Shares of residential solar installer Sunrun Inc. (NASDAQ:RUN) jumped as much as 14.3% in trading Thursday after reporting better than expected earnings. At 1:30 p.m. EST shares had given back some of their gains but were still up 8.7% on the day.
Solar deployments jumped 12% from a year ago to 90 megawatts, exceeding the company's guidance of 88 MW. More importantly, net present value created increased 21% to $93 million and unlevered NPV per watt was $1.15, the highest in Sunrun's history.
CEO Lynn Jurich said that California's solar market is rebounding and about 10% of solar-power systems there now include energy storage. That's a big change for Sunrun and could help drive further value for the company long term.
Sunrun is benefiting from Tesla's shrinking solar business and may soon take over the No. 1 market share spot in the industry. What's still concerning is that installation costs only fell $0.02 per watt over the past year to $3.34, which means the added value Sunrun is generating is from charging higher prices. Pricing power is a good sign short term, but long term I don't see it as something that's sustainable given the growth of low-cost solar loans and lower-cost local and regional installers. But right now those headwinds don't seem to be affecting Sunrun's business in the least.