Greetings, and welcome to the Sunrun 4th Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen only mode. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Patrick Jovan, Senior Vice President, Finance and Investor Relations. Please go ahead, sir.
Thanks, Kevin. And before we begin, please note that certain remarks we will make on this conference call constitute forward looking statements. Although we believe these statements reflect our best judgment based on factors currently known to us, actual results may differ materially and adversely. Please refer to the company's filings with the SEC for a more inclusive discussion of risks and other factors that may cause our actual results to differ from projections made in any forward looking statements. Please also note these statements are being made as of today, and we disclaim any obligation to update or revise them.
On the call today are Lynn George, Sunrun's Co Founder and CEO Ed Fencer, Sunrun's Co Founder and Executive Chairman and Tom Vonruckbauer, Sunrun's CFO. And now, let me turn the call over to Lynn.
Thanks, Patrick. We are pleased to share Segment's 4th quarter results, progress against our strategic priorities and outlook for 2021. We ended the year with more than 550,000 customers, 18% year over year growth pro form a to include Vivint Solar. We adapted swiftly to the dynamic environment during the year, improving our cost structure, increasing our market position and strengthening our competitive advantages. The Solar acquisition expands our scale and solidifies our position as a top owner of solar assets globally, with nearly 4 gigawatts of networked solar energy capacity.
I'm excited to share our results for the first time as a combined company. In the Q4, we added 23,500 customers. We saw continued improvements in our margins and beat the targets we set last quarter. The integration is progressing well with the team operating as a single organization. In 2021, we expect to significantly accelerate our growth rate to 20% to 25% from a baseline scale that's already twice the strong customer margins.
At the same time, we will increase our competitive advantages through our unmatched sales reach, investment in customer experience, brand and talent, significant head started batteries and grid services, and an improved cost structure from scale and synergies, which exceed our initial expectations. The unprecedented winter storm in Texas last week that left more than 3,000,000 people without power, yet again exposed the current grid vulnerability and the superiority of local solar and batteries. During the extreme demand on the power grid, our customers produce their own electricity from solar behind the meter and helped offset the need for additional blackout. For each customer with Sunrun Solar, we helped keep another homeowner's power on. Furthermore, our customers with Brightbox were able to power through the blackouts and stay warm.
Even customers without over 50 hours were able to power critical circuits uninterrupted as the solar system energy and recharge batteries during the winter storm. It is no surprise that our website traffic increased 3 50% over the past few days in Texas and our sales teams reported a record number of appointments in a single day. We saw a similar trend following power shutoffs in California. Accelerating extreme weather events will continue to drive consumers to choose solar and batteries. Nationally, we have now installed more than 16,000 Brightbox systems.
The Pivot solar attachment rates doubled in the 4th quarter, and we continue to expect Brightbox installations to accelerate and grow over 100% in 2021 despite expected constraints in battery supply. Utilities invested more than $120,000,000,000 in CapEx last year, yet storms, heat waves and wildfires continue to prove that our centralized grid As utilities across the country spend more to upgrade infrastructure with their guaranteed rate of return, these costs are falling on homeowners. In December, PG and E announced that its customers will be hit with an average rate increase of 8% over the next 2 years to pay for improvements to reduce the risk that its equipment will ignite deadly wildfires. This is compounded by the fact that 71% of California homeowners said they think the pandemic has increased demand for electricity. This dynamic is happening across the country with retail utility rates in our markets increasing 3% per year on average for the last 15 years.
Utility capital spending is forecast to continue to rise, which increases the values we can bring to customer and expands our addressable market. This month, we launched in additional areas of Texas and Florida, including San Antonio and Miami, offering residences away to power through outages and manage their energy costs. Turning now to our sustainability efforts. We are proud to lead 1 of the fastest growing sectors in the American economy and the Vivint Solar acquisition enables us to accelerate job growth. The combined company now has approximately 8,500 full time employees.
