SunPower 2010 - Corporate Solutions

SunPower Analyst Day November 18, 2010 © 2010 SunPower Corporation

© 2010 SunPower Corporation

Agenda  Tom Werner, CEO – Strategy, Cost, LCOE

 Jim Pape, President – Residential & Commercial

 Howard Wenger, President – Utility and Power Plants

 Chuck Boynton:, VP Finance and Corp. Development – Modeling

 Dennis Arriola, EVP CFO – Finance

 Q&A © 2010 SunPower Corporation

2

Safe Harbor Statement This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forwardlooking statements are statements that do not represent historical facts and may be based on underlying assumptions. Forward-looking statements are made in this presentation regarding management’s plans and expectations regarding future financial results, operating results, business strategies, projected costs, products and utilities projects and competitive positions, industry trends, and management’s plans and objectives for future operations, including: (a) 2010, 2011 and 2012 GAAP and non-GAAP financial and operating forecasts (such as revenue, gross margin, EPS, ASP, gross profit/watt, operating expenses, tax rates, etc.), and allocation of MW recognized; (b) 2011 financing plan and growth drivers, visibility into 2011 and 2012, including cost reduction roadmap, UPP and R&C forward contracts and dealer growth, robust business model and strong balance sheet, liquidity and cash flow; (c) execution of vertical integration strategy, such as drive for scale and cost reduction; (d) ability to monetize 5GW of pipeline; (e) efficiency adjusted cost/watt reduction and drivers of cost reduction, including 2011 actions; (f) Oasis cost savings and the company’s low LCOE; (g) the ramp schedule for Fab 3 and expected savings; (h) commercial rooftop BOS cost reduction and RLC growth in partners and MWs; (i) bankability of SunPower power plants and lower cost of funds; (j) potential of the SunPower concentrator PV system; (k) target schedule for CVSR; (l) finance and sale of Italian power plants in 2010, including Montalto 44 financing; (m) visibility into the UPP segment and projected growth of UPP market opportunity and revenues; (n) gross margin for UPP segment and leadership in value chain; (o) production, panel shipped, module revenue and cost/watt forecasts for 2010 and 2011; (p) UPP and R&C 2010 and 2011 MW recognized, ASP and gross profit/watt; (q) R&C key financial metrics and drivers forecasted for 2010 and 2011; (r) debt, debt/equity and debt/trailing EBITDA ratio forecast and target; (s) cash inflows in Q4 2010 and Q1 2011; (t) potential combination of A and B shares; and (u) Q4 2010 and Q1 2011 business catalysts, and financial focus and levers in 2011. Such forward-looking statements are based on information available to the company as of the date of this presentation and involve a number of risks and uncertainties, some beyond the company’s control, that could cause actual results to differ materially from those anticipated by these forward-looking statements, including risks and uncertainties such as: (i) potential difficulties associated with operating the JV with AUO and integrating the SunRay business, and the company’s ability to achieve the anticipated synergies and manufacturing benefits from these transactions; (ii) the company’s ability to obtain and maintain an adequate supply of raw materials, components, and solar panels, as well as the price it pays for such items; (iii) general business and economic conditions, including seasonality of the industry; (iv) growth trends in the solar power industry; (v) the continuation of governmental and related economic incentives promoting the use of solar power, particularly such incentives affecting the markets in which the company sells solar panels and constructs commercial systems and power plants; (vi) the significant investment required to construct power plants and the company’s ability to sell or otherwise monetize power plants; (vii) the improved availability of financing arrangements for the company’s utilities projects, including Montalto 44, and the company’s customers; (viii) construction difficulties or potential delays, including obtaining land use rights, permits, license, other governmental approvals, and transmission access and upgrades; (ix) increasing competition in the industry and lower average selling prices; (x) the JV’s ability to ramp new production lines in Fab 3 and the company’s ability to realize expected manufacturing efficiencies throughout its manufacturing operations; (xi) manufacturing difficulties that could arise; (xii) the success of the company’s ongoing R&D efforts and the acceptance of the company’s new products and services; (xiii) the company’s international operations; (xiv) the company’s liquidity, substantial indebtedness, and its ability to obtain additional financing; (xv) the company’s ability to protect its intellectual property; (xvi) evolving regional permitting, financing, grid interconnection, technical, and other customer or regulatory requirements, and the company’s ability to satisfy such requirements; (xvii) possible impairment of goodwill; (xviii) possible consolidation of the joint venture AUO SunPower; (xix) receipt of tax opinion regarding combination of A and B shares; and (xx) other risks described in the company’s Annual Report on Form 10-K for the year ended January 3, 2010 and Quarterly Report on Form 10-Q for the quarter ended October 3, 2010, and other filings with the Securities and Exchange Commission. These forward-looking statements should not be relied upon as representing the company's views as of any subsequent date, and the company is under no obligation to, and expressly disclaims any responsibility to, update or alter its forward-looking statements, whether as a result of new information, future events or otherwise. This presentation is not an offer of securities for sale in the United States, and the securities referred to in this presentation relating to Montalto 44 may not be offered or sold in the United States absent registration or an exemption from registration. The issuer of the securities does not intend to offer or sell these securities in the United States, and intends to conduct any offering of these securities outside the United States in reliance on Regulation S under the Securities Act of 1933.

