Rising Costs and Solar Energy: What Homeowners Need to Know in 2026
Published: Aug 17, 2022
Rising Costs and Solar Energy: What Homeowners Need to Know in 2026
Updated: February 13, 2026
With the cost of living continuing to climb in 2026, along with rising electricity prices, more homeowners are exploring solar energy as a way to reclaim control over their energy expenses. However, the expiration of the ITC Federal Tax Credit at the end of 2025 and diminished incentives have reshaped the dynamics of solar adoption. Despite these setbacks, solar energy remains a crucial investment for those looking to reduce reliance on the grid and combat mounting energy bills.
This article breaks down the current state of the solar industry, the impact of inflation and energy price hikes, and what it means for homeowners and businesses considering going solar in today’s economic climate.
The Impact of the Inflation Reduction Act in 2026
The Inflation Reduction Act (IRA) of 2022 has played a significant role in reshaping the renewable energy industry over the past few years. While the generous 30% Investment Tax Credit (ITC) provided an invaluable boost to solar adoption, it officially expired at the end of 2025. This means homeowners installing solar systems today must now navigate the industry without the financial cushion of the ITC.
Despite this, the IRA’s earlier investments in domestic solar manufacturing and infrastructure have helped stabilize panel supply in the U.S., lowering some production costs. However, these savings are being offset by the rising costs of materials, labor, and energy, driven by inflation.
Higher Electricity Costs Drive Demand for Solar
Electricity prices in 2026 have spiked due to increased demand, limited grid capacity, and the rising cost of fossil fuels. The average cost of electricity in the U.S. has risen by nearly 20% compared to 2023, leaving many households struggling to keep up with their utility bills.
For Arizona homeowners, solar energy has become a valuable buffer against these rising costs. By generating their own power, households can reduce reliance on expensive grid energy and even sell excess energy back to utility companies. However, without the ITC, upfront costs for installing solar panels have become a significant consideration for many.
Solar and the Cost of Living in 2026
With inflation pushing living expenses higher across the board, homeowners are weighing the financial benefits of solar energy more carefully. While the initial investment for a rooftop solar system can range from $20,000 to $30,000, depending on the size and location, the long-term savings on utility bills continue to make solar a worthwhile consideration.
Many states and local governments have introduced their own incentives to fill the gap left by the ITC. Homeowners should explore state rebates, net metering programs, and low-interest solar loans to reduce the financial burden of going solar.
Changes in Tax Credits and Subsidies
In 2026, the expiration of the ITC has shifted the focus to other renewable energy incentives. While the ITC no longer provides a 30% credit, commercial solar projects continue to benefit from some residual grants and funding under the IRA’s provisions.
For residential systems, new federal initiatives are limited, but some localities have stepped up. States like California, Arizona, and New York offer targeted rebates and property tax exemptions to encourage solar adoption. Homeowners may also qualify for subsidies on energy-efficient appliances or standalone battery storage systems, which complement solar installations.
The Role of Energy Independence and Return on Investment for Arizona
As energy prices rise, the appeal of energy independence continues to grow. Homeowners who install solar systems find value in generating their own power, especially during peak usage times when electricity rates are highest.
Selling excess energy back to the grid remains a key advantage, allowing households to offset installation costs and enjoy long-term savings. Solar also increases home value, with studies showing that properties equipped with solar systems sell faster and at higher prices than those without.
The Future of Solar Manufacturing
The U.S. solar industry has made significant strides in reclaiming its position in solar manufacturing thanks to the IRA’s earlier investments. However, the journey is far from over. Rising material costs and global supply chain challenges have kept solar panel prices higher than anticipated.
To combat these challenges, manufacturers are ramping up the use of domestically sourced materials, meeting the IRA’s original goal of reducing reliance on imports. This shift is expected to stabilize prices in the long term, but for now, inflation continues to impact upfront installation costs.
Wage and Apprenticeship Requirements for Solar Projects
Under the IRA, wage and apprenticeship requirements remain in effect for large-scale solar projects through 2026. Contractors are mandated to meet strict apprenticeship ratios and pay prevailing wages, ensuring fair compensation for workers. However, these requirements have contributed to higher labor costs, which are passed on to consumers in the form of increased installation prices.
Conclusion: Solar in 2026
While the expiration of the ITC Federal Tax Credit and rising costs have changed the landscape of solar energy adoption, the benefits of going solar in 2026 remain clear. Solar energy offers protection against soaring electricity prices, helps reduce carbon footprints, and provides a reliable source of renewable energy.
Homeowners exploring solar should take advantage of state and local incentives, as well as financing options, to make the transition more affordable. As the solar industry continues to grow and adapt, it remains a critical solution for sustainable energy and long-term savings.
If you’re ready to explore solar options, contact Solar Topps to learn how you can reduce your energy bills and gain energy independence in today’s challenging economy.\
