Special thanks to Gilbert Quintana for his contributions to this article.
An installer we know in the Bay Area told us recently that he doesn't like TPOs, traditional or prepaid, because he doesn't believe they're in his customers' best long-term interest, especially when most of his customers own multi-million-dollar homes they don't want to risk. But here's the bind he's in. He told us, "Customers come to us with competing quotes from TPO-heavy shops. They see a 20-30% discount on the cover page, and ask us to beat it. We're forced to sell the prepaid lease. If we say we won't do it, we probably won't get any jobs."
This is the moment most residential installers are in right now. As of January 1, the §25D residential ITC is gone, which means a homeowner buying with cash or a loan gets no federal tax help. The §48E commercial ITC is still alive, which means a TPO provider can claim the credit and notionally pass some portion of that value back as a discount on the upfront price or the monthly payment. The TPO has therefore become the default workaround for putting tax-incentive dollars back into a residential deal. Wood Mackenzie estimates that TPO's share of the solar financing market will reach 65% in 2026.
The prevailing feeling is that if you're an installer that doesn't lead with TPO, then you'll be watching customers walk to competitors who do. But is that always true? The question we want to answer in this article is: "Does TPO pricing actually beat cash/loan, or does it only look better because the comparison is uneven?"
The two paths: TPO-compliant vs. standard cash/loan systems
To capture §48E and its bonuses, the PV system has to clear at least one, but potentially two federal hurdles. The first is FEOC compliance: the equipment can't include components produced by, or with meaningful financial ties to, "foreign entities of concern," which in practice mostly means Chinese-affiliated manufacturers. That covers ownership, key inputs in the supply chain, and licensing relationships.
The second is the domestic-content adder - a 10% bonus on top of the 30% base credit. To qualify, a defined share of the manufactured product cost has to come from US factories: US glass, frames, backsheets, junction boxes, and encapsulants on modules; US steel and fabrication on racking; US electronics and assembly for inverters and batteries. A complication is that the amount of domestic content needed to qualify for the bonus changes annually. So what works this year may not work next year.
When we say "TPO-compliant," we mean a system built from the narrower, more expensive slice of the equipment market because the TPO provider needs to defend the tax credit if the IRS ever performs an audit. A standard cash/loan system can be built from a wider pool of equipment that doesn't carry the compliance premium.
To be clear, the compliance premium of a TPO-compliant system against a standard cash/loan system is not a quality gap. The same manufacturers often make both kinds of equipment. Enphase microinverters are a good example. The IQ8 family is offered in a 2026 FEOC-compliant SKU and a non-compliant SKU, with the same design and warranty behind both. Tesla Powerwalls are non-FEOC-compliant today because of where the cells are sourced, even though Tesla is a US company and the Powerwall is a tier-1 product.
The supply chain right now: how TPO is shaping availability and price
There are three reasons TPO-compliant equipment costs more than its standard counterpart. The first is the documentation required to support compliance. (Yes, accountants and lawyers will always figure out a way to get their piece of the pie.) The second is the cost of US manufacturing. Domestic factories run on higher labor, materials, and capital costs than the Asian supply chains that have dominated solar for two decades. That gap is structural.
The third is what's happening today with supply. Industry estimates suggest that as much as 70% of the equipment moving through the residential distribution channel is effectively controlled by TPO companies. Many are safe-harboring equipment. They have been writing massive purchase orders to lock in equipment under the safe-harbor rules and preserve their access to §48E credits before any future policy change. That removes a chunk of supply from the open market.
Put those dynamics together and you get a compounding effect. TPO-compliant equipment carries a real price premium that's not going away in the next 18 months.
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The real cost comparison: how TPO-compliant systems price out
To illustrate this, we priced out three equivalent 12 kW systems through a major equipment distributor to show the differences in pricing that are currently available today. One is spec'd as TPO-compliant with Q-Cells 410W domestic-content modules, post-Nov-2025 Enphase IQ8MC microinverters that meet the 2026 financial AVLs, and UNIRAC domestic-content racking. The second is spec'd as a high-end cash/loan system with Trina 445W modules, pre-Nov-2025 Enphase IQ8MC microinverters, and standard UNIRAC racking. The third is spec'd as an economical cash/loan system with JA 440W modules, SMA 11.5kW string inverter, and the same racking system.
Here's how the three systems price out.
One line item drives almost the entire gap in pricing. The TPO-compliant modules are Q-Cells 410W panels with domestic-content backsheet, encapsulant, and junction box versus Trina Vertex S 445W panels or JA 440W panels from the open market. All three are tier-1 N-Type panels with the same 25-year product and 30-year performance warranties. The premium of the Q-Cells panels has everything to do with allowing the TPO provider to claim the ITC and domestic-content adder and not anything to do with the panel's performance.
