America's residential solar industry continues bleeding out. Over 100 companies filed for bankruptcy or shut down in the past two years—including giants like SunPower and Sunnova, and most recently PosiGen in November 2025—wiped out by interest rate spikes, California's gutting of rooftop solar incentives, and Chinese manufacturers flooding the market with panels at 40% below US production costs. The carnage left 17,000+ workers jobless and thousands of homeowners stuck with orphaned systems. Nearly a month after Otovo's January 8 entry into California, analysts' projections of 13-25% residential installation drops in 2026 appear on track as the customer-owned solar tax credit expired at the end of 2025.
America's residential solar industry continues bleeding out. Over 100 companies filed for bankruptcy or shut down in the past two years—including giants like SunPower and Sunnova, and most recently PosiGen in November 2025—wiped out by interest rate spikes, California's gutting of rooftop solar incentives, and Chinese manufacturers flooding the market with panels at 40% below US production costs. The carnage left 17,000+ workers jobless and thousands of homeowners stuck with orphaned systems. Nearly a month after Otovo's January 8 entry into California, analysts' projections of 13-25% residential installation drops in 2026 appear on track as the customer-owned solar tax credit expired at the end of 2025.
Scavengers continue picking through the wreckage. On February 4, 2026, Otovo expanded beyond residential by acquiring service rights to Freedom Power's 70 MW commercial solar portfolio across 400+ systems, signaling service models' pivot to commercial revenue amid evaporating residential installations. Well-capitalized survivors like Otovo buy customer bases for pennies while Sunrun—the sole major installer still standing with 21% market share—positions itself to absorb more failures through battery storage growth. The question remains: who'll be left standing when the shakeout ends.
Otovo enters US commercial solar services by acquiring warranty and maintenance rights for 400+ systems totaling 70 MW capacity. Deal expected accretive to 2026 net income.
Otovo Acquires Solar Service Professionals
M&A
Norwegian firm enters California with 38,000-customer service base, expects deal accretive to 2026 net income.
Otovo Acquires Soly's 24,000 Customers
M&A
Dutch solar provider's customers and assets acquired as European expansion continues.
Analysts Project 13-25% Installation Drop in 2026
Forecast
SEIA and Ohm Analytics project residential solar installations will decline 13-25% in 2026 after customer-owned ITC expires December 2025.
PosiGen Files Liquidation Plan
Bankruptcy
Bankrupt solar installer files combined disclosure statement and joint plan of liquidation. Lenders agree to $41M DIP financing for asset sale.
Otovo Completes US-Europe Merger
M&A
Norwegian parent and US startup merge, creating global home energy service provider.
PosiGen Files Chapter 11 Bankruptcy
Bankruptcy
New Orleans-based installer serving 40,000 low-income customers files bankruptcy after rapid expansion strained liquidity. 500 employees affected.
California Supreme Court Orders NEM 3.0 Reconsideration
Policy
State supreme court sides with environmental groups, ordering lower court to reconsider NEM 3.0 policy. Outcome could reshape solar compensation.
John Berger Launches Otovo USA
Launch
Sunnova founder returns with AI-driven service model, $4M+ seed funding. Pivots from installation to maintenance.
Sunnova Files Bankruptcy with $8.5B Debt
Bankruptcy
One of largest US clean energy failures. Company plans to lay off 55% of workforce.
Solar Mosaic Files Chapter 11
Bankruptcy
Solar lender collapsed after failing to secure financing, halting all new loans.
John Berger Resigns as Sunnova CEO
Leadership
Founder steps down three months before bankruptcy as financial crisis intensifies.
SunPower Files Chapter 11 with $2B Debt
Bankruptcy
40-year solar pioneer collapses after disclosing past financials unreliable. Stock down 98% from peak.
Ernst & Young Resigns as SunPower Auditor
Investigation
Accounting scandal deepens as auditor abandons 40-year-old solar company.
Titan Solar Files Chapter 7 Bankruptcy
Bankruptcy
Top US residential installer collapsed, one of first major failures in consolidation wave.
California Implements NEM 3.0
Policy
New net metering rules cut rooftop solar export rates by 75%, triggering 80% volume decline.
Sunrun Acquires Vivint Solar for $3.2B
M&A
Largest residential solar consolidation in history. Combined company controlled 500,000+ customers and 3 GW capacity.
Discussed by: McKinsey, Wood Mackenzie energy analysts, solar industry trade press
New installation volume stays depressed through 2027 as high rates and weak incentives persist. The 4+ million existing US solar systems become the primary revenue source, with maintenance subscriptions ($150-300/year per customer) generating higher margins and valuation multiples than risky installation sales. Companies like Otovo systematically acquire orphaned customer bases from bankruptcies, converting one-time buyers into recurring subscribers. Traditional installer-financiers either pivot to service or exit. By 2028, the top three service providers control 40%+ of the installed base—essentially oligopoly. Total industry employment shrinks 30% from 2023 peak as service requires fewer workers than installation.
2
Policy Reversal Sparks Installation Recovery
Discussed by: SEIA (Solar Energy Industries Association), state renewable energy advocates
Federal or state governments restore stronger solar incentives by 2027—potentially reversing California's NEM 3.0 cuts or expanding the 30% ITC beyond 2032. Interest rates drop below 4% as Fed cuts continue. Installation demand rebounds 50%+ from 2025 lows, validating survivors like Sunrun who maintained capacity through the downturn. However, the shakeout permanently reduced installer competition, so pricing power shifts to the consolidated survivors who can charge higher margins. Homeowners pay 15-20% more per watt than pre-crisis levels despite rebounding demand. Failed companies' customers remain stranded with service-only providers.
