SUNNOVA ENERGY INTERNATIONAL (NOVA) Q3 2021 Earnings Call Transcript

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SUNNOVA ENERGY INTERNATIONAL (NOVA 0.53%)
Q3 2021 Earnings Call
Oct 29, 2021, 8:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning and welcome to Sunnova's third quarter 2021 earnings conference call. [Operator Instructions]

At this time, I would now like to turn the conference over to Rodney McMahan, Vice President of Investor Relations. Please go ahead, sir.

Rodney McMahan -- Vice President of Investor Relations

Thank you, operator. Before we begin, please note during today's call we will make forward-looking statements that are subject to various risks and uncertainties that are described in our slide presentation, earnings press release, and our 2020 form 10-K. Please see those documents for additional information regarding those factors that may affect these forward-looking statements. Also, we will reference certain non-GAAP measures during today's call. Please refer to the appendix of our presentation as well as the earnings press release for the appropriate GAAP to non-GAAP reconciliations and cautionary disclosures. On the call today are John Berger, Sunnova's Chairman and Chief Executive Officer and Robert Lane, Executive Vice President and Chief Financial Officer.

I will now turn the call over to John.

William J. Berger -- Chairman, President and Chief Executive Officer

Good morning and thank you for joining us. Today I am pleased to report another quarter of strong results, to reaffirm our 2021 guidance, and to officially initiate our 2022 guidance. Slide three summarizes the growth in Sunnova's customers, battery attachment, and dealer network. In the third quarter, we added over 14,000 customers, double the number added in the same quarter last year. This growth is notable not just for its magnitude, but for the optionality it creates. Each new customer Sunnova adds presents the opportunity for additional revenues in the future as we continue to broaden our service offerings. Sunnova's battery attachment rate on origination now stands at 30%, up from 19% in the fourth quarter of 2020. Improved equipment availability has contributed to this steady improvement in our battery attachment rate. We are encouraged by the progress our equipment partners have made in delivering energy storage systems over the past several weeks and months, which has helped alleviate supply chain constraints. This is great news for the ever-increasing number of homeowners seeking reliable power service.

Our growth remains powered by over 700 dealers, sub-dealers, and new homes installers strategically located across the 33 U.S. states and territories. Our dealer growth is driven by the strength of Sunnova's business model, our best-in-class technology platform, and our brand's growing ability to deliver strong lead generation to our dealers. Lastly, on this slide we have updated our information on customer contract life and expected cash inflows. As of September 30, 2021, the weighted average contract life remaining on our customers contracts equaled 22.4 years and expected cash inflows over the next 12 months has increased to $330 million. On slide four, we provide a summary of our Q3 2021 financial results, adjusted EBITDA, the principal and interest we collect on solar loans, adjusted operating cash flow, and recurring operating cash flow. Our financial results have shown strong growth over the past three years and, as I will discuss later in the call, we expect that trend to continue.

Slide five outlines our unique and unparalleled service commitment to customers. Launching first in select key markets, we have established a goal well beyond that of any other residential energy service provider, to provide service within 72 hours for our solar-only customers and within 24 hours for our solar plus storage customers. This responsiveness, when combined with the resilience of our storage product offering, amounts to a superior energy experience for customers who are frustrated with the increasing cost and decreasing reliability they experience with a monopoly power provider. We will accomplish this goal by accelerating the build-out of our software platform, continuing to build up our highly experienced and professionally managed service team, and continuously improve our logistics capabilities. This unprecedented service commitment will allow us to provide our customers with the power to live life uninterrupted.

In time, it is our goal for the Sunnova name to be synonymous with the best energy service in the world. Slide six illustrates our expansive, customer-centric vision for the future, the Sunnova Adaptive Home. With the Adaptive Home, our customers will have the option when it comes to staying connected to the centralized grid or not, an option many are already seeking in the wake of increased power outages and the rising cost of centralized power. We are working to achieve a service offering above what a traditional utility can provide. A service offering that integrates solar power, battery storage, possible secondary generation, electric vehicle charging, and energy control and management technologies which will give consumers unparalleled energy reliability and capabilities for their homes. What will further differentiate Sunnova will be our ability to integrate multiple technologies from multiple manufacturers into a single software and service interface.

Our vision for increased customer touchpoints and engagement impacts our forward-looking outlook, which is increasingly more constructive on growth. Slide seven updates expected growth in both Net Contracted Customer Value or NCCV and services provided on a per customer basis. Currently we provide an average of 3.5 services per customer, which equates to approximately $10,000 of NCCV generated per customer. We anticipate both metrics to increase over time as it is only natural the number of services per customer and the NCCV from those services increases as the technology and costs continue to improve. We estimate by 2025 we will be providing an average of seven services per customer. This, in turn, should increase the amount of NCCV per customer into the range of $18,000 to $20,000 of NCCV. Last quarter, we noted we are seeing significant opportunities in grid services.

To date, we have 10 grid service programs in place with an estimated value of at least $67 million over the next 20 years, and a pipeline with the potential for an additional $445 million in value. Turning to slide eight, we are unveiling our intermediate term major metric growth plan. We have dubbed this the Triple-Double Triple Plan. This plan consists of the following: A doubling of our estimated year-end 2021 customer count by year-end 2023. A doubling of our estimated year-end 2021 NCCV per share by year-end 2023. A doubling of our estimated year-end 2021 services sold per customer by year-end 2025. And a tripling of our estimated 2021 full-year adjusted EBITDA together with the principal and interest we collect on solar loans for full-year 2023. Our expectation is that our plan will assist shareholders in understanding how management anticipates creating value for shareholders over the coming quarters.

I will now hand the call over to Rob.

Robert R. Lane -- Executive Vice President and Chief Financial Officer

Thank you, John. Turning to slide 10. You will see the continued improvement in our third quarter results over the past few years. Q3 2021 revenues are up 88% from Q3 2019 while over the same period adjusted EBITDA and the principal and interest received on solar loans increased by 58% and over 200%, respectively. Slide 11 contains both our Gross Contracted Customer Value or GCCV, and NCCV, discounted at 4%. As the slide reflects, we are experiencing significant increases to these metrics. In just three years time NCCV went from $892 million as of September 30, 2018, to $1.8 billion as of September 30, 2021.

Overall, we deem 4% a conservative cost of capital as we continue to incur an incremental fully burdened cost of capital of 2.8% or less for our growth. Given our operations are generating flat to positive recurring cash flow, inclusive of our legacy securitizations and their heavy debt amortization profile, it is clear that our NCCV per share, as measured by a 4% discount, should naturally increase over time even if our treasury bill reference rates increase. Slide 12 summarizes our recent financing activity and liquidity position. Just this week, we closed our fourth securitization of the year. This loan securitization was our third loan securitization of 2021, and like the three issuances that proceeded it, was structured to include only investment grade tranches of debt. As a reminder, investment grade-only securitizations are less punitive in their amortization than those that include high-yield tranches.

This approach to generating long-lived, recurring cash flows gives us strong visibility into our expected financial performance over the next several years. This capitalization strategy also gives Sunnova an advantage in the cost of capital in our industry, which aids us in capturing the full spread, resulting in Sunnova generating some of the highest margins in the industry. Our total liquidity as of September 30, 2021, was $951 million, up from $629 million on June 30, 2021, and up from $212 million on September 30, 2020. Included in these numbers are both our restricted and unrestricted cash, as well as the available collateralized liquidity we could draw upon from our tax equity and warehouse credit facilities. Given available unencumbered assets as of September 30, 2021, this available collateralized liquidity equaled $431 million on September 30, 2021.

Beyond that, subject to available collateral, we have $578 million of additional capacity in our warehouses and open tax equity funds. That represents over $1.5 billion of liquidity available exclusive of any additional tax equity funds or securitization closures. Turning to slide 13. We have updated our forecasted sources and uses of cash for 2021 through 2023. In addition to the takeaways from last quarter, keen-eyed investors will note that while our capital commitments have increased somewhat, so has our expected debt utilization, which is reflective of the strong reception we have received in the ABS markets in our most recent transactions. This, in turn, has decreased our expected corporate capital requirements for 2023. Again, our options for capital in 2023 are numerous. These include issuing another bullet-maturity bond, service retained asset sales now that we have the critical mass of cash flows and assets have appreciated, refinancing of older securitizations, and incremental thickening of investment grade tranches of our securitizations.

On slide 14 you will see our fully burdened unlevered return on new origination remained at 9.4% as of September 30, 2021, based on a trailing 12 months, while our weighted average cost of debt was 2.8%. This resulted in a trailing 12 months implied spread of 6.6% as of September 30, 2021. On slide 16, you will see our guidance ranges remain unchanged for 2021 and then on slide 17 you will find our guidance ranges for 2022 which are customer additions of 83,000 to 87,000, adjusted EBITDA of $117 million to $137 million, principal payments received from solar loans, net of amounts recorded in revenue of $134 million to $154 million, interest received from solar loans of $45 million to $55 million, adjusted operating cash flow of $143 million to $153 million, recurring operating cash flow of $39 million to $59 million.

