Custom «The SunPower Corporation» Essay Paper Sample
Table of Contents
- Solar Industry: Industry Overview
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- The SunPower Corporation
- The United States’ Market Size for Solar Panel Systems
- Competitive Analysis
- The SunPower’s Competitors
- The First Solar
- The Suntech CHN
- The Sharp JPN
- The Q-cells GER
- The Yingly CHN
- Related Economics essays
The SunPower Corporation is being among leading players in the United States’ PV market. As the more residential homeowners and the commercial sectors seeking to embrace the alternative sources of energy, the global market of solar electric systems has witnessed a massive growth in a very short period of time. Buoyed by subsidy programs, the SunPower has managed to generate the demand for solar cells. Nonetheless, competition is very stiff in this industry. The current essay endeavors to undertake a competitive analysis of the SunPower Corporation. The firm’s key competitors shall also be identified. In addition, the essay will also attempt to evaluate the market shares of the key competitors, their key strategies, and growth prospects.
Solar Industry: Industry Overview
There is an increased demand for the solar energy globally. The United States has witnessed a considerable increase in the solar energy deployment for recent years. For example, in 2007, the country’s solar energy capacity rose by a massive 17 % (EERE News, 2008). A report reveals that by 2025, about 10% of the country’s power needs would be reliant on the solar power. Deriving from this, over 8 % will be provided by the solar photovoltaic cells. This is the equivalent to almost 50.000 cells (EERE News, 2008). For the last eight years, the solar power in the United States has grown to an average 40%. It is becoming increasingly expensive to meet the costs of generating electricity with using the fossil fuels, even as there has been a drastic drop in the power generation using the solar photovoltaic systems. Consequently, the reports indicate that the cost of conventional power sources will equal that of the solar power by 2015. Nonetheless, in order to attain the 10% of the set goal, it is important for the photovoltaic firms to ensure that solar power is becoming a “plug-and-play” technology (EERE News, 2008). This can only be done if the companies in question streamline the installations.
The SunPower Corporation
The SunPower Corporation is mainly concerned with the design, production, as well as the delivery of solar electric systems globally. The company ensures that it manufactures the high performance solar electric systems to fulfill the unique needs of its utility-scale power plant, of its residential and commercial customers. The company is also involved in the design and manufacture of roof tiles and crystalline silicon of PV cells. The SunPower Corporation mainly competes in the semiconductor manufacturing industry. Other industry, where the corporation competes, includes the solar power generation industry, the sensor chip manufacturing industry, and the chip design, the assembly, as well as packaging services. The solar cells that the SunPower in the U.S. manufactures are nearly 50 percent more efficient in comparison with those manufactured by the firm’s competitors (PRNewswire, 2011). As a result, they also tend to be comparatively cheaper not just for the homeowners, but also for the commercial users. For example, within 10 years, the most of homeowners using the SunPower solar cells are expected to have recouped the cost of their installations and to have recovered from the lower energy bills. The five-inch square SunPower’s solar cell, often dubbed as A-300, has a higher energy conversion efficiency of 21 percent in comparison with the energy conversion efficiency of between 12 and 15 percent that is the industry’s average (Henderson, Conkling, & Roberts, 2009).
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The design of the SunPower’s solar cells has resulted in the manufacture of a cell with the sleek black surface. This has been achieved with the installation of metal wiring on the solar cells’ back, thereby ensuring that solar rooftops remain by far more attractive in comparison with the exposed-plumbing appearance that characterized the past solar installations. Thanks to the company’s technological breakthrough in 2010, the SunPower was awarded a contract to supply the PowerLight with solar cells. The contract was worth 330 million dollars. In the late 2005, the SunPower floated a fantastic initial public offering, and on the first day of trading, the company’s stock rose to 25.45 dollars representing the 41 percent increase. By the mid-November, the company’s shares were already trading at 38.14 dollars (Alvarado, 2007).
