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What changed in Sunrun Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Sunrun Inc.'s 2023 and 2024 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 2024 report.

+370 added−353 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-21)

Top changes in Sunrun Inc.'s 2024 10-K

370 paragraphs added · 353 removed · 292 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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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 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 placed in service after 2024 and through at least 2032 for a 30% technology-neutral ITC under Section 48E of the Code (the “48E Credit”); 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.
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.
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 adopted procurement requirements for renewable energy.
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.
We have completed thousands of service transfers and, from inception through December 31, 2023, 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, 2024, the aggregate expected net present value of the Customer Agreements once assigned represented approximately 100% of what it was prior to assignment.
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 ITC.
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.
Intellectual Property As of December 31, 2023, we had 54 issued patents and 16 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, 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.
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. We prioritize the safety, health, and welfare of our team members as part of our people-centric culture.
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.
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 violations; a required recurring competent persons and human factors training; onsite safety visits from the executive leadership team with each front-line manager; the adoption of a formal rewards and recognition program; and the incorporation of proactive safety targets within bonus structures.
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.
As of December 31, 2023, we operated the largest fleet of residential solar energy systems in the United States. We have a Networked Solar Energy Capacity of 6,689 megawatts as of December 31, 2023, 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, 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.
Our Gross Earning Assets as of December 31, 2023 were approximately $14.2 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, 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.
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. 11 We also use the investor relations page on our website as a channel of distribution for important company information.
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.
Some of these final rules may be subject to Congressional Review Act (“CRA”) challenges in 2025, based on legal outcomes determining whether certain final rules are subject to the CRA, and on the date the U.S. Treasury finalizes and publishes the final rules.
Some of these final rules may be subject to Congressional Review Act (“CRA”) challenges in 2025, based on legal outcomes determining whether certain final rules are subject to the CRA. Notably, the U.S.
Available Information Our principal executive offices are located at 225 Bush Street, Suite 1400, San Francisco, California 94104, and our telephone number is (415) 580-6900. Our website address is www.sunrun.com.
Available Information Our principal executive offices are located at 600 California Street, Suite 1800, San Francisco, California 94108, and our telephone number is (415) 580-6900. Our website address is www.sunrun.com.
Important information, including press releases, analyst presentations and financial information regarding us, as well as corporate governance information, is routinely posted and accessible on the investor relations page on our website.
We also use the investor relations page on our website as a channel of distribution for important company information. Important information, including press releases, analyst presentations and financial information regarding us, as well as corporate governance information, is routinely posted and accessible on the investor relations page on our website.
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”), for the installation of certain energy properties, including solar power facilities owned for business purposes.
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 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 investment tax credits (“ITCs”) with respect to qualifying solar energy projects.
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.
Federal agencies may also issue tax guidance or regulations that could negatively impact our business, by, for example, narrowing the applicability of ITC bonus credits or preventing certain businesses from participating.
Federal agencies may also issue tax guidance or regulations that could negatively impact our business, by, for example, narrowing the applicability of ITC bonus credits or preventing certain businesses from participating. Human Capital Management At Sunrun, our human capital strategy is to attract, retain and develop the highest quality workforce.
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. Human Capital. As of December 31, 2023, we had approximately 10,833 full-time employees, inclusive of our active direct-to-home salesforce. Our front-line sales and installation teams are 80% of our total workforce.
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. Human Capital. As of December 31, 2024, we had approximately 11,058 full-time employees, inclusive of our active direct-to-home salesforce. We also engage independent contractors and consultants.
Solar energy system owners such as our investment funds often are able to sell SRECs to utilities directly or in SREC markets. 10 While there are numerous federal, state and local government incentives that benefit our business, some adverse actions, interpretations or determinations of new or existing laws or regulations could have a negative impact on our business.
While there are numerous federal, state and local government incentives that benefit our business, some adverse actions, interpretations or determinations of new or existing laws or regulations could have a negative impact on our business.
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.
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.
We have grown our Sunrun Employee Resource Groups (“ERGs”) to promote connection and communication among our employees, foster inclusivity, and assist in the development and facilitation of programming to support personal and professional development. Our eight ERGs have grown to a membership of over 1,000 employees as of December 31, 2023.
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.
In structuring tax equity partnerships and determining ITC eligibility, we have relied upon applicable tax law and published IRS guidance. The U.S. Treasury issued a final rule on the ITC bonus credit for low-income communities in 2023 and is expected to issue final rules on the other ITC bonus credits in 2024.
The U.S. Treasury issued final regulations on the Commercial ITCs in December 2024 and on the 48E Credits and the ITC bonus credit for low-income communities in 2023 and is expected to issue final rules on the other ITC bonus credits in 2025.
To prove compliance with such mandates, utilities must surrender solar renewable energy credits (“SRECs”) to the applicable authority.
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.
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.
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 also have minimum requirements for the length in time that many roles are posted to promote consideration of internal candidates and a broader range of external candidates. In 2023, we fostered deeper talent attraction partnerships with local organizations such as Illinois Solar For All (ILSFA) and military partnerships such as Skillbridge for hiring retiring military service members.
In 2024, we fostered deeper talent attraction partnerships with local organizations such as Illinois Solar For All (ILSFA) and military partnerships focused on hiring retiring military service members.
To help us continue to progress toward our goals, we continue to require that a diverse slate of qualified candidates must be presented to hiring managers for all new management-level roles and above. Additionally, we require that our interview panels of all new management-level roles and above include a diverse panel of interviewers.
Additionally, we require that our interview panels of all new management-level roles and above include a diverse panel of interviewers. We also have minimum requirements for the length in time that many roles are posted to promote in consideration of internal candidates and a broader range of external candidates.
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Human Capital Management At Sunrun, we love people and believe that focusing on, and investing in, our people is critical to our mission to work together to electrify homes and give all people the joy of clean, abundant energy from the sun.
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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.
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At Sunrun, the foundation of all our talent programs and initiatives is fostering a culture of inclusive, connected and innovative teams. In 2023, we focused on aligning our human capital strategy to support a high performance, customer-focused culture where our employees can thrive and meet our customer needs.
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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.
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We built additional community partnerships focused on attracting candidates from underrepresented populations and continued to provide learning and development opportunities aimed at promoting engagement and retention. Inclusion and Diversity .
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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.
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To progress our diversity efforts (achieving female director parity and parity in Black, Indigenous, People of Color (BIPOC) managers), we are investing in internal career progression programming and a career progression platform we plan to launch in early 2024.
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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.
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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.
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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.
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To ensure we have a large pool of applicants from a variety of backgrounds, and therefore that we identify the best qualified talent, we develop a diverse slate of qualified candidates to be presented to hiring managers for all new management-level roles and above.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur success and ability to compete are dependent on the products that we have developed or may develop in the future. There is a risk that the products that we have developed or may develop may not work as intended, or that the marketing of the products may not be as successful as anticipated.
Biggest changeIf our products do not work as well as planned or if we are unsuccessful in developing and selling new products or in penetrating new markets, our business, financial condition, and results of operations could be adversely affected. Our success and ability to compete are dependent on the products that we have developed or may develop in the future.
That value has always varied depending on the retail price of power in a certain market, substantial differences in rate design per market, and NEM market specific differences, including detail around how to carry over NEM credits, whether or not to cap the amount of net metered solar in a specific market, or how a market values the exported electricity.
That value has always varied depending on the retail price of power in a certain market, substantial differences in rate design per market, and NEM market specific differences, including detail around how to carry over NEM credits, whether or not to cap the amount of net metered solar in a specific market, or how a specific market values the exported electricity.
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 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: 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.
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 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 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.
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; 29 • 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 • 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; • 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.
Among other things, our restated certificate of incorporation and amended and restated bylaws include provisions: • authorizing “blank check” preferred stock, which could be issued by our board of directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock; • limiting the liability of, and providing indemnification to, our directors and officers; • limiting the ability of our stockholders to call and bring business before special meetings; • requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our board of directors; and 47 • controlling the procedures for the conduct and scheduling of board of directors and stockholder meetings.
Among other things, our restated certificate of incorporation and amended and restated bylaws include provisions: • authorizing “blank check” preferred stock, which could be issued by our board of directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock; • limiting the liability of, and providing indemnification to, our directors and officers; • limiting the ability of our stockholders to call and bring business before special meetings; • requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our board of directors; and • controlling the procedures for the conduct and scheduling of board of directors and stockholder meetings.
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; 45 • 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; • 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; 46 • 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; 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.
The 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 has 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.
The 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.
