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What changed in Sunrun Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Sunrun Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+560 added−542 removedSource: 10-K (2026-02-26) vs 10-K (2025-02-27)

Top changes in Sunrun Inc.'s 2025 10-K

560 paragraphs added · 542 removed · 448 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

75 edited+12 added−9 removed38 unchanged
Biggest changeThe Inflation Reduction Act of 2022 (the “IRA”) was signed into law by President Biden on August 16, 2022, and some of its notable provisions include: • the eligibility of solar facilities placed in service in 2022 (regardless of when construction began) and prior to January 1, 2025, or, at the election of the taxpayer, solar facilities that began construction prior to January 1, 2025 and are placed in service on or after January 1, 2025, for a 30% Commercial ITC under Section 48(a) of the Code (assuming apprenticeship and prevailing wage requirements are met; these requirements are deemed met for projects less than 1 MW), with standalone storage beginning in 2023; • in the absence of meeting apprenticeship and prevailing wage requirements, the “base” amount of the Commercial ITC is 6% for facilities beginning construction prior to January 1, 2025 and 2% thereafter (however, as indicated above, the majority of our business qualifies for 30% credits upon which “bonus credits” could increase the total credit amount up to 70% in certain circumstances); • the eligibility of solar and storage facilities that begin construction after December 31, 2024 (or began construction prior to January 1, 2025 but do not elect application of the Commercial ITC) and are placed in service after 2024 and through at least 2033 (with phase down for projects that begin construction after (i) 2033 or (ii) if later, the first year after the year in which the U.S.
Biggest changeThe Inflation Reduction Act of 2022 (the “IRA”) became law on August 16, 2022, and some of its notable provisions include: • the eligibility of solar facilities placed in service in 2022 (regardless of when construction began) and prior to January 1, 2025, or, at the election of the taxpayer, solar facilities that began construction prior to January 1, 2025 and are placed in service on or after January 1, 2025, for a 30% Commercial ITC under Section 48(a) of the Code (assuming apprenticeship and prevailing wage requirements are met; these requirements are deemed met for projects less than 1 MW), with standalone storage beginning in 2023; • in the absence of meeting apprenticeship and prevailing wage requirements, the “base” amount of the Commercial ITC is 6% for facilities beginning construction prior to January 1, 2025 and 2% thereafter (however, as indicated above, the majority of our business qualifies for 30% credits upon which “bonus credits” could increase the total credit amount up to 70% in certain circumstances); • the eligibility of solar and storage facilities that begin construction after December 31, 2024 and are placed in service after 2024 and through at least 2033, for a 30% 48E Credit (assuming that apprenticeship and prevailing wage requirements are satisfied, for facilities larger than 1 megawatt); and • several bonus credits under the 48E Credit, which apply to certain facilities placed in service beginning in 2023, including those meeting certain domestic content requirements, those located in “Energy Communities,” and those located in or that benefit low-income communities and tribal communities.
Sunrun also manages energy services that benefit communities, utilities, and the electric grid while enhancing customer value. We are engaged in the design, development, installation, sale, ownership and maintenance of residential solar energy systems (“Projects”) in the United States. We provide clean, solar energy typically at savings compared to traditional utility energy. Our primary customers are residential homeowners.
Sunrun also manages energy services that benefit communities, utilities, and the electric grid while enhancing customer value. We are engaged in the design, development, installation, sale, ownership and maintenance of residential energy systems (“Projects”) in the United States. We provide clean, solar energy typically at savings compared to traditional utility energy. Our primary customers are residential homeowners.
With our solar service offerings, we install solar energy systems on our customers’ homes and provide them with the solar power produced by those systems for typically a 20- or 25-year initial term. In addition, we monitor, maintain and insure the system during the term of the contract.
With our solar service offerings, we install energy systems on our customers’ homes and provide them with the solar power produced by those systems for typically a 20- or 25-year initial term. In addition, we monitor, maintain and insure the system during the term of the contract.
Customer Agreements Since we were founded in 2007, we have been providing solar energy to residential customers at prices typically below utility rates through a variety of offerings, most commonly through our leases and power purchase agreements which we refer to as our Customer Agreements.
Since we were founded in 2007, we have been providing solar energy to residential customers at prices typically below utility rates through a variety of offerings, most commonly through our leases and power purchase agreements which we refer to as our Customer Agreements.
These incentives enable us to lower the price we charge customers for energy from, and to lease, our solar energy systems, helping to catalyze customer adoption of solar energy as an alternative to utility-provided power.
These incentives enable us to lower the price we charge customers for energy from, and to lease, our energy systems, helping to catalyze customer adoption of solar energy as an alternative to utility-provided power.
To prove compliance with such mandates, utilities must surrender solar renewable energy credits (“SRECs”) to the applicable authority. Solar energy system owners such as our investment funds often are able to sell SRECs to utilities directly or in SREC markets.
To prove compliance with such mandates, utilities must surrender solar renewable energy credits (“SRECs”) to the applicable authority. Energy system owners such as our investment funds often are able to sell SRECs to utilities directly or in SREC markets.
Information on or that can be accessed through our website is not part of this Annual Report on Form 10-K, any other report or document we file with the SEC, and the inclusion of our website address is an inactive textual reference only.
Information on or that can be accessed through our website is not part of this Annual Report on Form 10-K or any other report or document we file with the SEC, and the inclusion of our website address is an inactive textual reference only.
To reinforce our safety culture of excellence, we have implemented many initiatives, including an expanded fall protection policy; the implementation of a zero-tolerance policy for any life threatening safety violations; a required recurring competent persons and human factors training; regular onsite safety visits from our front-line managers and the executive leadership team; the adoption of a formal rewards and recognition program; and the incorporation of proactive safety targets within bonus structures.
To reinforce our 12 safety culture of excellence, we have implemented many initiatives, including an expanded fall protection policy; the implementation of a zero-tolerance policy for any life threatening safety violations; a required recurring competent persons and human factors training; regular onsite safety visits from our front-line managers and the executive leadership team; the adoption of a formal rewards and recognition program; and the incorporation of proactive safety targets within bonus structures.
Most Customer Agreements, other than those billed based on generation, entitle the customer to a refund for underproduction below a guaranteed amount, which we refer to as our "performance guarantee." Either directly or through a solar partner, we construct a solar energy system on a customer’s home which generates electricity at set prices through Customer Agreements which typically have an initial term of 20 or 25 years.
Most Customer Agreements, other than those billed based on generation, entitle the customer to a refund for underproduction below a guaranteed amount, which we refer to as our "performance guarantee." Either directly or through an energy system partner, we construct an energy system on a customer’s home which generates electricity at set prices through Customer Agreements which typically have an initial term of 20 or 25 years.
Copies of our reports on Form 10-K, Forms 10-Q, Forms 8-K, and amendments to those reports may also be obtained, free of charge, electronically on the investor relations page on our website located at investors.sunrun.com as soon as reasonably practical after we file such material with, or furnish it to, the SEC.
Copies of our reports on Form 10-K, Form 10-Q, Form 8-K, and amendments to those reports may also be obtained, free of charge, electronically on the investor relations page on our website located at investors.sunrun.com as soon as reasonably practical after we file such material with, or furnish it to, the SEC.
In addition, the California Privacy Rights Act of 2020 (“CPRA”) expanded the CCPA by giving California residents the ability to limit use of certain sensitive personal data, establishing restrictions on personal data retention, expanding the types of data breaches that are subject to the CCPA’s private right of action, and establishing a new California Privacy Protection Agency to implement and enforce the new law.
In addition, the California Privacy Rights Act of 2020 (“CPRA”) expanded the CCPA by giving California residents the ability to limit use of certain sensitive personal data, establishing restrictions on personal data retention, expanding the types of data breaches that are subject to the 13 CCPA’s private right of action, and establishing a new California Privacy Protection Agency to implement and enforce the new law.
Approximately thirty states and the District of Columbia have adopted a renewable portfolio standard (and approximately eight other states have some voluntary goal) that requires regulated utilities to procure a specified percentage of total electricity delivered in the state from eligible renewable energy sources, such as solar energy systems, by a specified date.
Approximately thirty states and the District of Columbia have adopted a renewable portfolio standard (and approximately eight other states have some voluntary goal) that requires regulated utilities to procure a specified percentage of total electricity delivered in the state from eligible renewable energy sources, such as energy systems, by a specified date.
Our strategic partners find the residential solar market attractive, but recognize that significant barriers to entry make partnerships the preferred method to reach solar customers. Through these strategic arrangements, we typically market our solar service offerings to the strategic partner’s customer base and install the solar energy systems directly or through one of our solar partners.
Our strategic partners find the residential energy systems market attractive, but recognize that significant barriers to entry make partnerships the preferred method to reach solar customers. Through these strategic arrangements, we typically market our residential energy systems service offerings to the strategic partner’s customer base and install the energy systems directly or through one of our energy system partners.
Some customers might choose to subscribe to a community solar project or renewable subscriber program with these companies or their utilities, instead of installing a solar energy system on their home, which could affect our sales. Additionally, some utilities offer generation portfolios that are increasingly renewable in nature.
Some customers might choose to subscribe to a community solar project or renewable subscriber program with these companies or their utilities, instead of installing an energy system on their home, which could affect our sales. Additionally, some utilities offer generation portfolios that are increasingly renewable in nature.
Under our Customer Agreements, customers have the right to use and consume all electricity produced by the solar energy system on a continuous basis or, for customers who also opted for our battery storage offerings, stored in batteries which can be discharged as needed.
Under our Customer Agreements, customers have the right to use and consume all electricity produced by the energy system on a continuous basis or, for customers who also opted for our battery storage offerings, stored in batteries which can be discharged as needed.
Second, we are able to provide differentiated solutions to our customers that, combined with a great customer experience, we believe will drive meaningful margin advantages for us over the long term as we strive to create the industry’s most valuable and satisfied customer base.
Second, we are able to provide differentiated solutions to our customers that, combined with a great customer experience, we believe will drive meaningful margin advantages for us over the long term as we strive to create and serve the industry’s most valuable and satisfied customer base.
All contracts are between the customer and us, based on a price set by us. • Installation partners: trusted installation partners who procure and install a subset of our solar energy systems as our subcontractors and allow us to deploy a mix of in-house and outsourced installation capabilities more efficiently.
All contracts are between the customer and us, based on a price set by us. • Installation partners: trusted installation partners who procure and install a subset of our energy systems as our subcontractors and allow us to deploy a mix of in-house and outsourced installation capabilities more efficiently.
After the initial term of the Customer Agreement, customers have the option to renew their contracts for the remaining life of the solar energy system, typically at a 10% discount to then-prevailing power prices, to purchase the system from us at its fair market value, or have us remove the system.
After the initial term of the Customer Agreement, customers have the option to renew their contracts for the remaining life of the energy system, typically at a 10% discount to then-prevailing power prices, to purchase the system from us at its fair market value, or have us remove the system.
If we fail to maintain or expand our relationships with these suppliers and manufacturers, or if one or more that we rely upon to meet anticipated demand reduces or ceases production, it may be difficult to quickly identify and qualify alternatives on acceptable terms.
If we fail to maintain or expand our relationships with these suppliers and manufacturers, or if one or more that we rely upon to meet anticipated demand reduces or ceases production, it may be difficult to quickly identify and qualify comparable alternatives on acceptable terms.
We compete with these traditional utilities primarily based on price (cents per kilowatt hour), predictability of future prices (by providing pre-determined annual price escalations), the backup power capabilities of our battery storage solution, and the ease by which customers can switch to electricity generated by our solar energy systems. 8 We also compete with companies that are not regulated like traditional utilities but that have access to the traditional utility electricity transmission and distribution infrastructure pursuant to state and local pro-competitive and consumer choice policies, solar companies with business models that are similar to ours, and other renewable energy companies.
We compete with these traditional utilities primarily based on price (cents per kilowatt hour), predictability of future prices (by providing pre-determined annual price escalations), the backup power capabilities of our battery storage solution, and the ease by which customers can switch to electricity generated by our energy systems. 9 We also compete with companies that are not regulated like traditional utilities but that have access to the traditional utility electricity transmission and distribution infrastructure pursuant to state and local pro-competitive and consumer choice policies, solar companies with business models that are similar to ours, and other renewable energy companies.
Sales and Marketing We sell our solar energy offerings through a scalable sales organization using both a direct-to-consumer approach across online, retail, mass media, digital media, canvassing, field marketing and referral channels as well as our diverse partner network.
Sales and Marketing We sell our solar energy offerings through a scalable sales organization using both a direct-to-consumer approach across online, retail, mass media, digital media, canvassing, field marketing and referral channels as well as our partner network.
We compensate our installation partners on a per solar energy system basis for the procurement of materials and installation work they perform for us. Installation partners are solely our subcontractors and do not enter into any agreements with our customers.
We compensate our installation partners on a per energy system basis for the procurement of materials and installation work they perform for us. Installation partners are solely our subcontractors and do not enter into any agreements with our customers.
If the estimated production of the solar energy system is less than the actual production for a given year after the first full one to two years of the agreement, prepaid customers are refunded the difference at the end of each such year.
If the estimated production of the energy system is less than the actual production for a given year after the first full one to two years of the agreement, prepaid customers are refunded the difference at the end of each such year.
To operate our systems, we obtain interconnection permission from the applicable local primary electric utility. Depending on the size of the solar energy system and local law requirements, interconnection permission is provided by the local utility directly to us and/or our customers.
To operate our systems, we obtain interconnection permission from the applicable local primary electric utility. Depending on the size of the energy system and local law requirements, interconnection permission is provided by the local utility directly to us and/or our customers.
While customers have the option to purchase a solar energy system outright from us, most of our customers choose to buy solar as a service from us through our Customer Agreements without the significant upfront investment of purchasing a solar energy system.
While customers have the option to purchase an energy system outright from us, most of our customers choose to buy solar as a service from us through our Customer Agreements without the significant upfront investment of purchasing an energy system.
We believe that our passion for engaging our customers, developing a trusted brand, and providing a customized solar service offering resonates with our customers who are accustomed to a traditional residential power market that is often overpriced and lacking in customer choice. 5 We have experienced substantial growth in our business and operations since our inception in 2007, as well as through our acquisition of Vivint Solar on October 8, 2020.
We believe that our passion for engaging our customers, developing a trusted brand, and providing a customized solar service offering resonates with our customers who are accustomed to a traditional residential power market that is often overpriced and lacking in customer choice. 6 We have experienced substantial growth in our business and operations since our inception in 2007, as well as through our acquisition of Vivint Solar on October 8, 2020.
In addition, for some investors, the acceleration of depreciation creates a valuable tax benefit that reduces the overall cost of the solar energy system and increases the return on investment.
In addition, for some investors, the acceleration of depreciation creates a valuable tax benefit that reduces the overall cost of the energy system and increases the return on investment.
The prepayment amount is based on the estimated amount of the solar energy system’s output over the typically 20- or 25-year term of the Customer Agreement.
The prepayment amount is based on the estimated amount of the energy system’s output over the typically 20- or 25-year term of the Customer Agreement.
Through our education benefit, we develop future leaders with curated programs aligned to Sunrun’s priorities, enhancing business skills and job performance. Our career development programming is particularly focused on growing and developing our frontline sales and installation employees, who make up 81% of our workforce.
Through our education benefit, we develop future leaders with curated programs aligned to Sunrun’s priorities, enhancing business skills and job performance. Our career development programming is particularly focused on growing and developing our frontline sales and installation employees, who make up 82% of our workforce.
If the solar energy system’s energy production is in excess of the estimate, we allow customers to keep the excess energy at no charge.
If the energy system’s energy production is in excess of the estimate, we allow customers to keep the excess energy at no charge.
We compensate our solar integrators on a per solar energy system basis for generating Customer Agreements and the installation work they perform for us. • Sales partners: sales and lead generation partners who provide us with high-quality leads and customers at competitive prices.
We compensate our energy systems integrators on a per energy system basis for generating Customer Agreements and the installation work they perform for us. • Sales partners: sales and lead generation partners who provide us with high-quality leads and customers at competitive prices.
