Sunnova, a top U.S. residential solar and energy storage company, has filed paperwork to go public on the New York Stock Exchange, in which could be one of the biggest U.S. renewable-energy initial public offerings of recent years.
Houston-based Sunnova last week lightly filed a pre-IPO prospectus with U.S. securities regulators, giving investors a peek at the privately owned company’s financial health, even as many particulars of the IPO remain under wraps.
Sunnova would exchange under the ticker symbol”NOVA,” linking bigger rivals Sunrun and Vivint Solar in selling stocks to the general public. SolarCity, when the nation’s largest residential solar installer and a publicly listed company, was acquired by Tesla.
In 2018, Sunnova reported:
Sunnova’s filing paints a picture of a company which is growing quickly but with challenges ahead.
Much like Sunrun and Vivint Solar, Sunnova focuses on solar leases and power-purchase agreements with homeowners, also called the third-party possession (TPO) model. Sunnova generally remains the long-term owner of its own PV installations rather than selling systems outright, though it also does some loan prices.
Compared to its closest TPO competitions, Sunnova is exceptional in relying entirely on smaller solar organizations to market and install its systems, through its network of”dealers.” Sunrun and Vivint Solar both have large in-house installation teams.
The upshot is that Sunnova includes a relatively light physical footprint.
The company has an installed base of solar panels in 455 megawatts across 63,000 consumer accounts.
Yet with only 300 workers as of March 2019, Sunnova’s workforce is less than one-eighth the magnitude of Vivint’s 2,500-strong payroll. Sunnova has just 3 offices: its corporate headquarters in Houston, also satellites from New York and Puerto Rico.
What looks like an advantage in 1 light could also double as a vulnerability, however
Although Sunnova asserts over 75 independent dealers in its system, a remarkable 52 percent of its own prices came from one spouse last year: New Jersey’s Trinity Solar. Sunnova lately entered a four-year exclusivity deal with Trinity for many kinds of earnings.
Meanwhile, the character of Sunnova’s version gives it less control over quality, Perea said.
“Partnering with smaller installers allows Sunnova to maintain lower cost of customer acquisition — local installers that lean more heavily on referrals often have considerably lower customer acquisition costs compared to domestic players.”
“However, without any in-house installation capacities, Sunnova has less visibility to the business and sales practices of its channel partners than domestic installers,” Perea said. “In a business that increasingly relies heavily on customer experience, this can be a long-term threat a firm like Sunnova faces.”
Sunnova’s fleet of installed systems is heavily concentrated in New Jersey, California and Puerto Rico. Its post-IPO strategy would concentrate on growing in”underpenetrated markets” and enlarging its geographical footprint, including globally, the company says.
The decline of TPO
The time of Sunnova’s move toward the public markets is intriguing given the relative decline of the TPO segment of the residential market, which has been overtaken last year by solar loans, WoodMac data shows.
To put it differently, more American homeowners are deciding to have their solar systems , rather than signing leases or PPAs like those Sunnova offers.
On the other hand, the TPO model could find a boost over the longer term since the solar Investment Tax Credit phases out, analysts say. PV systems owned by homeowners won’t receive any ITC incentive following the phaseout, while those owned by firms like Sunnova are set to get a 10 percent ITC indefinitely.
Based on Woodman, Sunnova was the fourth-largest player in the TPO marketplace last year, trailing Sunrun, Vivint and SunPower, and it had been the seventh biggest in the overall residential solar market.
The U.S. installed 10.6 gigawatts of new solar power last year, with the residential market growing 7 per cent to 2.4 gigawatts.
Like most of its peers, Sunnova is putting a heavier emphasis on its own energy storage offering, called SunSafe. It’s also focusing on selling long-term support plans to homeowners who bought solar systems from other providers.
Sunnova did not respond Tuesday to a request for information about its IPO plans, which were first reported last month from Reuters.
