Ladies and gentlemen, please welcome Rodney McMahan, Vice President, Investor Relations. Good morning, and welcome to Sunnova's Analyst Day. We are thrilled to have so many of you here with us in person as well as virtually. Today, we have a great story to tell. Before we do, please note during today's event, we will make forward-looking statements. Actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause these results to differ materially are described in our slide presentation, our 2021 Form 10-K, and our subsequent 10-Qs filed with the SEC. Any forward-looking statements that we make during this presentation are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. Also, we will reference certain non-GAAP measures. Please refer to our presentation, which can be found on our website at sunnova.com or the appropriate cautionary disclosures. We've got a packed agenda for today, which includes presentations from our founder and CEO, John Berger, our Chief Marketing and Growth Officer, Michael Grasso, our Chief Information Officer, Chris Hayden, and our Chief Financial Officer, Robert Lane. We'll take a break around 10:15 A.M. Central Time and close by 12:30 P.M. after Q&A. As a reminder for our online participants, you can submit questions anytime during the webcast through the Ask a Question tab. Thank you, and let's begin. Ladies and gentlemen, please welcome John Berger, Founder and CEO. Welcome. Welcome to Houston and the great state of Texas. Thank you for making the trip. For those of you joining us virtually, welcome as well. Our mission is to power energy independence. Consumers want economic control and higher power reliability than they've been able to achieve under the existing system that's been with us for over a 100 years. It's been a clear trend. In the recent past, an accelerated movement up in utility rates from monopolies is causing them to search out for alternatives. What is a different service? With the weather events that were just portrayed in that video, you can see why more and more are looking for higher reliability. Our mission is to deliver power as a service to our customers when and how they need it. I set out 10 years ago. Next Wednesday will be the birthday of Sunnova. The day before Thanksgiving. It's marked by when we got funded, and I was able to make payroll for the first time. You're sitting here today, almost exactly 10 years from the birthday of the company. When I founded the company 10 years ago, I set out to deliver a better energy service at a better price. It's a big vision. To give consumers choice, control, security, control over rising prices, and to change the way that energy is consumed and generated. Not just provide them financing, not just provide them panels on the roof or a product, a battery in the garage. Service. Service is the key. Service is how power has been delivered for over 100 years through the monopoly lines, and service is the way consumers consume power. It is not a product. It is not a collection of boxes. It is not a collection of financing contracts. It is a service. Sunnova is a service business. If there is nothing else, not a single bit of information, not a single bit of understanding that you take away from this morning other than you walk out of here saying Sunnova is a service business, not a financing business. In fact, if you tell me it's a financing business, those of you that say that will not get lunch. Sunnova is a service company. Consumers buy a service, not a product. We are not a financing company, as I just said. We are not an installer. We are not a contractor. We have valuable dealers, one of which, or one of our top ones you'll hear from later, that do that work with us. We are a service company. Financing is an enabler. Software is an enabler. We deliver a superior energy service as a solution, taking together the panels, the energy storage systems, the batteries, EV chargers, generators, maybe fuel cells, load managers. Putting everything together so that we're delivering a superior energy service to the customer. This is supercharged by software. You're gonna hear from Chris Hayden here in a little while more about our software. I would hazard a bet that many of you have no idea how much software is embedded into Sunnova, how important software is to Sunnova, and how much we do, bringing all the pieces together, to simply serve the best energy service to the customer. That is a holistic service experience. We want customers to be able to come to us and say, "I want power from you 8,760 hours in the year, which is the number of hours in a year, and I want to pay this bill, and that's what I want. Anything that goes wrong, you fix it. You figure it out. You're constantly monitoring 24/7. You roll a truck, and you get it fixed. Bring it back online quickly." We're gonna talk about that. This also is something that we're gonna do on a global scale. It's not just the United States and its territories that need this kind of service, but all throughout the world. When you look at the opportunity that's in front of the company, and you'll hear from all the management team and employees of Sunnova, we truly believe that we're just in the beginning of something that's really going to be massive, and a big change, and a wonderful opportunity, not just for careers, but for investors as well, of course. What's created that opportunity? Well, when I founded the company 10 years ago, and candidly even before that, I saw a vision of an energy business on a global scale that needed to change. The first reason for that is energy security. Back then, it was more to do with the Middle East instability, which still exists today. It also had something to do with, as storms come by, you drop the power just like we had in Winter Storm Uri here in Houston and in the rest of Texas, and that was what you thought about energy insecurity. Now, as soon as I said that phrase, energy security, I guarantee you all of us thought of Russia's invasion of Ukraine and the fallout, especially in Europe, of higher energy prices, of the inability to depend on suppliers of energy. Also, what may have been the second thought is China. China increased the demand for hydrocarbons, for oil, for natural gas, for coal, for all forms of energy dramatically over its transformation over the last three decades. It had a huge impact and still does on the energy business on the demand side. However, unfortunately, the geopolitical scene and relationship between the United States and China continues to deteriorate. More and more investors, more and more people, consumers, are concerned with having so much of the supply chain embedded into the workshop of the world, as China was often called. What are we going to do about that? Part of the Inflation Reduction Act, we'll talk to a little bit later, was addressing just that, bringing that domestic production back here to the United States. However, the import and, the relationship with China goes far beyond anything in the energy business. It goes into many other areas of the economy, so it's not specific to solar or batteries. Energy affordability, it's something that we've all took for granted. When you look across what's happened over the last couple of years, here's an interesting statistic. 25 years ago, plus or minus, the average utility rate was made up of about 60% of interest and fuel. Those two costs. A year ago, it was 30%. Where do you think that 30% is gonna go from the next couple of years and beyond? Quite a bit ways up. Utility rates are moving up at an alarming and very quick pace. In fact, the fastest in over 30 years. Part of the reason is headquartered right here in Houston. The oil and gas industry from 2009 roughly to about 2021, roughly incinerated about $1 trillion of cash from Wall Street. Y'all kept giving them a lot of money, and they took it. Those days are over. The cost discipline, the return discipline in the U.S. oil and gas industry is pretty strong right now, and they're making that $1 trillion back over the next few years, and I'd say, and then some. They should. The amount of risk embedded into that industry and the business, just like the rest of the energy business, is pretty decent and should have a commensurate rate of return, certainly not negative. That is pushing rates up and will push rates as natural gas stays higher, as coal stays higher, as oil moves higher across the board. Therefore, dropping energy affordability for consumers, not just in the United States, but across the world. Lastly is climate change. I'm not gonna get into the politics of it. I know there's varying opinions about this, but at the end of the day, the science is pretty clear. There are more storms. They are more intense. The wildfires are there. The lake levels dropping across the world, not just in the United States, not just in Europe, but across the world. Something is happening here, and that something is not good. We must do our part to reduce the CO₂ emissions and bring at least a controlled solution to climate change. Now, all that is the problem, the problems. Coming together as the energy crisis trifecta. That gives us an enormous amount of opportunities. If you look at the low penetration rate of solar in the United States, it's extremely small. Looking ahead, there's so much more to do. There's at least 96% more, given a 4% penetration rate at best on single-family homes across the United States. That varies from almost 40% in Hawaii, roughly high teens, 17% in California, but in Texas, it's less than 1%. There's so much more opportunity ahead of us. For those that say that solar doesn't matter, they're right. The math is the math. But that the other side of the coin is, it's an enormous opportunity that we're just getting started in. Everything's an S-curve. Every technological adoption and shift in life and the economy is an S-curve. We're all trying to figure out what the slope of that S-curve is. We indeed think that we're on the upside, the middle part of that S-curve, and excited about the opportunity that brings with it. I've talked about the utility price inflation. There's clearly more and more pressure on consumers to find an alternative, to find a solution that's not just, "Here's the price from the monopolies. You take it, you pay it. You displace your other expenditures on your family budget. Pay this price. There is no competitive alternative." We wanna bring that competitive alternative. EV adoption. This is a wonderful technological transformation that's going on in transportation that syncs up with the stationary business. Indeed, there's an enormous opportunity for energy as a service provider like Sunnova to supply that additional energy to, quote, "Fill the tank up." Also, can that car, that truck be a part of the home solution as well? The answer is yes. Reimagining the energy delivery system, not just for the homes, but for the businesses that is brought about by the change in transportation, is something that's extremely exciting just by itself. Combining it together with the other opportunities for the homes and businesses, it presents an even larger opportunity. Policy changes. Look, if I had my druthers, I would have had a more market-based carbon pricing trade system. Doesn't matter what I want, doesn't matter what any of us want. The IRA was passed. These technologies that are deemed clean, including carbon sequestration for the hydrocarbon companies, is what is law of the land. We are gonna subsidize these technologies, including those associated directly with carbon fuels, and that is how we're gonna price carbon. That presents us an enormous opportunity and a gale-force tailwind that we're just gonna start to see the benefits of in the next few weeks and months. That's also a 10+ year policy. We've never had that kind of stability before. More and more, I think investors will understand what kind of stable outlook this has brought about with the passage of this law. New technologies. There's new technologies always coming. There's a lot that I can't possibly know what's gonna come to market. That's the beauty of capitalism. That's the beauty of having entrepreneurs out there, men and women who take risks, who go out there and come up with new technologies that nobody thought of and help them get to market. We're gonna help bring those new technologies, whatever they may be, to market. Fuel cells. Who knows? We're participating in that. We're testing some down in Puerto Rico. There's a lot of opportunity out there. The grid unreliability, and there is no one grid. There's a local regional grid, and some of them are really good or good, and some of them are really bad, but all are deteriorating in reliability. The digital transformation in our lives that started way back, wherever you wanna start it, eighties, nineties, whatever, has continued, and the pandemic accelerated it as a work from home. This presents us an enormous opportunity as well. Again, the U.S. is not an island. In fact, in many cases, the U.S. may be in one of the better neighborhoods with regards to energy affordability, reliability, security, et cetera. There's an enormous amount of opportunity on a global basis. What is Sunnova? Our business model, we are an energy as a service provider. That's what we are. Again, the only takeaway you have is Sunnova is an energy as a service provider. That would be a victory for me. We start with curated hardware. What does that mean? It means we take the best manufacturers of all the hardware. Hardware is solar panels, energy storage systems, generators, maybe fuel cells, EV chargers. Who knows? There's other demand control technologies as well. Load managers. And in fact, in a new partnership that we recently just signed, Robert Madonna of Savant Systems, the Founder and CEO, is here. And in fact, we took that load manager technology, and the first customer that we partnered up with was me. It's now in my house as of last night, and we're gonna be rolling that out to provide more technologies, to provide more service to our customers. Thank you, Robert Madonna, for joining us this morning. We're taking all this hardware, and we're putting it together in the most powerful and broad-based family of solutions, of products. Yes, we do loan, lease, PPA. No, no one else does it that way. We have the most broad family of products that anybody has in the industry, and we're continuing to add those together. We're bringing that solution to the customer. We're then taking these technologies together, maybe all these different manufacturers, and we're putting them and embedding them into our software. First, Chris Hayden will talk more about this later, the dealer software, the quote tool, the Catalyst. You may have seen it outside of this room. That is taking all these technologies together and increasingly will be able to pull in what's going on in the home. What's your lifestyle? How many kids do you have? How many bathrooms? How many EVs do you have? Do you have a pool? Put that in and come up with, yes, using the buzz terms, AI and such, machine learning, and figure out exactly what solution fits best for you, your home, your lifestyle, and your budget. It's really, really cool and more powerful technology as we move forward in time. The next is the consumer. We wanna have software that's very easy to use. We wanna have the customer have a simple experience with us. Our app that we recently launched pulls in all of the manufacturer's technologies, so you as the consumer don't have to go from one manufacturer app to the next. Just come here. Our single job is not to try to be the sexy app and so forth. Our single job is to make it easy for you and make it easy for us to understand what's going on in every single part of the energy system in our service delivery to your home or business, and then take in that data and analyze it, and if need be, roll a truck and get it fixed. That's the last service. We're gonna talk more about that in the next few minutes, but it all comes together. Nobody ever says, "I put panels on my house, and that's it. Do they work or not? I don't know." They want power. They want power 8,760 hours in a year, and they wanna pay us what they signed up to pay, and that's it. They want it, if anything goes wrong, fixed fast. That's exactly what we're doing and where we're headed. We're focused on, as we've said, energy as a service and pulling all these things together. In fact, I wanna tell you that, and this is gonna be a shocking statement, an increasing number of our customers view us as the primary power provider. I'm gonna let that sink in because it sure needed a few minutes or a few days for it to sink in with me. Things have changed tremendously. What's that catalyst for change, as y'all would say? The battery, the ESS. When you put that in there and you start putting more load control like Savant technology, et cetera, everything comes together, and that's when the consumer expects us to be there no matter what. If you look, we've come a long ways in 10 years. Right down the street, there was a Houston apartment that we used to meet in, and I made sure everybody got there at 8:00 A.M., and nobody left before 5:00 P.M. unless they had a meeting with an investor or somebody else to help put the company together. Now we're a multi-billion dollar New York Stock Exchange-listed company. It's definitely humbling. It's definitely the American dream. If you look at over 10 years, we've gone from just a handful of people to over 1,300 employees today and climbing quickly. We have over a quarter of a million customers and climbing even faster. We are in 54 markets, and we will be in all with all products in every state and U.S. territory by the end of next year. We have 65, I dare say probably 66 now with Savant joining us yesterday, strategic partners of all types that help us originate more customers, bring more technologies and more services to our customers, and they're key to our success. I always say it's important to have friends in this business. There's so much going on, and you wanna have more and more focus. Plus, it's a big, massive opportunity. You need friends. No better friends than over 1,000 dealers. These are dealers that are actively out there quoting and closing new Sunnova customers. We call this number frequently. Make sure that this is a tight number. We don't just throw some contractors in there and say, we are gonna inflate it. It's 5,000, 6,000, where 4,000 don't ever do anything for you. This is a real number, and it's climbing even faster. If you look at what makes us different, the so-called competitive moat, what is that? What is the strategy here? What makes it a little different from our competitors and even some of those in the value chain? First and foremost, I believe in focus. I believe that strongly, that focus is what has gotten us here, and focus will continue to get us where we wanna go in the future. We are an open platform, which means that we take the best hardware partners, and we incorporate them. We take their technologies, and no manufacturer, I don't care how good, can always have, as we have, the number of boxes, as I call them, on the home, be the best box maker at every single box for year in, year out. Best pricing, best technology. It's not possible. It's not gonna happen. There's always somebody that's gonna come up with something a little better, at least on one of those boxes. That's what we see in the field. If you look at the proliferation, the number of competitors out there manufacturing all these new technologies, it's proliferating. In the recent Renewable Energy Conference on the floor, for those of you that went there were 42 energy storage system providers. 42. Some of them that we know from bigger firms weren't even there. There's a lot of opportunity out there. It doesn't mean that the leaders that lead today will not lead tomorrow. I'm not saying that. What I'm saying is we're taking a lot less risk, and we're partnering with those leaders and whoever shows up to become a new leader in taking those new technologies and making sure our customers get them first. We are not combining a manufacturing business and a service business. In fact, listen to a lot of other CEOs outside the energy business, every time that has happened, that company has always gotten into trouble. Focus. We're focused on service. Our partners are focused on manufacturing. We're able to go to market at a much faster pace because of this. We're able to incorporate these new technologies and bring them into service contracts faster than most because we have this open source service platform. Now others, you can be an equipment manufacturer, you can try to have service. By the way, service is not answering the phone quickly. We can do that. We've done that for years in, year out. Service is actually taking in the data from all these 250,000+ customers, all the different manufacturing boxes, analyze that data. We just opened a new national operating center in Greenway just this past week to take in all this data, to analyze that data. Yes, again, some more AI, machine learning, and then see what that data tells us and roll a truck and get it fixed. That's hard to do, both manufacturing and do all of that, and we'll talk more about that last mile and what we're doing there here in a minute. On a part-time developer perspective, having gear that you own, maybe even outsource the manufacturing, or you heavily invested into it still ties you together. I challenge that if you put so much money into something, are you really gonna walk away from it? You need to be able to have that flexibility and agility as a service provider, and when you tie yourself to a hardware manufacturer that closely, you lose that advantage. Our software platform. I've said this over and over and over again in the years, but what I think Chris Hayden will take you through will shock most of you, if not all of you. Very few people think of Sunnova as a software company. Yet in other industries, it's not the manufacturer of the hardware that delivers a lot of the software, it's the service provider. Think about it. I'm not gonna mention all the names because I don't want it to seem like I'm trying to compare us to these big, successful companies. But service is delivered through software. As I mentioned earlier, Sunnova Catalyst, it's the dealer experience. It's how do we make it easy for our dealers to go out there and quote our customers, to get them signed up to our contracts, whatever it is that they want to finance, cash, no financing, loan, lease, PPA, doesn't matter. How do we make that more powerful? How do we make the dealer's job easier? Next is, how do we make the customer experience easier? How do we make the customer wanna come to the portal and the app if they have an issue? I'm a firm believer that energy is really not that sexy of an industry. Nobody really sits around and wants to look at their phone and say, "Looky, look at what my house is doing right now as I'm sitting here trying to figure out what to do or trying to watch a movie." People just want it to work. That's all they want. They wanna flip the switch 8,760 hours a year, and I pay the bill that I signed up, and that's it. That's what I want. Today, you can't get that from the monopolies. We want that ease. We want that ability for consumers to see what's going on, for us to see what's going on, and make their life easy and make their energy service the best energy service at the best price. Sunnova Sentient. Again, Chris Hayden will talk more about this later, but it's optimizing the pieces in the home, but then aggregating all the homes and businesses together. It could be in a microgrid. It could be what they call grid services, VPPs, whatever the slang term you wanna use. Basically, an intersection of the behind the meter to the front of the meter or the whole local wholesale market. We have the largest dollar amount of contracts in this area in the industry, and we're gonna continue to push forward because we're in a number of key markets where Sunnova Sentient could be providing a lot of value to its not only its customers, but the communities that we serve in. Our service experience. Consumers care, as I've said over and over, that the power flows, and they pay the price they expect. How do we know that they're happy? There's a lot of different consumer satisfaction scores out there that some of my competitors use and some members of the rest of the value chain in the industry use, and they're fine. We use them. We're presenting them up here. For instance, Net Promoter Score. Heard a lot about that. We're at a 56. How does that compare? Because I don't really, you know what that really means and how I have a yardstick to it. Verizon's a 30, TurboTax is 35. Apple, everybody loves Apple, 60. We're doing well. Customer satisfaction is at over a 4.5 out of five. Google Stars 4.1. This is all wonderful. This is great. We do well. Do I think this really tells the story about what an energy as a service provider should be graded on? No. It is response time. If you go into the field, you talk to our customers like I have, what they care about, again, how fast when something goes wrong, are you there to fix the problem? That's what they care about. It involves more than just showing a truck, as we'll talk about here in a few seconds. It involves getting replacement pieces of equipment and parts and the right truck at the right time to the right customer. What's the opportunity for this