What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-02-22 compared with 2022-02-17 · 87 added, 96 removed, 387 unchanged (32% of the section changed)

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We have been selling solar energy to residential customers through a variety of offerings since we were founded in 2007.

We, either directly or through one of our solar partners, install a solar energy system on a customer’s home and either sell the system to the customer or, as is more often the case, sell the energy generated by the system to the customer pursuant to a lease or power purchase agreement (“PPA”) with no or low upfront costs.

We refer to these leases and PPAs as “Customer Agreements.” Following installation, a system is interconnected to the local utility grid.

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Any excess solar energy, including amounts in excess of battery storage, that is not immediately used by the customers is exported to the utility grid using a bi-directional utility net meter, and the customer generally receives a credit for the excess energy from their utility to offset future usage of utility-generated energy.

On October 8, 2020, we completed the acquisition of Vivint Solar, Inc.

("Vivint Solar") a leading full-service residential solar provider in the United States, at an estimated purchase price of $5.0 billion, pursuant to an Agreement and Plan of Merger, dated as of July 6, 2020, by and among Sunrun, Vivint Solar and Viking Merger Sub, Inc., a Delaware corporation and direct wholly owned subsidiary of the Company (“Merger Sub”).

Further information about the acquisition of Vivint Solar can be found in Note 3, Acquisitions, to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

We offer our solar service offerings both directly to the customer and through our solar partners, which include sales and installation partners, and strategic partners, which include retail partners.

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Customer cancellation rates can change over time and vary between markets.

The Opportunity of Home Electrification and a Clean, Resilient Grid

The Opportunity of Home Electrification and Storage Solutions to Build a Clean, Resilient Grid

The United States is on the precipice of a once-in-a-generation transformation of our energy system.

The decarbonization of the American economy will require powering our energy supply, including our homes, appliances and automobiles, with clean energy.

Sunrun’s next goal and chapter of growth is to be the go-to company for clean and reliable home electrification, providing our customers with affordable renewable energy throughout their homes and our communities with a cleaner, more resilient grid.

Sunrun’s next goal and chapter of growth is to be the go-to company for clean

energy and storage solutions, and reliable home electrification, providing our customers with affordable renewable energy throughout their homes and our communities with a cleaner, more resilient grid.

We believe Sunrun will be uniquely positioned as the leading national provider of solar and storage energy subscription offerings, making our clean energy services more accessible to even more communities.

We intend to pursue these opportunities on a variety of fronts.

For instance, in May 2020, we announced a partnership with Ford Motor Company to be the preferred installer for Ford’s Charge Station Pro and Intelligent Backup Power System, debuting with the all-electric F-150 Lightning.

Under the partnership, we are co-developing Ford's Home Integration System, including the bi-directional inverter, which enables the F-150 Lightning to serve as a reliable home backup energy source by powering the home during an outage event.

Through this partnership, customers in participating markets will also be provided with the opportunity to install a solar and battery system on their home, enabling them to power their household with clean, affordable energy and charge their truck with the power of the sun.

Under the partnership, we co-developed Ford's Home Integration System, including the bi-directional inverter, which enables the F-150 Lightning to serve as a reliable home backup energy source by powering the home during an outage event.

Through this partnership, customers in participating markets have the opportunity to install a solar and battery system on their home, enabling them to power their household with clean, affordable energy and charge their truck with the power of the sun.

We also continue to pursue the development of our grid services business, creating virtual power plants that lead to a cleaner, more resilient grid.

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Additionally, we believe our omni-channel model and geographic reach provides us with the capabilities to execute on these opportunities in a variety of markets.

To further expand such future upsell and retrofit opportunities, from time to time, we may pursue acquisitions of previously installed solar systems.

While we do not expect such acquisitions to represent a material portion of our growth on an annual basis, we plan to pursue such transactions opportunistically.

For instance, in the third quarter, we completed a strategic transaction that added approximately 2,000 Customers and 13 MW of Networked Solar Energy Capacity.

We also believe that energy storage offerings will play an increasingly important role and be a key part of the customer value proposition.

Robust storage offerings will enable a variety of grid services and grid reliability benefits.

