Solar sector braces for rising bankruptcies in 2025
In a sobering statement to business magazine 'Capital', Peter Knuth, Chairman of the Federal Association of the Solar Crafts (BDSH), has expressed little hope for the stabilization of the solar industry's current decline in demand. Knuth, who is also the CEO of Enerix, represents installation companies in the solar industry.
The slowing expansion in the solar industry has raised concerns about more company bankruptcies, as the market braces for a year of consolidation in 2025. The BDSH anticipates that this trend will continue, with weaker players being forced out due to financial pressures and policy uncertainties.
High debt and interest costs, declining sales, adverse policy and tariff impacts, overproduction and pricing pressures, and financial restructuring and asset sales are some of the key factors driving this trend. Companies like Sunnova, for example, have carried over $10.6 billion in debt, making debt service costly and unsustainable.
The decline in solar capacity connection, particularly in residential rooftop systems, is a stark reflection of this trend. In the first half of 2025, around 7.1 gigawatts of solar capacity were connected to the grid, which is almost 15 percent less than the previous year.
The solar industry's demand for photovoltaics has significantly decreased, partly due to reduced tax incentives and increased financing costs. This has hit industry revenues, as seen with Solar Mosaic and others. Shifting U.S. trade policies, including tariffs under the Trump administration, have created uncertainty, discouraging investment and expansion. Similarly, California's new net metering rules under NEM 3.0 have drastically reduced system economics, causing an 80% plunge in rooftop solar installations and numerous bankruptcies in the state.
Global overproduction, especially from polysilicon and module manufacturers, has led to oversupply and depressed prices, creating margin pressure. While some production cuts have started in 2025, inventories remain high, sustaining downward pricing pressure and profitability challenges. Large firms like Sunnova have resorted to Chapter 11 bankruptcy and asset sales to manage debt and preserve operations under new ownership.
Since 2024, over 100 U.S. solar companies have declared bankruptcy, with more expected as federal and state subsidies contract and market realities reset after an artificial boom driven by earlier supportive policies such as the Inflation Reduction Act of 2022. Knuth warns that providers who fail to quickly adapt their cost structures to the new market reality will likely disappear.
The electricity price shock from the Ukraine war in 2022 led to a boom in solar systems and attracted new providers. However, the subsequent decline in demand has left many companies struggling. Knuth stated that selling photovoltaic systems alone is no longer enough for many companies, suggesting a shift towards diversification.
In summary, 2025 is expected to be a year of industry shakeout due to financial strain, regulatory shifts, and supply-demand imbalances that cause bankruptcies and consolidation in the solar sector. As weaker players exit and stronger firms reorganize or acquire assets, the solar industry will likely undergo significant changes in the coming year.
Environmental-science graduates may find opportunities in the solar industry's financial sector, as companies confront ongoing financial pressures and the potential for consolidation in 2025. Despite the decline in solar capacity connection and the increasing number of bankruptcies, science and finance graduates could contribute to the industry's resilience and adaptation to the new market reality, as predicted by Peter Knuth.
