• Francie Finn Sunrun

About Sunrun Founder; Lynn Jurich

Updated: Apr 24, 2019

Lynn Jurich, Sunrun’s CEO since 2015, is a mother of two young children and a regular on 40-under-40 and most-powerful-women-in-business lists. Harvard recruited her to play volleyball and basketball. She chose Stanford instead, and after graduation took a job in private equity that required cold-calling CEOs, because she knew it would make her uncomfortable. A few years later, while at Stanford Graduate School of Business, she met fellow student Ed Fenster, who’d also been in private equity, at Blackstone Group LP, and his friend Nat Kreamer, a U.S. Navy officer who was fresh off a tour of duty in Afghanistan. The three began diving into the challenge of making solar more accessible. Fundamentally it was a math problem—“a business-model challenge and a financing challenge,” Jurich told me when we sat down at Sunrun’s San Francisco headquarters in December. She, Fenster, and Kreamer founded Sunrun in 2007.

A company called SunEdison had used the TPO model for years on commercial-scale projects, and SolarCity Corp. had beaten Sunrun to the residential market, launching in 2006 with $10 million from Elon Musk, cousin of the two brothers who founded it. For years after its founding, Sunrun watched as competitors spent wildly to gain market share and new companies crowded the field.

The structure of tax incentives in the U.S. also helps explain why it’s the only country where the TPO model has thrived. Homeowners elsewhere buy solar panel outright, and for much cheaper; Americans pay twice as much as their global peers. Australia and other countries offer substantial upfront subsidies or rebates—at one point, the Australian subsidies covered some 80 percent of the cost of a typical system. (They now cover about a third of the cost, which is falling.) In the U.S., by contrast, homeowners who buy systems outright can’t claim the credits until the next time they file their taxes, and then only if they owe the government at least as much as the value of the credit. (Currently the credit can be spread over multiple years.) That and other factors play to the strengths of Sunrun.

Sunrun finances its initial costs by taking on debt and raising capital from what are called tax equity investors. Only a few dozen companies have the appetite for tax credits and financial sophistication to be in this pool, including Google, JPMorgan Chase, and General Electric, says Joe Osha, an analyst who covers energy technology at JMP Securities LLC. They invest in Sunrun not to generate significant cash returns but to reap tax benefits: By assuming ownership of thousands of solar systems they can claim the credits and thus lower their tax bills from other economic activities. Hugh Bromley, a solar analyst at BloombergNEF, says Sunrun and its competitors offer solar, sure, but can be better understood as having created “one of the most sophisticated financial engineering industries of any sector of the U.S. economy.”