Residential solar Tesla‘s (NASDAQ:TSLA) Powerwall is the best-known energy storage device, but Sunrun (NASDAQ:RUN), SunPower(NASDAQ:SPWR), and Vivint Solar (NYSE:VSLR) are entering the market as well, and they’re seeing some signs of success early in 2018.
What’s great about energy storage for solar installers is that it’s incremental revenue that leverages existing marketing and sales expenses. And it could help make solar more attractive to customers in states that have made it more difficult to justify solar economically.
The solar industry’s next growth product
Sunrun has given the most information about how many energy storage systems it’s selling with residential solar systems in the U.S., and the early numbers are impressive. During the company’s first-quarter 2018 conference call, CEO Lynn Jurich said, “We launched Brightbox in Massachusetts less than three months ago, and already nearly 10% of the time customers we sell to directly are opting to add a battery.”
She added, “In California, over 20% of the time our direct customers are choosing to add a Brightbox. In certain markets in Southern California, this rate is now above 50%”
Sunrun doesn’t disclose the revenue or margin per energy storage system, but according to EnergySage, there’s at least $5,000 of incremental revenue per energy storage system and sometimes over $10,000 of added revenue.
Since Sunrun built solar systems for 45,000 customers in past year, that’s a potential for $225 million of additional revenue each year. It’s unlikely the solar industry will ever reach 100% energy storage penetration, but even 10% to 50% of the market adopting energy storage could have a big impact on financials.
Sunrun isn’t alone in energy storage
Tesla was once the leader in solar energy storage, but its solar business is shrinking, and storage projects have been shifted to the utility-scale market. If you want to invest in a stock with residential energy storage growth, it sounds crazy to say it, but Tesla isn’t the right pick.
SunPower says it is now including energy storage with about 30% of commercial solar installations and expects to use the same strategy in residential energy storage products as they roll out later this year. The hope is that being a leader in commercial storage will give the company a leg up in residential energy storage, although it’s only in early stages of launching the product right now.
Vivint Solar is at least a few months behind Sunrun and SunPower after losing its battery partner Mercedes-Benz, which dropped out of residential energy storage earlier this year. The company is now selling the same LG Chem batteries that Sunrun installs, but isn’t yet selling in most markets and doesn’t have the same experience in energy storage controllers, which is ultimately what creates value for customers. Vivint has upside in residential energy storage, but Sunrun and SunPower are the two leaders right now.
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