SunPower: Mr. Heat Miser?

With competition among solar installers in California as fierce as ever, Kauffman said, the high price SunPower charges for its panels has forced dealers to sacrifice their own profit margins in order to make competitive bids.

"Their business model is to throw solar modules out there and let dealers fight amongst themselves. And our margins have shrunk because the only way to win the competition is by drastically reducing cost, and we keep getting undercut, and that devalues my company," Kauffman said, adding that most of the dealers with whom he talks feel the same way.

On SunPower's earnings conference call earlier in May, Robert W. Baird analyst Michal Horwitz asked management why the PowerPoint slide showing SunPower dealers' gross margins never changed from quarter to quarter.

"It's interesting that we never see much change going on in the dealer margin ... in terms of the benefit to the dealer to maintain their position in the market," the Baird analyst said.

SunPower chief Tom Werner responded that his company's dealer partners would "not react favorably if we forecast their margins for them." He added, "There are more dealers and a more competitive environment and that will influence margins, and that's the last thing I will say about dealer margins."

James Pape, president of SunPower's residential and commercial segment, jumped in when Werner asked him to take a crack at answering. "As the market matures, expectations by dealers and by each job compress on margins, as the industry maturity is passed across the planet."

But those responses don't satisfy NextEnergy's Kauffman, who says he's steering more business away from SunPower, and looking to work more with solar-module companies in China.

"Chinese manufacturers are motivated to help and get into this market, and we are open to making new relationships because of SunPower's arrogance," Kauffman said. "Why should I give my margin to SunPower?"

Click here for SunPower: Has it Become a Heat Miser? (Part 2)

-Reported by Eric Rosenbaum in New York.

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