The residential solar industry is often referred to in the United States as the “solar coaster,” as it has gone through peaks and troughs of customer demand, business profitability, and investment.
SunPower, one of the largest and oldest solar companies in the United States, has taken its last dip after announcing bankruptcy and delisting from the Nasdaq Stock Exchange. Once valued as being worth billions of dollars, SunPower’s stock fell more than 99% from its all-time high valuation, in 2007.
The company provided homeowners with rooftop solar, energy storage, and electric vehicle (EV) charging. It operated a dealer network in which small businesses could operate as sales agencies while SunPower handled installations, or could be installer-dealers with SunPower providing equipment procurement services. For many years the company was also a leading solar cell and module manufacturer and it was active in the large-scale project segment. The production business was spun out to form separate company Maxeon in 2020. On Aug. 12, 2024, SunPower said that it would be delisted as a publicly traded company.
Industry troubles
US residential solar had its strongest years during the Covid-19 pandemic, capping a broader trend of homeowners making improvements to their properties. Then, as post-pandemic inflation set in, the federal borrowing rate was raised and, along with it, loan terms increased, making it more expensive for homeowners to invest in solar. With a more expensive solar array, tightened budgets at home, and a prolonged return on investment, homeowners began to balk at the financial prospects of solar.
That loss of value was worsened when, in late 2022, the California Public Utilities Commission approved its Net Energy Metering 3.0 (NEM 3.0) regime. The new regulatory scheme cut the rate utilities are required to pay to solar customers for electricity they export to the grid, by 80%.
The switch to NEM 3.0 led to a temporary boom among customers looking to secure legacy NEM 2.0 rates, and then a bust in California. “With loans expensive and incentives removed, Californian residential PV has been devastated,” wrote pv magazine Editor Tristan Rayner at the time. “By late 2023, rooftop solar installations had fallen 80%, driving more than 17,000 layoffs – 22% of the industry.”
California represents about half the US residential solar market, so the hit to businesses with a strong presence in the state, including SunPower, was deeply felt. Solar installers in California are still adjusting to NEM 3.0, which now makes battery energy storage an essential part of any solar project to capture bill savings value for customers. Although the inclusion of a battery increases the sticker price of home solar, it adds benefits such as backup power. Solar installers with a strong focus on their battery offering are expected to fare better than those without.
SunPower’s struggles
For SunPower, problems began to mount about a year after the passage of NEM 3.0, as the regime’s negative effect on demand became clearer and “higher-for-longer” interest rates became a reality.
In December 2023, the company released a letter warning investors that the business was struggling to remain viable. The stock price fell 40% during December 2023.
The fear was sparked by a technical default on debts owed by the company. In October 2023, SunPower announced it would restate its third-quarter financial results due to an inventory reporting error related to one of its subsidiaries. Being late with financial reporting placed SunPower in breach of the key terms of several of its credit agreements, leaving the company exposed to lender demands for immediate repayment.
SunPower stated that the breach of credit terms could lead to lenders demanding immediate repayment of more than $65 million of debt, causing the company to express doubts about its ability to keep operations running. SunPower said it was trying to secure a waiver with its lenders and, without one, it could lack funds to support day-to-day operations.
On Dec. 8, 2023, the company received a waiver that saved it from technical default and provided access to $75 million in funding. SunPower was given until January 19, 2024 to shore up its finances or to secure another waiver for the $65 million debt it would otherwise have been obligated to repay.
At the time, an analyst told Reuters that the company stood a good chance of securing a waiver as its problems essentially resulted from a technical issue. Roth Capital Partners warned, however, that if SunPower failed to secure a waiver it could face a “cascade” of cash flow challenges, leading to constraints for its dealers.
SunPower – Maxeon
Cash flow
Not long after the warnings were issued about cash flow in US residential solar, negative headlines began appearing.
In February 2024, publicly traded installer Sunworks filed for bankruptcy following a 29.5% decline in quarterly revenues, year on year, for the third quarter of 2023, led by a 44.5% decline in residential PV business. That came after major installer Sunrun had posted a loss of more than $1 billion in the previous quarter.
In April 2024, SunPower announced it would close several business units and cut 1,000 jobs – just over a quarter of its workforce. The company announced plans to wind down its residential solar installation locations and the closure of its direct sales unit. “While we worked hard to avoid this outcome, the market has been slower to recover than we initially expected,” said Tom Werner, principal executive officer. The company said it would still operate its new homes business division.
