The Department of Energy has granted a conditional commitment for a partial loan guarantee of up to $3 billion to Sunnova Energy for the company’s solar-powered virtual power plant program.
Sunnova’s Project Hestia would aggregate grid-connected distributed energy resources such as photovoltaics, battery storage systems, electric vehicles with communications and control software to create virtual power plants.
If finalized, the Department of Energy partial loan guarantee would support the origination of Sunnova loans associated with solar, storage, or other Sunnova technologies that use the company’s demand response and virtual power plant software.
Sunnova anticipates the partial loan guarantee would support $4 to $5 billion in Sunnova loan originations for approximately 75,000 to 115,000 homeowners.
The project is expected to prioritize households in disadvantaged communities across the United States, as well as homeowners with lower credit ratings. Sunnova would also aim to provide up to 20 percent of Project Hestia loans to homeowners in Puerto Rico for installations that would include both solar and battery storage.
The partial loan guarantee would be the Department of Energy’s first for a virtual power plant project.
To be eligible for the program, each energy system must be outfitted with Sunnova’s technology, accessible by smart phone or other personal electronic device, that is designed to improve customers’ visibility into their power usage and enable them to reduce electricity use or contribute electricity to the grid when it is under stress.
Sunnova has agreed to provide monthly servicing reports supplemented by hardware and software deployment information to the Department of Energy. Sunnova also has agreed to measure the reduction in greenhouse gases associated with Project Hestia.
Several steps remain for Project Hestia to reach critical milestones, and certain conditions must be satisfied before the Department of Energy partial loan guarantee is issued, including finalization of definitive financing documents.
The transaction is expected to close in the second quarter of 2023. Sunnova said it plans to issue its first securitization under the program in the first half of 2023.