Sunrun (RUN) risk factors, 2025 10-K

Risks Related to the Solar Industry

1. 01The solar energy industry is an emerging market which is constantly evolving and may not develop to the size or at the rate we expect
2. 02Furthermore, market prices of retail electricity generated by utilities or other energy sources could decline for a variety of reasons, as discussed further below. Any declines in macroeconomic conditions, changes in retail prices of electricity or changes in customer preferences would adversely impact our business
3. 03offerings and any failure of these costs to continue declining as we currently expect. If we do not reduce our cost structure in the future, our ability to continue to be profitable may be impaired
4. 04We face competition from traditional energy companies as well as solar and other renewable energy companies
5. 05A material drop in the retail price of utility-generated electricity or electricity from other sources would harm our business, financial condition, and results of operations
6. 06Climate change may have long-term impacts on our business, our industry, and the global economy

Risks Related to Our Operating Structure and Financing Activities

1. 07service. As a result, the timing of tax equity and/or cash equity funding can be delayed, which may adversely impact our business and operations and may cause volatility to our cash flows as we have an increased mix of transferability funds
2. 08Volatility and increases in interest rates raise our cost of capital and may adversely impact our business
3. 09We expect to incur substantially more debt in the future, which could intensify the risks to our business
4. 10We may be required to make payments or contribute assets to our investors upon the occurrence of certain events, including one-time reset or true-up payments or upon the exercise of a redemption option by one of our tax equity investors
5. 11Loan financing developments could adversely impact our business
6. 12debt and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful
7. 13Indebtedness under certain of our Senior and Subordinated Debt Facilities and our other credit facilities accrue interest at variable interest rates based on the Secured Overnight Financing Rate (or other benchmark rates based thereof, collectively, “SOFR”)
8. 14We may not have the ability to raise the funds necessary to settle conversions of the Notes in cash or to repurchase the Notes upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the Notes
9. 15We are subject to counterparty risk with respect to the capped call transactions

Risks Related to Regulation and Policy

1. 16the Puerto Rico Energy Board in 2025 to review and determine the future of NEM, which could revise or reverse Puerto Rico’s Act 10, which had unanimously extended NEM through 2031
2. 17Electric utility statutes and regulations and changes to such statutes or regulations may present technical, regulatory and economic barriers to the purchase and use of our solar service offerings that may significantly reduce demand for such offerings
3. 18Regulations and policies related to rate design could deter potential customers from purchasing our solar service offerings, reduce the value of the electricity our systems produce, and reduce any savings that our customers could realize from our solar service offerings
4. 19We are not currently regulated as a utility under applicable laws, but we may be subject to regulation as a utility in the future or become subject to new federal and state regulations for any additional solar service offerings we may introduce in the future
5. 20Our business depends in part on the regulatory treatment of third-party-owned solar energy systems
6. 21Interconnection limits or circuit-level caps imposed by regulators may significantly reduce our ability to sell electricity from our solar service offerings in certain markets or slow interconnections, harming our growth rate and customer satisfaction scores