Customers can access our products through three channels: direct-to-consumer, solar partnerships and strategic partnerships. Direct-to-Consumer We sell solar service offerings and install solar energy systems for customers through our direct-to-consumer channel. These solar energy systems are offered to customers either under a Customer Agreement or for purchase.
Customers can access our products through three channels: direct-to-consumer, energy system partnerships and strategic partnerships. Direct-to-Consumer We sell storage and solar service offerings and install energy systems for customers through our direct-to-consumer channel. These energy systems are offered to customers either under a Customer Agreement or for purchase.
We have completed thousands of service transfers and, from inception through December 31, 2024, the aggregate expected net present value of the Customer Agreements once assigned represented approximately 100% of what it was prior to assignment.
We have completed thousands of service transfers and, from inception through December 31, 2025, the aggregate expected net present value of the Customer Agreements once assigned represented approximately 100% of what it was prior to assignment.
Since our founding, we have continued to invest in a platform of services and tools to enable large scale operations for us and our partner network, and these partners include solar integrators, sales partners, installation partners and other strategic partners. The platform includes processes and software, as well as fulfillment and acquisition of marketing leads.
Since our founding, we have continued to invest in a platform of services and tools to enable large scale operations for us and our partner network, and these partners include energy system integrators, sales partners, installation partners and other strategic partners. The platform includes processes and software, as well as fulfillment and acquisition of marketing leads.
Our solar partners include: • Solar integrators: trained and trusted partners who originate customers for our solar service offerings and procure and install the solar energy systems on our customers’ homes on our behalf as our subcontractors. Partnerships with solar integrators allow us to expand our brand, quickly enter new markets and drive capital-efficient growth.
Our energy system partners include: • Energy Systems integrators: trained and trusted partners who originate customers for our residential energy systems service offerings and procure and install the energy systems on our customers’ homes on our behalf as our subcontractors. Partnerships with energy systems integrators allow us to expand our brand, quickly enter new markets and drive capital-efficient growth.
See the section titled “Risks Related to Our Business Operations” for additional information about the laws and regulations to which we may become subject and about the risks to our business associated with such laws and regulations. 12
See the section titled “Risks Related to Our Business Operations” for additional information about the laws and regulations to which we may become subject and about the risks to our business associated with such laws and regulations. 14
We also have a long track record of attracting low-cost capital from diverse sources, including tax equity and debt investors. Since inception we have raised tax equity investment funds to finance the installation of solar energy systems. Our Multi-Channel Capabilities Our unique, multi-channel capabilities offer consumers a compelling solar service through scalable, cost-effective and consumer-friendly channels.
We also have a long track record of attracting low-cost capital from a variety of sources, including tax equity and debt investors. Since inception we have raised tax equity investment funds to finance the installation of energy systems. Our Multi-Channel Capabilities Our distinct, multi-channel capabilities offer consumers a compelling solar service through scalable, cost-effective and consumer-friendly channels.
Our ability to connect specialized sales and installation firms on a single platform, which we license to our solar partners at no cost, allows us to enjoy the benefits of vertical integration without the additional fixed cost structure.
Our ability to connect specialized sales and installation firms on a single platform, which we license to our energy systems partners at no cost, allows us to enjoy the benefits of vertical integration without the additional fixed cost structure.
More than half of the states in the U.S., and many local jurisdictions, have established property tax incentives for renewable energy systems that include exemptions, exclusions, abatements and credits. Many states also have 10 adopted procurement requirements for renewable energy.
More than half of U.S. states, and many local jurisdictions, have established property tax incentives for renewable energy systems that include exemptions, exclusions, abatements and credits. Many states also have adopted procurement requirements for renewable energy.
After inventing the residential solar service model and recognizing its enormous market potential, we have built the infrastructure and capabilities necessary to rapidly acquire and serve customers in a low-cost and scalable manner. Today, our scalable operating platform provides us with a number of unique advantages.
After inventing the residential solar service model and recognizing its market potential, we have built the infrastructure and capabilities necessary to acquire and serve customers in a low-cost and scalable manner. Today, our scalable operating platform provides us with a number of distinct advantages.
This creates margin opportunities, system efficiencies and benefits from network effects in matching these ecosystem participants. 6 Strategic Partnerships Our strategic partnerships encompass relationships with new market entrants not previously engaged in solar, including consumer marketing, retail and specialized energy retail companies.
This creates margin opportunities, system efficiencies and benefits from network effects in matching these ecosystem participants. 7 Strategic Partnerships Our strategic partnerships encompass relationships with new market entrants not previously engaged in solar or energy storage, including consumer marketing, retail and specialized energy retail companies.
For example, in the future, Congress could revise or eliminate certain provisions in the IRA that could negatively impact our business, such as reducing the percentage or duration of the ITCs.
For example, in the future, Congress could revise or eliminate additional provisions in the IRA or OBBB that could negatively impact our business, such as reducing the percentage or duration of the ITCs.
Rates for both forms of our Customer Agreements can be fixed for the duration of the contract or escalated at a pre-determined percentage annually. Upon installation, a system is interconnected to the local utility grid. The home’s energy usage is provided by the solar energy system with any additional energy needs provided by the local utility.
Rates for both forms of our Customer Agreements can be fixed for the duration of the contract or escalated at a predetermined percentage annually. Upon installation, an energy system is interconnected to the local utility grid. The home’s energy usage is provided by the energy system with any additional energy needs provided by the local utility.
First, we are able to drive distribution by marketing our solar service offerings through multiple channels, including our diverse partner network and direct-to-consumer operations. This multi-channel model supports broad sales and installation capabilities, which together allow us to achieve capital-efficient growth.
First, we are able to drive distribution by marketing our solar service offerings through multiple channels, including our partner network and direct-to-consumer operations. This approach supports broad sales and installation capabilities, which together allow us to achieve capital-efficient growth.
Because of our commitment to these solar organizations and our vested interest in their success, we refer to them as our “solar partners,” although the actual legal relationship is that of an independent contractor.
Because of our commitment to these organizations and our vested interest in their success, we refer to them as our “energy system partners,” although the actual legal relationship is that of an independent contractor.
Regulation by the Puerto Rico Energy Bureau as an electric power company does not currently subject us to centralized utility-like regulation and currently we do not need the Puerto Rico Energy Bureau's approval of charges to customers. 9 Government Incentives Federal, state and local government bodies provide incentives to owners, distributors, system integrators and manufacturers of solar energy systems to promote solar energy in the form of rebates, tax credits, payments for renewable energy credits associated with renewable energy generation and exclusion of solar energy systems from property tax assessments.
Regulation by the Puerto Rico Energy Bureau as an electric power company does not currently subject us to centralized utility-like regulation and currently we do not need the Puerto Rico Energy Bureau's approval of charges to customers. 10 Government Incentives Federal, state and local government policies provide incentives to owners, distributors, system integrators and manufacturers of energy systems to utilize home solar and storage energy in the form of rebates, tax credits, payments for renewable energy credits associated with renewable energy generation and exclusion of energy systems from property tax assessments.
The federal government also offers a personal income tax credit under Section 25D of the Code (“Residential Clean Energy Credit”), for the installation of certain solar power facilities owned by residential taxpayers, which is applicable to customers who purchase a solar energy system outright as opposed to entering into a Customer Agreement.
The federal government previously offered a personal income tax credit under Section 25D of the Code (“Residential Clean Energy Credit”), for the installation of certain solar power facilities owned by residential 11 taxpayers, which is applicable to customers who purchase an energy system outright as opposed to entering into a Customer Agreement.
Intellectual Property As of December 31, 2024, we had 61 issued patents and 11 filed patent applications in the United States relating to a variety of aspects of our solar solutions. Our issued U.S. patents will expire 20 years from their respective filing dates, with the earliest expiring in 2029.
Intellectual Property As of December 31, 2025, we had 64 issued patents and 12 filed patent applications in the United States relating to a variety of aspects of our solar solutions. Our issued U.S. patents will expire 20 years from their respective filing dates, with the earliest expiring in 2029.
In addition, equipment prices may increase in the coming years, or not decrease at the rates we historically have experienced, due to tariffs or other factors. As discussed in Item 1A.
In addition, equipment prices may increase in the coming years, or not decrease at the rates we historically have experienced, due to the imposition of trade regulations, tariffs or other factors. As discussed in Item 1A.
Gross Earning Assets as of December 31, 2024 were approximately $17.8 billion. Please see the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Key Operating Metrics” for more details on how we calculate Networked Solar Energy Capacity and Gross Earning Assets.
Gross Earning Assets as of December 31, 2025 were approximately $21.1 billion. Please see the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Key Operating Metrics” for more details on how we calculate Networked Solar Energy Capacity and Gross Earning Assets.
Risk Factors “ We have historically benefited from declining costs in our industry, and our business and financial results may be harmed as a result of recent and any continued increases in costs associated with our solar service offerings and any failure of these costs to continue declining as we currently expect.
Risk Factors “ We have historically benefited from declining costs in our industry, and our business and financial results have been and may continue to be harmed as a result of recent and any continued increases in costs associated with our solar service offerings and any failure of these costs to decline in the future.
As of December 31, 2024, we operated the largest fleet of residential solar energy systems in the United States. We have a Networked Solar Energy Capacity of 7,531 megawatts as of December 31, 2024, which represents the aggregate megawatt production capacity of our solar energy systems that have been recognized as deployments, from our inception through the measurement date.
As of December 31, 2025, we operated the largest fleet of residential energy systems in the United States. We have a Networked Solar Energy Capacity of 8,404 megawatts as of December 31, 2025, which represents the aggregate megawatt production capacity of our energy systems that have been recognized as deployments, from our inception through the measurement date.
For example, the CCPA imposes obligations on covered businesses to provide specific disclosures related to a business’s collecting, using, and disclosing personal data and to respond to certain requests from California residents related to their personal data (for example, requests to know of the business’s personal data processing activities, to delete the individual’s personal data, and to opt out of certain personal data disclosures).
For example, the CCPA imposes obligations on covered businesses to provide specific disclosures related to a business’s collection, usage, and disclosure of personal data and to respond to certain requests from California residents related to their personal data (for example, requests to know of the business’s personal data processing activities, to delete the individual’s personal data, and to opt out of certain personal data disclosures).
We do this by providing a differentiated company culture and employee experience, including through our compensation and benefits programming; and through the support of our employees’ career mobility, leadership development, continuous education and upskilling. In 2024, we invested and deployed a career mobility platform and this is our fourth year offering an education benefit.
We do this by providing a differentiated company culture and employee experience, including through our compensation and benefits programming; and through the support of our employees’ career mobility, leadership development, continuous education and upskilling. In 2025, we expanded the programming in our career mobility platform and this is our fifth year offering an education benefit.
Solar Partnerships We contract with diverse solar organizations that act as either exclusive or non-exclusive (depending on the terms of their contract with us) distributors of our solar service offerings and subcontractors for the installation of the related solar energy systems.
Energy System Partnerships We contract with a variety of organizations that act as either exclusive or non-exclusive (depending on the terms of their contract with us) distributors of our residential energy systems service offerings and subcontractors for the installation of the related energy systems.
The combination of direct-to-consumer, solar partnerships and strategic partnerships offers distinct advantages. The direct-to-consumer channel allows us to scale rapidly, drive incremental unit costs down over the long term, and refine operational processes to share with our partners. Our solar partnerships and strategic partnerships enable nimble market entry and exit, while allowing for capital efficient growth.
The direct-to-consumer channel allows us to scale rapidly, drive incremental unit costs down over the long term, and refine operational processes to share with our partners. Our energy system partnerships and strategic partnerships enable nimble market entry and exit, while allowing for capital efficient growth.
Together, this multi-channel strategy supported by our open platform allows us to reach more customers with our leading solar service offerings without compromising our ability to provide exceptional customer service.
Together, this multi-channel strategy supported by our open platform allows us to reach more customers with our leading solar service offerings without compromising our ability to provide exceptional customer service. Customer Agreements We provide clean, solar energy and energy storage to customers.
Treasury has not issued proposed or final rules on the Energy Communities Bonus Credit or the Domestic Content Bonus Credit, so we continue to rely on other published IRS guidance in this regard.
Department of Treasury issued final regulations on the 48E Credits in 2025, it has not issued proposed or final rules on the Energy Communities Bonus Credit or the Domestic Content Bonus Credit, so we continue to rely on other published IRS guidance in this regard.
In 2024 we also launched our wellbeing strategy to enhance and support our employees’ mental, physical, social, financial, and career wellbeing. Inclusion and Diversity . We believe that a culture of belonging creates an engaged and motivated workforce focused on our customers and delivering value for our shareholders.
In 2025, we continued to strengthen our wellbeing strategy and offerings to enhance and support our employees’ mental, physical, social, financial, and career wellbeing. We believe that a culture of belonging creates an engaged and motivated workforce focused on our customers and delivering value for our shareholders.
Our customers also receive up to a ten-year warranty for roof penetrations. 7 If a customer sells his or her home, the customer has the right to purchase the system or assign the Customer Agreement to the new homeowner, provided the new homeowner meets our credit requirements and agrees to be bound by the terms and conditions of the Customer Agreement.
We offer an industry-leading performance guarantee to ensure that our customers are receiving the energy they expect at the price they expect and our customers also receive up to a ten-year warranty for roof penetrations. 8 If a customer sells his or her home, the customer has the right to purchase the system or assign the Customer Agreement to the new homeowner, provided the new homeowner meets our credit requirements and agrees to be bound by the terms and conditions of the Customer Agreement.
We also face competition from purely finance-driven organizations that acquire customers and then subcontract out the installation of solar energy systems, from installation businesses that seek financing from external parties, to large construction companies and utilities and sophisticated electrical and roofing companies.
We believe that we compete favorably with these companies based on our extensive multi-channel approach and differentiated customer experience. We also face competition from purely finance-driven organizations that acquire customers and then subcontract out the installation of energy systems, from installation businesses that seek financing from external parties, to large construction companies and utilities and sophisticated electrical and roofing companies.
Regardless of the type of Customer Agreement our customers choose, we operate the system and agree to monitor it at no cost to the customer. System maintenance is included in our power purchase agreement (“PPA”) or lease. We offer an industry-leading performance guarantee to ensure that our customers are receiving the energy they expect at the price they expect.
Regardless of the type of Customer Agreement our customers choose, we operate the system and agree to monitor it at no cost to the customer. System maintenance is included in our power purchase agreement (“PPA”) or lease.
Information contained on, or that can be accessed through, our website does not constitute part of this Annual Report on Form 10-K and inclusions of our website address in this Annual Report on Form 10-K are inactive textual references only. 11 We file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Exchange Act.
Information contained on, or that can be accessed through, our website does not constitute part of this Annual Report on Form 10-K and inclusions of our website address in this Annual Report on Form 10-K are inactive textual references only.
Our safety strategy consists of four pillars: visible leadership, technical qualification and knowledge, operational discipline, and formal safety communications.
We prioritize the safety, health, and welfare of our team members as part of our people-centric culture. Our safety strategy consists of four pillars: visible leadership, technical qualification and knowledge, operational discipline, and formal safety communications.
The federal government also currently offers an investment tax credit (“Commercial ITC”) under Section 48(a) of the Internal Revenue Code of 1986, as amended (the “Code”) as well as a technology-neutral investment tax credit under Section 48(E) of the Code (the “48E Credit” and collectively with the Commercial ITC, the “ITCs”), for the installation of certain energy properties, including solar power facilities and energy storage owned for business purposes.
The federal government also currently offers a technology-neutral Clean Electricity Investment Credit under Section 48E of the Code (the “48E Credit,” or commonly known as “ITC”), for the installation of certain energy properties, including solar power facilities and energy storage owned for business purposes.
We believe that a customized, customer-focused selling process is important before, during and after the sale of our solar services to maximize our sales success and customer experience. We train our sales team to customize their consultative presentation to the individual customer based on guidelines and principles outlined in our training materials.
We train our sales team to customize their consultative presentation to the individual customer based on guidelines and principles outlined in our training materials.
We are focused on ensuring all of our employees are informed and regularly connected to values and performance based leadership through our internal communication platform.
