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Item 1A. Risk Factors

2026-02-26 compared with 2025-02-27 · 338 added, 307 removed, 680 unchanged (49% of the section changed)

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In that event, the market price of our common stock could decline, and you could lose part or all of your investment.

Risks Related to the Solar Industry

The solar energy industry is an emerging market which is constantly evolving and may not develop to the size or at the rate we expect.

The solar energy industry is an emerging and constantly evolving market opportunity.

We believe the solar energy industry is still developing and maturing, and we cannot be certain that the market will grow to the size or at the rate we expect.

Risks Related to the Battery Storage and Solar Industry

The battery storage and solar energy industry is an emerging market which is constantly evolving and may not develop to the size or at the rate we expect.

The battery storage and solar energy industry is an emerging and constantly evolving market opportunity.

We cannot be certain that the market will grow to the size or at the rate we expect.

For example, we have experienced increases in cancellations of our Customer Agreements in certain geographic markets during various periods in our operating history.

Any future growth of the solar energy market and the success of our solar service offerings depend on many factors beyond our control, including recognition and acceptance of the solar service market by consumers, the pricing of alternative sources of energy, a favorable regulatory environment, the continuation of expected tax benefits and other incentives, and our ability to provide our solar service offerings cost effectively.

If the markets for solar energy do not develop to the size or at the rate we expect, our business may be adversely affected.

Solar energy has yet to achieve broad market acceptance and depends in part on continued support in the form of rebates, tax credits, and other incentives from federal, state and local governments.

Additionally, there have been significant changes in the residential solar policy and pricing framework in California, which is one of our key markets and represents over 45% of our customer base.

Changes to California’s net metering policy adopted in December 2022, with the new billing regime implemented in April 2023, present a significant change to the financial benefits California customers receive from our solar systems and may limit the financial attractiveness of our offerings in this market, particularly for solar-only systems.

Any future growth of the solar and battery storage market and the success of our offerings depend on many factors beyond our control, including recognition and acceptance of the battery storage and solar service market by consumers, the pricing of alternative sources of energy, a favorable regulatory environment, the continuation of expected tax benefits and other compensation, and our ability to provide our storage and solar service offerings cost effectively.

If the markets for battery storage and solar energy do not develop to the size or at the rate we expect, our business may be adversely affected.

Home battery storage and solar energy has yet to achieve broad market acceptance and depends in part on continued support in the form of rebates, tax credits, and other incentives from federal, state and local governments.

For example, the most notable recent federal tax legislation affecting our business is the OBBB, that President Trump signed into law on July 4, 2025.

The new law makes adverse changes to tax policies that we rely upon, including to the eligibility of solar energy systems for the 48E Clean Electricity Investment Credit after 2027.

The law maintains the 48E credit for energy storage through 2033.

The law also applies new “Prohibited Foreign Entity” (“PFE”) restrictions to the Section 48E credit, which could potentially deny tax credits to entities owned, controlled, or influenced by certain specified foreign entities of concern, and for projects that use certain components or receive "material assistance" from certain prohibited foreign entities of concern, thereby potentially increasing costs and potentially reducing demand, or restricting access to tax credits.

Further, the law ended the Residential Clean Energy Credit on January 1, 2026.

Additionally, there have been significant changes in the residential solar policy and pricing framework in California, which is one of our key markets and represents over 45% of our customer base, as of December 31, 2025.

Changes to California’s net metering policy, with the new billing regime implemented in April 2023, presented a significant change to the financial credits California customers receive from our solar and battery systems and may limit the financial attractiveness of our offerings in this market, particularly for solar-only systems.

Originations in California are below levels prior to the Net Billing Tariff (“NBT”) transition, and without further increases in originations, our new installations in California may continue to decline compared to prior periods, which could have a material adverse effect on our business operations and financial performance.

Further, if support diminishes materially for solar policy related to rebates, tax credits, bill crediting, or other incentives, our ability to obtain external financing on acceptable terms, or at all, could be materially adversely affected.

If support diminishes materially for solar or storage policy related to rebates, tax credits, bill crediting, or other incentives, our ability to obtain external financing on acceptable terms, or at all, could be materially adversely affected.

These types of funding limitations could lead to inadequate financing support for the anticipated growth in our business.

Furthermore, growth in residential solar energy depends in part on macroeconomic conditions, retail prices of electricity and customer preferences, each of which can change quickly.

Furthermore, growth in residential solar and storage energy depends in part on macroeconomic conditions, retail prices of electricity and customer preferences, each of which can change quickly.

Declining macroeconomic conditions, including in job markets and residential real estate markets, could contribute to instability and uncertainty among customers and impact their financial wherewithal, credit scores or interest in entering into long-term contracts, even if such contracts would generate immediate and long-term savings.

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Any declines in macroeconomic conditions, changes in retail prices of electricity or changes in customer preferences would adversely impact our business.

Achieving net zero emissions by 2050 will require an unprecedented transformation of American energy systems and the adoption of a wide variety of clean energy, storage, and home electrification solutions.

Our successful deployment of such products will depend on several factors outside our control, including shifting market conditions and policy frameworks.

Meeting soaring demand for electricity and achieving net zero emissions will require an unprecedented transformation of American energy systems and the adoption of a wide variety of clean energy, storage, and home electrification solutions.

Our successful, efficient deployment of such products will depend on several factors outside our control, including shifting market conditions and policy frameworks.

Our failure to adapt to changing market conditions, to compete successfully with existing or new competitors, and to adopt new or enhanced offerings could limit our growth and have a material adverse effect on our business and prospects.

We have historically benefited from declining costs in our industry, and our business and financial results may be harmed as a result of recent and any continued increases in costs associated with our solar service

offerings and any failure of these costs to continue declining as we currently expect.

We have historically benefited from declining costs in our industry, and our business and financial results have been and may continue to be harmed as a result of recent and any continued increases in costs associated with our solar service offerings and any failure of these costs to decline in the future.

If we do not reduce our cost structure in the future, our ability to continue to be profitable may be impaired.

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While historically the prices of solar panels and raw materials have declined, the cost of solar panels and raw materials have at times increased and may increase in the future, and such products’ availability could decrease, due to a variety of factors, including supply chain disruptions, inflation, tariffs and trade barriers, export regulations, geopolitical conflicts, regulatory or contractual limitations, industry market requirements, and changes in technology and industry standards.

In addition, on April 24, 2024, antidumping (“AD”) and countervailing duty (“CVD”) petitions were filed against Cambodia, Malaysia, Thailand, and Vietnam.

AD and CVD measures (typically, in the form of tariffs) are used to remedy the economic advantage created by unfair foreign pricing and government subsidies.

Department of Commerce (“Commerce”) is responsible for investigating dumping and subsidization.

Preliminary determinations in the AD investigations were issued on December 2, 2024 and ranged from 0% - 271%.

Importers are now required to pay cash deposits (estimated duties) on all entries of cells and modules from the subject countries.

Preliminary determinations in CVD investigations were issued on October 1, 2024 with Commerce finding injury and imposing CVD levels that averaged from 8-10% (with specific rates varying depending on the country and the company investigated).

Further, Commerce determined that “critical circumstances” existed for some importers.

As a result, those importers now face retroactive collection of duty deposits for entries made during the 90-day period before the publication date of the preliminary determination.

Similarly, on February 4, 2022, the Biden Administration announced a four-year extension of the 2018 tariffs imposed in response to a petition filed under Section 201 of the Trade Act of 1974 (the “Section 201 Tariffs”).

The Biden Administration set the Section 201 Tariffs at 14.75%, with a modest rate reduction each year.

The decision exempted bifacial modules from the tariffs as well as 5 GW of imported solar cells each year.

On May 16, 2024, the Biden Administration announced the removal of the exemption for bifacial modules and those products are now subject to the Section 201 Tariffs.

In August 2021, an anonymous group of U.S.

solar manufacturers filed petitions with Commerce alleging that Chinese companies were evading antidumping and countervailing duty orders on crystalline silicon photovoltaic cells and modules, which are used in the production of solar panels.

Ultimately, Commerce objected to the anonymous nature of the petition, and it expired.

Subsequently, on February 8, 2022, Auxin Solar, a U.S.-based solar panel manufacturer, submitted a petition to Commerce to request country-wide circumvention inquiries pursuant to Section 781(b) of the Tariff Act of 1930 concerning crystalline silicon photovoltaic cells and modules assembled in Malaysia, Thailand, Vietnam and Cambodia using Chinese inputs.

On April 1, 2022, Commerce initiated the inquiries, and, after conducting an investigation, issued a preliminary decision on December 2, 2022, recommending that the Biden Administration impose tariffs on certain solar panel imports from the Southeast Asian countries.

However, prior to Commerce issuing its preliminary decision, the Biden Administration in June 2022 issued Presidential Proclamation 10414, which paused the collection of any new anti-dumping or countervailing duty of certain solar cells and modules imported from Cambodia, Malaysia, Thailand, and Vietnam for two years, until June 2024.

Since June 2024, new imports have been subject to these circumvention penalties unless suppliers can show they use sufficient non-Chinese materials in their production, including solar wafers and cells from outside China.

In December 2023, Auxin Solar, a U.S.-based solar panel manufacturer filed a lawsuit seeking to overturn the regulations implementing Presidential Proclamation 10414 and overturn the Biden Administration’s moratorium on additional duties and tariffs on certain solar cells and modules imported from Cambodia, Malaysia, Thailand, or Vietnam.

trade and tariff policy regarding solar energy equipment has experienced a high level of activity in recent years, under both the current and previous Administrations.

Most recently, on July 1, 2025, the U.S.

Commerce Department launched an investigation under Section 232 of the Trade Expansion Act of 1962 into imported polysilicon, a key component in solar panels.

A decision is expected in 2026.

If the investigation finds that imported polysilicon poses a national security threat to the United States, the Administration could impose new tariffs on those imports, potentially increasing the price of some of the equipment we procure.

In addition, on April 21, 2025, the U.S.

Commerce Department issued final anti-dumping (“AD”) and countervailing duty (“CVD”) rates on crystalline solar cells and modules imported from Vietnam, Malaysia, Thailand and Cambodia.

These countries have supplied the majority of imported solar cells and modules to the United States in recent years, and now face new country-wide final AD or CVD tariff rates ranging from 1.92% to 534.67%.

The Commerce Department also imposed new tariffs on individual cell and module manufacturers in those countries.

The imposition of tariffs generally has an inflationary effect on module prices for solar energy equipment installers, including us.

In addition, U.S.

laws and regulations intended to prevent the importation of goods manufactured with forced labor has and could continue to affect our business operation and supply chain, including the Uyghur Forced Labor Prevention Act and the withhold release order (“WRO”) that U.S.

laws and regulations intended to prevent the importation of goods manufactured with forced labor have and could continue to affect our business operations and supply chain, including ongoing enforcement of the Uyghur Forced Labor Prevention Act (“UFLPA”) and the withhold release order (“WRO”) that U.S.

Customs and Border Protection (“CBP”) issued on June 24, 2021, applicable to certain silica-based products manufactured in the Xinjiang Uyghur Autonomous Region of China.

Intensive examinations, withhold release orders, and related governmental procedures have resulted in supply chain and operational delays throughout the industry, and we have implemented policies and procedures to maintain compliance and minimize delays.

These and similar trade restrictions that may be imposed in the future

could cause delivery and installation delays, and restrict the global supply of polysilicon and solar products.

This could result in near-term demand for available solar energy systems despite higher costs, increased costs of polysilicon and the overall cost of solar energy systems, and equipment shortages, potentially reducing overall demand for and limiting the supply of our products and services.

These and similar trade restrictions that may be imposed in the future could cause delivery and installation delays, and restrict the global supply of polysilicon and solar products.

This could result in near-term demand for available energy systems despite higher costs, increased costs of polysilicon and the overall cost of energy systems, and equipment shortages, potentially reducing overall demand for and limiting the supply of our products and services.

In recent years, we have faced substantial trade policy volatility, marked by escalating tariffs and trade investigations that create substantial uncertainty in our supply chain and cost structure.

In April 2025, the Administration implemented broad "reciprocal" tariffs, including a 10% baseline tariff on most imports.

Following a 90-day pause to allow for bilateral negotiations, country-specific reciprocal tariffs took effect on August 7, 2025, with rates now ranging from 10% to 50% depending on the country of origin.

Existing tariffs on steel, copper and aluminum were notably already increased to 50% for most countries, with specific exemptions for the UK.

On February 20, 2026, the U.S.

Supreme Court held that the International Emergency Economic Powers Act does not authorize the President to impose tariffs, invalidating some but not all of the recently imposed tariffs.

The Trump Administration responded by announcing new tariffs pursuant to another statute, but significant uncertainty remains regarding the legality and effect of such tariffs.

In response to such U.S.

tariffs, some foreign governments have threatened or instituted retaliatory tariffs on certain U.S.

goods and have indicated a willingness to impose additional

tariffs on U.S.

products, which could increase tensions and create greater uncertainty and instability in our business dealings and negatively affect our business operations.

The legal standing of some reciprocal tariffs is currently under federal court review, though these rulings are stayed pending appeal, meaning the announced tariffs remain in effect.

The trade relationship with China has seen particularly aggressive and fluctuating tariff escalations.

While final tariff rates have yet to be determined, other pre-existing U.S.

tariffs on Chinese goods generally persist, can change more frequently than previously, and are additive.

For example, the current U.S.

presidential administration has announced a formal investigation process to consider new national security-based tariffs on imports of semiconductors and semiconductor manufacturing equipment, which are necessary components of our solar panels.

The highly fluid situation with China is potentially subject to further changes as this 90-day pause period concludes and with the ongoing sector-specific investigations into polysilicon and semiconductors.

These developments compound existing trade measures, including the previously discussed AD/CVD tariffs on solar cells and modules and the 50% Section 232 tariffs on steel and aluminum.

The cumulative effect impacts both our direct equipment procurement costs and the expenses faced by our U.S.-based component suppliers, whose manufacturing inputs are subject to these tariffs.

The unpredictable nature of these policy changes, including their scale, scope, and implementation timeline, creates significant challenges for cost forecasting and supply chain management.

While we are actively collaborating with suppliers to establish alternative, less impacted supply chains, these transitions require substantial time for development and scaling.

We cannot guarantee that these mitigation efforts will fully offset the adverse effects of these tariff increases on our business operations, financial condition, and results of operations

We cannot predict what actions may ultimately be taken with respect to tariffs or trade relations between the United States and other countries, which products may be subject to such actions, or what actions may be taken by other countries in retaliation.

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We face competition from traditional energy companies as well as solar and other renewable energy companies.

The solar energy industry is highly competitive and continually evolving as participants strive to distinguish themselves within their markets and compete with large utilities.

The battery storage and solar energy industry is highly competitive and continually evolving as participants strive to distinguish themselves within their markets and compete with large utilities.

We believe that our primary competitors are the established utilities that supply energy to homeowners by traditional means.

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While few utilities to date have received regulatory permission to rate-base residential solar or storage, our competitiveness would be significantly harmed should more utilities receive such permission because we do not receive guaranteed profits for our solar service offerings.

