Green Giants – Episode 17

Empowering Energy Independence: John Berger on Sunnova’s Vision for the Future

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Transcript

Wes Ashworth (00:01)

Welcome to another episode of Green Giants, Titans of Renewable Energy. Today, we’re honored to have a true pioneer in the renewable energy space joining us. John Berger is the Chairman, President, and CEO of Sunnova, a company he founded in 2012 with a mission to bring energy independence to homeowners. With over two decades of experience in the electric power industry, John has been at the forefront of advancing energy technology and advocating for consumer choice and free market competition.

Prior to Sunnova, he founded and led two other companies focused on renewable energy and solar services. John holds an MBA from Harvard Business School and a degree in civil engineering from Texas A&M University. John, we’re thrilled to have you on the show today.

John Berger (00:42)

Thanks for having me, glad to be here.

Wes Ashworth (00:44)

Yeah, so we’ll start at a really easy place. So, you’ve been a key figure in the renewable energy industry for a long time. Can you share just a bit about your journey and what inspired you to start Sunnova?

John Berger (00:56)

Certainly. So, I really consider myself that I’ve been in the power industry now for, you said for over two decades, unfortunately, it’s closer to the 30-year mark. [Laugh] I know I don’t look it.

Wes Ashworth (01:05)

Right. Nope, not at all.

John Berger (01:06)

It’s been a long time. I started on the power trading desk and really was more of a physical arbitrage. I spent some time even running a utility from the control room during the nights and weekends for a bit. And then moved up and started to actually trade a month ahead, day ahead power. And from there, really got a sense that I thought that the power system was at that point in time, and again, this is going to date me, was back in the 90s when the internet was really coming about, was really, frankly archaic. And that when you looked at the internet and what was going on then and what the potential was going to be, I think we’ve exceeded a lot of those thoughts in many cases. Now, fell short in a few, but exceeded them. It really stuck out to me that there was going to need to be a lot of changes. You couple that up with a growing sense that there was a climate crisis, that carbon was a problem. It confirmed for me that if you look back in history, we were way overdue in two things. One, a major new source of energy. And then secondly, we’re way overdue for a change in transportation technology. And so, when you looked at that, I thought, you know what? I think things are gonna change.

So I started working in venture capital. Then I founded the first firm, kind of fell into solar when I was doing a solar, or an energy efficiency installation business, and started to see solar was very cheap. I sold that business, and I thought, hmm, this stuff’s, in terms of stuff, solar’s gonna get really cheap. And that was a great call. Boy, I was more right than I could have possibly imagined. This is somewhere around, it’s around in 2009. Then started another company that was like Sunnova, quickly sold that to NRG, big power company. And then from there I said, that worked, and started Sunnova, which is basically a service company, a wireless utility. And we do the financing. We keep the lights on so it’s our folks that roll trucks after storms and fix the power. And then third, we aggregate and sell that power back into the wholesale system. And the view to come full circle is that the power system of the future, whether that’s in a certain location, region, country, however you want to look at it, looks more like the internet than it does in the last 130 years. And that means that you’ve got these big stations, could be combined cycle gas plants and so forth, that operate kind of like data centers. And then you’ve got the endpoints of the system that are more efficient and do a better job being smaller, kind of like iPads, computers, cell phones and so forth, smartphones that operate in the peripheral of the system, but it’s a network and it’s two ways and it’s all working together to deliver the best reliability at the best price. And that’s exactly our view of where the power business is going to go. You’re going to have a lot of different changes. It’s no longer command control, Soviet style. And we’ll get into this, I’m sure, including the economic model and choices for consumers. But a lot of those change, that’s where it all came from. That’s what I was starting these businesses and really learning about.

And now we’re here with solar, with storage, with load management, with software, with EVs, EV chargers, generators, all of that coming together to provide solutions to energy solutions to our customers.

