US solar firms haemorrhage cash, despite boosted demand

The US home solar business is growing fast, as tens of thousands of homeowners install panels on their roofs to save money. Installations went up by 17% last year and, even before President Biden’s ambitious climate change programme is implemented, is reckoned to grow by 15.4 GW in new capacity during 2021.

Yet the biggest companies that install and finance home solar systems are reporting hundreds of millions of dollars in losses. An ominous reminder of how hard it can be to make money even in an industry widely viewed by political leaders, and by business executives, as an important component of the global effort to address climate change.

“There have been very few financial success stories,” said Vikram Aggarwal, chief executive of Energy Sage, which helps consumers compare solar installers. “Practically everyone who has tried this has failed. The road is littered with dead bodies.”

SunRun and Sunnova are two of the biggest home solar companies. Between them, they lost around $500 million in the first nine months of the financial year, and their operations and component purchases used up some $1.3 billion in cash. The companies argue that these losses are occurring because solar installations are “growing rapidly and require a lot of upfront investments”. 

On the flip side, investors in these companies get to use the losses in order to offset their tax liabilities. What a curious financial world we do live in.