The IRA implemented a corporate alternative minimum tax of 15% of financial statement income (subject to certain adjustments) for companies that report over $1 billion in profits to shareholders; similar to existing law, business credits (including Commercial ITCs) are limited to 75% of income in excess of $25,000 (with no limit against the first $25,000).
The IRA implemented a corporate alternative minimum tax of 15% of financial statement income (subject to certain adjustments) for companies that report over $1 billion in profits to shareholders; similar to existing law, business credits (including Commercial ITCs) are limited to 75% of income in excess of $25,000 (with no limit 44 against the first $25,000).
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 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 solar energy 24 systems generally carry only ten year warranties.
If we are required to pay higher compensation than we anticipate, these greater expenses may also adversely impact our financial results and the growth of our business. 35 Regulators may limit the type of electricians qualified to install and service our solar and battery systems in California, which may result in workforce shortages, operational delays, and increased costs.
If we are required to pay higher compensation than we anticipate, these greater expenses may also adversely impact our financial results and the growth of our business. Regulators may limit the type of electricians qualified to install and service our solar and battery systems in California, which may result in workforce shortages, operational delays, and increased costs.
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.
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.
This activity could also cause or avoid an increase or a decrease in the market price of our common stock. The potential effect, if any, of these transactions and activities on the market price of our common stock will depend in part on market conditions and cannot be ascertained at this time. Item 1B. Unresolved Staff Comments. 49 Not applicable.
This activity could also cause or avoid an increase or a decrease in the market price of our common stock. The potential effect, if any, of these transactions and activities on the market price of our common stock will depend in part on market conditions and cannot be ascertained at this time. Item 1B. Unresolved Staff Comments. Not applicable.
If a court were to find the choice of forum provisions contained in our amended and restated bylaws to be 48 inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations and financial condition.
If a court were to find the choice of forum provisions contained in our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, results of operations and financial condition.
As part of the Tax Act, the current corporate income tax rate was reduced, and there were other changes including limiting or eliminating various other deductions, credits and tax preferences. This reduction in the corporate income tax rate may have reduced appetite for the Commercial ITC and depreciation benefits available with respect to solar facilities.
As part of the Tax Act, the current corporate income tax rate was reduced, and there were other changes including limiting or eliminating various other deductions, credits and tax preferences. This reduction in the corporate income tax rate may have reduced appetite for the ITC and depreciation benefits available with respect to solar facilities.
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.
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.
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.
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.
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.
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.
Our inability to meet demand and any product price increases may harm our brand, growth, prospects and operating results. 24 There have also been periods of industry-wide shortage of key components, including solar panels, batteries and inverters, in times of rapid industry growth or regulatory change.
Our inability to meet demand and any product price increases may harm our brand, growth, prospects and operating results. There have also been periods of industry-wide shortage of key components, including solar panels, batteries and inverters, in times of rapid industry growth or regulatory change.
Additionally, potential investors must remain satisfied that the structures that we offer make the tax benefits associated with solar energy systems available to these investors, which depends on the investors’ assessment of 41 the tax law, the absence of any unfavorable interpretations of that law and the continued application of existing tax law and interpretations to our funding structures.
Additionally, potential investors must remain satisfied that the structures that we offer make the tax benefits associated with solar energy systems available to these investors, which depends on the investors’ assessment of the tax law, the absence of any unfavorable interpretations of that law and the continued application of existing tax law and interpretations to our funding structures.
U.S. federal, state and local governmental bodies provide incentives to owners, distributors, installers and manufacturers of solar energy systems to promote solar energy. These incentives include Commercial ITCs and Residential Energy Efficient Property Credit, as discussed above, as well as other tax credits, rebates and SRECs associated with solar energy generation.
U.S. federal, state and local governmental bodies provide incentives to owners, distributors, installers and manufacturers of solar energy systems to promote solar energy. These incentives include ITCs and Residential Energy Efficient Property Credit, as discussed above, as well as other tax credits, rebates and SRECs associated with solar energy generation.
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.
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.
The tariffs described above, the adoption and expansion of trade restrictions, the 14 occurrence of a trade war, or other governmental action related to tariffs, trade agreements or related policies have the potential to adversely impact our supply chain and access to equipment, our costs and ability to economically serve certain markets.
The tariffs described above, the adoption and expansion of trade restrictions, the occurrence of a trade war, or other governmental action related to tariffs, trade agreements or related policies have the potential to adversely impact our supply chain and access to equipment, and our costs and ability to economically serve certain markets.
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.
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.
Because solar energy systems and many of our other current and anticipated products are electricity-producing devices, it is possible that customers or their property could be injured or damaged by our products, whether by product malfunctions, defects, improper installation or other causes.
Because solar energy systems and many of our other current and anticipated products are electricity-producing devices, it is possible that 27 customers or their property could be injured or damaged by our products, whether by product malfunctions, defects, improper installation or other causes.
Originations in California continue to be below levels prior to the NBT transition, and without further increases in originations, our 27 new installations in California may continue to decline compared to prior periods, which could have a material adverse effect on our business operations and financial performance.
Originations in California continue to be below levels prior to the NBT transition, and without further increases in originations, our new installations in California may continue to decline compared to prior periods, which could have a material adverse effect on our business operations and financial performance.
With respect to Commercial 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 solar energy systems is lower than the amount determined by the appraisal and accordingly argue that the tax credits previously claimed must be reduced.
Finally, as declining prices for solar panels and related equipment has resulted in an increase in consumers 15 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 solar energy systems, we face competition from companies that offer consumer loans for these solar panel purchases.
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.
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.
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.
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.
In the event that our 30 current or future products require features that we have not developed or licensed, or we lose the benefit of an existing license, we will be required to develop or obtain such technology through purchase, license or other arrangements.
In the event that our current or future products require features that we have not developed or licensed, or we lose the benefit of an existing license, we will be required to develop or obtain such technology through purchase, license or other arrangements.
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.
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.
Climate change may have long-term impacts on our business, our industry, and the global economy. 16 Climate change poses a systemic threat to the global economy and will continue to do so until our society transitions to renewable energy and decarbonizes.
Climate change may have long-term impacts on our business, our industry, and the global economy. Climate change poses a systemic threat to the global economy and will continue to do so until our society transitions to renewable energy and decarbonizes.
Customers may cancel their Customer Agreement, subject to certain conditions, during this process until commencement of installation, 25 and we have experienced increased customer cancellations in certain geographic markets during certain periods in our operating history.
Customers may cancel their Customer Agreement, subject to certain conditions, during this process until commencement of installation, and we have experienced increased customer cancellations in certain geographic markets during certain periods in our operating history.
Further, the unauthorized use of AI technologies by our employees, third-party providers, or our suppliers pose additional risks relating to data privacy and security, including the potential exposure of our confidential information to unauthorized recipients.
Further, the unauthorized use of generative AI technologies by our employees, third-party providers, or our suppliers pose additional risks relating to data privacy and security, including the potential exposure of our confidential information to unauthorized recipients.
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.
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.
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.
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.
We cannot predict what actions may ultimately be taken with respect to tariffs or trade relations between the United States and other countries, what products may be subject to such actions, or what actions may be taken by other countries in retaliation.
We cannot predict what actions may ultimately be taken with respect to tariffs or trade relations between the United States and other countries, which products may be subject to such actions, or what actions may be taken by other countries in retaliation.
Risks Related to Our Business Operations 23 Our growth depends in part on the success of our relationships with third parties, including our solar partners. A key component of our growth strategy is to develop or expand our relationships with third parties.
Risks Related to Our Business Operations Our growth depends in part on the success of our relationships with third parties, including our solar partners. A key component of our growth strategy is to develop or expand our relationships with third parties.
If we or the third parties on which we rely fail, or are perceived to have failed, to address or comply with applicable data privacy and security obligations, we could face significant consequences, including but not limited to: government enforcement actions (e.g., investigations, fines, penalties, audits, inspections), litigation (including class-action claims), additional reporting requirements and/or oversight, bans on processing personal data, and orders to destroy or not use personal data.
If we or the third parties on which we rely fail, or are perceived to have failed, to address or comply with applicable data privacy and security obligations, we could face significant consequences, including but not limited to: government enforcement actions (e.g., investigations, fines, penalties, audits, inspections), litigation (including class-action claims), mass arbitration claims, additional reporting requirements and/or oversight, bans on processing personal data, and orders to destroy or not use personal data.
Our 26 management will also be required to maintain and expand our relationships with customers, suppliers, and other third parties and attract new customers and suppliers, as well as to manage multiple geographic locations.
Our management will also be required to maintain and expand our relationships with customers, suppliers, and other third parties and attract new customers and suppliers, as well as to manage multiple geographic locations.
