Q4 2020 Sunrun Inc Earnings Call
Greetings and welcome to the Sunrun fourth quarter, 'twenty and 'twenty earnings Conference call. At this time all participants are in a listen only mode. If anyone should require operator assistance. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded and some of my pleasure to turn the call over to Patrick Jobin.
Senior Vice President and Finance and Investor Relations. Please go ahead, Sir thanks.
Thanks, Kevin and before we begin please note that certain remarks, we will make on this conference call constitute forward looking statements. Although we believe these statements reflect our best judgment based on factors currently known to US actual results may differ materially and adversely please refer to the company's filings with the FCC for a more inclusive discussion of risks and other factors that may cause our actual <unk>.
<unk> to differ from projections made and any forward looking statements. Please also note. These statements are being made as of today and we disclaim any obligation to update or revise them on the call today are Lynn George Sunrun scope.
And are anti E O and sensor Sunrun co founder and executive Chairman and Tom Van Repower, Sunrun CFO and now let me turn the call over to Lynn.
Thanks, Patrick.
We are pleased to share Sunrun fourth quarter results.
Net against our strategic priorities and outlook for 2021.
We ended the year with more than 550000 customers, 18% year over year growth pro forma debt.
And pillar.
And we adapted swiftly to the dynamic environment during the year.
And our cost structure, increasing our market position and strengthening our competitive advantages.
It's all our acquisition expands our scale and solidifies our position at the top owner of solar athletes globally with nearly four gigawatt.
Worked solar energy capacity.
I'm excited to share our results for the first time that the combined company.
And the fourth quarter, we added 23005 hundred customers with.
We saw continued improvement and our margin and beat the targets, we set last quarter.
The integration is progressing well with the team operating as a single organization.
In 'twenty and 'twenty, one and we expect to significantly accelerate our growth rate to 20 to 25 per cent from a baseline scale, that's already twice the Mexican tighter and with strong customer margin.
At the same time, we will increase our competitive advantages through our unmatched sales reach and debt.
And then and customer experience breakout and and talent.
And I had started batteries and grid services and and.
And and improved cost structure from scale and synergies, which exceed our initial expectation.
The unprecedented winter storm in Texas last week that last month, and 3 million, but without power, yet again and extends the current growth vulnerability and the superiority of local solar and batteries.
During the extreme demand and the power grid, our customers produce their own electricity from solar behind the meter and helped offset the need for additional blackout.
For each customer with Sunrun and solar we help keep another homeowners power on.
Furthermore, our customers with bright box, we're able to power through the blackout and stay warm.
And you've been customers without just over 50 hours, we're able to power critical circuits uninterrupted and the solar system.
Energy and recharge batteries during the winter storm.
And it's no surprise that our website traffic increased 350% over the past few days and Texas and our sales teams reported a record number of appointments and a single day.
And we saw similar trends falling power shutoff and California.
And accelerating extreme weather events will continue to drive consumers to choose solar and battery.
Nationally, we have now installed more than 16000 Breitbach systems.
And at full or attachment rates doubled and the fourth quarter and we continue to expect brite box installations to accelerate and grow over 100% in 'twenty and 'twenty one.
And I expected constraints and battery supplier.
Utilities invested more than 120 billion and Capex last year, yeah storms heat waves and wildfire continued to prove that our centralized credit failing.
And utilities across the country spend more to upgrade infrastructure with a guaranteed rate of return these costs are falling on homeowners.
And December PJM announced that its petsmarts will be hit with an average rate increase of 8% over the next two years to pay for improvements to reduce the rest and its equipment like night deadly wildfires.
This is compounded by the fact that 71 per cent of California homeowners. So they think the pandemic has increased demand for electricity.
This dynamic is happening across the country with retail utility rates and our markets increasing three per cent per year on average for the last 15 years.
Utility capital spending forecast and continue to rise, which increases the value, we can bring to customer and expands our addressable market.
This month and launching additional areas of Texas, and Florida, including and Antonio and Miami offering residences, a wage power through outages and their energy costs.
Turning now to our sustainability efforts.
We're proud to lead one of the fastest growing sectors and the American economy, and the different solar acquisition enables us to accelerate job growth.
The combined company now has approximately 8500 and full kind of employee and we have committed to providing all of our employees and plays wages of at least $15 per hour.
And the fourth quarter, we strengthened our talent communities with over 800 employees participating in our sex employee resource groups.
November we announced for environmental Justice to.
