Sunpower Corp. Declares Bankruptcy, Leaving Questions on the Future of Financing

On August 5th, 2024, SunPower Corporation announced it had filed a Chapter 11 bankruptcy petition in the District Court of Delaware, which included nine of its affiliates. The announcement came just 19 days after the company stopped supporting all lease and power purchase agreements (PPAs) and 103 days after it announced massive layoffs and the end of its direct installation business.

The bankruptcy filing marks what could be the beginning of the end for the nearly 40-year-old company, which was once one of the nation’s largest solar providers. At the end of 2023, SunPower had installed nearly 586,000 solar systems. All of those customers are now left with questions about the future of their SunPower systems’ operations, financial agreements, and warranty coverage.

Many have pointed to interest rates and net metering changes in California as concerns for solar installers in the wake of the SunPower news. However, SunPowers' bankruptcy leaves us with an even bigger question, especially if the remaining solar giants meet the same fate: How could this impact the future of solar financing?

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Preliminary details of the bankruptcy filing

The first thing to know about the SunPower bankruptcy is that it’s a Chapter 11 (or reorganization) bankruptcy, which is quite different from a Chapter 7 (or liquidation) bankruptcy. Filing under Chapter 11 means that the company hopes to restructure and sell off certain assets to pay its debts while continuing to operate certain portions of its business. It’s unclear whether SunPower will seek to retain and restructure any of its business assets.

As part of the reorganization, SunPower entered into an Asset Purchase Agreement (APA) with Complete Solaria, a residential solar EPC (engineering, procurement, and construction) company based in California. The agreement positions Complete Solaria as the “Stalking Horse Buyer” for three of SunPower’s assets: Blue Raven Solar, the New Homes business, and SunPower’s “non-installing Dealer network” (i.e., sales organizations that sell SunPower products installed by others). 

The price of Complete Solaria’s bid for these assets (and the liabilities associated with them) is $45 million, but there is no guarantee that will be the final sale price. As a “Stalking Horse,” Complete Solaria is the first bidder on the assets in question, and the $45M offer is the lowest price. Other groups will be able to submit bids during the bankruptcy process. 

SunPower acquired Blue Raven in 2021 for $145 million in cash, meaning the $45 million lowest bid would be a shocking decrease in the company's value. SunPower also plans to sell other assets during the bankruptcy process. 

For Complete Solaria, the SunPower asset purchase would be its second major acquisition of the year, following its purchase of Core Energy in July. A Complete Solaria news release details the company’s plan to combine the teams from Complete Solaria, Core, and Blue Raven into “a new company” that it says will “become a cost-competitive solar powerhouse.”

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SunPower’s fate gives a glimpse into financing’s future

Residential solar industry veteran and SolarReviews CEO Andrew Sendy commented on the SunPower news: “The events of the last few months raise two issues, both very troubling for the residential solar industry. First, will other solar leasing providers still be able to get financing for their lease receivables? Second, will this turmoil in the industry lead financiers to reprice the risk associated with solar lease receivables? This latter point troubles me more.”

The downfall of SunPower paints an interesting picture of what’s to come for the industry. SunPower isn’t the first large solar provider to fold, and it might not be the last; both ADT Solar and Titan Solar met a similar end, and we have yet to see if large companies like Sunnova and Sunrun will stand the test of time. 

While the closure of these nationwide players suggests that small and mid-sized local solar companies are better suited to weather the industry’s current storm, there may be some overlooked consequences. Companies like SunPower and Sunnova not only offer installation services but are also huge solar financing providers. If Sunnova were to follow in SunPower’s footsteps, solar financing choices would severely diminish, and available options could become pricier if financiers reevaluate the risks of third-party solar agreements.

Even before the bankruptcy filing, SunPower ceased solar lease and PPA offerings, creating problems that reverberated through the industry. The effects trickled down to dealers and installers like Renova Energy, a major SunPower partner that services the Nevada and California markets and maintains an excellent 4.9-star rating on SolarReviews. 

When SunPower suspended leases and PPAs, Renovas Founder and CEO Vincent Battaglia made the difficult decision to temporarily suspend operations and furlough hundreds of company employees while leadership forged new financing partnerships. While Battaglia announced that the company planned to return to full operation by mid-August 2024, other companies that rely on these financing partners may not bounce back as easily. 

The prospect of reduced financing options is especially troubling now, as leases and PPAs have kept solar installations accessible during periods of high interest rates and tough economic times. While interest rates have begun to drop, people are still hesitant to open new lines of debt or shell out thousands of dollars upfront. 

It may not all be doom and gloom. It will take time for the SunPower bankruptcy to shake out, and things will continue to evolve as the company’s assets are sold and reallocated. Also, despite the industry’s rocky waters, Sunnova outperformed loss expectations in Q2, with CEO John Berger saying, “When coupled with a rapid increase in customers favoring leases and power purchase agreements over loans, these dynamics result in an even greater value proposition for customers and a 'value wedge' for Sunnova,” during the Q2 earnings release.

We at SolarReviews will continue to monitor the situation with SunPower’s bankruptcy and keep our online resources up to date so that homeowners know the latest details and where they can go to get service and support for their SunPower systems.