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Russ: This is PKF Texas Entrepreneur’s Playbook, I’m Russ Capper, this week’s guest host, and I’m coming to you from the Gulf Coast Regional Family Forum. And I’m with John Berger, Co-founder and CEO of Sunnova Energy Corporation; John welcome to the Playbook.

John: Thank you Russ, nice to be here.

Russ: You bet. Tell us about Sunnova.

John: Sunnova Energy is a residential solar and storage service company. We operate from near Japan and Guam, Saipan all the way through California, Texas to Puerto Rico and all the way up far north as Massachusetts. What we do through a network of locally owned businesses, dealers and contractors is they’ll go out and source customers on our behalf and sign them up to our service and then install our equipment per our specifications on the customers’ homes, and then we provide for those customers for 25+ years cheaper power, cleaner power obviously with solar onsite, and increasingly - and just recently - a better service with storage, with batteries. Onsite they’re working with the solar system and then have more complex IT systems and such so in effect we’re creating wireless power.

Russ: That’s real cool. So tell us how you connect all those parts. There’s a lot happening there; there’s hardware, there’s installation and there’s finance. You have partners that do a lot of that and you do some of it yourself, is that the way it works?

John: Yes. What we feel like has made us a success is one word: focus. So what we do is we want to take care of the customer; we have a contract with the customer, we own the equipment in most cases. Now we do loans as well, but every loan that we sell – unlike most competitors – we stand behind fully by the way to think about it is a bumper to bumper warranty. So all of our customers down in Puerto Rico we’re repairing all of their systems for absolutely free. They paid for it instead of if you had “owned it” and so forth and tried to go through all that hassle you would have had a very different financial outcome, let’s just say that.

And so what we’re doing now as storage comes on board is we’re taking care of everything for the customer and we’re stepping in with our service technicians and with our partners in the field and making sure that all the equipment is running to the specifications and to what we signed up the customer to in terms of their expectations.

Russ: So you brought up Puerto Rico, that I assume was a significant part of your install base, is that right?

John: I wouldn’t say - it was significant in the sense that it was roughly about 10% so that’s roughly the way to think about it. We had a number of customers there. More importantly it was a humanitarian – and still is a humanitarian crisis; these are Americans, this is a part of the United States. And what we did prior – of course we are headquartered in Houston so we had to deal with Harvey, then Irma came and knocked down Puerto Rico for a little bit and then Maria came and boy that was a wallop. So we’ve gotten really good at crisis management and recovery and such and we had the largest fleet of solar systems ever to get hit by a major natural disaster in history, in the world. We’ve responded in I think fine fashion.

There’s a lot of challenges, I know our customers would rather have something immediately fixed the next day and so forth but there’s a lot of practicalities. We also came in and said storage - batteries – this wasn’t available prior to the storm but it is now. And Puerto Rico really did a service for the entire world, certainly the United States, in saying hey look, there’s a use for storage; not just for electric vehicles but for actually paring with solar, and you can get a much more resilient system. So we can deliver a better service at a better price than the monopoly down there or anywhere in the world and Puerto Rico has given a showcase for that. So the next storm with our customers that are getting batteries - and we’re trying to get as many batteries as we can to the island as fast as we can for our customers to buy and incorporate into their service contracts with us – then that next storm they’re going to have power no matter if the grid goes down or not. That’s a great place to be.

Russ: Okay. When you say no matter if the grid goes down or not, in Puerto Rico today the solar is tied into the grid though right?

John: It is. Now for a number of customers on a post basis the governor has a lot of foresight – Governor Rossello – has a lot of foresight down there and so we worked with his administration – his office – to say from this point forward, after the storm all the customers need to have batteries and that’s what’s been going on there. So over a period of time – and we’re trying to get batteries to our existing customers as fast as we can – over a period of time we hope that most of our customers have batteries.

Russ: How does including a battery with an installation – does that change the connection to the grid from solar or can they be completely independent of the grid?

John: You can still have the grid connected and I really hope that’s where we end up as a society, not just for our country but for around the world, is that think about a combination of the – remember the triple play in telecommunications, you have the cell phone and the landline and you’ve got the internet and all this other stuff. However, power is a little different and what I’d like to see is that the regulatory bodies, whether those are state or federal or whatever it is in that particular country, comes in and says stop spending so much money Mr. Monopoly. Come back in, just have the cord there, let’s have a minimum charge for that - $5, $10, $15 a month or something of that nature – that works with the solar and the storage that we provide so that the customers can have the most options for them to choose from.

