Sunnova breaks into tax equity with $80 million deal

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Sunnova has been an interesting entrant into the third-party owned solar space. Instead of raising funds specific to projects, like leading third-party solar providers SolarCity and Sunrun, Sunnova has financed the projects that it owns and deploys on customer rooftops off its own balance sheet.

But what really made waves for the Houston-based company was its stated opposition to extending the federal Investment Tax Credit (ITC) for solar, a position which put it at odds with most of the solar industry. This makes today’s announcement that the company has raised its first $80 million tax-equity fund from U.S. Bancorp Community Development Corporation (USBCDC) ironic, given that Sunnova has backed off its anti-big government rhetoric.

“We continue to believe that the solar industry can and should operate independent of government subsidies, and we will pursue opportunities that allow us to expand solar adoption throughout the country,” stated Sunnova CEO William Berger.

This speaks to a cognitive dissonance common in Texas, a deeply red state whose leading status as a wind market was highly dependent upon socializing the cost of transmission among ratepayers. However, as with the rest of Texas, when political ideology and money collide Sunnova is going with the money.

This is Sunnova’s first transaction with USBCDC, and CohnReznick Capital Markets Securities advised Sunnova on the deal. To date, the company reports that it has raised $1.5 billion in funding.