SunPower Corp., a California-based maker of solar photovoltaic panels, reported a significant drop in its profits on lowered panel sales largely from changes in Italy’s solar subsidies.
SunPower posted a net loss for the 2011 first quarter ending on April 3 of $2.12 million or $0.02 cents per share, lagging far behind a net income of $12.57 million for the first quarter a year earlier and worse than the $152.25 million in net income for the fourth quarter of 2010.
The company generated $451.42 million in revenue for the quarter, up from $347.27 million from the year earlier. However Tom Werner, SunPower’s president, said in the statement that it was “lower than planned as a result of changing market conditions in Europe,” specifically in Italy.
“Revenues and inventory levels in the first quarter were impacted by the pause in business activity in Italy, as several projects awaited clarity on the new tariffs,” said Dennis Arriola, chief financial officer for SunPower.
“Italy’s new feed-in tariff, announced earlier this month, follows the trend across Europe of favoring rooftop solar investment,” he added.
Italy, the world’s second-largest solar market after Germany, said last week it will start cutting incentive rates for photovoltaic energy to help consumers who pay for those incentives through their electric bills. It will also limit projects to curb explosive growth in solar project installations seen in recent years in Europe.
Feed-in tariff programs for solar projects excluding concentration technology and solar-roofed will be reduced monthly until the end of 2011. By 2012, cuts will be done in a half-yearly basis, data from the Ministry of Environment, Land and Sea showed.
According to Germany-based market research firm EuPD Research, incentives given to PV projects will be cut monthly until 2012 and will continue with half year reductions in 2013. Funding for large-scale PV systems will also be capped for the first time.
In addition, developers will receive a 5 percent bonus on their tariff when at least 60 percent of the investment costs are spent on components made by companies in the European Union. According to EuPD Research, Asian and American producers will be hardest hit by such a phenomenon.
“We plan to revise our 2011 guidance before the end of the second quarter to reflect the recent changes in Italy,” Mr. Arriola said.
SunPower has been investing big money in the Italian market for years, including spending $277 million on acquiring Malta-based project developer SunRay Renewable Energy last year. SunPower also bought an Italian solar distributor, Solar Solutions, back in 2008.
Italy was SunPower’s largest market in 2010, accounting for about 40 percent of its revenue, according to a document from the United States Securities and Exchange Commission.
SunPower, however, could receive much needed funding and bounce back in the next quarters after Total SA, a French oil and gas giant company, agreed to buy 60 percent of it for up to $1.38 billion. Total also promises to give SunPower up to $1 billion of credit over the next five years to support its power plant development business and allow the solar company’s current management to continue running the company.
For the second quarter of 2011, the company expects revenue to be in the range of $500 to $550 million and sell panels in the 160 to 190-MW range. For the whole year, SunPower expects to sell around 825 to 920 MW worth of panels, consistent with the previous guidance.
