Create a planet run by the sun. Investor Presentation May 2017
Safe Harbor & Forward Looking Statements This presentation contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements in this presentation include, but are not limited to, statements related to financial and operating guidance and expectations for our second quarter and full year 2017, momentum in our business strategies, expectations regarding our strategic partnership with National Grid, expectations regarding customers, cost reductions, project value, MW booked, MW deployed, product mix, proceeds raised on assets deployed and NPV as well as our ability to raise debt, tax equity, and cash equity and manage cash flow and liquidity, leverage our platform services and deliver on planned innovations and investments as well as expectations for our growth, the growth of the industry, macroeconomic trends and the legislative and regulatory environment of the industry. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. These forward-looking statements are subject to a number of risks, uncertainties and assumptions which could cause our results to differ materially and adversely from those expressed or implied including, but not limited to: the availability of additional financing on acceptable terms; changes in the retail prices of traditional utility generated electricity; 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; and such other risks and uncertainties identified in the reports that we file with the U.S. Securities and Exchange Commission, or SEC, from time to time. You should not rely on forward-looking statements as predictions of future events. All forward-looking statements in this presentation are based on information available to us as of the date hereof, and we assume no obligation to update publicly these forward-looking statements for any reason, except as required by law. 2
Sunrun Overview Who We Are Market Coverage Formed in 2007 and headquartered in San Francisco, CA, Sunrun pioneered the residential solar service product As of March 31, 2017, Sunrun has 951 MW of deployed systems and operates in 16 states and the District of Columbia Sunrun fuels its growth with capital raised through a combination of corporate debt and equity, tax equity, and senior project debt. As of May 8, 2017, the cumulative value of solar systems funded by tax equity reached $5.6 billion Compelling Value Proposition Sunrun / Partner Location Sunrun Solar Service Presence Sunrun Dealer Network / Lead Generation Presence $$$$ $$$ $$ $ Projected Electricity Bill Without Solar New Electricity Bill Sunrun Payment TODAY 10 YEARS 20 YEARS Illustrative Sunrun Customer Savings Value to customer Value to Sunrun Save 20% or more on electricity No upfront cost Maintenance and repairs included Agreement easily transferable 20+ year customer relationship Reliable, financeable cash flow streams Differentiated approach drives strong unit economics Note: Savings measured over initial 20 year contract term. 3
Actual neighborhood of Sunrun customer homes 4
It Takes a Great Brand to Get Invited Home to Meet the Family 5
Sunrun is led by seasoned professionals with extensive industry experience LYNN JURICH CEO & Co-Founder EDWARD FENSTER Executive Chairman & Co-Founder BOB KOMIN Chief Financial Officer MINA KIM General Counsel PAUL WINNOWSKI Chief Operating Officer
Sunrun s Addressable Market is Large and Growing, Supported By Powerful Macroeconomic Forces Residential system costs (1) Compelling customer value proposition and rapid adoption Costs have decreased by ~52% per watt since 2011 2011 2012 2013 2014 2015 2016 Residential utility rates (2) Retail rates have increased ~39% since 2004 2004 2006 2008 2010 2012 2014 2016 Notes: (1) Source: GTM Research. As of 9/30/2016. (2) Source: U.S. Energy Information Administration (EIA). As of 10/31/2016. 7
