Archives

  • All News
  • Portfolio Company
  • Millennium News
  • By Year

  • 2020
  • 2019
  • 2018
  • 2017
  • 2016
  • Sunrun Stands Out in the Residential Solar Industry

    October 5, 2020

    Excerpts From CNBC Article – Residential solar power has been around for years: after all, President Jimmy Carter famously installed panels on the White House in 1979. But it has yet to go mainstream, so to speak, with just 3% of the 84 million eligible homes across the U.S. sporting rooftop panels. That might be about to change, however, with the latest announcements from one key company in the space — Sunrun.

    While there are currently a number of ways to invest in the rooftop solar ecosystem — from manufacturers to inverter companies to the installers themselves — Sunrun stands out. The company already has the largest share of the residential solar market, and its planned acquisition of Vivint Solar means its position as the leader in an ultra-competitive sector will be underscored. Size, customer count and brand recognition is especially important, given the industry’s high customer acquisition cost. Sunrun is also building out its so-called virtual power plant capabilities, while its battery storage offering is becoming an increasingly popular alternative to an unreliable electricity grid

    If the industry initially attracted eco-conscious consumers, people are now choosing to go solar based on economics. The declining cost of solar, paired with fluctuating electricity prices from traditional providers, means that in many places across the U.S., solar power is competitive, if not cheaper. The immediacy of climate change and more frequent power outages from outdated grids are also driving adoption.

    Solar-As-A-Service

    Installing rooftop solar systems requires a significant outlay of capital at the outset. Sunrun comes in. The company provides solar-as-a-service, covering the financing, installation, repairs and upgrades, although it does not manufacture the equipment itself. Customers are offered solar leases or Power Purchase Agreements, which are typically 20 or 25-year contracts. In a lease, the homeowner pays a fixed monthly rate to lease the equipment and utilize the power generated, while a PPA is based on a fixed rate per kilowatt hour. Sunrun estimates that it saves customers an average of 10% to 40% on electricity.

    Sunrun and residential solar companies more generally can be difficult to value, given their complex financials. But the company is cash-flow positive, and has seen its price per installed watt drop as it scales its operations.

    Virtual Power Plants Allow Further Monetization

    Sunrun also offers energy storage via its Brightbox battery, which is a growing part of its business. This is especially attractive to consumers in areas where blackouts — whether caused by overburdened utility grids or extreme weather events — are frequent, since the storage option offers power reliability.

    The solar-plus-storage option is important to Sunrun since it is building out its so-called “virtual power plant” capabilities. This essentially means that Sunrun can harness the power stored in customers’ batteries — when the customer isn’t utilizing it — to bundle the energy all together, and then sell it back to local utility companies. The company has a number of contracts in place already, including with utility companies in New York and California.

    Who’s Investing?

    Sunrun’s acquisition of Vivint could lead to an influx of new investors as greater liquidity makes the company’s shares more accessible. The company also has a “scarcity value,” noted KeyBanc analyst Sophie Karp given that it’s “one of the few investable clean energy names that is in demand with multiple classes of investors.

    Sunrun’s largest shareholders include Tiger Global Management, BlackRock, The Vanguard Group and Blackstone.

    Ongoing momentum behind ESG investing should continue to attract investors to Sunrun. The company has 100% pay parity, and women constitute 50% of senior management and 43% of the board.

    Summation

    No one believes any more that solar power is a niche idea that might fail to catch on, and Sunrun stands out as the leader of the pack.

     



    All content copyright Millennium Technology Value Partners 2020 ©