Hannah Velásquez

Hannah Velásquez from Jefferies inquired about the market's reaction to the 25D tax credit expiration, specifically regarding any pull-forward effects and the viability of new financing options like the prepaid lease plus loan bundle as a replacement. She also asked about the competitive landscape, including new Third-Party Ownership (TPO) entrants and Tesla's impact, and sought SUNation's outlook on 2026 market growth given consultant predictions of a decline, along with an update on FIAC developments.

Answer

CEO Scott Maskin confirmed a significant pull-forward effect due to the 25D tax credit expiration, particularly in high-cost markets like New York and Hawaii, leading to intense installation efforts. He expressed confidence in the viability of evolving new financing tools, such as prepaid lease plus loan bundles, to mitigate the impact, despite initial delays in tax guidance. Maskin also acknowledged Tesla's potential to disrupt the market due to its strong balance sheet and discussed the cyclical nature of financial players, driven by capital and tax equity. He emphasized that rising energy costs consistently make solar more appealing and argued against broad market decline predictions, highlighting the hyper-regional nature of solar markets and potential growth in states with high energy costs. CFO James Brennan added that new tools like prepaid leases and synthetic cash are emerging, and noted that high power costs in potential acquisition markets could drive revenue growth in 2026, even without the federal ITC. Brennan also stated that 2026 guidance is not yet available but anticipates a lower-than-normal Q1, though early January bookings in New York were surprisingly strong, expecting the typical Q1/Q2 low and Q3/Q4 high seasonal cycle to continue.

Hannah Velásquez with Jefferies inquired about the impact of the 25D tax credit expiration, including any pull-forward effects, and the potential viability of new financing models like the prepaid lease plus loan bundle as a replacement. She also asked about competitive dynamics, specifically new entrants in the TPO market and Tesla's role, and sought insights on projected market growth for 2026 and the latest developments regarding FEOC.

Answer

CEO Scott Maskin and CFO James Brennan explained that the 25D sunset significantly impacted high-cost markets, driving a strong pull-forward effect with teams working extended hours. They anticipate new financing tools will evolve to fill the gap, though their tax implications are still being finalized. Maskin noted the cyclical nature of financial players in the solar industry, emphasizing that capital availability and rising energy costs are key drivers. Brennan highlighted SUNation's revenue diversification as a critical strength for navigating market transitions and mentioned that while 2026 Q1 might be lower, the company is already seeing strong bookings. Both executives acknowledged the uncertainty around FEOC guidance but expressed confidence in SUNation's ability to adapt and secure equipment, emphasizing the hyper-regional nature of market growth influenced by state policies and energy demand from sectors like AI and data centers.

Hannah Velásquez of Jefferies followed up on the battery safe harbor timeline for projects through 2029, asking if any hesitation was due to pending Treasury guidance, and requested an update on the 250 MW of PPA negotiations for data centers.

Answer

CFO Assi Ginzburg clarified that they do not anticipate issues with safe-harboring additional storage projects this year, as the decision is based on project readiness and interconnection visibility, not pending guidance. CEO Doron Blachar added that the data center PPA negotiations are ongoing for projects using existing technology and he hopes to announce signed contracts in the coming months.

Hannah Velásquez from Jefferies sought clarification on the safe harbor timeline and asked about the company's confidence that new Treasury guidance would not be retroactive. She also asked for the assumptions behind the 10 GWh battery deployment target for 2029.

Answer

CEO Mary Powell stated that based on D.C. conversations, the likelihood of retroactive guidance is 'extremely low.' President & CRO Paul Dickson explained the 10 GWh target is achievable with their current high storage attachment rate and is economically attractive for Sunrun independent of future grid service program expansion.

Hannah Velásquez of Jefferies inquired about the timeline for Clearway's wind repowering opportunities, asking if projects were pulled forward from 2029-2030, and questioned if the Tuolumne acquisition was factored into the updated 2025 CAFD guidance.

Answer

CEO Craig Cornelius clarified that the repowering opportunity pipeline has actually grown and is proceeding on its original schedule, not pulled forward. He also confirmed that the financial contribution from the Tuolumne project was already included in the high end of the initial 2025 guidance range.

Hannah Velásquez of Jefferies questioned the wind repowering opportunity, noting a perceived decrease in the 2029-2030 pipeline on slide nine, and asked if the updated 2025 CAFD guidance included contributions from the recently closed Tuolumne acquisition.

Answer

CEO Craig Cornelius clarified that the repowering opportunity is actually larger than in the prior quarter and is advancing on schedule. He also confirmed that the contribution from the Tuolumne project was already embedded in the high end of the original 2025 guidance range, as the deal was signed before the initial guidance was issued.

Hannah Velásquez, on behalf of Julien Dumoulin-Smith from Jefferies Financial Group Inc., asked for clarification on the timing of the projected $200 million working capital usage and when the company expects to return to positive free cash flow. She also questioned if the $700 million revenue deferral includes a buffer for potential future tariff issues.

Answer

CFO Ahmed Pasha clarified that the working capital usage is primarily for fiscal 2025 to support inventory and Q4 revenue delivery, with cash from those sales expected in Q1 2026. He stated that the company aims to be free cash flow positive next year. CEO Julian Nebreda and CFO Ahmed Pasha confirmed the $700 million figure is based on current visibility and is not cushioned for further downside, expressing confidence in the revised guidance because the required equipment is already in the U.S., de-risking the forecast.