What's Happening?
Sunrun, a leading U.S. installer of residential solar and energy storage systems, has reported a significant increase in participation in its virtual power plant (VPP) programs. According to the company's third-quarter investor presentation, over 106,000
customers are now enrolled in home-to-grid VPP programs, marking a 400% increase from the previous year. Sunrun's VPPs leverage networked energy storage capacity, which currently stands at 3.7 GWh across more than 217,000 customer-sited solar plus storage systems. The company aims to expand this capacity to 10 GWh by 2029. Sunrun's strategy includes a shift to a 'storage-first' approach, driven by changes in net metering policies in key markets like California. This approach has resulted in a steady increase in battery attachment rates for new customers, reaching 70% in recent quarters.
Why It's Important?
The growth in Sunrun's VPP participation highlights the increasing role of distributed energy resources in enhancing grid flexibility and reliability. As more customers adopt solar and storage systems, VPPs can provide significant value by dispatching stored energy during peak demand periods, reducing reliance on traditional power plants. This trend supports the broader transition to a cleaner energy grid and aligns with efforts to decarbonize the electricity sector. Sunrun's emphasis on leasing subscriptions allows it to monetize installed equipment through federal clean energy investment tax credits, providing financial stability amid potential market contractions. The company's focus on subscriber value and operational efficiencies further strengthens its position in the competitive solar market.
What's Next?
Sunrun anticipates continued growth in VPP enrollments and aims to expand its distributed power plant capacity. The company is focused on maintaining positive volume growth and margin expansion despite potential challenges from the expiration of federal tax credits for customer-owned solar systems. Sunrun's strategy includes attaching storage to existing solar-only customers, which is expected to drive long-term value creation. As the U.S. solar market faces potential contractions, Sunrun's approach to prioritizing subscriber quality over quantity may help mitigate risks and ensure sustainable growth.
