How to accelerate rooftop solar & household batteries in the US

How can the US make it easier, faster, and cheaper for homeowners
to install rooftop solar? In this episode, Sunrun CEO Mary Powell
shares her vision for boosting not only residential solar, but
other forms of residential electrification too.


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transcript)


(Active
transcript)


Text transcript:


David Roberts


In Australia, one out of three households has solar panels on the
roof. In the US, it’s one out of 25. That probably has something
to do with the fact that in the US, rooftop solar is twice as
expensive, twice the hassle, and takes twice as long to get
installed.


Why is the process so broken? And what could be done to make it
smoother and faster?


To discuss these and related matters, I went to the source: Mary
Powell, the CEO of Sunrun, the nation’s largest residential
rooftop solar company — or more accurately, the nation’s largest
residential electrification company.


Before taking the top spot at Sunrun, Powell spent more than 20
years in leadership at Green Mountain Power, Vermont’s largest
power utility and a nationally recognized pioneer in clean
energy. Sunrun brought her on to help the company move into
products — batteries, EV chargers, virtual power plants — that
were once thought the province of utilities.


I talked with her about how to speed up the rooftop solar
interconnection process, the role of net metering, Sunrun’s move
into vehicle charging and VPPs, and the future of distributed
energy.


All right, then, with no further ado, Mary Powell of Sunrun.
Welcome to Volts. Thank you so much for coming.


Mary Powell


Oh, my pleasure. I was looking forward to chatting with you.


David Roberts


Mary, I'm looking at my notes here and I have — let me just count
real quick — one million questions to ask you. So, we're going to
have to move quick here because I've got so much. But just by way
of framing, I was in Australia recently and was listening to them
talk about their rooftop solar success story there, the sort of
rooftop solar miracle. So the US is at, I think, something like
4% rooftop solar penetration. And Australia is up around 30%,
35%, something like that. One out of every three households,
mainly because it is two to three times less expensive and way,
way, way faster to get on your roof there.


Most of what I want to talk about are in different forms. How can
the US process be made cheaper and faster? That's kind of, I
think, the theme of our discussion here today. But before we get
to the reality of why things take so long, let's talk a little
bit about perception. So I guess Sunrun is now the biggest
residential solar company in the world — I know, in the US.


Mary Powell


Yeah, certainly in the US. Yeah, we're the largest, not just
residential solar company, but we are the largest in the
combination of solar-plus-storage. So we really see ourselves as
a clean energy lifestyle company, and we're really well
positioned to meet customers wherever they are on their clean
energy journey and help them transform their lives to something
that's more affordable, certainly something that's cleaner. So we
have solar, we have storage, we have sophisticated electric
panels, we have EV chargers, and of course, we have that amazing
partnership with Ford on the F-150 that you can use to back up
your home.


David Roberts


Going to get into all that later.


Mary Powell


Good.


David Roberts


But I assume as part of what you do, you do a lot of consumer
research, a lot of talking to homeowners. So the first thing I'm
interested in really is what do US homeowners say they want when
they come to you? Why are they now installing rooftop solar and
batteries? Why are they doing it? Or perhaps even more to the
point, what do they say about why they're not doing it? What are
the sort of pain points you hear about from customers?


Mary Powell


So the reason customers are going solar, and increasingly, as I
said, solar-plus-storage in California now we're up to probably
about an 80% attachment rate. So customers that are going solar
really want the benefits of storing their energy as well and
having the resilience and the comfort and the peace of mind that
comes with that. Back to what I'm hearing from customers: It's so
interesting. I would say for so many years, largely it was an
industry where customers were enticed to go solar to save money,
so they knew they could save money off of what they were paying
their utility.


And Dave, that's still true. I mean, in every market that we sell
in, the cost per kilowatt hour that you generate on your roof is
lower than the cost you're paying your utility. So many customers
still find the value of savings to be very appealing, but it
really has evolved over time where so many customers, I talk to
customers every single week as well as I've worked in our stores
and I've been in customers homes. And increasingly what you're
hearing is that they just want stability. I mean, I've heard so
many customers have said to me, "Mary, like, it's fine if I save
money, but honestly, I just want greater independence and I want
stability.


I want to know that the price isn't going to go up of the energy
that I'm getting." And of course, you also have so many customers
that want solar energy because of the clean energy attributes.
But so many customers now are really enticed around the energy
independence we can provide. And then, as customers increasingly
adopt electric vehicles, that makes them painfully aware of what
they're paying on the kilowatt hour basis with their utility. So
that also then entices them to really want to go solar.


David Roberts


So what do they say is stopping them then, the ones who are not
pulling the trigger?


Mary Powell


I would say back to your opening. We don't make things easy, not
Sunrun, but in the country, we don't make it an easy process for
customers. And then I think for many customers, I've heard many
customers who come back to us later because they say, well, it
just feels like such a big decision and a big project, and then
when they realize, "Oh, actually, I don't have to put any money
down, it gets installed in a day." In many cases, we now can
install up to two homes in a day. So they're starting to see it's
not a big infrastructure project.


But I think for many customers, they initially maybe feel that it
does. But also to your point that you started our conversation
with, there's a lot, particularly in some parts of the country,
it's a very onerous process and a long process, and some
customers just drop out along the way.


David Roberts


I think because there's only 4% penetration in the US, it's still
somewhat of a novelty to most people, I think. Most people
probably don't have a really good sense of what's involved. So
maybe just walk through what is the process of getting solar on
your roof and what are those pain points? What are the points
that are difficult and take a long time?


Mary Powell


It's not uniform, so it's different all over the country. It
really depends on the state that you live in and the utility that
you're served by, as well as then sometimes also local
regulations and restrictions. But let me talk it through in sort
of the easier and then the maybe more challenging state. So in
the sort of more straightforward geographies, you could have a
conversation with your salesperson, you could have a quote.
Within days, you make a decision.


David Roberts


So, nobody needs to come to your roof now to figure out your
suitability anymore. Is all that done by satellite and whatever
now?


Mary Powell


Yes, there's a lot of advanced technology that we can use to
understand whether a customer is suitable. In the process we do
have somebody, actually, we do have photos that we have to get
and we obviously want to verify everything. And so you start with
that initial consultation, you get an initial design and then,
yes, we go through the steps of finalizing that design, making
sure it's the absolute right design. Once we understand the
nuances of your home, once we understand the electrical
infrastructure, the roof, the design of the roof, the age of the
roof, the layout, and then that moves into full design.


