Good morning, welcome to Sunnova's Q1 2023 earnings conference call. Today's call is being recorded, and we have allocated an hour for prepared remarks and question and answer. At this time, I would like to turn the conference over to Rodney McMahan, Vice President, Investor Relations at Sunnova. Thank you. Please go ahead. Thank you, operator. Before we begin, please note during today's call, we will make forward-looking statements that are subject to various risks and uncertainties that are described in our slide presentation, earnings press release, and our 2022 Form 10-K. Please see those documents for additional information regarding those factors that may affect these forward-looking statements. Also, we will reference certain non-GAAP measures during today's call. Please refer to the appendix of our presentation, as well as the earnings press release for the appropriate GAAP to non-GAAP reconciliations and cautionary disclosures. On the call today are John Berger, Sunnova's Chairman and Chief Executive Officer, and Robert Lane, Executive Vice President and Chief Financial Officer. I will now turn the call over to John. Good morning. Thank you for joining us. The robust demand for our energy services, as described on our previous earnings calls, has persisted throughout the balance of the Q1 and into the month of April. This strong demand can be attributed to our ability to offer customers more affordable energy, higher reliability, and exceptional customer service relative to the centralized power monopolies. Our commitment to providing a superior energy service sets us apart as industry leaders. We provide responsive and reliable service to our valued customers, utilizing cutting-edge technologies to efficiently manage energy supply and demand through our Sunnova software platform, which powers our seamless Sunnova Adaptive Home, Sunnova Adaptive Business, and Sunnova Adaptive Community service experiences. Through our new National Operations Command Center, we are reimagining the way energy is delivered, consumed, and serviced. Our industry-leading service capabilities give us real-time data for the solar and solar plus storage systems we manage, allowing us to monitor and optimize these systems to ensure maximum efficiency and reliability. We are also focused on bolstering our highly experienced and professionally managed service team while improving our logistics capability to meet the robust demand for our service and repair business. Our command center is a significant step forward in our ability to deliver a better energy service at a better price that meets the unique needs of each customer and drives progress towards powering energy independence. Quarter-over-quarter, we continue to deliver exceptional value to our customers and shareholders while driving increased revenue, reducing loss of capital, and enhancing our brand. We have built our energy as a service business model around these objectives, and we strive to ensure that the power flows at the reliability and price point our customers expect. Our dedication to providing exceptional service to our growing customer base is a key differentiator from our peers, and we will continue to invest in our technological, operational, and logistical capabilities to improve the quality and response time of the energy service we provide. Indeed, customers who have invested in solar and battery systems for their homes are starting to question the necessity of staying connected to the outdated and unreliable grid, especially as monopoly utilities raise their rates nationwide. In contrast to the centralized utilities, we are proud to offer our customers even greater savings through a more resilient, reliable, and sustainable energy service. On slide three is a summary of our financial metrics for the Q1. On our Q4 call, we noted that we expected to capture approximately 10% or $53 million of our full year 2023 adjusted EBITDA together with the principal and interest we collect on solar loans in the Q1. We exceeded that target by $13 million through increased Sunnova Repair Services gross margins, lower than budgeted operating costs, and outperformance on loan prepayments. Slide four showcases the continued growth in Sunnova's customers' total solar power generation under management, battery penetration, and expected cash inflow over the next 12 months. During the Q1, we placed 30,100 customers into service, which brought our total customer count as of March 31, 2023 to 309,300 and brought our total solar power generation under management to 1.95 GW and megawatt hours under management to 801. These Q1 customer additions represented a 97% customer growth rate compared to the same quarter last year. Included in our customer count are cash sale customers originating through our new homes business and our service only customers who have either benefited from Sunnova Repair Services or purchased a Sunnova Protect Plan. We expect this customer class to generate approximately $1,000 of adjusted EBITDA per customer annually over an average contract life remaining of 17 years. Our strong customer additions to start the year, coupled with continued robust customer origination, gives us both the confidence and visibility needed to increase our customer additions guidance for 2023 by 10,000 customers at the midpoint. Our battery penetration rate continues to grow and reached 15.6% as of March 31st, 2023, inclusive of over 2,867 battery retrofits we have performed live to date. We have updated our customer contract life and expected cash inflows. As of March 31st, 2023, the weighted average contract life remaining on our customer contracts equals 22.2 years, and expected cash inflows from those customers over the next 12 months increased to $553 million, an increase of 37% from March 31st, 2022. I will now hand the call over to Rob, who will walk you through our financial highlights. Thank you, John. Starting on slide six, you'll once again see the year-over-year improvement in our Q1 financial results. This includes a 146% increase in revenues and a 44% increase in the adjusted EBITDA, together with the principal and interest we collect on solar loans. Revenues for the Q1 of 2023 included $59.9 million of revenue from inventory sales. Excluding that number, our revenue increase was 55%. On slide seven, you can see the steps Sunnova recently took to strengthen its access to capital. Thus far in 2023, we added $105 million in additional tax equity funds as the tax equity market remains healthy. As we plan to continue utilizing tax equity partnerships, we are closely following IRS guidance on investment tax credit transferability as well as ITC adders. Depending on the outcome of this guidance, we believe in some instances, transferring the credit may ultimately be more accretive than leaving it in a tax equity partnership. We expanded our warehouse capacity by $500 million. We have a long track record of successfully increasing our warehouse capacity to meet our growth. This includes expanding existing relationships and diversifying our capital partners by bringing new banks into the fold. We entered into a $50 million secured revolving credit facility to support our pivot to selling inventory to dealers. This facility allows us to borrow against the value of eligible inventory and eligible inventory accounts receivable, thereby improving our working capital position. We announced a conditional commitment by the U.S. Department of Energy Loan Programs Office, which John will discuss in more detail later in the call. We issued a $324 million TPO securitization that priced better than market expectations and below the weighted average yield of our November loan securitization, despite TPO typically pricing higher than loans. This improvement is another indicator the cost of capital is potentially stabilizing for our industry, and we completed the assignment of certain loans and commitments from Credit Suisse to Apollo affiliate ATLAS SP. Included in our $602 million of liquidity as of March 31, 2023, are both our restricted and unrestricted cash, as well as the available collateralized liquidity we could draw upon from our tax equity and warehouse credit facilities. Given available unencumbered assets as of March 31, 2023, this available collateralized liquidity equaled $181 million. Beyond that, subject to available collateral, we had $250 million of additional capacity in our warehouses and open tax equity funds. Combined, these amounts represent over $800 million of liquidity available exclusive of any additional tax equity funds, securitization closures, including the one just priced, in the money interest rate hedges, or further warehouse expansions during the year. On slide eight, you will see our fully burdened unlevered return on new origination increased to 10.6% as of March 31st, 2023, based on the trailing 12 months. On a quarter to date basis, this return equaled 11% as of March 31st, 2023, an