Distributed solar and storage company SunPower logged $109 million in net income and $274.8 million in GAAP revenue in the third quarter, which was the first quarter following its August separation from its manufacturing arm, now a separate entity called Maxeon Solar Technologies.
SunPower also laid out its expectations for the full year, updating guidance it withdrew in March due to uncertainty related to the coronavirus. The company now expects 2020 GAAP revenue between $1.12 billion and $1.16 billion, up from previous guidance of $1.06 billion and $1.10 billion, with annual solar installations between 465 megawatts and 515 megawatts. In Q3 the company installed 108 megawatts of solar, an increase of 20 percent from the previous quarter.
The residential solar industry’s largest companies appear to have largely recovered from the stress they experienced in the spring as the pandemic threatened sales. Tesla, which reported its Q3 results last week, hit its best quarter for solar in recent memory. That trend won’t be confirmed until Sunnova reports earnings Thursday and Sunrun holds its earnings call the following week.
SunPower — which has been working to streamline its finances for years — took early measures to shore up its business as the pandemic bore down, including cutting executive salaries. Its early pivot to online sales appears to have helped it weather Q2, the worst quarter of the pandemic for solar sales thus far. In Q3, 85 percent of the company’s sales also occurred online, according to CEO Tom Werner. SunPower’s residential business performed particularly well in Q3, with installed megawatts increasing 33 percent from the previous quarter. Incoming leads are up 43 percent in October compared to the same period last year.
SunPower cut back some employees' hours earlier in the year, but brought them back to full time in July, Werner told Greentech Media. At the end of September, SunPower also restored executive pay to pre-pandemic levels. The company’s confidence in the industry’s rebound also showed up in its increased Q4 and full-year guidance.
It’s been less than a year since SunPower launched its residential storage product, which was designed in-house. The company said Wednesday that it expects $100 million in residential storage revenue in 2021, equating to about 10,000 system sales. Werner expects demand to be strongest in California, where SunPower forecasts attachment rates between 30 and 40 percent. In the rest of the country, attachment rates are expected to be closer to 20 percent.
SunPower is still a relative newcomer in the residential storage space but has plans to aggregate solar and storage to bid into wholesale markets as virtual power plants. The company’s belief in that business opportunity is shared by others in the solar space including market leader Sunrun, which has already installed more than 10,000 of its storage systems and will add those installed by Vivint Solar. Sunrun announced its plans to acquire that company in July.
“The ability to have services is directly proportional to the amount of storage capacity you have in the market,” said Werner on Wednesday’s earnings call.
“We'll have the capacity even in the back half of next year, where we can aggregate and make a meaningful difference in grid services or in virtual power plants,” the CEO told GTM after the call.
SunPower now controls a sizable amount of commercial storage capacity, with Q4 attachment rates expected to exceed 50 percent. That’s allowed SunPower to bid into wholesale markets including those controlled by California grid operator CAISO and ISO New England. But the company hasn’t gotten close to achieving the scale needed to reap meaningful service revenue tied to residential systems. That equates to “perhaps gigawatts” of installations, said Werner, with SunPower realizing the financial benefits several years from now.