© 2010 SunPower Corporation

3

Tom Werner, CEO Strategy, Cost, LCOE © 2010 SunPower Corporation

© 2010 SunPower Corporation

SunPower Analyst Day Highlights  2011 Guidance: – Revenue up to 30% growth v. 2010 midpoint guidance

– Non-GAAP EPS up to 32% growth v. 2010 midpoint guidance

 High confidence in 2011 outlook and into 2012 – Scale differentiated technology through both UPP and R&C segments – Cost reduction on track: panel and BOS – UPP and R&C forward contracts + dealer growth model = visibility – Robust business model to adjust to changing market conditions – Solid balance sheet

 Transparent modeling: detailed business, finance and modeling drivers © 2010 SunPower Corporation

5

SunPower 2010 – 25th Anniversary 2010: Revenue $2.15-$2.25B

World-leading solar conversion efficiency

5,500+ Employees

Diversified portfolio: roofs to power plants

550+ MW 2010 production

1,500 dealer partners, #1 R&C USA

>1.5 GW solar PV deployed

5 GW power plant pipeline

Residential

Commercial

Power Plants

© 2010 SunPower Corporation

6

High-Efficiency, High Energy Collection Systems World’s Most Efficient Solar Cell: 22%

Residential Rooftop

Commercial Rooftop

Ground Systems

E18 225 W Panel

T5 Roof Tile

Oasis

Aesthetic

Up to 2X Power/Roof

Up to 25% More Energy © 2010 SunPower Corporation

7

Vertical Integration Strategy Upstream Poly

Ingot

Wafer

Downstream Cell

Panel

BOS

Sales

Install Services

 World‘s highest efficiency panels

 Adjust rapidly to market conditions

 Sustainable differentiated advantage

 Integrated cost reduction

 Drive for scale and cost reduction

 Premium brand / superior service

© 2010 SunPower Corporation

8

SPWR Downstream Strategy UPP Segment BOS

Ingot

Wafer

EPC

Services

 Multi-year fixed price contracts

Upstream Poly

Proj. Dev.

 NA, EMEA, emerging markets

Cell

Panel

 System-level cost reduction

 World’s highest efficiency panels

R&C Segment

 Sustainable differentiated advantage  Drive for scale and cost reduction

BOS

Dist.

Sales/ Services Install

 NAC: Multi-Qtr fixed price contracts  RLC: global dealer/partner network  System-level cost reduction © 2010 SunPower Corporation

9

FY10 Revenue Summary Suntech First Solar MEMC

SunPower LDK REC SolarW… JA Solar

Yingli… Q-Cells Trina… Canadia… ReneSola

2010 Revenue (Est)

Motech

2009 Revenue (Actual)

Solarfun $-

$500

$1,000

Sources: Company announcements and guidance, Reuters Knowledge

$1,500 $M

$2,000

$2,500

$3,000

© 2010 SunPower Corporation

10

FY10 Non-GAAP Gross Profit $/W Summary $0.88 $0.86

First Solar SunPower SolarWorld REC Yingli Green Trina Solar Q-Cells Suntech Solarfun ReneSola JA Solar Canadian Solar Motech Gintech LDK