Wes Ashworth (04:58)

Yeah, I love that story and just how that all came together. And I am curious, back in 2012 when the company first was getting off the ground and starting, so that vision behind when you originally started it, when you look at today, I guess how has that vision evolved and changed over that course of time?

John Berger (05:18)

No, really hasn’t. I mean, you know, there’s others that have changed strategy multiple times in the industry. We haven’t. We’ve stuck with our financing strategy, keeping the cash flows. We’ve stuck with our view about what the business, the industry is going to look like. We just talked about that.

Wes Ashworth (05:20)

I was curious if you were gonna say that.

John Berger (05:45)

We’ve stuck with our model using dealers instead of trying to do it on payroll. And the view has always been that we want to combine the utility power, grid power, with the solar and batteries and generators and load management, put all that together on a single bill and have that to be competitively shopped by the consumer service product.

And so all that’s coming together and aggregation as part of that and selling capacity and energy back in the wholesale system is something we envisioned years ago. Not much has really changed.

Wes Ashworth (06:27)

Consistently got it right the first time. It’s good. And I know a core focus is, as you can see if anybody watching the video behind you, powering energy independence. And this is a big part of the core of what you’re doing. And I know you know, Sunnova is dedicated to providing consumer choice and energy independence. Can you explain, you know, why this is so critical in today’s energy landscape? And how does Sunnova empower customers to take control their energy future?

John Berger (06:55)

Well, what we do is we offer choice. We can come in and say, look, we can provide a different service, a better energy service at a better price. Let us show you that. Here’s what that would cost. Here’s the contract and this what it looks like. This is the level of reliability that we can provide and so forth. And all of that is something that we do through our dealers. We’ve got a small direct desk, but that’s about it. And we do a lot of those installs or farmed out to our install -only dealers. It’s trying to become that new utility, if you will, in a competitive environment and offering competitive energy solutions to our customers.

Wes Ashworth (07:41)

Yeah, and it’s so much, you know, it looks really unchanged since, you know, kind of the industrial revolution of these reliances on, you know, big power companies and really you don’t have much of a choice. Hearing that, you know, these as things evolve and there is more choice and there are more options there. And I think consumers are starting to pay attention and ask the right questions. So think that’s critical. Anything else that’s important for the average consumer out there maybe to understand or to be thinking about in today’s climate?

John Berger (08:13)

What the average consumer should think about? I think they should think about looking at their utility bill. They sit in a monopoly area and think about why, how could you do better? First and foremost, it always gets me is that you can talk to lot of businessmen and women and they think capitalism and choice, consumer choice and competition works in their industry. When it comes to power, somehow it doesn’t work. For some unknown reason, force. And the true answer is, it absolutely does work. And we need to have these choices. It doesn’t mean we don’t have regulations. By the way, the regulations need to be very much updated – the technology has changed, the regulations have not. They need to be able to make sure that consumers are treated fairly. But with that said, we have new technologies, not unlike in the, to mention the nineties again, when the cell phone came about and the internet and IP telephony. If AT&T hadn’t been broken up and that regulator hadn’t been such a proponent of consumer choice, would all that wave of innovation, including what became Apple and Google and everything else, would that have happened? I would put forth that it would not have.

And that is the beauty of our system, economic system as a country. And it’s what every American wants, which is the right to determine who serves them and the right to determine their own future. And we’ve robbed every American of that, given the current system that we have in the power industry. We can sit there and argue, I would say there’s no point in it, but if we want to argue about the old system, the current Soviet style system worked for a while. That’s fine. The Soviet Union existed for a while before it collapsed under its own weight. But I think what we’re definitely seeing right now is a runaway freight train of costs that keep getting piled on. And unfortunately, when you look at the cost pressures, the natural gas rate is at a level that is not consistent with profitability for the oil and gas companies. So, the rates increases that you’ve been seeing for all Americans are with an unsustainably low natural gas price. As that moves up, that’s going to push rates up even further and faster. And there’s already price increases even in what has been a potentially maybe even going into deflation for at least a bit. But certainly, the inflation rate has dropped materially at this point, even over the last year or so. And so we see, you know, these rates are going in the opposite direction as everything else in the economy is doing, including deflation or less inflation is probably a more accurate, it is a more accurate way of putting it. And we still have this natural gas pricing that can move up at least somewhat to those rates up just by themselves enough. So people are seeing no end in sight to rate increases and you’re right, they’re looking for alternatives. And when they’re locked into a monopoly that dictates what they’re going to pay and then dictates the service quality on top of that, that is not a place that we as Americans have to put up with in anything else in our lives other than power.

