Sunnova warns of dwindling cash amid rooftop-solar woes

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.”