They will also play a crucial role in markets like California where time-of-use and net-billing policies mean that optimizing when power is consumed during the day is key to providing the most customer value.

In sum, we believe the electrification of the U.S.

economy with renewable energy presents an unprecedented economic opportunity, as well as our country’s best path to achieving net zero emissions by 2050.

Through these electrification opportunities and our grid services business, we aim to be the consumer brand synonymous with repowering our customers’ homes with renewable energy and providing a pathway to a cleaner, healthier future.

Impacts of COVID-19 on Our Business

The COVID-19 pandemic and the resulting impact on the U.S.

economy have accelerated many of our operational initiatives to deliver best-in-class customer value and to reduce costs.

We have invested in technology to streamline our installation processes, including online permitting and interconnection in many locations, enabled our entire salesforce to complete sales consultations in a virtual setting, and employed extensive use of drone technology to complete rooftop surveys.

We also implemented a company-wide COVID-19 vaccine rewards campaign to encourage vaccination among team members.

We believe this transition towards a digital model for many sales channels will position us well to realize sustaining reductions in customer acquisition costs.

The COVID-19 pandemic has had an unprecedented impact on the U.S.

economy, resulting in governments and organizations implementing public health measures in an effort to contain the virus, including physical distancing, work from home, supply chain logistical changes and closure of non-essential businesses.

With vaccine administration and adoption rising, governments and organizations have responded by adjusting such restrictions

and guidelines accordingly.

We are monitoring this fluid situation and will continue to follow official regulations to protect our employees and customers.

The ultimate impact of the COVID-19 pandemic (and virus variants, such as Delta and Omicron) is still highly uncertain and subject to change, and we do not yet know the full extent of potential delays or impacts on our business, operations or the global economy as a whole.

We will continue to monitor developments affecting our workforce, our customers, and our business operations generally and will take actions that we determine are necessary in order to mitigate these impacts.

Through these electrification, storage, and grid services opportunities, we aim to be the consumer brand synonymous with repowering our customers’ homes with renewable energy and providing a pathway to a cleaner, healthier future.

Macroeconomic Environment

Our business and financial performance also depend on worldwide economic conditions.

We face global macroeconomic challenges, particularly in light of increases and volatility in interest rates, uncertainty in markets, inflationary trends, navigating complex and evolving regulatory and tax frameworks, and the dynamics of the global trade environment.

Throughout fiscal 2022, we observed market uncertainty, increasing inflationary pressures, supply constraints and the ongoing and rippling effects from the COVID-19 pandemic.

These market dynamics, which we expect will continue into the foreseeable future, have and may continue to impact our business and financial results, including costs and revenues.

Investment Funds

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These assets are attractive to fund investors due to the long-term, recurring nature of the cash flows generated by our Customer Agreements, the high credit scores of our customers, the fact that energy is a non-discretionary good and our low loss rates.

In addition, fund investors can receive attractive after-tax returns from our investment funds due to their ability to utilize Commercial ITCs, accelerated depreciation and certain government or utility incentives associated with the funds’ ownership of solar energy systems.

In addition, fund investors can receive attractive after-tax returns from our investment funds due to their ability to utilize

Commercial ITCs, accelerated depreciation and certain government or utility incentives associated with the funds’ ownership of solar energy systems.

As of December 31, 2022, we had 64 active investment funds, which are described below.

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Consolidation Owner entity consolidated, tenant entity not consolidated Single entity, consolidated Owner and tenant entities consolidated

Balance sheet classification Pass-through financing obligation Redeemable noncontrolling interests and noncontrolling interests Redeemable noncontrolling interests and noncontrolling interests

Balance sheet classification Pass-through financing obligation Redeemable noncontrolling interests and noncontrolling interests Redeemable noncontrolling interests

Revenue from Commercial ITCs Recognized on the PTO date None None

Method of calculating investor interest Effective interest rate method Greater of HLBV or redemption value;

or pro rata Greater of HLBV or redemption value;

Method of calculating investor interest Effective interest rate method Greater of HLBV or redemption value Greater of HLBV or redemption value

Liability balance as of December 31, 2022 $ 305.6 N/A N/A

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We account for the payments from investors as borrowings by recording the proceeds received as financing obligations.