increase of 180 basis points since March 31st, 2022. We are forecasting further increases to our fully burdened unlevered return over the next two quarters. The implied spread for the trailing 12 months increased to above 500 basis points as our fully burdened unlevered return increased while our weighted average cost of debt remained unchanged. Our current view of the capital markets continues to suggest that the implied spread today has increased back to above 500 basis points and is moving towards 600 basis points. Slide nine reflects the strong growth we have seen in our net contracted customer value or NCCV. At a 6% discount rate, NCCV was $2.6 billion, an increase of 51% compared to March 31st, 2022. Our March 31st, 2023 NCCV at this discount rate equates to approximately $8,500 per customer and $22.68 per share. Slides 11 through 13 provide our 2023 guidance and liquidity forecast as well as our major metric growth plan, the Triple-Double Triple. As John noted earlier, given the strong growth we've experienced to start the year and the continued demand for our services, we are increasing our customer additions guidance for 2023 by 10,000 customers at the midpoint, bringing our updated guidance range to between 125,000 to 135,000 customer additions. There are no changes for our other 2023 guidance metrics. We captured 12% of our expected 2023 adjusted EBITDA, together with the principal and interest we collect on solar loans in the Q1, above our target of 10%. As previously forecasted, we expect to capture an additional 20% or $106 million of this combined financial metric in the Q2. as with our customer additions, there is certainly upside potential to our financial metrics, but we have elected to remain conservative and maintain our financial guidance ranges. As of March 31, 2023, over 90% of the midpoint of our total 2023 targeted customer revenue and principal and interest we expect to collect on solar loans was locked in through existing customers as of that same day, respectively. I will now turn the call back over to John. Thanks, Rob. Sunnova continues to innovate by finding new ways to not only provide great service to our customers, but also to fuel our growth and maintain our strong balance sheet. Our latest advancement is the recently announced conditional commitment by the U.S. Department of Energy Loan Programs Office to provide an up to $3 billion partial loan guarantee, which equates to a 90% guarantee of up to $3.3 billion of financing to support loans originated by Sunnova under a new solar loan channel named Project Hestia. This project, supported by the DOE loan guarantee, would provide disadvantaged individuals and communities with increased access to Sunnova services by indirectly and partially guaranteeing the cash flows associated with those customers' loans. If issued, the DOE guarantee would support Sunnova customers that choose to finance their energy service through loans that include solar, storage, or other Sunnova Adaptive Home technologies that utilize Sunnova's purpose-built demand response, aggregation, and grid services enabling software, Sunnova Sentient. We anticipate the guarantee will support up to $4 billion-$5 billion in loan originations, reduce our weighted average cost of capital, and generate hundreds of millions of dollars in interest savings. The DOE's conditional commitment is expected to support grid reliability, improve access to clean energy, and enhance ratings and advance rates on our senior bonds. Importantly, this financing would allow us to realize issuance spreads commensurate with the expected credit uplift and introduce new investment grade investors to our long-term strategy. We expect the transaction with the DOE to close in the Q2 of 2023. The Q1 of 2023 was a strong quarter. Our execution continues to be superior, as demonstrated by our continued gains in market share and increases to our total addressable market. Our energy as a service business model increasingly demonstrates strong, profitable growth, not just growth at any price. We are confident in our ability to meet or exceed our 2023 guidance targets, and we eagerly look forward to a healthy 2024. Operator, please open the line for questions. Thank you. If you'd like to ask a question today, please press star followed by one on your telephone keypad to enter the queue. When preparing to ask your question, please ensure your headset is unmuted locally. We ask participants to limit themselves to one question and one follow-up per person to get through the queue in good time. That's star one to enter the queue. Our first question today comes from Philip Shen from Roth. Philip, your line is open. Please go ahead. Hey, guys. Thanks for taking my questions. First one, looks like your cost of capital should be coming down ahead, and this should serve as a tailwind for spreads to go to 600 basis points. Can you talk about how the rapid decline of module storage and other equipment pricing is benefiting your cost structure? You know, how much has pricing come down for modules and storage? What do you expect ahead for inverter pricing ahead? What is your latest solar as in-phase mix, and how could that evolve? Thanks. Yes, you know, there is a general deflationary trend in our industry. We have, labor is definitely becoming much more available, all the way from software to installers. You know, technicians, highly qualified, like ours, are still a little bit harder to get, but even that's gotten a little bit more available. The equipment side of things across the board is very much in a deflationary cycle. If you were to just look at an example here, go into the Q4. I went to one of our major markets, pulled out an average equipment stack, consisting of panels, inverters, and ESS unit. It was roughly about, for a 8 KW system, about $15,100. If you look at the where that same equipment price is here just a couple of weeks or so ago, it's about $2,200 off. It's about $12,800. That's equivalent to about 100, 110 basis points of cost of capital. It's a pretty significant move. It's what's gonna help out consumers. It already has started, you know, obviously help out our dealers as well. We expect, you know, the, you know, what essentially amounts to equipment price war, do we expect that to continue? Absolutely. There's a lot of very high-quality partners that we have, and that are out there, globally, and we're seeing, you know, that kind of competition intensify, not just here in the U.S., but also in Europe as well. We, you know, there's differences in quality, amongst all, you know, depending on who makes what piece of gear. Some folks are better at one than the other. Overall, we think this is a powerful tailwind. With the IRA and some of the other global incentives like in the E.U., additional capacity is coming online. We feel pretty good about we're gonna see a lot better equipment, better pricing out there. I think that's really been something that folks have missed is really being helpful to the marketplace. Great. Thanks, John. Can you comment on the second part of my question there about the mix of inverters you have these days and how that could change in the coming year? Oh, I'd prefer, you know, not to, Phil, but what I would say is that are we seeing some, you know, strong inroads by some additional folks out there in the inverter side? The answer is yes, but we're also seeing, you know, a mix of competitors who as they improve their storage product. You know, a battery's not a battery. I think some people feel that way, but it's not, and there's a lot of differences in products. I think you've heard that from some of the equipment CEOs and friends we have talk about their product and so forth. So I do expect to see, you know, more and more folks show up. I mean, it's a very lucrative, especially if you look at that part of the value chain, it's pretty lucrative, right, with the margin. We're definitely seeing some inroads being made out there, but, you know, in terms of giving out the exact breakout and percentage, I'd prefer not to. Fair enough. As for my follow-up here, in terms of Puerto Rico, the governor and others have announced plans to finance up to 30% of resi solar system installation costs. You know, can you talk us through what exactly is happening there? Might that slow down some originations for you guys in the region? How could things evolve as we get through the year? Thanks. Yes. You know, Puerto Rico origination is very seasonal. It's very, you know, boom bust, if you will. That's just the way the market works. Obviously we, you know, we started that market 10 years ago, actually. It's our 10-year anniversary this month. In fact, our board meeting I just came back from was in Puerto Rico, was in San Juan. We greatly appreciate the governor and the people of Puerto Rico hosting us. We had a great time, learned a lot. What you're referring to is there's a good bit of federal money. Obviously