Sunrun Inc. (RUN) successfully pursues the sales of solar-powered residences on a long-term installment plan. Even though the segment’s share of revenue is growing, there are crucial features investors should be aware of.
The challenge of increasing sales of solar panels for homes has proven to be difficult due to the high price of the systems, which run from thousands to tens of thousands of dollars for bulky, stand-alone homes. California requires all new homes to have solar panels, but many users can find their electricity bills are reduced only with small systems.
It was solved by renting the panels from a stockpile for a short period before transferring ownership to the house owner. In a nutshell, the system is installed at no cost to the client and is then leased back to the customer for 20 years, at which time it becomes the owner’s property.
Convincing consumers that a solar plant is still valuable after 20 years was the most challenging part of this business model. Solar company Sunrun was able to cut their costs by citing panels with a 25-year guarantee and a pre-paid solar power plant’s advantages. A further factor for both parties is the availability of tax incentives for the use of green energy and its return to the grid.
This business model turned out to be successful, despite criticism from skeptics, which indicates that consumers trust modern renewable energy technologies. From its 20-year solar rental program, Sunrun generated net assets of $ 2.54 billion out of a total of $ 4.17 billion.
Sunrun’s decline in crediting costs can affect the Sunrun Inc. negatively, as some potential customers switch to more traditional, faster-purchasing panels. As a result, consumers are inclined to prefer digital loans since they come at a lower cost. Only the house’s early sale and its energy storage issue remain unsolved. Rather than renting batteries, loans are the preferred option for purchasing expensive batteries. Additionally, a solar system paid by loans is a definite selling point, whereas a system rented for another ten years, on the other hand, is an obstacle.
More than 3.94 million Sunrun Inc. (RUN) shares were traded Friday at a closing price of $51.60, representing a dollar volume of approximately 3.94 million. The shares have shown negative weekly performance since 04/09/21, with a loss of almost -3.77%. Public ownership of common shares stands at 192.99M, of which 189.78M are traded.