We face competition from other residential solar service providers, and we also may face competition from new entrants into the market as a result of the passage of the IRA and its impacts and benefits to the solar industry.

We face competition from other residential battery storage and solar service providers, and we also may face competition from new entrants into the third-party ownership market as a result of the passage of the OBBB and its impacts to customer-claimed tax credits.

Some of these competitors may have a higher degree of brand name recognition, differing business and pricing strategies, lower barriers to entry into the solar market, and greater capital resources than we have, as well as extensive knowledge of our target markets.

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This may limit our ability to attract customers, particularly those who wish to avoid long-term contracts or have an aesthetic or other objection to putting solar panels on their roofs.

Furthermore, we face competition from purely finance-driven nonintegrated competitors that subcontract out the installation of solar energy systems, from installation businesses (including solar partners) that seek financing from external parties, from large construction companies and from electrical and roofing companies.

In addition, local installers that might otherwise be viewed as potential solar partners may gain market share by being able to be the first providers in new local markets.

Furthermore, we face competition from purely finance-driven nonintegrated competitors that subcontract out the installation of energy systems, from installation businesses (including energy system partners) that seek financing from external parties, from large construction companies and from electrical and roofing companies.

In addition, local installers that might otherwise be viewed as potential energy system partners may gain market share by being able to be the first providers in new local markets.

Some of these competitors may provide energy at lower costs than we do.

Finally, as declining prices for solar panels and related equipment has resulted in an increase in consumers purchasing instead of leasing solar energy systems, we face competition from companies that offer consumer loans for these solar panel purchases.

As the solar industry grows and evolves, we will continue to face existing competitors as well as new competitors who are not currently in the market (including those resulting from the consolidation of existing competitors) that achieve significant developments in alternative technologies or new products such as storage solutions, EV chargers, loan products, or other programs related to third-party ownership.

Finally, as declining prices for solar panels and related equipment has resulted in an increase in consumers purchasing instead of leasing energy systems, we face competition from companies that offer consumer loans for these solar panel purchases.

As the battery storage and solar industry grows and evolves, we will continue to face existing competitors as well as new competitors who are not currently in the market (including those resulting from the consolidation of existing competitors) that achieve significant developments in alternative technologies or new products such as storage solutions, EV chargers, loan products, or other programs related to third-party ownership.

Our failure to adapt to changing market conditions, to compete successfully with existing or new competitors and to adopt new or enhanced technologies could limit our growth and have a material adverse effect on our business and prospects.

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• the construction of a significant number of new power generation plants, including nuclear, coal, natural gas or renewable energy technologies;

• the construction of additional electric transmission and distribution lines;

• load growth from data centers, manufacturing or other sources;

• a reduction in the price of natural gas or other natural resources;

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As a result, we may be unable to attract new customers and our growth would be limited.

The production and installation of solar energy systems depends heavily on suitable meteorological and environmental conditions.

The production and installation of energy systems depend heavily on suitable meteorological and environmental conditions.

If meteorological or environmental conditions are unexpectedly unfavorable, the electricity production from our solar service offerings may be below our expectations, and our ability to timely deploy new systems may be adversely impacted.

The energy produced and revenue and cash flows generated by a solar energy system depend on suitable solar and weather conditions, both of which are beyond our control.

The energy produced and revenue and cash flows generated by an energy system depend on suitable solar and weather conditions, both of which are beyond our control.

Furthermore, components of our systems, such as panels and inverters, could be damaged by severe weather or natural catastrophes, such as hailstorms, tornadoes, fires, hurricanes, atmospheric rivers, or earthquakes.

In these circumstances, we generally would be obligated to bear the expense of repairing the damaged solar energy systems that we own.

Sustained unfavorable weather or environmental conditions also could unexpectedly delay the installation of our solar energy systems, leading to increased expenses and decreased revenue and cash flows in the relevant periods.

Extreme weather

conditions, as well as the natural catastrophes that could result from such conditions, can severely impact our operations by delaying the installation of our systems, lowering sales, and causing a decrease in the output from our systems due to smoke or haze.

Weather patterns could change, making it harder to predict the average annual amount of sunlight striking each location where our solar energy systems are installed.

In these circumstances, we generally would be obligated to bear the expense of repairing the damaged energy systems that we own.

Sustained unfavorable weather or environmental conditions also could unexpectedly delay the installation of our energy systems, leading to increased expenses and decreased revenue and cash flows in the relevant periods.

Extreme weather conditions, as well as the natural catastrophes that could result from such conditions, can severely impact our operations by delaying the installation of our systems, lowering sales, and causing a decrease in the output from our systems due to smoke or haze.

Weather patterns could change, making it harder to predict the average annual amount of sunlight striking each location where our energy systems are installed.

This could make our solar service offerings less economical overall or make individual systems less economical.

Any of these events or conditions could harm our business, financial condition, and results of operations.

Climate change may have long-term impacts on our business, our industry, and the global economy.

Climate change poses a systemic threat to the global economy and will continue to do so until our society transitions to renewable energy and decarbonizes.

While our core business model seeks to accelerate this transition to renewable energy, there are inherent climate-related risks to our business operations.

Extreme weather events and climate change may have long-term impacts on our business, our industry, and the global economy.

Extreme weather, impacts from climate change, and dramatic increase in demand for electricity on the grid, present unprecedented challenges for energy systems, and we anticipate volatility for our industry.

While our core business model seeks to accelerate a transition to renewable energy, there are inherent climate-related risks to our business operations.

Warming temperatures throughout the United States, and in California, our biggest market, in particular, have contributed to extreme weather, intense drought, and increased wildfire risks.

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They can also cause a decrease in the output from our systems due to smoke or haze.

Additionally, if weather patterns significantly shift due to climate change, it may be harder to predict the average annual amount of sunlight striking each location where our solar energy systems are installed.

Additionally, if weather patterns significantly shift due to climate change, it may be harder to predict the average annual amount of sunlight striking each location where our energy systems are installed.

This could make our solar service offerings less economical overall or make individual systems less economical.

Natural disasters and extreme weather events associated with climate change have impacted our operations by delaying the installation of our systems, leading to increased expenses and decreased revenue and cash flows.

Natural disasters and extreme weather events associated with climate change have impacted our operations by delaying the installation of our systems, and in some cases, directly damaging our systems, leading to increased expenses and decreased revenue and cash flows.

Continued increases in similar types of extreme weather events may harm our business, financial condition, and results of operations.

Our corporate mission is to connect people to the cleanest energy on earth, and we seek to mitigate these climate-related risks not only through our core business model and sustainability initiatives, but also by working with organizations who are also focused on mitigating their own climate-related risks.

Risks Related to Our Operating Structure and Financing Activities

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To date, we have funded our business principally through low-cost tax equity investment funds.

If we are unable to establish new investment funds when needed, or upon desirable terms, the growth of our solar service business would be impaired.

unable to establish new investment funds when needed, or upon desirable terms, the growth of our solar service business would be impaired.

Changes in tax law or changes in the interpretation of existing tax law could also affect our ability to establish such tax equity investment funds, impact the terms of existing or future funds, or reduce the pool of capital available for us to grow our business.

The passage of the IRA, which extended subsidies for various renewable energy technologies, is expected to lead to additional demands for tax equity.

As a result, availability of tax equity may present constraints to our growth and harm our financial performance.

In addition, terms for tax equity funds, including the realization of tax credit value through potential structures that utilize transferability of the ITC, may not be at terms we view as favorable.

During the first quarter of 2024, we transitioned a large portion of our funding from a traditional tax equity framework (where tax equity funding is typically provided at or before installation) to a tax credit transfer framework under the IRA’s transferability provisions (where the timing of tax equity or cash equity funding can be dependent on the timing of the transfer of the tax credits, which occurs in arrears following the date the associated solar system is placed in service).

Under this new transferability framework, any transfers of tax credits that occur in arrears can occur in a range from monthly up to a year or more following the date the associated solar system is placed in

The passage of the OBBB in July 2025 adjusted the availability of federal tax credits for various energy technologies and is expected to lead to additional changes for tax equity.

As a result, the availability of tax equity may present constraints to our growth and harm our financial performance.

In addition, terms for tax equity funds, including the realization of tax credit value through potential structures that utilize transferability of the ITC, may not be on terms that we view as favorable.

During the first quarter of 2024, we transitioned a large portion of our funding from a traditional tax equity framework (where tax equity funding is typically provided at or before installation) to a tax credit transfer framework under transferability provisions (where the timing of tax equity or cash equity funding can be dependent on the timing of the transfer of the tax credits, which occurs in arrears following the date the associated solar system is placed in service).

Under this transferability framework, any transfers of tax credits that occur in arrears can occur in a range from monthly to up to a year or more following the date the associated solar system is placed in service.

As a result, the timing of tax equity and/or cash equity funding can be delayed, which may adversely impact our business and operations and may cause volatility to our cash flows as we have an increased mix of transferability funds.

The contract terms in certain of our existing investment fund documents contain various conditions with respect to our ability to draw on financing commitments from the fund investors, including conditions that restrict our ability to draw on such commitments if an event occurs that could reasonably be expected to have a material adverse effect on the fund or, in some instances, us.

Although the OBBB made certain adverse changes to the availability of federal tax credits for various energy technologies, it did not materially alter transferability.

The contract terms in some of our existing investment fund documents contain various conditions with respect to our ability to draw on financing commitments from the fund investors, including conditions that restrict our ability to draw on such commitments if an event occurs that could reasonably be expected to have a material adverse effect on the fund or, in some instances, us.

If we are not able to satisfy such conditions due to events related to our business, a specific investment fund, developments in our industry, including tax or regulatory changes, or otherwise, and as a result, we are unable to draw on existing funding commitments, we could experience a material adverse effect on our business, liquidity, financial condition, results of operations and prospects.

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Volatility and increases in interest rates raise our cost of capital and may adversely impact our business.

While interest rates had been at long-term historic lows during large parts of our operating history, they increased in recent years, and may continue to increase in the future.

Rising interest rates, including the historic increases starting in 2021, have resulted and may continue to result in a decrease in our advance rates, reducing the proceeds we receive from certain investment funds.

Because our financing structure is sensitive to volatility in interest rates, higher rates increase our cost of capital and decrease the amount of capital available to us to finance the deployment of new solar energy systems.

While interest rates have been at long-term historic lows during large parts of our operating history, they have generally increased since 2022, and may stabilize or continue to increase in the future.

Higher interest rates reduce our advance rates, and correspond to a reduction in the proceeds we receive from certain investment funds.

Because our financing structure is sensitive to volatility in interest rates, higher rates increase our cost of capital and

decrease the amount of capital available to us to finance the deployment of new energy systems.

Our project-level debt facilities have historically been refinanced every five to seven years.

If future prevailing interest rates are higher than the rates on our existing debt, our ability to effectively refinance our debt may be adversely impacted and we may face additional interest expense and reduced borrowing capacity, which would negatively impact our liquidity and financial performance.

Additionally, we have selectively increased pricing in many markets in prior years in response to higher interest rates, and may do so in the future, which may impact the overall attractiveness of our offerings to potential new customers.

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One of the components of this monetization is the present value of the payment streams from customers who enter into these Customer Agreements.

If the rate of return required by capital providers, including debt providers, rises as a result of a rise in interest rates, it will reduce

the present value of the customer payment stream and consequently reduce the total value derived from this monetization.

If the rate of return required by capital providers, including debt providers, rises as a result of a rise in interest rates, it will reduce the present value of the customer payment stream and consequently reduce the total value derived from this monetization.

Any measures that we could take to mitigate the impact of rising interest rates could ultimately have an adverse impact on the value proposition that we offer customers.

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Our investors in our tax equity investment funds typically advance capital to us based on, among other things, production capacity estimates.

The models we use to calculate prepayments in connection with certain of our tax equity investment funds are updated at a fixed date occurring after placement in service of all applicable solar energy systems or an agreed upon date (typically within the first year of the applicable term) to reflect certain specified conditions, as they exist at such date including the ultimate system size of the equipment that was sold or leased to the tax equity investment fund, the cost thereof, and the date the equipment went into service.

The models we use to calculate prepayments in connection with certain of our tax equity investment funds are updated at a fixed date occurring after placement in service of all applicable energy systems or an agreed upon date (typically within the first year of the applicable term) to reflect certain specified conditions, as they exist at such date including the ultimate system size of the equipment that was sold or leased to the tax equity investment fund, the cost thereof, and the date the equipment went into service.

In some cases, these true-up models also incorporate any changes in law, which would include any reduction in rates (and thus any reduction in the benefits of depreciation).

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The third-party ownership structure, which we bring to market through our solar service offerings, continues to be the predominant form of system ownership in the residential solar market in many states.

However, with the development of new loan financing products, we have seen a modest shift from leasing and power purchase arrangements to outright purchases of the solar energy system by the customer (i.e., a customer purchases the solar energy system outright instead of leasing the system or buying power from us).

However, with the development of new loan financing products, we have seen a modest shift from leasing and PPAs to outright purchases of the energy system by the customer (i.e., a customer purchases the energy system outright instead of leasing the system or buying power from us).

Continued increases in third-party loan financing products and outright purchases could result in the demand for long-term Customer Agreements to decline, which would require us to shift our product focus to respond to the market trend and could have an adverse effect on our business.

The majority of our customers have historically chosen our solar service offerings as opposed to buying a solar energy system outright.

Our financial model is impacted by the volume of customers who choose our solar service offerings, and an increase in the number of customers who choose to purchase solar energy systems (whether for cash or through third-party financing) may harm our business and financial results.

debt and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

We have substantial amounts of debt, including our convertible senior notes (“Notes”), our credit facility and the non-recourse debt facilities entered into by our subsidiaries, as discussed in more detail in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements, in each case, included in this periodic report.

The majority of our customers have historically chosen our solar service offerings as opposed to buying an energy system outright.

Our financial model is impacted by the volume of customers who choose our solar service offerings, and an increase in the number of customers who choose to purchase energy systems (whether for cash or through third-party financing) may harm our business and financial results.

Servicing our debt requires a significant amount of cash to comply with certain covenants and satisfy payment obligations, and we may not have sufficient cash flow from our business to pay our substantial debt and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

We have substantial amounts of debt, including our convertible senior notes (“Notes”), our credit facilities and the non-recourse debt facilities entered into by our subsidiaries, as discussed in more detail in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements, in each case, included in this periodic report.

Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness depends on our future performance, which is subject to economic, financial, competitive, and other factors beyond our control.

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In addition, upon conversion of the Notes, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the Notes being converted.

However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of Notes surrendered therefor or pay cash for Notes being converted.

However, we may not have enough available cash or be able to obtain financing at the time we are required to

make repurchases of Notes surrendered therefor or pay cash for Notes being converted.

In addition, our ability to repurchase the Notes or to pay cash upon conversions of the Notes may be limited by law, by regulatory authority or by agreements governing our indebtedness at the time.

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If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the Notes or make cash payments upon conversions thereof.

We repaid the convertible senior notes due in 2026 on February 2, 2026.

We are subject to counterparty risk with respect to the capped call transactions.