Please note that the midpoints of adjusted EBITDA together with the interest and principal we collect on solar loans and customer additions are in line with how we've guided investors in previous earnings calls. This includes a forecasted year-over-year increase of 80% in full-year adjusted EBITDA together with the interest and principal we collect on solar loans and a year-over-year increase of approximately 50% in organic customer additions. I should also note that we expect to have at least 75% of the midpoint of our 2022 targeted revenue and principal and interest collected from solar loans locked in through existing customers as of December 31, 2021.

I will now turn the call back over to John.

William J. Berger -- Chairman, President and Chief Executive Officer

Thanks, Rob. This could not be a more opportune time for our industry, especially for service providers like Sunnova. What was once often seen as an install and forget product sale, dealing only in solar panels and a single inverter, has now become an evolving energy service offering that contains an increasing number of pieces of equipment made by a growing number of manufacturers. Over time, this increasingly complex energy system will demand a level of service that is well beyond what our nascent industry currently provides, especially when juxtaposed with an ever-increasing consumer demand for higher energy reliability. Financing and software are enablers for this new energy service and we now have enough financial and operational scale in these areas to drive forward our long-term vision for service.

Our service response goals are ambitious, but we see what the future of service must be for our industry to truly flourish, and we are well on our way to delivering on these goals. At Sunnova, we are here to provide our customers with an energy service unlike anything they have experienced with traditional or new energy providers. And with the climate crisis on our front doorsteps, we are proud to be able to provide our customers with an energy solution that not only provides them with the ability to live life uninterrupted, but to also be a part of solving the biggest crisis facing our world today, climate change.

With that, operator, please open the line for questions.

Questions and Answers:

Operator

[Operator Instructions] Your first question comes from the line of Philip Shen, ROTH Capital Partners.

Philip Shen -- ROTH Capital Partners -- Analyst.

Everyone, thank you for taking my question. On your unit economics slide, I was wondering what you thought and how you thought the unit economics might trend ahead. We're hearing about resi module pricing already reaching mid $0.50 a watt for January delivery, for example, and contracts are now having structured based on an index to input costs like glass, aluminum, poly and freight. And so as just the friction and everything continues to increase, how do you expect that 6.6% implied spread to trend through 2022.

William J. Berger -- Chairman, President and Chief Executive Officer

Hello, Phil, this is John. Thank you. We've -- Rob and I have constantly said that the unlevered returns were very, very strong and the spread of nearing 700 basis points is a bit high, and we expect that to compress over time. To date, and currently, as we sit here today, that has not happened. And obviously that's good news. I do think it has a lot -- I know it has a lot to do with the fact that because we have a balance sheet, because we've taken a capitalization strategy that's much more -- much different than anybody else out there that we compete with, our cost of capital is very low. I mean, that's pretty clear when you look at all of the numbers and comparatives. So right now, we're seeing that spread maintain. You'll notice that the Q3 unlevered return is about 9.3%, obviously, 0.1 or even something double that or triple that. It doesn't really matter in the grand scheme of things. But we continue to see quite strong spreads. The cost of capital, we do expect to drift downwards.

And you can -- we've got some pretty good visibility in that as just recently closing that securitization. We think the investment-grade attachment point is going to continue to rise. We think that our cost of corporate debt, it's definitely traded up right after our issuance. It's only been a couple of months. We continue to see that, that's going to come down quite substantially. And then we see our cost scaling in terms of dropping our overall cost actors. Remember, these are fully burdened numbers. So I think that we're quite likely to see this spread relatively maintained as we move forward into 2022. And indeed, as we sell more services, a lot of these services, such as service only and so forth have 50% gross margins in it. So they're quite profitable for us. Some are more profitable than others, but we expect the spread to hang in here, if you will, as we move into 2022.

Philip Shen -- ROTH Capital Partners -- Analyst.

That's great John. Thank you. You talked about your cost of capital going down and the potential for that to go down some more. And on the previous slide, the liquidity forecast slide, we see and saw some changes in 2023 that went in your favor. Notably, the amount of borrowings have gone up or the $2.5 billion and then I think the cost in the new systems also went up a touch from $3.50 to $3.6 billion. And so you see this net change in cash go down. Is there a scenario where we could see that go from negative to positive in 2023 as your cost of capital goes down? And can you talk us through why some of those lines, especially as the $3.5 billion to $3.6 billion in new systems went up? Thanks.

Robert R. Lane -- Executive Vice President and Chief Financial Officer

Yes. This is Rob. So a lot of why that is going up is, one, we're seeing customers opt-in for more and more services. As you know, we just released yesterday, our partnership with ChargePoint, and we've seen a lot more -- a big increase in battery attachment. I think by the new home market, which was a market that we were probably expecting not to adopt batteries as fast. There's been a great deal of interest there as well. So I think what you're really seeing there, Phil, is the average ticket rise. It's not that the cost, the unitary costs themselves are rising. But then on the funding side, we've been able to go a little deeper into the investment-grade part of the securitization stack, picking up anywhere from about 2% to 5% more. In some cases, actually even maybe a little bit more. We haven't really tried -- see what is going to happen on the TPO side yet. But on the loan side, we've been able to pick up more advance even as we have been going with lower APRs on our loans.

So it's been moving actually in the opposite direction that we had initially anticipated. But as I mentioned in the prepared remarks, there are also a number of other things, tools that we have at our disposal to be able to postpone the use of any corporate capital. And again, as we continue to drive those efforts, we're actually seeing a lot of potential daylight on the CFADS number, which would mean that we would first turn toward new corporate debt when we're looking at that financing aspect. But I think that it's probably going to be prudent to continue to look at new corporate debt. It's just that our need and the timing of our need is -- continues to be pushed out.

Philip Shen -- ROTH Capital Partners -- Analyst.

Great. Thanks for the detail And then one last thing. As it relates to your 2022 guide, you mentioned in your prepared remarks that you might hit 75% of your 2022 guide as of December. When do you think you hit 100% of your guide? I mean, we probably see it in Q1 or maybe Q2 at the latest next year?

William J. Berger -- Chairman, President and Chief Executive Officer

Historically, the trend has been very consistent. And the higher the growth that you project in the next year, it's just a lot of numbers or math, right? So -- but we might get as high as 80% going into the year of our projected cash inflow. So I would say that you're right, probably by early Q3, we should be nearing 100%. I mean it will be something like 98%, 99% would be my guess based on past history. But things are very, very predictable. The only thing that we manage is the rate of growth, which right now is pretty heavy. In fact, I would say that as we look into 2022, there are a number of partnerships. We -- Rob made mention of the partnership, which we're very excited about with ChargePoint.

There's a lot to go on there. We could talk about that later. But there's more coming on the partnership side, and they're imminent, and they're big. And I would say that we're very, very constructive on growth. But we're also the only ones that give guidance this early, as you know, most give it in March of next year. So we'll have that opportunity to have a few more months here and get those partnerships underneath this and execute and look to see where our growth comes out after that. But I do expect to beat this growth profile that we laid out, and it's already very, very aggressive. So I would expect, as you move forward in 2023, we'll see even bigger increases in cash flow and adjusted EBITDA plus PI. Great. Will look forward to that. Thanks very much, I will pass it on. Thanks.

Operator

Your next question comes from the line of Ben Kallo, Baird.

Ben Kallo -- Baird -- Analyst.

Hey. Good morning. Congrats. Just maybe, John, you started talking about partnerships, you did the Home Depot deal and the ChargePoint. When you talked about Home Depot and we used to think about that as like one of the highest cost customer acquisition. But how has that changed? And then ChargePoint, and I have two follow-ups.

William J. Berger -- Chairman, President and Chief Executive Officer

Yes. Sure. You're right. The retail stores are your -- typically your highest customer acquisition channel. The way that we do our business, though, is that we're focused on our dealers, our partners. And we're working with them. And when you look at the way that we've constructed this is those returns are actually fairly even with our other originations. So this is mostly, I think, that the dealers decide that they want the additional growth. And candidly, they're paying a little bit more to acquire those leads that we generate for them with Home Depot. So it's pretty well down the fairway. This is the right way to do it. In my mind, it was early days in my first solar company with the Home Depot, and now we're back and really excited and feel really fortunate to be with them. So we've got to execute on that, but the returns are quite nice. On ChargePoint, I think this really is very interesting.

We've got what we feel is an excellent partner. They've got, I think, a great business model in a space that has a lot of charging companies and solutions, as you know. Neither company has an exclusivity on one or the other. I think that's the right way to do things here, especially in the nascent industry. But it's not only equipment. I think a lot of folks focus on that. We're putting a charger in for homeowners who are increasingly demanding that. That's a given. We're going to do that, and they have really good equipment. But really what we're also looking for is selling more -- the service, solar service, storage and so forth. So more equipment, and that generates bigger returns for us.

