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SunPower Sells Solar Asset

Zacks Equity Research

SunPower Corporation (SPWR) has sold its Kalaeloa solar farm to a consortium of buyers including D. E. Shaw Renewable Investments, L.L.C. (“DESRI”) and Bright Plain Renewable Energy, L.L.C. (“BPRE”).

Based in West Oahu, Hawaii, Kalaeloa solar farm has a power generation capacity of 5-megawatt (“MW”). SunPower started construction of this project in July 2012 and intends to complete it by the end of full-year 2012. The electricity generated from the plant will be sold to Hawaiian Electric Industries Inc. (HE) under a 20-year fixed-price agreement.

In August 2005, the U.S Environmental Protection Agency (“EPA”) circulated a regulation that each of the federal agencies will consume renewable energy in amounts of not less than 7.5% in 2013 and afterwards. Currently, most of the utility providers invest substantial amounts for developing and upgrading their renewable emission-free utility assets to meet the environmental legislations.

Moreover, the company is also installing high-efficiency solar panels. This operation is located on a 36 acres land, which is owned by the State of Hawaii Department of Hawaiian Home Lands. The tracker system in place will direct the solar panels towards the sun's movement during the day and increases the sunlight confinement capacity by approximately 25% over conventional fixed-tilt structures. Additionally, the current acquisition of this solar project would help Hawaii in meeting the EPA standards and goals.

Globally, demand for renewable energy is rising primarily due to its clean nature, increasing prices of fossil-fuels, and growing awareness among the masses regarding the benefits of renewable energy. This fact compels the utility providers to shift their mode of power generating operations to wind, solar and water from coal, oil and natural gas.   

SunPower is receiving continuous sale-orders from domestic as well as international clients. In October 2012, SunPower sold its 1-MW Uterne solar project to Australian renewable energy provider Epuron. This venture was developed by SunPower with the help of Power and Water Corporation under a 20-year solar power purchase contract.

We view this higher demand of solar powered energy as a positive catalyst for SunPower’s future operating as well as financial results. SunPower currently retains a short-term Zacks #2 Rank (Buy rating).

San Jose, California-based SunPower Corporation is a vertically-integrated solar manufacturer, with a presence along the entire solar value chain from cells through installation. With a market capitalization of $541.66 million, the company has 5,220 full time employees.

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