Sunrun, the largest home solar and storage installer in the U.S., delivered a third record quarter to round out 2018.

The company installed 115 megawatts in Q4, according to earnings numbers released Thursday. That deployment follows two consecutive record quarters: 100 megawatts in Q3 and 91 megawatts in Q2. The latest deployments achieved 35 percent year-over-year growth from 85 megawatts in Q4 2017.

The repeated growth solidified Sunrun's lead as the top rooftop solar installer after market leader SolarCity shrank activities following its acquisition by Tesla. Tesla only deployed 73 megawatts of solar in Q4, counting both homes and commercial installations. 

In recent months, Sunrun has established footholds beyond the standalone solar market. CEO Lynn Jurich confirmed to GTM that BrightBox solar-plus-storage installations met the 2018 target of "nearly 5,000," and have since surpassed it.

The guidance for 2019 is to grow BrightBox deployments in the triple digits year-over-year, she said. Growing the installed base of batteries, which can store solar power and dispatch it on command, will be crucial for Sunrun's strategy of expanding into grid services. 

The company reached an early milestone in that effort when it won a 20-megawatt bid in the ISO New England forward capacity market this month. Now Sunrun must deliver 5,000 homes in that region by 2022.

"The market leadership position we’ve been enjoying brings a lot of advantages," like referrals from customers and partnerships with large retailers, Jurich said. "We’re excited by our scale now, because we can really bring meaningful value to the energy system."

Just a few years ago, turmoil in the home solar space led many observers to doubt the viability of national installer models. Sungevity went bankrupt, NRG left residential solar, SolarCity sold itself. Sunrun, however, continues to expand its customer base while leaning almost exclusively on the leased model, where it owns the assets, even as the overall market shifts toward cash and loan deals.

"Sunrun's earnings show that it is possible for a large national installer to still grow, and to do so with the third-party-owned model," said Allison Mond, a senior analyst tracking rooftop solar at Wood Mackenzie Power & Renewables. 

RUN stock price has trended up since a dip in January. It closed above $15.50 on Thursday, before earnings were announced.

Big-box sales channel

Jurich hinted in a previous interview that the company was reaching out to big-box retailers, and that outreach paid off this week. Sunrun revealed a partnership expansion with Home Depot to put its solar and storage product in stores across 15 states.

Under these sorts of partnerships, solar companies get a shot at wooing customers shopping for home improvements. The opportunity doesn't come free: The solar company has to pay the big-box store for customers acquired there.

"It's an expensive way to acquire a customer, but it definitely works," Mond said.

SolarCity got a lot of customers that way, she noted, before Tesla pulled out of the partnership last summer to focus on sales online and in its own retail stores. The company announced Thursday it would take that strategy a step further, closing down many of its stores. Meanwhile, Sunrun's Home Depot investment adds to its existing retailer sales strategy; the company also acquires customers through selling in Costco stores nationwide. 

Despite the costs, Jurich called the Home Depot expansion an "attractive acquisition channel," and said it will become a meaningful contributor to overall sales.

Sunrun is guiding to increase net present value margins, which measure the long-term worth of an installation, to above $1.10 per watt in 2019. One way to get there is spending less on customer acquisition than previously.

15 percent annual growth

As of the previous earnings call, Sunrun's total 2018 deployments were on track to deliver 15 percent growth over 2017, and they hit that guidance, clocking in at 373 megawatts. The company expects 16 to 18 percent growth for 2019 deployments.

Cumulatively, the company has installed 1,575 megawatts, up from 1,460 megawatts last quarter. That portfolio amounts to $1.4 billion in net earning assets.

The average customer installation creates $9,600 in net present value as of Q4. Layering on the capacity revenue from the ISO New England deal, assuming Sunrun keeps winning those contracts after the first one expires, can add more than $2,000 to that NPV, Jurich said.

"As these energy services opportunities come up, that will benefit the larger parties that have this scale and density, and will further differentiate the companies that are owners and operators of the energy assets and can come in and provide meaningful capacity to the market."

Sunrun appears best positioned to take advantage of those opportunities, given its scale of battery deployment and high rate of ownership of the systems it installs. Of 2018 systems installed, 86 percent were leased to customers.

Sunrun ended the quarter with $304 million in cash and restricted cash on its balance sheet, compared to $275 million last quarter.

Q4 produced a net loss per share of $0.05, but the year as a whole delivered earnings per share of $0.23.

Cash flow offers a better indication of the company's financial performance than EPS, Jurich said, because Sunrun incurs costs upfront to install assets that will pay out over the coming decades. Sunrun exceeded guidance on that metric, delivering $63 million in cash for 2018. It expects to grow that to over $100 million in 2019.