Why Are We Seeing Bankrupt Solar Companies?
Solar continues to gain in popularity for homeowners looking to lower their carbon footprint and reduce their utility bills. In fact, nearly 7 GW of residential solar was installed in 2023, the industry’s fifth consecutive record year.
Despite such gains, sometimes solar companies go under, leaving customers with “orphaned” systems, meaning there is no service company to provide ongoing maintenance and support.
High Interest Rates
High interest rates not only increase borrowing costs for consumers seeking loans but also make it more challenging for businesses to secure funding from investors.
A handful of national solar companies, including Sunnova, offer third-party owned (TPO) options such as leases and power purchase agreements (PPAs) (where PPAs are allowed) alongside loans. These options can be attractive to homeowners who want to avoid high upfront costs, making solar more accessible even in a high-interest rate environment.
Understanding the SunPower Bankruptcy
Take, for example, the SunPower bankruptcy in 2024. Once a leading residential solar provider, SunPower’s financial struggles, driven by high operating costs and cash constraints, were worsened by a high-interest rate loan environment and shifts in California’s net energy metering (NEM) policy.
Net Metering Policy Changes
The SunPower bankruptcy was also attributed in part to the California Public Utilities Commission’s latest net metering program which dramatically reduced the price paid to solar customers for excess energy put back to the grid, thereby increasing the relative value of paired solar and battery storage.
SunPower wasn’t alone in going bankrupt. Several other bankrupt solar companies made headlines in 2024. In January, ADT got out of the solar business. Titan Solar ceased operations in June. Lumio, another large national installer, declared bankruptcy in September.
Yet the decline of these companies should not be viewed as a collapse of the greater residential solar market. Instead, it should be viewed as a normal part of a fast-growing industry.
Solar Energy Industry Trends
What do all these solar company bankruptcies say about the future of residential solar? The automobile industry offers an interesting parallel. In 1908, there were over 250 auto manufacturers looking to capitalize on the rapidly rising demand for motorized transportation.
Fast forward to 1929 and there were only 44 left standing with about 80% of the auto industry’s output accounted for by Ford, General Motors and Chrysler. In the interim, hundreds of companies rose and fell. Yet more cars were produced every year that were cheaper, safer and more fuel efficient.
Residential solar is following a similar path. In 2010, the average price per watt was $9 and roughly 200,000 homeowners had installed systems. By 2024, the average install price per watt was $3.16 with nearly 4.5 million homes equipped with solar. And according to SEIA, the number of solar installations is projected to double by 2030 and triple by 2034 as technological advancements and the need for cleaner, more affordable and more reliable power grows.
With many fly-by-night companies now exiting the industry, it’s important to choose a reputable solar service provider you trust to be around for the long term. And if you already purchased a system from a bankrupt solar company, don’t panic. You have options to ensure your investment continues to deliver value.
What Happens if I Stop Paying My Solar Lease, Loan or PPA?
If you have a solar lease, loan or PPA with a bankrupt company, your contract will likely be transferred to another entity. Bankrupt solar companies often sell these contracts as assets — loans to lenders, and leases or PPAs to other solar service providers who take ownership of the system and any associated incentives.
Solar Loan Agreements
Loan agreements remain in force after a lender transfer or bankruptcy, so you’ll need to continue making the agreed-upon payments to the new financing company or pay off the loan in full. If you stop paying, the loan provider may report you to a collection agency and can take legal action to recover the debt if it remains unpaid.
This could damage your credit score and complicate the sale of your home, since the lien on your solar system would need to be temporarily removed by the financing company you are in default with.
Solar Lease or PPA Agreements
With a lease agreement, you may be able to buy the system pursuant to the terms in your lease (i.e., at its fair market value) —provided your lease includes a buyout option. But that could be expensive. For example, you might have $5,000 left in payments, but your buyout price could be $10,000. Be sure to read the terms and conditions in your lease agreement before deciding.
If you stop payments on your lease or PPA, the company that owns the system could pursue legal action. If you’d like to end the lease or PPA early, be sure to review the terms in your agreement so you understand your rights. If you feel the bankrupt solar company has deceived you or committed fraud, contact a lawyer who specializes in energy law or reach out to a nonprofit legal service for help.
What Happens to Warranties After Solar Bankruptcies?
While solar requires less maintenance than systems with more moving parts like your HVAC, things happen as equipment ages. That’s why warranties and service plans are so important. Think of the warranty as coverage for problems with the equipment and the service plan as ongoing care.
- A solar warranty protects your solar system against equipment issues like defects or failures, usually covering repairs or replacements for a specified length of time. Customers with orphaned systems should begin by confirming their equipment manufacturer warranties will be honored, which is generally the case.
- A solar service plan goes further by offering maintenance, monitoring, and ongoing support to keep your system running smoothly. If you have an orphaned solar system, your service contract will most likely be transferred to a new service provider. Check the paperwork you signed with the bankrupt solar company and identify the options available.
Sunnova Offers a Solution for Orphaned Systems
If you notice an issue with your solar system and it’s out of warranty or your installer is no longer in business, Sunnova is here to help.
Companies That Can Fill the Void Left by a Bankrupt Solar Company
Whether you are considering getting solar or looking for a new provider to service your existing system, there are a few things to keep in mind. First, find out how many years they have been in business, how many customers they serve nationally and how customers rate the company. Make sure the provider has industry-standard certifications, like those provided through the North American Board of Certified Energy Practitioners.
Be sure the installer you choose is licensed, bonded and insured to install residential solar projects in your area. Ask if solar providers will be using subcontractors on your project and verify the subcontractors’ credentials.
Whether you were stranded by an installer that’s no longer around, bought your system without a service plan, or your warranty has expired, Sunnova can help. Sunnova Repair Services® provides one-time solar repairs, removals and reinstalls, panel cleaning services and more.
As a trusted, publicly traded company with one of the largest customer bases in the country, and a national network of solar technicians certified to work on most major solar brands, rest assured Sunnova has what it takes to get — and keep — your system in optimal working order.
Many options are available to homeowners whose solar company has gone bankrupt. Don’t wait for the company to solve the problem for you. Your orphaned solar system can continue to yield the benefits to which you’ve grown accustomed if you take a proactive approach and find a solar company that can step in and offer the services you need.
Fill the Void Left by Your Bankrupt Solar Company