The financing obligation is reduced over a period of approximately 22 years, or over 7 years in the case of one fund, by customer payments under the Customer Agreements, U.S.

Treasury grants (where applicable);

The financing obligation is reduced over a period of approximately 22 years, or over 7 years in the case of one fund, by customer payments under the Customer Agreements;

and proceeds from the contracted resale of SRECs as they are received by the investor.

In addition, funds paid for the Commercial ITC value upfront are initially recorded as a refund liability and recognized as revenue as the associated solar system reaches permission to operate ("PTO").

We account for these investment funds in our consolidated financial statements as if we have not assigned the Customer Agreement to the investor, and we record on our consolidated financial statements activities arising from the Customer Agreements and any related U.S.

Treasury grants, Commercial ITCs monetized as part of the upfront payments received from the investor and SREC sales.

The interest charge on our pass-through financing obligations is imputed at the inception of the fund based on the effective interest rate in the arrangement giving rise to the obligation and is updated prospectively as appropriate.

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Key Operating Metrics

The following operating metrics are used by management to evaluate the performance of the business.

Management believes these metrics provide investors with helpful information to determine the economic performance of the business activities in a period that would otherwise not be observable from historic GAAP measures.

We regularly review a number of metrics, including the following key operating metrics, to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions.

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Systems that have met these criteria are considered to be deployed.

We believe it is helpful to investors to evaluate networked solar energy capacity added during the period in order to measure the growth of our business as a whole, whether sold directly to customers or subject to executed Customer Agreements.

• Gross Earning Assets is calculated as Gross Earning Assets Contracted Period plus Gross Earning Assets Renewal Period.

◦ Gross Earning Assets Contracted Period represents the present value of the remaining net cash flows (discounted at 5%) during the initial term of our Customer Agreements as of the measurement date.

It is calculated as the present value of cash flows (discounted at 5%) we expect to receive from Subscribers in future periods, after deducting expected operating and maintenance costs, equipment replacements costs, distributions to tax equity partners in consolidated joint venture partnership flip structures, and distributions to project equity investors.

It is calculated as the present value of cash flows (discounted at 5%) we expect to receive from Subscribers in future periods, after deducting expected operating and maintenance costs based on the service agreements underlying each fund, equipment replacements costs, distributions to tax equity partners in consolidated joint venture partnership flip structures, and distributions to project equity investors.

We include cash flows we expect to receive in future periods from state incentive and rebate programs, contracted sales of solar renewable energy credits, and awarded net cash flows from grid service programs with utility or grid operators.

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We calculate the Gross Earning Assets Renewal Period amount at the expiration of the initial contract term assuming either a system purchase or a renewal, forecasting only a 30-year customer relationship (although the customer may renew for additional years, or purchase the system), at a contract rate equal to 90% of the customer’s contractual rate in effect at the end of the initial contract term.

After the initial contract term, our Customer Agreements typically automatically renew on an annual basis and the rate is initially set at up to a 10% discount to then-prevailing utility power prices.

After the initial contract term, our Customer Agreements typically automatically renew annually or for five years and the rate is initially set at up to a 10% discount to then-prevailing utility power prices.

• Subscribers represent the cumulative number of Customer Agreements for systems that have been recognized as deployments through the measurement date.

• Customers represent the cumulative number of deployments, from our inception through the measurement date.

We believe that it is helpful to investors to evaluate customers

added during the period in order to measure the growth of our business as a whole.

Gross Earning Assets is forecasted as of a specific date.

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Factors that could impact Gross Earning Assets include, but are not limited to, customer payment defaults, or declines in utility rates or early termination of a contract in certain circumstances, including prior to installation.

The definitions of Gross Earning Assets, Gross Earning Assets Contracted Period, and Gross Earning Assets Renewal Period use a discount rate of 5%;

whereas the definitions used previously in our periodic reports prior to December 31, 2020 used a discount rate of 6%.

We believe it is useful for investors to evaluate the future expected cash flows from all customers that have been deployed through the respective measurement date, less estimated costs to maintain such systems and estimated distributions to tax equity partners in consolidated joint venture partnership flip structures, and distributions to project equity investors.