Market penetration remains low even with significantly increased industry growth Solar today has reached only a small portion of the market (1) <2% 2015 ~$175B 2020 ~$195B Projected market penetration (2) <5% Notes: (1) Current market penetration calculation uses 2015 American Community Survey data on owner occupied housing units and number of residential PV customers as reported by EIA Form 826. (2) Estimated 2020 market penetration assumes housing units remain flat at 2015 levels (Census data), GTM residential cumulative MW installation estimates, average system size of 6.5 kw. Electricity revenues estimated using kwh pricing and consumption data from EIA s 2020 U.S. Electricity Spend per EIA Annual Energy Outlook 2017 report to calculate total residential electricity revenue in 2020. 8
Differentiated approach, high-quality results: 134,000 customers strong Disciplined market selection Technology-enabled customer targeting High-Quality Customers Differentiated customer experience COMPETITIVE PRICING ATTRACTIVE UNIT ECONOMICS Notes: Customer count as of December 31, 2016. See our 2016 Annual Report on Form 10-K filed with the SEC on March 8, 2017 for further information. 9
Sunrun s platform optimizes direct capabilities and high-quality partnerships MODULE AND INVERTER PRODUCTION FULFILLMENT RACKING LEAD GENERATION SALES FINANCE INSTALLATION MONITORING & MAINTENANCE CUSTOMER RELATIONSHIP Outsourced Technology agnostic, capital efficient Efficient & widespread customer acquisition Maximizes reach & utilization Maximizes reach & utilization 10-year thirdparty warranties from build partners 10
Open platform enables us to offer our products to homeowners through three channels STRATEGIC PARTNERS SOLAR PARTNERS Capital efficient, broad reach SUNRUN DIRECT Investing for cost efficiencies in core markets National brands and retailers 11
Sunrun has delivered consistent growth Cumulative MW Deployed MW DC 1.2 GW 252 325 MW 73 282 MW 203 MW 129 MW 2013 2014 2015 2016 2017 Note: All figures presented as of end of relevant time period. 12
The market is growing and we are taking share U.S. Residential Solar Market MW DC Sunrun MW DC 10% 2,807 15% 325 19% 2,583 39% 282 2,173 203 2015 2016 2017E 2015 2016 2017E Source: GTM Q1 2017 Solar Market Insight.. 13
Fundamentals Remain Intact Massive & Growing Market Opportunity Regulatory Environment Remains Conducive for Growth Each Customer Represents Significant Value Winning Business Model $176 billion annual electric sales in the U.S. to residential customers Low penetration in the U.S., less than 2% of >60M singlefamily owner-occupied homes (>36% penetration in Hawaii and growth continues) As costs fall, market continues to expand Sunrun s costs have declined >20% since Q1 2015 due to scale efficiencies and hardware cost reductions Recent Validation: Residential solar industry growth continues, growing 19% in 2016 Source: Data from EIA, GTM, U.S. Census. Distributed Energy Resources are an efficient means to upgrade the US energy infrastructure Federal incentives have been protected through 2021 (and with commence construction) with bi-partisan support in December 2015 Recent Validation: Nevada s Sierra Pacific recently lifted a NEM cap, reversing a previous decision Regulators have adopted or expanded NEM over 150 times during the last three decades. NEM currently exists in 42 states and DC Recent survey shows 84% of Republicans support solar In 2016, Sunrun achieved a Project Value of $4.48 per watt with Creation Costs of $3.61 per watt, generating $0.87 per watt in unlevered NPV or $213 million in aggregate. BrightBox, our storage + solar solution, represents additional opportunity Recent Validation: National Grid's $100 million Cash Equity Investment represents a total advance rate of 95-100% on Contracted Project Value, which utilizes a 6% discount rate Credit performance has been strong, with 99% of cumulative billings collected, less than 1% defaults, 99.7% NPV recovery on system transfers Multi-channel approach best leverages national scale efficiencies and local insight, enabling capital-efficient growth and broad reach Durable barriers to entry driven by scale, brand and access to capital 10+ years operating history Conservative capital structure Recent Validation: Achieved 20% Net Income margins with annual revenue growth of ~50% CAGR over 2 years. Market share gains through 2016 14
