Sunnova inks $3B loan deal for solar panels
The U.S. Department of Energy has agreed to back up to $3 billion in loans for residential solar installations and battery storage by Sunnova Energy as part of its effort to expand adoption in disadvantaged communities, finalizing a deal first announced in April.
The agreement is the single largest commitment made by the federal government to solar power, according to a Department of Energy statement. The $3 billion will serve as a partial loan guarantee for Sunnova’s Project Hestia, which intends to provide up to $3.3 billion in financing for Sunnova services to underserved communities.
“By backstopping those credits, we can write more and different customers, people who have more challenged credits or lower income, people that really benefit the most from lowerpriced energy or more reliable power,” said Dan Desnyder, Sunnova’s vice president of capital markets.
Project Hestia will indirectly and partially guarantee the cash flows associated with consumers’ solar loans, according to an earlier statement from Sunnova. Consumer access to Project Hestia financing is conditioned on using Sunnova’s
technology – which is likely to give a boost to the Houstonbased company, the 10th largest solar company worldwide by trailing 12 month revenue as of May.
Project Hestia is designed to provide loans for solar technology to as many as 115,000 homes across the country, according to the DOE. At least 20% of loans will go to customers with credit scores of 680 or less, the DOE said. Up to 20% of loans will go to homeowners in Puerto Rico, according to the DOE, supporting the U.S. territory where years of underinvestment and poor grid maintenance have caused chronic power issues amid hurricanes and other extreme
weather.
The agreement is also expected to create more than 3,400 jobs in the country, the DOE said.
The project is expected to support around 568 megawatts of rooftop solar installations, residential battery systems and smart software to reduce energy waste over the next 25 years, the Energy Department statement said.
Each Project Hestia loan recipient will have access to Sunnova technology available via a smartphone or other personal device that gives customers insight into their power consumption. The technology will also help make possible demand response
programs, which adjusts power usage based on conditions on the grid.
Rooftop solar and battery technology has been increasingly popular with U.S. consumers as a means to lower energy bills and to maintain power during outages. That’s particularly true in Texas, where electricity bills are rising and concerns remain about the reliability of the power grid following the deadly blackouts of 2021.
Environmentalists and the Biden administration have also identified rooftop solar as one way to reduce the nation’s fossil fuel emissions that are driving climate change.
Still, rooftop solar can have a high upfront cost, even more so if people choose to install batteries to store unused electricity from the sunniest times. Loans can help these systems be more affordable, but that may not be an option for people with low credit scores.
That means the benefits of solar lowering utility bills are often not felt by those who need it most. Low-income households tend to spend more of their income on their energy bills compared to higher-income households, in part because of inefficient appliances and inadequate home insulation.
The DOE’S backing of the Sunnova program aims to address this accessibility issue as part of the Biden administration’s Justice40 Initiative, which aims to provide 40% of certain federal investments to disadvantaged communities, according to the DOE.
The loan guarantee agreement will also lay the groundwork for future virtual power plant and demand response activities, according to Sunnova, which aim to provide demand flexibility as electricity supply struggles to keep up with demand in states like Texas.
Sunnova will provide monthly servicing reports and greenhouse gas reduction reports to the DOE, the company said.