To expand access to solar and its benefits.
Sunrun was also the first solar company and one of only 500 and total companies select and to be part of the department of defense military spouse employment partnership.
Finally, we want to create a healthier environment for future generations by aggressively retired and fossil fuel plants.
And 2020, our networks solar energy capacity prevented G. H T emission totaling an estimated $2 4 million metric tons and C O two.
And 'twenty and 'twenty, we installed more than 600 megawatts of solar to over 85000 customers.
These systems are expected to prevent the admission of over 13 million metric tons of C. O. Two over the next 30 years.
Before I turn it over to Ed I want to thank our fantastic team for another great quarter, where do you add.
Yeah.
Thanks Lynn.
Today I'll touch on some recent federal policy developments are evolving and capital structure strategy and recap our robust capital that way.
Over the last year and quarter, we have advocated for and achieved numerous political victories and we continue to enjoy tailwind and this area.
On December 21st the investment tax credit was extended for two more years and.
And as before this measure passed with bipartisan support passing through a Republican controlled Senate and signed by a Republican President.
Taken in combination with our safe Harbor capabilities, we now enjoy and investment tax credit of up to 26% through December 31 2025.
That said we are pleased at the bite and administration is demonstrating genuine interest not just and renewable energy, but also distributed energy and soft cost reduction.
President Bond and specifically cited home solar and batteries during last year's debate as critical investments for rebuilding our energy infrastructure with clean technology.
Given its track record of success and bipartisan support we think a longer term extension is the solar investment tax credit is probable.
Bye and administration is also taking steps to support soft cost reduction continued D O <unk> funding for training and software development.
In addition, the buy and administration has begun releasing funds previously appropriated by Congress for youth and repairing and modernizing Puerto Rico's electric grid. We believe this funding may open significant virtual power plant opportunity is for us and the island, along with an expanded market for home solar and battery installations.
Meanwhile, a number of factors are combining to offer us several paths to reducing our capital costs even further.
Our increased scale market capitalization and profitability following the <unk> and solar acquisition are opening new doors for us and lend.
Lenders and rating agencies have taken note that our collections actually improved during COVID-19.
We're also seeing and unprecedented increase and lender interest and green bonds, and just generally low cost of capital and most markets.
We believe we can leverage these factors into and updated capital structure that will increase long term cash flows available to our common shareholders.
And in part because of the various strategies, we are evaluating provide different combinations of cash upfront versus cash distributions over time, we are not providing 2021 cash flow guidance. At this time, we will share updates on the strategy review over the next two quarters. However, as we finalized a course of action.
We continue to maintain a robust project finance runway that affords us the ability to be selective and capital markets activities as of February 25th closed transactions and executed term sheets provide us expected tax equity and project debt capacity to fund over 500 megawatts for subscribers in 'twenty and 'twenty one.
And we're clearing both the tax equity and credit markets at or near all time low cost of capital.
And I'll turn it over to Tom.
Thanks, Ed.
And the fourth quarter capped off a transformative year for Sunrun, Inc.
Sunrun team continued to deliver sequential volume growth and margin expansion, while beginning the integration of <unk> and solar the combination of continued operational improvements and strategic advantage from our increased scale and set up the company for a breakout 2021.
As we previewed on the last call. This quarter, we have made various changes to our operating metrics converge and methodologies between sunrun and different solar and more clearly, reflecting our business post acquisition.
On slide eight of our earnings presentation, you can see a summary of the update the nomenclature and definitions of the key metrics we use.
For example, we now refer to customers under leased or power purchase agreements and subscribers given the long term and recurring nature of our relationships.
We now refer to the present value of upfront and recurring cash flows from customers and subscriber value instead of project value and presented on a per subscriber basis instead of per unit of solar energy capacity per.
Her what figures are still available and supplemental materials, but presenting metrics on a per customer basis, better aligns to our cost and value drivers of the business.
We now present subscriber value and gross earning assets and a 5% discount rate, reflecting the lower cost of capital environment, and our continued ability to raise capital at rates well below 6%.
Further net subscriber value also includes uncapitalized operating expenses would that creation cost harmonized and with different soldiers former reporting method and reflecting the increased mix of direct business as a result of the acquisition.
NPV is now referred to as total value generated and represents the net subscriber value multiplied by subscriber additions.
Net earning assets now includes both recourse and nonrecourse debt along with total cash megawatt.