And then you have to obviously work through interconnection with
the utility and any permitting that needs to happen.


David Roberts


When does that happen, though? Does that happen as I'm planning
my system? Or do I build my system and then contact the utility
and say "Hey, I've got the system, I want to connect" ?


Mary Powell


Well, first of all, at Sunrun, what we do is we want to make that
easy for all of you. And I first went solar 14 years ago, bought
the system outright in Vermont with a local company, and then
since then have gone with solar storage and EV charging with
Sunrun twice and once before I became CEO. And they make it very
easy. So they made it a very easy process. So they basically just
keep you updated. But Sunrun is the one that shepherds through
all of those process steps that we then make the customer aware.
I mean, obviously for the customer, it may entail that somebody
has to stop by the home if there's local inspection that needs to
happen, but we basically shepherd that for the customer.


But you have to work on interconnection. So again, in some
jurisdictions interconnection is actually very straightforward.
Vermont's a great example of a very solar friendly state where
the utilities make the interconnection process very easy. There's
some states where it's very time consuming with months of delay
for studies or paperwork. There's many states where the utility
interconnection for home solar and battery systems, the costs can
range from one hundred dollars to ten thousand dollars depending
on study costs or required upgrades. Yes. And then there's some
where there's just solar is prohibited.


David Roberts


Yeah, there's more and more areas now where they're just saying
"No more." Right. Like you're cut off. Which seems kind of crazy.


Mary Powell


Yeah, it does to me, too, particularly as a former utility CEO,
because even if I were facing what they like to call a
solar-saturated circuit, it's an amazing opportunity just to put
some storage, some power packs or utilizing some other storage
technology at the substation and basically just soak up all that
energy and use it exactly when it's best suited for the grid. So
there's many, many solutions that we could absolutely see.


David Roberts


It occurs to me that if the customer is just interfacing with
Sunrun and Sunrun is hashing through these difficult and extended
interconnection processes, it seems like a business risk for
Sunrun, basically is the customer aware that it's not Sunrun's
fault basically that it's taking so long? Are those tricky
discussions?


Mary Powell


I'm a firm believer in really setting expectations appropriately
up front. So we've done a lot of work on that, on our customer
obsession and customer experience to really make sure that right
up front it's all laid out so that they understand the steps of
the process, but they don't have to necessarily be exposed to
having to deal with all the steps. So again, in many cases when
you lay it all out and you tell a customer "So in your
jurisdiction it's going to take six months, and these are all the
reasons why," most customers are okay with that. But to your
point, when things increasingly become more complicated through
that process, there's obviously a risk of losing some of those
customers and they don't end up going all the way through the
whole process.


David Roberts


Right. Well, let's talk then about interconnection process. As
you say, it's not ideal that it differs so radically from one
utility to the next. And it's not ideal that it can take three to
six months. It's not ideal that it's impossible now in some
areas. So what are some reforms? Like what are some steps to take
to make that whole process smoother and more predictable and more
uniform. And who needs to take those steps?


Mary Powell


Right. And back to your example of Australia. Again, the
differences are exactly what you're talking about. The
differences are that it's very standardized there. So those are
the kinds of solutions that we're seeing that could help reduce
costs and speed up deployment of home solar and batteries. So
it's really having standardized costs for residential
interconnection so that there are no surprises or unequal costs
that will make a project too expensive for a family. For example,
in Illinois, through the Climate Equitable Jobs Act enacted, they
enacted a $200 interconnection fee so there are no surprises with
upgrade costs, and it remains affordable for all households.


So there's great examples all over the country. I think it's
really about how do we make those more standardized, faster and
more affordable interconnection with online and standardized
interconnection technical requirements, such as allowing meter
collars. I don't know how much you've spent time looking at meter
collars, but meter collar adapters, they avoid main panel
upgrades, so they save time and costs. So dozens of utilities
allow for customer owned meter collars, but the majority still
continue to block their use. So again, a really simple change.
Utilities could easily allow third party certified electricians
to approve main panel upgrades, also avoiding increasing and
unnecessary utility delays.


Those are a couple of examples. There's also ensuring
interconnection access with smart inverter functionality. A few
states have enacted fast and open interconnection rules that
leverage smart inverters. For example, Hawaii now uses a
combination of a voltvar function and a volt watt function to
avoid the need for distribution, circuit hosting capacity, and
customer service upgrades.


David Roberts


Explain it at my grandma level. What is the significance of a
smart inverter? What does that get you? What does that do for
you?


Mary Powell


I think the easiest way to explain it to grandma or anybody is
really, when you think about it, the design of the utility system
is literally like the same fundamental design as 100 years ago.
So when I use these names and these technologies, it's really
simply saying, moving towards putting technology on the grid that
makes it smarter and more effective so that it's more flexible to
allow additional solar energy on the circuit. So it kind of gets
back to what I was saying about the example of where we have
utilities that are saying no more solar in XYZ territory. They
could solve that through some of these kinds of technologies.


They could also solve that through just, again, putting storage
in substations along those circuits so it allows them to then
utilize that energy. So even on clogged circuits, customers can
interconnect solar and batteries to the grid and they can avoid
high upgrade costs.


David Roberts


And what is SolarAPP? Tell us a little bit about that initiative.


Mary Powell


Yeah, SolarAPP was launched by NREL in 2021 to basically address
the permitting times and to cut down on permitting.


David Roberts


Which is different than interconnection.


Mary Powell


Yes.


David Roberts


Permitting comes before or after interconnection or it's all at
the same time?


Mary Powell


To me, that's all at the same time. I am sure there's a linear
process to it that I'm not aware of. But at the same time as
you're having to get things ready for interconnection, you're
having to work through the permitting process.


David Roberts


Who is permitting? Who is the permit coming from? Is it the city?


Mary Powell


Yes, the local AHJ. So it's the local jurisdiction that you're
dealing with. So that is one of the reasons that the development
of the SolarAPP was so powerful. Because you're dealing with so
many different jurisdictions that in many cases were using an
intensely manual process and they also had just nuances that
weren't necessarily meaningful, but they were historic. Do you
know what I mean? They were just in place. So what was really
cool about the work that Sunrun did with NREL and others was
launching SolarAPP. And again, it has helped. It was launched in
2021 to cut down on permitting times.