Further struggles
In June 2024, another major US installer, Titan Solar, said it would close its doors. Founded in 2013 in Arizona, the company was among the largest residential solar installers in the nation, with tens of thousands of installations across 16 states.
Titan Solar had grown quickly through its Solar Dealer program, a network of partnerships with sales organizations that sold Titan services while the company focused on installation. The partnership was based on a pricing model in which Titan charged a fee for completing projects and dealers retained the balance as sales commission.
“Despite these achievements, the company faced criticism over its business practices, workmanship, and customer service, leading to numerous negative reviews and legal disputes,” said Ara Agopian, CEO at residential solar insurance provider Solar Insure. The insurance business said a reliance on third-party dealers for sales created a layer of separation between Titan and its customers, leading to communication gaps and an inconsistent service experience.
Solar Insure said that while Titan’s dealer-network business model was lucrative, it proved to be a double-edged sword. The sales organization dealers’ primary motivation was to maximize their commissions, said Solar Insure, which sometimes led to aggressive sales tactics and overselling of systems without adequate consideration of customer needs.
“This disconnect between sales promises and installation realities further strained Titan’s resources and customer relations,” said Agopian. “As economic conditions tightened and borrowing costs increased, the financial pressure on both Titan and its dealers intensified, exacerbating cash flow issues and operational inefficiencies.”
Final days
By July 2024, SunPower’s share price had suffered a 70% decline as it became clear the business was unlikely to survive. At that time, the company said it would stop countersigning new agreements and would be unable to support installation services for shipments that were in transit or had already been delivered.
On Aug. 6, 2024, the company officially declared bankruptcy. “SunPower has faced a severe liquidity crisis caused by a sharp decline in demand in the solar market and SunPower’s inability to obtain new capital,” said Matthew Henry, SunPower’s chief transformation officer.
The company said it would sell its assets, including installation company Blue Raven Solar and its new homes unit, to Complete Solaria for $45 million. SunPower requested courts approve that deal by late September 2024.
“SunPower’s travails are emphatically a company-specific issue and should not be seen as a comment on the underlying demand for US residential solar,” said Pavel Molchanov, an analyst with financial services provider Raymond James.
Ohm Analytics reports that, industry-wide, the US residential solar market is about 20% down in 2024. For 2025 and 2026, Ohm has forecast modest 5% to 10% growth in the industry, suggesting that US home solar may have already hit the bottom of the most recent dip on the solar coaster.
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Bottom line is that it isn’t viable for the vast majority of consumers anymore. First it was the tariffs on cheap Chinese panels years ago and once again were raised recently. Then it was the buyback costs lowered to wholesale or less even though you would have to pay full price for energy you literally put into the grid when demanded. Oh nevermind that in places that solar would be extremely viable that power companies would now say that the grid didn’t have the capacity thus not allowing new installation.
I understand the need to protect jobs and industry but the problem here is it’s bad for the consumer and in the long run it doesn’t protect jobs or industry in the US that cannot compete with global markets due to the extremely high costs of doing business in the US within certain industries.
Adapt or lose and the government need to stop getting so involved as by the example here shows. It’s great for business on the front end but in the end you are left with nothing.
Very well written. You did your homework. My son lives in Tampa and has been selling SunPower products (through another company that gives him leads) for a couple of years. For him, it’s high risk as he gets paid a smaller portion of his commission after the customer is approved, then the bulk of it upon completion of the job, which can be 4-5 months. And high reward, as he is very good at what he does. He frequently gets a monthly bonus for achieving sales goals, and is the #1 salesperson within his region. This is the perspective from which I read your article.
I can’t give you intricate details, but I know he has had to reconnect with all of his closed but not yet installed customers to ask them to agree to amend their deal. Brutal, but his success rate is ridiculous as his customers love him. If he chooses to persue employment elsewhere, his company has made it clear they will not pay him his pending commissions. How they can legally get away with that blows me away. (I’ve circled back around to high risk). He’s 34, and in a unique way a special needs child. I’m so thankful that he is so successful, but cannot help but worry at the same time due to the insecurities.
Hats off to you for having the ability to write very well and proofread very well. So many articles written today are not even fourth grade quality grammer, and proofreading is virtually non existent.