Various assumptions are made when calculating these metrics.

Gross Earning Assets utilize a 5% unlevered discount rate (weighted average cost of capital or “WACC”) to discount future cash flows to the present period.

Furthermore, this metric assumes that customers renew after the initial contract period at a rate equal to 90% of the rate in effect at the end of the initial contract term.

For Customer Agreements with 25-year initial contract terms, a 5-year renewal period is assumed.

For a 20-year initial contract term, a 10-year renewal period is assumed.

In all instances, we assume a 30-year customer relationship, although the customer may renew for additional years, or purchase the system.

Estimated cost of servicing assets has been deducted and is estimated based on the service agreements underlying each fund.

As of December 31,

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Customer Agreements typically have an initial term of 20 or 25 years.

After the initial contract term, our Customer Agreements typically automatically renew on an annual basis.

After the initial contract term, our Customer Agreements typically automatically renew annually or for five years.

We also apply for and receive SRECs associated with the energy generated by our solar energy systems and sell them to third parties in certain jurisdictions.

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Revenue is recognized to the extent it is probable that a significant reversal of such revenue will not occur.

If our estimate of the future production shortfall amount for Customer Agreements with a performance guarantee was 10% higher, the additional reduction to revenue in the twelve months ended December 31, 2022 would have been less than $2.4 million.

Our estimated production shortfall reduced revenue during the twelve months ended December 31, 2022 by less than $6.2 million more than the prior year's period.

We have historically estimated an immaterial amount of liquidated damages pursuant to SREC contracts, and actual damages have not been materially different from estimates, nor material in amount during the years ended December 31, 2022, 2021 and 2020.

Solar Energy Systems and Product Sales.

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Circumstances that could indicate impairment and require us to perform a quantitative impairment test include a significant decline in our financial results, a significant decline in our enterprise value relative to our net book value, a sustained decline in our stock price, or an unanticipated change in competition or our market share and a significant change in our strategic plans.

A sustained decrease in the price of our common stock is one of the qualitative factors to be considered as part of an impairment test when evaluating whether events or changes in circumstances may indicate that it is more likely than not that a potential goodwill impairment exists.

As of October 1, 2022, we concluded that our fair value exceeded our carrying value.

We will continue monitoring the analysis of the qualitative and quantitative factors used as a basis for the goodwill impairment test during fiscal year 2023.

In performing the assessment, we performed a qualitative assessment and determined there were no indicators of impairment.

To corroborate this conclusion, we compared the carrying value of our one reporting unit to our market capitalization and concluded that there was no goodwill impairment during the years ended December 31, 2022, 2021 and 2020.

Impairment of Long-Lived Assets

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If the useful life is shorter than originally estimated, we amortize the remaining carrying value over the new shorter useful life.

During the years ended December 31, 2022, 2021 and 2020, there were no indicators of impairment and therefore no cash flow analysis was performed.

Provision for Income Taxes

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The fund investors’ interest in the results of operations of these investment funds is initially determined by calculating the difference in the noncontrolling interests and redeemable noncontrolling interests’ claim under the HLBV method at the start and end of each reporting period, after taking into account any contributions and distributions between the fund and the fund investors and subject to the redemption provisions in certain funds.

The calculation of HLBV does not require estimates since each HLBV calculation is based upon the liquidation provisions of each fund’s contractual agreement.

The calculation of the redeemable noncontrolling interest balance involves estimates such as a discount rate used in net present value calculations, and customer default rates.

If the assumptions used for each of these were 10% higher, the impact to the aggregate redeemable noncontrolling interest balance as of December 31, 2022 would be a reduction of $13.3 million.

Results of Operations

The results of operations presented below should be reviewed in conjunction with the consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K.

Our Annual Report on Form 10-K for the year ended December 31, 2020 includes a discussion and analysis of our financial condition and results of operations for the year ended December 31, 2019 in Item 7.

of Part II, “Management's Discussion and Analysis of Financial Condition and Results of Operations.”

Our Annual Report on Form 10-K for the year ended December 31, 2021 includes a discussion and analysis of our financial condition and results of operations for the year ended December 31, 2020 in Item 7 of Part II, “Management's Discussion and Analysis of Financial Condition and Results of Operations.”

