Dive Brief:
- Sunrun installed 264.5 MWh of energy storage capacity in the second quarter of 2024, up 152% from Q2 2023, but solar installations fell 35% year-over-year to 192.3 MW and total customer additions fell 33% from Q2 2023, the company said Tuesday in its quarterly earnings presentation.
- The battery attachment rate on new Sunrun installations rose from 18% in Q2 2023 to 54% in Q2 2024 following a reorientation of Sunrun’s business around a “storage-first strategy” that allows the company to adapt faster to regulatory changes and lays the groundwork for Sunrun systems to provide grid services through virtual power plants in the future, CEO Mary Powell said Tuesday.
- Also on Tuesday, Sunrun announced a partnership with Tesla Electric to relieve the Electric Reliability Council of Texas grid during periods of high demand. In July, Sunrun announced a first-of-its-kind vehicle-to-home grid support program in Maryland, which in May enacted legislation requiring utilities to begin planning for bidirectional electric vehicle charging.
Dive Insight:
Sunrun has installed more than 116,000 paired solar and storage systems with nearly 1.8 GWh of stored energy capacity, according to the earnings presentation. Storage attachment rates for the remainder of 2024 are expected to equal or exceed Q2 levels, the company said.
Sunrun’s storage-first posture is a boon for the company and its customers due to favorable economics in electricity markets that incentivize storage pairing, the potential for residential energy storage systems to provide backup power capabilities, and higher profit margins on solar-and-storage systems compared with solar-only installations, Sunrun said.
Sunrun customers are increasingly focused on the resiliency benefits of energy storage, Powell said on the call.
“Many customers now want whole-home backup [and we’re] seeing more customers express the desire for multiple batteries,” she said. “That is part of what is driving the storage attachment rate.”
The annual average number of weather-related power outages in the U.S. has risen 80% in the past decade, according to Sunrun’s earnings presentation. Sunrun systems helped more than 1,600 households in the greater Houston area power through multiday outages caused by Hurricane Beryl last month, dispatching more than 70,000 backup hours at an average of 44 hours per customer, Sunrun said.
Sunrun’s Tesla Electric partnership will help the Texas grid manage periods of high demand, including those caused by extreme weather events, while ensuring participating customers have backup power to endure outages, Sunrun said in a Tuesday news release. More than 150 customers have so far enrolled in the program, which will provide an annual customer payment of $400 per Powerwall in 2024, Sunrun said.
Enrolled customers will participate in ERCOT’s aggregated distributed energy resources pilot program, which allows small customer-sited storage resources to take part in the Texas wholesale electricity market, Sunrun said.
Sunrun customers already take part in several other U.S. virtual power plant programs, including CalReady, which has more than 16,000 enrollees in California, and PowerOn Puerto Rico, which has nearly 2,000 participants.
“While still in the early stages of commercializing these valuable, dispatchable energy resources, we continue to advance programs which prove their value potentia,” Powell said on the earnings call. “We now have more than a dozen operating virtual power plants across the country.”
Sunrun’s Maryland grid support program, which Powell called “a significant proof of concept” in a July statement, is the United States’ first bidirectional EV power plant using customer vehicles, according to Sunrun. Operated by Sunrun in partnership with Baltimore Gas and Electric and funded by a U.S. Department of Energy grant, the program began last month with three F-150 Lightning pickup trucks providing power to their owners’ homes during peak demand periods, Sunrun said.
Sunrun sees the “market exit and restructuring” of competitor SunPower, which filed for bankruptcy Monday and announced plans to sell or wind down its assets and operations, as an opportunity to grow market share in the new homes segment, Powell said on the earnings call.
“We are engaged in conversations with many of [SunPower’s] former dealers…[and] with many large national homebuilders about joining the Sunrun platform,” Powell said.
Sunrun in July hired two former leaders of SunPower’s new homes business, she added.
Also expected to boost Sunrun’s business in the coming quarters are the Inflation Reduction Act’s 10% investment tax credit adders for energy communities, low-income communities and domestic content.
In Q2 2024, Sunrun’s weighted average ITC was approximately 35%, meaning about half of Sunrun subscribers qualified for a 10% average adder, according to the earnings presentation. Sunrun expects a weighted average ITC of 45% in 2025, with actual or projected annual run rates of $100 million to $150 million for the energy communities adder, $50 million to $100 million for the low-income communities adder and $200 million to more than $500 million for the domestic content adder, Sunrun said.
