SunPower (SPWR)

[dydo 1,558]

Sharpen your pencils, Q4 release season is upon us. REC tomorrow and MEMC on 13th.

[Guest ILOVEPV]

REC trades ONLY in Oslo. Did I miss anything? Why REC is on your watch list as an important stock?

[dydo 1,558]

SPWR said they have lowered their costs by 25%, in 2012 from 2011. This means that they have not reached their objective of 0.75 per (adjusted for efficiency) I think this is about 0.80 per watt. This is about 14% higher than REC Solar. Their module efficiency of 23% and the technology (copper based cells with 4.2g of poly per watt) is pretty exciting.

[explo 706]

SPWR said they have lowered their costs by 25%, in 2012 from 2011. This means that they have not reached their objective of 0.75 per (adjusted for efficiency) I think this is about 0.80 per watt. This is about 14% higher than REC Solar. Their module efficiency of 23% and the technology (copper based cells with 4.2g of poly per watt) is pretty exciting.

I think their efficiency adjustment should be at least in the order of 25 cents and I think I've seen numbers confirming that before, but it seems they don't keep all their prior publications on their site.. Will look into the 23% module efficiency. This is huge improvement from their current 20%. Cell level must be 25%+ then. Quality-wise SPWR are progressing greatly, but they must reduce cost too, since competition have cut costs with more than 50% from an already much lower level. Once SPWR get to within cost range they could become disruptive.

[dydo 1,558]

25% is .28 per watt

[explo 706]

25% is .28 per watt

The 25% cost reduction was .28? So from 1.12 to .84? Efficiency adjusted I guess. So their unadjusted per watt cost is around 1.10? Haven't had time to check the report myself..

[dydo 1,558]

Q4 2011 it was 1.08 so the 25% is .27-.28, I call it .80, not adjusted is probably a $1.

[explo 706]

I see thanks. So on the apples to apples (efficiency adjusted) they're 25 cents above best in class China with 80 cents vs 55 cents. This means that they are still a "no go" from a PV economics perspective. US and Japan residential rooftop is still a nisch where they can compete I guess.

[Guest Klothilde]

Please let's not get carried away here. In the CC they stated that "Blended cost per watt declined by more than 25% in 2012, with cost in our largest format panels coming in at less than $1 per watt in Q4." http://seekingalpha.com/article/1166721-sunpower-management-discusses-q4-2012-results-earnings-call-transcript?source=google_news Beware with the funny efficiency-adjusted cost figures. SPWR tweaks these to appear good. I remember that they have stated in the past that they take FS as a basis for adjustment, so a comparison against c-Si will yield a smaller adjustment. For instance if you assume area-dependant BOS-costs of 40 uscent/Wp (utility) then going up from 14,9% efficiency to 20,25% will give you only an 11 cent bonus relative to multicrystalline. Adjusted cost per watt would then be 89 cents (SPWR) vs. 70 cents (YGE Q3). As you go into residential and expensive markets the bonus will be higher, of course. @odyd: Where did you get the 23% module information? @odyd @explo: 25% cells is not realistic, the lab record for mono cells stands at 25.0% (NREL 1999). This means we can forget about 23% modules as well. http://www.scribd.com/doc/118399751/Green-Et-Al-2013-Solar-Cell-Efficiency-Tables-Version-41 http://www.renewableenergyworld.com/rea/news/article/2013/01/solar-cell-efficiency-round-up-thin-film-is-closing-the-gap-with-silicon

[explo 706]

For instance if you assume area-dependant BOS-costs of 40 uscent/Wp (utility) then going down from 20,25% efficiency to 14,9% will give you only an 11 cent bonus relative to multicrystalline. Adjusted cost per watt would then be 89 cents (SPWR) vs. 70 cents (YGE Q3). As you go into residential and expensive markets the bonus will be higher, of course.

I'm using $1 BOS saving instead of 40 cents. That's why I arrive at 25 cents instead of 10 cents efficiency adjustment. For SPWR the nisch is tight space, so instead of looking at area-dependent costs (since area is often fixed), you'll look at power independent costs (which I guess is the bulk).For same install size (same non-power dependent cost, like labor etc.), SPWR panels generate 36% more kWh, i.e. reducing per watt or per kWh costs with 26%.

