Happy days for U.S. solar big dogs

Sun Power

After boffo quarters, SunPower moves to add production capacity while First Solar makes serious manufacturing cost reduction, efficiency progress

Having the quarterly earnings releases from two of the big dogs of U.S. solar—SunPower and First Solar—on successive days provides an opportunity for some mix-and-match observations. That both companies pretty much killed it in their respective third quarters and each boast multigigawatt pipelines makes the rumination more fun and bodes well for the continued growth and health of the industry. Here are a few upstream takeaways.

Although SunPower’s second consecutive profitable quarter underscored its ongoing execution skills, the big news was the announcement–drum roll, please—that the company will be adding production capacity. Head honcho Tom Werner said during the conference call that “Fab 4, planned for the Philippines, will increase our capacity by 350MW, or more than 25% of current total capacity. We expect first silicon in the first half of 2015, with full total build-out by the end of that year…. Capex for the fab will be between $185 million and $230 million, and we will fund this expansion through internal cash generation. This plant positions us well for strong growth in 2015 and ’16, as we ramp to more than 1.8GW of annual capacity. While Fab 4 is being built, we plan to increase our existing fab capacity for 2014 by about 10% to more than 1.3GW,” something it will accomplish by improving production throughputs in the factories. As solid as SunPower’s quarter was, it might have been even better, as cell capacity constraints prevented the firm from selling more of its popular X-series high-efficiency monocrystalline panels.

First Solar isn’t likely to add production capacity for awhile. Thanks to equipment upgrades and process enhancements, its utilization rose to 80%, or 426MW (DC), during the period, still well short of the full-tilt 100%+ rate that SunPower’s factories has been running at for a few quarters. But the leading thin-film PV company did drop some manufacturing-related bombshells of its own. Its total cost-per-watt fell a whopping 8 cents from Q2 to 59 cents in Q3, the highest percentage reduction in the key metric since the firm’s IPO in 2007. In addition to the impressive cost drop, First saw its average CdTe module efficiency pop from 13% in Q2 to 13.3% in the just-completed quarter, according to company execs.

But even better days are ahead, according to CFO Mark Widmar. “During Q3, our best plant manufacturing cost at full utilization was $0.56 per watt,” he said during the call. “Average conversion efficiency for Q3 increased 30 basis points to 13.3%. While this is a significant quarter-on-quarter improvement, it is noteworthy to highlight that for the first month of Q4 our lead-line average efficiency is 13.9%. As we replicate the lead-line manufacturing process across the balance of our production lines, we expect the fleet average efficiency to meet or exceed the lead line 13.9% efficiency over the next few quarters.”

Both companies also shared news around a pair of 250MW (AC) projects at opposite ends of the development cycle. SunPower said the final phase of construction at California Valley Solar Ranch in San Luis Obispo County has been completed and the plant (owned by the NRG twins, Energy and Yield) has begun commercial operation. First Solar revealed during its call that it had sold the Silver State South project, which will be located next to the operational 50MW (AC) Silver State North power plant near Las Vegas, to a unit of NextEra Energy. First will be the EPC lead on the project, which still needs some permitting and regulatory approvals before construction can begin in earnest at the 3000-acre site; the plant should be completed in 2016, according to the company. There’s one other thing the two massive PV farms (will) have in common besides their installed generation capacity: both (will) feature the use of single-axis trackers.