{"id":4334,"date":"2015-12-09T18:54:49","date_gmt":"2015-12-09T23:54:49","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/sunpower\/"},"modified":"2015-12-09T19:01:58","modified_gmt":"2015-12-10T00:01:58","slug":"sunpower-a-bright-spot-in-renewable-energy","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/sunpower-a-bright-spot-in-renewable-energy\/","title":{"rendered":"SunPower: A Bright Spot in Renewable Energy"},"content":{"rendered":"

OVERVIEW<\/u><\/strong><\/p>\n

SunPower designs, manufactures and provides solar components, systems and services to residential, commercial and utility customers globally.\u00a0 Founded in 1985 by a Stanford professor, the Company now operates on six continents with over 7,000 employees and is majority owned by Total S.A., one of the world\u2019s largest energy companies.<\/p>\n

BUSINESS MODEL<\/u><\/strong><\/p>\n

SunPower\u2019s legacy remains its largest competitive advantage to date.\u00a0 SunPower manufactured solar components are the most efficient commercially available \u2013 meaning more power per panel vs. competitors (which is particularly important for maximized used of constrained spaces).<\/p>\n

Comparable Panel Efficiency (portion of sunlight the panel is able to transform into electricity)<\/strong><\/p>\n

\"Panel<\/a><\/p>\n

\"Segments\"In addition to selling panels, SunPower has evolved its business model to integrate them into a diversified range of complete solar solutions and is now organized across three key segments: 1) Residential, 2) Commercial and 3) Power Plant.\u00a0 The Company recently revised its reporting structure from a geographic segmentation in order to align with its \u201cone-stop shop\u201d, customer-centric approach.<\/p>\n

Residential<\/u><\/p>\n

SunPower offers complete residential solar solutions to homeowners, deriving revenues through direct cash sales and long-term leases, sales to third party dealers and follow-on maintenance services.\u00a0 In addition to a clear value proposition to homeowners of reducing monthly utility bills through clean, renewable energy, SunPower has dramatically simplified the process by managing each step.\u00a0 The Company offers free consultation services to create a custom design proposal and outline estimated savings, manages installation as well as permitting and paperwork and offers flexible long-term payment options.\u00a0 With zero money down lease financing available, SunPower rents the system directly to homeowners, significantly increasing its potential customer base by eliminating prohibitive upfront costs and managing the monetization of investment tax credits.\u00a0 Additionally, energy management software services and a best-in-class 25-year warranty provide continued value to the customer over the lifetime of ownership.<\/p>\n

Commercial<\/u><\/p>\n

SunPower provides a range of distributed generation systems to businesses, educational institutions, government and homebuilders.\u00a0 The Company\u2019s Helix TM<\/sup> platform represents the first fully-integrated commercial system, again simplifying a traditionally complex installation and integration process.\u00a0 SunPower offers a range of purchase and lease options designed to reduce overall energy costs, including Power Purchase Agreements (PPA) in which customers incur no upfront costs and pay a fixed rate per kilowatt-hour consumed.\u00a0 Similar to its Residential products, the Company differentiates itself through superior panel efficiency, durability and aesthetics, value-add services and ongoing maintenance support.<\/p>\n

Power Plant<\/u><\/p>\n

SunPower\u2019s Power Plant segment includes large scale solar projects.\u00a0 The Company works across the value chain, from developing utility-scale power plants, procuring solar off-take contracts, project finance, engineering & construction and maintenance.\u00a0 SunPower also sells components for third-party power plant developers, and its Oasis TM <\/sup>system of 1.5MW modular blocks allow for seamless scalability (think Tetris with solar panels), improving ease of installation and reducing costs.<\/p>\n

OPERATING MODEL<\/u><\/strong><\/p>\n

SunPower\u2019s operating model is predicated on its vertical integration, representing a clear alignment to its diversified business model and end-user base.\u00a0 As panel costs become a smaller part of the overall system, the Company\u2019s ability to drive scale and reduce overall systems costs by offering complete, standardized solutions will allow it to sustain its current advantages.<\/p>\n

\"Vertical<\/a><\/p>\n

Scale
\n\"Costs\"<\/a><\/u>Superior technology and fully integrated solutions have driven increased demand from the greater return on investment provided customers across channels (including being the only company with integrated offerings for the Commercial and Utility segments).\u00a0 As SunPower has grown, it has continuously and successfully invested in cost-control strategies, reducing manufacturing costs while still generating technological improvements.\u00a0 Likewise, as one of the dominant global producers, the Company has partnered with suppliers of key materials such as polysilicon through long-term arrangements to secure availability and drive down costs.<\/p>\n