[dydo 1,558]

@odyd @explo: 25% cells is not realistic, the lab record for mono cells stands at 25.0% (NREL 1999). This means we can forget about 23% modules as well.

Apparently from my vivid imagination: Cell 23%, module 21.5%, my bad for confusion.

[Guest Klothilde]

I'm using $1 BOS saving instead of 40 cents. That's why I arrive at 25 cents instead of 10 cents efficiency adjustment. For SPWR the nisch is tight space, so instead of looking at area-dependent costs (since area is often fixed), you'll look at power independent costs (which I guess is the bulk).For same install size (same non-power dependent cost, like labor etc.), SPWR panels generate 36% more kWh, i.e. reducing per watt or per kWh costs with 26%.

Ok I see. $1 BOS seems right for SPWR key residential markets. I would deduct at least the inverter however, as it clearly scales with power. Funny thing: In Germany residential BOS excluding Inverter is more in the order of $0,50, so BOS savings are not more than 12-13 uscents. This is not enough to generate a price premium that would allow profitable business. That's why we are seeing SPWR Europe numbers going down the drain. SPWR's business hinges heavily on its own project development (incl. leasing) and on high BOS-Cost markets.

[Pop2mollys 417]

Welcome to the new solar bull market.... http://finance.yahoo.com/q?s=Spwr&ql=1

[Guest MichaelZhao]

Wow! that's the power of sun. So, JKS first, then SPWR, who is the next? (FSLR, CSIQ, SOL, TSL...)

[dydo 1,558]

It's official SPWR turned green since January 1st, 2011. Over two years. Average US-listed Chinese is still off by 70%, money to be made there hopefully. https://solarpvinvestor.com/index.php?option=com_solarindex&Itemid=9

[Pop2mollys 417]

It's official SPWR turned green since January 1st, 2011. Over two years. Average US-listed Chinese is still off by 70%, money to be made there hopefully. https://solarpvinvestor.com/index.php?option=com_solarindex&Itemid=9

Absolutely amazing..... Time to make up for lost ground

[Guest ILOVEPV]

The only thing makes me a little bit puzlled is a gap in 6.30 area. Statistics says that gaps get filled in 85% of cases. On the other hand 6.30 is a way too far from a current 11.40. Any thoughts on this issue. I concider SPWR as a very solid player due to state of the art high efficient panels. If you have a lack of space such as roof tops it can be a crucial factor when you make a choice what panels are more beneficial (Japanese may be the best customer for SPWR). Any idea if any of Chinese 11 are able to reach the same or close efficiency in the nearest future? BTW: FSLR panel efficiency over 12% is impressive (if memory servese me right they had less than 8% only a year ago).

[Guest Boss]

I do not see why the gap will not get filled. I think SPWR is way to expensive.

[Guest MichaelZhao]

I do not see why the gap will not get filled. I think SPWR is way to expensive.

I agree, BUT nothing too expensive for a US company, for Chinses company, it is another story. Double standard, american style.

[Guest chrisceeaustin]

From the companies going out of business? Or does Sunpower maintain market share at same level, raise ASP, and ride the rising tide of demand? Also, how much more will Apple contract SPWR for building solar plants? How good will Q1 be? Q2 will be not so great, but there has been talk from at least one analyst of a "wildly profitable" H2. Any thoughts on just how wild the second half will be? Compare SPWR with what CSIQ is predicted by bulls of earning in H2. SPWR should earn a huge sum in H2 and in 2014. Must be measured in dollars, not cents. I am long on both stocks, seeing how CSIQ is ridiculously low in share price.

[Guest chrisceeaustin]

It's weird. I've been quite happy investing in SPWR; it's a well-run company. Why don't others here want to invest or talk about SPWR?

[explo 706]

I haven't looked at SPWR, but were't they saved by getting investment from big oil company and acquiring a project company? Aren't their module business in as much problem as other high cost makers? The premium ASP they require reduces the market available to them?