service? It's massive. Candidly, this industry was built on this idea, panels on a roof, a product sale. This is not a product sale. We were tricked into thinking it was a product sale by the net metering construct in some utilities areas, which we all know is changing. We were tricked into it in that there was no battery up until a few years ago. There was no system approach to this. It was simply putting silicon on a roof that generated power in an intermittent fashion, and the utility still provided that service. Those days are numbered, and in some cases, they're over. There's a number of customers out there that were told, "Look, there's no moving parts. Don't worry about this, ma'am. It won't break, ever, for 25 years." Really? A lot of things go wrong. Breakers blow, trip, conduit gets chewed on by a squirrel. Somebody does something with a panel with a golf ball. There's also inverters go bad. There's stuff that happens. If you strapped your iPad to the roof, how long do you think that thing would last? There's always something going wrong. More and more consumers are coming to us and our partners and saying, "Sunnova, you're the most focused on service. Fix this. Help me." We're doing it. Rob spoke yesterday. He'll speak more about the increase in the service-only business and how fast that's becoming a part and a key part of our business. We see the opportunity not just on a forward basis, but the existing customer basis as well. What's that opportunity look like? We estimate by 2025 it'll be near 6 million households alone, where we can go in and we can provide service for the first time to a number of customers when they were signed up with no service provider whatsoever. Another key part of our value creation, which we'll talk more about here in a few minutes, is the number of services driven by the new technologies like load managers that we can provide customers, existing customers and new customers. We set a metric out there to take that from roughly 3.5 to seven by 2025, and we're well on our way. We increasingly see consumers coming into us and saying, "I want a battery. I want a load manager. I want an additional system because I just bought an electric vehicle." In fact, the pace, as I've said earlier on prior earnings calls, has taken me by surprise about how many customers have two contracts or three contracts. It's an enormous opportunity for us. On service delivery, what does that look like? Here's a picture of our new national operating center. Could be a global operating center someday. We're taking all the data. We're watching everything that's going on out there for our customers and our customer base, the fleet, so to speak. That gives us the ability to constantly monitor what's happening out there. Our call centers, our multiple call centers around the world are taking in those calls from our customers, from our dealers. Over 80% of our staff in our call centers are bilingual, 'cause a lot of our markets, like Puerto Rico, is primarily Spanish. We're building a field service training center. How do you bring in all these technicians, train them up to be good electricians, get them licensed, get them back out there solving our customers' problems? We're building that out. The testing and training lab. The early days of the company, it was my house. That can't be the case anymore. We're gonna be building out how do you take these different technologies from these different manufacturers and put them together, and how you embed that into our software. All that needs to be tested in the field before we roll it out to our customers, and we're building that out. We're training employees. We're building out training programs. In some cases, you know, we already have training programs with community colleges for service technicians. We're building out field dispatch centers. We're taking in a lot of the information that we need to build out an entire supply chain. Here's what I want you to think about. As you go through time, each piece of equipment for a customer that signed up six, seven, eight years ago, those equipment pieces, inverters, whatever they may be, fail. You've got to go get a replacement. Sometimes you got to have a special manufacturing run grouped up by Sunnova, paid by Sunnova to go out there and get that panel that matches, to go get that inverter. The challenge is, how do you get that equipment, that replacement gear, to the right truck with the right technician on the right route to deliver it to the customer at the right time? It's an enormous challenge. One might think, at least in part, is the challenge that Amazon faced as it grew its business, certainly UPS and FedEx. How do you go to these homes in an optimized fashion so you can make money on this service and keep the replacement gear coming on a timely basis? Indeed, many of our customer complaints over the past couple of years or so are my system's down and I'm waiting on an inverter replacement. We're getting better and better at that. How do we get that right inverter to that customer at the right time? Our customer, we've talked about this over and over. How do you make it easier for the customer to interface with us? That's what our customer portal, our mobile app, all the SMS, voice communications, et cetera. sunnova.com, which we just had a refresh. It's bilingual. How do you make it easier for the customer to do business so that we can do more together? We've talked about the Network Operations Center. I actually think this is really cool, and I've wanted this for years. This is the vision of being basically a utility, a wireless power company, if you will, and having all the data come together so that we can dispatch technicians to go fix customers' problems. You can go down if those are interested and go see it in our Greenway headquarters. This is something that I think makes us unique. This is the kind of vision on how to supply service to customers that I think makes us stand out. This will be operated all year, constantly looking about what's going on, troubleshooting, and then dispatching the right technician to fix the problem. Speaking of the technicians, at the end of the day, as I've talked about customer satisfaction, the number one thing consumers want, again, power service that flows 8,760 hours a year and costs what they expected it to cost when they signed up. When it's not flowing, the power, they want the repair to happen within 72 hours if it's solar only, which clearly we're moving away from solar only, right? If it has a battery and other technologies, they want it repaired within 24 hours. That is something that we've talked about in the past. We're getting close in some of our regions to achieve that, and we will achieve it across the board. That will set us apart completely. Think about pizza delivery, Domino's. We're not going to say, you know, if we don't get there in 30 minutes, it's free. We're not doing that, so don't worry. Think about how important service delivery times, the speed of answer has been in consumer-facing industries like food. Why isn't it talked about here in this industry? Why? It's a service. You have to measure yourself on your response, the quality and the speed of your response. We're gonna be there. We're gonna make it happen. Value creation. Rob will go into this in more detail in his section. From day one, you can have all the vision in the world to change the industry, to make the world a better place. If you don't create value for your investors and your shareholders and pay your lenders back every penny plus the interest that they signed up for, you are not gonna make it. It's sustainable growth. That's why I was focused from day one on building a balance sheet to drive that long-term value to our shareholders. When you look at going back and talking about the number of services per customer that we are able to do. By the way, we're the only service firm out there that's upselling our current customers. That's gonna change. Maybe it changed in the last few weeks. Who knows? We've been doing it for years, and we're seeing an accelerated sales pace, sometimes directly, a lot of times with our dealers, in wanting batteries, wanting EV chargers, now wanting load managers, more system, more panels, more inverter because they bought the EV, more generators. We're seeing this happen. We're executing on this. It's not something that we're going to do. It's something that we've been doing, and we're gonna do a lot more of. The NCCV per customer, when you look at this, and you've seen this slide in the earnings decks for the last several quarters, not years, you look at this and say, "Well, this is a PV4. I don't like a PV4. I think it's ridiculous." Okay. Pick whatever discount rate you want in the fine print there as PV6. We'll update it accordingly as we can when the market changes, but that's not the point. The point is focusing on the value created on a per customer basis, and that translates directly into a per share basis because you all do not buy customers, you buy shares. Whatever the discount rate, looking at the contracted value that we're building on a per share basis. Even with the issuance of stock-based compensation and so forth, acquisitions is something that I think should be done across the sector. It keeps us honest. It keeps us focused on value creation for the shareholders. We're creating more value and have created more value at least over 2x per customer than any of our competitors. Some competitors are not even in the same universe as our value creation per customer. We've talked about the services per customer. We've talked about how we're increasing the battery penetration rate and the other technologies and services. We've talked about how that drives an increase in NCCV, Net Contracted Customer Value per customer. Let's talk about the cost of capital briefly. Again, Rob will get into more of this later. We have the lowest cost of capital, period. I know others may push back on that. That is a fact. It's math. The only way you are going to have a long-term sustainable cost of capital advantage is if you have your own balance sheet. Renting a balance sheet works when the Fed is flowing free money and everybody's happy, and new stock market highs happen every day. We are clearly not in that environment and will not be, in my opinion, for a long period of time. We built the balance sheet. I took the pain, I took the dilution, and I made sure we built a company that could withstand the kind of market dislocations and bad markets in both the equity and the debt capital markets that we're seeing today. That gave us the ability to issue the first and only corporate bond in our sector. That gave us the ability, plus looking ahead, thinking things weren't gonna be that great, timely capital raises to give us the lowest cost of capital. We're gonna take the IRA and the ITC adders, et cetera, and we're gonna have a further cost of capital advantage out there to some competitors. Some of our other competitors will obviously do the same thing. What does all this do? It drives increased liquidity. For those of you yesterday that were visiting with Rob, you can tell that we have multiple avenues of creating liquidity in these difficult times, and we're focused on that. This is not a recent plan. This is something I set out when I founded the company 10 years ago. Frankly, it is the only reason Rob joined the company, was the focus on cash flow, the focus on generating liquidity in multiple avenues for the company to go through any economic time period and to drive lower leverage. That's a focus of ours. How do you continuously have lower default rates? All this will come together. Listen to this point. The reason why we have a declining default rate when the default rates of mortgages, autos, personal unsecured, boat loans, all this stuff is going up is that the consumer sees this as not personal unsecured debt, whether it's a loan, a lease, or a PPA. They see it as a power service contract. It is cheaper and more reliable. That's why our default rate keeps dropping. Because if you don't pay us, you got to pay the utility 20% more, 50% more, maybe 100% more for the same thing. Who does that? That's like going down to the intersection. You got two gas stations, one's charging $3 a gallon, one's charging $6, and you choose the $6. Like, who does that? Maybe some of you just to help Exxon achieve its quarterly numbers, I don't know. Nobody does that in their right mind. That explains, and I get that question constantly, including last night. Why? Why is that? This is why. It's not hard. You talk to a customer, they see us as an energy, as a service provider. You have to provide the service. As you provide the service, what happens? A customer is happy. I got the power at the price that I signed up for. What does a happy customer do? Pay. All this is linked together. This is another reason we kept our cash flows, not just to achieve the lowest cost of capital, because we're reaping the financial benefits and our shareholders, to be clear, are reaping the financial benefits of keeping all these cash flows because we're providing a better service at a better price. The default rates that were estimated and continue to be estimated by the capital markets are wrong. It's just math. We're driving our own success. It's not by accident. It's not a moment in time. It's because of how we put the company together and how we're executing. Lastly, we talk a lot about focusing on what we call collectively as ESG, sustainable growth, impact, and what is our corporate responsibility for the communities we serve. First, environmental. Of course, when you look at what Sunnova is in terms of a solar company, we've been able to provide solar energy, clean power. Sorry, avoid and displace over almost 25 million metric tons of carbon. That's good. We can do a lot better. We're gonna do a lot more. But it's certainly something that's core to those that have joined us. Are we making the world a better place? Are we doing our part to solve climate change? The answer is yes, but we can do a lot more. Social diversity. You are sitting in the most diverse major city in the United States, Houston, Texas. Sorry, for those of you that came in from New York, it's not you. Those of you that get to live in L.A., it's not you either. It's Houston. How important is that to this company? It's everything. From day one, and indeed today, as we were having early Thanksgiving lunch here in Houston, the Houston offices, you would go there, and you would see a lot of my fellow employees, and very few look like me. That's a fantastic thing. We want, and from day one, I've always believed, no matter what you look like, no matter what your religion may or may not be, what your sex is, what you do in your personal life, doesn't matter. What matters is what you can contribute to the firm and how you treat your colleagues. That's what matters. That culture has driven us to the point of being very diverse. We're not satisfied, we can do more, but I fundamentally believe that diversity actually drives great economic returns for shareholders. I'll give you an example. Puerto Rico. We entered Puerto Rico years before any competitor did. We, along with our partners, one of which you'll hear from, created that market. Yes, there's more competitors in there. Same competitors that made fun of that market years ago. How? Why did we go into Puerto Rico, which I would argue is the most strategically important energy market in the United States? It was the first to get mass scale of batteries. We're seeing the ability to do microgrids. We're seeing the ability to bring in other technologies out there. Service and being the primary power provider is dominating in Puerto Rico. Why did we go in there? First and foremost, I believe that every American deserves access to the same technology. Indeed, everybody around the world deserves the access to the same technology. I was driven to make sure that we were gonna go to Puerto Rico. Another way and reason that it was made possible was we happened to hire some bilingual customer care people. I found that that was a competitive edge. No one else was doing that. No one else had a Spanish contract. We're therefore, because of these people, because of the early days of Sunnova employees, we were able to go in Puerto Rico and create an enormous value for our shareholders in what, again, I would argue is the most strategically important market in the entire United States. Lastly, how do we do better at governance? How do we make sure that our shareholders are taken care of? That proper governance is not just about how do we make our proper SEC filings, but how do we truly take our belief in making the world a better place, driving our environmental goals, driving our diversity goals, how do we truly make sure that's a part of who we are? I think a concrete example of this is the green bond that I mentioned earlier. The first and only corporate bond. No other company has the ability to issue a bond off its balance sheet, and I would argue no one will for a while. How did we do that? We're able to do that because, as I mentioned earlier, we created the balance sheet, but at the same time, we were the most highly rated on the green metric rating agencies for that bond. It gives us proof that we're walking the talk. As I mentioned, we can take environmental, social, governance, we can pull all this together. We've got a great tracker that I'm really proud of, but I know that we can do a lot more, and we're powering ahead to do just that. You know, when I founded the firm 10 years ago, I knew there had to be an immense change in the energy landscape. Competitive, more reliable, cleaner, simple. A complete change in the way we look at energy. We needed the change because of the limitations of hydrocarbons, because of climate change, and because of the increase in energy reliability demands by consumers due to the fact that all of our lives have been transformed digitally. I wanted to build a firm that would stand the test of time, that would be here for consumers for years to come. I knew the energy transformation would be a service that'd be more reliable, simple, and deployed on a massive global scale. The last 10 years, Sunnova has achieved remarkable things. With over 250,000 customers and almost all of the pieces of our vision now in place, now we must press the accelerator and move forward to achieve this vision of a new world. That is exactly what we're going to do. The biggest problem with the legacy energy economy is that it was designed for an era in which the customers didn't have any other options. Batteries and solar panels are becoming viable option for customers. In the U.S. today, the direction is obvious. If you fight change, you're going to lose. Our existing energy ecosystem is having a massive impact on climate change. It is causing harm to our planet, which in turn causes harm to our people. Puerto Rico is being hit by 100-year events every five years. Houston has experienced seven federally declared disasters in the last seven years. There have been issues with the traditional grid for a long time. It is very antiquated. It is non-competitive. It is expensive. The ultra gas is what we need to cool our homes, and that's a very energy-intensive activity. People are looking for their own energy independence. They're looking for their own well-being. They're looking to control costs. Electric rates have risen enormously, and many utilities are anticipating rate increases of 10% or more over the next few years. Meanwhile, solar modules have gone up significantly in efficiency. From a technological point of view, things are changing, and they're changing rapidly. That's why so many people are starting to install batteries for energy storage because they want to have reliable energy even when there are power shutdowns, when the grid is unstable. When you put all those things together, you've created a system. You've created an entire solution for a consumer. That's why distributed energy really is the answer to so many of our problems. Things are changing, and I think it's gonna change even more for the better under the Inflation Reduction Act. The Inflation Reduction Act is momentous. It provides opportunities for consumers. It provides manufacturing support. It's really a watershed moment for the clean energy industry. I believe the residential sector is just the tip of the iceberg. Business is the untapped opportunity. The nice thing about solar is it not only lowers your bill, but it is right there at your facility. That solves an immediate problem that you otherwise would have. Most of the adoption of solar is happening simply because of economics, and the economics is looking more and more favorable with every passing year. As we look for climate solutions, we're generally going to be looking for secure, distributed, clean energy. Right now, solar is proving itself to be all of those things. When you look at current energy demand, people's desire to have energy security and reliability, the provisions that are included in the Inflation Reduction Act, I think it's definitely a very optimistic moment in our history. What I sense from where I sit is that there is more momentum than I have felt, and I've been in the energy space for over a decade. It is clear to me that this change is happening. Ladies and gentlemen, please welcome Michael Grasso, Executive Vice President, Chief Marketing and Growth Officer. All right. Good morning. Great to see everybody this morning, and thank you for spending some time with us. It's great to be up here and be able to share our story with you and talk to you a little bit more about where we're going now on the growth front. Sunnova was built from the ground up to provide energy as a service. This entire business was created to deliver these market-leading solutions. Everything that we've done is all about this fully managed electrification for the home and for the business, so that customers are getting truly adaptive solutions that are resilient, that service their needs, that give them the benefits that they're looking for. It breaks out across a number of different tenets that we're focused on that are really fueling our growth as a business. You know, each of these areas underpins the strategy that we're talking about here today. It's for our dealers, and it's for our customers. By building these solutions the way that we've been building them, what we are creating is an opportunity for our dealers to get a greater share of the customer's wallet. That for Sunnova, in turn, to get a greater share of the customer's wallet and of the dealer's business. It's about propagating more solutions so that we're getting more deal flow, and we're creating a stickier customer over time and able to create more value over time for the enterprise. This is all about growth. It's all about the opportunity. It's all about continuing to advance our solutions in a way that puts us in the center of that consumer's energy ecosystem and allows us to continue to be the supplier of the services that they're looking for. I'm gonna take a few minutes now to walk through each of these different areas and talk about them in more depth. First, on geography. I like to think about the fact that if you wanna go fishing, you want a bigger area to fish in, and that's what we've been doing with our market expansion. You know, Sunnova now has a service offering in 54 U.S. states and territories. 