Commercial solar
In 2026, the right way to finance a commercial solar project comes down to one question: who can actually use the federal tax benefits? Here is a plain-English framework for choosing between buying, a loan, C-PACE, a PPA, and a lease — all gated by the July 4, 2026 begin-construction deadline.
Updated June 30, 2026 · 10 min read
The short answer: in 2026, the right way to finance commercial solar comes down to a single question — can your business actually use the federal tax benefits? If you have tax appetite, owning the system (cash, a loan, or C-PACE financing) keeps the Section 48E investment credit and the depreciation on your own return. If you can't use those benefits, a power purchase agreement (PPA) or lease hands them to a third-party owner who prices them into your rate. And the entire conversation is on a clock: the credit is gated by a begin-construction deadline of July 4, 2026.
Below is the framework, the tradeoffs, and one depreciation detail that is easy to get wrong.
Commercial and residential solar split apart this year. The residential credit (Section 25D) ended for systems placed in service after December 31, 2025 — homeowners who buy with cash or a loan now get $0 federal credit. (We cover that in detail in is there a solar tax credit in 2026?.)
The commercial credit is a different story. Section 48E survived the One Big Beautiful Bill Act (OBBBA). In plain English:
The catch is timing. For solar and wind, 48E is gated by when you begin construction — generally on or before July 4, 2026 to lock in eligibility. We unpack that deadline in the July 4, 2026 commercial solar deadline, and the bigger 2026 picture in the 2026 solar incentive guide.
Before you compare financing products, answer this: can your business actually use the tax benefits?
The 48E credit is non-refundable for most for-profit taxpayers — it offsets tax liability, so it only helps if you owe federal tax. Depreciation works the same way: it shelters income, which only matters if you have income to shelter. A profitable, tax-paying business has "tax appetite." A startup running at a loss, a non-profit, or an entity with little federal liability often does not.
This is the hinge of the whole framework, because the credit follows ownership. Section 48E ties the credit to "qualified property placed in service by the taxpayer" (§ 48E(b)) — so whoever owns the system claims the credit and the depreciation. If that's you, owning makes sense. If it isn't, you have two escape hatches:
Keep that question in mind as you read the four paths.
You own the system outright, so you claim 48E plus depreciation directly. Over the life of the array, this is usually the highest-savings path because no third party is taking a margin on your tax benefits. The flip side: you carry the upfront cost (cash) or interest (loan), plus performance and operations-and-maintenance (O&M) risk, and you need tax appetite — or you sell the credit via transferability.
A commercial loan is the same ownership story with the cash flow smoothed out: you keep your capital, pay interest over time, and the tax benefits still land on your return because you still own the equipment.
Commercial Property Assessed Clean Energy (C-PACE) is the ownership path for businesses that don't want to write a big check. Per the EPA, PACE "can be used to cover 100% of the upfront cost" of a qualified project, repaid over a long term through a voluntary assessment on your property tax bill — and the assessment "stays with the property in the event of a sale (assuming the buyer agrees to the transfer)" (US EPA).
The crucial point for 2026: because C-PACE is a financing mechanism (an assessment on your tax bill), not a third-party ownership structure, you keep ownership of the system — and therefore the 48E credit and the depreciation. It's the ownership upside of buying without the upfront cash.
One caveat: C-PACE is enabled state-by-state and locality-by-locality. The EPA notes that "state governments must adopt enabling legislation permitting PACE programs within the state." Whether C-PACE is available to you — and at what terms — depends entirely on whether your jurisdiction has an active program.
A third party owns the system on your roof or land, and you simply buy the electricity it produces, per kilowatt-hour. Typically $0 upfront. No tax appetite required on your end — the owner monetizes 48E and the depreciation and bakes those benefits into the rate they charge you.
What you get is a (hopefully) lower, more predictable power price; what you give up is the credit and the depreciation — those belong to the owner. A PPA is the right call when you can't use the tax benefits yourself and don't want O&M responsibility.
A lease also puts a third party in the owner's seat (in an operating lease), so they take the credit and you make fixed lease payments. In some cases the paperwork is simpler than a PPA, since you're paying for the equipment rather than metered output.
Lease structures vary, and the tax treatment turns on who is treated as the tax owner of the equipment under the specific contract. Don't assume — confirm with a tax advisor before signing.
| Buy (cash) | Loan | C-PACE | PPA | Lease | |
|---|---|---|---|---|---|
| Upfront cost | High | Low–none | None (up to 100% financed) | None | Low–none |
| Who owns the system | You | You | You | Third party | Third party |
| Who claims 48E | You | You | You | Owner | Owner |
| Who claims depreciation | You | You | You | Owner | Owner |
| Tax appetite needed? | Yes (or transfer) | Yes (or transfer) | Yes (or transfer) | No | No |
| Balance-sheet treatment | Asset you own | Asset + debt | Asset + tax assessment | Off-balance-sheet (service contract) | Varies (operating vs. capital) |
| Typical term | n/a | Medium | Long (tracks equipment life) | Long | Medium–long |
| Transfers on building sale? | Sell with property | Refinance/payoff | Assessment can transfer with property | Contract assigns to buyer | Contract assigns to buyer |
| Best for | Max lifetime savings, has capital | Keep cash, has tax appetite | Wants ownership + 100% financing | No tax appetite, wants simplicity | No tax appetite, prefers fixed payments |
Dollar paybacks, IRRs, and $/W pricing vary widely by project, state, utility, and rate design — run your own numbers on the commercial calculator.