We have committed to providing all of our employees wages of at least $15 per hour. In the 4th quarter, we strengthened our talent communities with over 800 employees participating in our 6 employee resource groups. In November, we announced 4 environmental justice initiatives to expand access to solar and its benefits. Sunrun was also the 1st solar company and one of only 500 total companies selected to be part of the Department of Defense Military South Employment Partnership. Finally, we want to create a healthier environment for future generations by aggressively retiring fossil fuel plants.
In 2020, our network solar energy capacity prevented GHG emissions totaling an estimated 2,400,000 metric tons of CO2. In 2020, we installed more than 600 megawatts of solar to over 85,000 customers. These systems are expected to prevent the emissions of over 13,000,000 metric tons of CO2 over the next 30 years. Before I turn it over to Ed, I want to thank our fantastic team for another great quarter. Over to you, Ed.
Thanks, Lynn. Today, I'll touch on some recent federal policy developments, our evolving capital structure strategy and recap our robust capital runway. Over the last year quarter, we have advocated for and achieved numerous political victories, and we continue to enjoy tailwinds in this area. On December 21, the investment tax credit was extended for 2 more years. As before, this measure passed with bipartisan support passing through a Republican controlled Senate and signed by a Republican President.
Taken in combination with our Safe Harbor capabilities, we now enjoy an investment tax credit of up to 26% through December 31, 2025. That said, we are pleased that the Biden administration is demonstrating genuine interest not just in renewable energy, but also distributed energy and soft cost reduction. President Biden specifically cited home solar and batteries during last year's debates as critical investments for rebuilding our energy infrastructure with clean technology. Given its track record of success and bipartisan support, we think the longer term extension of the solar investment tax credit is probable. The Biden administration is also taking steps to support soft cost reduction through continued DOE funding for training and software development.
In addition, the Biden administration has begun releasing funds previously appropriated by Congress for use in repairing and modernizing Puerto Rico's electric grid. We believe this funding may open significant virtual power plant opportunities for us on the island, along with an expanded market for home solar and battery installations. Meanwhile, a number of factors are combining to offer us several paths to reducing our capital costs even further. Our increased scale, market capitalization and profitability following the Vivint Solar acquisition are opening new doors for us. Lenders and ratings agencies have taken note that our collections actually improved during COVID.
We're also seeing an unprecedented increase in lender interest in green bonds and just generally low cost of capital in most markets. We believe we can leverage these factors into an updated capital structure that will increase long term cash flows available to our common shareholders. In part because the various strategies we are evaluating provide different combinations of cash upfront versus cash distributions over time, we are not providing 2021 cash flow guidance at this time. We will share updates on the strategy review over the next two quarters, however, as we finalize the course of action. We continue to maintain a robust project finance runway that affords us the ability to be selective in capital markets activities.
As of February 25, closed transactions and executed term sheets provide us expected tax equity and project debt capacity to fund over 500 megawatts for subscribers in 2021. We're clearing both the tax equity and credit markets atornearalltimelowcost of capital. I'll now turn it over to Tom.
Thanks, Ed. The Q4 capped off a transformative year for Sunrun. The Sunrun team continued to deliver sequential volume growth and margin expansion, while beginning the integration of Vivint Solar. The combination of continued operational improvements strategic advantage from our increased scale and set up the company for a breakout 2021. As we previewed on the last call, this quarter we have made various changes to our operating metrics, converging methodologies between Sunrun and Vivint Solar and more clearly reflecting our business post acquisition.
On Slide 8 of our earnings presentation, you can see a summary of updates to nomenclature and definitions of the key metrics we use. For example, we now refer to customers under lease or power purchase agreements as subscribers given the long term and recurring nature of our relationships. We now refer to the present value of upfront and recurring cash flows from customers as subscriber value instead of project value and present it on a per subscriber basis instead of per unit of solar energy capacity. Per watt figures are still available in the supplemental materials, but presenting metrics on a per customer basis better aligns to our cost and value drivers of the business. We now present subscriber value and gross earning assets using a 5% discount rate, reflecting the lower cost of capital environment and our continued abilities to raise capital at rates well below 6%.
