SunPower: Pipeline Smarts or Speculation?

SAN JOSE, Calif. (TheStreet) -- SunPower(SPWRA) is up more than 5% on Thursday -- the biggest rally for the U.S. solar player in some time -- after acquiring a pipeline of 1.2 gigawatts (GW) in solar projects from European company SunRay Renewable Energy.

SunPower is paying $235 million of the $277 million acquisition price for the 1.2 GW of solar projects in cash. It's a deal that is smaller than, but similar in strategy to, First Solar's(FSLR) $400 million acquisition of a 2 GW project pipeline from Canadian solar company OptiSolar in March of last year.

On paper, both the First Solar and SunPower deals make sense, allowing the U.S. solar leaders to diversify into more markets and at the level of large-scale projects. The First Solar deal was focused on utility scale projects in the U.S., while the SunPower deal provides it access to SunRay's pipeline in Italy, France, Greece, Israel, Spain and the U.K.

At a time when the largest solar market, Germany, is getting set to slash its support for solar, most significantly for large-scale projects, the entire solar sector is at work on moving their projects around the global chessboard of capacity.

What's more, in theory the deals allow First Solar and SunPower to leverage their existing capabilities in executing on large-scale solar projects.

However, First Solar has already run into many hurdles with the OptiSolar project pipeline. Some of the biggest projects in the First Solar pipeline face serious delays, as documented by Wedbush Securities analyst Christine Hersey. First Solar has already, in effect, converted at least a portion of the cash used for the acquisition of the OptiSolar pipeline into projects that may never see the light of day, or a drop of desert sunshine.

SunPower may have received a big boost on Thursday from the general solar rally, after JA Solar's(JASO) earnings during the pre-market made a bullish call for solar in 2010 -- First Solar was up over 4%.