Just two years ago, SolarCity and other rooftop solar providers were Wall Street darlings, and prospects for growth were flying high, as enthusiasm for solar power was seemingly boundless.

After all, they had built a better mousetrap, allowing the masses to install environmentally minded solar power systems at little or no cost to them and to reduce their electricity bills at the same time.

But in two years, the landscape has drastically shifted.

Nevada recently rolled back the generous support it gave rooftop solar systems; 20 other states are rethinking their policies, as well. And despite the extension of an important federal tax credit last year, losses by rooftop solar companies have accelerated.

SolarCity, the nation’s largest provider of rooftop systems, is but the most visible of a cluster of companies, built with the aid of government subsidies and utility incentives, now facing deep uncertainties, despite unflagging consumer interest and surging growth in renewable energy.

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Once nearly $86 a share, SolarCity’s stock price has gone in mostly one direction, down, as investors have cast increasing doubts about its business model. On Wednesday, after the company reported fourth-quarter earnings on Tuesday, the shares fell nearly 30 percent to close at $18.63 after a warning that the company faces steeper-than-expected losses.

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Lyndon Rive, co-founder and chief of SolarCity. Credit Thor Swift for The New York Times
Even Lyndon Rive, SolarCity’s brash and optimistic chief executive, concedes that the company is facing challenges, like the recent decision in Nevada to apply a less generous rate system to existing and future solar customers.

The company and other industry leaders like Vivint and Sunrun are so vulnerable to regulatory shifts that they all responded by abandoning the state.

“I don’t think anyone forecasted this risk,” Mr. Rive said. Referring to the potential to gain new customers in Nevada, he said, “It’s impossible for anyone to do it — it makes no financial sense for a consumer.”

The pain in the industry has been widely felt. Last year, two prominent companies, SunEdison and NRG, alarmed investors with ambitious forays into the rooftop solar business, leading to reorganization, belt-tightening and, in the case of NRG, the departure of its chief executive, David Crane.

Solar panels have been around for decades, but the businesses and methods that have propelled their fast spread across rooftops in the last five or six years are still new and untested.

Many of the assumptions that underpin the financial models are far from certain, analysts and experts say, and as market conditions, public policies and technologies evolve, the risks are becoming more evident. Cheap natural gas doesn’t help, making it harder for rooftop solar energy to compete in markets with low electric rates.

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SolarCity’s troubles have attracted strong interest from short-sellers, who make money by wagering that a stock price will fall. Prominent among them is James S. Chanos, the hedge fund manager who, more than a decade ago, was one of the first to question Enron and make millions betting against it.

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“A lot more risk has been introduced into the model,” said Paul Strigler, a vice president for Esplanade Capital in Boston, which focuses on solar energy. “I would call it an almost impossible segment of the market to even value.” Still, Esplanade bought stock in SolarCity on Wednesday.

Some things, though, have gone the company’s way of late, including the extension of a federal tax credit — worth 30 percent of a system’s cost — and a $113 million investment in its debt led by the clean-energy arm of Silver Lake and Mr. Rive along with his cousin, the solar company’s enigmatic chairman, Elon Musk.

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Workers prepare for a day of installing solar panels at the SolarCity operations center in Foster City, Calif. Credit Thor Swift for The New York Times
But it is not clear that those triumphs can offset the mounting losses and increasing competition that led SolarCity to cut its growth rate in half last fall.

“SolarCity has been way more aggressive than anybody in its marketing,” Mr. Chanos said in December at his offices in Midtown Manhattan, seated before shelves lined with business titles propped up by bear bookends. “They should be making huge amounts of money right now and they’re not.”

One way to make money is to look for new investors.

More so than any of its kind, SolarCity has been at the forefront of engineering ways to raise money to finance its operations, including its innovation of selling bonds backed by bundles of customer agreements.

Those agreements, which generate the bulk of the company’s revenue, are based on SolarCity’s fundamental pitch: Customers, with little or even no upfront payments, generally commit to 20-year leases to install rooftop solar systems on their homes and buy the electricity they produce for less than what they would typically pay utilities.

In addition to the federal tax break and state and local incentives, the credits that utilities give customers for excess electricity sent back to the grid — known as net metering — are a potent part of making the deals economically attractive all around.

Over the last couple of years, thanks to these generous, overlapping incentives, SolarCity’s revenue growth has been robust.

But it is expensive to build out these systems.

SolarCity’s revenue last year grew nearly 60 percent to $400 million from the year before. But its costs grew at much faster rate, leaving the company with an operating loss of $648 million for the year.

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SolarCity on Wall Street

Put another way, the company spent nearly two dollars for every new dollar in sales last year.

As a result, SolarCity announced a shift in its strategy last fall. It hopes to become profitable by cutting its growth rate from 85 percent a year to about 40 percent. It is planning to sell the cash flows from its customer agreements and recently has raised $345 million in debt, including some backed by a bundle of customer loan agreements, an industry first.

But even more troubling, SolarCity’s debt levels are soaring as cash levels shrink. Last year, the company’s interest payments on its debt totaled nearly a quarter of its revenue.

SolarCity executives continue to express faith in their business model. The potential market for solar panels is barely tapped, they say, and the extension of the federal tax credits bolsters their ability to capture it.

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As governments around the world look to increase their share of solar power, Mr. Rive said, customers will continue to want a product that saves them money and offers a clean alternative to utility power.

But it is local rate policies, like the sharp cut in net metering credits in Nevada, that pose a threat to SolarCity and its ilk. The reductions, supported by the main utility, NV Energy, a subsidiary of Warren E. Buffett’s company Berkshire Hathaway, apply to existing contracts as well as to new ones, raising worries that customers will try to renegotiate or break them.

“What the developers are selling is a savings,” said Tracy Rice, an analyst at Moody’s, which concluded that the Nevada ruling could spur other states to follow suit. “Unhappy customers who may have noted their savings eroded may attempt to get a modification or a lower solar price.”

In other important solar states like Arizona, California and Hawaii, which have approved new fees and less advantageous incentives or rate plans for future solar customers, the spread of rooftop solar could slow, she added.

In the meantime, solar customers in Nevada are left to grapple with a sudden gap between their budgets and their convictions.

“I feel kind of like I’m being penalized for making a choice for my family and the environment,” said Kelly Schwarze, who just had his panels installed and was still waiting for the utility to give a final approval to switch them on. He and his wife had discussed trying to get out of the contract but they were unsure of the best way forward.

“I was quite proud of the fact that I was going solar because it kind of made me feel like I was doing my part.”

But now, he said, “I feel like the black sheep in a way, like I’m some villain.”