First Solar Inc. (FSLR) has signed a power purchase agreement with Edison International’s (EIX) regulated subsidiary Southern California Edison (SCE) for 250 Megawatts of Solar Photovoltaic Power.
Per the agreement First Solar will develop the project titled Silver State South near Primm, Nevada. The project will interconnect with SCE’s proposed Eldorado-Ivanpah 220-kilovolt transmission line. First Solar expects the project to begin producing electricity in 2014.
Based in Phoenix, Arizona, First Solar designs, manufactures solar electric power modules using a proprietary thin film semiconductor technology and sells them too. The company’s solar modules employ a thin layer of cadmium telluride semiconductor material to convert sunlight into electricity.
First Solar designs and manufactures solar modules using a proprietary thin-film-semiconductor technology, which allows it to reduce its average solar module manufacturing costs to one of the lowest in the world.
At the end of the first nine months of 2010, First Solar’s average manufacturing cost amounted to $0.77 per watt; this is significantly lower than that incurred for traditional crystalline silicon solar modules. However, the advantage is dwindling fast with falling polysilicon prices.
First Solar will benefit from the steady recovery in the economy as well as favorable legislations supporting PV installations. The company is focused on capacity build-outs, technological enhancements and cost minimization. The technological superiority that it enjoys over its silicon-based solar peers is quite commendable.
However, its short-term growth may be partially hampered by the volatile euro, apprehension over reduction in German subsidies, falling crystalline silicon prices and the overproduction of modules.
Also competition in the industry is becoming tougher by the day for U.S. solar players such as First Solar, which has a huge German exposure that affects its top line compared to Suntech Power Holdings Company Ltd (STP), 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.
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