A PLACE IN THE SUN
Sunnova CEO John Berger adjusts to life running a public company
Sunnova CEO adjusts to life running a public company.
John Berger, chief executive officer of residential solar company Sunnova, heads one of the newest publicly traded companies in Houston. Sunnova, which trades under the ticker symbol NOVA on the New York Stock Exchange, went public in July, raising about $170 million.
Berger launched the company eight years ago from the tables at the restaurant Buffalo Grille in West University. Today, the company is headquartered at Greenway Plaza and has the full-time equivalent of 400 employees.
Residential solar has been slow to catch on in Texas and is especially slow in Houston, where power prices are low. But as frequent storms knock out power supplies and batteries get cheaper, solar is slowly starting to catch on.
Sunnova has expanded across the country, a process that has involved some growing pains. Some customers from New Jersey to California say the company and its dealer network installed defective panels, ignored requests to fix them and delivered the power at higher costs than promised. The Better Business Bureau, which once gave Sunnova its top score, no longer gives the company an accreditation rating after regulators in Puerto Rico launched a review of the pattern of complaints against Sunnova.
Berger said the company has fixed many of the customer service problems, strengthened its dealer network and is expecting that cheaper and better batteries will create new demand for residential solar power. His edited comments follow.
Q: How is life different now that you run a publicly traded company?
A: The biggest change is you don’t get to say whatever it is you want to say. I have a personality of being direct. That really has been my biggest challenge. When somebody asks me a question and I want to answer it but I have to catch myself and say I can’t.
Q: The stock price has spent most of the past five months lagging below the initial offering price of $12 a share. Is that painful?
A: Absolutely. We continue to hit the numbers we laid out before we did our initial public offering. It would seem like our price would be higher actually. But it doesn’t work out that way.
It will just take time, I’ve been told. You have to execute and you’ve got to continue to go out there and talk to potential investors about the company’s story and your vision.
Q: Is there something investors are not understanding?
A: I think so. I think just the growth of the entire industry. There is just a general lack of understanding about how the energy business is changing.
We’re growing like crazy, we’re focused on generating cash flow, we’re focused on delivering good service to our customers and tech keeps changing. Battery prices are coming down very quickly.
Plus, you’ve got this movement and realization that climate change is real and something that needs to be done about it. That is certainly a powerful tailwind to us.
Q: You’ve got a lot of debt on your balance sheet. Is that giving investors some pause?
A: I haven’t seen that. If you look at our debt and default data it is slightly improving over time.
As long as we have good performing assets, whether they’re loans or leases or power purchase agreements with customers, I don’t think there will be a lot of concern there. The real focus ought to be on the stability of cash flow. We’ve got a very stable model in the sense we’ve accumulated a lot of assets against the debt. We’re actually in really good shape. The company equity is considerably undervalued.
Q: What makes someone decide to install a solar system?
A: This is a service sell. Our customers are buying power. They expect three things: When they flip the lights it’s there, and increasingly we can provide better reliability with batteries at the home. They expect a cheaper price than what they can buy. They expect it to be cleaner.
Q: Is there one factor that makes someone pick up the phone?
A:
It depends. if you’re in Hawaii, 40 percent of Hawaii homes have solar. If you’re here in Houston, the probability is quite a bit lower than that. It depends on your awareness. It’s starting to get to the point you’ve heard of it.
Q: Do solar installations tend to develop neighborhood by neighborhood as more homeowners become aware?
A:
Yes. Power is not exactly front of mind for folks. They’re more interested in where are they going to take the kids tonight or what are they going to have for dinner. It’s not real exciting to sign up for solar service. There is some aspect of “I’ll get to it, I’ll get to it, I’ll get to it,” that you have to overcome.
Q: Why is Houston so slow to adapt to solar?
A:
Houston is the most difficult major market for us in the entire United States. Power rates are relatively low here. We get a lot of cloud cover here even versus Austin or Dallas.
Also, we’ve never had local incentives of any kind. In other states like California, local and state policies kick-started the market for solar. California penetration is around 15 percent while Houston probably has less than 0.5 percent.
At this point what we do have going for us is a regulatory structure where the local utility doesn’t own the generation or the customers and they’ll never put in net metering. Houston has a more open platform. Until batteries get cheap enough, penetration will be slower. But the good news is that batteries are rapidly getting cheaper. I think Houston will open up because of that.
Q: What role will batteries play? A:
If I have a battery I can store up the power when I don’t need it and pull it back out of storage when I do need it. Now I don’t have to give it back to the utility. I’ll just keep it.
Another reason for batteries is storms and flooding. Now you have your own backup power.
Q: Do you have solar panels on your own home? A:
Oh yes.
Q: Does your system at home have an attached battery? A:
It was the first install we did. Q: You have encountered problems from customers
who have complained they can’t get problems fixed from your network of dealers who install and maintain solar systems. Why did you decide to use a dealer method to install solar systems instead of using your own employees? A:
Industries that look like us operate under a dealer network. Dealers do a better job. Why do restaurant chains have a franchise system? The answer is entrepreneurs. Men and women who know their particular region and know the people better than those sitting in some farflung place across the world.