First Solar Inc.
(
FSLR
) announced that billionaire investor Warren Buffet's MidAmerican
Energy Holdings Company has entered into a definitive agreement to
acquire its Topaz Solar Farm.
The transaction is a win-win situation for both the parties
since with the Topaz deal First Solar is able to clear its house
with all the big four U.S. based utility solar projects under sale.
The other three big ticket projects include the 660-megawatt Desert
Sunlight project in California vended to
NextEra Energy Resources
(
NEE
) and
General Electric
(
GE
); the 348-megawatt Agua Caliente project in Arizona sold to
NRG Energy Inc.
(
NRG
); and the 280-megawatt Antelope Valley project in Nebraska sold to
Exelon Generation
(
EXC
).
On the other hand the buyer of the Topaz project would be able
to qualify for the U.S. Treasury grant rebate program. For solar
installations, the grant is equal to 30% of the system's cost and
the owner will get this amount regardless of their earnings and tax
bill. The move to acquire the Topaz project by MidAmerican Energy
Holdings is a smart move as the 30% grant would be locked in before
its expiry by the end of fiscal 2011.
The 550-megawatt Topaz project, under construction in San Luis
Obispo County, California, will have the capacity to generate
enough renewable energy to power about 160,000 average Californian
homes. The companies did not disclose the financial details of the
deal.
The project, in June 2011, was the fore runner in receiving a
$1.9 billion loan from the U.S. Department of Energy to cover part
of the financing. Though it announced in September that it was
unable to qualify for the loan, it was still keen upon pursuing the
project.
The Topaz project worth more than $2 billion is one of the
largest PhotoVoltaic endeavors in the world. Construction began in
November 2011 and is expected to be complete by early 2015. The
project will create about 400 construction jobs and 15 ongoing
operations and maintenance jobs.
Pacific Gas and Electric Company
(
PCG
) will purchase the electricity from Topaz under a 25-year power
purchase agreement.
First Solar, the largest stand-alone solar module manufacturer
in terms of market capitalization, will benefit greatly from the
steady economic recovery as well as favorable legislations
supporting PV installations. The company's project pipeline
currently stands at an impressive 3.2 GW.
First Solar manufactures solar modules with an advanced
semiconductor technology and is a premier provider of comprehensive
PV system solutions. The company is delivering an economically and
environmentally viable alternative to fossil fuel.
From raw material sourcing through end-of-life collection and
recycling, First Solar is focused on creating value-driven
renewable energy solutions that protect and enhance the
environment.
Moreover, by virtue of its diversified revenue exposure,
technological enhancements and cost minimization, the company has a
distinct edge over its competitors. Through cadmium telluride-based
solar modules, the company offers a differentiated technology
versus its silicon-based peers.
However, First Solar's short-term growth may be partially
hampered by the volatile euro, apprehension over reduction in
German subsidies, falling crystalline silicon prices and the
modules' glut in the market. The company presently retains a
short-term Zacks #5 Rank (Strong Sell). Over the longer run we
however maintain our long-term Neutral recommendation on the
stock.
EXELON CORP (
EXC
): Free Stock Analysis Report
FIRST SOLAR INC (
FSLR
): Free Stock Analysis Report
GENL ELECTRIC (
GE
): Free Stock Analysis Report
NEXTERA ENERGY (
NEE
): Free Stock Analysis Report
NRG ENERGY INC (
NRG
): Free Stock Analysis Report
PG&E CORP (PCG): Free Stock Analysis Report
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