In connection with our issuance of the convertible senior notes due 2026 in January 2021 and the convertible senior notes due 2030 in February 2024, we entered into privately negotiated capped call transactions (the “Capped Call transactions”) with certain financial institutions (the “Option Counterparties”).

counterparties are financial institutions or affiliates of financial institutions, and we will be subject to the risk that one or more of such option counterparties may default under the Capped Call transactions.

The Option Counterparties are financial institutions or affiliates of financial institutions, and we will be subject to the risk that one or more of such Option Counterparties may default under the Capped Call transactions.

Our exposure to the credit risk of the Option Counterparties will not be secured by any collateral.

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We can provide no assurance as to the financial stability or viability of any of the Option Counterparties.

The 2026 Capped Calls expired on January 29, 2026.

Risks Related to Regulation and Policy

The customer value proposition for distributed solar, storage, and home electrification products is influenced by a number of factors, including, but not limited to, the retail price of electricity, the valuation of electricity not consumed on site and exported to the grid, the rate design mechanisms of customers’ utility bills, various policies related to the permitting and interconnection costs of our products to homes and the grid, the availability of incentives for solar, batteries, and other electrification products, and other policies which allow aggregations of our systems to provide the grid value.

Federal tax policy impacts the competitiveness of our service offerings to customers and our market.

At the federal level, tax policy and associated regulations have a direct impact on our business.

The most notable recent tax legislation affecting our business is the OBBB signed into law on July 4, 2025.

The new law adjusts federal energy tax policies that we rely upon, including the 48E Clean Electricity Investment Credit and its associated “bonus” credits.

For example, while the law maintains the 48E credit for energy storage which begins construction by the end of 2033, it shortens the availability of the 48E credit for solar facilities by requiring construction to begin by July 4, 2026 to maintain the four-year continuity safe-harbor to place a project in service.

Solar facilities which begin construction after July 4, 2026 must be placed in service by the end of 2027.

The law also applies new PFE restrictions to the Section 48E credit, which could potentially deny tax credits to entities owned, controlled, or influenced by certain specified foreign entities, and for facilities that use certain components or receive “material assistance” from a PFE, thereby potentially increasing costs, reducing demand or restricting access to tax credits.

The law ends the customer-claimed 25D Residential Clean Energy Credit starting in 2026.

Changes in the law to the Section 45X Advanced Manufacturing Production Credit could also affect us indirectly, through our suppliers.

The implementation of the law through the federal regulatory process could also directly affect our business.

The customer value proposition for home solar, storage, and home electrification products is influenced by a number of factors, including, but not limited to, the retail price of electricity, the valuation of electricity not consumed on site and exported to the grid, the rate design mechanisms of customers’ utility bills, various policies related to the permitting and interconnection costs of our products to homes and the grid, the availability of incentives for solar, batteries, and other electrification products, and other policies which allow aggregations of our systems to provide the grid value.

Significant changes to any of these factors may impact the competitiveness of our service offerings to customers.

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For over two decades across the United States, utilities, their trade associations, fossil fuel interests, and some other stakeholders not aligned with a decentralized grid have been challenging many legislative and regulatory policies that enhance the customer value proposition of residential solar and storage.

In connection with the value attributed to exported electricity, net metering (“NEM”) has traditionally been the main policy mechanism to measure and value exported electricity sent back to the grid in the markets within which we do business.

That value has always varied depending on the retail price of power in a certain market, substantial differences in rate design per market, and NEM market specific differences, including detail around how to carry over NEM credits, whether or not to cap the amount of net metered solar in a specific market, or how a specific market values the exported electricity.

A substantial majority of the markets in which we operate have implemented NEM policies, allowing end customers to receive credits for the electricity not consumed on site and exported to the grid.

In connection with the value attributed to exported electricity, retail net metering (“NEM”) had traditionally been a main policy mechanism to measure and value electricity exported to the grid.

That value has always varied depending on the retail price of power in a certain market, substantial differences in rate design, and NEM market-specific differences, including billing details regarding whether or how NEM credits are carried forward, whether or not the amount of net metered solar is capped, or how a specific market values the exported electricity.

A substantial majority of the markets in which we operate have implemented various styles of NEM policies, allowing end customers to receive credits for the electricity exported to the grid.

Some states, including our largest market of California, have moved away from the traditional retail NEM credit structure of paying the full retail rate for exported electricity, and instead, such states have chosen to value excess generation by customers’ solar systems in different ways.

In 2016, the Arizona Corporation Commission (“ACC”) replaced retail NEM with a declining fixed export rate.

In 2017, Nevada implemented a reduced credit step down to NEM credits over time.

Hawaii ended retail NEM in 2016 and has since developed programs that utilize values from rooftop solar paired with batteries to support grid needs.

At the end of 2024, Illinois transitioned from traditional retail NEM to a Smart Solar Billing tariff, which includes an upfront distribution system payment paired with a time-varying export rate that can be responded to by utilizing solar paired with batteries.

Many states across the United States have traditionally set limits on the amount of rooftop solar that can be exported for retail credit and there is a long legislative and regulatory history of those limitations being extended in various states, including California, New Jersey, Illinois, North Carolina, and South Carolina.

Our ability to sell our solar service offerings may be adversely impacted by the failure to extend existing limits or “caps” to retail NEM or the elimination of other existing policies that value exported electricity to the grid.

In 2022, Florida Governor DeSantis vetoed legislation that would have established a threshold date and percentage trigger when retail NEM could have faced declines in the immediate export rate in Florida.

New Jersey currently has no NEM cap but reached a threshold that triggers regulatory review of its NEM policy, which will proceed over the next two years.

Recently, the Fiscal Oversight and Management Board of Puerto Rico filed a lawsuit that would require

the Puerto Rico Energy Board in 2025 to review and determine the future of NEM, which could revise or reverse Puerto Rico’s Act 10, which had unanimously extended NEM through 2031.

Most notably, as a result of the finalization of the NEM proceeding on December 15, 2022 by the California Public Utilities Commission (“CPUC”), California moved to a NBT structure in which exported electricity is no longer valued at the retail rate and is instead valued by the state’s “avoided cost” annual calculations, which substantially decreases the credit allocated to an exported electron during the day.

The final California NEM decision rejected a very controversial solar-specific fixed charge and rejected the creation of new non-bypassable charges, minimum bills, and grid participation charges for solar and solar plus storage customers.

Additionally, the final California NEM decision made no retroactive changes to legacy NEM 1.0 or 2.0 California customers.

In April 2023, new California solar customers located in areas serviced by investor-owned utilities (“IOU”) began applying for service under the new NBT.

Also, in April 2023, the California IOUs and other parties filed initial proposals that would represent the highest fixed charges in the United States.

In a June 2023 ruling, the CPUC indicated that it will approve by July 2024 guidelines for future development and implementation of income-graduated fixed charges, but the implementation of the first iteration of these charges is not expected to occur until late 2025 or early 2026.

In May 2024, the CPUC approved a final decision instituting a fixed charge of $24.15/month for most customers of the three major investor-owned utility territories, with no change in existing income-tiers.

Arizona moved to a declining export rate in 2016, and Nevada similarly transitioned to a step-down export credit over time starting in 2017.

Hawaii transitioned from retail NEM in 2016 and developed programs that utilize values from rooftop solar paired with batteries to support grid needs.

At the end of 2024, Illinois transitioned from traditional retail NEM to a Smart Solar Billing tariff, which includes an upfront distribution system payment paired with a time-varying export rate, which maintained customer value by utilizing solar paired with batteries.

In 2024, the Fiscal Oversight and Management Board of Puerto Rico filed a lawsuit that would require the Puerto Rico Energy Board to review and determine the future of NEM, which could revise or reverse Puerto Rico’s Act 10, which had unanimously extended NEM through 2031.

The lawsuit is still ongoing.

Most recently, the Public Utilities Commission of Nevada issued an order that transitioned net metering on a monthly basis to net metering on a 15-minute basis in the Sierra Pacific Power Company territory, which negatively impacted the value proposition of rooftop solar for new customers.

Additionally, some states like New Jersey and Maryland have established caps or thresholds that could trigger regulatory review of net metering policies in the coming years.

I n 2023, California moved to a net billing tariff (NBT) structure in which exported electricity is no longer valued at the retail rate and is instead valued by the state’s “avoided cost” annual calculations.

The California Public Utilities Commission in its final decision also rejected a solar-specific fixed charge and rejected the creation of new non-bypassable charges, minimum bills, and grid participation charges for solar and solar plus storage customers.

In 2024 the California Public Utilities Commission (CPUC) approved a fixed charge of $24.15/month for most residential customers, not just solar customers, of the three major investor-owned utility territories, with no change in existing income tiers.

The decision added a smaller fixed monthly charge of $6/month and $12/month, respectively, for the two-tiers of existing low-income customers.

The final California NEM decision presents a significant change to the residential solar market in California.

Under this new framework, storage paired with solar has a heightened value proposition to customers, and we have seen an increased demand for our solar plus storage offerings, thereby increasing the importance of procuring a variety of battery storage products and potentially accentuating supply chain risks related to battery storage systems.

The new NBT pricing framework may also result in the introduction of new product offerings and pricing structures by our competitors throughout the solar and utilities industries, and led to our introduction of Sunrun Shift™, our home solar subscription offering that maximizes the value of solar energy under California’s NBT by increasing self-consumption during peak hours when rates are highest and reducing low-value exports back to the grid through the use of a new storage configuration.

Under the new California NBT framework, storage paired with solar has a heightened value proposition to customers.

The NBT framework may also result in the introduction of new product offerings and pricing structures by our competitors throughout the solar and utilities industries.

This may also result in increased competition and uncertainty regarding the demand for such new products and offerings, which may adversely impact our business and results of operations.

Recently, California Governor Newsom issued an executive order directing the CPUC and other state agencies to evaluate and report on efforts to address rising electricity costs, and the potential impact of this executive order is still unclear.

Electric utility statutes and regulations and changes to such statutes or regulations may present technical, regulatory and economic barriers to the purchase and use of our solar service offerings that may significantly reduce demand for such offerings.

Existing customers utilizing net metering under NEM1 or NEM2 billing regimes have been routinely protected.

Most recently in 2025, legislation was introduced (AB942) which would have retroactively impacted existing customers’ rights to legacy net metering tariffs.

However, the California legislature removed the substantive provisions of the bill and it was held in committee in 2025.

Electric utility statutes and regulations and changes to such statutes or regulations may present technical, regulatory and economic barriers to the purchase and use of our solar and battery service offerings that may significantly reduce demand for such offerings.

Federal, state, and local government statutes and regulations concerning electricity heavily influence the market for our solar service offerings and are constantly evolving.

These statutes, regulations, and administrative rulings relate to electricity pricing, net metering, consumer protection, incentives, taxation, competition with utilities and the interconnection of homeowner-owned and third party-owned solar energy systems to the electrical grid.

These statutes, regulations, and administrative rulings relate to electricity pricing, net metering, consumer protection, compensation payments, taxation, interconnection to the grid, and competition with utilities.

These statutes and regulations are constantly evolving.

Governments, often acting through state utility or public service commissions, change and adopt different rates for residential customers on a regular basis and these changes can have a negative impact on our ability to deliver savings, or energy bill management, to customers.

In addition, many utilities, their trade associations, and fossil fuel interests in the country, which have significantly greater economic, technical, operational, and political resources than the residential solar industry, are currently challenging solar-related policies, which may have the effect of reducing the competitiveness of residential solar energy.

In addition, many utilities, their trade associations, and fossil fuel interests in the country, which have significantly greater economic, technical, operational, and political resources than the residential solar and storage industry, can challenge solar-related policies, which may have the effect of reducing the competitiveness of residential solar energy.

Any adverse changes in solar-related policies could have a negative impact on our business and prospects.

Regulations and policies related to rate design could deter potential customers from purchasing our solar service offerings, reduce the value of the electricity our systems produce, and reduce any savings that our customers could realize from our solar service offerings.

Regulations and policies related to rate design could deter potential customers from purchasing our solar and storage service offerings, reduce the value of the electricity our systems produce, and reduce any savings that our customers could realize from our solar service offerings.

All states regulate investor-owned utility retail electricity pricing.

In addition, there are numerous publicly owned utilities and electric cooperatives that establish their own retail electricity pricing through some form of regulation or internal process.

These regulations and policies could deter potential customers from purchasing our

solar service offerings.

For example, some utilities in states such as Arizona and Utah have sought and secured rate design changes that reduce the credit for residential solar exports to below the retail rate and impose new charges for rooftop solar customers.

These regulations and policies could deter potential customers from purchasing our solar service offerings.

For example, some utilities in states such as Arizona have sought and secured rate design changes that reduce the credit for residential solar exports to below the retail rate and impose new charges for rooftop solar customers.

Utilities in additional states may follow suit.

Such rate changes can include changing rates to charge lower volume-based rates—the rates charged for kilowatt hours of electricity purchased by a residential customer—while raising unavoidable fixed charges that an end customer is subject to when they purchase solar energy from third parties, and levying charges on homeowners based on their point of maximum demand during a month (referred to as “demand charge”).

For example, the Arizona Public Service Company offers residential demand charge rate plans and if our solar customers have subscribed to those plans, they may not realize typical savings from our offerings.

These forms of rate design could adversely impact our business by reducing the value of the electricity our solar energy systems produce compared to retail net metering, and reducing any savings customers realize by purchasing our solar service offerings.

These proposals could continue or be replicated in other states.

Such rate changes can include changing rates to charge lower volume-based rates — the rates charged for kilowatt hours of electricity purchased by a residential customer—while raising unavoidable fixed charges and levying charges on homeowners based on their point of maximum demand during a month (referred to as “demand charge”).

These forms of rate design could adversely impact our business by reducing the value of the electricity our energy systems produce, and reducing any savings customers realize by purchasing our solar and battery service offerings.

In September 2025, the Public Utilities Commission of Nevada approved a daily demand charge for all residential customers in Nevada Power service territory, scheduled to begin on April 1, 2026, which could negatively impact the value of home solar and storage.

This charge is currently being challenged.

These proposals could be replicated in other states.

In addition to changes in general rates charged to all residential customers, utilities sometimes have proposed solar-specific charges (which may be fixed charges, capacity-based charges, or other rate charges).

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Sales of electricity by third parties face regulatory challenges in some states and jurisdictions.

These challenges pertain to issues such as whether third-party-owned systems qualify for the same rebates, tax exemptions or other non-tax incentives available for homeowner-owned solar energy systems, whether third-party-owned systems are eligible at all for these incentives, whether our Customer Agreements are properly characterized as leases or PPAs, and whether third-party-owned systems are eligible for net metering and the associated significant cost savings.

whether our Customer Agreements are properly characterized as leases or PPAs, and whether third-party-owned systems are eligible for net metering and the associated significant cost savings.

Texas and Connecticut clarified through legislation that third-party-owned residential solar systems would be treated the same as customer-owned systems, and would qualify for the existing residential solar property tax exemption.

Additionally, Virginia passed legislation in 2024 that clarified leased systems are allowed.

