California helped create the U.S. solar industry, subsidizing rooftop panels at a time when the federal fight against climate change had barely begun. Now, it’s leading a sharp sales slowdown that’s threatening widespread adoption.

Installers are slashing jobs. Bankruptcies are mounting. And it’s not just mom & pops feeling the pinch. Solar equipment-maker Enphase Energy Inc., long considered a bellwether for the sector, announced this week it would cut its workforce 10% and close two contract factories, with Chief Executive Officer Badri Kothandaraman citing California’s woes in a letter to staff.

The shakeout follows a change in California regulations that scaled back the amount of money solar homeowners earn when they sell excess electricity to the grid — a shift that hit just as higher interest rates were making the systems more expensive. Research firm Ohm Analytics, which tracks the solar marketplace, found sales dropping 67% to 85% for the state’s private residential installers since the change went into effect in April.

The plunging sales in a state that accounts for the largest share of U.S. solar installations is a setback for a key source of green power just as President Joe Biden is trying to accelerate the nation’s transition toward clean energy. And it’s not just California. More than a dozen other states have trimmed their own subsidies, saying they raise utility rates for other homeowners who can’t afford to go solar.

As a result, rooftop solar’s rapid nationwide growth in recent years will likely slow. Residential solar installations across the U.S. rose an average of 32% per year from 2019 to 2022, according to BloombergNEF. Now, the research firm forecasts 5% annual growth for the rest of the decade.

“I’m very concerned about whether or not we’ll make it through winter,” said Ross Williams, CEO of the San Diego installer HES Solar. His sales have plummeted to about 20% of 2022 levels, and he’s laid off more than half of his 75-person staff. “It’s been pretty dramatic for us going through this process.”

Some hope the downturn is temporary. Sunnova Energy International Inc. CEO John Berger this month told Bloomberg TV “we are through the worst side of things,” predicting growth would return either in this quarter or the next as the industry adjusts to selling in a changed environment.

But the current slump shows that the rooftop solar business remains dependent on government policy, long after its backers hoped it could thrive on economics alone. For the time being, more job cuts look likely.

The California Solar & Storage Association found in a survey that 59% of the state’s solar contractors are anticipating further layoffs, with another 11% unsure. The organization estimates California is on the brink of losing 17,000 jobs in the industry.

“We are shedding jobs at a level that is reminiscent of the Great Depression,” said Bernadette Del Chiaro, executive director of the trade group, which fought changing the incentives for solar homeowners.