US residential solar installer Sunnova has reported reduced losses in the second quarter of 2024, with losses falling to US$79.7 million, down from US$90.1 million in the first quarter of the year.
This was driven by an increase in revenue of US$53.2 million over the previous quarter, reaching US$219.6 million in the three months to 30 June 2024. The company noted that an increase in revenue of US$55.9 million “from our core adaptive energy customers” drove this growth, with power purchase agreements (PPAs) and leases contributing to this positive development.
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Perhaps most impressively, the company’s earnings before inflation, taxation, depreciation and amortisation (EBITDA) jumped from US$28.1 million in the second quarter of 2023 to US$216.7 million in the second quarter of this year. The company noted that an increase in investment tax credit (ITC) sales contributed to this growth, a type of transaction enabled by the passage of the Inflation Reduction Act (IRA) that has given buyers and sellers more options in the US energy market.
Last month, Fred Petit of Investec told PV Tech Premium that ITC trading was increasing the liquidity of the energy industry “by the week,” as companies look to benefit from the tax credits offered by the IRA.
“Recent guidance on ITC adders has been more impactful than we had originally anticipated – a large contributor to what is driving our cash generation guidance higher – and we continue to maximise asset-level capital through greater efficiency and more timely financings,” said Sunnova founder and CEO William J Berger. “These tailwinds and the progress against our outlined priorities gives us confidence in our ability to drive value creation for our customers and our shareholders.”
The news is a positive development for the company, which has endured a string of tough financial results in recent quarters. The graph above shows the company’s losses since the first quarter of 2022, with greater losses in each quarter of 2023 than in the same quarter of the previous year. However, the company has now reported lower losses in both Q1 and Q2 of this year, compared to the same quarters of 2023.
For instance, in the first quarter of this year, the company’s adjusted EBITDA increased by over 200%. Berger said that the company would focus more on lease and PPA customers for the remainder of 2024, and this approach appears to be paying dividends early on.
However, Sunnova reported a number of less encouraging developments in its most recent results, including operating expenses of US$108.8 million in the second quarter of the year, US$21.9 million higher than in the previous quarter. On a slightly longer-term time frame, the company’s total operating expenses in the first half of this year reached US$523.7 million, up US$87 million from the first half of 2023, and while some of these expenses can be attributed to the company’s growing portfolio of operations, such high expenses and consistent losses are ominous.
The company has also continually revised down its forecast for new customer additions, a metric used frequently in its quarterly results until the most recent report, where it did not mention new customer additions. Sunnova now expects to add 110,000-120,000 new customers by the end of this year, down from a forecast of 140,000-150,000 made in the first quarter of this year, and predictions as high as 195,000 last year.
