SunPower, NorSun sign mutual supply agreements

San Jose, Calif.-based SunPower (Nasdaq: SPWR) said today it signed mutual supply agreements with Oslo's NorSun.

SunPower, which makes solar cells, plans to purchase silicon in ingot and potentially wafer form from NorSun for up to two gigawatts of solar cell production.

"By securing a large, long-term source of raw material, SunPower expects to achieve economies of scale that will contribute to our goal to reduce installed solar system costs by 50 percent by 2012," said PM Pai, chief operations officer at SunPower.

Under the second agreement, NorSun will buy polysilicon from SunPower at fixed annual volumes and prices.

"The NorSun agreements link our existing long-term polysilicon supply agreements and the expansion of our high-efficiency solar cell production at Fab 2 and Fab 3," said PM Pai.

SunPower opened its second solar cell fabrication facility in July, known as Fab 2, in the Philippines. The company said Fab 2 will have an annual capacity of 330 megawatts when it gets fully online.

The new facility is nearly 463,000 square feet, twice as large as the company's Fab 1, also in the Philippines.

Also in July, SunPower announced a 10-year silicon supply agreement with Hemlock Semiconductor of Michigan (see SunPower flat on silicon supply deal).

Financial terms of the contracts were not disclosed, but SunPower said NorSun will provide cash advance payments for the polysilicon.

Delivery is expected to begin in 2007 under both deals, continuing through 2019.

NorSun, founded in December 2005, is constructing its first factory in Årdal, with production planned for the start of 2008.

The producer of mono crystalline ingots and wafers said the factory will have initial capacity of 130 MW.

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