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.
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.
As of December 31, 2023, the average FICO score of our customers under a Customer Agreement with a monthly payment schedule remained at or above 740, which is generally categorized as a “Very Good” credit profile by the Fair Isaac Corporation. However, this may decline to the extent FICO score requirements under future investment funds are relaxed.
As of December 31, 2024, the average FICO score of our customers under a Customer Agreement with a monthly payment schedule remained at or above 740, which is generally categorized as a “Very Good” credit profile by the Fair Isaac Corporation. However, this may decline to the extent FICO score requirements under future investment funds are relaxed.
Subsequently, on February 8, 2022, Auxin Solar, a U.S.-based solar panel manufacturer, submitted a petition to the DOC to request country-wide circumvention inquiries pursuant to Section 781(b) of the Tariff Act of 1930 concerning crystalline silicon photovoltaic cells and modules assembled in Malaysia, Thailand, Vietnam and Cambodia using Chinese inputs.
Subsequently, on February 8, 2022, Auxin Solar, a U.S.-based solar panel manufacturer, submitted a petition to Commerce to request country-wide circumvention inquiries pursuant to Section 781(b) of the Tariff Act of 1930 concerning crystalline silicon photovoltaic cells and modules assembled in Malaysia, Thailand, Vietnam and Cambodia using Chinese inputs.
Customs and Border Protection ("CBP") issued on June 24, 2021 applicable to certain silica-based products manufactured in the Xinjiang Uyghur Autonomous Region of China. Intensive examinations, withhold release orders, and related governmental procedures have resulted in supply chain and operational delays throughout the industry, and we have implemented policies and procedures to maintain compliance and minimize delays.
Customs and Border Protection (“CBP”) issued on June 24, 2021 applicable to certain silica-based products manufactured in the Xinjiang Uyghur Autonomous Region of China. Intensive examinations, withhold release orders, and related governmental procedures have resulted in supply chain and operational delays throughout the industry, and we have implemented policies and procedures to maintain compliance and minimize delays.
If our solar energy systems, more than 45% of which were located in California as of December 31, 2023, are damaged as the result of a natural disaster beyond our control, losses could exceed or be excluded from, our insurance policy limits, and we could incur unforeseen costs that could harm our business and financial condition.
If our solar energy systems, more than 45% of which were located in California as of December 31, 2024, are damaged as the result of a natural disaster beyond our control, losses could exceed or be excluded from, our insurance policy limits, and we could incur unforeseen costs that could harm our business and financial condition.
These incentives may also expire on a particular date, end when the allocated funding is exhausted, or be reduced, terminated or repealed without notice. The financial value of certain incentives may also decrease over time. 42 In December 2017, significant federal tax legislation was enacted, including a change to the corporate tax rate (the “Tax Act”).
These incentives may also expire on a particular date, when the allocated funding is exhausted, or be reduced, terminated or repealed without notice. The financial value of certain incentives may also decrease over time. In December 2017, significant federal tax legislation was enacted, including a change to the corporate tax rate (the “Tax Act”).
In addition, we or our independent accounting firm may identify weaknesses and deficiencies that we may not otherwise identify in a timely manner in the future.
In addition, we or our independent accounting firm may identify weaknesses and deficiencies that we may not otherwise identify in a 45 timely manner in the future.
However, 38 given that we are operating in a rapidly changing industry, those fluctuations may be masked by our recent growth rates and thus may not be readily apparent from our historical results of operations. As such, our past quarterly results of operations may not be good indicators of likely future performance.
However, given that we are operating in a rapidly changing industry, those fluctuations may be masked by our recent growth rates and thus may not be readily apparent from our historical results of operations. As such, our past quarterly results of operations may not be good indicators of future performance.
Future reductions in the Commercial ITC and any further legislative reductions or changes to the Commercial ITC may impact the attractiveness of solar energy to certain tax equity investors and could potentially harm our business. Obtaining tax equity funding (and tax equity funding on advantageous terms) also may become more challenging.
Future reductions in the ITCs or any further legislative reductions or changes to the ITC may impact the attractiveness of solar energy to certain tax equity investors and could potentially harm our business. Obtaining tax equity funding (and tax equity funding on advantageous terms) also may become more challenging.
On April 1, 2022, the DOC initiated the inquiries, and, after conducting an investigation, issued a preliminary decision on December 2, 2022, recommending that the Biden Administration impose tariffs on certain solar panel imports from the Southeast Asian countries.
On April 1, 2022, Commerce initiated the inquiries, and, after conducting an investigation, issued a preliminary decision on December 2, 2022, recommending that the Biden Administration impose tariffs on certain solar panel imports from the Southeast Asian countries.
On April 26, 2022, Florida Governor DeSantis vetoed legislation that would have established a threshold date and percentage trigger when retail NEM could have faced declines in the immediate export rate in Florida. New Jersey currently has no NEM cap but reached a threshold that triggers regulatory review of its NEM policy, which will proceed over the next two years.
In 2022, Florida Governor DeSantis vetoed legislation that would have established a threshold date and percentage trigger when retail NEM could have faced declines in the immediate export rate in Florida. New Jersey currently has no NEM cap but reached a threshold that triggers regulatory review of its NEM policy, which will proceed over the next two years.
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 44 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, 2023.
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.
Whether we compete effectively may also be impacted by our ability to accurately anticipate and effectively respond to the risks and opportunities presented by the disruptions and developments of emerging and newly available technologies, including artificial intelligence ("AI").
Whether we compete effectively may also be impacted by our ability to accurately anticipate and effectively respond to the risks and opportunities presented by the disruptions and developments of emerging and newly available technologies, including artificial intelligence (“AI”).
Prior to the DOC issuing its preliminary decision, the Biden Administration in June 2022 issued Presidential Proclamation 10414, which paused the collection of any new anti-dumping or countervailing duty of certain solar cells and modules imported from Cambodia, Malaysia, Thailand, and Vietnam for two years, until June 2024.
However, prior to Commerce issuing its preliminary decision, the Biden Administration in June 2022 issued Presidential Proclamation 10414, which paused the collection of any new anti-dumping or countervailing duty of certain solar cells and modules imported from Cambodia, Malaysia, Thailand, and Vietnam for two years, until June 2024.
The energy produced and revenue and cash flows generated by a solar energy system depend on suitable solar and weather conditions, both of which are beyond our control. Furthermore, components of our systems, such as panels and inverters, could be damaged by severe weather or natural catastrophes, such as hailstorms, tornadoes, fires, or earthquakes.
The energy produced and revenue and cash flows generated by a solar energy system depend on suitable solar and weather conditions, both of which are beyond our control. Furthermore, components of our systems, such as panels and inverters, could be damaged by severe weather or natural catastrophes, such as hailstorms, tornadoes, fires, hurricanes, atmospheric rivers, or earthquakes.
The option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the Notes (and are likely to do so during the observation period for conversions of Notes following November 1, 2025 or following any repurchase of Notes by us).
The option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the Notes (and are likely to do so during the observation period for conversions of Notes following November 1, 2025 for the 2026 Notes or December 1, 2029 for the 2030 Notes or following any repurchase of Notes by us).
For example, on February 4, 2022, the Biden Administration announced a four-year extension of the 2018 tariffs imposed in response to a petition filed under Section 201 of the Trade Act of 1974 (the “Section 201 Tariffs”). The Biden Administration set the Section 201 Tariffs at 14.75%, with a modest rate reduction each year.
Similarly, on February 4, 2022, the Biden Administration announced a four-year extension of the 2018 tariffs imposed in response to a petition filed under Section 201 of the Trade Act of 1974 (the “Section 201 Tariffs”). The Biden Administration set the Section 201 Tariffs at 14.75%, with a modest rate reduction each year.
In a June 2023 ruling, the CPUC indicated that it will approve by July 2024 guidelines for future development and implementation of income-graduated fixed charges, but that implementation of the first iteration of these charges is not expected to occur until late 2026.
In a June 2023 ruling, the CPUC indicated that it will approve by July 2024 guidelines for future development and implementation of income-graduated fixed charges, but the implementation of the first iteration of these charges is not expected to occur until late 2025 or early 2026.
Generally accepted accounting principles in the United States are subject to change and interpretation by the Financial Accounting Standards Board (“FASB"), the SEC, and various bodies formed to promulgate and interpret appropriate accounting principles.
Generally accepted accounting principles in the United States are subject to change and interpretation by the Financial Accounting Standards Board (“FASB”), the SEC, and various bodies formed to promulgate and interpret appropriate accounting principles.