Year Ended December 31,

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Loss before income taxes (847,354) (971,259)

Income tax expense (benefit) 9,271 (60,573)

Income tax expense 2,291 9,271

Net loss (849,645) (980,530)

Net loss attributable to noncontrolling interests and redeemable noncontrolling interests (1,023,022) (901,107)

Net loss attributable to common stockholders $ (79,423) $ (173,394)

Net loss per share attributable to common stockholders

Net income (loss) attributable to common stockholders $ 173,377 $ (79,423)

Net income (loss) per share attributable to common stockholders

Basic $ 0.82 $ (0.39)

Diluted $ 0.80 $ (0.39)

Weighted average shares used to compute net loss per share attributable to common stockholders

Weighted average shares used to compute net income (loss) per share attributable to common stockholders

Basic 211,347 205,132

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Customer Agreements and Incentives .

The $292.7 million increase in Revenue from Customer Agreements was primarily due to both an increase in solar energy systems under Customer Agreements being added to our fleet upon the acquisition of Vivint Solar in October 2020, as well as new systems placed in service in 2021 and a full year of revenue recognized in 2021 for systems placed in service in 2020 versus only a partial amount of such revenue related to the period in which the assets were in service in 2020.

Revenue from incentives, which primarily consists of the sale of SRECs, increased by $49.7 million when compared to the prior year due to the timing of sales and market prices.

The $147.1 million increase in Revenue from Customer Agreements was primarily due to new systems placed in service in 2022 and a full year of revenue recognized in 2022 for systems placed in service in 2021 versus only a partial amount of such revenue related to the period in which the assets were in service in 2021.

Revenue from incentives, which primarily consisted of the sale of SRECs, increased by $9.4 million when compared to the prior year related to the timing and volume of SREC sales which were responsive to market conditions.

Solar Energy Systems and Product Sales .

Revenue from solar energy systems sales increased by $201.4 million compared to the prior year primarily due to solar energy systems sales from an expanded sales force following the acquisition of Vivint Solar, as well as increased demand through retail partners.

Product sales increased by $143.9 million compared to the prior year primarily due to lower volume of wholesale products sold in 2020, which was impacted by COVID-19, and customers' reduced purchases in 2020 after purchasing safe harbor materials in 2019 for use in 2020.

Revenue from solar energy systems sales increased by $442.6 million compared to the prior year primarily due to an overall increased demand for solar energy systems in the marketplace, particularly through retail partners.

Additionally, the average price of system sales increased 12% from the prior year period.

Product sales increased by $112.4 million compared to the prior year primarily due to an overall increased demand for solar energy related products and services in the marketplace, and to a lesser extent, price increases on various solar products sold to resellers.

Operating Expenses

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Cost of Customer Agreements and Incentives .

The $313.5 million increase in Cost of customer agreements and incentives was primarily due to the increase in solar energy systems added to our fleet upon the acquisition of Vivint Solar in October 2020, as well as new systems placed in service in 2021, plus a full year of costs recognized in 2021 for systems placed in service in 2020 versus only a partial amount of such expenses related to the period in which the assets were in service in 2020.

The Cost of customer agreements and incentives increased to 85% of customer agreements and incentives revenue during 2021, from 80% during 2020.

The increase was impacted by the acquisition of Vivint Solar, which resulted in an increase in depreciation expense of approximately $107.6 million related to the step up in solar systems fair value upon the acquisition of Vivint Solar.

The $145.1 million increase in Cost of customer agreements and incentives was primarily due to the new systems placed in service in 2022, plus a full year of costs recognized in 2022 for systems placed in service in 2021 versus only a partial amount of such expenses related to the period in which the assets were in service in 2021.

The Cost of customer agreements and incentives remained relatively consistent at 86% of customer agreements and incentives revenue during 2022, when compared with 85% in the prior year period.

Cost of Solar Energy Systems and Product Sales .

There was a $512.2 million increase in Cost of solar energy systems and product sales which was primarily due to the corresponding net increase in the solar energy systems and product sales discussed above.

