A One-Stop Shop for Residential Solar Energy Solutions
Sunrun, founded in 2007, pioneered the concept of “solar as a service”. The company has grown rapidly to become the second largest operator of solar energy systems in the US. The company’s business model focuses on providing full-lifecycle solar energy system installation service to residential customers. The company employs an effective multi-source business model along with customer-oriented operations to provides hassle free access to a clean energy alternative. Sunrun’s business model addresses all the key challenges in a home owner’s journey to install a solar energy system – making an informed purchase decision, identifying the appropriate financing strategy, and finding a hassle free installation and lifetime maintenance service.
Business Need: Educate the Customer; Action: Web Design and Operations
Sunrun’s typical interaction with the customer begins online. Sunrun’s website provides information to customers in a simple and coherent manner, helping them learn about solar technology and the different service models offered by Sunrun1. In 2015, Sunrun used some of its freshly raised capital to acquire Clean Energy Experts (CEE), considered by many as the best lead generator in the solar industry2. Sunrun also directs customers to third-party sites such as EnergySage, where customers can get “solar loan” quotes, and compare the costs and benefits of owning vs. leasing the system3. The company makes every effort to provide the best financing options to its customers. A typical customer may choose between buying the solar system outright, purchasing the system through a solar loan, entering into a lease or solar power purchase agreement (PPA) with Sunrun. Although lifetime savings, which include federal tax credits, are lower under a lease or PPA, such arrangements allow the customer to transfer ownership risks to Sunrun. Sunrun’s website explains the trade-offs between the options clearly1.
Business Need: Custom Solutions, Nimble Operations; Action: Data Analytics and Multi-Sourcing Strategies
Once a customer decides to proceed with the installation, Sunrun’s BrightPathTM software uses satellite images and its database of thousands of solar panel designs to find the best fit. Sunrun has developed a network of installation teams consisting of employees and licensed partners, who then visit the home to evaluate the design selection. Only after this step would Sunrun pick the appropriate solar panel, which would generally fit into four distinct types – monocrytalline, polysilicon, thin film silicon, and building integrated photovoltaic panels (BIPV)4.
Utilizing software analysis in design and sourcing decisions provides Sunrun with a significant competitive edge. First, Sunrun is able to provide custom solutions for each house quickly. Second, instead of being fully invested in a particular photovoltaic technology, Sunrun is able to multi-source the best technologies for a particular application, and maintain a nimble business model that can adapt to changes in the business environment. For example, the 30% federal tax credit for solar panel installations may be reduced to 10% by 20175, and utilities continue to push the government to overturn regulations that require them to pay customers for the excess electricity “dumped” by solar panels on to the grid6. If these changes come into effect, customers may need to invest in energy storage devices to improve the lifetime economics of their solar systems5. Sunrun’s operations and business model are well suited to provide solutions quickly. As needed, the company could source the best energy storage solutions from multiple suppliers, and put its network of installation teams to work. Simultaneously, the finance team could work with customers to fund the additional investment, and also develop payment options that allow for leasing the energy storage devices.
Business Need: Regulatory Compliance; Action: Dedicated Teams working for Customers
Sunrun’s fully-integrated service also includes dealing with the government. While the installation teams integrate panels into a solar energy system, a separate team engages with the government to obtain all the necessary permits. The team also takes on the responsibility of collecting tax credits, which are passed on to the customers through the all-inclusive price charged by Sunrun.
Providing a fully-integrated installation service at an all-in price has been very effective in increasing customer acceptance of a complex technology. Sunrun’s business model and operations are designed to address each customer pain-point. The company has expanded operations to cover 15 US states, and it very recently reached its 100,000th residential customer7. Adaptability would be key to Sunrun’s growth, as each new state presents new regulatory challenges, and federal policies on clean energy continue to evolve.
- “Sunrun solar plans and services.” Accessed December 8th, 2015. http://www.sunrun.com/our-plans-and-services.
- “Sunburn.” Accessed December 8th, 2015. https://en.wikipedia.org/wiki/Sunrun.
- “How much can you save going solar?” Accessed December 8th, 2015. https://www.energysage.com/solar/cost-benefit/savings-with-solar.
- “Cookie cutter are for cookies.” Accessed December 8th, 2015. http://www.sunrun.com/why-sunrun/our-approach.
- Hoium, Travis. “Who wins if solar subsidies plummet in 2017?” Accessed December 8th, 2015. http://www.fool.com/investing/general/2015/12/06/who-wins-if-solar-subsidies-plummet-in-2017.aspx.
- Roerink, Kyle. “For Warren Buffett, a house divided on climate change.” Accessed December 8th, 2015. http://m.lasvegassun.com/news/2015/dec/04/for-warren-buffett-a-house-divided-on-climate-chan/.
- “Sunrun surpasses 100,000 customers.” Accessed December 8th, 2015. https://blog.sunrun.com/sunrun-surpasses-100000-customers/.