Project Hestia has been, you know, prominently mentioning Puerto Rico and bradening out the credit aperture, which we expect to do when we finalize the deals expected with the Department of Energy Loan Program Office. you know, what I would say is that there are some other federal funds in there. Some are the DOE, some are HUD. The near-term program that's deploying capital right now is from the HUD department from the federal government through the local HUD agency, if you will, for the territory of Puerto Rico. that is been a complete giveaway of solar systems. Let me be very clear about this. It's for very low-income customers. It is not applicable to middle class, and certainly not upper class, and it's very limited in nature. We had the opportunity, my board and I, to meet with the governor, actually a couple of days ago. He was very gracious. He was very focused on getting the island to have a power system and energy system that would lead the world. As you know, we feel very strongly that post-Maria and a lot of the changes that was gonna happen and indeed is happening under his leadership and watch. Cares obviously a lot about the amount of economic activity, Sunnova and our competitors have in put into the island in solar and storage. We did make the point that there is a demand drop because people are waiting to see if they got something free, and encouraged him to accelerate those programs and get that money out there to those the very low income that need it. He thought that was a good idea. I'm convinced that we're gonna see something here that looks pretty, you know, much better and be more effective. I think that we can work with the Department of Energy and others in the federal government to figure out how do we have more of a private-public partnership and actually turbocharge the market. That's what the governor and everybody wants in the island of Puerto Rico, and we're committed to making that happen. Short term, a little bit of an issue, but we're coming out of it pretty strongly, and we expect to actually that market to really, you know, move up strongly later this year, if not surge. Great. Thanks very much. I'll pass it on. Thank you. The next question comes from Maheep Mandloi from Credit Suisse. Maheep, your line is open. Please go ahead. Hey, good morning. Thanks for taking questions and nice to see the beat here. Maybe one thing on the customer growth here. Could you talk about how should we think about growth in loan-heavy states, Texas, Florida, Arizona, others? There's something which the industry kind of talked about being or seeing a slowdown in those states with interest rates going up. Just curious, what are you seeing in those states? Maheep. It's interesting. I would say that let's take each of those that you mentioned. Florida first. The growth has been huge. A 100% growth in that market and it's actually over that. It's, you know, year-over-year, we have one of the major dealers up 400%. I mean, these are eye-popping numbers for us, I think for anybody. The TPO, and this is true across all these markets, has just skyrocketed. It's jumped up multiples of where it was just a year ago, and really in all cases, even where it was in Q4. We've seen a decided shift to lease. One thing that overall before I go into the other two states, before I forget, we're seeing something close to 70%, about 70% lease to loan on the last few weeks of origination here. And if you put our accessory loans in there, that works out to be about 50/50. If you're just to look at the comparable metric across the industry, you'd look at 70/30, and it's still climbing, which we expect to do, particularly as the ITC adders or rules have been get issued, and we are able to add that in. When you look at Texas is up pretty strong as well. We do see a big jump in the TPO as well. We see a lot of growth in Texas. We see a lot of battery upsales and such. We expect that market to continue to be very strong. It's obviously our backyard, so nobody knows it better than us. We're quite bullish on Texas. Arizona, just phenomenal. On fire. I mean, the numbers again are very eye-popping. We're not seeing any slowdown. In fact, I would tell you in states that I didn't think I'd be talking about this soon in the energy transition or transformation of the energy system and the power system, you know, in the middle part of the country, Arkansas and Tennessee and Michigan, Georgia, you know, the southeast is a rough market. That's where I got my start in the power industry. You know, we're seeing really strong growth, we're signing up more and more dealers. You can see that in our dealer account, we expect to see even more broadening in our solutions and our customer growth than we even have now, which is pretty broad and certainly is not heavily weighted to California whatsoever. As you think about rest of the year and with the DOE loan guarantee, should we expect a pickup in the loan mix here? Does that remain somewhat similar to what we saw in the last two quarters here? That's a great question. I don't know until we get out there in the marketplace, and then, you know, you have the ITC adders that come into play here, which way is this market gonna go. You know, the straight answer is we don't know, but we certainly will fulfill our commitment to the Department of Energy. We don't have any, just given our strong growth market share and you know, total addressable market growth, we don't have any reservations about that at all. It's I would say that it certainly would probably, without the Hestia deal, would be higher when we talk about this, say, in 12 months, in terms of the loan lease mix. What exactly, you know, how much share, if you will, would take away from an ITC adder lease, we don't know. If you put a gun to my head and said, "Hey, I want you to really guess," I'd say it's probably gonna be about 5-10 points difference. If we ultimately end up where I expect an 80/20 lease loan mix, maybe it ends up, you know, being 75, 70/75, and the balance being the loans with Hestia. Yeah. Just 1 last one from me quickly on non-solar customers. I think you had like around 12,600 non-solar customers in this quarter. Should we expect a similar run rate here through the rest of the year? Or how are you thinking about that? Yeah. It's, we're seeing a very strong demand in our service-only business, very strong. There's a lot of orphan customers out there, 2.5 million and growing. We're seeing, you know, quite a bit of demand growth there. We're also seeing the strategy of energy as a service with providing additional services such as battery upsells, load management upsells, EV charging, generators, everything to do with power, right? Roofing to make sure the roof is good for our solar systems. That's got a huge tailwind to it. You know, there's a limitation obviously in the capital markets given what's gone on with the banking system. That's, that's really helped push more folks over to us. It's really more about, you know, can I just get everything in one space and spot with a, with a partner like Sunnova from the contractor's perspective. That's really winning a lot of share. The strategy is working. I don't, you know, we're not gonna go out and guide out to what exact breakout is, but, you know, we still expect strong growth there. We're seeing, as I said, to be very clear about it, we're seeing very strong growth in solar and inclusive of storage and on the other adders. We're seeing strong growth across the board. There's nothing to pick on and say, "Well, that's showing a weakness." We're not seeing any weakness whatsoever. Got it. thanks. I'll jump back in the queue. The next question comes from Julien Dumoulin-Smith from Bank of America. Julien, your line is open. Please go ahead. Hey, guys. It's Alex. You know, first I would say it, the way I look at it, is I take the NCCV per customer and then, you know, just look at that ratio. That of course has been pretty strong. If you look at, you know, say at a solar-only type competitor or something, I'd invite everybody to do that calculation, and you can see that it's not a small difference. We're creating a lot of value no matter what. We also don't if we upsell a battery to a customer, just to remind you and everybody else, we don't call that as a separate customer. That's another thing in here is that there is an increasing amount, it's becoming thousands of upsells that we don't count as a customer, so you don't see it on that count. That's, you know, that's something just to remember. I would say storage is still the place where we see a lot more of the value, but generators are pretty good. It's just about the same ticket size, right? Then roofing's been a big one as well and growing, but not as not near as big as as storage and generators. I would leave it with, you know, I still think that we can, you know... and it's very clear that we're generating a value that would be commensurate with maybe