Most notably, as a result of the finalization of the NEM proceeding on December 15, 2022 by the California Public Utilities Commission (“CPUC”), California has moved to a NBT structure in which exported electricity is no longer valued at the retail rate and is instead valued by that state’s “avoided cost” annual calculations, which substantially decreased the credit allocated to an exported electron during the day.
Most notably, as a result of the finalization of the NEM proceeding on December 15, 2022 by the California Public Utilities Commission (“CPUC”), California moved to a NBT structure in which exported electricity is no longer valued at the retail rate and is instead valued by the state’s “avoided cost” annual calculations, which substantially decreases the credit allocated to an exported electron during the day.
Our business is concentrated in certain markets, putting us at risk of region-specific disruptions. As of December 31, 2023, California represented over 45% of our customer base.
Our business is concentrated in certain markets, putting us at risk of region-specific disruptions. As of December 31, 2024, California represented over 45% of our customer base.
Future acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, amortization expenses, incremental expenses or the write-off of goodwill, any of which could harm our financial condition or results of operations, and the trading price of our common stock could decline.
Future acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, amortization expenses, or incremental expenses, any of which could harm our financial condition or results of operations, and the trading price of our common stock could decline.
We may at times fail (or be perceived to have failed) in our efforts to comply with our data privacy and security obligations. Moreover, despite our efforts, our personnel or third parties on whom we rely may fail to comply with such obligations, which could negatively impact our business operations.
We may at times fail (or be perceived to have failed) in our efforts to comply with our data privacy and security obligations. Moreover, despite our efforts, our personnel or third parties with whom we work may fail to comply with such obligations, which could negatively impact our business operations.
The CCPA provides for fines of up to $7,500 per intentional violation and allows private litigants affected by certain data breaches to recover significant statutory damages. These developments further complicate compliance efforts, and increase legal risk and compliance costs for us, the third parties upon whom we rely, and our customers.
The CCPA provides for fines of up to $7,500 per intentional violation and allows private litigants affected by certain data breaches to recover significant statutory damages. These developments further complicate compliance efforts, and increase legal risk and compliance costs for us, the third parties with whom we work, and our customers.
Factors that can lead to impairment of goodwill and intangible assets include significant adverse changes in the business climate and actual or projected operating results, declines in the financial condition of our business and sustained decrease in our stock price.
Factors that can lead to impairment of goodwill include significant adverse changes in the business climate and actual or projected operating results, declines in the financial condition of our business and sustained decrease in our stock 46 price.
Obtaining a C-10 license can be an extended process, and the timing and cost of having a large number of our C-46 licensed electricians seek such additional qualification is unclear.
Obtaining a C-10 license can be an extended process, and the timing and cost of having a large number of our C-46 licensed Solar Contractors seek such additional qualification is unclear.
Our U.S. federal and certain state NOLs generated in tax years beginning after December 31, 2017 total approximately $2.0 billion and $357.1 million, respectively, have indefinite carryover periods, and do not expire.
Our U.S. federal and certain state NOLs generated in tax years beginning after December 31, 2017 total approximately $2.0 billion and $334.4 million, respectively, have indefinite carryover periods, and do not expire.
The availability of this tax-advantaged financing depends upon many factors, including: • our ability to compete with other solar energy companies for the limited number of potential fund investors, each of which has limited funds and limited appetite for the tax benefits associated with these financings; • the state of financial and credit markets; • changes in the legal or tax risks associated with these financings; and 40 • legislative or regulatory changes or decreases to these incentives, including forthcoming final regulations from the U.S.
The availability of this tax-advantaged financing depends upon many factors, including: • our ability to compete with other solar energy companies for the limited number of potential fund investors, each of which has limited funds and limited appetite for the tax benefits associated with these financings; • the state of financial and credit markets; • changes in the legal or tax risks associated with these financings; and • legislative or regulatory changes or decreases to these incentives.
Significant changes to any of these factors may impact the competitiveness of our service offerings to customers. 20 The value proposition of our solar and storage offering, as well as our other related home electrification offerings, such as the electric vehicle charging station, is impacted by several factors outside of our control including, but are not limited to, the retail price of electricity, the valuation of electricity not consumed on site but exported to the grid, the rate design mechanisms of customers’ utility bills, various policies related to the permitting and interconnection costs of our products to homes and the grid, the availability of incentives for solar, batteries, and other electrification products, and other policies which allow aggregations of our systems to provide the grid value.
The value proposition of our solar and storage offering, as well as our other related home electrification offerings, such as the electric vehicle charging station, is impacted by several factors outside of our control including, but are not limited to, the retail price of electricity, the valuation of electricity not consumed on site but exported to the grid, the rate design mechanisms of customers’ utility bills, various policies related to the permitting and interconnection costs of our products to homes and the grid, the availability of incentives for solar, batteries, and other electrification products, and other policies which allow aggregations of our systems to provide the grid value.
Under this new framework, storage paired with solar will have a heightened value proposition to customers, and we may see increased demand for our solar plus storage offerings, thereby increasing the importance of procuring a variety of battery storage products and potentially accentuating supply chain risks related to battery storage systems.
Under this new framework, storage paired with solar has a heightened value proposition to customers, and we have seen an increased demand for our solar plus storage offerings, thereby increasing the importance of procuring a variety of battery storage products and potentially accentuating supply chain risks related to battery storage systems.
If any of the investors that currently invest in our investment funds decide not to invest in future investment funds to finance our solar service offerings due to general market conditions, concerns about our business or prospects, decreased appetite for tax benefits or any other reason, or materially change the terms under which they are willing to provide future financing, we would need to identify new investors to invest in our investment funds and our cost of capital may increase. 17 In addition, our business and results of operations are materially affected by conditions in the global capital markets and the economy.
If any of the investors that currently invest in our investment funds decide not to invest in future investment funds to finance our solar service offerings due to general market conditions, concerns about our business or prospects, decreased appetite for tax benefits or any other reason, or materially change the terms under which they are willing to provide future financing, we would need to identify new investors to invest in our investment funds and our cost of capital may increase.
In the past few years, numerous U.S. states—including California, Colorado, and Connecticut —have enacted comprehensive data privacy and security laws that impose certain obligations on covered businesses, including providing specific disclosures in privacy notices and affording residents with certain rights concerning their personal data.
Numerous U.S. states—including California, Colorado, Utah, Virginia, and Connecticut —have enacted comprehensive data privacy and security laws that impose certain obligations on covered businesses, including providing specific disclosures in privacy notices and affording residents with certain rights concerning their personal data.
During times of war and other major conflicts, we, the third parties upon which we rely, and our customers may be vulnerable to a heightened risk of these attacks, including retaliatory 32 cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our goods and services.
During times of war and other major conflicts, we, the third parties with whom we work, and our customers may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our goods and services.
The possible volatility of, and uncertainty around, SOFR as the LIBOR replacement rate, the addition of credit spread adjustment in certain of our facilities, and potential illiquidity in SOFR derivative markets could result in higher borrowing costs for us, which would adversely affect our financial condition, and results of operations.
The possible volatility of SOFR, the addition of credit spread adjustment in certain of our facilities, and potential illiquidity in SOFR derivative markets could result in higher borrowing costs for us, which would adversely affect our financial condition, and results of operations.
As of December 31, 2023, we had U.S. federal and state net operating loss carryforwards (“NOLs”) of approximately $720.7 million and $3.3 billion, respectively, which begin expiring in varying amounts in 2028 and 2024, respectively, if unused.
As of December 31, 2024, we had U.S. federal, state and foreign net operating loss carryforwards (“NOLs”) of approximately $720.7 million, $3.3 billion, and $459.9 million respectively, which begin expiring in varying amounts in 2028, 2025, and 2031 respectively, if unused.
Cybersecurity incidents have become more prevalent, and could occur on our systems and those of our third parties in the future. Our team members who work remotely pose increased risks to our information technology systems and data, because many of them utilize less secure network connections outside our premises.
Cybersecurity threats have become more prevalent, and could impact our systems and those of our third parties in the future. Our team members who work remotely pose increased risks to our information technology systems and data, because many of them utilize network connections outside our premises that are less secure.
Changes to California’s net metering policy adopted in December 2022 present a significant change to the financial benefits California customers receive from our solar systems and may limit the financial attractiveness of our offerings in this market, particularly for solar-only systems.
Changes to California’s net metering policy adopted in December 2022, with the new billing regime implemented in April 2023, present a significant change to the financial benefits California customers receive from our solar systems and may limit the financial attractiveness of our offerings in this market, particularly for solar-only systems.