The Cost of solar energy systems and product sales increased to 88% of solar energy systems and product sales revenue during 2022, when compared with 85% in the prior year period, primarily as a result of increased demand for solar energy related products and services in the marketplace.

Sales and Marketing Expense.

The $270.7 million increase in Sales and marketing expense was primarily attributable to increases in headcount, which were primarily driven by the acquisition of Vivint Solar in October 2020, resulting in higher employee compensation.

Additionally, we spent more in costs to acquire customers through our sales lead generating partners in 2021 compared to the prior year.

Partially offsetting these increases in Sales and marketing expense is an $8.9 million decrease in non-recurring and restructuring costs incurred compared to the prior year which had $9.6 million in such costs following the acquisition of Vivint Solar.

The $122.4 million increase in Sales and marketing expense was primarily attributable to increases in headcount driving higher employee compensation and costs to acquire customers through our sales lead generating partners.

Additionally, there was an increase of $4.4 million in severance related costs incurred during 2022.

Included in sales and marketing expense were $38.7 million and $23.3 million of amortization of costs to obtain Customer Agreements for 2022 and 2021, respectively.

Research and Development Expense .

The $3.6 million increase in Research and development expense was primarily attributable to the acquisition of Vivint Solar, resulting in an increase in headcount driving higher employee compensation costs.

The $2.3 million decrease in Research and development expense was primarily attributable to a decrease in headcount driving lower employee compensation costs.

General and Administrative Expense .

The $7.6 million decrease in General and administrative expenses was primarily attributable to a decrease of $16.3 million in nonrecurring (primarily acquisition-related) costs incurred during 2021, partially offset by the acquisition of Vivint Solar, which resulted in an increase in headcount driving higher employee compensation and consulting costs.

The $69.9 million decrease in General and administrative expenses was primarily attributable to a decrease in stock-based compensation expense.

This decrease in stock-based compensation was primarily attributable to $36.4 million of expense related to Vivint Solar recognized during 2021,

which was based on the fair value at the time of the acquisition and the underlying awards have since fully vested.

Additionally, there were decreases related to consulting costs of $3.1 million and $18.0 million in severance-related integration costs, when compared to 2021.

Non-Operating Expenses

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Interest expense, net.

The increase in Interest expense, net of $97.1 million included $73.0 million for a full year of interest expense associated with the debt acquired with Vivint Solar.

The remaining increase is primarily related to additional non-recourse debt entered into in 2021.

The increase in Interest expense, net of $118.1 million is primarily related to additional non-recourse debt entered into in 2022.

Included in net interest expense is $28.3 million and $26.3 million of non-cash interest recognized under Customer Agreements that have a significant financing component for 2022 and 2021, respectively.

Other income, net.

The increase in other income, net of $14.4 million relates primarily to gains on derivatives recognized in 2021, with no such comparable activity in 2020.

Income Tax Expense (Benefit)

The increase in other income, net of $238.0 million relates primarily to an increase of $168.3 million in gains on derivatives recognized in 2022, as well as a $47.3 million gain on an equity investment, with no such comparable activity in 2021.

Income Tax Expense

December 31, Change

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(in thousands)

Income tax expense (benefit) $ 9,271 $ (60,573) $ 69,844 (115) %

The decrease in Income tax benefit of $69.8 million primarily relates to an increase in noncontrolling interest and redeemable noncontrolling interests, an increase in valuation allowance on certain federal and state tax credits and net operating losses, and decrease in stock based compensation that was offset by an increase in tax benefit related to a higher pre-tax loss.

Income tax expense $ 2,291 $ 9,271 $ (6,980) (75) %

The decrease in Income tax expense of $7.0 million primarily relates to a decrease in valuation allowance on certain federal and state tax credits and net operating losses, which was offset by a decrease in tax benefit related to a higher pre-tax loss and an increase in noncontrolling interest and redeemable noncontrolling interests.

Given our net operating loss carryforwards as of December 31, 2022, we do not expect to pay income tax, including in connection with our 2022 income tax provision, until our net operating losses are fully utilized.

As of December 31, 2021, the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $720.7 million and $2.3 billion, respectively, which will begin to expire in 2028 for federal purposes and in 2024 for state purposes.

