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SunPower, China in Solar Biz

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A Silicon Valley-based manufacturer of high-efficiency solar cells, solar panels and solar system, SunPower Corporation (SPWR - Free Report) has entered into a joint venture agreement with Tianjin Zhonghuan Semiconductor (“TZS”), Inner Mongolia Power Group (“IMP”) and Hohhot Jinqiao City Development Company (“HJCD”). Per the agreement, the partners will manufacture and deploy SunPower's high efficiency, C7 concentrator solar systems in Inner Mongolia and other regions in China.

In exchange, SunPower will get a stake of 25% in the joint venture agreement valued at $60 million, thereby investing $15 million. However, the agreement is subject to the approval of People's Republic of China (“PRC”) government. Post-approval, the initial C7 deployment is expected to begin by the end of 2013.

The SunPower C7 Tracker features single-axis tracking technology with rows of parabolic mirrors. These mirrors reduce the number of solar cells that are required to generate electricity. This lowers the levelized cost of energy by up to 20% in comparison with the other competing technologies.

Meanwhile, SunPower has also entered into an agreement with Kubokura Densetsu Co. Ltd. As per the deal, the former will supply its T5 Solar Roof Tile for the latter’s Kanagawa Prefecture.

T5 Solar Roof Tile provides the maximum installed capacity on limited rooftop space.  It has a non-penetrating installation that does not need anchoring of the system to the roof. Moreover, it minimizes waterproofing and structural risks on the rooftop surface.

The industry's first all-in-one, non-penetrating photovoltaic rooftop product combines solar panel, frame and mounting system into a single pre-engineered unit. The T5 roof tile features high efficiency E20 / 327 solar panels that have 20% efficiency, which is included into the all-in-one system. The T5 Solar Roof Tile is tilted at a five-degree angle. Its patented design is adjustable to virtually any flat or even a low-slope rooftop.

Through the local utility, Kubokura will sell the clean energy generated from the 540-kilowatt solar systems back to the grid. The system is sufficient to supply eco-friendly energy to more than 180 homes. Kubokura will begin the construction of the system at the end of 2012 and expects it to be completed in February 2013.

These two agreements demonstrate SunPower’s international footprints and would help the company in boosting sales globally. The company is proactive in entering new markets. SunPower’s customer base is spread across North America, Europe, the Middle East, Asia and Australia. In addition to a sizeable presence in the US, it is already focusing on improving market shares while gaining new market shares in the emerging markets.

Despite the current tepid economic environment, we are bullish on the company due to its diversified channel strategy with a strong presence in the residential and commercial market, along with its status as a conversion efficiency leader.  The company presently retains a short-term Zacks #2 Rank (Buy). We have a long-term Neutral recommendation on the stock.

The company mainly competes with First Solar, Inc. (FSLR - Free Report) and Suntech Power Holdings Co. Ltd. in the international markets like North America, Europe, the Middle East, Asia and Australia.

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