[Guest Klothilde]

@chrisceeaustin: My guess is that people look a lot at cost per watt and there the figures of SPWR seem spooky to many. At least that's the reason for me to stay away from the company. Everybody wants cheap power, so selling an expensive panel is not straightforward by definition. SPWR provides value in a few niches where the BOS is so expensive that the savings from higher efficiency panels more than compensate the extra cost (e.g. US residential or Japan). However imho the high BOS costs mainly result from generous subsidies which are not sustainable long-term. As soon as subsidies come down, so will the BOS, and the value of extra efficiency relative to the extra cost evaporates. One very clear example is Germany where SPWR used to be the king of the world. Now that tariffs have been cut almost to the bare minimum you see SPWR practically abandoning the market. If you look at their latest quarterly report you'll see the low revenue and hefty losses they have in Europe lately.

[Guest chrisceeaustin]

I agree that they have not made money in Europe for a two or three quarters, as I recall. But their project business is buying them time to reduce their costs, and like others have said, if the ASPs are pretty close, why not go with best quality? That's always been the bet with them. And no reason to poo-poo the project business. That's where the margins are this year, and likely 2014 and 15. That's why I like CSIQ and own a bit of WFR. The big risk for other companies is SPWR's C7 module with the mirrors and all that. They already claim it's the lowest levelized cost of electricity around, and they have not finished testing it in Saudi and some other places. Hubris? Or do they know something? My bet on CSIQ is that they can still build such cheap panels that they can compete with SPWR. But FSLR will fall; STP will fall; others with cheap panels but less experience fall by the wayside. The profits allow them time to lower their costs even further -- their reliability is thorugh the roof -- see their recent top three finishes in that department. I mean their panels took all three of the top three places, REC fell out of the box. And one more thing, the importance of cost is mitigated too by their leasing program. If you pay no money up front, might you be tempted to go with the top quality brand if the benefit is about the same? They can take a little hit on their premium pricing.

[explo 706]

chriscee, No doubt SPWR they have the best panels around. If they get the cost down to not depend on high prices, before the others catch up on the high efficiency positioning then they can be one of the biggest players in global module sales. One thing needs to be understood. The Chinese are not doing what they're doing because it is the only technology option to them. They choose the technology option that will have the biggest market coming 3 years. They like big scale. Chinese panels are currently adding value in more cases than SPWR modules. I read that SPWR panels are based on Chinese wafer technology. My guess is that SPWR module will remain as a Rolls Royce product position and not become mainstream. If they for some reason get costs down a lot. They will be ahead of the Chinese though.

[Guest chrisceeaustin]

I wonder what the industry will look like in three years. The cost of the panel will not matter as much; the cost of the panel is already a much, much smaller issue than it was three years ago. Why? Because it is a much smaller part of the total installation price. Poly will be cheaper and less will be needed. The best panels will be made from the GTAT poly. There will be further downstream integration, into projects, leasing, new products, maybe transmission, maybe transportation? Charging fuel cells, etc.? The cost structure of poly to panel will be less important. What will margin come from? From quality, reliability, length of warranty, from efficiency, from charging EVs, from efficiency of transmission, how well it works in a distributed system.... Sometimes I feel that these boards concentrate too much on cost of manufacturing. It is very important, but most of the tanking of ASP has had to do with business strategy. What happens when these companies have to start making a decent profit again? Will cost be as important?

[Guest ILOVEPV]

I have been waiting for this move. Nobody knows what is behind the move. I hope it will be retraced enough to pick it again. Same picture takes place for WFR. American based solars were artificially kept too high compared to their Chinese brothers/sisters. It is a high time to close gaps.

[Pop2mollys 417]

SPWR still up nearly 30% since beginning of February while Chinese solars down 40-60%. Compare q4 earnings and guidance vs. Top Chinese plays and the gap will close sooner or later despite short term trends....

[Guest ILOVEPV]

http://custom.fmg.dowjones.com/custom/tdameritrade-com/html-story.asp?guid=%7B6f435e14-c5ec-44cf-915a-d49b00a765f8%7D

[explo 706]

Very cool. If these high efficiencies can be achieved at low cost than PV will leapfrog as an energy alternative. It's good that they keep pushing the efficiency boundries for commercial products. Costs improvements will come later.