Sales Channels<\/u><\/p>\n

Through vertical integration, SunPower has sourced direct relationships across the solar ecosystem (from utilities through to homeowners). In addition to over 2,000 sales representatives in the U.S., SunPower has built a comprehensive network of channel partners.\u00a0 For example, the Company recently partnered with ConEdison, a major utility and developer of renewable projects, to serve as a channel partner for its residential distributed generation products.\u00a0 This type of customer sourcing is directly attributable\u00a0to its diversified model and has both broadened market access and reduced customer acquisition costs.<\/p>\n

Acquisitions \/ Partnerships<\/u><\/p>\n

SunPower has also been active in strategic acquisitions and partnerships to find further value additions to its systems.\u00a0 In late 2014 the Company acquired SolarBridge, a microinverter specialist.\u00a0 SolarBridge technology will allow SunPower to incorporate inverters directly into its modules, reducing the need to mount additional rooftop components thus further simplifying installation to reduce time and system costs.\u00a0 Furthermore, to better integrate energy management services offerings, SunPower made an investment in Tendril Networks Technologies to license its software to integrate data coming from its customers\u2019 systems.<\/p>\n

Financing<\/u><\/p>\n

Given up to one-third of power plant costs are financing related, a focus on managing capital costs is essential.\u00a0 In utilizing its scale and available resources through Total, SunPower has been able to effectively do so.\u00a0 This serves as a key pillar in supporting a diversified and integrated approach, from better managing its residential lease portfolio to securing financing for large-scale projects.<\/p>\n

As a notable example, SunPower recently took public 8point3 Energy Partners, a joint venture with FirstSolar.\u00a0 8point3 operates as a Yieldco formed to acquire and operate long-term, contracted solar generation assets and thus distribute a source of predictable dividends to investors. \u00a0One of the first renewable investment vehicles of its kind, 8point3 will serve as a unique source of cheap capital to fund growth going forward.<\/p>\n

\"Cycle\"<\/a>Sustainability<\/u><\/p>\n

It is also worth noting that SunPower use its own solar panels to power manufacturing operations at panel assembly facilities globally.\u00a0 Two of the Company\u2019s panels have been Cradle-to-Cradle certified, a prestigious international product certification standard evaluating \u201cproduct design, manufacturing and sourcing practices as well as corporate citizenship and ethics principles.\u201d\u00a0 The Company\u2019s commitment to sustainable operations directly corresponds to its integrated renewable offerings and drive to provide the best available clean technology solutions.<\/p>\n

CONCLUSION<\/u><\/strong><\/p>\n

SunPower is an example of how complementary business and operating models can generate\u00a0success even in an industry that has faced significant headwinds.\u00a0 The Company\u2019s focus of expanding on its core competency of producing high quality solar cells to provide solutions across\u00a0a diversified customer base has been supported by its vertically integrated approach that has driven scale and allowed for standardization to reduce system costs and continuously provide more value to its customers.<\/p>\n

 <\/p>\n

Sources:<\/strong><\/p>\n

    \n
  1. http:\/\/us.sunpower.com\/<\/li>\n
  2. SunPower SEC filings<\/li>\n
  3. SunPower 2015 Analyst Day Presentation. 12 November 2015. http:\/\/files.shareholder.com\/downloads\/SPWR\/1133560418x0x861169\/C9FCA34A-DC93-41DC-8CC8-9D52F1ACB49D\/2015_SPWR_Analyst_Day.pdf<\/li>\n
  4. \u201cFirst Solar, SunPower Plan 8point3 IPO.\u201d The Wall Street Journal. 10 March 2015. http:\/\/www.wsj.com\/articles\/first-solar-sunpower-plan-8point3-ipo-1425997308<\/li>\n
  5. \u201cSunPower Buys SolarBridge To Bring All-In-One Panels To Mainstream.\u201d Forbes. 10 November 2014. http:\/\/www.forbes.com\/sites\/michaelkanellos\/2014\/11\/10\/sunpower-buys-solarbridge-to-bring-all-in-one-panels-to-mainstream\/<\/li>\n
  6. \u201cSunPower: Leaders of the distributed generation.\u201d Macquarie Research. 30 October 2015.<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"

    A diversified, integrated approach to making solar energy both an affordable and profitable venture.<\/p>\n","protected":false},"author":628,"featured_media":5469,"comment_status":"open","ping_status":"closed","template":"","categories":[26,381,382,184,179],"class_list":["post-4334","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-clean-energy","category-cleantech","category-distributed-generation","category-solar","category-solar-energy"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/the-tom-challenge-tom-winners-and-losers-assignment\/","yoast_head":"\nSunPower: A Bright Spot in Renewable Energy - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/sunpower-a-bright-spot-in-renewable-energy\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"SunPower: A Bright Spot in Renewable Energy - 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