Sunrun (RUN) risk factors, FY2025 10-K

Risks Related to the Battery Storage and Solar Industry

1. 01The battery storage and solar energy industry is an emerging market which is constantly evolving and may not develop to the size or at the rate we expect49% rewritten
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 business72% rewritten
3. 03We face competition from traditional energy companies as well as solar and other renewable energy companies
4. 04A 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
5. 05Extreme weather events and climate change may have long-term impacts on our business, our industry, and the global economy44% rewritten

Risks Related to Our Operating Structure and Financing Activities

1. 06Volatility and increases in interest rates raise our cost of capital and may adversely impact our business29% rewritten
2. 07We expect to incur substantially more debt in the future, which could intensify the risks to our business
3. 08We 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
4. 09Loan financing developments could adversely impact our business
5. 10Indebtedness 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”)
6. 11We 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
7. 12We are subject to counterparty risk with respect to the capped call transactions

Risks Related to Regulation and Policy

1. 13Federal tax policy impacts the competitiveness of our service offerings to customers and our marketNew
2. 14Electric 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 and battery service offerings that may significantly reduce demand for such offerings30% rewritten
3. 15Regulations and policies related to rate design could deter potential customers from purchasing our solar and storage service offerings, reduce the value of the electricity our systems produce, and reduce any savings that our customers could realize from our solar service offerings43% rewritten
4. 16We 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. 17Our business depends in part on the regulatory treatment of third-party-owned solar energy systems
6. 18Interconnection limits or circuit-level caps imposed by utilities or 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 scores41% rewritten

Risks Related to Our Business Operations

1. 19Our growth depends in part on the success of our relationships with third parties34% rewritten
2. 20The acquisition of a supplier by one of our competitors could also limit our access to such components and require significant redesigns of our energy systems or installation procedures and have a material adverse effect on our business
3. 21As 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 operations20% rewritten
4. 22If 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. 23We typically bear the risk of loss and the cost of maintenance, repair and removal on energy systems that are owned or leased by our investment funds
6. 24Product liability claims against us could result in adverse publicity and potentially significant monetary damages
7. 25Our business is concentrated in certain markets, putting us at risk of region-specific disruptions24% rewritten
8. 26Changes to the applicable laws and regulations governing direct-to-home sales and marketing may limit or restrict our ability to effectively compete
9. 27As we continue to grow and expand our sales channels and affiliate channel partner networks, we may encounter challenges and additional costs
10. 28Obtaining 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. 29The value of our energy systems at the end of the associated term of the lease or PPA may be lower than projected, and future removal, disposal and recycling obligations could change, all of which may adversely affect our financial performance and valuation49% rewritten
12. 30We are exposed to the credit risk of customers and payment delinquencies on our accounts receivables37% rewritten
13. 31We 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. 32If we are unsuccessful in developing and maintaining our proprietary technology, including our BrightPath software, our ability to attract and retain energy system partners could be impaired, our competitive position could be harmed and our revenue could be reduced
15. 33Disruptions to our solar production metering solution could negatively impact our revenue and increase our expenses
16. 34Problems with product quality or performance may cause us to incur warranty expenses and performance guarantee expenses, may lower the residual value of our energy systems and may damage our market reputation and cause our financial results to decline
17. 35Our 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. 36Damage to our brand and reputation or failure to expand our brand would harm our business and results of operations
19. 37A 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
20. 38Regulators 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
21. 39The loss of one or more members of our senior management or key employees may adversely affect our ability to implement our strategy
22. 40A 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
23. 41Compliance 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
24. 42If 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
25. 43We have incurred losses and may be unable to sustain profitability in the future
26. 44Our 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
27. 45Our actual financial results may differ materially from any guidance we may publish from time to time
28. 46The 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. 47Our ability to provide our storage and 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 benefits80% rewritten
2. 48If the IRS makes determinations that the creditable basis of our 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 affected75% rewritten
3. 49Now or in the future, routine IRS audits may subject us to indemnity obligations to investors, and may result in certain limited out-of-pocket costs and potential increased insurance premiums in the futureNew
4. 50Any effort to repeal, overturn or alter 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. 51We may be subject to adverse California property tax consequences
6. 52If 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 affected55% rewritten
7. 53Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud will be detectedNew
8. 54Our 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
9. 55Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited22% rewritten

Risks Related to Ownership of Our Common Stock

1. 56Our 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. 57The 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. 58Sales 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. 59Anti-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. 60These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management
6. 61Provisions 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. 62Provisions 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. 63If 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. 64We 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. 65Additional issuances of our capital stock or equity-linked securities could result in dilution to our stockholders
11. 66The Capped Call transactions may negatively affect the value of our common stock