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Rooftop PV's potential 'unappreciated': Sunrun CEO

In spite of the Republicans’ sweeping electoral victory on Tuesday night, distributed solar is winning the regulatory battles it needs to in the US, teeing up the market for long-term annual growth above 20%, says Sunrun chief executive Lynn Jurich.

With Sunrun’s stock price having been cut in half since its August 2015 IPO, Jurich took advantage of the company’s conference call Thursday to argue that the bearish investor sentiment plaguing rooftop solar is misplaced.

California-based Sunrun is the second largest installer of US rooftop solar, trailing market leader SolarCity.

“Some of the most important developments supporting rooftop solar over the long run are being unappreciated by many observers,” Jurich said.

While questions remain about how President-elect Donald Trump’s plan to boost the US fossil-fuels sector could impact large-scale renewables, for rooftop solar “state-level regulations are really what matters”, Jurich says – and there the landscape is “evolving positively”.

“Market leaders like California and New York are laying the regulatory foundation for the value provided by distributed solar to enable a lower-cost modernised grid.”

Although Florida on Tuesday voted to put Republicans in the White House and US Senate, Jurich notes that Floridians also shot down a proposed amendment to their state constitution that would have imposed new fees on rooftop solar – even after the state’s power utilities spent more than $20m supporting the measure.

And beyond politics, the rooftop solar market is benefiting from rapid technology improvements and dramatic cost declines.

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Earlier this year California-based Sunrun launched a combined solar and battery product, known as BrightBox, and in October it announced a “partnership” that will see it using LG Chem’s RESU lithium-ion batteries in its BrightBox system.

“We’ve far surpassed our initial forecast of bookings for BrightBox,” Jurich says, claiming the company has notched “hundreds of orders” since May. “And the terms of our supply agreement with LG for batteries would have been unimaginable just a few quarters ago.”

Sunrun estimates that only 20% of “solar-ready” homes in its core market of California have a PV system today, leaving a big market opportunity ahead, while ongoing PV price declines paired with rising utility rates will steadily unlock new state markets.

Market growth of 20% per year for a decade would still leave only 19% of single-family US homes with a solar system, Jurich notes, less than levels seen today in countries like Australia.  

Despite its long-term potential, the distributed solar industry has fallen on tough times in the US, suffering from a variety of factors – including low natural gas prices, the opposition of some big utilities, and investor scepticism about a business model that emphasised rapid growth over near-term profitability.

Sunrun is far from alone in experiencing a dramatic fall in its share price in 2016, with SolarCity stock down 61% this year and Vivint Solar down 70%.

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But shares of Sunrun shot up more than 7% in after-hours trading on Thursday, to $4.71, after the company raised its full-year guidance modestly to 285MW, from previous guidance of 270-280MW.

Unlike larger rival SolarCity, which installed less capacity in the third quarter of 2016 than last year as it reins in its operating costs, Sunrun’s quarterly deployments soared 43% year on year, to 80MW.

Sunrun reported a net loss of $75m in the third quarter, compared to $72m in the same quarter last year.

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