SunPower view solid despite tax credit

By Matt Daily

NEW YORK (Reuters) - Solar power company SunPower Corp SPWR.O will meet its financial forecasts this year and in 2009, even if the U.S. government fails to renew tax incentives that expire at the end of the year, Chief Executive Officer Tom Werner said on Tuesday.

The U.S. Congress has yet to pass an extension of the Investment Tax Credit (ITC) for solar installations or similar incentives that reduce the costs of wind, biomass and other renewables that would be acceptable to the White House.

"We control our own destiny, (and) we'll be able to enter other new markets rapidly, and we believe we can hold our guidance for '08 and '09, even if the ITC doesn't pass, by moving business elsewhere," Werner told the Reuters Global Energy Summit.

Failure to expand U.S. tax credits would not likely hurt SunPower's residential sales, he said, which make up about 50 percent of its industry-leading North American business, but will squeeze sales to the business market.

"In the commercial business, it will impact our business," he said. "I think we're in the time frame of where it will impact in the back half of the year and early next year."

Still, the company expects solar markets to expand in countries such as Italy, Greece, France and Australia, which could absorb any drop in demand in the United States.

"It's not to suggest it would be easy, it's to suggest that we're prepared to do that," he said.

Werner also said the company's solar panel systems -- which he described as the most efficient in the industry -- would reach "grid parity," in which they are as economically efficient as more traditional forms of power generation, within the next five years.

"It's becoming more and more clear that it's a real possibility ... We believe that it will happen between now and 2010 and 2012, maybe 2013," he said.

That time frame moved closer because electricity prices rose much faster than anticipated, he said.

SunPower, like most other photovoltaic solar companies, relies on supplies of silicon to turn sunlight into electricity. Tight supplies of the material have crimped industry growth and squeezed margins for solar cell makers, but new silicon production capacity should boost supplies beginning later this year.

Still, silicon costs have been a key factor in helping makers of rival thin-film solar panels make inroads in the market. Their panels are less expensive than silicon-based ones, which make up about 90 percent of photovoltaic sales.

But most thin-film panels are less than half as efficient as SunPower's -- producing half as much electricity for the same amount of surface area.

With major corporations such as Sony Corp (6758.T: Quote, Profile, Research, Stock Buzz)(SNE.N: Quote, Profile, Research, Stock Buzz) and General Electric Co (GE.N: Quote, Profile, Research, Stock Buzz) poised to enter the solar market, SunPower sees its role in the coming years as less a mass market leader than a higher-quality alternative to its competitors.

"Our objective is to be like Apple (AAPL.O: Quote, Profile, Research, Stock Buzz), to have superior technology and a superior customer experience that people will pay a premium for," Werner said.  Continued...