Adverse regulatory treatment of third-party ownership arrangements could reduce demand for our solar service offerings, adversely impact our access to capital and cause us to increase the price we charge customers for energy.

Interconnection limits or circuit-level caps imposed by regulators may significantly reduce our ability to sell electricity from our solar service offerings in certain markets or slow interconnections, harming our growth rate and customer satisfaction scores.

Interconnection rules establish the circumstances in which rooftop solar will be connected to the electricity grid.

Interconnection limits or circuit-level caps imposed by regulators may curb our growth in key markets.

Adverse regulatory treatment of third-party ownership arrangements could reduce demand for our solar and battery service offerings, adversely impact our access to capital and cause us to increase the price we charge customers for energy.

Interconnection limits or circuit-level caps imposed by utilities or regulators may significantly reduce our ability to sell electricity from our solar service offerings in certain markets or slow interconnections, harming our growth rate and customer satisfaction scores.

Interconnection rules establish the circumstances in which rooftop solar and batteries will be connected to the electricity grid.

Interconnection limits or circuit-level caps imposed by regulators or utilities may curb our growth in key markets.

Utilities throughout the country have different rules and regulations regarding interconnection and some utilities cap or limit the amount of solar energy that can be interconnected to the grid.

Our systems do not provide power to customers until they are interconnected to the grid, and some relevant laws and regulations in certain markets may considerably slow the timing of interconnection, which may in turn impact the system production and our business and sales results.

Currently, our systems do not provide power to customers until they are interconnected to the grid, and some relevant laws and regulations in certain markets may considerably slow the timing or increase costs of interconnection, which may in turn impact the system production and our business and sales results.

Interconnection regulations are based on claims from utilities regarding the amount of solar energy that can be connected to the grid without causing grid reliability issues or requiring significant grid upgrades.

Although recent rulings from the Hawaii Utilities Commission have helped resolve some problems, historically, interconnection limits or circuit-level caps have slowed the pace of our installations in Hawaii.

Similar interconnection limits could slow our future installations in Hawaii, Puerto Rico, Colorado, New Jersey, or other markets, harming our growth rate and customer satisfaction scores.

Similarly, the California, Illinois, and Hawaii Public Utilities Commissions require the activation of some advanced inverter functionality to head off presumed grid reliability issues, which may require more oversight of the operation of the solar energy systems over time, but may also help ensure circuits remain open or interconnection costs remain low.

Interconnection constraints and limits may hamper our ability to sell our offerings in certain markets and increase our costs, adversely affecting our business, operating results, financial condition, and prospects.

Interconnection limits could slow our future installations, harming our growth rate and customer satisfaction scores.

Additionally, the California, Illinois, Puerto Rico, and Hawaii public utilities commissions require the activation of some advanced inverter functionality to head off presumed grid reliability issues, which may require more oversight of the operation of the energy systems over time, but may also help ensure circuits remain open or interconnection costs remain low.

We expect utility requirements to incorporate these advanced functions provided by the IEEE 1547-2018/UL-1741 SB inverters and that they will become more commonplace.

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Risks Related to Our Business Operations

Our growth depends in part on the success of our relationships with third parties, including our solar partners.

Our growth depends in part on the success of our relationships with third parties.

A key component of our growth strategy is to develop or expand our relationships with third parties.

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These programs may not roll out as quickly as planned or produce the results we anticipated.

A significant portion of our business depends on attracting and retaining new and existing solar partners.

Negotiating relationships with our solar partners, investing in due diligence efforts with potential solar partners, training such third parties and contractors, and monitoring them for compliance with our standards require significant time and resources and may present greater risks and challenges than expanding a direct sales or installation team.

A significant portion of our business depends on attracting and retaining new and existing partners.

Negotiating relationships with third parties, investing in due diligence efforts with potential third parties, training such third parties and contractors, and monitoring them for compliance with our standards require significant time and resources and may present greater risks and challenges than expanding a direct sales or installation team.

If our partners fail to perform their obligations or meet our standards, we may need to find other ways to meet their obligations to customers or find replacement partners, which could lead to increased costs, operational delays, and a diversion of management attention.

Additionally, if partners breach their contractual obligations or encounter financial difficulties, we may not be able to recover amounts owed to us, which could negatively impact our financial condition and operating results.

If we are unsuccessful in establishing or maintaining our relationships with these third parties, our ability to grow our business and address our market opportunity could be impaired.

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This would limit our growth potential and our opportunities to generate significant additional revenue or cash flows.

We and our solar partners depend on a limited number of suppliers of solar panels, batteries, and other system components to adequately meet anticipated demand for our solar service offerings.

Any shortage, bottlenecks, delay, detentions, or component price change from these suppliers, or the acquisition of any of these suppliers by a competitor, could result in sales and installation delays, cancellations, and loss of market share.

We and our solar partners purchase solar panels, inverters, batteries, and other system components from a limited number of suppliers, making us susceptible to quality issues, shortages, bottlenecks, and price changes.

If we or our solar partners fail to develop, maintain and expand our relationships with these or other suppliers, we may be unable to adequately meet anticipated demand for our solar service offerings, or we may only be able to offer our systems at higher costs or after delays.

If one or more of the suppliers that we or our solar partners rely upon to meet anticipated demand ceases or reduces production, we may be unable to quickly identify alternate suppliers or to qualify alternative products on commercially reasonable terms, and we may be unable to satisfy this demand.

The acquisition of a supplier by one of our competitors could also limit our access to such components and require significant redesigns of our solar energy systems or installation procedures and have a material adverse effect on our business.

We and our partners depend on a limited number of suppliers of solar panels, batteries, and other system components to adequately meet anticipated demand for our solar and storage service offerings.

Any shortage, bottlenecks, delay, detentions, or component price change from these suppliers, or the

acquisition of any of these suppliers by a competitor, could result in sales and installation delays, cancellations, and loss of market share.

We and our energy system partners purchase solar panels, inverters, batteries, and other system components from a limited number of suppliers, making us susceptible to quality issues, shortages, bottlenecks, regulatory risks, trade regulations and tariffs and price changes.

If we or our energy system partners fail to develop, maintain and expand our relationships with these or other suppliers, we may be unable to adequately meet anticipated demand for our solar service offerings, or we may only be able to offer our systems at higher costs or after delays.

If one or more of the suppliers that we or our energy system partners rely upon to meet anticipated demand ceases or reduces production, we may be unable to quickly identify alternate suppliers or to qualify alternative products on commercially reasonable terms, and we may be unable to satisfy this demand.

The acquisition of a supplier by one of our competitors could also limit our access to such components and require significant redesigns of our energy systems or installation procedures and have a material adverse effect on our business.

In particular, there is a limited number of suppliers of inverters, which are components that convert electricity generated by solar panels into electricity that can be used to power the home.

For example, once we design a system for use with a particular inverter, if that type of inverter is not readily available at an anticipated price, we may incur delays and additional expenses to redesign the system.

Further, the inverters on our solar energy

systems generally carry only ten year warranties.

Further, the inverters on our energy systems generally carry only ten-year warranties.

If there is an inverter equipment shortage in a year when a substantial number of inverters on our systems need to be replaced, we may not be able to replace the inverters to maintain proper system functioning or may be forced to do so at higher than anticipated prices, either of which would adversely impact our business.

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trade regulations to prohibit the importation of any goods derived from forced labor, could affect our operations.

Further, the Uyghur Forced Labor Prevention Act that President Biden signed into law on December 23, 2021, which took effect on June 21, 2022, has affected, and may continue to affect, our supply chain and operations.

Further, the Uyghur Forced Labor Prevention Act that President Biden signed into law on December 23, 2021, which took effect on June 21, 2022, has affected, and may continue to

affect, our supply chain and operations.

These and other similar trade restrictions that may be imposed in the future could cause delivery and installation delays, and restrict the global supply of polysilicon and solar products.

This, coupled with the passage of the IRA, could result in near-term demand for available solar energy systems despite higher costs, as well as increased costs of polysilicon and the overall cost of solar energy systems, potentially reducing overall demand for our products and services.

In addition, our supply chain and operations (or those of our partners) could be subject to events beyond our control, such as earthquakes, wildfires, flooding, hurricanes, tsunamis, typhoons, volcanic eruptions, droughts, tornadoes, the effects of climate change and related extreme weather, public health issues and pandemics, war, terrorism, government restrictions or limitations on trade, and geo-political unrest and uncertainties, such as Russia’s invasion of Ukraine and the current armed conflict in Israel and the Gaza Strip.

This, coupled with the passage of the Inflation Reduction Act of 2022 (the "IRA") and OBBB, could result in near-term demand for available energy systems despite higher costs, as well as increased costs of polysilicon and the overall cost of energy systems, potentially reducing overall demand for our products and services.

In addition, our supply chain and operations (or those of our partners) could be subject to events beyond our control, such as earthquakes, wildfires, flooding, hurricanes, tsunamis, typhoons, volcanic eruptions, droughts, tornadoes, the effects of climate change and related extreme weather, public health issues and pandemics, war, terrorism, government restrictions or limitations on trade, and geo-political unrest and uncertainties, including global conflicts in Ukraine and the Middle East.

We currently do not, and do not plan to in the future, source any products, materials, components, parts, or services directly from providers in these regions.

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As the primary entity that contracts with customers, we are subject to risks associated with construction, cost overruns, delays, customer cancellations, regulatory compliance, and other contingencies, any of which could have a material adverse effect on our business and results of operations.

We are a licensed contractor in certain communities that we service, and we are ultimately responsible as the contracting party for every solar energy system installation.

We may be liable, either directly or through our solar partners, to customers for any damage we cause to them, their home, belongings, or property during the installation of our systems.

For example, we, either directly or through our solar partners, frequently penetrate customers’ roofs during the installation process and may incur liability for the failure to adequately weatherproof such penetrations following the completion of construction.

In addition, because the solar energy systems we or our solar partners deploy are high voltage energy systems, we may incur liability for any failure to comply with electrical standards and manufacturer recommendations.

We are a licensed contractor in certain communities that we service, and we are ultimately responsible as the contracting party for every energy system installation.

We may be liable, either directly or through our energy system partners, to customers for any damage we cause to them, their home, belongings, or property during the installation of our systems.

For example, we, either directly or through our energy system partners, frequently penetrate customers’ roofs during the installation process and may incur liability for the failure to adequately weatherproof such penetrations following the completion of construction.

In addition, because the energy systems we or our energy system partners deploy are high voltage energy systems, we may incur liability for any failure to comply with electrical standards and manufacturer recommendations.

For example, on December 2, 2020, the California Contractors State License Board (the “CSLB”) filed an administrative proceeding against us and certain of our officers related to an accident that occurred during an installation by one of our affiliate channel partners, Horizon Solar Power, which held its own license with the CSLB.

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We could face other similar claims or proceedings in the future, which, if not resolved favorably, could potentially result in fines, public reprimand, probation, or the suspension or revocation of certain of our licenses.

Completing the sale and installation of a solar energy system requires many different steps including a site audit, completion of designs, permitting, installation, electrical sign-off and interconnection.

Completing the sale and installation of an energy system requires many different steps including a site audit, completion of designs, permitting, installation, electrical sign-off and interconnection.

Customers may cancel their Customer Agreement, subject to certain conditions, during this process until commencement of installation, and we have experienced increased customer cancellations in certain geographic markets during certain periods in our operating history.

We or our solar partners may face customer cancellations, delays or cost overruns which may adversely affect our or our solar partners’ ability to ramp up the volume of sales or installations in accordance with our plans.

We or our energy system partners may face customer cancellations, delays or cost overruns which may adversely affect our or our energy system partners’ ability to ramp up the volume of sales or installations in accordance with our plans.

These cancellations, delays or overruns may be the result of a variety of factors, such as labor shortages or other labor issues, defects in materials and workmanship, adverse weather conditions, transportation constraints, construction change orders, site changes or roof conditions, geographic factors, extended permitting and inspection times and other unforeseen difficulties or any other factors that may extend the timing to install, any of which could lead to increased cancellation rates, reputational harm and other adverse effects.

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If we continue to experience increased customer cancellations, our financial results may be materially and adversely affected.

In addition, the current macroeconomic environment, including rising interest rates, instability in financial markets and bank failures, may impact our ability to engage with new customers and expand our relationships with existing customers.

In addition, the current macroeconomic environment, including rising interest rates, instability in financial markets and bank failures,

may impact our ability to engage with new customers and expand our relationships with existing customers.

If our customers are materially negatively impacted by these factors, our business could be negatively impacted.

Policy can impact solar installation completion timelines.

For example, in fall 2022, California passed SB 379, which imposes a required timeline for cities and counties to implement an online, automated solar permitting platform like SolarAPP+.

Cities with populations over 50,000 and counties with populations over 150,000 were required to have instant, online, automated residential solar and storage permitting as of September 30, 2023, which may increase the speed at which we install solar systems.

The remaining, smaller jurisdictions were required to implement instant, online residential solar and storage permitting by September 30, 2024.

In addition, the installation of solar energy systems and other energy-related products requiring building modifications are subject to oversight and regulation in accordance with national, state and local laws and ordinances relating to building, fire and electrical codes, safety, environmental protection, utility interconnection and metering, and related matters.

For example, California passed SB 379 in 2022, which imposes a required timeline for cities and counties to implement an online, automated solar permitting platform.

In 2024 and 2025, Maryland, Texas, Florida, and New Jersey similarly passed streamlined permitting legislation that can reduce installation timelines.

In addition, the installation of energy systems and other energy-related products requiring building modifications are subject to oversight and regulation in accordance with national, state and local laws and ordinances relating to building, fire and electrical codes, safety, environmental protection, utility interconnection and metering, and related matters.

We also rely on certain of our and our partners’ employees to maintain professional licenses in many of the jurisdictions in which we operate, and our failure to employ properly licensed personnel could adversely affect our licensing status in those jurisdictions.

It is difficult and costly to track the requirements of every individual authority having jurisdiction over our installations and to design solar energy systems to comply with these varying standards.

It is difficult and costly to track the requirements of every individual authority having jurisdiction over our installations and to design energy systems to comply with these varying standards.

Any new government regulations or utility policies pertaining to our systems may result in significant additional expenses to us and our customers and, as a result, could cause a significant reduction in demand for our solar service offerings.

We have a variety of stringent quality standards that we apply in the selection, supervision, and oversight of our third-party suppliers and solar partners.

We have a variety of stringent quality standards that we apply in the selection, supervision, and oversight of our third-party suppliers and energy system partners.

We exercise oversight over our partners through written agreements requiring compliance with the laws and requirements of all jurisdictions, including regarding safety and consumer protections, by oversight of compliance with these agreements, and enforced by termination of a partner relationship for failure to meet those obligations.

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A lack of demonstrated compliance could lead us to seek alternative suppliers or contractors, which could increase our costs and result in delayed delivery or installation of our products, product shortages or other disruptions of our operations.

Violation of labor or other laws by our suppliers and solar partners or the divergence of a supplier’s or solar partner’s labor or other practices from those generally accepted as ethical in the United States or other markets in which we do business could also attract negative publicity for us and harm our business, brand and reputation in the market.