Wes Ashworth (11:54)

Yeah, that’s such a profound point and just a new way to think about that. And it really is. It’s unique, you know, compared to every other industry and things like that out there. Is it, I guess in your mind, from your perspective, what needs to change in order for that to change? Is it driven by the consumer level? Is it driven by the regulatory level or by enterprises or is it a mix of all of those things?

John Berger (12:21)

I think it’s driven by, let me say this, consumers are also called something else, voters. If you want a choice, if you want to not pay a power bill that’s now in some parts of the country, has been reported the last few weeks that rivals the mortgage bill. Think about that with mortgage rates just skyrocketed and the power bill is going north of that. I you know you have a problem. Getting people upset enough to stop listening to the lies of the politicians who’ve been paid off by the union of the utilities, the International Brotherhood of Electrical Workers, the utility folks I mean, we’ve seen these corruption scandals all across the country. People have got politicians have gone to jail in Ohio. There’s been corruption scandals in other areas of the country as well. And we shouldn’t be surprised because you’re having a very small group of politicians and people essentially quote manage the money that these utilities are getting and the utilities in many areas of the country, this blows me away, actually have the ability to take your money and spend it in a way that tells you that they should get more of it. Think about like politicians, all that’s illegal. You try to do that and you go to jail and so you’ve seen a number of states starting with the state of Colorado pass laws to prevent that very thing from happening. If you think a utility is gonna go to a playground and spend some of the shareholder dollars on that playground just to make you feel good about your bill going up, think again, it’s your money that’s going there. Now, you may get an outside share of it because of that playground you can utilize that more than somebody else that helped pay for it. But again, all this is being socialized and those funds are being used, those are your funds. That’s your money that’s being paid.

Wes Ashworth (14:01)

Huh. Yeah. It’s one of these, it’s such a mindset shift and I think an awakening in a way of just the realization of that and hopefully some aha moments are happening out there. And digging more into just decentralization of power systems and you’ve compared the future of power systems to the internet, which I love that analogy with a focus on decentralization. Can you elaborate on that vision and how you see it reshaping the way just we generate and consume electricity?

John Berger (14:49)

Yeah, it’s interesting here. And this is where you’re starting to see some of this aha moment. And those folks that I mentioned earlier that love capitalism, love business, love competition, love consumer choice, except in the power industry. And somehow they think that that’s, you know, the utilities, they justify universal service and everything else. By the way, you just charge for universal service and a bill. That’s what the AT&T and the baby bells did. Somehow that worked there, but it’s not going to work here. I mean, it’s a lot of this. It’s interesting. It’s in the AI data center world. As they become, wait a minute, I’ve got to serve all this load that I’m creating by doing AI. I want to put generation on my side of the meter and it’s cheaper. And so then the utility says, well time out. Like we’re supposed to get a hunk of that flesh. And people are like, yeah, why can’t we do that? And the industrials, in this case, the data centers are like, well, no, no, wait a minute. If we can do this cheaper than you, and it’s more reliable because it’s on site, what’s wrong with that? Why don’t I have a right to do that? And so you’re starting to see that argument happen where the utilities arguing its monopoly right to serve. And the industrial is like, no, that doesn’t make any sense. If it’s my money and I put it up and I have another company that comes out, could be somebody like us, that can operate essentially the microgrid, right? And be able to do it at a good reliability, why shouldn’t I have the option to do that in a free economy, in a free country? So you’re seeing a lot of that start to, when you look at the internet analogy I just made, start the internet itself is, if you will, with AI and so forth, some of this realization of, you know what, things need to change here. Just because you’re going to wire across a property line, doesn’t make, you know, it doesn’t mean that you’re really doing something that should be illegal. That’s crazy. In a large number of states, it’s exactly the case. The utility will say that their monopoly is to run a wire. So if you had an outsized battery or generator and you wanted to run a wire across for several of your neighbors from fighting power and emergency, in many states, that’s illegal to do.

