GlobeNewswire Inc | Aug 10, 2020 04:06PM EDT

August 10, 2020

309,000 Customers, an increase of 21% year-over-year

Net Earning Assets of $1.6 billion, an increase of 14% year-over-year

SAN FRANCISCO, Aug. 10, 2020 (GLOBE NEWSWIRE) -- Sunrun (Nasdaq: RUN), the nations leading provider of residential solar, storage and energy services, today announced financial results for the second quarter ended June 30, 2020.

Consumer interest in clean, affordable, and resilient power is stronger than ever with increased outages and more time spent at home. Sunrun is responding quickly to meet this need, said Lynn Jurich, Sunruns Chief Executive Officer and co-founder. In the quarter, we moved to a digital sales and streamlined operating model, improving our cost structure trajectory. In July we reached an agreement to acquire Vivint Solar to expand our customer reach and improve scale efficiencies. We have increased our customer value proposition with new virtual power plant contracts, increased battery adoption and launched a new venture for further home electrification.

Recent Business Developments

-- On July 6, 2020, Sunrun announced that it has entered into a definitive agreement to acquire Vivint Solar. This is a transformational opportunity to generate consumer and shareholder value, realize annual cost synergies and bring cleaner, affordable energy to more homes. It establishes Sunrun as a leading home solar and energy services company across the United States, with a combined customer base of more than 500,000, while bringing greater opportunities for consumers to save money on their electric bills and decrease dependence on fossil fuels. The acquisition of Vivint Solar is expected to be completed during the fourth quarter of 2020, subject to approval by Vivint Solar and Sunrun stockholders, regulatory approvals and other customary closing conditions. -- Sunrun, SK E&S and other affiliated companies, a top global energy and technology company, announced on July 29, 2020 they have co-invested in a new venture with plans to electrify the home. The initial investments from Sunrun and SK E&S and other affiliated companies will go toward forming a new company that will conduct research and development activities to accelerate the adoption of renewables, the electrification of homes, and the transition to a connected and distributed energy system. -- On July 30, 2020 Sunrun announced exclusive partnerships with three Community Choice Aggregators (CCAs) in California, which collectively provide power for approximately one million homes in the Bay Area, for co-marketing and building virtual power plants. The partnerships are with East Bay Community Energy, Silicon Valley Clean Energy, and Peninsula Clean Energy. The CCAs sought options to help increase the use of clean, affordable energy by leveraging these virtual power plants while also providing backup power to more of their customers following forced blackouts by PG&E that affected hundreds of thousands of customers in the Bay Area. -- In June, 2020, Sunrun announced Virtual Power Plant (VPP) awards with Southern California Edison and Orange & Rockland. These two VPP awards build on the prior announcements with ISO New England, East Bay Community Energy, and Hawaiian Electric Company (HECO). The Virtual Power Plants will provide a resilient, clean source of energy at times when electricity is needed most, such as during a hot summer day and other times when there is high demand for energy. Families with Sunruns Brightbox rechargeable solar battery systems will also have access to reliable backup power to keep their lights on and food fresh during outage events.

Key Operating Metrics & Outlook

In the second quarter of 2020, Megawatts Deployed (MW) were 78 MW, compared to 103 MW in the second quarter of 2019, a 24% year-over-year decline.

Creation Cost per watt was $3.72 in the second quarter of 2020, compared to $3.33 in the second quarter of 2019, a 12% year-over-year increase.

NPV created in the second quarter of 2020 was $34 million. Unlevered NPV in the second quarter of 2020 was $0.51 per watt, representing approximately $3,800 per leased customer.

Gross Earning Assets as of June 30, 2020 were $3.9 billion, up $580 million, or 18%, from the prior year. Net Earning Assets as of June 30, 2020 were $1.6 billion, up $204 million, or 14%, from the prior year.

Cash, including restricted cash, increased $0.4 million from the prior year. Cash Generation was negative $30 million in the second quarter of 2020. The company defines Cash Generation as the increase in total cash, including restricted cash, less any increases in recourse debt, and adjusted for certain items. In the second quarter of 2020, Cash Generation was adjusted by ($19.1) million related to the companys Investment Tax Credit safe harbor program, $4.0 million for restructuring related activities and ($4.8) million for the deferral of social security payroll taxes.