Further, net subscriber value also includes uncapitalized operating expenses within creation costs, harmonizing with Vivint Solar's former reporting method and reflecting the increased mix of direct business as a result of the acquisition. NPV is now referred to as total value generated and represents the net subscriber value multiplied by subscriber additions. Net earning assets now includes both recourse and non recourse debt along with total cash. Megawatts deployed is now referred to as solar energy capacity installed, while cumulative megawatts deployed is now referred to as the network of solar energy capacity. We believe these changes improve the usefulness of the metrics we present and will make our business less burdensome to understand.
Turning now to volumes. In the Q4, customer additions were approximately 23,500, including approximately 18,800 subscriber additions. Solar energy capacity installed was 172 megawatts in the Q4 of 2020, a 10% sequential increase in the 3rd quarter and 603 Megawatts for the full year 2020. Our network solar energy capacity was 3.9 Gigawatts at the end of Q4, an increase of 18% compared to the prior year. We ended Q4 with over 550,000 customers and nearly 479,000 subscribers, both growing 18% year over year.
Our subscribers generate significant recurring revenue with most under 20 or 25 year contracts for the clean energy we provide. At the end of the year, our annual recurring revenue or ARR stood at $668,000,000 with an average contract life remaining of 17 years. That's over $10,000,000,000 in revenue visibility just from customers we already have. In Q4, subscriber value was approximately $37,400 and creation cost was approximately $28,300 delivering a net subscriber value of $9,051 While we are presenting metrics on a per customer basis now, we appreciate that many investors have modeled per watt metrics. These metrics can still be calculated if desired.
For instance, subscriber value per watt of solar energy capacity installed for subscribers was $5.07 or what we used to call project value. Net subscriber value per watt or what we used to call NPV per watt would be $1.23 in the quarter. As discussed earlier, the changes we have made to the metrics resulted in some puts and takes. For instance, moving from a 5% discount rate, increased subscriber values, while the inclusion of uncapitalized operating expenses within creation costs aligned with Vivint Solar's former reporting method reduced the reported figure. We believe these changes that we have made are appropriate now given our increased mix of direct business following the acquisition of Vivint Solar, the financing environment and improvements we have made to internal cost accounting for fleet servicing expenses.
Under the prior methodology, which we had provided guidance against last quarter, net subscriber value would have been approximately $8,500 exceeding our target. Total value generated, which is the net subscriber value multiplied by number of subscriber additions in the period was $170,000,000 in the 4th quarter. Turning now to gross and net earning assets in our balance sheet. Gross earning assets were $7,800,000,000 at the end of the 4th quarter, reflecting an increase of $3,600,000,000 from the prior year. Gross earning assets is a measure of cash flows we expect to receive from customers over time, net of distributions to tax equity partners and partnership flip structures, project equity financing partners and operating and and maintenance expenses discounted at a 5% unlevered WACC.
Net earning assets were $4,200,000,000 at the end of the 4th quarter, reflecting an increase of $2,100,000,000 from last year. Net earning assets is gross earning assets plus cash less all debt. We ended the 4th quarter with $708,000,000 in total cash. A simple way many approach valuation is to look at the value of the growth business of new subscribers, total value generated times multiple given the growth prospects plus net earning assets, which represents the value of existing subscribers and net debt. A quick note on our GAAP income statement for the quarter and upcoming periods.
There are a few one time items along with purchase accounting treatment of Vivint Solar that depressed near term GAAP results. This quarter, operating costs included non recurring acquisition and deal related expenses and restructuring costs of $25,300,000 Operating costs this quarter also include stock based compensation expenses of $133,000,000 a significant step up from prior periods. Consistent with purchase accounting standards under GAAP, the fair value of outstanding equity awards for Vivint Solar employees was reevaluated upon the closing of the acquisition, which resulted in a step up of the value of such awards because of the higher stock price on the date of close. This resulted in an increase to non cash stock based compensation expense until such awards are fully vested. Additionally, the value of solar energy systems was recorded based on a fair value assessment, which was approximately $1,100,000,000 higher than the book value at the date of acquisition and will result in additional non cash depreciation expense over the estimated useful life of the assets, partially offset by a write off to Vivint Solar's cost to obtain customer contracts.