Additionally, we have selectively increased pricing in many markets over the last year in response to higher interest rates, and may continue to do so in the future, which may impact the overall attractiveness of our offerings to potential new customers.
Additionally, we have selectively increased pricing in many markets in prior years in response to higher interest rates, and may do so in the future, which may impact the overall attractiveness of our offerings to potential new customers.
Our executive officers, directors and each of our stockholders who beneficially own 5% or more of our outstanding common stock and their affiliates, in the aggregate, beneficially own approximately 33.7% of the outstanding shares of our common stock, based on the number of shares outstanding as of December 31, 2023.
Our executive officers, directors and each of our stockholders who beneficially own 5% or more of our outstanding common stock and their affiliates, in the aggregate, beneficially own approximately 27.8% of the outstanding shares of our common stock, based on the number of shares outstanding as of December 31, 2024.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur approach is to treat cybersecurity not just as a technology issue, but to recognize that it can have wide-ranging impacts on the business, operations, and financials of our company. 50 Our Audit Committee is responsible for the oversight of risks from cybersecurity threats and receives updates from management quarterly.
Biggest changeCybersecurity Governance Cybersecurity is a critical component of our enterprise risk management framework and a key area of focus for both our Board and management. Our approach is to treat cybersecurity not just as a technology issue, but to recognize that it can have wide-ranging impacts on the business, operations, and financials of our company.
To identify and assess material risks from cybersecurity threats, our enterprise risk management program considers cybersecurity threat 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.
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.
Our cybersecurity risk management and strategy processes, which are discussed in greater detail above, are led by our Chief Information Security Officer (CISO) in connection with our Chief Technology Officer, Chief Legal and People Officer, our Senior Vice President of Legal and Vice President, Internal Audit.
Our cybersecurity risk management and strategy processes, which are discussed in greater detail above, are led by our VP Information Security in connection with our Chief Technology Officer, Chief Legal and People Officer, our Senior Vice President of Legal and Vice President, Internal Audit.
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. 51
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
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 email simulations for employees and contractors with access to corporate email systems; • require employees, and certain service providers, 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 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.
Material cybersecurity threat risks are also considered during separate Board meeting discussions of important matters like enterprise risk management, operational budgeting, business continuity planning, mergers and acquisitions, brand management, and other relevant matters.
Material cybersecurity threat risks are also integrated into Board meeting discussions of important matters like enterprise risk management, operational budgeting, business continuity planning, mergers and acquisitions, brand management, and other relevant matters.
Such individuals have extensive prior work experience and expertise spanning over three decades in various roles involving managing information security, developing cybersecurity strategy, implementing effective information and cybersecurity programs, managing cybersecurity operations and incident response, and incorporating security and privacy by design into software development programs, and our CISO has both CISSP and CRISC certifications.
Such individuals have extensive prior work experience and expertise spanning over three decades in various roles involving managing information security, developing cybersecurity strategy, implementing effective information and cybersecurity programs, managing cybersecurity operations and incident response, and incorporating security and privacy by design into software development programs.
Our processes also address cybersecurity risks associated with our use of third-party service providers, including those in our supply chain, which also include, but are not limited to, open-source software in our application development processes, or those who have access to our customer and employee data or our systems. Addressing these risks is part of our enterprise risk management program.
Our processes also address cybersecurity risks associated with our use of third-party service providers, including those in our supply chain, which also include, but are not limited to, open-source software in our application development processes, or those who have access to our customer and employee data or our systems.
We employ various tools and services for such purposes, including network, cloud and endpoint monitoring, vulnerability assessments, penetration testing, and tabletop exercises. We also have a cybersecurity risk assessment process, which helps identify our cybersecurity threat risks by considering certain industry standards as well as by engaging third parties to assess the security posture of our information security program.
We employ various tools and services for such purposes, including network, cloud and endpoint monitoring, vulnerability assessments, penetration testing, and tabletop exercises. We also have a cybersecurity risk assessment process, which surfaces cybersecurity risks by measuring our posture against industry standards and engaging third parties to assess our information security program.
We describe the risks from cybersecurity threats that may materially affect us and how they may do so under the heading “Risks Related to Our Business Operations” under Item 1A of this Annual Report on Form 10-K, which disclosures are incorporated by reference herein.
We 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.
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Cybersecurity Governance Cybersecurity is an important part of our risk management processes and an area of increasing focus for our Board and management.
Added
In addition to maintaining a robust incident response plan, we regularly test our response capabilities through real-world simulations, post-incident reviews, and lessons-learned exercises to ensure continuous improvement in our ability to respond effectively to cybersecurity incidents.
Added
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.
Added
Cybersecurity Incidents During the last fiscal year, we did not identify any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that materially affected or are reasonably likely to materially affect the Company, including its business strategy, results of operations, or financial condition.
Added
While we have encountered routine cybersecurity threats and attempted attacks, such as phishing emails and malware attempts, our security measures have effectively mitigated these risks without causing material disruption. Despite our efforts, the risk of cybersecurity incidents remains, and we continue to monitor, adapt and enhance our security posture to address evolving threats.
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Any future cybersecurity breaches or system vulnerabilities could impact our business operations, reputation and regulatory compliance obligations.
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Our Audit Committee is responsible for the oversight of risks from cybersecurity threats and receives updates from management quarterly.

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 44,000 square feet of office space. We also maintain 101 other locations, consisting primarily of branch offices, warehouses, sales offices and design centers 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 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.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 52 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 53 Item 6. [Reserved] 54 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 55 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 74 Item 8.
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.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe 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 63,742, 346,269 and 69,309 warrants were exercised during the years ended December 31, 2023, 2022 and 2021, respectively.
Biggest changeThe 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.
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. 53
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
Item 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 16, 2024, there were approximately 429 holders of record of common stock.
Item 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.
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, 2018 through December 31, 2023.
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.
The figures represented below assume an investment of $100 in our common stock at the closing price of $10.89 on December 31, 2018 and in the Nasdaq Composite Index and the Invesco Solar ETF on December 31, 2018 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 $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.

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, 2022 includes a discussion and analysis of our financial condition and results of operations for the year ended December 31, 2021 in Item 7 of Part II, “Management's Discussion and Analysis of Financial Condition and Results of Operations.” 66 Year Ended December 31, 2023 2022 (in thousands, except per share amounts) Revenue: Customer agreements and incentives $ 1,186,706 $ 983,047 Solar energy systems and product sales 1,073,107 1,338,375 Total revenue 2,259,813 2,321,422 Operating expenses: Cost of customer agreements and incentives 1,077,114 844,162 Cost of solar energy systems and product sales 1,019,638 1,178,548 Sales and marketing 740,821 745,386 Research and development 21,816 20,907 General and administrative 221,067 194,611 Goodwill impairment 1,158,000 — Total operating expenses 4,238,456 2,983,614 Loss from operations (1,978,643) (662,192) Interest expense, net (652,989) (445,819) Other (expense) income, net (63,900) 260,657 Loss before income taxes (2,695,532) (847,354) Income tax (benefit) expense (12,691) 2,291 Net loss (2,682,841) (849,645) Net loss attributable to noncontrolling interests and redeemable noncontrolling interests (1,078,344) (1,023,022) Net (loss) income attributable to common stockholders $ (1,604,497) $ 173,377 Net (loss) income per share attributable to common stockholders Basic $ (7.41) $ 0.82 Diluted $ (7.41) $ 0.80 Weighted average shares used to compute net (loss) income per share attributable to common stockholders Basic 216,642 211,347 Diluted 216,642 219,157 Comparison of the Years Ended December 31, 2023 and 2022 Revenue Year Ended December 31, Change 2023 2022 $ % (in thousands) Customer agreements $ 1,077,099 $ 872,298 $ 204,801 23 % Incentives 109,607 110,749 (1,142) (1) % Customer agreements and incentives 1,186,706 983,047 203,659 21 % Solar energy systems 656,408 913,904 (257,496) (28) % Products 416,699 424,471 (7,772) (2) % Solar energy systems and product sales 1,073,107 1,338,375 (265,268) (20) % Total revenue $ 2,259,813 $ 2,321,422 $ (61,609) (3) % 67 Customer Agreements and Incentives .
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 .
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. ◦ 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. • 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.
For Customer Agreements that charge a fixed price per kilowatt hour, revenue is recognized based on the actual amount of power generated at rates specified under the contracts. Customer Agreements typically have an initial term of 20 or 25 years. After the initial contract term, our Customer Agreements typically automatically renew annually or for five years.
