Good afternoon, ladies and gentlemen, and welcome to the Q1 2019 Sunrun Earnings Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and then instructions will follow at that time. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr.
Patrick Jobin. Please go ahead.
Thank you, Angela, and thank you for those on the call for joining us today. 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 Jurich, Sunrun's Co Founder and CEO Bob Komen, Sunrun's CFO and Ed Fenster, Sunrun's Co Founder and Executive Chairman. The presentation today will use slides, which are available on our website at investors. Sunrun.com. And now, let me turn the call over to Lynn.
Thanks, Patrick. We are pleased to share with you Sunrun's Q1 results along with progress against our strategic priorities. In the Q1, we added more than 11,400 customers, representing 86 megawatts of deployments, a 27% year over year improvement. We generated $77,000,000 of net present value and created NPV per watt of $1.06 or $8,100 per customer. For the year, we are reiterating our growth guidance and cash generation of over $100,000,000 while raising our unit margin target.
These strong results can be achieved while investing in our customer experience and product leadership for long term differentiation. We have now installed over 5,000 Brightbox battery systems and continue to expect Brightbox installations to grow over 100% in 2019. We have launched the service in 8 states and it represents over 10% of our direct business overall and more than 25% in California. Brightbox provides customers with backup power and the ability to turn unfavorable rate changes into a benefit by using stored power at high cost times. It also offers Sunrun additional revenue streams through energy services.
As we've stated before, we believe energy services can add an incremental 25% to net value per customer. It also protects us against attempts by incumbents to undermine the value of residential solar. Given the value inherent in distributed solar and batteries, along with the increased competitive advantages they bring, we expect Brightbox to become our standard offering over the coming years. Sunrun is helping our country decarbonize through our rapidly growing customer base and pioneering work building the future energy system. Consumer preferences for clean energy they can control and rapid advancements in battery technology operators as well as our individual customers.
This will help us create a 100% clean energy future for Americans and a model for the rest of the world, whether or not you have solar panels on your roof. Last quarter, we demonstrated our initial success towards this effort, winning a 20 megawatt capacity bid in the ISO New England auction from an anticipated 5,000 Brightbox systems. This quarter, we've identified 2 additional opportunities to replace traditional infrastructure with superior customer sided resources. The City of Los Angeles has resource needs following the decommissioning of a fossil fuel power plant. We have proposed a solution to replace this capacity.
Our analysis found that as few as 75,000 Los Angeles homes with solar and batteries could provide a virtual power plant and replace the lost capacity. We estimate that doing so could save almost $60,000,000 as compared to an equivalent new gas plant. In addition to these direct savings, solar and batteries add quality jobs, cleaner air, lower energy costs and more reliable power for communities and businesses. Building clean energy locally eliminates the need for expensive transmission lines to move power into the city and can help strengthen an aging distribution grid, preventing blackouts and providing emergency backup power when outages occur. Our analysis also highlights how much room there is for Sunrun to grow.
Despite the significant expansion of residential solar, Los Angeles is home to only 100 and 80 megawatts of residential solar installed on 36,000 homes. This represents only 2.5% of the 1,300,000 total customers. Another report by the New York grid operator has highlighted that the best place to clean energy is local, where customers are. The grid operator warned that without upwards of $1,000,000,000 in new transmission lines into the New York City region, electricity from upstate renewables won't reach the city. With over 3 gigawatts of fossil fuel peaker plants in New York City and Long Island slated for retirement in the early 2020s, the role for local rooftop solar and battery storage as a cost effective peak capacity resource couldn't be more clear.
Turning now to our sustainability efforts. We as a company along with many of our shareholders care about leading in ESG matters as a foundation for building a strong and enduring company. We recently adopted a supplier code of conduct that reflects our commitment to doing business ethically and means that we will only work with vendors and suppliers who share the same commitment. To both advance and demonstrate our commitment to diversity and inclusion in the workplace, this quarter we joined 2 leading groups, the CEO Action for Diversity and Inclusion and the Catalyst CEO Champions for Change, signing on with many Fortune 500 Companies in the pledge to advance positive social change, including by maintaining and accelerating representation of women on our Board of Directors and driving diversity and inclusion as part of Sunrun's culture. Examples of this commitment include our achievement of gender pay parity last year and our demonstrated solar industry leadership on these issues based on a report published this week.