The future looks very bright for the solar industry with the sale of the solar equipment anticipated to the increase in ten times to 10 billion dollars by 2020; up from 1 billion dollars in 2010. In spite of good times ahead of the company, nonetheless, the SunPower is also facing a number of challenges as well. Globally, the company has to face the stiff competition from such giant firms as Shell, Sharp, BP, and Sanyo. In addition, there is also a global shortage of silicon, and the raw materials for the manufacture of solar cells. This will, without a doubt, make it hard for the company to maintain a low price for its products (Henderson et al., 2009). Nonetheless, the industry analysts contend that the SunPower is at a better position to deal with these challenges better compared with its competitors’ mainly because its every watt use of silicon contains 30 percent below the industry average.
The United States’ Market Size for Solar Panel Systems
Between 1998 and 2008, the US PV market attained the historical growth, at an average of 35 percent of its yearly growth (Henderson et al., 2009). Currently, this market is estimated to be worth 1.26 billion dollars in sales. At the same time, the industry analysts expect that the industry will realize an annual growth in sales of between 15 and 20 percent. The subsidy programs have helped such companies as the SunPower at a great deal in their quest to generate the demand for solar cells. However, the analysts contend that by 2012 the industry will be in the position to prop itself up, even by the absence of subsidies (Womack, 2007). In order to achieve this goal, the SunPower will have to scale up its production in the hope for lowering costs. In the terms of the market share, the main players in the United States’ PV market in view of their share on the market include the First Solar (13 percent), the Sharp (7 percent), the SunTech (7 percent), the Q-Cells (6 percent), the Kyocera (5 percent), and the SunPower (4 percent).
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The suppliers for the solar industry include Polysilicon producers. The key players in the United States’ solar energy industry include the First Solar, the SunPower, the Q-Cells,the SunTech Power, and the Solar World among others. These companies provide direct ompetition to SunPower Company in the industry. The potential entrants into the United States’ solar energy industry include the consumer brands with the equity in energy. They include the Panasonic and the Duracell. On the other hand, the substitute products would include other power sources such as coal, nuclear, and wind among others.
The SunPower’s Competitors
The First Solar
The first Solar has the largest market share in the United States’ PV market of 13 percent. The company mainly specializes in PolyChrystalline and the ThinFilm technology in the manufacture of less expensive solar panels. That is the company uses Cadmium Telluride that is more affordable compared to crystalline silicon. The efficiency of the Cadmium telluride products is about 8-10 percent, which is comparable to the efficiency of the crystalline products. In addition, the company also prides itself as the manufacturer of less expensive solar panels thanks to the part of its use of CdTe (cadmium telluride) as a semiconductor. This ensures that the company’s panels remain cheaper compared with those produced using crystalline silicon (Lynler, 2011). This means that First Solar Company has an upper hand in the solar business. That is when the prices for the solar energy have risen, the clients will opt for first solar, which will be offering reduced pricing for the same product. In the terms of the market performance, in the fiscal year 2010, the company earned 7.68 dollars for every share. This amounted to 664.2 million dollars in share earnings.
First solar has also had its own share of down falls in the past. That is in the second quarter of 2011, the company witnessed a 60 percent reduction in its profits to 61.1 million dollars down from the 159 million dollars realized in the same period in 2010. The drastic drop in the First Solar’s profits is mainly attributed to uncertainty of the renewable energy subsidies in Europe, the drastic drop in solar modules prices, and higher costs (Henderson et al., 2009). None the less the performance of the company is still remarkable compared to the other companies. In 2010, the Forbes magazine ranked the First Solar position 26 in the terms of the fastest-growing technology organizations in the United States (Ray, 2010). The company’s value proposition is the CdTe technology that ensures the high efficiency and lowest costs. For example, by july 2011, the First Solar had attained 17.3 percent of efficiency.
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The Suntech CHN
SunTech is a company that has had a outstanding growth in the solar energy industry in a short time. The company rose from being 8th largest in PV production to the 4th position in a span of one year. The company is the second largest in the United States’ solar industry with the market share of 7 percent. Just like the First Solar Company, the Suntech CHN relies on PolyChrystalline and the ThinFilm technology in the manufacture of solar panels. In the terms of the value proposition, the Suntech CHN relies on the high quality and low cosst of its products to enhance its brand equity (Henderson et al., 2009).
