Sunrun adds 30,000 customers, 213MW of solar in Q1 2022 as it looks to protect itself against US headwinds

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Sunrun said it was taking measures to protect itself from inflationary pressure in the US solar sector by sourcing modules from suppliers unaffected by recent legal challenges. Image: Sunrun via Facebook

Leading US solar installer Sunrun added 29,463 customers in Q1 2022, a 20% jump on the same period last year, with management now expecting installed solar capacity to be 25% or greater for the full year 2022, up from the previously forecast 20%.

In its Q1 2022 financial results, the company said customer orders were up 39% year-on-year and that it had taken a number of measures to insulate itself from upcoming headwinds in the US solar industry. It did, however, report a net loss of US$87.8 million and experienced a US$0.42c fall in share price, while increasing its loan facility to aid in equipment stockpiling.

The California headquartered company installed 213MW of solar PV in Q1 2022, bringing its total networked solar capacity to 4.9GW. Looking to Q2, management expects installed solar capacity to be in the range of 235MW-245MW. During Q1, Sunrun added 29,463 customers, bringing its total customer count to 689,774 as of the end of March.

Q1 figures were on par with customer additions last quarter, when it added 30,000 (a 28% year-on-year increase) and installed an analyst expectation-beating 220MW of solar. Buoyed by its install performance, Sunrun’s management have increased its installed solar capacity outlook and now expects growth to be 25% or greater for the full-year 2022 (previously 20%).

Sunrun said its customer orders were up 39% year-on-year, with Mary Powell, Sunrun CEO, stating on a call with analysts that, “Our customer orders grew 39% compared to last year, outpacing our still-impressive robust installation growth of 27%. These strong demand trends resulted in expected growth in our backlog of customers”. Sunrun entered 2022 with a record backlog of 57%.   

Meanwhile, the company has taken steps to mitigate the supply chain crisis currently buffeting the US solar sector. Referencing the anti-dumping and countervailing duty (AD/CVD) case in the US, Sunrun said it was “in a strong position to navigate a dynamic supply chain environment”.

It has increased its inventory by US$49 million in Q1 to US$556 million (an increase of US$273 million since the start of 2021) to maintain high levels of component supply, particularly solar modules. Sunrun said it has over 100 days of supply on hand of modules as of the end of Q1 and is buying modules from a diversified base of manufacturers.

Although branding the investigation “misplaced”, Sunrun said it was making efforts to “further diversify its supply chain and arrange procurement from unaffected countries” while also entering into several supply agreements “for hundreds of megawatts of solar modules from manufacturers unaffected from the investigation”.

“Over the last month we successfully implemented meaningful pricing changes to offset higher material and capital costs, and continue to see very strong demand as utility rate inflation exceeds 11% across the country,” said Tom vonReichbauer, Sunrun’s CFO, referencing legal proceedings and inflationary pressure which have cause the cost of utility-scale solar in the US to soar.

In its last financial result, Sunrun had warned of factors such as California’s contentious net metering changes, which have yet to be finalised, various proposals in Congress regarding the investment tax credit (ITC) and a volatile interest rate and inflation environment as reasons for uncertainty moving into 2022, with the AD/CVD investigation now added to that list.

In January, it upsized its loan facility to US$425 million from US$250 million. It has now increased this again to US$600 million. “The new facility expands the borrowing base to support more efficient inventory financing, also at a higher advance rate, while maintaining the same borrowing costs,” Sunrun said.  

The company posted a net subscriber value of US$7,141 (subscriber value of US$37,004 versus a creation cost of US$29,863) in Q1, with a total generated value of US$151.4 million. Its gross earning assets at the end of Q1 were US$10.2 billion, while net earning assets were US$4.5 billion, including US$863 million in total cash.

It recorded an annual recurring revenue of US$883 million with an average contract life remaining of 17.4 years. “Our subscribers generate significant, recurring revenue with most under 20-year or 25-year contracts for the clean energy we provide,” CFO vonReichbauer said on a call with analysts.

“Despite continuing to grow our backlog of customers, and the effects of Omicron early in the quarter, we generated sequentially higher net subscriber values and expect margins to increase meaningfully throughout the year,” added vonReichbauer.

Analyst commentary taken from Seeking Alpha.

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