Solar panel installer Vivint Solar has terminated merger agreement with US-based renewable energy firm SunEdison.

In 2015, SunEdison agreed to acquire Vivint Solar for $2.2bn, in an effort to develop its residential solar business.

The firm has also signed a related agreement with a subsidiary of TerraForm Power, which will acquire Vivint Solar’s rooftop solar portfolio for $922m.

Following the termination of the deal, Vivint Solar said it would seek damages due to SunEdison’s failure to complete the merger as per the terms of agreement.

A lawsuit has also been filed by Vivint against SunEdison in Delaware Chancery Court for breaching the agreement.

Vivint Solar president and CEO Gregory Butterfield said: "SunEdison has willfully breached its obligations under the merger agreement and we intend to pursue Vivint Solar’s remedies vigorously."

As per the terms of the agreement, each shareholder of Vivint Solar were entailed to receive $16.50 per share, including $9.89 in cash, $3.31 share in SunEdison stock, and $3.30 share in SunEdison convertible notes.

SunEdison said it would accelerate its existing business of in the US, UK and Australia with the deal.

Earlier, SunEdison CEO and TerraForm Power chairman Ahmad Chatila said: "We expect the Vivint Solar transaction to create significant value for our stockholders through the accretion in our TerraForm Power ownership, the acceleration of our Incentive Distribution Rights and an immediate expansion of our capacity and bandwidth to grow our residential business in the US and globally."