For Customer Agreements that charge a fixed price per kilowatt hour, revenue is recognized based on the actual amount of power generated at rates specified under the contracts. Customer Agreements typically have an initial term of 20 or 25 years. After the initial contract term, our Customer Agreements typically automatically renew annually or for a five year term.
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.
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.
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. 56 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 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.
In addition, funds paid for the Commercial ITC value upfront are initially recorded as a refund liability and recognized as revenue as the associated solar system reaches permission to operate ("PTO"). 58 We account for these investment funds in our consolidated financial statements as if we have not assigned the Customer Agreement to the investor, and we record on our consolidated financial statements activities arising from the Customer Agreements and any related Commercial ITCs monetized as part of the upfront payments received from the investor and SREC sales.
In addition, funds paid for the Commercial ITC value upfront are initially recorded as a refund liability and recognized as revenue as the associated solar system reaches permission to operate ("PTO"). 60 We account for these investment funds in our consolidated financial statements as if we have not assigned the Customer Agreement to the investor, and we record on our consolidated financial statements activities arising from the Customer Agreements and any related Commercial ITCs monetized as part of the upfront payments received from the investor and SREC sales.
", Note 12, Pass-Through Financing Obligations , Note 13, VIE Arrangements and Note 14, Redeemable Noncontrolling Interests to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K. Pass-through Financing Obligations Pass-Through Financing Obligations.
", Note 12, Pass-Through Financing Obligation , Note 13, VIE Arrangements and Note 14, Redeemable Noncontrolling Interests to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K. Pass-through Financing Obligations Pass-Through Financing Obligations.
After the initial contract term, our Customer Agreements typically automatically renew annually or for five years and the rate is initially set at up to a 10% discount to then-prevailing utility power prices. • Subscribers represent the cumulative number of Customer Agreements for systems that have been recognized as deployments through the measurement date. • Customers represent the cumulative number of deployments, from our inception through the measurement date.
After the initial contract term, our Customer Agreements typically automatically renew annually or for a five year term and the rate is initially set at up to a 10% discount to then-prevailing utility power prices. ◦ Subscribers represent the cumulative number of Customer Agreements for systems that have been recognized as deployments through the measurement date. • Customers represent the cumulative number of deployments, from our inception through the measurement date.
We intend to establish new investment funds in the future, and we may also use debt, equity or other financing strategies to finance our business. 72 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. 73
We intend to establish new investment funds in the future, and we may also use debt, equity or other financing strategies to finance our business. 73 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. 74
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, 2023, 2022 and 2021. 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, 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.
Customers may cancel their Customer Agreements with us, subject to certain conditions, during this process until commencement of installation. Customer cancellation rates can change over time and vary between markets. Market & Macroeconomic Environment 55 Our business and financial performance also depend on worldwide economic conditions.
Customers may cancel their Customer Agreements with us, subject to certain conditions, during this process until commencement of installation. Customer cancellation rates can change over time and vary between markets. Market & Macroeconomic Environment 57 Our business and financial performance also depend on worldwide economic conditions.
During the twelve months ended December 31, 2023, 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, 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.
As of December 31, 2023, 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, 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.
Under our partnership flip structures, we have determined that we control the partnership entity which is a variable interest entity (“VIE”), and accordingly we consolidate the entity and record the investor’s interest as either noncontrolling interests or redeemable noncontrolling interests in our consolidated balance sheets. Inverted Leases .
Under our partnership flip structures, we have determined that we control the partnership entity which is a variable interest entity (“VIE”), and accordingly we consolidate the entity and record the investor’s interest as either noncontrolling interests or redeemable noncontrolling interests in our consolidated balance sheets.
During the years ended December 31, 2023, 2022 and 2021, 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, 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.
We include cash flows we expect to receive in future periods from state incentive and rebate programs, contracted sales of solar renewable energy credits, and awarded net cash flows from grid service programs with utility or grid operators. ◦ Gross Earning Assets Renewal Period is the forecasted net present value we would receive upon or following the expiration of the initial Customer Agreement term but before the 30th anniversary of the system’s activation (either in the form of cash payments during any applicable renewal period or a system purchase at the end of the initial term), for Subscribers as of the measurement date.
We include cash flows we expect to receive in future periods from tax equity partners, government incentive and rebate programs, contracted sales of solar renewable energy credits, and awarded net cash flows from grid service programs with utility or grid operators. ◦ Gross Earning Assets Renewal Period is the forecasted net present value we would receive upon or following the expiration of the initial Customer Agreement term but before the 30th anniversary of the system’s activation (either in the form of cash payments during any applicable renewal period or a system purchase at the end of the initial term), for Subscribers as of the measurement date.
Given our net operating loss carryforwards as of December 31, 2023, we do not expect to pay income tax, including in connection with our 2023 income tax provision, until our net operating losses are fully utilized.
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.
In certain arrangements, we agree to defer a portion of the up-front payments by arranging a loan between one of our indirectly wholly owned subsidiaries to a subsidiary of the investor’s tenant entity. Consolidated Joint Ventures Partnership Flips . Under partnership flip structures, we and our fund investors contribute cash into a partnership entity.
In certain arrangements, we agree to defer a portion of the up-front payments by arranging a loan between one of our indirectly wholly owned subsidiaries to a subsidiary of the investor’s tenant entity. Partnership Flips Under partnership flip structures, we and our fund investors contribute cash into a partnership entity.
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, 2023, we had 64 active investment funds, which are described below.
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.
Customer lead revenue is recognized at the time the lead is delivered. 63 Goodwill Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed. Goodwill is reviewed for impairment at least annually or whenever events or changes in circumstances indicate that the carrying value may be impaired.
Customer lead revenue is recognized at the time the lead is delivered. Goodwill Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed. Goodwill is reviewed for impairment at least annually as of October 1st or whenever events or changes in circumstances indicate that the carrying value may be impaired.
Revenue from solar energy systems sales decreased by $257.5 million compared to the prior year primarily due to an increase in the proportion of customers choosing to enter into a Customer Agreement versus purchasing a system outright using a loan, likely due to increased interest rates.
Revenue from solar energy systems sales decreased by $451.6 million compared to the prior year primarily due to an increase in the proportion of customers choosing to enter into a Customer Agreement versus purchasing a system outright using a loan, likely due to increased interest rates.
Circumstances that could indicate impairment and require us to perform a quantitative impairment test include a significant decline in our financial results, a significant decline in our enterprise value relative to our net book value, a sustained decline in our stock price, or an unanticipated change in competition or our market share and a significant change in our strategic plans.
Circumstances or events that could indicate impairment and require us to perform a quantitative impairment test include a significant decline in our financial results, a significant decline in our enterprise value relative to our net book value, a sustained decline in our stock price, or an unanticipated change in competition affecting our market share and a significant change in our strategic plans or regulatory environment.
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, 2023 would have been less than $3.3 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, 2024 would have been less than $4.0 million.
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, 2023, we had cash of $678.8 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, 2024, we had cash of $575.0 million, which consisted of cash held in checking and savings accounts with financial institutions.
Changes in working capital resulted in a net cash outflow of $410.8 million. Investing Activities During 2023, we used $2.6 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.
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.
For all of our partnership flips and JV inverted leases, the redeemable noncontrolling interest is carried on our balance sheet at the greater of the redemption value or the amount calculated under the HLBV method.
For all of our partnership flips, the redeemable noncontrolling interest is carried on our balance sheet at the greater of the redemption value or the amount calculated under the HLBV method.
The $233.0 million increase in Cost of customer agreements and incentives was primarily due to the new systems placed in service in 2023, plus a full year of costs recognized in 2023 for systems placed in service in 2022 versus only a partial amount of such expenses related to the period in which the assets were in service in 2022.
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.
There was a $158.9 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 $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.
The $204.8 million increase in Revenue from Customer Agreements was primarily due to new systems placed in service in 2023 and a full year of revenue recognized in 2023 for systems placed in service in 2022 versus only a partial amount of such revenue related to the period in which the assets were in service in 2022.
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.
As of December 31, 2023, we had net operating loss carryforwards for federal and state income tax purposes of approximately $720.7 million and $3.3 billion, respectively, which will begin to expire in 2028 for federal purposes and in 2024 for state purposes.
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.
The $4.6 million decrease in Sales and marketing expense was primarily attributable to decreases in headcount driving lower employee compensation and costs to acquire customers through our sales lead generating partners. Included in sales and marketing expense were $56.3 million and $38.7 million of amortization of costs to obtain Customer Agreements for 2023 and 2022, respectively.
Sales and Marketing Expense. The $123.7 million decrease in Sales and marketing expense was primarily attributable to decreases in headcount driving lower employee compensation and costs to acquire customers through our sales lead generating partners. Included in sales and marketing expense were $76.2 million and $56.3 million of amortization of costs to obtain Customer Agreements for 2024 and 2023, respectively.