This is worth getting right, because it can swing your model.
Bonus depreciation did NOT phase down. OBBBA restored 100% bonus depreciation and made it permanent for qualified property placed in service after January 19, 2025 — reversing the prior TCJA schedule that would have dropped the rate toward zero by the end of the decade (BDO). So owners can still expense a large share of the system in year one.
Now the part that's easy to mix up: the 5-year MACRS change does not hit the 48E credit you're claiming on a 2026 project. OBBBA repealed the special 5-year MACRS class designation for energy property — but that repeal is written against the old Section 48 energy credit, for projects beginning construction after December 31, 2024 (Chapman and Cutler). For the Section 48E clean-electricity credit — the credit a new commercial solar project actually claims in 2026 — industry analysis indicates the 5-year MACRS designation for qualified property and energy-storage technology remains in place (SEIA).
In other words: if you read that "new solar lost its 5-year depreciation," that statement is about the legacy §48 credit, not the §48E credit your 2026 array runs under. The practical upshot for a typical 2026 commercial project: you generally still get strong first-year expensing via 100% bonus depreciation and the 5-year MACRS recovery schedule under 48E. The exact depreciation math for any specific project is a tax-advisor question — and the §48 vs. §48E distinction is exactly the kind of thing worth confirming before you rely on it.
The financing decision and the calendar are linked. For solar and wind, OBBBA terminates the 48E credit for facilities placed in service after December 31, 2027 — unless construction begins before July 5, 2026, i.e., on or before July 4, 2026 (Grant Thornton). Begin construction in time and your project keeps a longer placed-in-service window; miss it, and you generally have to be placed in service by the end of 2027.
Read that carefully: July 4, 2026 is a begin-construction trigger, not a placed-in-service deadline. You don't have to finish by then — you have to start by then (and finish within the window your start date earns you).
How do you "begin construction"? IRS Notice 2025-42 sets the rules for 45Y and 48E solar and wind. It makes the Physical Work Test — physical work of a significant nature — the sole method to establish beginning of construction (the old 5% cost safe harbor was eliminated for these facilities, except very small ones), paired with a continuity requirement. A project placed in service no more than four calendar years after the year construction began is treated as satisfying continuity (the Continuity Safe Harbor) (IRS Notice 2025-42).
Why this matters for financing: your installer and your financing partner need to move before the window closes. A PPA provider or a lessor planning to claim 48E faces the same deadline you would — so the timeline is a live constraint no matter which path you pick. See the July 4, 2026 commercial solar deadline for the full picture.
None of these is universally "best." The right answer is the one that matches your tax position, your capital, and your appetite for owning and maintaining an asset.
Start by running your project through the free commercial solar estimate to see the rough economics, then read how PanelPerks works to connect with vetted installers and financing partners who can move inside the begin-construction window.
PanelPerks provides information, not tax advice. Whether your business can use 48E, the adders, transferability, or a given depreciation schedule depends on facts specific to you — confirm everything with a CPA or tax advisor before committing. See our disclosures.
Educational content, not tax, financial, or legal advice. Figures are current as of the update date above; verify with a qualified professional before acting.
The owner of the system claims the Section 48E credit, not the host. In a PPA or lease, a third party owns the equipment, so they take the 48E credit and the depreciation — then price those benefits into your rate. If you want the credit on your own return, you need to own the system (buy, finance, or C-PACE), or own it and sell the credit via transferability under Section 6418.
Yes. C-PACE is a financing mechanism — repaid as an assessment on your property tax bill, and per the EPA it can cover up to 100% of the upfront project cost — not a third-party ownership arrangement. Because you still own the system, you keep the Section 48E credit and the depreciation. Availability depends on whether your state and locality have an active C-PACE program, since the EPA notes states must adopt enabling legislation first.
Yes. The commercial Section 48E credit survived the One Big Beautiful Bill Act: a 6% base rate, up to 30% with prevailing-wage and apprenticeship requirements (projects under 1 MW AC get the full rate automatically), plus stackable domestic-content and energy-community adders of up to 10 percentage points each, and depreciation. But it is gated by timing — for solar and wind, construction generally must begin on or before July 4, 2026 to lock in eligibility, or the project must be placed in service by the end of 2027. The residential credit (Section 25D) is the one that ended, for systems placed in service after December 31, 2025.
Not for the credit that matters to a 2026 project. OBBBA repealed the special 5-year MACRS class designation for energy property under the legacy Section 48 credit, for projects that begin construction after December 31, 2024. But a new commercial solar project in 2026 claims the Section 48E credit, and industry analysis indicates the 5-year MACRS designation remains in place for 48E qualified property and energy storage. Separately, OBBBA restored 100% bonus depreciation and made it permanent for property placed in service after January 19, 2025. The exact recovery schedule for your project is a question for your tax advisor — the Section 48 vs. 48E distinction is easy to get wrong.
Yes. Credit transferability under Section 6418 — selling your 48E credit to another taxpayer for cash — survived the OBBBA. The main new limit is that you cannot transfer credits to a specified foreign entity, effective for tax years beginning after July 4, 2025. Transferability is the key option if you own a system but lack the tax appetite to use the credit yourself.
Free, no obligation, and sourced from the IRS, USDA, and EIA.