UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2023~~March 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________

Commission File Number: 001-38995

Sunnova Energy International Inc.

(Exact name of registrant as specified in its charter)

Delaware

30-1192746

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification Number)

20 East Greenway Plaza, Suite 540

Houston, Texas 77046

(Address, including zip code, of principal executive offices)

(281) 892-1588

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $0.0001 par value per share	NOVA	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

The registrant had ~~122,416,359~~123,981,666 shares of common stock outstanding as of ~~October 23, 2023.~~April 29, 2024.

TABLE OF CONTENTS


		Page
PART I - FINANCIAL INFORMATION
Item 1.	Unaudited Condensed Consolidated Balance Sheets	4
	Unaudited Condensed Consolidated Statements of Operations	5
	Unaudited Condensed Consolidated Statements of Cash Flows	6
	Unaudited Condensed Consolidated Statements of Redeemable Noncontrolling Interests and Equity	8
	Notes to Unaudited Condensed Consolidated Financial Statements	109
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3733
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	6152
Item 4.	Controls and Procedures	6153

PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	6253
Item 1A.	Risk Factors	6254
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6261
Item 3.	Defaults Upon Senior Securities	6261
Item 4.	Mine Safety Disclosures	6361
Item 5.	Other Information	6361
Item 6.	Exhibits	6463
	Signatures	6665

Table of Contents

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Unless the context otherwise requires, the terms "Sunnova," "the Company," "we," "us" and "our" refer to Sunnova Energy International Inc. ("SEI") and its consolidated subsidiaries. Forward-looking statements generally relate to future events or Sunnova's future financial or operating performance. Actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. In some cases, you can identify these statements because they contain words such as "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "future," "goal," "intend," "likely," "may," "plan," "potential," "predict," "project," "seek," "should," "target," "will" or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this report include, but are not limited to, statements about:

•federal, state and local statutes, regulations and policies;

•determinations of the Internal Revenue Service ("IRS") of the fair market value of our solar energy systems;

•the price of centralized utility-generated electricity and electricity from other sources and technologies;

•technical and capacity limitations imposed by operators of the power grid;

•the availability of tax rebates, credits and incentives, including changes to the rates of, or expiration of, federal tax credits and the availability of related safe harbors;

•our need and ability to raise capital to finance the installation and acquisition of distributed solar energy systems, refinance existing debt or otherwise meet our liquidity needs;

•our expectations concerning relationships with third parties, including the attraction, retention, performance and continued existence of our dealers;

•our ability to manage our supply chains and distribution channels and the impact of natural disasters and other events beyond our control;

•our ability to retain or upgrade current customers, further penetrate existing markets or expand into new markets;

•our investment in our platform and new product offerings and the demand for and expected benefits of our platform and product offerings;

•the ability of our solar energy systems, energy storage systems or other product offerings to operate or deliver energy for any reason, including if interconnection or transmission facilities on which we rely become unavailable;

•our ability to maintain our brand and protect our intellectual property and customer data;

•our ability to manage the cost of solar energy systems, energy storage systems and our service offerings;

•the willingness of and ability of our dealers and suppliers to fulfill their respective warranty and other contractual obligations;

•our expectations regarding litigation and administrative proceedings; and

•our ability to renew or replace expiring, canceled or terminated ~~solar service~~customer agreements at favorable rates or on a long-term basis.

Our actual results and timing of these events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those discussed under "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or to changes in our expectations, except as required by law.

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

SUNNOVA ENERGY INTERNATIONAL INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts and share par values)

As of
September 30, 2023

As of
December 31, 2022

As of
March 31, 2024

As of
December 31, 2023

Assets

Current assets:

Cash and cash equivalents

467,902

360,257

Accounts receivable—trade, net

40,170

24,435

Accounts receivable—other

101,907

212,397

Other current assets, net of allowance of $4,276 and $3,250 as of September 30, 2023 and December 31, 2022, respectively

383,961

351,300

Other current assets, net of allowance of $4,649 and $4,659 as of March 31, 2024 and December 31, 2023, respectively

Total current assets

993,940

948,389

Property and equipment, net

5,119,027

3,784,801

Customer notes receivable, net of allowance of $106,385 and $77,998 as of September 30, 2023 and December 31, 2022, respectively

3,531,083

2,466,149

Property and equipment, net

Customer notes receivable, net of allowance of $111,576 and $111,818 as of March 31, 2024 and December 31, 2023, respectively

Intangible assets, net

141,175

162,512

Goodwill

13,150

Other assets

986,930

961,891

Total assets (1)

10,785,305

8,336,892

Liabilities, Redeemable Noncontrolling Interests and Equity

Current liabilities:

Accounts payable

194,551

116,136

Accrued expenses

107,140

139,873

Current portion of long-term debt

470,133

214,431

Other current liabilities

96,949

71,506

Total current liabilities

868,773

541,946

Long-term debt, net

6,710,734

5,194,755

Long-term debt, net

Other long-term liabilities

1,003,922

712,741

Total liabilities (1)

8,583,429

6,449,442

Commitments and contingencies (Note 14)

Commitments and contingencies (Note 13)

Redeemable noncontrolling interests

124,082

165,737

Stockholders' equity:

Common stock, 122,405,788 and 114,939,079 shares issued as of September 30, 2023 and December 31, 2022, respectively, at $0.0001 par value

Stockholders' equity:

Common stock, 123,971,555 and 122,466,515 shares issued as of March 31, 2024 and December 31, 2023, respectively, at $0.0001 par value

Additional paid-in capital—common stock

1,749,419

1,637,847

Accumulated deficit

(191,513)

(364,782)

Total stockholders' equity

1,557,918

1,273,076

Noncontrolling interests

519,876

448,637

Total equity

2,077,794

1,721,713

Total liabilities, redeemable noncontrolling interests and equity

10,785,305

8,336,892

(1) The consolidated assets as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 include ~~$4,712,182~~$5,568,816 and ~~$3,201,271,~~$5,297,816, respectively, of assets of variable interest entities ("VIEs") that can only be used to settle obligations of the VIEs. These assets include cash of ~~$51,260~~$63,777 and ~~$40,382~~$54,674 as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively; accounts receivable—trade, net of ~~$13,789~~$15,729 and ~~$8,542~~$13,860 as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively; accounts receivable—other of ~~$1,198~~$145,886 and ~~$810~~$187,607 as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively; other current assets of ~~$805,774~~$631,951 and ~~$422,364~~$693,772 as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively; property and equipment, net of ~~$3,778,707~~$4,615,433 and ~~$2,680,587~~$4,273,478 as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively; and other assets of ~~$61,454~~$96,040 and ~~$48,586~~$74,425 as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively. The consolidated liabilities as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 include ~~$88,275~~$249,869 and ~~$66,441,~~$278,016, respectively, of liabilities of VIEs whose creditors have no recourse to Sunnova Energy International Inc. These liabilities include accounts payable of ~~$17,502~~$156,518 and ~~$9,015~~$197,072 as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively; accrued expenses of ~~$77~~$532 and ~~$287~~$157 as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively; other current liabilities of ~~$6,112~~$11,684 and ~~$4,420~~$7,269 as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively; and other long-term liabilities of ~~$64,584~~$81,135 and ~~$52,719~~$73,518 as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

SUNNOVA ENERGY INTERNATIONAL INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)


		Three Months Ended September 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024
Revenue
Revenue
Revenue	Revenue	$	198,398	$	149,364		$	526,471	$	362,098

Operating expense:	Operating expense:

Operating expense:

Operating expense:
Cost of revenue—depreciation
Cost of revenue—depreciation
Cost of revenue—depreciation	Cost of revenue—depreciation	33,743		24,663			92,262		69,935
Cost of revenue—inventory sales	Cost of revenue—inventory sales	50,694		40,917			129,016		89,884
Cost of revenue—inventory sales
Cost of revenue—inventory sales
Cost of revenue—other
Cost of revenue—other
Cost of revenue—other	Cost of revenue—other	30,981		15,567			81,599		32,974
Operations and maintenance	Operations and maintenance	18,702		9,774			59,306		23,787
Operations and maintenance
Operations and maintenance
General and administrative
General and administrative
General and administrative	General and administrative	111,545		75,897			314,190		214,362

Other operating (income) expense		(9,051)		10,267			(3,134)		(4,186)
Other operating income

Other operating income

Other operating income
Total operating expense, net	Total operating expense, net	236,614		177,085			673,239		426,756
Total operating expense, net
Total operating expense, net

Operating loss

Operating loss

Operating loss	Operating loss	(38,216)		(27,721)			(146,768)		(64,658)

Interest expense, net	Interest expense, net	57,601		20,824			200,155		44,380

Interest expense, net

Interest expense, net

Interest income

Interest income

Interest income	Interest income	(30,590)		(16,185)			(81,670)		(40,428)

Other (income) expense	Other (income) expense	561		(12)			3,969		(327)

Other (income) expense

Other (income) expense
Loss before income tax
Loss before income tax
Loss before income tax	Loss before income tax	(65,788)		(32,348)			(269,222)		(68,283)

Income tax benefit		(9,325)		—			(1,632)		—
Income tax (benefit) expense

Income tax (benefit) expense

Income tax (benefit) expense
Net loss	Net loss	(56,463)		(32,348)			(267,590)		(68,283)
Net income (loss) attributable to redeemable noncontrolling interests and noncontrolling interests		6,684		32,195			(37,269)		72,455
Net loss
Net loss
Net loss attributable to redeemable noncontrolling interests and noncontrolling interests
Net loss attributable to redeemable noncontrolling interests and noncontrolling interests
Net loss attributable to redeemable noncontrolling interests and noncontrolling interests
Net loss attributable to stockholders
Net loss attributable to stockholders
Net loss attributable to stockholders	Net loss attributable to stockholders	$	(63,147)	$	(64,543)		$	(230,321)	$	(140,738)

Net loss per share attributable to stockholders—basic and diluted	Net loss per share attributable to stockholders—basic and diluted	$	(0.53)	$	(0.56)		$	(1.97)	$	(1.23)

Net loss per share attributable to stockholders—basic and diluted

Net loss per share attributable to stockholders—basic and diluted
Weighted average common shares outstanding—basic and diluted	Weighted average common shares outstanding—basic and diluted	119,554,008		114,816,879			116,971,318		114,293,251
Weighted average common shares outstanding—basic and diluted
Weighted average common shares outstanding—basic and diluted

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

SUNNOVA ENERGY INTERNATIONAL INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Nine Months Ended
September 30,

2023

2022

Three Months Ended
March 31,

2024

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss

(267,590)

(68,283)

Net loss

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation

107,957

78,401

Depreciation

Impairment and loss on disposals, net

24,930

2,971

Amortization of intangible assets

21,324

21,333

Amortization of intangible assets

Amortization of deferred financing costs

17,007

9,690

Amortization of debt discount

12,971

6,273

Amortization of debt discount

Non-cash effect of equity-based compensation plans

19,812

20,059

Non-cash direct sales revenue

(43,034)

(4,448)

Non-cash direct sales revenue

Provision for current expected credit losses and other bad debt expense

35,085

28,773

Unrealized gain on derivatives

(10,208)

(27,580)

Unrealized (gain) loss on fair value instruments and equity securities

846

(4,136)

Provision for current expected credit losses and other bad debt expense

Unrealized (gain) loss on derivatives

Unrealized gain on fair value instruments and equity securities

Other non-cash items

2,633

(38,412)

Changes in components of operating assets and liabilities:

Accounts receivable

99,753

(100,537)

Other current assets

(77,976)

(139,946)

Other current assets

Other assets

(95,321)

(84,142)

Accounts payable

(6,711)

1,403

Accounts payable

Accrued expenses

(35,193)

41,571

Accrued expenses

Other current liabilities

9,604

(4,243)

Other long-term liabilities

(10,680)

(4,542)

Other long-term liabilities

Net cash used in operating activities

(194,791)

(265,795)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of property and equipment

(1,315,192)

(637,556)

Payments for investments and customer notes receivable

(716,972)

(902,773)

Payments for investments and customer notes receivable

Proceeds from customer notes receivable

126,980

79,870

Proceeds from customer notes receivable

Proceeds from investments in solar receivables

8,708

9,388

Other, net

4,707

(282)

Other, net

Net cash used in investing activities

(1,891,769)

(1,451,353)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from long-term debt

2,859,489

2,308,033

Proceeds from long-term debt

Payments of long-term debt

(1,090,338)

(571,261)

Payments on notes payable

(4,356)

—

Payments on notes payable

Payments of deferred financing costs

(60,336)

(24,748)

Purchase of capped call transactions

—

(48,420)

Proceeds from issuance of common stock, net

81,329

(3,345)

Contributions from redeemable noncontrolling interests and noncontrolling interests

520,611

236,661

Contributions from redeemable noncontrolling interests and noncontrolling interests

Distributions to redeemable noncontrolling interests and noncontrolling interests

(30,159)

(20,847)

Payments of costs related to redeemable noncontrolling interests and noncontrolling interests

(8,475)

(10,380)

Payments of costs related to redeemable noncontrolling interests and noncontrolling interests

Proceeds from sales of investment tax credits for redeemable noncontrolling interests and noncontrolling interests

4,950

—

Other, net

(6,662)

(601)

Other, net

Net cash provided by financing activities

2,266,053

1,865,092

Net increase in cash, cash equivalents and restricted cash

179,493

147,944

Net cash provided by financing activities

Net decrease in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period

545,574

391,897

Cash, cash equivalents and restricted cash at end of period

725,067

539,841

Cash, cash equivalents and restricted cash at end of period

Restricted cash included in other current assets

(30,307)

(14,584)

Restricted cash included in other assets

(226,858)

(112,676)

Restricted cash included in other assets

Cash and cash equivalents at end of period

467,902

412,581

Cash and cash equivalents at end of period

Table of Contents


		Nine Months Ended September 30,
		2023		2022
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
	2024
Non-cash investing and financing activities:
Non-cash investing and financing activities:
Non-cash investing and financing activities:	Non-cash investing and financing activities:

Change in accounts payable and accrued expenses related to purchases of property and equipment	Change in accounts payable and accrued expenses related to purchases of property and equipment	$	66,022	$	14,019
Change in accounts payable and accrued expenses related to payments for investments and customer notes receivable		$	11,800	$	21,750

Change in accounts payable and accrued expenses related to purchases of property and equipment

Change in accounts payable and accrued expenses related to purchases of property and equipment

Distributions payable to redeemable noncontrolling interests and noncontrolling interests

Distributions payable to redeemable noncontrolling interests and noncontrolling interests

Distributions payable to redeemable noncontrolling interests and noncontrolling interests

Supplemental cash flow information:

Supplemental cash flow information:

Supplemental cash flow information:	Supplemental cash flow information:
Cash paid for interest	Cash paid for interest	$	213,016	$	105,375
Cash paid for interest
Cash paid for interest
Cash paid for income taxes	Cash paid for income taxes	$	11,693	$	—
Cash paid for income taxes
Cash paid for income taxes

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

SUNNOVA ENERGY INTERNATIONAL INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY

(in thousands, except share amounts)

Redeemable
Noncontrolling
Interests Common Stock Additional
Paid-in
Capital -
Common
Stock Accumulated
Deficit Total
Stockholders'
Equity Noncontrolling
Interests Total
Equity
Shares Amount
December 31, 2021 $ 145,336 113,386,600 $ 11 $ 1,649,199 $ (459,715) $ 1,189,495 $ 286,782 $ 1,476,277
Net income (loss) (2,432) — — — (35,058) (35,058) 15,386 (19,672)
Issuance of common stock, net — 524,788 — (2,976) — (2,976) — (2,976)
Contributions from redeemable noncontrolling interests and noncontrolling interests 3,757 — — — — — 48,132 48,132
Distributions to redeemable noncontrolling interests and noncontrolling interests (1,122) — — — — — (4,732) (4,732)
Costs related to redeemable noncontrolling interests and noncontrolling interests (57) — — — — — (2,292) (2,292)
Equity in subsidiaries attributable to parent (173) — — — 69,769 69,769 (69,596) 173
Equity-based compensation expense — — — 10,864 — 10,864 — 10,864
Other, net (123) — — — — — 174 174
March 31, 2022 145,186 113,911,388 11 1,657,087 (425,004) 1,232,094 273,854 1,505,948
Net income (loss) 4,563 — — — (41,137) (41,137) 22,743 (18,394)
Issuance of common stock, net — 745,829 — 15,828 — 15,828 — 15,828
Contributions from redeemable noncontrolling interests and noncontrolling interests 13,423 — — — — — 111,967 111,967
Distributions to redeemable noncontrolling interests and noncontrolling interests (1,239) — — — — — (5,237) (5,237)
Costs related to redeemable noncontrolling interests and noncontrolling interests (193) — — — — — (2,417) (2,417)
Equity in subsidiaries attributable to parent (10,168) — — — 83,316 83,316 (73,148) 10,168
Equity-based compensation expense — — — 4,732 — 4,732 — 4,732
Other, net (65) — — — (1) (1) (2,010) (2,011)
June 30, 2022 151,507 114,657,217 11 1,677,647 (382,826) 1,294,832 325,752 1,620,584
Net income (loss) (1,507) — — — (64,543) (64,543) 33,702 (30,841)
Issuance of common stock, net — 238,653 — (183) — (183) — (183)
Capped call transactions — — — (48,420) — (48,420) — (48,420)
Contributions from redeemable noncontrolling interests and noncontrolling interests 5,990 — — — — — 53,392 53,392
Distributions to redeemable noncontrolling interests and noncontrolling interests (1,203) — — — — — (7,314) (7,314)
Costs related to redeemable noncontrolling interests and noncontrolling interests (8) — — — — — (226) (226)
Equity in subsidiaries attributable to parent (1,240) — — — 52,191 52,191 (50,951) 1,240
Equity-based compensation expense — — — 4,463 — 4,463 — 4,463
Other, net (70) — — — — — (854) (854)
September 30, 2022 $ 153,469 114,895,870 $ 11 $ 1,633,507 $ (395,178) $ 1,238,340 $ 353,501 $ 1,591,841

~~Table of Contents~~


	Redeemable Noncontrolling Interests		Common Stock			Additional Paid-in Capital - Common Stock		Accumulated Deficit		Total Stockholders' Equity		Noncontrolling Interests		Total Equity


			Shares	Amount
December 31, 2022	$	165,737	114,939,079	$	11	$	1,637,847	$	(364,782)	$	1,273,076	$	448,637	$	1,721,713

Net loss	(20,404)		—	—		—		(81,083)		(81,083)		(8,859)		(89,942)
Issuance of common stock, net	—		645,580	1		(1,625)		—		(1,624)		—		(1,624)

Contributions from redeemable noncontrolling interests and noncontrolling interests	60,203		—	—		—		—		—		114,748		114,748
Distributions to redeemable noncontrolling interests and noncontrolling interests	(1,448)		—	—		—		—		—		(7,106)		(7,106)
Costs related to redeemable noncontrolling interests and noncontrolling interests	(2,605)		—	—		—		—		—		(1,460)		(1,460)
Equity in subsidiaries attributable to parent	(21,528)		—	—		—		78,893		78,893		(57,365)		21,528
Equity-based compensation expense	—		—	—		9,515		—		9,515		—		9,515
Other, net	(453)		—	—		—		—		—		(110)		(110)
March 31, 2023	$	179,502	115,584,659	$	12	$	1,645,737	$	(366,972)	$	1,278,777	$	488,485	$	1,767,262


	Redeemable Noncontrolling Interests																												Redeemable Noncontrolling Interests					Common Stock			Additional Paid-in Capital - Common Stock	Accumulated Deficit	Total Stockholders' Equity	Noncontrolling Interests	Total Equity

						Shares

						Shares

						Shares
December 31, 2023
December 31, 2023
December 31, 2023

Net loss
Net loss
Net loss
Issuance of common stock, net
Contributions from redeemable noncontrolling interests and noncontrolling interests
Distributions to redeemable noncontrolling interests and noncontrolling interests
Costs related to redeemable noncontrolling interests and noncontrolling interests
Distributions payable to redeemable noncontrolling interests and noncontrolling interests
Investment tax credit sales
Equity in subsidiaries attributable to parent
Equity-based compensation expense
Other, net
March 31, 2024

		Redeemable Noncontrolling Interests					Common Stock					Additional Paid-in Capital - Common Stock			Accumulated Deficit			Total Stockholders' Equity				Noncontrolling Interests		Total Equity

											Shares						Amount
December 31, 2022				$	165,737									114,939,079						$	11					$	1,637,847	$	(364,782)	$	1,273,076	$	448,637		$	1,721,713

Net loss				(20,404)				—			—			—			(81,083)			(81,083)						(8,859)		(89,942)
Issuance of common stock, net		—					645,580		1			(1,625)			—			(1,624)				—		(1,624)
Contributions from redeemable noncontrolling interests and noncontrolling interests		60,203					—		—			—			—			—				114,748		114,748
Distributions to redeemable noncontrolling interests and noncontrolling interests		(1,448)					—		—			—			—			—				(7,106)		(7,106)
Costs related to redeemable noncontrolling interests and noncontrolling interests		(2,605)					—		—			—			—			—				(1,460)		(1,460)
Equity in subsidiaries attributable to parent		(21,528)					—		—			—			78,893			78,893				(57,365)		21,528
Equity-based compensation expense		—					—		—			9,515			—			9,515				—		9,515
Other, net		(453)					—		—			—			—			—				(110)		(110)
March 31, 2023		179,502					115,584,659		12			1,645,737			(366,972)			1,278,777				488,485		1,767,262
Net income (loss)		860					—		—			—			(86,091)			(86,091)				(15,550)		(101,641)
Issuance of common stock, net		—					809,283		—			11,409			—			11,409				—		11,409
Contributions from redeemable noncontrolling interests and noncontrolling interests		40,201					—		—			—			—			—				104,204		104,204
Distributions to redeemable noncontrolling interests and noncontrolling interests		(2,498)					—		—			—			—			—				(7,320)		(7,320)
Costs related to redeemable noncontrolling interests and noncontrolling interests		(719)					—		—			—			—			—				(721)		(721)
Equity in subsidiaries attributable to parent		(111,121)					—		—			—			180,877			180,877				(69,756)		111,121
Equity-based compensation expense		—					—		—			4,803			—			4,803				—		4,803
Other, net		(6,144)					—		—			—			—			—				(1,073)		(1,073)
June 30, 2023		100,081					116,393,942		12			1,661,949			(272,186)			1,389,775				498,269		1,888,044
Net income (loss)		(8,715)					—		—			—			(63,147)			(63,147)				15,399		(47,748)
Issuance of common stock, net		—					6,011,846		—			81,976			—			81,976				—		81,976

Contributions from redeemable noncontrolling interests and noncontrolling interests		137,580					—		—			—			—			—				63,675		63,675
Distributions to redeemable noncontrolling interests and noncontrolling interests		(3,347)					—		—			—			—			—				(8,440)		(8,440)
Costs related to redeemable noncontrolling interests and noncontrolling interests		(2,575)					—		—			—			—			—				(155)		(155)
Equity in subsidiaries attributable to parent		(96,524)					—		—			—			143,820			143,820				(47,296)		96,524
Equity-based compensation expense		—					—		—			5,494			—			5,494				—		5,494
Other, net		(2,418)					—		—			—			—			—				(1,576)		(1,576)
September 30, 2023		$	124,082				122,405,788		$	12		$	1,749,419		$	(191,513)		$	1,557,918			$	519,876	$	2,077,794

See accompanying notes to unaudited condensed consolidated financial statements.

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) Description of Business and Basis of Presentation

We are ~~a leading Energy as a Service provider,~~an industry-leading energy services company focused on making clean energy more accessible, reliable and affordable for homeowners and businesses, serving over ~~386,000~~438,000 customers in more than 4550 United States ("U.S.") states and territories. Sunnova Energy Corporation was incorporated in Delaware on October 22, 2012 and formed Sunnova Energy International Inc. ("SEI") as a Delaware corporation on April 1, 2019. We completed our initial public offering on July 29, 2019 (our "IPO"); and in connection with our IPO, all of Sunnova Energy Corporation's ownership interests were contributed to SEI. Unless the context otherwise requires, references in this report to "Sunnova," the "Company," "we," "our," "us," or like terms, refer to SEI and its consolidated subsidiaries.

We ~~have a differentiated dealer model in which we~~ partner with local dealers and contractors who originate, design and install our customers' solar energy systems, energy storage systems and related products and services on our ~~behalf.~~behalf, as well as other sustainable home solutions, such as home security and monitoring, smart home devices, modern heating, ventilation and air conditioning, generators, upgraded roofing, water systems, water heaters, main panel upgrades and electric vehicle chargers. Our focus on our dealer and contractor model enables us to leverage our dealers' and contractors' specialized knowledge, connections and experience in local markets to drive customer origination while providing our dealers and contractors with access to high quality products at competitive prices, as well as technical oversight and expertise. We believe this structure provides operational flexibility, reduces exposure to labor shortages and lowers fixed costs relative to ~~our peers, furthering our competitive advantage.~~true vertically integrated models.

We offer customers products to power and improve the energy efficiency and sustainability of their homes and businesses with affordable solar energy and related products and services. We are able to offer energy generation savings compared to utility-based retail rates with little to no up-front expense to the customer in conjunction with solar and solar plus energy storage products, and, in the case of the latter, are able to also provide ~~our services through long-term agreements with a diversified pool of customers.~~energy resiliency. Our ~~solar service~~customer agreements typically are structured as either a legal-form lease (a "lease") of a solar energy system and/or energy storage system to the customer, the sale of the solar energy system's output to the customer under a power purchase agreement ("PPA") or the purchase of a solar energy system, energy storage system and/or accessory either with financing provided by us (a "loan") or paid in full by the customer (a "sale"); however, we also offer service plans and repair services for systems we did not originate. We make it possible in some states for a customer to obtain a new roof and/or other ancillary products. We also allow customers originated through our homebuilder channel the option of purchasing the system when the customer closes on the purchase of a new home. The initial term of our ~~solar service~~customer agreements is typically between 10 and 25 years, during which time we provide or arrange for ongoing services to customers, including monitoring, maintenance and warranty services. Our lease and PPA agreements typically include an opportunity for customers to renew for up to an additional 10 years, via two five-year or one 10-year renewal options. Our ancillary products include both cash sales and loans with an initial term between one year and 20 years. Customer payments and rates can be fixed for the duration of the ~~solar service~~customer agreement or escalated at a pre-determined percentage annually. We also receive tax benefits and other incentives from leases and PPAs, a portion of which we finance through tax equity, non-recourse debt structures and hedging arrangements in order to fund our upfront costs, overhead and growth investments. Our future success depends in part on our ability to raise capital from third-party investors and commercial sources. We have an established track record of attracting capital from diverse sources. From our inception through September 30, 2023, we have raised more than $14.5 billion in total capital commitments from equity, debt and tax equity investors.

Basis of Presentation

The accompanying interim unaudited condensed consolidated financial statements ("interim financial statements") include our consolidated balance sheets, statements of operations, statements of redeemable noncontrolling interests and equity and statements of cash flows and have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") from records maintained by us. We have condensed or omitted certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP pursuant to the applicable rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting. As such, these interim financial statements should be read in conjunction with our ~~2022~~2023 annual audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K filed with the SEC on February ~~23, 2023.~~22, 2024. Our interim financial statements reflect all normal recurring adjustments necessary, in our opinion, to state fairly our financial position and results of operations for the reported periods. Amounts reported for interim periods may not be indicative of a full year period because of our continual growth, seasonal fluctuations in demand for power, timing of maintenance and other expenditures, changes in interest expense and other factors.

Our interim financial statements include our accounts and those of our subsidiaries in which we have a controlling financial interest. In accordance with the provisions of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 810, Consolidation, we consolidate any VIE of which we are the primary beneficiary. We form VIEs with our investors in the ordinary course of business to facilitate the funding and monetization of certain attributes

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

associated with our solar energy systems. The typical condition for a controlling financial interest is holding a majority of the voting interests of an entity. However, a controlling financial interest may also exist in entities, such as VIEs, through arrangements that do not involve holding a majority of the voting interests. A primary beneficiary is defined as the party that has (a) the power to direct the activities of a VIE that most significantly impact the VIE's economic performance and (b) the

~~Table of Contents~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

obligation to absorb losses or receive benefits from the VIE that could potentially be significant to the VIE. We do not consolidate a VIE in which we have a majority ownership interest when we are not considered the primary beneficiary. We have considered the provisions within the contractual arrangements that grant us power to manage and make decisions that affect the operation of our VIEs, including determining the solar energy systems contributed to the VIEs, and the installation, operation and maintenance of the solar energy systems. We consider the rights granted to the other investors under the contractual arrangements to be more protective in nature rather than substantive participating rights. As such, we have determined we are the primary beneficiary of our VIEs and evaluate our relationships with our VIEs on an ongoing basis to determine whether we continue to be the primary beneficiary. We have eliminated all intercompany transactions in consolidation.

~~Reclassifications~~

~~Certain prior period amounts have been reclassified to conform to the current period presentation. These reclassifications did not have a significant impact on our interim financial statements.~~

~~Revisions~~

We have revised our previously issued interim financial statements to correct immaterial errors pertaining to our interest rate derivative financial instruments, specifically the credit valuation adjustment to account for the counterparties' credit risk. We originally did not record the estimated reduction to the derivative assets related to the credit valuation adjustment as of March 31, 2022, June 30, 2022 and September 30, 2022. These immaterial errors impacted our consolidated balance sheets, consolidated statements of operations, consolidated statements of cash flows and consolidated statements of redeemable noncontrolling interests and equity. The following tables present the impact of these revisions on the interim financial statements:

~~Consolidated Balance Sheets~~

As of March 31, 2022
As Previously
Reported Revisions As
Revised
(in thousands)
Other assets $ 662,456 $ (1,475) $ 660,981
Accumulated deficit $ (423,529) $ (1,475) $ (425,004)

As of June 30, 2022
As Previously
Reported Revisions As
Revised
(in thousands)
Other assets $ 802,862 $ (5,609) $ 797,253
Accumulated deficit $ (377,217) $ (5,609) $ (382,826)

As of September 30, 2022
As Previously
Reported Revisions As
Revised
(in thousands)
Other assets $ 920,634 $ (8,105) $ 912,529
Accumulated deficit $ (387,073) $ (8,105) $ (395,178)

~~Table of Contents~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Consolidated Statements of Operations~~

Three Months Ended March 31, 2022
As Previously
Reported Revisions As
Revised
(in thousands)
Interest expense, net $ (2,490) $ 1,475 $ (1,015)
Loss before income tax $ (20,629) $ (1,475) $ (22,104)
Net loss $ (20,629) $ (1,475) $ (22,104)
Net loss attributable to stockholders $ (33,583) $ (1,475) $ (35,058)
Net loss per share attributable to stockholders—basic and diluted $ (0.30) $ (0.01) $ (0.31)

Three Months Ended June 30, 2022 Six Months Ended June 30, 2022
As Previously
Reported Revisions As
Revised As Previously
Reported Revisions As
Revised
(in thousands)
Interest expense, net $ 20,437 $ 4,134 $ 24,571 $ 17,947 $ 5,609 $ 23,556
Loss before income tax $ (9,697) $ (4,134) $ (13,831) $ (30,326) $ (5,609) $ (35,935)
Net loss $ (9,697) $ (4,134) $ (13,831) $ (30,326) $ (5,609) $ (35,935)
Net loss attributable to stockholders $ (37,003) $ (4,134) $ (41,137) $ (70,586) $ (5,609) $ (76,195)
Net loss per share attributable to stockholders—basic and diluted $ (0.32) $ (0.04) $ (0.36) $ (0.62) $ (0.05) $ (0.67)

Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022
As Previously
Reported Revisions As
Revised As Previously
Reported Revisions As
Revised
(in thousands)
Interest expense, net $ 18,328 $ 2,496 $ 20,824 $ 36,275 $ 8,105 $ 44,380
Loss before income tax $ (29,852) $ (2,496) $ (32,348) $ (60,178) $ (8,105) $ (68,283)
Net loss $ (29,852) $ (2,496) $ (32,348) $ (60,178) $ (8,105) $ (68,283)
Net loss attributable to stockholders $ (62,047) $ (2,496) $ (64,543) $ (132,633) $ (8,105) $ (140,738)
Net loss per share attributable to stockholders—basic and diluted $ (0.54) $ (0.02) $ (0.56) $ (1.16) $ (0.07) $ (1.23)

~~Consolidated Statements of Cash Flows~~

Three Months Ended March 31, 2022
As Previously
Reported Revisions As
Revised
(in thousands)
Net loss $ (20,629) $ (1,475) $ (22,104)
Unrealized gain on derivatives $ (35,349) $ 1,475 $ (33,874)
Net cash used in operating activities $ (92,129) $ — $ (92,129)

Six Months Ended June 30, 2022
As Previously
Reported Revisions As
Revised
(in thousands)
Net loss $ (30,326) $ (5,609) $ (35,935)
Unrealized gain on derivatives $ (6,626) $ 5,609 $ (1,017)
Net cash used in operating activities $ (162,343) $ — $ (162,343)

~~Table of Contents~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

Nine Months Ended September 30, 2022
As Previously
Reported Revisions As
Revised
(in thousands)
Net loss $ (60,178) $ (8,105) $ (68,283)
Unrealized gain on derivatives $ (35,685) $ 8,105 $ (27,580)
Net cash used in operating activities $ (265,795) $ — $ (265,795)

~~Consolidated Statements of Redeemable Noncontrolling Interests and Equity~~

Accumulated Deficit
As Previously
Reported Revisions As
Revised
(in thousands)
December 31, 2021 $ (459,715) $ — $ (459,715)
Net loss attributable to stockholders (33,583) (1,475) (35,058)
Equity in subsidiaries attributable to parent 69,769 — 69,769
March 31, 2022 (423,529) (1,475) (425,004)
Net loss attributable to stockholders (37,003) (4,134) (41,137)
Equity in subsidiaries attributable to parent 83,316 — 83,316
Other, net (1) — (1)
June 30, 2022 (377,217) (5,609) (382,826)
Net loss attributable to stockholders (62,047) (2,496) (64,543)
Equity in subsidiaries attributable to parent 52,191 — 52,191
September 30, 2022 $ (387,073) $ (8,105) $ (395,178)

(2) Significant Accounting Policies

Included below are updates to significant accounting policies disclosed in our ~~2022~~2023 annual audited consolidated financial statements.

Use of Estimates

The application of GAAP in the preparation of the interim financial statements requires us to make estimates and assumptions that affect the amounts reported in the interim financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ materially from those estimates.

