SUNPOWER Consulting Report Section 2 – Team 2: Herve Buffard Peter Crayton Jeff Iannaccone Obi Okoye-Eze Anup Shah
SunPower: Summary Key issues: 2012 Financial Results: SunPower Inc.: Vertically integrated Solar Products Co. Customers: Residential, Commercial & Utility-scale power plant customers. Largest US installed base > 100,000 homes. PV Technology: Maxeon® cell Technology (X-Series) World record panel efficiency > 21.5%. 44% more solar power, 8-10% more energy per rated watt.. Best warranty, performance, reliability & aesthetics Industry Trends: 2012 Financial Results: Key issues: Downward pressure on price. Though revenue is increasing, increasing costs result in lower margin. DG: Need to provide constant power . The Task Ahead: Leverage Core capabilities and form new strategic partnerships to improve upstream and downstream business. Near term: Power-plants: Long term: Distributed generation - Residential and commercial.
Analysis: Environmental and Five Forces Five Forces: Solar Industry Rivalry: High High concentration, low differentiation. High exit barriers due to capital investment Threat of Entry: Low to moderate Barriers to entry: Learning curve, EOS, EOL & Capital requirements Availability of Substitutes: High Conventional power, nuclear, Etc. Low switching costs Power of Buyers: High Overcapacity has forced prices down. Low differentiation Power of suppliers: Low The Solar industry is not currently a very attractive industry, however the market has huge potential for growth. Environmental Analysis: Demographic trends: Macro-economic impact: Increasing price of oil, Instability in M.East. Socio-Cultural Influences Desire for low carbon emission electricity Political/Legal pressures: Many incentives for clean energy. Nuclear: Fukushima disaster Global trade issues Technological Developments Advances in PV and HEPV cells Analysis demonstrates that the Global Electricity Industry is trending in a positive direction.
Analysis: Value Chain, Capability and Competitor Analysis Value Chain Analysis: Core competency = R&D & manufacturing. Capability Analysis: The company’s core capability is rare and imitable, but it is substitutable, and as noted by shrinking margins, the capability is not valuable. Key Competitor Analysis: Chinese Commodity Solar Panel Manufactures: Yingli, Trinasolar, and Sun Tech. PV panel manufacturers only PV panels are lower price, lower efficiency First Solar Vertically integrated Focused on power plants only Use different technology to create cheaper panels Solar City Does not manufacture Residential market only Purchases panels, installs for free and charges for the power provided
Conclusion SunPower has the following unique advantages: Highest efficiency and most reliable solar PV panels in the market Partnership with Total SA, over $600m in cash for process improvements and new projects. SunPower must think beyond its current capabilities while leveraging its high efficiency Solar PV technology to create a new superior experience that provides the greatest value being sought by its largest customer groups. We recommend that SunPower take the following steps: Near term: Focus to the higher volume power plant segment. Leverage existing cash to seek out strategic UPP projects. High volume PV panel production will provide SunPower with needed learning to improve process and reduce costs. Long term: Joint venture with Schneider Electric to access battery competency. To differentiate themselves in the distributed generation segment. SunPower's residential and commercial solution must be able to provide constant power required by the customers. Specifically, they need to be able to store sunlight for re-use during peak or other periods when sunlight is not available.
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