Sunrun To Overtake SolarCity As Leading US Residential Solar Lease Provider, Predicts GTM Research
After leading the way for several years, SolarCity is expected to lose its spot as leading residential solar lease provider in the United States to its main competitor, Sunrun, by the end of the year, according to new data from GTM Research.
Despite being acquired by Elon Musk’s Tesla, SolarCity has been struggling over the last little while, after early years of explosive and dominant growth. Many have assumed that the tumult that has affected the US solar industry of late was at least partially at fault for SolarCity’s troubles, but new data published this week by GTM Research suggests that the struggles affecting some US residential solar companies are because of “company-specific failings” rather than an industry-wide issue.
Published on Wednesday, GTM Research’s U.S. Residential Solar Finance Update, H2 2017 report was authored by solar analyst Allison Mond, and predicts that Sunrun will overtake SolarCity as the leading third-party ownership financing provider in the US residential solar market by late 2017.
This may not come as a huge surprise to those who paid attention to Sunrun’s third quarter earnings news, in which the company announced it had beat its own expectations and deployed 90 MW (megawatts) worth of solar and taken in total revenue of $141.3 million for the quarter. GTM Research also highlights the fact that Sunrun has already surpassed SolarCity based on capacity financed so far in 2017.
As pertains to the third-party ownership market, Sunrun nearly took the top spot in the first half of 2017 with 27%, well up on the 18% market share it took in during 2016, but just behind SolarCity’s 31%. According to Allison Mond, the 4% difference between Sunrun and SolarCity in the first half of the year “equated to just 19 megawatts over two quarters.”
In the third quarter, Sunrun financed 80 MW worth of systems (compared to a total deployment of 90 MW) while SolarCity financed no more than 59 MW.
Sunrun is definitely benefiting from SolarCity’s decision to lean away from third-party ownership financing in favor of selling systems for cash or loans, an effort to increase the company’s cash position. But the news could be even better for Sunrun, according to Mond:
According to GTM Research’s residential solar financing analysis, SolarCity deployed 233 megawatts of residential solar in H1 2017, Sunrun deployed 148 megawatts, and Vivint Solar deployed 93 megawatts. Yet in Q3 2017, these companies deployed 109 megawatts, 90 megawatts, and 47 megawatts, respectively (SolarCity’s 109 megawatts includes its commercial business).
So if 18 percent or more of SolarCity’s Q3 installations were in its commercial business (which is reasonable given SolarCity’s historic channel mix), then Sunrun would have narrowly out-installed SolarCity in the quarter.
With SolarCity coming under the banner of Tesla, it has become a bit more difficult to tease out the specifics of its business accomplishments for a quarter, subservient as it is to Tesla’s primary business efforts. Of course, SolarCity — along with another US-based competitor, Vivint Solar — are both making “concerted efforts to increase cash and loans sales as a portion of their product mixes,” according to Mond, and “have deliberately scaled back operations and moved away from employing a strictly vertically integrated installer and financer model,” allowing Sunrun the opportunity to run ahead.
The way the US residential solar financier market is going to shake up is going to be interesting, but is highly dependent upon a number of different factors, making it increasingly difficult to accurately predict winners and losers. Vivint Solar continues to expand its market with new states added almost every month, but the current state of the US solar market as a whole — with the uncertainty currently stemming from the ITC’s Section 201 trade case — will likely shake things up even further.
For the full run-down of Allison Mond’s analysis, check out her piece on Greentech Media here.
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