David Roberts


It's just to standardize that process, that's what the app is
meant to do?


Mary Powell


Yeah, it's to automate it, but it obviously takes time to get the
local offices using the technology. But to date, we have more
than 24,000 permits that have been issued via SolarAPP across the
country. So that's very powerful because it took what was a weeks
to months long process and made it instant. So it ends up saving
consumers, installers, and local governments time and money.


David Roberts


Yeah, I would think the local governments would want that, right?
I mean, I think it would be desirable for them. I can't imagine
them resisting why they would resist such a thing.


Mary Powell


Well, I mean, human behavior, right? Don't we all —


David Roberts


Yeah, I often can't imagine why people would resist things. And
yet there they are resisting them all over the place.


Mary Powell


Exactly. No, I had the same reaction way back in 2007 when I
launched an incentive as a utility for our customers to go solar,
I had the same reaction. I was like, why would anybody resist
this? This is just the future, right?


David Roberts


Yes, turns out people can come up with all kinds of reasons to
resist.


Mary Powell


Exactly.


David Roberts


So that's interconnection, which is a utility thing that needs to
be standardized, and then there's permitting, which is a local
jurisdiction thing, which also needs to be and is being
standardized. Are there other soft costs? Because this is the
thing, right? Like, we're buying the same cheap panels here that
they're buying in Australia, so it's not hardware, it's all these
soft costs that are making ours take longer. Are there other soft
costs?


Mary Powell


That's why we should be able to deal with it because the biggies
are exactly that: The interconnection and the permitting. And
again, one of the things I was really thrilled with was just
about a year ago, California did adopt a mandate requiring cities
with populations over 50,000 and counties with populations over
150,000 to adopt an online automated permitting platform like
SolarAPP. So we are seeing Colorado also recently adopted
legislation which established a million-dollar grant program to
implement SolarAPP because there is cost to implementing it. So
back to your question of like, why wouldn't they use it? You
know, it's still converting a manual process to an automated one.


And we've also seen work in Maryland as well where the Maryland
Energy Administration requested money from DOE to support
SolarAPP efforts. So I do see on the permitting side, I
definitely see some progress happening. And on the soft cost on
the interconnection, again, there are some bright lights, but a
lot more work could be done to bring down the cost significantly
for consumers.


David Roberts


I feel like every pod I record at some point we come to the
problem of "utilities being utilities" being the main issue.
Okay, let's jump to a few other subjects then, which may or may
not be slowing things down and I'd like to get your read on. I
hear a lot in the clean energy world generally about labor, labor
shortages, sort of shortages in the trades, a shortage of trained
electricians and everything else. Is that something you're
struggling with right now? Like are you having trouble finding
people to do the work or is that —


Mary Powell


No, we really aren't. I mean, it's really interesting to me
leading Sunrun, it's so powerful the kind of work we do. We are a
highly attractive employer and in fact, I'm out and about on a
regular basis talking to installers and electricians and the
story I hear over and over again is that they are really thrilled
to have the opportunity to work at a company like Sunrun. I mean,
we treat people well, they get good benefits, they get
compensated well, and the attraction of working in clean energy.


David Roberts


I've heard, though, that I think, one of the sort of traditional
dings on the whole notion of a just transition, which you often
hear is that the old jobs in fossil fuels are unionized and
really well paid and et cetera, et cetera. And the shifting to
jobs like solar installers, which are less well paid, more often
gig work, et cetera, et cetera. So you don't think that's true?


Mary Powell


No, I mean, in fact, really, again, where we're pulling people
from the most on the installing side are people that have been
working in the construction business. And in fact, just with
electricians that I was meeting with when I was down visiting
some of the branches in Massachusetts, were telling me how,
again, it's not just the pay and the benefits, it's also the
stability, and frankly, the way they're treated at Sunrun. So no,
what I'm hearing is it's providing a lot of really good
opportunity — I mean, honestly I was a bit surprised just because
we have all talked about there's going to be a real challenge
with electricians in particular.


And so I continue to be pleasantly surprised that we have a
really good amount of applicants. Yeah, we haven't had any
challenges in saying "Oh my gosh, we can't meet the demand in XYZ
Market because we can't find the people that we need."


David Roberts


Let's talk a little bit then about supply chains. There was a lot
of hubbub in the last couple of years. Lithium got expensive,
there were shortages of materials, there was panel shortages,
silicon shortages for a while, panel shortages. I haven't kept it
all straight in my head, but there's a lot of difficulties with
the supply chain. So I have a couple of different questions about
that. One is just where does that stand? Are you currently able
to get what you need at a reasonable price? Are the supply chain
problems being smoothed out?


Mary Powell


Yeah, they are. There were a lot of things going on at the same
time in the last couple of years with COVID. So, yes, there were
some real challenges. We've been at this now for 16 years, so
we've always been a leader in ensuring that our suppliers meet
the highest standards in the context of all the existing rules
and regulations, but also really then shooting for the highest
standards possible. So we've always had that in place. So, when
there were different federal challenges that needed to be met, we
knew it was a matter of time until we met those with our
suppliers.


The real challenge was the COVID-related challenges, and that
impacted, as you know, panels, it impacted storage. Now the
pendulum has swung, and what we're finding is that as we look out
to the end of this year and into next year, we actually see
declining costs.


David Roberts


Yeah, I saw lithium has started nudging back down again already.


Mary Powell


Yes, exactly. So, as we look out, we're actually seeing declining
costs in our inventory. Right now, we're absorbing just a lot of
the inventory that we built up candidly because of some of the
challenges, and we wanted to make sure that it didn't slow us
down. But no, so, I would say right now we're feeling pretty
good.


David Roberts


And this is a broader question and I don't really know how freely
you'll be able to speak about this. But one of the sort of
philosophical things, animating IRA, the Inflation Reduction Act
and all the Biden legislation is this notion that it is a threat,
a national security threat and an economic threat for China to
dominate supply chains in all these technologies. That means
processing of raw materials straight up through anodes and
cathodes batteries, panels, the whole nine yards. And there's a
big effort in IRA to onshore and or friendshore, as they say,
supply chains. What's your general take on this at kind of a
philosophical level?