But the really interesting thing is we're going to plug into our network into charge points, and we're going to be able to provide energy to our customers when they travel away from home. And so this is going to be -- Sunnova is going to be your power provider, energy provider, not only at your home, but away from home. And I think it's going to be this really fascinating when we are able to put all the pieces together here and get this launched out next year, it's going to be really something special for our customer base. And we think it will actually drive more and more customers to Sunnova as well. So we're pretty -- we're very excited about this partnership.

Ben Kallo -- Baird -- Analyst.

I think in your remarks in the end the deck, the services comes up quite a bit, maybe more than a dozen times. And so I don't know if there's a way to help us understand what the different types of services are and how important this is, but it seems that it's pretty important because you're highlighting it here.

William J. Berger -- Chairman, President and Chief Executive Officer

Yes. That's a good eye on that. Yes. I mean, we see ourselves as from the founding of the company as a service provider. And we see financing as an enabler. We see software as an enabler. We're big in both, obviously, make great money on the financing side. But we're all about providing that service and having that customer for what effectively is like, but for the most part, 25 plus years. And as we add batteries, and we knew this because we're early days in places like Puerto Rico and other island markets in the Pacific. You can easily see where people start to go. This is very complex. This is power that it need to have on no matter what happens. And you need to have a totally different experience. Not unlike what -- and it has to be the same or better than what you experienced with your monopoly power provider, right? So when the power goes down, you expect them to be out five minutes ago. And that's something that we've been working toward for a long time.

We finally have the ability to -- given the scale of our operations and the density of our customer base, the software platform. And then the people and the logistics capability to be able to deliver this kind of service. And to give you an idea about how important this response time is and how different it is from the marketplace, we're aiming for 24 hours, within 24 hours of battery and solar customers and 72 hours with solar only. Right now we're roughly in about a couple of weeks, sometimes less than that timeframe. And we've got a little ways to go, but we're confident we can get there. The rest of the industry is like 60 days or 180 days to never. And so there's a wide Gulf and response time out there. We think that needs to be closed tremendously, obviously, and get something more commensurate with what you would see out-of-home security, satellite cable television, cellular, etc. So we're on the forefront of this, and we're driving toward that point.

In the meantime, the number of services you've heard on some of the equipment manufacturers calls and you will hear on the ones coming up, that there's a tremendous amount of new pieces of equipment, more energy storage systems, more load managers, the EV charger, the case in point, the ChargePoint relationship, generators, etc, there's a lot to be added here with services and upselling customers. And so we've laid that out quite clearly. We -- roughly about $10,000, which is inclusive of all of our sensory customers that income with cash flows of NCCV, which is PV4. We're borrowing capital fully loaded at 2.8. And we feel very strongly there's a lot of value to be added there.

And we've shot it down the fairway and said if we doubled from 3.5 services to seven services by 2025, which we see doable. That we should pick up about another $9,000 per customer on a midpoint, so certainly more between $18,000 and $20,000 by that timeframe. And so it's another way to valuing the company's equity, if you will, and looking at the breakup value of NCCV per share, but then adding the option value of the number of tons, the number of customers we have. And then expect to hold us accountable for executing against that option value. Are we upselling batteries? Are we upselling EV chargers? Are we up selling generators, load managers, etc? And I think you -- and I'm confident what you'll see as we go into 2022, we're going to be doing all of that and then some. So a lot of value out there in the services and a lot of value in being responsive to the customer with service.

Ben Kallo -- Baird -- Analyst.

Thank you for that. My last one, just NCCV total going up. I think per customer, it's ticked down just maybe in the last two quarters. But when should we see a tick back up with all of this stuff, good going on? Thank you.

William J. Berger -- Chairman, President and Chief Executive Officer

Yes. It's timing of cash flows, mainly on the tax equity, but also in some of the other fund flows, and I'll let Rob comment on that in just a second. We're -- I think the right way to look at it is NCCV per share because, obviously, investors are buying shares. But we do expect to see the NCCV per customer tick up over the next few quarters, particularly as we get into 2022. If it does not, then that means the customer additions are smoking the projections for us and they're more on the single services and some of the other services that we're launching out that we have yet to announce. But we do expect that NCCV customer -- per customer to be ticking up for what I just laid out, particularly as we upsell batteries.

So one thing I want to make it very clear is we have not upsold our existing customers very many batteries this year. And that is simply because of lack of battery availability. That is materially changing now, I mean, materially. So we're already starting to engage and upsell our existing customers batteries, and we'll be accelerating that tremendously as we go into 2022, expanding that to the new home business, where we have not sold a single battery yet. So it's definitely going to move up on a per customer basis as we upsell batteries, all other things being equal. Rob, do you want to talk about?

Robert R. Lane -- Executive Vice President and Chief Financial Officer

Yes. And I think John sort of really hit on a number of points there, and I won't rehash too much of it. But remember that the last two quarters were the first two quarters that we added the SunStreet customers. And so those customers did bring down the average ticket size on an NCCV per customer basis, mostly because they're just smaller systems, and as John said, fewer services because just everything there is, it's just the solar. But to John's point, we're making the churn right there as well to get those systems larger, to add more services to those systems. So that's one big catalyst. But the second one, and without getting too much into the sausage making, is just really the timing of our whip pile.

So the way that we're showing the NCCV is that as we put our assets into construction, to progress, we're carrying those at cost. As soon as we put them into service, we get the uplift of the actual value of the system itself. And given our trajectory, we would expect that to be a significant uplift in the fourth quarter. And it mainly has to do with the fact of the supply chain on the batteries unlocking. So we're putting in those really high-value systems into service in the fourth quarter. And at the same time releasing the remaining tax equity on those systems, which really all just sort of -- is accretive to cash because we've been carrying it this entire time.

Ben Kallo -- Baird -- Analyst.

Thanks guys.

Robert R. Lane -- Executive Vice President and Chief Financial Officer

Thanks Ben.

Operator

Your next question comes from the line of Brian Lee, Goldman Sachs.

Brian Lee -- Goldman Sachs -- Analyst.

Hey guys. Good morning, thanks for taking the question. I appreciate all the NCCV color here. Maybe thinking longer term, this -- the Triple-Double framework, which is new, I think you're going to end the year at 200,000 customers. So to double that, you're implying about 35% to 40% more growth in customers in 2023, off the 2022 guide you just gave, so quite robust growth even in the out year. But then you're talking about tripling the EBITDA plus P&I. So that's implying the metric grows close to 80% in 2022 based on the guidance and then another 70% in 2023. So I think this has to do with NCCV, but can you kind of bridge the gap a little bit as to where some of that additional leverage is coming in even in the out year? You're talking about $10,000 today, where does that number get to in the interim? And what are kind of the pieces in the next 12 to 24 months? I know you're talking about $19,000 midpoint by 2025. But what are you sort of embedding in the 2023 numbers?

William J. Berger -- Chairman, President and Chief Executive Officer

Yes, Brian. We're -- what we're seeing is an increased amount of operating leverage despite the fact that we're obviously investing, spending money to launch out new grid services, new lines of business, bring on new partnerships and an overall, not only increase our growth rate in terms of the number of customers, but the number of services sold per customer, right? So these are all heavy lifts. And at the same time, delivering a better service experience, which has been baked into our cost structure. So what that shows you quite simply, as I've always said, is what you want to see is you want to see adjusted EBITDA plus P&I grow faster than your growth rate of your customer base, eventually. So our challenge has been, in the near-term is, is that growing off a small base. And not having as much operating leverage by definition. But having a high-growth rate, we've been challenged in that a little bit. We've been close to basically breakeven or a little south of that.

As we get bigger and move forward, then, again, the law of math starts to help us and law of numbers, rather. And so we can gain a tremendous amount of operating leverage. And that's what we're highlighting for you all is, is that we're seeing it. We know we're going to experience it. And this is exactly what you should have expected out of us. So if we grow at a less of a rate on adjusted EBITDA plus P&I, then you should expect to see a heck of a lot more and profitable growth in number of customers and services sold per customer. But right now, it's pretty heavy growth. Again, if there's any bias, it's definitely to the upside on that growth rate. But we feel very good about the adjusted EBITDA plus P&I growing faster than the customer base. And quite frankly, we're seeing the growth that we have going back to unit economics and so forth is extremely profitable growth. And that's, again, reflected in the adjusted EBITDA plus P&I.

Brian Lee -- Goldman Sachs -- Analyst.

I guess to dig into that a little bit more granularly, though, if you're talking about the unit economics having leverage over the next couple of years. I know that the target model out to 2025 is pretty well laid out. But the $10,000 you're at today on NCCV, if I look at some of the bridges you've provided to get to the $19,000 over time, let's say, half of your customers are doing storage and energy management by the time you get to 2023, that would imply $2,000 more per customer. So you're at $12,000 right off the bat. But any just sort of color as to where you think you'll be able to see the most amount of sort of, I guess, materialization of some of these bridges to get to the $19,000 by the time you're out in 2023? Just -- is the $10,000 going to $14,000 before we get to the $19,000? Just trying to get a sense for how quickly you think you'll start to see some of these move into the customer unit economics over the next one to two years?