Violation of labor or other laws by our suppliers and energy system partners or the divergence of a supplier’s or energy system partner’s labor or other practices from those generally accepted as ethical in the United States or other markets in which we do business could also attract negative publicity for us and harm our business, brand and reputation in the market.

If we fail to manage our recent and future growth effectively, we may be unable to execute our business plan, maintain high levels of customer service, or adequately address competitive challenges.

We have experienced significant growth in recent periods and we intend to continue to expand our business within existing markets, such as Puerto Rico, and in a number of new locations in the future, and with our product offerings, such as EV chargers.

We have experienced significant growth in recent periods and we intend to continue to expand our business within existing markets and in a number of new locations in the future, and with our product offerings, such as EV chargers.

This growth has placed, and any future growth may continue to place, a significant strain on our management, operational and financial infrastructure.

In particular, we have been in the past, and may in the future, be required to expand, train and manage our growing employee base and solar partners.

In particular, we have been in the past, and may in the future, be required to expand, train and manage our growing employee base and energy system partners.

Our management will also be required to maintain and expand our relationships with customers, suppliers, and other third parties and attract new customers and suppliers, as well as to manage multiple geographic locations.

In addition, our current and planned operations, personnel, systems and procedures might be inadequate to support our future growth and may require us to make additional unanticipated investment in our infrastructure, including additional costs for the expansion of our employee base and our solar partners as well as marketing and branding costs.

In addition, our current and planned operations, personnel, systems and procedures might be inadequate to support our future growth and may require us to make additional unanticipated investment in our infrastructure, including additional costs for the expansion of our employee base and our energy system partners as well as marketing and branding costs.

Our success and ability to further scale our business will depend, in part, on our ability to manage these changes in a cost-effective and efficient manner.

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Any failure to effectively manage growth could adversely impact our business, operating results, financial condition, and reputation.

We typically bear the risk of loss and the cost of maintenance, repair and removal on solar energy systems that are owned or leased by our investment funds.

We typically bear the risk of loss and are generally obligated to cover the cost of maintenance, repair and removal for any solar energy system that we sell or lease to our investment funds.

At the time we sell or lease a solar energy system to an investment fund, we enter into a maintenance services agreement where we agree to operate and maintain the system for a fixed fee that is calculated to cover our future expected maintenance costs.

If our solar energy systems require an above-average amount of repairs or if the cost of repairing systems were higher than our estimate, we would need to perform such repairs without additional compensation.

If our solar energy systems, more than 45% of which were located in California as of December 31, 2024, are damaged as the result of a natural disaster beyond our control, losses could exceed or be excluded from, our insurance policy limits, and we could incur unforeseen costs that could harm our business and financial condition.

We typically bear the risk of loss and the cost of maintenance, repair and removal on energy systems that are owned or leased by our investment funds.

We typically bear the risk of loss and are generally obligated to cover the cost of maintenance, repair and removal for any energy system that we sell or lease to our investment funds.

At the time we sell or lease an energy system to an investment fund, we enter into a maintenance services agreement where we agree to operate and maintain the system for a fixed fee that is calculated to cover our future expected maintenance costs.

If our energy systems require an above-average amount of repairs or if the cost of repairing systems were higher than our estimate, we would need to perform such repairs without additional compensation.

If our energy systems, more than 45% of which were located in California as of December 31, 2025, are damaged as the result of a natural disaster beyond our control, losses could exceed or be excluded from our insurance policy limits, and we could incur unforeseen costs that could harm our business and financial condition.

We may also incur significant costs for taking other actions in preparation for, or in reaction to, such events.

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If our solar service offerings, including our racking systems, photovoltaic modules, batteries, inverters, or other products, injured someone, we would be exposed to product liability claims.

Because solar energy systems and many of our other current and anticipated products are electricity-producing devices, it is possible that

customers or their property could be injured or damaged by our products, whether by product malfunctions, defects, improper installation or other causes.

We rely on third-party manufacturing warranties, warranties provided by our solar partners and our general liability insurance to cover product liability claims and have not obtained separate product liability insurance.

Our solar energy systems, including our photovoltaic modules, batteries, inverters, and other products, may also be subject to recalls due to product malfunctions or defects.

Because energy systems and many of our other current and anticipated products are electricity-producing devices, it is possible that customers or their property could be injured or damaged by our products, whether by product malfunctions, defects, improper installation or other causes.

We rely on third-party manufacturing warranties, warranties provided by our energy system partners and our general liability insurance to cover product liability claims and have not obtained separate product liability insurance.

Our energy systems, including our photovoltaic modules, batteries, inverters, and other products, may also be subject to recalls due to product malfunctions or defects.

Any product liability claim we face could be expensive to defend and divert management’s attention.

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This concentration of our customer base and operational infrastructure could lead to our business and results of operations being particularly susceptible to adverse economic, regulatory, political, weather and other conditions in this market and in other markets that may become similarly concentrated, in particular the east coast, where we have seen significant growth recently.

Recent changes to net metering policy and the tariff structure in California in December 2022 have created additional uncertainty and challenges, given the size of our customer base in California.

Changes to California's net metering and tariff structure in 2023 created additional uncertainty and challenges, and thus a shift to more solar-paired-with-storage offerings, given the size of our customer base in California.

Originations in California continue to be below levels prior to the NBT transition, and without further increases in originations, our new installations in California may continue to decline compared to prior periods, which could have a material adverse effect on our business operations and financial performance.

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A significant natural disaster, such as an earthquake or wildfire, or a public health crisis, such as a pandemic, or civil unrest could have a material adverse impact on our business, results of operations and financial condition.

In addition, acts of terrorism or malicious computer viruses could cause disruptions in our or our solar partners’ businesses or the economy as a whole.

In addition, acts of terrorism or malicious computer viruses could cause disruptions in our or our energy system partners’ businesses or the economy as a whole.

To the extent that these disruptions result in delays or cancellations of installations or the deployment of our solar service offerings, our business, results of operations and financial condition would be adversely affected.

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With respect to developing our sales channels, such as direct-to-home, homebuilder, retail, and e-commerce channels and adapting to a remote selling model, we have incurred and may continue to incur significant costs.

addition, we may not initially or ever be successful in utilizing these new channels.

In addition, we may not initially or ever be successful in utilizing these new channels.

Furthermore, we may not be able to compete successfully with companies with a historical presence in such channels, and we may not realize the anticipated benefits of entering such channels, including efficiently increasing our customer base and ultimately reducing costs.

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If we are unable to successfully compete in new channels, our operating results and growth prospects could be adversely affected.

If we fail to maintain or expand our affiliate channel partner relationships, we may be unable to adequately meet anticipated demand for our solar service offerings, or we may only be able to offer our systems at higher costs or after delays.

Further, if the terms, including geographic scope, exclusivity, pricing, duration, or other key terms of our agreements with our solar partners are substantially altered, it may impact our operational results and financial performance.

If we fail to maintain or expand our affiliate channel partner relationships, we may be unable to adequately meet anticipated demand for our energy systems service offerings, or we may only be able to offer our systems at higher costs or after delays.

Further, if the terms, including geographic scope, exclusivity, pricing, duration, or other key terms of our agreements with our energy system partners are substantially altered, it may impact our operational results and financial performance.

Obtaining a sales contract with a potential customer does not guarantee that the potential customer will not decide to cancel or that we will not need to cancel due to a failed inspection, which could cause us to generate no revenue despite incurring costs and adversely affect our results of operations.

Even after we secure a sales contract with a potential customer, we (either directly or through our solar partners) must perform an inspection to ensure the home, including the rooftop, meets our standards and specifications.

If the inspection finds repairs to the rooftop are required in order to satisfy our standards and specifications to install the solar energy system, and a potential customer does not want to make such required repairs, we would lose that anticipated sale.

Even after we secure a sales contract with a potential customer, we (either directly or through our energy system partners) must perform an inspection to ensure the home, including the rooftop, meets our standards and specifications.

If the inspection finds repairs to the rooftop are required in order to satisfy our standards and specifications to install the energy system, and a potential customer does not want to make such required repairs, we would lose that anticipated sale.

In addition, per the terms of our Customer Agreements, a customer maintains the ability to cancel before commencement of installation, subject to certain conditions.

Any delay or cancellation of an anticipated sale could materially and adversely affect our financial results, as we may have incurred sales-related, design-related, and other expenses and generated no revenue.

The value of our solar energy systems at the end of the associated term of the lease or PPA may be lower than projected, which may adversely affect our financial performance and valuation.

We depreciate the costs of our solar energy systems over their estimated useful life of 35 years.

At the end of the initial typically 20- or 25-year term of the Customer Agreement, customers may choose to purchase their solar energy systems, ask to remove the system at our cost or renew their Customer Agreements.

Customers may choose to not renew or purchase for any reason, including pricing, decreased energy consumption, relocation of residence, or switching to a competitor product.

Furthermore, it is difficult to predict how future environmental regulations may affect the costs associated with the removal, disposal or recycling of our solar energy systems.

If the value in trade or renewal revenue is less than we expect, we may be required to recognize all or some of the remaining unamortized costs.

This could materially impair our future results of operations.

The value of our energy systems at the end of the associated term of the lease or PPA may be lower than projected, and future removal, disposal and recycling obligations could change, all of which may adversely affect our financial performance and valuation.

We depreciate the costs of our energy systems over their estimated useful life of 35 years.

At the end of the initial, typically 20- or 25-year, term of the Customer Agreement, customers may choose to purchase their energy systems, ask to remove the system at our cost or renew their Customer Agreements.

Customers may choose not to renew or purchase for any reason, including pricing, decreased energy consumption, relocation of residence, or switching to a competitor product.

Furthermore, it is difficult to predict how future environmental regulations may affect the costs associated with the removal, disposal or recycling of our energy systems.

These uncertainties could affect our calculation of asset retirement obligations (“AROs”) associated with our energy systems, which could increase in the future.

If the value in trade or renewal revenue is less than we expect, we may be required to recognize all or some of the remaining unamortized costs without corresponding revenues to offset the net effect of the cost.

The foregoing risks could have a material effect on our future balance sheets, cash flows, and results of operations.

We are exposed to the credit risk of customers and payment delinquencies on our accounts receivables.

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However, this may decline to the extent FICO score requirements under future investment funds are relaxed.

While customer defaults have been immaterial to date, we expect that the risk of customer defaults may increase as we grow our business.

As our fleet of systems ages and we experience annual defaults from customers, cumulative annual defaults increase accordingly.

If realized annual defaults and cumulative defaults exceed assumptions made by us or our financing partners, we may experience reduced revenue and face reductions in the financing proceeds obtained for new funds and potentially at less advantageous terms.

Due to the immaterial amount of customer defaults to date, our reserve for this exposure is minimal, and our future exposure may exceed the amount of such reserves.

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Mergers and acquisitions are inherently risky, may not produce the anticipated benefits and could adversely affect our business, financial condition or results of operations.

If we are unsuccessful in developing and maintaining our proprietary technology, including our BrightPath software, our ability to attract and retain solar partners could be impaired, our competitive position could be harmed and our revenue could be reduced.

Our future growth depends on our ability to continue to develop and maintain our proprietary technology that supports our solar service offerings, including our design and proposal software, BrightPath.

In addition, we rely, and expect to continue to rely, on licensing agreements with certain third parties for aerial images that allow us to efficiently and effectively analyze a customer’s rooftop for solar energy system specifications.

If we are unsuccessful in developing and maintaining our proprietary technology, including our BrightPath software, our ability to attract and retain energy system partners could be impaired, our competitive position could be harmed and our revenue could be reduced.

Our future growth depends on our ability to continue to develop and maintain our proprietary technology that supports our energy systems service offerings, including our design and proposal software, BrightPath.

In the event that our current or future products require features that we have not developed or licensed, or we lose the benefit of an existing license, we will be required to develop or obtain such technology through purchase, license or other arrangements.

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When new technologies are developed with U.S.

government funding, the government obtains certain rights in any resulting patents, including a nonexclusive license authorizing the government to use the invention for non-commercial purposes.

government funding, the government obtains certain rights in any resulting patents, including a nonexclusive license

authorizing the government to use the invention for non-commercial purposes.

These rights may permit the government to disclose certain confidential information related to BrightPath to third parties and to exercise “march-in” rights to use or allow third parties to use our patented technology.

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government in connection with funding for BrightPath.

If we are unable to maintain our existing proprietary technology, our ability to attract and retain solar partners could be impaired, our competitive position could be harmed and our revenue could be reduced.

If we are unable to maintain our existing proprietary technology, our ability to attract and retain energy system partners could be impaired, our competitive position could be harmed and our revenue could be reduced.

Disruptions to our solar production metering solution could negatively impact our revenue and increase our expenses.

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Should we be unable to continue to license, on agreeable terms, the software necessary to communicate with our meters, it could cause a significant disruption in our business and operations.

Problems with product quality or performance may cause us to incur warranty expenses and performance guarantee expenses, may lower the residual value of our solar energy systems and may damage our market reputation and cause our financial results to decline.

Problems with product quality or performance may cause us to incur warranty expenses and performance guarantee expenses, may lower the residual value of our energy systems and may damage our market reputation and cause our financial results to decline.

Customers who enter into Customer Agreements with us are covered by production guarantees and roof penetration warranties.

As the owners of the solar energy systems, we or our investment funds receive a warranty from the inverter and solar panel manufacturers, and, for those solar energy systems that we do not install directly, we receive workmanship and material warranties as well as roof penetration warranties from our solar partners.

Furthermore, one or more of our third-party manufacturers or solar partners could cease operations and no longer honor these warranties, leaving us to fulfill these potential obligations to customers, or such warranties may be limited in scope and amount, and may be inadequate to protect us.

As the owners of the energy systems, we or our investment funds receive a warranty from the inverter and solar panel manufacturers, and, for those energy systems that we do not install directly, we receive workmanship and material warranties as well as roof penetration warranties from our energy system partners.

Furthermore, one or more of our third-party manufacturers or energy system partners could cease operations and no longer honor these warranties, leaving us to fulfill these potential obligations to customers, or such warranties may be limited in scope and amount, and may be inadequate to protect us.

We also provide a performance guarantee with certain solar service offerings pursuant to which we compensate customers on an annual basis if their system does not meet the electricity production guarantees set forth in their agreement with us.

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We may suffer financial losses associated if significant performance guarantee payments are triggered.

Because of our limited operating history and the length of the term of our Customer Agreements, we have been required to make assumptions and apply judgments regarding a number of factors, including our anticipated rate of warranty claims and the durability, performance and reliability of our solar energy systems.

Our assumptions could prove to be materially different from the actual performance of our systems, causing us to incur substantial expense to repair or replace defective solar energy systems in the future or to compensate customers for systems that do not meet their production guarantees.

Product failures or operational deficiencies also would reduce our revenue from power purchase or lease agreements because they are dependent on system production.

Our assumptions could prove to be materially different from the actual performance of our systems, causing us to incur substantial expense to repair or replace defective energy systems in the future or to compensate customers for systems that do not meet their production guarantees.

Product failures or operational deficiencies also would reduce our revenue from PPAs or lease agreements because they are dependent on system production.

