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SunPower Corporation and NRG Energy, Inc. (NRG) announced the formal commencement of construction of the 250-megawatt California Valley Solar Ranch (“CVSR”). The project has received a loan guarantee of up to $1.237 billion from the U.S. Department of Energy's Loan Programs Office that supports the deployment of commercial technologies along with innovative technologies that lowers green house gas emissions.
NRG Energy is a pioneer in developing cleaner and smarter energy choices for its customers as one of the largest solar power developers in the country. It is currently the sole owner of the project. In September 2011, it had completed the acquisition of CVSR from SunPower. However, SunPower is responsible for the construction of this Californian solar farm with help from Bechtel; the latter being responsible for plant engineering and procurement & construction services. Upon completion of the project, NRG and SunPower will jointly operate and maintain CVSR for two years. After two years, NRG will take up the sole responsibility of the plant.
Under the construction and designing process, SunPower is installing the cost-effective SunPower Oasis Power Plant product that deploys utility-scale solar projects rapidly. Each power block integrates the SunPower T0 Tracker with SunPower high-efficiency solar panels, pre-manufactured system cabling, the Oasis smart inverter, and the Oasis operating system. SunPower Oasis also has the SunPower advanced Tracker Monitoring and Control System for wireless control of the power plant.
During the two-year construction period, the project is expected to invest $315 million in the local economy and also create 350 jobs. Upon completion, it will sell the clean, renewable solar energy generated to Pacific Gas & Electric Company (PCG) under a 25-year power purchase agreement that will power 100,000 homes yearly on an average. The project is expected to begin partial operations by early 2012, with the rest coming online later in 2012 and 2013.
Recently, in October, SunPower announced that it plans to start the construction of the 25-megawatt McHenry Solar Farm in Modesto before the end of fiscal 2011. This plant will also utilize the SunPower Oasis Power Plant product for electricity generation.
SunPower’s customer base is spread across North America, Europe, the Middle East, Asia and Australia. The company is proactive in entering new markets. However, we are concerned about its higher cost structures vis-à-vis its peers, as well as an oversupply glut of solar panels in the market, fluctuations in currency exchange rates and rising competition. The company presently retains a short-term Zacks #4 Rank (Sell). We have a long-term Neutral recommendation on the stock.
SunPower Corporation designs, develops, manufactures, markets and sells high-performance solar electric power technology products, systems and servicesworldwide for residential, commercial and utility-scale power plant customers.