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.
For further detail, see Note 2, Summary of Significant Accounting Policies to our consolidated financial statement included elsewhere in this Annual Report on Form 10-K.
These estimates are inherently uncertain and unpredictable. 65 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.
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.
Included within cash used in investing activities during 2023, was a $5.0 million contribution we made as an additional investment in Lunar Energy. During 2022, we used $2.1 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.
The majority was used to design, acquire and install solar energy systems and components under our long-term Customer Agreements. Included within cash used in investing activities during 2023, was a $5.0 million contribution we made as an additional investment in Lunar Energy. Financing Activities During 2024, we generated $3.4 billion from financing 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 $625.5 million from our net loss excluding non-cash and non-operating items. Changes in working capital resulted in a net cash outflow of $195.3 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 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 increase in Interest expense, net of $207.2 million is primarily related to additional non-recourse debt entered into in 2023. Included in net interest expense is $31.2 million and $28.3 million of non-cash interest recognized under Customer Agreements that have a significant financing component for 2023 and 2022, respectively. Other (expense) income, net.
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.
Revenue from incentives, which primarily consisted of the sale of SRECs, decreased by $1.1 million 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 $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 .
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. 59 • 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 on the roof, subject to final inspection; (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), or (iii) for multi-family and any other systems that have reached Notice to Proceed (“NTP”), measured on the percentage of the project that has been completed based on expected project cost.
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).
We use a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon tax authority examination, including resolution of related appeals or litigation processes, if any.
The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon tax authority examination, including resolution of related appeals or litigation processes, if any.
In January 2021, we issued $400.0 million of convertible senior notes with a maturity date of February 1, 2026, for net proceeds of approximately $389.0 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 solar energy systems.
Research and Development Expense . The $0.9 million increase in Research and development expense was primarily attributable to an increase in support related consulting costs. General and Administrative Expense . The $26.5 million increase in General and administrative expenses was primarily attributable to an increase in headcount driving higher employee compensation costs.
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 .
Our estimated production shortfall reduced revenue during the twelve months ended December 31, 2023 by less than $8.3 million more than the prior year's period.
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.
It is calculated as the present value of cash flows (discounted at 6%) we expect to receive from Subscribers in future periods, after deducting expected operating and maintenance costs based on the service agreements underlying each fund, equipment replacements costs, distributions to tax equity partners in consolidated joint venture partnership flip structures, and distributions to project equity investors.
It is calculated as the present value of cash flows (discounted at 6%) we expect to receive from Subscribers in future periods as set forth in Customer Agreements, after deducting expected operating and maintenance costs, equipment replacements costs, distributions to tax equity partners in partnership flip structures, and distributions to project equity investors.
We believe it is useful for investors to evaluate the future expected cash flows from all customers that have been deployed through the respective measurement date, less estimated costs to maintain such systems and estimated distributions to tax equity partners in consolidated joint venture partnership flip 60 structures, and distributions to project equity investors.
We believe it is useful for investors to evaluate the future expected cash flows from all customers that have been deployed through the respective measurement date, less estimated costs to maintain such systems and estimated distributions to tax equity partners in partnership flip structures, and distributions to project equity investors. Various assumptions are made when calculating these metrics.
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. 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.
During 2022, we used $848.8 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 2022, our operating cash outflows were $438.1 million from our net loss excluding non-cash and non-operating items.
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.
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. 57 The table below provides an overview of our current investment funds (dollars in millions): Consolidated Joint Ventures Pass-Through Financing Obligations Partnership Flip JV Inverted Lease Consolidation Owner entity consolidated, tenant entity not consolidated Single entity, consolidated Owner and tenant entities consolidated Balance sheet classification Pass-through financing obligation Redeemable noncontrolling interests and noncontrolling interests Redeemable noncontrolling interests Revenue from Commercial ITCs Recognized on the permission to operate date None None Method of calculating investor interest Effective interest rate method Greater of HLBV or redemption value Greater of HLBV or redemption value Liability balance as of December 31, 2023 $ 294.6 N/A N/A Noncontrolling interest balance (redeemable or otherwise) as of December 31, 2023 N/A $ 1,678.5 $ 5.3 For further information regarding our investment funds, including the associated risks, see Item 1A.
The table below provides an overview of our current investment funds (dollars in millions): Pass-Through Financing Obligations Partnership Flip Consolidation Owner entity consolidated, tenant entity not consolidated Single entity, consolidated Balance sheet classification Pass-through financing obligation Redeemable noncontrolling interests and noncontrolling interests Revenue from Commercial ITCs Recognized on the permission to operate ("PTO") date None Method of calculating investor interest Effective interest rate method Greater of HLBV or redemption value Liability balance as of December 31, 2024 $ — N/A Noncontrolling interest balance (redeemable or otherwise) as of December 31, 2024 N/A $ 1,610.0 For further information regarding our investment funds, including the associated risks, see Item 1A.
Product sales decreased by $7.8 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.
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.
Customer agreements and incentives revenue is primarily comprised of revenue from our Customer Agreements and sales of Commercial ITCs and SRECs to third parties. 62 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 solar energy system is given by the local utility company or on the date daily operation commences if utility approval is not required.
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. Significant estimates in valuing certain tangible assets include but are not limited to discount rates.
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.
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 $2.35 billion and extend the maturity date from April 2025 to April 2028.
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.
The following table summarizes our cash flows for the periods indicated: 70 Year Ended December 31, 2023 2022 (in thousands) Consolidated cash flow data: Net cash used in operating activities $ (820,740) $ (848,793) Net cash used in investing activities (2,613,143) (2,086,066) Net cash provided by financing activities 3,468,698 3,037,451 Net increase in cash $ 34,815 $ 102,592 Operating Activities During 2023, we used $820.7 million in net cash from operating activities.
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.
Income Tax (Benefit) Expense Year Ended December 31, Change 2023 2022 $ % (in thousands) Income tax (benefit) expense $ (12,691) $ 2,291 $ (14,982) (654) % The decrease in Income tax (benefit) expense of $15.0 million primarily relates to an increase in tax benefit related to a higher pre-tax loss, which was offset by goodwill impairment, an increase in valuation allowance on certain federal and state tax credits and net operating losses, and an increase in noncontrolling interest and redeemable noncontrolling interests.
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.
The allocation of the economic benefits between us and the fund investor and the corresponding accounting treatment varies depending on the structure of the investment fund. We currently utilize three legal structures in our investment funds, which we refer to as: (i) pass-through financing obligations, (ii) partnership flips and (iii) joint venture (“JV”) inverted leases.
The allocation of the economic benefits between us and the fund investor and the corresponding accounting treatment varies depending on the structure of the investment fund. 59 We currently utilize the legal structure for our investment funds which we refer to as partnership flips. Historically, we also utilized pass-through financing obligations as a legal structure for our investment funds.
During 2022, we generated $3.0 billion from financing activities. This was primarily driven by $1.2 billion in net proceeds from fund investors, $1.9 billion in net proceeds from debt, $32.9 million in net proceeds from stock-based awards activity, offset by $42.6 million in acquisition of noncontrolling interests and $14.1 million in repayments under finance lease obligations.
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.
We believe that policies associated with our principles of consolidation, revenue recognition, goodwill, 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. Therefore, we consider these to be our critical accounting policies and estimates.
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.
If redemption is at our option or the consolidated joint ventures are not redeemable, we record the investor’s interest as a noncontrolling interest and account for the interest using the HLBV method.
If redemption is at our option, we record the investor’s interest as a noncontrolling interest and account for the interest using the hypothetical liquidation at book value (“HLBV”) method.
The assumptions and estimates used in the assessment include, among others, estimated future net annual contracted cash flows under our existing long term customer agreements, as well as future growth estimates which rely on management judgements.
Under the income approach, our future cash flows were estimated and present valued based on a discount rate reflecting a market participant risk-adjusted rate of return. The assumptions and estimates used in the assessment include, among others, estimated future net annual contracted cash flows under our existing long term customer agreements, as well as future growth estimates.
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. 71 Investment Fund Commitments As of December 31, 2023, we had committed and available capital of approximately $386.9 million that may only be used to purchase and install solar energy systems.
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.
To corroborate this conclusion, we compared the carrying value of our one reporting unit to our enterprise market capitalization after consideration of a reasonable control premium and concluded that there was no goodwill impairment during the fourth quarter of 2023. 64 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.
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.