William J. Berger -- Chairman, President and Chief Executive Officer

Yes. I think it's fairly linear, but there's a lot of variables to it. So if we can launch out some of these other services and have them be more successful and some of these technologies are rather in early days, right, like load manager, then I think that we can have a little bit more of a higher slope on that escalation toward that rougher number. But the storage side, I would say, looking at internally, we think that by 2025 our storage attachment penetration rate will move up by a factor of six, so 60% or so. We see strong uptake on the storage side of things. So I think, obviously, that's first and foremost, is how do you execute on upselling customer storage. I think another one that's pretty interesting is we're seeing a lot of demand for EV charging. That's not a big needle mover, but the service that we talked about in a way, I think that could be pretty interesting margin-wise. And therefore NCCV, certainly recurring cash flow. And then some of these others like generators and so forth, we see a strong demand for the generators too.

So -- and an additional upsell of more panels, more inverters, etc, particularly as people do get EVs, we're seeing that accelerate. So -- and more fuel to the battery, if you will, for backup power, we're seeing that. So there's a lot in here, but I think that if you were to draw a gradual linear line from this period to the end of 2025, I think that's not a bad assumption. And remember, as we move forward in time, you're discounting out at 4%, but our cost of capital is really 2.8%, and we're paying the debt off at a fairly rapid rate. So that's something else to remember is that we'll be naturally accretive as you move forward in time and recognize that delta between the discount rate and the actual cost of capital falls out in cash flow, right, and then calls our cash to the equity. So that's another thing. And so in Rob's prepared remarks, he talked about that as naturally you should expect NCCV per share to -- and therefore, per customer for the large part as well to increase over time, even if we did nothing.

Brian Lee -- Goldman Sachs -- Analyst.

All right fair enough. I appreciate the additional color. Last one for me, and I'll pass it on. I guess I'm kind of surprised I'm the third caller, and we're talking about supply chain this late into the call. Maybe because, John, you started off the call talking about the supply chain being better for you. Can you maybe get into a bit more detail? It sounded like batteries, you're feeling better about what's happening there that's giving you more confidence? And then maybe also just your status on inverters and separately on solar panels. How much of that 2022 growth from a supply perspective? I know from a demand perspective, you see high visibility, but from a supply perspective, how much of that is derisked? How far out do you have supply visibility? And then obviously, a lot of focus around where you're getting panels these days, just given all the different geopolitics out there? So can you kind of level set us as to how much of your panel supply is not coming from Southeast Asia today? And then how much higher you think that mix could go over time? Thanks.

William J. Berger -- Chairman, President and Chief Executive Officer

Yes, sure. Yes, I knew supply chain was going to be a big topic. So thanks, Brian. Look, I'll divide things up to panels, inverters and ES. So when you look first and foremost at the panel, there's obviously a lot of, shall we say political intervention here or government intervention, however you want to phrase it, that's causing a lot of chaos and pushing up prices in United States. We've been moving as our storage attachment rate has been moved up. We're continuing to see more and more customers want the higher wattage panels, which typically don't come out of China or -- and at this point in time, which I don't think is bad to be clear about it, but that is a fact, just given the WRO, the countervailing duty issue, the 201, etc. So we're increasingly looking pretty good going, now is starting to look in toward Q2. On that front, we feel pretty confident.

We've got some, like I said, panels secured, just in case our dealers foot fault on some of the deliveries that they were expecting or should have procured. We're making -- we're on top of our dealers working with them and helping them to secure those panels. So we feel pretty good about the panel situation. It's clearly tight. We're meeting just -- meeting demand as an industry. But given the political intervention, but we feel pretty good about where we sit. On the inverter side, we continue to see more and more real, strongly well-managed firms come in and compete. And we've got a number of providers that are going to be providing ESSs with their own inverters in it. And that's going to have a dynamic impact on the inverter market by definition. And so the last one you go into the energy storage systems, and we're seeing an increasing amount of availability.

It's literally been every two weeks. We're seeing more deliveries hit our warehouses and hit our dealers' warehouses. And we continue to see a significant improvement in those delivery schedules as we move forward. I do think that will be normalized. Increasingly it looks like it will happen in Q1 at the latest, I think, Q2, barring any sort of significant unforeseen supply chain issues, which would have to be really significant, given how messed up things are globally. But we see a rapidly improving deliverability on energy storage, particularly the big player and the big -- and a couple of the biggest players. I would go so far to say that we are seeing those equipment providers who increase costs or try to raise price. Currently, they will start to lose market share. So there is not a huge amount of stickiness on price. There's more and more availability. There's more qualified competitors that we're looking for to buy their inverters their ESSs. So there's a loosening up in the equipment side that I think is pretty significant, particularly as we get into Q1 and Q2 of next year.

Brian Lee -- Goldman Sachs -- Analyst.

All right. Thanks a lot guys.

William J. Berger -- Chairman, President and Chief Executive Officer

Thanks Brian.

Operator

Your next question comes from the line of Julien Dumoulin-Smith, Bank of America Merrill Lynch.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst.

Hello. Good morning. Thanks so much for the time. Congratulations on all the continued progress. Really nicely done on the follow-through here on forward-looking guidance. Perhaps just to kick things off real quickly here. Can you elaborate a little bit on the pipeline, as you say, of opportunities and services? Can you elaborate a little bit on more granularly on what those are that sort of comprise that $400 million plus that you talked about a second ago?

William J. Berger -- Chairman, President and Chief Executive Officer

Are you talking about the grid services, Julien?

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst.

Yes, exactly

William J. Berger -- Chairman, President and Chief Executive Officer

Well, we can't break those programs out. That's competitive intelligence. We are bidding. I'm sure we're trying to get visibility to you and everyone else about, hey, what's the -- what are we working on, right? So what can you expect? I got to say I'm pleasantly surprised in a big way of how much progress we've made on grid services. How many contracts we've locked up? I mean, $67 million, I think, is up there, especially the number of contracts at 10. I never thought we'd be in the spot. And then looking ahead, more and more programs are coming our way, and we're seeing a lot more profitability as far as the dollars that are associated with these programs. So I can't break them out and for competitive reasons, but I'm trying to do everything I can to give you a window into what we're working on and what kind of money is associated with that. So -- and hopefully, we'll have big wins.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst.

Indeed, John, maybe ideal to ask it this way. What percent of your customers does that represent, i.e., is that fully monetizing your customers? Or what portion do you think at this point, does that represent, i.e., how much of a further upside is there to more fully maximize that opportunity?

William J. Berger -- Chairman, President and Chief Executive Officer

I see. I'd say that's probably representative of roughly about 50% or so, maybe 60% of our customer base. I would also point out that most of these are capacity services. And so we have the ability to upsell ancillary services and in some cases, energy as well. So I think that there's more grid services on top of this. And then we start looking into Microgrids and getting that moving, which I don't expect to have material movement there next year. But the following year, I think that we'll have something more to add there on the Microgrid front. But I think that's my best estimate I can give you right now, Julien. It's probably 50%, 60% is covered by what we've already done and then what we have in the backlog.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst.

And just to clarify this a little bit here on what you're implying for fourth quarter customer additions? Of this 14,000, it almost seems like you're implying something like 20,000 customers in the fourth quarter. It's a nice step up. Any nuances to what's driving the big quarter-on-quarter dynamic? And then if you can just specify, I know there's a few different small nuances. What is that specific baseline for the customer count here going into 2023, if you will?

William J. Berger -- Chairman, President and Chief Executive Officer

Yes. It's about 20,500. And the last question, I'll go ahead and answer that. I think it's just a little south of 200,000, I think, 197,500, somewhere in there, 198,000. So that's what we expect. Look, first to say that, yes, it's one heck of a climb. And we've got our work cut out for us. Now we're seeing good visibility in that. We have the customers. We have the backlog. We'll take into next year. Right now, we have just south of $1.1 billion of contracts in the backlog at cost. So we've got the contracts. What's held us up is a couple of things, mainly the batteries, which we're seeing an accelerated delivery schedule already. We expect to see more of that delivery schedule accelerate --. And so that's going to -- a source of customers that we didn't have in Q2 and Q3. The other is, is that the new homes business.

I think people are underestimating and it's because we talked about having roughly about $12,000 a year. That business continues to grow. So it's a little bit more than $1,000 a month. In some cases, moving toward $1,500 a month expectations. And the new Homes business has been challenged by all the supply chain issues as far as closeouts of the new homes. And you can't book those customers until those homes are closed out and sold to the customer. So that's been a delay from Q3 into Q4 as well. So we've got the reasons, and we've got -- we feel like we are in pretty good shape on both of those in terms of improvement given the supply chain improvements. But we'll be working all the way up to December 31 to hit that number. And -- but we're working hard at it. We've got the contracts. We've got the supply chain where we want it. Now we just got to get the work done and get it through the utility system to get the permission to operate and register the customer.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst.