Sunrun made the decision to maintain its organizational capabilities when certain sales channels were restricted, which decreased second quarter NPV, but enabled the company to be in an athletic position to safely provide essential services to customers as markets gradually reopened. Order volumes have increased significantly, now above February levels, and management expects to grow Megawatts Deployed by over 20% sequentially in the third quarter, at improving Unlevered NPV levels. We expect Unlevered NPV to increase to above $8,000 per leased customer in the fourth quarter. Management also expects to maintain a strong total cash balance and grow Net Earning Assets in full-year 2020.

Second Quarter 2020 GAAP Results

Total revenue was $181.3 million in the second quarter of 2020, down $23.3 million, or 11%, from the second quarter of 2019. Customer agreements and incentives revenue was $106.1 million, an increase of $13.7 million, or 15%, compared to the second quarter of 2019. Solar energy systems and product sales revenue was $75.2 million, a decrease of $37.0 million, or 33%, compared to the second quarter of 2019.

Total cost of revenue was $147.2 million, a decrease of 6% year-over-year. Total operating expenses were $264.8 million, a decrease of 1% year-over-year.

Net loss attributable to common stockholders was $13.6 million, or $0.11 per share, in the second quarter of 2020.

Financing Activities

As of August 10, 2020, considering only committed debt and closed tax equity funds, the companys pre-arranged financings provide capital to fund approximately 200 MW of leased projects beyond what was deployed through the end of the second quarter of 2020. We also have executed term sheets for additional project finance capital to fund installations.

Conference Call Information

Sunrun is hosting a conference call for analysts and investors to discuss its second quarter 2020 results and business outlook at 2:00 p.m. Pacific Time today, August 10, 2020. A live audio webcast of the conference call along with supplemental financial information will be accessible via the Investor Relations section of the Companys website at https://investors.sunrun.com. The conference call can also be accessed live over the phone by dialing 877-407-5989 (toll-free) or 201-689-8434 (international). An audio replay will be available following the call on the Sunrun Investor Relations website for approximately one month.

About Sunrun

Sunrun Inc. (Nasdaq: RUN) is the nations leading home solar, battery storage, and energy services company. Founded in 2007, Sunrun pioneered home solar service plans to make local clean energy more accessible to everyone for little to no upfront cost. Sunruns innovative home battery solution, Brightbox, brings families affordable, resilient, and reliable energy. The company can also manage and share stored solar energy from the batteries to provide benefits to households, utilities, and the electric grid while reducing our reliance on polluting energy sources. For more information, please visit www.sunrun.com.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, including statements regarding the expected benefits of the proposed acquisition of Vivint Solar, cost synergies and opportunities resulting from the proposed acquisition, the expected timing of the completion of the proposed acquisition, our leadership position in the industry, our expectations as to the opportunities for the proposed joint venture to electrify the home, the expected benefits of the joint venture, the expected benefits of our exclusive partnerships with the CCAs, our customer value proposition with new virtual power plant contracts, increased battery adoption, our competitive advantages, business plan, investments, market adoption rates, our future financial and operating performance, the impact of the COVID-19 on the Company and its business and operations, transitioning to a digital sales model, our operational and financial results such as Megawatts Deployed, Unlevered NPV, total cash balance and Net Earning Assets, our investment tax credit safe harbor strategy, and the assumptions related to the calculation of the foregoing metrics, as well as our expectations regarding our growth, financing activities, and financing capacity. These statements are not guarantees of future performance; they reflect our current views with respect to future events and are based on assumptions and estimates and are subject to known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from expectations or results projected or implied by forward-looking statements. The risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements include, but are not limited to: the occurrence of any event, change or other circumstances that could give rise to the termination of the definitive agreement to acquire Vivint Solar or the failure to satisfy closing conditions; the possibility that the consummation of the transactions contemplated by the definitive agreement to acquire Vivint Solar is delayed or does not occur, including the failure of the parties stockholders to approve the proposed transactions; uncertainty regarding the timing of the receipt of required regulatory approvals for the merger and the possibility that the parties may be required to accept conditions that could reduce or eliminate the anticipated benefits of the merger as a condition to obtaining regulatory approvals or that the required regulatory approvals might not be obtained at all; the outcome of any legal proceedings that have been or may be instituted against the parties or others following announcement of the transactions contemplated by the definitive transaction agreement; challenges, disruptions and costs of closing, integrating and achieving anticipated synergies, or that such synergies will take longer to realize than expected; risks that the merger and other transactions contemplated by the definitive transaction agreement disrupt current plans and operations that may harm the parties businesses; the amount of any costs, fees, expenses, impairments and charges related to the merger; uncertainty as to the effects of the announcement or pendency of the merger on the market price of the parties respective common stock and/or on their respective financial performance; the closing of co-investment; the availability of additional financing on acceptable terms; changes in the retail prices of traditional utility generated electricity; the impact of COVID-19 on the Company and its business and operations; worldwide economic conditions, including slow or negative growth rates in global and domestic economies and weakened consumer confidence and spending; changes in policies and regulations including net metering and interconnection limits or caps; the availability of rebates, tax credits and other incentives; the availability of solar panels and other raw materials; our limited operating history, particularly as a new public company; our ability to attract and retain our relationships with third parties, including our solar partners; our ability to meet the covenants in our investment funds and debt facilities; our continued ability to manage costs associated with solar service offerings, our business plan and our ability to effectively manage our growth and labor constraints, and such other risks identified in the reports that we file with the U.S. Securities and Exchange Commission, or SEC, from time to time. All forward-looking statements in this press release are based on information available to us as of the date hereof, and we assume no obligation to update these forward-looking statements.