a smaller solar system that, you know, is, you know, typical in some of the markets like a Puerto Rico or Northern California or something like that. At the end of the day, money's money. It's all fungible, and we're making it. Yep. That makes sense. Just curious maybe on the some of the gain on sale stuff. Rob, I know you had some commentary early in the call about, you know, some of the things you're waiting for on direct transfer or otherwise. I'm just curious if you can maybe help us with the moving pieces of when maybe some of the gain on sale stuff comes in. I saw the OpEx is a little heavy in the front as you guys had mentioned, but curious just on that piece about how we should think about the overhead versus some of the gain on sale pieces through the rest of the year. Thanks. Yeah, not a problem, Julian. I think that you'll see that in the shaping of our anticipated shaping of our adjusted EBITDA together with our P&I, how that's more back-end weighted. Part of that's just making sure that the systems that are being originated now are sort of going into service next in the H2 of the year. That's when we expect to take more of the gain on sale. The other thing, your point about the G&A, we do tend to see every time from the Q4 to the Q1 a slightly higher jump in our adjusted OpEx. It's mostly related to some payroll charges, not having to do with bonus accrual, but with the fact that it's sort of beginning of the year taxes and the like. That's a bit more heavily weighted in the Q1. As we have also put into service more customers typically in the Q4 than we have in any other quarter, we tend to see the service burden increase as well from the Q4 to the Q1. Just given how incredible last year's Q4 was, that's been a little bit higher this time around, whereas the sales and marketing side has tended to just increase a bit more ratably with our size. I don't think there's really much there, but to your point, we would expect the margin of revenue to OpEx or the ratio of revenue to OpEx to start widening out again as we get into the H2 of the year, and we do have more of that gain on sale. Hey, Alex, I would add that, increasingly as the service business increases, that, you know, that cost to serve, it's, you know, it's obviously our technicians, the command center staffing, that cost will it'll show up in that line and as well as some of our direct upsells on batteries and other accessories. I would expect that trend to continue, but again, it should be offset by higher, even higher customer adds. Again, you know, everything that Rob just said, of course, is right. You'll start to see some more operating leverage as we move forward. Again, the business is growing very fast. In fact, our challenge is not growth, period, full stop. Hopefully the, our numbers start to get convince folks. We're very confident growing into even 2024 at this point because we just have really about 2.5 months left at the most of growth this year, and the rest of them will start booking into next year given the way, the conservative way we count on customers. We're seeing very strong growth, and part of that spend is into other areas such as commercial, international, building out the service a little bit more so we can take in more service customers or maybe building out the service a lot more. There's a lot here that goes into growth that there's a little bit of a gap, maybe it's two quarters, maybe it's a year, depending upon new initiatives. You know, clearly the numbers are showing more and more growth is showing up. Yep. We're seeing it in the customer line for sure. Thanks, guys. We'll take the rest offline. The next question comes from Joseph Osha from Guggenheim. Joseph, your line is open. Please go ahead. Good morning, folks, sorry I've got a bit of a cold here. First question, just going back to the DOE LPO guarantee. I'm wondering if you have any preliminary thoughts about what that might look like when you hit the ABS market, say relative to the 225 spread that Mosaic saw on their recent A transaction. I know it's still speculative, but wondering if you can just maybe give us some senses to where you think that's likely to end up. talking about the A-class bond. We would expect that we'd have a larger A-class bond that would be all the way from the top through what would traditionally be a BB B- attachment point. Instead of having that trifurcated into a A A-, A-, BBB, we'd see that as a single class that could get potentially as high as a AA A type of rating. Therefore, we would expect to see the spread decrease significantly even at that first attachment point, but then that spread then to be across the entire attachment point. So we could see a significant decrease in the weighted average spread We would also expect that that would then allow, through the DSCR, to have a thicker single tranche than the combination of those other three tranches combined. Now the rating agencies may take a different view, but if you take a look at how it's structured, it's very similar to other government guaranteed type of paper where it's a set of cash flows that are guaranteed for the ABS investor at that attachment point. We would expect to see a significant uplift there. That's going in part to go and hit the initiatives that the DOE and the government are trying to hit, which is to bring more solar to more people and to be able to do more aggregation and things that help with VPPs and the like. Does that mean then that, you know, obviously the guarantee helps, probably we're gonna see the FICO mix shift a little bit? I guess I would like to try and pin you down to a number. Could we see this thicker A tranche price at, say, less than 100 over the relevant benchmark, do you think, when all is said and done? I'm going to have you be our lead investor there. Thank you. Yes, you would expect to see lower FICOs go in, not materially lower FICOs, but definitely some lower FICOs, in part because we do wanna make sure that we're bringing solar to more folks, but we still do have to go through an underwriting process. At the end of the day, we still have to make sure that however we bring those in, they're priced to be able for us to price in some of the anticipated greater losses we'd have with a lower FICO customer. The ABS investor will find that they are made whole, but we necessarily need to make sure that we're still out there doing our proper credit and underwriting, just going to a more friendly, FICO-friendly attachment point, if you will. Shifting gears, John, you've been talking about, you know, this rapid growth in TPO. We hosted a call yesterday with the Norton Rose guy, and he was saying at least in project land, you know, no one's managed to pick up the domestic content adder yet, and energy communities it's still very early days. I guess I'm trying to understand, is this TPO growth fueled just by the 30%, or are you saying that you are actually successfully claiming some of the adders right now today? I'm just trying to understand that. To be clear, Joe, we are not, just like everybody else claiming any adders, and there's no adders. There's a little bit of domestic con, very, very small in our, fully burdened unlevered return, roughly about 11%, and we see that climbing. When the adders come in, we have more price increases, by the way, in the next few days, you know, coming in. Then, you know, we, You know, I think what's going on is that the market is anticipating the adders coming in, therefore you as a, especially our larger dealers, you don't turn on a dime, right? You gotta prepare for that. The other is that the loans, because they're so much more sensitive to the interest rate increases, they've really, in many cases, zoomed over in cost to a lease regardless of adder or not. I think that coupled with as the economy bites down, as we, you know, have this deflationary environment and we're seeing more struggles on economic growth to potentially recession, you know, my opinion on that, and that will mean that fewer and fewer people actually have the tax capacity for claiming the ITC, which means that they need to go to a lease or PPA. I think there's a lot of tailwinds here. The numbers are the numbers, right? It's real. Yeah, that gives us more confidence that we'll see, you know, continued, a greater move towards, you know, lease and PPA, as the adders come in than we anticipated, say, you know, towards the end of last year. Okay. Thank you very much. The next question comes from Mark Strouse from JP Morgan. Mark, your line is open. Please go ahead. Yeah. Good morning. Thanks for taking our questions. Just a follow-up to Joe's question there on the DOE loan guarantee. Just I know it's a bit speculative right now, but generally when we model that, should we think about that being more of a spread expander, a margin expander or more of a addressable market expander? I think you can look at it more as a spread expander. I think that what's