SunPower executives said Wednesday they plan to roll out a loan program for the residential market, a move that will enable the company to attract homeowners who want to own rather than lease solar panels.
The plan would complement the Silicon Valley company’s effort to expand its residential leasing program, in which its network of U.S. installers market long-term leases that are financed by money that SunPower secured from investors such as the U.S. Bancorp. The leasing model, which doesn’t require a hefty upfront spending for equipment and labor, has been the engine that drives the boom in the residential market in recent years.
But solar gear ownership hasn’t exactly gone out of style, and doing so allows homeowners — not those who finance the leases — reap the local and federal tax benefits. Some companies are banking that an increasing number of homeowners will choose that option. The optimism comes partly from the falling prices of solar panels in the last three years because of an overproduction of them worldwide. Some financial institutions, such as Admirals Bank, are rolling out home solar loans.
Meanwhile, an insurance company, Assurant, is offering warranty management plans so that homeowners wouldn’t have to deal with haggling with manufacturers of solar panels, inverters, racking systems and other parts over repairs or replacement. Such solar warranty management plans are a new phenomenon, so how popular it will be remains to be seen.
SunPower’s CFO, Chuck Boynton, mentioned the loan program during conference call with analysts to discuss the company’s second-quarter earnings on Wednesday, though he didn’t provide any more detail about the program. The company has teamed up with banks to market home loan programs before.
The residential solar business is growing for SunPower, which has signed up over 18,400 customers through its lease program, which was launched in 2011. That total count stood at around 16,200 at the end of the first quarter this year. The company has talked about launching a similar leasing program in France and other countries. SunPower also holds 10 percent of Japan’s residential market by selling solar panels through Toshiba and Sharp.
SunPower still generates more sales from developing and building large projects for power plant owners such as MidAmerican and NRG. SunPower is on track to complete the 250MW California Valley Solar Ranch project by the end of 2013 and is also building the 579MW Solar Star, which is formerly called the Antelope Valley Solar Project. It also inked a deal to sell 25MW of solar panels for a power plant project in Japan during the second quarter.
The company did well financially during the second quarter. It generated profits after posting losses for many quarters. SunPower recorded $19.6 million in net income, or $0.15 per share, for the second quarter, compared with a net loss of $84.2 million, or $0.71 per share, from the year-ago period. SunPower also generated $576.5 million in revenue for the second quarter, down $595.9 million from the same quarter in 2012.
The company has been in major cost-cutting mode, and has closed some factory lines over the past two years to deal with the imbalance of supply and demand in the global market. In May, SunPower executives said they had beaten their cost-cutting goals. During the second quarter, the company’s factories were again running at their max production rate.
Although SunPower doesn’t plan to build new factories in the short term, it is looking at ways to increase its production over the next 18 months, said CEO Tom Werner. Werner declined to say what the company plans were for growing production, except that it will involve “sustainable solutions.” But he promised to discuss this issue in the next earnings call.