And megawatts deployed is now referred to and solar energy capacity installed while cumulative megawatts deployed and is now referred to as the network of solar energy capacity. We believe these changes improve the usefulness of the metrics, we present and will make our business less burdensome to understand.
Turning now to volumes and the fourth quarter customer additions were approximately 23005 hundred including approximately 18800 and subscriber additions.
Solar energy capacity installed was 172 megawatts and the fourth quarter of 2020, a 10% sequential increase from the third quarter and 603 megawatts for the full year of 2020.
Our network solar energy capacity was $3 nine gigawatts at the end of Q4 and increase of 18 per cent compared to the prior year.
We ended Q4 with over 550000 customers and nearly 479000 and subscribers both growing 18% year over year, our subscribers generate significant recurring revenue with most under 20 or 25 year contracts for the clean energy can provide.
At the end of the year, our annual recurring revenue or <unk> stood at 668 million with an average contract life remaining and a 17 years that's.
Over $10 billion and revenue visibility just from customers we already have.
And Q4 subscriber value was approximately 37000 and $400 and creation cost was approximately 28000 and $300 delivering a net subscriber value of $9051.
While we are presenting metrics on a per customer basis, now and we appreciate that many investors and module per watt metrics. These metrics and it'll be calculated if desired for instance subscriber value per watt of solar energy capacity installed for subscribers was $5 seven from what we used to call project value net.
Describe our value per watt or what we used to call NPV per watt would be $1 23 and the quarter.
As discussed earlier the changes we have made and the metrics resulted in some puts and takes.
Instance, moving from a 5% discount rate increase subscriber values, while the inclusion of Uncapitalized operating expenses within creation cost of line and bullish former reported method and reduced the reported figure and we believe these changes that we've made are appropriate now given our increased mix of direct business. Following the acquisition of its solar the financing environment and improvements we have made and her own cost accounted for.
Fleet servicing and expenses.
Under the prior methodology, which we had provided guidance against last quarter net subscriber value would have been approximately $8500 exceeding our target.
Total value generated which is the net subscriber value multiplied by the number of subscriber additions and the period was $170 million and the fourth quarter.
Turning now to gross and net earning assets and our balance sheet gross earning assets were $7 8 billion at the end of the fourth quarter, reflecting an increase of $3 6 billion from the prior year gross earning assets and the measure of cash flows we expect to receive from customers overtime net of distributions and tax equity partners and partnership flip structures project equity financing partners.
And operating and maintenance expenses discounted at a 5% Unlevered WAC and net.
Net earning assets were $4 $2 billion at the end of the fourth quarter, reflecting an increase of $2 $1 billion from last year net.
Earning assets as gross earning assets plus cash less all debt we.
We ended the fourth quarter was 708 million and total cash.
And simple way many approach valuation is to look at the value of the growth business of new subscribers total value and generated times are multiple.
Multiple given the growth prospects, plus net earning assets, which represents the value of existing subscribers and net debt.
Yeah.
A quick note on our GAAP income statement for the quarter and upcoming periods. There were a few one time items, along with purchase accounting treatment and so on that depressed and near term GAAP results.
This quarter operating costs included nonrecurring acquisition and deal related expenses and restructuring costs of $25 $3 billion.
Operating costs. This quarter also include stock based compensation expenses of $133 million, a significant step up from prior periods consistent with purchase accounting standards under GAAP. The fair value of outstanding equity Awards for good and solar employees was reevaluated upon the closing of the acquisition.
Which resulted in a step up of the value and such awards because of the higher stock price on the day to close.
This resulted in increased and noncash stock based compensation expense until such awards fully vested. Additionally, the value of solar energy systems and was recorded based on a fair value assessment, which was approximately $1 $1 billion higher than the book value at the date of acquisition and a little bit.
Result, and additional noncash depreciation expense over the estimated useful life of the assets, partially offset by a write off that cost you obtained customer contracts and these purchase accounting adjustments have no effect on our cash flows and how we measure the performance of our business.
Turning now to our outlook and we noted earlier the integration with different solar is going exceedingly well.
While we initially targeted and $90 million and run rate cost synergies. We are now confident that we can realize the $120 million and run rate cost synergies exiting this year.
We also believe our strengthening brand investment and customer experience and product innovation and expanded sales channels have us well positioned to capture strong underlying and consumer interest for reliable clean energy and the year ahead, and Furthermore, the combination of our business transformation and 2020 and increased cost synergy expectations enables us to both invest and growth and maintaining strong margins.