40 of those have our solar plus offers in them. Collectively, we're able to serve 106 million households. This has been an area of focus for us, continuing to grow and to push the boundaries so that we have more service offerings in more markets, so we can continue to build a stronger relationship with our customers and bring more customers into the top of the funnel. This also allows us to grow our dealer base, which is extremely important to us. We can operate in more markets, we can satisfy more dealers, and this will give us more capacity at the top of the funnel that can continue to drive value all the way down. We're planning to continue to expand this, and you'll expect to see all of our solar and service offerings in all markets by the end of 2024. We plan to expand to the 55th market that we don't currently have covered. On the portfolio side, when we talk about what are the services offerings, you know, it starts with solar. Like, that's still one of the key core solutions that we wanna ensure we're creating an opportunity for all consumers to get access to. More and more, as we get into this new environment where electrification is changing, and you all are part of this and you're seeing this, consumers enter the value stream in lots of different ways. We're looking for ways to both provide them with a better, more resilient solution up front and as well to service the other needs that they have. One of the ways that this comes about is in resiliency. Solar is definitely the key for the home, but we also are providing secondary generation, and that can happen either through a home standby generator or as we bring fuel cells into the market next year. The combination of those services is also important because some customers start with one solution and grow to another. They might start with a generator and then decide to add solar to their home, or they might start with solar and then look for resiliency to go the other way. Also at the core of our strategy has been storage. As you know, we have better than 15% penetration on our customer base today. We continue to pursue a high attachment rate of storage, and we expect that to continue to pick up in quarters and years to come. EV charging. We know that EV charging is gonna become a larger portion of the work that we do in the market today. We know that stationary storage that we've been pursuing in the home is gonna get complemented with mobile storage. We want those two technologies to work together, and we wanna be able to provide both from one single supplier. Smart load controls. We've been working to bring smart load controls to market for a while now. John mentioned our partnership with Savant. We're extremely excited to have such a strategic preferred partner working with us, where we know that we can take their best-in-class technology and provide whole home load control, well integrated into Sunnova solutions that allow us both when the customer is on grid or off grid, to provide the level of resiliency that that consumer is looking for. As you think about the other services in the portfolio, we sometimes get asked, like, "Why roofing?" You know, "Why main panel upgrades?" These are all friction points in the sales process. Roof alone is an opportunity to open up 15% of the market today. That's the number of homes that typically need some kind of roofing work in order to engage in a long-term relationship with a solar provider. Roofing is really a great way for us to help take one of those friction points out, and that's one of the reasons that we included it in our portfolio, to make it simple for our dealers to purchase, transact that into the same, financing agreement if they need it, and then also to make sure that that comes with a 25-year warranty. Some of the other features here you see, like tree trimming, those are obviously the same types of friction point removal, activities, and then electric panel upgrades and HVAC. HVAC is in the newest area for us, really allowing consumers now to extend further into that energy ecosystem. If they wanna use our platform to transact that HVAC system, they can now start to do that. Over time, we're gonna continually increase the integration points and the capabilities that we have with HVAC to make that more part of that centralized holistic energy solution. On the Protect and Repair Services, we talk a lot about service. In the core of what we offer, Sunnova has the best in the market. 25 years end-to-end monitor, maintain, repair, replace with a performance guarantee on the core solar solution in its offering. In addition to that, for those customers that get storage from us, we do the same 25 years of coverage. We're the only company in the industry that goes end-to-end for those consumers to ensure that those systems are gonna operate at the expected levels for the entirety of that agreement. We've been extending that now for those customers that weren't fortunate enough to get Sunnova the first time, and that's where our Sunnova Repair Services comes in. Taking that same centralized core solution where we have our Sunnova technicians and Sunnova trucks going out and servicing the Sunnova customer, that's where we can now, with Sunnova Repair Services, take that to the non-Sunnova customer, and they can get the benefit of our repair service experience. That comes also with some, you know, continuation of the agreement that we put in place to make sure that it's gonna perform over time. We also are very focused on extending that core solution from just products into additional services that sit on top of those technologies. That's where Sunnova Protect, Sunnova PowerGrid Protect comes into place. It's one of the grid services that we offer today and doing other services like managed RECs. Some consumers can't transact their RECs in their market or maybe they can, but it's complicated. We've simplified that in many markets now and are continuing to expand the ability for our customers to have Sunnova represent them in transacting those SRECs into the market and providing that monetary value back to the customer, and then Sunnova gets to earn a return off of that also. We're expanding the aperture of all of the solutions that we have that sit on top of these other solutions. Then obviously, we do the financing products all across the board, lease, loan, power purchase agreement, and cash. Within each of those financing constructs, we have some of the most innovative capabilities. One of those would, for example, be the PPA. PPAs have been around for a while, but our PPA structure allows you to put, you know, zero into it all the way up to 100% and anywhere in between. If you wanna dial in the price you pay for your energy, you can do so with our PPA structure. 50% prepaid, 100% prepaid. We also have other capabilities in the rest of the portfolio to simplify it for the customer and make it easy to transact. Let's talk simplification. That's a lot of services and more coming to the market. How do we bring all that together? You've heard us talk about the Sunnova Adaptive Home construct. This is really the simplification measure for Sunnova. We bring all of these services together under one roof, and this is all powered by the Sunnova platform as software using this curated hardware model. This really delivers on our vision of economic control and power resiliency, 'cause we're able to orchestrate the whole home's energy generation and management in a way that gives the best solution to the customer at the right time. Think about the home. What's going on in our home today? It's obviously receiving power from the grid 'cause all of our properties are still grid connected. There's also weather events that are occurring, some today, but some are also coming. We might have signals from utilities that are saying that they're gonna do something, a public safety power shutoff, possibly preparing for some repair work on a feeder group, some other activity, right? There's a lot of activity that's happening around this home, and we're ingesting those endpoints and those data streams to start to understand the behaviors that we can then come to expect. We also are aware, through the software platforms that we're using and the data points that we're consuming, of what's happening in the home. You know, what services are connected. They have solar. They have secondary generation. They have a load controller. There's an EV charger plugged in. The EV charger is set to charge during certain times of the day, or maybe it's free charging. Whenever it plugs in, just charge. Our technology is working to bring all of that together so that this home is able to operate the way that the consumer is expecting it to operate. We're committing to the consumers that they're gonna get that single bill, that single price point, that that's the economic control. We're committing to the consumer that if the power goes down, they're gonna get to continue to operate. That's the resiliency side. The Adaptive Home is contemplating all of those data points and ensuring that the technologies are working together, so that whether they're on grid or they're off grid, they're continuing to get the service features that they're looking for. This is really the key to the strategy around how do we get the financial security and energy security that consumers are looking for, and this is at the heart of how we're making our services capabilities all singular and supportive of our end vision. Let's talk a little bit more about it, because there's configurability in this that's important. You know, we like to think about these curated hardware solutions as being important in that they allow us to bring the right technologies to the customer at the right time also. We're all buyers of technology. Some of us got solar first, some of us got an EV first, right? Some of us decided that maybe we just need to do an HVAC upgrade. When I was talking to the electrician, he said I need to do a main panel upgrade. Since I was doing the main panel upgrade, if I was thinking about getting an EV, maybe I should get an EV charger installed at the same time and get a larger panel. All of them start to feed together. First for Sunnova, we work to select the right manufacturers for the right solutions. Many of our suppliers today that are best in class have technologies for multiple different points. They might have a technology for the microinverter or the string inverter. They could have a technology for the ESS. They could have load control technologies, EV chargers. They could have generators. They could have a variety of different technologies. Consumers don't buy everything at once, typically. Just because they bought from one manufacturer doesn't mean that the next transaction is gonna make sense to get it from that manufacturer. Oftentimes, it doesn't work that way. Either there's not a retroactive integration or they need a completely different application. What Sunnova is able to do, because we are working across these different suppliers and bringing all this together, is we act as the intermediary. We can bring somebody's supplier, inverter supplier together with an EV charger, together with an ESS, so you can have a combination of technologies operating together, and it's simple for the customer. I don't have to open up five different apps to understand how my home is working. I can use the Sunnova App, right? We bring it all together for the consumer. So that's where the software unification really happens. It's also about making sure that all of those endpoint devices work, and that's the service experience. I don't wanna have to pick up the phone as a consumer and call five different suppliers to say, "Well, I got your EV charger, and I got your electric panel, and I received your ESS, and it's not working, and can you help me figure this out?" Sunnova is at the core of that, and so our service experience and the way that we bring all those capabilities together puts us in the driver's seat to solve the customer's problems, and that's where we are operating and creating that value for the consumer. It's all about this integration, and this is really what allows Sunnova to build the community and also to service it with the 25-year experience. John talked about value and where we've talked about our guidance on NCCV and seven services per customer and the $19,000 in value that we assume we'll create on a PV4 basis. If you took an excerpt of the Adaptive Home, though, what you'll see is a higher concentration of services and more value. This is really speaking to where we're trying to go, right? This is why we want to do it, because we can bring more value to the table for the consumer and for Sunnova. This allows us to add and create more value over the entirety of the fleet, and this is where we're going to continue to drive to get more customers to adopt a broader set of solutions with the Adaptive Home, and that will allow us to create more value over time. We really like the Adaptive Home. We think it's pretty cool. Like really, really cool. Our consumers are telling us it's really cool. In fact, you know, we had over 30,000 customers in Puerto Rico that lived off of our battery and solar system after Hurricane Fiona for up to 10 days in some cases. I mean, pretty significant use case, beyond a use case, of how resilient the technologies are that we're deploying to the field. When we look at the market, we see this other massively underserved community, and it's the business markets. It's the commercial and industrial space. An audience which, you know, from my perspective, has not been getting the best solutions. We took a page out of our own book and said, "Why don't we create the Sunnova Adaptive Business? Why don't we give them the same technologies that they need in order to operate their businesses with resiliency, with economic control, right? How do we help them sustain their business models so that when one of these major weather events or grid upgrades or one of a number of a thousand excuses you have for not flowing power to the grid come up, that the businesses are allowed to continue to operate? This was made real for me a couple years ago when we were starting to get into some of the power safety, power shutoffs issues in Northern California. There's a-- I live in a small town just north of San Francisco, and, you know, we would get these shutoffs, and it'd be a blue sky day, and everything's great weather-wise, but there was a threat, you know, that something was gonna happen somewhere in the grid, and the grid couldn't isolate, and therefore, everybody loses power. We have a restaurant in town, and they use big ovens, and I know the owner, and he tells me he comes in every morning at 9:00 A.M. His team turns on the ovens so that by 11:00 A.M. they're ready to serve lunch. They make pizzas and sandwiches and those types of things. I was asking, "Well, what are you doing? Because you keep getting these daily, if not week-long, power interruptions." He's like, "Well, we usually don't know what's gonna happen. A lot of this outage activity happens in real time, and we're just stuck. I have to pay the staff for the full day and send them home, and I just take a huge loss on my books. He said, "If I have enough time, one of my options is I can get my truck, I can drive 30 minutes down the road to where I have a storage locker. I hook up my gas-fired generator. I drive it back to my lot. I take like an hour or two, and I interconnect it, and then I fire it up, and I hope the grid's not gonna come back on because I just went through all this, right? And I'm gonna try to get the business back online." I was thinking, like, this is ridiculous. Like who wants to live in a world where we don't support small businesses and even medium and large businesses? Who wants to live in a world where we have all this great technology, but there's not really been a company that's been brave enough to put it together in a unique way and put the service behind it that the business needs in order to deliver the value of the solution that we're looking for. That led to our development of the Sunnova Adaptive Business, really taking this set of technologies that we're already mastering for the residential market and bringing those together to be able to service businesses across this country. We think that by taking the same inputs and leveraging a lot of our infrastructure, we're gonna be able to serve them with a very, very high level of experience. Our sweet spot is 50 kW-500 kW. We're currently taking customers of all sizes as we continue to learn more about their needs in the marketplace. This is really about Sunnova as an industry leader delivering a high-value solution to a whole different audience in the market. That's important, right? Because there are about 600,000+ buildings in this country that don't have a great energy solution. That's about 145 GWh of power on an annual basis. It's a big audience, right? It's a lot of opportunity. Sunnova's in a position where we can quickly expand into the business markets, leveraging our infrastructure, and we can do this very, very quickly. We're already in seven markets. We'll be in 20 markets by Q1. This is allowing us now to start to follow businesses on a regional basis and very shortly coast to coast. As we continue to expand our footprint, we expect to mirror all residential markets as soon as we can. I get the question also, like, "What gives you the right to go and compete in the business market space? Others have tried, and they really haven't been as successful." Well, the truth is, we have been doing this for 10 years. It's not like we're starting from scratch. It's not we're just trying to solarize the rooftop. It's really about focusing on that consumer, that business market's customer, and using the leverage and the capabilities that we've built over a decade. Our experience in the market is one of the key drivers for us. We have a high velocity business, and we're working to create a high velocity commercial business. Things like underwriting need to be highly efficient and be software enabled, and that's a key focus of ours. Other points of this are about removing the friction for our dealers to go sell. Focused, right? Economic control and resiliency. We know that there are multiple motivators for purchase. This isn't just about solar on the roof. This is about the whole business solution. We're working to make sure that all of that comes together. National. A lot of these suppliers that are in the market today, they aren't national. When you have a national challenge, somebody that has a franchise business or operates across state and regional lines, they have to go find multiple different suppliers. That's not efficient for them. Sunnova's in a position where we can service the national needs of these businesses and make it easy for them. Also for the dealers that wanna operate on larger regional or national basis, as we can help them also. The last one is digital. This is about software first. Like, we're building the business the way we want it to operate, and so we're using software to drive the most efficiency and capability that we can to create the lowest friction and the highest velocity commercial sales business that's out there. This is really the Sunnova Adaptive Business strategy, and it truly does leverage all the strengths that Sunnova has and will continue to develop. We're early, but we've already got some great wins. Really excited about some of the projects that the team has brought to the table and the ways that we're bringing solutions to the market. This is just a small sampling to give you a sense for some of the things that we're working on, but we've got success occurring now in multiple different states. You'll see here examples around a nonprofit campus. Great time to work with nonprofits with the IRA. Building both rooftop and canopy solar systems. This will be a lease project for us. We're working on a winery in Northern California. They have a whole set of solutions they're looking for both to supply the winery and to supply the customers that come and visit. We've got mixed-use development in flight. Both the multifamily piece and then the commercial businesses that'll operate inside those buildings and multifamily. Multifamily is a great opportunity that has been relatively underserved, and again, is an area where people live and they work. They need both solar and resiliency in order for them to get the same benefits that standalone households or other businesses would. We're very excited by our business markets prospects, and we wanna continue to build them out. Which leads next to the community. We live in houses, but our houses are in communities. It's great for us to have the ability to operate our own nanogrid within the home, but what's really missing is the ability for this to extend into the broader community. We wanna serve the broader community, and this is at the core of our Sunnova Adaptive Community Strategy. It's taking all of the solutions that I just talked about, the home and the business, and bringing those together. It's also about bringing the common infrastructure, so the distribution system that supplies those homes, and balancing what happens behind the meter with what happens in front of the meter and creating a holistic solution. You might have seen that we filed an application in California to become our own micro utility, and that's currently with the CPUC, and we're working to move that through the process. That application is saying that Sunnova wants to build this. We wanna work with our builders and our developers, and we have a lot of new home builders, as you all know, and we're doing a lot of work in the new homes community. We wanna work with them to be able to, when there's bare dirt, put in our complete infrastructure. There's a point of common coupling with the utility, and after that point, Sunnova puts in an infrastructure. We put all these technologies in the homes and businesses, and we serve that entire area with a microgrid. In order to do that, we have to work through different regulatory environments, and that's why the application of the micro utility in California is so important to us. What this does for the community, though, is it provides, first and foremost, better prices. Our solution is less expensive than the utility solution, so they're gonna save money. Second, it's gonna be more resilient. We said, and we've tested this with numerous counterparties, we can provide a higher level of resiliency, meaning more uptime, less outages than the utilities have shown that they can. Third, this is obviously renewable energy, so it helps to address the carbon goals and the environmental goals that all the states have been setting, as well as some of the regional and other jurisdictional governing bodies have said. It's very good for the community, and it's good for the planet. Fourth, like, we've proven we can do this. We already are operating 250,000 homes, which is more than, you know, half the utilities in the country have in their total population that's served. We're very excited by this, and we're gonna continue to pursue it. The opportunity is relatively massive. The housing market is moving around a little bit, right? We know that the housing starts are gonna slow down here probably for the next year. If you look back to last year, about 1 million housing starts. This year, I think, was gonna be about 1 million too. Just conservatively working down that funnel, you know, when we think about new developments they're typically an HOA, so we use that as a structural way of filtering through the opportunity. If you went down one more step, there's probably 65,000 homes that would sit in a new homeowners association in a new community that are getting developed on an annual basis. For every 500 home block, it's about 4 MW of solar to serve the needs that they have. That's about 14 MWh of storage. Just taking that through the funnel, I mean, you're talking about 500 MW of solar opportunity and almost 2 GWh of storage capacity on an annual basis. You know, just an opportunity that we look at and go, "Somebody has to serve this, and we have to serve this in a better way." The needs of those communities we know will continue to expand with EV charging and with other solutions that they're gonna need to bring in, and in many times, the utilities won't serve them today. It's also helping the developers to ensure that their projects can continue to move forward. For Sunnova, it's about the Adaptive Home, it's about the Adaptive Business, it's about the Adaptive Community. We really believe that it is a situation where one plus one equals three or four. There's a lot of value that's trapped that we're trying to bring out through the solutions that we're bringing to market. This is providing significant growth opportunities for Sunnova to leverage the core of our services business and ensure that we're getting the most leverage off of all of the investments that we're making on hardware, on software, and on service that brings it all together for the market. In addition to bringing these core services, we're looking at ways to adapt them and create additional value. We've got this great fleet. This fleet is gonna continue to grow at a fast pace. 250,000 going to 400,000. We're gonna continue to see the population of our customer base increase exponentially. We have 25-year relationships, so we have a lot of time to operate these resources in a way that's efficient in the market. The programs that we're building on top of the fleet are also extremely valuable to Sunnova. On the solar renewable energy credits I shared, you know, we've taken that in two different ways. For our TPO customers, we obviously own those RECs. For our loan customers, we've built programs where we can monetize that value, both for the customer and for Sunnova. We've got that in 10 strategic markets today, and our goal is to continue to build that out so that in every market that we operate, we can turn RECs into a value that we can capture. The second is grid services. We've had a very successful track record over the last 24 months of building this portfolio up from scratch. We've got 12 deals that operate across the different jurisdictions that we operate in, each of them bringing value to the portfolio. Just recently this week, we also got told that we should be able to place 38 MW into ISO New England’s Forward Capacity Auction 17. We've already placed in 15 and 16. If we price this in the first quarter, this will put us somewhere north of 190 net MW in the forward capacity auctions in ISO New England. Those are just some testaments to the value that we're creating and the way that we're leveraging the capacity, both the installed solar capacity as well as the demand response value that we're getting from other programs in California, in New England, and we hope soon in Puerto Rico. We also mentioned that everything we do is about the dealer. Like, the dealer is at the core of the business model that Sunnova has. With over 1,000 dealers, it's evident that what we're trying to do is to continue to enable our dealers to be successful and to be supportive of our business. We like our dealers. We like them a lot, and we spend a lot of time and energy focused on them. How do we do that? I think it's important for you guys to understand the investments we make in our dealers and why we see them as important. First, when we think about the dealer