wonderful about this is that most of these markets we were already heading into, we already have over 40% of our fleet would be qualifying as low and moderate income. We've already are obviously very strong in Puerto Rico and in the other island markets. It's not as if we had to take a full pivot from our strategy, it is just helps us to expand and enhance our strategy. I mean, we believe, and in our conversations with the DOE, that the reasons that we were able to be able to get to this point at this time was really because we have had such a hard focus on service, and that's really what's missing. If you're gonna be going after and trying to bring solar to communities where the financial markets have yet to be able to accept it into securitizations, you need to be able to show them that in fact that is what you can bring, and that it's not gonna be something that they're gonna take a big loss on and have egg on their face. This is anecdotal, but our internal research bears this out, and this is from some very large investors in our space, that about 75% of non-performance of loans is due to non-performance of systems, not due to the credit quality of the underlying customer. It all goes back to something that John has said since the day he's founded this company, which is service matters. It is the reason why we're able to do this with the LPO, and it's why we believe that they have the faith in us to be able to bring our emerging technologies to folks so that they can not only get that better price, but get the better service at that better price. Got it. Okay. Thank you. Just as a follow-up, can you just give us the latest in California, kind of where your NIM 2 backlog stands and what you've observed over the last several weeks, selling under NIM 3? Hey, Mark. Yeah, I'd say this, that obviously California matters a lot less to us than it does to some of our major competitors. Did we see a move quarter-over-quarter if you took the same March? It was really more in the March for us. I don't know about any others, but we didn't see a huge increase in Jan, Feb, and then it was March. If you look at March 2022- March 2023, it was up, you know, at least 30% year-over-year. That's an overall quarter Q1 number, so March is probably up more like 50% or so. If you look at, you know, the backlog, we think that that will start to flow out, just given the huge amount of backlog out there, that if you look at the interconnection and so forth, that probably carries is really not gonna show up in our count, probably really till the Q4. That'd be my guess, and maybe a little bit in the third, and then, you know, spill into next year. I would say that in terms of California, look, this is very small amount of data, but I know everybody wants it, so we'll talk about it, is essentially the last few days, you know, we've seen a, as you would expect, post the 15th, a fairly steep drop. I mean, I think the first few days there was like a, you know, down 60%, down, you know, some cases 70% or so in customer origination. It's been a very sharp swing up till now. I was looking at it just yesterday, it's maybe down 30% in California, but climbing quickly. Interesting, yes, the TPO zoomed up, by the way, the storage attachment rate went up multiples as you would expect. We're starting to see something like north of 60%-70% attachment rates in California. You know, I know some others have talked about, hey, as NIM 3.0 goes, it's gonna be great for storage, you know, equipment sales and obviously our service. We have at least very early days. I wouldn't extrapolate too much on this, but, very early days shows that that's proving itself out very quickly. We do expect to see a very high attachment rate in California given the, again, early days of data that we're seeing. We expect that market to, it might surprise the upside. We've baked in a lot of pessimism, and again, it's not a big market for us to begin with, but, it's surprising, I think, to the upside from, again, for the last, few days of data that we've seen. Okay. Very helpful. Thank you. The next question comes from Kashy Harrison from Piper Sandler. Kashy, your line is open. Please go ahead. Good morning, everyone, and thanks for taking the questions. I think, Rob, in response to an earlier question, that Mark just asked, you indicated the DOE loan will primarily expand your spreads. Maybe just following up on that question, can you walk us through the implications to the liquidity forecast on slide 12? Could the -$ 100 for 2023 become $0, in terms of changes in corporate capital? Could that $0 for 2024 become positive? I'd love it certainly if that were the case. I don't believe necessarily that that is. What we expect to see is higher advanced rates, generally speaking, on the Hestia program, but it won't necessarily give us higher advanced rates on the TPO program. Likewise, what we would expect to see. Really, we've had much higher growth, and I think that's one of the bigger drivers right there. We're taking this opportunity that we've been afforded, and we're pushing it into higher growth. Or at least we're not turning away the higher growth that is coming towards us. It feels that, the origination, you know, that we're putting in today is really a lot of that's gonna end up showing up in 2024 as customers. And this program from the LPO is gonna extend over several years. It's not like this is all getting deployed this year. In fact, I think it should be said that, you know, this next deal that we're doing in the loan ABS market is not on the Hestia program. It is on the Helios program. And we anticipate that we'll be in a position for the next transaction that we do for that to be on the Helios on the Hestia program, but it still could be on Helios. We wanna make sure that we're working very closely with the DOE to make sure that we get everything buttoned up so we can start issuing under Hestia. There's still, you know, some things that are left to be done. We wanna make sure that we're doing everything right, that we're doing everything that there's really no holes to be punched in it later if there's someone who wants to pick a fight with it. The short answer here is a lot of what's happening now is still driving the growth, is still driving customer count for next year, and our growth still remains very robust. We're comfortable with the liquidity side as it stands. That's helpful. Thank you. Then just maybe as my quick follow-up, maybe you kind of alluded to this already, but what do you see as the barriers to competitors gaining access to the DOE loan guarantee? Is it just a lower delinquency rate that comes with your service offering? Is there anything else? Then do you think it's also possible to get a guarantee for leases? I'll leave it there. Thank you. Yeah, Kashy, what I would say is that, you know, let's focus on why the Department of Energy office chose us. As you know, Robin has been talking quite a bit about its service, and that was the big one, service. It's also software. Our Sunnova Sentient software and some of the other features on the, you know, carbon content of the, of the utility power, grid power, those are all very, you know, unique and specific to us. Then the contracted cash flows, right? To have that there and have those cash flows come in for 25 years and how many we have, which is, you know, now, you know, just south of $11 billion of contracted cash flow and climbing quickly. Those three things gave them the confidence of why choose Sunnova. Are those unique to us? Yes, they are right now. To be clear about it, I think this is a broad win for the industry. We would, there's somebody else, I know there's been some questions about that, it gets into the, can you do it with leases? You really can't, with the standard way we do the tax equity. That's not something that the Department of Energy really wanted to get behind tax equity investors and so forth. There's maybe a way to look at those down the line once the tax equity, you know, essentially is fulfilled or something of that nature. We're taking a look at that, you never say never. I would say that this right now is primarily focused on the loan side, but it's possible. And more importantly is we are encouraged that this is a win for the industry. You know, can somebody else, you know, get the DOE, you know, Hestia program? I would say, it is very possible. We expect the Department of Energy to hold them to the same high standards that they held us, which I know they will. And I will offer this up. If we can offer our service and software, and other things, anything we can do to facilitate even one of our competitors, particularly one of our loan-only, to be able to apply for that program and be qualified, we're certainly willing to do that. We think this is a big win for the industry. A cost to capital advantage, you know, for a period of time, and we're really focused on differentiating as a service provider with that