SunPower CEO Thomas Werner yesterday said that while long-term growth prospects for the solar power industry are compelling, the near-term conditions “remain challenging.”
Speaking during SunPower’s 4Q16 earnings conference call, Werner said that “energy policy is a key driver for the solar industry, and there is significant speculation related to the potential changes in the U.S. policy by the new administration.”
He added that the company has based its 2017-2018 business plan on a few key assumptions.
SunPower does not expect a change in the current investment tax credit policy structure, and it does not believe that the Clean Power Plan will be implemented, Werner said. The company, however, does expect “some type of corporate tax reform over the next 12 to 18 months,” he added.
“Given the number of different tax policies being discussed, it would be premature for us to speculate on specifics,” he said, “However, we believe that our diversified market and application portfolio helps mitigate policy risk.”
Werner also noted that the solar industry’s track record of technical innovation and cost reduction likely will drive long-term demand dynamics regardless of near-term U.S. policy outcome.
According to Werner, residential demand is solid in SunPower’s key markets, but overall market growth has slowed in California.
He said that time-of-use rates under California’s net metering 2.0 policy has increased customer uncertainty.
Despite the current climate in the state, Werner said that SunPower is “encouraged to see an increasing commitment by schools and public agencies in California to invest in renewable energy, supported by state policy, which allocates over $40 billion in local bond funds towards modernization and new construction, including renewable energy infrastructure.”
Werner also noted that SunPower’s power plant business remains challenging, with power purchase agreement (PPA) pricing “under considerable near-term pressure.”
He said that SunPower sold approximately 400 MW in projects, including majority stakes in the Stanford Turlock Irrigation and Boulder Solar I projects.
In Latin America, he added, the company continues to build out 850 MW of PPA projects.
“There are a number of risks in the region, including policy and foreign exchange,” he said. “We are focused on mitigating these risks while bringing most of these projects to completion over the next 18 months.”
Earnings and Guidance
SunPower yesterday reported 4Q16 revenue of $1.1 billion or $-0.64 per share, and reiterated 2017 guidance of $1.8 billion to $2.3 billion and deployments in the range of 1.3 GW to 1.6 GW.