Saturday , August 8 2020

Sunrun may become rooftop behemoth

Bloomberg

Sunrun Inc, America’s biggest rooftop-solar company, is set to become a behemoth through its $1.46 billion takeover of a major rival, Vivint Solar Inc.
The agreement, subject to approvals, is one of the industry’s biggest, following Tesla Inc’s 2016 purchase of debt-plagued SolarCity, as well as the failed 2015 acquisition of Vivint by SunEdison, the clean-energy giant that went bankrupt soon after.
The second major US energy deal in as many days — following Berkshire Hathaway Inc’s $4 billion purchase of Dominion Energy Inc assets — also threatens to further weaken Tesla’s grip on the rooftop-solar market and could inspire more sector consolidation. Sunrun and Vivint combined provide about 75% of new residential solar leases
each quarter, according to BloombergNEF. “Sunrun will be freaking big,” Joe Osha, an analyst at JMP Securities, said in an interview.
”They are clearly looking for ways to get scale and efficiency.”
The deal, which values Blackstone Group-backed Vivint at $3.2 billion including debt, comes as America’s rooftop-solar industry works its way back from the worst of the coronavirus pandemic. Door-to-door sales — a key marketing strategy for installers — practically ceased as states imposed lockdowns, while installations were slowed or cancelled.
There’s evidence that the sector may be rebounding. Investor enthusiasm for rooftop-solar equities has surged after March lows, companies have lined up financings in recent weeks, and there have been efforts to ramp up the digitisation of operations.
Amid the pandemic, rooftop solar “could be an industry that picks up faster than others,” Hugh Bromley, an analyst at BNEF, said. “People are staying home thinking about renovations and they’re seeing their power bills increase while they’re running the air conditioner around the clock.”
Sunrun has been America’s largest rooftop-solar company for more than two years, edging aside Tesla, which had inherited the throne from longtime king SolarCity.
Tesla’s market-share has shrunk since the acquisition amid strategic shifts and competition from rooftop rivals including Sunnova Energy International Inc and SunPower Corp.
New leases and power-purchase agreements represented about 27% of American residential-solar systems prior to the Covid-19 pandemic.

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