What Is TPO (Third-Party Ownership)?
TPO, third-party ownership, is the umbrella term for lease and PPA structures where a company other than the homeowner owns the solar system, and it has become the majority financing structure in residential solar since Section 25D expired.
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TPO, third-party ownership, is the umbrella term for lease and PPA structures where a company other than the homeowner owns the solar system, and it has become the majority financing structure in residential solar since Section 25D expired.
TPO (Third-Party Ownership) explained
TPO covers both leases, where the homeowner pays a fixed monthly amount for use of the system, and PPAs, where the homeowner pays per unit of electricity produced. In both structures, the homeowner does not own the equipment, does not carry maintenance responsibility directly, and does not claim any tax credit personally, since the credit follows ownership.
TPO's growth since 2025 has been dramatic and regionally uneven. 44% of solar reps reported more than half their 2025 volume in TPO deals, expected to reach 65% in 2026, with the share of reps selling zero TPO dropping from 9% to just 1%. Customer-owned market share fell from 54% to 43% during 2024 alone, while TPO grew from 40% to 52% in the same period. Some states moved even faster: Michigan went from 1.16% TPO to 38.96% TPO in a single year, and Connecticut from 9.23% to 50.00%.
The driver is straightforward: Section 25D's expiration removed the tax credit path for homeowner-owned systems, while Section 48E remains available to whoever owns the system, meaning TPO providers can still pass along a tax-credit-equivalent discount that a cash or loan buyer can no longer get directly. For sales orgs and setters, this means TPO fluency, being able to explain and pitch lease and PPA terms clearly, is now a core sales skill rather than a secondary option.
Why it matters when you're buying
Any solar appointment-setting operation working in 2026 needs to qualify and script around TPO as the default deal structure, not the exception. An appointment vendor still qualifying homeowners primarily on cash or loan eligibility is filtering against the majority of the actual 2026 buyer pool.
Frequently Asked Questions
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