global photovoltaic market: opportunities and challenges · commission. these forward-looking...

© 2011 SunPower Corporation


GLOBAL PHOTOVOLTAIC MARKET: Opportunities and Challenges

July 5, 2012 Gabriela Bunea


OUTLINE

§  SunPower overview §  Solar market §  SunPower Technology §  Acknowledgment

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SunPower Overview


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Safe Harbor Statement This presentation contains forward-looking statements within the meaning of the Private Securities litigation Reform Act of 1995. Forward-looking statements are statements that do not represent historical facts and may be based on underlying assumptions. SunPower uses words and phrases such as “driving,” “within reach,” “predictable,” “will,” “pipeline,” “visibility,” “goal,” “projected,” “target schedule” and similar words and phrases to identify forward-looking statements in this presentation, including forward-looking statements regarding: (a) plans and expectations regarding future financial results, operating results, liquidity, cash flows, capital expenditure and business strategies, (b) management’s plans and objectives for future operations, (c) reaching the goal of pricing competitiveness with conventional energy sources, (d) forecasted demand growth in the solar industry, and projected bookings and pipelines, (e) utility project construction and timing, completion, ability to obtain financing, (f) growth in dealer partners, (g) product development, advantages of new products, and competitive positioning, (h) manufacturing plans and expected savings, and (i) the success and benefits of joint ventures, acquisitions and partnerships. Such forward-looking statements are based on information available to SunPower as of the date of this presentation and involve a number of risks and uncertainties, some beyond SunPower’s control, that could cause actual results to differ materially from those anticipated by these forward-looking statements, including risks and uncertainties such as (i) increasing supply and competition in the industry and lower ASPs, impact on gross margins, and any revaluation of inventory as a result of decreasing ASP or reduced demand; (ii) the impact of regulatory changes and the continuation of governmental and related economic incentives promoting the use of solar power, and the impact of such changes on revenues, financial results; (iii) ability to meet cost reduction plans and reduce operating expenses; (iv) ability to obtain and maintain an adequate supply of raw materials, components, and solar panels, as well as the price paid for such items and third parties' willingness to renegotiate or cancel above market contracts; (v) general business and economic conditions, including seasonality of the solar industry, growth trends in the solar industry, and the challenges in becoming price competitive with conventional energy sources; (vi) ability to revise portfolio allocation geographically and across downstream channels to respond to regulatory changes; (vii) ability to increase or sustain growth rate; (viii) construction difficulties or potential delays, including obtaining land use rights, permits, license, other governmental approvals, and transmission access and upgrades, and any litigation relating thereto; (ix) timeline for revenue recognition and impact on operating results; (x) the significant investment required to construct power plants and the company's ability to sell or otherwise monetize power plants, including the company's success in completing the design, construction and maintenance of CVSR and the 711MW project for Southern California Edison; (xi) fluctuations and unpredictability in operating results; (xii) the availability of financing arrangements for the company's projects and the company's customers; (xiii) potential difficulties associated with operating the joint venture with AUO and ability to achieve the anticipated synergies with Tenesol; (xiv) success in achieving cost reduction, ability to remain competitive in product offering and obtain premium pricing; (xv) liquidity, substantial indebtedness, and ability to obtain additional financing and meet debt covenants; (xvi) manufacturing difficulties that could arise;(xvii) ability to achieve the expected benefits from relationship with Total; (xviii) the success of ongoing R&D efforts and the acceptance of new products and services; (xix) possible impairment or write-off of goodwill, intangible assets, long-lived assets and project assets; (xx) the success of residential lease program; (xxi) the assumptions and compliance with treasury grant guidance and timing and amount of cash grant; and (xxii) other risks described in SunPower’s Annual Report on Form 10-K for the year ended January 1, 2012 and other filings with the Securities and Exchange Commission. These forward-looking statements should not be relied upon as representing SunPower’s views as of any subsequent date, and SunPower is under no obligation to, and expressly disclaims any responsibility to, update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.


SunPower 2012

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World-leading solar conversion efficiency >2.5 GW solar PV deployed

More than 200 patents

5,000+ employees

Diversified portfolio: roofs to power plants Strategic investment by Total


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Cell and module technology is the foundation of our world class system solutions

Residential

Technology Businesses

Power Plants


Total Overview: §  11th largest company in the world* §  2011 sales: €185 billion. 92,855 employees §  Strategic investments in solar

Transformational Investment, June 2011: §  Long-term alignment with strategic investor who shares vision and strategy §  $1 billion credit support agreement accelerates long-term growth plan §  Expands SunPower’s R&D capacity through joint collaboration agreement §  Total’s footprint spans 130 countries expanding SunPower’s market access

Total SA Partnership

* Source: 2011 Fortune Global 500


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SunPower Revenue Growth

$11 $79$237

$775

$1,438$1,524

$2,230

$2,498

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

2004 2005 2006 2007 2008 2009 2010 2011

Annual Revenue ($M)

2012 Revenue on Non-GAAP basis



Solar Market


Energy Available from Sun §  AltEnergy.org:

–  The sun provides enough energy in one minute to supply the world's energy needs for one year.

