Download 140.1 Kb.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REPORT PURSUANT TO SECTION 15G OF
THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box to indicate the filing obligation to which this form is intended to satisfy:
Name and telephone number, including area code, of the person
to contact in connection with this filing
Indicate by check mark whether the securitizer has no activity to report for the initial period pursuant to Rule 15Ga-1(c)(1) ¨
Indicate by check mark whether the securitizer has no activity to report for the quarterly period pursuant to Rule 15Ga-1(c)(2)(i) ¨
Indicate by check mark whether the securitizer has no activity to report for the annual period pursuant to Rule 15Ga-1(c)(2)(ii) ¨
Central Index Key Number of depositor: 0001469367
Sunrun Callisto Issuer 2015-1, LLC
(Exact name of issuing entity as specified in its charter)
Central Index Key Number of issuing entity (if applicable): 0001645215
Central Index Key Number of underwriter (if applicable): Not applicable
Mina Kim, (415) 580-6900
Name and telephone number, including area code, of the person
to contact in connection with this filing
Explanatory Note: For purposes of the furnishing of this Form ABS-15G, the Depositors signing below do not have Central Index Key Numbers. The Central Index Key Number listed above of the depositor is the Central Index Key Number of the sponsor, Sunrun Inc.
INFORMATION TO BE INCLUDED IN THE REPORT
FINDINGS AND CONCLUSIONS OF THIRD-PARTY DUE DILIGENCE REPORTS
Item 2.01 Findings and Conclusions of a Third Party Due Diligence Report Obtained by the Issuer
In total, 47 distinct EPC partners have been used to sell and build the Portfolio’s PV systems. However, the largest three contributors, Verengo, Sungevity, and Sunrun (formerly REC Solar) combine for 65% of the installations and the top 10 contributors combine for 90% of the installations. The Sponsor’s network of EPC partners is somewhat more concentrated than that of several of its competitors, which DNV GL considers potentially advantageous in terms of relationship management for quality assurance purposes and for ongoing warranty support.
The Sponsor’s EPC network has undergone some natural turnover as businesses enter and exit the residential solar market, Sunrun’s platform, and/or are acquired. Several EPC partners contributing to the Portfolio—most notably Verengo, PetersenDean, and Roof Diagnostics—are no longer financing their new PV systems via the Sponsor’s platform. Despite such turnover, the rate of warranty support has been very high to date.
The Portfolio contains PV modules and inverters from various suppliers which were approved by the Sponsor at the time each system was purchased from its respective EPC partner. The procurement of the equipment used in the PV systems (aside from monitoring systems) is done by the Sponsor’s EPC partners.
All PV modules in the Portfolio use crystalline silicon (cSi) technology. By far, this is the most widely deployed and mature technology in the PV industry. Most module suppliers offer a 10-year workmanship warranty and a 97% performance guarantee (degrading at 0.7% per year). Due to the potential difficulty in processing performance-related warranty claims, DNV GL places greater emphasis on ‘out of the box’ quality, such as module design, reliability-related testing and design qualification certificates, manufacturing QA/QC and/or batch testing, and field performance track record. While the solar industry currently lacks a standardized approach for ongoing module QA/QC and reliability testing, historical PV module performance in the U.S. residential solar industry has been relatively strong through about five years to date, with few known warranty recalls occurring in residential solar.
All string level inverters are covered by a minimum 10 year warranty. Enphase microinverters have 25 year limited warranties; Enphase does not cover labor cost and has the option to reimburse only the value of the microinverter at the time of failure. String inverters are generally expected to be replaced during the course of the PV system life, with an estimated median life of 12 years. In contrast, DNV GL has reviewed confidential reliability information for Enphase M215 and M250
microinverters which supports a 25 year design life, although some proportion will likely fail over this period. A small proportion of the Portfolio (2%) uses isolated 3.8 / 4.6 kW inverter models from ABB Power-One or older Enphase models (i.e. D380, M190, M210) which have been known to have higher failure rates. The CS XV Fund has seen a relatively high field service dispatch rate in 2014-2015 related to arc fault circuit interrupter (AFCI) trips at systems with ABB inverters, although ABB is covering the cost of these truck rolls under warranty.
Balance of System
The Portfolio predominantly uses approved monitoring systems from Itron, Locus, or Enphase which include a revenue grade meter. Most non-Enphase installations will have monitoring systems which report via a cellular link (as opposed to the homeowner’s internet connection), which has allowed the Sunrun fleet to achieve a historical best 99.75% connectivity rate (within 30 days) as of April 2015.
Sunrun’s EPC partners are free to procure racking and other balance-of-system components at their own discretion, although they are required to meet any local permitting obligations and to comply with EPC Agreement quality standards, which for new installations typically includes compliance with the Installer Handbook.
