) has sold its two co-located Antelope Valley Solar Projects
("AVSP") to MidAmerican Solar, a unit of
Berkshire Hathaway (
). SunPower will receive a purchase amount in the range of $2
billion to $2.5 billion.
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Located in Kern and Los Angeles Counties in California, these two
projects have electric generation capacity of 579 megawatt
("MW"). The two projects will comprise SunPower Oasis Power
Plant, which is a fully integrated modular solar technology
unit that is built to quickly set up utility-scale solar
projects with minimum land use. The Oasis product employs
high-efficiency SunPower solar panels installed on SunPower T0
Trackers. These T0 Trackers have the capacity to capture 25%
additional energy as they keep the panels well positioned to
track the sun during the day.
Construction of these two projects is expected to begin in the
first quarter of 2013 and get completed by the end of 2015.
Besides acting as an engineering, procurement and construction
contractor, SunPower will operate and maintain the facility as
per a multiyear services agreement.
Per the two long-term power purchase contracts that are approved
by the California Public Utilities Commission ("CPUC"), the
renewable energy generated from these two projects will be sold
to Southern California Edison (SCE), a subsidiary of
Together these two projects will be the largest solar
photovoltaic power development in the world. During the
construction period, the projects are expected to create 650
jobs. Also, the projects will be able to offset more than 775,000
tons of carbon dioxide emissions per year, which is almost equal
to eliminating approximately three million cars over 20 years of
the operation of the plant.
SunPower is not the only company to have entered into a solar
project with MidAmerican Solar. This is MidAmerican's third solar
investment. Its other solar projects include
) 550-megawatt Topaz Solar Farms in San Luis Obispo County and a
49.0% ownership interest in the 290-megawatt Agua Caliente solar
project in Yuma County, Arizona.
Based in San Jose, California, SunPower Corp. designs,
manufactures and delivers the highest efficiency, highest
reliability solar panels and systems. Residential, business,
government and utility customers rely on the company's experience
and guaranteed performance to provide maximum return on
investment throughout the life of the solar system.
SunPower's customer base is spread across North America, Europe,
the Middle East, Asia and Australia. The company is proactive in
entering new markets. Throughout the world, SunPower has more
than 1,000 solar power plants in operation, which also includes
the first 130 megawatts of 250-megawatt California Valley Solar
Ranch, which is under construction in San Luis Obispo County,
Going forward, 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. Also, the proceeds from the sale of
the project, to some extent, would help in overcoming the glut of
solar panels in the market and lower average selling prices that
the company is facing.
However, we still remain concerned due to the higher cost
structure of the company compared to its peers, subsidy roll back
risk in Europe, rising competition, financial stability of its
customers and foreign exchange risk. The company presently
retains a short-term Zacks #3 Rank (Hold) that corresponds with
our long-term Neutral recommendation on the stock.