SunPower backs policy tailwinds, new focus to drive install growth after Q1 dip

This slight uptick in RLC revenue came despite total deployments actually falling by around 11% year-on-year to 97MW – 109MW of solar was installed in Q1 2020 – with the company noting increased margins, which rose to 22%, as well as healthy bookings growth and a strong uptick in other segments of the business, most notably in its nascent storage segment.

In total, around 12,000 customers were added in Q1 2021, taking SunPower’s total cumulative customer count to around 363,000.

Speaking to analysts, SunPower’s new chief executive Peter Faricy – who has replaced long-standing CEO Tom Werner at the company’s helm – said SunPower had been “fundamentally changed” over the course of the last 18 months, referring to the spin-off of its manufacturing division Maxeon Solar Technologies.

The resultant company, Faricy said, was “more focused, profitable… [and] cash generating”, with SunPower now aiming to build on early momentum with investment into various platforms to help build out its solar sales. Faricy highlighted three specific areas of improvement for analysts, citing the need for “world class customer experience”, the continued introduction of new innovations and the ability for the business to scale through the use and adoption of automated processes.

Faricy, a former Amazon executive, said he had spoken to the company’s dealers and installers within its network and had seen many of the same opportunities that he saw when scaling Amazon’s marketplace through collaborating with third-party merchants, indicating that the new CEO will lean heavily on his experience in consumer-facing retail.

Furthermore, while some US installers had noted possible supply chain constraints hindering growth in the coming quarters, SunPower said it felt “really comfortable” with its supplier relationships, name-checking Enphase and its former stablemate Maxeon specifically, however Faricy did conclude that cost rises in freight and materials were cause for caution.

SunPower is forecasting for sequential sales volume growth within its core RLC segment of around 20%, which would result in a performance more than 50% up on its performance in Q2 2020. That would amount to total solar deployed of around 116.5MW, a figure SunPower has only topped in two quarters of the previous two years (Q4 2019, Q4 2020).

Future growth looks set to be driven by numerous tailwinds that the company cited within its analyst call, including a prospective long-term investment tax credit (ITC) that the Biden administration has included within a multi-trillion-dollar infrastructure investment stimulus it is seeking to push through Congress.

“There [has] never been a better opportunity for this industry to take advantage of the momentum we have here,” Faricy said.

Analysts did, however, note SunPower’s greater exposure to policy uncertainty in its home market of California, where controversial proposals to “modernise” the state’s net metering policy have been roundly criticised.

Speaking to analysts, former CEO and now board member Tom Werner cast doubt over the progress of the proposals in their current guise.

“I think fixed charges are just not going to be popular with customers. And therefore, the PUC is unlikely to honor that part of the request from the IOUs. Rate changes are likely, but would be for that process and anything gets implemented is 2022 at the earliest,” he said.