SunPower Corporation has begun construction of an 8.79-megawatt (“MW”) solar power system at the new headquarters of Toyota Motor Corporation (TM Quick QuoteTM - Free Report) located in Plano, TX.

In Jun 2016, the company announced that it has won a contract to design and build a 7.75- MW photovoltaic (“PV”) solar power system for the new headquarters of Toyota. In this context, Toyota planned to install Sunpower’s solar system at the new headquarters, to meet 25% of the building’s energy requirement.

Notably, the Japanese automaker also unveiled plans to shift its North American headquarters from Southern California to Plano, near Dallas, this year.

However, Sunpower is now constructing almost 1 MW, greater than what was initially planned. This will mark the largest on-site solar installation in a corporate office, apart from utility companies, in the state.

Details of the Deal

Currently, high-efficiency SunPower E-Series solar panels are being installed on steel carport structures across the top of four parking garages. On completion, over 20,000 solar panels will cover the area and is now projected to generate sufficient electricity to meet about 33% of the headquarters' energy needs.

Earlier, during the announcement of the contract, the company had said that the solar system will feature three solar carport structures, utilizing high-efficiency SunPower solar panels. Two carports, each with of a capacity of 2.45 megawatts (MW), will become operational around mid-2017, while the third, which has a capacity of 2.83 MW, will come on line by 2017 end.

With the installation of the SunPower solar system, Toyota hopes to be able to cut carbon dioxide emissions by 7,122 metric tons, which is equivalent to the electricity required to power nearly 1,000 homes annually.

It should be noted that this solar system installation is part of Toyota’s objective to obtain the U.S. Green Building Council (USGBC) Platinum LEED Certification for its state-of-the-art campus. SunPower’s high-efficiency E-Series solar panels, known for generating 20% more efficient power than its competitors during the first year of operation, is expected to significantly aid Toyota in achieving this aim.

This project is being financed by Toyota through a power purchase agreement (“PPA”) arranged by SunPower. Also, the renewable energy credits associated with the system will be owned by Toyota.

SunPower and Toyota are celebrating their 14 years of partnership. There are SunPower solar arrays at a number of Toyota facilities in the U.S. Presently operating facilities are a 1.5 MW system in West Caldwell, NJ, a 2.3 MW installation in Ontario, CA, as well as an array in Torrance, CA, which was built in 2003.

A Brief Note on E-Series Solar Panels

SunPower’s E-Series solar panels deliver efficient performance with low levels of degradation, as validated by third-party performance tests. Per management, compared to other technologies, SunPower converts the greatest percentage of sunlight into electricity, thereby generating more electricity and helping consumers save more money on electricity bills.

The company primarily manufactures E-Series solar panels at its solar panel assembly facilities in Mexico and France.

Our View

SunPower strives to provide high-performance solar products to its customers. The company utilizes sophisticated manufacturing techniques to improve solar cell efficiency, reduce wafer thickness, improve throughput, process yield and quality, and introduce new products that help customers to develop solar projects.

With fossil fuels being scarce, a number of countries are adopting renewable resources as a major source of electrical energy. Among renewable, solar and wind energy are gaining the most traction. To tap this growing market for solar energy, SunPower has been expanding its customer base for quite some time now.

Price Movement

SunPower underperformed the Zacks categorized Solar market industry. Shares of the company lost 68.2% compared with the industry’s decline of 50.3% over the last 12 months. This could have been triggered by stiff competition from Chinese solar manufacturers in the Asia-Pacific region. As a result, SunPower’s performance lagged behind its peer, Canadian Solar, Inc. (CSIQ Quick QuoteCSIQ - Free Report) , who has outperformed the industry.

 
Zacks Rank & a Stock to Consider

SunPower currently carries a Zacks Rank #5 (Strong Sell). A better-ranked stock in the solar industry includes Vivint Solar, Inc. carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Vivint Solar delivered a positive earnings surprise of 6.89% in the trailing four quarters. It has an expected EPS growth rate of 13.90% in the next five years.

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