Deep-seated issues plague the rooftop solar industry, as evidenced by the bankruptcies of Sunnova and Mosaic.
Sunnova, a prominent player in the residential solar industry, has filed for Chapter 11 bankruptcy protection. The company cited falling sales, rising operational costs, and a growing debt burden as the reasons for the filing.
The bankruptcy filing comes at a time when the U.S. residential solar industry is facing a series of challenges. As of the end of 2024, Sunnova reported managing 3 gigawatts of solar panels and battery systems. However, recent data suggests a troubling trend, with the industry experiencing a 31% drop in installations compared to the previous year.
This decline is not isolated. According to research, the U.S. residential solar industry has seen six consecutive quarters of year-over-year decline in installations. Last year's sales hit a low not seen since 2021, and the first quarter of 2025 saw a 13% year-over-year decline in residential solar installations.
Sunnova's bankruptcy filing could have significant implications for the industry. The company chose to take on large amounts of corporate debt over the past 18 months to raise cash. This move, coupled with the bankruptcy filing, could serve as a warning sign for other companies in the sector.
The industry is also grappling with mounting pressures from other fronts. Rising interest rates, unfavorable policy shifts in California, and a proposed tax credit removal by Republicans in Congress are among the challenges facing residential solar companies.
The House of Representatives recently passed a bill that would terminate the 30% tax credit for households installing solar panels, batteries, inverters, and associated equipment by the end of 2025. This move would make installations about one-third more expensive, potentially further dampening demand.
The bill would also eliminate the tax credit for companies that lease solar panels to households and businesses, which could be a blow to firms like Sunnova and Sunrun. Another solar lender, Solar Mosaic, has also filed for Chapter 11 bankruptcy protection, citing macroeconomic challenges and legislation threatening to eliminate tax credits.
Desktop Metal, a company managing 2.5 gigawatts of solar panels and battery systems, also filed for bankruptcy protection in late July 2025.
The proposed changes could mean U.S. households install 40% less solar over the next five years compared to current policy, according to research firm Wood Mackenzie.
As the residential solar industry navigates these challenges, it remains to be seen how companies will adapt and whether the sector can recover.
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