We are focused on ensuring all of our employees are informed and regularly connected to values- and performance-based leadership through our internal communication platform. In 2025, we fostered deeper talent attraction partnerships with local organizations such as Illinois Shines and military partnerships focused on hiring retiring military service members.
If we do not reduce our cost structure in the future, our ability to continue to be profitable may be impaired.” Section 201 tariffs on solar modules were imposed beginning in 2018 and were extended through 2026. In addition, federal agencies and Congress are increasing enforcement against the importation of products suspected of being manufactured with forced labor.
If we do not reduce our cost structure in the future, our ability to continue to be profitable may be impaired.” Section 201 tariffs on solar modules were imposed beginning in 2018 and were extended through February 6, 2026. Federal policy regarding solar imports can change, and the U.S. government may implement other forms of tariffs or trade restrictions.
U.S. customs enforcement and the implementation of a new federal law could negatively impact our supply chain and the availability of products that we use to conduct our business. See “Risks Related to the Solar Industry” below for more information. Competition We believe that our primary competitors are the traditional utilities that supply electricity to our potential customers.
See “Risks Related to the Solar Industry” below for more information. Competition Our primary competitors are the traditional utilities that supply electricity to our potential customers.
As our industry grows, we believe that our unique platform and deep partnership experience position us to be the partner of choice for new market entrants. We believe that these broad strategic relationships will help us drive down our customer acquisition costs and make solar accessible to even more customers.
As our industry grows, we believe that our distinct platform and deep partnership experience position us to be the partner of choice for new market entrants. The combination of direct-to-consumer, energy system partnerships and strategic partnerships offers distinct advantages.
We also generate sales volume through customer referrals. Customer referrals increase in relation to our penetration in a market and shortly after market entry become an increasingly effective way to market our solar energy systems.
We also generate sales volume through customer referrals. Customer referrals have also become an increasingly effective way to market our energy systems. We believe that a customized, customer-focused selling process is important before, during and after the sale of our solar services to maximize our sales success and customer experience.
The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information that we file with the SEC electronically.
We file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Exchange Act. The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other information that we file with the SEC electronically.
None of our employees are covered by collective bargaining agreements. We have not experienced any work stoppages. Health and Safety. At Sunrun, we start with safety. We prioritize the safety, health, and welfare of our team members as part of our people-centric culture.
Human Capital. As of December 31, 2025, we had approximately 9,059 full-time employees, inclusive of our active direct-to-home salesforce. We also engage independent contractors and consultants. None of our employees are covered by collective bargaining agreements. We have not experienced any work stoppages. Health and Safety. At Sunrun, we start with safety.
The Residential Clean Energy Credit is not available for property placed in service after December 31, 2034. We and our tax equity partners have claimed and expect to continue to claim ITCs with respect to qualifying solar energy projects. In structuring tax equity partnerships and determining ITC eligibility, we have relied upon applicable tax law and published IRS guidance.
The OBBB ended the Residential Clean Energy Credit on January 1, 2026. We and our tax equity partners have claimed and expect to continue to claim ITCs with respect to qualifying solar energy and energy storage projects.
We have grown our nine Sunrun Communities (“Employee Resource Groups”) to promote connection, collaboration and communication among our employees, foster inclusivity, and assist in the development and facilitation of programming to support personal and professional development.
We maintain nine Sunrun Communities, which are open to all of our employees, to promote connection, collaboration, and communication and assist in the development and facilitation of programming to support personal and professional development. Annually, as part of our impact report on environment, sustainability, and governance, we share details on our strategies, focus areas, outcomes achieved, and workforce demographics.
Removed
We believe that we compete favorably with these companies based on our unique multi-channel approach and differentiated customer experience.
Added
We either arrange non-recourse financing and tax equity to finance energy systems under these Customer Agreements if held on our balance sheet, which we refer to as Retained Subscribers, or we sell certain of the energy systems under newly originated Customer Agreements to third-party investors (which we refer to as Non-Retained or Partially Retained Subscribers).
Removed
Department of Treasury determines greenhouse gas emissions from the production of electricity in the United States are no more than 25% of 2022 levels), for a 30% 48E Credit (assuming application of same apprenticeship and prevailing wage requirements outlined above); and • several new ITC bonus credits under both the Commercial ITC and the 48E Credit, which apply to certain facilities placed in service beginning in 2023, including those meeting certain domestic content requirements, those located in “Energy Communities,” and those located in or that benefit low-income communities and tribal communities.
Added
For example, federal agencies in recent years have increased enforcement against the importation of products suspected of being manufactured with forced labor. U.S. customs enforcement and the implementation of the Uyghur Forced Labor Prevention Act (“UFLPA”) could negatively impact our supply chain and the availability of products that we use to conduct our business.
Removed
The Residential Clean Energy Credit was 26% if the facility was placed in service during 2020 or 2021; 30% for facilities placed in service from January 1, 2022 through December 31, 2032; 26% for facilities placed in service during 2033; and 22% for facilities placed in service during 2034.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe new NBT pricing framework may also result in the introduction of new product offerings and pricing structures by our competitors throughout the solar and utilities industries, and led to our introduction of Sunrun Shift™, our home solar subscription offering that maximizes the value of solar energy under California’s NBT by increasing self-consumption during peak hours when rates are highest and reducing low-value exports back to the grid through the use of a new storage configuration.
Biggest changeUnder the new California NBT framework, storage paired with solar has a heightened value proposition to customers. The NBT framework may also result in the introduction of new product offerings and pricing structures by our competitors throughout the solar and utilities industries.
Finally, as declining prices for solar panels and related equipment has resulted in an increase in consumers purchasing instead of leasing solar energy systems, we face competition from companies that offer consumer loans for these solar panel purchases.
Finally, as declining prices for solar panels and related equipment has resulted in an increase in consumers purchasing instead of leasing energy systems, we face competition from companies that offer consumer loans for these solar panel purchases.
Weather patterns could change, making it harder to predict the average annual amount of sunlight striking each location where our solar energy systems are installed. This could make our solar service offerings less economical overall or make individual systems less economical. Any of these events or conditions could harm our business, financial condition, and results of operations.
Weather patterns could change, making it harder to predict the average annual amount of sunlight striking each location where our energy systems are installed. This could make our solar service offerings less economical overall or make individual systems less economical. Any of these events or conditions could harm our business, financial condition, and results of operations.
Additionally, if weather patterns significantly shift due to climate change, it may be harder to predict the average annual amount of sunlight striking each location where our solar energy systems are installed. This could make our solar service offerings less economical overall or make individual systems less economical.
Additionally, if weather patterns significantly shift due to climate change, it may be harder to predict the average annual amount of sunlight striking each location where our energy systems are installed. This could make our solar service offerings less economical overall or make individual systems less economical.
Our financial model is impacted by the volume of customers who choose our solar service offerings, and an increase in the number of customers who choose to purchase solar energy systems (whether for cash or through third-party financing) may harm our business and financial results.
Our financial model is impacted by the volume of customers who choose our solar service offerings, and an increase in the number of customers who choose to purchase energy systems (whether for cash or through third-party financing) may harm our business and financial results.
Interconnection limits or circuit-level caps imposed by regulators may curb our growth in key markets. Utilities throughout the country have different rules and regulations regarding interconnection and some utilities cap or limit the amount of solar energy that can be interconnected to the grid.
Interconnection limits or circuit-level caps imposed by regulators or utilities may curb our growth in key markets. Utilities throughout the country have different rules and regulations regarding interconnection and some utilities cap or limit the amount of solar energy that can be interconnected to the grid.
In addition, we, our third-party service providers with whom we work are subject to a variety of evolving threats, such as computer malware (including as a result of advanced persistent threat intrusions), ransomware, malicious code (such as viruses or worms), social engineering (including through deep fakes, which may be increasingly more difficult to identify as fake, and phishing attacks), telecommunications failures, denial-of-service attacks, credential stuffing attacks, credential harvesting, personnel misconduct or error, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, natural disasters and extreme weather events, general hacking, telecommunications failures, attacks enhanced or infiltrated by AI, and other similar threats.
In addition, we and our third-party service providers with whom we work are subject to a variety of evolving threats, such as computer malware (including as a result of advanced persistent threat intrusions), ransomware, malicious code (such as viruses or worms), social engineering (including through deep fakes, which may be increasingly more difficult to identify as fake, and phishing attacks), telecommunications failures, denial-of-service attacks, credential stuffing attacks, credential harvesting, personnel misconduct or error, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, natural disasters and extreme weather events, general hacking, telecommunications failures, attacks enhanced or infiltrated by AI, and other similar threats.
Additionally, on January 1, 2025, the ITC framework of Section 48 that the solar industry has historically relied upon shifted to the “tech-neutral” 48E Credit applied separately to a qualified facility and energy storage technology.
Additionally, on January 1, 2025, the ITC framework of Section 48(a) that the solar industry has historically relied upon shifted to the “tech-neutral” 48E credit applied separately to a qualified facility and energy storage technology.
State and local tax exemptions can have sunset dates, triggers for loss of the exemption, and can be changed by state legislatures and other regulators, and if solar energy systems were not exempt from such taxes, the property taxes payable by customers would be higher, which could offset any potential savings our solar service offerings could offer.
State and local tax exemptions can have sunset dates, triggers for loss of the exemption, and can be changed by state legislatures and other regulators, and if energy systems were not exempt from such taxes, the property taxes payable by customers would be higher, which could offset any potential savings our solar service offerings could offer.
Similarly, if state or local legislatures or tax administrators impose property taxes on third-party owners of solar energy systems, solar companies like us would be subject to higher costs. In general, we rely on certain state and local tax exemptions that apply to the sale of equipment, sale of power, or both.
Similarly, if state or local legislatures or tax administrators impose property taxes on third-party owners of energy systems, solar companies like us would be subject to higher costs. In general, we rely on certain state and local tax exemptions that apply to the sale of equipment, sale of power, or both.
The State of California provides an exclusion (the “Solar Exclusion”) from the assessment of California property taxes for qualifying “active solar energy systems” installed as fixtures before January 1, 2027, provided such systems are locally rather than centrally assessed (“Eligible Property”). However, the Solar Exclusion is not a permanent exclusion from the assessment of property tax.
The State of California provides an exclusion (the “Solar Exclusion”) from the assessment of California property taxes for qualifying “active energy systems” installed as fixtures before January 1, 2027, provided such systems are locally rather than centrally assessed (“Eligible Property”). However, the Solar Exclusion is not a permanent exclusion from the assessment of property tax.
Once a change in ownership of the Eligible Property occurs, the Eligible Property may be subject to reassessment and California property taxes may become due. Vivint Solar, through certain of its subsidiaries, owns solar energy systems that constitute Eligible Property (the “California PV Systems”).
Once a change in ownership of the Eligible Property occurs, the Eligible Property may be subject to reassessment and California property taxes may become due. Vivint Solar, through certain of its subsidiaries, owns energy systems that constitute Eligible Property (the “California PV Systems”).
Factors that could cause fluctuations in the market price of our common stock include the following: • price and volume fluctuations in the overall stock market from time to time; • volatility in the market prices and trading volumes of companies in our industry or companies that investors consider comparable; • changes in operating performance and stock market valuations of other companies generally, or those in our industry in particular; • sales of shares of our common stock by us or our stockholders; • failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow us, or our failure to meet these estimates or the expectations of investors; • the financial projections we may provide to the public, any changes in those projections or our failure to meet those projections; • announcements by us or our competitors of new products or services; • the public’s reaction to our press releases, other public announcements and filings with the SEC; 47 • rumors and market speculation involving us or other companies in our industry; • actual or anticipated changes in our results of operations; • changes in tax and other incentives that we rely upon in order to raise tax equity investment funds; • actual or perceived data privacy or security incidents; • our ability to protect our intellectual property and other proprietary rights; • changes in the regulatory environment and utility policies and pricing, including those that could reduce any savings we are able to offer to customers; • actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally; • litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors; • announced or completed acquisitions of businesses or technologies by us or our competitors; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • changes in accounting standards, policies, guidelines, interpretations or principles; • major catastrophic events, global armed conflicts or civil unrest; • negative publicity, including accurate or inaccurate commentary or reports regarding us, our products, our sales professionals or other personnel, or other third parties affiliated with us, on social media platforms, blogs, and other websites; • any significant change in our management; and • general economic conditions including instability in financial markets and bank failures, and slow or negative growth of our markets.
Factors that could cause fluctuations in the market price of our common stock include the following: • price and volume fluctuations in the overall stock market from time to time; • volatility in the market prices and trading volumes of companies in our industry or companies that investors consider comparable; • changes in operating performance and stock market valuations of other companies generally, or those in our industry in particular; • sales of shares of our common stock by us or our stockholders; • failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow us, or our failure to meet these estimates or the expectations of investors; • the financial projections we may provide to the public, any changes in those projections or our failure to meet those projections; • announcements by us or our competitors of new products or services; • the public’s reaction to our press releases, other public announcements and filings with the SEC; • rumors and market speculation involving us or other companies in our industry; • actual or anticipated changes in our results of operations; • changes in tax and other incentives that we rely upon in order to raise tax equity investment funds; • actual or perceived data privacy or security incidents; • our ability to protect our intellectual property and other proprietary rights; • changes in the regulatory environment and utility policies and pricing, including those that could reduce any savings we are able to offer to customers; 50 • actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally; • litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors; • announced or completed acquisitions of businesses or technologies by us or our competitors; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • changes in accounting standards, policies, guidelines, interpretations or principles; • major catastrophic events, global armed conflicts or civil unrest; • negative publicity, including accurate or inaccurate commentary or reports regarding us, our products, our sales professionals or other personnel, or other third parties affiliated with us, on social media platforms, blogs, and other websites; • any significant change in our management; and • general economic conditions including instability in financial markets and bank failures, and slow or negative growth of our markets.
Our ability to meet deployment volume, cost, net present value or any other forward-looking guidance is 41 impacted by a number of factors including, but not limited to, the number of our solar energy systems purchased outright versus the number of our solar energy systems that are subject to long-term Customer Agreements, changes in installation costs, the availability of additional financing on acceptable terms, changes in the retail prices of traditional utility generated electricity, the availability of rebates, tax credits and other incentives, changes in policies and regulations including net metering and interconnection limits or caps, the availability of solar panels and other raw materials, as well as the other risks to our business that are described in this section.
Our ability to meet deployment volume, cost, net present value or any other forward-looking guidance is impacted by a number of factors including, but not limited to, the number of our energy systems purchased outright versus the number of our energy systems that are subject to long-term Customer Agreements, changes in installation costs, the availability of additional financing on acceptable terms, changes in the retail prices of traditional utility generated electricity, the availability of rebates, tax credits and other incentives, changes in policies and regulations including net metering and interconnection limits or caps, the availability of solar panels and other raw materials, as well as the other risks to our business that are described in this section.
These risks include the following, among others: • failure to satisfy the required conditions and otherwise complete a planned acquisition, joint venture or other strategic transaction on a timely basis or at all; • legal or regulatory proceedings, if any, relating to a planned acquisition, joint venture or other strategic transaction and the outcome of such legal proceedings; • difficulty in assimilating the operations, systems, and personnel of the acquired company, especially given our unique culture; • difficulty in effectively integrating the acquired technologies or products with our current products and technologies; • difficulty in maintaining controls, procedures and policies during the transition and integration; • disruption of our ongoing business and distraction of our management and employees from other opportunities and challenges due to integration issues; • difficulty integrating the acquired company’s accounting, management information and other administrative systems; • inability to retain key technical and managerial personnel of the acquired business; • inability to retain key customers, vendors and other business partners of the acquired business; • inability to achieve the financial and strategic goals for the acquired and combined businesses; • incurring acquisition-related costs or amortization costs for acquired intangible assets that could impact our results of operations; • significant post-acquisition investments which may lower the actual benefits realized through the acquisition; • potential failure of the due diligence processes to identify significant issues with product quality, legal, and financial liabilities, among other things; • moderating and anticipating the impacts of inherent or emerging seasonality in acquired customer agreements; • potential inability to assert that internal controls over financial reporting are effective; and 30 • potential inability to obtain, or obtain in a timely manner, approvals from governmental authorities, which could delay or prevent such acquisitions.