Wes Ashworth (16:47)

Sure, yeah, which is wild, wild to think about. And this is semi-related, but in terms of just the increasing power demands out there, and this is somewhat related to the data centers and AI, they’re consuming more power, and I think as we continue, we require more and more power. So, and this is, I think, a good pathway to regards of what side of the fence you sit on, we need more power from alternative sources, and it’s great, coming from clean sources and things like that as well too, the impact of the environment. But even if that’s not your main motivator, it’s that the power demand is still rising, right? And so, I know that Sunnova plays a key role in meeting that surge in power demand. How does the solar and storage offerings contribute to addressing those current energy challenges in the US and the increase in power demand?

John Berger (17:58)

Well, what we do, there, you know, lot of people, I guess, let me back up. I don’t know what percentage of the AI, you know, power demand increase is just the data centers, but it’s not a hundred percent. It’s not even. And so part of, say if it’s half or less, a little less than half, that still means that it’s the demand that’s growing because of AI and more intense usage of, of the computers use a layman’s term, it definitely is causing demand to move up materially more than it has in the past. You couple that with the re-onshoring industry. Think about all the steel smelting. Think about the LNG terminals down here in Texas. These things consume an enormous quantity of power, and those industries had primarily been like, for instance, steel smelting in China. And so now we’re bringing all this back. But on top of that, then you have electric vehicles, electrification of heating. There’s a lot of different trends in the economy that have been measured in some cases, certainly years, in some cases, maybe even decades, like electric heating. So when you look at that, you’ve got a very bullish picture for the first time in two decades in the power industry. And so, I think now where we need to all realize is that it’s going to take a combination.

I personally think if you look at Texas, for instance, we hit peak load here. It’s called roughly about 85 gigawatt hours or so. It’s a little bit higher than that. But if about, you know, by the end of the decade, let’s say it’s another 20 on top of that, that’s a pretty good growth rate. But that’s probably about right what we think. And about half of that additional gigawatt hours are going to be met with natural gas combined cycle units, in our opinion. And about the other half is going to be met with solar and storage. And I think that’s right. I mean, that’s a general trend – I think solar and storage continues to pick up an outsized portion of the growth. And gas will grow maybe a little bit, maybe not. But it’s certainly coal. Not a big believer in the wind business being a huge growth engine. I think we’ve picked a lot of the good spots over the years. Happy to be wrong, but you know, it’s also on the hydro side that hasn’t grown in, I don’t know how long and nuke is not an answer and because we can’t seem to find a way to really get the cost down. We keep trying Vogel expansion was the recent one. That was a, you know, unmitigated financial disaster in any way you look at it. There’s no good way to look at that and say that it was somewhat of a success other than saying, well, it’s carbon free power. Okay, but there are a lot cheaper ways of getting carbon free power out of solar and storage, whether it’s in front of the meter or in terms of a solar farm or behind meter, like what we do. So I think all of that means is that we’re gonna see, need to see, growth in the ability to generate clean power. But at the same time, we are gonna have some growth in the hydrocarbon -based power, namely natural gas in our opinion. And we think overall, emissions will continue to come down rather dramatically as we continue to drop the use of coal. Again, solar and storage, we think, grows much faster than natural gas power generation.

