Newsletter: Sunrun’s strategy to become a solar-powered utility

There’s a bunch happening, so here’s a quick rundown of today’s agenda.

• The biggest U.S. rooftop solar company, Sunrun, just picked a utility chief to become its new CEO. I’ve got some intel on the strategy behind that move.
• Y’all had a ton of feedback on yesterday’s query about how people should be compensated when their batteries help the grid. I’ve pulled some highlights from that reader correspondence.
• One of our Canaries is taking flight!

Sunrun picks utility exec Mary Powell to lead next phase of growth

It’s worth taking a moment to scrutinize a change of leadership at the biggest rooftop solar company in the U.S.

Sunrun has brought solar power to some 600,000 rooftops, and it runs a rapidly growing battery business as well. Many of the biggest national solar brands ran out of cash or pulled out of the market, but Sunrun maintained steady growth through the turmoil and now holds a market-leading position as the industry is booming.

Throughout that time, Sunrun has portrayed itself as a high-tech alternative to the dirty and outdated utility paradigm that governed the power sector for over a century. Now, founder Lynn Jurich is stepping away from the CEO role and passing the baton to Mary Powell, a well-known utility executive.

Powell spent more than a decade running Green Mountain Power, the largest utility in Vermont. There, she modeled how different a traditional utility could be with the right leadership and incentives in place.

• GMP encouraged and paid customers to adopt solar instead of fighting it. 
• The utility adopted home batteries as an aggregated tool to help the overall grid, years before that kind of ​“virtual power plant” concept became popular.
• While other utilities talk about clean energy targets for 2045 or 2050, GMP aims to be 100 percent carbon-free by 2025.

My take: The choice to hire Powell tells us how Sunrun thinks about its place in the power sector today and where it aspires to be.

When it launched, the startup had to prove customers would and could pay monthly service fees for solar panels they didn’t own. Sunrun had to win over both customers and financiers, and then show this worked beyond the favorable early markets like California.

That’s ancient history now; Sunrun manages a fleet of 600,000 customer installations totaling 4.2 gigawatts of power. Selling to customers is still the engine driving the machine, but the overall business looks much more like an energy infrastructure play. It makes sense that Sunrun would look for a leader with expertise delivering power to hundreds of thousands of people.

Sunrun aspires to become even more like a utility through its small but growing grid services business. That’s where the company virtually controls the batteries it installed in homes across a given region and uses them to meet grid needs.

This is still early-stage — Sunrun estimates it has just $75 million in revenue lined up from grid services. This could become a meaningful source of income on top of the bread-and-butter solar payments. But achieving that requires convincing power providers that a cleantech company can be just as reliable as old-fashioned, utility-controlled power plants.

Powell can pitch this business from one utility exec to another, drawing on the credibility you can only earn in that industry by serving in it for years. She also built a virtual power plant in Vermont that successfully delivered on the theoretical benefits of the concept. Here’s what Powell predicted in our interview:

“As the grid and the utilities need more help meeting demand and dealing with climate events, we are just going to become the natural partner that they’re going to gravitate toward, even if they haven’t started that work already.”

We asked, you answered: How should you get paid to help the grid?

My last newsletter posed the question of how homeowners should be compensated when their residential batteries deliver power to help the broader grid system.

• Some companies offer moment-by-moment compensation based on how the battery performs.
• Others make it simple with an upfront payment for future activity.
• Some companies ask to use your battery for free.

That question clearly resonated — we got a ton of feedback from readers. The general consensus was that Canary Media readers like the idea of knowing what their battery is doing and how much value it’s providing to ensure they get a fair shake.

Thanks to all of you who responded! There was too much feedback to print all of it, but here are some choice excerpts:

Solar customer Ross Pumfrey:

I’d prefer more transparency — how is the battery contributing to the grid month by month.

Tesla Powerwall owner Lisa Adatto, who has relied on the batteries to maintain power during ice-storm-induced outages:

We wonder if participation in a program to share our battery would lower the benefit to us, and whether we’d get the same protection when the grid goes down. 

Reader Colin Tardrew:

If I had a battery, I’d prefer full transparency. I want to know I’m making money every time they take my battery, and not be surprised when my capacity is lower than I thought it was.

Reader Cole Lohman:

I would definitely love the option for full transparency, although I know I wouldn’t use it all the time. It satisfies that old adage ​“trust but verify” for me. I can check it and feel comfortable having my own record if I feel slighted by the company in any way at some point.

Also, I love both the incentive and the community benefit models of giving up battery energy. Why not a hybrid model that allows people to do both? Maybe custom if-then type of statements for when people would allow their battery energy to be used for free (i.e., if Governor of California issues grid warnings due to fires, allow free battery usage for 1-day, 1-week, or maybe until order is no longer in effect?). Just a thought.

Solar customer Joe, who would be open to buying a battery if there was a way to earn money by discharging it for the grid:

I would require full transparency and control, however. I do not trust the utility to have my best interest in mind otherwise. The idea of receiving a lump sum payment upfront and then bearing the risk of battery performance for 10 years is not something I would be attracted to.

Josh Castonguay, who leads the innovation team at Vermont’s Green Mountain Power (yes, the same one formerly led by Mary Powell, see above):

Our feeling on it is that you need to first get the storage deployed, and the best way to get them deployed is to make it as easy and affordable as you possibly can for the customers, while of course managing benefits for all customers, including those that do not participate. That’s why we have taken the approach of providing the upfront incentive or discounted lease arrangement in hopes to continue deployment as quickly as we can.

Emma’s off on a new adventure

Some Canary Media news for you: Emma Foehringer Merchant, one of our founding journalists and my longtime colleague, is heading off on a new adventure.

Emma’s journeying to Boston, or very close to Boston but a little farther north, to attend MIT’s Graduate Program in Science Writing. MIT comes up a lot in our work as a hotbed of science and entrepreneurship on the big challenges facing the energy transition. It’s hard to imagine a more fruitful environment to hone the craft of science journalism.

This makes Emma the first alumna of Canary Media since we launched in April. We’ll miss her nuanced accountability coverage of the solar industry, but I suspect this isn’t the last we’ve seen of her work. In the meantime, follow Emma on Twitter to catch her latest reporting.

(Lead photo: Andrey Grinkevich/Unsplash)