Sunnova Going Solyndra? (Enron-ex John Berger owes taxpayers a bundle)

Ed. Note: Just 15 months after receiving a $3.0 billion loan guarantee from the U.S. Department of Energy (Jigar Shaw), Sunnova stock price has cratered with the prospect of bankruptcy. Sunnova founder (and Enron-ex) John Berger’s battle cry–“solar is going to rip apart the energy business as we know it”– is an example of the philosophical fraud committed by political capitalists who are tipsy on taxpayer dollars.

I distinctly remember a Starbuck’s meeting at the request of fellow Enron-ex John Berger soon after he founded Sunnova in 2012. John knew I was adamantly opposed to solar’s government play, and he must have thought I was pliable. I was not. [1]

I stated my objections to John, and rather than try to defend his political bet, he flashed his toothy grin at me. Reminded me of an Ayn Rand quote about “pull peddlers” in Atlas Shrugged: “It is of such pennies and smiles that the destruction of your country is made.” 

And so Berger dodged bullet after bullet with extensions of the solar tax credit and special grants in 2016, 2017, 2019, and 2022. [2] The Inflation Reduction Act of 2022 set up a multi-billion-dollar rescue loan. Still, Sunnova is threatening to go the way of the infamous Solyndra and Ivanhoe.

This year, NOVA stock has declined by half, and the last month by one-third. The immediate question is what this means for US taxpayers if Chapter 11 is resorted too.

The $3 Billion DOE Loan

In a late 2023 E&E article, “How a DOE loan guarantee put Sunnova in Republican crosshairs,” authors Timothy Cama, Kelsey Brugger, quoted Sen. John Barrasso of Wyoming: “Solyndra is going to look like chump change.” The article continued:

Congressional Republicans and their allies believe they’ve hit on the next renewable energy scandal on par with the failed solar company Solyndra, which dominated headlines more than a decade ago.

This time, they’re focusing their attention on Sunnova Energy, which recently won a $3 billion federal loan guarantee for a massive “virtual power plant” project. Republicans are raising the alarm over the company’s track record, accusing it of “troubling sales practices” while alleging potential favorable treatment from the Department of Energy…. Cronyism.

Bankruptcy Talk

It was a year ago when the bankruptcy talk began. “High interest rates and NEM 3 destroying solar market Sunnova has struggled to raise further debt and surviving on $200m unrestricted cash,” one follower stated.

In total it needs to raise cash to $600m to cover its expected $600m loss predicted in 2024. Saw many of you were complaining about your issue suntinuity going bankrupt who installs for Sunnova, just a tad bit of info on how bad Sunnova is in itself. I’m guessing PPA lease agreements would go to whoever picks them up at bankruptcy. Sunnova is currently trying to market some agreements to other solar providers but hasn’t seen much success apparently….

With the news that Sunnova is at the U.S. DOE trough asking for a $3.3 billion loan guarantee, a repost from almost four years ago “Sunnova’s Rooftop Solar: Selling a Bad Product Requires ….” is timely.

Conclusion

The merchants of deceit have been touting solar for many decades. Consider the following:

“There is no longer any question that solar energy is feasible and cost effective.” (Jimmy Carter, 1979) [3]

“This is the technology that will allow us to provide solar electric power at competitive prices, both in the United States and in other areas of the world.” (John Urquhart, Enron Corp, 1995) [4]

“Solar is going to rip apart the energy business as we know it.” (John Berger, Sunnova Energy Corp, 2019) [5]

The impending competitiveness of solar-generated electricity is a siren song of a dilute, intermittent energy trying to compete with dense, storable energies. As it was a century ago, the reality today is that mineral energies producing electricity are far more economic than isolated power for homes and businesses in urban (and many rural) areas.

Sunnova would manufacture the panels, install the panels, and maintain the panels. Instead, it subcontracts everything out to “channel partners” that may or may not be there next month. This portends problems that put Sunnova, and thus the whole contract per roof, at risk.

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[1] Sunnova CEO John Berger, well educated and charismatic, was involved with Enron’s renewable business and has gone on to found and manage several solar-related businesses: Contango Capital Partners (2003–2007), Standard Renewable Energy (2007–2010), and SunCap Financial (2010–2012) before starting Sunnova in that year.

[2] The Sunnova political bailouts were under these laws:

1. The Consolidated Appropriations Act of 2016 (P.L. 114-113) extended the credit through 2019. The termination date was changed from a placed-in-service deadline to a construction start-date phaseout, with a 26 percent for construction beginning in 2020, and 22 percent for construction commencing in 2021.
2. The Bipartisan Budget Act of 2018 (P.L. 115-123) extended the ITC for five years for fiber-optic solar (as well as fuel cell, small wind, microturbine, CHP, and geothermal heat pumps). These energies were eligible for a 30 percent credit through 2019, with rates declining with construction dates.
3. The Taxpayer Certainty and Disaster Tax Relief Act of 2019 (P.L. 116-260) extended the ITC by two years.
4. The Inflation Reduction Act of 2022 extended the Residential Clean Energy Credit, previously called the Investment Tax Credit (ITC), through 2034 (12 years). The credit was increased to 30 percent (from 26 percent). Thirty percent of solar panel purchases were deductible from the total cost of federal taxes. The residential solar tax credit is scheduled to drop to 26 percent in 2033 and 22 percent in 2034.