Wes Ashworth (21:40)

Yeah, I love that analysis. And kind of getting further into that and looking ahead over the next five to 10 years, you know, being well connected, you’re a senior leader in the space, you’ve been in it a long time. What are your predictions for the industry looking over the next five to 10 years? And then how is solar and storage technology evolving, especially in response to, like we said, to increased power demand, also grid instability, which we haven’t talked about, rising utility rates, which we did hit on. What’s that look like over the next five to 10?

John Berger (22:15)

Well, I think we are entering a crisis phase where you have a repayable revolt. I don’t know exactly where that starts. California is way out of control. The governor put forth gutting net metering out in California. And the industry, our industry, was seen as, portrayed as by the utilities, as the reason for all these rate increases. But yet when they gutted net metering, they raised rates 85%. And they had raised rates previous to that too. So I’m pretty sure that was a lie. And the numbers don’t reflect the reality. And so I think a lot of people are getting wise to this.

It’s very clear to us that that’s what’s happening. Is that happening in other areas of the country? Yes, it is. And again, why is it so bad to have choice? Like when you look at Houston/Dallas even, there’s some things that we could do on the regulatory structure in Houston/Dallas to make this better for consumers, in my opinion. But if you did nothing but that, why couldn’t you do that as you have new technologies that can be wrapped into a single bill and let companies like mine compete for your business? Deliver better reliability, deliver a better price.

And if we want to take some things like wholesale pricing risk, so for instance, if I wanted to give everybody a little bit more battery, but for free, but I get the use of it to basically sell into the wholesale market so that I can take a trading position like I used to do to sell out when the power prices have spiked higher, just like they did last week in here in Texas, then I should be able to do that.  And maybe I win and maybe I lose. That’s up for my shareholders to vote on what they want to do. But as the consumer, you win no matter what. You got to be a battery for a little bit. In some cases, maybe you got a little bit battery in this example for free. So those are the kind of things that you’re not, not, not going to get from a utility. Because even when they give you a pilot program, that money’s coming from someplace. Where is it coming from? You. That’s where it’s coming from. And in this case, this is it and it stifles market innovation. It stifles competition. If you don’t have any competition, then when you come to work, do you really get pushed to do something that you wouldn’t have, you know, felt good, know, you know, uncomfortable, right? About doing. Do you work as hard? Really? You don’t. You don’t do it. And that’s why our system works. And that’s why we’re here. And frankly, the Soviet Union isn’t here anymore.

Wes Ashworth (24:48)

Yeah, well said, well said. And being such an advocate for consumer choice in this space, as you said, is not readily accepted and is unusual in that it compared to other industries. So, being an advocate for consumer choice where it’s not readily accepted and maybe not there as a commonplace, I guess, what are some of the challenges you face leading a company pushing for that? And then how do you stay motivated to push for change?

We’re really, you know, and this is called green giants, but you’re up against some giants, you know, as you look at the future and what’s pushing against you.

John Berger (25:36)

Well, it’s not easy. And I would say that being the solar company in Houston, I mean, Houston’s attracting a lot of new type of companies, renewable companies. And we do, I think, have a very good future in being the energy capital world, not just the oil and gas capital world. So, I think with all of that said, we started 12 years ago when that not necessarily was the case.

We’re used to adversity. We grew up in it. So we’re kind of that kid that grew up on the wrong side of the track We’re tough. And you have to be tough because you’re dealing with people that, you know, they can be a little mean. I gave you an example of what happened with California. Was that fair? No, it wasn’t fair. A lot of lies used? Yes, a lot of, you know, what was going on? Why did certain people vote certain ways? I’ll let you all use your imagination; usually following the money works. And so, you when you look at all this, yeah, you’re going up against some giants. And a lot of people, a lot of people go, you’ll never be successful. The utility system and monopoly system is so entrenched, it’s never gonna change and all that. And I just refuse to acknowledge, you know, to just succumb to that kind of, I think it’s a defeatist attitude. It’s this country can do wonderful things.