Additional Information and Where to Find It

In connection with the proposed merger, Sunrun intends to file with the SEC a registration statement on Form S-4, which will include a document that serves as a prospectus of Sunrun and a joint proxy statement of Sunrun and Vivint Solar (the joint proxy statement/prospectus). After the registration statement has been declared effective by the SEC, the joint proxy statement/prospectus will be delivered to stockholders of Sunrun and Vivint Solar. BEFORE MAKING ANY VOTING OR INVESTMENT DECISION, SECURITY HOLDERS OF SUNRUN AND VIVINT SOLAR ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS (INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER DOCUMENTS RELATING TO THE MERGER THAT WILL BE FILED WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. Investors and security holders will be able to obtain copies of the joint proxy statement/prospectus (when available) and other documents filed by Sunrun and Vivint Solar with the SEC, without charge, through the website maintained by the SEC at http://www.sec.gov. Copies of documents filed with the SEC by Sunrun will be made available free of charge on Sunruns website at http://investors.sunrun.com/ under the heading Filings & Financials and then under the subheading SEC Filings. Copies of documents filed with the SEC by Vivint Solar will be made available free of charge on Vivint Solars website at http://investors.vivintsolar.com/ under the link Financial Information and then under the heading SEC Filings.

Participants in the Solicitation

Sunrun and Vivint Solar and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the holders of Sunrun common stock and Vivint Solar common stock in respect of the proposed transaction. Information about Sunruns directors and executive officers is set forth in Sunruns Form 10-K for the year ended December 31, 2019 and the proxy statement for Sunruns 2020 Annual Meeting of Stockholders, which were filed with the SEC on February 27, 2020 and April 17, 2020, respectively. Information about Vivint Solars directors and executive officers is set forth in Vivint Solars Form 10-K for the year ended December 31, 2019 and the proxy statement for Vivint Solars 2020 Annual Meeting of Stockholders, which were filed with the SEC on March 10, 2020 and April 24, 2020, respectively. Stockholders may obtain additional information regarding the interests of such participants by reading the registration statement and the joint proxy statement/prospectus and other relevant materials to be filed with the SEC regarding the proposed merger when they become available. Investors should read the joint proxy statement/prospectus carefully when it becomes available before making any voting or investment decisions.