And 2021.
We forecast solar energy capacity installed growth to be and a range of 20 to 25 per cent in 'twenty and 'twenty one for the full year.
Total value generated is expected to be over $700 million for the full year.
Well, we were very focused on integration and the near term, we expect a return to year over year growth and solar energy capacity installed in Q1 with accelerating growth thereafter.
Similarly, because of seasonality and our business and the shape of our post acquisition cost structure as synergies are realized we expect to see slightly lower net subscriber margins and the first half and higher margins and the second half of 2021.
As Lynn mentioned at the beginning of the call consumer demand for alternatives doing old expenses and Dirty energy infrastructure is increasing and we believe we have the products business model and operational capabilities to deliver against this demand and the 2021 and beyond.
With that let's open the line for questions. Please.
Thank you and I'll be conducting a question and answer session, if you'd like to be placed and the question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your line is and the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment may be necessary to pick up per handset.
Net before pressing star one one moment. Please while we poll for questions. Our first question today is coming from Michael Weinstein from Credit Suisse. Your line is non life.
Hi, Thanks for the question.
And I think you guys talked about some interest picking up and green bonds coming forward is that something you could talk more about maybe alternative forms of financing.
Beyond the a b S issuances that we've all that and.
Starting to get used to.
Sure that's a great question.
And.
I think I was trying to say is that there's just a lot of.
Investor interest generally on the lender side.
And the loans from you know ESG.
Companies and and renewable energy.
I think our company is its so obviously and ESG company that actually getting a green rating of a bond may not make a difference to the cost of capital, but given the scale of the business.
And the market cap you know, we have a lot of opportunities for.
Ways to raise capital, including subordinated debt debt might be at various different places and the capital structure might be rated and would probably be likely significantly cheaper than the places we've been growing historically for that capital. So that's a process of investigation and discovery that we're going through we do have a number of interesting ops.
And is there and and as I T is do I think we'll be updating you all with further information and the next quarter or two there.
Right and I think you said, you're still working on your cash flow strategy or a cash use strategy for this year can you give us a little more color on that and what the timing is the timing of when you think you'll be able to give guidance.
Sure. So I think again in the next couple of quarters, we'll know more.
As I was trying to suggest on the call you know we could capitalize the business with.
Either two different and take an example, two different credit instruments, you know one might cost.
X percent might cost a little bit more than X percent and they would have different advance rates. So what we're trying to do is figure out what's the optimal long term strategy for the company how.
How much do we want to borrow today versus leave for cash flows for distribution tomorrow and as we maximize those to you know sort of co solve for the best possible solution on those two dynamics and may have some impact in the amount of cash that shows up today, but if there was less cashing up today it will be offset.
And obviously by significantly more cash coming over time, and we'd like to further fleshed that out before giving particular guidance on it.
That makes sense and one last one from me and that's.
What are you hearing from Goodbye the administration or from the you know from the Democrats in terms of timing of when we might see additional and additional ITC extension or and maybe some of the other some of the other initiatives or thinking about I mean battery tax credits, perhaps tax credit refund ability et cetera.
That's a great question I do think it is more likely to be in the second half.
There are obviously a lot of different ways. These sorts of bills can move forward and they can move forward and spending bills infrastructure bills dedicated bills.
And if you use the bill that's in front of you rather than the Bill you want.
So I think like we've often said when it comes to predicting federal policy, it's difficult to.
And to make a prediction based on any particular piece of legislation and any very discrete moment in time, but we do definitely do you think that you know over the next.
Three to 14 months Theres, a really good possibility of some interesting developments.
Okay, great. Thanks, guys.
Okay.
Thank you. Our next question today is coming from Brian Lee from Goldman Sachs. Your line is now live.
Hey, guys. Thanks for taking the questions good afternoon.
Maybe first off just a clarification because I know you're changing some of the naming conventions and different things based on the release, the 20% to 25% growth.
Our targeted and install capacity for 2021, that's off of the 630 megawatts in 2020. So you know roughly low to mid 700 megawatt.
New growth and install capacity for 'twenty, one just wanted to clarify if anything has changed and that convention.
Yes, Brian.
Correct and the 20 to 25 is off the 603 baseline.
Okay, great and.
And so you haven't changed that great and then I guess second question related to that is you know maybe my math is wrong or Oregon and might have to maybe convert you, but you mentioned and 700 or greater than 700 million of value generation against.