Accounts Receivable

Accounts Receivable—Trade. Accounts receivable—trade primarily represents trade receivables from customers that are generally collected in the subsequent month. Accounts receivable—trade is recorded net of an allowance for credit losses, which is based on our assessment of the collectability of customer accounts based on the best available data at the time. We review the allowance by considering factors such as historical experience, customer credit rating, contractual term, aging category and current economic conditions that may affect a customer's ability to pay to identify customers with potential disputes or collection issues. We write off accounts receivable when we deem them uncollectible. The following table presents

~~Table of Contents~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

the changes in the allowance for credit losses recorded against accounts ~~receivable~~—receivable—trade, net in the unaudited condensed consolidated balance sheets:


		Three Months Ended September 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
		(in thousands)
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024					2024		2023
						(in thousands)						(in thousands)
Balance at beginning of period	Balance at beginning of period	$	2,143	$	1,198		$	1,676	$	1,044
Provision for current expected credit losses	Provision for current expected credit losses	1,474		802			3,579		1,891
Write off of uncollectible accounts	Write off of uncollectible accounts	(1,257)		(717)			(3,005)		(1,769)
Recoveries	Recoveries	96		83			206		200

Other, net
Balance at end of period	Balance at end of period	$	2,456	$	1,366		$	2,456	$	1,366

Accounts Receivable—Other. Accounts receivable—other primarily represents receivables from ITC sales and receivables from our dealers or other parties related to the sale of inventory and the use of inventory procured by us. The

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

following table presents the changes in the allowance for credit losses recorded against accounts receivable—other in the unaudited condensed consolidated balance sheets:


	Three Months Ended March 31,
		2024		2023
		(in thousands)
Balance at beginning of period		$	13,045	$	—
Provision for current expected credit losses		581		671
Write off of uncollectible accounts		(6,850)		—


Balance at end of period		$	6,776	$	671

Inventory

Inventory is stated at the lower of cost and net realizable value using the first-in, first-out method. Inventory primarily represents (a) raw materials, such as energy storage systems, photovoltaic modules, inverters, meters and modems, (b) homebuilder construction in progress and (c) other associated equipment purchased. These materials are typically procured by us and used by our dealers, sold to our dealers or held for use as original parts on new solar energy systems or replacement parts on existing solar energy systems. We remove these items from inventory and record the transaction in typically one of these manners: (a) expense to operations and maintenance expense when installed as a replacement part for a solar energy system, (b) recognize in accounts receivable—other when procured by us and used by our dealers, (c) expense to cost of revenue—inventory sales if sold directly to a dealer or other party, (d) capitalize to property and equipment when installed on an existing home or business, (e) expense to cost of revenue—other when installed on a new home or ~~(e)~~business as part of a cash sale or (f) capitalize to property and equipment when placed in service under the homebuilder program. We periodically evaluate our inventory for unusable and obsolete items based on assumptions about future demand and market conditions. Based on this evaluation, provisions are made to write inventory down to net realizable value. The following table presents the detail of inventory as recorded in other current assets in the unaudited condensed consolidated balance sheets:


	As of March 31, 2024					As of March 31, 2024	As of December 31, 2023

		As of September 30, 2023		As of December 31, 2022
		(in thousands)

		(in thousands)

		(in thousands)
		(in thousands)
Energy storage systems and components	Energy storage systems and components	$	69,082	$	74,968
Homebuilder construction in progress	Homebuilder construction in progress	43,179		43,116
Modules and inverters	Modules and inverters	23,872		32,798

Meters and modems	Meters and modems	1,541		1,166
Other		—		65
Meters and modems
Meters and modems

Total	Total	$	137,674	$	152,113
Total
Total

Fair Value of Financial Instruments

Fair value is an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions market participants would use in pricing an asset or a liability. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 establishes a three-tier fair value hierarchy, which prioritizes inputs that may be used to measure fair value as follows:

•Level 1—Observable inputs that reflect unadjusted quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date.

•Level 2—Observable inputs other than Level 1 prices, such as quoted market prices for similar assets or liabilities in active markets, quoted market prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

~~Table of Contents~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

•Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy must be determined based on the lowest level input that is significant to the fair value measurement. An assessment of the significance of a particular input to the fair value measurement in its entirety requires

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

judgment and consideration of factors specific to the asset or liability. Our financial instruments include cash, cash equivalents, accounts receivable, customer notes receivable, investments in solar receivables, accounts payable, accrued expenses, long-term debt, interest rate swaps and caps and contingent consideration. The carrying values of accounts receivable, accounts payable and accrued expenses approximate the fair values due to the fact that they are short-term in nature (Level 1). We estimate the fair value of our customer notes receivable based on interest rates currently offered under the loan program with similar maturities and terms (Level 3). We estimate the fair value of our investments in solar receivables based on a discounted cash flows model that utilizes market data related to solar irradiance, production factors by region and projected electric utility rates in order to build up revenue projections (Level 3). In addition, lease-related revenue and maintenance and service costs were supported through the use of available market studies and data. We estimate the fair value of our fixed-rate long-term debt based on an analysis of debt with similar book values, maturities and required market yields based on current interest rates (Level 3). We determine the fair values of the interest rate derivative transactions based on a discounted cash flow method using contractual terms of the transactions and counterparty credit risk as key inputs. The floating interest rate is based on observable rates consistent with the frequency of the interest cash flows (Level 2). For contingent consideration, we estimate the fair value of the installation earnout using the Monte Carlo model based on the forecasted placements for the installations and the microgrid earnout using a scenario-based methodology based on the probabilities of the microgrid earnout, both using Level 3 inputs. See Note 6, Customer Notes Receivable, Note 7, Long-Term Debt and Note 8, Derivative Instruments.

The following tables present our financial instruments measured at fair value on a recurring basis as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022:~~2023:


		As of September 30, 2023
		Total		Level 1		Level 2		Level 3
		(in thousands)
	As of March 31, 2024											As of March 31, 2024
	Total									Total	Level 1	Level 2	Level 3
	(in thousands)											(in thousands)
Financial assets:	Financial assets:
Investments in solar receivables
Investments in solar receivables
Investments in solar receivables	Investments in solar receivables	$	64,250	$	—	$	—	$	64,250
Derivative assets	Derivative assets	129,643		—		129,643		—
Total	Total	$	193,893	$	—	$	129,643	$	64,250

Financial liabilities:	Financial liabilities:
Financial liabilities:
Financial liabilities:
Contingent consideration
Contingent consideration
Contingent consideration	Contingent consideration	$	12,874	$	—	$	—	$	12,874

Total	Total	$	12,874	$	—	$	—	$	12,874
Total
Total


		As of December 31, 2022
		Total		Level 1		Level 2		Level 3
		(in thousands)
	As of December 31, 2023											As of December 31, 2023
	Total									Total	Level 1	Level 2	Level 3
	(in thousands)											(in thousands)
Financial assets:	Financial assets:
Investments in solar receivables
Investments in solar receivables
Investments in solar receivables	Investments in solar receivables	$	72,171	$	—	$	—	$	72,171
Derivative assets	Derivative assets	112,712		—		112,712		—
Total	Total	$	184,883	$	—	$	112,712	$	72,171

Financial liabilities:	Financial liabilities:
Financial liabilities:
Financial liabilities:
Contingent consideration
Contingent consideration
Contingent consideration	Contingent consideration	$	26,787	$	—	$	—	$	26,787

Total	Total	$	26,787	$	—	$	—	$	26,787
Total
Total

Changes in the fair value of our investments in solar receivables are included in other operating ~~expense/income~~income/expense in the consolidated statements of operations. The following table summarizes the change in the fair value of our financial assets

1512

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

accounted for at fair value on a recurring basis using Level 3 inputs as recorded in other current assets and other assets ~~(see Note 4, Detail of Certain Balance Sheet Captions)~~ in the unaudited condensed consolidated balance sheets:


		Nine Months Ended September 30,
		2023		2022
		(in thousands)
	Three Months Ended March 31,						Three Months Ended March 31,
	2024					2024		2023
	(in thousands)						(in thousands)
Balance at beginning of period	Balance at beginning of period	$	72,171	$	82,658
Additions	Additions	969		—
Settlements	Settlements	(8,931)		(8,090)
Gain (loss) recognized in earnings	Gain (loss) recognized in earnings	41		(2,912)

Balance at end of period	Balance at end of period	$	64,250	$	71,656
Balance at end of period
Balance at end of period

Changes in the fair value of our contingent consideration are included in other operating expense/income in the consolidated statements of operations. The following table summarizes the change in the fair value of our financial liabilities accounted for at fair value on a recurring basis using Level 3 inputs as recorded in other long-term liabilities in the unaudited condensed consolidated balance sheets:


		Nine Months Ended September 30,
		2023		2022
		(in thousands)
	Three Months Ended March 31,						Three Months Ended March 31,
	2024					2024		2023
	(in thousands)						(in thousands)
Balance at beginning of period	Balance at beginning of period	$	26,787	$	67,895

Settlements
Settlements
Settlements	Settlements	(10,831)		(16,014)
Gain recognized in earnings	Gain recognized in earnings	(3,082)		(6,720)

Balance at end of period	Balance at end of period	$	12,874	$	45,161
Balance at end of period
Balance at end of period

The following table summarizes the significant unobservable inputs used in the valuation of our liabilities as of ~~September 30, 2023~~March 31, 2024 using Level 3 inputs:

Unobservable
Input

Weighted
Average

Liabilities:

Contingent consideration - installation earnout

Volatility

~~35.00%~~30.00%

Revenue risk premium

~~15.00%~~15.70%

Risk-free discount rate

~~5.25%~~5.03%

Contingent consideration - microgrid earnout

Probability of success

10.00%

Risk-free discount rate

~~5.25%~~5.03%

Significant increases or decreases in the volatility, revenue risk premium, probability of success or risk-free discount rate in isolation could result in a significantly higher or lower fair value measurement.

1613

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Revenue

The following table presents the detail of revenue as recorded in the unaudited condensed consolidated statements of operations:


		Three Months Ended September 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
		(in thousands)
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024
							(in thousands)
							(in thousands)
							(in thousands)
PPA revenue	PPA revenue	$	38,300	$	31,891		$	99,201	$	84,235
Lease revenue	Lease revenue	37,966		25,912			103,468		71,717
Lease revenue
Lease revenue
Inventory sales revenue
Inventory sales revenue
Inventory sales revenue	Inventory sales revenue	51,356		45,528			137,762		99,773
Service revenue	Service revenue	19,323		4,309			55,282		7,024
Service revenue
Service revenue
Direct sales revenue
Direct sales revenue
Direct sales revenue
Solar renewable energy certificate revenue
Solar renewable energy certificate revenue
Solar renewable energy certificate revenue	Solar renewable energy certificate revenue	16,136		16,241			38,982		37,172
Cash sales revenue	Cash sales revenue	24,284		18,933			62,827		45,695
Cash sales revenue
Cash sales revenue
Loan revenue
Loan revenue
Loan revenue	Loan revenue	9,283		5,012			24,538		12,582
Other revenue	Other revenue	1,750		1,538			4,411		3,900
Other revenue
Other revenue
Total	Total	$	198,398	$	149,364		$	526,471	$	362,098
Total
Total

We recognize revenue from contracts with customers as we satisfy our performance obligations at a transaction price reflecting an amount of consideration based upon an estimated rate of return, net of cash incentives. We express this rate of return as the solar rate per kilowatt hour ("kWh") in the customer contract. The amount of revenue we recognize does not equal customer cash payments because we satisfy performance obligations ahead of cash receipt or evenly as we provide continuous access on a stand-ready basis to the solar energy system. We reflect the differences between revenue recognition and cash payments received in accounts receivable, other assets or deferred revenue, as appropriate. Revenue allocated to remaining performance obligations represents contracted revenue we have not yet recognized and includes deferred revenue as well as amounts that will be invoiced and recognized as revenue in future periods. Contracted but not yet recognized revenue was approximately ~~$4.7~~$6.0 billion as of ~~September 30, 2023,~~March 31, 2024, of which we expect to recognize approximately 3%4% over the next 12 months. We do not expect the annual recognition to vary significantly over approximately the next 2019 years as the vast majority of existing ~~solar service~~customer agreements have at least 2019 years remaining, given the average age of the fleet of solar energy systems under contract is less than four years.

Certain customers may receive cash incentives. We defer recognition of the payment of these cash incentives and recognize them over the life of the contract as a reduction to revenue. The deferred payment is recorded in other assets for customers who receive the cash incentives under our lease and PPA agreements, and as a contra-liability in other long-term liabilities for customers who receive the cash incentives under our loan agreements.

~~PPAs.~~PPA Revenue. Customers purchase electricity from us under PPAs. Pursuant to ASC 606, we recognize revenue based upon the amount of electricity delivered as determined by remote monitoring equipment at solar rates specified under the PPAs. All customers must pass our credit evaluation process. The PPAs generally have a term of 20 or 25 years with an opportunity for customers to renew for up to an additional 10 years, via two five-year or one 10-year renewal options.

~~Leases~~Lease Revenue. We are the lessor under lease agreements for solar energy systems and energy storage systems, which do not meet the definition of a lease under ASC 842 and are accounted for as contracts with customers under ASC 606. We recognize revenue on a straight-line basis over the contract term as we satisfy our obligation to provide continuous access to the solar energy system. All customers must pass our credit evaluation process. The lease agreements generally have a term of 20 or 25 years with an opportunity for customers to renew for up to an additional 10 years, via two five-year or one 10-year renewal options.

In most cases, we provide customers under our lease agreements a performance guarantee that each solar energy system will achieve a certain specified minimum solar energy production output, which is a significant proportion of its expected output. The specified minimum solar energy production output may not be achieved due to natural fluctuations in the weather or equipment failures from exposure and wear and tear outside of our control, among other factors. We determine the amount of the guaranteed output based on a number of different factors, including: (a) the specific site information related to the tilt of the panels, azimuth (a horizontal angle measured clockwise in degrees from a reference direction) of the panels, size of the system,

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

and shading on site; (b) the calculated amount of available irradiance (amount of energy for a given flat surface facing a specific

~~Table of Contents~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

direction) based on historical average weather data and (c) the calculated amount of energy output of the solar energy system. While actual irradiance levels can significantly change year over year due to natural fluctuations in the weather, we expect the levels to average out over the term of a lease and to approximate the levels used in determining the amount of the performance guarantee. Generally, weather fluctuations are the most likely reason a solar energy system may not achieve a certain specified minimum solar energy production output.

If the solar energy system does not produce the guaranteed production amount, we are required to refund a portion of the previously remitted customer payments, where the repayment is calculated as the product of (a) the shortfall production amount and (b) the dollar amount (guaranteed rate) per kWh that is fixed throughout the term of the contract. These remittances of a customer's payments, if needed, are payable as early as the first anniversary of the solar energy system's placed in service date and then every annual period thereafter. See Note ~~14,~~13, Commitments and Contingencies.

Inventory Sales Revenue. Inventory sales revenue represents revenue from the direct sale of inventory to our dealers or other parties. We recognize the related revenue under ASC 606 upon shipment or upon sale when a bill and hold agreement is in place. Shipping and handling costs are included in cost of revenue—inventory sales in the consolidated statements of operations.

Service Revenue. Service revenue includes ~~revenue from the direct sale of solar energy systems and energy storage systems to customers with financing provided by us and~~ sales of service plans and repair services. ~~We recognize revenue from the direct sale of energy storage systems in the period in which the storage components are placed in service.~~ Service plans are available to customers whose solar energy system was not originally sold by Sunnova. We recognize revenue from service plan contracts on a straight-line basis over the life of the contract, which is typically 10 years. We recognize revenue from repair services in the period in which the service was performed.

Direct Sales Revenue. Direct sales revenue includes revenue from the direct sale of solar energy systems and energy storage systems to customers with financing provided by us. We recognize revenue from the direct sale of solar energy systems and energy storage systems in the period in which the systems are placed in service.

Solar Renewable Energy ~~Certificates.~~Certificate Revenue. Each solar renewable energy certificate ("SREC") represents the environmental benefit of one megawatt hour (1,000 kWh) generated by a solar energy system. SRECs can be sold separate from the actual electricity generated by the renewable-based generation source. We account for the SRECs we generate from our solar energy systems as governmental incentives with no costs incurred to obtain them and do not consider those SRECs output of the underlying solar energy systems. We classify these SRECs as inventory held until sold and delivered to third parties. As we did not incur costs to obtain these governmental incentives, the inventory carrying value for the SRECs was $0 as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022.~~2023. We enter into economic hedges related to expected production of SRECs through forward contracts. While these fixed price forward contracts serve as an economic hedge against spot price fluctuations for the SRECs, the contracts do not qualify for hedge accounting and are not designated as cash flow hedges or fair value hedges. The contracts require us to physically deliver the SRECs upon settlement. We recognize the related revenue under ASC 606 upon satisfaction of the performance obligation to transfer the SRECs to the stated counterparty. Payments are typically received within one month of transferring the SREC to the counterparty. The costs related to the sales of SRECs are generally limited to broker fees (recorded in cost of revenue—other), which are only paid in connection with certain transactions. In certain circumstances we are required to purchase SRECs on the open market to fulfill minimum delivery requirements under our forward contracts.

Cash ~~Sales.~~Sales Revenue. Cash sales revenue represents revenue from a customer's purchase of a solar energy system from us typically when purchasing a new home. We recognize the related revenue under ASC 606 upon verification of the home closing.

~~Loans.~~Loan Revenue. See discussion of loan revenue in the "Loans" section below.

Other Revenue. Other revenue includes certain state and utility incentives. We recognize revenue from state and utility incentives in the periods in which they are earned.

Loans

We offer a loan program, under which the customer finances the purchase of a solar energy system, energy storage system and/or accessory through a ~~solar service~~customer agreement, typically for a term of 10, 15 or 25 years. We recognize cash payments received from customers on a monthly basis under our loan program (a) as interest income, to the extent attributable to earned interest on the contract that financed the customer's purchase; (b) as a reduction of a note receivable on the balance sheet, to the extent attributable to a return of principal (whether scheduled or prepaid) on the contract that financed the customer's purchase; and (c) as revenue, to the extent attributable to payments for operations and maintenance services provided by us. To qualify for

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

the loan program, a customer must pass our credit evaluation process, which requires the customer to have a minimum FICO® score of 600 to ~~710~~780 depending on certain circumstances, and we secure the loans with the solar energy

~~Table of Contents~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

systems, energy storage systems or accessories financed. The credit evaluation process is performed once for each customer at the time the customer is entering into the ~~solar service~~customer agreement with us.

Our investments in solar energy systems, energy storage systems ~~and~~and/or accessories related to the loan program that are not yet placed in service are recorded in other assets in the consolidated balance sheets and are transferred to customer notes receivable upon being placed in service. Customer notes receivable are recorded at amortized cost, net of an allowance for credit losses (as described below), in other current assets and customer notes receivable in the consolidated balance sheets. Accrued interest receivable related to our customer notes receivable is recorded in accounts receivable—trade, net in the consolidated balance sheets. Interest income from customer notes receivable is recorded in interest income in the consolidated statements of operations. The amortized cost of our customer notes receivable is equal to the principal balance of customer notes receivable outstanding and does not include accrued interest receivable. Customer notes receivable continue to accrue interest until they are written off against the allowance, which occurs when the balance is 180 days or more past due unless the balance is in the process of collection. Customer notes receivable are considered past due one day after the due date based on the contractual terms of the loan agreement. In all cases, customer notes receivable balances are placed on a nonaccrual status or written off at an earlier date when they are deemed uncollectible. Expected recoveries do not exceed the aggregate of amounts previously written off and expected to be written off. Accrued interest receivable for customer notes receivable placed on a nonaccrual status is recorded as a reduction to interest income. Interest received on such customer notes receivable is accounted for on a cash basis until the customer notes receivable qualifies for the return to accrual status. Customer notes receivable are returned to accrual status when there is no longer any principal or interest amounts past due and future payments are reasonably assured.

The allowance for credit losses is deducted from the customer notes receivable amortized cost to present the net amount expected to be collected. It is measured on a collective (pool) basis when similar risk characteristics (such as financial asset type, customer credit rating, contractual term and vintage) exist. In determining the allowance for credit losses, we identify customers with potential disputes or collection issues and consider our historical level of credit losses and current economic trends that might impact the level of future credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics, such as differences in underwriting standards. Expected credit losses are estimated over the contractual term of the loan agreements based on the best available data at the time and adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals and modifications unless either of the following applies: (a) we have a reasonable expectation at the reporting date that a troubled debt restructuring will be executed with an individual customer or (b) the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancelable by us. Expected credit losses are recorded in general and administrative expense in the consolidated statements of operations. See Note 6, Customer Notes Receivable.

Deferred Revenue

Deferred revenue consists of amounts for which the criteria for revenue recognition have not yet been met and includes (a) payments for unfulfilled performance obligations that will be recognized on a straight-line basis over the remaining term of the respective ~~solar service~~customer agreements, net of any cash incentives earned by the customers, (b) down payments and partial or full prepayments from customers and (c) differences due to the timing of energy production versus billing for certain types of PPAs. Deferred revenue was ~~$297.8~~$615.6 million as of December 31, ~~2021.~~2022. The following table presents the detail of deferred revenue as recorded in other current liabilities and other long-term liabilities in the unaudited condensed consolidated balance sheets:

As of
March 31, 2024

As of
December 31, 2023

As of
September 30, 2023

As of
December 31, 2022

(in thousands)

Loans

871,981

586,128

PPAs and leases

34,122

24,893

Solar receivables

4,405

4,602

Other

Total (1)

910,508

615,623

(1) Of this amount, ~~$46.4~~$59.0 million and ~~$30.2~~$50.8 million is recorded in other current liabilities as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

During the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ we recognized revenue of ~~$28.8~~$13.9 million and ~~$12.3~~$7.9 million, respectively, from amounts recorded in deferred revenue at the beginning of the respective years.

~~Table of Contents~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~Goodwill~~Contract Assets and Contract Liabilities

~~Goodwill~~Billing practices are governed by the contract terms of each project based upon costs incurred, production or predetermined schedules. Billings do not necessarily correlate with revenue recognized using the percentage-of-completion method to reflect the transfer of control over time. Contract assets include unbilled amounts typically resulting from revenue under contracts when the percentage-of-completion method of revenue recognition is utilized and revenue recognized exceeds the amount billed to the customer. Contract liabilities consist of advance payments and billings in excess of revenue recognized. Retainage, included in contract assets, represents the ~~excess~~amounts withheld from billings by our clients pursuant to provisions in the contracts and may not be paid to us until the completion of specific tasks or the completion of the ~~purchase price over~~project and, in some instances, for even longer periods. Retainage may also be subject to restrictive conditions such as performance guarantees. Our contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. The payment terms of our contracts from time to time require the customer to make advance payments as well as interim payments as work progresses. As of March 31, 2024 and December 31, 2023, contract assets were $279,000 and contract liabilities were $3.9 million and $3.8 million, respectively. The increase in contract liabilities was due to the timing of advance payments partially offset by revenue recognized during the period. During the three months ended March 31, 2024 and 2023, we recognized revenue of an insignificant amount and $0, respectively, from amounts recorded in contract liabilities at the beginning of the respective years.

Equity-Based Compensation

We account for equity-based compensation, which requires the measurement and recognition of compensation expense related to the fair value of ~~assets acquired~~equity-based compensation awards. Equity-based compensation expense includes the compensation cost for all share-based awards granted to employees, consultants and ~~liabilities assumed. Goodwill is reviewed for impairment at least annually or whenever events or changes in circumstances indicate~~members of our board of directors. We use the carrying amount may be impaired. When assessing goodwill for impairment, we use qualitative and if necessary, quantitative methods in accordance with GAAP. As of September 30, 2023, we utilized a qualitative assessment and concluded it was more likely than notBlack-Scholes option-pricing model to measure the fair value ~~was greater than~~of stock options at the ~~carrying amount~~measurement date. For restricted stock units that will be settled in cash, we use the closing price of our common stock on the measurement date to measure the fair value at the measurement date and ~~thus, a goodwill impairment does not exist. As such, no further testing~~record in other current liabilities in the consolidated balance sheets. For restricted stock units that will be settled in common stock, we use the closing price of our common stock on the grant date to measure the fair value at the measurement date and record in additional paid-in capital—common stock in the consolidated balance sheets. We account for forfeitures as they occur. Equity-based compensation expense is ~~required. Our review considered performance compared to released guidance, renewable market factors, liquidity~~recorded in general and market capitalization including stock price along with other market factors including interest rate changes and inflation. Our annual assessment date is October 31 and should, among other events and circumstances, industry conditions deteriorate,administrative expense in the ~~outlook for future operating results and cash flow decline or regulations change, costs~~consolidated statements of equity or debt capital increase, valuations for comparable public companies or our market capitalization experiences a sustained decline, we may need to further reassess the recoverability of goodwill in future periods.operations. See Note 11, Equity-Based Compensation.

Self-Insurance

In January 2023, we changed our health insurance policy for qualifying employees in the U.S. from a fully-insured policy to a self-insured policy in order to administer insurance coverage to our employees at a lower cost to us. The change in insurance policy did not have a significant impact on our consolidated financial statements and related disclosures. Under the self-insured policy, we maintain stop-loss coverage from a third party that limits our exposure to large claims. We record a liability associated with these benefits that includes an estimate of both claims filed and losses incurred but not yet reported based on historical claims experience. In estimating this accrual, we utilize a third-party actuary to estimate a range of expected losses, which are based on an analysis of historical data. Assumptions are monitored and adjusted when warranted by changing circumstances. We record our liability for estimated losses under our self-insured policy in accrued liabilities in the consolidated balance sheets. As of ~~September 30,~~March 31, 2024 and December 31, 2023, our liability for self-insured claims was ~~$4.3~~$4.9 million and $3.5 million, respectively, which represents our best estimate of the future cost of claims incurred as of that date. We believe we have adequate reserves for these claims as of ~~September 30, 2023;~~March 31, 2024; however, the actual value of such claims could be significantly affected if future occurrences and claims differ from these assumptions.

Sales of Investment Tax Credits ("ITCs")

~~In September 2023, we entered~~We enter into tax credit purchase and sale agreements with a third-party ~~purchaser~~purchasers to sell to such third-party ~~purchaser,~~purchasers, for cash, the Section 48(a) ITCs generated by certain solar energy systems that have or will be placed in service, subject to certain conditions set forth therein. We account for ITCs using the flow-through ~~method.~~method, which states the tax benefit is to be recognized when the ITC is realizable. During the three months ended March 31, 2024 and 2023, we recognized income tax benefit of $44.2 million and $0, respectively, related to estimated future sales of ITCs for the remaining part of the year. For tax credit purchase and sale agreements entered into by certain of our consolidated tax equity partnerships, we record our share of the sale as income tax benefit in the unaudited condensed consolidated statements of operations and the tax equity investor's share as an increase to redeemable noncontrolling ~~interest~~interests or noncontrolling ~~interest.~~interests in the unaudited condensed consolidated

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

balance sheets. As of March 31, 2024 and December 31, 2023, accounts receivable from ITC sales of $144.9 million and $200.7 million, respectively, is recorded in accounts receivable—other in the unaudited condensed consolidated balance sheets. During the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, we recognized ITC sales of ~~$14.4~~$48.0 million and $0, respectively, of which ~~$11.8~~$3.0 million and $0, respectively, is recorded in income tax ~~benefit in the unaudited condensed consolidated statements of operations~~(benefit) expense and ~~$2.6~~$45.0 million and $0, respectively, is recorded in redeemable noncontrolling ~~interest in the unaudited condensed consolidated balance sheets.~~interests and noncontrolling interests.

New Accounting Guidance

New accounting pronouncements are issued by the FASB or other standard setting bodies and are adopted as of the specified effective date.

In ~~March 2022,~~November 2023, the FASB issued ~~Accounting Standards Update ("ASU")~~ASU No. ~~2022-02,~~2023-07, ~~Financial Instruments—Credit Losses: Troubled Debt Restructurings~~Segment Reporting: Improvements to Reportable Segment Disclosures, to refine and ~~Vintage Disclosures, to eliminate the accounting guidance for troubled debt restructurings while enhancing disclosure requirements for certain loan refinancings~~ensure a broader and ~~restructurings by creditors when a borrower is experiencing~~more transparent representation of segment-related financial ~~difficulty.~~activities. This ASU is effective for annual ~~and interim reporting~~ periods beginning in January ~~2023. We adopted this ASU~~2024 and interim periods beginning in January ~~2023 and determined it did not have a significant~~2025. We are currently evaluating the impact of this ASU on our consolidated financial statements and related disclosures.

~~Table~~In December 2023, the FASB issued ASU No. 2023-09, Income Taxes: Improvements to Income Tax Disclosures, to improve the transparency and effectiveness of ~~Contents~~income tax disclosures, including rate reconciliation and income taxes paid. This ASU is effective for annual periods beginning in January 2025. We are currently evaluating the impact of this ASU on our consolidated financial statements and related disclosures.

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

(3) Property and Equipment

The following table presents the detail of property and equipment, net as recorded in the unaudited condensed consolidated balance sheets:


	Useful Lives						Useful Lives		As of March 31, 2024	As of December 31, 2023

		Useful Lives	As of September 30, 2023		As of December 31, 2022
		(in years)

		(in years)

		(in years)	(in thousands)
		(in years)						(in thousands)
Solar energy systems and energy storage systems	Solar energy systems and energy storage systems	35	$	4,826,091	$	3,719,727
Construction in progress	Construction in progress		619,171		329,893
Asset retirement obligations	Asset retirement obligations	30	71,125		57,063
Information technology systems		3	102,170		72,797
Software and business technology systems
Computers and equipment	Computers and equipment	3-5	6,944		4,976
Leasehold improvements	Leasehold improvements	3-6	6,170		5,558
Furniture and fixtures	Furniture and fixtures	7	1,172		1,172
Vehicles	Vehicles	4-5	1,640		1,640
Other	Other	5-6	157		157
Property and equipment, gross	Property and equipment, gross		5,634,640		4,192,983
Less: accumulated depreciation	Less: accumulated depreciation		(515,613)		(408,182)
Property and equipment, net	Property and equipment, net		$	5,119,027	$	3,784,801

The amounts included in the above table for solar energy systems and energy storage systems and substantially all the construction in progress relate to our customer contracts (including PPAs and leases). These assets had accumulated depreciation of ~~$451.9~~$531.7 million and ~~$360.1~~$489.7 million as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(4) Detail of Certain Balance Sheet Captions

The following table presents the detail of other current assets as recorded in the unaudited condensed consolidated balance sheets:


	As of March 31, 2024					As of March 31, 2024	As of December 31, 2023

		As of September 30, 2023		As of December 31, 2022
		(in thousands)

		(in thousands)

		(in thousands)
		(in thousands)
Inventory	Inventory	$	137,674	$	152,113
Current portion of customer notes receivable	Current portion of customer notes receivable	165,884		114,910
Restricted cash	Restricted cash	30,307		51,733
Prepaid assets	Prepaid assets	28,805		17,492
Deferred receivables	Deferred receivables	12,984		7,392
Current portion of investments in solar receivables	Current portion of investments in solar receivables	7,618		7,107

Other	Other	689		553

Other

Other
Total	Total	$	383,961	$	351,300

~~Table of Contents~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

The following table presents the detail of other assets as recorded in the unaudited condensed consolidated balance sheets:


	As of March 31, 2024					As of March 31, 2024	As of December 31, 2023

		As of September 30, 2023		As of December 31, 2022
		(in thousands)

		(in thousands)

		(in thousands)
		(in thousands)
Construction in progress - customer notes receivable	Construction in progress - customer notes receivable	$	190,019	$	382,611
Restricted cash	Restricted cash	226,858		133,584
Exclusivity and other bonus arrangements with dealers, net	Exclusivity and other bonus arrangements with dealers, net	171,402		121,313
Investments in solar receivables	Investments in solar receivables	56,632		65,064
Straight-line revenue adjustment, net	Straight-line revenue adjustment, net	60,059		53,086
Other	Other	281,960		206,233
Total	Total	$	986,930	$	961,891

The following table presents the detail of other current liabilities as recorded in the unaudited condensed consolidated balance sheets:


	As of March 31, 2024					As of March 31, 2024	As of December 31, 2023

		As of September 30, 2023		As of December 31, 2022
		(in thousands)

		(in thousands)

		(in thousands)
		(in thousands)
Interest payable	Interest payable	$	36,041	$	35,258
Deferred revenue	Deferred revenue	46,403		30,172
Current portion of operating and finance lease liability	Current portion of operating and finance lease liability	4,001		3,247
Current portion of performance guarantee obligations	Current portion of performance guarantee obligations	2,675		2,495
Other	Other	7,829		334
Total	Total	$	96,949	$	71,506

(5) Asset Retirement Obligations ("ARO")

AROs consist primarily of costs to remove solar energy system assets and costs to restore the solar energy system sites to the original condition, which we estimate based on current market rates. For each solar energy system, we recognize the fair value of the ARO as a liability and capitalize that cost as part of the cost basis of the related solar energy system. The related assets are depreciated on a straight-line basis over 30 years, which is the estimated average time a solar energy system will be installed in a location before being removed, and the related liabilities are accreted to the full value over the same period of time. We revise our estimated future liabilities based on recent actual experiences, including third party cost estimates, average size of solar energy systems and inflation rates, which we evaluate at least annually. Changes in our estimated future liabilities

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

are recorded as either a reduction or addition in the carrying amount of the remaining unamortized asset and the ARO and either decrease or increase our depreciation and accretion expense amounts prospectively. The following table presents the changes in AROs as recorded in other long-term liabilities in the unaudited condensed consolidated balance sheets:


		Nine Months Ended September 30,
		2023		2022
		(in thousands)
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
	2024					2024		2023
	(in thousands)						(in thousands)
Balance at beginning of period	Balance at beginning of period	$	69,869	$	54,396
Additional obligations incurred	Additional obligations incurred	14,106		7,962
Accretion expense	Accretion expense	3,491		2,687

Other	Other	(61)		(79)
Other
Other
Balance at end of period	Balance at end of period	$	87,405	$	64,966

~~Table of Contents~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

(6) Customer Notes Receivable

We offer a loan program, under which the customer finances the purchase of a solar energy system, energy storage system and/or accessory through a ~~solar service~~customer agreement for a term of 10, 15 or 25 years. The following table presents the detail of customer notes receivable as recorded in the unaudited condensed consolidated balance sheets and the corresponding fair values:


	As of March 31, 2024					As of March 31, 2024	As of December 31, 2023

		As of September 30, 2023		As of December 31, 2022
		(in thousands)

		(in thousands)

		(in thousands)
		(in thousands)
Customer notes receivable	Customer notes receivable	$	3,807,628	$	2,662,307
Allowance for credit losses	Allowance for credit losses	(110,661)		(81,248)
Customer notes receivable, net	Customer notes receivable, net	$	3,696,967	$	2,581,059
Estimated fair value, net	Estimated fair value, net	$	3,609,218	$	2,554,948

The following table presents the changes in the allowance for credit losses related to customer notes receivable as recorded in the unaudited condensed consolidated balance sheets:


				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024					2024		2023
						(in thousands)						(in thousands)
Balance at beginning of period
Provision for current expected credit (gains) losses

		Three Months Ended September 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
Balance at end of period
		(in thousands)
Balance at beginning of period		$	102,337	$	57,043		$	81,248	$	41,138
Provision for current expected credit losses		8,324		10,945			29,413		26,814

Recoveries		—		—			—		36

Balance at end of period	Balance at end of period	$	110,661	$	67,988		$	110,661	$	67,988

Balance at end of period

As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, we invested ~~$190.0~~$123.5 million and ~~$382.6~~$159.1 million, respectively, in loan solar energy systems, energy storage systems ~~and~~and/or accessories not yet placed in service. For the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ interest income related to our customer notes receivable was ~~$26.8~~$31.0 million and ~~$15.1 million, respectively. For the nine months ended September 30, 2023 and 2022, interest income related to our customer notes receivable was $69.9 million and $39.1~~$20.1 million, respectively. As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, accrued interest receivable related to our customer notes receivable was ~~$25.8~~$8.7 million and ~~$10.2~~$14.3 million, respectively. As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, there was ~~$25.8~~$44.3 million and ~~$12.6~~$34.2 million, respectively, of customer notes receivable not accruing interest and there was ~~$568,000~~$966,000 and ~~$278,000,~~$754,000, respectively, of allowance recorded for loans on nonaccrual status. For the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ interest income of $0 was recognized for loans on nonaccrual status and accrued interest receivable of ~~$15,000~~$41,000 and $8,000, respectively, was written off by reversing interest income. For the nine months ended September 30, 2023 and 2022, interest income of $0 was recognized for loans on nonaccrual status and accrued interest receivable of $32,000 and $505,000,$13,000, respectively, was written off by reversing interest income.

