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SunPower’s (NASDAQ:SPWRA) shipments of utility and power plant components for residential and commercial purposes have increased from 49 megawatts (MW) in 2007 to 288 MW in 2010, and we expect this growth will continue driven by several benefits and subsidies provided by governments for solar energy. SunPower’s efforts in increasing its dealer network has also helped improve sales over the years. Increasing oil and gas prices will push for greater efforts in improving efficiency of solar energy, which will benefit SunPower and other solar energy providers First Solar (NASDAQ:FSLR), SuntechPower (NYSE:STP), and Yingli Green Energy Holding Com (NYSE:YGE).

While we estimate SunPower’s shipments of residential and commercial components will consistently rise crossing 1 GW by the end of our forecast period, Trefis members expect the shipments will reach closer to 1.2 GW – implying around 5% upside to our price estimate for SunPower’s stock.

We have a Trefis price estimate of $16.22 for SunPower’s stock, implying a discount of about 20% to current market price.

(Chart created by using Trefis' app)

Govt. Subsidies to Drive Solar PV Module Sales

High installation costs of solar systems has been one of the biggest hurdles to wider adoption of solar systems by consumers and businesses. As the price for traditional forms of energy like coal and oil rise and concerns for global warming rises, government subsidies will drive significant growth in the renewable energy industry over the next few years. In a recent development, U.S. Department of Energy (DOE) has announced the availability of $27 million in funding to reduce non-hardware costs of solar energy projects. [1] This is part of Obama government’s SunShot initiative to make solar energy cost-competitive in comparison to fossil fuels.

The cause to increase solar energy adoption is being embraced by governments globally, including emerging markets like India which plans to have installed 20GW of solar power by 2022 – equaling 12% of the country’s total expected energy output. This is a huge investment for India given that its current installed capacity stands at 12 MW as of December 2010 [2]

SunPower’s Focus on Improving Solar Efficiency

SunPower’s R&D focus is on increasing solar power efficiency while minimizing the use of inputs like polysilicon. If SunPower can develop technology that allows more electricity to be produced using less land for less money, then solar power will become more competitive. According to the State of California’s 30 most common and efficient solar power panels on the market, SunPower ranked highest in PTC/sq. foot (which shows how many watts per square foot the panel will produce), as of July 2009. [3].

Notes:

  1. DOE Announces $27 Million to Reduce Costs of Solar Energy Projects, US DOE, June 1, 2011
  2. Making India Solar, Revolve Magazine, Nov. 2010
  3. Most Efficient Solar Panels, Sroeco.com, July 2009

Disclosure: No positions

Source: Bright Outlook for SunPower Solar Components Shipments