Earnings Call: Q1 2019

May 8, 2019

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. If anyone should require assistance during the conference, please press star then zero on your touchtone telephone. 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 Komin, 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. Now let me turn the call over to Lynn. Thanks, Patrick. We are pleased to share with you Sunrun's first quarter results, along with progress against our strategic priorities. In the first quarter, we added more than 11,400 customers, representing 86 MW of deployments, a 27% year-over-year improvement. We generated $77 million 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 million 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 eight 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 a 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 mean that households will increasingly get a major portion of their energy on-site. We are designing our footprint of energy assets to provide ongoing value to utilities and grid 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 two additional opportunities to replace traditional infrastructure with superior customer-sited 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 million 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 180 megawatts of residential solar installed on 36,000 homes. This represents only 2.5% of the 1.3 million total customers. Another report by the New York grid operator has highlighted that the best place to put clean energy is local, where customers are. The grid operator warned that without upwards of $1 billion 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 two leading groups, the CEO Action for Diversity & 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 Komin, our CFO, to review Q1 performance and to discuss guidance in more detail. Thanks, Lynn. Customer NPV in the first quarter 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 eight. 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 costs to show modest declines for the full year 2019, even as we deploy more Brightbox battery systems and make investments to grow our direct business. As a reminder, our cost stack is not directly comparable to those of peers because of our channel partner business. 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, 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&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 third-party loan. We achieved platform services gross margin of $0.20 per watt. In the first quarter, we deployed 86 MW. 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 first quarter with $310 million in total cash, a $6 million increase from last quarter, while also reducing our recourse debt by $8 million, generating $14 million of cash in the quarter. We continue to expect cash generation to increase to over $100 million in 2019. Quarterly cash generation can fluctuate due to the timing of project finance activities, 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 up front 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 nine. 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 second quarter, we expect deployments to be in the range of 102 to 104 MW. 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 five 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 $1.4 billion, an increase of $143 million 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 million. Total cash less recourse debt increased $75 million 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. Ladies and gentlemen, if you have a question at this time, please press the star then the number one key on your touch tone telephone. If your question has been answered or you wish to remove yourself from queue, please press the pound key. 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 realize that The New York Times report initially came out quoted a 41% reduction in cost, but that turned out to be an error, and it was only 16%. Maybe you could just talk about the viability of that strategy just in general. How much can cost really be reduced off the sales process? 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. 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. We like the attention. 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 was an announcement, I think made about six months ago. In terms of a 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 wherever they make sense. 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. Just to answer a few other of your derivative questions, I think, on the cost side, what can you do with acquisition costs? We do continue to believe that our lifetime values of our customers support the acquisition cost where it is. Just in looking at the total net present value of our customer in the quarter is over $8,000. We're cash flow positive, we're making money, and we're taking share. We think that's the right strategy. I think just to put our money where our mouth is on that, you see us 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 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 in the first quarter of 2019, and that's more than made up for in the renewal asset value. Just wondering if that's a result of higher debt that's being put onto the contracts or being assigned to the contracts. Maybe you could just talk about that. Sure. Hi, it's Ed. Good afternoon. We're obviously pleased with the cash generation that we turned in 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. We continue to manage the business in such a way that we expect to generate cash and add to book value. I wouldn't read anything particular into the results this quarter. We'll continue to add to the book value in our cash balance over time. Well, along the same lines, when are you planning on coming back to the market for more ABS refinancing or any kind of debt activity? Sure. 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 five years ago. Are looking forward to that transaction and obviously are working to have that executed soon. 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 on the value? 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. 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. Your next question comes from the line of Julien Dumoulin-Smith with Bank of America Merrill Lynch. Please go ahead. Hey, good afternoon, everyone. Good afternoon. Hey. Perhaps just to go back to, I believe this is later in the slide deck on slide nine. The NPV per watt, you obviously raised that in terms of your total number to 115 from 110. 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 it 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 see confidence on both sides of the equation. If we look at our expectations, why we got more confidence to increase that, it's on both sides. We expect slight improvement to the project value throughout the year, and also slight improvement on the cost side. Those compounded together. 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. 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. Turning over to the other or focusing more on the Northeast markets rather, can you talk about SRECs 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 three-year forward look that you've done? 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 if there are any thoughts on Massachusetts, given some of the changes in that market, too? Sure, Julien. It's Ed. Good afternoon. To your question. 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. 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 that we had 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 are that would be around Q1 of 2020. The next program is likely to be a little less generous. We also see cost declines in those markets, and 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 million. Most of the proceeds were used to retire debt previously against those contracts. Got it. Excellent. Thank you, all. Thanks, Julien. 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, did you make any comments around the safe harbor strategy for the year? Any updates there, 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. Exactly what materials we would safe harbor and to what extent we view as proprietary and also subject to ongoing RFPs. We think it would be premature for us to chat about that at the moment. Over the course of the years, 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. I think someone alluded to this a little bit earlier in the call. Maybe I'll ask it kind of in a different way. If you look at slide 10, it looks like Net Earning Assets have been flattish for a few quarters sequentially on a pretty consistent basis over the past year or so. Again, on slide 10, 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, Brian, it's Ed again. Yeah, we described on the call Net Earning Assets increased about 11% in the year, and $75 million of cash was generated in the year as well. 