SunRun employees installing solar panels to help with the Puerto Rico relief effort.
(This story is for CNBC PRO subscribers only.)
Residential solar power has been around for years: after all, President Jimmy Carter famously installed panels on the White House in 1979. But it has yet to go mainstream, so to speak, with just 3% of the 84 million eligible homes across the U.S. sporting rooftop panels. That might be about to change, however, with the latest announcements from one key company in the space — Sunrun.
While there are currently a number of ways to invest in the rooftop solar ecosystem — from manufacturers to inverter companies to the installers themselves — Sunrun stands out. The company already has the largest share of the residential solar market, and its planned acquisition of Vivint Solar means its position as the leader in an ultra-competitive sector will be underscored. Size, customer count and brand recognition is especially important, given the industry’s high customer acquisition cost. Sunrun is also building out its so-called virtual power plant capabilities, while its battery storage offering is becoming an increasingly popular alternative to an unreliable electricity grid.
If the industry initially attracted eco-conscious consumers, people are now choosing to go solar based on economics. The declining cost of solar, paired with fluctuating electricity prices from traditional providers, means that in many places across the U.S., solar power is competitive, if not cheaper. The immediacy of climate change and more frequent power outages from outdated grids are also driving adoption.
From an investment standpoint, industry growth in residential solar should continue to fuel companies’ top-line results, while a greater focus on ESG, or environmental, social and governance metrics, should drive attention toward the space, all of which can benefit Sunrun in particular.