Rooftop solar giant Sunrun has found a new and growing stream of revenue stemming from utilities.
Sunrun strings together home batteries across sections of its customer base to form what are called virtual power plants.
The company has signed contracts with several utilities, which pay Sunrun for the power those power plants produce. Virtual power plants help utilities handle peak electricity demand.
Batteries, which some customers buy alongside solar panels, are an increasingly important part of Sunrun’s business and critical to its deal to acquire rival Vivint Solar, announced earlier this summer.
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Sunrun built its business on the sale of solar panels that go on your roof. But in the last few years, the San Francisco-based solar giant has begun focusing on another product in its growth strategy: home batteries.
Fueled, in part, by recent power outages, Sunrun’s battery sales aren’t just bringing in revenue on the margins. They’re also opening up a completely new stream of income — in this case, from electric utilities.
Thousands of Sunrun customers now have batteries attached to their solar arrays. One battery alone can power key appliances in your home when the electricity goes out. String together the batteries in hundreds of homes and the power they produce can start to act more like a traditional power plant on the grid.
Sunrun now sells that aggregated energy — known in industry jargon as a virtual power plant — as a product of its own. And utilities are the customer.
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When demand for electricity is surging and expensive, such as in the evening when people return from work, Sunrun can inject energy from that virtual power plant onto the grid, and get paid for it by utilities that would otherwise have to meet that demand with expensive-to-run conventional plants.
Sunrun is among the companies pioneering the virtual power plant (VPP) model, and it’s a small but growing segment of the firm’s business. On a call with investors Monday, Sunrun’s chief executive, Lynn Jurich, said the company now has 10 grid services contracts valued at $50 million over their lifetime. In 2019, the company had about $860 million in revenue, according to public filings.
“What we’re doing is going across the country, trying to find the areas that would most benefit from these virtual power plants, and really helping change the rules and pilot programs that prove these assets work,” Jurich said on the call. “The markets have not been necessarily designed to have a mechanism where they can pay for the value that the battery adds.”
About 10% of the regions in which Sunrun operates are starting to pilot and test virtual power plants, Jurich said.
$2,000 of value per customer
Large-scale power shutoffs, hurricanes, and a pandemic that’s tethered people to their homes have made it easier to persuade customers to buy batteries along with their rooftop panels, even though …read more
Source:: Business Insider