Do you agree that it is smart for the US to try to move supply
chains on shore, even perhaps at the expense of slightly more
expensive panels? And there's the whole tariffs issue too,
tariffs on Chinese panels, et cetera. Do you agree with that
general push or do you think it's better just to buy all the
cheap panels you can get and accelerate deployment?


Mary Powell


Candidly, one of the things we're pleased about is that the
Inflation Reduction Act is encouraging US manufacturing, you
know, and the domestic content adders are real. Do I think that
will have a positive impact on the US economy? Yeah, absolutely.
Do I think that's going to have a positive impact for Sunrun?
Absolutely, actually. I mean, from a broader perspective —


David Roberts


What do you get out of it to have US-manufactured panels?


Mary Powell


Just more choices of more vendors and companies to work with,
more competition. I don't think there's anybody that is launching
an effort in the US that is saying, "Well, I'm going to launch
it, but I'm just going to be a lot more expensive, and everyone's
going to buy it." So I think that the desire is to have
competitive manufacturing. It'll take time to see how that plays
out. But yes, we've already used US sources wherever we can and
so the idea of having more available to us is of course
attractive.


David Roberts


One question, I got to know, I threw it out on Twitter that I was
going to talk to you and one thing a lot of people are interested
in is whether higher interest rates are affecting your business
right now. This is a big subject in the clean energy world that
recent interest rate hikes are doing damage, say to the offshore
wind industry, for instance. Are you seeing that how's that
playing out in your business?


Mary Powell


Yeah, for sure. I mean, higher interest rates have affected, I
mean, they're going to affect utilities and utility rates in a
significant way and they have absolutely affected, I think, every
fabric of business and society in some way. And for sure for
Sunrun because really a lot of what we do is we finance for
customers. So we give customers the opportunity to buy through a
third party ownership model, which again so many customers love,
and allows us to have a really wonderful long relationship where
then we can sell them additional products in the future. But yes,
so a lot of what we do is financing, and we have absolutely had
to absorb the higher costs in the market.


We had flexibility to do that because honestly, in so many
jurisdictions in the country, we were selling at like 30% below
the utility. Again, utility prices went up dramatically over the
last few years. So that gave us headroom to deal with those price
increases that were coming through not just in that, but also
because of the supply chain challenges that you and I just talked
about. We had to absorb some of the costs associated with that
over the last couple of years. But really what we found is we had
significant headroom in the markets that we were in because of
how high the utility rates were.


So we were still able to provide in all the markets. We do
business in a value proposition which is below what customers are
generally paying the prevailing utility rate.


David Roberts


And you think that you could weather that for an extended period
of time, do you worry about this in the long term?


Mary Powell


Like everyone. The interest rates continuing to elevate, just
continue to make some aspects of business tighter. But yes, I
feel very confident in what we do in the value proposition we
provide customers and the flexibility that we have to create
other value streams that help offset that increase in rates. Like
for instance, one in particular this year, it's really, really
powerful now that I would say all across the country, but
particularly like in a really important market like California,
we're no longer just selling one product. So for years we were
basically monetizing — every customer was worth the value of one
product, we were selling them.


And now across the country, but particularly in some of our most
important markets, we're selling every single customer two
significant products. So that really helps offset some of the
other cost pressures from rising rates.


David Roberts


And here's a question that might seem kind of dumb and obvious,
but I still would be curious what you think is IRA helping? I
mean, obviously IRA is helping. What impact have you seen in the
year since IRA was passed on your business?


Mary Powell


I mean, the most significant impact on us was just the extension
of the federal tax credit. So that was effective right away and
having not just having it extended, but having the stability of
saying it was over a very long period of time was very, very
powerful. The other incentives are going through the process to
make their way to the market. So energy communities is one where,
again, if you're helping customers in fossil fuel based energy
communities go solar, there's additional incentives in those
communities. Sunrun was already selling in a lot of those
communities, but they didn't really get identified until about
this summer.


The other incentive that we're really excited about is the low
and modern income incentive because despite what people think,
the majority of households installing solar are low and modern
income households in the United States. So the fact that we're
going to be able to help more of those customers go solar and
have storage and have energy independence and feel more safe and
secure in their own homes, it's very, very powerful. So that is
one that we're really looking forward to. And then back to your
earlier question, the domestic content adder. I think it is
encouraging some domestic manufacturing, but it also is something
that is going to have an impact on making our packages for
customers more affordable because some of our partners will be
able to take advantage of that domestic content adder along with
us.


David Roberts


On to another very hot topic, which is net metering. For those
listeners of Volts who are not familiar with net metering, I
can't imagine who they are at this point. But this just means if
you put solar on your roof and you generate more than you use,
you can sell it back to the utility. Net metering sort of
determines how much the utility pays you for that power. Let's
start here. California has been wrestling with this and wrestling
with this, and wrestling with this because the critique of net
metering is, from its critics: They say if you wipe out the bills
of residential solar homeowners, then all the fixed costs of
maintaining the grid get lumped onto who remains.


Basically, prices rise for those people who can't afford solar,
and then the solar people — This is a long, endless debate, but
anyway, California has been wrestling with it, finally came out
with its new version of net metering, and then got roundly beat
up in public, went back to the drawing board, and I think have
come out with the new, new net metering. So I guess my first
question is just have those revisions downward in what California
is paying affected your business?


And just more generally, what's your take on net metering? How
much of your business relies on net metering?


Mary Powell


So what my takes is, going back to initially how you described
it, and again as a utility leader, I saw solar and distributed
energy and then storage — we were the first to partner with Tesla
on their Powerwall way back in 2015 — I saw all of those things
as obvious, necessary evolutions of a 100-year-old way of
thinking about providing energy to homes and businesses and to
refashioning the grid. So I've always felt that when you take a
lens of "How do I make this a valuable asset in the future?" you
get two very different answers than when you take the lens of
"How am I going to deal with this disruption and this new
technology that I'm feeling threatened by?"


So, from a big picture perspective, I think the most significant
thing that has been missed in this is the question of how should
the utilities leverage this transformation versus resist it? So
to put a point on that, and again, the argument about, "Well,
they're not using as much yet, they still need the grid" — we've
pushed energy efficiency as a society for decades, right? And so
a customer that's made a ton of energy-efficient investments and
has gotten their bill down to a very low amount, should they be
penalized for that? Back on the philosophical thing, I think
that's a very interesting question.


