SunPower Explores Opportunities in Italy - Analyst Blog

SunPower Corp. (SPWRA) is steadily progressing with its Italian ventures, as evident from its deal with E.ON Climate and Renewables Italia Solar Srl as well as the financing agreements signed in Italy.

The E.ON Deal

SunPower recently entered into a deal to design and build a 3.4-megawatt ground-mounted solar power plant in Italy's Lazio region for E.ON Climate and Renewables. The company will start building the plant before year-end 2010 and expects to complete it in April 2011.

At the plant, SunPower plans to install high-efficiency SunPower E19 solar panels on the SunPower T0 Tracker system, which is capable of delivering up to 25% more energy than conventional fixed-tilt solar power systems.

Earlier, SunPower had installed a 1.3-megawatt rooftop solar power system at an E.ON power station in Sardinia, Italy in 2009.

Worldwide, SunPower has more than 650 megawatts of large-scale solar power systems installed or under contract, including more than 225 megawatts of operational power plants in Europe. SunPower is currently constructing Italy's largest solar power plant, the 72-megawatt Montalto di Castro solar power park, located in the Lazio region of Italy near Rome.

Financing Agreement

SunPower entered into loan agreements to obtain financing for the final two phases of the 72-megawatt Montalto di Castro solar park.

Developed by SunPower, the Montalto di Castro solar park has four phases – the first 20-MW phase was commissioned in November 2009, while the 8-MW second phase commissioned earlier this fall.  Combined capacity of the third and fourth phases of the project is 44 megawatts (MW).

In lieu of this financing, SunPower borrowed €195.2 million associated with its previously announced solar bonds with BNP Paribas and Societe Generale, both located in Milan, Italy. The solar bonds are expected to be funded in December 2010. 

SunPower has completed construction and will provide operations and maintenance of these power plants, and intends to complete its equity sale before year-end 2010. 

This financing agreement puts SunPower one step closer to accomplishing the industry's first-of-its-kind solar bond. The company is on track to close the debt financing and sell the equity in these parks before the end of 2010, consistent with its fourth-quarter revenue and earnings guidance.

Outlook

SunPower expects its adjusted earnings to range between 95 cents and $1.15 for the fourth quarter, higher than the Zacks Consensus Estimate of 88 cents. For fiscal 2010, the company estimates adjusted earnings in the range of $1.45 – $1.65, substantially above the Zacks Consensus Estimate of $1.02. Quarterly revenues are expected to come in the $870 – $970 million and $2.150 – $2.250 billion range in the fourth quarter and fiscal 2010, respectively.

Headquartered in San Jose, California, SunPower 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 primary competitors of the company include JA Solar Holdings Co. Ltd. (JASO) and ReneSola Ltd. (SOL).

SunPower currently has a short term Zacks #3 Rank (Hold). Nevertheless, we maintain our Outperform recommendation on SunPower shares.

 
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