Unlike many of its peers, Sunnova Energy is keeping its 2020 guidance in place. The Houston-based residential solar company expressed a “high level of confidence” that it would meet its goals for the year as it reported earnings for Q1 2020.
In the first part of the year, Sunnova added 6,800 customers — compared to 3,276 in Q1 2019 — and increased revenue by $3.1 million, to $29.8 million. Though Sunnova more than doubled its net loss over the same period last year, to $77 million, CEO John Berger doesn’t expect that to hold the company back in 2020.
“We’re prepared to weather any storm and we’re prepared to do that for at least the next two years if not beyond,” Berger told Greentech Media. “We’re prepared for the worst and hoping for the best.”
Over the year Sunnova expects to add up to 30,000 new customers and end with cash flow between $10 and $20 million. Berger said after the first quarter the company was already close to reaching half of its target revenue and income from system loans for the entire year.
Berger attributed the company’s position to its dealer-centric model, conservative approach to forecasts and its recent work to shore up finances through tax equity investment and debt financing.
Sunnova’s confidence is not shared widely in an industry struggling through the pandemic. Among the solar industry, the residential sector has been particularly hard hit by an unprecedented economic slowdown and shutdown orders restricting installations and permitting.
Vivint Solar, SunPower and national leader Sunrun have all revoked guidance for the year, bracing for the possibility of reduced cash flows and lower installation figures. And those companies, with national footprints, are in many cases better positioned to weather the uncertainty than smaller and local installers.
Sunnova relies on a diffuse network of 191 local dealers. While managing the roll-out of online sales to local partners may have proven difficult, Sunnova appears to have taken the change to virtual sales channels in stride, growing installations over Q4 2019 and increasing its storage attachment rate to 30 percent, up from 24 percent in Q4 2019. On a Friday earnings call, Berger said the dealer model allowed Sunnova’s partners to “tailor their actions to the local situation.”
After a dip in demand in March and early April, Berger told GTM that customer interest began ticking back up last month and has returned to year-over-year growth. Whether that trend will hold remains unclear.
Impacts to Sunnova’s financials and sales may not fully materialize until later in the year, with the pandemic overlapping only partially with the first quarter. The company is also girding for potential resurgences of the virus, which is continuing to spread throughout the U.S.
If cases begin to increase exponentially, Berger said the impact on financial markets would likely be severe.
“I don’t think COVID[-19] is going to go away anytime soon,” Berger told GTM. “I also think we have a very large global economic problem and I’m concerned about that. I’m very optimistic about our industry, but I’m very cautious on the overall environment itself.”
The company did receive a loan through the Paycheck Protection Program, part of federal stimulus legislation that incentivizes businesses to keep workers on payroll by offering forgivable loans. But after closing on recent financing arrangements, Sunnova said it chose to pay the money back in May.
Looking through to the rest of the year, Berger admits that much is mired in uncertainty. But the company has worked to frame solar as a product that can save customers money in an economic downturn and guarantee reliable power with the addition of storage. California, the biggest solar-plus-storage market, is headed into a fire season that will coincide with the pandemic, making it even more difficult for people to go without power or evacuate from their homes.
“We’re stuck in our homes, right? You can’t have the power go off because a wildfire or hurricane,” said Berger. “People recognize … that the fragility of the world we live in shouldn’t be taken for granted.”