These purchase accounting adjustments have no effect on our cash flows and how we measure the performance of our business. Turning now to our outlook. As Lynn noted earlier, the integration with Vivint Solar is going exceedingly well. While we initially targeted $90,000,000 in run rate cost synergies, we are now confident that we can realize $120,000,000 in run rate cost synergies exiting this year. We also believe our strengthening brand, investment in customer experience and product innovation and expanded sales channels have us well positioned to capture strong underlying consumer interest for reliable clean energy in the year ahead.
Furthermore, the combination of our business transformation in 2020 and increased cost synergy expectations enables us to both invest in growth and maintain strong margins in 2021. We forecast solar energy capacity installed growth to be in a range of 20% to 25% in 2021 for the full year. Total value generated is expected to be over $700,000,000 for the full year. While we are very focused on integration in the near term, we expect a return to year over year growth in solar energy capacity installed in Q1 with accelerating growth thereafter. Similarly, because of seasonality in our business and the shape of our post acquisition cost structure as synergies are realized, we expect to see slightly lower net subscriber margins in the first half and higher margins in the second half of twenty twenty one.
As Lynn mentioned at the beginning of the call, consumer demand for alternatives to an old expensive and dirty energy infrastructure is increasing and we believe we have the products, business model and operational capabilities to deliver against this demand in 2021 and beyond. With that, let's open the line for questions please.
Thank you. We'll now be conducting a question and answer session. Our first question today is coming from Michael Weinstein from Credit Suisse. Your line is now live.
Hi, thanks for the question. Hey, Ed, I think you guys talked about some interest picking up in green bonds coming forward. Is that something you could talk more about, maybe alternative forms of financing beyond the ABS issuances that we've all gotten, starting to get used to?
Sure. That's a great question. And what I think I was trying to say is that there's just a lot of investor interest generally on the lender side in loans from ESG companies and in renewable energy. I think our company is so obviously an ESG company that actually getting a green rating of a bond may not make a difference to the cost of capital. But given the scale of the business and the market cap, we have a lot of opportunities for ways to raise capital, including subordinated debt that might be at various different places in the capital structure, might be rated and would probably be likely significantly cheaper than the places we've been going historically for that capital.
So that's a process of investigation and discovery that we're going through. We do have a number of interesting options there. And as IT is doing, I think we'll be updating you all with further information in the quarter or 2 there.
And I think you said you're still working on your cash flow strategy or cash use strategy for this year. Can you give us
a little more color on that and
what the timing is that you timing of when you think you'll be able to give guidance?
Sure. So I think again in the next couple of quarters, we'll know more. As I was trying to suggest on the call, we could capitalize the business with 2 different take an example, 2 different credit instruments. 1 might cost X percent, 1 might cost a little bit more than X percent and they would have different advance rates. So what we're trying to do is figure out what's the optimal long term strategy for the company.
How much do we want to borrow today versus lead for cash flows for distribution tomorrow? And as we maximize those 2 sort of co solve for the best possible solution on those two dynamics, it may have some impact in the amount of cash that shows up today. But if there was less cash during the day, it will be offset obviously by significantly more cash coming over time. And we'd like to further flesh that out before giving particular guidance on it.
That makes sense. And one last one for me, and that's what are you hearing from the Biden administration or from the Democrats in terms of timing of when we might see additional ITC extension or and maybe initiatives they're thinking about, I mean battery tax credits, perhaps tax credit refundability, etcetera?
That's a great question. I do think it is more likely to be in the second half. There are obviously a lot of different ways these sorts of bills can move forward. They can move forward in spending bills, infrastructure bills, dedicated bills. Sometimes you use the bill that's in front of you rather than the bill you want.
So I think like we've often said when it comes to predicting federal policy, it's difficult to make a prediction based on any particular piece of legislation in any very discrete moment in time. But we do definitely do think that over the next 3 to 14 months, there's a really good possibility of some interesting developments.
Okay, great. Thanks guys.
Thank you. Thank you. Your next question today is coming from Brian Lee from Goldman Sachs. Your line is now live.
