Sunnova Slashes Over Half its Workforce, Lays Off 718 Employees in Major Shake-Up

In an attempt to cut expenses while one of its companies declares bankruptcy, Sunnova Energy has let go of 718 workers, or around 55% of its workforce. In a filing on 5 June's afternoon, Sunnova informed federal regulators that its wholly owned subsidiary, Sunnova TEP Developer LLC, had declared Chapter 11 bankruptcy on 8 June.

Companies that file for Chapter 11 bankruptcy have the opportunity to restructure their finances and continue operating. In its notice to the Securities and Exchange Commission, Sunnova stated that the bankruptcy filing "is not expected to have a material effect on our servicing operations for existing customers."

Sunnova, once a symbol of Houston's transformation from the oil-and-gas city to the energy transition capital more generally, has seen a sharp decline in popularity, which is reflected in the enormous layoffs and bankruptcy filing.

The company's headquarters in Houston is also home to a large number of Sunnova's staff. Since the start of the year, Sunnova has lost about 1,000 workers, including the over 300 workers it let go in February.

Inimical Environment for Sunnova

In March, Sunnova issued a warning to investors that there was "substantial doubt" that the company would be able to avoid going bankrupt the following year. John Berger, the company's original CEO, left a week later.

 Since then, Sunnova has been "working diligently" to obtain funding, the company wrote in a May 30 letter to the Texas Workforce Commission. However, "after extensive negotiations", it has yet to get sufficient investor backing to prevent the mass layoffs.

According to Sunnova's worker adjustment and retraining notification, some of its investors have "unexpectedly shut off access" to more loans, which "in turn prevents the continued origination of new solar systems and the completion of existing solar systems."

The self-described "faltering company" claimed in the notification that Sunnova's financial situation was further limited by its incapacity to finish current solar installations.

On May 30, the same day Sunnova delivered its letter to the Texas Workforce Commission, the mass layoffs went into effect. The letter stated that the company's "unforeseeable business circumstances" prevented it from informing the state agency sooner.

According to Sunnova, the entire renewables business was shaken by an abrupt, unexpected, and difficult macroeconomic environment.

Lack of Strong Support and High Interest Rates Choking the Business Operations

High borrowing rates and diminished state subsidy programs have hampered Sunnova, as they have hurt other residential solar enterprises. These factors make rooftop solar technology more costly for prospective buyers.

Additionally, the US Senate is considering whether to remove federal tax subsidies for home solar systems as part of President Donald Trump's "big, beautiful bill." The cost of the technology would increase if those tax benefits stopped.

Sunnova claims that it was the driving force behind the Department of Energy's recent decision to revoke the majority of its $3 billion loan guarantee. The money would have been used to support Sunnova's now-canceled initiative to increase solar access for Puerto Ricans, low-income individuals, and those with poorer credit ratings.

Due to its $1.9 billion in debt that must be paid off in full by the end of 2028, Sunnova is particularly susceptible to these issues facing the industry.