Any widespread product failures or operating deficiencies may damage our market reputation and adversely impact our financial results.

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We rely on copyright, trade secret and patent protections to secure our intellectual property rights.

Although we may incur substantial costs in protecting our technology, we cannot be certain that we have adequately protected or will be able to adequately protect it, that our competitors will not be able to utilize our existing technology or develop similar technology independently, that the claims allowed with respect to any patents held by us will be broad enough to protect our technology or that foreign intellectual property laws will adequately protect our intellectual property rights.

Although we may incur substantial costs in protecting our technology, we cannot be certain that we have adequately protected or will be able to adequately protect it, that our competitors will not be

able to utilize our existing technology or develop similar technology independently, that the claims allowed with respect to any patents held by us will be broad enough to protect our technology or that foreign intellectual property laws will adequately protect our intellectual property rights.

Moreover, we cannot be certain that our patents provide us with a competitive advantage.

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However, our use of open source software may entail greater risks than use of third-party commercial software.

Open source licensors

generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code, which could introduce vulnerabilities that could be exploited and lead to the loss of sensitive or protected data.

Open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code, which could introduce vulnerabilities that could be exploited and lead to the loss of sensitive or protected data.

In addition, if we combine our proprietary software with open source software in a certain manner, we could, under certain open source licenses, be required to release the source code of our proprietary software to the public.

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During times of war and other major conflicts, we, the third parties with whom we work, and our customers may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our goods and services.

In addition, we, our third-party service providers with whom we work are subject to a variety of evolving threats, such as computer malware (including as a result of advanced persistent threat intrusions), ransomware, malicious code (such as viruses or worms), social engineering (including through deep fakes, which may be increasingly more difficult to identify as fake, and phishing attacks), telecommunications failures, denial-of-service attacks, credential stuffing attacks, credential harvesting, personnel misconduct or error, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, natural disasters and extreme weather events, general hacking, telecommunications failures, attacks enhanced or infiltrated by AI, and other similar threats.

In addition, we and our third-party service providers with whom we work are subject to a variety of evolving threats, such as computer malware (including as a result of advanced persistent threat intrusions), ransomware, malicious code (such as viruses or worms), social engineering (including through deep fakes, which may be increasingly more difficult to identify as fake, and phishing attacks), telecommunications failures, denial-of-service attacks, credential stuffing attacks, credential harvesting, personnel misconduct or error, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, natural disasters and extreme weather events, general hacking, telecommunications failures, attacks enhanced or infiltrated by AI, and other similar threats.

Cybersecurity threats have become more prevalent, and could impact our systems and those of our third parties in the future.

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Further, we may experience delays in developing and deploying remedial measures and patches designed to address identified vulnerabilities.

Any of the previously identified or similar threats could cause a security incident or other interruption that could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to our sensitive information or our information technology systems, or those of the third parties with whom we work.

the third parties with whom we work.

A security incident or other interruption could disrupt our ability (and that of third parties with whom we work) to provide our services.

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In the ordinary course of business, we collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share (collectively, “process”) personal data and other sensitive information, including proprietary and confidential business data, trade secrets, intellectual property, and sensitive third-party data.

Our data processing activities subject us to numerous data privacy and security

obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, contractual requirements, and other obligations relating to data privacy and security.

Our data processing activities subject us to numerous data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, contractual requirements, and other obligations relating to data privacy and security.

Obligations related to data privacy and security (and consumers’ data privacy expectations) are quickly changing, becoming increasingly stringent, and creating uncertainty.

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These state laws allow for statutory fines for noncompliance.

For example, the CCPA applies to personal data of consumers, business representatives, and employees who are California residents, and requires businesses to provide specific disclosures in privacy notices and honor requests of such individuals to exercise certain privacy rights.

For example, the California Consumer Privacy Act (“CCPA”) applies to personal data of consumers, business representatives, and employees who are California residents, and requires businesses to provide specific disclosures in privacy notices and honor requests of such individuals to exercise certain privacy rights.

The CCPA provides for fines of up to $7,500 per intentional violation and allows private litigants affected by certain data breaches to recover significant statutory damages.

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In addition to data privacy and security laws, we are or may become contractually subject to industry standards adopted by industry groups, such as the Payment Card Industry Data Security Standard (“PCI DSS”).

Noncompliance with PCI-DSS by us or the third parties with whom we work can result in penalties from credit card companies ranging from $5,000 to $100,000 per month, as well as litigation, reputational damage, and revenue losses.

Noncompliance with PCI-DSS by us or the third parties with whom we work can result in penalties from credit card companies, as well as litigation, reputational damage, and revenue losses.

We publish privacy policies, marketing materials, whitepapers, and other statements, regarding data privacy and security.

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government enforcement actions (e.g., investigations, fines, penalties, audits, inspections), litigation (including class-action claims), mass arbitration claims, additional reporting requirements and/or oversight, bans on processing personal data, and orders to destroy or not use personal data.

In particular, plaintiffs have become increasingly more active in bringing privacy-related claims against companies, including class claims and mass arbitration demands.

Some of these claims allow for the recovery of

statutory damages on a per violation basis, and, if viable, carry the potential for monumental statutory damages, depending on the volume of data and the number of violations.

In particular, plaintiffs have become increasingly more active in bringing privacy-related class claims and mass arbitration demands.

We have received, and plaintiffs do from time to time, bring privacy-related claims.

Some of these claims allow for the recovery of statutory damages on a per violation basis, and, if viable, carry the potential for monumental statutory damages, depending on the volume of data and the number of violations.

Information technology systems are a critical component of our long-term competitive strategy.

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We may not be successful in anticipating or responding to these developments on a timely and cost-effective basis, and if the rate at which we adopt and the ways in which we apply new technologies lags or differs negatively in meaningful ways from our competitors, our business could be adversely affected.

In particular, generative AI and other new and emerging technologies present a number of inherent risks and incorporating them into our information technology infrastructure, products, and services responsibly is crucial to maintaining and strengthening our competitive position in the market.

Sunrun uses, and may continue to expand the use of AI in a responsible manner to support business operations, efficiency, and innovation.

However, generative AI and other new and emerging technologies present a number of inherent risks and incorporating them into our information technology infrastructure, products, and services responsibly is crucial to maintaining and strengthening our competitive position in the market.

For example, the use of generative AI technologies may result in unintended biases, accuracy issues, or discriminatory outcomes, potentially leading to errors in decision-making, product development, or other business activities.

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Use of generative AI tools could result in future claims or litigation related to unauthorized access to or use of confidential information and failure to comply with open source software requirements.

In addition, the regulatory framework for AI technologies is rapidly evolving as many federal, state and foreign government bodies and agencies have introduced or are currently considering additional laws and regulations.

AI regulations may impose requirements related to transparency, accountability, and non-discrimination, and may change or be interpreted in ways that could directly affect our business operations.

For example, in the United States and Europe, recent and proposed laws regulate the use of automated decision-making and generative AI, and establish requirements for companies that develop, use, or provide AI technologies.

These developments create ongoing uncertainty regarding compliance and may require us to adapt our products, services, or practices as regulatory regimes evolve.

It is possible that further new laws and regulations (or interpretations of existing laws and regulations), including around intellectual property, data privacy, competition and antitrust laws, may limit our ability to use AI technologies for our business, or require us to change the way we use AI technologies in a manner that negatively affects the performance of our products, services and business.

Compliance with these laws and regulations may require significant resources and increase our operating expenses, and any actual or perceived failure to comply could adversely affect our business, financial condition, results of operations, or competitive position.

Damage to our brand and reputation or failure to expand our brand would harm our business and results of operations.

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Therefore, our inability to meet or exceed customers’ expectations would harm our reputation and growth through referrals.

We have at times focused particular attention on expeditiously growing our direct sales force and our solar partners, leading us in some instances to hire personnel or partner with third parties who we may later determine do not fit our company culture and standards.

Given the sheer volume of interactions our direct sales force and our solar partners have with customers and potential customers, it is also unavoidable that some interactions will be perceived by customers and potential customers as less than satisfactory and result in complaints.

We have at times focused particular attention on expeditiously growing our direct sales force and our energy system partners, leading us in some instances to hire personnel or partner with third parties who we may later determine do not fit our company culture and standards.

Given the sheer volume of interactions our direct sales force and our energy system partners have with customers and potential customers, it is also unavoidable that some interactions will be perceived by customers and potential customers as less than satisfactory and result in complaints.

If we cannot manage our hiring and training processes to limit potential issues and maintain appropriate customer service levels, our brand and reputation may be harmed and our ability to grow our business would suffer.

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To support our growth, we need to hire, train, deploy, manage and retain a substantial number of skilled employees, engineers, installers, electricians, sales and project finance specialists.

Competition for qualified personnel in our industry is increasing, particularly for skilled personnel involved in the installation of solar energy systems.

We have in the past been, and may in the future be, unable to attract or retain qualified and skilled installation personnel or installation companies to be our solar partners, which would have an adverse effect on our business.

We and our solar partners also compete with the homebuilding and construction industries for skilled labor.

Competition for qualified personnel in our industry is increasing, particularly for skilled personnel involved in the installation of energy systems.

We have in the past been, and may in the future be, unable to attract or retain qualified and skilled installation personnel or installation companies to be our energy system partners, which would have an adverse effect on our business.

We and our energy system partners also compete with the homebuilding and construction industries for skilled labor.

As these industries grow and seek to hire additional workers, our cost of labor may increase.

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Shortages of skilled labor could significantly delay a project or otherwise increase our costs.

Because our profit on a particular installation is based in part on assumptions as to the cost of such a project, cost overruns, delays or other execution issues may cause us to not achieve our expected margins or cover our costs for that project.

In addition, because we are headquartered in the San Francisco Bay Area, we compete for a limited pool of technical and engineering resources that requires us to pay wages that are competitive with relatively high regional standards for employees in these fields.

Further, we need to continue to expand upon the training of our customer service team to provide high-end account management and service to customers before, during and following the point of installation of our solar energy systems.

Because our profit on a particular installation is based in part on assumptions as to the cost of such a project, cost overruns, delays or other execution issues may cause us to fail to achieve our expected margins or cover our costs for that project.

In addition, because we are headquartered in the San Francisco Bay Area, we compete for a limited pool of technical and engineering

resources that requires us to pay wages that are competitive with relatively high regional standards for employees in these fields.

Identifying, and recruiting qualified personnel and training them requires significant time, expense and attention.

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If we are unable to hire, develop and retain qualified sales personnel or if they are unable to achieve desired productivity levels, we may not be able to compete effectively.

If we or our solar partners cannot meet our hiring, retention and efficiency goals, we may be unable to complete customers’ Projects on time or manage customer accounts in an acceptable manner or at all.

If we or our energy system partners cannot meet our hiring, retention and efficiency goals, we may be unable to complete customers’ Projects on time or manage customer accounts in an acceptable manner or at all.

Any significant failures in this regard would materially impair our growth, reputation, business and financial results.

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The Office of Administrative Law approved the proposed rule on June 5, 2024, and the rule was set to be effective as of October 1, 2024.

However, there is currently a preliminary injunction in the case and the CSLB is enjoined from taking any action to enforce or implement the regulation pending resolution of the case.

However, the rulemaking was challenged and there is currently a preliminary injunction in the case and the CSLB is enjoined from taking any action to enforce or implement the regulation pending resolution of the case.

The energy storage systems that we install in the residential market typically do not exceed 80 kWh.

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A significant portion of our customer base is in California, and as the state deals with growing wildfire risk and grid instability, an increasing number of our customers are choosing our solar and battery offerings.

If we are unable to hire, develop and retain sufficient certified electricians, our growth of solar and battery customers in California may be significantly constrained, which would negatively

impact our operating results.

If we are unable to hire, develop and retain sufficient certified electricians, our growth of solar and battery customers in California may be significantly constrained, which would negatively impact our operating results.

We have actively managed our workforce in anticipation of these changing contractor regulations by signing up Electrical Trainees in all of our California branches and through on the job training plus enrollment in schooling we have had many of our trainees become Journeypersons as well.

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With any change in leadership, there is a risk to organizational effectiveness and employee retention as well as the potential for disruption to our business.

None of our key executives or our key employees are bound by employment agreements for any specific term, and we may be unable to replace key members of our management team and key employees in the event we lose their services.

None of our key executives or our key employees are bound by employment agreements for any specific term, and we may be unable to replace key

members of our management team and key employees in the event we lose their services.

Integrating new employees into our management team could prove disruptive to our operations, require substantial resources and management attention and ultimately prove unsuccessful.

An inability to attract and retain sufficient managerial personnel who have critical industry experience and relationships could limit or delay our strategic efforts, which could have a material adverse effect on our business, financial condition, and results of operations.

We are subject to legal proceedings, regulatory inquiries and litigation, and we have previously been, and may in the future be, named in additional legal proceedings, become involved in regulatory inquiries or be subject to litigation in the future, all of which are costly, distracting to our core business and could result in an unfavorable outcome, or a material adverse effect on our business, financial condition, results of operations, or the trading price for our securities.

We are subject to legal proceedings, regulatory inquiries and litigation, and we have previously been, and may in the future be, named in additional legal proceedings, become involved in regulatory inquiries or subject to litigation, each of which is costly, distracting to our core business and could result in an unfavorable outcome, or have a material adverse effect on our business, financial condition, results of operations, or the trading price for our securities.

We are involved in legal proceedings and receive inquiries from government and regulatory agencies from time to time.

In the event that we are involved in significant disputes or are the subject of a formal action by a regulatory agency, we could be exposed to costly and time-consuming legal proceedings that could result in any number of outcomes.

Although outcomes of such actions vary, any current or future claims or regulatory actions initiated by or against us, whether successful or not, could result in significant costs, costly damage awards or settlement amounts, injunctive relief, increased costs of business, fines or orders to change certain business practices, significant dedication of management time, diversion of significant operational resources, or otherwise harm our business.

If we are not successful in our legal proceedings and litigation, we may be required to pay significant monetary damages, which could hurt our results of operations.

In the event that we are involved in significant disputes or are the subject of a formal action by a regulatory agency, including with regard to consumer protection, product liability, privacy, tax, among others, we could be exposed to costly and time-consuming legal proceedings that could result in any number of outcomes.

Although outcomes of such actions vary, any current or future claims or regulatory actions initiated by or against us, whether successful or not, could result in significant costs or impacts to our business, including costly damage awards or settlement amounts, injunctive relief, back taxes, increased costs of business, fines or orders to change certain business practices, significant dedication of management time, diversion of significant operational resources, or otherwise harm our business.

If we are not successful in our legal proceedings and litigation, we may be required to pay significant monetary damages, which could negatively impact our results of operations.

Lawsuits are time-consuming and expensive to resolve and divert management’s time and attention.

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Our business involves transactions with customers.

We and our solar partners must comply with numerous federal, state and local laws and regulations that govern matters relating to our interactions with customers, including those pertaining to data privacy and security, consumer financial and credit transactions, home improvement contracts, warranties and direct-to-home solicitation, along with certain rules and regulations specific to the marketing and sale of residential solar products and services.

