KBRA assigns preliminary ratings to two classes of notes issued by Sunnova Hestia I Issuer, LLC Solar Loan Backed Notes, Series 2023-GRID1, a $244.0 million residential solar loan ABS transaction.

This transaction represents the first securitization under the Hestia program, which contains a partial loan guarantee provided by the U.S. Department of Energy. Projects funded under Project Hestia are, in part, to provide loans for clean energy systems to disadvantaged communities in the US and Puerto Rico. The project is required to provide at least 20% of its loans to customers with credit scores of 680 or less, and at least 10% and a target minimum of 20% to homeowners in Puerto Rico.

In addition, the underlying Guaranteed Loan is collateralized by approximately $401.4 million of residential solar loans which includes PV Solar Loans under Sunnova’s Easy Own Plan Equipment Purchase (“Easy Own”) Agreements (65.1%), PV/BESS Solar Loans under its SunSafe Easy Own Plan Equipment Purchase (“SunSafe Easy Own”) Agreements (32.4%), and BESS Solar Loans under its SunSafe Agreements (2.5%). While Sunnova’s residential solar loan agreements offer 10- and 15-year loans, the majority of the aggregate initial pool balance (98.5%) has 25-year original terms.

Sunnova Energy Corporation (“Sunnova”, or the “Company”) is a Houston, TX based independent solar power company that provides low-cost solar electricity to homeowners, and is a wholly owned subsidiary of Sunnova Energy International Inc. ("SEI"), a public company. The Company started its operations in January 2013 and began providing solar energy services with its first operating Photovoltaic (“PV”) System in April 2013. The Company has served a total customer count of over 348,000 in more than 45 U.S. states and territories. Sunnova provides its services through long-term residential solar service agreements ("SSA") in the following formats i) lease agreements, ii) power purchase agreements (“PPA”), and iii) loan agreements. Only solar loan agreements are included in the Series 2023-GRID1. The Company originates loans to mostly prime credit quality homeowners through its partnerships with local dealers. The Company has also issued 10 ABS securitizations collateralized by secured residential solar loans and seven transactions collateralized by lease and PPA products.

KBRA applied its General Global Rating Methodology for Asset-Backed Securities and Consumer Loan ABS Global Rating Methodology, as well as Global Structured Finance Counterparty Methodology and ESG Global Rating Methodology, as part of its analysis of the transaction’s underlying collateral pool and the proposed capital structure. KBRA also conducted an operational assessment of Sunnova, as well as a review of the transaction’s legal structure and transaction documents. KBRA will review the operative agreements and legal opinions for the transaction prior to closing.

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Related Publications

• General Global Rating Methodology for Asset-Backed Securities
• Consumer Loan ABS Global Rating Methodology
• Global Structured Finance Counterparty Methodology
• ESG Global Rating Methodology

Disclosures

Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

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