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

We consider the performance of our customer notes receivable portfolio and its impact on our allowance for credit losses. We also evaluate the credit quality based on the aging status and payment activity. The following table presents the aging of the amortized cost of customer notes receivable:


	As of March 31, 2024					As of March 31, 2024	As of December 31, 2023

		As of September 30, 2023		As of December 31, 2022
		(in thousands)

		(in thousands)

		(in thousands)
		(in thousands)
1-90 days past due	1-90 days past due	$	147,369	$	91,668
91-180 days past due	91-180 days past due	32,861		16,859
Greater than 180 days past due	Greater than 180 days past due	62,252		14,504
Total past due	Total past due	242,482		123,031
Not past due	Not past due	3,565,146		2,539,276
Total	Total	$	3,807,628	$	2,662,307

~~Table of Contents~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the amortized cost of our customer notes receivable more than 90 days past due but not on nonaccrual status was ~~$69.3~~$96.5 million and ~~$31.4~~$83.3 million, respectively. The following table presents the amortized cost by origination year of our customer notes receivable based on payment activity:


		Amortized Cost by Origination Year
		2023		2022		2021		2020		2019		Prior		Total
		(in thousands)
	Amortized Cost by Origination Year																			Amortized Cost by Origination Year
	2024															2024	2023	2022	2021	2020	Prior	Total
	(in thousands)																			(in thousands)
Payment performance:	Payment performance:
Performing
Performing
Performing	Performing	$	1,237,601	$	1,360,949	$	703,184	$	215,362	$	111,257	$	117,023	$	3,745,376
Nonperforming (1)	Nonperforming (1)	1,655		26,752		16,337		4,979		4,543		7,986		62,252
Total	Total	$	1,239,256	$	1,387,701	$	719,521	$	220,341	$	115,800	$	125,009	$	3,807,628

(1) A nonperforming loan is a loan in which the customer is in default and has not made any scheduled principal or interest payments for 181 days or more.

(7) Long-Term Debt

Our subsidiaries with long-term debt include Sunnova Energy Corporation, Sunnova EZ-Own Portfolio, LLC ("EZOP"), Sunnova Helios II Issuer, LLC ("HELII"), Sunnova RAYS I Issuer, LLC ("RAYSI"), Sunnova Helios III Issuer, LLC ("HELIII"), Sunnova TEP Holdings, LLC ("TEPH"), Sunnova Sol Issuer, LLC ("SOLI"), Sunnova Helios IV Issuer, LLC ("HELIV"), Sunnova Asset Portfolio 8, LLC ("AP8"), Sunnova Sol II Issuer, LLC ("SOLII"), Sunnova Helios V Issuer, LLC ("HELV"), Sunnova Sol III Issuer, LLC ("SOLIII"), Sunnova Helios VI Issuer, LLC ("HELVI"), Sunnova Helios VII Issuer, LLC ("HELVII"), Sunnova Helios VIII Issuer, LLC ("HELVIII"), Sunnova Sol IV Issuer, LLC ("SOLIV"), Sunnova Helios IX Issuer, LLC ("HELIX"), Sunnova Helios X Issuer, LLC ("HELX"), Sunnova Inventory Supply, LLC ("IS"), Sunnova Sol V Issuer, LLC ("SOLV"), Sunnova Helios XI Issuer, LLC ("HELXI"), Sunnova Helios XII Issuer, LLC ("HELXII") ~~and~~, Sunnova Asset Portfolio 9, LLC ("AP9"), Sunnova Hestia I Borrower, LLC ("HESI"), Sunnova Sol VI Issuer, LLC ("SOLVI") and Sunnova Helios XIII Issuer, LLC ("HELXIII"). The following table presents the detail of long-term debt, net as recorded in the unaudited condensed consolidated balance sheets:


		Nine Months Ended September 30, 2023 Weighted Average Effective Interest Rates			As of September 30, 2023				Year Ended December 31, 2022 Weighted Average Effective Interest Rates		As of December 31, 2022
					Long-term		Current				Long-term		Current
		(in thousands, except interest rates)
	Three Months Ended March 31, 2024 Weighted Average Effective Interest Rates														Three Months Ended March 31, 2024 Weighted Average Effective Interest Rates	As of March 31, 2024		Year Ended December 31, 2023 Weighted Average Effective Interest Rates		As of December 31, 2023
			Long-term													Long-term	Current			Long-term	Current
	(in thousands, except interest rates)																		(in thousands, except interest rates)
SEI	SEI
0.25% convertible senior notes
0.25% convertible senior notes
0.25% convertible senior notes	0.25% convertible senior notes	0.71		%	$	575,000	$	—	0.71	%	$	575,000	$	—
2.625% convertible senior notes	2.625% convertible senior notes	3.03		%	600,000		—		3.11	%	600,000		—
Debt discount, net	Debt discount, net				(20,471)		—				(24,324)		—
Deferred financing costs, net	Deferred financing costs, net				(802)		—				(920)		—
Sunnova Energy Corporation	Sunnova Energy Corporation
Notes payable	Notes payable	5.54		%	—		5,878				—		—
5.875% senior notes		6.55		%	400,000		—		6.52	%	400,000		—
11.75% senior notes		9.92		%	400,000		—				—		—
Debt discount, net					(13,833)		—				(3,767)		—
Deferred financing costs, net					(13,080)		—				(7,339)		—
EZOP
Revolving credit facility		8.65		%	639,500		—		5.10	%	500,000		—
Debt discount, net					(343)		—				(532)		—
HELII
Solar asset-backed notes		5.66		%	194,933		9,065		5.69	%	204,016		8,632
Debt discount, net					(26)		—				(30)		—
Deferred financing costs, net					(3,090)		—				(3,591)		—
RAYSI
Solar asset-backed notes		5.55		%	106,666		6,280		5.54	%	105,878		9,957
Debt discount, net					(807)		—				(960)		—
Deferred financing costs, net					(3,120)		—				(3,451)		—
HELIII
Notes payable
Notes payable

2421

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


5.875% senior notes
11.75% senior notes
Debt discount, net
Deferred financing costs, net
EZOP
Revolving credit facility
Revolving credit facility
Revolving credit facility
Debt discount, net
HELII
Solar asset-backed notes
Solar asset-backed notes
Solar asset-backed notes
Debt discount, net
Deferred financing costs, net
RAYSI
Solar asset-backed notes
Solar asset-backed notes
Solar asset-backed notes
Debt discount, net
Deferred financing costs, net
HELIII
Solar loan-backed notes
Solar loan-backed notes
Solar loan-backed notes	Solar loan-backed notes	4.45	%	87,862	10,095	4.42	%	94,247	10,438
Debt discount, net	Debt discount, net			(1,318)	—			(1,536)	—
Deferred financing costs, net	Deferred financing costs, net			(1,265)	—			(1,474)	—
TEPH	TEPH
Revolving credit facility	Revolving credit facility	9.99	%	766,000	—	7.74	%	425,700	—
Revolving credit facility
Revolving credit facility
Debt discount, net	Debt discount, net			(1,320)	—			(2,043)	—
SOLI	SOLI
Solar asset-backed notes
Solar asset-backed notes
Solar asset-backed notes	Solar asset-backed notes	3.91	%	339,489	13,672	3.92	%	348,962	16,063
Debt discount, net	Debt discount, net			(77)	—			(87)	—
Deferred financing costs, net	Deferred financing costs, net			(6,035)	—			(6,827)	—
HELIV	HELIV
Solar loan-backed notes	Solar loan-backed notes	4.17	%	99,165	11,011	4.15	%	105,655	11,494
Solar loan-backed notes
Solar loan-backed notes
Debt discount, net	Debt discount, net			(453)	—			(564)	—
Deferred financing costs, net	Deferred financing costs, net			(2,114)	—			(2,609)	—
AP8	AP8
Revolving credit facility	Revolving credit facility	9.50	%	—	213,400	20.52	%	74,535	465
Revolving credit facility
Revolving credit facility
SOLII	SOLII
Solar asset-backed notes
Solar asset-backed notes
Solar asset-backed notes	Solar asset-backed notes	3.42	%	224,368	7,340	3.41	%	232,276	6,409
Debt discount, net	Debt discount, net			(58)	—			(64)	—
Deferred financing costs, net	Deferred financing costs, net			(4,106)	—			(4,576)	—
HELV	HELV
Solar loan-backed notes	Solar loan-backed notes	2.50	%	136,508	13,709	2.47	%	143,940	14,367
Solar loan-backed notes
Solar loan-backed notes
Debt discount, net	Debt discount, net			(577)	—			(690)	—
Deferred financing costs, net	Deferred financing costs, net			(2,234)	—			(2,661)	—
SOLIII	SOLIII
Solar asset-backed notes
Solar asset-backed notes
Solar asset-backed notes	Solar asset-backed notes	2.81	%	261,947	16,763	2.78	%	275,779	16,632
Debt discount, net	Debt discount, net			(106)	—			(117)	—
Deferred financing costs, net	Deferred financing costs, net			(5,061)	—			(5,616)	—
HELVI	HELVI
Solar loan-backed notes	Solar loan-backed notes	2.11	%	162,708	13,733	2.08	%	167,669	16,770
Solar loan-backed notes
Solar loan-backed notes
Debt discount, net	Debt discount, net			(34)	—			(40)	—
Deferred financing costs, net	Deferred financing costs, net			(2,488)	—			(2,909)	—
HELVII	HELVII
Solar loan-backed notes
Solar loan-backed notes
Solar loan-backed notes	Solar loan-backed notes	2.54	%	125,045	10,384	2.50	%	126,856	16,058
Debt discount, net	Debt discount, net			(33)	—			(38)	—
Deferred financing costs, net	Deferred financing costs, net			(1,898)	—			(2,193)	—
HELVIII	HELVIII
Solar loan-backed notes	Solar loan-backed notes	3.63	%	243,105	22,967	3.54	%	250,014	31,099
Debt discount, net				(4,579)	—			(5,267)	—
Deferred financing costs, net				(3,570)	—			(4,080)	—
SOLIV
Solar asset-backed notes		5.91	%	329,677	8,355	5.76	%	338,251	8,080
Debt discount, net				(9,885)	—			(11,190)	—
Deferred financing costs, net				(7,077)	—			(7,996)	—
HELIX
Solar loan-backed notes
Solar loan-backed notes	Solar loan-backed notes	5.65	%	191,394	23,945	5.46	%	193,837	29,632
Debt discount, net	Debt discount, net			(3,171)	—			(3,589)	—
Deferred financing costs, net				(2,931)	—			(3,303)	—
HELX
Solar loan-backed notes		7.29	%	200,868	22,671	6.23	%	162,301	18,335
Debt discount, net				(18,035)	—			(12,459)	—
Deferred financing costs, net				(3,268)	—			(3,319)	—
IS
Revolving credit facility		8.67	%	30,100	—			—	—

SOLV

2522

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Deferred financing costs, net
SOLIV
Solar asset-backed notes
Solar asset-backed notes
Solar asset-backed notes
Debt discount, net
Deferred financing costs, net
HELIX
Solar loan-backed notes
Solar loan-backed notes
Solar loan-backed notes
Debt discount, net
Deferred financing costs, net
HELX
Solar loan-backed notes
Solar loan-backed notes
Solar loan-backed notes
Debt discount, net
Deferred financing costs, net
IS
Revolving credit facility
Revolving credit facility
Revolving credit facility

SOLV
SOLV
SOLV
Solar asset-backed notes
Solar asset-backed notes
Solar asset-backed notes	Solar asset-backed notes	6.90	%	314,261		7,554		—		—
Debt discount, net	Debt discount, net			(16,344)		—		—		—
Deferred financing costs, net	Deferred financing costs, net			(7,054)		—		—		—
HELXI	HELXI
Solar loan-backed notes	Solar loan-backed notes	6.25	%	251,057		29,644		—		—
Solar loan-backed notes
Solar loan-backed notes
Debt discount, net	Debt discount, net			(12,451)		—		—		—
Deferred financing costs, net	Deferred financing costs, net			(5,494)		—		—		—
HELXII	HELXII
Solar loan-backed notes
Solar loan-backed notes
Solar loan-backed notes	Solar loan-backed notes	6.67	%	215,462		23,667		—		—
Debt discount, net	Debt discount, net			(13,724)		—		—		—
Deferred financing costs, net	Deferred financing costs, net			(4,495)		—		—		—
AP9	AP9
Revolving credit facility	Revolving credit facility	11.79	%	13,096		—		—		—
Revolving credit facility
Revolving credit facility
Debt discount, net	Debt discount, net			(650)		—		—		—
HESI
Solar loan-backed notes
Solar loan-backed notes
Solar loan-backed notes
Debt discount, net
Deferred financing costs, net

SOLVI

SOLVI

SOLVI
Solar asset-backed notes
Solar asset-backed notes
Solar asset-backed notes
Debt discount, net
Deferred financing costs, net
HELXIII
Solar loan-backed notes
Solar loan-backed notes
Solar loan-backed notes
Debt discount, net
Deferred financing costs, net

Total	Total			$	6,710,734	$	470,133	$	5,194,755	$	214,431

Total

Total

Availability. As of ~~September 30, 2023,~~March 31, 2024, we had ~~$312.2~~$860.8 million of available borrowing capacity under our various financing arrangements, consisting of ~~$235.5~~$484.8 million under the EZOP revolving credit facility, ~~$3.3~~$286.2 million under the TEPH revolving credit facility, ~~$1.6 million under the AP8 revolving credit facility, $19.9~~$15.9 million under the IS revolving credit facility, ~~and $51.9~~$49.0 million under the AP9 revolving credit facility and $25.0 million under the BMB revolving credit facility. There was no available borrowing capacity under any of our other financing arrangements. As of ~~September 30, 2023,~~March 31, 2024, we were in compliance with all debt covenants under our financing arrangements.

Weighted Average Effective Interest Rates. The weighted average effective interest rates disclosed in the table above are the weighted average stated interest rates for each debt instrument plus the effect on interest expense for other items classified as interest expense, such as the amortization of deferred financing costs, amortization of debt discounts and commitment fees on unused balances for the period of time the debt was outstanding during the indicated periods.

~~EZOP Debt.~~ In February 2023, we amended the EZOP revolving credit facility to, among other things, (a) increase the aggregate commitment amount from $450.0 million to $675.0 million, (b) increase the uncommitted maximum facility amount from $575.0 million to $800.0 million, (c) amend certain provisions related to the allocation of certain payments made to the lenders, (d) amend certain provisions related to excess concentration limits and eligibility criteria to permit us and our affiliates to provide warranties of, and replacements for, load controllers and generators in connection with the related solar loan contracts and (e) add provisions to allow EZOP to request an increase in the aggregate commitment amount (subject to certain conditions) by adding additional lenders to the EZOP revolving credit facility. In February 2023, Credit Suisse AG ("Credit Suisse") sold a significant part of its Securitized Products Group (the "Credit Suisse Securitized Products Sale") to Apollo Global Management ("Apollo"). Subsequently, Apollo publicly announced the majority of the assets and professionals associated with the sale are now part of or managed by ATLAS SP Partners, a new stand-alone credit firm focused on asset-backed financing and capital markets solutions ("Atlas"). In March 2023, in connection with the Credit Suisse Securitized Products Sale, certain of our subsidiaries consented to the assignment of the loans and commitments of the Credit Suisse lenders to the Atlas lenders (such assignment, the "EZOP Assignment") under the EZOP revolving credit facility. In connection with the EZOP Assignment, Credit Suisse AG, New York Branch ("CSNYB") resigned as the agent under the EZOP revolving credit facility, Atlas Securitized Products Holdings, L.P. (the "Successor Agent") was appointed as the successor agent thereunder and, in connection with such appointment, the Successor Agent assumed the agent roles under the EZOP revolving credit facility. In connection with the appointment of Atlas as Successor Agent, the borrowers and the lenders party to the applicable agency resignation and appointment agreements consented to, among other things, Atlas' ability to assign the agent role under the EZOP revolving credit facility to one of its affiliates subject to certain conditions set forth therein. In March 2023, after the EZOP Assignment, we amended the EZOP revolving credit facility to, among other things, (a) increase the aggregate commitment amount from $675.0 million to $775.0 million, (b) increase the uncommitted maximum facility amount from $800.0 million to $900.0 million, (c) amend and supplement certain defaulting lender provisions and (d) update the references from CSNYB, the predecessor agent, to Atlas, the successor agent, and remove or modify certain provisions related to the borrowing, funding and allocation of payments among the previous lender syndicate (that previously included lenders affiliated with Credit Suisse that, prior to the date of the amendment to the EZOP revolving credit facility and pursuant to the EZOP Assignment, had assigned their loans and commitments to lenders affiliated with Atlas). In August 2023, we amended the EZOP revolving credit facility to, among other things, (a) increase the aggregate commitment amount from $775.0 million to $875.0 million, (b) increase the uncommitted maximum facility amount from $900.0 million to $1.0 billion, (c) extend the maturity date from November 2024 to November 2025 and (d) amend the Advance Rate (as defined therein).

2623

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~TEPH Debt.~~EZOP Debt. In ~~March 2023, in connection with~~February 2024, we amended the ~~Credit Suisse Securitized Products Sale,~~EZOP revolving credit facility to, among other things, (a) reflect certain assignments of ~~our subsidiaries consented to~~commitments occurring within the Atlas Lender Group (as defined by such revolving credit facility) without increasing the existing commitments, and the assignment of the ~~loans and commitments~~role of the ~~Credit Suisse lenders to~~Atlas funding agent for the Atlas ~~lenders (such assignment,~~Lender Group, (b) amend the ~~"TEPH Assignment") under the TEPH~~thresholds for certain "Amortization Events" (as defined by such revolving credit ~~facility. In connection with~~facility) and (c) modify the ~~TEPH Assignment, CSNYB resigned as the agent under the TEPH~~"Liquidity Reserve Account Required Balance" (as defined by such revolving credit ~~facility, Atlas was appointed as~~facility). In March 2024, we amended the ~~successor agent thereunder and, in connection with such appointment, the Successor Agent assumed the agent roles under the TEPH~~EZOP revolving credit ~~facility. In connection with the appointment of Atlas as Successor Agent, the borrowers and the lenders party to the applicable agency resignation and appointment agreements consented~~facility to, among other things, ~~Atlas'~~(a) amend the Advance Rate, Excess Concentration Amount (in each case, as defined by such revolving credit facility) and certain related definitions and (b) amend the eligibility criteria for the Solar Loans (as defined by such revolving credit facility). We currently do not have the resources to repay this facility when it becomes due in November 2025. However, we believe we will be able to satisfy this obligation through a refinancing of the facility. Although we believe it is probable we will refinance this facility, there can be no assurance about our ability to ~~assign the agent role under the~~ do so.

TEPH ~~revolving credit facility to one of its affiliates subject to certain conditions set forth therein.~~Debt. In ~~March 2023, after the TEPH Assignment,~~February 2024, we amended the TEPH revolving credit facility to, among other things, ~~(a) increase~~reflect an assignment of commitments occurring within the aggregate commitment amount from $600.0 million to $700.0 million, (b) increase the uncommitted maximum facility amount from $689.7 million to $789.7 million, (c) add provisions to allow TEPH to request an increase in the aggregate commitment amount (subject to certain conditions) by adding additional lenders to the TEPH revolving credit facility, (d) amend and supplement certain defaulting lender provisions, (e) modify the hedging provisions to give all hedge counterparties the benefit of certain payment priorities and certain other terms previously limited to qualifying hedge counterpartiesAtlas Lender Group (as defined by ~~the TEPH~~such revolving credit facility)~~, to extend~~ without increasing the ~~time period~~existing commitments and the appointment of a new Atlas funding agent for the ~~event of default resulting from hedge counterparties ceasing~~Atlas Lender Group. We currently do not have the resources to be qualifying hedge counterparties and to make other hedge-related amendments, (f) update the references from CSNYB, the predecessor administrative agent, to Atlas, the successor administrative agent, and remove or modify certain provisions related to the borrowing, funding and allocation of payments among the previous lender syndicate (that previously included lenders affiliated with Credit Suisse that, prior to the date of the amendment to the TEPH revolving creditrepay this facility and pursuant to the TEPH Assignment, had assigned their loans and commitments to lenders affiliated with Atlas), (g) add European Union bail-in provisions and (h) add certain syndication-related provisions. In August 2023, we amended the TEPH revolving credit facility to, among other things, (a) increase the aggregate commitment amount from $700.0 million to $769.3 million, (b) increase the uncommitted maximum facility amount from $789.7 million to $859.0 million and (c) extend the maturity date from November 2024 towhen it becomes due in November 2025.

~~AP8 Debt.~~ ~~In March 2023,~~ However, we amended the AP8 revolving credit facility to, among other things, increase the aggregate commitment amount from $75.0 million to $150.0 million. In June 2023, we amended the AP8 revolving credit facility to, among other things, increase the aggregate commitment amount from $150.0 million to $185.0 million. In August 2023, we amended the AP8 revolving credit facility to, among other things, increase the aggregate commitment amount from $185.0 million to $215.0 million. We believe we will be able to satisfy this obligation through a refinancing of the facility. Although we believe it is probable we will refinance this facility, there can be no assurance about our ability to do so.

AP8 Debt. We currently do not have the resources to repay this facility when it becomes due in September ~~2024~~2024. However, we believe we will be able to satisfy this obligation through either a refinancing of the facility or ~~alternatively through~~an amendment and extension and have commenced discussions with this lender group. Although we believe it is probable we will refinance or extend this facility, there can be no assurance about our ability to do so. The AP8 revolving credit facility is non-recourse to Sunnova Energy Corporation. Absent a refinancing or extension, a failure to pay the ~~use~~principal and interest on the AP8 revolving credit facility when due would result in an event of default that enables the requisite lenders to demand immediate payment or exercise other remedies, such as charging default interest. If the lenders were to demand immediate repayment, the non-recourse borrower would not have sufficient liquidity to meet its obligations when they come due and the lenders would be able to seek foreclosure of the collateral at AP8. While we believe such event at AP8, if it were to occur, would not by itself have a material impact on our ~~existing~~consolidated business operations or expected cash ~~resources~~flows, it may affect the availability or terms of future financings for us and ~~liquidity.~~we may expend additional funds or incur additional obligations over the shorter term to ensure compliance with the terms of the AP8 revolving credit facility.

~~IS Debt.~~ In March 2023, IS entered into a secured revolving credit facility with Texas Capital Bank, as agent, and the lenders party thereto, for an aggregate commitment amount of $50.0 million with a maturity date of the earlier of (a) March 2026 and (b) six months from the latest maturity date of any material parent credit facility (defined as a parent credit facility with a commitment amount of $250.0 million or more that, if terminated could individually be expected to result in a liquidity event (as defined by the IS revolving credit facility)). The proceeds of the loans under the IS revolving credit facility are available to purchase or otherwise acquire certain accounts receivable and inventory, fund certain reserve accounts that are required to be maintained by IS in accordance with the revolving credit agreement and pay fees and expenses incurred in connection with the IS revolving credit facility. Interest on the borrowings under the IS revolving credit facility is due monthly. Borrowings under the IS revolving credit facility bear interest at an annual rate based on Term SOFR (as defined by the IS revolving credit facility).

~~SOLV~~SOLVI Debt. In ~~April 2023,~~February 2024, we pooled and transferred eligible solar energy systems and the related asset receivables into wholly-owned subsidiaries of ~~SOLV,~~SOLVI, a special purpose entity, that issued ~~$300.0~~$194.5 million in aggregate principal amount of Series ~~2023-1~~2024-1 Class A solar asset-backed notes, ~~and $23.5~~$16.5 million in aggregate principal amount of Series ~~2023-1~~2024-1 Class B solar asset-backed notes and $15.0 million in aggregate principal amount of Series 2024-1 Class C solar asset-backed notes (collectively, the ~~"SOLV~~"SOLVI Notes") with a maturity date of ~~April 2058.~~January 2059. The ~~SOLV~~SOLVI Notes were issued at a discount of ~~5.01%~~4.66%, 7.08% and ~~11.63%~~13.98% for the Class A, Class B and Class BC notes, respectively, and bear interest at an annual rate equal to ~~5.40%~~5.65%, 7.00% and ~~7.35%~~9.00% for the Class A, Class B and Class BC notes, respectively. The cash flows generated by the solar energy systems and the related asset receivables of ~~SOLV's~~SOLVI's subsidiaries are used to service the quarterly principal and interest payments on the ~~SOLV~~SOLVI Notes and satisfy ~~SOLV's~~SOLVI's expenses, and any remaining cash can be distributed to Sunnova ~~Sol V~~SOL VI Depositor, LLC, ~~SOLV's~~SOLVI's sole member. In connection with the ~~SOLV~~SOLVI Notes, certain of our affiliates receive a fee for managing ~~and servicing~~ the solar energy systems and servicing the related asset receivables pursuant to a transaction management agreement and management and servicing agreements. In addition, Sunnova Energy Corporation has guaranteed (a) the obligations of certain of our subsidiaries to manage ~~and service~~ the solar energy systems and service the related asset receivables pursuant to a transaction management agreement and management and servicing agreements, (b) the managing members' obligations, in such capacity, under the related financing fund's limited liability company agreement and (c) certain of our subsidiaries' obligations to repurchase or substitute certain ineligible solar energy systems eventually sold to ~~SOLV~~SOLVI pursuant to the sale and contribution agreement. ~~SOLV~~SOLVI is also required to maintain certain reserve accounts for the benefit of the holders of the ~~SOLV~~SOLVI Notes, each of

~~Table of Contents~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

which must remain funded at all times to the levels specified in the ~~SOLV~~SOLVI Notes. The indenture requires ~~SOLV~~SOLVI to track the debt service coverage ratio (such ratio, the "DSCR") of (a) the amount of certain payments received from customers, certain performance based incentives, certain energy credits and any applicable insurance proceeds as of a specific date to (b) interest and scheduled principal due on the ~~SOLV~~SOLVI Notes as of such date, with the potential to enter into an early amortization period if the DSCR drops below a certain threshold. The holders of the ~~SOLV~~SOLVI Notes have no recourse to our other assets except as expressly set forth in the ~~SOLV~~SOLVI Notes.

~~HELXI~~HELXIII Debt. In ~~May 2023,~~February 2024, we pooled and transferred eligible solar loans and home improvement loans and the related receivables into ~~HELXI,~~HELXIII, a special purpose entity, that issued ~~$174.9~~$166.0 million in aggregate principal amount of Series ~~2023-A~~2024-A Class A ~~solar~~ loan-backed notes, ~~$80.1~~$33.9 million in aggregate principal amount of Series ~~2023-A~~2024-A Class B ~~solar~~ loan-backed notes and ~~$31.7~~$27.1 million in aggregate principal amount of Series ~~2023-A~~2024-A Class C ~~solar~~ loan-backed notes (collectively, the ~~"HELXI~~ "HELXIII

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Notes") with a maturity date of ~~May 2050.~~February 2051. The ~~HELXI~~HELXIII Notes were issued at a discount of ~~2.57%~~2.77%, 2.83% and 7.18% for the Class A, ~~5.31% for~~ Class B and ~~13.56% for~~ Class C notes, respectively, and bear interest at an annual rate of 5.30%, ~~5.60%~~6.00% and ~~6.00%~~7.00% for the Class A, Class B and Class C notes, respectively. The cash flows generated by these solar loans and home improvement loans are used to service the monthly principal and interest payments on the ~~HELXI~~HELXIII Notes and satisfy ~~HELXI's~~HELXIII's expenses, and any remaining cash can be distributed to Sunnova Helios XIXIII Depositor, LLC, ~~HELXI's~~HELXIII's sole member. In connection with the ~~HELXI~~HELXIII Notes, certain of our affiliates receive a fee for managing ~~and servicing~~ the solar energy systems and servicing the loans pursuant to management and ~~service~~servicing agreements. In addition, Sunnova Energy Corporation has guaranteed, among other things, (a) the obligations of certain of our subsidiaries to manage ~~and service~~ the solar energy systems and service the loans pursuant to management and servicing agreements and (b) certain of our subsidiaries' obligations to repurchase or substitute certain ineligible ~~solar~~ loans eventually sold to ~~HELXI~~HELXIII pursuant to the related sale and contribution agreement. ~~HELXI~~HELXIII is also required to maintain certain reserve accounts for the benefit of the holders of the ~~HELXI~~HELXIII Notes, each of which must be funded at all times to the levels specified in the ~~HELXI~~HELXIII Notes. The holders of the ~~HELXI~~HELXIII Notes have no recourse to our other assets except as expressly set forth in the ~~HELXI~~HELXIII Notes.

~~HELXII Debt.~~ In August 2023, we pooled and transferred eligible solar loans and the related receivables into HELXII, a special purpose entity, that issued $148.5 million in aggregate principal amount of Series 2023-B Class A solar loan-backed notes, $71.1 million in aggregate principal amount of Series 2023-B Class B solar loan-backed notes and $23.1 million in aggregate principal amount of Series 2023-B Class C solar loan-backed notes (collectively, the "HELXII Notes") with a maturity date of August 2050. The HELXII Notes were issued at a discount of 4.23% for Class A, 6.67% for Class B and 12.64% for Class C and bear interest at an annual rate of 5.30%, 5.60% and 6.00% for the Class A, Class B and Class C notes, respectively. The cash flows generated by these solar loans are used to service the monthly principal and interest payments on the HELXII Notes and satisfy HELXII's expenses, and any remaining cash can be distributed to Sunnova Helios XII Depositor, LLC, HELXII's sole member. In connection with the HELXII Notes, certain of our affiliates receive a fee for managing and servicing the solar energy systems pursuant to management and service agreements. In addition, Sunnova Energy Corporation has guaranteed, among other things, (a) the obligations of certain of our subsidiaries to manage and service the solar energy systems pursuant to management and servicing agreements and (b) certain of our subsidiaries' obligations to repurchase or substitute certain ineligible solar loans eventually sold to HELXII pursuant to the related sale and contribution agreement. HELXII is also required to maintain certain reserve accounts for the benefit of the holders of the HELXII Notes, each of which must be funded at all times to the levels specified in the HELXII Notes. The holders of the HELXII Notes have no recourse to our other assets except as expressly set forth in the HELXII Notes.

~~AP9 Debt~~. In September 2023, AP9 entered into a secured revolving credit facility with Citibank, N.A., as administrative agent, and the lenders party thereto, for an aggregate commitment amount of $65.0 million with a maturity date of October 2027. The proceeds of the loans under the AP9 revolving credit facility are available to purchase or otherwise acquire home improvement loans, fund certain reserve accounts that are required to be maintained by AP9 in accordance with the AP9 revolving credit facility and pay fees and expenses incurred in connection with the AP9 revolving credit facility. Interest on the borrowings under the AP9 revolving credit facility is due monthly. Borrowings under the AP9 revolving credit facility bear interest at an annual rate based on either Term SOFR or a CP Yield Rate (as defined by the AP9 revolving credit facility).

~~Sunnova Energy Corporation Debt~~. In June 2023, Sunnova Energy Corporation entered into an arrangement to finance $6.8 million of insurance premiums at an annual interest rate of 7.24% over ten months. In August 2023, Sunnova Energy Corporation entered into an arrangement to finance $1.5 million of insurance premiums at an annual interest rate of 7.49% over ten months. In September 2023, Sunnova Energy Corporation entered into an arrangement to finance $1.9 million of insurance premiums at an annual interest rate of 7.49% over nine months. In September 2023, Sunnova Energy Corporation issued and sold an aggregate principal amount of $400.0 million of 11.75% senior notes ("11.75% senior notes") at a discount to the initial purchasers of approximately 2.74%, for an aggregate purchase price of approximately $389.0 million. The 11.75% senior notes mature in October 2028 and are initially guaranteed on a senior unsecured basis by SEI and a wholly-owned subsidiary of Sunnova Energy Corporation.

~~Table of Contents~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

Fair Values of Long-Term Debt. The fair values of our long-term debt and the corresponding carrying amounts are as

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

follows:


	As of March 31, 2024										As of March 31, 2024			As of December 31, 2023

		As of September 30, 2023				As of December 31, 2022
		Carrying Value

		Carrying Value

		Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
		(in thousands)
		Carrying Value								Estimated Fair Value		Carrying Value			Estimated Fair Value
	(in thousands)												(in thousands)
SEI 0.25% convertible senior notes	SEI 0.25% convertible senior notes	$	575,000	$	510,607	$	575,000	$	511,733
SEI 2.625% convertible senior notes	SEI 2.625% convertible senior notes	600,000		561,077		600,000		574,693
Sunnova Energy Corporation notes payable	Sunnova Energy Corporation notes payable	5,878		5,878		—		—
Sunnova Energy Corporation 5.875% senior notes	Sunnova Energy Corporation 5.875% senior notes	400,000		358,407		400,000		359,283
Sunnova Energy Corporation 11.75% senior notes	Sunnova Energy Corporation 11.75% senior notes	400,000		399,397		—		—
EZOP revolving credit facility	EZOP revolving credit facility	639,500		639,500		500,000		500,000
HELII solar asset-backed notes	HELII solar asset-backed notes	203,998		190,769		212,648		206,045
RAYSI solar asset-backed notes	RAYSI solar asset-backed notes	112,946		98,595		115,835		104,594
HELIII solar loan-backed notes	HELIII solar loan-backed notes	97,957		85,697		104,685		93,706
TEPH revolving credit facility	TEPH revolving credit facility	766,000		766,000		425,700		425,700
SOLI solar asset-backed notes	SOLI solar asset-backed notes	353,161		299,219		365,025		313,174
HELIV solar loan-backed notes	HELIV solar loan-backed notes	110,176		95,114		117,149		100,913
AP8 revolving credit facility	AP8 revolving credit facility	213,400		213,400		75,000		75,000
SOLII solar asset-backed notes	SOLII solar asset-backed notes	231,708		184,006		238,685		189,728
HELV solar loan-backed notes	HELV solar loan-backed notes	150,217		128,945		158,307		135,408
SOLIII solar asset-backed notes	SOLIII solar asset-backed notes	278,710		226,217		292,411		237,425
HELVI solar loan-backed notes	HELVI solar loan-backed notes	176,441		149,601		184,439		157,289
HELVII solar loan-backed notes	HELVII solar loan-backed notes	135,429		116,533		142,914		124,476
HELVIII solar loan-backed notes	HELVIII solar loan-backed notes	266,072		233,492		281,113		252,483
SOLIV solar asset-backed notes	SOLIV solar asset-backed notes	338,032		315,855		346,331		334,335
HELIX solar loan-backed notes	HELIX solar loan-backed notes	215,339		198,336		223,469		210,070
HELX solar loan-backed notes	HELX solar loan-backed notes	223,539		217,342		180,636		183,165
IS revolving credit facility	IS revolving credit facility	30,100		30,100		—		—
SOLV solar asset-backed notes	SOLV solar asset-backed notes	321,815		307,706		—		—
HELXI solar loan-backed notes	HELXI solar loan-backed notes	280,701		268,627		—		—
HELXII solar loan-backed notes	HELXII solar loan-backed notes	239,129		235,836		—		—
AP9 revolving credit facility	AP9 revolving credit facility	13,096		13,096		—		—
HESI solar loan-backed notes

SOLVI solar asset-backed notes
SOLVI solar asset-backed notes
SOLVI solar asset-backed notes
HELXIII solar loan-backed notes

Total (1)	Total (1)	$	7,378,344	$	6,849,352	$	5,539,347	$	5,089,220
Total (1)
Total (1)

(1) Amounts exclude the net deferred financing costs (classified as debt) and net debt discounts of ~~$197.5~~$220.3 million and ~~$130.2~~$201.7 million as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, respectively.

