sunpowerSunPower*, one of the world’s largest solar module manufacturers and developers, as well as the solar efficiency leader for commercial solar cells and solar modules, recently announced that it was¬†starting construction on a 135-megawatt California solar power plant, the Quinto Solar Project in Merced County.

The solar power plant will be owned and operated by SunPower while it is being constructed, and it is part of a holdco strategy SunPower is heading into.

A holdco (aka holding company) is “a firm that is established in order to exercise control over one or more other firms. This is accomplished through the acquisition of stock that is sufficient to control or influence voting. The holding company earns money by collecting the dividends from the shares of firms in which it owns a controlling interest.”

“This strategy allows SunPower to realize the return on investment from the leading power-producing performance of our technology, and reduces the risk to potential buyers if we decide to sell the operational plant,” SunPower President and CEO Tom Werner says.

The Quinto Solar Project will provide electricity to Southern California Edison customers under a long-term power purchase agreement (PPA), enough for ~40,000 homes. The power plant will create ~295 local jobs and $80 million of local economic activity, SunPower projects. Furthermore, approximately $5 million of tax revenues.

Getting back to SunPower’s holdco strategy, the company writes:

“Including the Quinto power plant, SunPower has more than 500 megawatts of residential, commercial and utility solar assets under contract around the world that it may choose to own for a period of time before a strategic sale or continue ownership post-construction during the operational phase of the project. Under this holdco strategy, SunPower expects to improve project margins and drive higher shareholder returns by capturing the material benefit of its lower system degradation rates, long term project life as well as benefitting from distributions from the project as an equity owner.”

*Full Disclosure: I own stock in SunPower.