Rooftop solar is one of the best opportunities we have to create a lower cost, more reliable modern infrastructure The U.S. is on a path to replace an estimated 70% of grid infrastructure that is nearing the end of its useful life. Utilities are spending billions of dollars to add capacity to our grid while our actual electricity demand is flat Rooftop solar is one of the best opportunities we have to create a lower cost, more reliable modern infrastructure, and to circumvent unnecessary utility expenditures Crossborder Energy conducted a study looked at solar s ability to replace the most expensive peak generation capacity and the cost of new transmission and distribution (T&D) capacity to serve new electricity demand Crossborder Energy s research suggests that solar homes can lower power rates for all consumers by reducing utility infrastructure costs. Case study in Arizona (the results are applicable across the country) A typical home solar system would save utilities $750 in future annual infrastructure costs. This is in addition to the benefits provided by the clean energy the system generates That value doubles, to $1,500 annually, for an average solar system equipped with storage Source: Crossborder Energy, Power to the Customer: Differentiating Rooftop and Utility-scale Solar, February 6, 2017. 15
High quality of our assets is recognized by the markets Performance Exceeds Expectations Customer Pay Their Bills Easy to Transfer Market Believes in Quality Total cumulative production has exceeded forecast production to date Cumulative solar electricity production approaching 1,400 GWh to date Sunrun s credit standards yield a high credit customer pool Cumulative lost billings rate since inception is less than 1.0% (1) In-house service transfer specialists successfully completed thousands of service transfers to date Service transfers achieve an average of 99% in total NPV recovery (2) First securitization in sector to achieve a single A rating Class A notes priced at 4.4%, competitive with commercial bank debt Production over-performance < 1% Cumulative loss rate on billings ~99% Service transfer recovery rate Rewarded with low cost of capital Note: All figures represent fleetwide statistics as of December 31, 2016. Losses include uncollected recurring billings 5 months after invoice date, write downs and appeasement credits. Based on analysis of completed service transfers for monthly customers; Recoveries >100% arise from prepayments. 16
Customer Credit Risk Sunrun customers are prime credit risks Sunrun Actual Loss Rate: <1% Prime Expected Loss Rate: ~1-2% Subprime Expected Loss Rate: ~15% 750 752 745 743 763 741 761 710 700 650 600 576 550 551 500 Sunrun Fannie Mae Freddie Mac First Republic USAA Ally Honda Santander Americredit Solar PPA & lease Prime Mortgage Issuers Prime Auto ABS Issuers Subprime Auto ABS Issuers Source: Form 10-Qs/10-Ks, 2016 ABS issuances. 17
Service Transfer Performance When customers move or their service is otherwise transferred to a new homeowner, Sunrun has maintained 99% of expected contract value 100.0% NPV Recovery 1 99.1% 100.5% 99.3% 99.1% 99.6% 100.2% 100.1% 100% 91.2% 80% Short Sale 2% Death 6% Divorce 2% Foreclosure 1% Bankruptcy 0% 60% 40% 20% Normal Sale 89% Transfer Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 Service Transfers 1 15 71 185 628 936 1,415 2,184 585 Recovery (%) (2) 100.00 91.20% 99.10% 100.50 99.30% 99.10% 99.60% 100.20 100.10 Note: Data as of March 31, 2016 for Sunrun host customer agreements with monthly payments only. The sum of the percentage columns and the balance columns may not equal 100.0% or the total, as applicable, due to rounding. Excludes new home transfers, transfers that occurred prior to PTO and prepaid contracts. Since inception, Sunrun has repossessed 43 systems. included bankruptcy, unsuccessful transfer and a customer self-removing the system. One repossessed system has been redeployed and the rest are located in installer warehouses awaiting redeployment. (1) Recovery percentage is equal to (i) remaining customer agreement cash flows after the service transfer discounted at 6%, divided by (ii) the sum of (a) remaining customer agreement cash flows before the service transfer discounted at 6% and (b) prepayments received in connection with the service transfer. 0% Transfer Reason Transfers NPV Recovery 1 Normal Sale 5,370 100.02% Death 329 99.50% Short Sale 137 95.30% Divorce 110 99.90% Foreclosure 66 82.90% Bankruptcy 8 63.60% Total 6,020 99.70% 18
