of the US residential solar sector. Of those surveyed, 49% said they didn’t think they would be able to afford solar without IRA tax credits, while 68% of those with residential installations said they had benefited from the IRA, demonstrating the importance of the policy, and the uncertainty that its removal could create on the future of US residential solar.

After five editions of Large Scale Solar USA, the event becomes SolarPLUS USA to mirror where the market is heading. The 2026 edition, held this week in Dallas, Texas, will bring together developers, investors and utilities to discuss managing hybrid assets, multi-state pipelines, power demand increase from data centres and AI as well as the co-location of solar PV with energy storage in a complex grid. For more details and how to attend the event, visit the website here.