SUNPOWER 2014 ANNUAL REPORT SUNPOWER 2014 CORPORATE HEADQUARTERS www.sunpower.com SunPower Corporation 2014 77 Rio Robles ANNUAL REPORT San Jose, Calif. 95134 USA 408.240.5500 Laurent Zylberman / Total EXECUTIVE OFFICERS Thomas H. Werner President, CEO and BOARD OF DIRECTORS Chairman of the Board Lisa Bodensteiner Thomas H. Werner Executive Vice President Chairman of the Board and General Counsel Arnaud Chaperon Charles D. Boynton Director Executive Vice President Bernard Clement and Chief Financial Officer Director Eric Branderiz Denis Giorno Senior Vice President, Changing the Way Our World Director Corporate Controller and is Powered – for 30 Years Chief Accounting Officer Catherine Lesjak Director Marty T. Neese SunPower has been leading the solar revolution by developing Chief Operating Officer Thomas R. McDaniel Director world record-breaking technology, enabling consumers, businesses, Douglas J. Richards governments and utilities worldwide to harness the benefits of clean, Executive Vice President, Jean-Marc Otero del Val Administration Director abundant power from the sun. Through design, manufacturing and installation, as well as ongoing maintenance and monitoring, we Howard Wenger Humbert de Wendel provide our customers with cutting-edge, leading solar technology President, Business Units Director and Smart Energy solutions. Pat Wood III Director Founded in 1985 and headquartered in San Jose, California, the company operates in Africa, Asia, Australia, Europe, North America, and South America. Since 2011, SunPower has been majority-owned by Total, the fourth largest publicly-traded energy company. SunPower is approximately 7,000 talented team members strong, SunPower provides who feel compelled to make a difference. We passionately believe clean energy through residential, commercial that our company’s achievements – and our individual contributions and power plant – are making the world a better place. We are driven to innovate, installations worldwide. persevere, blaze new trails, and deliver on our promises. We are changing the way our world is powered and empowering customers to realize the potential of clean, renewable solar energy. Dear Shareholders: In 2015, SunPower is celebrating three decades of changing the way our world is powered. A lot has happened since our beginning but one constant is our innovative, leading solar technology. It has always been the basis for our solar solutions that have helped our residential, commercial and utility customers around the world tap into the abundance of the sun to power their lives. We’re proud of our experience, which informs how we innovate to serve our customers’ evolving energy needs. Our customers are at the core of everything we do. We made significant progress during the past year, focusing on three key strategic areas, all of which move us forward for the long-term: Continuing to innovate and scale our unique, differentiated solar cell and panel technology; Transitioning our residential and commercial business toward total energy solutions and services; and Broadening the international reach of our power plant business. We did all this while meeting our financial goals, prudently managing our cash and finishing the year with a strong balance sheet. We’re off to a strong start this year, having announced plans for 8point3 Energy Partners, our proposed YieldCo vehicle with First Solar. We expect this strategic joint venture will drive long-term value for our shareholders by providing us with a sustainable competitive advantage through lower cost of capital, improved visibility, stronger balance sheets and attractive financing options for existing and future project sales. Innovating, Scaling Our Solar Technology As the premium solar brand, SunPower has consistently anticipated customer demand and market trends through innovation. We continued to diversify our product offerings and transition our business from solar systems to comprehensive energy solutions. We made several key acquisitions and investments in the field of energy management and storage technologies, giving our customers the ability to control their energy usage and costs. We call this “Smart Energy.” We also acquired a differentiating micro-inverter technology that has already been installed on 200,000 homes. This new plug-and-play technology means we can offer a single, easy- to-install solar panel that contains more of the complete system functionality. It includes conduit, grounding, string inverters and meter, greatly simplifying the design and engineering processes and driving down manufacturing costs. Most importantly, we focused our innovation on the way we engage with our customers. We launched a new, customer facing portal and we also acquired a customer relationship management software platform. Called Spectrum, this platform is now the enterprise backbone serving both our indirect and direct sales channels, and our customers. Through it, our dealer network can, with just a few clicks, access an automated design and quoting system. Customers can also leverage Spectrum to authorize and monitor the construction of their solar projects, and then visualize – via any convenient mobile device – the completed solar power system’s performance and cost savings. Through these hardware and software innovations, SunPower has made the reduction of our customers’ cost of energy our top priority. Keeping Up With Demand, Increased Capacity To keep pace with an ever-increasing global demand for our energy products and services, we took aggressive steps to expand our manufacturing capacity while streamlining our manufacturing processes. We are retrofitting our Philippines-based Fab 1 into Fab 4, where we will begin production of up to 350 megawatts (MW) of SunPower X-Series Solar Panels this year. We also announced plans for a new solar panel manufacturing facility in Cape Town, South Africa, where we plan to produce up to 160 MW of our SunPower E20 Solar Panels. Additionally, we made strong inroads in defining our NextGen manufacturing process. We expect this will dramatically simplify the way we make our cells and panels, allowing us to continue to make solid progress on our cost-reduction roadmap. Our team reached a tremendous accomplishment last September when we manufactured our one-billionth high efficiency solar cell. By the end of this year, our Fabs are expected to generate a total of more than 1,500 MW per year of solar cells. Affirming our commitment to manufacturing our products in the most earth-friendly manner possible, we were thrilled that our SunPower® E-Series Solar Panel and SunPower® X-Series Solar Panel received the Cradle to Cradle Certified™ Silver distinction. Awarded by the Cradle to Cradle Products Innovation Institute, this citation was presented in recognition of the sustainable manufacturing processes implemented at our Mexicali, Mexico manufacturing plant. Our products were the first solar offerings to be so honored. We’re aggressively pursuing the same industry-leading efficiency in our operations and resource management that we have pioneered with our solar panels. We want to design and produce the world’s cleanest, most eco-friendly power plants and energy solutions. Unprecedented Efficiency Our history of technology leadership continued with the lab-scale production of our first 25 percent efficient solar cells. We’re proud of our track record to better ourselves on efficiency and we’re even prouder in our ability to take our high efficiency cells from the lab to market at mass-production scale. SunPower solar technologies proved to be ideally suited for many new markets in desert climates such as the Southwestern United States and the Middle East. TUV Rheinland, an independent research and testing company based in Cologne, Germany, confirmed that our photovoltaic (PV) modules, system components and mounting structures passed their rigorous sand abrasion test specifications. We were the first solar manufacturer to successfully pass this new testing criteria. Distributed Generation to Meet Customer Needs We continued to see strong momentum in our distributed generation (DG) business, which comprises our residential and commercial channels. We are well-positioned to take advantage of this fast-growing market based on our market leading high efficiency solar panels. Our DG business is based on four fundamental strategies: Ensuring that we continue to have differentiated, high efficiency panel technology; Offering comprehensive PV solar solutions; Connecting and managing our sales channel with a complete digital solution; and Delivering a Smart Energy platform that gives our customers greater control over the way they buy, when they use and how they use energy. Our high efficiency solar technology enables SunPower panels to deliver 70 percent more lifetime energy than competing rooftop systems of the same size, enhancing customer value. As mentioned previously, we made several strategic investments in integrated technology solutions that will help our customers manage the way they use energy. We reached an exclusive agreement with Sunverge for residential energy storage solutions in the United States and Australia, with our combined solar and storage solutions scheduled for commercial availability this year. Additionally, we licensed Tendril’s Energy Services Management (ESM) software, which will help us develop a range of new Smart Energy applications for a broader set of consumers and utilities. Our acquisition of SolarBridge, a leader in micro-inverter technologies,