model, what Sunnova does is we create a very dedicated account management structure around a dealer. That enables the dealer to know who they're gonna talk to in the business. If you just bring somebody on board and give them your software and walk away, they're not gonna be as successful as if you spend time with them, training them, supporting them, and helping them collaboratively get success. Both our dealer account, our dedicated account managers and GMs as well as a dedicated support desk are two of the touch points of many that support our dealer model. Dealers are here to make money. It's important to pay them well. It's important to give them the right products at the right price with the right promotions. We operate in a highly competitive market. Pricing, underwriting, all the rates and promotional offers, that all goes into support, ensuring that they have the tools they need to transact with consumers. Our number one competitor in this market is consumer apathy. We have a better product at a better price. We need to get people off the couch. By giving the dealers the incentives and the tools they need to get the consumer motivated enough to purchase or at least to go down that journey, is something that we focus on, which then leads to lead generation. We've had success in building some very strong lead generation partners, some of the best in the industry, and these partnerships will continue to grow. We've got a whole pipeline of additional partners that we're working to bring to the table, but by bringing high quality leads to the dealers so that they can share in turn grow their wallet, and they can take more value and capture more of the market share, that also makes our dealers that much more healthy. Then market development programs. We do make investments. We reserve some of the sales proceeds, and we reinvest that into the dealer, so they have the capability to continue to expand their business, to grow their brand, and in turn, to grow the Sunnova brand. All of these areas are working together collectively to expand the dealer relationship, to tighten the dealer network, and to grow the volume and the velocity of sales that they're contributing to us. I've talked about why we like dealers, but I'd like to introduce and welcome to stage JJ González, who's gonna talk to you a little bit more about why he likes being a dealer from Sunnova. JJ is one of our master dealers. Thanks, Michael. I'm JJ González. I am the president and co-founder of WindMar Home. WindMar Home is the largest solar installer in Puerto Rico, and we've recently expanded to the state of Florida. I wanna thank Sunnova's executive team and John for inviting me to speak today and share some thoughts from the dealer's point of view about Sunnova in the market. I wanna talk about three things today. First, I wanna say why the best business decision that a solar installer can do is to partner up with Sunnova. Secondly, I wanna share thoughts about where I was born and raised in Puerto Rico and talk about how that has become a strategic market, just like John said earlier, in the U.S. Lastly, how the lessons learned in Puerto Rico or the biggest lesson learned in Puerto Rico has been that you simply cannot sell batteries without service. It's not a good to have, it's a must-have. Why is Sunnova a great partner? Obviously, Sunnova has been great to us. That's why, they've invited me to speak today. Out of 1,000 dealers, it's me up here. But most, if not all of the dealers would echo what I'm saying today. Sunnova is a great partner. They're not a financing partner. They're not an installation partner. They're not just a product. They're not a bank. They're a partner. They get involved in every area of my business and other dealers' business. That is critical because the solar installation game is tough. I'm in a tough business. Selling and installing solar is a difficult business in Puerto Rico and Florida and elsewhere. One needs a partner if you wanna scale and you wanna be selling and installing solar for a long time. Sunnova has been the perfect partner to us and others during that. They get involved in all areas of our business. They have the technology platform. Just to give some examples, the technology, the sales strategies, installation practices, design, everything. Every single area or department of WindMar, and we have over 1,000 employees right now, full-time, have been impacted and are in contact in some way or another with Sunnova's team. Okay. In the screen, you can see a couple examples of some of the benefits of working with Sunnova. We work closely with Sunnova's equipment procurement team, be that advice on what's happening in the market. With the recent supply chain challenges, that's been incredibly useful. They've also supplied directly some of the equipment throughout the years. The Home Depot program has been a great success. We started in Florida last year. Sunnova has a national deal with Home Depot. We started in Florida, and a couple months ago, we launched throughout Puerto Rico and their 10 stores. We currently have over 100 full-time sales reps rotating in and out of those stores every week. Lastly, the third example is the MDF program. That's the Marketing Development Fund program, and basically it's cost-sharing and co-branding. We spent this year dollar millions in traditional marketing and digital marketing, and every single time it has a Sunnova logo on it, and Sunnova helps us with that. Look, I would, along with every other Sunnova dealer, recommend any solar installer, be that small or large, right, in Puerto Rico, outside of Puerto Rico, everywhere, to partner up with Sunnova. You need a partner in this business, and Sunnova is the best one in the business. Now I wanna talk about Puerto Rico. Puerto Rico, I was born and raised there. Sunnova has been in the market for almost since its inception. They got in in 2013. We opened up WindMar. I founded WindMar Home in late 2014, and we've been working together ever since. We're a Sunnova exclusive platinum dealer in Puerto Rico. Without a doubt, Sunnova has been instrumental in developing the residential solar industry in Puerto Rico. Sunnova has been great to Puerto Rico, and Puerto Rico has been great to Sunnova. You heard earlier how Sunnova said how John said that Puerto Rico has become the most strategic market in the U.S., and that has a lot to do with batteries. After Hurricane Maria in 2017 and Irma, we got hit by two hurricanes. Most of you have heard this or remember the stories. We had month-long outages. At that time, we hadn't installed one battery. A lot of people forget this, but we hadn't installed one battery before those hurricanes hit, but everything changed. Sunnova launched their first solar plus storage product couple months after the hurricanes hit, and we've been selling that ever since. It's been a great success. The numbers speak for themselves, right? Sunnova has absolutely dominated the Puerto Rico market. They're completely committed. You can see there are 38,000 homes of solar plus storage. There's only, like, 44,000 homes in Puerto Rico with solar plus storage, and we're just getting started. There's 1.3 million residential utility customers in Puerto Rico. Another KPI is the 100% battery attachment rate. Every single system we sell has a battery. What we've learned that we didn't know before the hurricanes hit, because batteries are expensive, is that it's a lot easier, no matter the price, right, and a much better value proposition to the customer to instead of just selling savings, selling savings with energy security. I know some of you are thinking, "Well, Puerto Rico is, you know, their grid is a mess. There's a bunch of outages," right? Obviously, everyone needs a battery. We're seeing the same thing in Florida. Yes, Puerto Rico has outages. Many areas in the U.S. have similar rate of outages. Two to four hours a year is unacceptable to a customer no matter where they live in the U.S. The biggest lesson we've learned and the key takeaway from Puerto Rico leads me to the last point, and it's that you can't sell batteries without service. It is a must-have. Okay. We've learned that recently with Hurricane Fiona, where we had a week-long outage in Puerto Rico. It is critical to have a service component for multiple reasons. Mostly being that the customer expects you to be their primary service provider. They look to Sunnova instead of to LUMA to provide that power. LUMA being the Puerto Rican power utility, right? With expectations so high, they expect 100%, and the only way to deliver on those expectations is by having the service component that Sunnova's offering. The end result is that Sunnova is, thanks to their commitment to Puerto Rico and thanks to the lessons learned in Puerto Rico, is uniquely positioned, right, in the market. They have a competitive advantage as attachment rates rise throughout the U.S. to better service potential customers in the years to come. Thank you. Yeah. Thank you. Thanks, JJ. Thank you, JJ. You know, it's dealers like JJ that help us do what we do, right? They create the opportunities for Sunnova to serve customers. They are the front line. They bring the business to us, and we can't thank them enough. Thank you, guys. I appreciate you taking some time out of your day to hear from me and how we're growing this business and our strategy to continue to build out our adaptive solutions. I don't want you just to hear from me, so we're gonna take a few minutes now to let you hear from a few of our customers. This is my dream home. My home is a place for me to settle and be comfortable. The house allows a lifestyle. We sit and enjoy wine and music and conversation. I work from home 100% of the time. I am using electricity 24/7. We have the AC on, the TV's on, everything's on. There's a lot of electricity being used. Back in February 2021, in Houston, we had, like, a five day freeze, and our grid just gave up. It was five days of no heat, no power. There were power outages when there was fires and a lot of smoke in the Bay Area. Without electricity, I had no way to filter the air in my house, and I had no internet. I could not work at all. Our biggest concern was we've got a refrigerator full of food. It was just a huge inconvenience. The fear of power shutdowns is enough to cause some insecurity from an energy standpoint. That was when we figured out we had to do something different. Before solar, we were getting our power through the utility company like everybody else. My energy bill was going up. I would close my eyes, pull the bill out, and then open one eye and take a peek at it. My original reason for getting solar was to have less of a carbon footprint. Energy independence was a big factor, and I wanted to be able to supply my own energy for an electric car. I started googling for a company who can help me, and that's when I found Sunnova. The reason we chose Sunnova is they just seemed to offer a lot more than the other companies did. I researched online about their reputation, and I felt very comfortable. I could tell I wasn't talking to a call center rep who was reading a script. There was thought behind the answers that came back to us. I was offered some attractive financing options. I received a rebate for the battery. I received a federal tax credit for the panels. I kept saying, "But I don't have to put any money down?" The guy said, "No. Sunnova's warranty covers both my solar panels and the battery for 25 years. It just made it a no-brainer. Sunnova installed 40 solar panels. 19 panels. 13 panels and a battery. The installation was extremely professional. It took them a day. Those guys were rocking, let me tell you. The system performed even better than they said it was going to perform. I have a consistent monthly amount that I know I'm going to pay Sunnova for energy. The payments on the loan are about $50-$100 less each month than what I was paying for electricity. I love the Sunnova portal. I'm on my phone looking at how much power am I generating, how much is my house using, how much am I giving back to the grid. I produce enough power to charge my EV. I mean, these are all cool things. I'm only using 1% of my energy consumption from the utility company. How does that feel? That is so awesome. In the last year, we probably have had four to five outages in the neighborhood, but it hasn't affected us. Our clocks don't even reset. During the winter, it's like, "Crank the heat up, baby." I know that I am also helping the environment, which is just to my heart what I really wanted to do. You're lowering your carbon footprint. You're locking in your rate for a 25-year period. There's just a lot of different factors that go into feeling good about putting this on the roof. On a scale of 1 to 10, my satisfaction with Sunnova is a 10, maybe an 11 or 12. The fact that I know I'm always gonna have energy, that's what I call security. Okay, we're now gonna take a 15-minute break. That gets us back here at say 10:35 Central Time. For those of you here in person, I do recommend checking out some of the demo stations we have set up just outside these doors. There you can preview some of the software solutions that Chris will walk us through next. Thank you. Good morning, everybody. Welcome back. Please take your seats so we can get started. We'll be getting started here just another minute. All right. Well, welcome back, everybody. Thank you for attending today. We really appreciate you guys taking time out of your busy schedule to meet with us. Hopefully, you took an opportunity to see a little bit of the software out there at the kiosk. If not, I'm gonna walk you through some of it today, and we'll also have an opportunity afterwards to look at it again. As the announcer said, I'm Chris Hayden. I'm the CIO here. I basically lead up the IT and software development functions at Sunnova. I've been with the company almost seven years, so not quite as long as John's been here, but getting really close. During that time, I've seen a tremendous amount of growth and innovation in this space. Just to kind of give you an idea of that, our software development team, two years ago was around 60 people. Today, it's close to 200 people that are focused on software change. I'm gonna walk you through a little bit of that strategy and what we're doing in this space. Some of what you'll see today is stuff that's built and some of it's things that are on the roadmap for later this year, early next year, and through 2023. As you heard from John and Michael and JJ, service is critically important to Sunnova as a business. We really think of ourselves as a services company, energy-as-a-service, effectively, creating that holistic service experience. Our software is what brings all of that together, and we're gonna really show you today really what that means to us specifically. I have a lot of pride in what we've built. We basically have taken this heterogeneous ecosystem of hardware. You know, you've heard us talk about Tesla and Enphase, SolarEdge. Savant is a new partner that we just added to our ABL. We basically brought that together into a cohesive, seamless experience for our customers, for our dealers, and for our agents that are serving our customers as well as our technicians. It's really an end-to-end platform that brings all that together for us to create that energy independent customer experience. Well, let me step back. We really think about it in three different towers: the customer experience, the dealer experience, and then that energy management platform that you've heard us talk about called Sentient. First, I'm gonna walk you guys through the Catalyst part of it. This is really. We use the word Catalyst because we want to encourage or have our dealers really think about this as being an accelerant to their dealer business. They have it. It's really an end-to-end tool that allows them to manage their leads, design and quote, contract the customer, run credit checks, manage the steps of the installation process, and play a little bit of a role in the O&M, the operations and maintenance of our fleet. You look on the right side of the screen. This is that single integrated customer experience. We've got the ability to control and give access to our customers to be able to see what's going on in their home and control some of the devices that are there, request service and get visibility to what's going on related to their service experience. We've got the Sunnova Sentient platform that kind of runs underneath that. We did that on purpose because there's parts of Sentient that you'll see later today in the Catalyst platform that we use, as well as there's several parts of it that we're using in the Sunnova App and the mobile experience. Let's start off with Catalyst. This is that dealer tool that I talked to you a little bit about. We launched it late last year. Really the goal of this platform is really to be the single best place for our dealers to interact with Sunnova. It's really to give them every tool they could possibly need in order to manage their business. Like I said, we launched it late last year. We're really kind of still in that adoption curve, but just to give you an idea what kind of volume we're already seeing there. Just in the last six weeks alone, we've processed 10,000 leads through that platform, and we're still using it and are driving up the adoption of it. All right. Now on this screen, you'll actually see this is what we think of as that dealer life cycle and what Catalyst really enables. We've got lead management, designing and quoting capability. In designing and quoting capability, we have some new tools that we've deployed that are really exciting to automate the design process. We have the financing and contracting capabilities. You've heard us talk about leases, loans, PPAs. We're also starting to introduce premium services, so a dealer can request a plan permit set and other services from Sunnova directly. We've built some new capability and just recently launched it around commissioning and the installation process that I'll walk you through as well. Then there's also that little bit of the O&M, where we have the dealer. Most of the time it's that first year where they're helping us with workmanship issues that they're engaged in this part of the platform. All right. Jumping into an area that I'm really excited about. This is where our dealers will see Sentient really come to play for the first time. Early next year, we're launching a new capability that is really designed to, you know. You heard us talking about all this equipment, like the load controllers from Savant and Tesla Powerwalls and Enphase inverters and all these different battery systems. That is getting to be a difficult sale for some of our dealers. We're building new tools we loosely call the recommendation engine, which is one of the product towers inside of the Sentient platform that asks customers lifestyle questions. You know, how big is your home? How many kids do you have? Do you work from home? Do you work in the office? Do you have an EV? Do you plan to have an EV? What's your electricity bill? All those inputs are fed into the Sentient recommendation engine, and out of that comes a recommendation of what is the best fit for this customer. How many panels do they need? Generally speaking, how many batteries do they need? That is then fed into the next part of this process, which is our designing and quoting capability. In this platform, we've integrated a software provider that uses machine learning and AI to programmatically design a rooftop system that's optimized for that lifestyle questions that we just asked in the last step of that process. This capability, the automated design, is already in the platform today. Basically all it does is a dealer drops a pin on top of the house, and this AI and machine learning capability programmatically draws the 3D landscape of that home. It fits the right number of panels in the right places on that roof to basically be the perfect combination for that customer. What that might mean for our customers is that what used to take a day before when you had to get up on the roof and measure the roof planes and the slope of the roof and the shading, then move to software, where it took you know, 30 minutes to do a design, now it could be done in less than two minutes. But it's much more than a quoting platform. It's also the installation and commissioning part of the process, some of those later steps in the process. We just launched a new mobile app for our dealers that guides them through the photos that they need to take in order to turn them over to us and make sure that the system that they have built for that customer can sustain the 25 years of that customer's life and that warranty that we expect and we need for our own ready purposes. It's a guided process that really makes sure that they give us the right pictures, and all that information is then fed into Sentient, and we're using that to help influence some of our decisions we're making around our platform in the future as well. All right. You heard us talk a little about how we think of each customer as very, very unique. You look at these, you know, these houses look very similar, right? They're freestanding homes. They all have solar. In a lot of ways, they are very similar. In our minds, these are very unique, and we basically create a bespoke custom solution for every one of our customers. Let's take, for example, this first home. It's a California-based home, so they don't have quite the same HVAC load as we have in Texas as an example. Their electricity usage is a little bit lower at 1,200 kWh on a monthly basis. We recommended in our Sentient process, 26 panels, Enphase inverters, Enphase battery, no generator, and they said that they didn't have an EV or don't plan on buying an EV anytime soon. That's the recommendation they made. They did tell us while we were doing that they anticipate that, you know, they live in California, they're gonna have public safety power shutoffs. They think they're gonna have one or two or three outages a year for a sustained period of time, but not much more than maybe a few hours. That's why we paired them up with that one Enphase battery. Transitioning over to the next customer here. This is a customer that lives in the Northeast. They're affected by winter storms and have high natural gas prices, so they wanted to offset a little bit more of their electricity usage. We recommended a system that was a little bit larger, so 36 panels, also Enphase inverters, but we chose Tesla Powerwalls for this customer and more of them. In this case, it looks like it's about two. They said they also want an EV charger, and so we gave them the ChargePoint charger at the same time. Now I'll transition to this last customer. This customer lives in the Gulf Coast, so you guys know hurricanes hit this part of the United States on a regular basis. The storms are getting larger, seem to be more frequent. This customer said to us, "Hey, I anticipate having short-term outages, like one hour here, two hours there. But I also think there might be an opportunity maybe every five or 10 years where I'm gonna have to sustain an outage like in Hurricane Ike," where customers or utilities here were out of power for 10 days. They are also, because they're based in the Texas area, they've got a pretty high energy usage pattern. You see 2,000 kW. We have a really large system that we recommended, 45 panels. We also paired it with Generac inverters and a pretty large set of Generac batteries, as well as a generator in this customer's case, as well as an EV charger. What's interesting about this customer, this is exactly how we've configured John Berger's house. No more excuses of him not working for you guys 'cause he's got power all the time. All right. Moving on to the next slide here. Transitioning over to the customer experience. The goal of this part of our ecosystem is all the customer-facing technology. It's a web portal as well as a customer app, is to be that single, unified, seamless experience for our customers. Regardless if you have Enphase and Savant and SolarEdge and Tesla, this app brings all that together. You don't have to pivot across multiple apps. You can go to one app, which is our app, and see how your energy system is performing. The goal of that really is to give you insights into how the grid is responding, what kind of solar production you have, how your battery's performing, what your generator may or may not be doing at the time, and whatever the status of your EV charger and your charging session specifically. Now, I'm gonna walk you through kind of the day in the life of our customer, using the app if they so chose. One of the things that's important to communicate is that we don't measure active sessions or how many people log in to the app on a daily basis. We don't really want that. We really wanna encourage and reinforce peace of mind with our application. We don't expect people to be checking in every once in a while, but when they do, we wanna reinforce the value of the solar battery, EV charging generator capability. I'm gonna walk you through kind of how we think that works. Let's take a customer who's basically getting ready to start their work for the day. It's 8:00 A.M., and you can see the house is basically producing the rooftop solar is producing just a little over 5 kW, and there's a little trickle of energy coming off of the grid. The