Sunrun has raised tax equity to support $5.6 billion in solar systems Cumulative System Value Funded by Tax Equity Strong Long-Term Partnerships ($ in billions) $5.6 $4.0 $2.8 $1.9 $1.3 $0.0 $0.2 $0.4 $0.8 2008 2009 2010 2011 2012 2013 2014 2015 5/8/2017 As of May 8, 2017, the cumulative value of solar systems funded by tax equity reached $5.6 billion. 19
Our debt financing strategy minimizes risks while preserving upside opportunity We have financed long-term assets solely with non-recourse capital We use interest rate swaps to fix the risk-free rate (LIBOR) for the approximate initial term of the customer contracts, independent of any given credit facility Our swaps generally fix rates for ~18 years, even when credit facilities mature in 5-7 years We enjoy opportunity for substantial refinance proceeds after our tax equity funds flip Our existing bank loans are expected to represent less than 60% loan to contracted value when our tax equity funds flip down We have already demonstrated a 76% advance rate can be achieved with a BBB credit rating BBB is a strong credit rating; e.g., most U.S. utilities have BBB or BBB+ credit ratings Refinancing 1 GW from ~60% to ~76% LTV provides proceeds of ~$215 million We don t hedge credit spread We believe spreads will continue to improve over time Spreads have been declining as the asset class matures over time Because we can grant lenders first liens after paying back tax equity, we should likely enjoy tighter spreads in ~6 years. Back-leverage lenders lack such customary liens 20
Sunrun and National Grid, a Leading Global Utility, Formed A Multifaceted Strategic Partnership $100m Project Equity Investment Grid Services Pilot Joint Marketing Agreement National Grid will contribute $100 million in cash equity to a partnership to own ~200 MW of residential solar assets nationally. Proceeds from the investment are expected to add approximately $0.45 to $0.55 per watt to Sunrun s typical advance rates from tax equity, backleverage, and other upfront payments. Sunrun estimates it will receive total upfront proceeds of approximately 95% to 100% of contracted Project Value (i.e., consistent with the contracted Project Value calculated based on a 6% unlevered discount rate) for the assets financed through this transaction. Upside related to refinancings or stronger than expected asset performance will be shared between Sunrun and National Grid National Grid and Sunrun will work together to explore options for how distributed energy resources (DERs) might be aggregated and used to help keep the energy grid balanced and optimized on a nationwide basis. Currently, these services are typically provided by centralized generators but there is significant long-term opportunity for DERs. Agreement leverages both companies strong brands. Goal is to accelerate the adoption of rooftop solar in a cost-effective, highly scalable way. Program initially targets approximately 100,000 single family homes in downstate New York. Program could be expanded more broadly 21
Financial Overview and Q1 Highlights
Sunrun Gains Market Share and Generates Significant Value 73 MW Deployed 21% increase from Q1 2016 $56 Million NPV 145% increase from Q1 2016 $0.83 per watt in NPV $1.1 Billion in Net Earning Assets 35% increase from Q1 2016 $4.21 Project Value Per Watt Lower than prior year due to business mix $3.38 Creation Cost (1) Per Watt Lower than prior year due to declines in all categories and business mix 951 Cumulative MW Deployed 45% increase from Q1 2016 See Appendix for glossary of terms (1) The presentation of Creation Cost for periods prior to December 31, 2016 reflects changes made to the methodology further described in our Fourth Quarter 2016 earnings presentation available on our investor relations website. 23
