Sunnova and Mosaic bankruptcies highlight deepening rooftop solar woes

These mounting pressures have driven two of the most prominent firms in the U.S. residential solar sector into bankruptcy in recent days.

Privately held solar lender Solar Mosaic filed for Chapter 11 bankruptcy protection on Friday, stating it has taken action to ​“reorganize the business to meet its current liquidity needs.” The Oakland, California-based company, which claims it has funded $15 billion in loans to more than 500,000 households, cited “[m]acroeconomic challenges facing the entire residential solar industry, including high interest rates and legislation that threatens to eliminate tax credits for residential solar.”

Those two companies have unique problems that have contributed to their financial collapse, said Joe Osha, an analyst at Guggenheim Securities. ​“The causes of the difficulties that Mosaic and Sunnova face predate Trump,” he said.

But they also suffered from a market environment that is increasingly difficult and uncertain for every firm in the sector, he said.

The reconciliation bill passed by the House of Representatives last month and now being considered in the Senate would abruptly end a tax-credit regime that’s supported households and solar installers for the past 20 years.

The bill would terminate the 30% tax credit available to households installing solar panels, batteries, inverters, and associated solar equipment at the end of 2025, essentially making those installations about one-third more expensive than they are today.

Singling out Sunnova and Mosaic’s challenges

That bill hasn’t been passed yet, however. Osha warned that it’s too early to extrapolate broader implications for the industry at large from these latest bankruptcies.

That’s because both Mosaic and Sunnova have fallen prey not only to challenging business conditions, but to mistakes in how they’ve reacted to the sector’s ongoing woes, he said.

“The way this business works, at the most basic level, is that you spend money now to create a long stream of contracted cash flows in the future,” Osha said. In the case of solar companies like Sunnova and Mosaic, those cash flows come from households making payments on the loans, leases, or power purchase agreements they’ve signed. The companies bundle those into asset-backed securities for sale to investment banks and other financial firms.

But those securities become far less attractive to buyers when the market for residential solar sours — and in the past year it has soured dramatically. Wood Mackenzie reported a 31% drop in U.S. residential solar installations in 2024 from the prior year.

The Solar Energy Industries Association reported in March that last year’s sales hit a low not seen since 2021. The trade group’s latest data, released this week, shows that ​“we have now had six consecutive quarters of year-over-year decline in residential solar installations,” Pavel Molchanov, investment strategy analyst at financial services firm Raymond James, pointed out. That includes a 13% year-over-year decline in the first quarter of 2025.

“In any industry, six consecutive down quarters is going to lead to pressure on companies across the board,” he said. ​“There’s just no escaping that.”

This downturn left Sunnova and Mosaic exposed to a cash crunch, Osha said.

Over the past 18 months or so, Sunnova had chosen to take on large amounts of corporate debt rather than selling off more of its portfolio to raise cash, he explained. As the market turned, finding buyers for those solar-backed assets became harder, making it difficult to raise cash to meet debt payments. The firm listed estimated assets and liabilities of $10 billion to $50 billion and debt of $10.67 billion as of Dec. 31.