home itself is only consuming just under half a kW. Why is that? Where is that energy going? It's being fed into the EV charger because the customer wants to make sure that's topped up before they go to work for the day. You can see how that energy is flowing. Now let's drill into a little bit into that solar panel and see how it's actually performing. On this screen, you can see that it's basically producing about a little over 5 kW. You can see how much money you've made or you've saved from solar in the last 30 days. You can see what kind of energy is produced today, so 20 kWh. The app also has integration with location services as well as weather sources, so it can see what kind of weather conditions are in the area, and then also gives you a quick view of how frequently the data is getting updated. You scroll down on that same page, and you get a screen here that really gives you better insight into how the system's producing its energy. You have a day view, a week view, month view, year view, and you can drill across and slide across this, you can see the different states of production. Really, the goal here is to kind of give some insight into how your system's performing over different periods of time and really give them an idea of their energy patterns. You scroll down a little bit further on that same page, and you can see here how much energy the system's producing and how much of the energy has been used by the home. Then there's a line there around net energy supplied. That's really the goal there is to demystify the energy experience so they understand how much their system's producing, how much energy their house is consuming to make sure that, you know, it's really meeting their expectations. Now let's jump over to the EV charging session. Here on this page, you can see that how long that we've estimated until they finish that charging session, the percentage of how much the battery's been charged in the car, the available energy, as well as the session cost of that specific charging session. What's interesting about this is eight dollars is not too bad, right? I don't remember the last time I went to the gas station and filled up for $8. All right. We scroll down a little bit further, and we have a little bit different view with a little bit other data elements here, where we've basically put in a screen that shows you how much time you charge away from home, how much time you charge at home, a pie chart view, same information around that current session, but just as a different layout. Now we fast-forward to later in that same day. While the customer was at work, they got notifications from their utility that the grid, they anticipate that the grid's gonna be constrained that night. They might live in a market where they have demand charges. They might also live in a market where they dictate time of use charges as well. Your rate for electricity is higher in the evenings than it is during other parts of the day. This customer lives in that area. Behind the scenes, Sentient software, as well as our hardware technologies, have made a decision that they're gonna stop taking power from the grid to make sure we optimize the power that was produced during that day. As you can see in the diagram here, it's basically pulling all the energy from the battery, and then it's also producing a little bit of energy. You can also notice that it's getting a little bit later, so we've got this this view here that's starting to show that it's the sun is about to set, which is why the system's not quite producing what it was earlier in the day. What's happening there is it's basically feeding the home and also topping up the EV charger. Continuing to move forward, you can drill into the battery again, and you can see how much the battery is charged, how much energy is available, what its total capacity is, and the backup hours. This one I think is really particularly interesting because what we've done behind the scenes is we're Based on its current discharge pattern, we've estimated how much time they have left or how many miles you have left in the tank of gas before you run out, and that's what that gives you insight into there. Just like the other screen we saw where you can drill down, and you can see a little bit more and get more information about how the battery is performing. You can see here that this is the amount of energy that the system's discharged over the time that you've selected, the amount of energy that's been stored in the battery, and the net energy that's been supplied is that little white line you see across there. Now transitioning over to something really new and exciting that we're doing in this space, which is integration with load control, load manager technologies. On this screen here, you have the ability to basically preset what you want your system to how you want it to perform during these different scenarios. When a grid outage that takes place, when a storm is approaching, you inform Sunnova and Sentient how you want it to respond. On this screen is the drill down beyond that, which is basically you tell us which circuits in your home you want to have always be on, which ones are the must-have, which ones are optional, and which ones are always off. The way that the technology works is based on these preferences. When an event occurs, we use this as how to influence the decision-making that Sentient and the app is making. Basically, it works its way up the list, depending on the state of charge of the battery. If your grid is down, shedding those individual circuits to make sure that you get the best life out of that battery for that specific outage. Now let's fast-forward a little bit and actually go through kind of the scenario what happens during a grid outage. It's 3 A.M. We notice that the weather is gonna get bad in that area, and we send a push notification to these customers, and you can see the little weather alert up there in the top part of that. It's 3:00 A.M. The customer is not awake at this time. That's okay, because we already know what their preferences are if there is an outage that takes place. We fast-forward two more hours, and there is a grid outage. You can see there's a little exclamation point over that power pole back there in the corner. We've detected there's no more grid energy being supplied. Automatically, behind the scenes, the battery kicks in and sends energy to that home without ever even interrupting the customer's experience, so they don't wake up tomorrow morning with their alarm clock flashing, and they miss their first part of the day, right? All right. Just like we looked at before, you can drill into the battery screen. You can see how much is charged, how much energy is available, what the total capacity is, and back to that backup hours. This is where the customer can get real insight into how long that battery is gonna last for them and can make some decisions about what do they wanna do if they think they wanna get a longer duration, sustain a longer duration outage by shedding some of those devices that you saw in that load control screen. Now let's fast-forward a few days later. What we thought was just a short outage, so it wasn't just one or two or three hours, it ended up being a multi-day outage because it impacted a substation. Here, the battery's been cycling back and forth. It's basically been feeding the home, doing its very best to feed the home for that sustained outage. The system's producing right around 5 kW. The battery's been supplying it. Some of the circuits are off in the home, but the customer has decided that they wanna basically run more than just what their critical circuits are. That's when Sentient and our app technology basically kicks in the generator and starts feeding that into the home instead of taking it from the battery. That energy that's being produced on that rooftop solar during this time is being fed directly into that battery to top it back up. Once that battery gets back to a full charge, it kicks it back in, shuts off the generator, and starts supplying the home again and starts the cycle all over. Now you fast-forward to a year later. It's time for your annual maintenance. You can do all that work right from our app, right from our customer portal. You can request appointments, schedule appointments, see your service history. If you need any more details about your equipment, you have that available to you here as well. Next, we're gonna talk a little bit about the Sunnova Sentient platform. This is one area that I think is particularly compelling. We're basically using data science, a team of data scientists, as well as 10 years of telemetry data and billions of records of telemetry information to basically create an energy management platform that gives, allows us to manage the nanogrid, the fleet, the microgrid, the communities, all the things you heard Michael talking about earlier. It's AI-infused automation, and it's now embedded inside of the Catalyst application as well as our customer experience. The way we think about this ecosystem is it's a continuous cycle. We're constantly analyzing all these millions of records of information coming in off of these different endpoints. We're feeding that into our analysis engine. We're using that information to anticipate customer needs, anticipate fleet needs, anticipate community needs. We use that information, and we adapt and make decisions, and then we feed those decisions, the outcomes of that, back into our platform. Let's take an example of Sentient in action. It's very much like what you heard us talk about earlier. Basically, this customer, instead of going into the office, is a work from home customer. It's critically important that they have power during the day. Just like we talked about earlier, we anticipated the storm because of the integrations we have to the Sentient platform and weather events and location information. We also then use that information to adapt. In anticipation of this event, we actually. We detected that the EV was plugged into their EV charger. We used that opportunity to fill up the battery and fill up the battery in the car, fill up the battery in the home, and get it ready for any kind of inclement weather. All right. You heard us today talk a little bit about how important service is. Well, actually not a little bit, quite a bit about how important service is to us. I just walked you through a little bit about how software really enables that service experience that we want for our customers. I think it's really been a great experience, and I thank you very much for your time. Ladies and gentlemen, please welcome Robert Lane, Executive Vice President, Chief Financial Officer. I'm the only guy wearing a tie. Thank you very much. My name is Robert Lane. I am the Chief Financial Officer. I've been with Sunnova for a little over 3.5 Years. I joined about two months before the IPO, and have had a wonderful time working with some of the finest people in this industry. Let's go ahead and get started. I think a lot of you are familiar with the metric that we use, which is the fully burdened unlevered return. As a reminder, this is the internal rate of return that we have on any new project we originate. Any new service customer contract that we originate. We take all the costs, the costs we're paying the dealer, the costs that we have internally that are soft costs, like permitting, like our G&A costs that are related to sales. Also, we look at the interest that we pay when the assets are in the warehouse phase. That is the denominator, if you will. That is that first payment out the door, and we take a look at what the expected cash flows are over the life of that asset, just for what we know are in place and contracted at the time that we originate the asset. In other words, if we find new grid services, if there are new benefits that we achieve, if we think that there are new, aggregation benefits, if the, SREC curve moves up and, gets to higher levels, none of that is included, nor our upsells, nor our ability, to recontract with the customer. It's just the contract at the time. What you've seen, I'm gonna show this in a little bit more details, that fully burdened unlevered return staying steady around 9%-10%. It had come down a little bit, in the, as we went into the end of last year. Let's just look at that here for a bit of detail. My apologies for anybody who can't tell the difference between the orange and the yellow line, but the orange line is the one that's a trailing 12 months, and the yellow line is a trailing three months, fully burdened unlevered return. You'll see that when interest rates in the market were at their lowest, our fully burdened unlevered return was at its lowest. This makes absolute sense because what we're really after is trying to find the best implied spread between our cost of capital and the cost of the asset. What you'll also see is that starting in the first quarter of this year, we moved up on our fully burdened unlevered return. How did we do that? We increased the prices to our dealers. We increased the caps and the floors that we had for new products, and basically made ourselves, if you wanna think of it, slightly less competitive relative to other originators out there in the market who were thinking that interest rates be damned, I'm just gonna go ahead and originate no matter what the profit is. We continued to drive that up and have continued to drive that up. One question we get is, "Well, how much of the IRA is in this number?" The answer is zero. Not even the step up from the 26 to the 30, because when we originated those assets, we hadn't even considered the IRA when we were doing that origination. You will see the IRA be reflected at least you'll see the 26-30 being reflected when we go into the fourth quarter, as well as other price increases. You should expect to see this number approach 11% on a trailing 12 months, if not actually hit 12%. The other adders we'll go into in a minute, that adds even more to that fully burdened unlevered return. What you can really see here is that quarter-over-quarter increase has been significant, but we can't lose sight of the fact that the cost of debt has gone up as well. One thing also that you can notice is that the cost of debt hasn't skyrocketed. Why is that? It's because we have not just asset-level debt, but we have corporate debt, the high-yield bond that we issued a year and a half ago, and folks were asking us, "Well, you know, hey, 6%, that seems like a pretty rich number." I think we could all agree that 6% was a phenomenal yield to have achieved and to continue to be using right now. Along with the convert that we did earlier this year, I've been told by a lot of folks that we timed that market perfectly. I will take full credit for having timed the market perfectly. At the end of the day, what it means is that our cost of debt is in fact lower than that of our peers. We don't have to go out and raise more capital. I'll talk about this in a minute as well, but, I mean, right now, as far as corporate capital, we feel we have sufficient corporate capital and sufficient liquidity to carry us through not only 2023, but through 2024. Now, the end of this equation is that implied spread. As we've talked about, we're targeting long-term 500 basis point spread. We think that we can get back up closer to that 600 here into the first quarter. We've talked about that as well, and the question is, well, how do you feel that you can actually do that? Well, part of the answer is that we do believe that interest rates are starting to moderate, and it's not just the interest rate, the base rate itself, it's also the spread that the ABS market requires. More certainty on what the interest rate base rate will be leads to more certainty around what that spread is and helps to bring that down. Also the continued escalation of the fully burdened unlevered return leads us to believe that yes, in fact, we're going to be able to get higher spreads as interest rates flatten and then ultimately decline because like everything else, interest rates go through cycles. One other note is that just like we can't turn on a dime to increase our prices out there in the market instantly as interest rates go up, we're also not turning on a dime to lower the instant the interest rate drops a couple basis points. You should expect to see as within any cycle that the implied spread is gonna ebb and flow as well. As interest rates turn down, our higher, fully burdened unlevered return should see a very wide increase in that implied spread. We're reiterating, as everyone saw this morning when we released the triple double triple. Just a reminder of what the triple double triple was. We announced this in the third quarter of 2021, and we said, "By the time we get to the end of 2023, we will have doubled our number of customers, doubled our NCCV per share on a PV-four basis, and doubled the number of services sold per customer by the end of 2025. We also believe we will have tripled the Adjusted EBITDA plus the P&I we receive on our solar loans by the end of 2023." The triple double triple. What does that mean in actual concrete numbers? We believe we will have reached 400,000 customers by the end of next year. We believe that the NCCV per share will be $37 on a PV-4 basis. We understand that there are lots of different interest rates and discount rates that folks are using out there for our assets. At a PV-6, it looks like it reaching $30. Doubling the services sold per customer. This is a big thing because it really talks about the value of having service and what that means as far as Michael said earlier, getting more of the wallet of the customer while still providing more value to the customer. If you look at some of our new home communities, we're adding solar, financing, service, batteries, microgrids, EV chargers, load managers. It doesn't take a lot to actually reach that seven-plus service customer and to create that seven-plus service customer. Like all of these things, we think, you know, this is table stakes for us. This is the floor of what we think we're gonna be able to achieve. The triple double triple, the triple part of it, that's $530 million. If you add up the Adjusted EBITDA, the principal and interest on our solar loans, that's roughly the goal that we're trying to achieve. When we look at the actual 2023 numbers, how does that break out? Well, to get to 400,000 customers, depending on how we end up this year, we need about 115,000-125,000 customers. We think that's very achievable out there based on where we are in our WIP and what we expect to exit the year with WIP as well. When you try to take a look at the balance between Adjusted EBITDA, interest, and principal, and you look at it, what we were looking at before when we first came out with the triple double triple, there were lower interest rates at the time. We were expecting to do a lot more loans at the time and a lot of lower interest loans at the time. What has happened is that we expect fewer loans, fewer prepayments, more scheduled payments, higher interest loans that we are already originating now. We expect that we're gonna have especially more service revenue. I think this is the big thing that when you're a service company, and John talked about this before. When you're a service company, people identify you as a service company. While it's the big point we're trying to make today, when we're communicating to all of y'all and those listening on the webcast that we are a service company, the industry already knows us as a service company. When we launched Sunnova Repair Services earlier this year, the uptake on that was significant, and we expect that to continue to increase. You say, "Well, where's some of this additional Adjusted EBITDA coming if your P&I is gonna be a little bit lower on the principal and interest on the principal of your solar loans?" It's gonna come really on the service side of the business. We also expect, as we talked about earlier, to have more gain on sale, but that was already in the plan when we had been talking about the Triple-Double Triple Plan the first time. We had already said, "Hey, the loan market, it looks like, our opportunity to monetize some loans is a lot better." We already had been in the new homes market since the beginning of 2011, doing cash sales on new homes. We already knew about the change of getting rid and having finished up our Safe Harbor inventory and moving to the Sunnova purchased inventory, how that would affect the P&L. Everything was already in there, but it's that service component that we think we're really gonna start to monetize. All of this stuff, more leases and PPAs, more services per customer, yes, more gain on sale, is all gonna be driving Adjusted EBITDA. If you look now at the principal payments received on solar loans, that's a little bit of the hidden gem because we have never really focused on prepayments. We've been fortunate with the market, incentive prepayments, but we've actually been doing some things lately. My colleague, Chris Andrews, who's here, has been driving all of this for us. We've actually started to see our prepayments pick up. Yes, in this interest rate environment, we've seen our prepayments pick up. There could be a pleasant surprise there relative to what our current expectations are. Let's talk about the catalyst, right? We've talked about this a little bit, but the increase in the customer base and the increase in the services per customer means that we're adding those customers, which increases NCCV and Adjusted EBITDA plus the P&I. It also means that we're going back to the old customers without having to reacquire those customers and getting a larger benefit monetarily and a better return on the added services that we're providing for those customers. Now obviously, we're gonna maximize the ITC benefits from the IRA. There's also the idea of what are we gonna do on the loan portfolio side. We've talked about this, that we are increasing the base interest rates. We actually had been for quite some time. If you look at earlier, beginning of this year, we had been offering zero coupon and 0.99s as the market was. We were one of the first to sort of cut that out. Right now, the market itself, when you look at it, I don't believe that there will be anything lower than the 3.99 coupon by the time we get to the end of the year, and some of the silly money is dumb out there, thinking that you can still do a 1.99 without having to worry about it. At the same time, we have a lot of these loans on our balance sheet. It's the joy of having a balance sheet, is that when the market does come back, when the required returns that loan purchasers have come back, and we've originated these loans at these really good margins, tight margins today, but good margins for the future, you can pick up a lot more that way on that loan portfolio. That really goes to how we balance our long-term cash flows, which we're still gonna continue to build through our leases and PPAs and through our loans with the opportunity to have more of this gain on sale type of earnings. Now it's also again, back to service. Big surprise. Service drives the proper customer behavior, and we're gonna continue to drive down our default rates, which by all evidence that we've been able to see, are the lowest in the industry. When you look at a lot of the folks who monetize their loans at origination, there are a number of different factors that they're expecting the loan buyer to look at. The biggest one, obviously, is the loan buyer's required return and what they expect the payment stream to be. But the two factors that the originator can help influence are the default rate and the prepayment rate. A higher prepayment rate and a lower default rate assumption by the buyer means that they're gonna give a better price in purchasing a loan. What had happened is there are some folks who are much better at prepayments, admittedly, than we have been because we've really been concentrating on the customer service on the long-term relationship with the customer and on bringing down the defaults to an industry low. In this environment, I told you our prepays are going up. It's 'cause we had a pretty low point to begin with, but our peers have not had their prepayments go up. They've been actually going down. What does this mean? It means that defaults are being laid bare. There's nothing left to hide. A customer that you thought you were going to be able to refinance quickly, but instead is no longer paying because you haven't been providing the correct service. This is where we see that customers and loan buyers and loan financers on the ABS side of the market realize that the customer service matters, that you're gonna have ebbs and flows in the interest rates, that there may be a time and expectation you have over the life of a loan of a certain prepayment rate. What you really wanna make sure is that you don't have a toe stub during periods like right now when the refinancing market isn't as strong as it possibly could be. The other thing, Chris had talked about all the stuff we're doing for the customers and all the stuff we're doing for the load management and all the stuff that we're doing for the dealers. What he didn't tell you about is all the stuff he's doing internally, all the stuff he's doing to help make the way that we do our operations better. We talked a little bit about the NOC, about the technology that we're