In Wood Mackenzie’s solar installer Leaderboard, Freedom Forever overtakes Tesla in the top three spot for the first time.
US residential solar grew nearly 30% year-on-year and reached a record-breaking 4.2GW of new installations in 2021. This is a significant accomplishment considering the challenges faced last year including volatile supply chains, rising system prices, labor shortages, policy uncertainty, and more.
Wood Mackenzie reports that Freedom Forever, a California-based solar installer, secured nearly 4% of the US residential solar market share last year, overtaking Tesla in the top three spot for the first time.
For the fifth consecutive year, Sunrun holds onto its number one top residential installer position, with 13% of the total market. However, Sunrun’s market share declined–down nearly a point since the previous year. Sunrun’s direct and indirect installation volumes continued to grow, but COVID was to blame for flat Q4 volumes due to labor shortages.
“While Sunrun still maintains a comfortable lead, the rising pressure on the company’s growth rate is a testament to the unyielding momentum of other top players,” said Wood Mackenzie research associate Caitlin Connelly. “An example is Freedom Forever, who made the most notable shift in rankings as it secured 3.9% of the total US residential solar market and squeezed Tesla out of a top three spot for the first time. ”
Freedom Forever’s installation volumes grew a massive 80% in 2021, and the company entered 12 new state markets. Simultaneously, Tesla has become increasingly dependent on subcontractors for solar installations as the company shifts its business model more towards that of a full-suite technology supplier. Given these two factors, we expect to see Tesla continue to decline in the installer rankings over the next several quarters.
If Freedom Forever maintains its momentum, it could edge Titan Solar Power out of its number two position (4.8% market share) going into 2022. Titan grew installation volumes and market share in 2021, but its growth was smaller compared to previous years. Both Freedom Forever and Titan are large regional installers with expansive networks, and they have similar business models that rely solely on third-party sales. Their operations overlap in 15 state markets. Sunrun also has a similar model of outsourcing sales to third-party companies, which is a popular tactic for top installers looking to create efficiencies as they expand their geographic footprints.
Interestingly, early in 2021 Freedom Forever selected Sunrun as its primary solar-plus-storage as-a-service provider for the next three years. The company planned to leverage Sunrun’s home solar and battery service offering, as well as its favorably branding among consumers.
Together, Sunrun, Titan Solar Power, and Freedom Forever command over 20% of the US solar residential market, and the competition among the rest is intensifying. In October 2021 SunPower acquired residential solar provider Blue Raven Solar, a move intended to help SunPower expand in the Northwest and Mid-Atlantic regions. With this acquisition, SunPower now holds 2.7% of the market. Momentum has 2.2% in the number 6 spot, and Trinity Solar is number 7 with a 2% share.
“The acquisition of Blue Raven strengthens SunPower’s direct installation business, expanding their geographic footprint for direct installs from eight to 19 states. SunPower has noted that direct installs are central to expanding service options and revenue streams,” Connelly said.
Residential finance
The top five in the residential finance market accounted for 70% of the financing of the residential market in 2021, up from 60% the previous year. This market is consolidating, which drives up competition and drives down interest rates and dealer fees.
Top financier position again goes to GoodLeap with 26% of the total market. Sunrun leads the third-party owned (TPO) market, capturing 15%. While TPO capacity volumes grew in 2021, loan volumes continue to dominate new growth and now represent over 60% of the market. Wood Mackenzie analysts expect this trend to become the norm over the next couple of years before the investment tax credit expires for customer-owned systems in 2023.
Commercial solar
The US commercial solar market continues to consolidate for both development and asset ownership. Borrego leads the pack with 10% of total market share for the second year in a row.
The top 75 national installers accounted for over 60% of the market for the first time since 2013, when Leaderboard data begins. The top asset owners now command almost 40% of the annual market, up from 32% last year. While commercial solar remains a difficult business to scale, many top developers and asset owners have grown their businesses faster through this route, according to WoodMac.
