Sunnova Energy Corporation is one of the leading residential solar and storage service providers in the U.S. The company offers a broad portfolio of solar and solar+storage offerings, including multiple PPA, lease and loan financing options designed to help solar customers find the choice that works best for them. Sunnova pairs these product offerings with long-term service and maintenance agreements–which they see as fundamental to ensuring long-term customer satisfaction.
Sunnova operates in 18 states around the country, as well as several U.S. territories including Puerto Rico, Guam and Saipan, and utilizes a dealer model, working with a select number of qualified regional partners that have first-hand knowledge of local markets.
The Aurora Solar team recently had the opportunity to talk with Sunnova founder and CEO John Berger to learn from his two-plus decades of experience in the energy industry. Prior to Sunnova, Berger was founder and CEO of SunCap Financial, a residential solar system lease provider. He also founded Standard Renewable Energy (SRE), a Top 10 provider of renewable energy and energy-efficient products and services.
In our interview, Berger offered insights into what solar financing options work best for customers and some of the trends he expects to see in solar finance, what Sunnova looks for in its installation partners, and tips for success in the solar industry.
Aurora Solar: Based on your many years of experience in solar finance and Sunnova’s wide area of operations, do you notice any trends in what types of solar financing options are most appealing to customers in different contexts?
John Berger: Yes, I do, and I think the industry is going to see some movement on the financing side in the market as it reverts back to better reflect the balance of what financing options are best for each customer.
What we have seen and continue to see is that lease and PPA options are the most viable for most consumers—somewhere between 70 and 80% of the population. We see the proportion of customers with leases and PPAs trending back up and think the market will balance itself back out to a 70-30, maybe 80-20, split between customers with leases or PPAs and customers with loans.
To be clear, Sunnova is neutral about sales of loans, leases and PPAs. It doesn’t matter to us what people choose; we’re indifferent to that. But in terms of where I expect the customer base to balance out, that’s my best estimate at this time—which points to roughly a 20% or more pick up in lease and PPA sales over the next few years.
Aurora: Sunnova is unique in its model of working with a network of regional installation and maintenance partners that have firsthand knowledge of local markets. When Sunnova evaluates potential partners, what qualities and processes does it look for?
JB: That’s a great question. I would say that what we’re looking for above all else in our partners is honesty. They must understand the rules, in terms of consumer protection laws and the various geographic rules, and abide by them. I expect members of my company and our dealers and partners to adhere to the highest ethical standards, not just meeting the letter of the law but meeting the spirit of the law.
The second thing we’re looking for is someone who can run a business. For example, partial payment for jobs in progress is not profit—don’t spend it! We see that mistake over and over again.
Third, we also avoid partnering with companies that are trying to grow too fast. The telltale sign is somebody who’s trying to do a multi-state expansion without proper equity capital—which is usually far more than they think they need—all within the same year or two.
It’s really problematic, and frankly, I have yet to see it really work. And I built a multi-state contracting business and sold it, so I understand the difficulties of doing that. The problem is you’re trying to scale something, in terms of people, that is not scalable.
The most successful dealers that we have are methodical about their growth. Some years that growth is bigger than others, but they’re methodical. This is a business where you’re going to have to do a lot of hard work and build over a period of time. You’re going to have to earn your reputation with customers, with communities. Nobody’s perfect, and we’re no exception, but over a period of time you can be successful. It will not be overnight success.
“Get rich quick” has got to get out of people’s heads. That’s something that we’ve seen repeatedly in every market. We frown upon that quite a lot because we’ve seen the outcome and it’s not good for the customer, for us or for them. And, overall, it’s not good for the industry.
Those are the top three things that we’re looking for from partners: honesty, being able to run a business and understanding that growth is something that occurs over years, not months. Beyond that, competency to install and sell solar is a given.
Aurora: What’s one piece of advice that you would give to every solar contractor?
JB: I think it goes back a lot of what we look for in those contractors. I would say that if you can run a good business, if you’re an honest person, the thing that I would recommend is don’t go out there with a “go big or go home” mentality. That’s not the way it works, it ends in ruin.
I’ve seen heartache, heartbreak, partner bankruptcies over and over again for people that chase the flavor of the month, whether it’s a service provider they’re teaming up with, a financing relationship or something else. Nine times out of ten that ends in tears. Don’t do it.
Focus on running the business, keeping your costs low, satisfying your customers and picking long-term partners. Don’t jump around all over the place; when you jump around, you can’t meet your long-term customer relationship obligations.
So I would end with that, maybe that’s the bullet statement: think long-term. If you can do that you’ll be successful.