investing there. There's also a lot of stuff he's doing in order to help maximize the efficiency of the customer service and maximize the efficiency of our truck rolls. Within my own department, Chris and I talk every day, and we've got several standups that are increasing the efficiency that we have within accounting, within automation there, within taxes and everywhere. Really we're continuing to drive that automation, and that helps us to continue to improve the operating leverage. We'd set a goal that we talked about in 2019, that we expected to get as much as 35% reduction in OpEx per customer by the time we got to the end of 2022. We're on track. All right. We think we're gonna get, you know, if not 35, very close to 35. But it's a continual process, and we continue to see that our cost per customer is declining. When I say our cost per customer, I'm talking about all our costs, not just the cost to service the customer, but all the G&A and the sales and everything else that goes around that. Again, because of the efficiencies that Chris is creating, for the whole company. Then we'll continue to increase our fully burdened unlevered return. Again, sanity, we believe, will return to the interest rate market, and that will continue to drive that implied spread. All of those things together come together and give us confidence in a triple double triple. Thank you very much to the graphics department. Let's talk now a little bit about the IRA. I think everybody's familiar with these pieces, but let's just talk a little bit about what it means here for Sunnova, okay? Right now, everything that we originated this year has gone from qualifying from 26% ITC to qualifying for 30% ITC, and then that goes forward as well. Standalone storage now qualifies as well. This is all great news for the market, great news for our consumers. For those who are the service companies that are providing the leases and the PPAs, and I think a couple of you have hit on this, to the analysts with some of the pieces you've written and talking about, not only us, but Sunrun and SunPower as well, is that we're going to qualify for these adders. It could really add something significant. We took a look at our current portfolio and said, "Okay, if we'd always had these adders, what would it have meant for us?" Well, on the LMI side, about 15%-25% of our systems, we believe would have qualified for the LMI adders. About 25%-35% of our systems, we believe, would have qualified for the domestic content adders, and about 10%-20% for the energy community. That's again based on our entire portfolio. The markets were growing fast. That's actually a little bit higher. As we model what our 2023 numbers should look like, we're actually starting off in the low-to-mid 30s as far as how we're modeling. We actually think it could be a lot better than that. We're waiting, obviously, for guidance from the IRS. We expect that to grow significantly. If we just sort of look and say, "Well, what could this do," we think it adds about 100- 150 basis points to our fully burdened unlevered return. At the end of the day, the IRA provides the customers with greater savings and us with higher asset level returns. It's fantastic, but it also means that you have all these other pieces where we want to be able to create value, to be able to create more value for the LMI community, to be able to create more value to encourage domestic manufacturing here in the United States. The IRA, we believe, will do exactly what it was supposed to do, lower cost to consumers, encourage American innovation and investment, and help us fight climate change. Now, for some numbers. We're updating the liquidity forecast through 2024. What you can see right here is that we are expecting more TPO versus loans than we had in the past. If you look at the net borrowings from non-recourse debt, we think that some of that could be replaced by additional gain on sale, depending on what the markets look like. For some of you, I have talked in depth about what the sell versus hold decision looks like. We're gonna take full advantage of that in the market. We wanna make sure that we don't over-lever the company with too much debt, but certainly as, you know, we're gonna look and say, "What is the debt markets and what do the sale markets offer us?" The key takeaway here should be, at our current growth plans, we do not anticipate the need for any corporate capital, at least through 2024. Let's talk just a minute about the stock price. When we were a brand-new company about 3.5 Years ago, our Adjusted EBITDA plus P&I was at $61 million. Our customer count was just under 64,000. Our NCCV per share on a PV-4 basis was $13.60. Per the Triple-Double Triple, that should be nearly 3x on the NCCV per share, over 5x the customer count, and 8x the Adjusted EBITDA plus P&I. With the stock price just not even 2x where it'd been. We've gone from an unproven concept to a highly proven concept through COVID, supply chain disruptions, and other uncertainties. Michael talked about this before. Puerto Rico, just a few weeks ago, 30,000 customers all relying on Sunnova for their power for a week. Passage of the IRA, strong grassroots efforts that are fighting for state incentives and fighting against attempts to try to hurt NEM. I gotta tell you, I really don't care what they do for California NEM. I really don't, because what they are talking about right now, we think is just gonna drive more and better battery adoption. We're already the leader here on battery adoption. With the new tools that Chris has, it's gonna be amazing the value that we can bring customers beyond just saying, "Hey, why don't you throw a battery on with your solar panels?" We have a strong balance sheet, very strong liquidity. We don't need to be going into the market seeking more liquidity right now. Well over $1 billion of liquidity at the end of the quarter, and we've just done another ABS to help reload some of that liquidity as well. We established positive RLCF. We proved that, yes, if you were to just take the operating assets and shut down the rest of the company, the company, Sunnova, makes money. That will only grow, by the way, as we hit flips on our tax equity and as we go past anticipated repayment dates of our securitizations. We've also outlined that, yes, we believe that there is a path to achieving GAAP positive earnings and GAAP positive operating cash flow. We keep talking about, you know, we think our company is undervalued. Everybody's gonna talk about that. We realize that the financials can be confusing. But at the end of the day, we think the biggest disconnect is that folks don't realize we are a service company. We have a long-term contract and a long-term relationship with the customer. We sell energy independence, reliability, affordability, sustainability, peace of mind, and a promise to be there for our customers. I know you guys wanna hear me keep going on, but I think what might be even better is if you hear from some of the amazing people that I work with every day. Sunnova's mission as an organization is to power energy independence so that homeowners and businesses have the freedom to live life uninterrupted. Sunnova has been going through an incredible growth evolution for the last couple years. We've hit our first milestone of 100,000 customers, our second milestone of 200,000 customers, and now we're getting close to 250,000 customers. We're expanding into communities with microgrids. We're expanding into commercial. We're now over 1,000 dealers. When you think about that quarter of a million customers that we have right now, that's really just the beginning. The Sunnova Adaptive Home is a vision that is very quickly going to become a reality. We bring together hardware from all sorts of different vendors, the best in class. Software at Sunnova is a huge part of what we're doing. When you buy a system, your experience of it is divided across three or four different apps. We are going to disrupt that. Our customers really need an energy service provider to bring it all together and make it easy and simple for them to understand. The Adaptive Home is a synergy of systems, solar, energy storage, load management, EV charging, and generators or fuel cells. A dealer doesn't have to go into a customer's living room and sit and think, "How do I design an Adaptive Home?" We're doing that work for them. A lot of our competitors are there for the sale, and then they're on to the next sale. We're here for the long run. We are an energy service provider. We put a 25-year service on the work that we do, and our competitors are not really focused on that. 25 years gives us a long runway to develop a very fulsome and trusted relationship with our customers. The business advantage is we also get to sell that relationship with more services. As they have kids, as the grid becomes more unstable or they see more storms in their area, we have the ability to grow their system with Sunnova. Because we monitor, we're able to see how things are changing. Sunnova is going to be leading the pack in technology. Our ability to bring disparate technologies together and create a cohesive product for our dealers to sell and for our customers to experience, it's just going to set us apart. The culture of Sunnova has been incredible. A lot of people, they talk a lot, but we're actually doing it. We're actually bringing the services and the infrastructure and the resources to consumers to make it a reality every day. Sunnova's people are one of its greatest assets, and you can see that all the way through the organization. When somebody has an idea, we talk about it and say, "Man, if this is good for the customer, it's good for Sunnova, let's go. Everyone has that drive to try to make a change, to try to do something different that's gonna be beneficial not only for the company, but beneficial for society as a whole. We're tackling big problems, but we've got the right skill set to find the solutions and to offer them to market at rocket speed. You hear all this rhetoric in the media about how dismal things are. Climate change is accelerating, inflation's going up. Increasingly, what we're able to provide as a company is a solution to those problems. We're part of this transformation in the country, helping people realize that there is a better way to get energy. We have sunlight that shines on us every day, and I want to be a part of the team that brings about solutions that help people harness that power. I feel like that what I'm doing has meaning and purpose and that it's making a difference. I think everybody at Sunnova feels like that. Our mission is helping customers live life freely and independently. One of the most exciting things for me is helping customers realize the value and the benefits of that. We're making a difference in customers' lives, and we're driving towards a better future for future generations. It's just really exciting to be a part of it. Okay. We will now move into our Q&A session. We are happy to be hosting this session both in person and virtually. Please keep it to one question and one follow-up per. For those of you in person, please raise your hand, and if you would like to ask a question. For those of you watching the webcast, you may submit a question virtually via the Ask a Question tab. To start, we would like to take our first question from those in person. Please raise your hand. Thank you. Brian Lee, Goldman Sachs. Kudos on your first Analyst Day. Really well done. Just a couple questions on the guidance here. I guess, first off, for 2023, can you give us a sense of what you're expecting on the mix of loan versus lease and service only customers in 2023 in that new customer count? And then secondly, I know the principal payments have been in focus here for you guys recently. The guidance range, Rob, is a little bit wider than you normally do for that metric. Just sort of what are the assumptions you're baking in there? What's the visibility? I know that's a metric you know you had a little bit of a challenge here in 2022, so wanted to understand what you're thinking about here into 2023. Sure. Let me tackle the second one first, which is the prepayments. That is really what the variable is there. We have a viewpoint that we think that the interest rates will be coming in and that the mortgage rates will be coming in by the second half of the year, and possibly, but possibly earlier. We're trying to build in a little bit of timing variance there. Yes, that is a wider range than we would normally expect. It really has to do with where we expect the prepayment volatility. We actually have an even wider range of scenarios that we're looking at, but we're trying to keep it a little bit tighter here for Analyst Day. Back to your first point, when we take a look at lease versus loan customers, we're probably expecting, I would think, around 10,000-15,000 service customers between the different pieces where we're originating them. On the lease versus PPA, probably starting off the year, we're probably gonna be about 55% loan, 45% lease and PPA as we continue to roll through our adjustments on the fully burdened unlevered return. We expect that to switch by the time we get to the second half of the year to be 45%, 55%. All right. If I can get a second question in real quick. Just the C&I business, really helpful disclosure around kind of the TAM and what you guys are thinking about the opportunity set there. Can you? I know it doesn't seem to impact 2023 guidance here very much, but as you think about sort of the medium to longer term, commercial customer economics, can you kinda give us a sense of, you know, not only the growth opportunity, but economics for you and maybe in relation to kinda what you all, you know, already laid out on the resi side? Yeah. The economics, we're targeting the same economics, right? Our fully burdened number of return is indifferent. You're not gonna see the customers that we have on the commercial side really in the customer count because it's one customer, you know, one great big customer, but it's one customer. As far as the opportunity goes, we expect around 100 million- 150 million of the investments in new systems, maybe a little bit more, to be on that commercial side. But we do expect that to grow significantly, and actually, there are a couple of catalysts that could increase that significantly. When we take a look at the opportunity set, it's obviously very broad. One of the reasons, and I think Michael could go into this more if he wants to, that we identified the sector was because there does seem to be a huge focus on residential, a big focus on utility scale, a big focus on large C&I, but that low to moderate C&I is just nobody touches that sector. Nobody's really figured it out. We've been actually working with a number of banks on the financing of it, which is that's how you figure it out, is you make sure you have financing behind it. Michael, anything you wanna add to that? No, I think Rob talked to the financials pretty well. It is definitely an underserved market. I think just taking an example like Puerto Rico and looking at the opportunities in a market like that or across any of the other regions that we're currently serving or plan to serve, that 50 kW-250 kW customer is, you know, they just don't really have solutions in the market, and that's really what excites us and prompted us to get into this space. The fact that many of our dealers are already in the market with these customers, we think that leverage is gonna create a lot of additional opportunity, and the salespeople are already calling on individuals that own businesses, so they can sell both sides of the equation. The only thing I would add, Brian, is you can probably get a very good sense that we think next year as far as the growth targets that we've laid out is a fairly conservative number. There's a lot of uncertainty out there. We don't have to go into that. We feel a lot of these new businesses like the business or the commercial business. It wouldn't be the right move to really start having a heavy you know forecasting based on you know and input it into our guidance based on a business that we haven't done our first customer in. The other thing I would say is on the service only business. We've talked about, made reference to it all the way through my comments, Michael's comments, Rob's comments. The skew is decidedly up on that forecast for the service only business. That business is really coming on very, very strong. It would make sense why. We've talked about the importance of service over and over, but another couple of points is the higher those utility rates go, the more interruptions consumers come back and say, "Wait a minute, my system isn't working. My service isn't working. I need somebody to come fix it." And so that's why it's not a mystery to us about why we're seeing really an explosion in that business in terms of count and the amount of business. It's just fundamental. I would expect to see that business grows faster than we even think at this point in time. We good? This is Philip Shen with Roth Capital Partners. Right here. Oh, hey, Phil. Hey, John. Just a quick question on the spread outlook. You know, Rob, thanks for that graph with the three-month trailing and versus the 12-month trailing. Much earlier in the year, John, I think you were alluding to the potential of getting back to that 6% spread by year-end. Clearly, we're, you know, not gonna get there. Was wondering if you could talk through knowing what you know about the rate cycle and where we are, what do you expect that spread to be ahead, you know, from a cadence standpoint by quarter, perhaps Q4, Q1, and Q2 of next year? Thanks. I'll take a first stab and then turn it over to you. Yeah. We said about the turn of the year, it wasn't an illusion. We said it on the calls, right? You're too kind in using that word. You know, look, what I would say is that we're not betting on a huge drop in rates. I don't think that's prudent. Rob and I both don't think that's prudent. There is some. I mean, just looking at our last securitization, the risk-free has come off a lot just in the last week. Is it gonna stay there? We have no idea. We are gonna close on in the next few weeks and months some additional capital. It's gonna continue to keep on the debt side the cost of capital very low. Again, going into the balance sheet, the corporate, which we've already got all the corporate rates done, as Rob mentioned, that by itself gonna anchor the cost of capital much more so than any competitor out there. We feel pretty good about the cost side of the equation. I know that sounds very strange, but we do for these reasons that we've laid out. Now on the unlevered return, as Rob laid out, we're gonna see some pretty big moves up in the unlevered return, we think we're seeing it over the next few weeks and months. Coming back in, are we gonna get close to that 600? Could we achieve that, you know, by the turn of the year when we report the fourth quarter and certainly looking in the first quarter? I don't think that's out of the question at all. It's certainly, you know, we're seeing an improvement as Rob laid out in that implied spread on the capital we deploy. That is separate and apart from the gain on sale, EBITDA from the service business, loan sales, equipment sales, and so forth. I just wanna make that distinction. That is a metric that we use when we deploy capital. I don't think it's out of the question, whatsoever. Rob, do you wanna, you know, comment on that? No, I would just again point out that the IRA gives us a lot of ceiling. If we see, there are some things we could see that could create the moves faster on the increase of the fully burdened unlevered return. I think that the biggest thing out there is we talk about, well, what is our competition doing, right? Because that's the limiting factor on how quickly we can adjust our fully burdened unlevered return, is if we have a lot of competitors out there acting willing to generate assets at an economic loss, it makes it more difficult for us to get the volumes that we want as we increase our fully burdened unlevered returns. We're still gonna do it, right? We've done it. We did it at the beginning of COVID, no one else moved. We did it at the beginning of this year, and then slowly folks started to move. Some folks even leapfrogged where we were with their pricing. We know this 'cause the dealers tell us, "Hey, this is what happened," right? I mean, it's not. They know what the competitor prices are. It's not anything we would have been able to figure out on our own. I would say there's not the proliferation of stupid money out there right now that's willing to just gain volume with negative contribution margin. That gives us some of the ceiling to be able to not only raise our fully burdened unlevered returns, but also to continue to do so at scale. The other thing that continues to be the friend of the whole industry is that utility rates continue to rise. That even commodity shocks from earlier this year aren't fully baked into utility prices. In everything that we see with most of the utilities out there, they're gonna continue to raise their infrastructure part of their pricing even more over the next few years. Our savings that we have with our current customer base continues to widen, and our opportunities to create savings with higher solar rates also continues to widen. Great. Thanks, guys. Quick follow-up here on the commercial business. Do you expect to standardize those docs, and ultimately to tap into the ABS market as you do for the residential segment? What might the timing around that be? Thanks. Yeah. The first part of your question, Phil, on standardizing, did you say standardizing the docs? We do have a variety of agreements that we've already put in place with the ability to sell across the portfolio. We've got lease, loan, power purchase agreements coming, cash options out there, prepaid leases. We do expect a lot of those to be standardized offers in the market, but we will have room for some customization for those customers that are looking for slightly nuanced solutions. As far as the growth rate is concerned, you know, I think, yes, we're working to push as far as we can across the country because a number of the transactions that we're already looking at are multi-state, and we've got a desire to be able to fulfill that. Franchised businesses that haven't had a good solution yet is definitely at the top of the list. You know, we're talking dozens to, you know, potentially hundreds of locations that they're looking for a standardized offer from a single service provider, where we can bring them both the full turnkey solution as well as maintain that for them for their business for the term. We're looking across all those as being pretty holistic and standardized solutions. On the financing side, Todd Griggs in the back of the room, the other guy wearing the orange tie. He and I have been working hard on a lot of those solutions. There have already been a couple, as you know, ABSs that have really concentrated a lot more on MUSH. We've been working with not only banks but also with the ultimate buyers of either 144A or 4(2) type ABSs who like our approach, they like how we're moving forward on this. They are willing to give a little bit of wiggle room in the structure of the contracts per what Michael says. Because if you're talking about different entities and you can get multiple contracts that look alike 'cause it's all with the same entity, it tends to serve a little bit of the same purpose. You know, definite interest, definite folks who are saying that they want to transact in this space. Hey, guys. Oh, sorry, over here. Julien Dumoulin-Smith, Bank of America. Good to see you guys again. Nicely done. Julien may get the light shining right in our eyes, so we're gonna keep it very short. No wonder you guys can't see, indeed. Well, thank you. Listen, again kudos on continuing to try to unpack some of these complex subjects. I wanted to come back to this. We're sitting here today on this day, obviously a number of metrics. We've got this triple, double, triple that hasn't changed. How do you think about the evolution of the metrics that you guys are talking about, right? One of the big points of feedback consistently has been the complexity can scare away investors at the time. Can you talk about the evolution of your metrics, how you think about evolving this triple, double, triple into something else, right? Are we talking about GAAP? What does that look like? When do we get those kinds of metrics? Can you elaborate a little bit? I mean, is that a 4Q thing? Do we need to see things evolve a little bit further around the IRA? Let's talk about things that help us and things that hurt us, right? Obviously the more gain on sale we do, the better that is, 'cause that just takes things that might flow other parts of the financials and puts them onto the P&L. That's beneficial. Things that aren't beneficial are movements in interest rates. As interest rates drop, we would expect to see a decrease, a loss on our hedge position. We're not losing or gaining any money, it's just that the hedge itself was less valuable relative to the existing interest rate in the market. We'd have to roll that through the P&L, even though at the end of the day, our interest rate doesn't actually change, right? Then the HLBV accounting is probably the biggest one. HLBV basically