These risks include the following, among others: • failure to satisfy the required conditions and otherwise complete a planned acquisition, joint venture or other strategic transaction on a timely basis or at all; • legal or regulatory proceedings, if any, relating to a planned acquisition, joint venture or other strategic transaction and the outcome of such legal proceedings; • difficulty in assimilating the operations, systems, and personnel of the acquired company, especially given our unique culture; • difficulty in effectively integrating the acquired technologies or products with our current products and technologies; • difficulty in maintaining controls, procedures and policies during the transition and integration; • disruption of our ongoing business and distraction of our management and employees from other opportunities and challenges due to integration issues; • difficulty integrating the acquired company’s accounting, management information and other administrative systems; 32 • inability to retain key technical and managerial personnel of the acquired business; • inability to retain key customers, vendors and other business partners of the acquired business; • inability to achieve the financial and strategic goals for the acquired and combined businesses; • incurring acquisition-related costs or amortization costs for acquired intangible assets that could impact our results of operations; • significant post-acquisition investments which may lower the actual benefits realized through the acquisition; • potential failure of the due diligence processes to identify significant issues with product quality, legal, and financial liabilities, among other things; • moderating and anticipating the impacts of inherent or emerging seasonality in acquired customer agreements; • potential inability to assert that internal controls over financial reporting are effective; and • potential inability to obtain, or obtain in a timely manner, approvals from governmental authorities, which could delay or prevent such acquisitions.
The models we use to calculate prepayments in connection with certain of our tax equity investment funds are updated at a fixed date occurring after placement in service of all applicable solar energy systems or an agreed upon date (typically within the first year of the applicable term) to reflect certain specified conditions, as they exist at such date including the ultimate system size of the equipment that was sold or leased to the tax equity investment fund, the cost thereof, and the date the equipment went into service.
The models we use to calculate prepayments in connection with certain of our tax equity investment funds are updated at a fixed date occurring after placement in service of all applicable energy systems or an agreed upon date (typically within the first year of the applicable term) to reflect certain specified conditions, as they exist at such date including the ultimate system size of the equipment that was sold or leased to the tax equity investment fund, the cost thereof, and the date the equipment went into service.
During the first quarter of 2024, we transitioned a large portion of our funding from a traditional tax equity framework (where tax equity funding is typically provided at or before installation) to a tax credit transfer framework under the IRA’s transferability provisions (where the timing of tax equity or cash equity funding can be dependent on the timing of the transfer of the tax credits, which occurs in arrears following the date the associated solar system is placed in service).
During the first quarter of 2024, we transitioned a large portion of our funding from a traditional tax equity framework (where tax equity funding is typically provided at or before installation) to a tax credit transfer framework under transferability provisions (where the timing of tax equity or cash equity funding can be dependent on the timing of the transfer of the tax credits, which occurs in arrears following the date the associated solar system is placed in service).
For example, we are investing resources in establishing strategic relationships with market players across a variety of industries, including large retailers, to generate new customers. These programs may not roll out as quickly as planned or produce the results we anticipated. A significant portion of our business depends on attracting and retaining new and existing solar partners.
For example, we are investing resources in establishing strategic relationships with market players across a variety of industries, including large retailers, to generate new customers. These programs may not roll out as quickly as planned or produce the results we anticipated. A significant portion of our business depends on attracting and retaining new and existing partners.
As the solar industry grows and evolves, we will continue to face existing competitors as well as new competitors who are not currently in the market (including those resulting from the consolidation of existing competitors) that achieve significant developments in alternative technologies or new products such as storage solutions, EV chargers, loan products, or other programs related to third-party ownership.
As the battery storage and solar industry grows and evolves, we will continue to face existing competitors as well as new competitors who are not currently in the market (including those resulting from the consolidation of existing competitors) that achieve significant developments in alternative technologies or new products such as storage solutions, EV chargers, loan products, or other programs related to third-party ownership.
Although we may incur substantial costs in protecting our technology, we cannot be certain that we have adequately protected or will be able to adequately protect it, that our competitors will not be able to utilize our existing technology or develop similar technology independently, that the claims allowed with respect to any patents held by us will be broad enough to protect our technology or that foreign intellectual property laws will adequately protect our intellectual property rights.
Although we may incur substantial costs in protecting our technology, we cannot be certain that we have adequately protected or will be able to adequately protect it, that our competitors will not be 34 able to utilize our existing technology or develop similar technology independently, that the claims allowed with respect to any patents held by us will be broad enough to protect our technology or that foreign intellectual property laws will adequately protect our intellectual property rights.
We could also be subject to tax liabilities, including interest and penalties. If the IRS further disagrees now or in the future with the amounts we or our tax equity investment funds reported regarding the creditable or depreciable basis of our solar energy systems, it could have a material adverse effect on our business, financial condition, and prospects.
We could also be subject to tax liabilities, including interest and penalties. If the IRS further disagrees now or in the future with the amounts we or our tax equity investment funds reported regarding the creditable or depreciable basis of our energy systems, it could have a material adverse effect on our business, financial condition, and prospects.
In addition, the current macroeconomic environment, including rising interest rates, instability in financial markets and bank failures, may impact our ability to engage with new customers and expand our relationships with existing customers. If our customers are materially negatively impacted by these factors, our business could be negatively impacted. Policy can impact solar installation completion timelines.
In addition, the current macroeconomic environment, including rising interest rates, instability in financial markets and bank failures, 28 may impact our ability to engage with new customers and expand our relationships with existing customers. If our customers are materially negatively impacted by these factors, our business could be negatively impacted. Policy can impact solar installation completion timelines.
We have incurred net losses in the past and may continue to incur net losses as we increase our spending to finance the expansion of our operations, expand our installation, engineering, administrative, sales and marketing staffs, increase spending on our brand awareness and other sales and marketing initiatives, make significant investments to drive future growth in our business and implement internal systems and infrastructure to support our growth.
We have incurred net losses in the past and may continue to incur net losses as we increase our spending to finance the expansion of our operations, expand our installation, engineering, administrative, sales and marketing staffs, increase spending on our brand awareness and other sales and marketing initiatives, make significant investments to drive future growth in our business and implement internal systems and infrastructure to support our 42 growth.
The contract terms in certain of our existing investment fund documents contain various conditions with respect to our ability to draw on financing commitments from the fund investors, including conditions that restrict our ability to draw on such commitments if an event occurs that could reasonably be expected to have a material adverse effect on the fund or, in some instances, us.
The contract terms in some of our existing investment fund documents contain various conditions with respect to our ability to draw on financing commitments from the fund investors, including conditions that restrict our ability to draw on such commitments if an event occurs that could reasonably be expected to have a material adverse effect on the fund or, in some instances, us.
We have substantial amounts of debt, including our convertible senior notes (“Notes”), our credit facility and the non-recourse debt facilities entered into by our subsidiaries, as discussed in more detail in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements, in each case, included in this periodic report.
We have substantial amounts of debt, including our convertible senior notes (“Notes”), our credit facilities and the non-recourse debt facilities entered into by our subsidiaries, as discussed in more detail in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements, in each case, included in this periodic report.
All states regulate investor-owned utility retail electricity pricing. In addition, there are numerous publicly owned utilities and electric cooperatives that establish their own retail electricity pricing through some form of regulation or internal process. These regulations and policies could deter potential customers from purchasing our 22 solar service offerings.
All states regulate investor-owned utility retail electricity pricing. In addition, there are numerous publicly owned utilities and electric cooperatives that establish their own retail electricity pricing through some form of regulation or internal process. These regulations and policies could deter potential customers from purchasing our solar service offerings.
Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments. 33 Applicable data privacy and security obligations may require us to notify relevant stakeholders, including affected individuals, customers, regulators, and investors, of security incidents.
Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments. Applicable data privacy and security obligations may require us to notify relevant stakeholders, including affected individuals, customers, regulators, and investors, of security incidents.
Any investigations, actions, adoption or amendment of regulations relating to the marketing of our products to residential consumers could divert management’s attention from our business, require us to modify our operations and incur significant additional expenses, which could have an adverse effect on our business, financial condition, and results of operations or could reduce the number of our potential customers.
Any investigations, actions, adoption or amendment of regulations relating to the marketing of our products to residential consumers could divert management’s attention from our business, require us to modify our operations 41 and incur significant additional expenses, which could have an adverse effect on our business, financial condition, and results of operations or could reduce the number of our potential customers.
Any of the previously identified or similar threats could cause a security incident or other interruption that could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to our sensitive information or our information technology systems, or those of the third parties with whom we work.
Any of the previously identified or similar threats could cause a security incident or other interruption that could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to our sensitive information or our information technology systems, or those of 36 the third parties with whom we work.
We and our fund investors claim the ITCs in amounts based on the purchase price paid by our funds for our solar energy systems ( i.e. , the funds’ basis in the solar energy systems, or creditable basis). Such purchase prices are based on the fair market value of our systems as determined pursuant to independent appraisals obtained by us.
We and our fund investors claim the ITCs in amounts based on the purchase price paid by our funds for our energy systems ( i.e. , the funds’ basis in the energy systems, or creditable basis). Such purchase prices are based on the fair market value of our systems as determined pursuant to independent appraisals obtained by us.
We may be adversely affected by changes in, and application of, these laws or other incentives to us, and the expiration, elimination or reduction of these benefits could adversely impact our business. Our business depends on government policies that promote and support solar energy and enhance the economic viability of owning solar energy systems.
We may be adversely affected by changes in, and application of, these laws or other incentives to us, and the expiration, elimination or reduction of these benefits could adversely impact our business. Our business depends in part on government policies that promote and support solar energy and enhance the economic viability of owning energy systems.
With respect to developing our sales channels, such as direct-to-home, homebuilder, retail, and e-commerce channels and adapting to a remote selling model, we have incurred and may continue to incur significant costs. In 28 addition, we may not initially or ever be successful in utilizing these new channels.
With respect to developing our sales channels, such as direct-to-home, homebuilder, retail, and e-commerce channels and adapting to a remote selling model, we have incurred and may continue to incur significant costs. In addition, we may not initially or ever be successful in utilizing these new channels.
Changes in these laws or regulations or their interpretation could dramatically affect how we do business, acquire customers, 38 and manage and use information we collect from and about current and prospective customers and the costs associated therewith. We strive to comply with all applicable laws and regulations relating to our interactions with residential customers.
Changes in these laws or regulations or their interpretation could dramatically affect how we do business, acquire customers, and manage and use information we collect from and about current and prospective customers and the costs associated therewith. We strive to comply with all applicable laws and regulations relating to our interactions with residential customers.
We intend to continue to make substantial investments in developing new products and it is possible that we may not develop or acquire new products or product enhancements that compete effectively within 39 our target markets or differentiate our products based on functionality, performance or cost and thus our new technologies and products may not result in meaningful revenue.
We intend to continue to make substantial investments in developing new products and it is possible that we may not develop or acquire new products or product enhancements that compete effectively within our target markets or differentiate our products based on functionality, performance or cost and thus our new technologies and products may not result in meaningful revenue.
To support our growth, we need to hire, train, deploy, manage and retain a substantial number of skilled employees, engineers, installers, electricians, sales and project finance specialists. Competition for qualified personnel in our industry is increasing, particularly for skilled personnel involved in the installation of solar energy systems.
To support our growth, we need to hire, train, deploy, manage and retain a substantial number of skilled employees, engineers, installers, electricians, sales and project finance specialists. Competition for qualified personnel in our industry is increasing, particularly for skilled personnel involved in the installation of energy systems.
Any adverse changes in solar-related policies could have a negative impact on our business and prospects. Regulations and policies related to rate design could deter potential customers from purchasing our solar service offerings, reduce the value of the electricity our systems produce, and reduce any savings that our customers could realize from our solar service offerings.
Any adverse changes in solar-related policies could have a negative impact on our business and prospects. Regulations and policies related to rate design could deter potential customers from purchasing our solar and storage service offerings, reduce the value of the electricity our systems produce, and reduce any savings that our customers could realize from our solar service offerings.
Further, we need to continue to expand upon the training of our customer service team to provide high-end account management and service to customers before, during and following the point of installation of our solar energy systems. Identifying, and recruiting qualified personnel and training them requires significant time, expense and attention.
Further, we need to continue to expand upon the training of our customer service team to provide high-end account management and service to customers before, during and following the point of installation of our energy systems. Identifying, and recruiting qualified personnel and training them requires significant time, expense and attention.
Servicing our debt requires a significant amount of cash to comply with certain covenants and satisfy payment obligations, and we may not have sufficient cash flow from our business to pay our substantial 19 debt and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.
Servicing our debt requires a significant amount of cash to comply with certain covenants and satisfy payment obligations, and we may not have sufficient cash flow from our business to pay our substantial debt and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.
In addition, the installation of solar energy systems and other energy-related products requiring building modifications are subject to oversight and regulation in accordance with national, state and local laws and ordinances relating to building, fire and electrical codes, safety, environmental protection, utility interconnection and metering, and related matters.
In addition, the installation of energy systems and other energy-related products requiring building modifications are subject to oversight and regulation in accordance with national, state and local laws and ordinances relating to building, fire and electrical codes, safety, environmental protection, utility interconnection and metering, and related matters.
Changes in existing law or interpretations of existing law by the IRS and/or the courts could reduce the willingness of investors to invest in funds associated with these solar energy systems. Moreover, reductions to the corporate tax rate may reduce the appetite for tax benefits overall, which could reduce the pool of available funds.
Changes in existing law or interpretations of existing law by the IRS and/or the courts could reduce the willingness of investors to invest in funds associated with these energy systems. Moreover, reductions to the corporate tax rate may reduce the appetite for tax benefits overall, which could reduce the pool of available funds.
Extreme weather 16 conditions, as well as the natural catastrophes that could result from such conditions, can severely impact our operations by delaying the installation of our systems, lowering sales, and causing a decrease in the output from our systems due to smoke or haze.
Extreme weather conditions, as well as the natural catastrophes that could result from such conditions, can severely impact our operations by delaying the installation of our systems, lowering sales, and causing a decrease in the output from our systems due to smoke or haze.
Our assumptions could prove to be materially different from the actual performance of our systems, causing us to incur substantial expense to repair or replace defective solar energy systems in the future or to compensate customers for systems that do not meet their production guarantees.
Our assumptions could prove to be materially different from the actual performance of our systems, causing us to incur substantial expense to repair or replace defective energy systems in the future or to compensate customers for systems that do not meet their production guarantees.
In addition, because we are headquartered in the San Francisco Bay Area, we compete for a limited pool of technical and engineering resources that requires us to pay wages that are competitive with relatively high regional standards for employees in these fields.
In addition, because we are headquartered in the San Francisco Bay Area, we compete for a limited pool of technical and engineering 39 resources that requires us to pay wages that are competitive with relatively high regional standards for employees in these fields.
Our incentives revenue is also highly variable due to associated revenue recognition rules, as discussed in greater detail in Management’s Discussion and Analysis of Financial Condition and Results of Operations. Seasonal and other factors may also contribute to variability in our sales of solar energy systems and product sales.
Our incentives revenue is also highly variable due to associated revenue recognition rules, as discussed in greater detail in Management’s Discussion and Analysis of Financial Condition and Results of Operations. Seasonal and other factors may also contribute to variability in our sales of energy systems and product sales.
If, for any reason, we are unable to finance our solar service offerings through tax-advantaged structures or if we are unable to realize or monetize ITCs or other tax benefits, we may no longer be able to provide our solar service offerings to new customers on an economically viable basis, which would have a material adverse effect on our business, financial condition, and operations. 43 If the IRS makes determinations that the creditable basis of our solar energy systems is materially lower than what we have claimed, we may have to pay significant amounts to our fund investors, and our business, financial condition, and prospects may be materially and adversely affected.
If, for any reason, we are unable to finance our solar service offerings through tax-advantaged structures or if we are unable to realize or monetize ITCs or other tax benefits, we may no longer be able to provide our solar service offerings to new customers on an economically viable basis, which would have a material adverse effect on our business, financial condition, and operations. 46 If the IRS makes determinations that the creditable basis of our energy systems is materially lower than what we have claimed, we may have to pay significant amounts to our fund investors, and our business, financial condition, and prospects may be materially and adversely affected.