Hey, guys. Thanks for taking
the questions. Good afternoon. Maybe first off, just targeted in installed capacity for 2021, that's off of the 603 megawatts in 2020. Roughly low to mid-seven 100 megawatts new growth in installed capacity for 2021. Just wanted to clarify if anything's changed in that convention.
Yes. No, Brian, you're correct. The 'twenty to 'twenty five is off the 603 baseline.
Okay, great. So you haven't changed that, great. And then I guess second question related to that is, maybe my math is wrong or again, I might have the wrong naming convention, but you mentioned $700,000,000 or greater than $700,000,000 of value generation against this over 700 megawatts of new subscribers in 2021. So on a dollar per watt basis, I know you don't want to stick with that convention, but it's less than $1 or what seemed to be around that range. Why would that be falling given the cost synergies that are being raised here, the new PV5 versus PV6 convention?
Again, maybe I'm missing something here, but you did $1.23 here in 4Q. So wondering why that number might be coming down in 2021?
Yes. Good question, Brian. So first, we're providing full year guidance here on aggregate margin dollars. And we think that total value generated of more than $700,000,000 is a really strong result. That's more than our Q4 results annualized, which seasonally Q4 tends to be our best performing quarter of the year.
2020 also had the benefit of sort of full year of 30 percent ITC from our safe harbor investments. And so you've got some shift there. Obviously, there's a range of outcomes there on volume. And then we're saying more than $700,000,000 So also a range of possible outcomes above that. We're also seeing an acceleration in total growth here moving to 20% to 25% year over year performance, which will be one of our fastest growing years in recent history.
So part of this, we're investing in some of that growth while also being able to maintain a really strong margin profile. And then the last bit I'll note is that the 20% to 25% is total megawatt growth. But when you turn it into per customer, the mix between lease and cash loan may move around the mix across different channels and move around a bit too. So really thinking about it on a per subscriber basis, not a per customer basis, if that's helpful.
Yes. So just to put a fine point on it, the calculation would be down and it would not be under $1 a watt. It would not apply under $1 a watt.
It won't come out under $1.01 Okay. And maybe Tom on that, you did 9,000 a little over $9,000 per subscriber in Q4. Is that I might have missed it during the early part of the call, but is there a guidance range for is it 9,000 through the balance of 21? Is it going up to 10? What number or range should we be thinking about for per subscriber value generation?
Yes. No, we didn't provide any color on the per subscriber amount, but rather the aggregate dollars of margin generated, which we think is really the best way to think about it. I did mention that because of the timing of realization of some of those synergies as well as the natural seasonality that we have that will be lower than the average in the first half, a little bit higher than the average in the second half and accelerating especially as we see those synergies realize throughout the year.
Okay. Thanks a lot. I appreciate the color. I'll pass it on.
Thanks, Brian. Thank you.
Our next question today is coming from Mark Strouse from JPMorgan. Your line is now live.
Yes, good afternoon. Thank you very much for taking our questions. Just following up on Brian's question there, kind of more longer term on the value per subscriber. Under PV6, you had talked about the $8,000 per household growing from different buckets, the cost synergies from Vivint, grid services, energy storage, which I think in the past you had talked about that number getting somewhere in the low to mid teens over time. Now under PV5 and a little bit higher starting point from 4Q with over 9,000.
I'm just curious if you can give an update on that bridge.
Yes. So a couple of things I'll note here. As I mentioned in the comments to Brian there, Q4 tends to seasonally be our highest performing quarter of the year on margin. So not the direct linear point to extrapolate from, but definitely proud of the improvements we made there and being above $8,500 or around $8,500 under the prior methodology. Then as we move to PV5, as I mentioned, that has positive impacts than the inclusion of these non capitalized costs that Dividend had included previously, which is more reflective of our direct businesses, those are all really incurred on that side, bring that number back down a bit.
I think the walk from there, we won, believe that we're able to continue to hold really strong margins here, while also investing and accelerating our growth at scale. So we're now providing guidance on growth of higher than what we had previously estimated. And so some investments there and continuing to invest in our brand and technology and differentiated from the pack. Long term, I think also the other things we've talked about continue to hold quite well. So as we deploy more batteries into the mix, those are margin accretive for us.
