Question-and-Answer Session
Operator
Your first question comes from Steve O'Rourke – Deutsche Bank.
Steve O'Rourke – Deutsche Bank
Tom, you mentioned in your prepared remarks that with greater visibility you can site expansions more aggressively. What do you mean by greater visibility? Is it just silicon or is there more to it than that?
Tom Werner
Steve, what I'm referring to there is the channel strategy that we embarked on when we acquired PowerLight was to have a direct touch to the customer in the commercial and public sectors, as well as power plants. Of course, in new production homes we install turnkey, and legacy SunPower was developing a premium dealer network. So those channel strategies are starting to mature and we are better connected with direct end market demand.
We have a better sense of where we excel and the size of that demand. Because of the ability to tie what we can learn from the field directly into internal capacity, we can have greater confidence that we are not reacting to signals that perhaps would be buffered by a step in between us; again, since we touch the end customer.
The reference there was that we have better visibility into the channel because of our channel strategies that we started out on about six or nine months ago.
Steve O'Rourke – Deutsche Bank
You talk about a 30% power output boost from a tracking system. What is the cost per kilowatt hour improvement rather than the power output improvement? Because there's some cost tradeoffs there too, right?
Tom Werner
Howard, I will look to you to give me a little bit of help here. Just let me elaborate briefly. The idea, of course, is to have the panel-oriented to the sun in an optimum position and you can do that by essentially tracking the sun through as it goes from east to west.
The key, of course, is to do that economically and produce more energy; but then, of course, you have to do that without adding a lot of costs.
Howard, can you give us an estimate of the cost per kilowatt hour?
Steve O'Rourke – Deutsche Bank
Just a percent improvement if you have it.
Howard Wenger
The percent improvement depends on the climate, so the clearer the climate, the better improvement you have of tracking. So in most of our target markets where we are using our trackers, we are getting an improvement on the order up from 8% to 15%.
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