Risks Related to Our Business Operations

1. 22Our growth depends in part on the success of our relationships with third parties, including our solar partners
2. 23The acquisition of a supplier by one of our competitors could also limit our access to such components and require significant redesigns of our solar energy systems or installation procedures and have a material adverse effect on our business
3. 24As the primary entity that contracts with customers, we are subject to risks associated with construction, cost overruns, delays, customer cancellations, regulatory compliance, and other contingencies, any of which could have a material adverse effect on our business and results of operations
4. 25If we fail to manage our recent and future growth effectively, we may be unable to execute our business plan, maintain high levels of customer service, or adequately address competitive challenges
5. 26We typically bear the risk of loss and the cost of maintenance, repair and removal on solar energy systems that are owned or leased by our investment funds
6. 27Product liability claims against us could result in adverse publicity and potentially significant monetary damages
7. 28Our business is concentrated in certain markets, putting us at risk of region-specific disruptions
8. 29Changes to the applicable laws and regulations governing direct-to-home sales and marketing may limit or restrict our ability to effectively compete
9. 30As we continue to grow and expand our sales channels and affiliate channel partner networks, we may encounter challenges and additional costs
10. 31Obtaining a sales contract with a potential customer does not guarantee that the potential customer will not decide to cancel or that we will not need to cancel due to a failed inspection, which could cause us to generate no revenue despite incurring costs and adversely affect our results of operations
11. 32The value of our solar energy systems at the end of the associated term of the lease or PPA may be lower than projected, which may adversely affect our financial performance and valuation
12. 33We are exposed to the credit risk of customers and payment delinquencies on our accounts receivables
13. 34We may not realize the anticipated benefits of past or future investments, strategic transactions, or acquisitions, and integration of these acquisitions may disrupt our business and management
14. 35If we are unsuccessful in developing and maintaining our proprietary technology, including our BrightPath software, our ability to attract and retain solar partners could be impaired, our competitive position could be harmed and our revenue could be reduced
15. 36Disruptions to our solar production metering solution could negatively impact our revenue and increase our expenses
16. 37Problems with product quality or performance may cause us to incur warranty expenses and performance guarantee expenses, may lower the residual value of our solar energy systems and may damage our market reputation and cause our financial results to decline
17. 38Our business may be harmed if we fail to properly protect our intellectual property, and we may also be required to defend against claims or indemnify others against claims that our intellectual property infringes on the intellectual property rights of third parties
18. 39statutory damages on a per violation basis, and, if viable, carry the potential for monumental statutory damages, depending on the volume of data and the number of violations
19. 40Damage to our brand and reputation or failure to expand our brand would harm our business and results of operations
20. 41A failure to hire and retain a sufficient number of employees and service providers in key functions would constrain our growth and our ability to timely complete customers’ projects and successfully manage customer accounts
21. 42Regulators may limit the type of electricians qualified to install and service our solar and battery systems in California, which may result in workforce shortages, operational delays, and increased costs
22. 43impact our operating results. We have actively managed our workforce in anticipation of these changing contractor regulations by signing up Electrical Trainees in all of our California branches and through on the job training plus enrollment in schooling we have had many of our trainees become Journeypersons as well
23. 44The loss of one or more members of our senior management or key employees may adversely affect our ability to implement our strategy
24. 45A failure to comply with laws and regulations relating to our interactions with current or prospective residential customers could result in negative publicity, claims, investigations, and litigation, and adversely affect our financial performance
25. 46Compliance with occupational safety and health requirements and best practices can be costly, and noncompliance with such requirements may result in potentially significant penalties, operational delays and adverse publicity
26. 47If our products do not work as well as planned or if we are unsuccessful in developing and selling new products or in penetrating new markets, our business, financial condition, and results of operations could be adversely affected
27. 48We have incurred losses and may be unable to sustain profitability in the future
28. 49Our results of operations may fluctuate from quarter to quarter, which could make our future performance difficult to predict and could cause our results of operations for a particular period to fall below expectations, resulting in a decline in the price of our common stock
29. 50Our actual financial results may differ materially from any guidance we may publish from time to time
30. 51The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members and officers

Risks Related to Taxes and Accounting

1. 52Our ability to provide our solar service offerings to customers on an economically viable basis depends in part on our ability to finance these systems with fund investors who seek particular tax and other benefits
2. 53The federal government also currently offers a Residential Clean Energy Credit, for the installation of certain solar power facilities owned by residential taxpayers, which is applicable to customers who purchase a solar energy system outright as opposed to entering into a Customer Agreement
3. 54If the IRS makes determinations that the creditable basis of our solar energy systems is materially lower than what we have claimed, we may have to pay significant amounts to our fund investors, and our business, financial condition, and prospects may be materially and adversely affected
4. 55Any effort to overturn federal and state laws, regulations or policies that are supportive of solar energy generation or that remove costs or other limitations on other types of energy generation that compete with solar energy projects could materially and adversely affect our business
5. 56We may be subject to adverse California property tax consequences
6. 57If we are unable to maintain effective disclosure controls and internal controls over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and, as a result, the value of our common stock may be materially and adversely affected
7. 58Our reported financial results may be affected, and comparability of our financial results with other companies in our industry may be impacted, by changes in the accounting principles generally accepted in the United States
8. 59Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited
9. 60We may be required to record an impairment expense on our goodwill in the future

Risks Related to Ownership of Our Common Stock

1. 61Our executive officers, directors and principal stockholders continue to have substantial control over us, which will limit your ability to influence the outcome of important matters, including a change in control
2. 62The market price of our common stock has been and may continue to be volatile, and you could lose all or part of your investment in our common stock
3. 63Sales of a substantial number of shares of our common stock in the public market, including by our existing stockholders, could cause our stock price to fall
4. 64Anti-takeover provisions contained in our restated certificate of incorporation and amended and restated bylaws, as well as provisions of Delaware law, could impair a takeover attempt
5. 65These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management
6. 66Provisions contained in our restated certificate of incorporation and amended and restated bylaws limit the ability of our stockholders to call special meetings and prohibit stockholder action by written consent
7. 67Provisions contained in our restated certificate of incorporation and amended and restated bylaws could preclude our stockholders from bringing matters before meetings of stockholders and delay changes in our board of directors
8. 68If securities or industry analysts cease publishing research or reports about us, our business, our market or our competitors, or if they adversely change their recommendations regarding our common stock, the market price of our common stock and trading volume could decline
9. 69We do not expect to declare any dividends in the foreseeable future, so investors may need to rely on sales of our common stock after price appreciation, which may never occur or only occur at certain times, as the only way to realize any future gains on their investment
10. 70Additional issuances of our capital stock or equity-linked securities could result in dilution to our stockholders
11. 71The Capped Call transactions may negatively affect the value of our common stock