I'll now turn the call over to Bob Komen, our CFO to review Q1 performance and to discuss guidance in more detail.
Thanks, Lynn. Customer NPV in the Q1 was approximately $8,100 or $1.06 per watt. Project value per customer was approximately $34,600 or $4.52 per watt in Q1. As a reminder, project value is very sensitive to modest changes in geographic channel and tax equity fund mix. Turning now to creation costs on Slide 8.
In Q1, total creation costs were approximately $26,500 per customer or $3.46 per watt. Similar to project value, creation costs can fluctuate quarter to quarter. Creation cost per watt improved $0.05 year over year. We expect creation cost to show modest declines for the full year 2019, even as we deploy more Blended installation cost per watt, which includes the cost of solar projects deployed by our channel partners as well as installation costs incurred for Sunrun built systems improved by $0.07 year over year to $2.58 per watt. Install costs for systems built by Sunrun were $1.95 per watt.
In Q1, our sales and marketing costs were $0.78 per watt. Our total sales and marketing unit costs are calculated by dividing costs in the period by total megawatts deployed. A higher mix of direct business results in higher reported sales and marketing cost per watt, but it also means there will be lower blended installation cost per watt over time due to the higher mix of direct business installations at a lower cost per watt. In Q1, G and A costs were $0.29 per watt, a slight improvement from Q1 of 2018. Finally, when we calculate creation costs, we subtract the GAAP gross margin contribution realized from our platform services.
This includes our distribution, racking and lead generation businesses as well as solar systems we sell for cash or with a 3rd party loan. We achieved platform services gross margin of $0.20 per watt. In the Q1, we deployed 86 megawatts. Our cash and third party loan mix was 16% in Q1, in line with recent levels. We expect this mix to be in the mid to high teens for the year.
Turning now to our balance sheet. We ended the Q1 with $310,000,000 in total cash, a $6,000,000 increase from last quarter, while also reducing our recourse debt by $8,000,000 generating $14,000,000 of cash in the quarter. We continue to expect cash generation to increase to over $100,000,000 in 2019. Quarterly cash generation can fluctuate due to the timing of project finance activities, but this represents our best view based on our plans for the remainder of the year. We define cash generation as the change in our total cash less the change in recourse debt.
Also, please note that our cash generation outlook excludes any strategic opportunities beyond our current plans, along with ITC safe harboring activities, which we may undertake. Net income to common shareholders and EPS was slightly negative in the quarter. As the growth rates in our direct business exceed the growth in our channel business, we have more GAAP costs expensed upfront instead of capitalized and amortized over 20 years or more. Given faster growth rates in our direct business, this trend may continue. Our focus is on managing the business to our key value creation metrics of cash generation, NPV and building a growing base of valuable customers.
Moving on to guidance on Slide 9. We continue to expect full year 2019 deployments to grow between 16% 18%. We are increasing our unit economics to $1.15 or greater per watt in NPV, up from the prior target of $1.10 In the Q2, we expect deployments to be in the range of 102 megawatts to 104 megawatts. Now let me turn it over to Ed.
Thanks, Bob. Today, I plan to discuss our capital strategy for the remainder of 2019, and I'll also review net earning assets and capital runway. By mid year, we continue to expect to execute on better terms than our Q4 2018 transaction, a securitization of assets that have been operating for 5 or more years. We expect to generate proceeds that exceed or are consistent with our valuation framework that uses gross earning assets as a book value measure. This highlights the quality of our assets and our capability to continue to extract value from them over time.
Moving to Slide 10 at quarter end, net earning assets was $1,400,000,000 an increase of $143,000,000 or 11% year over year. Net earning assets is our way to describe the value of the cash flows to Sunrun shareholders after payments to financing counterparties. Cash was $310,000,000 total cash less recourse debt increased $75,000,000 from the prior year period. Turning finally to our pipeline, our tax equity and debt capital commitments provide runway through Q4 2019. With that, I'll turn the call back over to Lynn.
Thanks, Ed. Let's please open the line for questions.
Our first question comes from the line of Michael Weinstein with Credit Suisse. Please go ahead.
Hi, guys.
Hi, Michael.