I believe in the American people. I believe that when they are able to make the choices for their families, that ultimately, collectively, it puts us in a better spot, a much better spot. And I’m going to continue to fight for that right for you to choose. hopefully, what I also fight for is when you get that right to choose, that you choose us and we do a great job. But you should have the right nonetheless, that if we don’t do a good job or you don’t want us, that you should be able to choose somebody else. And I think that we’re just going to continue to bang that drum. Businesses is a lot about timing. And right now I think our timing is really good and that rate payer revolt is coming because utilities just can’t help themselves. They just will continue to spend, spend, spend your money and keep spiraling those rates higher and higher because they, you know, what they think you have no choice. You have no voice. That’s what they think. And they’re dependent on you doing nothing and saying nothing.

Wes Ashworth (27:41)

Yeah. Right? Yep. That’s so good. And just that, how resolved you are in that, is amazing. And I’m sure for me, it’s the entire company, you as you have that belief and hold that hold true to that. thinking about maybe a listener out there who is considering maybe they do have an option, you know, they’re frustrated with rising utility rates, unreliable power.

I guess what would you say to them and then specifically, how can Sunnova help them achieve energy independence and in what steps should they take if they’re interested in exploring your solutions?

John Berger (28:35)

Well first, call us up and call one of our dealers out, whatever your choice is. Again, you have choice. So, you know, what we try to provide is something that’s tailored to what you want. So, for instance, you may work quite a bit at home. And so your demand for reliability is a lot higher and your willingness to pay than say somebody like me that really doesn’t work at home. And so right now, you know, the only thing that everybody did over the last few decades is just go buy a backup diesel generators, right? Now we have the ability to take in technology and think about this, those generators, we’re not against generators. We deal with those too natural gas fire predominantly, but the cost to maintain those things is really high, really high. And so when you take that cost over a very small number of hours that you would need it for that year, that’s pretty expensive. But if you have solar and storage, then you can use constantly every single day and it’s there for those times where the utility isn’t there, then that cost can be essentially amortized over a larger number of kilowatt hours. It even impacts about how we think about the cost structure and delivery of service between generators and solar and storage.

So further to that, there’s also software you can do from your iPhone where you can turn off and on the loads in your house to further stretch out your batteries or to maintain, know, not hit, you know, consume power than maybe when it’s really expensive to take advantage of that through a service provider like us. So, there’s a lot of different options. It is limited by the regulatory structure where you are. So your politicians are limiting what you can and cannot do.

And the other piece of this is that, again, it may be something that is more specific and enabling in that particular area of the country. So for instance, Alaska operates very differently through the seasonality than, say, Puerto Rico does to give you some streams. So there’s some other things that go in within that. No, we’re not going to advocate you clear cutting trees to go put the solar up and so forth. So if you have a home that you’ve got trees over it, you know, in storm area like Houston, you might want to watch that. I have a lot of friends that had some trees fall in their house and they probably should’ve cut them down earlier. But in another place where you don’t, maybe in the middle of the country, maybe it doesn’t matter as much. So there’s a lot of like regional and personal specifics that we can help work with our dealers to craft you a solution that makes sense for you and your family.

Wes Ashworth (31:05)

Yeah, and I think that’s a lot of the resistance, at least that I’ve heard in talking to people that they don’t have solar, or they haven’t really gotten the option, they’re curious, they’re interested, they’re starting to ask questions, they really don’t know where to start. And I think there’s some caution behind, I think to put it plainly, there’s been some bad actors and you’ve heard some stories, and unfortunately that’s what gets promoted over and over and over again to where they go, God, I don’t know who to call, I don’t wanna have a bad circumstance, get ripped off or have this issue. So I think anything that’s just pointing people in the right direction to go. So they can go check Sunnova out obviously make a call and you’ll work with them on their unique case and just sort of piecing that together, which I think is really key.

