*

Sunnova no longer using Project Hestia loan guarantee

*

Sunnova has $371 mln in bonds outstanding backed by

cancelled

guarantee, source says

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DOE Loan Programs Office faces uncertain future amid

budget cuts

(Adds details from sources, background on Sunnova and DOE loan

office throughout story)

By Timothy Gardner and Nichola Groom

WASHINGTON, May 28 (Reuters) - President Donald Trump's

administration has canceled a partial loan guarantee of $2.92

billion that had been awarded to residential solar panel

installer Sunnova Energy ( NOVA ), the company said on

Wednesday.

A source familiar with the matter said the Department of

Energy had "de-obligated" the loan guarantee, meaning the

federal government is not responsible for the financing.

Bloomberg News first reported the move.

Sunnova, which is restructuring its debt and has warned that

it may not be able to continue as a going concern, said in a

regulatory filing in March that it did not intend to use the DOE

facility, known as Project Hestia, for the foreseeable future.

In April 2023, former President Joe Biden's administration

announced the partial loan guarantee of up to $3 billion to back

financing for about 100,000 rooftop solar installations,

primarily for lower-income homeowners. At the time, the Energy

Department billed the facility as the largest ever U.S.

government commitment to solar power.

But residential solar has struggled since then as higher

interest rates have pushed up financing costs.

Sunnova, one of the biggest U.S. residential solar

companies, has sold $371 million in bonds that are backed by the

Project Hestia loan guarantee, according to a source, but those

notes are not included in the debt that the company is seeking

to restructure.

The program became less attractive to Sunnova because the

company could market cheaper, leased systems to homeowners using

tax credits created by former President Joe Biden's 2022

Inflation Reduction Act, a company source said. The credit for

loans, which was Project Hestia's focus, is less lucrative.

The Trump administration, which is pushing to maximize oil

and gas production, has said it is reviewing financing from the

Department of Energy's Loan Programs Office to companies

involved in alternative energy.

Under Biden, the office aimed to speed development of the

clean energy sector, with loans to companies that struggled to

obtain private financing.

It faces an uncertain future with job cuts implemented by

Elon Musk's so-called Department of Government Efficiency and

reductions to the office outlined in the House budget bill.

The loans office since 2009 has issued more than $35 billion

in loans and loan guarantees and been paid back by companies,

including Musk's Tesla. But it has also been a target for

Republicans since 2011 over a $535 million loan to Solyndra, a

failed solar company.

The Department of Energy did not immediately respond to a

request for comment.