software underpinning that. We've always said financing is an enabler. We stand by that through thick and thin, and it's an enabler. It's not who we are. We wanna do what's best for the country and for the industry. I think, you know, it puts us on the same quality of credit almost that the utilities have. It's not like the utilities do a great job. They just have a credit wrap. No matter what state you're in, including Texas, the utilities have socialized the losses of those folks who don't pay their bills. This is a step to equalizing and having equal treatment, behind the meter and from the meter. Anything we can do to help our side of the industry, be able to, have that equal treatment, we are very supportive of. Thank you. The next question comes from Sophie Karp from KeyBanc. Sophie, your line is open. Please go ahead. Hi. Thank you for taking my question, and congrats on this quarter. Maybe if you could, going back to the question of how different states perform, going into 2023. You guys commented that you saw very strong growth in Florida and Texas. This is perhaps counterintuitive, just looking at what the power prices have done in those places, right? If you could comment on how you achieve that growth or how your sales is going to be pivoted in the sales pitch and what adjustments had to be made to continue selling successfully and growing in these geographies where others have struggled. I'd be curious to hear that. Hey, Sophie. I think first and foremost, we've never fallen in love with one type of financing or product type over another. We have the broadest set of products, the best family of products available to our dealers and to our customers, and that's hands down. There's no one close. That's really given us the ability to win the market and flex very quickly one way or the other, in this case, with interest rates, disadvantaging loans relative to the huge maybe advantage that they'd had previously to lease and PPAs. We didn't miss a beat, right? Just click on something else. It's really that simple. It's right next to the loan product in terms of the lease and PPA product. I think we had, you know, just our business model and the way we thought about things over the years and prepared for something like this, we were the best prepared. I think that's first and foremost. You know, I would also say and remind folks, we've seen some price declines in like the, you know, semi deregulated markets like Houston here and Dallas. Other markets like Florida's gone up still and hasn't had much of a price break, if any. It's still pretty high. Is it lower than, you know, a market that's crazy high from these utilities that are, you know, gouging prices on consumers like in California? I mean, no, but it never has been. I don't think it will be. You know, when you look at places like Georgia, for instance, I mean, Vogtle is gonna add, what, $0.045 to a rate that was at one time $0.10, $0.11. It's moved up. Those are big, big numbers and big moves percentage-wise. Remember these customers in these areas like Houston, for instance, has the highest amount of power consumption per square foot for an average home than anywhere else in the country. These are big, big power consumer areas. I don't think that, you know, coupled with, in terms of the price decreases not really being too many price decreases from these, you know, utilities that are really monopolies and are not good at cutting price. I think the history shows that measured in decades. When you look at that, and you look at what we're seeing in terms of the deflation of cost, out there and looking for, you know, better cost and price points and batteries, et cetera, I think that, you're overall, you're seeing a pretty, you know, growth underpinning picture here. That's what we've seen. The data doesn't lie. That's what we're seeing out there. We're expecting more and more of that growth. Again, we're broadening out of those states as well. Getting into states that, like I said before, that didn't think that we would be seeing this kind of growth in, we're seeing it. It's not just these states, it's much broader than that. Again, you can see that through the data and the upcoming data as we start to register in more and more states for growth. I just think that there is probably not a good data signals here from other folks. You know, we're seeing the strong growth and the fundamentals underpin that growth. Thank you. My other questions have been answered, so thank you so much. Thank you. The next question comes from Ben Kallo from Baird. Ben, your line is open. Please go ahead. Hey, thanks for fitting me in here. A couple of question, quick ones. Just on the cadence of customers, because, you know, Q1 was a big customer growth, you know, seasonally weak. Just how do we think about the rest of the year? Hey, Ben. It's definitely going to go up. Do I think Q2's is on track to beat, you know, Q1? You know, most definitely. I expect to see, you know, bigger Q3 and bigger Q4. You know, that's been year in, year out. When you have this kind of growth rate, I mean, we're growing at 97% quarter-over-quarter. You should expect to see not only the customer count be in the third and Q4. Is there a potential upside to even this? Yeah. When you look at the financials that follow it, they tend to follow because you have to spend the money ahead of time for the growth right before it shows up. I would expect to see, just as we've laid out from the beginning, including last earnings call, that our, you know, financial metrics, both due to the growth, the dynamic and because the seasonality will show up in more in the second, third and Q4. I think we're well on track and, you know, everything's upwards and to the right. You know, everyone, or a lot of people out there were worried about the, you know, the whole, finance, capital markets, access for you guys, but for the dealers, and I think that you added the most absolute dealers since you've been public, in a quarter. Could you just talk about, you know, the health of dealers? Yeah. We've seen some strains out there for certain, and we've helped some folks work out their problems with other dealers that we didn't have and so forth. We'll continue to see some of our service only business grow in that area. We've got, you know, 10 years of experience of managing dealers that, you know, may not manage their business as well as they should and so forth, and staying on top of them. We've created things like duration holdbacks. Those are a creation of ours that are now being adopted across the industry. This is if the, if the job stays in the duration too long, we actually call it back against other payments. We're very happy to see others copying that finally and being more I think responsible for where investors' capital. We're seeing that. I think dealers are running to the safety of Sunnova, and we have our own working capital. A lot of folks borrow their working capital, which can get flipped off at a moment's notice given the dislocation in capital markets, which has happened, right? If you look at the banking system and so forth. We're not dependent on that. We're in a very strong financial position, and frankly, the dealers know it and contractors know it that wanna become dealers. We see a huge amount of demand. I will say this: I am surprised at this point as we are in the peak selling season, how many dealers, sub-dealers that we have across the board in all of our channels in the queue waiting to become a dealer. It is very heavy from my... what I've seen in my, you know, 10+ years of experience. I think that, you know, folks are running to, you know, the safety. Is that meaning that there's not other areas of our industry that are not safe to go to? I'm not saying that. There are. I'm just saying that if you want to come to Sunnova, have the broadest product portfolio, don't worry about whether it's a loan or lease, just do what's right for the customer. We now have, you know, a great program in Hestia if we can get that finalized, which we expect to and don't expect any issues. We have the ITC adders, you choose what's best for the customer. We have the working capital for you. You know, do your job, go and sell customers, make them happy, get the install done quickly, and you will get paid. And I think that's clear that our model, again, our financial strategy is superior in this type of market. Just moving on quickly to international, there was a LinkedIn, you're hiring someone, sales in Germany. Would you talk about that and, what that means? Well, as always, you do your homework. Yes. Yeah, we are. If you know somebody, that is a really good German sales manager, we'd be happy to talk to him or her. We're interested in that. We are preparing our systems, our people. We've had managers, you know, starting to, you know, move over there and we're preparing. We're gonna take it very cautiously. We obviously don't need the growth, we