And this over 700 megawatts of new subscribers in 'twenty and 'twenty, one and so on a dollar per watt basis. I know you don't want to stick with that convention, but it's less than a dollar or would seem to be around that range why would that be falling given you know the cost synergies that are being raised here. The new P V five versus D V. Six convention again, maybe I'm missing something here.
You did about 23 year and for Q.
And so wondering why that number might be coming down in 'twenty one.
Yeah. Good question, Brian. So first we're providing full year guidance year on aggregate margin dollars and and we think that total value generated a more than $700 million is a really strong result.
More than our Q4 results annualized which seasonally Q4 is tends to be our best performing quarter of the year.
2020 also had the benefit of sort of full a full year of <unk> 30 per cent ITC from our safe Harbor and investments.
And so you've got some shifts there.
Honestly, there is a range of outcomes, there on volume and that and.
And we're saying more than more than 700 million. So also a range of possible outcomes are above that.
We're also seeing them.
And acceleration and and total growth here and moving to $20 25 per cent year over year performance, which will be one of our fastest growing years and recent history and so part of this and you know where we're investing and some of that growth, while also being able to maintain a really.
Strong margin profile and then the last but I'll note is that the 20 to 25 per cent is total total megawatt growth.
But when you turn it into a per customer the mix between lease and cash loan may move around the mix across different channels and move around a bit too so really thinking about it on a on a per a per subscriber basis, not a not a per customer basis. If that's helpful.
Okay.
Yeah, Okay. So that just to put a fine point on it but the calculation would be debt and it would not be under a dollar a lot it would not apply under a dollar per watt.
It won't come out under a dollar a lot okay and maybe on that you did 9000 and you know a little over 9000 per subscriber and Q4 is that I might have missed it during the early part of the call but is there a guidance range for <unk> is at 9000 and through the balance of 'twenty. One is it is it going up to 10, what what number or range should we be thinking of.
For per subscriber value generation.
Yeah, no we didn't provide any color on the per subscriber amount, but but rather the aggregate dollars of margin generated which we think is really the best way to think about it.
And that.
Because of the timing of realization and some of those synergies as well as the natural seasonality that we have debt.
It will be lower than the average and the first half a little bit higher than the average and the second half and.
And accelerating and especially as we see those synergies are realized throughout the year.
Okay. Thanks, a lot I appreciate the color I'll pass it on.
Thanks, Brian.
Thank you. Our next question today is coming from Mark Strouse from JP Morgan Your line is and our lives.
Yeah. Good afternoon, and thank you very much for taking our questions.
Just following up following up on Brian's question, there and kind of more longer term on the the value per subscriber.
And under P. V. Six you had talked about the day $8000 per household.
And growing from from different buckets.
Cost synergies moving and grid services.
Storage.
Which I think in the past you had talked about that number.
Getting somewhere in the low to mid teens over time now under P V five and a little bit higher.
Starting point from four Q with over 9000.
Just curious if you can give an update on that bridge.
Yeah. So a couple of things I'll note here that as I mentioned.
Brian there.
Q4 tends to seasonally be are our highest performing quarter of the year on a got it.
On margins so.
Not the direct linear and point to extrapolate from but but definitely proud of the improvements, we made there and and being above $8500 or.
And we're around $8500 under the prior methodology that as we move to PV five as I mentioned that has positive impacts and then the inclusion of.
Yeah. These non capitalized costs that didn't and that included previously which is more reflective of our direct businesses. Those are all really incurred on outside bring that number back down a bit I think.
The walk from there.
We won and I believe that we're able to continue to hold really strong margins here, while also investing and accelerating our growth at scale. So we're now providing guidance on growth that's.
Higher than what we had previously estimated.
And so some investments there and continuing to invest in.
Brand and technology and <unk>.
And from the back.
Long term I think also the other things we've talked about continue to hold quite well so as we deploy more batteries into the mix. You know those are margin accretive for us the grid services opportunities also continue to be margin accretive as we have and win more agreements and deploy contracts there.
And then cost synergies as well and those will be heavily realized throughout 'twenty and 'twenty. One here. So certainly expect.
You know our year end 2021 margins to be better than the average year and exiting and.
Continued at a really strong position.
Okay. That's helpful. And then just a quick follow up to them and the.
The vivid and synergies at 120 now instead of 90, just confirming those are still are entirely cost synergies are.
And then if so can you just give a bit more color and sort of what's driving that.
