Earnings Call Roundup, U.S. Edition: First Solar, SunPower, and SolarCity

Earnings Call Roundup, U.S. Edition: First Solar, SunPower, and SolarCity

By Ed Cahill, Lux Research

While prominent Chinese solar companies are following up strong Q4 2013 earnings with capacity expansions, American solar companies are responding with different tactics.

First Solar shipped 1.6 GW of modules in 2013 and announced higher-than-expected net gains of $353 million with 26.1% average gross profit. The company also confirmed a 20.4% efficient cell and accelerated its module efficiency roadmap, targeting 16.2% in Q4 2015 and 17.2% by Q4 2017. Reportedly, the company's acquisition of GE's (Primestar) intellectual property has helped accelerate this efficiency roadmap. The company expects higher efficiencies will help lower utility-scale system costs to $0.99/W (in addition to other factors like 1500 V systems) and module costs to $0.37/W by 2017.

SunPower shipped 1.1 GW in 2013 with net gains of $95.6 million and 20.4% gross margins. More impressively, the company announced 20% module and 24% balance of system (BOS) cost reduction over 2013. It also acquired automated module cleaning company Greenbotics, is piloting a residential energy storage program in California, Germany, and Australia, and secured an additional $220 million (over $1 billion total) in financing for residential solar leases from Bank of America. SunPower also expects to produce its first 23% efficient module by the end of 2015 along with its newest 350 MW manufacturing facility.

SolarCity significantly increased installation volume from 157 MW in 2012 to 280 MW in 2013. The company expects between 475 MW and 525 MW of new installations in 2014. Lease revenue grew 79%, as well, and the company halved its net loss in Q4 to total $55.8 million in 2013. The company acquired both Zep Solar and Paramount Solar (solar marketing and sales company) in addition to proposing the securitization of $54 million of solar leases and power purchase agreements.

The main contrast between these earnings calls and those from China is how the companies chose to respond strategically after a strong year in the face of a more optimistic future for the solar industry. Yingli, Trina, JA, Jinko, and Canadian Solar chose to aggressively expand capacity of the same technology that has made them successful – multi-crystalline silicon (mc-Si). First Solar, SunPower, and SolarCity, on the other hand, are choosing to improve their technologies and expand offerings through acquisitions and internal development. Of course, SunPower is also expanding its capacity, but doing so with its new 23% efficient modules as opposed to its old 21% efficient technology.

These U.S. companies are being much more forward-thinking in their strategic decisions, but mostly out of necessity. These companies cannot compete with Chinese manufacturers on scale, so instead are using their strong margins to further differentiate themselves and protect those margins moving forward by targeting higher efficiencies.

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SEMI, The Grid – April 2014