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U.S. Rooftop Panel Installer Sunrun Buys Competitor Vivint, Creates ‘New Solar Goliath’

The biggest home solar installer in the United States, San Francisco-based Sunrun, is buying its nearest competitor, Vivint Solar, in a deal that will make the combined company the country’s third-largest owner of solar capacity across all types of projects, reduce operating costs, and according to one news report, produce a “new solar Goliath, leaving Tesla to play David”.

The US$3.2-billion deal “will grow the portfolio of Sunrun, already the nation’s top home solar installer, to more than three gigawatts and around 500,000 customers,” Greentech Media reports, bringing together “two companies with significantly overlapping business models and similar visions for a distributed energy future. Though Sunrun and Vivint Solar have slightly different geographic coverage areas, both install rooftop solar across much of the country through leases, loans, and direct sales.”

The new company will have an “enterprise value”—its market capitalization plus debt—of $9.2 billion.

“We have big ambitions for what we can accomplish together,” Sunrun CEO Lynn Jurich told analysts and reporters. “We are only scratching the surface of our opportunity,” with only 3% of U.S. households installing solar to date. “At a larger scale, with more customers and a lower cost structure, Sunrun will be a meaningful contributor to a fully renewable and electrified energy system.”

“The consolidation of the top two residential solar companies in the U.S. comes as both companies have adapted to growing demand in the distributed solar sector,” Utility Dive says. “Sunrun offers energy storage and grid services, working with utilities and grid operators on virtual power plants that combine distributed energy systems. Sunrun expects to offer battery storage to the combined base of nearly 500,000 solar customers.” Vivint “has targeted customer adoption through a direct-to-homes sales channel, similar to other utility platforms, to ease customer access to services and drive product purchases.”

“Vivint, with its direct sales channel and healthy margins on system sales, offers Sunrun an expanded canvas and an opportunity to capitalize on higher storage attachments and grid services plays, all while potentially improving operational and financing costs,” Wood Mackenzie Head of Solar Ravi Manghani told Greentech.

Utility Dive says the two companies have faced supply chain shortages and lagging demand during the pandemic, with both reporting first-quarter losses and Sunrun announcing layoffs. After the acquisition announcement, Greentech says, Sunrun’s shares were up by 20%, Vivint’s by more than 38%.

The two companies held a combined 17.5% of the U.S. residential solar market last year, with Tesla the next-biggest at 4.6%, InsideClimate News writes. As recently as 2017, Tesla’s SolarCity subsidiary was at the top of the U.S. rooftop solar market, “but it pulled back on its sales outreach and got passed by Sunrun in 2018 and then Vivint in 2019.” Now, Tesla’s main business is selling electric cars, but it “has the resources to be a much larger player in rooftop solar if it can figure out how to revitalize that side of the company.”

But ICN’s Dan Gearino says the Sunrun-Vivint acquisition still won’t produce the dynamics he would normally expect under such circumstances.

“When the top two competitors in any industry join forces, I expect the third-place player to be listening to sad music and feeling generally glum,” he writes. “But Tesla is not simply a rival for the new, super-sized Sunrun. Tesla also is an important supplier for Sunrun, part of a partnership in which Sunrun sells Tesla’s Powerwall battery storage systems.”

“I don’t think Tesla cares much about what its competitors are doing,” said WoodMac analyst Bryan White. “I don’t think they need to.”