Progress Against Key Priorities Make Residential Solar Mainstream Remain focused on disciplined growth continue to focus on NPV generation through selective growth and cost improvements Less than 2% of U.S. households have adopted solar thus far, but in Hawaii, where residential solar first made economic sense, adoption has surpassed 36% and growth is continuing Multi-Channel Model Provides Broad Reach & Strategic Benefits Leverage our national scale and local execution to deliver cost efficiencies and success in each market we operate in As the largest dedicated residential solar company with a national presence, Sunrun is the natural choice for big-box retailers and large consumer brands, which are effective acquisition channels and offer geographic expansion opportunities Innovate Brilliant Home Energy Leverage leading position to address all home energy needs, including BrightBox, our solar + storage offering and grid services to enhance value proposition to our customers and the grid at large BrightBox adoption trends surpass expectations and installations continue in California and Hawaii Our multi-pronged partnership with National Grid demonstrates that forward thinking utilities recognize the value distributed energy resources can bring to the country s energy infrastructure 24
Unlevered NPV was $0.83 per watt in Q1 70-75 % $4.21 $3.38 (1) Upfront Installation costs We expect to monetize, on a non-recourse basis, 70-75% of Project Value upfront before cash equity (2) PV 6% Renewal PV 6% (O&M costs) $0.63 Upfront S&M Upfront G&A PV 6% Customer payments Upfront (Platform Services Margin) Upfront State rebates & prepayments PV 6% Tax equity $3.58 $0.83 PV 6% (O&M costs) PV 6% Project value Creation cost Unlevered NPV See Appendix for glossary of terms. Note: Numbers may not sum due to rounding. (1) The presentation of Creation Cost for periods prior to December 31, 2016 reflect changes made to the methodology as further described in our Fourth Quarter 2016 earnings presentation available on our investor relations website. (2) We expect to monetize, on a non-recourse basis, 70-75% of Project Value upfront which would reflect approximately 82-88% of contracted Project Value in Q1. 25
NPV of $56M Up 145% Year- Over-Year Driven by volume growth and unit economic improvements $56m 145% $67M $23m $46M Q1 2016 Q1 2017 Presented by: Nikki Goetz October 11, 2016 Note: The presentation of Creation Cost for periods prior to December 31, 2016 reflects changes made to the methodology further described in our Fourth Quarter 2016 earnings presentation available on our investor relations website. Numbers may not total due to rounding. See Appendix for glossary of terms. 26
Costs Decline Year-Over-Year Sunrun Built Install Cost At $2.14 / Watt, a $0.22 decrease year-over-year TOTAL COST STACK $4.50 $4.00 $3.50 $3.00 $4.39 $4.31 $0.47 $0.42 $0.80 $0.91 $4.05 $0.35 $0.92 $3.72 $0.30 $0.72 $4.07 (1) $0.35 $0.86 $3.75 $0.33 $0.86 $3.36 $3.41 $3.38 $0.24 $0.28 $0.29 $0.64 $0.58 $0.51 SUNRUN BUILT INSTALL COST $2.50 $2.00 $2.36 $2.14 $1.50 $3.18 $3.07 $2.87 $2.81 $2.97 $2.80 $2.63 $2.71 $2.67 $1.00 $0.50 $0.00 ($0.50) ($0.06) ($0.09) ($0.08) ($0.11) ($0.12) ($0.24) ($0.15) ($0.16) ($0.09) Presented by: Nikki Goetz October 11, 2016 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q1 2016 Q1 2017 Install S&M G&A Platform Services Margin Note: The presentation of Creation Cost for periods prior to December 31, 2016 reflects changes made to the methodology further described in our Fourth Quarter 2016 earnings presentation available on our investor relations website. Numbers may not total due to rounding. (1) Q1 2016 figures are pro forma and exclude exit costs in Nevada. 27
Guidance Deployments of 72 MW in Q2 Reiterating guidance of 325 MWs in 2017 28