see huge growth over there in other countries, and we're gonna take it slow. Maybe there's an acquisition that we can do to accelerate our entry there. You know, it's something that we're gonna be very judicious and cautious about to make sure we don't, you know, use up any necessary working capital and such that we need over here for our growth. We are moving. The ship is moving very, very slowly, but we are moving in that direction for certain. I hope to be able to talk about more, much more about that in the next couple of earnings calls. All right. I'll leave it there. Thank you, guys. Congrats. The next question comes from Brian Lee at Goldman Sachs. Brian, your line is open. Please go ahead. Hey, John, Rob, thanks for taking the questions. This is Grace on for Brian. I just have a just a follow-up to one of Mark's questions. Just trying to understand the potential upside to the 600 basis point spread you mentioned in the prepared remark. I think in the last call you mentioned like all the adders together, represents about 250 basis points in spread, and now you have the DOE loan guarantee, which is a spread expander. Just trying to understand the potential upside to the 600 basis point. Do you see a path towards like 800 or 900 spread in the next 12 months? Thanks. Hey, Grace. No. I think 600. We've said long term, we expect it to settle around the 500, maybe a touch lower. 600 is where we think we can be with this part of the energy transition or transformation of the U.S. power industry, energy industry and global energy industry. Look, as even in, you know, and you see this on the equipment side, you can have the best equipment in the world, but, you know, there's a willingness to pay limitation. We have the best service in the world. We recognize that we can't push our margins to crazy levels or, you know, there's a lack of willingness to pay. Is it possible? We did see a little bit of the, you know, a couple of prints there, a couple of quarters where it was above 600 for a little bit there. Yes, it's possible, but I would not, you know, I would not have shareholders and investors expect that to be the case. We certainly don't expect that to be the case. That would be a pleasant surprise. Again, everything, there's a willingness to pay, and as they say, when you're in trading, pigs get fat, hogs get slaughtered. Thank you. I'll pass it on. Thanks. The next question comes from Pavel Molchanov from Raymond James. Pavel, your line is open. Please go ahead. Thanks for taking the question. Let me address one of the kind of proverbial elephants in the room. Ever since Silicon Valley and Credit Suisse went under, there's been a fear that banks will simply stop lending at any interest rate to, you know, renewables, solar included. Have you seen any evidence of a lack of appetite to lend into the solar space? No, we have not. We have had a number of folks who have reached out to us about expanding existing relationships, about coming into our program, about telling us that they've been approved after a couple of years of work, and now they wanna make sure that they're in our program. It has been very gratifying to see that strength. Again, to be clear, even for an entity such as Credit Suisse, they do now have a very strong backdrop. Silicon Valley Bank did get support from the U.S. government. We really never saw any sort of interruption from our within our programs. We still continue to have very strong partners there on all fronts. As I did say in the prepared comments and as you've probably seen in some of the 8-Ks, we have been increasing our warehouse capacity. We added another half billion dollars of capacity this quarter alone, and we anticipate the ability to add more here as well as we move on. It's been with a more diversified group of lenders, which is underpinned by the incredible support that we're getting out of Apollo and ATLAS SP. We're very pleased with our access to capital as it stands right now, and have noticed more demand to be able to provide capital for us, not less. Okay. Let me follow up about utility pricing. You know, last year, double-digit increases in utility rates across the board. You guys raised prices along with that. Now that there is some stabilization and, you know, potentially even ticking down in some states, I assume you're gonna be careful not to get ahead of your skis in sort of overpricing your product relative to the utility, correct? That is correct. Okay. Geographically, where is that, you know, risk of overpricing maybe the greatest? Well, I think there's a couple of different answers there. If you look at, you know, for instance, you know, California rates, whether, you know, they try to disguise it as a fixed fee or just a kilowatt-hour rate, they're really crazy high, and they just wanna just push them higher on consumers. Consumers need choices. So I would say that, it, you know, we actually have a bit of a diversion to that because we just see it as ridiculous with a monopoly abuse of power that's being allowed to persist. We've been very cautious on that because we see long term, that those rates are unsustainable, that these monopolies are charging. That the system, the regulatory system will change, that consumers will get choice. As opposed to other states like Texas and so forth, even if they're the same kind of monopoly power abuse, you know, that you see out there and rate, you know, strong than it should be rates, but they're lower. Again, when you move a penny or something on a $0.10 rate or a $0.14 rate, it matters more percentage-wise than moving a penny on a $0.28 rate. It's just math, right? And typically the ones that have the lower kilowatt-hours are typically have the bigger bills because they consume more power, right? Think in the South versus say, you know, the North, Northern California, for instance. I... You know, there's a lot of room in some of these areas on the kilowatt-hour rate basis. As again, as, you know, equipment pricing falls, we get back in that deflationary trend, which we solidly see, we've talked about that, and, you know, you have more of a competitive markets and so forth, labor's freeing up, et cetera, then I think that we'll see the ability to get underneath, and continue to have the ability to get underneath relatively, quote-unquote, low rates. Because, you know, you can get a lot more scale on a per customer basis. If you're putting on a, you know, 5 KW system in maybe Northern California or 6 KW, it's not atypical to see something like 12 KW or 15 KW on something in Texas and Florida, for instance. There's a little bit of economies of scale there, or a lot of economies of scale that are going with you, to be able to help the economics there to still hit your targets and still generate savings for consumers. Appreciate the detail on that. Thanks. The next question comes from Ameet Thakkar from BMO Capital. Ameet, your line is open. Please go ahead. Hey, good morning. Thanks for sneaking me in. John, I think you kind of just alluded to this maybe a second ago. But, like, just thinking about, and I know California's not a big part of your business today, just thinking about kind of the implications of like I said, the fixed charge rulemaking out in California under I guess AB 25. You know, it would raise maybe overall bills for everybody, but it would seem to reduce the variable portion of their bill. I was just wondering how big of a headwind do you kind of anticipate that being? Well, I don't, I don't think anybody expects to get the, you know, the egregious proposal that was put forth by folks. How would you even implement it? I mean, it's just crazy. It's just nuts. Evidently people that make, I think more than $130,000, $150,000 are, quote, rich. I mean, anybody ever been to San Francisco and see what the cost of living is there, explain to me how that's rich? You know, outside just the, I think just unrealistic, clearly, proposal that is in so many ways, I think what you're gonna see very clearly is that, you know, could people, you know, could customers, cut the cord? Absolutely. I know that sounds crazy. We're running 32,000 customers in Puerto Rico, you know, post Fiona for a week without any grid power. Why couldn't we do it with the same load factor in California? These folks that, you know, if you look at these fixed charges that were proposed, that buys a lot of batteries today, let alone how many batteries you'll buy by the end of the year or next year or the year after that, or even certainly five years. You know, look, again, there has to be some reasonableness and fairness that's put into this, and the utilities just can't spend whatever other people's money and then put some matter on top of it, take it home and go pay the CEO lots of money. I mean, there needs to be a break on this, and that break comes in the form of capitalism, consumer choice, so that consumers can pick what's best for them. Our model is geared for this, and