John Berger (32:07)

Yeah, and that’s a key part. We’ve been a big proponent of a couple of things. One is consumer protection. And look, again, there needs to be an overhaul. I would hope it would be on the federal level, but I power is pretty much regulated on the local level, state level. But to have some sort of better consumer protection, that also needs to go to the utilities, too. And a lot of them are poking behind the scenes, some of these folks and so forth, the politics that have gotten involved in this stuff with the Democrats and Republicans that have made a point that no solar panels ever voted D or an R. I mean, you’re politicizing something, you should be able to get behind it, regardless of who you’re going to vote for in November. And then the other thing is mandating service. We’ve been a huge proponent of this. Make it illegal to put quote panels on your roof or a battery in your garage without having a financially viable entity that may be post financials with the state, respective state, like insurance companies, where you’re guaranteeing that customer that service over that term of that contract, in our case, 25 years. That should be mandated. That should be law. And why it isn’t is again, the government or governments, in the case of states, are behind the times as far as technology, in this case way behind. It’s usual that they’re behind, they’re way behind. They need to get with the program and really start having proactive solutions to this instead of just, I’m going to stamp out, you know, because there’s a few bad apples in the bunch, I’m going to stamp the whole orchard out. We’ve never done that as a country, but for obvious reasons, that didn’t make any sense. What we need to do is be thoughtful about how do we proactively protect consumers and move forward in a structure that’s fair to consumers and fair to business to compete for those consumers.

Wes Ashworth (34:07)

Yeah, no, that’s good stuff. And I’m curious. So, it’s been it’s been a somewhat of an unusual year in some respects. You’ve seen some companies in the renewable space doing really well, some doing having a really hard time and kind of vice versa. If you look over going into next year, year prior, I guess, where’s your confidence level? How are you feeling about the industry as a whole?

John Berger (34:32)

I feel pretty good about where we are as an industry. I think we are coming out of a slump. I think that the speed of which interest rates went up rather than the absolute amount really was the big thing. And I think that we’re going to have a delayed reaction in the overall economy. Think mortgage rates. Eventually the chickens will come home to roost. Eventually those mortgages do end and eventually people will do for whatever life reason have to move and break it,  so I think we’re starting I’m confident, well, it’s not the right word to use, but I’m pretty certain that we are moving into a much more difficult environment economically and I make that point because our industry I believe to be counter cyclical just like the electric utilities themselves. And you always need power and when you’re not doing as well financially and you have to pay a bill, you’re going to spend not much more time figuring out how to pay that bill less, right? And a number of our customers, I mean a huge chunk, are now that signed up with us three plus years ago, are now paying 50 % or less than what they’re paying utility for the same power, because they locked it. And so when you look at the potential for our industry, we’ve got utility rates moving up. We’ve got utility reliability moving down and we’ve got equipment pricing on solar modules, batteries, inverters, everything moving down. And part of that is there’s a massive overbuild centered in China, four to one as is estimated supplied at a global demand. But on top of that, what did we do as a country? We said, let’s go build more, because it’s not made here. We want it to be made here.

I’m not going to get into the political argument about whether that’s a good idea or not. Interestingly, both Democrats and Republicans both agree that it’s a good idea, whether it is or not. The only thing they agree on is anything anti-China. When you look at where we’re going to go as an industry, you cannot, in my opinion, be constructive on equipment pricing anytime soon. There’s a massive oversupply. More supply is coming. And when you look at how the original equipment manufacturers, Tesla is a great example, just came out the Powerwall 3, they’re innovating product on top of that, getting better, more efficient, better performance, et cetera. So I’m pretty optimistic that when you have the utility rates doing this, equipment pricing doing this, that wedge is the value wedge for the consumer, that’s growing. And then add on top of that, maybe interest rates even coming down. You’ve got to really nice growth story here that I think will surprise to the upside, maybe by quite a lot.

Wes Ashworth (37:29)

Yeah, and I think as you said, that the price gap or what have you, if you will, is going to get worse or bigger. I guess in a way, as you said, natural gas, I think you said is at an all-time low. I believe is what you shared in the beginning and that’s going to increase. So your prices are going to go up even more. So, yeah, that’s a really great analysis and perspective and great way to sort of like put it all wrap it up in a bow is really nice.