Yeah, Yeah. So those those are cost synergies that we're referring to here.
And as we dug in deeper and now have you now.
Going on almost five months of integration under our belts.
And we're able to.
Get a lot more confidence and what we're gonna be able to deliver and we saw improvements really up and down the entire cost stack. There are sales operations, G&A and definitely a bit more and some of the corporate overheads.
And then also our higher growth expectations for 'twenty, and 'twenty, one and provide additional leverage against fixed costs and and some of our negotiations that are taking place to to drive more cost synergies. So seen it sprinkled across but Oh, you know what.
And happy to give any update here from 90 up to 120.
Okay I'll take the rest offline. Thank you.
Yeah.
Thank you. Our next question is coming from Stephen Byrd from Morgan Stanley. Your line is now live.
And good afternoon, and thanks for taking my questions.
And of course.
Just going back to the the questions around federal legislation and we're fairly bullish about storage getting it's getting a separate tax credit would you mind just talking a bit further just sort of the impacts them whether it be from the customer side in terms of adoption rates because I guess already you know the demand appears to be very high Lynn as per year.
And your commentary, but just would you might just try and little more color. If we did see a standalone tax credit for storage. How would you sort of think about that impacting your business I presume that the value per customer could so the net subscriber value guests could could go up but would you mind just talking further to that.
Sure and let me, let me up and with so we.
And do you believe that the growth rate of a 100% installed. This year is we will we will be easily able to achieve and and from a demand standpoint. It would be even higher is this we are we are absolutely seen and you know some battery constrained I think that's and that's.
Anybody with and semiconductor short edge and just you know manufacturing generally and you know so well.
We do think that we're well positioned given just the competitive environment with a long term contracts that we have and with the fact that you know supplier the U S.
And you know that the park.
Later, and that's going to put out and you got.
And long term and order profile, but you know what.
What we've really seen that that because of day constrained and.
And supply the battery prices to the Yankees and.
Really haven't dropped to match, where the input prices are so you know and the short term and.
I think that demand from Irene <unk> with.
Far exceed 100 per cent growth, but you know even if.
The challenge really is we need to get more providers into the mix, which I think we will but I think you know that's not a.
And next quarter or two.
And issue a it'll take a few quarters, so that day to happen and that'll be prime to really unleash and.
Growth I think as we mentioned in the call and Texas, just as one kind of early anecdote and it wasn't.
And that traffic and increased 350 per cent just overnight just to give you some indication of.
What we're seeing on the ground.
The debt, that's very helpful and I guess stepping way back over a multiyear period of time, let's put the constraints on storage decide which and it was as easy to say and I know there are a lot of practical issues, but as you think about the importance of storage over time.
What do you think is likely to be kind of the consumer preference for storage and you've talked a lot and the past about attach rates I just want to make sure I'm thinking.
And over multi year period of time, what would it what kind of trends are you seeing there in terms of likely adoption rates I'm I'm guessing very high but just to make sure I'm sorry about that correctly. They are very high at all it'll it'll rollout, but I bet, you know different geos geographically based on just local value proposition and.
And in places like Hawaii, or California, or Northern California.
80 plus percent.
And you know and and you know places where there relative to latency issues and are really high power prices and these type rates. So that will drive very high attach rate. It is our belief that as you can get the unit cost down to you know four or $5000 and.
And you know it can be pretty ubiquitous because if you you know the early indications around how much revenue you can get off the grid services and $2000 plus you know the net kind of outlay for that battery of just a couple of thousand dollars, we think will be exceedingly attractive for that and the benefits that it brings for resiliency and.
You know R. R.
Internally.
And that.
Pretty much every single one of our sources should have battery attached to it and you know over the medium term.
Yeah, that's helpful and the data from the grid and places like Texas, certainly does seem to reinforce that for you and that's all I had thank you.
Thank you.
Thank you. Your next question is coming from Tristan Richardson from true of Securities. Your line is now live.
Hey, good evening.
The opportunity for questions. Just a quick question with respect to your comments on activity and Texas.
Should we think of that opportunity near term is primarily a storage Standalone service offering I think we generally think and Texas is up.
Our low cost retail power state is that still generally the case or can or should we generally expect penetration to accelerate there.
Oh, you mean and the stuff that solar plus battery.
Right.
Yes, I would I would no I believe that it makes more sense to per bed.
