SunPower changes mind in allowing Maxeon Solar to sell direct to US market

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Maxeon Solar could be planning to re-establish P-Series solar panel assembly in Oregon as part of new manufacturing plans matching SunPower needs in the DG and its own utility-scale market ambitions in the US. SunPower owns a manufacturing plant in Oregon, although currently shuttered. Image SunPower Corp.

Updated and corrected: SunPower is to allow Maxeon Solar to sell the Performance Series (P Series) p-type mono-Passivated Emitter Rear Cell (PERC) shingled PV modules into the US market as part of a major change to initial manufacturing agreements.

However, PV Tech would like to clarify and correct the above statement as the original agreement between the parties excluded Maxeon Solar selling IBC and P-Series modules to the DG market, notably the residential market until after the initial agreement could be ended on August 26, 2022.

Importantly, the agreement excluded certain niche markets but allowed Maxeon Solar to supply P-Series modules to the US utility-scale market.

SunPower also clarified to financial analysts in its Q2 2020 earnings conference call in early August 2020 that Maxeon Solar would be able to handle sales and shipments directly to the US utility-scale market in relation to the P-Series modules.

However, SunPower also said that it could also do the same in selling P-Series modules to the utility-scale market, but production would come from overseas. P-Series had been made in small quantities (approx. 200MW module capacity at its Oregon factory before announcing the closing of the plant in January, 2021).

As part of the complex partnership between SunPower and its spun-off manufacturing operations into Maxeon arranged Solar last year, the US market was deemed off limits to Maxeon Solar. PV Tech would like to correct this mistake as per the initial agreement (see at bottom the reproduction of the key agreement paragraph).

The company was initially prevented from selling SunPower’s P Series shingled PV modules into the US market, however Maxeon Solar retained the selling rights in most countries outside North America, as per the original IP licence and manufacturing and marketing agreements. PV Tech would like to correct this mistake as per the initial agreement as it only related primarily to the residential market and wider defined DG market.

Ahead of releasing its first financial results after its IPO, Maxeon Solar has announced a new agreement with dedicated US PV installer/supplier SunPower to sell the P Series modules into the country’s utility-scale market.

Therefore, Maxeon Solar will be able to have a direct sales operation in the US selling the P Series modules exclusively to the utility-scale market. PV Tech would like to correct this mistake as per the initial agreement as it only related primarily to the residential and wider DG markets and did not exclude the utility-scale market.

When SunPower had been a PV manufacturer, P Series modules were only earmarked for supply to its own Commercial & Industrial (C&I) market segment business. The solar modules were assembled in small quantities at its plant in Oregon before announcing the closure of that facility in January 2021.

The reason for this was to prevent pricing dilution of SunPower’s IBC technology-based PV modules that have been the highest performance rated products on the market for many years but are sold at a premium against overseas products but have historically not led to sustainable company profitability.

PV Tech would like to clarify the above wording as it was SunPower’s initial plans, long before the Maxeon spin-off to only offer the P-Series modules to the US C&I market segment and not to the US residential market.

Maxeon Solar said that it would now be directly supplying SunPower the P Series modules made in China under its joint venture operation for SunPower to expand its C&I market opportunities. PV Tech would like to correct a mistake referencing China made P-Series modules via its JV in China as modules will be supplied from Malaysia and from expanded Mexican assembly plant.

Maxeon Solar plans to include PERC cell and P-Series module assembly at its underutilised manufacturing plant in Malaysia to provide P-Series modules into the US utility-scale market and into the EU. The Malaysian facility has been dedicated to IBC solar cell production since the disbanding of SunPower’s JV agreement with Taiwanese firm AUO (Ben-Q) in assembly of IBC modules and selling into markets outside the US, EU and some other countries.

“Maxeon and SunPower have agreed to an option to expand their exclusive DG supply agreement to cover a multi-year commitment for Performance line [Series] solar panels in addition to IBC [Interdigitated Back Contact] products”, commented Norm Taffe, SunPower Corporation EVP. “We are eager to expand our product portfolio by adding Maxeon’s Performance line shingled panels to our premium IBC line. Based on Maxeon’s sales experience outside the U.S., we believe that this complete product portfolio will enable us to expand our share of account through our channel and penetrate new markets with a solar panel made at substantial scale in North America.”