So getting closer to time here and I just want to open it up. Any one I guess anything that’s coming from Sunnova, things that people should look out for, maybe things that are in the works that you can share anything that you’re excited about that’s it’s in the works?

John Berger (38:13)

I’m excited about really having a lot of solar and batteries out there and the key is there is batteries to really be able to enable more and more of an aggregation of consumers, customers of ours to be able to participate in the wholesale market. And the software and the managing the load that goes around with that is starting to get more and the hardware associated with that load management is starting to get more accepted by the costs is coming down.

So I really think that this vision that we have of the power system becoming more like the internet, I think we’re very much there. And I think that the whole, whether you want to call it a virtual power plant, grid services, we call it energy services, aggregation, whatever it is that you want to refer to it as, but that collective ability to move power and capacity and other services into the wholesale market and then have that benefit be shared to consumers, I think is the most exciting thing we have going. Second would be the microgrid business. see whether it’s funny, it’s even in the Permian with oil and gas wells, you get power from the utilities there, because utilities move wherever they wanna move and they’re building microgrids. then you’ve got, you know, the data centers building microgrids. got a lot, got home builders building microgrids because they can’t get service from the utility. So there’s a lot of people building these microgrids. And what’s interesting about it is if you think about it, a utility, electric utility, no matter how big they are, they all started from a little baby microgrid. Someday they put one generator, a couple of generators, threw some wires together, and genesis of the utility. So, we are reforming, restructuring the physical industry to meet the new demands at a better price, at a better service for the consumers. And so I’m real excited about the micro utility side of the business as well.

Wes Ashworth (40:20)

Yeah, that’s a really cool way to think about it. I don’t think I’ve ever really pieced all that together in my mind, but that’s a really, really cool point. Any other things that you want to share, just key takeaways or anything else you’d want to share with the audience out there?

John Berger (40:35)

No, I think that, you know, we’ve got a lot on our mind right now about the politics and the election. And I want to say this, that I think that the industry at large has done a good job of coming together with the existing part of the industry. Yes, hydrocarbon and so forth. I think that regardless of the election outcome, I think that we’re going to we’re on a consistent policy path. It doesn’t mean there won’t be some bumps. But I think there’ll be bumps rather than huge changes. And I don’t think there’s any way turning back. I think things like putting factories here in the United States, it does change the political calculus materially. And I think those politicians that even voice strongly like, I really want to repeal the IRA, they really don’t. You can see that resistance to the Inflation Reduction Act and the energy portion really, really fade quite substantially before the election. After the election, think about it, you got to have a lot more folks, at least quietly behind the scenes going, I’m not going to vote to repeal that because there’s too many jobs in my district. And by the way, jobs these days, it’s kind of becoming harder and harder to come by. You can go get somebody else to vote for. I’m not doing that. And so I really think that we’ve ended up in a good spot.

We need all forms of energy at this point in time. And so moving together, I think, is really the democracy, the democratic system has worked and we’ve ended up in a place where it wouldn’t have been where I’ve designed it. For instance, pricing carbon through tax credits is not what I would want. I just want a straight carbon tax, but it doesn’t matter what I wanted or want. It’s where we are now. And I think regardless of what the election outcome is, we’re going to be going down this path as a country. So I think the consistency of policy from the business community standpoint is key and fundamental to us being successful. And I think it will be intact regardless of the outcome.

Wes Ashworth (42:40)

Yeah, that’s so good. It’s such a great just wrapping up the conversation. So, John, it’s really been inspiring hearing a bit about your journey, your dedication to empowering consumers with energy independence and the innovative solutions Sunnova is bringing to the renewable energy landscape. Really appreciate you sharing just your insights and your passion, which comes through very clearly with us today. To the audience out there as always, thanks for listening to Green Giants, Titans of Renewable Energy.

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