–  In one day, it provides more energy than our current population would consume in 27 years.

–  In fact, the amount of solar radiation striking the earth over a three-day period is equivalent to the energy stored in all fossil energy sources.

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Solar Market Context

§  $1 trillion global electric power market

§  Global power demand to roughly double by 2025

§  Solar power market share today < 1%

§  Policy driven by demand growth, power plant retirement, security and environment

§  PV electricity is approaching conventional power prices in some markets

SunPower is managing to an incentive-free solar market


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Solar Role as Baseline Energy Source

Source: IEA 2010

0

5

10

15

20

25

30

35

40

45

2007 2020 2030 2040 2050

Global Electricity Production By Energy Source

Other

Solar

Wind

Hydro

Biomass

Nuclear

Natural gas

Oil

Coal

PWh


Average Annual Growth Rates of Renewable Energy Capacity

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Source: REN21 Renewable Energy Policy Network for the 21st Century

www.ren21.net (November 2010)


2012 PV Industry Strategic Context Industry Trends §  Proliferation and fragmentation of

demand. Moving from few “mega-markets” to broad # of small-medium sized mkts

§  No longer just an EU + US story: Asia, Middle East and Africa rising fast

§  Market-driven policy design

–  Days of administratively set fixed-rate tariffs are nearing an end

–  Reverse auction format and PPA-based tenders to dominate

§  Souring sentiment in EU over PV on agricultural land.

§  Convergence across markets of economic returns from solar

§  Stage set for industry shake-out

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Solar PV History and Forecast

0 5 000

10 000 15 000 20 000 25 000 30 000 35 000 40 000

Annual Global PV Additions (MW)

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>1 >10 >100 >1000

~25 - 30 GW/yr

Sources: Historic - Photon, Solarbuzz; 2011+ - Base case industry consensus


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Radical Shifts in Regional Demand

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

40 000

45 000

2011 2012 2013 2014 2015 2016

APAC

MEA

Europe

Americas

Annual PV Capacity Additions by Market (MW)

26,400

Sources: Historic - Photon, Solarbuzz; 2011+ - Base case industry consensus

27,700 32,200

35,500 39,400

27,500

© 2012 SunPower Corporation Source: OECD/IEA, 2010

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New Power Generation Capacity by Geography 2010-2020

GW By Key Country

By Global Region

262 74 91

773

200 45

-500

0

500

1000

United States Japan Russia China India Brazil

Additions Retirements Net Addition

322 337 118 161

1,095

114 76 95

2,319

-1000

-500

0

500

1000

1500

2000

2500

3000

North America

OECD Europe

Pacific E. Europe Asia Middle East

Africa Latin America

World

© 2012 SunPower Corporation Source: GTM Research, April 2012

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The U.S. Utility PV Pipeline

© 2012 SunPower Corporation Source: GTM Research, April 2012

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Contracted PV Pipeline By Utility


California Renewable Portfolio Standard (RPS) Overview

§  California has mandated that 33% of energy comes from renewable by 2020

§  Major California utilities: PG&E (Northern California, San Francisco), SCE (Southern California/LA), and SDG&E (Southern California/San Diego) are entering into contracts for large solar/wind projects to meet mandate

§  High solar resource §  Large projects >20MW++ §  US Federal Government 30%

Investment Tax Credit providing financial support

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Market Participation by Segment

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Retail: compete with retail customer electric rates

Wholesale: compete with peak wholesale energy prices


Grid Parity: Executive Outlook What does Grid Parity mean?: Not a single definition !!

§  Cost of kWh produce with solar PV = Price of the electricity, but ….

§  There is not a single price of electricity:

–  Retail price: Residential, Commercial , Industrial, etc.

–  Wholesale price, etc.