puts a burden on... My apologies for anybody who's not well-versed in HLBV, but the HLBV is a consequence of the tax equity, and there's really no point at which HLBV suddenly turns positive. It is affected by the interest rates, it is affected by the takeouts. When you actually have a takeout, if we exercise a call on the takeout, it doesn't flow through the P&L, even though what we've done is we've taken something that would otherwise continue to be negative income and just taken it away, right? If we have it put to us, it does flow through the P&L as a big positive. There's sort of this real adverse way of treating it. On the investor side, there is a big push to move to proportional amortization, which would do a lot of smoothing out rather than using HLBV. We're gonna be trying to push that as well. At the end of the day, as we add more of the service revenue to the P&L, as we add more of the gain on sale, and as we add more of higher interest income from our loans, and we add more leases and PPAs while continuing to control our operating costs, we expect that to impact both net income on a GAAP basis and operating cash flow on a GAAP basis. Our goal is to get to positive on both those numbers, we're not having to talk about other metrics to talk about adjustments that we might otherwise make in order for folks to be able to understand. We've used adjusted operating cash flow and recurring operating cash flow so that folks can sort of understand how we're looking at the business on a number of ways. To your point, we think it makes the business easier to understand as far as what's management thinking, but it's just one more metric for folks to try to have to look at and understand. Within the back of our book, we'll keep those metrics. I don't think we're gonna be guiding to those. I think what we need to be working towards is simplification of actual net income that's GAAP positive and actual GAAP OCF that's positive as well. Nice. And just to put you on a further spot, when do you anticipate getting there, if you can? Just to quickly clarify that. Well, some of it can be done with some accounting rules changes that we are advocating for, and that could be happening as early as like 2023, 2024, if we can get those through. If not, we think it's probably 2025 when we can get to something that looks like it's positive. Got it. Julien, I would chime in there and just say we're focused on it. We'd love to make y'all's lives simpler and better, because then it makes our lives simpler and better. As Rob mentioned in his comments, we think there's a tremendous amount of value within the stock price, right? It's our job to come up and say, "All right, well, how do we communicate that value?" We've been trying to do that through, if you remember, we were the pioneer in the EBITDA and all that war about using it and so forth. I think most people look towards EBITDA and certainly are not distinguishing between gain on sale, which is very short term, which is fine. As Rob said, we're gonna be driving more of that to get towards those GAAP numbers, those positive numbers in GAAP. Also the recurring EBITDA that we have more than anybody in the industry by far, to say the least, that should trade at a higher multiple, and yet it doesn't. We're going back and say, "All right, well, if it means that we go to a GAAP EPS, and we're doing more gain on sale to get there, in GAAP OCF, then let's do it. Let's make those changes and move forward." Because we certainly a large part of our compensation, I know this is important to shareholders, is stock-based compensation. We wanna be able to make the communication about how we create value simpler and be able to hopefully drive home that with average investors and hopefully obviously improve the stock price. Got it. Now if I may just on a second question, just real quickly. Unpacking the spread we talked about earlier, the 12% IRR, Rob, you alluded to. Just can you unpack when you get there and how that fits with the ITC conversation you talked about with 100-150 basis points? Just how does that evolve here? How quickly does that materialize on both fronts? I think it can evolve actually very quickly within the course of 2023 to move up. I mean, again, we expect to have a significant increase here as we get to the end of this quarter and going into next quarter. A lot of it depends on some of the rules that we get from the IRS and how we're able to use those rules. The biggest thing we have right now is we know we have the IRA. We're just waiting on some interpretations to figure out exactly what that means, even to the how we're gonna account for some of those changes, but also how we utilize some of them. I can just sort of give you a very simple way to think about it, right? What's the LMI test? Is it a zip code test? Is it an address test? Is it something where we actually have to collect tax returns from the actual individual to try to figure out how do they qualify as an LMI individual or not? There can be easy ways that we can do very quick identification and then have our dealers move more into those markets and transact more in those markets. If it's actually something where you have to run a full on credit profile, who knows how much we'll be able to get from that? Pardon me. We need to wait and see what the rules are, but knowing what the rules are can give us the ability to act very quickly to take advantage and maximize the value that will be created through the IRA. One small point just to make, it's probably obvious, but a lot, if not all the customers that we've been originating over the last couple of months, and certainly will originate by the end of the year, will be subject to those adders as we move into 2023, because they will highly likely not be installed by December 31, 2022, right? We're building a lot of the value that's not priced in those contracts, and that value will accrete to Sunnova. Thank you. Sophie Karp, KeyBank. Can I start with a kinda big picture question? Utility rates are moving up, as you pointed out, right, and the utility bill is about, on average in this country, about 2.5% to maybe 3.5% of the customer wallet. It seems like you are displacing some of that by cannibalizing some of that, and also, going for additional services, right? The chargers and HVACs, maybe et cetera. Since you are positioning as a service and consumer-oriented company, have you given it a thought, like what kind of percentage of consumer wallet you ultimately wanna capture or could capture, and how should we think about that? Michael, you want to answer? Yeah, it's a good question. I don't know that we've got a clear calculation right now of what the wallet percentage would be in total. I think that the services are stacking. I think there's also a trend and a change in the behavior, I think, in where consumers' wallets are going, right? I think we're going after both the energy in the home. We're going after some of the investments that they're making to shore up their home. As you know, there's a large trend in the U.S. right now around heating and ventilation, and people are adding or swapping out systems for efficiency or because they don't currently have it, and because there's weather temperature creep, and that's impacting their lives. We expect that those trends are gonna continue. We're gonna be able to play into them. I think also, you know, if the trend that came about because of COVID, wherein more charging occurred at the home continues, then that's gonna allow us to participate in more of the fuel stack there. There are lots of numbers that float in the industry. We shared one on the screen earlier. About 35% of charging is at the home, excuse me, 35% increase in your home's energy use because of charging at the home. I actually think it's much higher. I mean, I think that the average system should be increased by 50%-80% at a minimum for the homes, when they're gonna have an EV in them. If you go to a two-EV home, obviously you're more than doubling the system size. Some of these share of wallet questions, I think, are dependent on the rate of acceleration and which services the customers are gonna opt into and how fast that's gonna come at us. But I think that the opportunity for us to expand, as I shared with the 23 and 23,000 NCCV, you know, we think that that's very near term, and then we think there's a lot of upside to it, based on the way that we're aggregating services and some of the consumer behaviors that are gonna be behind those. Thank you. My other question is on California NEM and kinda battery availability. Not gonna ask you a question about your, like, opinion on the PD here, but let's say if this gets adopted, right, close to what it, as it's written, the amended PD, do you have enough capacity or battery availability rather to procure enough given the path that they laid out to go to pretty much close to 100% adoption of battery attach in California without maybe cannibalizing those opportunities in other markets where you currently have battery offerings? Right. Thanks, Sophie. You know, in terms of I'll go ahead and answer the question anyways of where we think the proposed decision comes out. We think there's a few gives to make this a little more reasonable for folks for solar only, for at least a period of time, if nothing else, for the lower income side of things. We think something is reasonable there to give before something happens. But to answer your question directly, assuming nothing happens, just whatever was proposed by the PUC slash utilities, that's what goes and gets done. Look, we're seeing an equipment market, and you're asking specifically about ESS or battery units that really is increasing dramatically in supply. And the equipment is getting better. There will be some more product iterations out of some of the name partners that we have here, in Enphase, Generac, et cetera, over the next year to two years. There'll be some more. Tesla is coming out with some new products. SolarEdge has got a really compelling product in the marketplace, right now and ramping up. There is a, and I made mention earlier, for those of us at the RE+ Conference, there was 42, just at the show alone, ESS manufacturers. Now, what I'm bringing all this up for is not to say, well, that means that there's gonna be this massive price decline and so forth and all that. I'm not gonna get into that. It could. You know, you look at the panel market, for instance. We are seeing some break in that fever on the pricing. It's not huge, but it's a little bit there. We can tell, as we talked about in the earnings call just a couple of weeks ago, that the panel market is dramatically loosening up. We can see that. Why? Because it's crickets with our dealers complaining about panels versus the previous year. We're also seeing that in batteries. As we move towards hitting our numbers on customer count this year, one of the things that we're looking at is we got plenty of batteries. We got plenty of ESS units. That right there tells us an enormous amount about what's going on in the marketplace. As we move into 2023, even with the California change, there is a lot of product out there. We feel very comfortable being able to meet a 100% attachment rate, and we'd love to see a 100% attachment rate really across the country. I think you'd have to see something like that, a 100% attachment rate across all markets for really ESS market to tighten back up where it was, say, three, four, six months ago. Thanks. Joe, it's your Guggenheim. I'm over here sitting at the cool kids table. So, to return to Julien's point about gain on sale, obviously you're beginning to toggle the business that way, and that's fine, and that will manifest in the financials over the course of the next couple of years. But the business is still, to a significant degree, focused on retaining contracted value and trying to generate EBITDA on trying to get credit for that in the stock price. At what point do you say, "Enough of that, people aren't giving me credit, I'm gonna move to a simple gain on sale business model for all of those contracted assets, just realize cash for them? Well, I'll put my two cents in and then I'll let Rob answer. You know, I know hope's not a strategy and but hope does spring eternal here that somebody will go, "Oh my gosh, look at the cash flows." You know, one thing that, and I've talked to some of you individually, I know both Rob and I have, is that taking the gross cash flows and discounting them at whatever rate, four, five, six, whatever you wanna use, it's not right, not for us. We've locked that debt in. We've locked that spread. So you really should be discounting the net cash flows. Now, I can't force you to do anything. You're gonna do whatever you wanna do, and that's fine, and other investors will too. But you're gonna miss the NCCV per share creation time in, quarter in, quarter out. The reason is that cash that you are missing in your evaluation analysis is falling to the equity. There's a rising floor in NCCV per share. If we did nothing else, it would keep rising as we continue to pay debt off, and as that discount rates obviously moved up 6%+, it's inaccurate. Our debt is closer, the last reported earnings, I think it was 4.3%. That's a far cry, especially when you got $9 billion of contracted cash flows and climbing very quickly. It's a lot of money, not option value, a lot of contracted cash. I love contracted cash. I gave a lot of my ownership up to make sure we built the balance sheet. I still believe in it. I don't wanna give that up, and I don't wanna give up what arguably, when we have private equity firms come in and take a look, still got a couple of those, folks on the board, right? Take a look at it and say, quite possibly outside the business model and the platform that is Sunnova as an energy as a service provider. What we can do in the future and what we will do in the future, maybe the biggest financial asset is that locked-in debt, which is different than the commercial debt. Most people don't appreciate how when you went to the ABS market time in, time out in a programmatic way, that really created an enormous amount of value for equity shareholders. We're not gonna just give that up. On a forward basis, as we increasingly can see that opportunity to get to a GAAP EPS positive, GAAP OCF positive, we'll increasingly do the gain on sale. Indeed, we already have a loan flow program in place. Rob will put in any others in place as he sees fit. We think we can do more on the forward basis than coming in, and certainly not gonna destroy value. What I will also say, and I think you love this comment, we do not, to use a Texas phrase, name our cows. If anybody wants to pay us a lot of money for contracted cash flows and can figure out how to take the debt with it, which there are ways to do that, talk to Rob, he'll take your contact information afterwards, and of course, everything's for sale at the right price. We doubt that that's gonna materialize certainly in this market. We're gonna continue to just clip those coupons, but do more and more on the gain on sale basis, so we can drive, to Julien's question, that simplification for investors. You know, I'll go even further, Joe. The leases and the PPAs revenue works really well as long-term revenue, and the loans work really well as a shorter duration investment. Our ABS investors like both of them. Being programmatic on one program actually helps the cost of capital on the other. While the easy answer might be, we'll sell all our loans, we'll just keep our leases and PPAs, and now we've solved the problem, I don't think it actually does, because the loans actually get even lower cost of debt than the leases and PPAs do. As I said, we're increasing those CPRs, so with the prepayment rates, so we do expect that to continue to drive down all things being equal. The service revenue side, which we're sort of including in this sort of gain on sale picture, the new homes, and the ability to balance out some forward flow and other opportunities, we like that mix of cash flows, and we like what it does to our leverage numbers to keep the leverage numbers down, a little bit more. The idea is we're letting you know now, loud and clear, just like we did in the third quarter, you should expect to see that gain on sale number increase, but it shouldn't be taking over long-term contracted cash flows. John actually made an allusion in his comments to his and my, you know, first sit-down conversation. It was all about how do we achieve repeatable cash flow? I mean, that was our breakfast meeting. Okay, thanks. Follow up on a totally unrelated subject, you know, supply chain. Had a really interesting meeting with NextEra Energy in Miami earlier this week, and you know, going back and forth in the UFLPA and batteries and all this stuff, and that's fine, but you know, they made an interesting point. They said, "Look, the longer term challenge here is this overdependence on China," you know, regardless of what you think about the UFLPA. We're seeing some reshoring, and I'm just wondering how you all feel about your role in that process. Obviously, you said you don't wanna make things, but you're a big buyer of panels. You're a big buyer of storage. So I'm wondering how you think about your involvement in this reshoring process over the next, you know, five, 10 years. Thank you. Yeah, Joe, we actually were concerned about this issue years ago, and in fact, I talked to some of our key supplier CEOs and said, "Where do you make the box?" You know, let's just call it the box, so I don't identify anybody. "Where do you make the, you know, the piece of equipment?" And it was like, "Oh, well, I make it in a different country other than China." "Okay, that's great. Do you get any components to make that box out of China?" And they're like, "Well, there's these little bits and pieces," and then the chips which we all know about in terms of our dependency on TSMC or Taiwan and so forth. And I'm like, "Yeah, that's the problem. Get it out of there." It was like, "Well, we can't do that." You know, China literally makes 100%, for everybody in the world in any industry, that little component. I said, "Okay, well, you still gotta do it." About 18 months ago, we started to see some folks go, "Yeah, we got it. We're gonna do it." We actually see this moving very quickly, I think underneath the surface. The IRA obviously is going to supercharge that. We've been in there and continue to be in there and say, "Look, bring the production here. Bring it close to here, if nothing else, Mexico, et cetera, and we'll put in more purchase orders." It goes to the equipment, you know, buying and purchasing. I think that if you look at our domestic content today, which very few suppliers of anything actually qualify for what we think Treasury is gonna issue guidance for, we most likely have the highest domestic content out there of any service provider. That has to do with a couple of key relationships we've built over the years. We'll continue to emphasize that. We'll continue to ask them to at least consider, now we really want them to, at least somebody, to put factories here in Houston area in Texas. We're a good community leader here. Were it not for that little small renewable energy firm that makes cars down the road there, headquartered in Austin, we would be the largest renewable energy company that's publicly traded, headquartered in Texas. We want more of that production down here. We're gonna continue to push for that, but I feel quite confident we'll be a leader, and we continue to push to make sure that we're de-risking the China risk. Thanks, everyone. Yep, thanks. Mark Strouse, J.P. Morgan. Thanks for hosting us today. Rob, can you talk about what the 2023 EBITDA guide assumes as far as pricing? I mean, the last few CPI prints have been year-over-year increases kind of in the mid-teens or so. Are you assuming that continues into next year, or just kinda how to think about that? Are you talking about sort of the pricing on the solar rate, or are you talking about the pricing for the equipment itself? The rates. Yeah. The CPI, I'm just talking about electricity rates in general. We would expect to see that those electricity rates would go up a little bit relative to where they had been. Again, the savings that we're able to offer right now are significant. When we take a look, so think about what the break-even point is, where we can achieve savings and still get a customer to transact. It's about 15%-20% savings off the utility. We're wide of that right now, so there's plenty of room to move up. It doesn't mean we're necessarily gonna jump up as fast as we can. In some markets, we're looking at it and thinking that the price increases might be a little bit more temporary. In other markets, we understand that they are not only fundamental, but they will continue to move up over time. Michael has an entire team dedicated to looking at this in a real-time basis and looking at what our pricing will be, and it's not just what today's pricing is, but the pricing all the way through the life of the contract. We would certainly expect to see the solar rates move up a little bit, but that's on new contracts. Existing contracts, those savings are locked in. They may have an escalator on them, but those savings are locked in for those customers. The savings that our legacy customers are achieving are tremendous, and you know, Mark, you've heard me mention this before, but I'll mention it for everyone else. When I bought my solar system two years ago, it was a resiliency system because my local utility was not, you know, for better or for worse, my power was going out often enough and had had a couple hurricanes that had really taken it down. Now, I was glad to have it for the freeze, I'll tell you that much. But today, I am a savings customer too. I am saving between $100-$200 a month off what my electricity rate would be were I to go into Power to Choose today and pick a new rate, pick the best rate possible. That's probably a brown rate. It's not even a green rate that I'd be able to pick out today. We're not gonna go back to those customers and say, "Hey, because you're saving so much money, why don't we go ahead and increase your rate a little bit more?" To the newer customers, our ability to offer savings is so wide right now, and we will take advantage of that. Okay, thanks. A follow-up to Brian's earlier question about C&I. Just to understand you're just getting going, but kinda what are your expectations as far as you've had this slide for the last several quarters, maybe years now, showing the number of services for residential kinda increasing over time. What does that look like on the C&I side? Are you kind of starting on second base, you know, just C&I kind of being more ready to adopt storage or EV charging, anything like that? Yeah, I think out of the gate, we're gonna be seeing like three to four services per customer, and then that'll quickly pick up. I do think that with the C&I customer, we not only have a greater opportunity to have a higher attachment rate out of the gate, but they're looking for more services. They need more capabilities to help their business perform at a level that's typically higher than what the residential customer is even looking for. It is a combination of things that we talked about, but it's also helping them interact with the grid so that they are getting the best utility rates, that they are getting a little bit more of that mentorship, even things like UPS being a pre-stage to stationary storage. You know, some other services that help them think about how they manage their fleet if they've got vehicles. There's an opportunity, I think, that's even greater in the C&I space, and I think we will have a fast start there. I think the way that we're approaching the sector will start us in that three to five, but, you know, quickly get us north of seven. Hey, on the back side here, Maheep from Credit Suisse. Just on previous question, on Mark's question on the ability to raise leasing prices. Could you talk about the loan side if electric rates increase? Is it more easier to increase those leasing prices, or do you get any benefits on the loans as well, either on dealer fee or the equipment costs? As we've talked about before, Maheep, there are a number of levers that we can pull, and ultimately, what the customer looks at is what their monthly payment is. That can—we can show that to sort of an equivalent to the lease, right? I mean, we're pricing it more or less the same way. We may price an incent one or the other based on, you know, what we want out of a certain market because of certain concentrations. I won't go into too much of the sausage-making, but I mean, we're looking at what that equivalent is when we price our loans in a market, as well, is that we look at what their monthly payment would be versus what a levelized utility payment would be for the same market. That's how we help them calculate their savings. Got it. No, that's helpful. Maybe just one housekeeping on the cash sales business. How should that mix look like in 2023? Your peers are 15%-20% cash sales, but how should we model that? Yeah, I mean, I would say that if you look at sort of where we're tracking right now for this year on all of our cash sales, on a margin basis, we'd expect that to probably double maybe a little bit more depending on market conditions for next year, partly just because we're growing so much as