For example, some utilities in states such as Arizona and Utah have sought and secured rate design changes that reduce the credit for residential solar exports to below the retail rate and impose new charges for rooftop solar customers. Utilities in additional states may follow suit.
For example, some utilities in states such as Arizona have sought and secured rate design changes that reduce the credit for residential solar exports to below the retail rate and impose new charges for rooftop solar customers. Utilities in additional states may follow suit.
At the time we sell or lease a solar energy system to an investment fund, we enter into a maintenance services agreement where we agree to operate and maintain the system for a fixed fee that is calculated to cover our future expected maintenance costs.
At the time we sell or lease an energy system to an investment fund, we enter into a maintenance services agreement where we agree to operate and maintain the system for a fixed fee that is calculated to cover our future expected maintenance costs.
Because of our limited operating history and the length of the term of our Customer Agreements, we have been required to make assumptions and apply judgments regarding a number of factors, including our anticipated rate of warranty claims and the durability, performance and reliability of our solar energy systems.
Because of our limited operating history and the length of the term of our Customer Agreements, we have been required to make assumptions and apply judgments regarding a number of factors, including our anticipated rate of warranty claims and the durability, performance and reliability of our energy systems.
To date, we have funded our business principally through low-cost tax equity investment funds. If we are unable to establish new investment funds when needed, or upon desirable terms, the growth of our solar service business would be impaired.
To date, we have funded our business principally through low-cost tax equity investment funds. If we are 19 unable to establish new investment funds when needed, or upon desirable terms, the growth of our solar service business would be impaired.
If the rate of return required by capital providers, including debt providers, rises as a result of a rise in interest rates, it will reduce 18 the present value of the customer payment stream and consequently reduce the total value derived from this monetization.
If the rate of return required by capital providers, including debt providers, rises as a result of a rise in interest rates, it will reduce the present value of the customer payment stream and consequently reduce the total value derived from this monetization.
The option 20 counterparties are financial institutions or affiliates of financial institutions, and we will be subject to the risk that one or more of such option counterparties may default under the Capped Call transactions. Our exposure to the credit risk of the option counterparties will not be secured by any collateral.
The Option Counterparties are financial institutions or affiliates of financial institutions, and we will be subject to the risk that one or more of such Option Counterparties may default under the Capped Call transactions. Our exposure to the credit risk of the Option Counterparties will not be secured by any collateral.
Further, the Uyghur Forced Labor Prevention Act that President Biden signed into law on December 23, 2021, which took effect on June 21, 2022, has affected, and may continue to affect, our supply chain and operations.
Further, the Uyghur Forced Labor Prevention Act that President Biden signed into law on December 23, 2021, which took effect on June 21, 2022, has affected, and may continue to 27 affect, our supply chain and operations.
As the owners of the solar energy systems, we or our investment funds receive a warranty from the inverter and solar panel manufacturers, and, for those solar energy systems that we do not install directly, we receive workmanship and material warranties as well as roof penetration warranties from our solar partners.
As the owners of the energy systems, we or our investment funds receive a warranty from the inverter and solar panel manufacturers, and, for those energy systems that we do not install directly, we receive workmanship and material warranties as well as roof penetration warranties from our energy system partners.
With respect to ITCs, the IRS may on audit determine that the creditable basis for our solar energy systems is lower than the amount determined by the appraisal and accordingly argue that the tax credits previously claimed must be reduced.
With respect to ITCs, the IRS may on audit determine that the creditable basis for our energy systems is lower than the amount determined by the appraisal and accordingly argue that the tax credits previously claimed must be reduced.
If the inspection finds repairs to the rooftop are required in order to satisfy our standards and specifications to install the solar energy system, and a potential customer does not want to make such required repairs, we would lose that anticipated sale.
If the inspection finds repairs to the rooftop are required in order to satisfy our standards and specifications to install the energy system, and a potential customer does not want to make such required repairs, we would lose that anticipated sale.
Open source licensors 32 generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code, which could introduce vulnerabilities that could be exploited and lead to the loss of sensitive or protected data.
Open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code, which could introduce vulnerabilities that could be exploited and lead to the loss of sensitive or protected data.
None of our key executives or our key employees are bound by employment agreements for any specific term, and we may be unable to replace key members of our management team and key employees in the event we lose their services.
None of our key executives or our key employees are bound by employment agreements for any specific term, and we may be unable to replace key 40 members of our management team and key employees in the event we lose their services.
Adverse regulatory treatment of third-party ownership arrangements could reduce demand for our solar service offerings, adversely impact our access to capital and cause us to increase the price we charge customers for energy.
Adverse regulatory treatment of third-party ownership arrangements could reduce demand for our solar and battery service offerings, adversely impact our access to capital and cause us to increase the price we charge customers for energy.
The acquisition of a supplier by one of our competitors could also limit our access to such components and require significant redesigns of our solar energy systems or installation procedures and have a material adverse effect on our business.
The acquisition of a supplier by one of our competitors could also limit our access to such components and require significant redesigns of our energy systems or installation procedures and have a material adverse effect on our business.
We have purchased insurance policies insuring us and related parties for additional taxes owed in respect of lost Commercial ITCs, depreciation, gross-up costs and expenses incurred in defending the types of claims described above.
We have purchased insurance policies insuring us and related parties for additional taxes owed in respect of lost ITCs, depreciation, gross-up costs and expenses incurred in defending the types of claims described above.
This could result in near-term demand for available solar energy systems despite higher costs, increased costs of polysilicon and the overall cost of solar energy systems, and equipment shortages, potentially reducing overall demand for and limiting the supply of our products and services.
This could result in near-term demand for available energy systems despite higher costs, increased costs of polysilicon and the overall cost of energy systems, and equipment shortages, potentially reducing overall demand for and limiting the supply of our products and services.
In addition, we rely, and expect to continue to rely, on licensing agreements with certain third parties for aerial images that allow us to efficiently and effectively analyze a customer’s rooftop for solar energy system specifications.
In addition, we rely, and expect to continue to rely, on licensing agreements with certain third parties for aerial images that allow us to efficiently and effectively analyze a customer’s rooftop for energy system specifications.
When new technologies are developed with U.S. government funding, the government obtains certain rights in any resulting patents, including a nonexclusive license authorizing the government to use the invention for non-commercial purposes.
When new technologies are developed with U.S. government funding, the government obtains certain rights in any resulting patents, including a nonexclusive license 33 authorizing the government to use the invention for non-commercial purposes.
If we are unable to hire, develop and retain sufficient certified electricians, our growth of solar and battery customers in California may be significantly constrained, which would negatively 37 impact our operating results.
If we are unable to hire, develop and retain sufficient certified electricians, our growth of solar and battery customers in California may be significantly constrained, which would negatively impact our operating results.
Provisions contained in our restated certificate of incorporation and amended and restated bylaws limit the ability of our stockholders to call special meetings and prohibit stockholder action by written consent. 49 Our restated certificate of incorporation provides that our stockholders may not take action by written consent.
Provisions contained in our restated certificate of incorporation and amended and restated bylaws limit the ability of our stockholders to call special meetings and prohibit stockholder action by written consent. Our restated certificate of incorporation provides that our stockholders may not take action by written consent.
However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of Notes surrendered therefor or pay cash for Notes being converted.
However, we may not have enough available cash or be able to obtain financing at the time we are required to 22 make repurchases of Notes surrendered therefor or pay cash for Notes being converted.
Any shortage, bottlenecks, delay, detentions, or component price change from these suppliers, or the acquisition of any of these suppliers by a competitor, could result in sales and installation delays, cancellations, and loss of market share.
Any shortage, bottlenecks, delay, detentions, or component price change from these suppliers, or the 26 acquisition of any of these suppliers by a competitor, could result in sales and installation delays, cancellations, and loss of market share.
If our solar energy systems require an above-average amount of repairs or if the cost of repairing systems were higher than our estimate, we would need to perform such repairs without additional compensation.
If our energy systems require an above-average amount of repairs or if the cost of repairing systems were higher than our estimate, we would need to perform such repairs without additional compensation.
At the end of the initial typically 20- or 25-year term of the Customer Agreement, customers may choose to purchase their solar energy systems, ask to remove the system at our cost or renew their Customer Agreements.
At the end of the initial, typically 20- or 25-year, term of the Customer Agreement, customers may choose to purchase their energy systems, ask to remove the system at our cost or renew their Customer Agreements.
However, these policies only cover certain investment funds and have negotiated exclusions from, and limitations to, coverage and therefore may not cover us for all such lost Commercial ITCs, taxes, costs and expenses.
However, these policies only cover certain investment funds and have negotiated exclusions from, and limitations to, coverage and therefore may not cover us for all such lost ITCs, taxes, costs and expenses.
For example, in connection with the acquisition of Vivint Solar, we issued 0.55 shares of our common stock for each share of Vivint Solar’s common stock owned prior to the acquisition, which resulted in dilution to our stockholders.
For example, in connection with the acquisition of Vivint Solar, we issued 0.55 shares of our common 53 stock for each share of Vivint Solar’s common stock owned prior to the acquisition, which resulted in dilution to our stockholders.
Any significant refunds, capital contributions, or purchases that we may be required to make could adversely affect our liquidity or financial condition. Loan financing developments could adversely impact our business.
Any significant refunds, capital contributions, or purchases that we may be required to make could adversely affect our liquidity or financial condition. 21 Loan financing developments could adversely impact our business.
It is difficult and costly to track the requirements of every individual authority having jurisdiction over our installations and to design solar energy systems to comply with these varying standards.
It is difficult and costly to track the requirements of every individual authority having jurisdiction over our installations and to design energy systems to comply with these varying standards.
We and our solar partners depend on a limited number of suppliers of solar panels, batteries, and other system components to adequately meet anticipated demand for our solar service offerings.
We and our partners depend on a limited number of suppliers of solar panels, batteries, and other system components to adequately meet anticipated demand for our solar and storage service offerings.
These and similar trade restrictions that may be imposed in the future 14 could cause delivery and installation delays, and restrict the global supply of polysilicon and solar products.
These and similar trade restrictions that may be imposed in the future could cause delivery and installation delays, and restrict the global supply of polysilicon and solar products.
In addition to the other risks described in this “Risk Factors” section, as well as the factors discussed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section, the following factors, among others, could cause our results of operations and key performance indicators to fluctuate: 40 • the expiration, reduction or initiation of any governmental tax rebates, tax exemptions, or incentives; • significant fluctuations in customer demand for our solar service offerings or fluctuations in the geographic concentration of installations of solar energy systems; • changes in financial markets, which could restrict our ability to access available and cost-effective financing sources; • seasonal, environmental or weather conditions that impact sales, energy production, and system installations; • the amount and timing of operating expenses related to the maintenance and expansion of our business, operations and infrastructure; • announcements by us or our competitors of new products or services, significant acquisitions, strategic partnerships, joint ventures, or capital-raising activities or commitments; • changes in our pricing policies or terms or those of our competitors, including utilities; • changes in regulatory policy related to solar energy generation; • the loss of one or more key partners or the failure of key partners to perform as anticipated; • actual or anticipated developments in our competitors’ businesses or the competitive landscape; • actual or anticipated changes in our growth rate; • general economic, industry and market conditions beyond our control, such as bank failures, the COVID-19 pandemic, inflationary pressures, other macroeconomic factors, and associated economic downturn; and • changes to our cancellation rate.
In addition to the other risks described in this “Risk Factors” section, as well as the factors discussed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section, the following factors, among others, could cause our results of operations and key performance indicators to fluctuate: • the expiration, reduction or initiation of any governmental tax rebates, tax exemptions, or incentives; • significant fluctuations in customer demand for our solar service offerings or fluctuations in the geographic concentration of installations of energy systems; • changes in financial markets, which could restrict our ability to access available and cost-effective financing sources; • seasonal, environmental or weather conditions that impact sales, energy production, and system installations; • the amount and timing of operating expenses related to the maintenance and expansion of our business, operations and infrastructure; 43 • announcements by us or our competitors of new products or services, significant acquisitions, strategic partnerships, joint ventures, or capital-raising activities or commitments; • changes in our pricing policies or terms or those of our competitors, including utilities; • changes in regulatory policy related to solar energy generation; • the loss of one or more key partners or the failure of key partners to perform as anticipated; • actual or anticipated developments in our competitors’ businesses or the competitive landscape; • actual or anticipated changes in our growth rate; • general economic, industry and market conditions beyond our control, such as bank failures, a global pandemic, inflationary pressures, other macroeconomic factors, and associated economic downturn; and • changes to our cancellation rate.
Furthermore, growth in residential solar energy depends in part on macroeconomic conditions, retail prices of electricity and customer preferences, each of which can change quickly.
Furthermore, growth in residential solar and storage energy depends in part on macroeconomic conditions, retail prices of electricity and customer preferences, each of which can change quickly.
Any such limitations on our ability to use our NOLs and other tax assets could adversely impact our business, financial condition, and results of operations. We have performed an analysis to determine whether an ownership change under Section 382 of the Code had occurred and determined no ownership changes were identified as of December 31, 2024.
Any such limitations on our ability to use our NOLs and other tax assets could adversely impact our business, financial condition, and results of operations. We have performed an analysis to determine whether an ownership change under Section 382 of the Code had occurred and determined no ownership changes were identified as of December 31, 2025.
These challenges pertain to issues such as whether third-party-owned systems qualify for the same rebates, tax exemptions or other non-tax incentives available for homeowner-owned solar energy systems, whether third-party-owned systems are eligible at all for these incentives, whether our Customer Agreements are properly characterized as leases or PPAs, and whether third-party-owned systems are eligible for net metering and the associated significant cost savings.
These challenges pertain to issues such as whether third-party-owned systems qualify for the same rebates, tax exemptions or other non-tax incentives available for homeowner-owned energy systems, whether third-party-owned systems are eligible at all for these incentives, 25 whether our Customer Agreements are properly characterized as leases or PPAs, and whether third-party-owned systems are eligible for net metering and the associated significant cost savings.
For example, once we design a system for use with a particular inverter, if that type of inverter is not readily available at an anticipated price, we may incur delays and additional expenses to redesign the system. Further, the inverters on our solar energy 24 systems generally carry only ten year warranties.
For example, once we design a system for use with a particular inverter, if that type of inverter is not readily available at an anticipated price, we may incur delays and additional expenses to redesign the system. Further, the inverters on our energy systems generally carry only ten-year warranties.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe remain committed to maintaining a robust cybersecurity program to mitigate these risks. 52 We provide disclosures on the potential material impacts of cybersecurity threats on our business operations, which are detailed under the heading 'Risks Related to Our Business Operations' in Item 1A of this Annual Report on Form 10-K, and those disclosures are incorporated by reference herein.
Biggest changeWe provide disclosures on the potential material impacts of cybersecurity threats on our business operations, which are detailed under the heading 'Risks Related to Our Business Operations' in Item 1A of this Annual Report on Form 10-K, and those disclosures are incorporated by reference herein.
At least annually, the entire Board receives an overview from management of our cybersecurity threat risk management and strategy processes covering topics such as data security posture, results from third-party assessments, progress towards pre-determined risk-mitigation-related goals, our incident response plan, and material cybersecurity threat risks or incidents and developments, as well as the steps management has taken to respond to such risks.
At least annually, the entire Board receives an overview from management of our cybersecurity threat risk management and strategy processes covering topics such as data security posture, results from third-party assessments, progress towards pre-determined risk-mitigation-related goals, our incident response plan, and material cybersecurity threat risks or incidents and developments, as well as the steps 55 management has taken to respond to such risks.
To identify and assess material risks from cybersecurity threats, our enterprise risk management program considers cybersecurity risks alongside other company risks as part of our overall risk assessment process. Our 51 enterprise risk professionals collaborate with subject matter specialists, as necessary, to gather insights for identifying and assessing material cybersecurity risks, their severity, and potential mitigation strategies.
To identify and assess material risks from cybersecurity threats, our enterprise risk management program considers cybersecurity risks alongside other company risks as part of our overall risk assessment process. Our enterprise risk professionals collaborate with subject matter specialists, as necessary, to gather insights for identifying and assessing material cybersecurity risks, their severity, and potential mitigation strategies.
