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Sunnova, one of the country’s largest residential-solar companies, has warned investors that it may run out of money within the next 12 months. It’s a snapshot of a company struggling to maintain financial viability amid a punishing economic climate for rooftop solar installers and financiers.
The “going concern” warning came during Sunnova’s fourth-quarter and fiscal-year earnings statement on Monday. The news sank the Houston-based company’s stock price from about $1.60 per share on Friday evening to a low of 56 cents per share on Monday morning. (Sunnova shares were trading at about 60 cents as of market close on Monday.)
Sunnova’s revenue grew to about $840 million in 2024, up from nearly $721 million in the prior year. But the company’s net losses before income taxes of almost $448 million last year were little improved from just over $502 million in 2023. The losses stemmed from declining sales of solar energy systems and products alongside rising operating expenses.
Over the course of the year, Sunnova was unable to increase the amount of unrestricted cash and commitments under existing financing arrangements to fund its business. The company, which finances rooftop-solar and battery installations conducted by independent installers, laid off about 300 employees, or about 15% of its workforce, in February.
As of Friday, these unrestricted funds were “not sufficient to meet obligations and fund operations for a period of at least one year from the date we issue our consolidated financial statements without implementing additional measures,” the company stated.
A Sunnova spokesperson told Canary Media on Monday that the company is “confident in our ability to manage our obligations and position Sunnova for long-term success.”
The bad news from Sunnova comes amidst a tough economic picture for U.S. rooftop solar overall. The nation’s residential-solar installations were forecast to decline by roughly 26% in 2024 compared to 2023 in a December report from analytics firm Wood Mackenzie and the Solar Energy Industries Association trade group — the market’s first annual drop in at least four years.
“When interest rates began to really escalate, more than two years ago, it put a damper on demand for residential solar across the United States,” said Pavel Molchanov, investment strategy analyst at financial services firm Raymond James. “The cost of capital for residential solar correlates with what’s happening with the broader interest-rate environment.”
The Federal Reserve started cutting rates last fall. But the economic and trade policies instituted by President Donald Trump have raised fears of a potential economic downturn and increasing inflation, tamping down expectations of near-term interest rate cuts.
Among different types of solar power, “residential solar is near the high end of the spectrum” in terms of its sensitivity to interest rates, Molchanov added.
That’s in part because residential rates tend to be higher from the start. Unlike utility-scale solar projects, which are backed by power purchase agreements from utilities or large corporate customers, residential projects are “ultimately tied to individual homeowners,” Molchanov explained, increasing the perceived risk of default — and raising the interest rates they are offered as a result.
Sunnova CEO John Berger said in a Monday statement that the company has “acted on several initiatives” to improve its financial picture, including “raising price, simplifying our business to reduce costs, and changing dealer payment terms,” which are intended to “support positive cash in 2025 and beyond.”
But Sunnova’s financial position may make it difficult for the company to raise the capital it needs, at least at reasonable terms. The company stated on Friday that it had secured a $185 million loan at a 15% interest rate, which is well above typical corporate borrowing rates, to use for “general working capital purposes.”
The interest-rate environment has helped drive a number of residential-solar companies into bankruptcy in the past two years, including SunPower, one of the country’s oldest solar companies. Some of SunPower’s assets have been bought by residential installer Complete Solaria.
Sunrun, the country’s largest residential solar and battery installer, also reported declining revenue and increasing losses in 2024 compared to the previous year in an earnings statement last week.
Beyond interest rates, Sunnova and other residential-solar installers have had to contend with a dramatic shift in California’s residential-solar policy, Molchanov said. The state is by far the largest rooftop-solar market in the country.
In April 2023, California regulators sharply reduced the net-metering rates that owners of rooftop solar systems can earn for the electricity they feed back to the power grids operated by the state’s three large investor-owned utilities. Residential solar installations have dropped sharply since that change, and many solar companies in the state have laid off workers or closed their doors.
California’s cutback on net metering “put a damper on demand, compounding the effect of high interest rates,” Molchanov said. Residential-solar sales in the state have grown slightly in recent quarters but remain far from their pre-2023 highs, according to the California Solar and Storage Association trade group.
Residential solar could be hampered further by the Trump administration and Republican-controlled Congress.
After Trump’s election, publicly traded clean-energy companies including Sunrun and Sunnova took hits in the market due to fears that the president’s antipathy to climate and clean-energy policy could drive Congress to undo or weaken federal tax credits that play a central role in boosting the economics of solar power. Trump’s decisions on tariffs could also raise the cost of solar systems.
Sunnova has itself previously been targeted by Republicans in Congress. In 2023, the company won a $3 billion loan guarantee from the U.S. Department of Energy to support its effort to lower consumer costs for financing “virtual power plants” — solar systems bolstered by batteries that can help reduce peak energy.
Rising electricity costs are one of the few tailwinds for residential solar, Molchanov said. Utility rates have been climbing in many parts of the country, which can make generating one’s own electricity more attractive by comparison. More households are also looking to residential systems for reliability purposes, choosing to pair batteries with solar to provide power during grid outages.
“But the No. 1 variable we need to watch is interest rates,” Molchanov said. “The higher they go, the more difficult it will be for residential solar in the aggregate in this country.”
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