a company. Again, when that flows through, it's just fully accretive to the bottom line. Also because of the more opportunities, I think, and again, we can't overemphasize this enough, that service revenue line. You've already seen it expanding. When we first put that service line in there, it was a couple hundred thousand, maybe a quarter. Now it's a few million a quarter and growing. I mean, that's really where a lot of the juice is coming in and where we think, you know, we're sort of including that in our discussions on what a gain on sale is, right? Because it's just a service we're performing and it's flowing fully through the P&L without depreciation or HLBV or having to go to the cash flow from investing to pull the number, right? It's all in there, but I think that's really one of the lines we should expect to see grow disproportionately relative to the others. One comment to pull in some of y'all's questions. We're gonna raise prices on products over the next few days and weeks. That's already been out there. We've talked about that, embedded that in. But we haven't assumed any ability really to raise too much pricing on any at all really in next year. I think it's gonna be there. I think utilities are gonna raise prices, whether we're in deep recession or not, because their rates typically lag. They always lag, outside some markets like Houston, Dallas, and Puerto Rico. I think there'll be more pricing power as we move towards. Then, of course, the IRA is pushing those ITC adders into more lease PPA to be preferential over loans. There's a lot of tailwinds on margins here that we're not factoring in yet. Now, to be fair to what Rob was saying, a lot of that may end up falling into the back half of 2023 or into 2024, just given the time and duration to in service. There is, I think, more, definitely more push and tailwinds on that part, than we've currently factored in. It would be irresponsible to factor in, you know, more price increases until they actually, yeah, the utilities actually happen. Thank you. Thanks. James West with Evercore. You kinda maybe a little bit of heavy foreshadowing by John at the start when you're talking about going from a national company to an international global strategy company. I don't think you'd say that if you hadn't thought a little bit about what that might entail, what markets. Maybe you could just kinda talk about when you look around broadly, not committing to any you know global moves yet, but what markets are sorta catching your eye in terms of attractiveness? Well, I was wondering who was gonna ask that. Look, we had to come up with a different legal name before taking the company public, and Drew, our general counsel, came up and said, "What do you want the name to be?" I said, "Sunnova Energy International." He said, "But we're not in another country." I said, "I know that. It's aspirational. I'm the entrepreneur, I get to do goofy things." It was where, as I mentioned in my comments, as you referred, is where we've always wanted to go. I think that it gives you an enormous amount of scale advantage, enormous amount of advantage in talent as well, for different developers around the world to link into what Chris Hayden is doing out there, which is really exciting, as y'all saw. I think it's very obvious where a huge market exists that's under a tremendous amount of stress on the energy crisis trifecta as it went through, and that is Europe. I think it's an interesting place. It's obviously several different countries there. I'm not gonna be the dumb American and refer to Europe as a country. There's a lot of opportunity out there. I think it makes a lot of economic sense. Quite candidly, our model, the energy-as-a-service model that we are moving forward, obviously we've had a tremendous amount of accomplishments, but as my comment said, you know, the best is yet to come. You haven't seen anything yet. That needs to go internationally everywhere, within Australia, within other parts of Asia. In fact, Japan has a couple of competitors, at least one that look just like us and been there for years doing very well. I think there's a tremendous amount of opportunity, but you know, clearly Europe is an obvious place for us. It's something we're very interested in. It's why I said that almost all pieces of our vision are in place. The other piece is beefing up the mobility side of things. There's a lot more that we can do there. Michael and I worked and have a very valued relationship clearly with ChargePoint. You've seen that. There's a lot more that we should and we will do in the mobility side as well to further growth even more. Okay. Then you've mentioned a couple times before, either, like, maybe a light recession in 2023 or maybe even a harder recession in 2023. This is a somewhat nascent industry. We haven't really seen default rates through this cycle. I think S&P looks at more like sort of a mortgage default rate plus for the ABS for this industry. You talked about your defensiveness relative to utilities and basically maybe having default rates inside a utility. Do you think historical default rates for utility customers at a standalone without solar could maybe be sort of a benchmark? Because we can look at that data over a longer period. Do you think your default rates would be inside or outside of that? I think right now we're clearly taking a different credit spectrum than the utilities do, right? Now, to be fair, we want equality on both sides of the meter. So what that means is the utilities take on those customers that they know will not pay them, certainly not in a recession, which, as you know, Sean Morgan, I've been calling for for well over a year now. I feel like we're in it. The reason why the utilities are willing to do it is they socialize those credit losses. They get paid back. We should have that, too. I think there's parts of the infrastructure bill and the IRA where the federal government believes that that equality on behind the meter and in front of the meter should happen from a credit standpoint. There's also state, and there's some of which we've already done. Maryland's a good example of that that does just that as well. As those credit wraps, and again, we achieve equality on behind the meter and in front of the meter, you're gonna see this market completely change. Yes, we will serve more customers that have trouble historically paying their bills because of these credit wraps, because of these incentives based on credit through the IRA and other areas. What I would say over time then, we should look more like the utilities. You're right. Especially as we have the service and consumers and customers thinking of us as the primary power provider, it should mimic that of which the monopoly has. I think that's the case. In the meantime, because we do have a different credit profile, and I wanna say this, make this very specific point. Credit and income, bad credit and low income, yes, there's an overlap, but it's not one for one. It's not even close. If you look at the Puerto Rican market, for instance, investors, lenders consistently underestimate how far that default rate can fall and how low it can actually be. We pick up the difference. That's another reason to keep the cash flows. It's not the same as being low income and low credit. We've done, I think, an excellent job composing a portfolio that basically will perform better than the average utility out there on a default basis through even a deep recession. In the short term, it's better. Long term, it should equal to what the utilities have seen over the last 10, 20, 30, 40 years. Thanks, John. Kashy Harrison, Piper Sandler. Thank you guys for hosting this and giving us a vision of what you're trying to achieve here. If I could go to the liquidity forecast slide. You're showing here that you only need $100 million of corporate cash, and then you're flipping to neutrality in 2024. Conceptually, as you think about 2025, 2026, 2027, does that flip to positive? Can you start generating corporate cash, and you know, you don't need to do another convert or what have you? Does this become a cash generative business at that point? That's absolutely what we're trying to do, right? That's absolutely what we're trying to do. I think another thing to sort of realize is that we don't have any refinancing event up until 2026 is our first refinancing event. We're gonna look at a lot of different ways to try to continue to enhance value to the shareholders. Right now, we think there's definitely a path that does not have us going back for capital to the capital markets on certainly equity-linked capital markets for some time. I think what we might still wanna do is to do another high yield bond or to refi our current high yield bond when the market prices come back or to look at more high yield bond that way. In part, it was taking up part of the credit stack that we had always had, which was the double B portion of our securitizations. We may decide to try to do a little bit more of that. At the same time, again, as we hit these tax equity flips, as we continue to build scale over the operating expenses that we have, it may not be necessary to do on a repeatable basis. We'll continue to look for what's the best and most optimal thing for shareholders. Well, I would add to that. Just to be very clear, that's what Rob was saying earlier about ROCF and those cash flows. We don't burn cash. We haven't for a long time. It's all about when we have a stack of customers, whether it's loans, leases, PPAs, financed, how much of that stack is gonna be funded by the corporate capital, be it equity, be it corporate debt as the bond, as Rob mentioned, and versus the asset level capital in the ABS market, commercial bank market, et cetera. Obviously, we've used the ABS market almost exclusively over the last few years. That means that as we fund it with corporate capital, the cash flows that are coming off that stack, like this recent securitization, are gonna be a lot more because we didn't use the asset level side. It also self-reinforces, and then you start getting into tax equity flips and so forth. You end up producing a lot more cash flow to the corporate parent and the equity as you move forward in time, if you did nothing else. I wanna make sure that that was very clear, is that this is all about optimizing for the cost of capital. What we're saying is that we're seeing more and more generation of actual cash coming up to the parent, and we see a very clear line. Now, what we're hedging ourselves a little bit is past that 24 is like you tell me, we talked about the enormous opportunity, even globally of what's out there. If our growth just shot through the moon, well, then that may be different, but I would contend that I come back to the shareholders and say, "Look, I'm gonna give you a whole lot more Adjusted EBITDA plus P&I or how about earnings on a GAAP basis, a lot more cash flow, and I need a little bit more of corporate debt or something, equity to be able to do that." We're not contemplating that, and we'll be abundantly clear on that. That's what Rob's been abundantly clear on. We will never say never. If there's something, just tremendous amount of growth, like we're gonna achieve, we're gonna grow 300,000-400,000 customers in a single year. That is entirely possible, not probable is what we see it right now, but that would be really the only time. We're in a very, very solid liquidity position at this point in time. Thank you. As my follow-up, you've indicated that you have a lower cost of capital than the loan providers that do not have balance sheets. Can you help us think through conceptually what that spread might be? So for example, if you're offering a 4% loan, what would that competitor have to offer to earn the same return that you earn at 4%? You're saying on a net basis, what would they have to earn given their cost of capital? Exactly. Yeah. I mean, without trying to go through too much quantification, they would have to be buying that loan from a dealer at a deeper discount. Our goal is not to try to get into a bidding war with them. Our goal is certainly not to try to go out there and push our growth spread to the lowest margin that it can be, where we still feel profitable and comfortable. We're gonna try to continue to see what we can do to both maximize profits and to be able to help that dealer generate as much new business as possible within the current environment that we're in. I mean, our If I were to take a look at what that spread would look like, I'd have to run a bunch of scenarios for you to be able to show you what that would be. I sort of need your inputs and a computer, and then I can sort of tell you what the equivalent would be between one theoretical loan that we could originate and a theoretical loan that our peers would originate. I know that doesn't answer your question fully, Kashy, but if you wanna huddle around a computer with me someday, we'll go through it. Looks like you have a date, Rob. Yeah. Fantastic. Hi. Dylan Nassano, Wolfe Research. John, you've alluded to new sources of capital several times now, just going back to, I think the third quarter call, and you even pointed out, I think, on one of the slides. Could you maybe just expand on what that could look like and just how that would compare to you know, what you got recently in the ABS market? Would it change the cadence that you go to the ABS market? Just any more color there would be helpful. I think it's actually better to turn that over to Rob, if you don't mind. Yeah. You'll pardon me. If you're talking about the cadence of going back to the ABS market, will we continue to utilize the ABS market? The answer is yes. Will we also utilize the term market? Yes. Will we be selling loans? Yes. I mean, the answer is all of the above. The question is what's gonna maximize the value for the shareholders. At the end of the day, and this is, you know, John does a lot more of the equity IR, and I do the debt IR, which you may or may not believe is as much of an IR journey. What I tell them is I've got a whole lot of equity holders, myself included, who don't get paid unless you, the debt holder, get fully paid and get exactly what it is that you're expecting. At the end of the day, they know that I'm not compensated in debt, I'm compensated in equity. Whatever decisions we make are all in line with how do we maximize the value to the equity shareholder. However, going back to the ABS market on a regular basis is an important part of that. What you can change is the magnitude of what it is that you're bringing, how much you're bringing. We can do certain things around structuring, but to try to give them as much consistency as possible allows us to do more within that market, which allows us to have more optionality and do more in the other market. If the loan purchasers end up coming in and doing better and offering much better terms in the ABS market, what we will do is pivot more in that direction, but we're not gonna just shut off the ABS market on a go-forward basis. The illusion that, you know, we obviously can't be more descriptive, but I think going back to my answer about the credit wrap on both sides of the meter, I think there's a lot of interesting supplies of capital to start thinking through as that starts to materialize. It's gonna be very dependent on having a big balance sheet, providing service to the customer through technology, and being able to stand behind a financial not only offering that you've enabled the service to be served to the customer, but serving the customer. You're gonna have to prove that you are gonna be here year in, year out for the foreseeable future. Without a balance sheet, without doing the service, that's incredibly difficult, if not impossible to do. Thanks. My one follow-up, Rob, you mentioned wanting to, you know, do the gain on sale transactions in part to keep the right amount of leverage on the company. Just how do you define that? Is there a certain metric that you're gonna be targeting on a go-forward basis? We've always said that we're targeting 55%-60% debt to asset ratio at the company. Okay. Thank you. Yes, sir. Thanks. Hey, Chris Souther, B. Riley. Maybe just a quick one on the C&I side. Anything you could share around the IRR targets that you'd be looking for in that market? Is that, you know, gonna be similar to what we see on the res here or just, you know, slightly lower? You know, how should that change kind of the mixes? You know, we saw kind of from a market perspective, it's similarly sized. I just wanna get a sense. On the seasonality, I think you're still gonna see similar seasonality that you were gonna see more in the third and fourth quarters than you've seen in the first and second quarters. Just as a refresher for those who are, you know, to understand the selling season tends to be in the second and third quarters, which means that you see a lot more go into service in the third and the fourth quarters, which means that's when not only do you have your highest level of revenue and other items because you've been building it up all over the year, but especially when you look at the, you know, moving more into the gain on sale, then there'll be more transactions upon which we can transact in the latter half of the year as well. On really almost all of our metrics, we've been looking at somewhere around 35%-40% comes in the first half of the year, and the balance comes into the second half of the year. We still expect to see that. You see that on customer count, Adjusted EBITDA, a whole lot of numbers we've done this year and in the past couple years. I would expect that cadence to continue. All right. Maybe just on the software side, you know, I think you guys are certainly making a case why you'd be the natural aggregator of all the different suppliers you use as far as, you know, being kind of the, you know, the God app for the consumer facing. Could you just talk a little bit about, you know, what the software spend is as far as OpEx, you know, kind of plans monetizing the app just between, you know, upselling different services, you know, adding kind of the service, new customers, and how you guys think about kind of, you know, the value you're bringing on the software and how you get paid for that? Yeah, let me go ahead and start, and then I can toss it over for anyone else who wants to add. We actually break that out in that corporate cash reconciliation of the capitalized software cost that goes into sales and the capitalized software cost that goes into service. So you can actually follow that trajectory. I don't think we've broken it out as far as projecting what that amount is. What I can tell you is whenever Chris asks me for money, I'm always happy to give it to him because the ROI on money I spend with him is phenomenal. I don't know if you wanna add anything to that. No, I don't have anything to add to that. I think you did a good job. Thank you. Right. One thing I will point out is that we try to exclude as little as possible from Adjusted EBITDA, because I want that to be as close to reality of cash in, cash out, what leaves Houston, what comes into Houston, so to speak, as possible for y'all. 'Cause that's the way I look at it. You know, look at reality. Dealing with reality sooner rather than later is always a good, you know, motto to follow in life. You know, when we look at all the things that Chris Hayden talked about, Michael talked about on the growth side, think about all of that is in your cost and cash flow numbers. Think about that. That means that the earnings power, the cash flow power of this company is being underestimated tremendously. If we were to shut off growth, don't get nervous, Hayden and Michael, but if we were to take everything that they showed you today and said, "Cut it," the cash flow that would fall to the equity would be tremendous, and it would literally increase every single year because our debt gets swept to the face of that debt faster, the tax equity flips faster, the default rate continues to be low, which enables all this to be even turbocharged as far as generating cash to the equity. At the end of the day, I think cash to the equity is the only thing that matters. Free cash flow to the equity. We're focused on that. We're spending it, we're investing it, to his point, very wisely. Just think about that. All this stuff that you didn't expect to see on the software side, all the stuff on growth, obviously some more growth to come, that's all being funded in the numbers. Even in looking at the cost per customer coming down, as Rob mentioned in his comments that we put out there. All this is being accounted for. You can see the tremendous value of the way that we capitalize the company, the strategy over the last 10 years and the business model. Staying focused, creating value on a per share, per customer basis. Okay. I think we got time for maybe one more question before lunch. Praneeth Satish, Wells Fargo over here. Just maybe staying on the software theme. There's a lot of focus on data and ultimately monetizing that data. But I guess at the end of the day, you're getting that data from suppliers that have competing aspirations. So I guess how do you ensure that you're able to get that data feed, both now and into the future? You want me to take that or you? Yeah, go ahead. We have contracts in place with each of these vendors, long-term contracts that allows us to have access to that data, and we just constantly work on developing that relationship and expanding our technology platform to consume that information more quickly. There has been conflicts in the past where they feel like we aren't aligned there, but that has changed quite a bit in the last maybe six to 12 months, where we're now more aligned than ever. Is there anything you wanna add to that, John? Yeah. I think, you know, to be clear about it, We're not here to get involved in all parts of home automation and do all these wonderful things and have the app experience, you know, made mention of that earlier in Chris's comments about, "Hey, we don't really want the customer to be going there every single day," and so forth. But when the customer needs us, needs to understand about this necessity of life, which is why even in a recession, we feel so good about the default rate, we want that to be a seamless, simple exercise to interface with us. That's our purpose. Make the power flow. 8,760, you pay the bill that you signed up with us to pay, that's it. The equipment, the hardware, manufacturers and maybe even some other folks out there in the value chain, there's a lot of other things that they wanna do, and we're like, "That's fine." Now, to what Chris just said, there were some strategies about walled garden, let's keep everything close. I want all the boxes. I don't wanna share. Yeah, that didn't work. We knew that, and it was all about the customer service. You can put a widget on the house, but if the widget broke and it's not supplying the service, nobody's really happy about the widget. It's not something that people really want in terms of panels or a battery or an EV charger. If it doesn't supply the service, they don't want it. It's no use to them. We're much more collaborative with all of our equipment and hardware manufacturers than we ever have been. I think we're breaking through and saying, "Look, we're here just to make the power flow. If there's other things you wanna do, have at it. That's not our business." Again, we're gonna stay focused on supplying that power, 8760 at the payment that the customer signed up. That's all we wanna do. The technology that we're, it developed, we're integrating with others to do that is quite powerful and we think will drive our service cost, and that's ultimately increase the service experience, obviously in a positive way with the customer and decrease the per service cost, is our objective. That's what we're deploying technology to do all across, whether it's dealer, customer or Sentient and the aggregation and in performance even at the household and business level. Thank you. I'll also add that one thing that we've detected that all these OEMs have thought about recently is that, you know, initially there was this walled garden mentality. Now they are starting to realize that they don't, they don't necessarily wanna do the service, and we're much more enabled to do that. So expose that data to us, share that data. Why would we withhold that? If you're gonna help us create a better customer experience overall, that customer then refers them to other customers and the whole environment improves. Like more Enphase batteries go out the door, more Tesla goes out, more SolarEdge goes out. That open architecture has proven to be much more successful in helping customers be serviced. Again, I'll reiterate to build on that, we're not gonna manufacture things. We're not gonna compete with our manufacturing partners. Yeah. It's not what we're gonna do. Okay. I think that's it for questions. All right. Well, thank you all for joining us. This is our first Analyst Day. Hopefully, we've imparted some thoughts in giving you a little bit more insight onto the firm, what we're doing, our strategy. Like I said, if nothing else, you walk out of here and you say, "Sunnova is the best energy as a service provider I have ever seen." Thank you for your time. Thank you for coming all the way for those who traveled to Houston, and we look forward to seeing you again very soon. Thank you.