For the notes payable, EZOP, TEPH, AP8, IS and AP9 debt, the estimated fair values approximate the carrying amounts primarily due to the variable nature of the interest rates of the underlying instruments. For the convertible senior notes, senior notes and the HELII, RAYSI, HELIII, SOLI, HELIV, SOLII, HELV, SOLIII, HELVI, HELVII, HELVIII, SOLIV, HELIX, HELX, SOLV, HELXI, HELXII, HESI, SOLVI and ~~HELXII~~HELXIII debt, we determined the estimated fair values based on an analysis of debt with similar book values, maturities and required market yields based on current interest rates.

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(8) Derivative Instruments

Interest Rate Swaps and Caps on EZOP Debt. During the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ EZOP entered into interest rate swaps and caps for an aggregate notional amount of ~~$924.4~~$73.1 million and ~~$506.6~~$153.0 million, respectively, to economically hedge its exposure to the variable interest rates on a portion of the outstanding EZOP debt. No collateral was

~~Table of Contents~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

posted for the interest rate swaps and caps as they are secured under the EZOP revolving credit facility. In August 2023, the notional amount of the interest rate swaps and caps began decreasing to match EZOP's estimated monthly principal payments on the debt. During the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ EZOP unwound interest rate swaps and caps with an aggregate notional amount of ~~$659.6~~$511.7 million and ~~$360.2 million,~~$0, respectively, and recorded a realized loss of $1.2 million and a realized gain of ~~$26.8~~$4.8 million, ~~and $19.6 million,~~ respectively.

Interest Rate Swaps and Caps on TEPH Debt. During the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ TEPH entered into interest rate swaps and caps for an aggregate notional amount of ~~$601.6~~$340.0 million and ~~$333.7~~$119.6 million, respectively, to economically hedge its exposure to the variable interest rates on a portion of the outstanding TEPH debt. No collateral was posted for the interest rate swaps and caps as they are secured under the TEPH revolving credit facility. In October ~~2023,~~2025, the notional amount of the interest rate swaps and caps will begin decreasing to match TEPH's estimated quarterly principal payments on the debt. During the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ TEPH unwound interest rate swaps and caps with an aggregate notional amount of ~~$241.1~~$362.6 million and ~~$515.4 million,~~$0, respectively, and recorded a realized gain of ~~$6.2~~$3.5 million and ~~$27.8~~$1.9 million, respectively.

Interest Rate Swaps and Caps on AP8 Debt. During the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ AP8 entered into interest rate swaps and caps for an aggregate notional amount of ~~$140.0~~$0 and $75.0 million, ~~and $0,~~ respectively, to economically hedge its exposure to the variable interest rates on a portion of the outstanding AP8 debt. No collateral was posted for the interest rate swaps and caps as they are secured under the AP8 revolving credit facility. The notional amount of the interest rate swaps and caps is locked for the life of the contract. During the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ AP8 unwound interest rate swaps and caps with an aggregate notional amount of $0 and recorded a realized gain of ~~$470,000~~$620,000 and ~~$0,~~$3,000, respectively.

Interest Rate Swaps and Caps on AP9 Debt. During the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ AP9 entered into interest rate swaps and caps for an aggregate notional amount of ~~$25.0 million and~~ $0 ~~respectively,~~ to economically hedge its exposure to the variable interest rates on a portion of the outstanding AP9 debt. No collateral was posted for the interest rate swaps and caps as they are secured under the AP9 revolving credit facility. In September 2025, the notional amount of the interest rate swaps and caps will begin decreasing to match AP9's estimated monthly principal payments on the debt. During the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ AP9 unwound interest rate swaps and caps with an aggregate notional amount of $0 and recorded a realized gain of ~~$0.~~$90,000 and $0, respectively.

The following table presents a summary of the outstanding derivative instruments:

As of March 31, 2024

As of December 31, 2023

As of September 30, 2023

As of December 31, 2022

Effective
Date

Termination
Date

Fixed
Interest
Rate

Aggregate
Notional
Amount

Effective
Date

Termination
Date

Fixed
Interest
Rate

Aggregate
Notional
Amount

(in thousands, except interest rates)

Effective
Date

Termination
Date

Fixed
Interest
Rate

Aggregate
Notional
Amount

Effective
Date

Termination
Date

Fixed
Interest
Rate

Aggregate
Notional
Amount

(in thousands, except interest rates)

EZOP

July 2023 -

September 2023

September 2029 -

November 2035

2.000%

575,550

June 2022 -
July 2022

July 2034

0.890%

489,477

TEPH

July 2022 -

September 2023

October 2031 -

October 2041

2.620% - 4.035%

743,740

July 2022 -
December 2022

January 2035 -
April 2041

1.520% -

2.630%

383,749

AP8

November 2022

- August 2023

September 2025

4.250%

215,000

November 2022

September 2025

4.250%

75,000

AP9

September 2023

September 2027

4.250%

25,000

—

Total

1,559,290

948,226

Total

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table presents the fair value of the interest rate swaps and caps as recorded in the unaudited condensed consolidated balance sheets:

As of
September 30, 2023 As of
December 31, 2022
(in thousands)
Other assets $ 129,643 $ 112,712


	As of March 31, 2024		As of December 31, 2023


	(in thousands)
Other assets	$	54,226	$	55,471

~~Table of Contents~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

We did not designate the interest rate swaps and caps as hedging instruments for accounting purposes. As a result, we recognize changes in fair value immediately in interest expense, net. The following table presents the impact of the interest rate swaps and caps as recorded in the unaudited condensed consolidated statements of operations:


		Three Months Ended September 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
		(in thousands)
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024
							(in thousands)
							(in thousands)
							(in thousands)
Realized gain	Realized gain	$	(17,753)	$	(1,928)		$	(33,522)	$	(47,434)
Unrealized gain		(18,219)		(26,563)			(10,208)		(27,580)
Unrealized (gain) loss
Unrealized (gain) loss
Unrealized (gain) loss
Total	Total	$	(35,972)	$	(28,491)		$	(43,730)	$	(75,014)
Total
Total

(9) Income Taxes

Our effective income tax rate is ~~14%~~32% and 0% for the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022, respectively, and is 1% and 0% for the nine months ended September 30, 2023 and 2022,~~ respectively. Total income tax differs from the amounts computed by applying the statutory income tax rate to loss before income tax primarily as a result of our ~~full~~ valuation allowance ~~foreign tax expense~~ and income tax benefit from ~~ITC sales.~~the sale of ITCs. For interim reporting, we apply a forecasted annualized effective tax rate to year-to-date loss before income tax. We assessed whether we had any significant uncertain tax positions taken in a filed tax return, planned to be taken in a future tax return or claim, or otherwise subject to interpretation and determined there were none not more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position, or prospectively approved when such approval may be sought in advance. ~~Accordingly, we recorded no reserve for uncertain tax positions.~~ Should a provision for any interest or penalties relative to unrecognized tax benefits be necessary, it is our policy to accrue for such in our income tax accounts. There were no such accruals as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022~~2023 and we do not expect a significant change in gross unrecognized tax benefits in the next twelve months. Our tax years after ~~2011~~2013 remain subject to examination by the ~~Internal Revenue Service~~IRS and by the taxing authorities in the states and territories in which we operate.

(10) Redeemable Noncontrolling Interests and Noncontrolling Interests

Redeemable Noncontrolling Interests

In February 2023, the Class A member of Sunnova TEP 7-B, LLC increased its capital commitment from approximately $30.0 million to approximately $125.0 million. In March 2023, the Class A member of Sunnova TEP 7-C, LLC increased its capital commitment from approximately $41.0 million to approximately $51.3 million. In May 2023,2024, we admitted a tax equity investor as the Class A member of Sunnova TEP ~~7-E,~~8-D, LLC ("~~TEP7E"~~TEP8D"), a subsidiary of Sunnova TEP ~~7-E~~8-D Manager, LLC, which is the Class B member of ~~TEP7E.~~TEP8D. The Class A member of ~~TEP7E~~TEP8D made a total capital commitment of ~~approximately $51.0~~$195.0 million. In June 2023, we exercised our purchase option to purchase 100% of the Class A member's interest in Sunnova TEP I, LLC ("TEPI") for $5.9 million. This purchase resulted in an increase in our equity in TEPI of $67.0 million. In August 2023, we admitted a tax equity investor as the Class A member of Sunnova TEP 7-G, LLC ("TEP7G"), a subsidiary of Sunnova TEP 7-G Manager, LLC, which is the Class B member of TEP7G. The Class A member of TEP7G made a total capital commitment of approximately $104.0 million. In September 2023, we admitted a tax equity investor asFebruary 2024, the Class A member of Sunnova TEP 7-F, LLC ~~("TEP7F"), a subsidiary of Sunnova TEP 7-F Manager, LLC, which is~~increased its capital commitment from approximately $134.9 million to approximately $190.8 million. In March 2024, the ~~Class B member of TEP7F. The~~ Class A member of ~~TEP7F made a total~~Sunnova TEP 7-E, LLC increased its capital commitment offrom $51.0 million to approximately ~~$134.9~~$51.2 million. ~~The carrying values of the redeemable noncontrolling interests were equal to or greater than the redemption values as of September 30, 2023 and December 31, 2022.~~

Noncontrolling Interests

In ~~April 2023,~~February 2024, the Class A member of Sunnova TEP ~~V-C,~~7-A, LLC increased its capital commitment from approximately ~~$150.0~~$59.0 million to approximately $150.2 million. In April 2023, the Class A member of Sunnova TEP 6-A, LLC increased its capital commitment from approximately $50.0 million to approximately $57.7 million. In June 2023, the Class A member of Sunnova TEP 7-D, LLC increased its capital commitment from approximately $150.0 million to approximately $250.0$61.4 million.

(11) ~~Stockholders' Equity~~

~~During the nine months ended September 30, 2023 and 2022, we issued 693,443 and 694,446 shares of our common stock to Len~~x~~, LLC pursuant to the terms of the earnout agreement, as amended, entered into in connection with the acquisition of SunStreet Energy Group, LLC.~~

~~Table of Contents~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

In August 2023, we sold 5,865,000 shares of common stock at a public offering price of $14.75 per share. We received aggregate net proceeds of approximately $82.2 million, after deducting underwriting discounts and commissions of approximately $3.9 million and offering expenses of approximately $400,000. We used the net proceeds from the offering for general corporate purposes.

~~(12)~~ Equity-Based Compensation

In February ~~2023,~~2024, the aggregate number of shares of common stock that may be issued pursuant to awards under the 2019 Long-Term Incentive Plan (the "LTIP") was increased by ~~1,525,652,~~2,960,908, an amount that, together with the shares remaining available for grant under the LTIP, is equal to ~~5,746,588~~6,123,326 shares, or approximately 5% of the number of shares of common stock outstanding as of December 31, ~~2022.~~2023.

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Stock Options

The following table summarizes stock option activity:

Number
of Stock
Options Weighted
Average
Exercise
Price Weighted
Average
Remaining
Contractual
Term (Years) Weighted
Average
Grant Date
Fair Value Aggregate
Intrinsic
Value
(in thousands)
Outstanding, December 31, 2022 3,259,459 $ 18.48 4.75 $ 10,341
Granted 1,017,493 $ 15.01 9.49 $ 8.82
Exercised (36,360) $ 13.11 $ 182
Forfeited (140,680) $ 21.96 $ 11.70
Outstanding, September 30, 2023 4,099,912 $ 17.54 5.19 $ 102
Exercisable, September 30, 2023 2,656,858 $ 16.44 3.07 $ 102
Vested and expected to vest, September 30, 2023 4,099,912 $ 17.54 5.19 $ 102
Non-vested, September 30, 2023 1,443,054 $ 10.78


	Number of Stock Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
							(in thousands)




Outstanding, December 31, 2023	4,018,149	$	17.61	4.97			$	5,542
Granted	1,817,193	$	7.02	9.93	$	4.31
Exercised	(11,357)	$	1.85				$	118
Forfeited	(87,259)	$	17.99		$	10.31
Outstanding, March 31, 2024	5,736,726	$	14.28	6.32			$	—
Exercisable, March 31, 2024	2,712,597	$	17.31	2.84			$	—
Vested and expected to vest, March 31, 2024	5,736,726	$	14.28	6.32			$	—

Non-vested, March 31, 2024	3,024,129				$	6.69

The number of stock options that vested during the three months ended ~~September 30,~~March 31, 2024 and 2023 was 148,859 and ~~2022 was 0. The number of stock options that vested during the nine months ended September 30, 2023 and 2022 was 16,816.~~16,816, respectively. The grant date fair value of stock options that vested during the three months ended ~~September 30,~~March 31, 2024 and 2023 was $2.2 million and ~~2022 was $0. The grant date fair value of stock options that vested during the nine months ended September 30, 2023 and 2022 was $309,000.~~$309,000, respectively. As of ~~September 30, 2023,~~March 31, 2024, there was ~~$10.5~~$14.9 million of total unrecognized compensation expense related to stock options, which is expected to be recognized over the remaining weighted average period of ~~2.04~~2.45 years.

Restricted Stock Units

The following table summarizes restricted stock unit activity:


	Number of Restricted Stock Units				Number of Restricted Stock Units	Weighted Average Grant Date Fair Value

		Number of Restricted Stock Units	Weighted Average Grant Date Fair Value

Outstanding, December 31, 2023

Outstanding, December 31, 2022		1,609,615	$	20.62

Outstanding, December 31, 2023

Outstanding, December 31, 2023
Granted	Granted	2,085,532	$	14.67
Vested	Vested	(961,682)	$	17.88
Forfeited	Forfeited	(311,648)	$	17.94
Outstanding, September 30, 2023		2,421,817	$	16.93
Outstanding, March 31, 2024

The number of restricted stock units that vested during the three months ended ~~September 30,~~March 31, 2024 and 2023 was 1,776,290 and ~~2022 was 145,115 and 245,740, respectively. The number of restricted stock units that vested during the nine months ended September 30, 2023 and 2022 was 961,682 and 948,404,~~740,979, respectively. The grant date fair value of restricted stock units that vested during the three months ended ~~September 30,~~March 31, 2024 and 2023 ~~and 2022~~ was ~~$2.2~~$18.1 million and ~~$3.4 million, respectively. The grant date fair value of restricted stock units that vested during the nine months ended September 30, 2023 and 2022 was $17.2 million and $18.5~~

~~Table of Contents~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

$13.5 million, respectively. As of ~~September 30, 2023,~~March 31, 2024, there was ~~$31.3~~$45.1 million of total unrecognized compensation expense related to restricted stock units, which is expected to be recognized over the remaining weighted average period of ~~1.54~~1.92 years.

Employee Stock Purchase Plan ("ESPP")

As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the number of shares of common stock issued under the ESPP was ~~20,966 and 7,106, respectively.~~35,160.

~~(13)~~

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(12) Basic and Diluted Net Loss Per Share

The following table sets forth the computation of our basic and diluted net loss per share:


		Three Months Ended September 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
		(in thousands, except share and per share amounts)
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024
							(in thousands, except share and per share amounts)
							(in thousands, except share and per share amounts)
							(in thousands, except share and per share amounts)

Net loss attributable to stockholders—basic and diluted	Net loss attributable to stockholders—basic and diluted	$	(63,147)	$	(64,543)		$	(230,321)	$	(140,738)

Net loss attributable to stockholders—basic and diluted

Net loss attributable to stockholders—basic and diluted

Net loss per share attributable to stockholders—basic and diluted

Net loss per share attributable to stockholders—basic and diluted

Net loss per share attributable to stockholders—basic and diluted	Net loss per share attributable to stockholders—basic and diluted	$	(0.53)	$	(0.56)		$	(1.97)	$	(1.23)
Weighted average common shares outstanding—basic and diluted	Weighted average common shares outstanding—basic and diluted	119,554,008		114,816,879			116,971,318		114,293,251
Weighted average common shares outstanding—basic and diluted
Weighted average common shares outstanding—basic and diluted

The following table presents the weighted average shares of common stock equivalents that were excluded from the computation of diluted net loss per share for the periods presented because including them would have been anti-dilutive:


		Three Months Ended September 30,			Nine Months Ended September 30,
		2023	2022		2023	2022
			Three Months Ended March 31,
			Three Months Ended March 31,
			Three Months Ended March 31,
				2024
Equity-based compensation awards
Equity-based compensation awards
Equity-based compensation awards	Equity-based compensation awards	6,400,263	5,033,658		5,971,205	4,906,182

Convertible senior notes	Convertible senior notes	34,150,407	25,294,010		34,150,407	19,548,462

Convertible senior notes

Convertible senior notes

~~(14)~~(13) Commitments and Contingencies

Legal. We are a party to a number of lawsuits, claims and governmental proceedings that are ordinary, routine matters incidental to our business. In addition, in the ordinary course of business, we periodically have disputes with dealers and customers. We do not expect the outcomes of these matters to have, either individually or in the aggregate, a material adverse effect on our financial position or results of operations.

Performance Guarantee Obligations. As of ~~September 30, 2023,~~March 31, 2024, we recorded ~~$5.6~~$6.0 million related to our guarantee of certain specified minimum solar energy production output under our leases and loans, of which ~~$2.7~~$3.1 million is recorded in other current liabilities and $2.9 million is recorded in other long-term liabilities in the unaudited condensed consolidated balance sheet. As of December 31, ~~2022,~~2023, we recorded ~~$4.8~~$6.8 million related to these guarantees, of which ~~$2.5~~$2.7 million is recorded in other current liabilities and ~~$2.3~~$4.1 million is recorded in other long-term liabilities in the unaudited condensed consolidated balance sheet. The changes in our aggregate performance guarantee obligations are as follows:


		Nine Months Ended September 30,
		2023		2022
		(in thousands)
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
	2024					2024		2023
	(in thousands)						(in thousands)
Balance at beginning of period	Balance at beginning of period	$	4,845	$	5,293
Accruals	Accruals	3,620		1,811

Settlements	Settlements	(2,855)		(3,170)
Settlements
Settlements
Balance at end of period	Balance at end of period	$	5,610	$	3,934

3330

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Operating and Finance Leases. We lease real estate and certain office equipment under operating leases and vehicles and certain other office equipment under finance leases. The following table presents the detail of lease expense as recorded in general and administrative expense in the unaudited condensed consolidated statements of operations:


		Three Months Ended September 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
		(in thousands)
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024
							(in thousands)
							(in thousands)
							(in thousands)
Operating lease expense	Operating lease expense	$	754	$	676		$	2,138	$	2,061
Finance lease expense:	Finance lease expense:
Finance lease expense:
Finance lease expense:
Amortization expense
Amortization expense
Amortization expense	Amortization expense	308		201			787		562
Interest on lease liabilities	Interest on lease liabilities	31		15			69		42
Interest on lease liabilities
Interest on lease liabilities
Short-term lease expense	Short-term lease expense	62		37			128		97
Short-term lease expense
Short-term lease expense
Variable lease expense
Variable lease expense
Variable lease expense	Variable lease expense	367		190			835		712

Total	Total	$	1,522	$	1,119		$	3,957	$	3,474

Total

Total

The following table presents the detail of right-of-use assets and lease liabilities as recorded in other assets and other current liabilities/other long-term liabilities, respectively, in the unaudited condensed consolidated balance sheets:

As of
March 31, 2024

As of
December 31, 2023

As of
September 30, 2023

As of
December 31, 2022

(in thousands)

Right-of-use assets:

Operating leases

13,805

14,706

Finance leases

3,523

2,476

Total right-of-use assets

17,328

17,182

Current lease liabilities:

Operating leases

2,845

2,451

Finance leases

1,156

796

Long-term leases liabilities:

Operating leases

14,406

15,751

Operating leases

Finance leases

1,393

957

Total lease liabilities

19,800

19,955

Other information related to leases was as follows:


		Nine Months Ended September 30,
		2023		2022
		(in thousands)
		Three Months Ended March 31,
		Three Months Ended March 31,
		Three Months Ended March 31,
	2024
		(in thousands)
		(in thousands)
		(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:	Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases (1)		$	2,187	$	1,242
Operating cash flows from operating leases
Operating cash flows from operating leases
Operating cash flows from operating leases
Operating cash flows from finance leases
Operating cash flows from finance leases
Operating cash flows from finance leases	Operating cash flows from finance leases	$	69	$	42
Financing cash flows from finance leases	Financing cash flows from finance leases	$	725	$	601
Financing cash flows from finance leases
Financing cash flows from finance leases
Right-of-use assets obtained in exchange for lease obligations:
Right-of-use assets obtained in exchange for lease obligations:
Right-of-use assets obtained in exchange for lease obligations:	Right-of-use assets obtained in exchange for lease obligations:
Operating leases	Operating leases	$	703	$	226
Operating leases
Operating leases
Finance leases	Finance leases	$	1,835	$	758
Finance leases
Finance leases

~~(1)Includes reimbursements in 2023 and 2022 of approximately $225,000 and $45,000, respectively, for leasehold improvements.~~

3431

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


		As of September 30, 2023		As of December 31, 2022
	As of March 31, 2024								As of March 31, 2024				As of December 31, 2023

Weighted average remaining lease term (years):	Weighted average remaining lease term (years):

Weighted average remaining lease term (years):

Weighted average remaining lease term (years):
Operating leases
Operating leases
Operating leases	Operating leases	5.74		6.60		5.27				5.51
Finance leases	Finance leases	3.06		2.86		Finance leases	3.11				3.12
Weighted average discount rate:	Weighted average discount rate:
Operating leases	Operating leases	4.07	%	3.95	%
Operating leases
Operating leases							4.06	%			4.06	%
Finance leases	Finance leases	5.81	%	4.37	%	Finance leases	6.29	%			6.26	%

Future minimum lease payments under our non-cancelable leases as of ~~September 30, 2023~~March 31, 2024 were as follows:


		Operating Leases		Finance Leases
		(in thousands)
Remaining 2023		$	894	$	351
2024		3,496		1,180
	Operating Leases					Operating Leases		Finance Leases
	(in thousands)						(in thousands)
Remaining 2024
2025	2025	3,392		716
2026	2026	3,236		370
2027	2027	3,304		147
2028 and thereafter		5,485		—
2028
2029 and thereafter
Total	Total	19,807		2,764
Amount representing interest	Amount representing interest	(2,160)		(215)
Amount representing leasehold incentives	Amount representing leasehold incentives	(396)		—
Present value of future payments	Present value of future payments	17,251		2,549
Current portion of lease liability	Current portion of lease liability	(2,845)		(1,156)
Long-term portion of lease liability	Long-term portion of lease liability	$	14,406	$	1,393

Guarantees or Indemnifications. We enter into contracts that include indemnifications and guarantee provisions. In general, we enter into contracts with indemnities for matters such as breaches of representations and warranties and covenants contained in the contract and/or against certain specified liabilities. Examples of these contracts include dealer agreements, debt agreements, asset purchases and sales agreements, service agreements and procurement agreements. We are unable to estimate our maximum potential exposure under these agreements until an event triggering payment occurs.

Dealer Commitments. As of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, the net unamortized balance of payments to dealers for exclusivity and other similar arrangements was ~~$171.4~~$174.5 million and ~~$121.3~~$166.4 million, respectively. Under these agreements, we paid ~~$55.0~~$9.6 million and ~~$33.6~~$24.6 million during the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ respectively. We could be obligated to make maximum payments, excluding additional amounts payable on a per watt basis if even higher thresholds are met, as follows:


		Dealer Commitments
		(in thousands)
Remaining 2023		$	7,845
2024		78,529
	Dealer Commitments			Dealer Commitments
	(in thousands)			(in thousands)
Remaining 2024
2025	2025	60,561
2026	2026	36,904
2027	2027	30,000
2028 and thereafter		—
2028
2029 and thereafter
Total	Total	$	213,839

3532

Table of Contents

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Purchase Commitments. In ~~October 2023,~~April 2024, we amended an agreement with a supplier in which we agreed to purchase approximately ~~$325.0~~$255.0 million of solar energy ~~storage~~ systems from May 2024 through ~~December 2024, with approximately $80.0 million in the fourth quarter of 2023 and approximately $245.0 million in 2024.~~March 2025. Under this agreement, we purchased ~~$12.8~~$6.8 million and ~~$55.4~~$78.4 million during the three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022, respectively, and we purchased $119.3 million and $141.1 million during the nine months ended September 30, 2023 and 2022,~~ respectively.

~~Information~~Software and Business Technology Commitments. We have certain long-term contractual commitments related to ~~information~~software and business technology ~~software~~ services and licenses. Future commitments as of ~~September 30, 2023~~March 31, 2024 were as follows:


		Information Technology Commitments
		(in thousands)
Remaining 2023		$	22,649
2024		10,181
	Software and Business Technology Commitments			Software and Business Technology Commitments
	(in thousands)			(in thousands)
Remaining 2024
2025	2025	4,282
2026	2026	2,561
2027	2027	3,300
2028 and thereafter		—
2028
2029 and thereafter
Total	Total	$	42,973

~~(15)~~(14) Subsequent Events

~~EZOP~~TEPH Debt. In ~~October 2023,~~April 2024, additional lenders joined the TEPH revolving credit facility and the aggregate commitment amount was increased from $1.3 billion to $1.4 billion.

IS Debt. In April 2024, we amended the ~~EZOP~~IS revolving credit facility to, among other things, ~~reallocate commitments among~~(a) change the ~~lenders.~~date on which payments are made to borrower from the collections account from monthly to weekly and (b) increase the applicable margin by 0.75% which results in a revised margin of (i) 3.25% for term SOFR loans and (ii) 2.25% for base rate loans.

~~HESI Debt. In October 2023, we entered into a note purchase agreement,~~ ~~which at closing will indirectly benefit from a partial guarantee provided by the~~ U.S. Department of Energy ("DOE") Loan Programs Office. The notes will not be directly guaranteed by the DOE. The offering consists of $219.6 million in aggregate principal amount of Series 2023-GRID1 Class A solar loan-backed notes and $24.4 million in aggregate principal amount of Series 2023-GRID1 Class B solar loan-backed notes (collectively, the "HESI Notes") with a maturity date of December 2050. The HESI Notes were issued at a discount of 2.46% for Class A and 9.40% for Class B and bear interest at an annual rate of 5.75% and 8.25% for the Class A and Class B notes, respectively. The offering is expected to close in November 2023, subject to customary closing conditions.

~~Table of Contents~~

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis contain forward-looking statements that are subject to risks, uncertainties and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including but not limited to those discussed under "Special Note Regarding Forward-Looking Statements" above and "Special Note Regarding Forward-Looking Statements", "Risk Factors" and elsewhere in our Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on February ~~23, 2023, our Quarterly Reports on Form 10-Q filed with the SEC on April 27, 2023 and July 27, 2023~~22, 2024 and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment and new risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Unless the context otherwise requires, the terms "Sunnova," "the Company," "we," "us" and "our" refer to SEI and its consolidated subsidiaries.

Company Overview

We are ~~a leading Energy as a Service provider,~~an industry-leading energy services company focused on making clean energy more accessible, reliable and affordable for homeowners and businesses, serving over ~~386,000~~438,000 customers in more than 4550 United States ("U.S.") states and territories. ~~Our goal is to be the source of clean, affordable and reliable~~Through our adaptive energy ~~with a simple mission: to power energy independence so home and business owners have the freedom to live life uninterrupted. We were founded to deliver customers~~platform, we provide a better energy service at a better ~~price; and, through~~price to deliver our mission of powering energy ~~service offerings, we are disrupting the traditional energy landscape and the way the 21st century customer generates and consumes electricity.~~independence.

Table of Contents

while providing our dealers and contractors with access to high quality products at competitive prices, as well as technical oversight and expertise. We believe this structure provides operational flexibility, reduces exposure to labor shortages and lowers fixed costs relative to ~~our peers, furthering our competitive advantage.~~true vertically integrated models.

We offer customers products to power and improve the energy efficiency and sustainability of their homes and businesses with affordable solar energy and related products and services. We are able to offer energy generation savings compared to utility-based retail rates with little to no up-front expense to the customer in conjunction with solar and solar plus energy storage products, and, in the case of the latter, are able to also provide energy resiliency. Our ~~solar service~~customer agreements typically take the form of a lease, power purchase agreement ("PPA"), loan or cash purchase; however, we also offer service plans for systems we did not originate. We make it possible in some states for a customer to obtain a new roof and/or other ~~ancillary products.~~sustainable home products as part of their solar loan agreement or as an accessory loan to their lease or PPA. Customers who are not interested in a new solar energy system or energy storage system may also finance a new roof and other sustainable home products via a stand-alone loan from us. We also allow customers originated through our homebuilder channel the option of purchasing the ~~system~~products when the customer closes on the purchase of a new home. ~~The initial term of our solar service agreements is typically between 10 and 25 years.~~ Service is an integral part of our agreements and includes operations and maintenance, monitoring, repairs and replacements, equipment upgrades, on-site power optimization for the customer (for both supply and demand), the ability to efficiently switch power sources ~~among~~between the solar ~~panel,~~energy system and/or energy storage system, and the grid, as appropriate, and also the solar energy system and energy storage system ~~as appropriate, and~~ diagnostics. During the life of the contract, we have the opportunity to integrate related and evolving servicing and monitoring technologies and other sustainable home products to upgrade the flexibility and reduce the cost of our customers' energy supply.

In the case of leases and PPAs, we also currently receive tax benefits and other incentives from federal, state and local governments, a portion of which we finance through tax equity, tax credit sales, non-recourse debt structures and hedging arrangements in order to fund our upfront costs, overhead and growth investments. We have an established track record of attracting capital from diverse sources. From our inception through September 30, 2023, we have raised more than $14.5 billion in total capital commitments from equity, debt and tax equity investors.

In addition to providing ongoing service as a standard component of our ~~solar service~~customer agreements, we also offer ongoing energy services to customers who purchased their solar energy system through third parties. Under these arrangements, we agree to provide monitoring, maintenance ~~and~~and/or repair services to these customers for the life of the service contract they sign with us. In addition, we offer one-time repair services to customers who purchased their solar energy systems or sustainable home products through third ~~parties.~~ parties that are not otherwise covered by warranty.

We ~~also offer complementary~~continue to expand our offerings to include additional sustainable home products ~~as well as~~to our agreements, including non-solar financing. Specifically, we have expanded our offerings to include a non-solar loan program enabling customers to finance the purchase of products independent of a solar energy system or energy storage system. We believe the quality and scope of our ~~comprehensive energy service~~expanding sustainable home product offerings, whether to customers that obtained their solar energy system or energy storage system through us or through ~~another~~a third party, is a key differentiator between us and our competitors.

~~Table of Contents~~

In April 2021, we acquired SunStreet Energy Group, LLC, Lennar Corporation's ("Lennar") residential solar platform that focuses primarily on solar energy systems and energy storage systems for homebuilders. In connection with that acquisition, we entered into an agreement pursuant to which we would be the exclusive solar and storage provider for Lennar's new home communities with solar across the U.S. for a period of four years. We believe the acquisition provides a new strategic path to further scale our solar business, reduces customer acquisition costs, provides a multi-year supply of sites through the development of new solar communities and allows us to pursue the development of clean and resilient microgrids across the U.S.

We also enter into leases with third-party owners of pools of solar energy systems to receive such third party's interest in those systems. In connection therewith, we assume the related customer PPA and lease obligations, entitling us to future customer cash flows as well as certain credits, rebates and incentives (including SRECs) under those agreements, in exchange for a lease payment, whether upfront or over time, to the third-party owner, which may be made in the form of cash or shares of our common stock. We believe such arrangements enhance our long-term contracted cash flows and are complementary to our overall business model.

We commenced operations in January 2013 and began providing solar energy services under our first solar energy system in April 2013. Since then, our brand, innovation and focused execution have driven significant, rapid growth in our market share and in the number of customers on our platform. We operate one of the largest residential fleets of solar energy systems in the U.S., comprising more than ~~2,099~~2,443 megawatts of generation capacity and ~~serving~~our diversified offerings of sustainable home solutions serve over ~~386,000 customers.~~438,000 customers as of March 31, 2024.

Recent Developments

Financing Transactions

In ~~August 2023,~~February 2024, we admitted a tax equity investor with a total capital commitment of ~~approximately $104.0 million. In September 2023, we admitted~~$195.0 million, a tax equity investor ~~with a total~~increased its capital commitment offrom approximately $59.0 million to approximately $61.4 million and a tax equity investor increased its capital commitment from approximately $134.9 million to approximately $190.8 million. In March 2024, a tax equity investor increased its capital commitment from $51.0 million to approximately $51.2 million. See "—Liquidity and Capital Resources—Financing Arrangements—Tax Equity Fund Commitments" below.

Table of Contents

In ~~August 2023,~~February 2024, we amended the revolving credit facility by and among Sunnova EZ-Own Portfolio, LLC ("EZOP"), certain of our other subsidiaries party thereto, Atlas Securitized Products Holdings, L.P., as administrative agent, and the lenders and other financial institutions party thereto, to, among other things, (a) ~~increase~~reflect certain assignments of commitments occurring within the ~~aggregate commitment amount from $775.0 million to $875.0 million,~~Atlas Lender Group (as defined by such revolving credit facility) without increasing the existing commitments, and the assignment of the role of the Atlas funding agent for the Atlas Lender Group, (b) ~~increase the uncommitted maximum facility amount from $900.0 million to $1.0 billion, (c) extend the maturity date from November 2024 to November 2025 and (d)~~ amend the ~~Advance Rate~~thresholds for certain "Amortization Events" (as defined ~~therein)~~by such revolving credit facility) and (c) modify the "Liquidity Reserve Account Required Balance" (as defined by such revolving credit facility). In ~~October 2023,~~March 2024, we amended the EZOP revolving credit facility to, among other things, ~~reallocate commitments among~~(a) amend the ~~lenders.~~ Advance Rate, Excess Concentration Amount (in each case, as defined by such revolving credit facility) and certain related definitions and (b) amend the eligibility criteria for the Solar Loans (as defined by such revolving credit facility).

In ~~August 2023,~~February 2024, we amended the revolving credit facility by and among Sunnova TEP Holdings, LLC ("TEPH"), certain of our other subsidiaries party thereto, Atlas Securitized Products Holdings, L.P., as administrative agent, and the lenders and other financial institutions party thereto, to, among other things, ~~(a) increase~~reflect an assignment of commitments occurring within the Atlas Lender Group (as defined by such revolving credit facility) without increasing the existing commitments and the appointment of a new Atlas funding agent for the Atlas Lender Group. In April 2024, additional lenders joined the TEPH revolving credit facility and the aggregate commitment amount was increased from ~~$700.0 million~~$1.3 billion to $769.3 million, (b) increase the uncommitted maximum facility amount from $789.7 million to $859.0 million and (c) extend the maturity date from November 2024 to November 2025. In August 2023, the revolving credit facility by and among Sunnova Asset Portfolio 8, LLC ("AP8"), certain of our other subsidiaries party thereto, Banco Popular de Puerto Rico, as agent, and the lenders and other financial institutions party thereto was amended to, among other things, increase the aggregate commitment amount from $185.0 million to $215.0 million. In September 2023, one of our subsidiaries, Sunnova Asset Portfolio 9, LLC ("AP9") entered into a secured revolving credit facility with Citibank, N.A., as administrative agent, and the lenders party thereto, for an aggregate commitment amount of $65.0 million with a maturity date of October 2027. Interest on the borrowings under the AP9 revolving credit facility is due monthly. Borrowings under the AP9 revolving credit facility bear interest at an annual rate based on either Term SOFR or a CP Yield Rate (as defined by the AP9 revolving credit facility).$1.4 billion. See "—Liquidity and Capital Resources—Financing Arrangements—Warehouse and Other Debt Financings" below.