As of December 31, 2022, we had net operating loss carryforwards for federal and state income tax purposes of approximately $720.7 million and $2.5 billion, respectively, which will begin to expire in 2028 for federal purposes and in 2024 for state purposes.

In addition, federal and certain state net operating loss carryforwards generated in tax years beginning after December 31, 2017 total $1.4 billion and $296.8 million, respectively, and have indefinite carryover periods and do not expire.

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Net loss attributable to noncontrolling interests and redeemable noncontrolling interests $ (1,023,022) $ (901,107) $ (121,915) 14 %

Net loss attributable to noncontrolling interests and redeemable noncontrolling interests was primarily the result of an addition of six new investment funds since December 31, 2020, for which the HLBV method was used in determining the amount of net loss attributable to noncontrolling interests, as well as $66.4 million of net loss related Vivint Solar's noncontrolling interests and redeemable noncontrolling interests.

Redeemable noncontrolling interests generally allocates more loss to the noncontrolling interest in the first several years after fund formation.

determining the amount of net loss attributable to noncontrolling interests.

Investment funds generally allocate more loss to the noncontrolling interest in the first several years after fund formation.

Liquidity and Capital Resources

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We finance our operations mainly through a variety of financing fund arrangements that we have formed with fund investors, cash generated from our sources of revenue and borrowings from secured credit facilities arrangements with syndicates of banks and from secured, long-term non-recourse loan arrangements.

In 2021, we received $1.8 billion of new commitments on secured credit facilities arrangements with syndicates of banks and $888.7 million of commitments from secured, long-term non-recourse loan arrangements.

In 2022, we received $1.2 billion of new commitments on secured credit facilities arrangements with syndicates of banks and $1.2 billion of commitments from secured, long-term non-recourse loan arrangements.

Our principal uses of cash are funding our business, including the costs of acquisition and installation of solar energy systems, satisfaction of our obligations under our debt instruments and other working capital requirements.

As of December 31, 2021, we had outstanding borrowings of $211.1 million on our $250.0 million corporate bank line of credit maturing in April 2022, however, in January 2022, we retired this corporate bank line of credit, repaid the outstanding balance, and replaced it with a $425.0 million credit facility maturing in January 2025.

As of December 31, 2022, we had outstanding borrowings of $505.2 million on our $600.0 million credit facility maturing in January 2025.

Additionally, we have purchase commitments, which have the ability to be canceled without significant penalties, with multiple suppliers to purchase $360.1 million of photovoltaic modules, inverters and batteries by the end of 2022.

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We believe our cash, investment fund commitments and available borrowings as further described below will be sufficient to meet our anticipated cash needs for at least the next 12 months.

We believe we will meet longer-term expected future cash requirements and obligations through a combination of cash flows from operating activities, available cash balances, and available credit via our credit facilities.

The following table summarizes our cash flows for the periods indicated:

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During 2022, we used $848.8 million in net cash from operating activities.

The driver of our operating cash inflow consists of payments received from customers as well as incentives.

The driver of our operating cash outflow consists of the costs of our revenue, as well as sales, marketing and general and administrative costs.

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During 2021, we used $817.2 million in net cash from operating activities.

The driver of our operating cash inflow consists of payments received from customers as well as incentives.

The driver of our operating cash outflow consists of the costs of our revenue, as well as sales, marketing and general and administrative costs.

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The majority was used to design, acquire and install solar energy systems and components under our long-term Customer Agreements.

During 2020, we used $497.8 million in cash in investing activities.

Included within cash used

in investing activities during 2022, was a $75.0 million contribution we made as an additional investment in our home electrification venture with SK E&S Co., Ltd.

During 2021, we used $1.7 billion in cash in investing activities.

The majority was used to design, acquire and install solar energy systems and components under our long-term Customer Agreements.

During 2020, we contributed $65.4 million as an investment in a home electrification venture.

Offsetting these outflows was $537.2 of cash and restricted cash provided by the acquisition of Vivint Solar on October 8, 2020.

Financing Activities

During 2022, we generated $3.0 billion from financing activities.

