Is Sunrun A Legit Company?

Sunrun is a leading provider of residential solar, storage and energy services in the United States. The company designs, installs, finances, insures, monitors and maintains solar energy systems for homeowners, providing them with clean, affordable solar power with little to no upfront costs (Source).

Despite Sunrun’s success and position as an industry leader, some have questioned the legitimacy of its business model and practices. Concerns have been raised around its financial performance, lawsuits filed against the company, and complaints from some customers. This has led many to ask – is Sunrun’s offer of affordable, hassle-free solar energy too good to be true?

This article will provide an in-depth look at Sunrun’s history, business model, leadership, partnerships, customer reviews and past controversies. The goal is to objectively evaluate the company’s track record and determine if its services and offerings live up to their promises, or if there are legitimate reasons for consumers to be wary.

History and Founding

Sunrun was founded in 2007 by Lynn Jurich and Edward Fenster https://en.wikipedia.org/wiki/Sunrun. The company pioneered the concept of home solar service plans, which allowed homeowners to go solar for little to no upfront cost by leasing the solar energy system from Sunrun rather than purchasing it outright.

Jurich served as Sunrun’s CEO, bringing her background in clean energy financing. Fenster served as executive chairman, contributing his expertise in solar energy and public policy. The two founders aimed to make rooftop solar more affordable and accessible to the average homeowner.

Sunrun’s initial business model involved leasing solar panels to homeowners and selling the solar energy generated back to the homeowner at a discounted rate compared to the utility. This allowed more homeowners to utilize solar energy without high equipment costs. Sunrun owns, installs, maintains, insures, and monitors the solar panels while homeowners pay a predictable monthly amount for the solar energy produced https://dcf.fm/blogs/blog/run-history-mission-ownership.

Business Model

Sunrun operates primarily on a subscription-based business model, where customers pay a monthly fee to lease or finance solar panel systems installed on their homes. The company sells the electricity generated from these systems to the homeowners at a rate discounted compared to local utility rates (Source).

Sunrun offers a few key products and services:

• Solar lease – Customers pay no upfront costs and lock in a monthly payment for solar power.
• Solar loan – Customers own the system but finance it with a solar loan from Sunrun.
• Solar power purchase agreement (PPA) – Customers pay for the solar power produced but don’t own the system.
• Solar installations – Sunrun handles the permitting, design, and installation of the solar system.

The company’s target customers are homeowners interested in going solar to reduce their electricity bills and increase sustainability, but who may not be able to afford the upfront costs of a solar system purchase (Source). Sunrun focuses its marketing and operations in states with high electricity rates and favorable policies, like California, New Jersey, and Massachusetts.

Growth and Expansion

Sunrun has experienced rapid growth and expansion since its founding in 2007. Some key milestones include:

In 2012, Sunrun expanded to the East Coast, launching in New Jersey, Massachusetts and New York (Sunrun Reports First Quarter 2023 Financial Results).

By 2015, Sunrun was operating in 15 states and announced it had surpassed 100,000 customers (Sunrun Reports Second Quarter 2023 Financial Results).

In 2016, Sunrun acquired SolarCity, the leading residential solar installer at the time, for $2.6 billion. This acquisition allowed Sunrun to expand its reach and market share (Sunrun Reports Third Quarter 2023 Financial Results).

By 2021, Sunrun was operating in 22 states, Washington D.C. and Puerto Rico. The company now has over 600,000 customers and continues to expand geographically through strategic acquisitions and partnerships.

Financial Performance

Sunrun has experienced steady revenue growth over the past several years, with total revenue increasing from $477 million in 2018 to $1.6 billion in 2022, representing a compound annual growth rate of 34%. The company generates revenue primarily from customer agreements and incentives related to its solar energy systems. In Q3 2023, customer agreements and incentives revenue was $316.5 million, up 17% year-over-year (Source).

While revenue has grown substantially, Sunrun has yet to achieve consistent profitability. The company has posted net losses each year since 2018, though the losses have narrowed in recent periods. Net loss in 2022 was $115 million, compared to a net loss of $550 million in 2018 (Source). Improving gross margins on customer agreements have helped drive the narrowing net losses.

Sunrun has generated positive operating cash flow since 2020, including $469 million in operating cash flow in 2022. The company’s free cash flow, however, has been negative as Sunrun continues investing heavily in growth (Source).

Sunrun’s stock price has been volatile but is up over 200% from its IPO price. The company completed its IPO in 2015 at $14 per share and now trades around $30 per share as of November 2023. Sunrun’s market capitalization stands at approximately $6 billion (Source).