As discussed above, these members of management report to the entire Board about cybersecurity threat risks, among other cybersecurity related matters at least annually, with updates to the Audit Committee on a quarterly basis. 53
As discussed above, these members of management report to the entire Board about cybersecurity threat risks, among other cybersecurity related matters at least annually, with updates to the Audit Committee on a quarterly basis. 56
To manage our material risks from cybersecurity threats, we take certain measures, including the below listed activities, depending on the nature of the relevant systems, data, and environment: • undertaking period reviews of our consumer-facing policies and statements; • conduct phishing security training for employees and contractors with access to corporate email systems; • require employees, and data service providers with whom we share customer, employee or partner data, to treat customer information with care; • running tabletop exercises to simulate a response to a cybersecurity incident; • carrying cybersecurity insurance that provides protection against the potential losses arising from a cybersecurity incident; • conducting annual cybersecurity awareness training for employees; and • maintaining an incident response plan to prepare for, detect, respond to, and recover from, cybersecurity incidents.
To manage our material risks from cybersecurity threats, we take certain measures, including the below listed activities, depending on the nature of the relevant systems, data, and environment: • undertaking periodic reviews of our consumer-facing policies and statements; • conducting phishing security training for employees and contractors with access to corporate email systems; 54 • requiring employees, and data service providers with whom we share customer, employee or partner data, to treat customer information with care; • running tabletop exercises to simulate a response to a cybersecurity incident; • carrying cybersecurity insurance that provides protection against the potential losses arising from a cybersecurity incident; • conducting annual cybersecurity awareness training for employees; and • maintaining an incident response plan to prepare for, detect, respond to, and recover from, cybersecurity incidents.
Our cybersecurity program is closely aligned with our commitment to data privacy. We adhere to applicable data protection laws and regulations, integrate privacy-by-design principles into our processes, and routinely assess our practices to ensure that we protect customer, employee, and partner information. Addressing these risks is part of our enterprise risk management program.
Our cybersecurity program is closely aligned with our commitment to data privacy. We always intend to adhere to applicable data protection laws and regulations, integrate privacy-by-design principles into our processes, and routinely assess our practices with the goal of protecting customer, employee, and partner information. Addressing these risks is part of our enterprise risk management program.
Any future cybersecurity breaches or system vulnerabilities could impact our business operations, reputation and regulatory compliance obligations.
Any future cybersecurity breaches or system vulnerabilities could impact our business operations, reputation and regulatory compliance obligations. We remain committed to maintaining a robust cybersecurity program to mitigate these risks.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties. Our corporate headquarters and executive offices are located in San Francisco, California, where we lease approximately 14,800 square feet of office space. We also maintain 91 other locations, consisting primarily of branch offices, warehouses and sales offices in 19 states. We lease all of our facilities and we do not own any real property.
Biggest changeItem 2. Properties. Our corporate headquarters and executive offices are located in San Francisco, California, where we lease approximately 15,000 square feet of office space. We also maintain 81 other locations, consisting primarily of branch offices, warehouses and sales offices in 18 states. We lease all of our facilities and we do not own any real property.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 54 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 55 Item 6. [Reserved] 56 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 57 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 75 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 57 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 58 Item 6. [Reserved] 59 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 60 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 78 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock began trading on the Nasdaq Global Select Market under the symbol “RUN” on August 5, 2015. Holders of Record As of February 21, 2025, there were approximately 429 holders of record of common stock.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock began trading on the Nasdaq Global Select Market under the symbol “RUN” on August 5, 2015. Holders of Record As of February 20, 2026, there were approximately 456 holders of record of common stock.
This graph shall not be deemed “soliciting material” or be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. 55
This graph shall not be deemed “soliciting material” or be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. 58
Stock Price Performance Graph The following stock performance graph compares our total stock return with the total return for (i) the Nasdaq Composite Index and the (ii) the Invesco Solar ETF, which represents a peer group of solar companies, for the period from December 31, 2019 through December 31, 2024.
Stock Price Performance Graph The following stock performance graph compares our total stock return with the total return for (i) the Nasdaq Composite Index and the (ii) the Invesco Solar ETF, which represents a peer group of solar companies, for the period from December 31, 2020 through December 31, 2025.
The figures represented below assume an investment of $100 in our common stock at the closing price of $13.81 on December 31, 2019 and in the Nasdaq Composite Index and the Invesco Solar ETF on December 31, 2019 including the reinvestment of dividends into shares of common stock.
The figures represented below assume an investment of $100 in our common stock at the closing price of $69.38 on December 31, 2020 and in the Nasdaq Composite Index and the Invesco Solar ETF on December 31, 2020 including the reinvestment of dividends into shares of common stock.
Removed
In addition, our credit agreements contain restrictions on payments of cash dividends. Unregistered Sales of Equity Securities During the year ended December 31, 2021, we issued warrants exercisable for up to 846,943 shares of our common stock to certain strategic partners, calculated using the closing stock price for the respective stock grant’s quarter of issuance.
Added
In addition, our credit agreements contain restrictions on payments of cash dividends. Unregistered Sales of Equity Securities None. Issuer Purchases of Equity Securities None.
Removed
The shares underlying the warrants will vest upon certain time- and performance-based criteria as set forth in the warrants. The exercise price of the warrants is $0.01 per share, and 13,939, 63,742 and 346,269 warrants were exercised during the years ended December 31, 2024, 2023 and 2022, respectively.
Removed
The warrants were issued and sold pursuant to an exemption from the registration requirements of Section 5 of the Securities Act, as they did not involve a public offering under Section 4(a)(2) and were issued as restricted securities pursuant to Rule 144 of the Securities Act.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeOur Annual Report on Form 10-K for the year ended December 31, 2023 includes a discussion and analysis of our financial condition and results of operations for the year ended December 31, 2022 in Item 7 of Part II, “Management's Discussion and Analysis of Financial Condition and Results of Operations.” Year Ended December 31, 2024 2023 (in thousands, except per share amounts) Revenue: Customer agreements and incentives $ 1,505,227 $ 1,186,706 Solar energy systems and product sales 532,492 1,073,107 Total revenue 2,037,719 2,259,813 Operating expenses: Cost of customer agreements and incentives 1,169,213 1,077,114 Cost of solar energy systems and product sales 539,952 1,019,638 Sales and marketing 617,162 740,821 Research and development 39,304 21,816 General and administrative 245,127 221,067 Goodwill impairment 3,122,168 1,158,000 Total operating expenses 5,732,926 4,238,456 Loss from operations (3,695,207) (1,978,643) Interest expense, net (848,366) (652,989) Other income (expense), net 161,539 (63,900) Loss before income taxes (4,382,034) (2,695,532) Income tax benefit (26,817) (12,691) Net loss (4,355,217) (2,682,841) Net loss attributable to noncontrolling interests and redeemable noncontrolling interests (1,509,050) (1,078,344) Net loss attributable to common stockholders $ (2,846,167) $ (1,604,497) Net loss per share attributable to common stockholders Basic $ (12.81) $ (7.41) Diluted $ (12.81) $ (7.41) Weighted average shares used to compute net loss per share attributable to common stockholders Basic 222,215 216,642 Diluted 222,215 216,642 68 Comparison of the Years Ended December 31, 2024 and 2023 Revenue Year Ended December 31, Change 2024 2023 $ % (in thousands) Customer agreements $ 1,388,412 $ 1,077,099 $ 311,313 29 % Incentives 116,815 109,607 7,208 7 % Customer agreements and incentives 1,505,227 1,186,706 318,521 27 % Solar energy systems 204,776 656,408 (451,632) (69) % Products 327,716 416,699 (88,983) (21) % Solar energy systems and product sales 532,492 1,073,107 (540,615) (50) % Total revenue $ 2,037,719 $ 2,259,813 $ (222,094) (10) % Customer Agreements and Incentives .
Biggest changeOur Annual Report on Form 10-K for the year ended December 31, 2024 includes a discussion and analysis of our financial condition and results of operations for the year ended December 31, 2023 in Item 7 of Part II, “Management's Discussion and Analysis of Financial Condition and Results of Operations.” 71 Year Ended December 31, 2025 2024 (in thousands, except per share amounts) Revenue: Customer agreements and incentives $ 1,819,007 $ 1,505,227 Energy systems and product sales 1,137,990 532,492 Total revenue 2,956,997 2,037,719 Operating expenses: Cost of customer agreements and incentives 1,282,357 1,169,213 Cost of energy systems and product sales 777,342 539,952 Sales and marketing 709,253 617,162 Research and development 36,125 39,304 General and administrative 278,049 245,127 Goodwill impairment — 3,122,168 Total operating expenses 3,083,126 5,732,926 Loss from operations (126,129) (3,695,207) Interest expense, net (996,782) (848,366) Other (expense) income, net (53,413) 161,539 Loss before income taxes (1,176,324) (4,382,034) Income tax benefit (167,218) (26,817) Net loss (1,009,106) (4,355,217) Net loss attributable to noncontrolling interests and redeemable noncontrolling interests (1,459,053) (1,509,050) Net income (loss) attributable to common stockholders $ 449,947 $ (2,846,167) Net income (loss) per share attributable to common stockholders Basic $ 1.96 $ (12.81) Diluted $ 1.71 $ (12.81) Weighted average shares used to compute net income (loss) per share attributable to common stockholders Basic 229,809 222,215 Diluted 264,465 222,215 Comparison of the Years Ended December 31, 2025 and 2024 Revenue Year Ended December 31, Change 2025 2024 $ % (in thousands) Customer agreements $ 1,708,483 $ 1,388,412 $ 320,071 23 % Incentives 110,524 116,815 (6,291) (5) % Customer agreements and incentives 1,819,007 1,505,227 313,780 21 % Energy systems 878,341 204,776 673,565 329 % Products 259,649 327,716 (68,067) (21) % Energy systems and product sales 1,137,990 532,492 605,498 114 % Total revenue $ 2,956,997 $ 2,037,719 $ 919,278 45 % 72 Customer Agreements and Incentives .
We account for investment tax credits as a reduction of income tax expense in the year in which the credits are recognized (i.e. the flow-through method). The Company enters into ITC transfer agreements with third-party transferees to transfer to such third-parties, for cash, the ITCs generated by certain solar energy systems that have been or will be placed in service.
We account for investment tax credits as a reduction of income tax expense in the year in which the credits are recognized (i.e. the flow-through method). The Company enters into ITC transfer agreements with third-party transferees to transfer to such third-parties, for cash, the ITCs generated by certain energy systems that have been or will be placed in service.
As the demand for solar plus storage offerings grows, we anticipate facing additional operational challenges associated with the complexity of deploying storage solutions. For example, solar plus storage offerings tend to have longer cycle times due to factors such as lengthened permitting and inspection times and potential need of a main panel upgrade.
As the demand for solar plus storage offerings grows, we anticipate facing additional operational challenges associated with the complexity of deploying storage solutions. For example, solar plus storage offerings tend to have longer cycle times due to factors such as lengthened 61 permitting and inspection times and potential need of a main panel upgrade.
In February 2024, we issued $475.0 million of convertible senior notes with a maturity date of March 1, 2030, for net proceeds of approximately $470.1 million. Our business model requires substantial outside financing arrangements to grow the business and facilitate the deployment of additional solar energy systems.
In February 2024, we issued $475.0 million of convertible senior notes with a maturity date of March 1, 2030, for net proceeds of approximately $470.1 million. Our business model requires substantial outside financing arrangements to grow the business and facilitate the deployment of additional energy systems.
Therefore, we consider these to be our critical accounting policies and estimates. Principles of Consolidation Our consolidated financial statements include our accounts and those of our subsidiaries in which we have a controlling financial interest. The typical condition for a controlling financial interest is holding a majority of the voting interests of an entity.
Therefore, we consider these to be our critical accounting policies and estimates. 67 Principles of Consolidation Our consolidated financial statements include our accounts and those of our subsidiaries in which we have a controlling financial interest. The typical condition for a controlling financial interest is holding a majority of the voting interests of an entity.
Customer Agreements with a performance guarantee provide a credit to the customer if the system's 64 cumulative production, as measured on various PTO anniversary dates, is below our guarantee of a specified minimum. Revenue is recognized to the extent it is probable that a significant reversal of such revenue will not occur.
Customer Agreements with a performance guarantee provide a credit to the customer if the system's cumulative production, as measured on various PTO anniversary dates, is below our guarantee of a specified minimum. Revenue is recognized to the extent it is probable that a significant reversal of such revenue will not occur.
We recognize the effect of tax rate and law changes on deferred taxes in the reporting period in which the legislation is enacted. We sell solar energy systems to investment funds. As the investment funds are consolidated by us, the gain on the sale of the solar energy systems is not recognized in the consolidated financial statements.
We recognize the effect of tax rate and law changes on deferred taxes in the reporting period in which the legislation is enacted. We sell energy systems to investment funds. As the investment funds are consolidated by us, the gain on the sale of the energy systems is not recognized in the consolidated financial statements.
The solar energy systems that are operational are expected to generate a positive return rate over the term of the Customer Agreement, typically 20 or 25 years. However, in order to grow, we will continue to be dependent on financing from outside parties.
The energy systems that are operational are expected to generate a positive return rate over the term of the Customer Agreement, typically 20 or 25 years. However, in order to grow, we will continue to be dependent on financing from outside parties.
We offer our solar service offerings both directly to the customer and through our solar partners, which include sales and installation partners, and strategic partners, which include retail partners. In addition, we sell solar energy systems directly to customers for cash. We also sell solar energy panels and other products (such as racking) to resellers.
We offer our solar service offerings both directly to the customer and through our energy system partners, which include sales and installation partners, and strategic partners, which include retail partners. In addition, we sell energy systems directly to customers for cash. We also sell solar energy panels and other products (such as racking) to resellers.
Our ability to offer Customer Agreements depends in part on our ability to finance the purchase and installation of the solar energy systems by monetizing the resulting customer cash flows and related Commercial ITCs, accelerated tax depreciation and other incentives from governments and local utilities.
Our ability to offer Customer Agreements depends in part on our ability to finance the purchase and installation of the energy systems by monetizing the resulting customer cash flows and related Commercial ITCs, accelerated tax depreciation and other incentives from governments and local utilities.
Under the new NBT framework, the value proposition of our products is best understood when customers compare the combined costs of their utility bill along with their Sunrun solar and storage bill, due to the impact of time-of-use rates and export rates.
Under the new California NBT framework, the value proposition of our products is best understood when customers compare the combined costs of their utility bill along with their Sunrun solar and storage bill, due to the impact of time-of-use rates and export rates.
For Customer Agreements with 25-year initial contract terms, a 5-year renewal period is assumed. For a 20-year initial contract term, a 10-year renewal period is assumed. In all instances, we assume a 30-year customer relationship, although the customer may renew for additional years, or purchase the system.
In all instances, we assume a 30-year customer relationship, although the customer may renew for additional years, or purchase the system. For instance, Customer Agreements with 25-year initial contract terms, a 5-year renewal period is assumed. For a 20-year initial contract term, a 10-year renewal period is assumed.
We generally recognize revenue from solar energy systems sold to customers when the solar energy system passes inspection by the authority having jurisdiction, which inspection generally occurs after installation but prior to PTO, at which time we have met the performance obligation in the contract.
We generally recognize revenue from energy systems sold to customers when the energy system passes inspection by the authority having jurisdiction, which inspection generally occurs after installation but prior to PTO, at which time we have met the performance obligation in the contract.
We begin to recognize revenue from a Customer Agreement when PTO for the applicable solar energy system is given by the local utility company or on the date daily operation commences if utility approval is not required.
We begin to recognize revenue from a Customer Agreement when PTO for the applicable energy system is given by the local utility company or on the date daily operation commences if utility approval is not required.
Because our financing structure is sensitive to volatility in interest rates, higher rates increase our cost of capital and may decrease the amount of capital available to us to finance the deployment of new solar energy systems.
Because our financing structure is sensitive to volatility in interest rates, higher rates increase our cost of capital and may decrease the amount of capital available to us to finance the deployment of new energy systems.
