First Solar, Inc.
) has installed its 10 millionth solar photovoltaic ("PV") module
at the 550 megawatt ("MW") AC Desert Sunlight Solar Farm. This
solar project is being constructed by First Solar for NextEra
Energy Resources, a subsidiary of
NextEra Energy, Inc.
) and GE Energy Financial Services, a unit of
General Electric Company
The project is located 35 miles west of Blythe and six miles
north of Desert Center in the Chuckwalla Valley on approximately
3,800 acres of land. It was sold to NextEra Energy and GE Energy
Financial Services in September 2011. Both had acquired the project
in a 50-50 partnership. However, First Solar will continue to build
and subsequently operate and maintain the project.
Per two long-term power purchase agreements, of the 550 MW of
solar power generated, 300 MW will be sold to Pacific Gas and
Electric Company, a subsidiary of
) and the remaining 250 MW of energy will be sold to Southern
California Edison, a subsidiary of
The project is a part of First Solar's 2.7 gigawatt ("GW")
utility-scale solar pipeline projects in North America that will
continue to create construction jobs over the next several years.
During its construction period, the Desert project will create 400
The project will also help California in meeting its target of
generating 33% of its power from renewable sources by 2020. The
project would power approximately 160,000 California homes and
remove 300,000 metric tons of greenhouse gas emissions per year,
which is equivalent to taking 60,000 cars off the road. It will
generate $27 million in sales and property tax revenue. Moreover,
the project will contribute $336 million as total indirect local
First Solar has produced almost 80 million advanced thin-film
solar modules. These modules are sufficient to generate 6 GW of
energy, power 3 million homes and remove more than 4 million tons
of Co2 per year.
Besides supplying modules, First Solar is busy building solar
power projects. Once completed, in 2015, the Desert project will be
one of the two largest PV solar projects in the world. Another 550
MW project called Topaz is under construction in San Luis Obispo
County by the company's Engineering, Procurement and Construction
Based in Phoenix, Arizona, First Solar Inc. designs,
manufactures, and sells solar electric power modules using a
proprietary thin film semiconductor technology. As of December 31,
2011, the company had an annual global manufacturing capacity of
approximately 2.4 GW at its three manufacturing plants. Overall,
the company expects to increase its manufacturing capacity by
fiscal-end 2012 to approximately 2.5 GW. However, solar module
producers, across the board, are experiencing a steep decline in
Average Selling Prices. Also, the current macro scenario does not
bode well for the solar industry, which thrives mainly on subsidies
However, in order to counter the weak trend, the company is
focusing more on utility-scale electricity power projects.
Moreover, the decline in margins will be compensated by a broader
geographic revenue base, technological enhancements and cost
minimization. The company presently retains a short-term Zacks #3
Rank (Hold) that corresponds with our long-term Neutral
recommendation on the stock.
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