SunPower, headquartered in San Jose, California and Geneva, Switzerland, has been around a long time – 25 years in fact – and has seen more downturns than many other companies in the space. But in recent times, those pioneers such as SunPower that have remained in the industry for the long haul have seen their rewards grow substantially.
According to a report produced by the Solar Energy Industries Association (SEIA) and GTM Research, which examined solar technologies and market segments in the USA alone, all segments taken together grew by over 100% in 2010. And the US Solar Market Insight Report projected that the industry will exceed 1 GW of installed capacity for the first time by the end of 2010.
Commercial and residential installations grew at a 40% to 50% rate. 866 MW of solar photovoltaics (PV), along with 79 MW of concentrating solar power (CSP) systems, worth US$2.5 billion, have been installed in 2010 – a 119% increase.
SunPower itself managed to install more than 100 MW worldwide. According to Howard Wenger, President of the company's utility and power plants division, the company has now installed and is maintaining over 500 MW worldwide: “Our fleet operates at 99% reliability when it is supposed to be on – during daylight hours,” he said.
So the industry has indeed come a long way, a far cry from the days when SunPower first came into being.
SunPower founded to develop technology
Richard Swanson founded SunPower in 1985 to develop and commercialise high efficiency solar cell technologies – solar PV – then a new technology, which he had initially developed while at Stanford University.
Today, SunPower is a vertically integrated company serving utilities and large commercial clients with design, construction and installation services, as well as the residential and small commercial customer sectors in 9 countries through a global dealer or partner network.
In 2002, Cypress Semiconductor Corp. became a majority investor in SunPower.
In November 2005, the company held its initial public offering, and Cypress sold its majority shares.
Today SunPower's stock trades publicly and is listed on the Nasdaq Global Select Market under the symbols SPWRA and SPWRB.
And in late 2006, it acquired PowerLight, a California company that installed large commercial rooftop and ground-mounted solar power plants in the US, Germany, Spain, Portugal, Italy and Korea. SunPower was already one of PowerLight's key suppliers. This and later acquisitions allowed the manufacturer and supplier to expand its business into the worldwide retail market.
Underlying SunPower's acquisitions was a desire to accelerate the reduction of solar power costs to compete with retail electric rates without incentives. Since 2007, it has cut its costs to produce its trackers for 50% less. Total manufacturing costs, which were just under US$3/W in 2006, shrank to less than US$2/W in the fourth quarter of 2009, while expanding its quarterly production to a record 130 MW, according to its 2009 annual report. The company's goal is to further trim its costs to less than US$1/W in 2014.
At the system level, SunPower reported that its products deliver up to 50% more power per unit of space than conventional crystalline silicon systems, and over 100% more than thin-film products.
The efficiency of its A-300 solar cell has a specified power value of 3.1 W and its conversion efficiency averages between 20% and 21.5%. The A-330 cell delivers 3.3 W with a conversion efficiency of up to 22.7%. In October 2009, SunPower announced it had produced a world-record, full-sized solar panel with a 20.4% total area efficiency, thanks to funding from the US Department of Energy.
Continuing down the cost curve
Starting in 2008, SunPower began serving the utility and power plant market in the USA, sensing that the area would be a significant driver of its future growth, and Howard Wenger was appointed to head up the utility and power plant division. Speaking at SPI2010, Wenger said it is imperative that the solar industry continues down the cost curve. On this learning curve, costs have been reduced by 18% with every doubling of cumulative capacity installed by the industry – that rate is about every 18 to 24 months, he said.
SunPower is on the same trajectory, he said. Shareholders were promised that starting in 2006 costs would be reduced over a five-year period; “we're on target to get to US$4.50/W next year, and that includes costs for the inverter, panels, and installation, he claimed.
|“Our industry has been working for 25 years to get to this place. It’s been a learning process for both us and the utilities. I’m entirely optimistic.”
|- Howard Wenger, SunPower
“We are building competitive utility-scale solar systems with the 30% tax credit,” he continued. “The goal is to get to US$4.50/W where the 30% tax credit is not needed. When you drive the whole supply chain down, you get economies of scale and efficiency in construction which accounts for the drop in prices,” he added. His evidence? SunPower is signing more and more contracts.
In 2009, SunPower completed the construction of a 25 MW solar PV power plant in the USA, in DeSoto County, Florida for the utility Florida Power & Light. It also completed a 9 MW project for Exelon in Chicago on a brown-field site, the largest urban solar PV power plant in the country, and it completed the financing of a 19 MW plant with Xcel. MetLife financed the equity while John Hancock Financial Services is handling the debt.
SunPower, in partnership with SunRay Renewable Energy, built the 24 MW Montalto di Castro power plant in the Viterbro province of Italy in 2009, the largest solar plant to be financed in Europe that year. The plant started delivering power to the grid in December 2009. It is the first phase of a planned 85 MW development expected to be fully operational in 2010.
SunPower is now developing its largest utility-scale plant, the 250-MW California Valley Solar Ranch project, in an area half way between Los Angeles and San Francisco, and has signed a power purchase agreement with Pacific Gas & Electric. It is confident economies of scale will reduce costs even further for this size plant.
