SunPower Begins Solar Project Construction

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SunPower Corp. (SPWR) in collaboration with MidAmerican Solar has begun the construction of the Antelope Valley Solar Projects (:AVSP). The 579-megawatt (“MW”) solar projects consist of two co-located projects in Kern and Los Angeles counties in Calif.

These big-scale projects are owned by MidAmerican Solar. Meanwhile, SunPower is the engineering, procurement and construction contractor. Under a multiyear services agreement, SunPower will also provide operations and maintenance services for the plants.

Together these projects form the largest solar power development that is under construction. On an average, these projects have the capacity to generate electricity that is sufficient to power approximately 400,000 homes. Per two long-term power purchase contracts, the renewable energy generated from these solar farms will be sold to Southern California Edison, a subsidiary of Edison International (EIX).

The energy generated will eradicate approximately 775,000 metric tons of carbon dioxide annually. This is almost equal to removing approximately 3 million cars from the road over the next 20 years.

SunPower is installing the SunPower Oasis Power Plant product at the sites. Oasis Power Plant product is a fully integrated, modular solar technology requiring minimal land use. The Power Plant product uses high-efficiency SunPower solar panels mounted on SunPower T0 Trackers. The T0 Trackers boost energy capture by up to 25% because of the strategic placement of solar panels.

Besides being eco-friendly, the projects will fulfill corporate social responsibility. During the three-year construction period, approximately 650 workers will be employed. Moreover, it will contribute more than $500 million to the regional economy. The construction of the projects is expected to be completed by the end of 2015.

SunPower Corporation designs, develops, manufactures, markets and sells high-performance solar electric power technology products, systems and services worldwide for residential, commercial and utility-scale power plant customers.

The company is also currently working on the development of solar projects. Only a few days back SunPower commenced the construction of twin solar projects in Yolo County, Calif. The company expects the projects to produce 5.8 MW of emission-free solar power for county facilities.

Going forward, we like the company’s diversified channel strategy with a strong presence in the residential and commercial market, along with its status as a conversion efficiency leader. Over the near term, however, we are apprehensive about the higher cost structure of the company compared to its peers, the glut of solar panels in the market, lower average selling prices, subsidy roll-back risk in Europe, rising competition, financial stability of its customers and foreign exchange risk.

SunPower carries a Zacks Rank #3 (Hold). Stocks worth considering are ReneSola Ltd. (SOL) and STR Holdings, Inc. (STRI), both with a Zacks Rank #2 (Buy).

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