But what is more important, from my perspective on this topic, is
that what you actually will find, if you look at the data of
what's happened over the last seven years, is that solar
customers tend to be the first customers that then want an
electric vehicle, that then decide they want a heat pump, that
then decide they're going to go with the induction stove — like a
lot of customers. What we found, and now I'm talking from a
utility perspective, but we see this as well at Sunrun, what we
found is actually in many cases, we ended up supporting more load
at that home than we did before because they were the leaders of
electrification. The really cool thing, if you think about it
from a "How do I leverage this transformation" versus resistant
perspective, is it gets really cool when you start thinking
about, well then how if that home has solar-plus-storage plus a
smarter panel like we put in homes now, we've started partnering
on that. Right.


What you in essence do is you create for the utility an amazing
capacity to have smart controllable load all over the grid. So I
can't answer the question, it's like, why are we staring at the
blade of grass instead of the lawn? Because that was for me, the
sort of challenging part of dropping into California right as
this was all happening. I kept saying, "Geez, I think the biggest
problem is this whole thing is based on a look-back study." We
need to be looking forward. We need to be thinking about how do
we radically collaborate and actually create a world where we're
helping by having all of this smart controllable load which will
then make the grid more affordable for everybody.


So that was always the orientation I took, Dave. I mean, I never
took the orientation of, "Oh geez, you're generating your own and
now you want me to buy it and you're using less." I took the
orientation of "Where are we going with this, this could be
really powerful and it could be a really powerful way to save
money as a grid operator." That was the way I looked at it.


David Roberts


I think some of the smarter net metering critics approach it from
basically that perspective, saying like, this is a relatively old
school, kind of primitive way of compensating for this. It's not
sensitive to time of use, it's not sensitive to geography and
grid conditions. That's because households are getting more
sophisticated and because the ways grid managers are interacting
with households is getting more sophisticated. We need to
basically evolve beyond net metering to something more smarter
and more nuanced. Do you buy that or do you think that net
metering is good enough?


Mary Powell


I've always been bullish on the notion of solar and storage in
every place. I mean, we're actually going to be offering storage
only to customers by the end of the year, going into next year.
So, again, I think storage alone is a great standalone product in
the energy transition. But for customers who've gone solar like
to have storage, we feel like that's really powerful and that's
been where we've been headed for years. The only reason we don't
have more of it on the system is really back to your earlier
question on the supply chain challenges, right?


So storage just wasn't readily available for a couple of years
and I think that slowed things down. So policies and approaches
that encourage more storage on the system, I think that's a very
forward way of approaching the energy transition. But back to my
earlier point though, and the way I looked at it from a grid
perspective, and in fact we did, we attracted, we actually held
like a forum in a part of the state where we knew we could really
leverage having a lot more solar energy capacity online. So we
made it super easy. We brought solar installers into town, we
showed them the areas where it would be great if they could
install more.


So I think there's ways to do it that way and there's also ways
to do it in the context of so then just put some storage on some
of those circuits. When I look at the speed at which we need to
all be moving in the context of the energy transition, my view is
we should all be working with the lens of coming at it from a
place of abundance, of how do we get more. I mean, again, we're
scaling at a gigawatt pace.


David Roberts


Yeah, that's wild.


Mary Powell


As a utility executive, I know how hard it is to bring on a
gigawatt, right? So why wouldn't we want to leverage homeowners?
They're the ones paying for these generation assets to go on
their roofs, right? So why wouldn't we want to continue to
encourage it and then just get smarter and better at how we
capture that in a way that is useful from a grid perspective? And
there are many ways to do it. Again, you know, having all of that
smart controllable load that you could have through companies
like Sunrun is really incredibly powerful.


David Roberts


Do you see any — you know because California is not the only
state that is contemplating reducing their net metering rates or
imposing fixed fines or costs on solar homeowners? Basically, the
generosity I think is declining in a lot of places. Do you see
any appetite for going off-grid? Do you see that in the future,
more people wanting to go off-grid? And is that any part of your
business yet? Are you helping anybody go off-grid yet?


Mary Powell


There are customers that are interested in it. Even as a utility,
I offered customers the opportunity to go off-grid years ago. So
I think for some customers that is what they want to do. But I
think for your mass market, I think for your average American,
being interconnected makes a world of sense. And leveraging these
technologies can dramatically reduce outages, can dramatically
reduce challenges that we're having with the grid. In 2022, more
than 140,000,000 people in 40 states dealt with blackouts or
calls to conserve power due to extreme weather. So that's a great
example. In California, we real-time dispatched back to the grid
that stored solar power that then helped every other person on
the grid.


For me, it is so much like what we really need to do is reframe
and be thinking about how do we radically collaborate? Because
again, the grid let's go back to the grid. The grid is like 40%
economically efficient. It's not built for economic efficiency.
It's built for the worst minute of the worst day that happens
every ten years and then 20% some, right? So one of my big
drivers in really embracing distributed technology was that.
Because I was so tired of the old thinking of beat the peak: "Oh,
we got to chase the peak," and then you had all these peakers,
right?


David Roberts


Yes. Overbuilding.


Mary Powell


Right. Why don't we focus on flattening and crushing the peak?
Why don't we focus on eliminating? The way to do that is to get
to a grid that is as — I used to like to think of it, where you
become like the symphony conductor of an orchestra of a ton of
instruments. You have EV technology that you can use now to
support the grid. So it's really how we could make the entire
grid more affordable by embracing distributed smart controllable
load and being able to store it and dispatch it. So this year
alone, we're installing a nuclear power plant's worth of solar
just this year.


And when you think of that attached to storage, it is it's
mind-blowing.


David Roberts


Another excellent segue to my next question, which is about,
speaking of being a conductor of an orchestra, is about virtual
power plants. These are also a hot new thing in the energy world.
And for those who don't know, a virtual power plant is just a
bunch of distributed energy resources. Panels, batteries, cars,
smart panels, water heaters, what have you, coordinated by a
single entity in such a way that they act like a big — well, it's
kind of misleading to call them virtual power plants, actually.
This is one of those things. It's dumb terminology because
they're not just producing power.


Right. You can also coordinate them to store power. So it's like
virtual power plant plus storage, virtual generation plus
storage.


Mary Powell


Well, it's a power plant. Like, how I think of it is there's
nothing virtual about it. It's a power plant.