Hey, just to start off, maybe we could talk a little bit about the news last week that Tesla was going to be cutting prices for its solar option at SolarCity. I realized that the New York Times report initially came out quoted a 41% reduction in cost, but that turned out to be an error and is only 16%. But maybe you could just talk about what the viability of that strategy just in general. I mean, how much can cost really be reduced off the sales process? And also whether do you think there is a threat from Tesla ever in the future at any point or anybody else for that matter?
Yes. Thanks, Michael. Tesla certainly gets a lot of attention. So we do think that's great for the industry because as we've always said, more awareness at this stage in the game really raises the boat for everyone. So we like the attention.
But in terms of the specific tactic, first of all, I believe they announced lowering prices already back in November. As you can see with our share gains, we like our competitive position just given that that wasn't announced I think made about 6 months ago. In terms of the specific tactic around trying to standardize and automate, we don't think necessarily there's anything particularly proprietary about it. We certainly pursue those efforts wherever possible as well and there's wherever they make sense. And we certainly believe that there might be a small segment of customers where this can be a good strategy, but that the majority of customers still very much benefit from a consultation and something more customized.
So just to answer a few other of your derivative questions, I think on the cost side, what can you do with acquisition cost? We do continue to believe that our lifetime values of our customers support the acquisition cost where it is. I mean, just in looking at the total net present value of our customer in the quarter is over $8,000 So, we're cash flow positive, we're making money and we're taking share. And so, we think that's the right strategy. And I think just to put our money where our mouth is on that, you see that reiterate the growth acceleration this year from last year.
At the same time, we're increasing our unit margin targets, just underscoring that we like our competitive position and our strategy.
Got you. Hey, a question about the on Slide 11 regarding the value of future cash flows. It looks like contracted net earning assets, that portion of it went down slightly from 2018 and Q1 of 2019 and that's made up more than made up for in the renewal asset value. Just wondering if that's a result of higher debt that's being put on to the contracts or being assigned to the contracts. Is that maybe you could just talk about that?
Sure. Hi, it's Ed. Good afternoon. So, we're obviously pleased with the cash generation that we turned in Q1, particularly in light of it being the seasonally toughest quarter for the business. Certainly, the cadence of financing activities is such that in any given quarter, you can see fluctuations up or down.
And we continue to manage the business in such a way that we expect to generate cash and add to book value. So, I wouldn't read anything particular into the results this quarter. We'll continue to add to the book value and our cash balance over time.
Along the same lines, when do you when are you planning on coming back to the market for more ADS refinancing or any kind of debt activity?
Sure. So, we still anticipate that our next transaction in the ABS market will be mid year this year. I expect it will be, as I suggested on the call, a transaction that is principally assets that we've placed in service more than 5 years ago And looking forward to that transaction and obviously are working to have that executed soon and then expect there to be more work that we'll be doing in the debt financial markets over the balance of the year as well.
Are you seeing spreads continuing to improve at this point, loan to value?
So, the financial markets this year generally have been favorable. The base rate, the treasury rate obviously has fallen. Spreads certainly compressed since December and have stabilized. And so, we think that the financial markets are in a good spot. Obviously, the day to day news is difficult to predict these days.
But overall, I think we feel like the markets are in a good spot and we're optimistic for good execution.
All right. Thanks a lot. I'll let somebody else have a crack at it.
Thanks, Michael.
And your next question comes from the line of Julien Dumoulin with Bank of America Merrill Lynch. Please go ahead.
[SPEAKER JULIEN DUMOULIN
SMITH:] Hey, good afternoon, everyone.
Good afternoon.
Hey. So perhaps just to go back to I believe this is later in the slide deck on Slide 9. The NPV per watt, you obviously raised that in terms of your total number to 115 from 110. And as you said already, 1Q perhaps isn't necessarily when you would expect these kinds of things given the seasonality here. What drives the confidence early in the year to already bump this up?
Is this something about cost? Is this something about confidence in customers, what you're selling and where regionally? Just wanted to get some sense of that confidence.
Sure. I think we're we see confidence on both sides of the equation. So if we look at our project value throughout the year and also improvement on slight improvement on the cost side. So those compounded together. And it's really just a factor of just more confidence in the execution capabilities.
I think we're also constantly looking and trimming business that we don't like or doesn't hit our thresholds. And so I think in Q2, we do expect that we have good confidence in the growth rate and that gives us more confidence to trim some of the less profitable business, particularly in the channel area for next quarter.
