SunPower Corporation (SPWR - Analyst Report) announced that it has invested in Diamond Energy Pty Ltd (Diamond Energy), a privately-owned, alternative energy project developer and clean electricity retailer headquartered in Melbourne, Australia. SunPower has acquired a minority stake of approximately 42% in Diamond Energy and under terms of the agreement has an option to increase its ownership percentage over time. SunPower will also assume a seat on the company's board of directors.
Aligning with Diamond Energy will allow SunPower to offer more comprehensive and customizable clean energy solutions for customers in Australia. The unique partnership creates a one-stop shop for consumers, providing high efficiency solar electric systems, grid-source renewable energy, and retail services such as metering, billing, and management of exported electricity to the grid.
Established in 2004, Diamond Energy specializes in developing, delivering and managing renewable generation, cogeneration and interruptible load projects with a breadth of experience spanning solar, bioenergy, wind and wave technologies. The company currently owns two biogas plants, has power purchase agreements with a number of third-party generators and as Australia's "Solar Friendly Retailer" sells clean energy through its retail divisions to its residential and Commercial Green customers. Diamond Energy holds licenses to deliver electricity across the National Electricity Market (“NEM”) in Australia.
SunPower and Diamond Energy will also work for the development of commercial and utility solar power projects in Australia, leveraging SunPower's experience, delivering more than 1,000 megawatts of cost-competitive, large-scale solar power systems worldwide. With a presence in the country since 2008, SunPower has deployed the utility-scale Uterne solar power plant in Alice Springs and delivered commercial-scale solar power systems for customers such as Crowne Plaza Hotel, Perth Zoo, Central Institute of Technology and Midland Redevelopment Authority.
SunPower is a vertically integrated solar company with presence across the entire solar value chain. The company designs, develops, manufactures, markets and sells high-performance solar electric power technology products, systems and services worldwide for residential, commercial and utility-scale power plant customers. The company’s semiconductor-based solar cells and solar panels, which convert sunlight into electricity, are manufactured using proprietary processes and technologies. SunPower is largely owned by French oil major Total S.A. (TOT - Analyst Report).
SunPower is witnessing falling ASPs and margins in its residential and small commercial markets segment which accounts for approximately two-thirds of its topline. We expect the trend to continue unabated in the near future with valuation further restrained by the higher cost structure of the company compared to its peers besides subsidy roll-back risk in Europe and foreign exchange risk.
SunPower presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
SunPower mainly competes with Suntech Power Holdings Co. Ltd. and First Solar, Inc. (FSLR - Analyst Report).