Sunrun, the leading provider of residential solar, storage and energy services in America, this week announced financial results for the fourth quarter and full year ended December 31, 2022. In the fourth quarter of 2022, Sunrun says it added 37,359 customers, including 27,493 subscribers. Sunrun grew new installed solar energy capacity in 2022 by 25.2% y/y to 991 MW, modestly exceeding guidance. That’s almost 1 gigawatt in one year!
Installing a gigawatt (GW) of new residential solar in 2022 is really impressive. Of this total, 275.4 megawatts was in the fourth quarter of 2022. Solar energy capacity installed for Subscribers was 197.5 MW in the fourth quarter of 2022. This awesome performance meant that Sunrun surpassed a record set in 2015 by SolarCity. In the last quarter of 2015, SolarCity installed 272 MW.
As of December 31, 2022, Sunrun had 797,296 customers, including 667,241 Subscribers. Customers grew 21% in the fourth quarter of 2022 compared to the fourth quarter of 2021. Annual Recurring Revenue from Subscribers was $1.04 billion as of December 31, 2022. The Average Contract Life Remaining of Subscribers was 17.6 years as of December 31, 2022.
Sunrun says networked solar energy capacity was 5,667 MW as of December 31, 2022, and of this total, the networked solar energy capacity for Subscribers was 4,765 MW as of December 31, 2022. Sunrun’s subscription model has several advantages compared with traditional solar loans in many markets as loan costs have come under pressure due to deteriorating prepayment speeds in a higher mortgage rate environment. Sunrun adds that loans are typically structured in non-escalating payments, pressuring upfront savings and resulting in a more complicated consumer sales message. Sunrun subscribers also benefit from maintenance, inverter and battery replacements, monitoring, and production performance guarantees which are not included with most loan-financed systems.
“Sunrun is poised to gain market share and help lead the country towards a clean energy future. Our focus on becoming faster, better and stronger continues to deliver tremendous value to our customers and shareholders. Our team is operating at record-levels of efficiency in Q4 while also breaking records with robust early-funnel sales growth in January,” said Mary Powell, Sunrun’s Chief Executive Officer.
“Sunrun is particularly well positioned in the current economic environment, where our subscription model is advantaged. Our immense operating scale and customer reach, along with our strengths being the leader in storage solution procurement, complex system design expertise, and advanced installation capabilities, are driving considerable differentiation in the marketplace, both as the platform company attracting the best sales talent and our ability to offer the best value to customers. I am confident 2023 will be a break-out year for Sunrun as we extend our market-leading position.”
“The Sunrun team executed well in Q4, moderately exceeding our volume guidance while also delivering substantial improvements in Net Subscriber Value, driven by operating efficiency and price optimization. The actions we took throughout the year to respond to higher interest rates and material costs have resulted in significantly improved cash proceeds against assets we are deploying, setting the company in a strong position as we focus on unit-level cash generation,” said Danny Abajian, Sunrun’s Chief Financial Officer. “We will continue to maintain a laser focus on customer obsession, innovation and differentiation as we continue to execute on our disciplined and sustainable growth strategy.”
Sunrun also says it is seeing record sales activities in Sunrun’s direct business, with January 2023 setting early-funnel sales records, growing over 30% y/y overall and with even faster growth in California. The company is also expecting to gain market share in 2023 by guiding to 10% to 15% growth in total Solar Energy Capacity Installed.
Sunrun also recently announced a partnership with PG&E to build a first-of-its-kind virtual power plant which will offer financial incentives for up to 7,500 customers in exchange for leveraging their systems into a collective energy resource of 30 MW during periods of peak demand this summer. This program will also provide Sunrun with incremental revenue for managing and delivering virtual power plant services to the grid for one year, and an opportunity for Sunrun and PG&E to extend and expand the program in future years.
Sunrun has now forged 14 VPP opportunities which provide incremental recurring revenue and offer an enhanced customer value proposition while also further differentiating Sunrun’s offering from companies that lack the scale, network density, and technical capabilities to serve this market.
For a long time, supplies of batteries for the residential market were severely constrained. Battery equipment supply has since improved and Sunrun has entered into agreements with leading manufacturers. Therefore, Sunrun is looking to leverage its vast experience in the residential storage sector along with its capabilities in procuring, selling, designing, and installing advanced storage systems to maximize on the opportunities in residential energy storage taking advantage of this improved supply chain. As part of this, Sunrun is pushing innovation to adapt to the forthcoming Net Billing Tariff (NBT) changes in California, with a customer-first approach to optimize when and how energy is generated, consumed, and stored. This innovative offering will enable most customers to save on their energy bills under the NBT by using a storage system directly connected to the solar energy system, lowering costs for installation and enabling maximum self-consumption to avoid exports at reduced export values.
Sunrun also gave an update on its partnership with Ford which is progressing well. Sunrun has an exciting partnership with Ford where they have teamed up to make vehicle-to-home (V2H) technology available to people who buy an F-150 Lightning electric pickup truck. Sunrun also offers electric vehicle chargers. Sunrun says it continues to take orders for the installation of the 80-amp Ford Charge Station Pro and the Home Integration System, along with providing options for solar and battery systems. Over 2,000 orders have been placed thus far (and many thousands of initial conversations) and installs are ramping rapidly. A large proportion of customers placing orders are opting for the advanced bidirectional power flow and home backup capabilities from the Charge Station Pro along with the Home Integration System. Based on initial numbers, we are seeing approximately 10% uptake of bundling solar at the same time as the installation of a Home Integration System. Last year Ford announced that it had exceeded 200,000 reservations and also announced plans to nearly double production of the all-electric F-150 Lightning to 150,000 units annually by the end of 2023 due to high customer demand.
Sunrun has also started rolling out these F-150 Lightnings as part of its fleet across the country and has a goal of transitioning half of its fleet to electric or hybrid by the end of 2025. This is all very exciting to me as I can relate to it having worked in the solar industry. There is a whole lot of driving in this industry (like in many other sectors) to visit customers on sales visits and installation visits, as well as follow-up visits for general operations and maintenance issues. In sales, the sales cycle can be quite long, especially in the C&I sector for long term PPAs. That means tens of trips to see the same customer over a prolonged period along with engineering site visit on top of driving around on other business matters. Solar companies adopting EVs for their operations with all the driving they do will be a great advert for electric mobility. They get to meet a lot of people at their homes and offices and will be a great channel for EV exposure.
Apart from decreasing their transportation emissions, solar companies can partner with EV companies just as Sunrun and Ford have done in several areas across the EV and solar value chain. As the penetration of renewables such as solar continues to grow, we will get more and more people charging on sunshine, unlocking efficiencies and reducing both their electricity bills for their homes as well as their “fuel” bills for their vehicles.
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