Excellent. And then turning over to the others or the north you're focusing more on the northeast markets rather. Can you talk about SRAX and just any monetization opportunities or anything as you think about kind of trying to highlight that value to any extent, is there any ability to sell this on a more forward basis rather than sort of the traditional 3 year forward look that you've done? And then maybe in tandem with that, I'd be curious, how are you seeing the New Jersey market evolve here given some of the questions before the BPU and as well as any if there are any thoughts on Massachusetts given some of the changes in that market too?
Sure, Julien. It's Ed. Good afternoon. So to your question, so first, we obviously continue to evaluate our SREC portfolios. Actually in the quarter, we did do a transaction that was designed to sort of hedge SREC prices more significantly than we had before.
So in the financial statements, for instance, you'll see we substituted one liability deferred revenue for another project debt as we retired some of the debt we had against SREC contracts and firmed those up in a transaction with a third party. That transaction included about half, maybe slightly more than half of the assets that we have installed in SREC states. With the New Jersey program, we expect that the state will implement a successor program or if not a stopgap program prior to the exhaustion of the current program, which even assuming some rush to interconnect towards the end, I think best estimates in the marketplace or that would be around Q1 of 2020. The next program is likely to be a little less generous, but we also see cost declines in those markets and so expect those markets will continue to grow.
Sorry, just to clarify, what was the size of the SREC transaction?
The amount of the transaction in the footnote, I believe it was $95,000,000 and but most of the proceeds were used to retire debt previously against the contracts.
Got it. Excellent. Thank you all.
Thanks, Julien.
And your next question comes from the line of Brian Lee with Goldman Sachs. Caller, please go ahead.
Hey, guys. Thanks for taking the questions. I might have missed this, but did you make any comments around your the Safe Harbor strategy for the year? Any updates there and then implications for near to medium term cash flow?
Sure, Brian. It's Ed again. Good afternoon. We didn't make any comments on the call regarding the Safe Harbor. We are excited about the opportunity that the Safe Harbor provides us.
That said exactly what materials we would safe harbor and to what extent we view as proprietary and also subject to ongoing RFPs. So, we think it would be premature for us to chat about that at the moment. But over the course of the year, as we continue to evaluate the results of those RFPs as well as technological and political developments, we'll have more details to share in the future.
Right. Fair enough. Then I think someone alluded to this a little bit earlier in the call, but maybe I'll ask it kind of in a different way. If you look at Slide 10, it looks like net earnings assets has been flattish for a few quarters sequentially on a pretty consistent basis over the past year or so. Again on Slide 10 and then gross has been growing a lot more consistently.
Does this have all to do with how you're financing the assets? I'd be curious if there's something structurally different there over the past year or so since if I recall correctly the growth in net balances had been more correlated in the past?
Sure. So Brian, it's Ed again. So, as we described on the call, net earning assets increased about 11% in the year and $75,000,000 of cash was generated in the year as well. So to a certain extent, the value that we generate, we take it in period and some of it we defer over time. Given the improvement in the capital markets for subordinated debt, the fact that those sorts of securities can now be called and refinanced, there's increasingly less trade off in financing some of those more cash flows upfront.
So that's been something that we've been on the margin playing with kind of over the last year. But we think that the increase in net earning assets taken together with the increase in cash is the strong result for the company.
All right. And should we read into that, that just given that environment, it will probably be a similar trend on those two metrics moving through the year?
I mean, certainly, we'll have quarterly fluctuations in these metrics based on the timing of individual project finance transactions. But certainly at the moment, I think our current trends give or take we expect will continue over the course of the year.
All right. Thanks a lot guys.
Thanks Brian.
And your next question comes from the line of Philip Shen with ROTH Capital Partners. Caller, your line is open.
Hi, everyone. Thanks for the questions. The first is on California. It looks like all 3 utilities there are looking to at least request a much larger return on equity for shareholders. And it looks like rates could increase by as much as 12% for customers.
Let's say this comes through, it seems like you might have an opportunity to raise your price commensurately and our back of the envelope analysis suggests that you can increase your NPV per watt by $0.25 or you could invest in growth as well. So how would you guys want to prioritize if this were to come through the additional value? Would you focus on growth? Would you focus on NPV or something else altogether?
