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Sunnyvale, Calif., Solar Cell Manufacturer Inks $330 Million Contract

Posted on: Thursday, 15 December 2005, 00:00 CST

By Dean Takahashi, San Jose Mercury News, Calif.

Dec. 15--Solar cell manufacturer SunPower is expected to announce today (Thursday) that it has won a $330 million contract to supply solar cells to a global solar systems installer, PowerLight, over the next five years.

The deal is the biggest in Sunnyvale-based SunPower's history and will help it expand its manufacturing capacity over time, said Tom Werner, chief executive of SunPower.

The announcement also comes on the heels of the plan unveiled this week by California state regulators to provide $3.2 billion in incentives over the next decade to encourage Californians to use solar panels on homes and office buildings. The incentive plan would rebate $7,000 in 2006 to homeowners installing a typical residential solar system that can cost $25,000.

"This will help the company grow rapidly," Werner said.

SunPower makes solar cells at a factory in the Philippines. Companies such as PowerLight, based in Berkeley, use the cells to run solar systems they install on the roofs of houses to collect sunlight and convert it into electricity. PowerLight is the largest installer of solar systems in North America.

A spinoff from Cypress Semiconductor, SunPower went public in November at $18 a share and saw its shares rise dramatically. On Wednesday, the company's stock closed at $28.10 a share, up 27 cents. It is one of the year's best initial public offerings of stock in Silicon Valley.

Solar is hot because of volatile energy prices and the willingness of governments in Japan, Germany and California to promote alternative energy. SunPower's factory can produce enough tiles to generate 25 megawatts of solar power a year, but that's not enough to meet demand.

Werner said the company is tripling its capacity and will use the money from PowerLight to expand. SunPower has more than 1,000 employees, including 110 in Sunnyvale.

Howard Wenger, executive vice president at PowerLight, said his company needed to secure a source of supply for solar cells because capacity is so tight. In addition, he says PowerLight can use the SunPower solar cells to distinguish its products.

That's because SunPower's solar cells are square tiles that are completely black, whereas other tiles are circular disks. The circular disks aren't as easy to disguise on a roof and are often built into much bulkier systems that stick out on roof tops. PowerLight can use the black SunPower tiles to blend them into roof tiles, giving homes with the tiles a unique look, Wenger said.

PowerLight had $92 million in revenues last year and has been one of the fastest-growing private companies for the past five years, according to Inc. magazine. The company installed a solar energy system atop the Moscone Convention Center in San Francisco.

"This lets us focus on innovation and deploying solar around the world," Wenger said.

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Copyright (c) 2005, San Jose Mercury News, Calif.

Distributed by Knight Ridder/Tribune Business News.

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SPWR,

Source: San Jose Mercury News

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