Sincerely,
Patrick Alpert
Expect more negatives for the solar industry as the federal government goes crazy with tariffs on the best and very attractively priced panels, inverters, and now batteries. We are already paying four times the global market price for solar panels $.40/w, Sungold power, $.10/w on Alibaba. A lesser product for a much higher price, that is our future.
Why are the solar panel companies going bankrupt? The sales tactics the salesman are using is based on lies and deceitfulness. When my salesman sold me the system they told me I would receive a 30 percent rebate from the government for 19 thousand dollars. I could use that to put down on my contract with the finance company in one year. My tax man and CPA told me that was a lie. Now I’m still on the hook for paying the 19 k dollars out of my pocket or pay the higher interest rate. It’s a con job and a scam racket. Now I love my solar panel array and it did reduce my electric bill as promised . But the cost is not affordable. I should have just paid my electric bill. People eventually wake up and find this scam when it’s to late. Word of mouth can do far more damage than the lies and excuses printed on paper by the news media. If it takes lieing and cheating to make sales, it’s not worth it.
Exactly what happened to me . Lies and more lies. Huge scam !! Glad you bring it up. For a lot of people it’s too late and you pay for it. I’m a victem too. Shame on all those people involved that screwed us over.
Hmmm… seems like you haven’t heard of the IRS residential solar tax credit. It was updated two years ago via the Inflation Reduction Act. Or, you have not or will not pay IRS taxes since your solar array was put into service.
If your CPA was actually any good he or she would have TOLD you this and provided you the form. Easy Peasy. But, yes, although there’s no such thing as a rebate, there is, based on the dollar amount you said, a $19k TAX CREDIT available to you.
So, unless you have NO FEDERAL TAXES TO PAY, it seems like you’ve unwittingly scammed yourself! You have five years in which to claim the Tax Credit post installation. When you get it (if you qualify per tax requirements) you apply that to the solar loan. Otherwise, your monthly payment goes up by… 30%.
PS… I’m not saying you weren’t lied to, but if you’re paying taxes this EASILY FIXED.
Same here . . . however, I’m still waiting to pay the 30% tax rebate. Question is, should I at this point? I assume that, if I don’t, my loan will get auto-refinanced in January 2025 and I’ll be forced to make a higher monthly payment. So, I am leaning toward doing what I agreed to do in the first place. At least my conscience is clean.
I thought biden’s incentives were supposed to be for helping US businesses to expand operations by providing help to build up the industrial capacity needed to actually compete with China.
Since it didn’t work, both Trump and Biden should NOT put tariffs on Chinese PV. Maybe we should instead become the big battery capital of the world (and that’s demanding since China is kicking butt with that, too).
Please folks stop asking for cheap Chinese products. If you think we have problems now, you just don’t know what it will be like to live under a Chinese dominated system. Trust me I’ve lived in China and it sucks- the West is trading our freedom and values for cheap threads on shein… sad
Would be awesome if Elon Musk purchased Sunpower for pennies on the dollar! Then offered existing customers Battery backup for their existing systems. Might be a win-win for customers & Tesla wall!
You are a genius! Great idea.
It’s grid tied that is THE problem.
1) grid tie goes down when the grid goes down.
2) grid tie does not provide power from your system at night.
3) I was quoted >$70k for a grid tie system and a 30 year note.
I did an off grid with batteries that allows me to completely disconnect from the grid, supplies me with 100% of my power day and night and I gave up nothing like some say you have to.
Price for my off grid … just under $30,000.00!
Half the price of a grid tied option which completely eliminates a >$300.00/month bill which can ROI in <8 years.
I never have to worry about a blackout or weather related issues!
I have a broke down Sunpower leased system that I can’t get service due to the bankruptcy. They don’t answer anymore on their chat line, I filed a case number a few days before everything went south. Don’t know if I should keep paying my lease. Half the worth was maintenance and warranty. what do I do?
I worked with industrial solar at remote locations. It was economically feasible. Most current activity runs on subsidies and happy thoughts as much as it runs on the sun. The problem is that eventually, you run out of other people’s money.
Good reply! Spot on!
Is not the civil law of the USA providing protection when there is any contract containing lies or any cheating or missing advice of possible financial problems ? In Germany the civil protection law actually learned from the USA how to protect the people when produced items proved having mistakes or even caused damage or If advice was not complete.