Sunrun installs record capacity in Q4 while cutting customer acquisition costs

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From PV magazine USA

The fourth quarter of 2019 was another successful one for Sunrun, the largest residential solar company in the United States – building on an already strong 2019.

The company reported 117 MW of installations in the fourth quarter, representing a 9% increase over the 107 MW installed in the third quarter of 2019. In total, Sunrun installed 413 MW in 2019, up from 373 MW 2018 and good for an 11% increase year-over-year.

The company also increased its total customer base to 285,000 in the fourth quarter. This was driven by the addition of 52,000 customers in 2019 – a growth rate of 22% year-over-year.

As for revenue, Sunrun ran into the same issue that has plagued residential solar companies: Expenses outweigh income in the pursuit of long-term value. In the fourth quarter, Sunrun increased revenue to $243.9 million, up $3.8 million (2%) from in the fourth quarter of 2018. With this revenue came quarterly operating expenses of $292.4 million, an increase of 18% in comparison to 2018.

On the year, the company reported $858.6 million in total revenue, which represents a 13% increase from 2018’s $760 million. But as was the case in the fourth quarter, Sunrun experienced $1,074.3 million in operating expenses on the year, which is up 22% from 2018.

Note that operating expenses are rising alongside a decreasing “creation costs” for systems financed by Sunrun. This number represents the per-watt cost the company incurs for each new system installed, so long as Sunrun finances said system.

Sales and marketing expenses fell for the second consecutive quarter to $0.69/watt in the fourth quarter, representing a steady decrease from the $0.77/watt cost the company reported after the second quarter of 2019. Installation costs fell an impressive $0.234 year on year – a figure equivalent to total installation cost decreases from 2017 to 2019.

Looking forward

Regardless of operating losses – the bane of residential solar companies nationwide – Sunrun anticipates even more growth in 2020. The company expects deployments to grow 15% year-over-year, with 20% growth in the overall customer base.

A portion of this confidence comes from the company’s drastically decreasing inspection time for new installations. Sunrun has begun to utilize onsite drone inspections for new installations, which has resulted in a 50% decrease in total inspection time. In tandem, Sunrun has also made strides in decreasing the time between contract closing and system installation, boasting five-day and two-day margins between signing and installation completion on projects in the fourth quarter.

As for coronavirus-related hardware shortage concerns, Sunrun has none, with company representatives sharing that enough hardware was safe-harbored leading up to the 2020 investment tax credit reduction to cover any potential shortages.