While we do not expect such acquisitions to represent a material portion of our growth on an annual basis, we plan to pursue such transactions opportunistically. For instance, in the third quarter of fiscal 2021, we completed a strategic transaction that added approximately 2,000 Customers and 13 MW of Networked Solar Energy Capacity.
While we do not expect such acquisitions to represent a significant portion of our growth on an annual basis, we plan to pursue such transactions opportunistically. For instance, in the third quarter of fiscal 2021, we completed a strategic transaction that added approximately 2,000 Customers and 13 MW of Networked Solar Energy Capacity.
We also compared the total invested capital (including market 65 capitalization) to the fair value of our reporting unit to assess the reasonableness of fair value.
We also compared the total invested capital (including market capitalization) to the fair value of our reporting unit to assess the reasonableness of fair value.
We, either directly or through one of our solar partners, install a solar energy system on a customer’s home and either sell the system to the customer or, as is more often the case, sell the energy generated by the system to the customer pursuant to a lease or PPA with no or low upfront costs.
We, either directly or through one of our energy system partners, install an energy system on a customer’s home and either sell the system to the customer or, as is more often the case, sell the energy generated by the system to the customer pursuant to a lease or PPA with no or low upfront costs.
As of December 31, 2024, we provided our solar services to customers and sold solar energy panels and other products to resellers throughout the United States. More than 45% of our cumulative systems deployed are in California. We compete mainly with traditional utilities.
As of December 31, 2025, we provided our solar services to customers and sold solar energy panels and other products to resellers throughout the United States. More than 45% of our cumulative systems deployed are in California. We compete mainly with traditional utilities.
During the years ended December 31, 2024, 2023 and 2022, there were no indicators of impairment and therefore no cash flow analysis was performed. Provision for Income Taxes We account for income taxes under an asset and liability approach.
During the years ended December 31, 2025, 2024 and 2023, there were no indicators of impairment and therefore no cash flow analysis was performed. Provision for Income Taxes We account for income taxes under an asset and liability approach.
Given our net operating loss carryforwards as of December 31, 2024, we do not expect to pay income tax, including in connection with our 2024 income tax provision, until our net operating losses are fully utilized.
Given our net operating loss carryforwards as of December 31, 2025, we do not expect to pay income tax, including in connection with our 2025 income tax provision, until our net operating losses are fully utilized.
The $92.1 million increase in Cost of customer agreements and incentives was primarily due to the new systems placed in service in 2024, plus a full year of costs recognized in 2024 for systems placed in service in 2023 versus only a partial amount of such expenses related to the period in which the assets were in service in 2023.
The $113.1 million increase in Cost of customer agreements and incentives was primarily due to the new systems placed in service in 2025, plus a full year of costs recognized in 2025 for systems placed in service in 2024 versus only a partial amount of such expenses related to the period in which the assets were in service in 2024.
If our estimate of the future production shortfall amount for Customer Agreements with a performance guarantee was 10% higher, the additional reduction to revenue in the twelve months ended December 31, 2024 would have been less than $4.0 million.
If our estimate of the future production shortfall amount for Customer Agreements with a performance guarantee was 10% higher, the additional reduction to revenue in the twelve months ended December 31, 2025 would have been less than $5.0 million.
Investment Funds Our Customer Agreements provide for recurring customer payments, typically over 20 or 25 years, and the related solar energy systems are generally eligible for Commercial ITCs, accelerated tax depreciation and other government or utility incentives. Our financing strategy is to monetize these benefits at a low weighted average cost of capital.
Investors Our Customer Agreements provide for recurring customer payments, typically over 20 or 25 years, and the related energy systems are generally eligible for ITCs, accelerated tax depreciation and other government or utility incentives. Our financing strategy is to monetize these benefits at a low weighted average cost of capital.
In addition, federal and certain state net operating loss carryforwards generated in tax years beginning after December 31, 2017 total $2.0 billion and $334.4 million, respectively, and have indefinite carryover periods and do not expire.
In addition, federal and certain state net operating loss carryforwards generated in tax years beginning after December 31, 2017 total $2.6 billion and $371.4 million, respectively, and have indefinite carryover periods and do not expire.
This low cost of capital enables us to offer attractive pricing to our customers for the energy generated by the solar energy system on their homes. Historically, we have monetized a portion of the value created by our Customer Agreements and the related solar energy systems through investment funds.
This low cost of capital enables us to offer attractive pricing to our customers for the energy generated by the energy system on their homes. Historically, we have monetized a portion of the value created by our Customer Agreements and the related energy systems through Funds, as defined below.
In particular, rising interest rates, including recent historic increases starting in 2021, have resulted and may continue to result in a decrease in our advance rates, reducing the proceeds we receive from certain investment funds.
In particular, elevated interest rates, including historic increases starting in 2021, have resulted and may continue to result in a decrease in our advance rates, reducing the proceeds we receive from certain Funds.
Investment funds generally allocate more loss to the noncontrolling interest in the first several years after fund formation. Liquidity and Capital Resources As of December 31, 2024, we had cash of $575.0 million, which consisted of cash held in checking and savings accounts with financial institutions.
Investment funds generally allocate more loss to the noncontrolling interest in the first several years after fund formation. Liquidity and Capital Resources As of December 31, 2025, we had cash of $823.4 million, which consisted of cash held in checking and savings accounts with financial institutions.
Furthermore, other companies may calculate these metrics differently than we do now or in the future, which would reduce their usefulness as a comparative measure. • Networked Solar Energy Capacity represents the aggregate megawatt production capacity of our solar energy systems, whether sold directly to customers or subject to executed Customer Agreements (i) for which we have confirmation that the systems are installed, subject to final inspection; or (ii) in the case of certain system installations by our partners, for which we have accrued at least 80% of the expected project cost (inclusive of acquisitions of installed systems).
Furthermore, other companies may calculate these metrics differently than we do now or in the future, which would reduce their usefulness as a comparative measure. • Deployments represent solar or storage systems, whether sold directly to customers or subject to executed Customer Agreements (i) for which we have confirmation that the systems are installed, subject to final inspection, or (ii) in the case of certain system installations by our partners, for which we have accrued at least 80% of the expected project cost (inclusive of acquisitions of installed systems).
This was primarily driven by $1.3 billion in net proceeds from fund investors, $2.1 billion in net proceeds from debt, $124.3 million in net proceeds from trade receivable financing, $98.2 million in net proceeds from convertible senior notes and $18.9 million in net proceeds from stock-based awards activity, offset by $26.2 million in acquisition of noncontrolling interests and $27.2 million in repayments under finance lease obligations. 72 During 2023, we generated $3.5 billion from financing activities.
This was primarily driven by $1.3 billion in net proceeds from fund investors, $2.1 billion in net proceeds from debt, $124.3 million in net proceeds from trade receivable financing, $98.2 million in net proceeds from convertible senior notes and $18.9 million in net proceeds from stock-based awards activity, offset by $26.2 million in acquisition of noncontrolling interests and $27.2 million in repayments under finance lease obligations.
Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include those identified below and those discussed in the section titled “Risk Factors” included elsewhere in this Annual Report on Form 10-K. We provide clean, solar energy and energy storage to customers at a significant savings compared to traditional utility energy.
Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include those identified below and those discussed in the section titled “Risk Factors” included elsewhere in this Annual Report on Form 10-K. We provide clean, solar energy and energy storage to customers.
However, under this new policy, the value proposition of storage offerings is significantly enhanced. We believe that California will be predominantly a solar plus storage market going forward and the vast majority of California sales now consist of either our Sunrun Shift product or our backup battery offerings.
However, under this new policy, the value proposition of storage offerings is significantly enhanced in California. We believe that California will be predominantly a solar plus storage market going forward and the vast majority of California sales now consist of our backup battery offerings.
We have historically estimated an immaterial amount of liquidated damages pursuant to SREC contracts, and actual damages have not been materially different from estimates, nor material in amount during the years ended December 31, 2024, 2023 and 2022. Solar Energy Systems and Product Sales. Solar energy systems sales are revenue from the sale of solar energy systems directly to customers.
We have historically estimated an immaterial amount of liquidated damages pursuant to SREC contracts, and actual damages have not been materially different from estimates, nor material in amount during the years ended December 31, 2025, 2024 and 2023. Energy Systems and Product Sales. Energy systems sales are revenue from the sale of energy systems directly to customers or third-party investors.
Gross Earning Assets utilize a 6% unlevered discount rate (weighted average cost of capital or “WACC”) to discount future cash flows to the present period. Furthermore, this metric assumes that customers renew after the initial contract period at a rate equal to 90% of the rate in effect at the end of the initial contract term.
Gross Earning Assets utilize a 6% unlevered discount rate to discount future cash flows to the present period. Furthermore, this metric assumes that customers renew after the initial contract period at a rate equal to 90% of the rate in effect at the end of the initial contract term.
The $311.3 million increase in Revenue from Customer Agreements was primarily due to new systems placed in service in 2024 and a full year of revenue recognized in 2024 for systems placed in service in 2023 versus only a partial amount of such revenue related to the period in which the assets were in service in 2023.
The $320.1 million increase in Revenue from Customer Agreements was primarily due to new systems placed in service in 2025 and a full year of revenue recognized in 2025 for systems placed in service in 2024 versus only a partial amount of such revenue related to the period in which the assets were in service in 2024.
As of December 31, 2024, we had net operating loss carryforwards for federal, state, and foreign income tax purposes of approximately $720.7 million, $3.3 billion, and $459.9 million, respectively, which will begin to expire in 2028 for federal purposes, in 2025 for state purposes, and in 2031 for foreign purposes.
As of December 31, 2025, we had net operating loss carryforwards for federal, state, and foreign income tax purposes of approximately $720.7 million, $3.5 billion, and $1.3 billion, respectively, which will begin to expire in 2028 for federal purposes, in 2026 for state purposes, and in 2031 for foreign purposes.
In 2024, we received $3.4 billion of new commitments on secured credit facilities arrangements and $1.5 billion of commitments from secured, long-term non-recourse loan arrangements. Our principal uses of cash are funding our business, including the costs of acquisition and installation of solar energy systems, satisfaction of our obligations under our debt instruments and other working capital requirements.
In 2025, we received $1.2 billion of new commitments on secured credit facilities arrangements and $1.6 billion of commitments from secured, long-term non-recourse loan arrangements. Our principal uses of cash are funding our business, including the costs of acquisition and installation of energy systems, satisfaction of our obligations under our debt instruments and other working capital requirements.
The Cost of customer agreements and incentives decreased to 78% of customer agreements and incentives revenue during 2024, from 91% in the prior year. This decrease is primarily due to customer pricing increases catching up to costs. 69 Cost of Solar Energy Systems and Product Sales .
The Cost of customer agreements and incentives decreased to 70% of customer agreements and incentives revenue during 2025, from 78% in the prior year. This decrease is primarily due to customer pricing increases catching up to costs. Cost of Energy Systems and Product Sales .
The increase in Interest expense, net of $195.4 million is primarily related to additional non-recourse debt entered into in 2024. Included in net interest expense is $34.8 million and $31.2 million of non-cash interest recognized under Customer Agreements that have a significant financing component for 2024 and 2023, respectively. Other income (expense), net.
The increase in Interest expense, net of $148.4 million is primarily related to additional non-recourse debt entered into in 2025. Included in net interest expense is $38.1 million and $34.8 million of non-cash interest recognized under Customer Agreements that have a significant financing component for 2025 and 2024, respectively. Other (expense) income, net.
This indicator triggered an interim quantitative assessment as of December 31, 2024. Per ASC 350-20-35-22 “quoted market prices in active markets are the best evidence of fair value and shall be used as the basis for the measurement, if available.” We estimated the fair value of our reporting unit primarily based on consideration of an income approach and market capitalization.
Per ASC 350-20-35-22 “quoted market prices in active markets are the best evidence of fair value and shall be used as the basis for the measurement, if available.” We estimated the fair value of our reporting unit primarily based on consideration of an income approach and market capitalization.
Noncontrolling Interests and Redeemable Noncontrolling Interests Our noncontrolling interests and redeemable noncontrolling interests represent fund investors’ interests in the net assets of certain investment funds, which we consolidate, that we have entered into in order to finance the costs of solar energy facilities under Customer Agreements.
These estimates are inherently uncertain and unpredictable. 70 Noncontrolling Interests and Redeemable Noncontrolling Interests Our noncontrolling interests and redeemable noncontrolling interests represent fund investors’ interests in the net assets of certain investment funds, which we consolidate, that we have entered into in order to finance the costs of solar energy facilities under Customer Agreements.
Management believes these metrics provide investors with helpful information to determine the economic performance of the business activities in a period that would otherwise not be observable from historic GAAP measures.
Key Operating Metrics The following operating metrics are used by management to evaluate the performance of the business. Management believes these metrics provide investors with helpful information to determine the economic performance of the business activities in a period that would otherwise not be observable from historic GAAP measures.
However, we believe our diversified business model and flexible operational framework position us to adapt to potential changes in the regulatory landscape and will continue to build on the robust bi-partisan support for residential solar policy.
However, we believe our diversified business model and flexible operational framework position us to adapt to potential adverse changes in the regulatory landscape and to continue building on the robust bipartisan support for residential solar policy.
Changes in working capital resulted in a net cash outflow of $195.3 million. Investing Activities During 2024, we used $2.7 billion in cash in investing activities. The majority was used to design, acquire and install solar energy systems and components under our long-term Customer Agreements. During 2023, we used $2.6 billion in cash in investing activities.
Additionally, changes in working capital resulted in a net cash outflow of $318.5 million. Investing Activities During 2025, we used $2.5 billion in cash in investing activities. The majority was used to design, acquire and install energy systems and components under our long-term Customer Agreements. During 2024, we used $2.7 billion in cash in investing activities.
Revenue from incentives consisted primarily of sales of SRECs. The $7.2 million increase when compared to the prior year related to the timing and volume of SREC sales, which were responsive to market conditions. Solar Energy Systems and Product Sales .
Revenue from incentives consisted primarily of sales of SRECs. The $6.3 million decrease when compared to the prior year related to the timing and volume of SREC sales, which were responsive to market conditions. Energy Systems and Product Sales .
In Q4 2024, we retired our last pass-through financing obligation fund. We record the investor’s interest in partnership flips as noncontrolling interests or redeemable noncontrolling interests. These partnership flips are usually redeemable at our option and, in certain cases, at the investor’s option.
Historically, we also utilized pass-through financing obligations as a legal structure for our Funds. In Q4 2024, we retired our last pass-through financing obligation Fund. We record the investor’s interest in partnership flips as noncontrolling interests or redeemable noncontrolling interests. These partnership flips are usually redeemable at our option and, in certain cases, at the investor’s option.
These assets are attractive to fund investors due to the long-term, recurring nature of the cash flows generated by our Customer Agreements, the high credit scores of our customers, the fact that energy is a non-discretionary good and our low loss rates.
Additionally, we sell certain energy systems under newly originated Customer Agreements to third-party investors. These assets are attractive to investors due to the long-term, recurring nature of the cash flows generated by our Customer Agreements, the high credit scores of our customers, the fact that energy is a non-discretionary good and our low loss rates.
These market dynamics, some of which we expect will continue into the foreseeable future, have impacted and may continue to impact our business and financial results.
These market dynamics, some of which we expect will continue into the foreseeable future, despite a recent reduction in federal interest rates, have impacted and may continue to impact our business and financial results.
Any delay, reduction, or elimination in the implementation of policies that support the residential solar industry, such as the ITCs and adders under the IRA, or Executive Orders issued by the President of the United States, could have an adverse effect on our business.
The recent changes to ITCs under the OBBB, or Executive Orders issued by the President of the United States, as well as any other elimination, reduction or delay in policies that support the residential storage and solar industry, could have an adverse effect on our business.
There was a $479.7 million decrease in Cost of solar energy systems and product sales, which was primarily due to the corresponding net decrease in the solar energy systems and product sales discussed above.
There was a $237.4 million increase in Cost of energy systems and product sales, which was primarily due to the corresponding net increase in the energy systems and product sales discussed above.
Product sales decreased by $89.0 million compared to the prior year primarily due to the lower average sales price of solar energy products, as well as lower sales volume of solar energy products to installers of solar energy systems compared to the prior year, due to easing of supply chain constraints and the wind-down of the AEE Solar operations in 2024.