–  Grid Parity will be reached soon in the retail market and in selected wholesale markets

§  Reaching GP is not enough if regulatory framework is not ready & fair :

–  Net Metering: Auto Consumption is not enough ! Roll over and value 100 % generation

–  No caps; no limitations in size; no fees

–  Value kWh = Retail electricity price

–  Interconnections rights and priority dispatch

§  We are in retail grid parity in some segments in Southern EU

§  We are at wholesale grid parity in fuel oil dominated regions

§  LCOE’s have fallen dramatically faster than market forecasts!!

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Goldman Sachs (Jan 2011)

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Expected parity in residential : ITA 2010 SPA 2012 GER >2014 FRA >2014


Schleicher-Tappeser (Jan 2011)

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Expected parity: RES COM

ITA 2010 2012/3 SPA 2010 2014 GER 2011 2016 FRA 2016 >2016


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72-Mwac Montalto Italy Largest in world by energy production

First investment grade solar bond – 200M Euro


California Valley Solar Ranch: 250 MW

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September 2011

-  Financing approved -  Construction started


750 MW DC – SunPower Antelope Valley Solar – Washington D.C. Comparison

© 2012 SunPower Corp.

601-MW Antelope Valley, CA Largest in world by energy

production


Solar Market Thoughts

§  The Internet went through a boom 1997-2000 followed by a correction

§  Despite the dot-com correction Internet use continued dramatic growth as

communication costs plummeted, usage increased and new applications

were created

§  The PV market is entering a consolidation phase but that is an opportunity as

dramatically lower PV LCOEs transform the market for solar generation

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SunPower Technology Highest Efficiency, Highest Reliability, Guaranteed Performance


SunPower: A Technology Leader

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§  Dedication to research and development: §  >200 patents issued to date §  Constantly innovating


SunPower’s Maxeon all-back contact, n-type solar cell is patented, hard to replicate and provides industry-leading efficiencies of up to 24%

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SunPower® Maxeon® Cell Technology

All-Back Side Contacts Front Side (no gridlines)


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SunPower® Maxeon® Solar Cell: A Differentiated Technology SunPower’s all-back contact solar cells are up to 50% more efficient than Conventional c-Si cells

SunPower Maxeon Cell

22%-24% Efficient

Conventional Mono Cell

15%-18% Efficient

Conventional Multi Cell

14%-17% Efficient

* Cell efficiencies shown are indicative of cells in mass production


Broad Spectral Response

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SunPower Cells capture more light from the blue and infra-red parts of the spectrum through a lightly doped front surface and light trapping


N-type Silicon – 270 um thick N-type High Lifetime Silicon •  reduces bulk recombination

P+ P+ P+ N+ N+ N+

Conventional Solar Cell 15% Efficiency

P-Type Multi-crystalline Silicon

Front

Back

Texture + ARC

P+

Gridlines

Aluminum Paste"Silver Paste Pad"

N-Type Diffused"Junction"

Technology Comparison

Passivating!SiO2 layer!•  Reduces surface recombination loss"

Texture +ARC

Backside Gridlines •  Eliminates shadowing •  High-coverage metal reduces resistance loss

Lightly doped front diffusion!•  Reduces recombination loss"

Localized Contacts!•  Reduces contact "recombination loss"

Backside Mirror!•  Reduces back light absorption & causes light trapping"

SunPower ® Solar Cell Up to 24% Efficiency

N+

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Cell Efficiency Evolution

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POWER DISTRIBUTION BY NAMEPLATE

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Gen 2 Cell in all distributions


Gen 3 delivers unprecedented value

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18%

20%

16%

14%

Mod

ule

Effi

cien

cy

21%

Standard Efficiency

HIT Selective Emitter

Maxeon™ Gen 2

Maxeon™ Gen 3

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16%

14%

19%

20%


SunPower Extended Testing for Highest Reliability

8x IEC

8x UL

ISO

Basic Industry Qualifications

SunPower Custom Tests

Extended Qualifications

Highly Accelerated Life Test (HALT) Design & Manufacturing Testing


AKNOWLEDGEMENTS

§  Matt Campbell, Sr. Director Business Development Power Plants §  Helen Kendrick, Sr. Manager, External Communications Dept

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Global PV Power Plant Market LCOE’s have fallen dramatically creating new PV power plant markets

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California RPS driven PV plants

taking off

FIT markets dramatically changed – first PPA’s under

development China FIT driving fast

growth

First large power plants under solar flagships program

India FIT & RPO driven growth

Focus on high solar resource areas of Chile

South Africa tender-driven

growth

Large potential in GCC


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Photon Survey: SunPower ® panels are more efficient per rated watt SunPower Technology Leadership

Graph shows SunPower vs. conventional silicon PV Source: Photon Annual Market Survey, 2010 and SunPower

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