Sunrun is crushing Tesla in the market for solar panels that go on your roof. A top exec revealed a key piece of the $2.5 billion company's strategy to widen its lead.

Benji Jones,Benji Jones

Feb 13, 2020, 20:48 IST

Sunrun

Sunrun is dominating the residential solar industry with help from a disaster-prone grid.

A little-known rival of Tesla called Sunrun is dominating the rooftop solar industry.
Sunrun deployed about 300 megawatts of solar in the first nine months of 2019, dwarfing Tesla's deployment of 119 megawatts.
A growing market for clean energy isn't the only driving force behind the company's success.
A top executive says the company's products are the answer to power outages and could even replace gas-fired power plants on the grid.
Click here for more BI Prime stories.

Before SolarCity was acquired by Tesla in 2016, it was the largest residential solar installer in the country.

Now, it's in the shadow of a little-known rival that has quickly dominated the business of putting solar panels on your roof, clinching the top spot.

The rooftop solar company Sunrun deployed about 300 megawatts (MW) of residential solar panels in the first nine months of last year, according to the company, while Tesla's numbers came in at just 119 MW. The situation was similar in 2018, when Sunrun put in 373 megawatts of panels, and Tesla did 326 MW.

"In a lot of ways, SolarCity ceded leadership when they were acquired by Tesla," Ron Pernick, the founder of the clean energy research firm Clean Edge, said. "Selling a car to a consumer and putting solar on the roof of a consumer's home should have been a good synergy, but I don't think it proved out that way."

Tesla did not respond to a request for comment for this article.

Click here to subscribe to Power Line, Business Insider's weekly clean-energy newsletter.

As the leading rooftop solar provider, Sunrun is riding the surge of consumer interest in clean and affordable energy. The company has a stock market value of about $2.5 billion.

In a conversation with Business Insider, Audrey Lee, the VP of energy services at Sunrun, revealed that Sunrun's products aren't just about access to renewable power for individual consumers. The company is trying to position itself as part of the solution to make the power grid more stable and reliable.

Its batteries and panels can keep homes powered during blackouts. They can also contribute energy or lower demand when there's a lot of need for power, helping replace carbon-emitting power plants off the grid.

Reuters

PG&E workers repairing damaged power lines

Sunrun and other solar providers win big in the wake of blackouts

Sunrun is, of course, aware that sweeping blackouts are good for its business. The company sells battery packs that can power a home for days, linked to its solar panels.

Following California's PG&E shutoffs last fall, Sunrun published a report that showed how its customers who lost grid power were able to keep the lights on for up to five or six days straight.

According to a company spokesperson, the proportion of new Sunrun customers in the Bay Area who bought batteries with their residential systems doubled in October, when the shutoffs reached their peak, from 30% to 60%.

"Especially given Public Safety Power Shutoffs in California, customers want resiliency," Lee said.

Last year, Bill Johnson, the chief executive of PG&E, told state regulators that power shutoffs - which can help prevent wildfires - could persist for a decade in California, the San Francisco Chronicle reported.

zstock/Shutterstock

Sunrun says 75,000 homes in LA equipped with solar panels and batteries could replace a gas-fired power plant.

75,000 homes with solar could replace a gas-fired power plant

Sunrun is also pitching itself as an answer to a stressed-out, dirty grid.

While Sunrun's solar panels are distributed among hundreds of thousands of homes, together they generate a lot of power.

"People often underestimate - because it's distributed - the amount of capacity that you could get from rooftop solar and batteries," Lee said. "It's quite significant what our contribution would be."

Last year, the company published a report showing that 75,000 homes in LA equipped with solar and batteries could replace one gas-fired power plant, owned by the municipal utility LA Department of Water and Power (LADWP).

"Instead of turning on a power plant in the early evening," Lee said, "the utility could ask our customers to use the battery instead of the grid and so that provides relief off of the grid and eliminates the need to turn on power plants."

Customers could also discharge the power in their batteries back to the grid, she says.

Sunrun works with its rivals

Lee says Sunrun is also positioned to help utilities - the very companies it's rivaling for business - manage energy demand without frustrating customers.

When energy demand is peaking, such as in the evenings or during hot summer months, some utilities will call on customers to adjust their thermostats, she says, or fire up old power plants that usually remain idle.

If those customers have solar, they could simply switch to battery power instead.

"If you call on the thermostat more than, you know, 15 times during the summer it gets pretty uncomfortable, right?" she said. "You get customer fatigue and that impacts customer comfort. The great thing about batteries is that you can just charge them every day without having any negative impact on the customer."

Even though utilities are competitors, Pernick says it's smart for Sunrun to consider them as partners. Still, there are challenges with the integration between home batteries and the grid, he said.

"The proof will be in the integration pudding," Pernick said. "There are ways to do it, but there are still issues. Theoretically, it does make sense"

Sunrun will announce its fourth-quarter earnings later this month. The company said on its third-quarter earnings call that it would likely deploy between 115 and 118 megawatts of panels in the last 3 months of 2019, meaning the company is poised to maintain its significant lead in the residential market.

This story is part of Business Insider's clean-energy coverage. Do you have tips about Sunrun or Tesla? Please contact this reporter at bjones@businessinsider.com or through the secure messaging app Signal at (646) 768-1657.