Great Balls of Fire

Sunrun acquires Vivint in residential solar megadeal worth $3.2 billion

San Francisco-based Sunrun, a provider of residential solar, battery storage and energy services, will acquire Vivint Solar of Lehi, Utah, in an all-stock deal worth approximately $3.2 billion, according to a July 6 press release from Sunrun. The deal will add complementary direct-to-home sales channel to both companies’ new platform and make Sunrun one of the top solar companies in the world in terms of assets, with nearly 500,000 customers and more than 3 gigawatts of solar energy, it said.

Annual cost synergies—the opportunity of a combined corporate entity to reduce or eliminate expenses associated with running a business—are estimated at $90 billion. Cost synergies are realized by eliminating positions that are viewed as duplicate within the merged entity, meaning that the megadeal could potentially lead to layoffs. The cost savings projected due to cost synergy can take many other forms, however, including technological improvements, supply chain advancements, and research and development. It is not clear yet whether Sunrun plans to make and job cuts.

“Americans want clean and resilient energy. Vivint Solar adds an important and high-quality sales channel that enables our combined company to reach more households and raise awareness about the benefits of home solar and batteries,” said Lynn Jurich, Sunrun’s Chief Executive Officer and co-founder. “This transaction will increase our scale and grow our energy services network to help replace centralized, polluting power plants and accelerate the transition to a 100% clean energy future. We admire Vivint Solar and its employees, and look forward to working together as we integrate the two companies.”

David Bywater, Chief Executive Officer of Vivint Solar, added, “Vivint Solar and Sunrun have long shared a common goal of bringing clean, affordable, resilient energy to homeowners. Joining forces with Sunrun will allow us to reach a broader set of customers and accelerate the pace of clean energy adoption and grid modernization. We believe this transaction will create value for our customers, our shareholders, and our partners.”

Sunrun and Vivint Solar share a mission “to create a planet run by the sun.” The companies contend that this can be achieved by giving families—the primary consumers of residential solar energy—increased choice in how they create and consume power.

Despite exponential growth in the 21st century, residential solar has reached only 3% penetration in the United States today, and the runway for growth remains massive. Some surveys by the Energy Department and solar companies show nearly 9 out of 10 people in the United States favor expanding the use of solar power.

Sunrun has a mere thirteen years of experience in the market, but its rapid growth has shown that a consultative experience from trusted sales advisors is important to educate customers of the merits of solar energy. Vivint Solar’s highly trained, consultative field sales experts will reportedly be an important part of this combined platform and will serve as critical ambassadors for consumers to learn the benefits of solar energy.

Most energy consumers are currently beholden to a single power company that provides electricity to them based on their household location. As a benefit of this combination, Sunrun say its increased scale, operating efficiency and combined research and development (R&D) efforts will enable the company to even further accelerate the adoption of renewable energy and give households more control over their energy future.

A lower cost structure from greater scale can open more markets and allow lower pricing for customers, accelerating the transition away from polluting fossil fuels. It will also give customers access to better, more affordable products and services. Lastly, combining R&D resources and focusing efforts could accelerate the offering of advanced solutions, such as virtual power plants and other energy services programs, to more customers in more markets.

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