Today’s chart comes from Sunrun’s August investor presentation:

In the span of a single year year, the share of Sunrun’s rooftop solar customers who opted to “attach” a battery system tripled.

Notes:

• Sunrun points out that there is extremely high geographic variation behind these numbers. The storage attach rate is basically 100% in Hawaii, where utility tariffs & incentives make batteries a no-brainer; and in Puerto Rico, where storm resilience is by far the most urgent value proposition for customers. Sunrun also reports an attach rate of ~86% in California, which now approximates Hawaii from the standpoint of economic incentives, and rivals Puerto Rico from the standpoint of backup power demand.1
• Soaring attach rates in those states isn’t too surprising… but I was a little surprised that Texas now clocks in at 46%. Given relatively low retail electricity prices and no statewide net energy metering requirement, residential solar has only recently begun to achieve lift off in the state. But in fact, the lack of mandatory NEM combined with volatile wholesale power prices seems to have made Texas a distinctively strong market for the combination of solar & storage.
• Actually, it’s the battery that’s doing most of the heavy lifting in this pairing. Consumes get a “set it and forget it” backup power option, while load serving entities — e.g. competitive retailers and municipal utilities — get a tool for avoiding Texas’ infamous sky-high peak wholesale energy prices.2 This dual value proposition is so compelling, a new energy retailer called Base Power is staking its business on it!

  

• Stepping back, it feels like residential storage is in the midst of a significant market inflection, and the tailwinds are only getting stronger — most importantly, cheaper batteries, and the “gauntlet” facing the electricity sector.
• On the other hand, Sunrun’s storage attach rate in the rest of the country is still ~5%. Nothing to write home about.
• Here are two more companies I see taking distinctive approaches to creating value from the various tailwinds behind residential storage:
  • Sparkfund (an Energy Impact Partners portfolio company) has developed a distinctive set of tools and capabilities to help utilities deploy distributed capacity resources — including residential batteries — at scale. Their “Distributed Capacity Procurement” services are focused on turning these kinds of resources into dependable, gigawatt-scale options which utilities can employ to address acute capacity shortfalls.

    

  • Block Energy has developed a modular solution for ‘neighborhood-scale’ solar & storage microgrids. In addition to a proprietary microgrid architecture, the company has also tailored its business model to support utilities seeking lower-cost alternatives to traditional infrastructure for serving new customers.

1

Owing to the rise in “public safety power shutoffs” instituted to reduce wildfire risk.