Global solar product manufacturer,
FirstSolar Inc
. (
FSLR
) announced its plans to build four solar plants for New
Mexico-based utility company,
PNM Resources, Inc
. (
PNM
). The aggregate capacity generation from these plants will be
around 20 Megawatts ("MW"). The solar plants are expected to come
online by the end of 2013 subject to approval by the New Mexico
Public Regulation Commission. The regulatory ruling is anticipated
to come by the fourth quarter 2012.
Per the agreement, FirstSolar will deliver engineering,
construction and procurement facilities to PNM Resources. It will
use its high-tech thin-film photovoltaic modules for the solar
farms. These solar plants will provide clean power to about 7000
homes in New Mexico. Besides the current endeavor, FirstSolar had
already completed five projects, aggregating 22 MW, for PNM
Resources in 2011.
We believe this energy project will enable customers in New
Mexico to benefit from clean and reliable solar electricity in the
coming years. In addition, with the current depressed macroeconomic
environment in the U.S., this solar project would come as a
blessing as it is expected to create 450 construction jobs.
With increasing preference for renewable energy, this
pro-environment venture by FirstSolar will certainly bode well for
the company's position in the global market. Although lower average
selling prices are limiting growth, we anticipate the company's
hardened focus on electricity power projects will counter this weak
trend.
Also, the cost of operating the solar plants could be lowered if
the solar panels used to generate energy have high conversion
rates. FirstSolar is heavily investing in its research and
development wing to achieve increasing conversion rates.
FirstSolar, during the second quarter 2012, entered into a power
purchase agreement with Pacific Gas and Electric Company
(PG&E), a subsidiary of
PG&E Corporation
(
PCG
), to sell 72 MW of electricity from its solar photovoltaic power
plants currently under development in California.
Prospects from the Agua Caliente project in Yuma County,
Arizona, also look encouraging as it has accomplished a peak
generating capacity of 250 MW. The series of renewable investments
will fetch lucrative returns for FirstSolar in the long run.
The company also invaded the prime Asian market of India where
it has made a joint pact with Green Infra Limited for the supply of
solar modules for a 25 MW project.
The company's closest peer,
SunPower Corporation
(
SPWR
) recently entered into an agreement with PG&E to supply
100-megawatt power from its Henrietta Solar Project.
First Solar expects pro forma earnings per share in the range of
$4.20-$4.70 for 2012. The Zacks Consensus Estimates for the third
quarter and full-year 2012 currently stand at $1.10 per share and
$4.47 per share, respectively.
FirstSolar presently has a Zacks #2 Rank (Buy Rating). Based in
Tempe, Arizona, FirstSolar engages in the design, manufacture and
sale of solar modules in the United States and internationally.
FIRST SOLAR INC (FSLR): Free Stock Analysis
Report
PG&E CORP (PCG): Free Stock Analysis Report
PNM RESOURCES (PNM): Free Stock Analysis Report
SUNPOWER CORP-A (SPWR): Free Stock Analysis
Report
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