$0.74 $0.57 $0.53 $0.52 $0.44 $0.33 $0.29 $0.28 $0.26 $0.26 $0.26 $0.19 $0.18 $-

$0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 $0.90

Sources: Company guidance, Reuters Knowledge Note: GP $/W = Gross Margin x (Revenues ÷ Watts (Wafers, Cells, Modules) Shipped)

© 2010 SunPower Corporation

11

Efficiency Adjusted Cost/Watt* Q4’09

Q4’10

Q4’11

SunPower 19% Panel Cost / Watt**

$1.91

$1.71

$1.48

Efficiency Adjusted (vs. 14%)

$1.47

$1.36

$1.08

Efficiency Adjusted (vs. 11%)

$1.01

$0.92

$0.71

 Cost reduction drivers − Leveraging R+D investments − Improved manufacturing efficiency − Increased ramp, yield and OEE − Fab 3 JV with AUO *Efficiency adjustments consider the BOS/tracking benefits of high efficiency panels. **Base Cost/Watt excludes freight and pre-op expenses. Comparison: 14% panel on T20 tracking system, 11% panel on fixed tilt.

© 2010 SunPower Corporation

12

System Cost: BOS Matters

2010 Tracking Power Plant

Panel BOS

© 2010 SunPower Corporation

13

2011 Panel Cost Reduction Roadmap $/W

$1.80 $1.70

$0.04 $0.03 $0.04

$1.60

$0.07

$1.50

1.71

$0.05

$1.40

1.48

$1.30 Q4 2010

Poly

Ingot

Wafer

Cell

Panel

Q4 2011F

On track to meet efficiency adjusted cost/W of $1.08 in Q411 *Efficiency adjustments consider the BOS/tracking benefits of high efficiency panels v. 14% panels on T20 tracking system. **Base Cost/Watt excludes freight and pre-op expenses. © 2010 SunPower Corporation

14

2011 Panel Cost Reduction Roadmap Value Chain Step

$/W

Cost Reduction Actions

Poly

$0.04

90% contracted, finalizing M.Setek value chain

Ingot

$0.03

WJE and M.Setek scaling and lowering costs

Wafer

$0.04

Reduced wafer thickness, Scale at FPSC Ramping on site wafering at Fab 3

Cell

$0.07

Chemical consumption reduction ($0.02), OEE and yield ($0.05)

Panel

$0.05

Lean manufacturing ($0.02), outsourced module production cost improvement ($0.02), materials cost reduction ($0.01)

Total 2011

$0.23

© 2010 SunPower Corporation

15

2014 Panel Cost Reduction Roadmap $/W

$3.50 $3.00

$3.01 Fab 3 Ramp 135 um wafers Lean Fab Mngt Material Red‘n

$2.38

$2.50

$1.91

$2.00

Gen 3 Ramp

$1.71

$1.50 $1.00

$1.00 Step Red‘n DW Sawing

$0.50 $Q407

Q408

Q409

Q410

Q411

Q412

Q413

Q414

© 2010 SunPower Corporation

16

Oasis Modular Power Plant Savings Oasis 25% Balance-of-System Savings by Category 100%

9% 8%

80%

60% 40%

8% Inverter, Cabling Tracker Components

Electrical & Structural System Optimization

Design, Overhead, Installation Commissioning

20% 0% 2010 BOS Cost Standardization Materials / / Volume Design Savings Savings

Installation Efficiency Savings

2011 Oasis BOS Cost © 2010 SunPower Corporation

17

LCOE: Total Cost of Ownership & Capacity Factor LCOE =

Total Life Cycle Cost NPV Energy Output

Panel = $ / Watt

=

Panel Cost + BOS Costs + NPV (O&M Costs) NPV (kW x kWh/kW)

LCOE = ¢ / kWh

− Industry-leading panel efficiency = lower balance of system cost per watt − High capacity factor = lower balance of system cost per watt, more kWh/kW 18

SunPower LCOE Competitive with Thin Film LCOE Sensitivities: $/Wp, Capacity Factor $4.00 / Wp

$3.38 / Wp

SPWR Oasis

11% Fixed Tilt

$0.170

$0.170

Sacramento 8.5% IRR

LCOE =

Total Life Cycle Cost NPV Energy Output

=

Panel Cost + BOS Costs + NPV (O&M Costs) NPV (kW x kWh/kW)

Note: Includes ITC, IRR is unlevered 19

SunPower LCOE Competitive with Thin Film LCOE Sensitivities: $/Wp, Capacity Factor $4.00 / Wp