David Roberts


But also a big battery.


Mary Powell


Yeah, well, that's my point. It's actually a distributed,
flexible, amazing power plant. Like, again, as somebody who ran a
utility —


David Roberts


It's the coolest power plant.


Mary Powell


It's the coolest power plant you could have. Just seriously, from
a utility perspective, we had a bunch of peakers, right? And you
have to run tests, you have to make sure they're running for like
that one hour of that one day a year that you're going to need
them. And then guess what? Sometimes that big hunk of metal, it
doesn't turn on and then you're out of luck. Right. When you have
a distributed power plant and you have all these devices you're
pulling from, guess what? If a few of them you don't pull from,
you still have 99% or 95%, right.


That's not true. With a fossil-based peaker planner, it's either
working or it's not. And I can tell you when it's not. It's
painful, as we all know.


David Roberts


Yeah. This is one of the dumb things I always hear because you
always hear critics being like, variable power has to have 100%
backup. And I'm just like, that's ridiculous.


Mary Powell


Right.


David Roberts


A natural gas power plant, you need 100% backup because if it
doesn't come on, then the whole thing doesn't come on. But as you
say, there's not one single failure — point of failure in a
virtual power plant. It "degrades gracefully" is, I think, the
system architecture term for it.


Mary Powell


Yeah.


David Roberts


So I didn't actually know until very recently that Sunrun had
gotten into the virtual power plant business, the aggregation
business. Just tell me a little bit about what that looks like,
where you're doing that, and kind of like how's it going so far?


Mary Powell


Yeah, actually, one of the reasons Sunrun got on my radar and I
think I got on Sunrun's radar so many years ago, was because I
think we were the first on the utility side to do a virtual power
plant, and Sunrun was the first on the solar storage side to do a
virtual power plant.


David Roberts


When you say "we" just for listeners benefit, you were in Vermont
at —


Mary Powell


Green Mountain Power. Yes.


David Roberts


— at Green Mountain Power.


Mary Powell


Yeah. So that was one of the reasons that Lynn and I got — Lynn,
who was the co-founder and former CEO of Sunrun — Lynn and I got
on each other's radar was because of our work and our work both
seeing that, "Oh, my gosh, like, through collaboration, we can
modernize the grid and make it more affordable for everybody." So
Sunrun's had many different programs. I would say one of the ones
that I think is most exciting, to tell you the truth, is the most
recent one because we've learned as we've gone along and we did a
project with Patty at PG&E where our customers in California
were able to participate in a three-month program.


PG&E compensated our customers. So these are existing Sunrun
solar-plus-storage customers that we've had in many cases for
years.


David Roberts


How many were involved in this? I just mean, like, scale, roughly
scale wise, hundreds of thousands? I have no idea how big these
things —


Mary Powell


We're in the tens of thousands with PG&E. So what's really
cool about that program is, again, it's to help with summer
reliability. And again, back to what we were talking about. You
can have big peakers you can rely on, or you can have these
distributed resources. And so, again, what PG&E wanted to do
was leverage these distributed resources. So the customers
received a notice that they could get paid $750, which is real
money to households. Right, $750 —


David Roberts


Is that per year or just a flat fee?


Mary Powell


It was just a flat fee for these three months. So it was for
three months they were getting paid and with no impact on their
use of the storage. So it was also done in a way to make sure
that if there's an outage, they would still have the storage and
still be able to use it for resilience, which so many customers
want. So I think it's a great example of the kind of program that
really can scale.


David Roberts


So you're not doing the thing where you call these people and
say, "Hey, can we take some of your storage?" This is all
automated. Sunrun is controlling all these things centrally. And
you're not interfacing with homeowners about it.


Mary Powell


Our whole vision is to make life easier for customers. One of the
things that I was never a fan of was energy policy that was about
making lives harder for customers. I think most Americans have
enough things to worry about when they come home. So we want to
make their lives easier.


Yeah, tell it to Texan ratepayers.


Exactly right. So if they have time of use rates or — we want to
make all of that easy for them so that it all just happens behind
the curtain, if you will, and they get the best optimized value
for their home and they don't have to worry about anything. They
can just live their lives and use energy when they need to.


David Roberts


So do you see the virtual power plant thing evolving where —
because just a flat upfront fee seems like for a test project is
fine, but do you think these things will evolve where
compensation for the homeowners involved will be more sort of
scaled to the amount of use you're getting or scaled to — you
know what I mean? Sort of like variable, the compensation for
homeowners, is that going to evolve or do you think just writing
them a check upfront is the best way to do it?


Mary Powell


I think undoubtedly it will evolve just because this is still a
relatively new space. So when you look at any evolving system,
you're going to see different mechanisms. You're also going to
see because we don't have every state is different, every utility
is different. So I don't see a homogenized like "This is the
program." I think it's going to definitely be very
jurisdictional. So based on the regulatory and utility climate of
the state in which customers live in, I can tell you the
reception from our customers to this program was glee.


David Roberts


If someone offers you $750 for you doing nothing at all.


Mary Powell


Right, exactly. So, they just feel like they were so smart to
make the decision to go with solar and storage. And when I look
to the future three to five years out and I see what's happening
from a climatic perspective to the utility system and to the
utilities, I just see this as this value really just growing
immensely, both from a Sunrun perspective as well as for the
customers that we serve.


David Roberts


In terms of VPPs, is there policy help you'd like to see, or is
this just a matter of utilities sort of deciding to do it and try
it? Or are there sort of systemic changes you think need to be
made? Or is this just utilities getting with it?


Mary Powell


For sure in California, I mean, the policymakers and the
regulators, they set up the framework to encourage PG&E, for
sure, to do this type of a program. I see it coming from
different directions, but largely coming more from the policy
perspective and the regulatory perspective than the utility
perspective, except for the few more enlightened ones.


David Roberts


The partnership with Ford is really interesting. So, basically,
the idea here is that people who are buying a Ford F-150 electric
can opt into this package deal, where they also get, with the
Ford F-150, they get a charger that is bi-directional. Such that
the Ford can charge their house, which is cool, and also
optionally solar panels so they can buy if they want, the full
meal deal. And a home battery, too. I don't know what all is part
of the package that's available to them, but I'm curious how
that's going? Like, are Ford customers taking that up?


