Joseph Osha: Okay. Thank you. Second question is, if you look at what [indiscernible] had to say and then SolarEdge just here today, pretty shocking outlooks for the fourth quarter driven, I think to some extent, by inventory. Obviously some of that’s in Europe, which has nothing to do with you guys, but I am curious as to how you feel about the level of inventory on your own balance sheet and also what you’re seeing out there, especially in the dealer world? Thanks. And then I have one more question after that.
Danny Abajian: Great. So the inventory, I’d say very simply, we’ve been above our targets. We measure in days of supply based on our run rate installation activity, and that’s been — we’ve been trending well north of our objectives, but we’ve also made progress in reducing the inventory balance. So, for instance, in the last quarter, we drove the inventory balance down by $130 million. I think we have another $100 million to $200 million to go to get levelized to our targets. So the rate of our purchasing activity is now, and will be until we’re right-sized beneath the rate of our installation flow as we right-size. And we think that’s going to take us another two to two quarters.
Ed Fenster: And Joe, this is Ed. I might add. I think there are three markets that are reducing inverter sales that haven’t really impacted us. We’re calling out international is obviously one. Companies unable to make the transition to storage is another. And then the third, which we’ve mostly sidestepped is markets within the United States that stop being cost effective with higher interest rates. And so that’s a differentiating factor that has helped us relatively. Got you. Nice to hear from you, Ed. And then last one, and then I’ll go away. Probably is another one for Danny, maybe you, Ed. How are the economics of direct ITC monetization relative to traditional tax equity for you guys? And in particular, is there some mechanism for a basis step up when you do a direct monetization? I’m curious about that. And that’s it for me. Thank you.
Danny Abajian: So there’s structural economics and then there’s price per credit. I’d say, as has been noted across the market, we’re in a period of everybody doing their first deal on both the sponsor side and the investor side and participation has been pleasing to see, but deals are getting done for the first time. And ultimately we think the price per credit is going to increase as we do more and more of these transactions. And that’s why we also noted we expect it to be part of our mix, that is driving that. As far as structurally, I think there are different modes of transaction being done in the market, some of which do not have monetization for things like depreciation, some do. In some cases, it might look more like a traditional tax equity structure where there’s a subsequent sale of the credit not directly by us.
And so, there are emerging structures as well. I think ultimately we’d expect to preserve the value, if you will, relative to tax equity, putting price per credit aside.
Joseph Osha: Understood. Thank you.
Danny Abajian: Thank you.
Operator: Our next question is from James West with Evercore ISI. Please proceed.
James West: Good afternoon, guys. So, Mary, as you think about this move to storage first, which makes perfect sense, but you’re going to have to do some re-skilling. You got a lot of stuff going on with the company in general. How long of a transitional period should we expect to be in for?
Mary Powell: Great question. I mean, we’re well on our way. I mean, the good thing is, as you know, like Sunrun’s been invested in a storage future since 2016. So the cool thing is, we already did have expertise in the company. We had experience. And it’s really the challenge of scaling and taking that experience that we have and scaling it in a significant way, particularly amidst a very rapid policy shift in one of our large markets in California. So, we’re really well on our way. It’s just been incredible to see the strides that have been made over the quarter. As, again, we’re improving all of our customer communications, our sales training, our installation teams, instead of having like a percent of them that are experts in installing storage, we’re moving to having all of them being experts that install storage.
So I would say, we’re well on our way and I’m feeling really good about this uptake that we saw. I mean, no question, we were working towards that kind of uptake. So we were just really pleased with the customer reaction to our focus on whole home backup and storage across the country, particularly — and particularly in California.
James West: Okay, okay, got it. And then as we think about things starting to at some point normalize here in whatever the new normal environment looks like, you are prioritizing cash flows. So how should we think about what the normal volume growth should be on an annual basis?
Mary Powell: I mean, as you know, we guide to next year at our next earnings call. Again, we’re talking about how we expect to see storage megawatt hours grow this quarter, because we think it is so strategic and so important. So as you think about how we’re going to talk about it next year, I think you can really anticipate that we’re going to be talking about growth in a broader context than we have historically. Which is really important from a value creation perspective, value creation for our customers, and value creation for our shareholders. And it’s also really powerful, like that’s again why we — like we’ve been really pleased with the initial reaction we’re getting to our retrofit program, for instance. And again, we’re also launching our renewal practices around helping customers renew their contracts.
And as a part of that, that gives us the opportunity to cross-sell, to up-sell, and to lock in even longer-term relationships. But Ed, it sounded like you wanted to add something on.
Ed Fenster: Yeah, I was just [indiscernible]. Storage is significantly higher entry barrier business, that probably most obvious if you look historically what happened in Hawaii where our market share grew several times after the market effectively required storage. Storage is harder to price, design, sell, permit it requires working capital. There are obvious fantastic economy scale in grid services and [indiscernible] making the strong pivot. And so obviously volume holistically is still very important to us. Solar nameplate megawatts were de-emphasizing a little bit and we’re now focusing on total value proposition, a broader suit of products and cash flow.
Mary Powell: Yes, and we haven’t talked a lot about grid services on this call so far, but the program that we just did with PG&E this summer was very, very powerful. And as a former utility executive, to build on what Ed said, it’s incredibly powerful to think about the amount of clean energy generation we’re going to be sitting on top of with this kind of storage attachment rate and with the ability to now go back and retrofit customers with storage.
James West: Very helpful. Thanks, guys.
Operator: Our next question is from [Pranesh Satish] (ph) with Wells Fargo. Please proceed.