$3.38 / Wp

$3.00 / Wp

$2.55 / Wp

SPWR Oasis

11% Fixed Tilt

SPWR Oasis

11% Fixed Tilt

$0.170

$0.170

$0.130

$0.130

Sacramento 8.5% IRR

LCOE =

Total Life Cycle Cost NPV Energy Output

=

Panel Cost + BOS Costs + NPV (O&M Costs) NPV (kW x kWh/kW)

Note: Includes ITC, IRR is unlevered 20

SunPower LCOE Competitive with Thin Film LCOE Sensitivities: $/Wp, Capacity Factor, Location, Unlevered IRR $4.00 / Wp

$3.38 / Wp

$3.00 / Wp

$2.55 / Wp

SPWR Oasis

11% Fixed Tilt

SPWR Oasis

11% Fixed Tilt

$0.170

$0.170

$0.130

$0.130

$0.128

$0.131

$0.097

$0.100

Sacramento 8.5% IRR Mojave 7.5% IRR

LCOE =

Total Life Cycle Cost NPV Energy Output

=

Panel Cost + BOS Costs + NPV (O&M Costs) NPV (kW x kWh/kW)

Note: Includes ITC, IRR is unlevered 21

SunPower UPP LCOE Range $/kWh

$0.25 $0.20 $0.15 $0.10 $0.05 $0.00 2010 Note: Includes ITC

2011

2012

2013

2014 © 2010 SunPower Corporation

22

SunPower SunPowerLCOE LCOEAdvantages Advantages― 100GWh Plant* SunPower

11% TF Fixed

GWh/yr

100

100

MW

37

46

Acres

191

351

Inverters

74

92

SunPower

Note: Illustrative 100 GWh / year power plant, Phoenix, AZ

SunPower delivers the same GWh using far fewer acres and less BOS leading to lower O&M costs

Thin Film

© 2010 SunPower Corporation

23

SunPower SunPowerLCOE LCOEAdvantages Advantages― 100GWh Plant* SunPower

11% TF Fixed

GWh/yr

100

100

Total $

$200 MM

$200 MM

$/Wp DC

$4.37

$3.50

SunPower delivers the same LCOE with a 25% $/Wp price premium

Economically equivalent to customer SunPower

Note: Illustrative 100 GWh / year power plant, Phoenix, AZ

Thin Film

© 2010 SunPower Corporation

24

AUO SunPower Fab 3 Capacity Ramp Status  Lines 1 & 2 operational and running  Line 3 install on plan  Yields ahead of ramp plan  ~900 employees hired  Integrating M.Setek‘s onsite wafering  Reduced Fab 3 2011 CapEx by $40M  Improved cell processing: $30M in savings

© 2010 SunPower Corporation

Jim Pape, President Residential & Commercial © 2010 SunPower Corporation

© 2010 SunPower Corporation

Agenda  Premium Brand, Superior Service  System Cost Reduction  Rapidly Adjust to Market Conditions  Flexible Channel Structure Yields Predictability – SunPower Dealer Partner Network – North American Commercial

© 2010 SunPower Corporation

Complete Solar Solution

PRODUCT WARRANTY  10-year Product Warranty  25-year Performance Warranty

Panels

Inverters

Mounting Systems

Monitoring

Industry-leading Warranty © 2010 SunPower Corporation

28

Highest Value Technology

The Planet’s Most Powerful Solar™ 1

More Power/Roof = Bigger Savings

2

Blends Seamlessly With Your Roof

© 2010 SunPower Corporation

29

SunPower Delivers the Most Energy per Roof

250 ft2 Solar System Peak Power Electricity Savings

SunPower 18 x 230 W

Conventional 18 x 165 W

4.1 kWp

3.0 kWp

85%

62%

* Sacramento, CA 2,600 ft2 home using 7,000 kWh per year (Source, RLW Analytics)

© 2010 SunPower Corporation

30

2011 Commercial Rooftop BOS Cost Roadmap

100%

3%

90%

3%

2%

3%

80% 70% 60% 50% Q4 2010

Channel

Electrical Mechanical BOS BOS

Value Added Services

Q4 2011

31

RLC Major Market Outlook Market

Retail Rate Parity (Yrs)

> 10% Share

Share Goal 2010-2012

California