In February 2024, we amended our bank line of credit to, among other things, reduce the total commitments from $600.0 million to $447.5 million, and to extend the maturity date from January 2025 to November 2025. This maturity date can be further extended to March 2027, if we meet certain liquidity tests as of September 30, 2024.
In July 2024, we amended the same senior secured credit facility to increase total commitments from $2.4 billion to $2.6 billion. In February 2024, we amended our bank line of credit to, among other things, reduce the total commitments from $600.0 million to $447.5 million, and to extend the maturity date from January 2025 to November 2025.
As of September 30, 2023, we concluded that the fair value of our one reporting unit did not exceed its carrying value with consideration of a control premium and recorded an impairment charge of $1.2 billion in our consolidated statements of operations.
As of December 31, 2024, we concluded that the fair value of our one reporting unit did not exceed its carrying value primarily driven by our market capitalization and recorded an impairment charge of $3.1 billion in our consolidated statements of operations equal to the full value of the previously recorded goodwill.
We reflect pass-through financing obligations on our consolidated balance sheet as a pass-through financing obligation. We record the investor’s interest in partnership flips or JV inverted leases (which we define collectively as “consolidated joint ventures”) as noncontrolling interests or redeemable noncontrolling interests. These consolidated joint ventures are usually redeemable at our option and, in certain cases, at the investor’s option.
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.
The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. Our policy is to include interest and penalties related to unrecognized tax benefits, if any, within the provision for taxes in the consolidated statements of operations.
The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement.
We account for investment tax credits as a reduction of income tax expense in the year in which the credits arise ( i.e. the flow-through method). We determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position.
We determine whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. We use a two-step approach to recognizing and measuring uncertain tax positions.
Business Combinations We allocate the fair value of purchase price to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. Any residual purchase price is recorded as goodwill.
Our policy is to include interest and penalties related to unrecognized tax benefits, if any, within the provision for taxes in the consolidated statements of operations. 66 Business Combinations We allocate the fair value of purchase price to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values.
During the third quarter of fiscal 2023, consistent with other industry peers, our stock price continued to decline resulting in a decline in our market capitalization after consideration of a control premium below the book value of equity.
To corroborate this conclusion, we compared the carrying value of our one reporting unit to our enterprise market capitalization after consideration of a reasonable control premium. However, in November 2024, consistent with industry peers, our stock price declined resulting in a significant decline in our market capitalization below the book value of equity.
The increase in other expense of $324.6 million relates primarily to a $58.7 million loss on an equity investment in Lunar Energy Inc. (“Lunar Energy”) during 2023, compared with a $47.3 million gain on this same equity investment in Lunar Energy during 2022, as well as to gains on derivatives during 2022, with no such comparable activity in 2023.
The increase in other income of $225.4 million relates primarily to an increase in gains on derivatives during 2024, as well as a $7.4 million decrease in loss on an equity investment, as we recorded a $51.3 million loss on an equity investment in 2024, compared with a $58.7 million loss on an equity investment during 2023.
Results of Operations The results of operations presented below should be reviewed in conjunction with the consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K.
If the assumptions used for each of these were 10% higher, the impact to the aggregate redeemable noncontrolling interest balance as of December 31, 2024 would be a reduction of $21.8 million. 67 Results of Operations The results of operations presented below should be reviewed in conjunction with the consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K.
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. As of December 31, 2023, we had outstanding borrowings of $539.5 million on our $600.0 million credit facility maturing in January 2025.
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.
Through these electrification opportunities and our grid services business, we aim to be the consumer brand synonymous with repowering our customers’ homes with renewable energy and providing a pathway to a cleaner, healthier future.
Through these electrification opportunities and our grid services business, we aim to be the consumer brand synonymous with repowering our customers’ homes with renewable energy and providing a pathway to a cleaner, healthier future. 2024 Election As a result of the recent transition in both the White House and Congress, we may face changes or delays in policies that affect our business, including those related to federal tax credits, tariffs, and other regulatory measures.
In all instances, we assume a 30-year customer relationship, although the customer may renew for additional years, or purchase the system. Estimated cost of servicing assets has been deducted and is estimated based on the service agreements underlying each fund.
Estimated cost of servicing assets has been deducted and is estimated based on the service agreements underlying each fund.
The $1.2 billion increase in Goodwill impairment expense related to an impairment charge of $1.2 billion that was a result of an interim impairment test performed during the third quarter of 2023. For further detail, see Note 2, Summary of Significant Accounting Policies to our consolidated financial statement included elsewhere in this Annual Report on Form 10-K.
The $2.0 billion increase in Goodwill impairment expense related to an impairment charge of $3.1 billion that was a result of an interim impairment test performed during the fourth quarter of 2024 and an impairment charge of $1.2 billion that was a result of an interim impairment test performed during the third quarter of 2023.
In addition, federal and certain state net operating loss carryforwards generated in tax years beginning after December 31, 2017 total $2.0 billion and $357.1 million, respectively, and have indefinite carryover periods and do not expire. 69 Net Loss Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests Year Ended December 31, Change 2023 2022 $ % (in thousands) Net loss attributable to noncontrolling interests and redeemable noncontrolling interests $ (1,078,344) $ (1,023,022) $ (55,322) 5 % Net loss attributable to noncontrolling interests and redeemable noncontrolling interests was primarily the result of an addition of six new investment funds since December 31, 2022, 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 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.
Various assumptions are made when calculating these metrics. 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.
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.
Operating Expenses Year Ended December 31, Change 2023 2022 $ % (in thousands) Cost of customer agreements and incentives $ 1,077,114 $ 844,162 $ 232,952 28 % Cost of solar energy systems and product sales 1,019,638 1,178,548 (158,910) (13) % Sales and marketing 740,821 745,386 (4,565) (1) % Research and development 21,816 20,907 909 4 % General and administrative expense 221,067 194,611 26,456 14 % Goodwill impairment 1,158,000 — 1,158,000 100 % Total operating expenses $ 4,238,456 $ 2,983,614 $ 1,254,842 42 % Cost of Customer Agreements and Incentives .
Operating Expenses Year Ended December 31, Change 2024 2023 $ % (in thousands) Cost of customer agreements and incentives $ 1,169,213 $ 1,077,114 $ 92,099 9 % Cost of solar energy systems and product sales 539,952 1,019,638 (479,686) (47) % Sales and marketing 617,162 740,821 (123,659) (17) % Research and development 39,304 21,816 17,488 80 % General and administrative expense 245,127 221,067 24,060 11 % Goodwill impairment 3,122,168 1,158,000 1,964,168 100 % Total operating expenses $ 5,732,926 $ 4,238,456 $ 1,494,470 35 % Cost of Customer Agreements and Incentives .
Additionally, there 68 were increases related to information technology related consulting costs, when compared to the prior year period. Included in general and administrative expense were $7.458 million and $5.364 million of amortization of intangibles for 2023 and 2022, respectively. Goodwill impairment .
The $24.1 million increase in General and administrative expenses was primarily attributable to an increase in headcount driving higher employee compensation costs. Additionally, there were increases related to information technology related consulting costs, when compared to the prior year period. Goodwill impairment .
The Cost of solar energy systems and product sales increased to 95% of solar energy systems and product sales revenue during 2023, when compared with 88% in the prior year, primarily as a result of sales price increases lagging cost increases, as well as volume pricing granted in our distribution business. Sales and Marketing Expense.
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.
Non-Operating Expenses Year Ended December 31, Change 2023 2022 $ % (in thousands) Interest expense, net $ (652,989) $ (445,819) $ (207,170) 46 % Other (expense) income, net (63,900) 260,657 (324,557) (125) % Total interest and other expense, net $ (716,889) $ (185,162) $ (531,727) 287 % Interest expense, net.
Non-Operating Expenses Year Ended December 31, Change 2024 2023 $ % (in thousands) Interest expense, net $ (848,366) $ (652,989) $ (195,377) 30 % Other income (expense), net 161,539 (63,900) 225,439 (353) % Total interest and other expense, net $ (686,827) $ (716,889) $ 30,062 (4) % Interest expense, net.
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. 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.
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.

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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 $11.7 million and $6.0 million for the year ended December 31, 2023 and 2022, respectively. 74
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
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. We are exposed to certain market risks in the ordinary course of our business. Our primary exposure includes changes in interest rates because certain borrowings bear interest at floating rates based on LIBOR or SOFR, as applicable, plus a specified margin.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. We are exposed to certain market risks in the ordinary course of our business. Our primary exposure includes changes in interest rates because certain borrowings bear interest at floating rates based on SOFR, as applicable, plus a specified margin.

Other RUN 10-K year-over-year comparisons