In summary, most inverter warranties generally have a 10-year term starting upon shipment from the factory. In all cases, repaired or replaced components are warranted until the end of the original term, at a minimum. Compensation for labor expense associated with replacing the defective unit varies among the suppliers. The majority of the time, it will be at the supplier’s discretion whether the replacement will be new or refurbished. SMA and Fronius provide an advanced shipment option whereby shipping is paid for and the returned unit can be placed in the same packaging that the replacement unit comes in. Such service is useful for reducing repair downtime.
DNV GL considers the warranty terms strong and a benefit to the Portfolio, particularly the response time requirements and the reimbursement / payment offset provisions in the event that an EPC partner fails to meet them.
The Sponsor has confirmed that as of 31 March 2015, it has paid for EPC partner-responsible warranty work out-of-pocket in just 76 cases (0.6% of the total warranty claims), resulting in just $32k of expenses borne by Sunrun—DNV GL considers this as a positive indication that the warranty provisions have been successfully enforced.
In summary, many of the manufacturers’ leading recent models have been tested to what DNV GL considers essential industry standard performance tests—these models have been included, along with many others, in the Portfolio. DNV GL considers that the risk of design-related performance issues is mitigated to the extent that certified models are used, at least for those bills of materials (BOMs) covered by the third party testing programs. DNV GL notes that Sunrun’s approved equipment list may also contain PV module types other than those modules listed in the above table; Sunrun’s primary consideration for equipment qualification (other than commercial considerations) is inclusion on the CEC list, which requires UL 1703 testing only and therefore does not have the same degree of reliability testing as do modules which also have IEC 61215 certification.
Given that PV module suppliers have faced stiff price competition over the past several years, the manufacturing base of the industry is changing rapidly and there is still some risk of variability in quality across plants and production lines. To the extent that any potential quality issues are not covered by warranty, DNV GL recommends using module replacement estimates and stress cases for the financial model that consider the diversity of the Portfolio, among other factors.
Sunrun Energy Estimate Methodology
The Sponsor’s EPC partners use the PVWatts solar forecasting model within its Proposal Tool (a software platform) to generate PV system energy production estimates. As a simulation engine, the Proposal Tool model sacrifices some accuracy and flexibility in order to increase accessibility and reduce runtime, which is typical for the residential solar industry. The Proposal Tool pulls meteorological data from the overlapping SolarAnywhere 10 km grid tile. DNV GL notes that the uncertainty of the meteorological data is moderately high but is in line with typical industry practice and has the advantage of providing consistency among EPC partners. While DNV GL has not reviewed the PVWatts simulation code, the models employed by the Sponsor are appropriate and should yield accurate energy production estimates given accurate inputs (i.e. meteorological data and loss factor assumptions).
The 25% of systems in the Portfolio which were initiated by Sungevity followed Sungevity’s own forecast process, for which details are not available. For a population of 2,449 systems which had side-by-side Sungevity and Sunrun estimates available, the median ratio of Sungevity-to-Sunrun estimates was 0.991 and the average ratio was 0.996, meaning that on average Sungevity’s estimates were very slightly more conservative than those of Sunrun. In its quantitative energy analysis, DNV GL has considered the slight regional differences in estimation which were observed between Sunrun and Sungevity, and has also (due to lack of specific estimate information and operating history) applied a higher estimate uncertainty for the Sungevity systems.
Overall, based on data from its operating systems, DNV GL notes that the Sponsor’s loss factor assumptions are reasonable and achievable (on average) assuming an active and effective operation and maintenance program. Longer-term degradation has been assessed separately.
In order to validate the EPC partners’ and Sunrun’s level of process consistency with respect to energy estimation, DNV GL has reproduced forecasts for a total of 15 PV systems in the Portfolio, 10 of which were estimated using Sunrun’s processes and 5 of which were estimated using Sungevity’s processes. The level of agreement achieved in these reconciliations leads DNV GL to conclude that the Sponsor’s stated processes have been followed in most cases, with user input errors or other factors leading to variances in some cases which are captured in DNV GL’s analysis of the performance data and uncertainty projections.
IT and Data Management
DNV GL considers the IT and data management systems and procedures implemented by the Sponsor in line with good industry practice. Based on its review of fleet production and service history summaries to date, DNV GL considers that the Sponsor has demonstrated its ability to adequately operate and manage its large portfolio of solar PV systems.
DNV GL Energy Analysis
DNV GL has quantitatively evaluated historical system performance against the Sponsor’s methodologies in order to develop Portfolio-specific performance expectations. From this analysis, DNV GL has made the following observations.