Prepaid leases, data center dollars key for DERs in 2026: Enphase executive

Industry Overview - The residential solar and energy storage market is expected to contract in 2026, with Jefferies predicting a 30% contraction in the solar market and Wood Mackenzie forecasting a 6% decline in storage installation volumes [3][4] - Enphase CEO Badri Kothandaraman anticipates a 20% contraction in the residential solar market next year [3] Third-Party Ownership (TPO) Model - Experts predict that third-party-owned systems will account for a larger share of total installations, with Jefferies projecting a 25% increase in TPO ownership next year [4] - The TPO model has gained traction, covering nearly half of new installations as of summer 2023 [5] Tax Incentives and Market Dynamics - TPO systems remain eligible for the section 48E investment tax credit, which can offset 30% or more of construction costs, for a longer duration than customer-owned systems [6] - This tax incentive is beneficial for TPO providers like Sunrun, whose stock price has more than doubled since the passage of the One Big Beautiful Bill Act [6] Market Resilience and Adaptation - Highly leveraged solar-only installers may face challenges after federal tax credits for customer-owned systems expire on December 31 [8] - Independent home energy installation businesses have shown resilience and are expected to adapt to the new market conditions more readily [8] - Prepaid leases are anticipated to support the market by reducing upfront costs and long-term price risks for customers [8]