In April 2024, we amended the revolving credit facility by and among Sunnova Inventory Supply, LLC ("IS"), Texas Capital Bank, as agent and lender, and the lenders party thereto, to, among other things, (a) change the date on which payments are made to borrower from the collections account from monthly to weekly and (b) increase the applicable margin by 0.75% which results in a revised margin of (i) 3.25% for term SOFR loans and (ii) 2.25% for base rate loans.

In ~~August 2023,~~February 2024, one of our subsidiaries issued ~~$148.5~~$194.5 million in aggregate principal amount of Series ~~2023-B~~2024-1 Class A solar ~~loan-backed~~asset-backed notes, ~~$71.1~~$16.5 million in aggregate principal amount of Series ~~2023-B~~2024-1 Class B solar ~~loan-backed~~asset-backed notes and ~~$23.1~~$15.0 million in aggregate principal amount of Series ~~2023-B~~2024-1 Class C solar ~~loan-backed~~asset-backed notes (collectively, the ~~"HELXII~~"SOLVI Notes") with a maturity date of ~~August 2050.~~January 2059. The ~~HELXII~~SOLVI Notes ~~were issued at a discount of 4.23%, 6.67% and 12.64% for the Class A, Class B and Class C notes, respectively, and~~ bear interest at an annual rate of ~~5.30%~~5.65%, ~~5.60%~~7.00% and ~~6.00%,~~9.00% for the Class A, Class B and Class C notes, respectively. In ~~October 2023, we entered into a note purchase agreement,~~ ~~which at closing will indirectly benefit from a partial guarantee provided by the~~ ~~U.S. Department~~February 2024, one of ~~Energy ("DOE") Loan Programs Office. The notes will not be directly guaranteed by the DOE. The offering consists of $219.6~~our subsidiaries issued $166.0 million in aggregate principal amount of Series ~~2023-GRID1~~2024-A Class A solar loan-backed notes, ~~and $24.4~~$33.9 million in aggregate principal amount of Series ~~2023-GRID1~~2024-A Class B solar loan-backed notes and $27.1 million in aggregate principal amount of Series 2024-A Class C solar loan-backed notes (collectively, the ~~"HESI~~"HELXIII Notes") with a maturity date of ~~December 2050.~~February 2051. The ~~HESI~~HELXIII Notes ~~were issued at a discount of 2.46% and 9.40% for the Class A and Class B notes respectively, and~~ bear interest at an annual rate of

~~Table of Contents~~

~~5.75%~~ 5.30%, 6.00% and ~~8.25%~~7.00% for the Class A, Class B and Class BC notes, respectively. ~~The offering is expected to close in November 2023, subject to customary closing conditions.~~ See "—Liquidity and Capital Resources—Financing Arrangements—Securitizations" ~~below~~.

In September 2023, one of our subsidiaries issued and sold an aggregate principal amount of $400.0 million of 11.75% senior notes ("11.75% senior notes") at a discount to the initial purchasers of approximately 2.74%, for an aggregate purchase price of approximately $389.0 million. The 11.75% senior notes mature in October 2028. See "~~—Liquidity and Capital Resources—Financing Arrangements—Senior Notes~~" below.

In August 2023, we sold 5,865,000 shares of common stock at a public offering price of $14.75 per share. We received aggregate net proceeds of approximately $82.2 million, after deducting underwriting discounts and commissions of approximately $3.9 million and offering expenses of approximately $400,000. See "~~—Liquidity and Capital Resources—Financing Arrangements—Public Offerings~~" ~~below~~.

Securitizations

As a source of long-term financing, we securitize qualifying solar energy systems, energy storage systems and related ~~solar service~~customer agreements into special purpose entities who issue solar asset-backed and solar loan-backed notes to institutional investors. We also securitize the cash flows generated by the membership interests in certain of our indirect, wholly-owned subsidiaries that are the managing member of a tax equity fund that owns a pool of solar energy systems, energy storage systems and related ~~solar service~~customer agreements that were originated by one of our wholly-owned subsidiaries. The federal government currently provides business investment tax credits under Section 48(a) (the "Section 48(a) ITC") and residential energy credits under Section 25D (the "Section 25D Credit") of the U.S. Internal Revenue Code of 1986, as amended. For projects that begin construction after December 31, 2024, the Section 48(a) ITC will be replaced with investment tax credits under Section 48E(a) (the "Section 48E ITC"). We do not securitize the Section 48(a) ITC incentives, and currently do not plan to securitize any Section 48E ITC incentives, associated with the solar energy systems and energy storage systems as part of these arrangements. However, we may in the future securitize the expected proceeds from the sale of such tax credits. We use the cash flows these solar energy systems and energy storage systems generate to service the monthly, quarterly or semi-annual principal and interest payments on the notes and satisfy the expenses and reserve requirements of the special purpose entities, with any remaining cash distributed to their sole members, who are typically our indirect wholly-owned subsidiaries. In connection with these securitizations, certain of our affiliates receive a fee for managing and servicing the solar energy systems and energy storage systems pursuant to management, servicing, facility administration and asset management agreements. The special purpose entities are also typically required to maintain a liquidity reserve account and a reserve account for equipment replacements and, in certain cases, reserve accounts for financing fund purchase option/withdrawal right exercises or storage system replacement for the benefit of the holders under the applicable series of notes, each of which are funded from initial deposits or cash flows to the levels specified therein. The creditors of these special purpose entities have no recourse to our

Table of Contents

other assets except as expressly set forth in the terms of the notes. From our inception through ~~September 30, 2023,~~March 31, 2024, we have issued ~~$4.5~~$5.2 billion in solar asset-backed and solar loan-backed notes.

Tax Equity Funds

Our ability to offer long-term solar service agreements depends in part on our ability to finance the installation of the solar energy systems and energy storage systems by co-investing with tax equity investors, such as large banks who value the resulting customer receivables and Section 48(a) ITCs or, in the future, Section 48E ITCs, accelerated tax depreciation and other incentives related to the solar energy systems and energy storage systems, primarily through structured investments known as "tax equity". Tax equity investments are generally structured as non-recourse project financings known as "tax equity funds". In the context of distributed generation solar energy, tax equity investors make contributions upfront or in stages based on milestones in exchange for a share of the tax attributes and cash flows emanating from an underlying portfolio of solar energy systems and energy storage systems. In these tax equity funds, the U.S. federal income tax attributes offset taxes that otherwise would have been payable on the investors' other operations. The terms and conditions of each tax equity fund vary significantly by investor and by fund. We continue to negotiate with potential investors to create additional tax equity funds.

In general, our tax equity funds are structured using the "partnership flip" structure. Under partnership flip structures, we and our tax equity investors contribute cash into a partnership. The partnership uses this cash to acquire long-term solar service agreements, solar energy systems and energy storage systems developed by us and sells energy from such solar energy systems and energy storage systems, as applicable, to customers or directly leases the solar energy systems and energy storage systems, as applicable, to customers. We assign these solar service agreements, solar energy systems, energy storage systems and related incentives to our tax equity funds in accordance with the criteria of the specific funds. Upon such assignment and the satisfaction of certain conditions precedent, we are able to draw down on the tax equity fund commitments. The conditions precedent to funding vary across our tax equity funds but generally require that we have entered into a solar service agreement

~~Table of Contents~~

with the customer, the customer meets certain credit criteria, the solar energy system is expected to be eligible for the Section 48(a) ITC or the Section 48E ITC, as applicable, we have a recent appraisal from an independent appraiser establishing the fair market value of the solar energy system and the property is in an approved state or territory. Certain tax equity investors agree to receive a minimum target rate of return, typically on an after-tax basis, which varies by tax equity fund. Prior to receiving a contractual rate of return or a date specified in the contractual arrangements, the tax equity investor receives substantially all of the non-cash value attributable to the solar energy systems and energy storage systems, which includes accelerated depreciation and Section 48(a) ITCs or Section 48E ITCs, as applicable; however, we typically receive a majority of the cash distributions, which are typically paid quarterly. After the tax equity investor receives its contractual rate of return or after a specified date, we receive substantially all of the cash and tax allocations.

We have determined we are the primary beneficiary in these tax equity funds for accounting purposes. Accordingly, we consolidate the assets and liabilities and operating results of these partnerships in our consolidated financial statements. We recognize the tax equity investors' share of the net assets of the tax equity funds as redeemable noncontrolling interests and noncontrolling interests in our consolidated balance sheets. The income or loss allocations reflected in our consolidated statements of operations may create significant volatility in our reported results of operations, including potentially changing net loss attributable to stockholders to net income attributable to stockholders, or vice versa, from quarter to quarter.

We typically have an option to acquire, and our tax equity investors may have an option to withdraw and require us to purchase, all the equity interests our tax equity investor holds in the tax equity funds starting approximately five years after the last solar energy system in the applicable tax equity fund is operational. If we or our tax equity investors exercise this option, we are typically required to pay at least the fair market value of the tax equity investor's equity interest and, in certain cases, a contractual minimum amount. From our inception through ~~September 30, 2023,~~March 31, 2024, we have received commitments of approximately ~~$2.3~~$3.0 billion through the use of tax equity funds, of which an aggregate of ~~$1.9~~$2.4 billion has been funded and ~~$199.3~~$435.4 million remains available for use.

Key Financial and Operational Metrics

We regularly review a number of metrics, including the following key operational and financial metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate our financial projections and make strategic decisions.

Number of Customers. We define number of customers to include every unique premises on which a Sunnova product or Sunnova-financed product is installed or on which Sunnova is obligated to perform services for a counterparty. We track the total number of customers as an indicator of our historical growth and our rate of growth from period to period.

As of
September 30, 2023 As of
December 31, 2022 Change
Number of customers 386,200 279,400 106,800

Table of Contents


	As of March 31, 2024	As of December 31, 2023	Change


Number of customers	438,500	419,200	19,300

Weighted Average Number of Systems. We calculate the weighted average number of systems based on the number of months a customer and any additional service obligation related to a solar energy system is in-service during a given measurement period. The weighted average number of systems reflects the number of systems at the beginning of a period, plus the total number of new systems added in the period adjusted by a factor that accounts for the partial period nature of those new systems. For purposes of this calculation, we assume all new systems added during a month were added in the middle of that month. The number of systems for any end of period will exceed the number of customers, as defined above, for that same end of period as we are also including any additional services and/or contracts a customer or third party executed for the additional work for the same residence or business. We track the weighted average system count in order to accurately reflect the contribution of the appropriate number of systems to key financial metrics over the measurement period.

Three Months Ended
September 30, Nine Months Ended
September 30,
2023 2022 2023 2022
Weighted average number of systems (excluding loan agreements and cash sales) 225,200 171,600 210,900 163,800
Weighted average number of systems with loan agreements 133,300 60,800 110,500 50,900
Weighted average number of systems with cash sales 10,000 4,300 8,600 3,300
Weighted average number of systems 368,500 236,700 330,000 218,000

~~Table of Contents~~


	Three Months Ended March 31,
		2024	2023
Weighted average number of systems (excluding loan agreements and cash sales)		259,400	197,500
Weighted average number of systems with loan agreements		160,900	88,700
Weighted average number of systems with cash sales		13,500	7,300
Weighted average number of systems		433,800	293,500

Adjusted EBITDA. We define Adjusted EBITDA as net income (loss) ~~plus net~~excluding the impacts of interest expense, income tax (benefit) expense, depreciation and amortization expense, ~~income tax~~non-cash compensation expense, ~~financing deal costs, natural~~asset retirement obligation ("ARO") accretion expense, non-cash disaster losses, ~~and related charges, net,~~losses on unenforceable contracts, losses on extinguishment of long-term debt, ~~realized and~~ unrealized gains and losses on fair value instruments and equity securities, amortization of payments to dealers for exclusivity and other bonus arrangements, legal settlements, investment tax credit ("ITC") sales and excluding the effect of certain non-recurring items we do not consider to be indicative of our ongoing operating performance such as, but not limited to, acquisition costs, losses on unenforceable contracts, indemnification payments to tax equity investors and other non-cash items such as non-cash compensation expense, asset retirement obligation ("ARO") accretion expense, provision for current expected credit losses and non-cash inventory and other ~~impairments.~~impairments and including the impacts of investment tax credit ("ITC") sales.

Adjusted EBITDA is a non-GAAP financial measure we use as a performance measure. We believe investors and securities analysts also use Adjusted EBITDA in evaluating our operating performance. This measurement is not recognized in accordance with accounting principles generally accepted in the United States of America ("GAAP") and should not be viewed as an alternative to GAAP measures of performance. The GAAP measure most directly comparable to Adjusted EBITDA is net income (loss). The presentation of Adjusted EBITDA should not be construed to suggest our future results will be unaffected by non-cash or non-recurring items. In addition, our calculation of Adjusted EBITDA is not necessarily comparable to Adjusted EBITDA as calculated by other companies.

We believe Adjusted EBITDA is useful to management, investors and analysts in providing a measure of core financial performance adjusted to allow for comparisons of results of operations across reporting periods on a consistent basis. These adjustments are intended to exclude items that are not indicative of the ongoing operating performance of the business. Adjusted EBITDA is also used by our management for internal planning purposes, including our consolidated operating budget, and by our board of directors in setting performance-based compensation targets. Adjusted EBITDA should not be considered an alternative to but viewed in conjunction with GAAP results, as we believe it provides a more complete understanding of ongoing business performance and trends than GAAP measures alone. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP.

Three Months Ended
September 30, Nine Months Ended
September 30,
2023 2022 2023 2022
(in thousands)
Reconciliation of Net Loss to Adjusted EBITDA:
Net loss $ (56,463) $ (32,348) $ (267,590) $ (68,283)
Interest expense, net 57,601 20,824 200,155 44,380
Interest income (30,590) (16,185) (81,670) (40,428)
Income tax benefit (9,325) — (1,632) —
Depreciation expense 40,082 27,594 107,957 78,401
Amortization expense 7,416 7,309 22,112 21,894
EBITDA 8,721 7,194 (20,668) 35,964
Non-cash compensation expense 5,494 4,463 19,812 20,059
ARO accretion expense 1,257 952 3,491 2,687
Financing deal costs 608 162 1,282 582
Natural disaster losses and related charges, net 1,442 1,161 2,388 1,161
Acquisition costs 150 3,005 1,137 5,622
Unrealized (gain) loss on fair value instruments and equity securities (8,482) 10,625 846 (4,136)
Amortization of payments to dealers for exclusivity and other bonus arrangements 1,996 1,185 4,957 3,110
Legal settlements — (1,001) 750 (1,001)
Provision for current expected credit losses 8,360 10,967 29,467 26,881
Non-cash inventory and other impairments 6,443 864 22,106 864
Indemnification payments to tax equity investors — 1,727 3,053 1,727
ITC sales 14,422 — 14,422 —
Adjusted EBITDA $ 40,411 $ 41,304 $ 83,043 $ 93,520

4137

Table of Contents


	Three Months Ended March 31,
		2024		2023
		(in thousands)
Reconciliation of Net Loss to Adjusted EBITDA:
Net loss		$	(90,075)	$	(110,346)
Interest expense, net		84,601		85,607

Interest income		(35,696)		(24,788)
Income tax (benefit) expense		(43,028)		510
Depreciation expense		50,759		32,671
Amortization expense		7,527		7,338
EBITDA		(25,912)		(9,008)
Non-cash compensation expense		13,587		9,515
ARO accretion expense		1,477		1,081
Non-cash disaster losses		(10)		—



Unrealized gain on fair value instruments and equity securities		(12,339)		(487)
Amortization of payments to dealers for exclusivity and other bonus arrangements		1,974		1,386
Provision for current expected credit (gains) losses		(268)		10,259
Non-cash inventory and other impairments		19,982		—
ITC sales		47,953		—
Other, net		—		1,807

Adjusted EBITDA		$	46,444	$	14,553

Interest ~~Income from Customer Notes Receivable;~~Income; Principal Proceeds from Customer Notes Receivable, Net of Related Revenue; and Proceeds from Investments in Solar Receivables. Under our loan agreements, the customer obtains financing for the purchase of a solar energy system from us and we agree to operate and maintain the solar energy system throughout the duration of the agreement. Pursuant to the terms of the loan agreement, the customer makes scheduled principal and interest payments to us and has the option to prepay principal at any time in part or in full. Whereas we typically recognize payments from customers under our leases and PPAs as revenue, we recognize payments received from customers under our loan agreements (a) as interest income, to the extent attributable to earned interest on the contract that financed the customer's purchase of the solar energy system; (b) as a reduction of a note receivable on the balance sheet, to the extent attributable to a return of principal (whether scheduled or prepaid) on the contract that financed the customer's purchase of the solar energy system; and (c) as revenue, to the extent attributable to payments for operations and maintenance services provided by us. Interest income also includes income on short term investments with financial institutions. We also enter into leases with third-party owners of pools of solar energy systems to receive such third party's interest in those systems. In connection therewith, we assume the related customer PPA and lease obligations, entitling us to future customer cash flows as well as certain credits, rebates and incentives (including SRECs) under those agreements. We recognize payments received from such third parties as proceeds from investments in solar receivables.

While Adjusted EBITDA effectively captures the operating performance of our leases and PPAs, it only reflects the service portion of the operating performance under our loan agreements. We do not consider our types of ~~solar service~~customer agreements differently when evaluating our operating performance. In order to present a measure of operating performance that provides comparability without regard to the different accounting treatment among our different types of ~~solar service~~customer agreements, we consider interest income, ~~from customer notes receivable,~~ principal proceeds from customer notes receivable, net of related revenue, and proceeds from investments in solar receivables as key performance metrics. We believe these metrics provide a more meaningful and uniform method of analyzing our operating performance when viewed in light of our other key performance metrics across the primary types of ~~solar service~~customer agreements.

Three Months Ended
September 30, Nine Months Ended
September 30,
2023 2022 2023 2022
(in thousands)
Interest income from customer notes receivable $ 26,761 $ 15,119 $ 69,950 $ 39,051
Principal proceeds from customer notes receivable, net of related revenue $ 36,966 $ 22,284 $ 102,914 $ 67,478
Proceeds from investments in solar receivables $ 3,779 $ 3,768 $ 8,708 $ 9,388

Table of Contents


	Three Months Ended March 31,
		2024		2023
		(in thousands)
Interest income		$	35,696	$	24,788
Principal proceeds from customer notes receivable, net of related revenue		$	39,616	$	29,098
Proceeds from investments in solar receivables		$	2,259	$	2,132

Adjusted Operating Expense. We define Adjusted Operating Expense as total operating expense less depreciation and amortization expense, ~~financing deal costs, natural~~non-cash disaster losses, ~~and related charges, net,~~ amortization of payments to dealers for exclusivity and other bonus arrangements, ~~legal settlements,~~cost of revenue related to direct sales, ~~costs,~~ cost of revenue related to cash sales, cost of revenue related to inventory sales, unrealized gains and losses on fair value instruments, gains and losses on held-for-sale loans and excluding the effect of certain non-recurring items we do not consider to be indicative of our ongoing operating performance such as, but not limited to, ~~acquisition costs,~~ losses on unenforceable contracts ~~indemnification payments to tax equity investors~~ and other non-cash items such as non-cash compensation expense, ARO accretion expense, provision for current expected credit losses and non-cash inventory and other impairments. Adjusted Operating Expense is a non-GAAP financial measure we use as a performance measure. We believe investors and securities analysts will also use Adjusted Operating Expense in evaluating our performance. This measurement is not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance. The GAAP measure most directly comparable to Adjusted Operating Expense is total operating ~~expense.~~expense, net. We believe Adjusted Operating Expense is a supplemental financial measure useful to management, analysts, investors, lenders and rating agencies as an indicator of the efficiency of our operations between reporting periods. Adjusted Operating Expense should not be considered an alternative to but viewed in conjunction with GAAP total operating expense, net, as we believe it provides a more complete understanding of our performance than GAAP measures alone. Adjusted Operating Expense has limitations as an analytical tool and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP, including total operating expense.

We use per system metrics, including Adjusted Operating Expense per weighted average system, as an additional way to evaluate our performance. Specifically, we consider the change in this metric from period to period as a way to evaluate our performance in the context of changes we experience in the overall customer base. While the Adjusted Operating Expense figure provides a valuable indicator of our overall performance, evaluating this metric on a per system basis allows for further nuanced understanding by management, investors and analysts of the financial impact of each additional system.

4239

Table of Contents


		Three Months Ended September 30,					Nine Months Ended September 30,
		2023		2022			2023		2022
		(in thousands, except per system data)
				Three Months Ended March 31,
				Three Months Ended March 31,
				Three Months Ended March 31,
						2024
							(in thousands, except per system data)
							(in thousands, except per system data)
							(in thousands, except per system data)
Reconciliation of Total Operating Expense, Net to Adjusted Operating Expense:	Reconciliation of Total Operating Expense, Net to Adjusted Operating Expense:
Total operating expense, net	Total operating expense, net	$	236,614	$	177,085		$	673,239	$	426,756
Total operating expense, net
Total operating expense, net
Depreciation expense
Depreciation expense
Depreciation expense	Depreciation expense	(40,082)		(27,594)			(107,957)		(78,401)
Amortization expense	Amortization expense	(7,416)		(7,309)			(22,112)		(21,894)
Amortization expense
Amortization expense
Non-cash compensation expense
Non-cash compensation expense
Non-cash compensation expense	Non-cash compensation expense	(5,494)		(4,463)			(19,812)		(20,059)
ARO accretion expense	ARO accretion expense	(1,257)		(952)			(3,491)		(2,687)
Financing deal costs		(608)		(162)			(1,282)		(582)
Natural disaster losses and related charges, net		(1,442)		(1,161)			(2,388)		(1,161)

Acquisition costs		(150)		(3,005)			(1,137)		(5,622)
ARO accretion expense
ARO accretion expense
Non-cash disaster losses
Non-cash disaster losses
Non-cash disaster losses

Amortization of payments to dealers for exclusivity and other bonus arrangements	Amortization of payments to dealers for exclusivity and other bonus arrangements	(1,996)		(1,185)			(4,957)		(3,110)
Legal settlements		—		1,001			(750)		1,001
Provision for current expected credit losses		(8,360)		(10,967)			(29,467)		(26,881)

Amortization of payments to dealers for exclusivity and other bonus arrangements

Amortization of payments to dealers for exclusivity and other bonus arrangements
Provision for current expected credit gains (losses)
Provision for current expected credit gains (losses)
Provision for current expected credit gains (losses)
Non-cash inventory and other impairments	Non-cash inventory and other impairments	(6,443)		(864)			(22,106)		(864)
Direct sales costs		(12,635)		(3,237)			(33,199)		(4,110)
Non-cash inventory and other impairments
Non-cash inventory and other impairments
Cost of revenue related to direct sales
Cost of revenue related to direct sales
Cost of revenue related to direct sales
Cost of revenue related to cash sales
Cost of revenue related to cash sales
Cost of revenue related to cash sales	Cost of revenue related to cash sales	(12,698)		(10,225)			(34,001)		(23,946)
Cost of revenue related to inventory sales	Cost of revenue related to inventory sales	(50,694)		(40,917)			(129,016)		(89,884)
Unrealized gain (loss) on fair value instruments		9,043		(10,637)			3,123		3,809
Indemnification payments to tax equity investors		—		(1,727)			(3,053)		(1,727)
Cost of revenue related to inventory sales
Cost of revenue related to inventory sales

Unrealized gain on fair value instruments

Unrealized gain on fair value instruments

Unrealized gain on fair value instruments
Gain on held-for-sale loans	Gain on held-for-sale loans	8		—			11		—
Gain on held-for-sale loans
Gain on held-for-sale loans
Other, net
Other, net
Other, net

Adjusted Operating Expense		$	96,390	$	53,681		$	261,645	$	150,638
Adjusted Operating Expense per weighted average system		$	262	$	227		$	793	$	691
Adjusted operating expense

Adjusted operating expense

Adjusted operating expense
Adjusted operating expense per weighted average system
Adjusted operating expense per weighted average system
Adjusted operating expense per weighted average system

Estimated Gross Contracted Customer Value. We calculate estimated gross contracted customer value as defined below. We believe estimated gross contracted customer value can serve as a useful tool for investors and analysts in comparing the remaining value of our customer contracts to that of our peers.

Estimated gross contracted customer value as of a specific measurement date represents the sum of the present value of the remaining estimated future net cash flows we expect to receive from existing customers during the initial contract term of our customer agreements, which are typically 25 years in length, plus the present value of future net cash flows we expect to receive from the sale of related solar renewable energy certificates ("SRECs"), either under existing contracts or in future sales, plus the cash flows we expect to receive from energy services programs such as grid services, plus the carrying value of outstanding customer loans on our balance sheet. From these aggregate estimated initial cash flows, we subtract the present value of estimated net cash distributions to redeemable noncontrolling interests and noncontrolling interests and estimated operating, maintenance and administrative expenses associated with the ~~solar service~~customer agreements. These estimated future cash flows reflect the projected monthly customer payments over the life of our ~~solar service~~customer agreements and depend on various factors including but not limited to ~~solar service~~ agreement type, contracted rates, expected sun hours and the projected production capacity of the solar equipment installed. For the purpose of calculating this metric, we discount all future cash flows at 6%.

The anticipated operating, maintenance and administrative expenses included in the calculation of estimated gross contracted customer value include, among other things, expenses related to accounting, reporting, audit, insurance, maintenance and repairs. In the aggregate, we estimate these expenses are $20 per kilowatt per year initially, with 2% annual increases for inflation, and an additional $81 per year non-escalating expense included for energy storage systems. We do not include maintenance and repair costs for inverters and similar equipment as those are largely covered by the applicable product and dealer warranties for the life of the product, but we do include additional cost for energy storage systems, which are only covered by a 10-year warranty. Expected distributions to tax equity investors vary among the different tax equity funds and are based on individual tax equity fund contract provisions.

~~Table of Contents~~

Estimated gross contracted customer value is forecasted as of a specific date. It is forward-looking and we use judgment in developing the assumptions used to calculate it. Factors that could impact estimated gross contracted customer value include, but are not limited to, customer payment defaults, or declines in utility rates or early termination of a contract in certain circumstances, including prior to installation. The following table presents the calculation of estimated gross contracted customer value as of ~~September 30, 2023~~March 31, 2024 and December 31, ~~2022,~~2023, calculated using a 6% discount rate.

Table of Contents

As of
September 30, 2023 As of
December 31, 2022
(in millions)
Estimated gross contracted customer value $ 8,244 $ 5,875


	As of March 31, 2024		As of December 31, 2023


	(in millions)
Estimated gross contracted customer value	$	9,490	$	9,097

Sensitivity Analysis. The calculation of estimated gross contracted customer value and associated operational metrics requires us to make a number of assumptions regarding future revenues and costs that may not prove accurate. Accordingly, we present below a sensitivity analysis with a range of assumptions. We consider a discount rate of 6% to be appropriate based on recent transactions that demonstrate a portfolio of ~~solar service~~customer agreements is an asset class that can be securitized successfully on a long-term basis with a weighted-average coupon of less than 6%. We also present these metrics with a discount rate of 6% based on industry practice. The appropriate discount rate for these estimates may change in the future due to the level of inflation, rising interest rates, our cost of capital and consumer demand for solar energy systems. In addition, the table below provides a range of estimated gross contracted customer value amounts if different cumulative customer loss rate assumptions were used. We are presenting this information for illustrative purposes only and as a comparison to information published by our peers.


Estimated Gross Contracted Customer Value	Estimated Gross Contracted Customer Value											Estimated Gross Contracted Customer Value
		As of September 30, 2023
		Discount rate
	As of March 31, 2024																As of March 31, 2024
	Discount rate																Discount rate
Cumulative customer loss rate	Cumulative customer loss rate	4%		5%		6%		7%		8%		Cumulative customer loss rate	4%	5%	6%	7%		8%
		(in millions)
	(in millions)																(in millions)
5%	5%	$	8,741	$	8,338	$	7,985	$	7,675	$	7,402
0%	0%	$	9,085	$	8,635	$	8,244	$	7,901	$	7,600

Significant Factors and Trends Affecting Our Business

Our results of operations and our ability to grow our business over time could be impacted by a number of factors and trends that affect our industry generally, as well as new offerings of services and products we may acquire or seek to acquire in the future. Additionally, our business is concentrated in certain markets, putting us at risk of region-specific disruptions such as adverse economic, regulatory, political, weather and other conditions. See "Risk Factors" in our Annual Report on Form 10-K filed with the SEC on February ~~23, 2023, our Quarterly Reports on Form 10-Q filed with the SEC on April 27, 2023 and July 27, 2023 and in this Quarterly Report on Form 10-Q~~22, 2024 for further discussion of risks affecting our business.

Financing Availability. Our future growth and profitability depends, in significant part, on our ability to raise capital from third-party investors on competitive terms to help finance the origination of our solar energy systems under our solar service agreements. We have historically used debt, such as convertible senior notes, senior notes, asset-backed and loan-backed securitizations and warehouse facilities, tax equity, preferred equity, common equity and other financing strategies to help fund our operations. ~~From our inception through September 30, 2023, we have raised more than $14.5 billion in total capital commitments from equity, debt and tax equity investors.~~ With respect to tax equity, there are a limited number of potential tax equity investors, and the competition for this investment capital is intense. The principal tax credit on which tax equity investors in our industry rely is the Section 48(a) ITC. Prior to the Inflation Reduction Act of 2022 ("IRA"), which was enacted in August 2022, the amount for the Section 48(a) ITC was equal to (a) 30% of the basis of eligible solar property that began construction before 2020 or (b) 26% of the basis of eligible solar property that began construction during 2020, 2021 or 2022. Under the IRA, the Section 48(a) ITC is (a) 26% for eligible solar property that began construction after 2019 and was placed in service before 2022 and (b) 30% for eligible solar property or eligible energy storage property that begins construction before 2025 provided (i) the project satisfies certain labor and apprenticeship requirements, (ii) the project has a maximum net output of less than one megawatt (as measured in alternating current) or (iii) the project began construction prior to January 29, 2023. If no criterion is satisfied, the base amount of the Section 48(a) ITC will be equal to 6%. In addition, the Section 48(a) ITC will be replaced by the Section 48E ITC for eligible solar energy property or eligible energy storage property that begins construction after 2024, and the Section 48E ITC percentage will be the same as the percentage for the Section 48(a) ITC and subject to the same requirements in order to receive the full benefit. The Section 48E ITC percentage will begin to phase down for projects that begin

~~Table of Contents~~

construction after (a) 2033 or (b) if later, the first year after the year in which the U.S. Department of Treasury determines greenhouse gas emissions from the production of electricity in the United States are no more than 25% of 2022 levels. We believe our solar energy systems and energy storage systems generally will not be subject to the labor and apprenticeship requirements of the IRA due to the maximum net output of most of our solar energy systems and energy storage systems. However, solar energy systems and energy storage systems ~~systems~~ financed by Hestia securitizations will be subject to applicable labor and other requirements imposed by the ~~DOE~~U.S Department of Energy ("DOE") and the U.S. Department of Labor. In addition, the IRA added a new provision that allows taxpayers to transfer certain federal income tax credits that arise after 2022, such as the Section 48(a) ITC, to third

Table of Contents

parties for cash. In September 2023, we entered into our first tax credit purchase ~~agreements.~~and sale agreements and subsequently entered into additional tax credit purchase and sale agreements in December 2023, February 2024 and March 2024. It is unclear what long-term effect the ability to transfer Section 48(a) ITCs will have on tax equity structures, although we expect the market for tax equity structures to continue for investors who will continue to value benefits that are not transferable, such as accelerated depreciation. We are continuing to evaluate the overall impact and applicability of the IRA to our ability to raise capital from third-party investors.

Our ability to raise capital from third-party investors is also affected by general economic conditions, the state of the capital markets, inflation levels and concerns about our industry or business. Specifically, interest rates have risen over the past few years and remain subject to volatility that may result from action taken by the Federal Reserve. Recent data have suggested inflationary pressures may be more durable than anticipated, which could result in interest rate increases or continued higher interest rates and/or further tapering of quantitative easing policies enacted towards the outset of the COVID-19 pandemic sooner than previously expected.

Cost of Solar Energy Systems and Energy Storage Systems. ~~Upward~~Although we have experienced a prolonged period of component cost declines, upward pressure on prices of solar energy systems and energy storage systems may still occur due to growth in the solar industry, regulatory policy changes, tariffs and duties or inflationary cost ~~pressures and an increase in demand.~~pressures. As a result of these developments, we may pay higher prices on solar modules and other cost components, which may make it less economical for us to serve certain markets. ~~Attachment rates for energy storage systems have trended higher while the price to acquire has trended~~While lower ~~making the addition~~costs of ~~energy storage systems a potential area of~~components may benefit our growth ~~for us. Downward~~and profitability, downward pressure on prices of solar energy systems and energy storage systems may lead to impairment of our inventory.

Energy Storage Systems. Our energy storage systems increase our customers' independence from the centralized utility and provide on-site backup power when there is a grid outage due to storms, wildfires, other natural disasters and general power failures caused by supply or transmission issues. In addition, at times it can be more economic to consume less energy from the grid or, alternatively, to export solar energy back to the grid. Recent technological advancements for energy storage systems allow the energy storage system to adapt to pricing and utility rate shifts by controlling the inflows and outflows of power, allowing customers to increase the value of their solar energy system plus energy storage system. The energy storage system charges during the day, making the energy it stores available to the home or business when needed. It also features software that can customize power usage for the individual customer, providing backup power, optimizing solar energy consumption versus grid consumption or preventing export to the grid as appropriate. The software is tailored based on utility regulation, economic indicators and grid conditions. The combination of energy control, increased energy resilience and independence from the grid is strong incentive for customers to adopt solar and energy storage. Attachment rates for energy storage systems have trended higher while the price to acquire has trended lower making the addition of energy storage systems a potential area of growth and profitability for us. As energy storage systems and their related software features become more advanced, we expect to see increased adoption of energy storage systems.

Climate Change Action. As a result of increasing global awareness of and aversion to climate change impacts, we believe the renewable energy market in which we operate, and investment in climate solutions more broadly, will continue to grow as the impact of climate change increases. This trend, along with increasing commitments to reduce carbon emissions, is expected to result in increased demand for our products and services. Under the current presidential administration, the focus on cleaner energy sources and technology to decarbonize the U.S. economy continues to accelerate. The federal government's administration under President Joe Biden ("Biden administration") has taken immediate steps that we believe signify support for cleaner energy sources, including, but not limited to, rejoining the Paris Climate Accord, re-establishing a social price on carbon used in cost/benefit analysis for policy making and announcing a commitment to transition the U.S. economy to a net-zero carbon economy by 2050. We expect the Biden administration, combined with a closely divided Congress, to continue to take actions that are supportive of the renewable energy industry, such as incentivizing clean energy sources and supporting new investment in areas like renewables. There is no guarantee a new administration or a change in the makeup of Congress would continue to take supportive actions, and such a changed administration may make decisions and/or pass laws that are detrimental to our industry.