Thanks for the question. It's a great question. And I would also add to that. It's not just the increase the potential price increase, but also the outages that are planned. So it's worth noting that PG and E itself has come out and said they're expecting to turn power off for as many as 5,000,000 customers.
So I think the combination of that and how visceral that will be when people have their power up for multiple days, in connection with a lot of news around these price increases, We do we are encouraged what that will do for customer awareness. In terms of how that plays out, I think that will be something that will make the decisions when we look at what the incremental business could yield at different customer acquisition costs. But certainly, there is an opportunity to increase price. As we think about just our longer term ITC strategy that's our and how we absorb that decline. We've always said that we expect that we'll be able to increase our project values by about 2% per year while improving costs at about 4% ish.
And so that kind of a dimension may be in the zone there and a good way to think about it. But I think the bigger story is just one of the issues with one of the challenges in acquiring customers has been awareness, urgency of why they do this now. And so this factor, the awareness around the price increases in the wildfires plus the reason to do it now because your power is going to be turned off, that is a really powerful marketing benefit to us.
Great. Thanks, Lynn. Shifting gears to something you guys talked about in your prepared remarks in terms of grid services and capability for LA as well as, I believe, New York. Could you talk perhaps expand on what you guys talked about there and specifically talk to timing? Sorry if I missed it, but I don't think you guys talked about timing of when, for example, the LA opportunity could be realized.
Thanks.
Yes, great question. We are very excited about the progress being made on energy services. And so the way we're pursuing that business is we're pursuing it in 2 ways. One is we're just going direct to customers and offering Brightboxes to as many customers as possible because the value proposition stands on itself in many way in places with time of these rate structures plus with backup power. At the same time, we're trying to open up these contracts with utilities or these other virtual power plant opportunities where we can start to leverage those assets and thinking about like a sharing economy.
People aren't going to use the battery all the time. So we should set up our program and our platform and our technology to actually share those batteries and replace traditional utility CapEx, which is a $50,000,000,000 annual market. So the reality of these programs is that they take there are multi years in terms of setting them up. If you look at the ISO New England win as an example, that's 3 years out. But once you set the programs up, they're very scalable.
And we think it will be an increasing competitive advantage for us and for our customers given that we have the market share and the sophistication to be setting them up today in order to yield the benefit. And so we expect and we've shared that per margin per customer potential would be about a 25% incremental value. But we haven't come out with specific guidance around, hey, next year, the year after, here's what we expect because these are multiyear programs to set up.
Okay, fair enough. Shifting gears to the California new home mandate. Under that mandate, how do you expect customer acquisition costs in this channel to compare with your other channels? And ultimately, do you expect the same NPV per watt in this channel? And I know I'm kind of asking the question from 2 different perspectives there.
Or do you expect there to be somewhat lower NPV per watt? Are you willing to accept the lower NPV per watt given the potential volume that could come through from some of these builders?
Yes, it's a great question. We will we don't believe that we have to materially compromise on the margin at all in that market and we wouldn't expect to. So we again, our current strategy and the way we run the business is so that incremental customers generate cash to us. And so you need to be at that sort of dollar ish plus level in order to be in that type of position. We also like our competitive position with that new homes market as well because it's increasingly clear that the builders prefer the 3rd party owned business model, the service business model versus owning it because it's more efficient.
People want to use their mortgage capacity for a bigger house or other features in the home. And so, by us owning and paying for it, it's just the builder doesn't have to pay and the home buyer doesn't have to pay. It's much more efficient. So, just by definition, that's a market where we have 40 plus market share. So we like our competitive position in being able to offer that
product.
And your next question comes from the line of Joseph O'Salle with JMP Securities. Please go ahead.
Who knew that was my last name? It's very exciting. Great interest
didn't tell you that.
Apparently not. So a couple of ones. Ed, actually to refer to back to a comment you made earlier, I thought was interesting. Are you basically saying that upfront cash equity or upfront monetization is a result of what's happening in the market now no longer carries that kind of total IRR penalty that it did before. I remember you had your position had been for a long time that if you could retain as opposed to cashing out in the end it was more efficient.
Are you saying something different now?
Joe, I think we're just saying on the margin that it has become easier to obtain call options and retain overall asset control given improvements in the market, which one, yes, does create a little bit less of a penalty for obtaining more financing upfront, but also gives you more control as it just makes things simpler if you're going to offer storage retrofits or other products for existing customers. You don't longer have quite the complexity if you had like an equity owner in the project or something that wasn't you. So, there is a simplicity benefit and there is a flexibility benefit as the terms in that market sort of for subordinated debt continue to become more sponsor friendly.