you're gonna see some things out of us as we move forward that are gonna give us huge competitive edges in the marketplace. We see, you know, we don't think that that's gonna pass. It shouldn't pass. I don't think Governor Newsom or anybody else is gonna let that anything close to that pass. If it does, in the worst case scenario, we're prepared for it, and we'll take, I guess at that point, we will take a lot of market share in California. Great. Thanks. Next question comes from Sean Morgan from Evercore. Sean, your line is open. Please go ahead. Guten tag, John and Rob. Thanks for taking my questions. Just really quickly on the DOE program. I think that they announced in Project Hestia, there's this 680 FICO cap, and you guys talked a little bit about the tranches that you see developing. It looks like the DOE will have you guys maintaining, I mean, it looks like 10% versus the $3 billion that they're putting up. Then of course, you mentioned the $4 billion-$5 billion of total project, you know, capital financing formation that you see from this program. Questions basically, do you see the FICO scores in the program kind of clustering around that 680? Because I think it's about 33% of FICO scores are sort of below that 670 level. I'm just wondering how broadly you see the TAM expanding as a result of this program. Also where does the additional $1 billion-$1.3 billion of capital come in above the $3.3 billion that was sort of announced with your $300 million plus the $300 million fed? Is that gonna be outside ABS or where does that capital come from? Yeah. A good question. First off, just for clarification, it's not a cap. Really what they're asking for is that a certain minimum percentage be below that FICO level. That's actually we're already there as far as our origination. Then there's a higher target that is, I would not call it aspirational. I would call it extremely achievable with us making small adjustments to our FICO requirements. We're certainly going to look to broaden the tent if we can for solar users. I would expect again, that our weighted average FICO will in fact come down some, but that for that partial guarantee class of investor, that it's not going to mean as much or really much of anything at all. Really, they're gonna be looking for make sure that we keep the systems up and running, the systems themselves are performing and that we're standing by our service guarantees. That's how I'd address that piece of it. As far as the rest of the market, you know, we're still gonna be able to put other, our other origination into that program. You're still gonna see some very strong, very robust origination go into there. Even for the non-guaranteed portion of the loan, if you would, a double B perhaps class that would go behind the initial, the A class of loan, there's still gonna be an incredible amount of strength in there, we believe. We've really never had a problem making all of our investors whole and making sure that we are making sure that we have our customers paying. When we do, we do in fact do loan substitutions if we do notice a trend about a certain type of origination class where we can narrow it down to some root cause, maybe a specific dealer or something like that in a specific jurisdiction, a specific FICO, we'll start substituting those loans out if they end up underperforming. The other piece of it was where's the rest of it come from? We're really sort of looking at the difference between loan balance and capital. If we can perform correctly and we get very high advance rates, then it will support a lower volume of loans at the end of the day. If we have a lower advance rate because the base rates are much higher, even if we're able to bring the spreads in, then it will not support a higher amount of loan volume. I know it sounds counterintuitive, but, you know, just simple math of getting a 75% advance rate versus a 60% advance rate, but the fixed dollar amount is the same, then it just goes farther to lower advance rate. We are going to be gunning for the higher advance rate. I mean, that's, that is exactly how we would be doing our business and how you would expect us to manage our liquidity. The balance comes in part from the dealer fee. Remember that dealer fee is there so that we're able to provide the service to the customer. It's a full service loan where we are actually out there providing full O&M service to that customer and not just providing billing and collections. We're providing the technology as well. It all gets wrapped up into this, into that, into that dealer fee. Okay. On the DOE that the customer adds that you increased, like, the midpoint by 10,000, does that include the DOE, I guess, benefit of sort of increased, you know, customers? Is that sort of excluding DOE impact? I think largely excluding at this point. I think that the, you know, DOE impact there is, yeah, it broadens it out, but on a large base that we have and the, you know, the amount of growth that we have just in aggregate, I'm not sure it will make a huge. I mean, it would be some difference, but it'll probably start to show up later on, say, a Q3, Q4, and then those customers would be the customers we would recognize in 2024. I think largely just to simplicity, it excludes it. Okay. All right, thanks. Thanks, John and Rob. Look forward to that Strasbourg Analyst Day that hopefully will be coming up at some point. Okay, sure. Auf wiedersehen. The next question comes from Corinne Blanchard from Deutsche Bank. Corinne, your line is open. Please go ahead. Hey, good morning. Most of my question has been answered, but, maybe two quick one. The first one on cost. How should we think about it for Q2 and Q3? I'm assuming you would have maybe some extra expense for training. We have heard it from some of your peer, saying they expect to have some, training period for the dealer for them to be able to sell more battery in the different business model. Do you expect that as well? We do, and we've been doing that for a while. We work in conjunction with our OEM or hardware partners. They provide training as well, and that may be where you pick that up. Corinne, I wouldn't say that it would be but a rounding error on our expenses in terms of the training. Okay. The last one, to see the EBITDA guidance increase at some point this year, what do you need to see? Just trying to see, like, where the upside could be. I think that, you know, in terms of gain on sale, that can, you know, continue to increase. You can see that in our numbers. We expect that to increase quite a bit. We wanna see, as Rob said earlier, the ITC, selling the ITC rules, be very, you know, issued and be clear. I think it's really, you know, clearly just a balance between growth spending and, you know, what you wanna print on that particular quarter. It's, we still see the, you know, very profitable, strong growth, we're likely to continue this trajectory. That being said, we actually spent less money than we expected in Q1, as we said, that's probably gonna be the case. We're very disciplined as far as spending firm. I think that, yes, it'll increase, but it's... you shouldn't expect to see huge increases. Okay. Thank you. Thanks. The final question we have time for today comes from Andrew Percoco from Morgan Stanley. Andrew, please go ahead. Your line is open. Thanks so much for squeezing me in. Most of mine have been answered, but just one quick one on the commercial business and the outlook there. Obviously, a lot of concern around the commercial real estate environment in the US because of the exposure to the regional banks. Just wondering if there's any pivot or strategy change on the commercial side of the business. Thanks. Andrew, no. That's actually going very well. It takes a while to get the, that growth channel moving, but we've got some backlog. We're seeing a huge amount of potential out there, bigger than we thought. You know, we don't see that the financial, the adjusted EBITDA, and the NCCV will show up till really probably 2024 or 2025. That channel continues to really show a lot of growth. No strategy change, but frankly, it was probably well timed to launch that growth endeavor. Thank you. This does conclude today's Q&A session. I'll now hand the call back to John Berger for concluding remarks. Thank you. As you've heard today, our growth is broadening in geographies and services. This growth is strong, profitable growth, not growth at any cost, which underlines our commitment to sustainability and a long-term view. As our strategic plans and growth initiatives continue to bear fruit, we possess a growing confidence in the intermediate and long-term growth of the company as we work hard to change the global energy industry, create long-term value for our shareholders, and become the preeminent energy as a service provider. Thank you. This concludes today's call. Thank you all very much for your attendance. You may now disconnect your line.