And of course, numerous people, hilariously, numerous people ask
me, are they going to throw heat pumps in with that package at
any point? These partnerships of trying to get electrification
technologies in a bundle, how's that going so far? And do you see
that expanding in the future?


Mary Powell


It's going great. I mean, I think I started with, like, we see
ourselves as a clean energy lifestyle company. I mean, what we
are about is meeting customers wherever they are on the customer
journey and helping them to transform their lives in ways that
make it more affordable, more resilient, have them feel more safe
and secure in their own homes and have some sense of energy
independence. So yes, we were so excited about the Ford
partnership. I will tell you that Ford was very pleasantly
surprised with the uptake of the number of customers that wanted
the full bi-directional.


So, again, if you went online and you just wanted to buy the Ford
Lightning, you could buy a basic program that doesn't include,
like, the bi-directional charger is, of course, more expensive.
It's the higher end Ford F-150 Lightning. And they were really
surprised at how many customers wanted the bi-directional
charging. So we've been very pleased with the partnership. Many
of the customers did want to talk to us about solar. Some already
had solar because, as I said, there's such a strong statistical
correlation between EV adoption and solar adoption. And then to
your point on heat pumps, yes, absolutely.


We do see the future as being one where we can provide customers
with very holistic, easy to transition to bundles of products and
services.


David Roberts


Yeah, I was going to ask, is that the end state we're moving
toward here, which is like a homeowner can just call up Sunrun
and say, I want the package, and then you'll come in and
electrify the stove and the water heater, the furnace, whatever,
panels, batteries. Is that sort of what you're heading toward?


Mary Powell


Definitely. Directionally, that is absolutely what we're headed
towards. My passion has always been, how do we make the energy
transition easy for consumers? And one of the ways that when
consumers move quickly, it's usually because you have found a way
to make it easy for them. So yes, we're continuing to explore all
facets of expanding the relationship and doing it in a way that
works for customers and works for Sunrun.


David Roberts


Let me ask about this, your basic financing model, the lease
model, which is people pay nothing upfront. Basically, you are
installing and owning the solar panels and you're selling the
power to the homeowner. So the homeowner doesn't pay anything up
front, they just buy the power from you, basically.


Mary Powell


Right, and they save on what they would otherwise be paying the
utility.


David Roberts


Right. From their perspective, the only change is lower
electricity bills. Sort of financially. But that means you own
the panels and that means when the 20 to 25 years is up, you're
responsible for those panels. So, I'm wondering what your general
thoughts on end-of-life stuff, recycling, and just the financial
burden, which I assume is going to be substantial, of you being
responsible for dismantling and doing something with all these
panels. How does all that figure in?


Mary Powell


First of all, we do meet customers wherever they are. So, we do
provide the customers with the opportunity: They can buy the
system outright if they want to, and they can also get a loan if
they want to. So, just to be clear, but I love the third-party
ownership model because as I mentioned, I went solar 14 years ago
myself in Vermont, at my home in Vermont with a local installer.
And I had no way of knowing, two years later, is it working? Is
it not? Like, who do I call? So one of the things we find,
customers just love the ease and the convenience of not having to
worry.


And now we're getting these great reports, these impact reports,
out to them so they understand how much their system is
generating and the impact it's having on their life as well as
the planet. So we love these longer-term relationships. We also
find that, again, so many customers that we sold solar to so many
years ago are now on — we have quite a long list of customers
that now want us to come back and attach a battery. We also
provide an EV charger as well. It's not just the Ford F-150
partnership. We also have a Sunrun branded EV charger.


So we see real opportunity over that time to expand and deepen
the customer relationship. As it relates to the technology: The
technology is good to go for 30 to 35 years. With many customers,
over the course of that time period, they'll contact us. In many
cases, actually, it's multiple customers because again, the
panels are on the home and the average American owns their home
for about seven years. So we also find it's a great way to add
more customers because the customer who then moves tends to want
to become a Sunrun customer. And then we adopt a new Sunrun
customer, and we're also getting more sophisticated in our
outreach to those new customers that are taking over homes and
providing them the opportunity.


We can upsell them to, in many cases, more solar, we can upsell
them to storage. So we see a lot of value in having that longer
relationship relative to when the technology, when a panel needs
to be turned out or a change needs to be made. We partnered with
Solarcycle, which is a leader in solar panel recycling, and so we
really love our partnership with them. But again, we see real
opportunity to continue to renew the relationships with customers
over the long term, to expand the solar that they have on their
roof. And when they need it, we'll be there for them to basically
take the system down and put a brand new system on.


David Roberts


So you're not worried about recycling, you're not worried about
because there's a lot of hype around now about solar panels
piling up in landfills, et cetera, et cetera. Do you feel good
about the general state of recycling for these technologies?


Mary Powell


Let me just put it this way. I feel as somebody who's been in
energy a long time and having built a wind farm, I mean, you
still have to think of end of life, of just about anything. So
when I look at it, compared to other energy technology, I'd say
30 to 35 years is a really good length of time and just then be
responsible and how you can recycle. So I'm really excited that
so many of the components can be recycled, as I would be just
about any part of society. It's nice when we can recycle things
and put them to use.


David Roberts


So you sell to residences and I guess you sell to small
businesses and commercial as well?


Mary Powell


No, we're just residential.


David Roberts


Oh, pure residential.


Mary Powell


Yeah, we're pure residential. The only thing that you could call
quasi-commercial is we do multifamily housing. And that I'm
really excited about. We're the largest supplier of multifamily
housing projects. So, again, those are, generally speaking, low
and moderate-income rental housing where we help the renters also
save money through the project that we do with the owner of the
multifamily housing.


David Roberts


So there's no thought then, because I got a bunch of questions
about community solar. I got a bunch of questions about solar on
parking lots people are obsessed with solar on parking lots. Are
you going to get into any of that or is this a pure residential
play?


Mary Powell


I mean, we have so much opportunity ahead of us on the
residential side. I too am a huge fan, particularly of carport
solar. I did a project myself back in 2018 to do that. So I'm a
big fan of it. I think it makes so much sense, particularly as
we're seeing so much more EV adoption. To have solar and have
charging right there wherever possible makes a lot of sense. But
for Sunrun, we see just tremendous opportunity in accelerating
this customer-led revolution, which truly, Dave, that is
foundationally what I've always seen. Which is why even way back
in 2007, I really embraced this technological advancement because
I always saw that ultimately this is a better system from a
customer lens.


