Utilities Like Solar More Than You Think - SunPower

At the JP Morgan technology conference in Boston, I had a chance today to chat with Julie Blunden, who is VP of public policy for SunPower (SPWR), which makes solar panels. I asked her about the opinion held by some that electric utilities in the US may be slow to adopt solar because they can’t be certain yet of the technology’s long-term reliability.

As Eric mentioned in a post today, Friedman, Billings Ramsey downgraded First Solar (FSLR), a solar technology firm, in part because the firm is concerned that First Solar will find adoption by utilities to be slow.

But Blunden thinks utilities will step up to adopt the technology faster and more aggressively than some think, based on her 25 years in the energy business. “They need solar to meet their targets for their renewable energy portfolios,” she says. The portfolio is something that’s regulated by states and municipalities, and so it’s not an easy mandate for utilities to get around.

Moreover, Blunden doesn’t think that utilities’ buying in will depend on their being covered by the US investment tax credit [ITC], the current means of subsidizing solar in the US. It’s possible there may be language written into the ITC in future that will extend the credit to utilities — it currently does not cover their investment in alternative energy. But even without benefiting from the ITC directly, utilities can exploit it by funding solar investment through intermediaries — banks and anyone else who’s willing to act as the nominal investor, said Blunden.

Blunden did mention, however, that SunPower sees enough opportunities globally that the company is not dependent on the uptake of solar in the US.

SunPower shares today are trading down about 2.5% at $86.06. I didn’t hear anything especially concerning in Blunden’s presentation. I imagine the shares are trading down on the aforementioned FBR downgrade of First Solar.

Comments

[Road Runner]

I think Julie Blunden's response is more positive-thinking spin than reality. This seems natural since she is the VP of public policy for SunPower ("VP of positive spin").

She said “They need solar to meet their targets for their renewable energy portfolios,”. Yes, they are using solar, but it is concentrating solar (CSP) and not PV. CSP is basically using mirrors to concentrate the sun to heat something to run a steam turbine. They are building more of these plants. They have been around for decades and are well proven. Also, improvements are being made continuously to improve lifetime and bring down cost.

One company, Ausra, has greatly improved the design of the CSP technology to cut the cost dramatically, like 50%. One of the CA electric utilities is building a pilot plant to prove the new technology. Ausra says within 3 years they will improve the cost to 6-8 cents per kWh which is equivalent to coal (which is one of the cheapest). I'm on an IPO watch for Ausra.