Government Regulations, Policies and Incentives. Our growth and operations strategy depends in significant part on government policies and incentives that promote and support solar energy and enhance the economic viability of distributed solar. These policies and incentives come in various forms, including net metering, eligibility for accelerated depreciation such as the modified accelerated cost recovery system, SRECs, tax abatements, rebates, renewable targets, DOE loan guarantee programs, incentive programs and tax credits, particularly the Section 48(a) ITC and the Section 25D Credit. The ~~recently enacted~~ IRA expanded and extended the tax credits available to solar energy projects in an effort to achieve the Biden administration's non-binding target of net-zero emissions by 2050, which we expect will increase demand for our services. The ~~IRA~~Section 25D Credit allows qualifying

~~Table of Contents~~

homeowners to deduct up to 30% of the cost of installing residential solar energy systems from their U.S. federal income taxes, thereby returning a significant portion of the purchase price of the residential solar energy system to homeowners that may participate in our solar loan programs. Under the terms of the current extension, the residential tax credit will remain at 30% through the end of 2032, reduce to 26% for 2033, reduce to 22% for 2034, and further reduce to 0% after the end of 2034 for residential solar energy systems, unless it is extended before that time. The IRA also extended the

Table of Contents

investment tax credit for solar energy projects through at least 2033 and, depending on the location of a particular project, its size, its ability to satisfy certain labor and domestic content requirements and the category of consumers it serves, the investment tax credit percentage can range between 6% and 70%. Policies requiring solar on new roofs, such as those enacted in California and New York City, also support the growth of distributed solar. The sale of SRECs has constituted a significant portion of our revenue historically. A change in the value of net metering credits or SRECs or changes in other policies or a loss or reduction in such incentives could decrease the attractiveness of distributed solar to us, our dealers and our customers in applicable markets, which could reduce our customer acquisition opportunities. Such a loss or reduction could also reduce our willingness to pursue certain customer acquisitions due to decreased revenue or income under our ~~solar service~~customer agreements. Additionally, such a loss or reduction may also impact the terms of and availability of third-party financing. If any of these government regulations, policies or incentives are adversely amended, delayed, eliminated, reduced, retroactively changed or not extended beyond their current expiration dates or there is a negative impact from the recent federal law changes or proposals, our operating results and the demand for, and the economics of, distributed solar energy may decline, which could harm our business.

Components of Results of Operations

Revenue. We recognize revenue from contracts with customers as we satisfy our performance obligations at a transaction price reflecting an amount of consideration based upon an estimated rate of return, net of cash incentives. We express this rate of return as the solar rate per kilowatt hour ("kWh") in the customer contract. The amount of revenue we recognize does not equal customer cash payments because we satisfy performance obligations ahead of cash receipt or evenly as we provide continuous access on a stand-ready basis to the solar energy system. We reflect the differences between revenue recognition and cash payments received in accounts receivable, other assets or deferred revenue, as appropriate.

~~PPAs~~PPA Revenue. We have determined solar service agreements under which customers purchase electricity from us should be accounted for as revenue from contracts with customers. We recognize revenue based upon the amount of electricity delivered as determined by remote monitoring equipment at solar rates specified under the contracts. The PPAs generally have a term of 20 or 25 years with an opportunity for customers to renew for up to an additional 10 years, via two five-year or one 10-year renewal options.

Lease ~~Agreements~~Revenue. We are the lessor under lease agreements for solar energy systems and energy storage systems, which we account for as revenue from contracts with customers. We recognize revenue on a straight-line basis over the contract term as we satisfy our obligation to provide continuous access to the solar energy system. The lease agreements generally have a term of 20 or 25 years with an opportunity for customers to renew for up to an additional 10 years, via two five-year or one 10-year renewal options.

We provide customers under our lease agreements a performance guarantee that each solar energy system will achieve a certain specified minimum solar energy production output. The specified minimum solar energy production output may not be achieved due to natural fluctuations in the weather or equipment failures from exposure and wear and tear outside of our control, among other factors. We determine the amount of guaranteed output based on a number of different factors, including (a) the specific site information related to the tilt of the panels, azimuth (a horizontal angle measured clockwise in degrees from a reference direction) of the panels, size of the solar energy system and shading on site; (b) the calculated amount of available irradiance (amount of energy for a given flat surface facing a specific direction) based on historical average weather data and (c) the calculated amount of energy output of the solar energy system.

If the solar energy system does not produce the guaranteed production amount, we are required to provide a bill credit or refund a portion of the previously remitted customer payments, where the bill credit or repayment is calculated as the product of (a) the shortfall production amount and (b) the dollar amount (guaranteed rate) per kWh that is fixed throughout the term of the contract. These bill credits or remittances of a customer's payments, if needed, are payable in January following the end of the first three years of the solar energy system's placed in service date and then every annual period thereafter. See Note ~~14,~~13, Commitments and Contingencies, to our interim unaudited condensed consolidated financial statements ("interim financial statements") included elsewhere in this Quarterly Report on Form 10-Q.

~~Table of Contents~~

Table of Contents

period in which the service was performed.

~~SRECs~~SREC Revenue. Each SREC represents the environmental benefit of one megawatt hour (1,000 kWh) generated by a solar energy system. We sell SRECs to utilities and other third parties who use the SRECs to meet renewable portfolio standards and can do so separate from the actual electricity generated by the renewable-based generation source. We account for SRECs generated from solar energy systems owned by us, as opposed to those owned by our customers, as governmental incentives with no costs incurred to obtain them and do not consider those SRECs output of the underlying solar energy systems. We classify SRECs as inventory held until sold and delivered to third parties. We enter into economic hedges with major financial institutions related to expected production of SRECs through forward contracts to partially mitigate the risk of decreases in SREC market rates. While these fixed price forward contracts serve as an economic hedge against spot price fluctuations for the SRECs, the contracts do not qualify for hedge accounting and are not designated as cash flow hedges or fair value hedges. The contracts require us to physically deliver the SRECs upon settlement. We recognize the related revenue upon the transfer of the SRECs to the counterparty. The costs related to the sales of SRECs are generally limited to fees for brokered transactions. Accordingly, the sale of SRECs in a period generally has a favorable impact on our operating results for that period. In certain circumstances we are required to purchase SRECs on the open market to fulfill minimum delivery requirements under our forward contracts.

Loan ~~Agreements~~Revenue. We recognize payments received from customers under loan agreements (a) as interest income, to the extent attributable to earned interest on the contract that financed the customer's purchase; (b) as a reduction of a note receivable on the balance sheet, to the extent attributable to a return of principal (whether scheduled or prepaid) on the contract that financed the customer's purchase; and (c) as revenue, to the extent attributable to payments for operations and maintenance services provided by us. Similar to our lease agreements, we provide customers under our loan agreements a performance guarantee that each solar energy system will achieve a certain specified minimum solar energy production output, which is a significant proportion of its expected output.

Other Revenue. Other revenue includes certain state and utility incentives. We recognize revenue from state and utility incentives in the periods in which they are earned.

Cost of Revenue—Depreciation. Cost of revenue—depreciation represents depreciation on solar energy systems under lease agreements and PPAs that have been placed in service.

Cost of Revenue—Inventory Sales. Cost of revenue—inventory sales represents costs related to the procurement and direct sale of inventory to our dealers or other parties, including shipping and handling costs.

Cost of Revenue—Other. Cost of revenue—other represents costs related to cash sales, costs to purchase SRECs on the open market, SREC broker fees, payroll and related costs for Sunnova personnel who install solar energy systems and energy storage systems and other items deemed to be a cost of providing the service of selling power to customers or potential customers, such as certain costs to service loan agreements, costs for filing under the Uniform Commercial Code to maintain title, title searches, credit checks on potential customers at the time of initial contract and other similar costs, typically directly related to the volume of customers and potential customers.

Operations and Maintenance Expense. Operations and maintenance expense represents costs from third parties for maintaining and servicing the solar energy systems, property insurance, property taxes and warranties. When services for maintaining and servicing solar energy systems are provided by Sunnova personnel rather than third parties, those amounts are included in payroll costs classified within general and administrative expense. During the ~~nine~~three months ended ~~September 30,~~March 31, 2024 and 2023, ~~and 2022,~~ we incurred ~~$26.6~~$15.9 million and ~~$13.3~~$9.6 million, respectively, of Sunnova personnel costs related to maintaining and servicing solar energy systems, which are classified in general and administrative expense. In addition, operations and maintenance expense includes write downs and write-offs related to inventory adjustments, gains and losses on disposals and other impairments and impairments and costs due to natural disaster losses net of insurance proceeds recovered under our business interruption and property damage insurance coverage for natural disasters.

~~Table of Contents~~

General and Administrative Expense. General and administrative expense represents costs for our employees, such as

Table of Contents

salaries, bonuses, benefits and all other employee-related costs, including stock-based compensation, professional fees related to legal, accounting, human resources, finance and training, ~~information~~software and business technology ~~and software~~ services, marketing and communications, acquisition costs, travel and rent and other office-related expenses. General and administrative expense also includes depreciation on assets not classified as solar energy systems, including ~~information technology~~ software and business technology development projects, vehicles, furniture, fixtures, computer equipment and leasehold improvements and accretion expense on AROs. We capitalize a portion of general and administrative costs, such as payroll-related costs, that is related to employees who are directly involved in the design, construction, installation and testing of the solar energy systems but not directly associated with a particular asset. We also capitalize a portion of general and administrative costs, such as payroll-related costs, that is related to employees who are directly associated with and devote time to internal ~~information technology~~ software and business technology development projects, to the extent of the time spent directly on the application and development stage of such software project.

Other Operating ~~(Income) Expense.~~Income. Other operating ~~(income) expense~~income primarily represents changes in the fair values of certain financial instruments related to our investments in solar receivables and contingent consideration related to the installation and microgrid earnouts.

Interest Expense, Net. Interest expense, net represents interest on our borrowings under our various debt facilities, amortization of debt discounts and deferred financing costs and realized and unrealized gains and losses on derivative instruments.

Interest Income. Interest income represents interest income from the notes receivable under our loan program and income on short term investments with financial institutions.

Other (Income) Expense. Other (income) expense primarily represents changes in the fair value of certain financial instruments related to non-operating assets.

Income Tax ~~Benefit.~~(Benefit) Expense. We account for income taxes under Accounting Standards Codification 740, Income Taxes. As such, we determine deferred tax assets and liabilities based on temporary differences resulting from the different treatment of items for tax and financial reporting purposes. We measure deferred tax assets and liabilities using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. Additionally, we must assess the likelihood that deferred tax assets will be recovered as deductions from future taxable income. We ~~have a full valuation allowance on our deferred tax assets because we believe it is more likely than not that our deferred tax assets will not be realized. We~~ evaluate the recoverability of our deferred tax assets on a quarterly basis. The income tax ~~benefit~~(benefit) expense includes the effects of taxes incurred in U.S. territories where the tax code for the respective territory may have separate tax reporting requirements, as applicable. We account for ITCs using the flow-through ~~method.~~method, which states the tax benefit is to be recognized when the ITC is realizable. For interim reporting, we utilize a forecasted annualized effective tax rate. For tax credit purchase and sale agreements entered into by certain of our consolidated tax equity partnerships, we record our share of the sale as income tax benefit and the tax equity investor's share as an increase to redeemable noncontrolling interest or noncontrolling interest.

Net ~~Income (Loss)~~Loss Attributable to Redeemable Noncontrolling Interests and Noncontrolling Interests. Net ~~income (loss)~~loss attributable to redeemable noncontrolling interests and noncontrolling interests represents tax equity interests in the net income or loss of certain consolidated subsidiaries based on hypothetical liquidation at book value.

4845

Table of Contents

Results of Operations—Three Months Ended ~~September 30, 2023~~March 31, 2024 Compared to Three Months Ended ~~September 30, 2022~~March 31, 2023

The following table sets forth our unaudited condensed consolidated statements of operations data for the periods indicated.


		Three Months Ended September 30,
		2023		2022		Change
		(in thousands)
	Three Months Ended March 31,
		2024
		2024
		2024						2023		Change
	(in thousands)								(in thousands)
Revenue	Revenue	$	198,398	$	149,364	$	49,034

Operating expense:	Operating expense:
Operating expense:
Operating expense:
Cost of revenue—depreciation
Cost of revenue—depreciation
Cost of revenue—depreciation	Cost of revenue—depreciation	33,743		24,663		9,080
Cost of revenue—inventory sales	Cost of revenue—inventory sales	50,694		40,917		9,777
Cost of revenue—other	Cost of revenue—other	30,981		15,567		15,414
Operations and maintenance	Operations and maintenance	18,702		9,774		8,928
General and administrative	General and administrative	111,545		75,897		35,648

Other operating (income) expense		(9,051)		10,267		(19,318)
Other operating income
Other operating income
Other operating income
Total operating expense, net	Total operating expense, net	236,614		177,085		59,529

Operating loss	Operating loss	(38,216)		(27,721)		(10,495)
Operating loss
Operating loss

Interest expense, net	Interest expense, net	57,601		20,824		36,777
Interest expense, net
Interest expense, net

Interest income
Interest income
Interest income	Interest income	(30,590)		(16,185)		(14,405)

Other (income) expense	Other (income) expense	561		(12)		573

Other (income) expense

Other (income) expense
Loss before income tax	Loss before income tax	(65,788)		(32,348)		(33,440)

Income tax benefit		(9,325)		—		(9,325)
Income tax (benefit) expense
Income tax (benefit) expense
Income tax (benefit) expense
Net loss	Net loss	(56,463)		(32,348)		(24,115)
Net income attributable to redeemable noncontrolling interests and noncontrolling interests		6,684		32,195		(25,511)
Net loss attributable to redeemable noncontrolling interests and noncontrolling interests
Net loss attributable to stockholders	Net loss attributable to stockholders	$	(63,147)	$	(64,543)	$	1,396

Revenue


		Three Months Ended September 30,
		2023		2022		Change
		(in thousands)
	Three Months Ended March 31,
		2024
		2024
		2024						2023		Change
	(in thousands)								(in thousands)
PPA revenue	PPA revenue	$	38,300	$	31,891	$	6,409
Lease revenue	Lease revenue	37,966		25,912		12,054
Inventory sales revenue	Inventory sales revenue	51,356		45,528		5,828
Service revenue	Service revenue	19,323		4,309		15,014
Direct sales revenue
SREC revenue	SREC revenue	16,136		16,241		(105)
Cash sales revenue	Cash sales revenue	24,284		18,933		5,351
Loan revenue	Loan revenue	9,283		5,012		4,271
Other revenue	Other revenue	1,750		1,538		212
Total	Total	$	198,398	$	149,364	$	49,034

4946

Table of Contents

Revenue ~~increased~~decreased by ~~$49.0 million~~$792,000 in the three months ended ~~September 30, 2023~~March 31, 2024 compared to the three months ended ~~September 30, 2022~~March 31, 2023 primarily due to a decrease in inventory sales, partially offset by an increased number of solar energy systems in service. The weighted average number of systems (excluding systems with loan agreements, service-only agreements and cash sales) increased from approximately ~~132,000~~149,800 for the three months ended ~~September 30, 2022~~March 31, 2023 to approximately ~~173,500~~206,300 for the three months ended ~~September 30, 2023.~~March 31, 2024. Excluding SREC revenue, revenue under our loan agreements, inventory sales revenue, cash sales revenue, and service revenue, on a weighted average number of systems basis, revenue remained relatively flat at $450 per system for the three months ended September 30, 2022 and 2023. Inventory sales revenue increased by $5.8 million in the three months ended September 30, 2023 compared to the three months ended September 30, 2022 primarily due to the sale of inventory to our dealers or other parties. Service revenue increased by $15.0 million in the three months ended September 30, 2023 compared to the three months ended September 30, 2022 primarily due to an increased focus on direct sales of additional services to existing customers. SREC revenue decreased by $105,000 in the three months ended September 30, 2023 compared to the three months ended September 30, 2022 primarily due to a decrease in SREC volume in New Jersey. The amount of SREC revenue recognized in each period is also affected by the total number of solar energy systems, weather seasonality and hedge and spot prices associated with the timing of the sale of SRECs. On a weighted average number of systems basis, revenues under our loan agreements (excluding accessory loans, which do not generate revenue) increased from $87 per system for the three months ended September 30, 2022 to $103 per system for the same period in 2023 (19% increase) primarily due to an increase in the fees charged for operations and maintenance services.

~~Cost of Revenue—Depreciation~~

Three Months Ended
September 30,
2023 2022 Change
(in thousands)
Cost of revenue—depreciation $ 33,743 $ 24,663 $ 9,080

Cost of revenue—depreciation increased by $9.1 million in the three months ended September 30, 2023 compared to the three months ended September 30, 2022. This increase was primarily due to an increase in the weighted average number of systems (excluding systems with loan agreements, service-only agreements and cash sales) from approximately 132,000 for the three months ended September 30, 2022 to approximately 173,500 for the three months ended September 30, 2023. On a weighted average number of systems basis, cost of revenue—depreciation remained relatively flat at $187 per system for the three months ended September 30, 2022 compared to $194 per system for the same period in 2023 (4% increase).

~~Cost of Revenue—Inventory Sales~~

Three Months Ended
September 30,
2023 2022 Change
(in thousands)
Cost of revenue—inventory sales $ 50,694 $ 40,917 $ 9,777

~~Cost of revenue—inventory sales increased by $9.8 million in the three months ended September 30, 2023 compared to the three months ended September 30, 2022 due to higher inventory sales activity.~~

~~Cost of Revenue—Other~~

Three Months Ended
September 30,
2023 2022 Change
(in thousands)
Cost of revenue—other $ 30,981 $ 15,567 $ 15,414

Cost of revenue—other increased by $15.4 million in the three months ended September 30, 2023 compared to the three months ended September 30, 2022. This increase was primarily due to costs related to services of $12.4 million.

~~Table of Contents~~

~~Operations and Maintenance Expense~~

Three Months Ended
September 30,
2023 2022 Change
(in thousands)
Operations and maintenance $ 18,702 $ 9,774 $ 8,928

Operations and maintenance expense increased by $8.9 million in the three months ended September 30, 2023 compared to the three months ended September 30, 2022 primarily due to higher impairments and losses on disposals, truck roll costs and property insurance costs. Operations and maintenance expense per weighted average system, excluding net natural disaster losses and non-cash inventory and other impairments, increased from $45 per system for the three months ended September 30, 2022 to $47 per system for the three months ended September 30, 2023 primarily due to higher truck roll costs.

~~General and Administrative Expense~~

Three Months Ended
September 30,
2023 2022 Change
(in thousands)
General and administrative $ 111,545 $ 75,897 $ 35,648

General and administrative expense increased by $35.6 million in the three months ended September 30, 2023 compared to the three months ended September 30, 2022 primarily due to increases in (a) payroll and employee related expenses primarily due to the hiring of personnel to support growth of $20.6 million, (b) consultants, contractors, and professional fees of $3.8 million, (c) depreciation expense of $3.4 million, (d) information technology expense of $3.2 million, (e) marketing expense of $2.4 million, (f) other personnel expense of $1.6 million and (g) legal expense of $1.4 million.

~~Other Operating (Income) Expense~~

Three Months Ended
September 30,
2023 2022 Change
(in thousands)
Other operating (income) expense $ (9,051) $ 10,267 $ (19,318)

Other operating (income) expense changed by $19.3 million in the three months ended September 30, 2023 compared to the three months ended September 30, 2022 primarily due to changes in the fair value of certain financial instruments and contingent consideration.

~~Interest Expense, Net~~

Three Months Ended
September 30,
2023 2022 Change
(in thousands)
Interest expense, net $ 57,601 $ 20,824 $ 36,777

Interest expense, net increased by $36.8 million in the three months ended September 30, 2023 compared to the three months ended September 30, 2022. This increase was primarily due to an increase in interest expense of $39.5 million due to higher levels of debt outstanding in 2023 compared to 2022 and a decrease in unrealized gains on derivatives of $8.3 million. This was partially offset by an increase in realized gains on derivatives of $15.8 million.

~~Table of Contents~~

~~Interest Income~~

Three Months Ended
September 30,
2023 2022 Change
(in thousands)
Interest income $ 30,590 $ 16,185 $ 14,405

Interest income increased by $14.4 million in the three months ended September 30, 2023 compared to the three months ended September 30, 2022. This increase was primarily due to an increase in the weighted average number of systems with loan agreements from approximately 60,800 for the three months ended September 30, 2022 to approximately 133,300 for the three months ended September 30, 2023. On a weighted average number of systems basis, loan interest income decreased from $249 per system for the three months ended September 30, 2022 to $201 per system for the three months ended September 30, 2023 primarily due to an increase in the volume of accessory loans, which have smaller principal balances.

~~Income Tax Benefit~~

Income tax benefit increased by $9.3 million in the three months ended September 30, 2023 compared to the three months ended September 30, 2022 primarily due to ITC sales that resulted in an income tax benefit offset by an increase in taxable income related to tax gains recognized on the sale of solar energy systems and energy storage systems located in separate tax-reporting jurisdictions.

~~Net Income Attributable to Redeemable Noncontrolling Interests and Noncontrolling Interests~~

Net income attributable to redeemable noncontrolling interests and noncontrolling interests decreased by $25.5 million in the three months ended September 30, 2023 compared to the three months ended September 30, 2022 primarily due to a decrease in income attributable to noncontrolling interests from tax equity funds added in 2021, 2022 and 2023.

~~Table of Contents~~

~~Results of Operations—Nine Months Ended September 30, 2023 Compared to Nine Months Ended September 30, 2022~~

~~The following table sets forth our unaudited condensed consolidated statements of operations data for the periods indicated.~~

Nine Months Ended
September 30,
2023 2022 Change
(in thousands)
Revenue $ 526,471 $ 362,098 $ 164,373
Operating expense:
Cost of revenue—depreciation 92,262 69,935 22,327
Cost of revenue—inventory sales 129,016 89,884 39,132
Cost of revenue—other 81,599 32,974 48,625
Operations and maintenance 59,306 23,787 35,519
General and administrative 314,190 214,362 99,828
Other operating income (3,134) (4,186) 1,052
Total operating expense, net 673,239 426,756 246,483
Operating loss (146,768) (64,658) (82,110)
Interest expense, net 200,155 44,380 155,775
Interest income (81,670) (40,428) (41,242)
Other (income) expense 3,969 (327) 4,296
Loss before income tax (269,222) (68,283) (200,939)
Income tax benefit (1,632) — (1,632)
Net loss (267,590) (68,283) (199,307)
Net income (loss) attributable to redeemable noncontrolling interests and noncontrolling interests (37,269) 72,455 (109,724)
Net loss attributable to stockholders $ (230,321) $ (140,738) $ (89,583)

~~Revenue~~

Nine Months Ended
September 30,
2023 2022 Change
(in thousands)
PPA revenue $ 99,201 $ 84,235 $ 14,966
Lease revenue 103,468 71,717 31,751
Inventory sales revenue 137,762 99,773 37,989
Service revenue 55,282 7,024 48,258
SREC revenue 38,982 37,172 1,810
Cash sales revenue 62,827 45,695 17,132
Loan revenue 24,538 12,582 11,956
Other revenue 4,411 3,900 511
Total $ 526,471 $ 362,098 $ 164,373

Revenue increased by $164.4 million in the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022 primarily due to an increased number of solar energy systems in service. The weighted average number of

~~Table of Contents~~

systems (excluding systems with loan agreements, service-only agreements and cash sales) increased from approximately 124,200 for the nine months ended September 30, 2022 to approximately 161,000 for the nine months ended September 30, 2023. Excluding SREC revenue, revenue under our loan agreements, inventory sales revenue, cash sales revenue and service revenue, on a weighted average number of systems basis, revenue ~~remained relatively flat at $1,287~~increased from $361 per system for the ~~nine~~three months ended ~~September 30, 2022 compared~~March 31, 2023 to ~~$1,286~~$393 per system for the same period in ~~2023.~~2024 (9% increase). Inventory sales revenue decreased by $36.3 million in the three months ended March 31, 2024 compared to the three months ended March 31, 2023 due to our dealers having sufficient inventory on hand from prior purchases. Service revenue decreased by $2.8 million in the three months ended March 31, 2024 compared to the three months ended March 31, 2023 primarily due to a decrease in repair service revenue. Direct sales revenue increased by ~~$38.0~~$1.6 million in the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 compared to the ~~nine~~three months ended ~~September 30, 2022 due to the sale of inventory to our dealers or other parties, which began in April 2022. Service revenue increased by $48.3 million in the nine months ended September 30,~~March 31, 2023 ~~compared to the nine months ended September 30, 2022 primarily~~ due to an increased focus on direct sales of additional services to existing customers. SREC revenue increased by ~~$1.8 million~~$617,000 in the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 compared to the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 primarily due to increases in SREC ~~prices~~volumes in Connecticut, ~~Puerto Rico~~Massachusetts and Pennsylvania. The amount of SREC revenue recognized in each period is also affected by the total number of solar energy systems, weather seasonality and hedge and spot prices associated with the timing of the sale of SRECs. On a weighted average number of systems basis, ~~revenues~~revenue under our loan agreements (excluding accessory loans, which do not generate revenue) increased from ~~$253~~$95 per system for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 to ~~$297~~$113 per system for the same period in ~~2023 (17%~~2024 (19% increase) primarily due to an increase in the fees charged for operations and maintenance services.

Cost of Revenue—Depreciation

Nine Months Ended
September 30,
2023 2022 Change
(in thousands)
Cost of revenue—depreciation $ 92,262 $ 69,935 $ 22,327


	Three Months Ended March 31,
	2024		2023		Change
	(in thousands)
Cost of revenue—depreciation	$	42,156	$	28,197	$	13,959

Cost of revenue—depreciation increased by ~~$22.3~~$14.0 million in the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 compared to the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023. This increase was primarily due to an increase in the weighted average number of systems (excluding systems with loan agreements, service-only agreements and cash sales) from approximately ~~124,200~~149,800 for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 to approximately ~~161,000~~206,300 for the ~~nine~~three months ended ~~September 30, 2023.~~March 31, 2024. On a weighted average number of systems basis, cost of revenue—depreciation ~~remained relatively flat at $563~~increased from $188 per system for the ~~nine~~three months ended ~~September 30, 2022 compared~~March 31, 2023 to ~~$573~~$204 per system for the same period in ~~2023 (2%~~2024 (9% increase).

Cost of Revenue—Inventory Sales

Nine Months Ended
September 30,
2023 2022 Change
(in thousands)
Cost of revenue—inventory sales $ 129,016 $ 89,884 $ 39,132


	Three Months Ended March 31,
	2024		2023		Change
	(in thousands)
Cost of revenue—inventory sales	$	21,892	$	51,779	$	(29,887)

Cost of revenue—inventory sales ~~increased~~decreased by ~~$39.1~~$29.9 million in the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 compared to the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023. This ~~increase~~decrease was due to ~~costs from the sale of inventory to~~ our dealers ~~or other parties, which began in April 2022.~~having sufficient inventory on hand from prior purchases.

Cost of Revenue—Other

Nine Months Ended
September 30,
2023 2022 Change
(in thousands)
Cost of revenue—other $ 81,599 $ 32,974 $ 48,625


	Three Months Ended March 31,
	2024		2023		Change
	(in thousands)
Cost of revenue—other	$	39,348	$	19,224	$	20,124

Cost of revenue—other increased by ~~$48.6~~$20.1 million in the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 compared to the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023. This increase was primarily due to costs related to ~~services of $35.8 million and costs related to cash~~direct sales revenue of ~~$10.1 million.~~

$10.8 million, costs

5447

Table of Contents

related to cash sales revenue of $4.5 million and costs related to services of $3.6 million.

Operations and Maintenance Expense

Nine Months Ended
September 30,
2023 2022 Change
(in thousands)
Operations and maintenance $ 59,306 $ 23,787 $ 35,519


	Three Months Ended March 31,
	2024		2023		Change
	(in thousands)
Operations and maintenance	$	36,945	$	10,739	$	26,206

Operations and maintenance expense increased by ~~$35.5~~$26.2 million in the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 compared to the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 primarily due to higher impairments and losses on disposals and truck roll ~~costs and property insurance~~ costs. Operations and maintenance expense per weighted average system, excluding net natural disaster losses and non-cash inventory and other impairments, increased from ~~$131~~$52 per system for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 to ~~$163~~$58 per system for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 primarily due to higher truck roll costs.

General and Administrative Expense

Nine Months Ended
September 30,
2023 2022 Change
(in thousands)
General and administrative $ 314,190 $ 214,362 $ 99,828


	Three Months Ended March 31,
	2024		2023		Change
	(in thousands)
General and administrative	$	117,111	$	101,261	$	15,850

General and administrative expense increased by ~~$99.8~~$15.9 million in the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 compared to the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 primarily due to increases in (a) payroll and employee related expenses primarily due to the hiring of personnel to support growth of ~~$51.1~~$15.4 million, (b) depreciation expense of $4.1 million, (c) software and business technology expense of $2.6 million, (d) marketing expense of $2.2 million and (e) consultants, contractors and professional fees of ~~$9.9~~$1.5 million, ~~(c) depreciation expense of $7.2 million, (d) information technology expense of $7.0 million, (e) legal expense of $6.0 million, (f) marketing expense of $4.9 million, (g) fees of $4.6 million and (h)~~partially offset by a decrease in provision for current expected credit losses ~~primarily due to the growth in loan customers~~ of ~~$2.6~~$10.5 million.

Other Operating Income

Nine Months Ended
September 30,
2023 2022 Change
(in thousands)
Other operating income $ (3,134) $ (4,186) $ 1,052


	Three Months Ended March 31,
	2024		2023		Change
	(in thousands)
Other operating income	$	(12,326)	$	(723)	$	(11,603)

Other operating income ~~decreased~~increased by ~~$1.1~~$11.6 million in the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 compared to the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 primarily due to changes in the fair value of certain financial instruments and contingent consideration.

Interest Expense, Net

Nine Months Ended
September 30,
2023 2022 Change
(in thousands)
Interest expense, net $ 200,155 $ 44,380 $ 155,775


	Three Months Ended March 31,
	2024		2023		Change
	(in thousands)
Interest expense, net	$	84,601	$	85,607	$	(1,006)

Interest expense, net ~~increased~~decreased by ~~$155.8~~$1.0 million in the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 compared to the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023. This ~~increase~~decrease was primarily due to an increase in unrealized gains on derivatives of $54.3 million, partially offset by (a) an increase in interest expense of $~~111.0~~41.9 million primarily due to higher levels of debt outstanding in ~~2023~~2024 compared to ~~2022, a decrease in unrealized gains on derivatives of $17.4 million and~~2023, (b) a decrease in realized gains on derivatives of ~~$13.9~~$3.7 million, (c) an increase in amortization of deferred financing costs of $3.1 million and (d) an increase in amortization of debt discounts of $3.1 million.

5548

Table of Contents

Interest Income

Nine Months Ended
September 30,
2023 2022 Change
(in thousands)
Interest income $ 81,670 $ 40,428 $ 41,242


	Three Months Ended March 31,
	2024		2023		Change
	(in thousands)
Interest income	$	35,696	$	24,788	$	10,908

Interest income increased by ~~$41.2~~$10.9 million in the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 compared to the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023. This increase was primarily due to an increase in the weighted average number of systems with loan agreements from approximately ~~50,900~~88,700 for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 to approximately ~~110,500~~160,900 for the ~~nine~~three months ended ~~September 30, 2023.~~March 31, 2024. On a weighted average number of systems basis, loan interest income decreased from ~~$767~~$226 per system for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 to ~~$633~~$192 per system for the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 primarily due to an increase in the volume of accessory loans, which have smaller principal balances.

Income Tax ~~Benefit~~(Benefit) Expense

Income tax ~~benefit increased~~(benefit) expense changed by ~~$1.6~~$43.5 million in the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 compared to the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 primarily due to ITC sales that resulted in an income tax benefit and income tax benefit related to estimated future sales of ITCs, partially offset by an increase in taxable income related to tax gains recognized on the sale of solar energy systems and energy storage systems located in separate tax-reporting jurisdictions.

Net ~~Income (Loss)~~Loss Attributable to Redeemable Noncontrolling Interests and Noncontrolling Interests

Net ~~income (loss)~~loss attributable to redeemable noncontrolling interests and noncontrolling interests ~~changed~~decreased by ~~$109.7~~$9.1 million in the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 compared to the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 primarily due to ~~an increase~~a decrease in loss attributable to redeemable noncontrolling interests and noncontrolling interests from tax equity funds added in 2021, 2022 and 2023.

Liquidity and Capital Resources

As of ~~September 30, 2023,~~March 31, 2024, we had total cash of ~~$725.1~~$487.5 million, of which ~~$467.9~~$231.7 million was unrestricted, and ~~$312.2~~$860.8 million of available borrowing capacity under our various financing arrangements. We seek to maintain diversified and cost-effective funding sources to finance and maintain our operations, fund capital expenditures, including customer acquisitions, and satisfy obligations arising from our indebtedness, which may include reducing debt prior to scheduled maturities through debt repurchases, either in the open market or in privately negotiated transactions, through debt redemptions or tender offers, or through repayments of bank borrowings. For a discussion of cash requirements from contractual and other obligations, see Note ~~14,~~13, Commitments and Contingencies, to our interim financial statements included elsewhere in this Quarterly Report on Form 10-Q. Historically, our primary sources of liquidity have included tax equity, non-recourse and recourse debt, investor asset-backed and loan-backed securitizations and cash generated from operations. Our business model requires substantial outside financing arrangements to grow the business and facilitate the deployment of additional solar energy systems. We will seek to raise additional required capital, including from new and existing tax equity investors, additional borrowings, securitizations and other potential debt and equity financing sources. We believe our cash and financing arrangements, as further described below, will be sufficient to meet our anticipated cash needs for at least the next twelve months. As of ~~September 30, 2023,~~March 31, 2024, we were in compliance with all debt covenants under our financing arrangements.

As of September 30, 2023, our liquidity and financial condition had not been materially affected by the adverse developments affecting financial institutions and companies in the financial services industry, including Silicon Valley Bank and Credit Suisse. For a discussion of the potential impact of these adverse developments, see Item 1A. Risk Factors included elsewhere in this Quarterly Report on Form 10-Q.

Financing Arrangements

The following is an update to the description of our various financing arrangements. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Financing Arrangements" in our Annual Report on Form 10-K filed with the SEC on February ~~23, 2023~~22, 2024 for a full description of our various financing arrangements.

~~Table of Contents~~

Tax Equity Fund Commitments

As of ~~September 30, 2023,~~March 31, 2024, we had undrawn committed capital of approximately ~~$199.3~~$435.4 million under our tax equity funds, which may only be used to purchase and install solar energy systems. In February 2023, a tax equity investor increased its capital commitment from approximately $30.0 million to approximately $125.0 million. In March 2023, a tax equity investor increased its capital commitment from approximately $41.0 million to approximately $51.3 million. In April 2023, two tax equity investors increased their capital commitment from approximately $200.0 million to approximately $207.8 million. In May 2023,2024, we admitted a tax equity investor with a total capital commitment of ~~approximately $51.0 million. In June 2023,~~$195.0 million and a tax equity investor increased its capital commitment from approximately ~~$150.0~~

Table of Contents

$59.0 million to approximately ~~$250.0~~$61.4 million. In ~~August 2023, we admitted~~February 2024, a tax equity investor ~~with a total~~increased its capital commitment offrom approximately ~~$104.0~~$134.9 million to approximately $190.8 million. In ~~September 2023, we admitted~~March 2024, a tax equity investor ~~with a total~~increased its capital commitment offrom $51.0 million to approximately ~~$134.9~~$51.2 million.