Net Earning Assets grew 35% Year-Over-Year ($ in millions) Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Gross Earning Assets, Contracted (1) $913 $992 $1,108 $1,200 $1,269 Gross Earning Assets, Renewal (1) $467 $507 $561 $609 $647 Total Gross Earning Assets (1) $1,380 $1,499 $1,669 $1,809 $1,916 Project Level Debt (1)(2) ($442) ($512) ($571) ($654) ($702) Lease Pass-Through Financing Obligation ($148) ($144) ($143) ($144) ($144) Net Earning Assets $791 $843 $954 $1,011 $1,070 Presented by: Nikki Goetz October 11, 2016 See Appendix for glossary of terms. Note: Numbers may not sum due to rounding (1) Gross Earning Assets excludes the pro-rata share of forecasted unlevered cash flows attributable to cash equity financing partners, allocated based on the estimated pro-rata split of cash flows. Because estimated cash distributions to our cash equity financing partners are deducted from Gross Earning Assets, so is a proportional share of the corresponding project level debt from Net Earning Assets. (2) Project Level Debt is presented net of substantially all debt issuance costs to conform with the adoption of a new accounting standard. 29
Significant Renewal Value Potential In addition to presenting the portion of Project Value represented by the renewal period, we also provide an estimate of total post-contract value from the Operating Portfolio (i.e., cumulative systems deployed) based on Real PPA rates and years of renewals as an alternative method to estimate the value of assets after the initial contract period ends. Deployed portfolio as of 3/31/17, $ of NPV in millions, using a 6% discount rate Years of Renewal Obtained After Initial Contract Ends 1 years 2 years 3 years 4 years 5 years 6 years 7 years 8 years 9 years 10 years $ 0.04 $ 13 $ 23 $ 31 $ 36 $ 43 $ 52 $ 63 $ 74 $ 85 $ 95 $ 0.06 $ 25 $ 46 $ 64 $ 79 $ 96 $ 115 $ 135 $ 155 $ 174 $ 192 Real $ 0.08 $ 37 $ 69 $ 97 $ 122 $ 149 $ 177 $ 207 $ 236 $ 264 $ 290 PPA Rate at $ 0.10 $ 48 $ 91 $ 130 $ 166 $ 202 $ 240 $ 279 $ 317 $ 353 $ 388 Renewal 1 $ 0.12 $ 60 $ 114 $ 163 $ 209 $ 255 $ 302 $ 351 $ 398 $ 443 $ 486 ($/kwh) $ 0.14 $ 72 $ 136 $ 196 $ 252 $ 308 $ 365 $ 423 $ 479 $ 532 $ 584 $ 0.16 $ 83 $ 159 $ 229 $ 295 $ 360 $ 428 $ 495 $ 560 $ 622 $ 681 $ 0.18 $ 95 $ 182 $ 263 $ 338 $ 413 $ 490 $ 567 $ 640 $ 711 $ 779 $ 0.20 $ 107 $ 204 $ 296 $ 382 $ 466 $ 553 $ 639 $ 721 $ 801 $ 877 Presented by: Nikki Goetz October 11, 2016 (1) 2.5% inflation assumed See Appendix for glossary of terms. Note: Additional sensitivities are provided in the appendix. 30
Appendix
Operating Metrics Summary For a description of how the below metrics are calculated, see (i) our 2016 Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on March 8, 2017, (ii) the quarterly earnings releases and presentation materials for each applicable period available on our investor relations website and (iii) the accompanying notes therein. Operating Metrics 1Q15 2Q15 3Q15 4Q15 FY2015 1Q16 2Q16 3Q16 4Q16 FY2016 1Q17 MW Booked (1) 34.3 46.2 65.7 82.3 228.5 61.7 68.7 82.8 71.9 285.1 73.5 q/q growth 35% 42% 25% (25)% 11% 21% (13)% 2% y/y growth 80% 49% 26% (13)% 25% 19% MW Deployed 36.6 42.4 55.7 68.1 202.9 59.9 65.2 79.9 77.2 282.0 72.8 q/q growth 16% 31% 22% (12)% 9% 22% (3)% (6)% y/y growth 63% 54% 43% 13% 39% 21% Cumulative MW Deployed 430.1 472.5 528.2 596.0 596.0 656.0 721.0 801.0 878.5 878.5 951.3 q/q growth 10% 12% 13% 10% 10% 11% 10% 8% y/y growth 53% 53% 52% 47% 47% 45% Leased MW Deployed 35.3 40.4 52.1 58.3 186.2 51.7 54.9 71.6 67.3 245.5 67.4 q/q growth 15% 29% 12% (11)% 6% 30% (6)% 0% y/y growth 46% 36% 37% 15% 32% 30% Leased MWs as % of total MW Deployed 96% 95% 94% 86% 92% 86% 84% 90% 87% 87% 93% Cumulative Leased MW Deployed 384.7 425.1 477.2 535.6 535.6 587.2 642.1 713.7 781.0 781.0 848.4 q/q growth 11% 12% 12% 10% 9% 11% 9% 9% y/y growth 53% 51% 50% 46% 46% 44% Project Value (per watt) $ 5.02 $ 5.00 $ 4.70 $ 4.50 $ 4.76 $ 4.51 $ 4.61 $ 4.43 $ 4.41 $ 4.48 $ 4.21 Contracted 4.45 4.43 4.18 4.01 4.19 3.99 4.03 3.84 3.80 3.90 3.58 Renewal 0.57 0.57 0.52 0.49 0.57 0.52 0.58 0.59 0.60 0.58 0.63 Creation Cost (per watt) (2) $ 4.39 $ 4.31 $ 4.05 $ 3.72 $ 4.06 $ 4.07 $ 3.75 $ 3.36 $ 3.41 $ 3.61 $ 3.38 Installation 3.18 3.07 2.87 2.81 2.95 2.97 2.80 2.63 2.71 2.76 2.67 Sales & Marketing (expensed & capitalized) 0.80 0.91 0.92 0.72 0.83 0.86 0.86 0.64 0.58 0.72 0.51 General & Administrative 0.47 0.42 0.35 0.30 0.37 0.35 0.33 0.24 0.28 0.29 0.29 (-) Platform services margin (0.06) (0.09) (0.08) (0.11) (0.09) (0.12) (0.24) (0.15) (0.16) (0.17) (0.09) Sunrun Built Install Cost (per watt) $ 2.35 $ 2.33 $ 2.36 $ 2.27 $ 2.01 $ 2.04 $ 2.21 $ 2.14 Unlevered NPV (per watt) $ 0.63 $ 0.69 $ 0.65 $ 0.78 $ 0.70 $ 0.44 $ 0.86 $ 1.07 $ 1.00 $ 0.87 $ 0.83 NPV created ($ in millions) $ 22 $ 28 $ 34 $ 46 $ 130 $ 23 $ 47 $ 76 $ 67 $ 213 $ 56 y/y growth 3% 70% 126% 47% 64% 145% Gross Earning Assets ($ in millions) Gross Earning Assets, contracted $ 842 $ 842 $ 913 $ 992 $ 1,108 $ 1,200 $ 1,200 $ 1,269 Gross Earning Assets, renewal 432 432 467 507 561 609 609 647 Total Gross Earning Assets $ 881 $ 962 $ 1,078 $ 1,274 $ 1,274 $ 1,380 $ 1,499 $ 1,669 $ 1,809 $ 1,809 $ 1,916 q/q growth 9% 12% 18% 8% 9% 11% 8% 6% y/y growth 57% 56% 55% 42% 42% 39% Project Level Debt (191) (198) (336) (338) (338) (442) (512) (571) (654) (654) (702) Lease Pass-Through Financing Obligation (196) (207) (127) (157) (157) (148) (144) (143) (144) (144) (144) Net Earning Assets ($ in millions) $ 494 $ 558 $ 615 $ 779 $ 779 $ 791 $ 843 $ 954 $ 1,011 $ 1,011 $ 1,070 q/q growth 13% 10% 27% 2% 7% 13% 6% 6% y/y growth 60% 51% 55% 30% 30% 35% (1) The presentation of MW Booked for periods prior to December 31, 2016 reflects changes made to the methodology further described in our 2016 Annual Report on Form 10-K filed with the SEC on March 8, 2017 and quarterly earning presentations available on our investor relations website. (2) The presentation of Creation Cost for periods prior to December 31, 2016 reflects changes made to the methodology further described in our Fourth Quarter 2016 earnings presentation available on our investor relations website. 32
Gross Earning Assets - Sensitivities $ in millions, as of March 31, 2017 Gross Earning Assets Under Energy Contract Discount rate Default rate 4% 5% 6% 7% 8% 5% $ 1,461 $ 1,341 $ 1,235 $ 1,141 $ 1,057 0% $ 1,503 $ 1,379 $ 1,269 $ 1,172 $ 1,085 Gross Earning Assets Value of Purchase or Renewal Discount rate Purchase or Renewal rate 4% 5% 6% 7% 8% 80% $ 860 $ 695 $ 564 $ 459 $ 374 90% $ 987 $ 798 $ 647 $ 526 $ 429 100% $ 1,113 $ 900 $ 729 $ 593 $ 484 Total Gross Earning Assets Discount rate Purchase or Renewal rate 4% 5% 6% 7% 8% 80% $ 2,363 $ 2,074 $ 1,833 $ 1,630 $ 1,459 90% $ 2,489 $ 2,176 $ 1,916 $ 1,698 $ 1,514 100% $ 2,616 $ 2,278 $ 1,998 $ 1,765 $ 1,569 Note: See Appendix for glossary of terms. 33
Additional Renewal Value Sensitivities Renewal Value of Operating Portfolio as of 3/31/17 using Real PPA Rates (1) & Years of Renewal Total Renewal Value of Operating Portfolio - 5 % discount rate Deployed portfolio as of 3/31/17, $ of NPV in millions, using a 5% discount rate Years of Renewal Obtained After Initial Contract Ends 1 years 2 years 3 years 4 years 5 years 6 years 7 years 8 years 9 years 10 years $ 0.04 $ 15 $ 28 $ 37 $ 43 $ 52 $ 63 $ 77 $ 91 $ 104 $ 117 $ 0.06 $ 29 $ 54 $ 76 $ 95 $ 115 $ 138 $ 164 $ 189 $ 214 $ 237 Real $ 0.08 $ 43 $ 81 $ 115 $ 146 $ 179 $ 214 $ 251 $ 288 $ 323 $ 357 PPA Rate at $ 0.10 $ 57 $ 108 $ 155 $ 198 $ 242 $ 290 $ 339 $ 386 $ 433 $ 477 Renewal 1 $ 0.12 $ 71 $ 135 $ 194 $ 250 $ 306 $ 365 $ 426 $ 485 $ 542 $ 597 ($/kwh) $ 0.14 $ 85 $ 162 $ 234 $ 301 $ 369 $ 441 $ 513 $ 583 $ 652 $ 718 $ 0.16 $ 99 $ 189 $ 273 $ 353 $ 433 $ 516 $ 600 $ 682 $ 761 $ 838 $ 0.18 $ 112 $ 215 $ 313 $ 405 $ 497 $ 592 $ 688 $ 780 $ 871 $ 958 $ 0.20 $ 126 $ 242 $ 352 $ 456 $ 560 $ 667 $ 775 $ 879 $ 980 $ 1,078 Total Renewal Value of Operating Portfolio - 6 % discount rate Deployed portfolio as of 3/31/17, $ of NPV in millions, using a 6% discount rate (1) 2.5% inflation assumed Years of Renewal Obtained After Initial Contract Ends 1 years 2 years 3 years 4 years 5 years 6 years 7 years 8 years 9 years 10 years $ 0.04 $ 13 $ 23 $ 31 $ 36 $ 43 $ 52 $ 63 $ 74 $ 85 $ 95 $ 0.06 $ 25 $ 46 $ 64 $ 79 $ 96 $ 115 $ 135 $ 155 $ 174 $ 192 Real $ 0.08 $ 37 $ 69 $ 97 $ 122 $ 149 $ 177 $ 207 $ 236 $ 264 $ 290 PPA Rate at $ 0.10 $ 48 $ 91 $ 130 $ 166 $ 202 $ 240 $ 279 $ 317 $ 353 $ 388 Renewal 1 $ 0.12 $ 60 $ 114 $ 163 $ 209 $ 255 $ 302 $ 351 $ 398 $ 443 $ 486 ($/kwh) $ 0.14 $ 72 $ 136 $ 196 $ 252 $ 308 $ 365 $ 423 $ 479 $ 532 $ 584 $ 0.16 $ 83 $ 159 $ 229 $ 295 $ 360 $ 428 $ 495 $ 560 $ 622 $ 681 $ 0.18 $ 95 $ 182 $ 263 $ 338 $ 413 $ 490 $ 567 $ 640 $ 711 $ 779 $ 0.20 $ 107 $ 204 $ 296 $ 382 $ 466 $ 553 $ 639 $ 721 $ 801 $ 877 Total Renewal Value of Operating Portfolio - 7 % discount rate Deployed portfolio as of 3/31/17, $ of NPV in millions, using a 7% discount rate Years of Renewal Obtained After Initial Contract Ends 1 years 2 years 3 years 4 years 5 years 6 years 7 years 8 years 9 years 10 years $ 0.04 $ 11 $ 20 $ 26 $ 30 $ 36 $ 43 $ 52 $ 61 $ 69 $ 77 $ 0.06 $ 21 $ 39 $ 54 $ 66 $ 80 $ 95 $ 112 $ 128 $ 143 $ 157 Real $ 0.08 $ 31 $ 58 $ 82 $ 103 $ 124 $ 147 $ 171 $ 194 $ 216 $ 236 PPA Rate at $ 0.10 $ 41 $ 77 $ 109 $ 139 $ 168 $ 199 $ 231 $ 261 $ 289 $ 316 Renewal 1 $ 0.12 $ 51 $ 96 $ 137 $ 175 $ 212 $ 251 $ 290 $ 327 $ 363 $ 396 ($/kwh) $ 0.14 $ 61 $ 115 $ 165 $ 211 $ 257 $ 303 $ 350 $ 394 $ 436 $ 476 $ 0.16 $ 71 $ 134 $ 193 $ 247 $ 301 $ 355 $ 409 $ 460 $ 509 $ 556 $ 0.18 $ 81 $ 154 $ 221 $ 283 $ 345 $ 407 $ 468 $ 527 $ 583 $ 636 $ 0.20 $ 91 $ 173 $ 249 $ 320 $ 389 $ 459 $ 528 $ 593 $ 656 $ 715 As an alternative presentation to estimate the potential value of Sunrun s currently deployed assets, we estimate the NPV of future cash flows under various scenarios, sensitizing the number of years of renewal obtained after the initial contract ends along with the PPA rates obtained in real terms and with various discount rates. 34
Glossary 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 residential homeowners (i) who have executed a Customer Agreement or cash sales agreement 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 the net cash flows (discounted at 6%) we expect to receive during the initial 20-year term of our Customer Agreements 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 system purchase at the end of the initial term. Gross Earning Assets excludes 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 cash equity financing providers. In calculating Gross Earning Assets, we do not deduct customer payments we are obligated to pass through to investors in lease pass-throughs as these amounts are reflected on our balance sheet as long-term and short-term lease pass-through obligations, similar to the way that debt obligations are presented. In determining our finance strategy, we use lease pass-throughs and long-term debt in an equivalent fashion as the schedule of payments of distributions to lease pass-through 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. Gross Earning Assets Under Energy Contract represents the net cash flows during the initial (typically 20 year) 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. MW Booked represents the aggregate megawatt production capacity of our solar energy systems, whether sold directly to customers or subject to an executed Customer Agreement, for which we have confirmation that the systems have reached NTP, net of cancellations. MW Deployed represents the aggregate megawatt production capacity of our solar energy systems, whether sold directly to customers or subject to executed Customer Agreements, for which we have (i) confirmation that the systems are installed on the roof, subject to final inspection or (ii) in the case of certain system installations by our partners, accrued at least 80% of the expected project cost. Net Earning Assets represents Gross Earning Assets less both project level debt and Lease Pass-Through Financing Obligation, as of the same measurement date. Because estimated cash distributions to our cash 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. Proceeds equals the sum of proceeds from non-recourse debt, proceeds from lease pass-through financing obligations, contributions received from redeemable and nonredeemable noncontrolling interests, proceeds from state tax credits, and estimated customer upfront payments and utility rebates. Estimated customer upfront payments and utility rebates is estimated by averaging the beginning period deferred revenue (current portion) and end period deferred revenue (current portion) divided by the portion of the year being analyzed. 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. 35