Residential solar looked like a generational opportunity to Lynn Jurich back when few American homeowners had panel systems. The cost of solar equipment would fall, she surmised, and utility bills would rise. The economic case for going green would become clear.
There was little expectation that her company, Sunrun Inc., would capture new customers as a result of widespread panic triggered by fragile U.S. power grids heaving under the weight of climate calamities. But that’s happening now. Since summer 2020, emergencies have battered or threatened electricity systems in the New York area, California, the Gulf Coast, California again and in February, perhaps the most surprising place of all: Texas, the nation’s energy hub, a place unaccustomed to debilitating winter storms.
“It’s not slowing down, and it’s probably going to be even faster than we have anticipated,” says Jurich, Sunrun’s co-founder and chief executive officer. “To really combat the speed of climate change and extreme weather and what it’s doing to the grid, we need to go faster. We don’t have the luxury to rebuild this over the next 20 to 30 years.”
Climate-induced weather crises aren’t yet a primary catalyst for the growth of Sunrun, the leading residential-solar company in the U.S. But the urgency they foster is helping move the rooftop sector and home batteries into the American zeitgeist. Only about 3% of U.S. homes are equipped with solar, compared to more than 20% in Australia.
“The dynamics in places that haven’t historically been friendly to residential solar are starting to change,” says Joe Osha, an equity analyst at JMP Securities. “In Texas, you’re going to have people looking for resilience.”
America’s climate emergencies are happening at an inflection point: The U.S. residential-solar sector achieved record installations in 2020 despite an historically weak stretch early in the pandemic—and projections from Wood Mackenzie anticipate new highs in each of the next three years.
“If you had asked me in 2008, what’s the chances of weeklong blackouts in California and Texas, I would’ve said they were really low,” says Edward Fenster, a Sunrun co-founder and executive chairman. “The fact that the grid was so ill-equipped to handle modern weather, we missed. And that’s obviously created a real important urgency and opportunity around storage.”
Then there’s the change in administration: President Joe Biden is pushing to make the country’s electric system fully green by 2035, a moonshot ambition that will require a lot of rooftop capacity—as well as billions of dollars in new transmission lines that could take a decade to build to support remote pockets of robust wind and solar power. Biden’s bid will only amplify megatrends that are here to stay, no matter who ultimately succeeds him: decarbonization and the electrification of everything from vehicles to buildings to stoves, as the U.S. tries to eliminate carbon emissions in the decades ahead.
In some ways, Jurich’s company is ideally positioned to meet the moment. San Francisco-based Sunrun was the leading residential company in the U.S. even before it bought rival Vivint Solar Inc. amid the pandemic last year. It has a national brand that, while obviously nowhere near the notoriety of Tesla Inc., is gaining in consumer awareness. It also saw the potential of storage before many of its peers, which could ultimately transform the company from installer and financier to new-age utility. (Sunrun is among the companies that are working with electric-system incumbents to provide some energy from solar-powered battery systems.)
Still, there are challenges. The biggest utilities in California—America’s leading solar state—in March proposed lowering compensation for rooftop customers and adding a new connection charge. Interest rates have ticked up. There’s competition from other companies eager to participate in the electrification of residences, including solar-loan originators and local installers. And bureaucracy continues to stretch out the residential-sales process, contributing to high customer-acquisition costs.