Awesome, I wish you the best of luck. Hear from you soon.

William J. Berger -- Chairman, President and Chief Executive Officer

Thanks Julien.

Operator

Your next question comes from the line of Maheep Mandloi, Credit Suisse.

Maheep Mandloi -- Credit Suisse -- Analyst.

Hey. Good morning and thanks for taking the question. Congratulations on the progress here as well. John, maybe just talking about the 2023 guidance over here, if we kind of look at the customer growth, it kind of implies probably around 20%, 25% increase in new customer adds in 2023 versus 2022. So just want to understand what's driving that growth? And is the expectation that the market growth is somewhat similar in line with that growth? And how should we think about the mix of loans and leases in that year? Thanks.

William J. Berger -- Chairman, President and Chief Executive Officer

So I think the implied growth rate is a little bit higher than that on the heap for 2023. Obviously, that's a little ways out there. But let me give you some more color. As you look at what we've been originating for the last couple of quarters and if you look at my answer on this Q4 and this quarter to Julien's question just prior, you basically multiply that times four, you get pretty close to our range, right, if not in the range, exactly that we've laid out for growth for next year. So as we're looking forward, and we're seeing a number of these partnerships, the Home Depot, ChargePoint, we've got more coming that's imminent. And just the general growth, our improvement in our technology platform, we're picking up more dealers, the number of services sold for customer and so forth. We've -- I think we've done a pretty good job of being fairly conservative at moving off of growth, the number of customers from 2022 to 2023. So simply put, that's not, in nominal terms, a huge increase in number of customers from 2022 to 2023. So again, if there's any bias and there is, it would be to the upside of these growth projections on both the number of customers and the services sold per customer.

Maheep Mandloi -- Credit Suisse -- Analyst.

Got it. But fair to say it's more kind of in line with your expectations for the market at this time? Or do you think the market's slower than that?

William J. Berger -- Chairman, President and Chief Executive Officer

No. I think it's in line. I think we've telegraphed, I think, quite nicely, it was laid out even sources and uses of cash two years out, which I don't think anybody -- I know nobody else does. And so we're trying to get more visibility out to everybody on what we're seeing out there. Look, again, I referenced this earlier, Maheep, is no one else gives guidance for 2022 this early, and it really is early, going across the year. So this is our -- where we feel comfortable at this point in time. Candidly, right now, the stock is, in our opinion, if you look at -- if you double NCCV per share as measured on the PV4 within two years, and I've already got the next two quarters, we start by the end of the year, booked up in terms of contract backflow or back -- sorry, with going into 2022. That means that we're really just kind of looking about roughly 18 months or so, right, of growth.

And so we've got a high degree of predictability and what I would say is that right now we felt like, hey, look, their share prices needs to start reflecting that we can move something into the kind of low to mid-30s of essentially breakout value within the next 24 months. We think that's pretty cheap, but that's for the market to decide. But right now this is where we sit and this is where we have laid out for folks, and we'll update on the Q4 call. And the bias is definitely to the upside. On your loan question, we continue to see consumers to take more loans. We see that to be roughly volatile if it continues to move up. When I say volatile, on a week-by-week, day-by-day basis. And we can -- as you look forward to the policy, which I haven't had a question yet, there's a possibility, given the refundability, we think, has a high degree of chance of getting done and the reconciliation bill.

There's a possibility that can move more leases and PPAs. I know there's a good argument on the other side of that. But that's something to pay attention and watch. And what I would also point out is that on page 33 of the deck, we've laid out for the first time, and no one else does this again, what our discount is on the loans that we get. So for those of you who don't want to just look at principal and say that's return of capital. No, we've been clear about it, its return of capital and return on capital. And it's pretty sizable. So it's about $213 million of margin, not revenue margin that's booked as of 9/30/'21 and roughly about 21% of our expanding face value of the note. So these loans are quite profitable. We've laid out. And if you just want to take the OID and the interest on the loans instead of taking the principal and interest. You can now do that. And obviously that's pure profit and margin. So hopefully, that gives you a little bit more comfort as far as getting your hands around modeling the loan versus lease mix.

Maheep Mandloi -- Credit Suisse -- Analyst.

Okay. I appreciate the color. Thanks.

Operator

Your next question comes from the line of Mark Strouse, JPMorgan.

Mark Strouse -- JPMorgan -- Analyst.

Yes. Good morning. Thank you very much for taking our questions. Just wanted to ask, the 30% storage attach rate in 3Q, what would that have been -- supply constraints? Just trying to think about the full look like as the storm kind of clears here?

William J. Berger -- Chairman, President and Chief Executive Officer

Yes. Hello, Mark, this is John. I think that, first of all, that's on all customers. So we would have had if it was just in the dealer channel, that would have been closer to 35%, a little over 35% storage attachment rates, which would have been a new record for us. I don't want to play games. I don't play games on metrics. So we added all the customers in, even though we don't have the capability just yet. We're just getting into that by upselling batteries to new home customers. And we'll start to see that attachment rate, I would say, probably Q2 or Q3 of next year start to materialize. So that suppresses that number. And that's the primary driver is the new homes customers that have no battery upsells at this point in time. We've had some -- many weeks of 40%+ percent attachment rates on the dealer only channel. So it's something that is clearly moving up. And you just get a modicum of selling batteries to new homes customers, that storage attachment rate is going to zip up. So we continue to see a lot of interest from consumers and growing amount of interest in battery. So we're becoming even more constructive on the storage attachment rates and move forward in the next few quarters.

Mark Strouse -- JPMorgan -- Analyst.

Okay. Thanks. And then, John, I know you're a football fan, so I want to ask you a question about your supply chain kind of as an analogy to college football, right? So we've got four teams that make the playoffs every year. But rank number five, rank number six are obviously good teams as well. Thinking about that as your supply chain. I mean, in the past, you've selected suppliers, but there's been a company on the cusp that's been left out. Just given everything that's happened over the past year, how do you change that approach? Do you potentially look to diversify your supply chain by adding more? And how do you weigh that against a potentially kind of inferior product that you hadn't chosen in the past?

William J. Berger -- Chairman, President and Chief Executive Officer

Okay. I'll try to answer that. I don't know if I can wrap it into the football analogy. But I would say we're seeing more really strong, and this is on a global basis, equipment providers show up with inverters with energy storage systems and even some that haven't been in the panel manufacturing business get into that and start to ramp that up as well. I would say that our primary relationships on the ESS side, with Tesla, with Generac, with SolarEdge and then lastly Enphase are well intact. I would say that some are doing better than others on the supply chain side of things. I think it's pretty clear that Elon and Tesla are doing very well, as you can see by their numbers that they reported, and again, I'll let them talk to their own business. But with microchip deliveries, and therefore, you would expect to see that flow into their ESS business, and indeed, that's been the case and continues to be the case of a rapidly improving supply chain.

And then some others have struggled a bit of late and continuing this quarter. But I do expect that to get ironed out. We're eagerly anticipating ramping up very strongly with SolarEdge, in particular, they've got some really nice products out. We know that there are some dealers that want to start selling that immediately. And -- but it will -- Genrec has got a lot of new products coming out, very close with that company as well. And I think that they're doing a great job, and we'll continue to increase our purchases quite substantially as we move into 2022. They obviously have a microinverter coming out. We're very interested in that as well. And so all of these companies are very well-managed companies. They're obviously very well financed companies in terms of financial capability and balance sheet.

So we don't see any problems with the equipment among these and even some others that are fairly large companies in themselves in Asia and Europe. So we feel comfortable that we're getting, and they have to go through a rigorous process to get on our AEL, our Available Equipment List. But we feel very comfortable that we're seeing more and more highly qualified, good equipment manufacturers making great equipment that we can buy. And so that's definitely a change from the past few years, and it's obviously great news for increasingly lower prices to consumers. And frankly, those lower prices, again, juxtaposed against higher utility rates, which we expect to increase over the next few years quite substantially given gas prices and other cost pressures. That will have this business, in this industry overall, in terms of solar and storage, etc., grow much more substantially than I think a lot of people are thinking at this point in time. So we need all of those -- that equipment is what I'm saying and then some. But we think part of that will also be some decreases in the equipment pricing to incent more and more consumer demand.

Mark Strouse -- JPMorgan -- Analyst.

Got it. Thank you very much.

William J. Berger -- Chairman, President and Chief Executive Officer

Thanks Mark.

Operator

Your next question comes from the line of Sophie Karp, KeyBanc.

Sophie Karp -- KeyBanc -- Analyst.

Hi. Good morning. Can you guys hear me?

William J. Berger -- Chairman, President and Chief Executive Officer

Yes, Sophie we can. Good morning.

