Sunnova seeks to outrun its losses

Understanding the quarterly financial reports of third party solar companies always requires a shift in thinking. These are companies that rack up losses every quarter as they build long-term value in pools of assets, and make up the difference by aggressively raising money as best they can.

But some third party solar companies are pushing this model, and are looking more like Silicon Valley exercises in loss-making, seeking to grow their way into profitability.

We’ve expressed concern before when Vivint’s quarterly losses exceeded the value that it created. And while we were not able to determine exactly the value that Sunnova created, the company paid out more in interest than it received in revenues during Q2.

Including affiliates, during Q2 Sunnova had a net cost of $35.9 million in interest, exceeding the $34.6 million in revenues it earned. This pattern was a repeat of the first quarter, and over the first half of the year the company had a net cost of $67.0 million versus $61.3 million in revenues.

Furiously raising money

Sunnova has two paths forward: growth and accessing capital at better rates. It’s hard to judge how Sunnova is doing on the first, as during this first quarter as a public company it did not supply many of the standard metrics for this, such as megawatts installed. Instead, the company merely reported 27% year-over-year customer growth, and that it has grown its customer base by 7,300 customers over the first six months of 2019.

Sunnova President and CEO John Berger also cited “the expansion of our geographical footprint, the continued growth of our dealer base, the launch of new solar plus storage product offerings and increases in battery attachment rates.”

In terms of raising money, Sunnova had a lot more wins to report, but some of the biggest were after the second quarter ended. During the second quarter the company closed a $168 million solar loan securitization at what it describes as “favorable rates”, and in July raised $178 million through its initial public offering. Additionally, last week Sunnova closed on a $75 million tax equity commitment.

We look forward to greater transparency in Sunnova’s business developments as the company gets more comfortable with the format of releasing quarterly results as a public company.