Sunnova's hidden spreadsheets reveal questionable accounting practices

In the United States, the residential solar developer Sunnova is facing scrutiny over its financial practices due to revelations about a hidden spreadsheet that potentially obscures important data. An analyst, frustrated by the read-only nature of the document, discovered that it contained locked rows and columns, with notes from financial reporting chief Kat Scherer indicating how to compute the total weighted average number of systems. The spreadsheet suggests that a significant number of systems being reported may include battery storage systems, raising concerns about possible double counting in their financial metrics. Sunnova aggregates data in its public financial disclosures based on information from its internal accounting system, but questions have been raised about the accuracy of these metrics. The company recently experienced a steep decline in share prices, dropping from $12 to 30 cents, as allegations of manipulated data and misleading practices surfaced. The hidden data shows that 54,709 leased systems and 22,909 loan systems reported may include non-solar elements, which complicates financial assessments. Industry analysts speculate that this lack of transparency may lead to severe consequences for investors and stakeholders involved with Sunnova. Further investigations indicate that operational and maintenance (O&M) costs related to these solar systems and any battery systems included might not have been allocated appropriately. Kroll’s estimates suggest significant O&M costs associated with solar systems without and with battery storage, amounting to tens of millions annually. Additionally, as Sunnova's general and administrative costs have significantly increased from $180 million in 2021 to $460 million in 2022, concerns mount about financial health and the potential for bankruptcy, further fueled by the fallout from similar issues at other residential solar companies. The implications of this situation also resonate within the larger context of residential solar financing, where tax equity investors like Google have economically backed such projects, expecting returns primarily through federal investment tax credits. Given the volatile nature of the residential solar stock market and the tightening political climate around green subsidies, the ramifications of Sunnova's financial practices could disturb the entire sector, risking both investor confidence and broader investment into solar infrastructure.