The grid services opportunities also continue to be margin accretive as we win more agreements and deploy contracts there. And then cost synergies as well, and those will be heavily realized throughout 2021 here. So certainly expect our year end 2021 margins to be better than the average year and exiting in a continued really strong position.
Okay. That's helpful. And then just a quick follow-up to that. I mean the Vivint synergies at 120 now instead of 90, just confirming those are still entirely cost synergies. And then if so, can you just give a bit more color into what's driving that?
Yes. So those are cost synergies that we're referring to here. As we dug in deeper and now have going on almost 5 months of integration under our belts, we're able to get a lot more confidence in what we're going to be able to deliver. And we saw improvements really up and down the entire cost stack there, sales, operations, G and A, definitely a bit more in some of the corporate overheads. And then also, our higher growth expectations for 2021 provide additional leverage against fixed costs and in some of our negotiations that are taking place to drive more cost synergies.
So seeing it sprinkled across, but happy to have given the update here from 90 up to 120.
Okay. I'll take the rest offline. Thank you.
Thank you. Our next question is coming from Stephen Byrd from Morgan Stanley. Your line is now live.
Just going back to the questions around federal legislation and we're fairly bullish about storage getting a separate tax credit. Would you mind just talking a little bit further to sort of the impacts, whether it be from the customer side in terms of adoption rates, because I guess already the demand appears to be very high, Lynn, as per your commentary. But just would you mind just provide a little more color if we did see a standalone tax credit for storage, how would you sort of think about that impacting your business? I presume the value per customer could sort of the net subscriber value, I guess, could go up. But would you mind just talking further to that?
Sure. And let me open with so we do believe that the growth rate of 100% installed this year is we will be easily able to achieve that. And from a demand standpoint, it would be even higher. It's just we are absolutely seeing some battery constraints. I think that's no surprise to anybody with the semiconductor shortage and just manufacturing generally.
So we're we do think that we're well positioned given just the competitive environment with the long term contracts that we have and with the fact that suppliers view us as the market leader that's going to put in good long term order profile. But what we've really seen is that because of the constraint in supply, the battery prices to the end consumer really haven't dropped to match where the input prices are. So in the short term, I think that demand for VARU would far exceed 100% growth. But even if the challenge really is we need to get more providers into the mix, which I think we will, but I think that's not a next quarter or 2 issue. It will take a few quarters for that to happen and then that will be prime to really unleash growth.
I think as we mentioned in the call in Texas just as one kind of early anecdote, the website traffic increased 3 50% just overnight, just to give you some indication of what we're seeing on the ground.
That's very helpful. And I guess stepping way back over a multiyear period of time, let's put the constraints on storage aside, which I know is easy to say and I know there are a lot of practical issues. But as you think about the importance of storage over time, what do you think is likely to be kind of the consumer preference for storage? You've talked a lot in the past about attach rates. I just want to make sure I'm thinking
over
a multi period of time, what kind of trends are you seeing there in terms of likely adoption rates? I'm guessing very high, but just make sure I thought about that correctly.
Very high. It will roll out a bit different geographically based on just local value proposition. And certainly in a place like Hawaii or California or Northern California, it's 80% plus and places where there's real resiliency issues and or really high power prices and or time abuse type rates. So that will drive very high attach rates. It is our belief that as you can get the unit cost down $4,000 or $5,000 it's going to be pretty ubiquitous because if you the early indications around how much revenue you can get off of grid services is $2,000 plus the net kind of outlay for that battery of just a couple of $1,000 we think will be exceedingly attractive for the benefits that it brings for resiliency.
So, internally, it is our vision that pretty much every single one of our solar systems should have battery attached to it, over the medium term.
That's helpful. And the data from the grid in place like Texas certainly does see to reinforce that view. That's all I had. Thank you.
Great. Thank you.
Thank you. Our next question is coming from Tristan Richardson from Truist Securities. Your line is now live.
Hey, good evening, guys. I appreciate the opportunity for questions. Just a quick question with respect to your comments on activity in Texas. Should we think of that opportunity near term as primarily a storage standalone service offering? I think we generally think of Texas as a low cost retail power state.
