Enphase: Shifting Solar Gears As Tax Credits Drive Lease-First Future

Enphase Energy, Inc. (NASDAQ:ENPH) CEO Badri Kothandaraman on Tuesday addressed the changes underway in the solar energy market, triggered by evolving incentive structures, and how Enphase plans to respond. 

What To Know: During the company's second quarter earnings call on Tuesday, Enphase's management team outlined its expectations for a shift toward leases and power purchase agreements (PPAs), largely anchored by the 48E tax credit, which extends through 2027. 

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Enphase believes that as traditional cash and loan sales decline — potentially dropping from approximately 2.5GW in 2025 to just 1GW in 2026 — leasing and PPAs will become the dominant solar sales channels. 

Kothandaraman also shared his personal view that the total addressable market (TAM) would drop by 20% in 2026 due to the ending of the 25D tax credit. 

He listed three things Enphase will do in order to "mitigate the market reduction." 

1. Expanding lease financing through third-party owners (TPO) partnerships
2. Driving down installation costs — especially for batteries
3. Lowering customer acquisition costs with advanced lead-generation platforms

Management clarified that these initiatives do not involve leveraging Enphase's balance sheet, but instead rely on Enphase's unique data position and relationships across its vast installer network.

The CEO expressed optimism about the broader U.S. solar market and said he expects to see increased orders later this year as consumers rush to secure the 25D homeowner tax credit before it expires. 

"The U.S. solar market is showing signs of improvement with rising battery attach rates and seasonal demand contributing to increased momentum," Kothandaraman said. 

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