As the coronavirus pandemic shutters large parts of the country's economy, four of the top U.S. rooftop solar companies face nearly $1.3 billion in payment obligations in 2020, a sum that exceeds the cash and equivalents the group held entering the year.

The $1.27 billion in obligations listed in annual reports by SunPower Corp., Sunrun Inc., Vivint Solar Inc. and Sunnova Energy International Inc. range from leasing payments to inventory and equipment purchases and include approximately $565.4 million in debt-related expenses. The companies, each of which reported operating losses in 2019, finished 2019 with a combined $1.1 billion in cash and equivalents.

Now they are confronting a sharp dropoff in demand as governments move to contain the novel coronavirus, as well as the prospect of an extended downturn that could cut off the flow of third-party financing that the companies rely on to fund their growth.

Philip Shen, an analyst at Roth Capital Partners LLC, said in a recent report that demand in the residential solar sector "could be meaningfully impacted to the downside" by the coronavirus, with a "very weak" second quarter potentially followed by a third-quarter recovery.

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Citing market uncertainty, SunPower, which is majority-owned by French energy giant Total SA, withdrew 2020 financial guidance on March 25 and said it will cut costs by up to $50 million this year as it tries to complete the spin-off of an international manufacturing business.

The company reported contractual obligations totaling $695.7 million due in 2020, including more than $500 million in materials purchases and $137.5 million in debt-related expenses. SunPower finished 2019 with $423 million in cash and equivalents and a $55 million revolving line of credit.

SunPower did not respond to a message seeking comment. It recently said it believes it has enough cash and equivalents to meet its obligations for a year.

'Still getting things done'

On March 31, a subsidiary of Sunnova increased the size of a credit facility by $200 million to $400 million, while another subsidiary was able to raise the advance rate on certain loans.

"We're still getting things done, we're still seeing things moving in capital markets," Sunnova Chairman, President and CEO John Berger said in an April 1 interview.

Sunnova reported 2020 contractual obligations of $202.5 million, including $170.3 million in debt-related expenses, compared to $150.3 million in cash and restricted cash.

"We are in a better position than most," Berger said. He pointed to the company's decision to retain long-term cash flows from customer contracts, rather than sell them to investors, as a source of financial strength.

Vivint Solar declined to comment on its financial position. The company had $118.3 million in payment obligations due in less than a year at the end of 2019, including $93.3 million in debt-related expenses. The company finished last year with $166 million in cash and equivalents and unused borrowing capacity of up to $223.5 million.

Sunrun also did not respond to a message seeking comment. It finished 2019 with $254.7 million in contractual obligations due in less than a year, including $164.3 million in debt-related expenses, compared to $363.1 million in cash and restricted cash, $14.6 million in unused borrowing capacity and undrawn committed capital from investment funds of $581.3 million that can only be used to buy and install solar systems.

"We're not able to predict what the impact of COVID-19 will have on our business and financial results in the future ... but we're managing our cash diligently to survive through this uncertainty," said Charles Cargile, CEO of solar project developer Sunworks Inc., on a March 30 earnings call.

Seeking support

Sunworks, which said it plans to reduce expenses by about $500,000 per month, is looking for financial support from the $2.2 trillion coronavirus relief package that President Donald Trump signed into law on March 27. Cargile said the amount of money that may be available to Sunworks, as well as the terms and timing, are still unknown.

Renewable energy advocates hope subsequent relief measures will include provisions allowing solar and wind companies to receive cash grants in lieu of tax credits in case an economic downturn reduces the earnings of investors who buy the credits to offset tax liabilities.

Residential solar companies say they are already dealing with a relatively small pool of tax-equity investors, and that economic volatility could prevent them from raising the money they need for working and growth capital.

"The point of [cash grants] is to just replace existing equity at a time when it's not available in order to preserve deal flow, preserve investment … and create the opportunity for markets to recover from what is meant to be a short-term aberration," said Allan Marks, a partner at Milbank LLP specializing in project finance, in a March 27 interview.

For now, residential solar executives are looking for ways to survive the crash as they await federal aid and push for more.

"It's just hard to get customers ... to make commitments in the throes of such [economic] uncertainty," Cargile said.