Sophie Karp -- KeyBanc -- Analyst.

Thank you. Thanks for taking my questions. I guess a couple of questions here that I have. Can you talk a little bit about whether you are experiencing loan interconnect times in any of your markets with the utility and how that might be impacting your outlook? Is that an issue for you at this point anywhere?

William J. Berger -- Chairman, President and Chief Executive Officer

Yes. Sophie, that's a good question. A little bit here and there. There's a utility in the southeast that's been dragging their feet a little bit on some interconnections. There is one out in California, one or two up in the Northeast, but some others have sped up the issuance of PTO. We're talking about days, two, three weeks, that could matter, I'll grant you that. And so we're watching it closely. But we're putting a lot of pressure on those utilities as well as others in the industry, such as our dealers, etc, are doing to close those gaps. We can do a little better job in our end too of being more quick on the operational side to apply for those PTOs and then also to convert a PTO into end service and flip the system on. So we've got a number of initiatives to do an improvement on our side and drop that time, if you will. But we have seen a little bit, but not a huge amount change. If anything, some of the -- there's been quite a bit of improvement in the second and third quarter over the first and fourth quarters and certainly the last year that were heavily impacted by the pandemic.

Sophie Karp -- KeyBanc -- Analyst.

Got it. Thank you. And then John, you mentioned the -- my other question was on the kind of equipment landscape. You mentioned that there's a growing number of suppliers of various pieces of equipment that you use. Could you talk a little bit about your sort of barriers to switch, if you will? How hard is it to qualify a new supplier for you once they roll out their product? And is your bias to kind of stay with the existing ones or to price shop around if there's an offering that seems comparable and cheaper, maybe than what you have currently? Can you talk a little bit about your thought process here?

William J. Berger -- Chairman, President and Chief Executive Officer

Yes. So we've had a strategy of having, basically being an open platform service provider. I know there is a strategy where if you want to be an equipment provider getting into the service business that basically you close your world off, right? And it's just your equipment and your service. Typically, in other industries that are very similar to ours, that has led to, frankly, much lower growth, inability to scale and a disaster, ultimately. And so we think that the best way to go about this, particularly as more and more capital is flowing into this industry, is to keep an open mind and their new technology, new firms that crop up around the world, and it is a global business.

With that said, some of those traditional partners have you seen acquire those new upstarts and firms and then integrate that technology into what they're doing. Obviously, the most recent example of that is what Generac is doing with the microinverter side of things. And so in some cases, we're certainly very well open to new technologies. And some of these are new technologies like electronic or digital J-Box for load management and so forth. Those are different companies out there. But the traditional ones are also coming on with the load manager solutions as well. And so I think it's keeping an open mind and looking to see when we become comfortable. We go through rigorous testing. We have engineers on staff here that do that for us. And so once we've become comfortable with both the equipment quality and their financial capability, then we'll start to look at how do we launch their product out. ChargePoint is a good example of that.

That's a new piece of equipment, right, Sophie, that we've -- and service and plugging into their software platform with our software platform that we're launching out. But I think it's primarily going to be that we're going to stick with our core group of partners on the equipment side of things. That may narrow a bit depending upon what strategic decisions those equipment partners make. If it's not favorable, if it's to try to get into our business, then we'll stop buying equipment there. And that can be a fairly, very rapid change in the dealer network with us. So the switching capability is actually decently quick if something goes wry, so to speak.

Sophie Karp -- KeyBanc -- Analyst.

Thank you. That's very helpful. Always have.

William J. Berger -- Chairman, President and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Pavel Molchanov, Raymond James.

Pavel Molchanov -- Raymond James -- Analyst.

Thanks for taking the question. So we are supposedly 24, maybe 48 hours away from learning what happens with the reconciliation package in Congress. And therefore, among other things, the ITC for solar. Depending on what that tax credit extension looks like and particularly the duration of the extension, would that have any impact on, let's say, the urgency of installation in 2022 or 2023 for you directly and across the industry?

William J. Berger -- Chairman, President and Chief Executive Officer

Hey, Pavel. I think we -- I spent some time, actually a few days in Washington last week. And my sense of this and our sense as a company is that there's definitely a deal that's going to get done here. I've read some reports as recently as a few hours ago, there are some -- there. I just think the Democrats need to do something over the next 60 days and clearly trying to do something between Christmas and New Year is going to be really challenging as always. So I think it's less than 60 days. And I think it's very clear, by the way, that even on both sides of the aisle, that the investment tax credit is strongly supported. And we see 10-year ITC at 30% plus refundability plus storage ITC, plus a few other things.

We're also strong supporters of a domestic manufacturing initiative and suggestions of subsidies to locate these different parts of -- particularly the module manufacturing supply chain in the United States. And so we strongly support Senator Ossoff's proposals as part of the reconciliation. And I think some of that is going to get, if not all of that gets into the bill. It's probably going to be some. So I think that there's going to be very little pressure for accelerated pull forward, if you will, of demand from the federal angle. I think what we're going to have is actually a fairly long runway, which is fantastic for the industry. We've never had that before. As you know, we need it to grow the business in the right way and to grow the industry in the right way and deal with climate change. And I think we're on the cusp of finally getting that. Does that answer your question fully or no?

Pavel Molchanov -- Raymond James -- Analyst.

Right. So I guess your guidance for 2022 assumes what scenario, the kind of the urgency scenario of the laws that currently stands or an extension scenario?

William J. Berger -- Chairman, President and Chief Executive Officer

An extension scenario. So if we were surprised, you're right, the growth would be tremendously higher than what we've laid out for 2022. But again, I feel pretty comfortable we're going to get a very long runway on the ITC finally.

Pavel Molchanov -- Raymond James -- Analyst.

Okay, understood. One more question on the supply chain. You alluded to some of the geopolitical complications earlier. Have any suppliers, modules or otherwise that you directly work with, have they had any shipments into the United States blocked or confiscated at the border because of forced labor issues.

William J. Berger -- Chairman, President and Chief Executive Officer

No. Not our knowledge.

Pavel Molchanov -- Raymond James -- Analyst.

Okay. Clear now. Thank you guys.

William J. Berger -- Chairman, President and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Sean Morgan, Evercore ISI.

Sean Morgan -- Evercore ISI -- Analyst.

Hey guys. Thanks for taking my question. So my first question is, I think, probably for Rob. But of the three tranches on that securitization, you guys just stating, obviously great interest rates achieved. And I think there was three different credit ratings on the three sub-tranches. But I guess my question is, is that mainly a function of just the high FICO scores of the customers with the portfolio as large as you guys have, it's going to have to obviously be some kind of workout or distressed customers in that portfolio. So is there like a support tranche that you guys are effectively retaining on your balance sheet to support those three investment grade tranches?

Robert R. Lane -- Executive Vice President and Chief Financial Officer

Yes, absolutely. We're retaining a significant portion of the face value of those loans on our balance sheet. That's really what's driving the ROCF. One of the things that's allowed us to be competitive within that marketplace, in the securitization marketplace has been the incredible track record we've had on collections on not only keeping customers from becoming delinquent, but when they do become delinquent or go and we default the customers, which we do earlier than anyone else in the industry, we do that 120 days. We actually get more than half of those defaults recovered, which is also pretty unique. And that's information that they take into account as well when they look at those securitizations. So we've actually had a very good track record there. And while we do have very strong FICOs, we find that that's been probably a little bit less of an advantage in the industry. There are some that -- that will hold out their lower FICOs to try to get a higher FICO score.

What we've really just been doing is coming back with the receipts of what our default delinquency data is, which is -- which is for an asset class that is already very strong. We are among the strongest, if not the strongest within the industry. And that's really the feedback that we're getting with our loan product, and it all goes back to really what the theme is in this whole conference call on the prepared remarks, which is service. Just that focus on service and making sure that we have the systems up and we make sure they're producing power. We make sure the customer is happy. We make sure that the customer has the moral obligation to pay. All of that is very virtuous for our ability to continue to squeeze the margins. And I think that it -- our data actually helps our competitors as well to squeeze their margins because it's beneficial to the whole asset class. But that's great. We think that's a positive thing and continues to drive more interest and more investors into the asset class.

Sean Morgan -- Evercore ISI -- Analyst.

Okay, thanks. And then next question, I guess, probably more for John. And it goes back to this solar adaptive homes on slide six. And I think in the prepared remarks, you said that the homeowners would have the option to either stay connected to the centralized grid or not. Is that something that customers are asking for? Or do they look at grid connectivity even despite the additional charges that they would incur as sort of a -- almost like a second battery if they were to do solar and storage and they want, I guess, redundancy that the grid offers despite the costs? And also would that impact SRECs and net metering charges, like would they be foregoing all of that? And would you see that in states like Florida, where maybe net metering isn't quite as strong?