Furthermore, the microinverters for the TPO-compliant and high-end cash/loan system are the same Enphase IQ8MC, but the TPO-compliant version meets the 2026 financial AVL requirements. It's the same hardware, same firmware, same warranty. Just a different SKU. It's possible for an even lower cost system by considering an SMA string inverter, especially for designs with straightforward panel layouts and minimal shading.
Comparing the costs at a system level, the TPO-compliant system carries a 30% premium relative to the high-end cash/loan system and a 61% premium over the economical cash/loan option. That's the premium for TPO-compliance on equipment alone before the operational overhead required by TPOs for milestone funding is even factored in.
Equipment generally constitutes about 40% of an installed system's price. The other 60%, customer acquisition, labor, operations, and overhead, is roughly the same whether the equipment underneath is TPO-compliant or not.
Layer the 30-60% equipment gap onto a complete system and the all-in numbers come out to about $38,700 ($3.2/W) for a TPO-compliant 12kW system versus $29,713 ($2.48/W) for the same-size high-end cash/loan system or $14,725 ($2/W) economical cash/loan system. That's a $9k to $14.7 premium before any tax-credit pass-through.
Now factor in the TPO discount. Using a prepaid lease as an example, it typically passes about 20-30% of the tax incentive value back to the homeowner. We'll use 25% for this example which translates to roughly $9,675 on a $38,700 system. That results in a final price to the customer of $29,025. Compare that to the high-end cash/loan system, the real cash advantage of a prepaid TPO is only $688. Compared to the economical cash/loan system, the customer has to actually pay over $5,000 more with the prepaid TPO. Those are the numbers worth holding in your head, not the upfront 20-30% discount offered by the prepaid TPO.
Weighing the tradeoffs: what the homeowner gives up, and what risks the installer takes on
The exact differences in pricing of these options will vary depending on equipment choices, special pricing agreements, availability, and other factors. That being said, the TPO-premium is real and undercuts the perceived cost advantages of TPO's ability to access the ITC tax incentive. Given the loss of that advantage, the next question for installers is "What does the customer give up and what risk does the installer take on with a TPO-funded project?"
What the customer gives up
Compared to a TPO, a standard cash/loan homeowner has freedom of ownership. The system is their property and their equity from the moment that it's installed. That means they can add a battery, sign up for a VPP program, or expand the array later without any restrictions placed by a PPA or lease. If they sell the house, they don't have to worry about lease assumption and buyer qualification holding up the sale. And most importantly, they don't have to worry about the fine print coming back to haunt them, from complex production clauses to ambiguous Year-6 transfer rules that the TPO product wraps around the equipment. They also have real clarity around recourse, namely who to talk to if the system has a problem. With a cash/loan system, the installer owns the customer relationship. With a TPO system and the many entities involved, it can be anybody's guess, leaving the customer confused, or worse, angry when something goes wrong.
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What the installer takes on
The risks on the installer side are real too. Funding has gotten tighter, and a TPO project that should fund in less than 60 days can stretch to 120 days when TPO provider's capital is constrained or when their documentation requirements catch a gap in your site capture or procurement records.
The Year-6 transfer conversation is a potential customer-service liability when the leases approach their first FMV (Fair Market Value) opportunity. When the FMV letter arrives and doesn't conform to what they thought they heard during the sale, that first call the homeowner makes will be the installer, not the TPO provider. The installer we mentioned at the beginning of the article has his customers sign an acknowledgement that they understand the prepaid product and risks associated with them, specifically to limit the liability when that letter comes.
We've also seen too many recent reminders (SunPower in 2024, Sunnova and Posigen in 2025) that single TPO partner concentration is a real business risk. The installers who built their books on those programs were left with millions of dollars of unpaid work for projects they already completed.
Beyond that, the cost of TPO compliance is real, and many installers report having to increase headcount to create, process, and upload procurement records and site photos. Some TPOs require more than 30 photos! Stack any minimal apparent savings of a TPO against everything the customer gives up and everything the installer takes on, and the case for the standard cash/loan path gets stronger, not weaker.
Making an informed equipment decision
TPO is not automatically bad. For some homeowners, especially those that love renting things, it may still be the right fit.
But installers should be careful about treating TPO as the only viable path forward.
The real work now is knowing when TPO makes sense, when a standard cash/loan system is still the better long-term answer, and how to explain that tradeoff clearly to homeowners. That starts with understanding both sides of the equation: the equipment choices underneath the proposal and the financing structure wrapped around it.
If you are trying to sort through which modules, inverters, and batteries are FEOC-compliant, domestic-content eligible, or simply the best value for a standard cash/loan system, talk to your distributor. They can help you understand what is actually available, where the premiums are showing up, and how to build the right bill of materials for the type of project you are selling.
And if you are trying to understand how to position financing in this new market, especially when to lead with no-dealer fee loans, reach out to us. We can help you think through the financing conversation and how to present it in a way that is clear, credible, and homeowner-friendly.
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