More than a third of Sunrun’s California sales included batteries, and more than half of all Bay Area solar installations were storage-paired.
The nation’s top rooftop solar installer finished the year with a burst of home solar-plus-storage deals.
Sunrun installed a record 117 megawatts of solar in Q4, within its most recent guidance for the quarter and up 9 percent from Q3. The company achieved double-digit percentage annual growth in installations, although it grew at a slower pace than originally expected. Sunrun also reported rapid growth in its battery business, with the company pitching customers on resilient power in the face of California’s wildfires and utility power shutoffs.
More than half of Q4 solar sales in the Bay Area included battery storage, CEO Lynn Jurich said in an interview Thursday. Overall in California, 35 percent of Sunrun’s sales included energy storage. The company reported that 20 percent of national direct sales included batteries.
Many homeowners opt for diesel generators for backup power. Sunrun aims to sell customers on the relatively new battery solution instead, noting that the units are quiet, don’t need costly and dirty fuel, and can keep recharging from the solar panels.
Jurich expects rising customer interest in batteries for resilient backup power.
“Most consumers still don’t understand that solar plus a battery is a superior solution to a generator,” she told GTM.
Put another way, the Q4 bump came in the early stages of customer awareness about the technology. Interest could pick up even more as awareness spreads and battery prices decline further.
Sunrun has installed 9,000 Brightbox solar-plus-storage systems in total, up from 8,000 reported in November.
Still growing, but not as fast as expected
Back in November, Jurich told Greentech Media that a shortage of installation labor was holding the company back; it was trying to fill 600 openings for sales and installation jobs. Though sales at that time were on track to deliver 15 to 20 percent growth year over year, that installation bottleneck made it unlikely that the company would deliver the 16 to 18 percent annual growth in deployments it had hoped for.
Headed into a new year, Jurich said Sunrun has moved through the majority of its labor constraints. Now there are only 100 open positions in the installation workforce. The sales organization has 300 openings, but that’s more typical in the run-up to the busy summer season, she added.
Indeed, the 117 megawatts installed in Q4 amounted to Sunrun’s most productive quarter ever. But annual deployments fell short of the company’s earlier hopes for the year. Instead of 16 to 18 percent growth, Sunrun delivered 413 megawatts for the year, an 11 percent increase from 373 megawatts in 2018.
That growth rate underperformed the overall residential solar market, which grew 15 percent in 2019, according to data from research firm Wood Mackenzie.
Sunrun expects to grow total solar deployments by 15 percent in 2020.
Despite the lower-than-expected annual installations, Sunrun maintains a dominant leadership position in the market compared to runners-up Vivint Solar and Tesla. As Jurich noted on the earnings call, Sunrun added as many new customers in 2019 as the next two largest installers combined.
Sunrun produced positive earnings per share of $0.10 in Q4 and $0.21 for the year, in spite of accounting for the costs of installations upfront and monetizing customer payments over the next 20 years. It generated $102 million in cash for the year. Q4 installations created net present value of $1.13 per watt or $100 million.
Modest expectations for California new home mandate
California, the largest state solar market, implemented a rooftop solar requirement for new homes built in 2020 and onwards. The policy has the potential to generate several hundred megawatts of new solar installations over the next five years.
But compared to Sunrun’s excitement around storage adoption and grid services, the company is moderating its expectations around the impact of the new-build home solar mandate.
“It’s a slower-build kind of channel,” Jurich said in the interview. “It’s not a big piece of our growth plan.”
Some of Sunrun’s modesty may stem from the competition from other home solar companies racing to lock in new-build home deals.
“They’re getting beaten out by SunPower, which benefits from being a premium panel manufacturer and installer and has exclusive relationships with multiple homebuilders, and as a result has installed over 50 megawatts of new home solar in 2019, before the mandate even took effect,” said Austin Perea, a senior solar analyst at Wood Mackenzie.
But, he added, Sunrun does not actually need new business from the solar rooftop mandate in order to grow in 2020; it’s doing that organically. Because Sunrun entered the storage market before many of its competitors, the company has a comparative advantage with its Brightbox solar-storage product, which makes individual solar deals more valuable in the long run.
Jurich also expressed excitement for efforts to speed up solar permitting. Department of Energy-backed Solar Automated Permit Processing (SolarAPP) software will be piloted around the country this summer.
Early experience with instant permitting in Las Vegas shows it can cut days or even weeks of waiting from installation timelines, Jurich said. Broader adoption of these policies could reduce the soft costs of permitting and interconnection, which contribute an estimated $7,000 to the cost of a typical home solar installation.
Source: greentechmedia
