Wells Fargo and SunPower - A Positive Deal for Renewable Energy

On June 29, Wells Fargo & Co. (WFC) (Analyst Report) and solar panel maker SunPower Corp. (SPWRA) (Analyst Report) entered into a collaboration to fund up to $100 million in commercial-scale solar systems for businesses and public institutions.

As per terms of the agreement, SunPower will build and maintain the solar systems, which will be financed and owned by Wells Fargo. This will allow commercial customers to buy electricity from SunPower at rates that are competitive with retail prices. This will prove to be a long-term hedge against rising power prices for customers and also enable them to take advantage of the environmental and financial benefits of solar power without any initial capital investment.

The initial projects being financed under the program include a 1.1-megawatt system for the University of California, Merced, and a 1 MW system for the Western Riverside County Regional Wastewater Authority. Both projects are expected to be completed by the end of 2009.

The deal is a step in the positive direction especially as financing for solar and other renewable power projects has diminished due to turmoil in credit markets and the global economy. Wells Fargo predicts immense opportunities over the next several years in the renewable-energy markets.

Wells Fargo has provided more than $1.75 billion in financing for renewable energy projects since 2006. This includes 27 wind projects, more than 150 commercial-scale solar projects and 1 utility-scale solar thermal project. SunPower has more than 500 large public and commercial solar power systems installed or under contract, representing more than 400 megawatts.

We maintain a Hold recommendation on the shares of Wells Fargo.

Comments

[Mad Hedge F...:]

Great news! I have been covering the solar industry for nearly 40 years now, and for most of this time it has only been economic in space stations. But times are changing. If you look carefully at your electric bill and calculate the cost per kilowatt hours each month as I do, you will notice that the price has been going up for the last ten years. This is partly because of ineptly handled deregulation, but also because our utility, Pacific Gas & Electric (PCG) is mandated by state law to reduce greenhouse gas emissions. Last year, the collapse of the economy and crude prices drove the cost of thin film solar’s primary raw material, polysilicon, down dramatically. The cost curve is falling, the demand curve is rising, and it is only a matter of time before they cross. The gap now is only a few cents per kilowatt, and that can easily be bridged with government subsidies. This industry is on the verge of becoming truly profitable. All it might take is another rise in crude prices, something you can count on. Watch behemoth First solar (FSLR) position itself to cash in, as well as Suntech Power (STP) and SunPower (SPWR. But also watch the volatility, as this is definitely an “E” ticket ride.

Jun 30 01:44 PM

[Fred W:]

Thanks for another boiler plate post. Your thoughts on FSLR are about 2 year old and no longer apply.
Another "re-post" by MHF


On Jun 30 01:44 PM Mad Hedge Fund Trader wrote:

> Great news! I have been covering the solar industry for nearly 40
> years now, and for most of this time it has only been economic in
> space stations. But times are changing. If you look carefully at
> your electric bill and calculate the cost per kilowatt hours each
> month as I do, you will notice that the price has been going up for
> the last ten years. This is partly because of ineptly handled deregulation,
> but also because our utility, Pacific Gas & Electric (seekingalpha.com/symbo...)
> is mandated by state law to reduce greenhouse gas emissions. Last
> year, the collapse of the economy and crude prices drove the cost
> of thin film solar’s primary raw material, polysilicon, down dramatically.
> The cost curve is falling, the demand curve is rising, and it is
> only a matter of time before they cross. The gap now is only a few
> cents per kilowatt, and that can easily be bridged with government
> subsidies. This industry is on the verge of becoming truly profitable.
> All it might take is another rise in crude prices, something you
> can count on. Watch behemoth First solar (seekingalpha.com/symbo...)
> position itself to cash in, as well as Suntech Power (seekingalpha.com/symbo...)
> and SunPower (SPWR. But also watch the volatility, as this is definitely
> an “E” ticket ride.

Jul 01 10:47 AM

[harammph:]

I've been following the Solar Industry for 30 years, I think there were 2 Solar companies in existence then, but both went bankrupt.

A fond Memory of my first Stock investment gone K-Putscy.

Jul 04 04:40 AM