First Solar, Inc.
) has completed the acquisition of Solar Gen 2 power project from
a subsidiary of
The Goldman Sachs Group, Inc.
), Energy Power Partners and a third equity partner for the
project. The financial terms of the transaction were not
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As a part of the transaction, First Solar will also get hold of
40 megawatt of direct current (MWDC) of solar modules purchased
earlier for the solar photovoltaic ("PV") plant from another
supplier. Following the transaction, First Solar will supply the
remaining modules for the plant and provide project development,
engineering, procurement and construction, and grid integration
Located in Imperial County, Calif., near El Centro, the solar
power project has an electric generation capacity of 150-megawatt
alternating current (MWAC). It will generate sufficient
electricity to power more than 60,000 average Calif. homes. It
will displace more than 115,000 metric tons of CO2 on an annual
basis which is equal to eradicating 22,000 cars off the road.
Moreover, this project will save 93,000 metric tons of water
Under a 25-year agreement, San Diego Gas & Electric Company
(SDG&E), a subsidiary of
), will purchase all the electricity generated from the project.
This will help Sempra in meeting its renewable portfolio standard
requirement that calls for generating 33.0% of renewable power by
Besides being eco-friendly, the project also fulfills its
corporate social responsibility well. Solar Gen 2 is expected to
create more than 800 construction jobs in Imperial County on an
average. Currently, the region is suffering from high
unemployment. The company expects the construction of the solar
PV plant to begin in 2013 and complete in 2014.
First Solar is a leading global provider of comprehensive PV
solar systems. The company designs, manufactures, and sells solar
electric power modules using a proprietary thin film
semiconductor technology. First Solar makes cadmium telluride
glass substrate-based thin film PV panels. Unlike silicon-based
solar cell manufacturers who produce crystalline silicon PV
cells, First Solar makes thin-film PV panels on glass substrates.
Currently, the company is working on a major restructuring plan
to counter the continuous drop in margins. The fall in margins
came in the wake of a precipitous drop in Average Selling Prices
due to a supply glut in the market. We also remain concerned
about the current macro scenario which does not bode well for
solar energy producers who thrive mainly on subsidies and grants.
The company presently retains a short-term Zacks Rank #3 (Hold).
In the near term, we would advise investors to accumulate its
short-term Zacks Rank #2 (Buy) peer
Canadian Solar Inc.