Julien Dumoulin-Smith: Got it. And 7.25%, why that number?
Danny Abajian: It’s a math. We look at — our longer-term capital costs are driven by a 7-year base rate, right? We — I look at that several times a day, more than I should and then credit spreads are a function of the market, like we’re not observing the data points every day, but there are several deals in the residential solar market, very big scale that get done. I think there was a loan transaction that priced today that had a spread compression of over 50 basis points from its last transaction. So we’re reflecting all of these things as we, again, constantly evaluate the capital markets environment.
Operator: Your next question today is coming from Andrew Percoco from Morgan Stanley.
Andrew Percoco: Just wanted to circle in on the net subscriber value guidance for the back half of the year. Is there any way you can provide some kind of bookends in terms of how we should be thinking about it? Looking back to this time last year, you did see a pretty noticeable uptick in 3Q. Should we think about order of magnitude relatively similar to what we’ve seen in 3Q of 2022? And maybe slightly differently, how should we think about growth in total value generated in the back half of the year when you combine it with your customer growth?
Mary Powell: Yes. I mean what you’re seeing is, as we described, a really different like customer profile moving forward. So we are selling to much higher margin customers. So a big part of how we see value creation is in the context of the product mix that we’re selling and that increasing storage attachment rate. And again, what we’re seeing from just a sales perspective, funnel perspective, we’re feeling really strong about the whole — the second half of the year and consistent with our guidance. Danny, do you want to hit the more specific question on.
Danny Abajian: Yes. Happy to give you a little bit of bridging here, which I think is helpful in the context of the value creation per subscriber going up but also the discount rate changing in that period of time. So if you look at Q2 2022, is the number you referenced, that $7,910 per customer. And as we talked about, if we adjust our PV6 metric to a PV7 in a quarter, we get to $8100, which is a couple of hundred dollars higher year-over-year despite interest rates increasing significantly over that period of time. And then if you look at the total value generated and you do the same compare, and you take the current period total value generated and adjusted for discount rate and compare that year-over-year, that number is up 31%.
So substantial pickup year-over-year and then as far as the outlook, again, reiterate the potential here with the battery attached lift is a few thousand dollars per customer. And then we’ll — as we get more clarity on the adders and other things, we’ll talk more about that as well.
Andrew Percoco: Got it. That’s helpful. And maybe just one follow-up question on the virtual power plant opportunity. You’ve made some interesting announcements over the last few days in this space. And I’m just curious of the 900-megawatt hours or so of batteries that you have in the field, what percentage of that is already included in virtual power plant agreements and it does sound like you have a decent amount of retrofit in storage growth going forward, which is obviously an opportunity in itself. But just curious about the untapped potential in your existing customer base.
Mary Powell: The untapped potential is significant. And again, one of the things that has been a really strong value proposition that — Sunrun has been strong in the space of grid services and figuring out how to leverage these assets from a grid perspective for many years and we’re really starting to see the acceleration of that and really — and seeing the acceleration of the appreciation of what these distributed power plants can do from a growth perspective. So really, right now, it’s a relatively small percentage in terms of the total available megawatt hours we have control of and that’s one of the things that is so exciting when we think about the potential ahead. It’s a huge part of why we also are really looking forward to launching retrofits for our existing customer base.
We already have a significant list of customers that have let us know that they want to be — they think they want a storage device. And then we also are going to be doing storage only solutions for customers as well.
Operator: Your next question is coming from Joseph Osha from Guggenheim Partners.
Joseph Osha: I have 2 completely unrelated questions. The first, can I read into your comments that barring extraordinary circumstances, you are not going to be raising recourse capital or equity to fund growth. Is that kind of what I’m hearing is the corollary to this commitment to generate cash?
Mary Powell: Yes. That’s what you’re hearing.