[3] Quoted in Robert L. Bradley Jr., Enron Ascending: The Forgotten Years (Scrivener Press and John Wiley & Sons, 2018), p. 532.

[4] Quoted in Bradley Jr., Enron Ascending, p. 534.

[5] Quoted in L. M. Sixel, “Solar Company Sunnova Losing Some of Its Glow Amid Complaints.” Houston Chronicle, April 14, 2019.

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APPENDIX Sunnova’s Pitch

Just last year, Sunnova pitch and caveats were as follows:

With nearly 60,000 customers across the U.S and its territories, including Guam, Puerto Rico and the Northern Mariana Islands, Sunnova uniquely provides a 25-year service commitment with every homeowner’s customized solar + storage system. Sunnova’s goal is to provide the choice of affordable, worry-free solar energy and battery storage technology that generates long-term value for customers and facilitates continued business growth for its network of trusted partners.

“On average,” the headline at Sunnova’s website states, “Sunnova customers save 20% on their energy bills with solar.*” The fine print is as follows:

* Individual savings will vary based on your utility rate, your energy consumption habits, the solar system equipment installed on your property, your tax incentives eligibility, weather and other factors.

In some states Sunnova’s products are not designed to offer savings. Customers located in states or territories other than CA, CT, MA, RI, NY and NJ are likely to perceive savings substantially lower than 20%, if any.

Individual savings estimates are based on your solar energy production, your solar kWh rate, potential tax incentives, your utility kWh rate at the time of purchase, and projected increases in the utility rate (based on historical data and national averages).

Estimates do not take into consideration other changes in utility rates. Such changes could affect your overall estimated savings. Sunnova does not guarantee savings.

Refer to the Limited Warranty in your agreement for complete warranty terms and limitations. Your solar system production will vary based on weather and other factors. Solar system’s cumulative production will be evaluated to validate annual production guarantee. Refer to your agreement for details. Restrictions and limitations apply.

The service agreement can be transferred to the new homeowner. Sunnova’s approval required. Some restrictions apply.

Twenty-five years? What buyer can possibly know what is going to happen five or ten years out, much less 25? Will the house be sold or even still standing?

Seems like the fine print would want to have something else like

Near-term performance will be more predictable than medium- and long-term service. Your present contractor relationships will probably change, and Sunnova as you know us today may not exist. The buyer takes these risks.

Here is the deal. The homeowner rents their roof for 25 years to Sunnova, which utilizes the 30 percent federal tax credit. That’s just one subsidy. The second is requiring utilities to continue to provide service to that customer so that service can be firm (meaning that fossil-fueled and other generation is part of the mix).

Without reliability-backup by the utility, Sunnova would be required to provide storage, ruining the economics of the deal even with the federal subsidy. (Off-grid is another story where, solar-plus-storage is the electrical option.)

A third subsidy: some states require utilities to buy back excess generation from the home. That’s where Sunnova gets to promise savings compared to regular utility service.

With a high subsidy sum at the expense of other taxpayers and ratepayers, some customers will save 20 percent. But for 25 years? Imagine all the things that could or will go wrong. Will that solar installer still be around to replace weathered panels experiencing lower efficiency? Will Sunnova still be around? A bankruptcy, common in the solar industry, could leave a homeowner in the lurch.

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If you want to see a crony capitalist inventing a story to protect his sagging stock price, listen to the CNBC interview with John Berger, founder and CEO of Sunnova Energy, self-advertised as “The leading national residential solar company.”

Founded in Houston by Enron-ex John Berger, the company has never (yes, never) turned a profit. But Berger has a few million dollars of Sunnova stock, and he has been paid handsomely … for (!) destroying more resources than he has created in his ten year history.

Berger’s biography paints him as a free-market fellow, just the opposite of the truth,

Mr. Berger … is an energy entrepreneur who has always supported free market competition, consumer choice and the advancement of energy technology to power energy independence. Before Sunnova, Mr. Berger served as Founder and Chief Executive Officer at SunCap Financial, a residential solar service provider. He also founded Standard Renewable Energy, a provider and installer of renewable energy and energy-efficient products and services.

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Final note: This public policy peace is not intended to be predictive as the future is not known. Sink or swim, U.S. taxpayers should get a full accounting of the monies received and expended by Sunnova and Berger personally.

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Source: https://www.masterresource.org/solar-power-issues/sunnova-berger-bankruptcy/