Warehouse and Other Debt Financings

In February 2023, we amended the revolving credit facility by and among EZOP, certain of our other subsidiaries party thereto, Atlas Securitized Products Holdings, L.P. (as successor to Credit Suisse AG, New York Branch), as agent, and the lenders and other financial institutions party thereto, to, among other things, (a) increase the aggregate commitment amount from $450.0 million to $675.0 million, (b) increase the uncommitted maximum facility amount from $575.0 million to $800.0 million, (c) amend certain provisions related to the allocation of certain payments made to the lenders, (d) amend certain provisions related to excess concentration limits and eligibility criteria to permit us and our affiliates to provide warranties of, and replacements for, load controllers and generators in connection with the related solar loan contracts and (e) add provisions to allow EZOP to request an increase in the aggregate commitment amount (subject to certain conditions) by adding additional lenders to the EZOP revolving credit facility. In February 2023, Credit Suisse AG ("Credit Suisse") sold a significant part of its Securitized Products Group (the "Credit Suisse Securitized Products Sale") to Apollo Global Management ("Apollo"). Subsequently, Apollo publicly announced the majority of the assets and professionals associated with the sale are now part of or managed by ATLAS SP Partners, a new stand-alone credit firm focused on asset-backed financing and capital markets solutions ("Atlas"). In March 2023, in connection with the Credit Suisse Securitized Products Sale, certain of our subsidiaries consented to the assignment of the loans and commitments of the Credit Suisse lenders to the Atlas lenders (such assignment, the "EZOP Assignment") under the EZOP revolving credit facility. In connection with the EZOP Assignment, Credit Suisse AG, New York Branch ("CSNYB") resigned as the agent under the EZOP revolving credit facility, Atlas Securitized Products Holdings, L.P. (the "Successor Agent") was appointed as the successor agent thereunder and, in connection with such appointment, the Successor Agent assumed the agent roles under the EZOP revolving credit facility. In connection with the appointment of Atlas as Successor Agent, the borrowers and the lenders party to the applicable agency resignation and appointment agreements consented to, among other things, Atlas' ability to assign the agent role under the EZOP revolving credit facility to one of its affiliates subject to certain conditions set forth therein. In March 2023, after the EZOP Assignment,2024, we amended the EZOP revolving credit facility to, among other things, (a) ~~increase~~reflect certain assignments of commitments occurring within the ~~aggregate commitment amount from $675.0 million to $775.0 million, (b) increase~~Atlas Lender Group (as defined by such revolving credit facility) without increasing the ~~uncommitted maximum facility amount from $800.0 million to $900.0 million, (c) amend~~existing commitments, and ~~supplement certain defaulting lender provisions and (d) update~~ the references from CSNYB, the predecessor agent, to Atlas, the successor agent, and remove or modify certain provisions related to the borrowing, funding and allocation of payments among the previous lender syndicate (that previously included lenders affiliated with Credit Suisse that, prior to the dateassignment of the ~~amendment to~~role of the ~~EZOP~~Atlas funding agent for the Atlas Lender Group, (b) amend the thresholds for certain "Amortization Events" (as defined by such revolving credit ~~facility~~facility) and ~~pursuant to~~(c) modify the ~~EZOP Assignment, had assigned their loans and commitments to lenders affiliated with Atlas)~~"Liquidity Reserve Account Required Balance" (as defined by such revolving credit facility). In ~~August 2023,~~March 2024, we amended the EZOP revolving credit facility to, among other things, (a) increase the aggregate commitment amount from $775.0 million to $875.0 million, (b) increase the uncommitted maximum facility amount from $900.0 million to $1.0 billion, (c) extend the maturity date from November 2024 to November 2025 and (d) amend the Advance Rate, Excess Concentration Amount (in each case, as defined by such revolving credit facility) and certain related definitions and (b) amend the eligibility criteria for the Solar Loans (as defined ~~therein). In October 2023, we amended the EZOP~~by such revolving credit facility). We currently do not have the resources to repay this facility when it becomes due in November 2025. However, we believe we will be able to ~~among other things, reallocate commitments among~~satisfy this obligation through a refinancing of the ~~lenders.~~facility. Although we believe it is probable we will refinance this facility, there can be no assurance about our ability to do so.

In March 2023, in connection with the Credit Suisse Securitized Products Sale, certain of our subsidiaries consented to the assignment of the loans and commitments of the Credit Suisse lenders to the Atlas lenders (such assignment, the "TEPH Assignment") under the revolving credit facility by and among TEPH, certain of our other subsidiaries party thereto, Atlas Securitized Products Holdings, L.P. (as successor to CSNYB), as agent, and the lenders and other financial institutions party thereto. In connection with the TEPH Assignment, CSNYB resigned as the agent under the TEPH revolving credit facility, Atlas was appointed as the successor agent thereunder and, in connection with such appointment, the Successor Agent assumed the agent roles under the TEPH revolving credit facility. In connection with the appointment of Atlas as Successor Agent, the borrowers and the lenders party to the applicable agency resignation and appointment agreements consented to, among other things, Atlas' ability to assign the agent role under the TEPH revolving credit facility to one of its affiliates subject to certain conditions set forth therein. In March 2023, after the TEPH Assignment,February 2024, we amended the TEPH revolving credit facility to, among other things, ~~(a) increase~~reflect an assignment of commitments occurring within the aggregate commitment amount from $600.0 million to $700.0 million, (b) increase the uncommitted maximum facility amount from $689.7 million to $789.7 million, (c) add provisions to allow TEPH to request an

~~Table of Contents~~

increase in the aggregate commitment amount (subject to certain conditions) by adding additional lenders to the TEPH revolving credit facility, (d) amend and supplement certain defaulting lender provisions, (e) modify the hedging provisions to give all hedge counterparties the benefit of certain payment priorities and certain other terms previously limited to qualifying hedge counterpartiesAtlas Lender Group (as defined by ~~the TEPH~~such revolving credit facility)~~, to extend~~ without increasing the ~~time period~~existing commitments and the appointment of a new Atlas funding agent for the event of default resulting from hedge counterparties ceasing to be qualifying hedge counterparties and to make other hedge-related amendments, (f) update the references from CSNYB, the predecessor administrative agent, to Atlas ~~the successor administrative agent, and remove or modify certain provisions related to the borrowing, funding and allocation of payments among the previous lender syndicate (that previously included~~Lender Group. In April 2024, additional lenders ~~affiliated with Credit Suisse that, prior to the date of the amendment to~~joined the TEPH revolving credit facility and pursuant to the TEPH Assignment, had assigned their loans and commitments to lenders affiliated with Atlas), (g) add European Union bail-in provisions and (h) add certain syndication-related provisions. In August 2023, we amended the TEPH revolving credit facility to, among other things, (a) increase the aggregate commitment amount was increased from ~~$700.0 million~~$1.3 billion to ~~$769.3 million, (b) increase~~$1.4 billion. We currently do not have the ~~uncommitted maximum~~resources to repay this facility ~~amount from $789.7 million to $859.0 million and (c) extend the maturity date from November 2024 to~~when it becomes due in November 2025. However, we believe we will be able to satisfy this obligation through a refinancing of the facility. Although we believe it is probable we will refinance this facility, there can be no assurance about our ability to do so.

~~In March 2023,~~We currently do not have the ~~AP8 revolving credit facility was amended~~resources to ~~among other things, increase~~repay the ~~aggregate commitment amount from $75.0 million to $150.0 million. In June 2023, the~~secured revolving credit facility by and among ~~AP8, certain of our other subsidiaries party thereto,~~Sunnova Asset Portfolio 8, LLC ("AP8"), Banco Popular de Puerto Rico, as agent, and the lenders ~~and other financial institutions~~ party thereto, was amended to, among other things, increase the aggregate commitment amount from $150.0 million to $185.0 million. In August 2023, the AP8 revolving credit facility was amended to, among other things, increase the aggregate commitment amount from $185.0 million to $215.0 million. Wewhen it becomes due in September 2024. However, we believe we will be able to satisfy this obligation ~~due in September 2024~~ through either a refinancing of the facility or ~~alternatively through~~an amendment and extension and have commenced discussions with this lender group. Although we believe it is probable we will refinance or extend this facility, there can be no assurance about our ability to do so. The AP8 revolving credit facility is non-recourse to Sunnova Energy Corporation. Absent a refinancing or extension, a failure to pay the ~~use~~principal and interest on the AP8 revolving credit facility when due would result in an event of default that enables the requisite lenders to demand immediate payment or exercise other remedies, such as charging default interest. If the lenders were to demand immediate repayment, the non-recourse borrower would not have sufficient liquidity to meet its obligations when they come due and the lenders would be able to seek foreclosure of the collateral at AP8. While we believe such event at AP8, if it were to occur, would not by itself have a material impact on our ~~existing~~consolidated business operations or expected cash ~~resources~~flows, it may affect the availability or terms of future financings for us and ~~liquidity.~~we may expend additional funds or incur additional obligations over the shorter term to ensure compliance with the terms of the AP8 revolving credit facility.

In March 2023, Sunnova Inventory Supply, LLC, ("IS") entered into a secured revolving credit facility with Texas Capital Bank, as agent, and the lenders party thereto, for an aggregate commitment amount of $50.0 million with a maturity date of the earlier of (a) March 2026 and (b) six months from the latest maturity date of any material parent credit facility (defined as a parent credit facility with a commitment of $250.0 million or more that, if terminated could individually be expected to result in a liquidity event (as defined by the IS revolving credit facility)). The proceeds of the loans underApril 2024, we amended the IS revolving credit facility to, among other things, (a) change the date on which payments are ~~available~~made to ~~purchase or otherwise acquire certain accounts receivable~~borrower from the collections account from monthly to weekly and ~~inventory, fund certain reserve accounts that are required to be maintained~~(b) increase the applicable margin by IS0.75% which results in ~~accordance with the revolving credit agreement~~a revised margin of (i) 3.25% for term SOFR loans and pay fees and expenses incurred in connection with the IS revolving credit facility. Interest on the borrowings under the IS revolving credit facility is due monthly. Borrowings under the IS revolving credit facility bear interest at an annual(ii) 2.25% for base rate ~~based on Term SOFR (as defined by the IS revolving credit facility).~~

In September 2023, AP9 entered into a secured revolving credit facility with Citibank, N.A., as administrative agent, and the lenders party thereto, for an aggregate commitment amount of $65.0 million with a maturity date of October 2027. Interest on the borrowings under the AP9 revolving credit facility is due monthly. Borrowings under the AP9 revolving credit facility bear interest at an annual rate based on either Term SOFR or a CP Yield Rate (as defined by the AP9 revolving credit facility).loans.

Securitizations

In ~~April 2023,~~February 2024, one of our subsidiaries issued ~~$300.0~~$194.5 million in aggregate principal amount of Series ~~2023-1~~2024-1 Class A solar asset-backed notes, ~~and $23.5~~$16.5 million in aggregate principal amount of Series ~~2023-1~~2024-1 Class B solar asset-backed notes ~~(collectively, the "SOLV Notes")~~and $15.0 million in aggregate principal amount of Series 2024-1 Class C solar asset-backed notes with a maturity date of ~~April 2058.~~January 2059. The ~~SOLV~~SOLVI Notes ~~were issued at a discount of 5.01% and 11.63% for the Class A and Class B notes, respectively, and~~ bear interest at an annual rate of ~~5.40%~~5.65%, 7.00% and ~~7.35% for the Class A and Class B notes, respectively.~~

In May 2023, one of our subsidiaries issued $174.9 million in aggregate principal amount of Series 2023-A Class A solar loan-backed notes, $80.1 million in aggregate principal amount of Series 2023-A Class B solar loan-backed notes and $31.7 million in aggregate principal amount of Series 2023-A Class C solar loan-backed notes (collectively, the "HELXI Notes") with a maturity date of May 2050. The HELXI Notes were issued at a discount of 2.57%, 5.31% and 13.56% for the Class A, Class B and Class C notes, respectively, and bear interest at an annual rate of 5.30%, 5.60% and 6.00%9.00% for the Class A, Class B and Class C notes, respectively.

In ~~August 2023,~~February 2024, one of our subsidiaries issued ~~$148.5~~$166.0 million in aggregate principal amount of Series ~~2023-B~~2024-A Class A solar loan-backed notes, ~~$71.1~~$33.9 million in aggregate principal amount of Series ~~2023-B~~2024-A Class B solar loan-backed notes and ~~$23.1~~$27.1 million in aggregate principal amount of Series ~~2023-B~~2024-A Class C solar loan-backed notes with a maturity date of ~~August 2050.~~February 2051. The ~~HELXII~~HELXIII Notes ~~were issued at a discount of 4.23%, 6.67% and 12.64% for the Class A, Class B and Class C notes, respectively, and~~ bear interest at an annual rate of 5.30%, ~~5.60%~~6.00% and ~~6.00%,~~7.00% for the Class A, Class B and Class C notes, respectively.

Table of Contents

In April 2023, the DOE announced a conditional commitment to guarantee 90% of up to approximately $3.3 billion of certain of our future financing arrangements under its Innovative Clean Energy Loan Guarantee Program. The commitment is subject to various customary conditions. There is no assurance the DOE's conditional commitment will be fulfilled on the terms announced or at all or that the related guarantees will provide the anticipated benefits to us. In September 2023, we entered into a $3.0 billion partial loan guarantee agreement (the "Hestia Agreement") with the DOE to support certain loans originated by us. We anticipate the Hestia Agreement will support future loan originations, reduce our weighted average cost of capital and generate interest savings. Before the DOE issues loan guarantees under the Hestia Agreement, various customary conditions must be fulfilled. In October 2023, we entered into a note purchase agreement, ~~which at closing will indirectly benefit from a partial guarantee provided by the~~ DOE Loan Programs Office. The notes will not be directly guaranteed by the DOE. The offering consists of $219.6 million in aggregate principal amount of Series 2023-GRID1 Class A solar loan-backed notes and $24.4 million in aggregate principal amount of Series 2023-GRID1 Class B solar loan-backed notes with a maturity date of December 2050. The HESI Notes were issued at a discount of 2.46% and 9.40% for the Class A and Class B notes respectively, and bear interest at an annual rate of 5.75% and 8.25% for the Class A and Class B notes, respectively. The offering is expected to close in November 2023, subject to customary closing conditions.

~~Senior Notes~~

In September 2023, one of our subsidiaries issued and sold an aggregate principal amount of $400.0 million of 11.75% senior notes at a discount to the initial purchasers of approximately 2.74%, for an aggregate purchase price of approximately $389.0 million. The 11.75% senior notes mature in October 2028.

~~Public Offerings~~

Historical Cash Flows—~~Nine~~Three Months Ended ~~September 30, 2023~~March 31, 2024 Compared to ~~Nine~~Three Months Ended ~~September 30, 2022~~March 31, 2023

The following table summarizes our cash flows for the periods indicated:


		Nine Months Ended September 30,
		2023		2022		Change
		(in thousands)
	Three Months Ended March 31,
		2024
		2024
		2024						2023		Change
	(in thousands)								(in thousands)
Net cash used in operating activities	Net cash used in operating activities	$	(194,791)	$	(265,795)	$	71,004
Net cash used in investing activities	Net cash used in investing activities	(1,891,769)		(1,451,353)		(440,416)
Net cash provided by financing activities	Net cash provided by financing activities	2,266,053		1,865,092		400,961
Net increase in cash, cash equivalents and restricted cash		$	179,493	$	147,944	$	31,549
Net decrease in cash, cash equivalents and restricted cash

Operating Activities

Net cash used in operating activities decreased by ~~$71.0~~$103.7 million in the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 compared to the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023. This decrease is primarily due to ~~a decrease~~an increase in net cash received for derivative origination and breakage fees of $70.4 million and decreases in purchases of inventory and prepaid inventory of ~~$176.2~~$20.0 million ~~offset by an increase in~~and payments to dealers for exclusivity and other bonus arrangements of ~~$21.4~~$15.0 million. This decrease is ~~also due~~partially offset by net outflows of $26.0 million in 2024 compared to net outflows of ~~$78.3~~$25.6 million in 2023 ~~compared to net inflows of $24.6 million in 2022~~ based on: (a) our net loss of ~~$267.6~~$90.1 million in ~~2023~~2024 excluding non-cash operating items of $189.3 million, primarily from depreciation, impairments and losses on disposals, amortization of intangible assets, amortization of deferred financing costs and debt discounts, non-cash direct sales revenue, provision for current expected credit losses and other bad debt expense, unrealized net gains on derivatives, unrealized net losses on fair value instruments and equity securities and equity-based compensation charges, which results in net outflows of $78.3 million and (b) our net loss of $68.3 million in 2022 excluding non-cash operating items of $92.9$64.1 million, primarily from depreciation, impairments and losses on disposals, amortization of intangible assets, amortization of deferred financing costs and debt discounts, non-cash direct sales revenue, provision for current expected credit losses and other bad debt expense, unrealized net gains on derivatives, unrealized net gains on fair value instruments and equity securities and equity-based compensation charges, which results in net ~~inflows~~outflows of ~~$24.6~~$26.0 million and (b) our net loss of $110.3 million in 2023 excluding non-cash operating items of $84.7 million, primarily from depreciation, impairments and losses on disposals, amortization of intangible assets, amortization of deferred financing costs and debt discounts, non-cash direct sales revenue, provision for current expected credit losses and other bad debt expense, unrealized net losses on derivatives, unrealized net gains on fair value instruments and equity-based compensation charges, which results in net outflows of $25.6 million. These net differences between the two periods resulted in a net change in operating cash flows of ~~$102.9~~$0.4 million in ~~2023~~2024 compared to ~~2022.~~

~~Table of Contents~~

2023.

Investing Activities

Net cash used in investing activities ~~increased~~decreased by ~~$440.4~~$65.6 million in the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 compared to the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023. This ~~increase~~decrease is primarily due to a decrease in payments for investments and customer notes receivable of $160.3 million and an increase in proceeds from customer notes receivable of $14.4 million. This decrease is partially offset by an increase in purchases of property and equipment, primarily solar energy systems, of $677.6 million. This increase is partially offset by a decrease in payments for investments and customer notes receivable of $185.8 million and an increase in proceeds from customer notes receivable of $47.1$109.5 million.

Financing Activities

Net cash provided by financing activities ~~increased~~decreased by ~~$401.0~~$51.4 million in the ~~nine~~three months ended ~~September 30, 2023~~March 31, 2024 compared to the ~~nine~~three months ended ~~September 30, 2022.~~March 31, 2023. This ~~increase~~decrease is primarily due to a decrease in net borrowings under our debt facilities of $163.7 million. This decrease is partially offset by increases in proceeds from sales of investment tax credits of $88.8 million and net contributions from our redeemable noncontrolling interests and noncontrolling interests of ~~$274.6 million, net proceeds from the issuance of common stock of $84.7 million and net borrowings under our debt facilities of $28.0~~$30.1 million.

Seasonality

The amount of electricity our solar energy systems produce is dependent in part on the amount of sunlight, or irradiation, where the assets are located. Because shorter daylight hours in winter months and poor weather conditions due to cloud cover, rain or snow results in less irradiation, the output of solar energy systems will vary depending on the season or the year. While we expect seasonal variability to occur, the geographic diversity in our assets helps to mitigate our aggregate seasonal variability.

Our Easy Plan PPAs with variable billing, Solar 20/20 Plan Agreements and Fixed Rate Power Purchase Agreements are subject to seasonality because we sell all the solar energy system's energy output to the customer at either a fixed price per kWh or indexed, variable rate per kWh. Our Easy Plan PPAs with balanced billing are not subject to seasonality (from a cash flow perspective or the customer's perspective) within a given year because the customer's payments are levelized on an annualized

Table of Contents

basis, so we insulate the customer from monthly fluctuations in production. In addition, energy production true-ups and production estimate adjustments for Easy Plan PPAs with balanced billing are calculated over an entire year. However, our Easy Plan PPAs with balanced billing are subject to seasonality from a revenue recognition perspective because, similar to the Easy Plan PPAs with variable billing, we sell all the solar energy system's energy output to the customer. Our lease agreements are not subject to seasonality within a given year because we lease the solar energy system to the customer at a fixed monthly rate and the reference period for any production guarantee payments is a full year. Finally, our loan agreements are not subject to seasonality within a given year because the monthly installment payments for the financing of the customers' purchase of the solar energy system are fixed and the reference period for any production guarantee is a full year.

In addition, weather may impact our dealers' ability to install solar energy systems and energy storage systems. For example, the ability to install solar energy systems and energy storage systems during the winter months in the Northeastern U.S. is limited. This can impact the timing of when solar energy systems and energy storage systems can be installed and when we can acquire and begin to generate revenue from solar energy systems and energy storage systems.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations is based upon our interim financial statements, which have been prepared in accordance with GAAP, which requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, expenses, cash flows and related disclosures. We base our estimates on historical experience and on various other assumptions we believe to be reasonable under the circumstances. In many instances, we could have reasonably used different accounting estimates, and in other instances, changes in the accounting estimates are reasonably likely to occur from period-to-period. Actual results may differ from these estimates. Our future financial statements will be affected to the extent our actual results materially differ from these estimates. For further information on our significant accounting policies, see Note 2, Significant Accounting Policies, in our Annual Report on Form 10-K filed with the SEC on February ~~23, 2023~~22, 2024 and Note 2, Significant Accounting Policies, to our interim financial statements included elsewhere in this Quarterly Report on Form 10-Q.

We identify our most critical accounting policies as those that are the most pervasive and important to the portrayal of our financial position and results of operations, and that require the most difficult, subjective, and/or complex judgments by management regarding estimates about matters that are inherently uncertain. We believe the assumptions and estimates associated with our principles of consolidation, the valuation of assets acquired and liabilities assumed in acquisitions, the

~~Table of Contents~~

estimated useful life of our solar energy systems, the valuation of the removal assumptions, including costs, associated with AROs, the valuation of redeemable noncontrolling interests and noncontrolling interests and our allowance for current expected credit losses have the greatest subjectivity and impact on our interim financial statements. Therefore, we consider these to be our critical accounting policies and estimates. There have been no material changes to our critical accounting policies and estimates as described in our Annual Report on Form 10-K.

Recent Accounting Pronouncements

See Note 2, Significant Accounting Policies, to our interim financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to various market risks in the ordinary course of our business. Market risk is the potential loss that may result from market changes associated with our business or with an existing or forecasted financial or commodity transaction. Our primary exposure includes changes in interest rates because certain borrowings bear interest at floating rates based on SOFR or a similar index plus a specified margin. We sometimes manage our interest rate exposure on floating-rate debt by entering into derivative instruments to hedge all or a portion of our interest rate exposure on certain debt facilities. We do not enter into any derivative instruments for trading or speculative purposes. Changes in economic conditions could result in higher interest rates, thereby increasing our interest expense and operating expenses and reducing funds available tofor capital investments, operations and other purposes. A hypothetical 10% increase in our interest rates on our variable-rate debt facilities would have increased our interest expense by ~~$3.4 million and $8.5~~$3.9 million for the three ~~and nine~~ months ended ~~September 30, 2023, respectively.~~March 31, 2024.

Table of Contents

Item 4. Controls and Procedures.

Internal Control Over Financial Reporting

Evaluation of Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer ("CEO") and our Chief Financial Officer ("CFO"), of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q, pursuant to Rules 13a-15(e) and 15d-15(e) under the Exchange Act. In connection with that evaluation, our CEO and our CFO concluded our disclosure controls and procedures were effective and designed to provide reasonable assurance the information required to be disclosed is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms as of ~~September 30, 2023,~~March 31, 2024, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosures. The term "disclosure controls and procedures", as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure information required to be disclosed by a company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure information required to be disclosed by a company in the reports it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the ~~third~~first quarter of ~~2023~~2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives as specified above. However, our management, including our principal executive and principal financial officers, does not expect that our disclosure controls and procedures will prevent or detect all error and fraud. Any control system, no matter how well

~~Table of Contents~~

designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our company have been detected.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Although we may, from time to time, be involved in litigation, claims and government proceedings arising in the ordinary course of business, we are not a party to any litigation or governmental or other proceeding we believe will have a material adverse impact on our financial position, results of operations or liquidity. In the ordinary course of business, we have disputes with dealers and customers. In general, litigation claims or regulatory proceedings can be expensive and time consuming to bring or defend against, may result in the diversion of management attention and resources from our business and business goals and could result in settlement or damages that could significantly affect financial results and the conduct of our business.

On February 16, 2024, a purported stockholder class action was filed against us and certain of our individual executives in the Southern District of Texas, Houston Division. The plaintiff, who seeks to certify a class of persons who purchased our stock between February 25, 2020 and December 7, 2023, alleges that certain statements made during the class period about our business, operations and compliance policies were false and misleading, specifically that we failed to disclose we engaged in improper business practices with respect to disadvantaged homeowners and communities. The plaintiff seeks an unspecified amount of damages. We believe the lawsuit to be without merit and intend to vigorously defend ourselves.

Table of Contents

Item 1A. Risk Factors.

We are supplementing the risk factors as previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K filed with the SEC on February 22, 2024, to add or update the following risk factors. There have been no material changes in the risks facing us as described in our Annual Report on Form 10-K filed with the SEC on February ~~23, 2023~~22, 2024 except as described below.

~~Adverse developments affecting~~Risks Related to the ~~financial services~~Solar Industry

The solar energy industry is an emerging market which is constantly evolving and may not develop to the size or at the rate we expect.

The solar energy industry is an emerging and constantly evolving market opportunity. We believe the solar energy industry is still developing and maturing, and we cannot be certain the market will grow to the size or at the rate we expect. The growth and sustainability of the solar energy market and the success of our solar service offerings and operations depend on many factors beyond our control, including:

•recognition and acceptance of the solar service market by consumers;

•fluctuations in economic and market conditions that affect the viability of conventional and other renewable energy sources, such as ~~actual events~~increases or ~~concerns involving liquidity, defaults,~~decreases in the prices of oil, gas and other fossil fuels;

•the availability of favorable regulation for solar power and battery energy storage within the electric power industry and the broader energy industry;

•the continuation and expansion of expected tax benefits and other government incentives;

•increases in the cost or ~~non-performance~~reduction in supply of solar energy system and energy storage system components due to tariffs or trade restrictions imposed by ~~financial institutions~~the U.S. government;

•the availability and cost of capital to finance new solar and battery storage projects and working capital, including interest rates, risk premiums charged to solar industry borrowers, tax equity and tax credit purchases;

•the success of other renewable energy technologies such as wind power, hydroelectric power, clean hydrogen, geothermal power and biomass fuel;

•capital expenditures by end users of solar power and battery storage products and services; and

•our ability to provide our solar service offerings cost effectively.

If the markets for solar energy and related financing sources do not develop to the size or ~~transactional counterparties, could adversely impact~~at the rate we expect, our business may be adversely affected.

Solar energy has yet to achieve broad market acceptance and depends in part on continued support in the form of rebates, tax credits and other incentives from federal, state and local governments. Additionally, there have been significant changes in the residential solar policy and pricing framework in several markets, including California and Arizona, and proposed changes in other markets such as Puerto Rico. Further, if support diminishes materially for solar policy related to rebates, tax credits, bill crediting or other incentives, including interest in related financings by tax equity investors and financiers, our ability to obtain external financing on acceptable terms, or at all, could be materially adversely affected. These types of funding limitations could lead to inadequate financing support for our business.

Growth in residential solar energy depends in part on macroeconomic conditions, retail prices of electricity and customer preferences, each of which can change quickly. For example, recent interest rate increases and resulting loan financing costs have led to a shift in customer demand from solar loans to leases and PPAs, which in turn requires a shift by industry participants in required financing sources to support such originations from loan-focused debt financings to tax equity, tax credit sales and related debt financing. Although tax credit incentives exist under the IRA, competition for these forms of financing sources continues to increase and may not be available on terms or timing or in sufficient quantity to fund our growth or operations, and we may not be able to shift our financing sources quickly enough to use them. Similarly, declining macroeconomic conditions, including in job markets and residential real estate markets, could contribute to instability and uncertainty among customers and impact their financial ~~condition~~wherewithal, credit scores or interest in entering into long-term contracts, even if such contracts would generate immediate and ~~results of operations.~~long-term savings.

Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions ~~or other companies in~~supporting the ~~financial services~~solar industry or the financial services industry generally, or similar events at companies in the solar industry or businesses that provide tax equity to or purchase tax credits from the solar industry, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. For example, in March 2023, Silicon Valley Bank ("SVB") was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation as receiver. Similarly, in March 2023, Signature Bank and Silvergate Capital Corp. were each swept into receivership. Further, uncertainty remains over liquidity concernsproblems or challenges in the ~~broader financial services industry, including~~availability or cost of capital for ~~example in~~ the ~~case~~solar industry.

Table of First Republic Bank and Credit Suisse ("CS") during March 2023. In March 2023, CS agreed to be acquired by UBS following the intervention of the Swiss Federal Department of Finance, the Swiss National Bank and the Swiss Financial Market Supervisory Authority. While we have no deposits with CS or SVB, we continue to have ongoing relationships with both banks. CS was the primary lender and agent for our EZOP and TEPH revolving credit facilities until March 2023; and CS was and remains an interest rate counterparty. SVB and its successor, Silicon Valley Bridge Bank ("SVBB") were and are lenders of our TEPH revolving credit facility. To date, CS and SVBB have performed their obligations to us and have been responsive to our requests, although there can be no assurances such performance will continue in the future.Contents

~~We maintain deposits at financial institutions as a part~~Any adverse changes in macroeconomic conditions, changes in the availability or cost of ~~doing business that could be at risk if another similar event were~~capital or solar energy system and energy storage system components, changes in retail prices of electricity, changes in regulatory condition or government incentives or changes in customer preferences would adversely impact our business.

Increases in the cost or reduction in supply of solar energy system and energy storage system components due to occur. Our ongoing cash management strategy is to maintain the majority of our deposit accounts in large "money center" financial institutions, but there can be no assurance this strategy will be successful. Increasing concerns regardingtariffs or trade restrictions imposed by the U.S. or international financial systems, including bank failures and bailouts, and their potential broader effects and potential systemic risk on the banking sector generally, may adversely affect our access to capital. Any decline in available funding or access to our cash and liquidity resources could, among other risks, limit our ability to meet our capital needs and fund future growth or fulfill our other obligations, or result in breaches of our financial and/or contractual obligations. Any of these impacts, or any other impacts resulting from the factors described above or other related or similar factors not described above,government could have ~~material~~an adverse ~~impacts~~effect on our business, financial condition and results of operations.

China is a major producer of solar cells and other solar products. Certain solar cells, modules, laminates and panels from China are subject to various U.S. anti-dumping and countervailing duty rates, depending on the exporter supplying the product, imposed by the U.S. government as a result of determinations that the U.S. was materially injured as a result of such imports being sold at less than fair value and subsidized by the Chinese government. While historically our dealers have endeavored to purchase these products from manufacturers outside of China, some of these products are purchased from manufacturers in China or from manufacturers in other jurisdictions who rely, in part, on products sourced in China. If alternative sources are no longer available on competitive terms in the future, we and our dealers may be required to purchase these products from manufacturers in China. In addition, tariffs on solar cells, modules and inverters in China may put upward pressure on prices of these products in other jurisdictions from which our dealers currently purchase equipment, which could reduce our ability to offer competitive pricing to potential customers.

The anti-dumping and countervailing duties discussed above are subject to annual review and may be increased or decreased. Furthermore, under Section 301 of the Trade Act of 1974, the Office of the United States Trade Representative ("USTR") imposed tariffs on $200 billion worth of imports from China, including inverters and certain AC modules and non-lithium-ion batteries, effective September 2018. In May 2019, the tariffs were increased from 10% to 25% and may be raised by the USTR in the future. Since these tariffs impact the purchase price of the solar products, these tariffs raise the cost associated with purchasing these solar products from China and reduce the competitive pressure on providers of solar cells not subject to these tariffs.

In August 2021, an anonymous trade group filed a petition with the U.S. Department of Commerce requesting an investigation into whether solar panels and cells imported from Malaysia, Thailand and Vietnam are circumventing anti-dumping and countervailing duties imposed on solar products manufactured in China. The group also requested the imposition of tariffs on such imports ranging from 50% - 250%. In November 2021, the U.S. Department of Commerce rejected the petition, citing the petitioners' ongoing anonymity as one of the reasons for its decision. In March 2022, the U.S. Department of Commerce announced it was initiating country-wide circumvention inquiries to determine whether imports of solar cell and modules produced in Cambodia, Malaysia, Thailand and Vietnam that use components from China were circumventing anti-dumping and countervailing duty orders on solar cells and modules from China. The Department of Commerce's inquiries were initiated pursuant to a petition filed by Auxin Solar, Inc. in February 2022.

In December 2022, the Department of Commerce announced its preliminary determination in the investigation. In its determination, the Department of Commerce found that certain Chinese solar manufacturers circumvented U.S. import duties by routing some of their operations through Cambodia, Malaysia, Thailand and Vietnam. Given the Department of Commerce preliminarily found that circumvention was occurring through each of the four Southeast Asian countries, the Department of Commerce made a "country-wide" circumvention finding, which designates each country as one through which solar cells and modules are being circumvented from China. However, companies in these countries will be permitted to certify they are not circumventing the U.S. import duties, in which case the circumvention findings may not apply. In August 2023, after completing its investigation, which included conducting in-person audits and gathering public comments, the Department of Commerce issued a final determination that affirmed its preliminary determination in most respects and found that five of eight manufacturers investigated were circumventing anti-dumping and countervailing duty orders.

Notably, however, in June 2022, the President of the United States issued an emergency declaration establishing a two-year tariff exemption on new tariffs for solar panels and cells imported from Cambodia, Malaysia, Thailand and Vietnam, delaying the possibility of the imposition of new anti-dumping and countervailing duties until the end of such two-year period. In September 2022, the Department of Commerce issued its final rule effectuating the two-year exemption period, and new dumping duties will not be imposed on solar panels and cells imported from Cambodia, Malaysia, Thailand and Vietnam until the earlier of two years after the date of the emergency declaration or when the emergency is terminated. Tariffs may be reinstated following the exemption period, but under the Department of Commerce's rule, imports of solar cells and modules will not be subject to retroactive tariffs during the exemption period. In December 2023, Auxin Solar and Concept Clean Energy commenced a new lawsuit challenging the Department of Commerce's authority to effect the exemption period and seeking to "reliquidate" imports completed during that period in order to retroactively apply anti-dumping and countervailing

Table of Contents

duty tariffs. In April 2024, a new rule, originally issued by the U.S. Department of Commerce in March 2024, went into effect. The new rule enhances the U.S. Department of Commerce's ability to enforce and administer anti-dumping and countervailing duty rules, including to consider cross-border subsidies in its calculations. Also in April 2024, a group of U.S. solar manufacturers filed new petitions seeking new anti-dumping and countervailing duties on solar components from Cambodia, Malaysia, Thailand and Vietnam. The addition of new anti-dumping and countervailing duties would significantly disrupt the supply of solar cells and modules to customers in the U.S., as a large percentage of solar cells and modules used in the U.S. are imported from Cambodia, Malaysia, Thailand and Vietnam. If imposed, these or similar tariffs could put upward pressure on prices of these solar products, which could reduce our ability to offer competitive pricing to potential customers.

In addition, in December 2021, the U.S. International Trade Commission recommended the President extend tariffs initially imposed in 2018 under Section 201 of the Trade Act of 1974 on imported crystalline silicon PV cells and modules for another four years, until 2026. Under Presidential Proclamation 10339, published in February 2022, President Biden extended the tariff beyond the scheduled expiration date in February 2022, with an initial tariff of 14.75%, which will gradually be reduced to 14% by the eighth year of the measure. Since such actions increase the cost of imported solar products, to the extent we or our dealers use imported solar products or domestic producers are able to raise their prices for their solar products, the overall cost of the solar energy systems will increase, which could inhibit our ability to offer competitive pricing in certain markets.

