What happened
A government program intended to support the take-up of alternative energy sources was supporting Sunnova Energy's (NOVA -5.12%) stock on Thursday. On news that Sunnova had won this backing from the federal government's Department of Energy (DoE), investors traded the stock up by almost 15% on the day.
So what
The DoE is providing a partial loan guarantee of up to $3 billion to Sunnova, which covers 90% of the $3.3 billion of solar energy loans the company is planning to originate. Under a company program called Project Hestia, that amount aims to help provide disadvantaged customers with financing that builds or expands solar energy systems.
This ties in well with the Biden administration's goal of boosting green energy solutions in the U.S. While the upfront costs of solar aren't as burdensome as they used to be, systems can still be rather expensive to build from the ground up.
Under Project Hestia, customers are required to use Sunnova technology, which is accessible through smartphones and other devices.
The company quoted its CEO William (John) Berger as saying, "Project Hestia would make possible a historic private sector investment in disadvantaged American communities and energy infrastructure."
"The DOE financing would accelerate the adoption of solar and storage, decrease greenhouse gas emissions, and expand the availability of reliable, clean, and affordable energy to those communities who benefit the most from low-cost energy," he added.
Now what
The initiative, it almost goes without saying, could dramatically improve Sunnova's top line without bringing on too much risk. It was little wonder, then, that investors were so keen on the solar company's stock following the announcement.
