Following Tesla’s shift in its solar power business after the acquisition of SolarCity, which has been dominating the US residential solar market for years, SunRun has now come within, at least, 17% of Tesla’s residential solar construction volume in the 3rd quarter.
Tesla and SunRun are the two largest residential solar installation companies in the USA. Tesla booked 109MW of solar and SunRun 93MW in the 3rd quarter of 2017.
If trends were to continue, SunRun would catch Tesla in 2018 as the largest residential solar installer. Really though, SunRun could have already caught Tesla – however, we don’t expect these downward residential solar trends to continue on Tesla’s part.
While SunRun booked 93MW of solar power in Q3’17, their quarterly report didn’t specifically break out how much was sold versus leased. However, a prior analysis suggests this number might be about 80%, meaning 74MW of residential solar power was leased to the homeowners.
Vivint’s booked 53MW in the 3rd quarter, with a suggestion that 90% of their volume – 47.7MW – was from third-party leases.
Tesla’s 3rd quarter included 109MW of solar power booked with a specific reference to 46% of it being cash sales.
As noted in their last quarterly report – Tesla is pulling back from commercial/utility and focusing on residential cash sales versus leasing. The whole of the solar industry has seen a shift away from residential solar leasing toward cash sales. SunRun and Vivint have been weathering this shift in opposition though.
In terms of exact volumes on Tesla’s side, there are a few blurry spots. In the aforementioned quarterly report, Tesla gave very little specific information on their solar power installations. They simply noted that they’d installed 109MW of solar. They did specify that 46% of their residential solar installations were now cash purchases versus leases, but they did not talk about the total volume of commercial/utility or residential.
It was noted they were pulling back from low margin commercial and utility solar installations. If Tesla had done 16MW of commercial/utility solar in Q3 – then they’d have 93 MW of residential, the same amount as SunRun.
Tesla could have leased as much as 58.8MW of residential solar – if they’d installed zero commercial/utility, however I don’t feel this is the case as they’d probably have stated it.
In the quarterly report, they noted $128 million was spent deploying solar leases. If that solar was deployed at $2.94/W (like Vivint’s ~47MW was built for) and the money was spent on all of the solar booked in the 3rd quarter, then we’d see that they’d done 43MW of residential solar lease. However, we don’t know solar costs or breakdowns from projects in these current versions of Tesla’s quarterly reports (past SolarCity report did break data out in this way).
What this mess of numbers means is that SunRun is the USA’s largest residential lease company, and probably the 2nd largest residential installer – but maybe the largest. Vivint is highly likely to be the third largest residential installer, but possibly the second largest lease company (90% of 53MW of leases puts it real close to what Tesla’s lease volume could be).
One residential solar factor that is a big monkey on everyone’s back though – what’s going to come from Tesla’s Buffalo Gigafactory? Tesla thinks they’re going to have a 2GW/year capacity from that facility. That’d be more volume than Vivint plus SunRun times thirteen. Tesla has stated they’re sold out their solar roof tiles well into 2018. How long will it take to deploy and install volume though?
With a projected 2.3GW of solar power to be installed for all of 2017 and Tesla shaking a 2GW Gigafactory stick at it, it’s going to be a challenge to predict what comes of the residential solar market. Maybe Tesla sells its shingles to third-party competitors and this argument gets blended and even more complex?
Whatever happens, expect change.
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