SunPower To Supply Up To 600 MW Panels, Trackers To FPL

FPL Group Inc. (FPL) may receive up to 600 megawatts of solar panels and trackers from SunPower Corp. (SPWRA) as the Florida energy company pushes into developing solar projects both in its home state and elsewhere.

SunPower can deliver its panels and trackers from 2010 to 2012. In a Form 8-K filing with the Securities and Exchange Commission, the San Jose company said that under the "master supply agreement," it guarantees delivery over the three-year period of up to 100 MW annually as a base amount, and an additional 100 MW annually should Juno Beach, Fla.-based FPL exercise its options to purchase this extra amount.

These deliveries may come as part of SunPower's engineering, procurement and construction services for FPL Group's solar projects, the filing said. It's not clear whether SunPower would still have to go through a competitive request for proposals process to get these construction contracts or not.

FPL is already working with SunPower on two Florida projects totaling 35 MW that will be owned by the utility part of FPL. FPL is also planning a 75 MW solar thermal plant. All three will cost about $728 million to build, according to FPL's 2008 annual report.

"We are going to be the No. 2 producer of solar in the U.S. when we complete 110 MW, and our goal is to make Florida No. 1 in the nation eventually," said Jackie Anderson, spokeswoman for Florida Power & Light, the utility subsidiary of FPL. "We will ensure through a competitive pricing process that FPL customers receive the best price available for delivering solar electric power," Anderson said.

The panels from the deal will go to new projects to be developed by the FPL utility subsidiary in Florida, where an aggressive renewable power standard is in the works, as well to its independent project development arm, which has thus far focused on wind, for projects outside Florida.

"SunPower's success on the DeSoto Next Generation Solar Energy Center, the 25 MW project that we are constructing now, gives us confidence that we can extend our relationship," Anderson said.

Anderson declined to disclose terms of the deal, and representatives from SunPower didn't respond to a request for comment by press time.

Such master supply agreements are also known as framework agreements, meaning that the customer doesn't place a firm order but the supplier sets aside so much of production for the customer. FPL will pay a certain termination payment if it decides to reduce or terminate the commitment to buy the 300 MW base amount.

FPL also reserves the right to terminate or reduce its base commitment if the State of Florida and the Florida Public Service Commission doesn't allow it to receive cost recovery for projects for which these panels would be used by Sept. 30, 2009.

SunPower said that it is also planning to locate a research and development center with up to 50 employees in Florida. Demand for solar could lead to "manufacturing and distribution centers for solar panels and tracking systems being located in the state," SunPower said in the statement. These goals are contingent on state government support, according to the company.

The Florida legislature is now considering a renewable power standard that would mandate that all utilities in the state get 20% of their generation from renewable sources by 2020. "A lot of that will be solar, because of the lack of wind resources in the state," said Gwen Rose, deputy director of Vote Solar Initiative, a nonprofit that works to promote favorable solar policies across the U.S. The opportunity for wind generation in Florida is primarily offshore.

"You could see a minimum of 3 to 4 gigawatts of solar in Florida by 2020" under this RPS, Rose said. She included in this estimate concentrating solar thermal and photovoltaics technology. By comparison, there are now 9.18 gigawatts of all kinds of solar energy production installed in the U.S., according to the Solar Energy Industry Association. Photovoltaics account for slightly above 1 gigawatt of the total.

Still, a Florida RPS is not a sure thing. The state Senate has introduced an RPS bill, but the House of Representatives has yet introduce its own version, Rose said. "With the legislative session ending next week, we're running out of time," she said.

"The RPS is dead for this year, as far as we can tell," said Steve Chadima, spokesman for Suntech Power Holdings Co., another solar panel maker.

Florida Power and Light's Anderson said that the deal with SunPower is not contingent on the RPS per se, but on the utility's ability to recover costs of solar projects through electricity rates.

Florida has minimal solar installed right now - the state isn't part of the top-10 states by solar photovoltaic installations, as of 2008, according to SEIA.

Other Florida utilities are also trying to increase their solar generation ahead of the state or a national RPS. JEA, of Jacksonville, is negotiating a power-purchase agreement with Juwi Solar for a 12.6 MW project, measured in alternate current, that will use First Solar Inc.'s panels. Tampa Electric filed an application in March with the Florida Public Service Commission to buy power from a 25 MW solar photovoltaics project to be developed by Energy 5.0. That project could be expanded to 75 MW.

The draft RPS rule passed to the Florida legislature in January included a 7% intermediate renewable goal to be met by 2013 by state utilities. The draft rule caps each utility's expenditures on renewables programs to 2% of annual revenue.

Some of the SunPower panels and trackers will also go to support projects to be developed by FPL Group's project development arm NextEra Energy Resources. "It is too early in this agreement for us to have specifics as to the breakdown between FPL and NextEra," Anderson said in an email.

NextEra is the largest owner and developer of wind projects in the U.S., having added 1,300 MW in 2008 and with plans to add 7,000 to 9,000 MW between 2008 and 2012. But it hasn't been very active in solar, aside from co-owning solar thermal facilities built in the late 1980s in the Mojave desert.

"For NextEra Energy Resources, this agreement [with SunPower] will further advance our solar development efforts in key markets such as Colorado, California, Arizona and New Jersey," FPL Group President and Chief Operating Officer Jim Robo said in a statement.

(Dow Jones Clean Technology Insight covers news about public and private clean-technology and alternative-energy companies)

-By Yuliya Chernova, Dow Jones Clean Technology Insight, [e-mail]