Battery. So you know just to use debt and example, we had many you know multiple customers, who had who had multi day outages and so the battery was able to run through the night and then recharged then I stay with solar and so we had and well you know customer and to lock power and and uninterrupted for 50 hours.
So you want that the solar aspect to.
And you know further and further recharge ability and and you know the pricing on the solar piece, it's really quite competitive and I think we'd sell debt so that cash.
Cash and 11 tenths a kilowatt hour.
And in Texas and.
Already competitive with many of the traditional rate plan plus the fact that it's a fixed price.
And we'll also be that much more attractive now given that you know people, who really were you know so really felt the pain.
Pass through variable rate plan.
That's helpful. And then just with respect to the weather in Texas.
Could we see anything from a disruption perspective to the downside whether it just be.
Temporary outages or.
I know the installed base is relatively low there, but anything that we could expect to see disruption wise and the first quarter.
No.
And that's bad.
Uh huh.
Resilient and even if you look back to and he may remember that's more than I do but even with Super high winds and hurricane Andy I mean, we had them zero.
Maintenance issue.
And this is that and maybe just to expressly stated.
None of our customers are on floating rate plans and we have no exposure as a company to wholesale power rates as well.
Yes, correct and that's helpful.
Thank you guys very much appreciate it.
Yeah.
Thank you. Your next question today is coming from Eric Lee from Bank of America. Your line is now live.
Hey, good afternoon, and thanks for taking the question.
So just wanted to touch upon the growth guidance again, so with 20, 25% growth and megawatts for full year 'twenty. One could you one talk about your expectations for broader resi solar market growth and to your long term annual growth expectations is that still 15 to 20 per cent as we step in.
And to 'twenty two.
Great question, I think that debt this year and it's so dynamic just given you.
You know the Covid situation and net cost of capital and new entrants and things that I think it is our and so I think we believe it's too early to call what the market growth rate will be we feel confident and and our position and that will be a share taker and we feel confident that we're able to head into 'twenty and 'twenty five per cent grew.
Growth. So I think that those are the statements we would make on that I do I do think that you know one of the other things. We're very encouraged by is that this growth rate is clearly and acceleration for us and we're doing it at all.
Large scale now.
And you look at the scale of our.
Sunrun and where you know twice as large as it's been.
Next competitor and.
Doing and integration and yet were accelerating growth, which makes us gives us a lot of confidence that you know potentially that the growth rate could exceed what we had put and historically.
But you know too early and I've called out right now.
Got it and for storage just to clarify on expectations, how many price box units would your greater than 100% growth guide equate to is greater.
Greater than X units.
And also on starch mhm.
We haven't I'll, let you clarify first Oh sure we've had.
And we disclosed that we have 16000 and operation, but we have not given that last year specific number.
Okay, and the 16000 and are installed our accumulative.
Gotcha and then.
And just in terms of I know you mentioned equipment supply constraints for storage, but how much of a constraint is the longer lead times to install storage. Currently we're hearing that it's taking a good amount and longer too.
And installer to get the storage and and that's moving some installers to prioritize.
Solar only.
Yeah, I think that's a thank you for pointing that out I think I think that's why we really like.
Have a nice channel.
And our market strategy I think it's we we have been very effective and I think we're the only company that has both.
Alerts as well as our own direct sales and installation work force I think you know part of part of being able to have that direct sales and installed channel and fast.
Able to train your people and get up the learning curve and you know suffer maybe a few growing pains that happen and that's I think why we are off to such a fast start on storage versus and the long tail. So yes, it's a more complicated product yeah. It does you do you have to educate them and.
You have to educate permanent and departments and but we've already you know then and through that which is why again when we win battery constrained Lynn.
And is that when prices come down to where they should be we believe really primed to accelerate our lead there.
Got it and one last question from my end and I'll take the rest offline.
But just in terms of a day shift that you talked about towards expanding our customer advantages with over 550000 customers to upsell to know what is your timeline for pursuing these upsell opportunities is that something that we should expect to see and the middle of the year.
And in terms of specifically going back and battery operating batteries or or other thing yeah batteries and other things that you've mentioned yeah.
You know that and certainly an opportunity and we have not prioritized.
That today, we've prioritized new and bright box installation one because you know again there is some constraint and its just way more efficient to do it all at the same time and because we believe the technology is improving so much that the retrofit option and that'll be available to consumers will be you know much.
Much better.
And the coming quarters.
So we do expect that that'll be a part of our plan. This year, but you know that retrofit, but it has not been that corporate priority.