William J. Berger -- Chairman, President and Chief Executive Officer

Yes, Sean, it's a good question. To be clear, we think the best solution for everybody here is to integrate the centralized system with the decentralized resources. And again, our vision of the power industry in the United States and in other countries, we're all starting to look sort of the same in terms of the business models and so forth and where we think things are settling out as far as the transformation of the energy business is basically that there's going to be a hybrid approach between centralized and decentralized. Now with that said, there are the demands to be able to run off the centralized system and those demands are increasing in not in a linear fashion.

Why is that? Because more and more of the centralized power service is failing more and more of the times. I think that is primarily due to climate change, but it is also due to the fact is that consumer demand and behavior has materially changed, where they're no longer tolerant of a few hours of outage certainly and they become intolerant of even a few seconds of outages because everything is more digital. Basically, the work-from-home and the pandemic has accelerated this change in consumer behavior and taste. And you've heard about that. I know Aaron over at Generac calls the home as the sanctuary, right. And we see the same thing. And it is a material change in consumer behavior and trend. And that consumer change and behavior has nothing to do with climate change and decarbonization, except for the fact that climate change is causing some of that consumer behavior change.

So simply put, this home needs to be able to run off the grid because the grid is -- and more often than not, as we move forward in time, not there for whatever reason. And so the last piece of this is, could a home continuously run off the grid if the utilities got egregious and for some strange reason, a public utility commission allowed them to just reap an ungodly number of profits and have really high fixed charges on folks and very punitive to consumers. I don't think that's going to happen. I'll hold out a very recent example of Arizona last night, the Arizona Corporation Commission reversed a demand charge on solar only customers. That's never been done before. So I hope everybody talks about -- we talk a lot about California NEM and some other issues. But gosh, look at that victory for our industry. That's tremendous, and we applaud the leadership of the ACC and look forward to the lack of need for consumers to really cut the cord, so to speak. With that said, technology is improving.

You heard a lot of good things from Enphase and Badri yesterday about how he's going to be able to have new technology coming out the gate that enables homes to run off grid. You've got that with Generac. You've got that with Tesla. You've got that with the SolarEdge and others out there. So don't underestimate technology as strange than they sound to be able to have consumers cut the cord, and you're going to need a service provider like us, obviously. And so we're going to -- we're going to have some examples of that of the homes being able to run off-grid continuously in the not-too-distant future. And we may even put an Analyst Day around that. But that's not what we see as a dominant nor are we betting any sort of forecast or guidance or growth initiatives on that type of customer, if you will. But we certainly see the technological capability, and we expect that that would keep the utilities in check and have us all play nice together and have a more integrated, centralized and decentralized power service that serves all customers in the country the best.

Sean Morgan -- Evercore ISI -- Analyst.

Okay, great. So it's more of an offset to any risk that utilities, I guess, taking actions that are sort of anti-solar consumer at the residential level, but not really a trend right now at this point?

William J. Berger -- Chairman, President and Chief Executive Officer

I think that's fair. I think that's very fair.

Sean Morgan -- Evercore ISI -- Analyst.

Okay. All right, thanks John.

William J. Berger -- Chairman, President and Chief Executive Officer

Thanks.

Operator 61

Operator

Your next question comes from the line of David Peters, Wolfe Research.

David Peters -- Wolfe Research -- Analyst.

Good morning guys. Just again, on slide six, the Sunnova Adaptive Home, it sounds great to sort of be the brains of home energy management with grid services and the like, if you will. But I think some of your peers and even some of your suppliers are trying to do similar things. So can you maybe just kind of talk to what your edge is here and kind of confidence in being able to execute in this arena to effectively double the services that you're currently providing today by that 2025 target?

William J. Berger -- Chairman, President and Chief Executive Officer

Yes, certainly. So first and foremost, as you add more complexity here, and we've seen this with the battery additions, consumers naturally go, wait a minute, I need a service provider just like I have with my cellular service or satellite cable television or home security or even the current centralized power provider, which is typically a monopoly, not always a monopoly, right? So what we're seeing is that consumers are coming to and wanting one broth to choke, so to speak, on service of all these different pieces of equipment. And the reality is that I know some, if not all equipment manufacturers, every piece of equipment to be theirs, right? And if I was running one of those companies, that's exactly what I do.

The reality is going to be quite a bit different than that from what we're seeing. So our job is to go in and assemble different manufacturer pieces of equipment into one seamless interface of software. It will be an app for consumers to enter and also to have a single software interface to deal with us on service. So if you have a service problem, a billing question, am I -- I've got a production problem, maybe look at your production estimates and so forth. It's going to be very highly interactive, and it's going to be something that consumers are going to be able to understand very easily. And so we've got, we think, an advantage over trying to have a single manufacturer, we have one single interface of the customers.

The last one is that in terms of advantage is again, just a reminder, and Rob made mention of it earlier, even in our loan contracts, and this is unique to us, but I don't think it will remain so. We have the service to the customer built in loan contracts. We also have the grid services built in the loan contract. So we've truly made ourselves agnostic to lease PPA and loan, and we truly see the financing as an enabler of our relationship with the customer. So basically, we're the only one in the value chain that has a contract with the customer. That's it. And so that gives us a huge leg up as we were going back to the customer and asking them, "Hey, would you like to add on a battery? Would you like to add on EV charging, plus the EV charging service away from home?" All these different things, we feel like we have an enormous leg up on anybody out there. But you -- the way you've -- you've couched the question, we don't -- I don't disagree with it. We just have a significant advantage over others, and it's our job to continue to execute and demonstrate that advantage to our customers.

David Peters -- Wolfe Research -- Analyst.

Great. Thank you guys.

Operator

Your next question comes from the line of Joseph Osha, with Guggenheim Partners.

Joseph Osha -- Guggenheim Partners -- Analyst.

Hello, there, John. Just to return to the policy issue a little bit. I would think that the fact we're going to have cash pay would tend to drive customers to trying to monetize that value on their own as opposed to third-party ownership. So I'm just wondering if you can amplify your comments a little bit on why you think cash pay might drive third-party ownership? And then I have a follow-up. Yes, Joe. Well, there's two different types. I think the most likely cash pay of refundability, if you will, is going to come in the so-called commercial ownership or this would be a lease PPA. And that would go to providers like ourselves. Obviously, this is more -- maybe it's not obvious, but it's more geared toward the utility-scale folks that don't have access to the tax equity or the tax equity simply just isn't enough. And so that's mainly what I was referring to. There is another ask out there to have consumers be able to get direct refundability, that is a different ask. That is a different part of the code. I think based on, again, this may -- I may have too many years on me, but the -- there is a lot of problems with the grant period from the 2009 and 2010 and 2011 period of time, including fraud, including very much slow payments from the treasury. And the treasury was -- and the service was much better staffed relative to their -- the job back then than they are now. I think we've all experienced -- I certainly personally experienced that this year. And so there's a lot of problems with that. There's tremendous amount of problem sending a check out from the service from the treasury to an individual and making sure that's above board and making sure that that's done on a timely basis. So it doesn't create a working capital problem for that individual or a contractor. So I don't think it's a good idea for that reason. I think it's better done in the current construct of where we think things are going to go with refundability and lease PPA. But we'll see what happens. But regardless, whether somebody is going to get a 30% of a check directly, you're going to need to have that balance financed, and you're going to more importantly need that service. So we feel comfortable about -- no matter what happens, it's going to benefit us. But I think it's more likely to see that we'll have refundability on the lease PPA side, if anything, versus a full cash refund, if you will, on loans. Okay. Thank you. And then just also on the policy front, it seems like we are going to get some stronger prevailing wage provisions. I think the IBW seems to have done pretty well this time around. I'm curious as to how you think about that and the impact on your business?

William J. Berger -- Chairman, President and Chief Executive Officer

There is an exclusion underneath one megawatt, which obviously covers everything we do by a large amount. So that's the answer.

Joseph Osha -- Guggenheim Partners -- Analyst.

And you think that one megawatt exclusion standard is going to survive?

William J. Berger -- Chairman, President and Chief Executive Officer

Yes. I think it's very much impractical. You don't see a lot of unions in the residential market. There's a lot of reasons for that. I'll just point out that we pay very strong wages as an industry. We're very interested in making sure people have a living wage and then some. So our industry has been very good about that. And so I don't feel like any sort of demand or law to increase wages is needed. It's quite clear that we pay way above what most other industries pay. So -- but I think that that will stand in terms of the one megawatt carve-out.

Joseph Osha -- Guggenheim Partners -- Analyst.

Okay. Thank you.

William J. Berger -- Chairman, President and Chief Executive Officer

Thanks.

Operator

Your next question comes from the line of Elvira Scotto, RBC Capital Markets.

Elvira Scotto -- RBC Capital Markets -- Analyst.

Hey. Good morning everyone. Thanks for taking the question so late. So just three quick ones for me. Thanks for providing the intermediate term major metric growth plan. Can you provide a little detail? Like within that plan, thanks for all the detail, but is that dependent on any certain outcome of net metering 3.0 in California? And then maybe if you can provide us any of your latest thinking around that? And then finally, my last question, I'm glad you brought up Arizona. I thought that was great news last night for the industry. Just your thoughts on how you see that driving rooftop solar growth in Arizona with that announcement yesterday.

