First Solar, Inc. (FSLR) has stopped panel deliveries to the 290 MW Agua Caliente Solar Project, which is world’s largest solar photovoltaic project currently under construction in Yuma County, Arizona.

Till January 2012, the company will neither ship additional modules nor will install panels at the project as the project is moving ahead of schedule and has to be held up to meet other contractual needs. Earlier this year, the company has speed up its construction to use the panels it produced, but as the project is 85% complete, it has stopped using the panels for the project. Therefore, the company intends to divert its shipments to other projects that had been neglected this year.

The plant is owned by NRG Energy Inc. (NRG) and MidAmerican Energy Holdings Co. In August 2011, NRG had completed the acquisition of the project from First Solar. In the same month, the company received 967 million loan guarantee from the U.S Energy Department. Later in January 2012, MidAmerican Energy Holdings acquired 49.0% interest in the project from NRG Energy. Under a 25-year agreement, the energy generated from the project will be sold to Pacific Gas and Electric Company, a subsidiary of PG&E Corporation (PCG).

The $1.8 billion project is scheduled to be completed by 2013 and is expected to create 400 construction jobs and 10 permanent positions. When fully operational, the project will offset approximately 5.5 million metric tons of CO2 over 25 years, which is equivalent of taking over 40,000 cars off the road annually serving more than 225,000 homes.

As a result of the pause on the deliveries, the price of the company’s shares fell sharply by 18.7% to $19.67.

First Solar Inc. designs, manufactures, and sells solar electric power modules using a proprietary thin film semiconductor technology. The company’s solar modules employ a thin layer of cadmium telluride semiconductor material to convert sunlight into electricity. It sells its products to project developers, system integrators, and operators of renewable energy projects, primarily in Europe with a distinct focus on Germany. First Solar also focuses on designing and deploying commercial solar projects for utilities.

Currently, the solar industry is experiencing a steep drop in Average Selling Prices. Also, the current macro scenario does not bode well for the solar industry, which thrives mainly on subsidies and grants. However, First Solar stands out among the pack due to its stable liquidity position, which is in sharp contrast to its cash-strapped peers. Moreover, in order to counter the weak trend, the company is focusing more on utility-scale electricity power projects. It is partially compensating for its drop in margins through a major restructuring of its operations.

Recently, First Solar posted second-quarter 2012 results with pro forma earnings per share of $1.52, outshining the Zacks Consensus Estimate of $0.89 per share and year-ago figure of $0.70 per share.

The company presently retains a short-term Zacks #2 Rank (Buy) rating.

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