So it's really more about callable debt than it is cash equity. Is that correct?
Correct.
Obviously, with
the callable
debt, we retain full refinancing upside, full opportunities in that context.
Okay, great. To amplify a little bit on what Philip was asking, this New England ISO deal was a capacity market deal. As you look at California and all of this potential for utilities turning off and so forth, is there some potential for pooling these assets in the locale, for example, to provide some kind of, I don't know what to call a community island or something? Or when we're thinking about your conversations with CAIs or in regulators, is it still going to be just a fairly straightforward capacity kind of deal?
No, there certainly are those opportunities and we're taking it upon ourselves to present them. And so I think there's the powers that be in the situation are scrambling, but we believe we have very compelling solutions to help set up micro grids and we're trying to figure out who do we want to team up with to offer those. And so I think stay tuned. We're not announcing anything yet, but we're certainly working on those ideas. And in the meantime, we're pursuing the path to just sell Brightboxes direct to customers, which we're quite excited about the prospects.
And just so I'm clear, this is going to be CA ISO more than anyone and we've already had the FERC ruling.
So, I mean, I think we're pursuing the ability to sell into either that sort of wholesale type structure or have bilateral agreements with the utility or the CCA presents an interesting opportunity as well. So I think energy because it's so local, there will be different business models with which where we sell our grid services into. So I think in California, it's still very much TBD.
Got it. Thanks. And then one last one. Back, Ted, your comment on ABS. Obviously, your Sunrun's position has been and I think it makes sense that net metering relationships from the market about how they feel about PG and E assets and whether there's been any kind of sense as to how that's going to go given the utility status?
No, I mean appetite to finance assets in California investor owned utilities is as strong as ever, if not becoming just nationally stronger. The recent track records with net metering are positive states that had diminished or were considering diminishing net metering are more returning to net metering, Maine as an example, Connecticut as an example, then the other way around. So, the regulatory environment has been very supportive and we are not aware of any widget through the bankruptcy of PG and E or any other California utility that could diminish that relationship. And to Lynn's earlier comment with rates increasing and reliability falling, consumer interest in on-site energy is increasing and I think consumers would react very negatively to having those options diminished against the backdrop of the current environment.
Okay. I agree. Thank you very much. Thanks. And
your final question comes from the line of Colin Rusch with Oppenheimer. Please go ahead.
Thanks so much for fitting me in. As you look at optimizing your upfront capital, I know you've done a couple of structures there. What new opportunities are you starting to see out there? We've seen some innovative structures with some of the other asset owners in the public markets.
Sure. So, I think the big picture, which is encouraging to us, is that the overall interest in residential solar assets grows, the performance history expands and multiple options continue to be available to us. Again, I think as we plan for the future of the company, as we may expand our offerings to customers beyond simply rooftop solar, the more control and ownership we have in these assets, the easier that will all be. And so, I think, although certainly, we evaluate all possibilities on a case by case basis, maintaining flexibility is important to us and what we're doing currently is working. And I think over time it's just going to be cheaper and deeper as a market and we're encouraged about that.
Okay.
And then with going back to solar customer existing solar customers and trying to sell additional services, you highlighted that as an opportunity. But certainly it sounds like there's going to be some acute opportunities over the near term, particularly in California. What sort of success rates or data do you have on take rates for existing solar customers getting retrofits of batteries or additional services?
Thanks for asking that question. It's a good thing to clarify. We currently have not offered that product. It's been it's our judgment that putting Brightbox on new builds is much more efficient and so we focused our efforts there as we launched it. So we currently haven't offered it, so we don't have any data to share on that currently.
And maybe just to clarify my comments, certainly we do expect technology to evolve and products to improve over time. And the assets that we're financing today, we are putting 7 to 20 plus year capital in place. And so obviously, as we plan for that, we want to maintain that flexibility over not just the near term, but the medium to long term as well.
Okay. Thanks so much, guys.
Thanks, Colin. Okay. Thank you, everyone, and have a great evening. Bye bye.
And ladies and gentlemen, this concludes today's conference. Thank you for your participation, and have a wonderful day. You may now
disconnect.