NOVA WACC - Weighted Average Cost of Capital
The WACC of Sunnova Energy International Inc (NOVA) is 6.3%.
| Range | Selected | |
| Cost of equity | 67.9% - 143.6% | 105.75% |
| Tax rate | 0.2% - 1.4% | 0.8% |
| Cost of debt | 5.0% - 7.0% | 6% |
| WACC | 5.2% - 7.4% | 6.3% |
| Category | Low | High |
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 13.91 | 24.78 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 67.9% | 143.6% |
| Tax rate | 0.2% | 1.4% |
| Debt/Equity ratio | 306.1 | 306.1 |
| Cost of debt | 5.0% | 7.0% |
| After-tax WACC | 5.2% | 7.4% |
| Selected WACC | 6.3% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| NOVA | Sunnova Energy International Inc | 306.1 | 1.89 | 0.01 |
| BLX.TO | Boralex Inc | 1.35 | 1 | 0.42 |
| CBLU.V | Clear Blue Technologies International Inc | 1.06 | 0.13 | 0.06 |
| ELLO | Ellomay Capital Ltd | 2.74 | 0.42 | 0.11 |
| ETX.TO | Etrion Corp | 3.52 | 0.32 | 0.07 |
| INE.TO | Innergex Renewable Energy Inc | 2.46 | 0.44 | 0.13 |
| KNR.CN | Kontrol Technologies Corp | 0.07 | 1.11 | 1.04 |
| NKW.V | Oceanic Wind Energy Inc | 0 | -0.75 | -0.74 |
| PWCO | PwrCor Inc | 0.03 | -1.79 | -1.74 |
| RNW.TO | TransAlta Renewables Inc | 0.24 | 1.28 | 1.03 |
| Low | High | |
| Unlevered beta | 0.07 | 0.12 |
| Relevered beta | 20.27 | 36.49 |
| Adjusted relevered beta | 13.91 | 24.78 |
NOVA's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for NOVA:
cost_of_equity (105.75%) = risk_free_rate (4.15%) + equity_risk_premium (5.10%) * adjusted_beta (13.91) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.