First Solar, Inc.
) has stopped panel deliveries to the 290 MW Agua Caliente Solar
Project, which is world's largest solar photovoltaic project
currently under construction in Yuma County, Arizona.
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Till January 2012, the company will neither ship additional modules
nor will install panels at the project as the project is moving
ahead of schedule and has to be held up to meet other contractual
needs. Earlier this year, the company has speed up its construction
to use the panels it produced, but as the project is 85% complete,
it has stopped using the panels for the project. Therefore, the
company intends to divert its shipments to other projects that had
been neglected this year.
The plant is owned by
NRG Energy Inc.
) and MidAmerican Energy Holdings Co. In August 2011, NRG had
completed the acquisition of the project from First Solar. In the
same month, the company received 967 million loan guarantee from
the U.S Energy Department. Later in January 2012, MidAmerican
Energy Holdings acquired 49.0% interest in the project from NRG
Energy. Under a 25-year agreement, the energy generated from the
project will be sold to Pacific Gas and Electric Company, a
The $1.8 billion project is scheduled to be completed by 2013 and
is expected to create 400 construction jobs and 10 permanent
positions. When fully operational, the project will offset
approximately 5.5 million metric tons of CO2 over 25 years, which
is equivalent of taking over 40,000 cars off the road annually
serving more than 225,000 homes.
As a result of the pause on the deliveries, the price of the
company's shares fell sharply by 18.7% to $19.67.
First Solar Inc. 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
Currently, the solar industry is experiencing a steep drop in
Average Selling Prices. Also, the current macro scenario does not
bode well for the solar industry, which thrives mainly on subsidies
and grants. However, First Solar stands out among the pack due to
its stable liquidity position, which is in sharp contrast to its
cash-strapped peers. Moreover, in order to counter the weak trend,
the company is focusing more on utility-scale electricity power
projects. It is partially compensating for its drop in margins
through a major restructuring of its operations.
Recently, First Solar posted second-quarter 2012 results with pro
forma earnings per share of $1.52, outshining the Zacks Consensus
Estimate of $0.89 per share and year-ago figure of $0.70 per share.
The company presently retains a short-term Zacks #2 Rank (Buy)