We and our energy system partners must comply with numerous federal, state and local laws and regulations that govern matters relating to our interactions with customers, including those pertaining to data privacy and security, consumer financial and credit transactions, home improvement contracts, warranties and direct-to-home solicitation, along with certain rules and regulations specific to the marketing and sale of residential solar and storage products and services.

These laws and regulations are dynamic and subject to potentially differing interpretations, and various federal, state and local legislative and regulatory bodies may expand current laws or regulations, or enact new laws and regulations, regarding these matters.

Changes in these laws or regulations or their interpretation could dramatically affect how we do business, acquire customers,

and manage and use information we collect from and about current and prospective customers and the costs associated therewith.

Changes in these laws or regulations or their interpretation could dramatically affect how we do business, acquire customers, and manage and use information we collect from and about current and prospective customers and the costs associated therewith.

We strive to comply with all applicable laws and regulations relating to our interactions with residential customers.

It is possible, however, that these requirements may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or our practices.

Noncompliance with any such laws or regulations, or the perception that we or our solar partners have violated such laws or regulations or engaged in deceptive practices that could result in a violation, could also expose us to claims, proceedings, litigation and investigations by private parties and regulatory authorities, as well as substantial fines and negative publicity, each of which may materially and adversely affect our business.

Noncompliance with any such laws or regulations, or the perception that we or our energy system partners have violated such laws or regulations or engaged in deceptive practices that could result in a violation, could also expose us to claims, proceedings, litigation and investigations by private parties and regulatory authorities, as well as substantial fines and negative publicity, each of which may materially and adversely affect our business.

We have incurred, and will continue to incur, significant expenses to comply with such laws and regulations, and increased regulation of matters relating to our interactions with residential customers could require us to modify our operations and incur significant additional expenses, which could have an adverse effect on our business, financial condition, and results of operations.

Any investigations, actions, adoption or amendment of regulations relating to the marketing of our products to residential consumers could divert management’s attention from our business, require us to modify our operations and incur significant additional expenses, which could have an adverse effect on our business, financial condition, and results of operations or could reduce the number of our potential customers.

and incur significant additional expenses, which could have an adverse effect on our business, financial condition, and results of operations or could reduce the number of our potential customers.

We cannot ensure that our sales professionals and other personnel will always comply with our standard practices and policies, as well as applicable laws and regulations.

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Compliance with occupational safety and health requirements and best practices can be costly, and noncompliance with such requirements may result in potentially significant penalties, operational delays and adverse publicity.

The installation of solar energy systems requires our employees and employees of our solar partners to work with complicated and potentially dangerous electrical and utility systems.

The installation of energy systems requires our employees and employees of our energy system partners to work with complicated and potentially dangerous electrical and utility systems.

The evaluation and installation of our energy-related products also require these employees to work in locations that may contain potentially dangerous levels of asbestos, lead or mold or other substances.

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The development of new products generally requires substantial investment and can require long development and testing periods before they are commercially viable.

our target markets or differentiate our products based on functionality, performance or cost and thus our new technologies and products may not result in meaningful revenue.

We intend to continue to make substantial investments in developing new products and it is possible that we may not develop or acquire new products or product enhancements that compete effectively within our target markets or differentiate our products based on functionality, performance or cost and thus our new technologies and products may not result in meaningful revenue.

In addition, any delays in developing and releasing new or enhanced products could cause us to lose revenue opportunities and potential customers.

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We have incurred losses and may be unable to sustain profitability in the future.

We have incurred net losses in the past and may continue to incur net losses as we increase our spending to finance the expansion of our operations, expand our installation, engineering, administrative, sales and marketing staffs, increase spending on our brand awareness and other sales and marketing initiatives, make significant investments to drive future growth in our business and implement internal systems and infrastructure to support our growth.

We do not know whether our revenue will grow rapidly enough to absorb these costs and our limited operating history makes it difficult to assess the extent of these expenses or their impact on our results of operations.

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• the expiration, reduction or initiation of any governmental tax rebates, tax exemptions, or incentives;

• significant fluctuations in customer demand for our solar service offerings or fluctuations in the geographic concentration of installations of solar energy systems;

• significant fluctuations in customer demand for our solar service offerings or fluctuations in the geographic concentration of installations of energy systems;

• changes in financial markets, which could restrict our ability to access available and cost-effective financing sources;

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• actual or anticipated changes in our growth rate;

• general economic, industry and market conditions beyond our control, such as bank failures, the COVID-19 pandemic, inflationary pressures, other macroeconomic factors, and associated economic downturn;

• general economic, industry and market conditions beyond our control, such as bank failures, a global pandemic, inflationary pressures, other macroeconomic factors, and associated economic downturn;

• changes to our cancellation rate.

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Our incentives revenue is also highly variable due to associated revenue recognition rules, as discussed in greater detail in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Seasonal and other factors may also contribute to variability in our sales of solar energy systems and product sales.

Seasonal and other factors may also contribute to variability in our sales of energy systems and product sales.

For these or other reasons, the results of any prior quarterly or annual periods should not be relied upon as indications of our future performance.

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We have in the past provided, and may from time to time provide, guidance regarding our future performance that represents our management’s estimates as of the date such guidance is provided.

Any such guidance is based upon a number of assumptions with respect to future business decisions (some of which may change) and estimates that, while presented with numerical specificity, are inherently subject to significant business, economic, and competitive uncertainties and contingencies (many of which are beyond our control, including those related to the COVID-19 pandemic, inflationary pressures, geopolitical conflict, bank failures, other macroeconomic factors, and associated economic downturn).

Any such guidance is based upon a number of assumptions with respect to future business decisions (some of which may change) and estimates that, while presented with numerical specificity, are inherently subject to significant business, economic, and competitive uncertainties and contingencies (many of which are beyond our control, including those related to the global pandemics, inflationary pressures, geopolitical conflict, bank failures, other macroeconomic factors, and associated economic downturn).

Guidance is necessarily speculative in nature, and it can be expected that some or all of the assumptions that inform such guidance will not materialize or will vary significantly from actual results.

Our ability to meet deployment volume, cost, net present value or any other forward-looking guidance is

impacted by a number of factors including, but not limited to, the number of our solar energy systems purchased outright versus the number of our solar energy systems that are subject to long-term Customer Agreements, changes in installation costs, the availability of additional financing on acceptable terms, changes in the retail prices of traditional utility generated electricity, the availability of rebates, tax credits and other incentives, changes in policies and regulations including net metering and interconnection limits or caps, the availability of solar panels and other raw materials, as well as the other risks to our business that are described in this section.

Our ability to meet deployment volume, cost, net present value or any other forward-looking guidance is impacted by a number of factors including, but not limited to, the number of our energy systems purchased outright versus the number of our energy systems that are subject to long-term Customer Agreements, changes in installation costs, the availability of additional financing on acceptable terms, changes in the retail prices of traditional utility generated electricity, the availability of rebates, tax credits and other incentives, changes in policies and regulations including net metering and interconnection limits or caps, the availability of solar panels and other raw materials, as well as the other risks to our business that are described in this section.

Accordingly, our guidance is only an estimate of what management believes is realizable as of the date such guidance is provided.

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Risks Related to Taxes and Accounting

Our ability to provide our solar service offerings to customers on an economically viable basis depends in part on our ability to finance these systems with fund investors who seek particular tax and other benefits.

Our solar service offerings have been eligible for federal investment tax credits, U.S.

Our ability to provide our storage and solar service offerings to customers on an economically viable basis depends in part on our ability to finance these systems with fund investors who seek particular tax and other benefits.

Our solar service offerings have been eligible for federal ITCs, U.S.

Treasury grants, and other tax benefits.

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• legislative or regulatory changes or decreases to these incentives.

The federal government currently offers ITCs under Section 48(a) and 48E of the Code, for the installation of certain energy properties, including solar power and storage facilities owned for business purposes.

The federal government currently offers ITCs under Sections 48(a) (for solar facilities that began construction prior to January 1, 2025) and 48E of the Code, for the installation of certain energy properties, including solar power and storage facilities owned for business purposes.

The Commercial ITC was extended and expanded upon and the 48E credit was created by the IRA, which was signed into law by President Biden on August 16, 2022.

The IRA also created several ITC “bonus credits” to further incentivize various types of solar and storage facilities.

Our inability to operationalize these tax credits, avail ourselves of IRA benefits in a timely fashion, or ensure the facilities we intend to qualify under the ITC bonus credits satisfy the applicable requirements could impact our ability to compete, and compromise or eliminate opportunities to financially benefit from these tax credits, which would adversely impact our business.

Department of the Treasury has issued various stages of issuing guidance on the ITC bonus credits.

Department of Treasury recently issued final regulations and further guidance on the Commercial ITC, 48E Credits and ITC bonus credits.

We are continuing to review and analyze such final regulations and guidance and whether, to what extent, and when we may benefit from the ITCs and bonus credits.

The federal government also currently offers a Residential Clean Energy Credit, for the installation of certain solar power facilities owned by residential taxpayers, which is applicable to customers who purchase a solar energy system outright as opposed to entering into a Customer Agreement.

We and our tax equity partners have claimed and expect to continue to claim ITCs with respect to qualifying solar energy projects.

However, the application of law and guidance regarding ITC eligibility to the facts of particular solar energy projects is subject to a number of uncertainties.

In particular with respect to the new IRA provisions for which U.S.

Treasury regulations (“Treasury Regulations”) had been proposed and were only recently finalized, there can be no assurance that the IRS will agree with our approach in the event of an audit.

On July 4, 2025, the OBBB was signed into law by the President of the United States.

The OBBB contains a number of changes to the IRA that significantly impact the availability of the ITCs under Sections 48(a) and 48E of the Code, including the accelerated sunsetting of certain investment tax credits (including for residential solar projects), and certain limited restrictions on their transferability to third-parties for sale.

In particular, ITCs for solar projects under Section 48E are terminated if they do not begin construction by July 4, 2026 unless such projects are placed in service by December 31, 2027.

The OBBB also introduces significant restrictions beginning in 2026 around certain PFEs, which will not only impact who can invest in renewable energy projects, but also who can supply components and know-how to develop them.

On August 15, 2025, in response to an Executive Order issued by the President of the United States on July 7, 2025, the U.S.

Department of Treasury and the IRS issued Notice 2025-42, which provides for beginning of construction rules for wind and solar, revising existing guidance by largely eliminating the long-established 5% safe harbor.

However, the 5% safe harbor continues to apply to solar facilities having a maximum output of 1.5 megawatts or less.

Therefore, our existing safe harbor strategies should not be

impacted by such guidance.

However, Notice 2025-42 did not respond to the portion of the Executive Order regarding beginning of construction for purposes of the new restrictions regarding PFEs and indicated additional guidance is forthcoming.

On February 12, 2026, the U.S.

Department of Treasury and the IRS issued Notice 2026-15, which provides interim guidance, including regarding safe harbors for purposes of determining a taxpayer’s material assistance from a PFE.

Department of Treasury and the IRS have indicated that they intend to issue more comprehensive proposed regulations and other guidance with respect to the definitions of a PFE and material assistance from a PFE.

We cannot predict with certainty what such guidance, or any other future guidance, will say, or how it will impact our existing safe harboring strategies.

We routinely monetize investment tax credits and such monetization is a key component in our financing of solar projects.

Obtaining tax equity funding (and tax equity funding on advantageous terms) may become more challenging as a result of the OBBB.

Additionally, the benefits of the ITC have historically enhanced our ability to provide competitive pricing for customers.

Accordingly, the OBBB could slow our growth and adversely impact our financial results and operational metrics.

In addition, our inability to operationalize these tax credits, avail ourselves of tax credit benefits in a timely fashion, or ensure the facilities we intend to qualify under the ITC bonus credits satisfy the applicable requirements could impact our ability to compete, and compromise or eliminate opportunities to financially benefit from these tax credits, which would adversely impact our business.

In 2025, the federal government offered the Residential Clean Energy Credit, for the installation of certain solar power facilities owned by residential taxpayers, which was applicable to customers who purchased an energy system outright as opposed to entering into a Customer Agreement.

As a result of the tax policy changes in the OBBB this credit expired on December 31, 2025.

Expiration of the Residential Clean Energy Credit could reduce the number of customers who choose to purchase our energy systems and may further adversely impact our financial results and operational metrics.

We and our tax equity partners have claimed and expect to continue to claim ITCs with respect to qualifying solar energy and energy storage projects, subject to the accelerated expiration of such ITCs under the OBBB.

However, the application of law and guidance regarding ITC eligibility to the facts of particular solar energy projects remains subject to a number of uncertainties.

With respect to the Section 48E final rule that the U.S.

Department of Treasury issued on January 15, 2025, there can be no assurance that the IRS will agree with our approach in the event of an audit.

While the U.S.

Department of the Treasury addressed and clarified certain outstanding issues from the proposed Treasury Regulations regarding energy property and aggregation, the final rules may be subject to further interpretation and guidance.

Congress and Executive branches may enact legislation or issue executive orders that impact the newly enacted IRA provisions, and the IRS and U.S.

Treasury may modify existing guidance, possibly with retroactive effect.

For example, on January 20, 2025, the current U.S.

administration issued an executive order for all federal agencies to immediately review all agency actions that potentially burden development of domestic energy resources, including any clean energy-related federal disbursements, followed by additional guidance and judicial action that generally make the fate of clean energy tax credits unclear.

Additionally, on January 1, 2025, the ITC framework of Section 48 that the solar industry has historically relied upon shifted to the “tech-neutral” 48E Credit applied separately to a qualified facility and energy storage technology.

The IRS and U.S.

Department of Treasury may modify existing guidance, possibly with retroactive effect.

Additionally, on January 1, 2025, the ITC framework of Section 48(a) that the solar industry has historically relied upon shifted to the “tech-neutral” 48E credit applied separately to a qualified facility and energy storage technology.

This transition may create uncertainty regarding the implementation of Section 48E of the Code under this new framework, which may cause delays or potentially adverse impacts on our business.

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In this event, we could be required to indemnify tax equity partners for disallowed ITCs, adjust the terms of future tax equity partnerships, or seek alternative sources of funding for solar energy projects, each of which could have a material adverse effect on our business, financial condition, results of operations and prospects.

Future reductions in the ITCs or any further legislative reductions or changes to the ITC may impact the attractiveness of solar energy to certain tax equity investors and could potentially harm our business.

Obtaining tax equity funding (and tax equity funding on advantageous terms) also may become more challenging.

Additionally, the benefits of the Commercial ITC have historically enhanced our ability to provide competitive pricing for customers.

Reductions in, eliminations of or expirations of governmental incentives such as the Residential Clean Energy Credit could reduce the number of customers who choose to purchase our solar energy systems.

Additionally, potential investors must remain satisfied that the structures that we offer make the tax benefits associated with solar energy systems available to these investors, which depends on the investors’ assessment of the tax law, the absence of any unfavorable interpretations of that law and the continued application of existing tax law and interpretations to our funding structures.

Changes in existing law or interpretations of existing law by the IRS and/or the courts could reduce the willingness of investors to invest in funds associated with these solar energy systems.