This was primarily driven by $1.0 billion in net proceeds from fund investors, $1.6 billion in net proceeds from debt, $36.1 million in net proceeds from stock-based awards activity, offset by $42.0 million in acquisition of noncontrollling interests.

This was primarily driven by $1.2 billion in net proceeds from fund investors, $1.9 billion in net proceeds from debt, $32.9 million in net proceeds from stock-based awards activity, offset by $42.6 million in acquisition of noncontrolling interests and $14.1 million in repayments under finance lease obligations.

During 2021, we generated $2.6 billion from financing activities.

This was primarily driven by $705.0 million in net proceeds from fund investors, $329.1 million in net proceeds from debt and $48.7 million in net proceeds from stock-based awards activity, offset by $2.7 million in acquisition of noncontrolling interests.

Additionally, during 2020, we received $75.0 million from the sale and issuance of shares pursuant to a subscription agreement with SK E&S Co., Ltd.

Debt, Equity, and Financing Fund Commitments

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For a discussion of the terms and conditions of debt instruments and changes thereof in the period, refer to Note 11, Indebtedness, to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Convertible Senior Notes Offering

On January 25, 2021, we entered into a purchase agreement (the “Purchase Agreement”) with Credit Suisse Securities (USA) LLC and Morgan Stanley & Co.

LLC, as representatives of the several initial purchasers (the “Purchasers”), to issue and sell $350.0 million aggregate principal amount of 0% Convertible Senior Notes due 2026 (the “Notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act.

The Notes were sold to the Purchasers pursuant to an exemption from the registration requirements of the Securities Act afforded by Section 4(a)(2) of the Securities Act.

In addition, we granted the Purchasers an option to purchase, during a 13-day period beginning on, and including, the date on which the Notes were first issued, up to an additional $50.0 million aggregate principal amount of Notes on the same terms and conditions.

The Purchasers exercised their option in full on January 26, 2021.

The net proceeds from the sale of the Notes issued on January 28, 2021 (after deducting the Purchasers’ discount and estimated offering expenses) was approximately $389.0 million.

On January 28, 2021, we entered into an Indenture (the “Indenture”) with Wells Fargo Bank, National Association, as trustee (the “Trustee”), pursuant to which we issued $400.0 million aggregate principal amount of Notes.

The Notes will not bear regular interest, and the principal amount of the notes will not accrete.

The Notes may bear special interest under specified circumstances relating to our failure to comply with our reporting obligations under the Indenture or if the Notes are not freely tradable as required by the Indenture.

The Notes will mature on February 1, 2026, unless earlier repurchased by us, redeemed by us or converted pursuant to their terms.

In connection with the offering of the Notes, on January 25, 2021 and January 26, 2021, we entered into privately negotiated capped call transactions with Credit Suisse Capital LLC, represented by Credit Suisse Securities (USA) LLC, Morgan Stanley & Co.

LLC, Barclays Bank PLC, through its agent Barclays Capital Inc., and Royal Bank of Canada, represented by RBC Capital Markets, LLC (the “Capped Calls”).

The Capped Calls each have an initial strike price of approximately $117.91 per share, subject to certain adjustments, which corresponds to the initial conversion price of the Notes.

The Capped Calls have initial cap prices of $157.22 per share.

The Capped Calls cover, subject to anti-dilution adjustments, approximately 3.4 million shares of common stock.

The Capped Calls are expected generally to reduce the potential dilution to the common stock upon any conversion of Notes

and/or offset any cash payments we are required to make in excess of the principal amount of the Notes, as the case may be, in the event the market price per share of common stock, as measured under the Capped Calls, is greater than the strike price of the Capped Call, with such offset subject to a cap.

If, however, the market price per share of the common stock, as measured under the Capped Calls, exceeds the cap price of the Capped Calls, there would be dilution and/or there would not be an offset of such potential cash payments, in each case, to the extent that the then-market price per share of the common stock exceeds the cap price.

We used approximately $28.0 million from the net proceeds from the issuance and sale of the Notes to purchase the Capped Calls.

The final components of the Capped Calls are scheduled to expire on January 29, 2026.

Investment Fund Commitments

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Item 7. Management’s Discussion and Analysis