SunPower designs, manufactures and provides solar components, systems and services to residential, commercial and utility customers globally. Founded in 1985 by a Stanford professor, the Company now operates on six continents with over 7,000 employees and is majority owned by Total S.A., one of the world’s largest energy companies.
SunPower’s legacy remains its largest competitive advantage to date. SunPower manufactured solar components are the most efficient commercially available – meaning more power per panel vs. competitors (which is particularly important for maximized used of constrained spaces).
Comparable Panel Efficiency (portion of sunlight the panel is able to transform into electricity)
In addition to selling panels, SunPower has evolved its business model to integrate them into a diversified range of complete solar solutions and is now organized across three key segments: 1) Residential, 2) Commercial and 3) Power Plant. The Company recently revised its reporting structure from a geographic segmentation in order to align with its “one-stop shop”, customer-centric approach.
SunPower offers complete residential solar solutions to homeowners, deriving revenues through direct cash sales and long-term leases, sales to third party dealers and follow-on maintenance services. In addition to a clear value proposition to homeowners of reducing monthly utility bills through clean, renewable energy, SunPower has dramatically simplified the process by managing each step. The Company offers free consultation services to create a custom design proposal and outline estimated savings, manages installation as well as permitting and paperwork and offers flexible long-term payment options. With zero money down lease financing available, SunPower rents the system directly to homeowners, significantly increasing its potential customer base by eliminating prohibitive upfront costs and managing the monetization of investment tax credits. Additionally, energy management software services and a best-in-class 25-year warranty provide continued value to the customer over the lifetime of ownership.
SunPower provides a range of distributed generation systems to businesses, educational institutions, government and homebuilders. The Company’s Helix TM platform represents the first fully-integrated commercial system, again simplifying a traditionally complex installation and integration process. SunPower offers a range of purchase and lease options designed to reduce overall energy costs, including Power Purchase Agreements (PPA) in which customers incur no upfront costs and pay a fixed rate per kilowatt-hour consumed. Similar to its Residential products, the Company differentiates itself through superior panel efficiency, durability and aesthetics, value-add services and ongoing maintenance support.
SunPower’s Power Plant segment includes large scale solar projects. The Company works across the value chain, from developing utility-scale power plants, procuring solar off-take contracts, project finance, engineering & construction and maintenance. SunPower also sells components for third-party power plant developers, and its Oasis TM system of 1.5MW modular blocks allow for seamless scalability (think Tetris with solar panels), improving ease of installation and reducing costs.
SunPower’s operating model is predicated on its vertical integration, representing a clear alignment to its diversified business model and end-user base. As panel costs become a smaller part of the overall system, the Company’s ability to drive scale and reduce overall systems costs by offering complete, standardized solutions will allow it to sustain its current advantages.
Superior technology and fully integrated solutions have driven increased demand from the greater return on investment provided customers across channels (including being the only company with integrated offerings for the Commercial and Utility segments). As SunPower has grown, it has continuously and successfully invested in cost-control strategies, reducing manufacturing costs while still generating technological improvements. Likewise, as one of the dominant global producers, the Company has partnered with suppliers of key materials such as polysilicon through long-term arrangements to secure availability and drive down costs.
Through vertical integration, SunPower has sourced direct relationships across the solar ecosystem (from utilities through to homeowners). In addition to over 2,000 sales representatives in the U.S., SunPower has built a comprehensive network of channel partners. For example, the Company recently partnered with ConEdison, a major utility and developer of renewable projects, to serve as a channel partner for its residential distributed generation products. This type of customer sourcing is directly attributable to its diversified model and has both broadened market access and reduced customer acquisition costs.
Acquisitions / Partnerships
SunPower has also been active in strategic acquisitions and partnerships to find further value additions to its systems. In late 2014 the Company acquired SolarBridge, a microinverter specialist. SolarBridge technology will allow SunPower to incorporate inverters directly into its modules, reducing the need to mount additional rooftop components thus further simplifying installation to reduce time and system costs. Furthermore, to better integrate energy management services offerings, SunPower made an investment in Tendril Networks Technologies to license its software to integrate data coming from its customers’ systems.
Given up to one-third of power plant costs are financing related, a focus on managing capital costs is essential. In utilizing its scale and available resources through Total, SunPower has been able to effectively do so. This serves as a key pillar in supporting a diversified and integrated approach, from better managing its residential lease portfolio to securing financing for large-scale projects.
As a notable example, SunPower recently took public 8point3 Energy Partners, a joint venture with FirstSolar. 8point3 operates as a Yieldco formed to acquire and operate long-term, contracted solar generation assets and thus distribute a source of predictable dividends to investors. One of the first renewable investment vehicles of its kind, 8point3 will serve as a unique source of cheap capital to fund growth going forward.
It is also worth noting that SunPower use its own solar panels to power manufacturing operations at panel assembly facilities globally. Two of the Company’s panels have been Cradle-to-Cradle certified, a prestigious international product certification standard evaluating “product design, manufacturing and sourcing practices as well as corporate citizenship and ethics principles.” The Company’s commitment to sustainable operations directly corresponds to its integrated renewable offerings and drive to provide the best available clean technology solutions.
SunPower is an example of how complementary business and operating models can generate success even in an industry that has faced significant headwinds. The Company’s focus of expanding on its core competency of producing high quality solar cells to provide solutions across a diversified customer base has been supported by its vertically integrated approach that has driven scale and allowed for standardization to reduce system costs and continuously provide more value to its customers.
- SunPower SEC filings
- SunPower 2015 Analyst Day Presentation. 12 November 2015. http://files.shareholder.com/downloads/SPWR/1133560418x0x861169/C9FCA34A-DC93-41DC-8CC8-9D52F1ACB49D/2015_SPWR_Analyst_Day.pdf
- “First Solar, SunPower Plan 8point3 IPO.” The Wall Street Journal. 10 March 2015. http://www.wsj.com/articles/first-solar-sunpower-plan-8point3-ipo-1425997308
- “SunPower Buys SolarBridge To Bring All-In-One Panels To Mainstream.” Forbes. 10 November 2014. http://www.forbes.com/sites/michaelkanellos/2014/11/10/sunpower-buys-solarbridge-to-bring-all-in-one-panels-to-mainstream/
- “SunPower: Leaders of the distributed generation.” Macquarie Research. 30 October 2015.