Must Watch for Investors: Sunrun’s Key Operating Metrics



Megawatts deployed

Megawatts (or MW) deployed includes solar energy systems deployed under energy contracts as well as solar energy system direct sales. MW deployed in a given period is an indicator of asset growth and efficiency of the scale of a company’s operations in a particular period.

For 1Q16, Sunrun’s (RUN) MW deployed came in at 60 MW compared to 68 MW in 4Q15.

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MW booked

Megawatt booked includes the total capacity of solar (TAN) energy systems sold to customers or subject to an executed customer agreement after considering cancellations during the applicable period. It’s an important metric used in the calculation of S&M (sales and marketing) cost per watt deployed during a particular period. In general, higher MW booked will result in lower S&M cost per watt deployed.

For 1Q16, Sunrun reported its MW booked at 56 MW compared to 79 MW in 4Q15.

Sunrun’s creation cost per watt

Sunrun’s cost performance can be determined by its key cost factor: creation cost per watt, which is the sum of the following:

  • installation
  • G&A (general and administrative) expenses per watt deployed
  • platform service margin
  • S&M costs per watt booked in a particular period after considering cancellations

For 1Q16, Sunrun’s creation cost per watt was $4.11 compared to $3.64 in 4Q15. Its built install cost was $2.36 compared to $2.33 in 4Q15. Lower creation costs imply higher operational efficiency.

Uncertainty surrounding the net metering system increased customer acquisition costs for Surun and its peers Vivint Solar (VSLR) and SolarCity (SCTY) in 1Q16. As a result, Sunrun’s S&M expenses per watt deployed increased from $0.64 in 4Q15 to $0.90 in 1Q16.

Estimated retained value

ERV (estimated retained value) represents net cash flows (discounted at 6%) expected to be received from long-term customer contracts. That’s after deducting cash distribution to fund investors and estimated operating expenses for systems installed as of the measurement date. Higher ERV represents higher future cash flows from operations.

For 1Q16, Sunrun reported ERV of $1.6 billion compared to $1.5 billion in 4Q15.

Since ERV is sensitive to interest rates, any future increase in interest rates could have a negative impact on the ERVs of Sunrun and peers Vivint Solar, SolarCity, and SunPower (SPWR).


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