No Offer or Solicitation

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

Consolidated Balance Sheets(In Thousands)

June 30, 2020 December 31, 2019 Assets Current assets: Cash $ 269,569 $ 269,577 Restricted cash 84,515 93,504 Accounts receivable, net 60,000 77,728 State tax credits receivable ? 6,466 Inventories 210,507 260,571 Prepaid expenses and other current assets 13,649 25,984 Total current assets 638,240 733,830 Restricted cash 148 148 Solar energy systems, net 4,774,425 4,492,615 Property and equipment, net 47,839 56,708 Intangible assets, net 16,892 19,543 Goodwill 95,094 95,094 Other assets 432,404 408,403 Total assets $ 6,005,042 $ 5,806,341 Liabilities and total equity Current liabilities: Accounts payable $ 99,895 $ 223,356 Distributions payable to noncontrollinginterests and redeemable noncontrolling 17,751 16,062 interestsAccrued expenses and other liabilities 187,891 148,497 Deferred revenue, current portion 78,750 77,643 Deferred grants, current portion 8,274 8,093 Finance lease obligations, current portion 8,065 10,064 Non-recourse debt, current portion 105,381 35,348 Pass-through financing obligation, current 11,292 11,031 portionTotal current liabilities 517,299 530,094 Deferred revenue, net of current portion 663,797 651,856 Deferred grants, net of current portion 213,956 218,568 Finance lease obligations, net of current 8,547 12,895 portionRecourse debt 236,435 239,485 Non-recourse debt, net of current portion 2,081,725 1,980,107 Pass-through financing obligation, net of 326,278 327,974 current portionOther liabilities 227,984 141,401 Deferred tax liabilities 36,834 65,964 Total liabilities 4,312,855 4,168,344 Redeemable noncontrolling interests 450,682 306,565 Total stockholders? equity 888,167 964,731 Noncontrolling interests 353,338 366,701 Total equity 1,241,505 1,331,432 Total liabilities, redeemable noncontrolling $ 6,005,042 $ 5,806,341 interests and total equity

Consolidated Statements of Operations(In Thousands, Except Per Share Amounts)

Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019Revenue: Customer agreements $ 106,095 $ 92,439 $ 205,219 $ 192,289 and incentivesSolar energysystems and product 75,199 112,156 186,806 206,810 salesTotal revenue 181,294 204,595 392,025 399,099 Operating expenses: Cost of customeragreements and 83,422 70,594 161,699 140,087 incentivesCost of solarenergy systems and 63,746 86,348 155,344 164,147 product salesSales and marketing 69,701 70,038 139,971 125,991 Research and 4,971 6,555 9,017 12,029 developmentGeneral and 41,756 33,044 69,830 62,107 administrativeAmortization of 1,167 814 2,650 1,707 intangible assetsTotal operating 264,763 267,393 538,511 506,068 expensesLoss from (83,469 ) (62,798 ) (146,486 ) (106,969 )operationsInterest expense, 50,721 42,309 100,645 83,649 netOther (income) 148 1,388 98 6,144 expenses, netLoss before income (134,338 ) (106,495 ) (247,229 ) (196,762 )taxesIncome tax benefit 211 (1,910 ) (3,131 ) (5,271 )Net loss (134,549 ) (104,585 ) (244,098 ) (191,491 )Net lossattributable tononcontrollinginterests and (120,987 ) (103,292 ) (202,577 ) (176,336 )redeemablenoncontrollinginterestsNet lossattributable to $ (13,562 ) $ (1,293 ) $ (41,521 ) $ (15,155 )common stockholdersNet loss per shareattributable to common stockholdersBasic $ (0.11 ) $ (0.01 ) $ (0.35 ) $ (0.13 )Diluted $ (0.11 ) $ (0.01 ) $ (0.35 ) $ (0.13 )Weighted averageshares used tocompute net loss per shareattributable tocommon stockholdersBasic 120,279 115,765 120,201 114,843 Diluted 120,279 115,765 120,201 114,843

Consolidated Statements of Cash Flows(In Thousands)

Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019Operating activities: Net loss $ (134,549 ) $ (104,585 ) $ (244,098 ) $ (191,491 )Adjustments toreconcile net loss tonet cash provided by (used in) operatingactivities:Depreciation andamortization, net of 51,994 45,358 103,015 89,019 amortization ofdeferred grantsDeferred income taxes 211 (1,910 ) (3,131 ) (5,271 )Stock-based 22,018 6,783 29,327 12,566 compensation expenseBonus liability (11,636 ) ? ? ? converted to RSUsInterest onpass-through 5,896 5,906 11,773 12,378 financing obligationsReduction inpass-through (9,569 ) (9,716 ) (19,258 ) (19,702 )financing obligationsOther noncash items 8,859 5,225 20,301 6,714 Changes in operatingassets and liabilities:Accounts receivable 4,084 (12,701 ) 15,128 (12,848 )Inventories 47,107 (13,645 ) 50,064 (10,362 )Prepaid and other (15,460 ) (13,903 ) (14,345 ) (49,771 )assetsAccounts payable (43,331 ) 21,010 (98,935 ) (1,567 )Accrued expenses and 36,469 (6,199 ) (15,198 ) 1,525 other liabilitiesDeferred revenue 2,539 10,347 13,104 112,195 Net cash (used in)provided by operating (35,368 ) (68,030 ) (152,253 ) (56,615 )activitiesInvesting activities: Payments for thecosts of solar energy (154,720 ) (189,550 ) (362,080 ) (388,430 )systemsPurchases of property 768 (11,433 ) (2,337 ) (13,950 )and equipment, netNet cash used in (153,952 ) (200,983 ) (364,417 ) (402,380 )investing activitiesFinancing activities: Proceeds from statetax credits, net of 6,219 (275 ) 6,219 2,329 recaptureProceeds fromissuance of recourse ? 15,000 43,475 55,000 debtRepayment of recourse (1,525 ) (15,000 ) (46,525 ) (62,965 )debtProceeds fromissuance of 5,500 359,597 197,251 541,249 non-recourse debtRepayment of (24,315 ) (214,226 ) (37,312 ) (313,474 )non-recourse debtPayment of debt fees ? (4,808 ) ? (7,462 )Proceeds frompass-through 1,959 3,497 3,721 5,282 financing and otherobligationsEarly repayment ofpass-through ? ? ? (7,597 )financing obligationPayment of finance (2,592 ) (3,444 ) (5,545 ) (6,445 )lease obligationsContributionsreceived fromnoncontrollinginterests and 204,045 178,162 374,949 330,311 redeemablenoncontrollinginterestsDistributions paid tononcontrollinginterests and (20,937 ) (17,160 ) (39,929 ) (35,607 )redeemablenoncontrollinginterestsAcquisition ofnoncontrolling ? ? ? (4,600 )interestsProceeds fromexercises of stockoptions, net of 8,950 11,603 11,369 12,442 withholding taxespaid on restrictedstock unitsNet cash provided by 177,304 312,946 507,673 508,463 financing activitiesNet change in cash (12,016 ) 43,933 (8,997 ) 49,468 and restricted cashCash and restrictedcash, beginning of 366,248 309,934 363,229 304,399 periodCash and restricted $ 354,232 $ 353,867 $ 354,232 $ 353,867 cash, end of period

Key Operating Metrics and Financial Metrics

Three Months Ended June 30, 2020 2019Megawatts Deployed (during the period) 78 103Cumulative Megawatts Deployed (end of period) 2,163 1,763Gross Earning Assets under Energy Contract (end of $ 2,667 $ 2,252period)(in millions)Gross Earning Assets Value of Purchase or Renewal (end $ 1,225 $ 1,060of period)(in millions)Gross Earning Assets (end of period)(in millions) (1) $ 3,892 $ 3,312Net Earning Assets (end of period)(in millions) (1) $ 1,633 $ 1,429

Three Months Ended June 30, 2020 2019Project Value, Contracted Portion (per watt) $ 3.95 $ 4.04Project Value, Renewal Portion (per watt) $ 0.28 $ 0.40Total Project Value (per watt) $ 4.23 $ 4.44Creation Cost (per watt) (2) $ 3.72 $ 3.33Unlevered NPV (per watt) (1) $ 0.51 $ 1.11NPV (in millions) $ 34 $ 95

(1) Numbers may not sum due to rounding.

(2) Creation Cost for the three months ended June 30, 2020 includes an adjustment of $10.7 million for restructuring and transaction related activities and $6.7 million for charges related to litigation.

Definitions

Creation Cost includes (i) certain installation and general and administrative costs after subtracting the gross margin on solar energy systems and product sales divided by watts deployed during the measurement period and (ii) certain sales and marketing expenses under new Customer Agreements, net of cancellations during the period divided by the related watts deployed.