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 up front. That's been something that we've been on the margin playing with kind of over the last year. We think that the increase in Net Earning Assets taken together with the increase in cash is a strong result for the company. All right. Should we read into that just given that environment, it'll probably be a similar trend on those two metrics moving through the year? Certainly we'll have quarterly fluctuations in these metrics based on the timing of individual project finance transactions. 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. Your next question comes on 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. Looks like all three 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 pricing commensurately, and our back of the envelope analysis suggests that you can increase your NPV per watt by $0.25. You could invest in growth as well. 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. I would also add to that, it's not just the potential price increase, but also the outages that are planned. It's worth noting that the PG&E itself has come out and said they're expecting to turn power off for as many as five million customers. I think the combination of that and how visceral that will be when people have their power out for multiple days, in connection with a lot of news around these price increases, we are encouraged what that will do for customer awareness. In terms of how that plays out, I think that will be something that we'll make the decisions when we look at what the incremental business could yield at different customer acquisition costs. Certainly there is an opportunity to increase price. As we think about just our longer-term ITC strategy 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. That kind of a dimension may be in the zone there and a good way to think about it. I think the bigger story is just one of the challenges in acquiring customers has been awareness, urgency of why to do this now. 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 L.A. as well as I believe New York. Could you perhaps expand on what you guys talked about there and specifically talk to timing? Sorry if I missed it, I don't think you guys talked about timing of when, for example, the L.A. opportunity could be realized. Thanks. Great question. We are very excited about the progress being made on energy services. The way we're pursuing that business is we're pursuing it in two ways. One is we're just going direct to customers and offering Brightbox to as many customers as possible because the value proposition stands on itself in many places with time of use 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 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 billion annual market. The reality of these programs is that they are multi-years in terms of setting them up. If you look at the ISO New England one as an example, that's 3 years out. Once you set the programs up, they're very scalable. We think it'll 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. We expect, and we've shared that the per margin, per customer potential would be about a 25% incremental value. We haven't come out with specific guidance around, hey, next year, the year after, here's what we expect, because these are multi-year 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? Ultimately, do you expect the same NPV per watt in this channel? I know I'm kind of asking the question from 2 different perspectives there. 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? Great question. We don't believe that we have to materially compromise on the margin at all in that market, and we wouldn't expect to. Again, our current strategy and the way we run the business is so that our 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 like our competitive position with that new homes market as well, because it's increasingly clear that the builders prefer the third-party-owned business model, the solar as a 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. By us owning it and paying for it, the builder doesn't have to pay, and the home buyer doesn't have to pay. It's much more efficient. 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. Okay, great. Thanks very much. I'll pass it on. Thank you. Your next question comes on the line of Joseph Osha with JMP Securities. Please go ahead. Who knew that was my last name? It's very exciting. Your grandparents didn't tell you that? Apparently not. A couple of ones. Ed, actually, to refer 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 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, yes, does create a little bit less of a penalty for obtaining more financing up front, 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 no longer have quite the complexity if you had an equity owner in the project or something that wasn't you. There's 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. It's really more about callable debt than it is cash equity, is that correct? Correct. Okay With the callable debt, we retain full refinancing upside, full control of the assets. There are more no regret sort of opportunities in that context. Okay, great. To amplify a little bit on what Philip was asking, this ISO New England 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 a 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 CAISO and regulators, is it still going to be just a fairly straightforward capacity kind of deal? There certainly are those opportunities, we're taking it upon ourselves to present them. I think the powers that be in this situation are scrambling. We believe we have very compelling solutions to help set up microgrids, and we're trying to figure out who do we want to team up with to offer those. I think, stay tuned. We're not announcing anything yet, but we're certainly working on those ideas. In the meantime, we're pursuing the path to just sell Brightbox direct to customers- Sure which we're quite excited about the prospect. Just so I'm clear, this is going to be CAISO more than anyone, and we've already had the FERC ruling. Is it going to be CAISO, or who do you have to interface with? I think it's really dynamic in California. Will it be CAISO? Will it be the utility directly? Will it be CCAs increasingly? I think there's a lot in flux still. Okay, thanks. I think we're pursuing the ability to sell into either that sort of wholesale type structure or have bilateral agreements with a utility, or the CCA presents an interesting opportunity as well. I think, energy, because it's so local, there will be different business models with which, where we sell our grid services into. I think in California, it's still very much TBD. Got it. Thanks. Then one last one. Back, Ed, your comment on the ABS. Obviously, Sunrun's position has been, I think it makes sense, that net metering relationships are regulatory mandated. They're not contracts, so they're not at risk. I'm wondering if you've gotten any kind of early signals from the market about how they feel about PG&E assets and whether there's been any kind of sense as to how that's going to go given the utility status. No, 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, than the other way around. The regulatory environment has been very supportive. We are not aware of any widget through the bankruptcy of PG&E or any other California utility that could diminish that relationship. 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. 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. 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. 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. I think over time it's just going to be cheaper and deeper as a market, and we're encouraged about that. Okay. Going back to existing solar customers and trying to sell additional services, you highlighted that as an opportunity. 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 our judgment that putting Brightbox on new builds is much more efficient. We've focused our efforts there as we've launched it. We currently haven't offered it. We don't have any data to share on that currently. Okay. Maybe just to clarify my comments. Certainly we do expect technology to evolve and products to improve over time. The assets that we're financing today, we are putting seven to 20-plus year capital in place. 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. Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and have a wonderful day. You may now disconnect.