Sunrun bucks the trend and grows during Q1 2017


The first quarter of 2017 was not kind to the U.S. residential solar industry. Two of the three largest solar companies saw deployments decline, and the fourth-largest company went belly up, as the nation’s largest state market contracted.

And while some of this is due to factors outside the marketplace, one company bucked the trend of increasing fragmentation. Sunrun increased its deployments 21% year-over-year to 73 MW during Q1, and booked another 74 MW. And while final numbers from other companies are not in this clearly allowed the company to gain market share, especially given the potential contraction in the overall market.

Financials are much more difficult to assess for third-party solar companies like Sunrun, as such companies build value over the long run while typically reporting quarterly losses. To add to the complication, third-party solar companies do not use a standard metrics to measure their creation of long-term value, which results in Sunrun issuing a glossary with its quarterly results.

Sunrun grew its revenue 5% to $104 million, $48 million of which came from third-party solar and storage revenues and $56 million from direct sales, but also a net loss of $73 million.

In terms of the long-term value Sunrun created, the company has its own metric, Net Present Value (NPV) created, which appears similar to the “retained value” measured by Vivint. And while Sunrun reported only $56 million in NPV created during the quarter, it also indicates that NPV tends to increase over the quarter.

Sunrun has a slightly different business model than either SolarCity or Vivint, in that installs PV systems both directly and through a network of third-party installers. And while prices fell for both categories Sunrun’s installers are not cheap, with a “creation cost” of $3.38 per watt.

Much of this is coming not from sales, general and administrative costs, but a high installation costs of $2.67 per watt through its channel partners, as opposed to $2.14 per watt for solar installed by Sunrun.

But while value creation metrics and costs were still difficult matters, Sunrun has a good capital position, with over $204 million in cash, and closed yesterday on a $195 million tax equity facility. Sunrun Chair Ed Fenster dismissed concerns about tax equity availability due to the potential of cuts to corporate tax rates.

“We continue to see robust interest in tax equity investors,” stated Fenster.

On its quarterly results call Sunrun also briefly addressed the SEC investigation of its customer cancellation rates, a matter which it has declined to discuss with the press. Sunrun has implied that public concerns form cancellations come from a misunderstanding of its sales process, with CEO Lynn Julich saying she was “phenomenally proud” of the Sunrun customer experience.

To back this up, Fenster notes that customer referral rates have grown over the last four quarters, and noted the company’s Better Business Bureau rating of A+.

Sunrun is expecting a more modest Q2, with deployments of only 72 MW, but reiterated its guidance of 325 MW over the full year 2017.

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