Customers refers to all parties (i) who have executed Customer Agreements or cash sales agreements with us and (ii) for whom we have internal confirmation that the applicable solar energy system has reached notice to proceed or NTP, net of cancellations. Customer Agreements refers to, collectively, solar power purchase agreements and solar leases.

Gross Earning Assets represent the remaining net cash flows (discounted at 6%) we expect to receive during the initial term of our Customer Agreements (typically 20 or 25 years) for systems that have been deployed as of the measurement date, plus a discounted estimate of the value of the Customer Agreement renewal term or solar energy system purchase at the end of the initial term. Gross Earning Assets deducts estimated cash distributions to investors in consolidated joint ventures and estimated operating, maintenance and administrative expenses for systems deployed as of the measurement date. In calculating Gross Earning Assets, we deduct estimated cash distributions to our project equity financing providers. In calculating Gross Earning Assets, we do not deduct customer payments we are obligated to pass through to investors in pass-through financing obligations as these amounts are reflected on our balance sheet as long-term and short-term pass-through financing obligations, similar to the way that debt obligations are presented. In determining our finance strategy, we use pass-through financing obligations and long-term debt in an equivalent fashion as the schedule of payments of distributions to pass-through financing investors is more similar to the payment of interest to lenders than the internal rates of return (IRRs) paid to investors in other tax equity structures. We calculate the Gross Earning Assets value of the purchase or renewal amount at the expiration of the initial contract term assuming either a system purchase or a five year renewal (for our 25-year Customer Agreements) or a 10-year renewal (for our 20-year Customer Agreements), in each case forecasting only a 30-year customer relationship (although the customer may renew for additional years, or purchase the system), at a contract rate equal to 90% of the customers contractual rate in effect at the end of the initial contract term. After the initial contract term, our Customer Agreements typically automatically renew on an annual basis and the rate is initially set at up to a 10% discount to then-prevailing power prices. Gross Earning Assets Under Energy Contract represents the remaining net cash flows during the initial term of our Customer Agreements (less substantially all value from SRECs prior to July 1, 2015), for systems deployed as of the measurement date.

Gross Earning Assets Under Energy Contract represents the remaining net cash flows during the initial term of our Customer Agreements (less substantially all value from SRECs prior to July 1, 2015), for systems deployed as of the measurement date.

Gross Earning Assets Value of Purchase or Renewal is the forecasted net present value we would receive upon or following the expiration of the initial Customer Agreement term (either in the form of cash payments during any applicable renewal period or a system purchase at the end of the initial term), for systems deployed as of the measurement date.

Megawatts Deployed 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, or (iii) for multi-family and any other systems that have reached NTP, measured on the percentage of the project that has been completed based on expected project cost.

Net Earning Assets represents Gross Earning Assets less both project level debt and pass-through financing obligations, as of the same measurement date. Because estimated cash distributions to our project equity financing partners are deducted from Gross Earning Assets, a proportional share of the corresponding project level debt is deducted from Net Earning Assets.

NPV equals Unlevered NPV multiplied by leased megawatts deployed in period.

NTP or Notice to Proceed refers to our internal confirmation that a solar energy system has met our installation requirements for size, equipment and design.

Project Value represents the value of upfront and future payments by customers, the benefits received from utility and state incentives, as well as the present value of net proceeds derived through investment funds. Specifically, Project Value is calculated as the sum of the following items (all measured on a per-watt basis with respect to megawatts deployed under Customer Agreements during the period): (i) estimated Gross Earning Assets, (ii) utility or upfront state incentives, (iii) upfront payments from customers for deposits and partial or full prepayments of amounts otherwise due under Customer Agreements and which are not already included in Gross Earning Assets and (iv) finance proceeds from tax equity investors, excluding cash true-up payments or the value of asset contributions in lieu of cash true-up payments made to investors. Project Value includes contracted SRECs for all periods after July 1, 2015.

Unlevered NPV equals the difference between Project Value and estimated Creation Cost on a per watt basis.

Investor & Analyst Contact:

Patrick JobinSenior Vice President, Finance & IRinvestors@sunrun.com(415) 373-5206

Media Contact:

Andrew NewboldDirector of Communicationspress@sunrun.com816-516-5809