Despite the boom in quarterly installations, this is a difficult time for both developers, who are struggling with a lull in new contract signings and depleted pipelines, and PV module makers, who are facing another round of collapsed prices and oversupply.
And while both of these conditions are affecting SunPower, the company reported remarkably good Q3 results, with revenues nearly doubling year-over-year to $729 million. The company also reported a net loss of $40 million, but this is its lowest level of losses in at least one year.
The sale of SunPower’s remaining 49% interest in the 102 MW Henrietta project to yieldco 8point3 Energy Partners clearly boosted its revenues, with the company’s Power Plant business brought in over 60% of revenues on a non-GAAP basis. This is a much higher share than in the last three quarters.
But the company’s more important successes during the quarter were not so easily measurable in dollars. SunPower launched its next generation Oasis 3.0 Power Plant solution during the quarter, and has already contracted to supply over 700 MW of these systems.
Shipments to residential and commercial markets were more modest. The company shipped around 40 MW of its Equinox residential solutions, and commercial MW shipped rose around 50% quarter-over-quarter, with SunPower noting multiple public sector contract wins.
SunPower also reports that it has entered into agreements to supply parent company Total with 200 MW of modules for global projects over the next four years.
More impressive is SunPower’s results with cell and module manufacturing. During the quarter SunPower settled its disputes with Taiwan’s AUO and acquired the remaining portion of AUO’s JV stake in its Fab 3 in Malaysia, which the company notes is its highest performing fab.
At SunPower’s Fab 4, the company reports that its back contact Maxeon solar cells have reached an average efficiency of 24.7%, a raw increase of 0.8% since April (slide 9). This is impressive technology improvement for what was already by far the most high-efficiency solar product currently in mass deployment.
SunPower says that its cost roadmaps remain on plan for the back contact cells. For its new, low-cost P-Series, SunPower notes that ramping of volume production remains on track and that costs reduction is ahead of plan. During the call CEO Tom Werner also reiterated that the P-Series is intended for lower-price global markets, and that it would focus its back-contact module sales in the United States and other markets that are more open to higher-priced, higher output products.
But despite this technology progress, SunPower says that the “current mismatch between supply and demand” is already having impacts, and that it will reduce its capacity utilization to align with demand and limit inventory. The company also plans to implement cost-cutting programs, while focusing on cash generation and profitable growth.
In terms of numbers, SunPower expects to deploy 235 to 265 MW of PV modules during Q4, with nearly 40% going to the residential segment. Due to increased income from project sales, the company is expecting $900 million to $1.1 billion in revenue, but a net loss of $100-$125 million.
SunPower’s ongoing problems with profitability are highlighted in its 2016 guidance as well. The company expects to bring in $2.43-$2.63 billion, but a net loss of $295-$320 million.
Looking forward to 2017, SunPower says that cash flow and liquidity will be its key performance metrics, and notes that it will be both modifying its power plant sales process and timing to expand the universe of buyers as well as focusing on improving margins by leveraging its complete solutions.
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