Is that still generally the case or should we generally expect penetration to accelerate there?
You mean of the solar plus the battery?
Right.
Yes. I would no, I believe that it makes more sense to pair the solar battery. So just to use an example, we had many multiple customers who had multi day outages. And so the battery was able to run through the night and then recharge the next day with solar. So we had to pull customers who lost our environment uninterrupted for 50 hours.
So you want the solar aspect to for the rechargeability and the pricing on that solar piece is really quite competitive now. I mean, I think we sold at $0.10 to $0.11 a kilowatt hour in Texas, and it is already competitive with many of the traditional rate plans. Plus, I think the fact that it's a fixed price will also be that much more attractive now given that people who really were so really felt the pain on some of these pass through variable rate plans.
That's helpful. And then just with
respect to the weather in Texas, could we see anything from a disruption perspective to the downside, whether it just be temporary outages or I know the installed base is relatively low there, but anything that we could expect to see disruption wise in the Q1?
No. That's the tough Brazilian. I mean, even if you look back to and you may remember this more than I do, but even with super high winds and Hurricane Sandy, I mean, we had 0 maintenance issues.
And this is Ed. And maybe just to expressly state it, none of our customers are on floating rate plans and we have no exposure as a company to wholesale power rates as well?
Yes, correct. That's helpful.
Thank you guys very much. Appreciate it.
Thank you. Next question today is coming from Eric Lee from Bank of America. Your line is now live.
Hey, good afternoon. Thanks So just wanted to touch upon the growth guidance again. So with 20%, 25% growth in megawatts for full year 2021, could you, 1, talk about your expectations for broader resi solar market growth? And 2, your long term annual growth expectations, is that still 15%, 20% as we step into 'twenty two?
Great question. I think it's this year is so dynamic just given the COVID situation and the cost of capital and new entrants and things. I think it is our and so I think we believe it's too early to call what the market growth rate will be. We feel confident in our market position and that we will be a share taker. We feel confident that we're able to hit 20% to 25% growth.
So I think that those are the statements we would make on that. I do think that one of the other things we're very encouraged by is this growth rate is clearly an acceleration for us and we're doing it at a large scale now. So if you look at the scale of Sunrun, we're twice as large as the next competitor doing an integration and yet we're accelerating growth, which makes us gives us a lot of confidence that potentially the growth rate could exceed what we had put in historically, but too early to call that right now.
Got it. And for storage, just to clarify on expectations, how many Brightbox units would your greater than 100% growth guide equate to is like greater than X units and also on storage?
We have I'll let you clarify first. Sure. We've had we disclosed that we have 16,000 in operation, but we have not given the last year specific number. So the 16,000 that are installed are cumulative.
Got you. And then just in terms of I know you mentioned the equipment supply constraints for storage, but how much of a constraint is the longer lead times to install storage currently? We're hearing that it's taking a good amount longer to for an installer to get the storage in and that's leading some installers to prioritize solar only?
Yes. I think that's thank you for pointing that out. I think that's why we really like to have a mid channel go to market strategy. I think it's we have been very effective and I think we're the only company that has both dealers as well as our own direct sales and installation workforce. I think part of being able to have that direct sales and install channel is that you're able to train your people, get up the learning curve, suffer maybe a few growing pains that happen.
And that's I think why we are up to such a fast start on storage versus the long tail. So yes, it's a more complicated product. It does you have to educate installers, you have to educate permitting departments. But we've already been through that, which is why, again, when we win battery constraints loosens up when prices come down to where they should be, we believe we're really primed to accelerate our lead there.
Got it. And one last question from my end and I'll take the rest offline. But just in terms of the shift that you talked about towards expanding customer advantages with over 550,000 customers to upsell to now, what is your timeline for pursuing these upsell opportunities? Is this something that we should expect to see in the middle of the year?
In terms of specifically going back and retrofitting batteries or other things?
Yes, batteries and other things that you've mentioned.
Yes. That is certainly an opportunity. We have not prioritized that today. We prioritize new Brightbox installations. 1, because again, there's some constraints and it's just way more efficient to do it all at the same time.
