Sunpower declares bankruptcy: Reasons and consequences

Leading US solar company, SunPower, announced filing for Chapter 11 bankruptcy on August 5, sending shockwaves through the industry. Why this happened and what is known so far – let’s go through in detail.

Why SunPower declared bankruptcy

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SunPower cited a “severe liquidity crisis” as the primary reason for filing for bankruptcy. The company struggled with high debt levels exceeding $2 billion while rising inflation and interest rates cooled demand for residential solar panels. This pushed the company to take on hundreds of millions in additional debt in late 2023 and early 2024 as bridge financing.

Yet the delays in filing financial statements caused by errors in previous reports hindered SunPower from raising additional financing in spring 2024. Now the company has agreed to sell its Blue Raven and New Homes business units and a portion of its dealer network for $45 million to Complete Solaria as a “stalking horse” bidder to settle its outstanding debts.

The stalking-horse principle means that the Complete Solaria deal will be considered the initial lowest bid and the company’s assets can be sold to another company if it offers a higher price. SunPower plans to select the successful bidder by September 10.

What happens to SunPower customers

The fate of warranties for existing SunPower systems is a top priority for customers. While bankruptcy proceedings are complex, a new owner will likely assume responsibility for warranty obligations. However, the specific terms and conditions may change. While the situation is still unfolding, it’s crucial to understand the status quo.

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Existing installations are expected to continue operating normally. Though SunPower is currently unable to offer maintenance services, they are working on a service provider agreement. All updates on manufacturer warranties will be posted on SunPower.com. Customers with questions can reach out to SunPower’s Customer Care team at 1-800-SUNPOWER.

Who else went bankrupt in solar industry in 2023/2024

SunPower isn’t the only solar company facing financial difficulties. The solar industry has experienced a wave of bankruptcies in recent years.

• Pink Energy, once a prominent residential solar installer, filed for bankruptcy in October 2022 amid more than 30,000 complaints of faulty systems. The company’s aggressive sales tactics, coupled with subpar installation quality and financing issues, contributed to its downfall.

• ADT, known for its home security systems, acquired Sunpro Solar in 2021 and expanded its solar network to 22 states. In January 2024, just a few years later, it jumped off the solar bandwagon, citing poor financial performance.

• Titan Solar, which had installed tens of thousands of residential solar installations in 16 states, abruptly closed its doors in June 2024 after failing to secure a buyer. Because of the company’s vast dealer network, customers complained about delays and miscommunication. This caused criticism over the company’s business practices, workmanship, and customer service, leading to numerous negative reviews, legal disputes, and ultimately bankruptcy.

What does SunPower’s bankruptcy mean for industry

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SunPower had some of the most expensive panels on the market, in line with LG and Panasonic, both of which had stopped solar panel manufacturing in 2022. Demand for premium products has never been high, and amid rising inflation, climbing interest rates and fierce competition from Chinese brands with much cheaper panels, some American solar businesses are having a tough time.

Despite all that, the US solar market is thriving. With nearly 10 gigawatts of utility solar installed in the first quarter of 2024, solar is rapidly becoming the dominant source of new electricity generation in the country. While the residential market faces challenges due to high interest rates, it’s expected to gradually recover, with a projected growth of 5-10% in 2025. Experts anticipate sustained growth in the solar sector over the next five years.

Julia Zaraeva

Author

Years of experience in translation and a love of nature help Julia find the right words to encourage going solar. She joined the team in 2023 and is happy to make her contribution to a greener future.

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