SUNPOWERConsulting Report

Section 2 – Team 2:Herve Buffard

Peter Crayton

Jeff Iannaccone

Obi Okoye-Eze

Anup Shah

SunPower: Summary

• SunPower Inc.: – Vertically integrated Solar Products Co.– Customers: Residential, Commercial & Utility-

scale power plant customers.– Largest US installed base > 100,000 homes.

• PV Technology:– Maxeon® cell Technology (X-Series)

• World record panel efficiency > 21.5%.• 44% more solar power, • 8-10% more energy per rated watt..

– Best warranty, performance, reliability & aesthetics

• Industry Trends:

• 2012 Financial Results:

• Key issues:– Downward pressure on price.– Though revenue is increasing, increasing

costs result in lower margin.– DG: Need to provide constant power .

• The Task Ahead:– Leverage Core capabilities and form new

strategic partnerships to improve upstream and downstream business.

• Near term: Power-plants: • Long term: Distributed generation -

Residential and commercial.

Analysis: Environmental and Five Forces

Environmental Analysis:• Demographic trends:

• Macro-economic impact:– Increasing price of oil, Instability in M.East.

• Socio-Cultural Influences– Desire for low carbon emission electricity

• Political/Legal pressures:– Many incentives for clean energy.– Nuclear: Fukushima disaster

• Global trade issues• Technological Developments

– Advances in PV and HEPV cells

Analysis demonstrates that the Global Electricity Industry is trending in a positive direction.

Five Forces: Solar Industry

• Rivalry: High– High concentration, low differentiation.– High exit barriers due to capital investment

• Threat of Entry: Low to moderate– Barriers to entry: Learning curve, EOS, EOL &

Capital requirements

• Availability of Substitutes: High– Conventional power, nuclear, Etc.– Low switching costs

• Power of Buyers: High– Overcapacity has forced prices down.– Low differentiation– Low switching costs

• Power of suppliers: Low– Low switching costs

The Solar industry is not currently a very attractive industry, however the market has huge potential for growth.

Analysis: Value Chain, Capability and Competitor Analysis

Value Chain Analysis:– Core competency = R&D & manufacturing.

Capability Analysis:

The company’s core capability is rare and imitable, but it is substitutable, and as noted by shrinking margins, the capability is not valuable.

Key Competitor Analysis:

• Chinese Commodity Solar Panel Manufactures: Yingli, Trinasolar, and Sun Tech.– PV panel manufacturers only– PV panels are lower price, lower

efficiency

• First Solar– Vertically integrated– Focused on power plants only– Use different technology to create

cheaper panels

• Solar City– Does not manufacture– Residential market only– Purchases panels, installs for free

and charges for the power provided

ConclusionSunPower has the following unique advantages:

– Highest efficiency and most reliable solar PV panels in the market– Partnership with Total SA, over $600m in cash for process improvements and new projects.

SunPower must think beyond its current capabilities while leveraging its high efficiency Solar PV technology to create a new superior experience that provides the greatest value being sought by its largest customer groups.

We recommend that SunPower take the following steps:

1. Near term: Focus to the higher volume power plant segment. Leverage existing cash to seek out strategic UPP projects. High volume PV panel production will provide SunPower with needed learning to improve process and reduce costs.

2. Long term: Joint venture with Schneider Electric to access battery competency. To differentiate themselves in the distributed generation segment.

SunPower's residential and commercial solution must be able to provide constant power required by the customers. Specifically, they need to be able to store sunlight for re-use during peak or other periods when sunlight is not available.

Q & A

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