U.S. residential solar customer acquisition costs are projected to rise significantly by 2026, marking a clear shift from recent market trends.
Understanding the looming increase in U.S. residential solar customer acquisition costs
Residential solar in the U.S. will see customer acquisition costs rise significantly starting in 2026, marking a clear shift from recent years’ dynamics. This is a severe blow to the U.S. photovoltaic market, which already experienced a noticeable decline in 2025.
According to an analysis by Wood Mackenzie, CAC (Customer Acquisition Cost) will increase from $0.60 per watt in 2025 to $0.84/W in 2026, a +40% rise.
This represents a significant reversal from the recent trend. 2025 had seen a five-year low in costs, but that result proved temporary. The market now enters a more complex phase, characterized by declining demand and intensified competition among installers.
The 2025 downward trend was only temporary
The cost reduction recorded in 2025 was not structural but linked to specific market conditions. The impending expiration of the federal Section 25D tax credit, which offered a 30% deduction on home solar systems, generated a strong acceleration in demand.
Many U.S. homeowners brought forward their decision to install a system to benefit from the incentive before its cessation. This “pull-forward” effect allowed companies to reduce investments in marketing and commercial activities while still maintaining a high customer flow.
Concurrently, operational efficiency improved. The use of digital tools and AI-based sales platforms further helped contain costs. Overall, CAC decreased by 10% compared to 2024.
U.S. home solar market to decline 19% in 2026
With the end of the 25D tax credit, the picture changes radically. The U.S. home photovoltaic market is expected to contract by 19% in 2026.
This reduction in demand implies fewer available customers, forcing operators to increase investments to acquire them. Companies are boosting marketing and sales budgets and, at the same time, rethinking their commercial model.
A progressive transition is observed towards different models compared to the past, with increased reliance on third-party ownership models and prepaid leasing solutions. Simultaneously, companies are expanding their product portfolios to include battery storage, electric vehicle charging infrastructure, and services related to building and energy efficiency.
All these changes contribute to increased costs in the short term but address the need to adapt to a more competitive market.
Economic model shifts with residential solar customer lifetime value
One of the most significant changes concerns the evolution of the business model. In U.S. residential solar, operators are progressively moving away from a single-installation sales model to adopt an approach based on customer lifetime value.
In this new paradigm, the customer is no longer an isolated revenue source but a source of value throughout the commercial relationship’s lifecycle. Companies are therefore investing in customer relationship management systems, referral programs, and integrated sales strategies that include multiple products and services.
These investments lead to higher acquisition costs in the short term. However, they allow for generating subsequent sales at lower costs compared to acquiring new customers through traditional channels. According to Wood Mackenzie, the benefits of this approach will emerge after 2027, once platforms and operating models are fully mature.
Vertical integration is growing
The end of the tax credit also affects the market structure. Without public support, many companies can no longer sustain models based on fully outsourced sales, characterized by high commissions and significant costs for acquiring commercial leads.
In U.S. residential solar, a growing vertical integration is observed. Installers tend to internalize customer acquisition activities, reducing reliance on intermediaries and external platforms.
This allows for cost containment, maintaining control over the customer experience, and direct data management. Furthermore, vertically integrated companies can distribute costs across multiple products and services, improving economic sustainability in a context of tighter margins.
The opposite case: community solar reduces costs until 2030
The community solar segment, however, presents a different dynamic. In 2025, subscriber acquisition costs decreased by 12%, averaging $69 per kW.
Forecasts indicate a further 18% decline by 2030, supported by increased market maturity and more efficient customer acquisition strategies.
However, some critical issues remain. In particular, acquiring low- and middle-income customers entails costs 34% higher than the average. This is due to the need for targeted outreach activities, more complex income verification processes, and higher churn rates.
Despite these challenges, the segment benefits from operational and regulatory innovations, such as integrated billing systems and automatic enrollment programs, which help improve customer satisfaction and reduce long-term costs.
