First Solar Inc. (FSLR) has signed a contract with PNM Resources Inc. (PNM) to build 22 MW photovoltaic solar power plants in New Mexico. PNM Resources has to add 45 MW of utility-scale solar Photovoltaic capacity by 2011 in terms of its commitment to New Mexico’s environmental, renewable energy and governmental organizations. First Solar expects to complete construction of the project by late 2011.
PNM is a subsidiary of PNM Resources, an energy holding company based in Albuquerque, New Mexico. PNM provides electric utility services to about 500,000 retail customers in New Mexico.
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. 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 in the United States.
First Solar enjoys a distinct cost advantage over its peers due its reliance on low-cost thin-film cells. However, the advantage is ebbing away due to falling polysilicon prices. First Solar’s growth potential and that of the solar industry in the aggregate requires a prudent long-term focus on technological advancements, capacity build-out and cost minimization. Balancing all the three aspects would be an uphill task. We maintain our market Neutral recommendation on the shares.
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