First Solar Inc. (FSLR) completed the acquisition of solar development firm NextLight Renewable Power LLC, from private equity firm Energy Capital Partners. First Solar acquired NextLight in an all-cash transaction valued at approximately $297 million.
 
First Solar through the acquisition at one fell swoop increased its power purchase agreement to 2.2 GW for utility-scale solar projects in North America. The transaction represents another strategic step in the company’s expansion in the U.S. utility-scale power market, which began in 2007 with the acquisition of Turner Renewable Energy. Subsequently, the company acquired the ongoing solar projects from OptiSolar in 2009 and Edison International (EIX) in 2010.
 
The first project of NextLight that is expected to start construction is the 290 MW Agua Caliente Solar Project in Yuma County, Arizona. The California Public Utilities Commission in June 2010 approved the project’s power purchase agreement with Pacific Gas and Electric Company (PCG).
 
Based in Phoenix, Arizona, First Solar 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.
 
First Solar enjoys a distinct cost advantage over its peers due to its reliance on low cost thin-film cells. However, the advantage is ebbing fast due to falling polysilicon prices. First Solar’s growth potential and that of the solar industry on the whole requires a prudent long-term focus on technological enhancements, capacity build-out and cost minimization. Balancing all the three aspects would pose a significant challenge.
 
Competition in the industry is becoming tougher by the day for U.S. solar players such as, First Solar, who have a huge German exposure in their top line compared with Suntech Power Holdings Company Ltd. (STP), SunPower Corporation (SPWRA) and ReneSola Ltd. (SOL) whose markets are more diversified.
 
We currently have a market Neutral recommendation on the Zacks #3 Rank (‘Hold’) First Solar stock.
Read the full analyst report on “FSLR”
Read the full analyst report on “EIX”
Read the full analyst report on “PCG”
Read the full analyst report on “STP”
Read the full analyst report on “SPWRA”
Read the full analyst report on “SOL”
Zacks Investment Research