In terms of valuation, Sunrun trades at a forward price-to-sales ratio around 3x, which is on par with solar industry peers. The company does not yet have positive net income to benchmark on a P/E ratio basis.

Leadership Team

Lynn Jurich and Edward Fenster co-founded Sunrun in 2007 and serve as co-executive chairs today. Jurich previously worked at a venture capital firm focused on clean technology and Fenster worked at a financial services firm before founding Sunrun. Together they have guided the company’s growth strategy as co-CEOs since the beginning (Sunrun).

Mary Powell serves as CEO, bringing experience from her time leading Green Mountain Power as CEO. Danny Abajian is the Chief Strategy Officer and oversees marketing, sales, and long-term strategic planning. Other key executives include CFO Jeanna Steele, Chief Legal Officer Chris McClellan, and Chief Operating Officer Paul Dickson (Sunrun Investor Relations).

The executive team has backgrounds spanning technology, energy, finance, and business strategy. Their combined experience has enabled Sunrun’s rapid expansion as a leading residential solar and battery storage provider.

Partnerships and Investors

Sunrun has partnered with several major companies and organizations to grow its business. According to Sunrun’s website, the company actively seeks partnerships with businesses that share its customer-centric philosophy and can help it scale operations and reach more customers.

One of Sunrun’s key partnerships is with National Grid, signed in 2019. Through this partnership, National Grid acquired Sunrun’s residential solar operations in Massachusetts, and the companies are working together to expand clean energy adoption in the state.

Other major partnerships include:

• Home Depot – Sunrun solar installations are available in Home Depot stores in 19 states.
• Vivint Solar – Sunrun acquired Vivint Solar in 2020 to become a leading home solar and energy services company.
• Mercedes-Benz – Partnership to provide solar power and energy storage to Mercedes me Charge customers.

According to Partnerbase, Sunrun also has over 10 channel partners that help distribute and sell its solar services. These include local solar installers, renewable energy companies, and HVAC providers.

Prominent investors in Sunrun include Credit Suisse, Paulson & Co., and Fidelity Investments. Sunrun has raised over $3 billion from investors since its founding.

Customer Reviews

Based on reviews on ConsumerAffairs.com, customers seem generally satisfied with Sunrun’s solar systems, though some have complained about high initial costs. Many customers praise the systems for lowering their energy bills. One customer said they’ve had “huge savings” since installing Sunrun panels. However, multiple reviewers said Sunrun’s systems come with a hefty price tag. One customer claimed their system cost $60,000 upfront. Others said financing can lower upfront costs but results in high monthly payments. Some customers have complained about poor communication and delays in issue resolution from Sunrun. According to BBB complaints, customers have been frustrated by lack of follow-through from the company after installation.

Lawsuits and Controversies

Sunrun has faced a number of legal issues and controversies regarding their sales and installation practices over the years. In 2016, a class action lawsuit was filed alleging the company used deceptive marketing and sales tactics to mislead customers into leasing solar panel systems that were larger and more expensive than necessary (Source). The lawsuit accused Sunrun sales representatives of overstating potential savings and not adequately disclosing contract terms.

Additional lawsuits have accused Sunrun of misleading consumers about the systems they were signing up for and not delivering what was promised (Source). Some customers claimed they were locked into long-term lease contracts even though Sunrun failed to fully install or activate the solar panel systems as agreed upon. While the outcomes of these lawsuits varied, they highlighted issues with Sunrun’s sales practices and customer service that have damaged the company’s reputation.

Sunrun has worked to improve its business practices and customer satisfaction in recent years. However, a number of customers still report difficulties getting out of contracts or resolving issues when systems fail or underperform. These lingering controversies point to the importance of carefully reviewing all terms and doing thorough research before signing any long-term lease agreement with Sunrun or similar solar providers.

Conclusion

After reviewing Sunrun’s history, business model, growth, financials, leadership, partnerships, customer feedback, and legal issues, the evidence points to Sunrun being a legitimate company overall. While no company is perfect, Sunrun has built a large customer base over 15 years in business, expanded successfully across many states, and maintains strong financials and backing from reputable investors. Some customers have raised concerns about high-pressure sales tactics and misleading claims, and Sunrun has faced a few lawsuits, but these seem limited compared to the hundreds of thousands of customers served. While pricing and quality should be closely evaluated, Sunrun’s legitimacy does not appear widely in doubt. The solar industry will continue evolving, but Sunrun has established itself as a leading residential solar provider that delivers working systems to most customers as promised.