Source: SunPower

Of all the renewable energy stocks that I cover, SunPower (NASDAQ:SPWR) is the only one I own in my portfolio. Over the next few years, I believe that it will prove itself to be one of the winners in the solar industry. The company's recent news regarding its entry into the Chinese market is one more reason why I'm confident in the company's success.

First time in China
With the government looking to add 14 GW of solar power capacity in 2014, China represents a major market opportunity for solar companies. In an attempt to gain market share here, SunPower recently announced a deal in which it will sell 70 MW of cell packages to joint-venture firm, Huaxia Concentrated Photovoltaic Power. The cell packages will be used in two concentrated photovoltaic, or CPV, projects, which are expected to be completed in 2015. Located in Mongolia, the C7 Tracker power plants, a 20 MW project and a 100 MW project, use parabolic mirrors, unlike the traditional flat, rectangular panels. According to the company, its C7 Tracker offers the lowest leveled cost of electricity, or LCOE, for utility-scale deployment. The company claims that a "400-MW C7 power plant requires less than 70 MW of SunPower cells."

SunPower does not foresee this as being its only endeavor in China but rather as what SunPower president and CEO Tom Werner calls "a first step in our aggressive efforts to break into the Chinese market." He adds, "Working together with our strong local partners, we believe that we can deploy significant volumes of our SunPower C7 Tracker power plants to help serve China's growing need for clean power."

If SunPower succeeds in developing a CPV system that seriously brings down the LCOE, it will be a significant threat to the success of another U.S. solar company looking to grab a share of the Chinese solar market. First Solar (NASDAQ:FSLR) took its first steps toward entering the Chinese market in 2009, when it announced its intent to develop a 2 GW solar project in Inner Mongolia. Development of the project never really took off, but Jim Hughes, First Solar's CEO, announced that the company has signed a memorandum of understanding with the city of Ordos in Mongolia. The company will be supplying the city with 300 MW to 500 MW of solar panels, and construction is expected to begin this year.

Concentrating on CPV
One of the company's highlights from the fourth quarter was the booking of its largest C7 project to date -- a 20 MW datacenter, which is scheduled to begin construction this year. Management contends that this is further evidence of its status as the "the market share leader in the U.S commercial business." This and the Chinese projects may very well be just the start of the company's efforts to profit from the CPV market. Although the CPV market is rather small now, industry research firm, GlobalData, expects the global market to rise dramatically in the next five years -- growing from 357.9 MW in 2014 to 1,043.96 MW by 2020.

Around the world
The company has made progress in 2013 diversifying in global markets. In 2012, of the company's total revenue, EMEA accounted for 18.7% and APAC accounted for 8.8%, whereas in 2013, although EMEA dropped to 17.3%, APAC grew to 15.6%. Illustrating the importance of global diversification, management commented on the company's outlook for 2014 as "extremely strong" with "a very balanced portfolio across the world." Management expects that half of its revenue will come from foreign markets.

Foolish final take
In 2013, SunPower successfully diversified its operations in global markets, and this latest deal in China proves that the company is intent on furthering its diversification. The deal also reaffirms my opinion that the company is poised to profit nicely from the growing adoption of solar power, both in the U.S., and around the world.

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Scott Levine owns shares of SunPower. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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