Additionally, the U.S. government has imposed various trade restrictions on Chinese entities determined to be acting contrary to U.S. foreign policy and national security interests. For example, the U.S. Department of Commerce's Bureau of Industry and Security has added a number of Chinese entities to its entity list for enabling human rights abuses in the Xinjiang Uyghur Autonomous Region ("XUAR") or for procuring U.S. technology to advance China's military modernization efforts, thereby imposing severe trade restrictions against these designated entities. Moreover, in June 2021, U.S. Customs and Border Protection issued a Withhold Release Order pursuant to Section 307 of the Tariff Act of 1930 barring the entry into U.S. commerce of silica-based products (such as polysilicon) manufactured by Hoshine Silicon Industry Co. Ltd. ("Hoshine") and related companies, as well as goods made using those products, based on allegations related to Hoshine labor practices in the XUAR to manufacture such products. Additionally, in December 2021, Congress passed the Uyghur Forced Labor Prevention Act, which, with limited exception, prohibits the importation of all goods or articles mined or produced in whole or in part in the XUAR, or goods or articles mined or produced by entities working with the XUAR government to recruit, transport or receive forced labor from the XUAR. Although we maintain policies and procedures designed to maintain compliance with all governmental laws and regulations, these and other similar trade restrictions that may be imposed against Chinese entities in the future may have the effect of restricting the global supply of, and raising prices for, polysilicon and solar products, which could increase the overall cost of solar energy systems and reduce our ability to offer competitive pricing in certain markets.

We cannot predict what additional actions the U.S. may adopt with respect to tariffs or other trade regulations or what actions may be taken by other countries in retaliation for such measures. The tariffs described above, the adoption and expansion of trade restrictions, the occurrence of a trade war or other governmental action related to tariffs, trade agreements or related policies have the potential to adversely impact our supply chain and access to equipment, our costs and ability to economically serve certain markets. If additional measures are imposed or other negotiated outcomes occur, our ability or the ability of our dealers to purchase these products on competitive terms or to access specialized technologies from other countries could be further limited, which could adversely affect our business, financial condition and results of operations.

Risks Related to Our Financing Activities

We need to obtain substantial additional financing arrangements to provide working capital and growth capital. If financing is not available to us on acceptable terms when needed, our ability to continue to fund our operations and grow our business would be materially adversely impacted.

Distributed solar power is a capital-intensive business that relies heavily on the availability of debt and equity financing sources to fund solar energy system purchase, design, engineering and other capital and operational expenditures. Our future success depends in part on our ability to raise capital from third-party investors and commercial sources, such as banks and other lenders, on competitive terms to help finance the deployment of our solar energy systems. We seek to minimize our cost of capital in order to improve profitability and maintain the price competitiveness of the electricity produced by, the payments for and the cost of our solar energy systems. We rely on access to capital, including through tax equity financing and indebtedness in the form of debt facilities, asset-backed securities and loan-backed securities, to cover the costs related to bringing our solar energy systems and energy storage systems in service, although our customers ultimately bear responsibility for those costs pursuant to our solar service agreements.

To meet the capital and liquidity needs of our business, we will need to obtain additional debt or equity financing from current and new investors. We have limited cash resources with which to operate our business and we may have difficulty in

Table of Contents

accessing financing on a timely basis or at all. The contract terms in certain of our existing investment fund documents contain various conditions with respect to our ability to draw on financing commitments from the fund investors, including conditions that restrict our ability to draw on such commitments if an event occurs that could reasonably be expected to have a material adverse effect on the fund or, in some instances, us. If we are not able to satisfy such conditions due to events related to our business, a specific investment fund, developments in our industry, including tax or regulatory changes, or otherwise, and as a result, we are unable to draw on existing funding commitments, we could experience a material adverse effect on our business, liquidity, financial condition, results of operations and prospects. Any delays in accessing financing could have an adverse effect on our ability to pay our operational expenses, make capital expenditures and fund other general corporate purposes. Further, our flexibility in planning for and reacting to changes in our business may be limited and our vulnerability to adverse changes in general economic, industry, regulatory and competitive conditions may be increased.

If any of our current debt or equity investors decide not to invest in us in the future for any reason, or decide to invest at levels inadequate to support our anticipated needs or materially change the terms under which they are willing to provide future financing, we will need to identify new investors and financial institutions to provide financing and negotiate new financing terms. In addition, our ability to obtain additional financing through the asset-backed securities market, loan-backed securities market or other secured debt markets is subject to our having sufficient assets eligible for securitization as well as our ability to obtain appropriate credit ratings. If we are unable to raise additional capital in a timely manner, our ability to meet our capital needs and fund future growth and profitability may be limited.

Delays in obtaining financing could cause delays in expansion in existing markets or entering into new markets and hiring additional personnel. Any future delays in capital raising could similarly cause us to delay deployment of a substantial number of solar energy systems for which we have signed solar service agreements with customers. Our future ability to obtain additional financing depends on banks' and other financing sources' continued confidence in our business model and the renewable energy industry as a whole. It could also be impacted by the liquidity needs of such financing sources themselves. Additionally, it could be impacted by our failure to satisfy certain conditions to receive additional guarantees of certain of our indebtedness from the DOE. We face intense competition from a variety of other companies, technologies and financing structures for such limited investment capital. If we are unable to continue to offer a competitive investment profile, we may lose access to these funds or they may only be available to us on terms less favorable than those received by our competitors. For example, if we experience higher customer default rates than we currently experience, it could be more difficult or costly to attract future financing. Any inability to secure financing could lead us to cancel planned installations, impair our ability to accept new customers or increase our borrowing costs, any of which could have a material adverse effect on our business, financial condition and results of operations. Further, because we must continue to comply with certain additional rules and requirements imposed by the DOE in connection with its loan guarantees, any material noncompliance may result in penalties that limit our ability to access capital. If we are unable to arrange new or alternative methods of financing on favorable terms, our business, liquidity, financial condition, results of operations and prospects could be materially and adversely affected.

We enter into securitization structures, warehouse financings and other financings that may limit our ability to access the cash of our subsidiaries and include acceleration events that, if triggered, could adversely impact our financial condition.

Since April 2017 through March 31, 2024, we have pooled and transferred eligible solar energy systems, energy storage systems and the related asset receivables into 21 special purpose entities for securitizations, which sold solar asset-backed notes and solar loan-backed notes to institutional investors, the net proceeds of which were distributed to us. As of March 31, 2024, we currently have outstanding 31 tax equity funds and 6 warehouse credit facilities at special purpose entities. We intend to monetize additional solar energy systems, energy storage systems and other sustainable home products in the future through contributions to new special purposes entities for cash. Our securitizations, warehouses and tax equity financings typically require the cash flows from related customer contracts be paid into a secured collection account and only be available for general use after amounts on deposit in such accounts are first applied to satisfy the current obligations of the applicable special purpose entity.

There is a risk the institutional investors that have purchased the notes, loans or equity interests issued by these special purpose entities will be unwilling to make further investments at attractive prices. Although the creditors of these special purpose entities have no recourse to our other assets except as expressly set forth in the terms of the related securities, the special purpose entities are typically required to maintain some or all of the following: a liquidity reserve account, a reserve account for equipment replacements, as well as, in certain cases, reserve accounts to finance purchase option/withdrawal right exercises, storage system replacement or payment of liquidated damages, each of which are funded from initial deposits or cash flows to the levels specified therein.

The securitization structures, warehouse financings and other financings often include certain other features designed to protect investors. The primary feature relates to the availability and adequacy of cash flows in the pool of assets to meet

Table of Contents

contractual requirements, the insufficiency of which triggers an early repayment of the indebtedness. We refer to this as "early amortization", which may be based on, among other things, a debt service coverage ratio falling or remaining below certain levels or exceeding certain allowable thresholds for customer defaults or delinquencies. In the event of an early amortization, the applicable borrower or notes issuer would be required to repay the affected indebtedness using available collections received from the asset pool. However, the period of ultimate payment would be determined based on the amount and timing of collections received and, in limited circumstances, early amortization may be cured prior to full repayment. An early amortization event would impair our liquidity and may require us to utilize other available contingent liquidity or rely on alternative funding sources, which may not be available at the time. Certain of the securitizations, warehouse financings and other financings also contain a "cash trap" feature, which requires excess cash flow to be held in an account based on, among other things, a debt service coverage ratio falling or remaining below certain levels. If the cash trap conditions are not cured within a specified period, then the cash in the cash trap account must be applied to repay the indebtedness. If the cash trap conditions are timely cured, the cash is either released back to the borrower or used to repay the indebtedness at the borrower's option. The indentures of our securitizations also typically contain customary events of default for solar securitizations that may entitle the noteholders to take various actions, including the acceleration of amounts due and foreclosure on the issuer's assets. Any significant payments we may be required to make as a result of these arrangements could adversely affect our financial condition. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Financing Arrangements".

Servicing our existing debt requires a significant amount of cash. We may not have sufficient cash flow from our business to timely pay our interest and principal obligations and may be forced to take other actions to satisfy our payment obligations.

As of March 31, 2024, our total indebtedness was approximately $7.8 billion and the available borrowing capacity under our credit facilities was $860.8 million. Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not generate cash flow from operations sufficient to service our debt and make necessary capital expenditures to operate our business. For example, we currently do not have the resources to repay the secured revolving credit facility by and among AP8, Banco Popular de Puerto Rico, as agent, and the lenders party thereto, when it becomes due in September 2024. Although we believe we will be able to satisfy this obligation through either a refinancing of the facility or an amendment and extension, there can be no assurance about our ability to do so. The AP8 revolving credit facility is non-recourse to Sunnova Energy Corporation. Absent a refinancing or extension, a failure to pay the principal and interest on the AP8 revolving credit facility when due would result in an event of default that enables the requisite lenders to demand immediate payment or exercise other remedies, such as charging default interest. If the lenders were to demand immediate repayment, the non-recourse borrower would not have sufficient liquidity to meet its obligations when they come due and the lenders would be able to seek foreclosure of the collateral at AP8. While we believe such event at AP8, if it were to occur, would not by itself have a material impact on our consolidated business operations or expected cash flows, it may affect the availability or terms of future financings for us and we may expend additional funds or incur additional obligations over the shorter term to ensure compliance with the terms of the AP8 revolving credit facility.

If we are unable to generate sufficient cash flows to timely pay our interest and principal obligations, we may be required to adopt one or more alternatives, such as slowing or ceasing the origination of new customer agreements, selling assets, restructuring debt or obtaining additional debt and equity capital on terms that may be onerous or highly dilutive. Our securitizations and warehouse financings are structured so cash flows generated by the pool of solar energy systems, energy storage systems, other sustainable home products and related customer agreements deposited in the related collection account are initially used to repay outstanding principal amounts and other obligations based on the priority of payments in the agreement. However, should these cash flows decrease below applicable thresholds or other triggering events occur, all excess cash flows from such asset pool must be applied to pay down the related indebtedness, which would reduce the cash available to otherwise fund our business. Our ability to timely repay or otherwise refinance our indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.

Furthermore, we and our subsidiaries expect to incur additional debt in the future, subject to the restrictions contained in our debt instruments. Increases in our existing debt obligations would further heighten the debt related risk discussed above. In addition, we may not be able to enter into new debt instruments on acceptable terms or at all. If we were unable to satisfy financial covenants and other terms under existing or new instruments, or obtain waivers or forbearance from our lenders, or if we were unable to obtain refinancing or new financings for our working capital, equipment and other needs on acceptable terms if and when needed, our business would be adversely affected.

Table of Contents

Volatility and continued increases in interest rates would raise our cost of capital and may adversely impact our business.

Due to recent increases in inflation, the U.S. Federal Reserve has raised its benchmark interest rates. Further increases in the federal benchmark rate could result in an increase in market interest rates, which may increase our interest expense under our variable-rate borrowings and the costs of refinancing existing indebtedness or obtaining new debt. For example, borrowings under our existing warehouse credit facilities accrue interest based on the Secured Overnight Financing Rate ("SOFR") as a benchmark for establishing the rate of interest. Consequently, rising interest rates or continued higher interest rates will increase our cost of capital and may decrease the amount of capital available to us to fund our operations and finance deployment of new solar energy systems, energy storage systems and other sustainable home products. Our future success depends in part on our ability to raise capital from investors and obtain secured lending to help finance the deployment of our customer agreements. As a result, rising interest rates may have an adverse impact on our ability to offer attractive pricing on our customer agreements to our customers. If in the future we have a need for significant borrowings and interest rates increase or continue at high interest rates, that may increase the cost of the systems we purchase, which either would make those systems more expensive for customers, which is likely to reduce demand, or would lower our operating margins, or both.

The majority of our cash flows to date have been from solar service agreements monetized under various tax equity fund structures and secured lending arrangements. One of the components of this monetization is the present value of the payment streams from customers who enter into these long-term solar service agreements. If the rate of return required by capital providers, including debt providers, rises as a result of a rise in interest rates, it will reduce the present value of the customer payment stream and consequently reduce the total value derived from this type of monetization. Any measures we could take to mitigate the impact of rising interest rates on our ability to secure third-party financing could ultimately have an adverse impact on the value proposition we offer our customers or our profitability.

Risks Related to Regulations

We rely on net metering and related policies to offer competitive pricing to our customers in most of our current markets and changes to net metering policies may significantly reduce demand for electricity from solar energy systems.

Net metering is one of several key policies that have enabled the growth of distributed generation solar energy systems in the U.S., providing significant value to certain qualifying residential and commercial customers for electricity generated by their solar energy systems but not directly consumed on-site. Net metering allows a homeowner or a business to pay the local electric utility for power usage net of production from the solar energy system or other distributed generation source. Homeowners or businesses receive a credit for the energy an interconnected solar energy system generates in excess of that needed by the home to offset energy purchases from the centralized utility made at times when the solar energy system is not generating sufficient energy to meet the customer's demand. In many markets, this credit is equal to the retail rate for electricity and in other markets, such as Hawaii and Nevada, the rate is less than the retail rate and may be set, for example, as a percentage of the retail rate or based upon a valuation of the excess electricity. In some states and utility territories, customers are also reimbursed by the centralized electric utility for net excess generation on a periodic basis.

Net metering programs have been subject to legislative and regulatory scrutiny in some states and territories including, but not limited to, California, New Jersey, Arizona, Nevada, Connecticut, Florida, Maine, Kentucky, Puerto Rico and Guam. These jurisdictions, by statute, regulation, administrative order or a combination thereof, have recently adopted or are considering new restrictions and additional changes to net metering programs either on a state-wide basis or within specific utility territories. Many of these measures were introduced and supported by centralized electric utilities. These measures vary by jurisdiction and may include a reduction in the rates or value of the credits customers are paid or receive for the power they deliver back to the electrical grid, caps or limits on the aggregate installed capacity of generation in a state or utility territory eligible for net metering, expiration dates for and phasing out of net metering programs, replacement of net metering programs with alternative programs that may provide less compensation and limits on the capacity size of individual distributed generation systems that can qualify for net metering. Net metering and related policies concerning distributed generation also received attention from federal legislators and regulators.

In California, the California Public Utilities Commission (the "CPUC") issued an order in 2016 retaining retail-based net metering credits for residential customers of California's major utilities as part of Net Energy Metering 2.0 ("NEM 2.0"). Under NEM 2.0, new distributed generation customers receive the retail rate for electricity exported to the grid, less certain non-bypassable fees. Customers under NEM 2.0 also are subject to interconnection charges and time‑of-use rates. Existing customers who receive service under the prior net metering program, as well as new customers under the NEM 2.0 program, currently are permitted to remain covered by them on a legacy basis for a period of 20 years. In December 2022, the CPUC's Net Energy Metering 3.0 ("NEM 3.0") order reduced the value of net metering credits from the retail rate to an avoided cost rate for new customers not covered by the legacy NEM 2.0 program. While NEM 3.0 is currently under judicial review, it

Table of Contents

remains in effect. Proceedings on distributed energy policy and utility rates before the CPUC or legislation concerning these matters could also result in changes that affect customers with distributed generation systems.

In New Jersey, the Board of Public Utilities has the option under state law of limiting participation in the retail rate net metering program if the aggregate capacity of owned and operating systems reaches 5.8% of total annual kWh sold in the state. As of December 31, 2023, that threshold had not yet been reached.

In October 2023, the Arizona Corporation Commission voted to reopen the proceeding that set the level of net metering credits. The value of credits, the current schedule for the step-down of the credit value over time and the length of the period during which the value of credits are locked in for customers may all be subject to review. No final action has been taken at this stage.

In Puerto Rico, legislation enacted in January 2024 known as Act 10 extended net metering policies through 2031, absent further regulatory action. In April 2024, the Puerto Rico Financial Oversight and Management Board objected to Act 10 and called for its repeal or amendment, and advocated assessing and making changes to the net metering policies in Puerto Rico. We cannot predict with certainty whether Act 10 will be repealed or amended nor what effect that and other actions will have on net metering policies in Puerto Rico.

Net metering customers in Puerto Rico may be impacted by transition charges and other requirements contemplated in a restructuring agreement between the Puerto Rico Electric Power Authority ("PREPA") and its creditors, currently pending before the U.S. District Court for the District of Puerto Rico in bankruptcy-like proceedings under Title III of the Puerto Rico Oversight, Management, and Economic Stability Act ("PROMESA"). Nevertheless, that matter has not been finally adjudicated by the Title III Court and creditors could appeal any final judgement. Hence, the PREPA bankruptcy is ongoing but is nearing its final stages and its effects on net metering in Puerto Rico are currently unknown.

In Guam, the Consolidated Commission on Utilities adopted a resolution in 2018 recommending retail rate net metering for customers of the Guam Power Authority be replaced with a "buy all/sell all" or similar program that provides for compensation to homeowners at a lower, avoided cost rate. In other jurisdictions, including Minnesota, Connecticut and parts of Texas, replacing net metering with a "value of distributed energy", "feed-in", or "sell-all/ buy-all" tariff is also being considered or has been adopted.

Net metering and related policies concerning distributed generation have received attention from federal legislators and regulators and challenge by various stakeholders. For example, in April 2020, the New England Ratepayers Association petitioned the Federal Energy Regulatory Commission ("FERC") to declare its exclusive federal jurisdiction over distributed generation, including residential solar, and to establish new federal customer compensation rates for excess energy in lieu of state net metering programs. While the FERC rejected the petition on procedural grounds, further challenges to net metering based on federal law may occur. Changes in federal law, including those made by statute, regulation, rule or order, could negatively affect net metering or other related policies that otherwise promote and support solar energy and enhance the economic viability of distributed solar.

Additionally, distributed solar customers in certain jurisdictions may be subject to higher charges from centralized electric utilities than non-solar customers and such charges should be evaluated together with the net metering policies in place. If such charges are imposed, the cost savings associated with switching to solar energy may be significantly reduced and our ability to expand our portfolio of solar service agreements and related solar energy systems and energy storage systems and compete with centralized electric utilities could be impacted.

Our business is subject to consumer protection laws. Such laws and regulatory enforcement policies and priorities are subject to change that may negatively impact our business.

We are subject to a constantly evolving consumer protection and consumer finance regulatory environment that is difficult to predict and may affect our business. We must comply with various international, federal, state, and local regulatory regimes, including those applicable to consumer credit transactions, leases, and marketing activities. These laws and regulations, including those applicable to consumer loans and their origination, are subject to change and modification by statute, administrative rules and orders, and judicial interpretation. As a result of infrequent or sparse interpretations, ambiguities in these laws and regulations may create uncertainty with respect to what type of conduct is permitted or restricted under such laws and regulations. Regulators, such as the Federal Trade Commission and the Consumer Financial Protection Board, as well as state attorney generals and agencies, also can initiate inquiries into market participants, which can lead to investigations and, ultimately, enforcement actions. For example, state attorneys general of several states have filed lawsuits against other solar financing companies alleging (among other claims) that certain so-called "upfront fees" related to loan financing were not

Table of Contents

properly disclosed to consumers. These lawsuits are at an early stage and we cannot predict their outcome or how, if any of them is adversely determined to the other solar financing companies, they will affect our practices.

The laws to which we may be subject to include federal and state laws that prohibit unfair, deceptive or abusive business acts or practices (such as the Federal Trade Commission Act and the Dodd-Frank Act), regulate lease and loan disclosures and terms and conditions (such as the Truth-in-Lending Act and the Consumer Leasing Act), prohibit discrimination (such as the Equal Credit Opportunity Act), and provide additional protections for certain customers in the military (such as the Servicemembers Civil Relief Act). Our business is or may also be subject to federal and state laws that regulate consumer credit report information, data privacy, debt collection, electronic fund transfers, service contracts, home improvement contracting and marketing activities (such as telemarketing, door-to-door sales, and e-mails).

While we have developed policies and procedures designed to assist in compliance with these laws and regulations, no assurance is given that our compliance policies and procedures will be effective. Failure to comply with these laws and with regulatory requirements applicable to our business could subject us to damages, revocation of licenses, class action lawsuits, administrative enforcement actions, civil and criminal liability, settlements, limits on offering certain products and services, changes in business practices, increased compliance costs, indemnification obligations to our capital providers, loan repurchase obligations and reputational damage that may harm our business, results of operations and financial condition.

General Risk Factors

The loss of one or more members of our senior management or key employees may adversely affect our ability to implement our strategy.

We depend on our experienced management team and the loss of one or more key executives could have a negative impact on our business. In particular, we are dependent on the services of our founder and CEO, William J. Berger. We also depend on our ability to retain and motivate key employees and attract qualified new employees. We have experienced recent changes to our finance organization, including the planned departure of our Chief Financial Officer, which could adversely affect our ability to execute our business plan if not properly managed. None of our key executives are bound by employment agreements for any specific term. We may be unable to replace key members of our management team and key employees if we lose their services. Integrating new employees into our team could prove disruptive to our operations, require substantial resources and management attention and ultimately prove unsuccessful. An inability to attract and retain sufficient managerial personnel who have critical industry experience and relationships could limit or delay our strategic efforts, which could have a material adverse effect on our business, financial condition and results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Not applicable.

Item 3. Defaults Upon Senior Securities.

Not applicable.

~~Table of Contents~~

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

~~Bylaws~~Debt Amendment ~~and Restatement~~

On ~~October 25, 2023,~~April 29, 2024, one of our ~~Board of Directors adopted amendments~~indirectly wholly-owned subsidiaries, Sunnova Inventory Supply, LLC ("Borrower"), entered into that certain First Amendment to ~~our bylaws, effective~~Credit Agreement (the "TCB Amendment") to amend that certain Credit Agreement, dated as of ~~such date~~March 10, 2023, by and among the Borrower, each of ~~adoption (the "Amended~~the subsidiaries of the Borrower from time to time party thereto, the lenders from time to time party thereto and ~~Restated Bylaws").~~Texas Capital Bank, as lender, agent and letter-of-credit issuer. The ~~Amended and Restated Bylaws,~~TCB Amendment amended the Credit Agreement to, among other things, ~~provide~~(a) change the date in which payments are to made to Borrower from the collections account from monthly to weekly and (b) increase the Applicable Margin by 0.75% which results in a revised margin of (i) 3.25% for ~~reasonable steps to ensure~~Term SOFR Loans and (ii) 2.25% for Base Rate Loans (as each is defined in the list of stockholders entitled to vote at a meeting would be made available electronically only to stockholders before the meeting (Section 1.5), address the adjournment of stockholders meetings (Section 1.7), clarify that, in relation to an action at a stockholder meeting, abstentions and broker non-votes will not be considered votes cast in determining the outcome of a matter (Section 1.9) and update the provisions regarding the obligations of a stockholder who intends to propose certain business or nominations of persons for the election of directors before a meeting of stockholders, including deadlines and obligations to provide and update information and representations, and to comply with applicable rules regarding the solicitation of proxies (including Rule 14a-19 under the Securities Exchange Act of 1934) (Section 1.10)TCB Amendment).

Table of Contents

The foregoing ~~summary~~description of the ~~Amended and Restated Bylaws~~TCB Amendment is qualified in its entirety by reference to the full text of the ~~Amended and Restated Bylaws attached~~TCB Amendment, a copy of which is filed as Exhibit 10.5 to this ~~report as Exhibit 3.2 in unmarked form,~~Quarterly Report on Form 10-Q and ~~as Exhibit 3.3 to~~is incorporated into this ~~report in redline form marking the amendments as described above, and are incorporated herein~~Item 5 by reference.

~~10b5-1 Plans~~10b-5 Trading Plan

During the three months ended ~~September~~March 31, 2024, William J. Berger, Chief Executive Officer, adopted a trading plan (the "10b5-1 Plan") intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act. The 10b5-1 Plan, which commences on July 30, ~~2023, there were no "Rule 10b5-1 trading plans" or "non-Rule 10b5-1 trading arrangements" adopted, modified or terminated by~~2024 and ends on August 30, 2024, authorizes an agent to sell such securities as are necessary to satisfy tax withholding obligations, commissions and any fees, arising exclusively from the vesting of ~~our directors or officers (as each term is defined in Item 408(a) of Regulation S-K).~~up to 119,047 restricted stock units.

6362

Table of Contents

PART IV

Item 6. Exhibits.


Exhibit No.						Description
2.1						Merger Agreement, dated as of July 29, 2019, by and among Sunnova Energy International Inc., Sunnova Energy Corporation and Sunnova Merger Sub Inc. (incorporated by reference to Exhibit 2.1 to Form 8-K filed on July 29, 2019).
2.2						Merger Agreement, by and among Sunnova Energy International Inc., Moonroad LLC, Sunnova Energy Corporation, SunStreet Energy Group, LLC and ~~Len~~x,LEN X, LLC, dated as of February 17, 2021 (incorporated by reference to Exhibit 2.1 to Form 8-K filed on February 19, 2021).
3.1						Second Amended and Restated Certificate of Incorporation of Sunnova Energy International Inc. (incorporated by reference to Exhibit 3.3 to Form 8-K filed on July 29, 2019).
3.2						~~Third~~ ~~Amended and Restated Bylaws of Sunnova Energy International Inc.~~,~~dated as of October~~ 25 ~~, 2023~~.
~~3.3~~						Third Amended and Restated Bylaws of Sunnova Energy International Inc.~~, dated as of~~ (incorporated by reference to Exhibit 3.2 to Form 10-Q filed on October 25 ~~, 2023~~ ~~(redline)~~26, 2023).
4.1∞						Indenture, by and between Sunnova ~~Helios XII~~SOL VI Issuer, LLC and Wilmington Trust, National Association, as indenture trustee, dated as of ~~August 30,~~February 13, 2024 (incorporated by reference to Exhibit 10.1 to Form 8-K filed on February 14, 2024).
4.2						Form of 5.65% Solar Asset Backed Notes, Series 2024-1 Class A due 2059 (included in Exhibit 4.1).
4.3						Form of 7.00% Solar Asset Backed Notes, Series 2024-1 Class B due 2059 (included in Exhibit 4.1).
4.4						Form of 9.00% Solar Asset Backed Notes, Series 2024-1 Class C due 2059 (included in Exhibit 4.1).
10.1∞						Master Revolving Loan Agreement, by and among Sunnova Business Markets Borrower, LLC, as borrower, each subsidiary of Sunnova Business Markets Borrower, LLC from time to time party thereto, each lender from time to time party thereto and Mitsubishi HC Capital America, Inc., as administrative agent, dated as of December 27, 2023 (incorporated by reference to Exhibit 10.1 to Form 8-K filed on ~~September 6, 2023)~~January 3, 2024).
~~4.2~~10.2∞						~~Form of 5.30% Solar Loan Backed Notes, Series 2023-B Class A Notes due 2050 (included in Exhibit 4.1).~~
~~4.3~~						~~Form of 5.60% Solar Loan Backed Notes, Series 2023-B Class B Notes due 2050 (included in Exhibit 4.1).~~
~~4.4~~						~~Form of 6.00% Solar Loan Backed Notes, Series 2023-B Class C Notes due 2050 (included in Exhibit 4.1).~~
~~4.5~~						~~Indenture, dated September 26, 2023,~~Amendment No. 2 to Second Amended and Restated Credit Agreement (SLA), among Sunnova ~~Energy Corporation,~~EZ-Own Portfolio, LLC, Sunnova ~~Energy International Inc.,~~SLA Management, LLC, Sunnova ~~Intermediate~~Asset Portfolio 7 Holdings, LLC, the Lenders party thereto, the Funding Agents party thereto and ~~Wilmington Trust, National Association~~Atlas Securitized Products Holdings, L.P. as administrative agent, dated as of February 14, 2024 (incorporated by reference to Exhibit ~~4.1~~10.2 to Form 8-K filed on ~~September 26, 2023)~~February 14, 2024).
~~4.6~~10.3∞						~~Form of 11.750% Senior Note due 2028 (included in Exhibit 4.5).~~
~~10.1∞~~						First Amendment to Second Amended and Restated Credit Agreement, among Sunnova TEP Holdings, LLC, as borrower, Sunnova TE Management, LLC, as facility administrator, the lenders and funding agents party thereto and Atlas Securitized Products Holdings, L.P., as administrative agent, dated as of February 14, 2024 (incorporated by reference to Exhibit 10.3 to Form 8-K filed on February 14, 2024).
10.4∞						Amendment No. 3 to Second Amended and Restated Credit Agreement (SLA), by and among Sunnova EZ-Own Portfolio, LLC, Sunnova SLA Management, LLC, Sunnova Asset Portfolio 7 Holdings, LLC, the lenders and other financial institutions party thereto and Atlas Securitized Products Holdings, L.P., as administrative agent, dated as of ~~August 2, 2023~~March 28 , 2024 (incorporated by reference to Exhibit ~~10.1~~10.1 to Form ~~8-K~~8-K filed on ~~August 7, 2023)~~April 3 , 2024).
~~10.2∞~~10.5∞						F irst Amendment ~~No. 5~~ to Credit Agreement by and among Sunnova ~~Asset Portfolio 8,~~Inventory Supply, LLC, ~~as Borrower,~~each of the subsidiaries of Sunnova ~~SLA Management,~~Inventory Supply, LLC ~~as Manager and Servicer, Sunnova Asset Portfolio 8 Holdings, LLC, as Seller (Solar Loans) and Seller (Solar Assets), Banco Popular de Puerto Rico, as Agent, the lenders~~from time to time party thereto, the ~~funding agents~~lenders from time to time party thereto, and ~~U.S.~~Texas Capital Bank ~~National Association, as Custodian, dated as of August 16, 2023 (incorporated by reference to Exhibit 10.1 to Form 8-K filed on August 21, 2023).~~
~~10.3∞~~						~~Tenth Amendment to Amended and Restated Credit Agreement, among Sunnova TEP Holdings, LLC, Sunnova TE Management, LLC, Atlas Securitized Products Holdings, L.P.~~, as ~~administrative~~lender, agent and ~~the lenders and other financial institutions party thereto,~~letter of credit issuer , dated ~~as of August 31, 2023 (incorporated by reference to Exhibit 10.2 to Form 8-K filed on September 6, 2023).~~
~~10.4∞~~						Credit Agreement, by and among Sunnova Asset Portfolio 9, LLC, Sunnova SLA Management, LLC, Sunnova Asset Portfolio 9 Holdings, LLC, the lenders and other financial institutions party thereto and Citibank, N.A.April 29 , ~~as administrative agent, dated as of September 5, 2023 (incorporated by reference to Exhibit 10.3 to Form 8-K filed on September 6, 2023).~~2024
~~10.5∞~~						Loan Guarantee Agreement, dated as of September 27, 2023, by and among Sunnova Energy Corporation, as sponsor, Sunnova ABS Management, LLC, as servicer and manager, and the United States Department of Energy, as guarantor (incorporated by reference to Exhibit 10.1 to Form 8-K filed on September 28, 2023).
31.1						Certification of Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2						Certification of Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1						Certification of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2						Certification of Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its tags are embedded within the inline XBRL document.
101.SCH						XBRL Taxonomy Extension Schema Linkbase Document.
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document.

6463

Table of Contents


Exhibit No.						Description
~~101.CAL~~						~~XBRL Taxonomy Extension Calculation Linkbase Document.~~
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB						XBRL Taxonomy Extension Label Linkbase Document.
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document.
104						Cover Page Interactive Data File (embedded within the inline XBRL document).

__________________

∞ Portions of this exhibit have been omitted in accordance with Items 601(a)(5) and 601(b)(10) of Regulation S-K. We agree to furnish a copy of any omitted schedule or exhibit to the SEC upon request.

6564

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	SUNNOVA ENERGY INTERNATIONAL INC.

Date: ~~October 26, 2023~~May 2, 2024	By:	/s/ William J. Berger
		William J. Berger
		Chief Executive Officer and Director
		(Principal Executive Officer)


Date: ~~October 26, 2023~~May 2, 2024	By:	/s/ Robert L. Lane
		Robert L. Lane
		Chief Financial Officer
		(Principal Financial Officer)

6665


	As of March 31, 2022
	As Previously Reported		Revisions		As Revised
	(in thousands)
Other assets	$	662,456	$	(1,475)	$	660,981
Accumulated deficit	$	(423,529)	$	(1,475)	$	(425,004)


	As of June 30, 2022
	As Previously Reported		Revisions		As Revised
	(in thousands)
Other assets	$	802,862	$	(5,609)	$	797,253
Accumulated deficit	$	(377,217)	$	(5,609)	$	(382,826)


	As of September 30, 2022
	As Previously Reported		Revisions		As Revised
	(in thousands)
Other assets	$	920,634	$	(8,105)	$	912,529
Accumulated deficit	$	(387,073)	$	(8,105)	$	(395,178)


	Three Months Ended March 31, 2022
	As Previously Reported		Revisions		As Revised
	(in thousands)
Interest expense, net	$	(2,490)	$	1,475	$	(1,015)
Loss before income tax	$	(20,629)	$	(1,475)	$	(22,104)
Net loss	$	(20,629)	$	(1,475)	$	(22,104)
Net loss attributable to stockholders	$	(33,583)	$	(1,475)	$	(35,058)
Net loss per share attributable to stockholders—basic and diluted	$	(0.30)	$	(0.01)	$	(0.31)


	Three Months Ended June 30, 2022						Six Months Ended June 30, 2022
	As Previously Reported		Revisions		As Revised		As Previously Reported		Revisions		As Revised
	(in thousands)
Interest expense, net	$	20,437	$	4,134	$	24,571	$	17,947	$	5,609	$	23,556
Loss before income tax	$	(9,697)	$	(4,134)	$	(13,831)	$	(30,326)	$	(5,609)	$	(35,935)
Net loss	$	(9,697)	$	(4,134)	$	(13,831)	$	(30,326)	$	(5,609)	$	(35,935)
Net loss attributable to stockholders	$	(37,003)	$	(4,134)	$	(41,137)	$	(70,586)	$	(5,609)	$	(76,195)
Net loss per share attributable to stockholders—basic and diluted	$	(0.32)	$	(0.04)	$	(0.36)	$	(0.62)	$	(0.05)	$	(0.67)


	Three Months Ended September 30, 2022						Nine Months Ended September 30, 2022
	As Previously Reported		Revisions		As Revised		As Previously Reported		Revisions		As Revised
	(in thousands)
Interest expense, net	$	18,328	$	2,496	$	20,824	$	36,275	$	8,105	$	44,380
Loss before income tax	$	(29,852)	$	(2,496)	$	(32,348)	$	(60,178)	$	(8,105)	$	(68,283)
Net loss	$	(29,852)	$	(2,496)	$	(32,348)	$	(60,178)	$	(8,105)	$	(68,283)
Net loss attributable to stockholders	$	(62,047)	$	(2,496)	$	(64,543)	$	(132,633)	$	(8,105)	$	(140,738)
Net loss per share attributable to stockholders—basic and diluted	$	(0.54)	$	(0.02)	$	(0.56)	$	(1.16)	$	(0.07)	$	(1.23)