And because we believe the technology is improving so much that the retrofit option that will be available to consumers will be much better in the coming quarters. So we do expect that that will be a part of our plan this year, but the retrofit, but it has not been the corporate priority so far.
Got it. Thank you.
Thank you.
Thank you. Our next question is coming from Colin Rusch from Oppenheimer. Your line is now live.
Hey, there. It's Joe on for Colin. Circling back on the policy discussion, are you seeing any potential for cash in lieu of tax credits that could potentially be included in any of the federal spending bills this year?
Great question. This is Ed. This is a topic that some have been lobbying intensely on and we've not really been part of that effort. I would be surprised if that sort of policy is enacted into law, But it's certainly possible.
Got it. And then on the new geographies, it sounds like the Texas rollout is going really well. Does it make sense to move into any additional geographies looking into 2021?
Good question. I do think you will see that happen. The ones we announced this quarter, again, were San Antonio and Miami were 2 expansions that we have recently announced. And just as you continue to look at the fact that utility rates are continuing to rise and the fact that our costs are continuing to decrease, more and more markets are opening up and getting competitive. So I do think 2021 will be a year where you will see more new market expansions than we thought previously.
Now the growth targets that we put out there do not require us to any sort of massive geographic extension. It's more sort of same store. So that would be incremental to the stated growth. Okay.
Got it. If I could sneak one more in on the storage side. Are you seeing anything on the technology development front that would enhance the virtual power plant capabilities?
Just the fact that the grid keeps going down. That's the primary one. I mean, I think it's just the as we announced earlier in the quarter, the program, for example, that we announced with Southern California Edison, I mean, that is, I think, borne out of these rolling blackouts. And so I think there's just more regulator interest and more necessity for utilities to be coordinated to be able to dispatch the battery at a moment's notice when the break is taxed.
Great. Thanks so much.
Thank you.
Thank you. Next question today is coming from Philip Shen from Roth Capital Partners. Your line is now live.
Hey guys, thanks for taking the questions. From an absolute dollar standpoint, how much grid service revenue do you think you could generate in 2021? And then how do you think that trends as we get into 2022 and 2003?
So the we've announced 12 grid services programs, which we believe we're far we know are far and away the lead on. And we've really been working on, hey, how do we open up as many grid services markets and as many geographies as we can open up so that we're able to get access. So it's sort of like we're kind of building the foundation and building the market. The programs that we have announced for the most part have been in terms of just at our scale now, they're not huge contributors to the near term financial results. So when they do become big contributors, which we expect they will, we will definitely start to provide more color there.
But for now, it's really a it's still more in sort of I mean, I would say beyond pilot because we have a decent amount of assets committed, but it's still in sort of early innings.
Okay. Thanks, Lynn. And as you think about
the first half of twenty nineteen? So let me clarify one point there because in the past we have talked about we have talked about an additional $2,000 per customer being directionally the value that we think would net to Sunrun after any sort of customer enticement or any sort of other fees that you have to pay to operate and that still has no change there has been no change to that outlook.
Okay, great. And just as a kind of question of refinement, in terms of your contracts that you have with your clients, lease PPA contracts, what percentage of those have the capability to allow you to provide grid services and generate that revenue? Are we talking about half of the contracts or the vast majority? You guys have definitely demonstrated leadership here and want to just understand over time, how does this ramp and if you have that legal capability to is that box checked, for example, to give you that ability to ramp up nicely?
Ed, Tom, maybe you were I wasn't quite following the question.
Yes. I think the question is without express subsequent customer permission, about what percentage of our customer contracts would allow for enrollment in grid services. And I think the answer to that is certainly over the last several years on the legacy Sunrun side of the house, they all have. I think we still feel like working with our customers is maybe the better course of action, But it's a very, very material number of customers.
Correct.
Great. Okay. Thanks guys. I'll pass it on.
Thanks, Phil.
Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to management for any further or closing comments.
All right. Well, thank you everybody, and we'll talk to you again in another quarter. Take care.
Thank you. That does conclude today's teleconference. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.