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  "documentTitle": "Sunrun Inc. (RUN)",
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  "authorName": "Carson C. Block",
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  "notes": "Includes specific references to footnotes 19, 20, and 21. Contrasts RUN's accounting practices with Sunnova's.",
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      "text": "We adjust RUN’s balance sheet and non-GAAP metrics due to its failure to reserve for panel removal liabilities, which we estimate are at present value $668 million.",
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      "text": "Net Earning Assets: $668 million",
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      "text": "We estimate that by understating operating & maintenance expense assumptions, RUN increases the Net Earning Assets and Income Approach valuation by $.07 / watt and $0.10 / watt, respectively.",
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      "text": "Our base case estimate for the cost of removing all RUN's PV Systems... is a present value of $668 million... We use a company friendly undiscounted assumption of $1,700 (NPV ~$1,100) per system removal.",
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      "text": "We adjust RUN's balance sheet and non-GAAP metrics due to its failure to reserve for panel removal liabilities, which we estimate are at present value $668 million.",
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      "kind": "paragraph",
      "text": "In contrast to RUN, Sunnova recognizes an Asset Retirement Obligation that applies to ~50% of its installed PV Systems.",
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      "text": "RUN ignores this contractual liability... We estimate that the NPV of an average roof removal is roughly $1,100.",
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      "kind": "paragraph",
      "text": "RUN is contractually obligated to remove the PV System... RUN justifies its lack of panel removal reserves by stating that if customers do decide to remove or replace panels, they will enter into a new contract with RUN.",
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      "kind": "quote",
      "text": "The liability is initially measured at fair value based on the present value of estimated removal costs... corresponding asset retirement costs are capitalized as part of the carrying amount of the solar energy system and depreciated over the solar energy system’s remaining useful life. — Sunnova (via 202110-K, p. 88)",
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      "text": "19 Communication with RUN Investor Relations, November 2021\n20 Conversation with RUN Investor Relations, December 2021\n21 Source: NOVA 202110-K, p. 88",
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      "text": "RUN's Models Ignore the Estimated $668 million Liability of System Removal",
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      "text": "Understated O&M Expenses of $15 / kW vs $24 / kW",
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