3
Chinese Manufacturers Vertically Integrate into US Service
Discussed by: Bloomberg Energy, trade policy analysts, anti-China hawks in Congress
Chinese solar manufacturers—already dominating panel production at 40% below US costs—begin acquiring bankrupt US installers and service providers to control the full value chain. Vertical integration lets them subsidize US operations with manufacturing profits, undercutting independent service firms. Congress considers blocking Chinese ownership of US residential energy assets on national security grounds, sparking trade war escalation. If restrictions pass, Chinese firms partner with US financial sponsors as fronts. Either way, margin compression intensifies as Chinese-backed service providers wage price wars. Independent operators like Otovo face a second existential threat after surviving the installer shakeout.
4
ITC Expiration Triggers Second Wave of Bankruptcies
Discussed by: SEIA, Ohm Analytics, Raymond James analysts
The Section 25D ITC for customer-owned solar expires December 31, 2025, eliminating the 30% tax credit that made cash and loan purchases viable for nearly half of residential customers. Analysts project 13-25% installation declines in 2026 as this segment collapses. Mid-tier installers who relied on cash/loan sales—lacking the scale to offer competitive third-party ownership like Sunrun—face a second bankruptcy wave in Q1-Q2 2026. Companies with 2,000-10,000 customers and <$50M revenue become acquisition targets for service-focused buyers like Otovo. By end of 2026, the market bifurcates completely: Sunrun dominates installation via TPO leases (still ITC-eligible), while service specialists like Otovo control the orphaned customer maintenance market. Installation employment drops another 25% as cash/loan channels evaporate.
5
California Reverses NEM 3.0, Sparking Market Recovery
Discussed by: Environmental groups, California Supreme Court proceedings, solar industry advocates
The California Supreme Court's order to reconsider NEM 3.0 leads to partial restoration of rooftop solar export credits by late 2026 or early 2027. The court finds the CPUC's 75% rate cut violated environmental law or failed to properly consider solar's grid benefits. A revised NEM 3.5 policy raises compensation 30-40% above current levels—not back to NEM 2.0 rates, but enough to revive installation economics. California installations rebound 50%+ in 2027, validating survivors who maintained installation capacity. However, the two-year NEM 3.0 depression permanently destroyed competition. Sunrun and 2-3 other survivors exploit oligopoly pricing power, charging homeowners 20% more per watt than pre-crisis despite improved policy. The reversal saves the California market but consolidates it permanently.
Historical Context
Sunrun Acquires Vivint Solar (2020)
2020
What Happened
In October 2020, Sunrun completed a $3.2 billion acquisition of Vivint Solar, the second-largest US residential solar installer. The all-stock deal nearly doubled Sunrun's market share, creating a company with 500,000+ customers and 3 GW of capacity—the largest residential solar provider in America. At the time, both companies were profitable and analysts framed consolidation as a growth strategy to achieve economies of scale.
Outcome
Short Term
Sunrun achieved $90M in annual cost synergies and cemented market leadership.
Long Term
The deal set precedent for M&A as the industry's primary growth strategy, foreshadowing today's distressed acquisitions.
Why It's Relevant Today
The Sunrun-Vivint deal was consolidation from strength—combining two healthy firms. Today's wave involves scavengers picking through bankruptcy wreckage. Otovo's SSP acquisition represents the new reality: buying customers, not capabilities.
US Telecom Industry Shakeout (1999-2002)
1999-2002
What Happened
After the Telecom Act of 1996 sparked an infrastructure boom, over 500 competitive local exchange carriers (CLECs) launched to compete with incumbents. When the dot-com bubble burst and capital dried up, 200+ telecoms filed bankruptcy between 1999-2002—including major players like WorldCom ($104B debt) and Global Crossing. Survivors acquired assets for cents on the dollar.
Outcome
Short Term
Massive job losses (500,000+ telecom jobs eliminated), stranded customers, and destroyed equity.
Long Term
Industry consolidated into oligopoly dominated by AT&T, Verizon, and regional players. Infrastructure survived but competition permanently decreased.
Why It's Relevant Today
Solar's consolidation follows the telecom playbook: debt-fueled growth during easy money, mass failures when capital tightens, acquisition of distressed assets by capitalized survivors. The 100+ solar bankruptcies echo telecom's 200+ failures—both born from overleveraged expansion.
California Energy Crisis (2000-2001)
2000-2001
What Happened
California's electricity deregulation combined with price caps created market manipulation opportunities. Energy companies like Enron gamed the system, causing rolling blackouts and bankrupting utility Pacific Gas & Electric. The crisis exposed how flawed policy design could destroy functioning markets. Notably, John Berger worked at Enron's fuel cell division during this period before leaving in August 2001.
Outcome
Short Term
Rolling blackouts across California, PG&E bankruptcy, $40+ billion in economic damage.
Long Term
California partially re-regulated electricity markets and maintained price controls that persist today.
Why It's Relevant Today
Today's solar crisis stems partly from California policy—NEM 3.0's 75% rate cut mirrors how price caps destabilized electricity markets in 2000-01. The state's tendency toward aggressive intervention backfired twice in 25 years. Berger's presence at Enron during that crisis makes his return to solar service amid another California-triggered collapse darkly symmetrical.
