The U.S. Department of Energy has cancelled a $2.92 billion loan guarantee previously committed to residential solar company Sunnova, Reuters reports.
A source who spoke with Reuters claims Sunnova has $371 million in bonds outstanding backed by the cancelled guarantee. Now, the DOE has “de-obligated” the loan guarantee, which removes the requirement for the federal government to continue financing.
The loan guarantee was originally closed in 2023. It was DOE’s first loan guarantee for virtual power plants (VPPs). The former terms of the loan guaranteed up to 90% of $3.3 billion in term loans, which could have resulted in the deployment of 568 MW of solar and storage capacity. The agreement was meant to support Sunnova’s “Project Hestia,” which was intended to make distributed energy resources (DERs), including rooftop solar, battery storage, and VPP-ready software, available to more American homeowners.
Sunset for Sunnova?
Sunnova’s struggles had already been made public before the loan cancellation was announced. Earlier this month, The Wall Street Journal reported that Sunnova Energy International skipped a bond interest payment in April and entered into a 30-day grace period, which expired on May 1. The missed payment was on $400 million in 11.75% senior notes maturing in 2028. Sunnova is reportedly working with stakeholders to reduce debt and increase its financial flexibility ahead of a potential bankruptcy filing and/or a bridge loan to restructure its roughly $8.5 billion in debt outside of a courtroom.
Sunnova recently appointed 41-year-old Ryan Omohundro as chief restructuring officer. Omohundro has about two decades of experience in reworking debt. Last month, Sunnova took out a $185 million loan from KKR & Co. to continue paying independent contractors to install and maintain its solar systems.
In March, Sunnova saw its shares fall 71% after the company cast doubt on its ability to stay in business, and as political tides turn the United States back toward fossil fuels. In its Q4 2024 financial results, Sunnova revealed that customer agreements and incentives rose by 43% ($163 million) but solar system and product sales revenue fell by 13% ($441 million), PV Magazine reports. This reveal followed the announcement from last month that Sunnova would cut around 15% of its workforce, nearly 300 positions, in an effort to focus on efficiency and cash generation.