It's a more reliable system, it's a more energy independent
system. And so we see tremendous opportunity to continue to
accelerate the customer-led revolution and bring them so many
more ways to improve their lives in the clean energy transition.


David Roberts


One of the advertised benefits of DERs (Distributed Energy
Resources), generally speaking, is that they defer the need to
build new power lines, basically new distribution lines, in some
cases new transmission lines. This is one of the things that in
the net metering arguments constantly comes up sort of on the
solar side of things is, "Well, we defer TND costs." But as far
as I know, there's no way to compensate them for that. As far as
I know, they're not actually being compensated for that deferral.
Is there any way they could be or how is there any mechanism
through which they could actually see that value?


Mary Powell


Yes, it's true. That can happen. And that was exactly when I used
the example of — it was actually Rutland, Vermont, where we held
a Solar Summit and we encouraged development of rooftop
residential solar by private companies in that city. It was
because we also saw that we could use it as a non-transmission
alternative and basically save customers — in that case, I think
that project was like a little over $100 million by putting
online more solar energy capacity in that area. So it kind of,
for me, gets back to the broader point. When we were talking
about net metering, which is if you brought leaders to the table
looking at how can we create a more affordable grid for all, you
might find, you'd end up paying them more than you're paying them
through some of these net metering schemes.


David Roberts


If you avoided a 100 million dollar outlay, some of that value,
it seems, ought to go to the solar. Right. And it's not now, I
don't know exactly how that would work or what the mechanism
would be.


Mary Powell


Yeah, and again, some of it, it's not inherently the utility's
fault. Like, they're also part of a broader regulatory construct
that is really largely incenting them to build stuff.


David Roberts


Yes.


Mary Powell


So again, it was really our focus on customer obsession, on
innovation, and on keeping rates low that led us to a lot of this
innovation that I think is just a nice postcard from the future
for so many other parts of the country.


David Roberts


Final question. Solar panels at this point are very
straightforwardly commoditized. They're very standardized and
have been for a while. Batteries are sort of getting that way,
pretty commodified. Are there big technological advances that you
have your eye on or that you think are intriguing in this?
Specifically in the residential sort of electrification space, it
doesn't seem like thin film. I mean, maybe thin film will make a
comeback. Or maybe solar in the windows, the window pane solar,
there's all these different battery chemistries. But today at
least, the business is standard PV panels, standard lithium LFP
batteries.


I think in the home, lithium-ion in the cars. Are there big
technological advances that you think might shake things up?


Mary Powell


One of the things that's very exciting about where we are on the
energy transition is frankly the amount of investment that's just
going into clean energy and going into clean energy technology.
So I'm humbled by and excited by different things that I hear
that are happening. What I can tell you, sort of as I take a
longer view, I just get excited at like, "Oh my gosh, I'm sure
there's going to be all of these amazing evolutions that you and
I could never concoct today." But back to the here and now, in
the here and now, the things that I'm really excited about are
yes, first of all, solar technology has continued to improve.


But the other thing that's happening is you're really seeing
improvement in not just sort of the capacity of storage. So
again, back to the Ford F-150 Lightning. I mean, that sucker can
back up your home for up to two weeks.


David Roberts


I know, it's insane. People don't appreciate it's so much bigger
than a home battery.


Mary Powell


Yes, exactly. But the other thing that's happening that's so
exciting, for instance, with our partnership with Lunar, which
was founded by Kunal from Tesla, is they're also working on ways
to make it so much easier and faster to install and embedding a
lot of the technology in the storage device. So we're also seeing
improvements, like back to where you and I started this
conversation of friction and things that make things more costly.
So even a year ago, storage was just longer and harder to install
than it is today. And I see continued advancements and
improvements in that so that we could get to like maybe a 20
minutes install.


So, again, back in the day, it was multiple days sometimes just
for — I think my solar project I told you about was days here.
And now we have crews that are in some cases doing two solar
installations in a day. And with storage now getting easier, that
all will be a real unlock from a consumer perspective.


David Roberts


And what about the sort of home coordination? You're getting into
that a little bit with the bi-directional charger, but are you
going to get further into sort of the kind of smart panels and
the things that are like coordinating loads and all this kind of
stuff?


Mary Powell


We can already do that. So, I mean, that is something that we
already can do. And again, we had a partnership that we launched
a while ago with Span using their panel, which is just really
cool, particularly if you live in a part of the country like
California where you're going to have outages a lot. One of the
things I love about that partnership is it gives the homeowner
the ability right during an outage to decide, oof, I actually
think you can just open the app and you can say, I'm just going
to shut off this and I'm going to use this.


David Roberts


Right. I did a podcast with the Span CEO a couple of years ago.
People should look it up.


Mary Powell


Yeah, for sure. So again, yes, that's what I mean about the
excitement of like, oh my gosh, if we all look forward the power
for utilities of our capability to be able to package load back
to the grid when the grid needs it the most from an economic
perspective. We could really get away from this tired, old
fashioned, "beat the peak" thinking and really move towards a
future where it is a fully orchestrated maximized energy system
that is a lot more affordable for all.


David Roberts


Well, that seems like a great place to wrap up. This is so
interesting and fascinating. I'm so into the distributed energy
thing in general and the household thing in particular. I think
we didn't really get into this, but in addition to being
technologically fascinating like we've been discussing, I really
feel like politically leading with, "Hey, we're going to reduce
your bills and make your stuff work better" is just politically
way better than leading with, "Hey, we're going to tax everything
you use," or "Hey, we're going to give a billion dollars to this
big corporation and trust me, they're going to do cool stuff."


Politically, it's so much more potent to start with households.


Mary Powell


It is to that point. That's another thing that really struck me.
I mean, I think it was way back in 2012 when I saw data on how
homeowners felt about this. Right across the political spectrum,
there was dramatic support for solar for different reasons. Some
people saw it as energy independence. Some people are attracted
to the clean energy benefits. Some are attracted because they
want to save money. But it's why I've always felt like this is
just going to be an accelerating customer led revolution because
it's something that just provides Main Street America with what
they've been wanting for years.


David Roberts


Mary Powell of Sunrun, thanks so much for coming and sharing
today.


Mary Powell


Awesome, so nice to chat.


David Roberts


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