Product sales decreased by $68.1 million compared to the prior year primarily due to the lower average sales price of solar energy products, as well as lower sales volume of solar energy products to installers of solar energy systems compared to the prior year, due to easing of supply chain constraints.
In December 2022, California made changes to its net metering policy by adopting NBT, which presents a significant change to the rate structure for new California customers, and has partially limited the financial attractiveness of our offerings in certain regions of the state, particularly for solar-only systems.
For example, on April 15, 2023, California implemented changes to its net metering policy by adopting a net billing tariff (“NBT”), which presented a significant change to the rate structure for new California customers, and has partially limited the financial attractiveness of our offerings in certain regions of the state, particularly for solar-only systems.
This was primarily driven by $1.4 billion in net proceeds from fund investors, $2.2 billion in net proceeds from debt, $22.6 million in net proceeds from stock-based awards activity, offset by $1.5 million in repurchase of convertible senior notes, $46.3 million in acquisition of noncontrolling interests and $23.3 million in repayments under finance lease obligations.
This was primarily driven by $1.8 billion in net proceeds from fund investors, $1.6 billion in net proceeds from debt, $2.1 million in net proceeds from convertible senior notes and $16.8 million in net proceeds from stock-based awards activity, offset by $124.3 million in net repayments from trade receivable financing, $30.7 million in acquisition of noncontrolling interests and $25.2 million in repayments under finance lease obligations.
In addition, fund investors can receive attractive after-tax returns from our investment funds due to their ability to utilize Commercial ITCs, accelerated depreciation and certain government or utility incentives associated with the funds’ ownership of solar energy systems. As of December 31, 2024, we had 62 active investment funds, which are described below.
In addition, investors can receive attractive after-tax returns due to their ability to utilize ITCs, accelerated depreciation and certain government or utility incentives associated with the ownership of energy systems. Funds As of December 31, 2025, we had 59 active Funds, which are described below. We have established different types of Funds to implement our asset monetization strategy.
Income Tax Benefit Year Ended December 31, Change 2024 2023 $ % (in thousands) Income tax benefit $ 26,817 $ 12,691 $ 14,126 111 % The increase in Income tax benefit of $14.1 million primarily relates to an increase in pre-tax loss, increased proceeds from investment tax credit transfers, and a decrease in valuation allowance on certain federal and state 70 tax credits and net operating losses, which was offset by goodwill impairment and an increase in noncontrolling interest and redeemable noncontrolling interests.
Income Tax Benefit Year Ended December 31, Change 2025 2024 $ % (in thousands) Income tax benefit $ 167,218 $ 26,817 $ 140,401 524 % The increase in Income tax benefit of $140.4 million primarily relates to increased proceeds from investment tax credit transfers and a reduction of goodwill impairment, which was partially offset by an overall increase in valuation allowance on certain tax credits and net operating losses, a decrease in pre-tax loss, and a decrease in losses allocable to noncontrolling interests and redeemable noncontrolling interests.
Our estimated production shortfall reduced revenue during the twelve months ended December 31, 2024 by less than $7.6 million more than the prior year's period.
Our estimated production shortfall reduced revenue during the twelve months ended December 31, 2025 by less than $10.2 million compared to the prior year's period.
Debt, Equity, and Financing Fund Commitments Debt Instruments For a discussion of the terms and conditions of debt instruments and changes thereof in the period, refer to Note 10, Indebtedness, to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
For a discussion of the terms and conditions of debt instruments and changes thereof in the period, refer to Note 10, Indebtedness, to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. 76 Recent Accounting Pronouncements See Note 2, Summary of Significant Accounting Policies, to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. 77
The following table summarizes our cash flows for the periods indicated: Year Ended December 31, 2024 2023 (in thousands) Consolidated cash flow data: Net cash used in operating activities $ (766,153) $ (820,740) Net cash used in investing activities (2,701,024) (2,613,143) Net cash provided by financing activities 3,426,755 3,468,698 Net (decrease) increase in cash $ (40,422) $ 34,815 Operating Activities During 2024, we used $766.2 million in net cash from operating activities.
The following table summarizes our cash flows for the periods indicated: Year Ended December 31, 2025 2024 (in thousands) Consolidated cash flow data: Net cash used in operating activities $ (421,440) $ (766,153) Net cash used in investing activities (2,500,338) (2,701,024) Net cash provided by financing activities 3,211,350 3,426,755 Net increase (decrease) in cash $ 289,572 $ (40,422) 75 Operating Activities During 2025, we used $421.4 million in net cash from operating activities.
Any residual purchase price is recorded as goodwill. The allocation of the purchase price requires management to make significant estimates in determining the fair values of assets acquired and liabilities assumed, especially with respect to the solar energy systems acquired as part of our acquisition of Vivint Solar in 2020.
The allocation of the purchase price requires management to make significant estimates in determining the fair values of assets acquired and liabilities assumed, especially with respect to the energy systems acquired as part of our acquisition of Vivint Solar in 2020. Significant estimates in valuing certain tangible assets include but are not limited to discount rates.
During the twelve months ended December 31, 2024, we observed market uncertainty, increasing inflationary pressures, rising interest rates, the market impacts of proposed or newly enacted regulatory frameworks in markets within which we do business and within our industry, supply constraints, and bank failures.
During the twelve months ended December 31, 2025, we observed market uncertainty, including as a result of ongoing announcements related to tariffs, inflationary pressures, elevated interest rates, the market impacts of proposed or newly enacted regulatory frameworks in markets within which we do business and within our industry and supply constraints.
During 2023, we used $820.7 million in net cash from operating activities. The driver of our operating cash outflow consisted of the cost of our revenue, as well as sales, marketing and general and administrative costs. During 2023, our operating cash outflows were $625.6 million from our net loss excluding non-cash and non-operating items.
During 2024, we used $766.2 million in net cash from operating activities. The driver of our operating cash outflow consisted of the cost of our revenue, as well as sales, marketing and general and administrative costs. During 2024, after adjusting our net loss to exclude non-operating and non-cash items, we had operating cash outflows of $447.6 million.
Net Loss Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests Year Ended December 31, Change 2024 2023 $ % (in thousands) Net loss attributable to noncontrolling interests and redeemable noncontrolling interests $ (1,509,050) $ (1,078,344) $ (430,706) 40 % Net loss attributable to noncontrolling interests and redeemable noncontrolling interests was primarily the result of an addition of seven new investment funds since December 31, 2023, for which the HLBV method was used in determining the amount of net loss attributable to noncontrolling interests.
Net Loss Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests Year Ended December 31, Change 2025 2024 $ % (in thousands) Net loss attributable to noncontrolling interests and redeemable noncontrolling interests $ (1,459,053) $ (1,509,050) $ 49,997 (3) % 74 The decrease in Net loss attributable to noncontrolling interests and redeemable noncontrolling interests was primarily the result of an addition of only six new investment funds in 2025, as compared to the addition of seven new investment funds in 2024, for which the HLBV method was used in determining the amount of net loss attributable to noncontrolling interests.
We have not historically incurred a material recapture of Commercial ITCs, and do not expect to experience a material recapture of Commercial ITCs in the future. Consideration from customers is considered variable due to the performance guarantee under Customer Agreements and liquidated damage provisions under SREC contracts in the event minimum deliveries are not achieved.
Consideration from customers is considered variable due to the performance guarantee under Customer Agreements and liquidated damage provisions under SREC contracts in the event minimum deliveries are not achieved.
Customer agreements and incentives revenue is primarily comprised of revenue from our Customer Agreements and sales of Commercial ITCs and SRECs to third parties.
Customer agreements and incentives revenue is primarily comprised of revenue from our Customer Agreements and sales of solar renewable energy credits (“SRECs”) to third parties.
We have established different types of investment funds to implement our asset monetization strategy. Depending on the nature of the investment fund, cash may be contributed to the investment fund by the investor upfront or in stages based on milestones associated with the design, construction or interconnection status of the solar energy systems.
Depending on the nature of the Fund, cash may be contributed to the investment Fund by the investor upfront or in stages based on milestones associated with the design, construction or interconnection status of the energy systems. The cash contributed by the Fund investor is used by the Fund to purchase energy systems.
If the investor has the option to put their interest to us, we record the investor’s interest as a redeemable noncontrolling interest at the greater of the HLBV and the redemption value.
If the investor has the option to put their interest to us, we record the investor’s interest as a redeemable noncontrolling interest at the greater of the HLBV and the redemption value. 63 For further information regarding our Funds, including the associated risks, see Item 1A.
We receive on-going cash distributions from the investment funds representing a portion of the monthly customer payments received. We use the upfront cash, as well as on-going distributions to cover our costs associated with designing, purchasing and installing the solar energy systems. In addition, we also use debt, equity and other financing strategies to fund our operations.
The Funds own a Sunrun subsidiary for the energy systems, Customer Agreements and associated incentives. We receive on-going cash distributions from the Funds representing a portion of the monthly customer payments received. We use the upfront cash, as well as on-going distributions to cover our costs associated with designing, purchasing and installing the energy systems.
Factors that could impact Gross Earning Assets include, but are not limited to, customer payment defaults, or declines in utility rates or early termination of a contract in certain circumstances, including prior to installation.
Gross Earning Assets is forecasted as of a specific date. It is forward-looking, and we use judgment in developing the assumptions used to calculate it. Factors that could impact Gross Earning Assets include, but are not limited to, customer payment defaults, or declines in utility rates or early termination of a contract in certain circumstances, including prior to installation.
The solar industry in California is adjusting from selling based on the value of solar-only to a more complicated rate design with NBT. We believe the best customer offering is one that pairs solar and storage, although it may be more confusing to customers when compared to solar-only offers from competitors.
We believe the best customer offering is one that pairs solar and storage, although it may be more confusing to customers when compared to solar-only offers from competitors.
For further information on all of our significant accounting policies, see Note 2, Summary of Significant Accounting Policies , to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. 63 We believe that policies associated with our principles of consolidation, revenue recognition, impairment of long-lived assets, provision for income taxes, business combinations and calculation of noncontrolling interests and redeemable noncontrolling interests have the greatest impact on our consolidated financial statements.
We believe that policies associated with our principles of consolidation, revenue recognition, impairment of long-lived assets, provision for income taxes, business combinations and calculation of noncontrolling interests and redeemable noncontrolling interests have the greatest impact on our consolidated financial statements.
As of December 31, 2024, we had outstanding borrowings of $384.2 million on our $447.5 million credit facility maturing in March 2027. In February 2024, we amended one of our subsidiary’s senior secured credit facility to, among other things, increase the total commitments from $1.8 billion to $2.4 billion and extend the maturity date from April 2025 to April 2028.
As of December 31, 2025, we had outstanding borrowings of $238.3 million on our $321.4 million credit facility maturing in March 2028. In December 2025, we amended our bank line of credit to, among other things, reduce the total commitments from $447.5 million to approximately $321.4 million, and to extend the maturity date from March 2027 to March 2028.
The Cost of solar energy systems and product sales increased to 101% of solar energy systems and product sales revenue during 2024, when compared with 95% in the prior year, primarily as the result of a $22.1 million increase in inventory reserves recorded in the first quarter of fiscal 2024 related to the wind-down of the AEE Solar operations.
The Cost of energy systems and product sales decreased to 68% of energy systems and product sales revenue during 2025, when compared with 101% in the prior year, primarily due to the increase in system sales to a third-party investor related to the transaction Sunrun entered in Q3 2025 discussed above, as well as a $22.1 million increase in inventory reserves recorded in the first quarter of fiscal 2024 related to the wind-down of the AEE Solar operations with no such comparable activity in 2025.
We are actively delivering demand response and capacity services to meet operational needs in multiple geographies, and partnering with grid managers to build a more resilient electricity system that integrates the new energy technologies customers want. 58 We believe the electrification of U.S. households with renewable energy, and the accompanying development of an inter-connected, smart grid will provide a number of market opportunities beyond our traditional solar and battery storage offerings, including EV chargers, battery retrofits, re-powered or expanding systems, home energy management services, and other home electrification products.
We believe the electrification of U.S. households with renewable energy, and the accompanying development of an inter-connected, smart grid will provide a number of market opportunities beyond our traditional solar and battery storage offerings, including EV chargers, battery retrofits, re-powered or expanding systems, home energy management services, and other home electrification products.
Research and Development Expense . The $17.5 million increase in Research and development expense was primarily attributable to an increase in headcount driving higher employee compensation costs, as well as an increase in support related consulting costs. General and Administrative Expense .
The $3.2 million decrease in Research and development expense was primarily attributable to a decrease in support-related consulting costs, as well as a decline in employee compensation. 73 General and Administrative Expense . The $32.9 million increase in General and administrative expenses was primarily attributable to an increase in employee compensation costs.
We face global macroeconomic challenges, particularly in light of increases and volatility in interest rates, uncertainty in markets, inflationary trends, navigating complex and evolving regulatory and tax frameworks, and the dynamics of the global trade environment.
Market & Macroeconomic Environment 60 Our business and financial performance also depend on worldwide economic and geopolitical conditions. We face global macroeconomic challenges, particularly in light of volatility in interest rates, uncertainty in markets, inflationary trends, navigating complex and evolving regulatory and tax frameworks, and the dynamics of the global trade environment, including the imposition of tariffs.
The driver of our operating cash outflow consisted of the cost of our revenue, as well as sales, marketing and general and administrative costs. During 2024, our operating cash outflows were $447.6 million from our net loss excluding non-cash and non-operating items. Changes in working capital resulted in a net cash outflow of $318.5 million.
The driver of our operating cash outflow consisted of the cost of our revenue, as well as sales, marketing and general and administrative costs. During 2025, after adjusting our net loss to exclude non-operating and non-cash items, we had operating cash outflows of $20.3 million. Additionally, changes in working capital resulted in a net cash outflow of $441.7 million.
We also apply for and receive SRECs associated with the energy generated by our solar energy systems and sell them to third parties in certain jurisdictions.
After the initial contract term, our Customer Agreements typically automatically renew annually or for a five year term. We also apply for and receive SRECs associated with the energy generated by our energy systems and sell them to third parties in certain jurisdictions.
Impairment of Long-Lived Assets The carrying values of our long-lived assets, including solar energy systems, are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that the useful life is shorter than originally estimated.
Holding all other assumptions constant, a 50 basis point decrease in the discount rate assumptions or a 10% increase in our market capitalization as of December 31, 2024 would not change the goodwill impairment charge. 69 Impairment of Long-Lived Assets The carrying values of our long-lived assets, including energy systems, are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable or that the useful life is shorter than originally estimated.
We believe it is helpful to investors to evaluate networked solar energy capacity added during the period in order to measure the growth of our business as a whole, whether sold directly to customers or subject to executed Customer Agreements. • Gross Earning Assets is calculated as Gross Earning Assets Contracted Period plus Gross Earning Assets Renewal Period. 61 ◦ Gross Earning Assets Contracted Period represents the present value of the remaining net cash flows (discounted at 6%) during the initial term of our Customer Agreements as of the measurement date.
We believe it is helpful to investors to evaluate networked solar energy capacity added during the period in order to measure the growth of our business as a whole, whether sold directly to customers or subject to executed Customer Agreements. • Subscriber Additions represent the number of Subscribers added in a period.
We intend to pursue these opportunities on a variety of fronts, and we continue to pursue the development of our grid services business, creating virtual power plants that lead to a cleaner, more resilient grid. In collaboration with grid managers, we can deploy our battery systems where they will add the most value for utilities, the grid, and customers.
We intend to pursue these opportunities on a variety of fronts, and we continue to pursue the development of our grid services business, creating distributed power plants that we believe will lead to a more affordable and more resilient grid.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeA hypothetical 10% increase in our interest rates on our variable rate debt facilities would have increased our interest expense by $14.8 million and $11.7 million for the year ended December 31, 2024 and 2023, respectively. 75
Biggest changeA hypothetical 10% increase in our interest rates on our variable rate debt facilities would have increased our interest expense by $11.3 million and $14.8 million for the year ended December 31, 2025 and 2024, respectively. 78

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