William J. Berger -- Chairman, President and Chief Executive Officer

Certainly. We have a good portion, I would say, call it, roughly 30%, some months it is a little bit higher, of our origination in California -- all of our originations. Some months is lower than that. Overall, it's mid to high 20s on a customer basis. I would say that that's quite a bit lower than anybody else that we compete with in the space. I would say probably less than half as far as weighting than others have. So we have much less of exposure, if you will. However, let me be very clear. I think that California is going to do the right thing here. There's such a groundswell support for solar. I think if you look at our average customer income, it's a moderate-income customer because they do care about the savings, particularly in California, with some of the highest utility monopoly rates in the country. And it would be a complete disenfranchisement of consumers to do anything that's anywhere close to what the utilities have asked for. So I think the commission is going to do the right thing.

And I've been very clear about it. I think the offset rate will go down. And so more money will flow to the utilities. You can call it a win to the utilities. I think that's appropriate. But it's not going to be something that severely hurts us or even crimps the growth of the industry, in our opinion, as best as we can tell right now. With that said, we're continuing to diversify, point out that we will probably be in all 50 U.S. states, and on top of that, all the territories within the next 12 months or less. And so we've continued to diversify our geography quite substantially. So I think that we're in a great position. And even if something came down as a little worse than what we were expecting on NEM 3.0 in California, I think we'd still be able to be fine with the growth that we've laid out. Because, again, if anything, there is a definite bias to the upside in terms of the number of customers on a growth trajectory and the services sold for customer in the next couple of years. Arizona, I mean, at the bottom line, again, applaud the commission for what they did. This is pro consumer, and it's going to have more growth.

I mean, the bottom line is, I don't know how much more growth, but it's either incremental or it could be quite a bit. But, yes, that's retarded some of the growth in Arizona. There's no question about that. And now that burden has been lifted off the folks -- people of Arizona, and I think that we're going to see higher growth there. So it was very much a surprise and obviously a very good one. And I think a lot of other commissions need to look at very seriously, including California, about the experience when you put something punitive on people that basically distant franchise them and gives them less choice in their energy, particularly given the technology changes that we're seeing. I think what you're seeing is when those bad choices are made, they're rolled back. We've got Nevada, there's Arizona, there's other examples out there. So I think that folks ought to be looking more to the positive side of things with regards to policy rather than dwelling on some of the potential negatives that we don't see happening.

Elvira Scotto -- RBC Capital Markets -- Analyst.

Great. Thanks very much.

William J. Berger -- Chairman, President and Chief Executive Officer

Thank you.

Operator

Your final question comes from the line of Tristan Richardson, Truist.

Tristan Richardson -- Truist -- Analyst.

Hi. Good morning guys. Really appreciate all the comments on 2025 and the services and NCCV implications. Just looking at that slide, I mean, assuming we get that double in services per customer, can you talk about maybe some of the biggest drivers between the 18,000 and 20,000 of potential NCCV outcomes? I mean, is that in that mix of seven, is it simply a higher storage attach rate over the forecast period versus, say, a higher mix of some of the smaller ticket items would drive the range of potential outcomes there?

William J. Berger -- Chairman, President and Chief Executive Officer

Yes. This a little bit earlier. But what I would say, the first one is that we say, roughly a 60% penetration rate of storage on the base by the end of 2025. So that's a big driver. We see a lot in grid services to the question that Julien asked a few minutes ago. I think that's a big driver. I think anything on the generator side could be pretty interesting, load management, EV charging and service may not be a huge NCCV per customer increase, but it certainly will provide a lot of high-margin recurrent cash flow for us. And so it's certainly going to be helpful in that regard. And then again, to reiterate the point that as we move forward in time and we rapidly pay off our debt, so the negative on that calculation is obviously debt, right? That's going to naturally improve on a per share basis and a per customer basis, if we did none of those. So there's a rising -- natural rising floor, if you will, on the NCCV per share, which is really more accounts, right? But also on a per customer basis, that's going to come with as we just move forward in time and pay our debt off in a much more rapid fashion like we have been doing. I think debt pay down this year, Rob, roughly is going to be north of, call it, $110 million or so?

Robert R. Lane -- Executive Vice President and Chief Financial Officer

Yes, it's strong, and it's really driven by the fact that we've been able to increase the principal payments and really increase the loan payments. And the irony here is that we are issuing less of the hyper-amortizing debt that we've had before, and yet we're still able to bring down and naturally deliver the company faster regardless.

Tristan Richardson -- Truist -- Analyst.

That's helpful. Thank you guys. And then just maybe the quick follow-up there on your last comment about the 60% penetration that -- presumably that does include sort of going back to the existing base and sort of tapping the retrofit opportunity. Can you frame that up in terms of maybe how much retrofit penetration do you need to get to that 60%?

William J. Berger -- Chairman, President and Chief Executive Officer

Yes. I think it's all -- it's a combination of math on your forward attachment rate and the origination rate. So the higher that goes up, then that means you need less of the existing base to buy, right, storage service. But we clearly see a lot of demand. Some of our markets are 100% attachment rate on a forward origination basis and have been for years. And so we're seeing a lot of demand from existing customers that frankly we just haven't even booked into contracts. We're now going back in there and upselling them now that we have a very good signaling and actual delivery of ESS systems. And so we see that next year could be a big uplift in terms of upselling storage per customer.

One thing is I'll point out is that is not a part of our customer count. So this would be part of the NCC, the per customer per share increase, but it's not picked up in our customer count because we just count customers that -- and we list out services sold per customer to help track that. So that's something in terms of upsell opportunity. We see a lot of pent-up demand for. So we're pretty excited and started to go back and ramp that effort up, if you will. And I see a significant amount of growth in terms of upselling our existing customers as we move forward in next year. And a lot of that has not necessarily been baked into what we've laid out today. So as we get further into the year, say, next earnings call, we'll be able to hopefully get a good update on that front. But I strongly suspect we're going to see a lot of uptake as far as upsells and storage on the existing customer base.

Tristan Richardson -- Truist -- Analyst.

That's very helpful. Thank you guys very much.

William J. Berger -- Chairman, President and Chief Executive Officer

Thank you.

Operator

I would now like to turn the call back to Mr. Berger for any additional or closing remarks.

William J. Berger -- Chairman, President and Chief Executive Officer

Thank you, operator. Thanks everybody for joining us on the call. And I appreciate all the patience. The calls are getting longer as we have more and more interest in the industry and obviously, in particular, in Sunnova. Next time, we'll be joining you all, it will be a New Year. And I want to point out a couple of things that we're seeing as far as the overall industry attractiveness. We strongly believe that our industry and in particularly the service providers like Sunnova is, it's a real opportune time. And why is that? We expect very strong monopoly retail power rate increases over the next few years. Sitting in Houston, we have a front-row seat to what's going on in the natural gas and the oil side of things. And we see a very, very constructive pricing environment. Obviously, it's not good for consumers, but we see strong retail power rate increases to -- so consumers are going to be looking for more options against that. We see a low rate of cost of capital, even with the rise -- anticipated rise in risk-free rates.

We've laid that out. We've executed on that quite nicely this year. We see that continuing as far as the risk premium continue to compress even a little bit. And we see supply and competition for key equipment increasing. So we're going to get past this issue with the energy storage systems being not available. We're already seeing a tremendous insight and visibility into that. And we see a lot more equipment and therefore, a lot more services per customer increasing. But overall consumers are turning to service. They need to have one interface, one service provider that's going to be there in a timely fashion. And I'm proud to say that Sunnova has laid out a very strong vision for what the future of the industry is going to be in the not-too-distant future, and we've laid out and well on our way of executing on that plan. So thank you for joining us and look forward to seeing you again in the New Year.

Operator

[Operator Closing Remarks]

Duration: 96 minutes

Call participants:

Rodney McMahan -- Vice President of Investor Relations

William J. Berger -- Chairman, President and Chief Executive Officer

Robert R. Lane -- Executive Vice President and Chief Financial Officer

Philip Shen -- ROTH Capital Partners -- Analyst.

Ben Kallo -- Baird -- Analyst.

Brian Lee -- Goldman Sachs -- Analyst.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst.

Maheep Mandloi -- Credit Suisse -- Analyst.

Mark Strouse -- JPMorgan -- Analyst.

Sophie Karp -- KeyBanc -- Analyst.

Pavel Molchanov -- Raymond James -- Analyst.

Sean Morgan -- Evercore ISI -- Analyst.

David Peters -- Wolfe Research -- Analyst.

Joseph Osha -- Guggenheim Partners -- Analyst.

Elvira Scotto -- RBC Capital Markets -- Analyst.

Tristan Richardson -- Truist -- Analyst.

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