Rooftop solar market leader Sunrun withdrew its 2020 financial forecast Monday and announced cost cutting measures in response to the coronavirus pandemic.
In February, Sunrun told investors that it expected to grow its installations 15 percent in 2020, from a base of 413 megawatts installed in 2019. It got off to a strong start, with 97.4 megawatts delivered in the first quarter, up 13 percent year-over-year, according to a statement released Monday.
Then came the coronavirus and the public health response, which forced the company to scramble its approach to selling and installing.
Last week, Business Insider reported (paywall) that Sunrun had laid off at least 100 workers. On Monday, Sunrun confirmed that it has cut $30 million of quarterly expenses relative to Q1 levels, largely through unspecified “labor-related cost actions.”
“This pandemic has forced some tough decisions on our business, including a reduction to certain parts of our workforce,” a spokesperson told GTM in an email. “Our hope is to bring back as many impacted employees as possible as we get through this unprecedented situation together.”
Sunrun shared what it now sees as a “reasonable” downside scenario in 2020: two quarters in which volumes fall to half of what they were a year before. Even then, Sunrun expects to burn $30 million per quarter, well within its cash reserves. But the outlook marks a long way down from the record growth that seemed likely just a few weeks ago.
COVID-19 has infected hundreds of thousands in the U.S. and killed 10,522, according to the New York Times tracker on Monday afternoon. As states locked down their economies to prevent human contact, the solar industry has shifted from delivering on expectations of a record year to minimizing economic fallout.
Premium home solar manufacturer SunPower cut executive pay, froze hiring, and dumped its 2020 forecast as it prepared for diminished revenues. Sungevity laid off 400 workers.
Sunrun’s approach appears to have been less drastic. The company finished the quarter with $366 million of cash on hand, so it is not facing the looming cash flow problems that smaller firms must navigate. It also enjoys previously arranged financing for another 216 megawatts of leased solar capacity, the company said.
‘Overnight’ shift to digital operations
Rooftop solar companies long depended on in-person meetings to close their deals. As Greentech media reported Monday, installers now are shifting to online sales to keep business moving without setting foot in customers’ homes. Sunrun executed this shift “almost overnight,” CEO Lynn Jurich said in a letter released Monday.
“This protects our employees from in-person interactions,” Jurich wrote. “Early signs indicate that our customers appreciate this as well.”
After a sale, installation still requires dispatching crews to homes, but the company has invested in technology to make this process “almost completely contact-free.” This includes digital permitting and interconnection procedures, which Jurich had championed prior to the coronavirus pandemic as a more efficient system. Sunrun also is using drones to survey sites remotely.
“The innovations and adaptations we are implementing today will help us get through this and ultimately make us stronger,” Jurich said.
Amid these shifts, Sunrun installed more systems in the second half of March than in the first half, in absolute terms and adjusted for the number of business days, the company said.
That datapoint indicates that although business overall is down compared to prior expectations, shelter-in-place orders needn’t bring solar installation activites to a halt. The jury is still out on whether the online sales tactics bring in enough new customers to keep the installations rolling at this pace.
Source: Greentech Media