And we have competitors, we think obviously we do the best job, but let the customer decide who does the best job. Let them go and choose that and then still have that wire there. Now I will say that if some monopolies get their way and charge crazy - $30, $50, $100 a month - I think more and more people are going to be looking at is those batteries keeping down the cost and say maybe I don’t need that anymore.

Russ: Real interesting. There always seems to be a battle between the grid and the new actual solar power just on whether it can be bought back and those kinds of things. Do you see all of that changing in the near term?

John: What you’re referring to Russ is net metering. And what the utilities like to say is that – some of them anyway unfortunately – distort that and say we’re buying retail and selling wholesale. No, what really going on is that we’re treating the grid as a battery. So during the day our customers over-generate power, we send it to the utility for free – for free – and then our customer takes that power back at night when the sun doesn’t shine – for free – and we net it out, hence net metering. So it’s not portrayed right from some monopolies.

What I think, what I would do – and I ask this all the time, if you ran a utility what would you do John – I’d offer net metering. I’d offer it for $5, $10 a month. I don’t want to have customers pushed further down and get the storage, I want to be able to provide that. That’s shocking news but that’s the reality. You can’t fight technology, technology moves on. You can’t fight customers and giving them choices, customers are going to get what they want at the end of the day which is a better service at a better price.

And again, hopefully my company works hard enough to be able to earn that business, but if not then somebody else should be able to earn that business. That’s the American way and that’s what I hope we’re going to end up here with, is something that’s much more of a collaboration with the regulators and with the monopolies, the pole and wires utilities, and with the new power companies like myself, coming together to provide and do what’s best and right for the consumers.

Russ: Talk a little bit more before I let you go about storage, that’s kind of a new feature for you, first I know if, but it always seems to really make sense with solar. Battery technology though is different because it’s chemistry, share with us where it is today and how it fits in with Sunnova so well.

John: Well how it fits in is that a lot of folks want to have that backup power, that higher reliability that through no fault of their own, it’s a piece of wire on a stick in the air right? Anywhere else you go in the world, not to pick on anywhere, but particularly in the Gulf Coast region here in Texas, in Florida we saw that with Irma, obviously in Puerto Rico, Hawaii. The Northeast got just hammered over the last few days with the snow storm there. And all of that as we’ve been trying to figure out how do we do more over electronic; look at now delivering groceries with Amazon and so forth.

So everything’s getting where we’re more dependent upon electricity but the system hasn’t changed. This is what the consumers are saying, the system must change. And the technology that drove a lot of those changes in telecommunication, e-commerce and so forth is what I’m talking about with solar and batteries. And batteries are coming in really in a lot of the same processes. If you look at how you make a solar module, a lot of the same processes. Now there are differences and so forth, but the scale up – what’s going on; what Elon Musk has done and really shown the way. And we both do business with Mr. Musk in buying product but we also compete with him as well, but I would say that he’s shown good leadership here and shown the way with what we can go and do with batteries. But there’s a lot of other companies out there; LG, Mercedes, Panasonic. The Chinese companies are big into BYD and so forth. And all of them have been focused on electric vehicles and then all of a sudden Maria hit Puerto Rico and it really shown a light about what could be done and there’s actually higher values add.

So basically consumers are willing to pay more to have that reliability in their home, whether it’s in Houston or New York or Boston or San Juan than they are even willing to pay for electric vehicles. And so we hope what we see out there is a lot of the manufacturers gearing the operating technologies, the information technologies that manage the batteries better. We can then sync that up with what we have in our operating technologies on solar and then be able to remotely monitor and manage in the most optimal fashion back here in Houston for all of our customers, whether they’re in Guam or they’re in Puerto Rico or they’re in Massachusetts.

Russ: Nice. John, a fascinating story, a great company you have cooking right now. Looks like you’ve got a bright future going too.

John: Yes, yes we do. Everybody does. The energy business is going to be an exciting place to be in the next few years. Thank you.

Russ: And that wraps up my discussion with John Berger with Sunnova Energy Corporation. And this has been a Thought Leader production brought to you by PKF Texas Entrepreneur’s Playbook.