Additionally, potential investors must remain satisfied that the structures that we offer make the tax benefits associated with energy systems available to them, which depends on the investors’ assessment of the tax law, the absence of any unfavorable interpretations of tax law and the continued application of existing tax law and interpretations to our funding structures.

Changes in existing law or interpretations of existing law by the IRS and/or the courts could reduce the willingness of investors to invest in funds associated with these energy systems.

Moreover, reductions to the corporate tax rate may reduce the appetite for tax benefits overall, which could reduce the pool of available funds.

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If, for any reason, we are unable to finance our solar service offerings through tax-advantaged structures or if we are unable to realize or monetize ITCs or other tax benefits, we may no longer be able to provide our solar service offerings to new customers on an economically viable basis, which would have a material adverse effect on our business, financial condition, and operations.

If the IRS makes determinations that the creditable basis of our solar energy systems is materially lower than what we have claimed, we may have to pay significant amounts to our fund investors, and our business, financial condition, and prospects may be materially and adversely affected.

We and our fund investors claim the ITCs in amounts based on the purchase price paid by our funds for our solar energy systems ( i.e.

, the funds’ basis in the solar energy systems, or creditable basis).

If the IRS makes determinations that the creditable basis of our energy systems is materially lower than what we have claimed, we may have to pay significant amounts to our fund investors, and our business, financial condition, and prospects may be materially and adversely affected.

We and our fund investors claim the ITCs in amounts based on the purchase price paid by our funds for our energy systems ( i.e.

, the funds’ basis in the energy systems, or creditable basis).

Such purchase prices are based on the fair market value of our systems as determined pursuant to independent appraisals obtained by us.

With respect to ITCs, the IRS may on audit determine that the creditable basis for our solar energy systems is lower than the amount determined by the appraisal and accordingly argue that the tax credits previously claimed must be reduced.

With respect to ITCs, the IRS may on audit determine that the creditable basis for our energy systems is lower than the amount determined by the appraisal and accordingly argue that the tax credits previously claimed must be reduced.

If the creditable basis is determined in these circumstances to be less than what we or our tax equity investment funds reported, we may owe our fund investors an amount equal to the amount by which the ITCs are reduced (including any interest and penalties), plus any costs and expenses associated with a challenge to that valuation.

We could also be subject to tax liabilities, including interest and penalties.

If the IRS further disagrees now or in the future with the amounts we or our tax equity investment funds reported regarding the creditable or depreciable basis of our solar energy systems, it could have a material adverse effect on our business, financial condition, and prospects.

We have purchased insurance policies insuring us and related parties for additional taxes owed in respect of lost Commercial ITCs, depreciation, gross-up costs and expenses incurred in defending the types of claims described above.

However, these policies only cover certain investment funds and have negotiated exclusions from, and limitations to, coverage and therefore may not cover us for all such lost Commercial ITCs, taxes, costs and expenses.

In 2018, the IRS opened an audit of our investors and reviewed the tax basis of our solar energy systems in the investment fund, which is covered by our 2018 insurance policy.

In December 2024, this IRS audit resolved with no adverse findings involving the fair market value of the price paid by the investment fund for our solar energy systems.

We incurred no out-of-pocket costs except the time, procedural, and administrative expenses associated with such a multi-year process.

We do not expect increases in insurance premiums as a result of this audit.

If the IRS further disagrees now or in the future with the amounts we or our tax equity investment funds reported regarding the creditable or depreciable basis of our energy systems, it could have a material adverse effect on our business, financial condition, and prospects.

We have purchased insurance policies insuring us and related parties for additional taxes owed in respect of lost ITCs, depreciation, gross-up costs and expenses incurred in defending the types of claims described above.

However, these policies only cover certain investment funds and have negotiated exclusions from, and limitations to, coverage and therefore may not cover us for all such lost ITCs, taxes, costs and expenses.

Now or in the future, routine IRS audits may subject us to indemnity obligations to investors, and may result in certain limited out-of-pocket costs and potential increased insurance premiums in the future.

Our business currently depends on the availability of utility rebates, tax credits and other benefits, tax exemptions and exclusions, and other financial incentives on the federal, state, and/or local levels.

Our business currently depends in part on the availability of utility rebates, tax credits and other benefits, tax exemptions and exclusions, and other financial incentives on the federal, state, and/or local levels.

We may be adversely affected by changes in, and application of, these laws or other incentives to us, and the expiration, elimination or reduction of these benefits could adversely impact our business.

Our business depends on government policies that promote and support solar energy and enhance the economic viability of owning solar energy systems.

federal, state and local governmental bodies provide incentives to owners, distributors, installers and manufacturers of solar energy systems to promote solar energy.

Our business depends in part on government policies that promote and support solar energy and enhance the economic viability of owning energy systems.

federal, state and local governmental bodies have provided incentives to owners, distributors, installers and manufacturers of energy systems to promote solar energy.

These incentives include ITCs and Residential Energy Efficient Property Credit, as discussed above, as well as other tax credits, rebates and SRECs associated with solar energy generation.

Some markets, such as New Jersey and Maryland, currently utilize SRECs.

SRECs can be volatile and their value could decrease over time as the supply of SREC-producing solar energy systems installed in a particular market increases.

The OBBB made significant changes to these incentives at the federal level, as described above under “Our ability to provide our storage and solar service offerings to customers on an economically viable basis depends in part on our ability to finance these systems with fund investors who seek particular tax and other benefits.” Some markets, such as New Jersey and Maryland, currently utilize SRECs.

SRECs can be volatile and their value could decrease over time as the supply of SREC-producing energy systems installed in a particular market increases.

We rely on these incentives to lower our cost of capital and to attract investors, all of which enable us to lower the price we charge customers for our solar service offerings.

These incentives have had a significant impact on the development of solar energy but they could change at any time, especially after changes in the Administration or Congress.

These incentives have had a significant impact on the development of solar energy but they have undergone significant changes and could change further at any time, especially after changes in the Administration or Congress.

These incentives may also expire on a particular date, when the allocated funding is exhausted, or be reduced, terminated or repealed without notice.

The financial value of certain incentives may also decrease over time.

In December 2017, significant federal tax legislation was enacted, including a change to the corporate tax rate (the “Tax Act”).

As part of the Tax Act, the current corporate income tax rate was reduced, and there were other changes including limiting or eliminating various other deductions, credits and tax preferences.

In addition to the OBBB, prior federal tax legislation, the Tax Cuts and Jobs Act (the "TCJA"), was enacted in December 2017.

As part of the TCJA, the current corporate income tax rate was reduced, and there were other changes including limiting or eliminating various other deductions, credits and tax preferences.

The OBBB generally continued these policies into the future after 2025, when some of them were set to expire.

This reduction in the corporate income tax rate may have reduced appetite for the ITC and depreciation benefits available with respect to solar facilities.

The IRA implemented a corporate alternative minimum tax of 15% of financial statement income (subject to certain adjustments) for companies that report over $1 billion in profits to shareholders;

similar to existing law, business credits (including Commercial ITCs) are limited to 75% of income in excess of $25,000 (with no limit

against the first $25,000).

We cannot predict whether and to what extent the U.S.

corporate income tax rate will change as a result of the new White House administration and changes in Congress.

Congress has been consistently considering changes to the tax code.

For example, Congress and the current administration are discussing several approaches to adjust the 48E Credit and other tax credits.

Further limitations on, or elimination of, the tax benefits that support the financing of solar energy under current U.S.

The IRA also implemented a corporate alternative minimum tax of 15% of financial statement income (subject to certain adjustments) for companies that report over $1 billion in profits to shareholders;

similar to existing law, business credits (including ITCs) are limited to 75% of income in excess of $25,000 (with no limit against the first $25,000).

The OBBB permanently extended many provisions of the TCJA and did not change the corporate income tax rate, although we cannot predict whether and to what extent such rate may change in the future as a

result of further changes to the Code.

Further limitations on, or elimination of, the tax benefits that support the financing of solar energy under the OBBB and other aspects of current U.S.

law could significantly impact our ability to raise tax equity investment funds or impact the terms thereof, including the amount of cash distributable to our investors.

Similarly, any unfavorable interpretations of tax law by the IRS and/or the courts with respect to our financing structures could reduce the willingness of investors to invest in our funds associated with any such structure.

Any effort to overturn federal and state laws, regulations or policies that are supportive of solar energy generation or that remove costs or other limitations on other types of energy generation that compete with solar energy projects could materially and adversely affect our business.

Any effort to repeal, overturn or alter federal and state laws, regulations or policies that are supportive of solar energy generation or that remove costs or other limitations on other types of energy generation that compete with solar energy projects could materially and adversely affect our business.

Our business model also relies on multiple tax exemptions offered at the state and local levels.

For example, some states have property tax exemptions that exempt the value of solar energy systems in determining values for calculation of local and state real and personal property taxes.

State and local tax exemptions can have sunset dates, triggers for loss of the exemption, and can be changed by state legislatures and other regulators, and if solar energy systems were not exempt from such taxes, the property taxes payable by customers would be higher, which could offset any potential savings our solar service offerings could offer.

Similarly, if state or local legislatures or tax administrators impose property taxes on third-party owners of solar energy systems, solar companies like us would be subject to higher costs.

For example, some states have property tax exemptions that exempt the value of energy systems in determining values for calculation of local and state real and personal property taxes.

State and local tax exemptions can have sunset dates, triggers for loss of the exemption, and can be changed by state legislatures and other regulators, and if energy systems were not exempt from such taxes, the property taxes payable by customers would be higher, which could offset any potential savings our solar service offerings could offer.

Similarly, if state or local legislatures or tax administrators impose property taxes on third-party owners of energy systems, solar companies like us would be subject to higher costs.

In general, we rely on certain state and local tax exemptions that apply to the sale of equipment, sale of power, or both.

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We may be subject to adverse California property tax consequences.

The State of California provides an exclusion (the “Solar Exclusion”) from the assessment of California property taxes for qualifying “active solar energy systems” installed as fixtures before January 1, 2027, provided such systems are locally rather than centrally assessed (“Eligible Property”).

The State of California provides an exclusion (the “Solar Exclusion”) from the assessment of California property taxes for qualifying “active energy systems” installed as fixtures before January 1, 2027, provided such systems are locally rather than centrally assessed (“Eligible Property”).

However, the Solar Exclusion is not a permanent exclusion from the assessment of property tax.

Once a change in ownership of the Eligible Property occurs, the Eligible Property may be subject to reassessment and California property taxes may become due.

Vivint Solar, through certain of its subsidiaries, owns solar energy systems that constitute Eligible Property (the “California PV Systems”).

Vivint Solar, through certain of its subsidiaries, owns energy systems that constitute Eligible Property (the “California PV Systems”).

To the extent Vivint Solar or its subsidiaries are considered the tax owners of the California PV Systems for purposes of the California Revenue and Tax Code, our acquisition of Vivint Solar may constitute a change of control of the California PV Systems, triggering the loss of the Solar Exclusion and the imposition of California property taxes, which could adversely affect our business.

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Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business, which presents additional complexities relating to the design and implementation of our disclosure controls and internal control over financial reporting.

In addition, we or our independent accounting firm may identify weaknesses and deficiencies that we may not otherwise identify in a

timely manner in the future.

In addition, we or our independent accounting firm may identify weaknesses and deficiencies that we may not otherwise identify in a timely manner in the future.

If we are not able to complete the work required under Section 404 of the Sarbanes-Oxley Act on a timely basis for future fiscal years, our annual report on Form 10-K may be delayed or deficient.

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As of December 31, 2025, we had U.S.

federal, state and foreign net operating loss carryforwards (“NOLs”) of approximately $720.7 million, $3.3 billion, and $459.9 million respectively, which begin expiring in varying amounts in 2028, 2025, and 2031 respectively, if unused.

federal, state and foreign net operating loss carryforwards (“NOLs”) of approximately $720.7 million, $3.5 billion, and $1.3 billion, respectively, which begin expiring in varying amounts in 2028, 2026, and 2031 respectively, if unused.

federal and certain state NOLs generated in tax years beginning after December 31, 2017 total approximately $2.6 billion and $371.4 million, respectively, have indefinite carryover periods, and do not expire.

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We have performed an analysis to determine whether an ownership change under Section 382 of the Code had occurred and determined no ownership changes were identified as of December 31, 2025.

We may be required to record an impairment expense on our goodwill in the future.

We are required under generally accepted accounting principles to test goodwill for impairment at least annually or when events or changes in circumstances indicate that the carrying value may be impaired.

Factors that can lead to impairment of goodwill include significant adverse changes in the business climate and actual or projected operating results, declines in the financial condition of our business and sustained decrease in our stock

As of October 1, 2024, we conducted our annual goodwill impairment test and concluded that the fair value of our one reporting unit exceeded its carrying value.

However, during the fourth quarter of fiscal 2024, we performed an interim quantitative assessment as of December 31, 2024 related to the recoverability of our goodwill for our one reporting unit as a result of a material sustained decline in the Company’s market capitalization.

We concluded that the fair value of our one reporting unit did not exceed its carrying value as of December 31, 2024 and recorded an impairment of $3.1 billion in our consolidated statements of operations equal to the full value of the previously recorded goodwill.

We may be required to record an impairment expense on any goodwill to arise from a future acquisition.

For further information regarding the assessment please see Note 2, Summary of Significant Accounting Policies , in this Annual Report on Form 10-K.

Risks Related to Ownership of Our Common Stock

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Our amended and restated bylaws provide advance notice procedures for stockholders seeking to bring business before, or nominate candidates for election as directors at, our annual or special meetings of stockholders.

In addition, our restated certificate of incorporation provides that stockholders may remove directors only for cause.

In addition, our restated certificate of incorporation provides that until our 2026 Annual Meeting of Stockholders, stockholders may remove directors only for cause.

Any amendment of these provisions in our amended and restated bylaws or restated certificate of incorporation would require approval by holders of a majority of our then outstanding capital stock.

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We may issue additional equity securities to raise capital, make acquisitions or for a variety of other purposes.

For example, in connection with the acquisition of Vivint Solar, we issued 0.55 shares of our common stock for each share of Vivint Solar’s common stock owned prior to the acquisition, which resulted in dilution to our stockholders.

For example, in connection with the acquisition of Vivint Solar, we issued 0.55 shares of our common

stock for each share of Vivint Solar’s common stock owned prior to the acquisition, which resulted in dilution to our stockholders.

Additional issuances of our capital stock may be made pursuant to the exercise or conversion of new or existing convertible debt securities (including the Notes), warrants, stock options or other equity incentive awards to new and existing service providers.

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The Capped Call transactions are expected generally to reduce the potential dilution to our 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 converted Notes, as the case may be, with such reduction and/or offset subject to a cap.

The option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the Notes (and are likely to do so during the observation period for conversions of Notes following November 1, 2025 for the 2026 Notes or December 1, 2029 for the 2030 Notes or following any repurchase of Notes by us).

The Option Counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the maturity of the Notes (and are likely to do so during the observation period for conversions of Notes following December 1, 2029 for the 2030 Notes or following any repurchase of Notes by us).

This activity could also cause or avoid an increase or a decrease in the market price of our common stock.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors