PV Power Plant LCOE

Matt Campbell
Director, Utility Power Plant Products
December 1, 2010
Safe Harbor Statement
This presentation contains forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements are statements that do not represent historical
facts and may be based on underlying assumptions. The company uses words and phrases such as
"expects," “believes,” “plans,” “anticipates,” "continue," "growing," "will," to identify forward-looking
statements in this presentation, including forward-looking statements regarding: (a) our plans and
expectations regarding our cost reduction roadmap, (b) cell manufacturing ramp plan, (c) financial
forecasts, (d) Levelized Cost of Energy (LCOE) reduction, (e) future solar and traditional electricity rates,
and (f) future percentage allocation of SunPower solar panels within our systems business. Such forward-
looking statements are based on information available to the company as of the date of this release and
involve a number of risks and uncertainties, some beyond the company's control, that could cause actual
results to differ materially from those anticipated by these forward-looking statements, including risks and
uncertainties such as: (i) the company's ability to obtain and maintain an adequate supply of raw materials
and components, as well as the price it pays for such; (ii) general business and economic conditions,
including seasonality of the industry; (iii) growth trends in the solar power industry; (iv) the continuation of
governmental and related economic incentives promoting the use of solar power; (v) the improved
availability of third-party financing arrangements for the company's customers; (vi) construction difficulties
or potential delays, including permitting and transmission access and upgrades; (vii) the company's ability
to ramp new production lines and realize expected manufacturing efficiencies; (viii) manufacturing
difficulties that could arise; (ix) the success of the company's ongoing research and development efforts to
compete with other companies and competing technologies; and (x) other risks described in the
company's Annual Report on Form 10-K for the year ended January 3rd, 2010, and other filings with the
Securities and Exchange Commission. These forward-looking statements should not be relied upon as
representing the company's views as of any subsequent date, and the company is under no obligation to,
and expressly disclaims any responsibility to, update or alter its forward-looking statements, whether as a
result of new information, future events or otherwise.

2
SunPower 2010 – 25th Anniversary
2010: Revenue $2.15-$2.25B World-leading solar conversion efficiency

5,500+ Employees Diversified portfolio: roofs to power plants

550+ MW 2010 production 1,500 dealer partners, #1 R&C USA

>1.5 GW solar PV deployed 5 GW power plant pipeline

Residential Commercial Power Plants

3
 PV Technology Vertical Integration
Your Full-Service Utility-Scale PV Technology Partner

Systems
Solar module EPC Operation
Integration

Solar cell Trackers Systems Performance

engineering modeling
Module materials Roof mounting Plant
Automated
optimization
design software
Manufacturing SCADA Long-term
Advanced grid system reliability
Module reliability Commercial integration
monitoring SunPower R&D

4 4
SunPower 300MW+ Global Power Plants Installations

Xcel / PSCo in Construction

PG&E Contract 17 MW AC Greater Sandhill GERMANY
250 MW AC CA Valley Solar 10 MW Bavaria I
Ranch Ontario Hydro 3.0 MW Bavaria II
20 MW AC ASF 1.6 MW Pfenninghof

NEVADA
ITALY
15 MW Nellis AFB
45MW Montalto
HAWAII 3.1 MW Las Vegas WD
24 MW Montalto
1.5 MW Lanai 2.3 MW Toletino
Modesto
Irrigation District 1.0 MW Ferentino
25 MW AC 1.0 MW Siron/Soleto KOREA
McHenry Solar 6.0 MW Samsung
EAST COAST – U.S. SPAIN
Farm 2.2 MW Mungyeong
25 MW AC FPL–Desoto 29 MW Naturener 2.0 MW JeonJu
10 MW AC FPL– 23 MW Trujillo
CALIFORNIA 1.4 MW Hampyeong
SpaceCoast 23 MW Jumilla
1.7 MW Lake County 1.0 MW Gwangju
1.6 MW Merck 18 MW Olivenza
1.2 MW Peninsula Packaging
1.0 MW FPL–NASA 14 MW Lorca
1.2 MW Napa Valley College
1.0 MW J & J 12 MW Almodovar
1.1 MW Rancho Water
1.0 MW QVC Network 11 MW Magasquilla
1.1 MW Grundfos Pump
1.0 MW SAS Institute 11 MW Ciudad Real
1.1 MW North Bay Reg. Water
1.1 MW Inland Empire Utility 9.9 MW Zaragoza
1.1 MW Chico Water Recycling 8.4 MW Isla Mayor
1.1 MW Agilent Technologies 8.3 MW Guadarranque Australia
1.1 MW Skinner Water Facility 6.9 MW Caceres 1.0 MW Marble Bar
1.1 MW Gap Pacific Distr. Ctr. 6.0 MW Atersa
1.1 MW Marine Corp AGCC 4.8 MW Llerena
1.0 MW Sonoma County Water 3.8 MW Lebrija
1.0 MW Applied Materials

PORTUGAL
11 MW Serpa
10 MW Ferreira
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 T0 Tracker
FPL Desoto – 25MW

6
Levelized Cost of Energy (LCOE)

The LCOE equation is one analytical tool that can be used to compare
the cost of energy from alternative technologies when different scales
of operation, investment or operating time periods exist

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Why Costs Must be Levelized
$20,000,000

$18,000,000

$16,000,000

$14,000,000

$12,000,000

$10,000,000

$8,000,000

$6,000,000

$4,000,000

$2,000,000

$-
2011 2016 2021 2026 2031 2036 2041 2046

Simplified Annual Cash Costs for a 10MW PV Power Plant

Low carbon energy sources such as solar, wind, nuclear, and hydro share the
properties of higher up-front capital costs and lower annual operating costs

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Why Costs Must be Levelized
$10,000,000

$9,000,000

$8,000,000

$7,000,000

$6,000,000

$5,000,000
4% Inflation
$4,000,000

$3,000,000

$2,000,000
2% Inflation
$1,000,000

$-
2011 2016 2021 2026 2031 2036 2041 2046

Simplified Annual Cash Costs for a 10MW Fossil Fuel Plant

Fossil fuel based energy sources have lower capital costs and higher annual
costs which are highly sensitive to fuel inflation

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Using LCOE to Evaluate Solar Power Plant Technologies

Silicon PV

CLFR CSP Heliostat / Tower CSP

Thin Film PV

CPV Dish Sterling CSP Parabolic Trough CSP

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The PV Power Plant LCOE

Capital cost, capacity factor, and cost of capital

equally affect the levelized cost of energy (LCOE)

Capital Capacity
Cost Factor

Cost of
Capital

LCOE
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 Detailing the LCOE
Initial investment
Area related costs
Grid interconnection costs
Project related costs
Depreciation Tax/
other Public Benefit
 Is the present value of the
benefit over the financed
life of the project asset.
Annual Costs
Annual system operating and
maintenance costs ( inverter
maintenance, panel cleaning,
monitoring..)
System Residual Value
 Present value of the end of life
asset value is deducted from
the total life cycle cost in the
LCOE calculation.
System energy production
 First year energy generating
(kWh/kwp) then degrading
output over the system life
based on an annual
performance degradation rate
 n = the system’s financing term
(which will determine the
duration of cash flows)
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The PV Power Plant LCOE

Capital Capacity
Cost Factor

Capital Cost = Cost of

Capital
PV + BOS + Land +
Development costs

LCOE

13
Capital Cost Levers for PV Power Plants
 Panel cost
– Increase manufacturing scale
– Improve conversion efficiency
– Reduce material consumption
– Simplify manufacturing processes
 BOS cost
– Reduce materials through design
– Reduce materials through panel efficiency
– Reduce labor through design
– Reduce labor through panel efficiency
– Reduce skill required for construction
– Optimize supply chain
– Accelerate construction timelines

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 SunPower cell efficiency history

Gen 3
24.2% Note Gen 2 distribution is
25% Laboratory Prototyping Results tighter than Gen 1 distribution
Cell Efficiency (%)

Production median 23.4%

24%
Gen 2
23%
22.0% 22.4%

22% Gen 1
20.6%
21%
20.6%

20%

2003 2004 2005 2006 2007 2008 2009 2010

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© 2010 SunPower Corp.
 SunPower Efficiency/BOS Case Study: CVSR
 Most power plants are constrained
 SunPower maximizes MW/m2
 More MW/m2 lowers BOS/kWh
– Land
– Permitting/development
– Transmission/substation
– Foundations/structures
– Cabling/trenching
– Shipping
– Roads
Solar Array Open Space – Fencing/security
– Construction management
SPWR 14% x-Si 11% TF – O&M
250 MW 186 MW 146 MW

•Illustrative layout as of May 2010, subject to change

•Final project design may include std efficiency panels

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1.4GW - Fab 3: Production Begins Q4 2010

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 Oasis Evolution: Standard systems, lower cost, more features

2007 2010 2011

12 MW Nellis 19 MW Xcel 25+ MW

Feature T20 Gen 1 T20 Gen 2 Oasis 2011

Panel 225 W 400 W 425 W
Capacity per tracker 2.5 kWp 3.6 kWp 17.0 kWp
Pre-fabricated structure Yes Yes Yes
Advanced inverter functionality Yes Yes
Pre-fabricated electrical Yes
Turn-key AC power block Yes

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Oasis Power Blocks
Drive Standardization, Enable Whole System Component Sales

 1 MW Power Block = SKU

 Tracker blocks = standard units
- Configure to fit land boundary
- Smallest block = 300 kWdc
 Inverter/power electronics standard blocks

Oasis blocks rotate to fit land boundaries

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 Oasis Modular Power Plant Savings
Oasis 25% Balance-of-System Savings by Category
100%
9%
8%
80% 8%
Inverter, Cabling Electrical &
60% Tracker Structural
Design,
Components System
Overhead,
Optimization
Installation
40% Commissioning

20%

0%
2010 BOS Cost Standardization / Materials / Installation 2011 Oasis BOS
Volume Savings Design Savings Efficiency Cost
Savings

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 The PV Power Plant LCOE

Capital Capacity
Cost Factor

Cost of
Capital

Net Actual Generation

Capacity Factor =
Period Hours x
Net Maximum Capacity

LCOE

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 20%
40%
60%
80%

0%
100%
120%
12:00:00 AM
1:00:00 AM
2:00:00 AM
3:00:00 AM
4:00:00 AM
5:00:00 AM
6:00:00 AM
7:00:00 AM
8:00:00 AM
9:00:00 AM
10:00:00 AM
11:00:00 AM
12:00:00 PM
1:00:00 PM
2:00:00 PM
3:00:00 PM
4:00:00 PM
5:00:00 PM
6:00:00 PM
7:00:00 PM
8:00:00 PM
9:00:00 PM
10:00:00 PM
11:00:00 PM
Load
Peak CA
Summer

T0 Tracker - Mojave
Fixed Tilt CF - Mojave

Cal ISO Load 7/15/08

PV Power Plant Output vs. Utility Demand Curve

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Energy Performance & Capacity Factor

9% higher than Poly-Si

7% higher than Poly-Si

5% higher than HIT

CREST

Dept. of Energy
ASU* University of
(DOE)
Cypress / Stuttgart

Independent Sites
7% Higher than CdTe
SunPower Sites

Independent tests show that SunPower panels deliver the

highest capacity factors at sites around the world

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Capacity Factor over Time – Impact of Degradation

33.00%

31.00%

29.00%

25%
27.00%

Tracker @ 0.5%
25.00% Degradation

Fixed @ 0.8%
23.00% Degradation

40%
21.00%

19.00%

17.00%

15.00%
1 6 11 16 21 26 31 36

Simplified, illustrative annual PV power plant capacity factor over

time: fixed vs. tracking at 2 degradation rates

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 The PV Power Plant LCOE

Capital Capacity
Cost Factor

Cost of
Capital
Cost of Capital Drivers:
- Risk of energy production
- Risk of energy purchase

LCOE

25
Silicon PV Panels - 25 Years and Counting
C-Si PV Panel After 20 years of Outdoor Exposure
Total Degradation 4%

Extended Financing Term Yields Lower LCOE

E. Duniop, D.Halton, H.Ossenbrick, « 20 Years of Life and More: Where is the End of Life of a PV Module » IEEE Proeceedings, 2005, p.1595
A. Kimber, “Long Term Performance of 60MW of Installed Systems in the US, Europe, and Asia”, Proceedings of the 22 nd Annual Photovoltaic
Solar Energy Conference, Sept. 2007

26
SunPower Bankability: Module Reliability
SunPower v. 3th Party Power vs. Incoming inspection
100% Damp Heat Cycle Tests of 3rd party panel
showing micro cracks
80%

60%

40%

20%

0%
1000 2000 3000 4000 5000 6000 7000
SunPower Third Party 25 Yr Warranty

 SunPower tests modules to standards far exceeding industry norms

 Many “top tier” bankable PV suppliers do not pass SunPower’s
rigorous qualification test program
27
SunPower Bankability: Reliable System Energy Delivery
Actual vs. Expected Annual Production: 106.2% SPWR Operations Center

2005 2006 2007 2008 2009

Expected Energy Production Actual Energy Production

 SunPower has delivered >1 TWh solar energy: consistently exceeding

performance predictions
 SunPower received the first investment grade rating for a PV Power Plant bond
 Focus on bankability yields lower cost of money, 100bps = ~$0.30/Wp of ASP

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The PV Power Plant LCOE

Capital Capacity
Cost Factor

Cost of
Capital
LCOE Model
Sensitivities

LCOE

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LCOE Sensitivity: $/Wp and Capacity Factor

$4.00 / Wp $3.38 / Wp $3.00 / Wp $2.55 / Wp

SPWR Oasis 11% Fixed Tilt SPWR Oasis 11% Fixed Tilt

Sacramento
$0.170 $0.170 $0.130 $0.130
8.5% IRR

Total Life Cycle Cost Panel Cost + BOS Costs + NPV (O&M
LCOE = =
Costs)
NPV Energy Output NPV (kW x kWh/kW)

Note: Includes ITC, IRR is unlevered

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LCOE Sensitivity: Location and Cost of Capital

$4.00 / Wp $3.38 / Wp $3.00 / Wp $2.55 / Wp

SPWR Oasis 11% Fixed Tilt SPWR Oasis 11% Fixed Tilt

Sacramento
$0.170 $0.170 $0.130 $0.130
8.5% IRR

Mojave
$0.128 $0.131 $0.097 $0.100
7.5% IRR

Total Life Cycle Cost Panel Cost + BOS Costs + NPV (O&M
LCOE = =
Costs)
NPV Energy Output NPV (kW x kWh/kW)

Note: Includes ITC, IRR is unlevered

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SunPower
SunPowerLCOE
LCOEAdvantages
Advantages― 100GWh Plant*
SunPower 11% TF Fixed SunPower delivers
GWh/yr 100 100 the same GWh using
far fewer acres and
MW 37 46
less BOS leading to
Acres 191 351 lower O&M costs
Inverters 74 92

SunPower Thin Film

Note: Illustrative 100 GWh / year power plant, Phoenix, AZ

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SunPower
SunPowerLCOE
LCOEAdvantages
Advantages― 100GWh Plant*
SunPower 11% TF Fixed
GWh/yr 100 100
Total $ $200 MM $200 MM
$/Wp DC $4.37 $3.50

Economically equivalent LCOE to

customer

SunPower Thin Film

Note: Illustrative 100 GWh / year power plant, Phoenix, AZ

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Alamosa 19 MW: Xcel
Alamosa County, CO

34
Amherstburg Solar Farm, 20 MW
Ontario, Canada

35
Montalto 72 MW: Lazio, Italy
Largest Solar Power Plant (GWh)

36
9 MW in Progress
Alange, Spain

37
 First Systems in Greece
Crete

38
 First T0 Tracker in India
Hyderabad

39
…and we’re putting power plants
on rooftops too…

6MW T5 Installation for

Southen California Edison

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PV Power Plant LCOE Conclusions

 LCOE drivers: capital cost, cost of capital, system capacity factor

 Capital cost dominated by PV, BOS, and land development

– PV costs driven down per experience curve + technology
– BOS costs reduced by larger plant sizes, experience curve, and
higher panel efficiencies
– Land development costs lowered by panel efficiency and scale

 Capacity factor reduced with tracking systems

– Tracking also delivers more energy during peak demand periods

 Cost of capital is a function of the perceived risk by investors

– Proven technologies and performance lower cost of capital

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