The electric utility is cutting about 4,000 jobs at the solar facility in Durham, North Carolina, and will stop paying for power generated by the plant.
The solar project will be sold and sold again to someone else, said Tom Ritter, president and chief executive officer of SunPower.
He said the company is continuing to look for other options to offset the costs of operating the plant, including leasing it.
SunPower is seeking to recoup about $200 million of its costs, he said.
The utility said on Tuesday that it will shutter the project in 2018, a day after the state of North Carolina announced it was suing it for not paying $2.4 billion in sales taxes on the solar project.
The state filed the lawsuit in February, accusing SunPower of violating tax laws.
The state’s attorney general, Ralph Northam, said SunPower had not paid any taxes on electricity generated by its solar project since it was constructed in 2004.
SunPower, which has a 30-year contract to build solar projects in North America, said in a statement that it had completed “a number of analyses” and that “the project is financially sound.”
The company said it expects to save “at least $200,000 in annual operating costs” and “substantially more” in other ways as it restructures the business.
It expects to reduce annual solar power production by about 20 percent to 30 percent from now through 2020, the statement said.
Sunpower is the nation’s second-largest solar installer, behind NRG Energy, which was spun off from Duke Energy.