And so far.
Got it thank you.
Thank you.
Thank you as a reminder, that starwood and replace and good question queue. Our next question is coming from Colin Rusch from Oppenheimer. Your line is now live.
And there it's Joe on for Colin and circling back on the policy discussion are you seeing any potential for a cash and move of tax credits that could potentially be included in any of the federal spending bills. This year.
Great question and this is Ed. This is a topic that some have been lobbying intensely on and we've not really been part of that effort.
And I would be surprised.
And if that sort of policy is enacted into law, but it's a it's certainly and it's certainly possible.
Got it.
And then on the new geographies and it sounds like the Texas rollout is going.
Going really well does it does it makes sense to move into any additional geographies looking into 2021.
Good question and I do think you will see that and then.
And the ones, we announced this quarter again, where San Antonio and Miami, where to you expansion that that we have recently announced and.
And just as you continue to you know at.
And and fact that utility rates are continuing to rise and the fact that our costs continuing to decrease more and more markets are opening up and getting competitive. So I do think 'twenty 'twenty, one will be a year, where you will see more and new market expansion than we thought previously now are you know the growth.
And targets that we put out there do not require us to you know and he sort of massive geographic expansion and its more and sort of same stores, so that would be incremental.
To debt stayed the growth Okay got.
Got it and if it gets.
One more and on the storage side.
Are you seeing anything on it.
The technology development front that would enhance the virtual power plant capabilities.
Yeah.
Since the fact that the grant keeps going down.
That's the that's the primary one I mean I you know I think it's just a U S.
As we announced you know earlier and earlier early in the quarter or the the program for example, that we announced and southern California, Edison and I mean that is I think born out of the.
Rolling blackouts and so you know I think there's just more regular regulator interest and more necessity for you know for utilities to be coordinated to be able to dispatch the battery at and you know amendment no no that's.
And then Greg attacks.
Great. Thanks, so much.
Thank you.
Thank you. Your next question today is coming from Philip Shen from Roth Capital Partners. Your line is now live.
Hey, guys. Thanks for taking the questions.
From an absolute dollar standpoint, how much grid service revenues do you think do you think you can generate in 'twenty, one and then how do you think that trends as we get into 'twenty two and three.
So the you know that we've announced 12 grid services programs, which we believe we're far and we now are far and away the bill.
Leon and <unk>.
And we've really been working on Hey, how do we open up as many grid services markets and as many geography and we can open up you know so that we're able to get access that sort of like we're kind of building the foundation and building and building.
And building the market the programs that we've announced for the most part and then you know in terms of just our at our scale and now they're not huge contributors to it and you know the.
Near term financial results. So when they do become big contributors, which we expect they will and we will definitely start to provide more color there, but for now it's really a and you know, it's it's still more and circuit and I mean, I would say beyond pilot because we have.
And just.
And the Manhattan assets committed, but it's still and it's and it.
So the early innings.
Okay, Thanks, Lynn and as you think about.
Uh huh.
Let me clarify and let me clarify clarify.
Clarify one point that because you know and the task we have talked about we have talked about an additional $2000 per customer being directionally and you know the value that we think will net to sunrun aster and he sort of customer and Turkmen or any sort of other fees that you have to pay to operate and not still has.
No change there has been net changed that outlook.
Okay, Great and just a zone.
And question of refinement.
In terms of your contracts that you have with your clients.
Lease PPA contracts, what percentage of those have the capability to allow you to per.
Provide grid services and generate that revenue are we talking about half of the contracts or the vast majority because you guys have definitely demonstrated leadership here and want to just understand that over time, you know how does this ramp and and if you have that legal capability too.
Is that box checked for example to give you the ability to ramp up nicely.
And I.
Tom maybe you were I wasn't quite following the question was.
Yeah, I think I think the question is is without without cost without express subsequent customer permission.
About what percentage of our customer contracts.
Would allow for enrollment and grid services.
Yeah.
And I think the answer to that.
Is certainly over the last several years.
On the on.
On the legacy Sunrun side of the house they all have.
We still feel like you know working with our customers is maybe the better course of action, but it's a very very material number of customers.
Correct great.
Okay. Thanks, guys I'll pass it on thanks, though.
Thank you we've reached end of our question and answer session, let's turn the floor back over to management for any further or closing comments.
Alright, well, thank you everybody and well talk to you again in another quarter and take care.
Thank you and that does conclude today's teleconference. You may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.
Okay.