Maxeon Solar makes major changes to manufacturing plans in Asia

Instead of using its manufacturing JV in China to provide wafers and produce solar cells and modules, Maxeon Solar plans to provide SunPower the P-Series mono PERC solar module from its largest manufacturing site in Malaysia. PV Tech would like to clarify that Maxeon Solar has been dependent on third-party PERC solar cells for its P-Series shingled modules that have been supplied to its JV in China.

Maxeon Solar and its China JV also have plans to increase in-house PERC cell production by the beginning of 2022 to offset ASP volatility of purchasing merchant solar cells, due to the impact of higher ASPs, due to raw material (polysilicon) and wafer supply issues that have been pushing prices higher.

Original plans as part of spin-off by SunPower of its manufacturing operations under Maxeon Solar included the need for Maxeon to raise fuds to migrate SunPower’s solar cell capacity to its latest generation of high-performance IBC technology.

This would also generate a fluctuation in manufacturing capacity as old IBC lines would need to be replaced with new equipment to provide higher efficiency solar cells at significantly lower manufacturing costs.

The transition would be very slow at around 250MW of capacity upgrades per year and would also add to the capital expenditure placed on Maxeon Solar to implement those changes.

What has changed is that Maxeon Solar pans to focus on introducing PERC solar cell production (210mm- wafer-base) at its Malaysian fab to the tune of 1.8GW as fast as possible.

It should be noted that the Malaysian solar cell plant nameplate capacity when originally built many years ago had around 1.8 to 2.0GW of potential IBC solar cell capacity. The Malaysian fab was only ever ramped to around 50 to 60% of nameplate IBC planned capacity.

Maxeon Solar also plans to also increase P-Series module assembly capacity at its facility in Mexicali, Mexico to meet expected US demand from SunPower and its own pipeline for utility-scale P-Series module supply.

US module assembly plant plans

Further to the plans already noted, Maxeon Solar indicated that it would be conducting a comprehensive process to potentially select a US location for a 1.8GW module assembly facility that could potentially begin manufacturing operations in 2023.

Maxeon Solar noted that such expansion plans that did not exist before, would be contingent upon obtaining debt or equity financing to execute such plans. The company could be assembling P-Series modules in the US in 2023, according to the company.

Re-establishing P-Series shingled solar module assembly at the SunPower plant in Hilsboro, Oregon could be the ideal site selection decision, dependent on local incentive plans. However, the shuttered plant remains under the ownership of SunPower as this was not transferred to Maxeon Solar under the original spin-off agreements.

Jeff Waters, CEO of Maxeon Solar Technologies said, “By using existing manufacturing facilities for phase one, we can leverage our current plant footprint and our experienced, highly trained work force to quickly ramp volume of our advanced Performance line solar panels for sale into the U.S. market. Greater volume in Malaysia and Mexico will also enhance overhead utilization, helping to drive down cost for our industry-leading IBC products. Our Mexicali factory offers a particularly efficient outbound logistics profile for customers in the Southwest U.S. region. This and later planned expansion of our Performance line module assembly capacity in the U.S. will bring our supply chain even closer to our customers.”

Maxeon Solar is expected to announce 2020 full-year results late on 6 April with expected lower PV module shipments and subsequent revenue, coupled to higher net losses than in the previous year.

For reference, PV Tech is publishing the SEC filing section that covers the orginal agreement.

Maxeon Solar SEC filing Ref: Page 5 of 245 pages FORM 6-K Date of Report: August 26, 2020.

For products designated for installation on a residence or by a third party for the exclusive use of a specific customer, the exclusivity provisions will last until August 26, 2022 (or the entire initial term). For products designated for other applications (including multiple-user, community solar products), the exclusivity provisions will last until August 26, 2021. The exclusivity provisions will not apply to off-grid applications, certain portable or mobile small-scale applications (including applications where solar cells are integrated into consumer products), or power plant, front-of-the-meter applications where the electricity generated is sold to a utility or other reseller.

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