Sunnova went bankrupt—what does it mean for other major solar players?

Sunnova Energy, a leading U.S. solar installer and lease provider, said it filed for Chapter 11 bankruptcy protection on Sunday, just a week after one of its subsidiaries took the same action. 

The residential solar and storage provider filed for bankruptcy in the Southern District of Texas, reporting a range of $10 billion to $50 billion in both assets and liabilities, and total debt of $10.67 billion. Financial documents also show that the company laid off 55% of its workforce. 

The bankruptcy filing comes amid a series of challenges for Sunnova, including the Department of Energy’s termination of a $3 billion loan agreement last month, and substantial debt amounting to $8.5 billion as reported in its 2024 year-end financial results. Earlier layoffs, executive leadership changes, and a drastic stock plunge following a “going concern” statement make the bankruptcy announcement unsurprising.

Macroeconomic factors have further exacerbated the downturn. An unpredictable political and regulatory landscape, high interest rates, and persistent inflation have weakened consumer demand for solar installations, particularly in the residential sector. In the U.S., residential solar installations plummeted 32% from 2023 to 2024, highlighting a broader slowdown in home solar adoption. Indeed, solar financing giant Mosaic cited these macroeconomic challenges as the reason for its own Chapter 11 bankruptcy protection filing, which comes at the same time as Sunnova’s. 

With Sunnova and Mosaic now navigating bankruptcy proceedings less than a year after one of the industry’s most established players, SunPower, met the same fate, attention turns to their peers’ future: Will more major solar companies follow suit?

EnergySage reached out to Sunnova for comment but didn’t immediately hear back. 

Although the U.S. solar industry continues to grow, several factors are driving this downturn in demand: High interest rates and net metering rollbacks have reduced the financial benefits of going solar for homeowners, while shifting government policies are causing uncertainty for the future of clean energy incentives, putting heavy financial pressure on companies like Sunnova and SunPower that rely on customers taking out loans or leases to pay for the cost of going solar over time. 

High interest rates

High interest rates have negatively impacted the solar industry in recent years. On average, installing solar panels costs around $29,000, leading 39% of homeowners to rely on loans and financing to pay for their installations. While oil- and gas-free solar panel systems are far more cost-effective than utility-generated electricity in the long run, it’s an expensive upfront investment, and the average person may not have the funds to pay for it in cash. 

With this in mind, companies like Sunnova built their business models around the idea that most homeowners would finance their installations, allowing them to pay over time using loans, leases, or power purchase agreements (PPAs).

This model thrived when interest rates were low—particularly in 2020 when the Federal Reserve slashed rates to near zero. But as rates climbed in recent years, the cost of borrowing money skyrocketed, shrinking profit margins for solar companies reliant on financing. Sunnova, SunPower, and others found themselves caught between rising capital costs and slowing customer demand, a squeeze that led to financial distress.

Diminishing financial benefits from net metering 

Solar energy is still an emerging industry that depends on federal, state, and local government policies and subsidies to aid mass adoption and make it a more affordable investment for the average American.

One of the most impactful state policies has been net metering, which allows solar owners to send excess electricity generation to the grid in exchange for credits on their electric bills. It’s been instrumental in making solar a smart financial investment while also reducing reliance on carbon-intensive energy sources. Unfortunately, the policy is under attack. 

Despite its obvious financial and environmental benefits to utility companies, electricity providers continue to push for reforms that shrink net metering. The most notable example is California's Net Energy Metering 3.0 (NEM 3.0), which slashed net metering credit values by 75% when it took effect in April 2023. As a result, residential solar installations in California fell by 45% between 2023 and 2024, further sealing the fate of companies like Sunnova.

This policy change has had ripple effects throughout the industry. While California is just one state, its solar market is by far the largest in the U.S., so a sharp decline there impacts national demand. NEM 3.0 also directly contributed to the headwinds that toppled one of the biggest players on the market, SunPower, and it may set a precedent for other states considering similar cuts. 

Uncertainty surrounding the federal solar tax credit

Shortly after taking office for a second term, President Trump ordered a pause on funding for the Inflation Reduction Act (IRA), including the landmark 30% solar tax credit—a key financial incentive for homeowners considering solar. While that executive order has since been ruled illegal, the disruption created by Trump’s anti-solar rhetoric was enough to chill demand. Now, the GOP reconciliation bill threatens to eliminate clean energy tax credits as soon as next year, compounding the unpredictability surrounding residential solar’s affordability. 

Understandably, many homeowners are hesitant to invest in solar without confidence that the tax credit will remain intact. This consumer hesitation, combined with high interest rates and diminishing returns from net metering, has made residential solar a tougher sell, further straining companies that were already struggling.

Review all your contracts and warranties

Your paperwork holds key details about your coverage, so taking the time to review it can provide clarity and prepare you for any next steps. Another company may take over your warranty, contract, or financing agreement, so understanding what you’re entitled to will help you navigate any changes with confidence.

Check in with your installer

Your original installer is likely the best resource for understanding how your warranty and service agreements might be affected. Reach out to see how they’re handling Sunnova customers and whether they have updates on your system’s ongoing support.

Contact your equipment manufacturer

Sunnova’s bankruptcy shouldn’t impact your equipment warranties through the manufacturers. Review your documentation to confirm your panel and battery brands, then contact the manufacturers directly to ensure your coverage remains intact.

Sunnova’s struggles highlight the ongoing shifts within the solar industry. While solar power remains essential to the clean energy transition, political and regulatory challenges continue to test the resilience of solar providers. The coming months will determine whether cost-cutting strategies—like those seen at Sunnova—will be enough to stabilize the industry or if more companies will face similar setbacks.