SunPower Racking Up the PPAs: 711 MW with SCE

SunPower’s total contracted U.S. pipeline is now more than one gigawatt.

Eric Wesoff January 10, 2011

Eric Wesoff

Editor-at-Large
Greentech Media

Eric Wesoff is Editor-at-Large at Greentech Media. Prior to joining GTM, Eric Wesoff founded Sage Marketing Partners in 2000 to provide sales and marketing-consulting services to venture-capital firms and their portfolio companies in the alternative energy and telecommunications sectors. Mr. Wesoff has become a well-known, respected authority and speaker in these fields.

His expertise covers solar power, fuel cells, biofuels and advanced batteries. His strengths are in market research and analysis, business development and due diligence for investors. He frequently consults for energy startups and Silicon Valley's premier venture capitalists.

SunPower (Nasdaq: SPWRA, SPWRB) just signed 711 megawatts (AC) of new Power Purchase Agreements (PPAs) with Southern California Edison (SCE). The PPAs cover three new projects in California (sites in Rosamond and Los Banos, California) with completion dates extending out from 2014 to 2016.

It's pretty big news, as it solidifies SunPower's position, along with First Solar, as the leading utility project developers in the U.S. SunPower still trails First Solar in total contracted pipeline (FSLR is at 2.3 gigawatts) but it serves as a validation of SunPower's restructuring earlier this year in creating a dedicated Utility and Power Plant (UPP) business unit. The UPP group is providing strong visibility into demand in the coming years.

It's also a big win for SunPower's Oasis Power Plant, their modular solar-farm-in-a-box product. Each SunPower Oasis power block uses 425-watt SunPower solar panels with the SunPower T0 Tracker and pre-manufactured cabling to minimize on-site wiring.

Shayle Kann, Managing Director at Greentech Media Research notes that "The success of these projects will be greatly impacted by SunPower's ability to finance and complete its more mature large-scale projects (e.g. High Plains, the 250 megawatts project currently seeking a loan guarantee).

I spoke with Julie Blunden, VP of Government Relations at SunPower and she said that this 711 megawatts adds to the current 200 megawatts that SunPower already has with SCE in their "substantial U.S. pipeline."
She called it "a demonstrable confidence point" with one of the larger U.S. utilities and the result of "a sophisticated buyer who has decided that SunPower is the way to go."

Blunden also noted that these projects are priced below the 2009 market price reference and that SunPower is cost-competitive.

This flies in the face of the eulogies for SunPower, based on the high cost structure of their high efficiency modules. It would seem that SunPower's vertical integration strategy and their strategic use of third party modules allows them to compete in this savage market.

The three contracts include:

110 megawatts in Los Banos, Calif., scheduled to be operational by year-end 2014.
325 megawatts in Rosamond, Calif., scheduled to be operational by October 2016.
276 megawatts in Rosamond, Calif., scheduled to be operational by October 2016.

As incentives in the European Union come under increasing pressure, SunPower amassing U.S. projects appears to be a strategically sound move.