Climate Tech

The US’s biggest residential solar installer has a battery problem

Demand for energy storage “far outpaces” the supply of batteries, execs said.
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Sunrun

· 3 min read

Sunrun, the largest residential solar installer in the US, is experiencing a challenge that has, thus far, mostly been reserved for automakers.

While the US solar tariff saga caused headaches for Sunrun’s solar-panel inventory in the second quarter, it’s batteries that are actually a limiting factor on the company’s growth, executives said during the company’s Q2 earnings call on August 3.

Sunrun saw 33% growth in new solar installations in the second quarter compared with 2021. Rising utility costs and incentives from the Inflation Reduction Act are expected to contribute to continued strong demand from US customers, CEO Mary Powell said.

But even as an industry leader, Sunrun’s ability to grow its energy storage business is limited by the fact that there just aren’t enough batteries. Sunrun has installed more than 42,000 solar and battery systems in the US to date, but it can’t keep up with the number of customers asking for energy storage.

“If we look at the demand for storage, I think it far outpaces the supply that we have of batteries. If we look at the volume growth rate in our storage customers, that has been robust—far outpacing the overall growth in the business,” CFO Danny Abajian said during the earnings call.

Demand for behind-the-meter energy storage has grown from 3 gigawatt hours in 2018 to 9 GWh last year, Rho Motion research shared with Emerging Tech Brew. By 2030, it expects the market to grow by more than 10x to reach over 100 GWh.

Last year, Sunrun announced it would work with Ford to provide customers with home energy systems to power the new F-150 Lightning. That partnership is one example of how Sunrun has also been expanding its offerings beyond solar panels to include energy storage systems and, most recently, Level 2 at-home EV chargers.

Storage shortage

As consumers signal a desire for more control over power costs and reliability, other solar companies are also stepping in with energy storage options.

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SolarEdge saw demand for battery storage increase in the second quarter, especially in Europe. The Israeli company doubled its battery installations compared with Q1 2022. SolarEdge makes its own batteries, and its system is also compatible with some third-party batteries. The company is pushing to increase its battery manufacturing capacity in Europe to meet demand.

Sunpower CEO Peter Faricy said he expects demand for residential backup power to rise and that consumers will increasingly want bigger batteries. The California-based company introduced a partial home backup power system in the US last year.

For its part, Sunrun offers customers Tesla Powerwall or LG Chem lithium-ion batteries through its Brightbox home battery system, but the company plans to work with additional suppliers in order to source enough batteries to satisfy installation requests, Abajian said.

“Today we are prioritizing allocation of batteries in key markets where they are needed the most for grid reliability concerns,” he said.

Sunrun execs see provisions in the Inflation Reduction Act as an opportunity to attract new customers, but also said that the company’s expanded offerings create the potential to generate revenue from returning customers.

“The interest, particularly in retrofit storage, is enormous,” Sunrun’s co-executive chair Edward Fenster told analysts. “While we support that for customers, we haven’t marketed it yet, given some of the constraints in battery supply. But as those constraints [are relieved], we would expect to market that and think there’s a really enormous opportunity there.”

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