However, San Luis Obispo County, which is reviewing the project, is asking that it be scaled back to between 150 MW and 175 MW to protect an endangered species – the Kangaroo rat – living in the area. SunPower hopes to preserve the original size of the project by adding a 320 acre parcel, and shifting arrays to avoid the areas where species might be impacted.
Working with utilities
“Utilities are our partners and they can be very tough [in contract negotiations] [but] we have found them to be fair,” Wenger said. “These are power plants on multiple square miles of land with facilities and phasing requiring terms and conditions as on conventional plants. We have to play by the same rules,” he said.
“It is a tough and selective process where some companies cannot participate. Some are coming back in,” Wenger added. Some toughness is needed, he continued, adding that “our industry has been working for 25 years to get to this place. It's been a learning process for both us and the utilities. I'm entirely optimistic.” California utilities have the most experience [with solar] in the nation. Sixty-five percent of all solar PV modules are installed in California, he said.
Despite the discussions surrounding the desperate need to upgrade the grid, Wenger believes that grid integration is actually not an issue for the “next few years”. In fact, he explains, there are places in Spain where 15% to 20% of the power going into the grid is generated by solar systems, and the utilities operate seamlessly with day-ahead forecasts.
As the California Energy Commission, and the California Independent System Operator have found in simulation studies, grid integration becomes difficult only when utilities' renewable contributions to delivered power approach 33%.
Wenger said SunPower is developing power electronics to moderate power, voltage, frequency and reactive power of generated electricity on utility-scale solar systems. A SunPower project installed a 1.2 MW solar photovoltaic system on the island of Lanai in Hawaii, and configured site controls to integrate it into the island's electrical system, which is owned by Hawaiian Electric. The island has a total demand of 4 MW to 5 MW, with the remaining power supplied by diesel generators.
The solar system supplies 25% to 30% of the power to the island's load and can be disruptive to the grid because of its intermittent power production. SunPower's power electronics and a battery system provided by Xtreme Power are integrating the solar system into the grid so that it is not disruptive to the system. “This is a metaphor for California,” Wenger says, “this technology could be deployed in five years to solve the integration problem”.
SunPower had already developed its T-5 Solar Roof Tile System, an all-in-one non-penetrating solar PV rooftop product that combines solar panel, frame and mounting system into a single pre-engineered unit. In October, SunPower began marketing OASIS, a 1 MW solar package system. Wenger's business group developed the system in collaboration with SunPower's research and development team.
|SunPower will partner with three energy storage companies, Ice Energy, Xtreme Power and ZBB Energy, to establish a pilot programme for demonstrating advanced energy storage systems in combination with existing solar PV systems for commercial customers.
OASIS features a pre-manufactured tracker and electrical system, which can be delivered on a truck to a company, utility or school – pre-designed and pre-engineered and installed without on-site construction. This will make it easier for independent power customers to order a system – say in multiples of 1 MW – and speed up the execution of a contract, the company claims. Wenger hopes this will drive costs down further and increase the quality of solar systems.
Wenger said that SunPower is taking orders now and will start shipping OASIS package systems in the second quarter of 2011. He sees initial customers to be utilities and independent power developers such as AES and NextEra.
SunPower also formed PVDOCK, a special interest group, with SolarBridge Technologies and Tigo Energy, both distributed power control systems manufacturers. The group's goal is to develop and publish a specification that manufacturers can use to develop a dock or universal port that would accept various technologies for residential solar systems.
Wenger thinks of the universal port as a 'plug-and-play' for solar systems, and equivalent to the development of the RJ11 phone jack which allows any phone to be plugged into a wall jack. The universal port will further drive down solar costs, serve as a safety element and will make monitoring the system easy, Wenger believes.
SunPower has also been awarded three research grants totalling US$3.3 million from the California Solar Initiative RD&D programme, overseen by the California Public Utilities Commission.
Awarded US$1.5 million in March 2010, two of the grants will involve SunPower working with solar technologists to research how to facilitate high levels of distributed solar PV penetration into California's transmission and distribution network. First, the company will research the development of tools and resources, to study high-penetration solar PV scenarios using industry-standard simulation tools.
In the second project, SunPower will team up with the Sacramento Municipal Utility District to study the effectiveness of new hardware and software tools for providing bi-directional communication and management between solar PV systems and utility controls, using advanced metering infrastructure.
In September 2010, in a second round of funding, SunPower received US$1.8 million to research solar PV energy storage for large commercial applications. It will partner with three energy storage companies, Ice Energy, Xtreme Power and ZBB Energy to establish a pilot programme for demonstrating the integration of advanced energy storage systems in combination with existing solar PV systems for commercial customers.
SunPower will work with a major retailer to demonstrate the economic and operational benefits of combining solar PV with each of the partners' storage devices.
Wenger agreed that while higher prices increase profits, there is the potential for sacrificing critical research and development in the drive for lower prices. SunPower appears to be continuing its founder's work – utilising R&D in the drive to reduce prices, increase sales and in the long term improve profits without needing subsidies.
About the author:
Lyn Corum is a freelance US correspondent for Renewable Energy Focus magazine.
Renewable Energy Focus, Volume 11, Issue 6, November-December 2010, Pages 36-38