Fueling The Conversation, Week of June 23rd, 2025
While the House version of the One Big Beautiful Bill Act did a great job at eliminating many of the Inflation Reduction Act’s (IRA) tax credits for green technologies, the end result remains up in the air as Senate Democrats and some Republicans, like Senators Thom Tillis, John Curtis, and Lisa Murkowski, are hoping to preserve many of them.
Proponents of IRA subsidies often claim that dolling out billions of dollars to green industries is worthwhile because they inevitably result in reductions in cost and emissions. These talking points are backed by misleading studies — such as the myth that solar is the cheapest energy source based on its levelized cost of energy — and are then parrotted by the media and politicians, who accept them at face value because they align with their preferred narrative. But when the rubber meets the road, the high costs and consequences of what President Trump calls the “Green New Scam,” are proven time and again. The latest example – the bankruptcy of Sunnova Energy.
Sunnova, a residential rooftop solar company, filed for bankruptcy on June 9 due to growing debt and weakening demand. According to Reuters, it’s the second residential solar company to file for bankruptcy this month. In 2023, the company received a $3 billion partial loan guarantee from the Department of Energy to make “distributed energy resources — including residential rooftop solar, battery storage, and virtual power plant-ready, consumer-facing software — available to more American homeowners.”
The Trump administration canceled this loan guarantee just a few weeks before Sunnova declared bankruptcy as the company was moving on to more profitable ventures (which involved relying on IRA tax credits). The company also faced congressional scrutiny for its alleged history of predatory practices and scamming elderly clients.
Sunnova’s failings as a company should not be analyzed as an isolated case of poor management. Instead, it is representative of the broader problems of subsidy-driven markets. Rooftop solar has been promoted as a cost-effective energy alternative that increases grid resilience and reliability, but these supposed benefits don’t hold up to the facts. Because many utilities pay residential solar power generators the full retail rate for electricity generation, they end up paying two to six times the market price for energy, which non-solar customers are forced to subsidize in many states due to net-metering policies. If these households were to rely on electricity coming from the grid, these costs would be reduced because they would be utilizing already existing transmission lines and generating capacity instead of building new infrastructure. Building redundant generation has always been inefficient. As IER’s Robert L. Bradley Jr. argues, “From the time of Thomas Edison to the present, economies of scale in electrical generation, transmission, and usage has resulted in central station service. … Battery storage to decouple instantaneous production/consumption has always been prohibitively expensive.”
Sunnova is not merely a failed solar company, it is the embodiment of what happens when ideology overrides economic reality, and when the government attempts to bend markets to its will. Its collapse was not a fluke, but a flashing red warning light to lawmakers who continue to cling to the fiction that subsidies can conjure sustainable industries out of thin air. Rooftop solar may glitter with promise in glossy reports and political speeches, but behind the curtain lies a system riddled with inefficiencies, hidden costs, and technical liabilities that burden both the grid and the average consumer.
The Senate now stands at a crossroads: heed the hard truth revealed by cases like Sunnova, or continue down the path of wishful thinking propped up by taxpayer dollars. The failure of subsidy-backed solar is not a policy hiccup, it is a systemic indictment of the green-industrial complex. If Senators truly wish to serve the public good, they must reject the mirage of costless green energy and restore a commitment to sound economics, technological realism, and market discipline.
Let Sunnova’s downfall not just be another headline. Let it be a moment policymakers wake up and step back from policies that will devolve energy markets into a rent-seeking nightmare. The time is now to end the IRA’s misguided regime of political favoritism and restore America’s abundant energy future.
__________________
Fueling the Conversation, a weekly column by IER President Tom Pyle, offers a principled take on energy events. Energy underpins all aspects of modern life, so policies that artificially limit production hurt everyday people paying to heat their homes and driving to work. “Green” groups push these policies for idealogical reasons, but this column uses economic logic and hard facts to advocate for energy freedom.