SunTech have high prospects about the growth of the business in the near future. The company’s strategy is to ensure that shareholders get the value for their money invested. The SunTech has an efficiency of 15 percent. Almost 90 percent of the company’s revenues emanates from exports, mainly to Spain and Germany. However, the company anticipates that by 2015 the Chinese market will account for the 20 percent of its exports. Already, the SunTech management is trying to convince the Chinese government to provide the photovoltaic cell industry with incentives.
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The Sharp JPN
This is the third largest solar panel manufacturing company in the United States. The company already has a market share of 7 percent. The company has 427.5 MW of cell in 2005. Sharp solar has based the production of the solar products on standard technology. The company relies on PolyChrystalline and the ThinFilm technology for the manufacture of its solar panels. Its value proposition includes a big brand. The Sharp JPN’s strategy is to get the value for the money invested. The Sharp Solar has over 40 years of experience in the research and development of the cell and module production, as well as the spanned wafer. In addition, the company has pursued the concentrator technology, R & in thins films, as well as some solar integrated products.
The analysts contend that the Sharp Solar’s modules are reliable. Multicrystalline solar cells 22 form the basis for the Sharp solar modules, and their efficiency ranges between 14 and 15 percent (PV Cells and Arrays, n. d.).This translates into approximately 13 percent efficiency while factoring in the standard module efficiency losses. In the past, much of the company’s revenues have been generated from the basic modules. However, in recent months, the company has introduced a wide range of innovative products of the low volume, such as triangular modules. These have been designed to fit in the translucent solar window glass and tight corners. In addition, the Sharp is also experimenting with the contact solar cells. These are similar to those manufactured by the SunPower.
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The Q-cells GER
Q-cells is a Germany based company that has been rated as the second largest player in the market. In 2005, the Q-cells company had produced 165.7 MW solar cells. The company is the fastest growing solar ompany with a growth rate of 118 percent annually. The company has a market share of 6 percent. It also uses PolyChrystalline and the ThinFilm technology in the manufacture of solar panels. Its value proposition includes the high German quality, as well as the high efficiency. The Q-Cells mainly manufactures multi crystalline solar cells and monocrystalline cells. The former has an efficiency of between 14.5 and 15.5 percent, while the latter has an efficiency of between 16 and 17 percent (PV Cells and Arrays, n. d.). Instead of adopting the 5” or 6” squares format cells, which are being the industry’s standard, the Q-Cells has adopted the 8” square cells so as to lower the processing cost per watt.
The Yingly CHN
With the 5 percent market share, the Yingly CHN utilizes PolyChrystalline technology in the manufacture of solar cells (Henderson et al., 2009). The company has an efficiency of 14.2 percent, which is comparable to SunPower. So far Yingly CHN has a minimal power that is 255 W. The company’s value proposition is its lowest price. At the same time, the company pursues the low cost strategy. However, if the company manages to secure the long term contracts, it will source in up to 50 percent of polysilicon. One of the advantages the company has is the strong brand name. That is the company has gained reputation in the market due to the strong brand name. the Yingli brand is well balanced between cost and quality. As a result, the company is likely to increase in its growth rate.
SunPower solar company has come a long way from low production to being one of the most recognized solar production companies. The SunPower is faced with the challenges of guarding or increasing its market share in the U.S. solar industry, where it has to compete with the First Solar, the Sharp, and the Suntech among other companies. Globally, the main challengers include the BP, the Shell, the Sanyo, and the Sharp. The SunPower should also consider the use of cadmium telluride as a semiconductor in the manufacture of the less expensive solar panels. This is the strategy that the First Solar has adopted; that may perhaps explain why the company is still being the market leader. The SunPower is also highly innovative producing solar cells of the high quality. The firm’s management needs to prevail on the government is to provide the photovoltaic cell industry with more incentives to ensure that the various players remain competitive on the local, national, and global market.