DOE closes $3B loan guarantee with Sunnova, it’s first for VPPs

The Department of Energy’s Loan Programs Office and Sunnova, a provider of residential solar, storage, and virtual power plant services, have announced the close of a $3 billion partial loan guarantee.

The agreement marks the US government’s largest commitment ever to solar power and DOE’s first loan guarantee for VPPs. The terms of the loan guarantee 90% of up to $3.3 billion of term loans, which could support 75,000-115,000 homeowners and result in the deployment of 568MW of solar and storage capacity.

Sunnova said the partial guarantee will support over $5 billion in loan originations, reduce the company’s weighted average cost of capital and generate interest savings.

The DOE loan guarantee agreement will support the origination of Sunnova loans associated with solar, storage, or other Sunnova Adaptive Home technologies that utilise Sunnova’s purpose-built demand response and VPP-enabling software throughout the United States and its territories. 

Sunnova will provide DOE with monthly servicing reports supplemented by hardware and software deployment information. To measure project benefits, Sunnova will also measure and report on the reduction in greenhouse gases associated with the effort, named Project Hestia. To advance economic and environmental benefits for disadvantaged communities, Sunnova intends to use Project Hestia to finance collateral pools that realise agreed criteria related to FICO distributions and certain concentrations of customers located in disadvantaged communities.

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“Today marks the beginning of an exciting chapter in our pursuit of a cleaner and more equitable energy landscape,” Sunnova CEO John Berger said in a statement.

VPPs are aggregated grid-connected DERs such as photovoltaics (PV), battery storage systems, electric vehicles and flexible end uses combined with communications and control software. Coupling aggregated DERs with smart software can create a virtual power plant to deliver power and support grid reliability and decarbonization in an increasingly electrified world.

Sunnova is expected to offer homeowners software to accompany the PV and batteries and support demand flexibility. The software will give customers insight into their household’s energy usage and greenhouse gas emissions, allowing them to reduce electricity use or contribute electricity to the system in markets that allow such contributions when the grid is under stress. 

As of September 30, Sunnova served around 250,000 customers across the US, 14% of whom had added battery storage to their solar systems.

DOE said that with the partial loan guarantee to Project Hestia, Sunnova can expand into more markets. Sunnova is targeting at least 20% of Project Hestia loans to help customers with credit scores of 680 FICO or less.

In addition, Sunnova anticipates 30% of Project Hestia customers will have batteries included with their system, doubling Sunnova’s battery system footprint fleetwide based on a September 2022 baseline.

Sunnova also is expected to provide up to 20% of loans to homeowners in Puerto Rico. All installations there are expected to include both solar and battery storage. 

Originally published on Renewable Energy World.