General Electric Company
) has recently extended its technical collaboration with
specialized semiconductor manufacturer
First Solar, Inc.
) to develop state-of-the-art utility-scale PV (photovoltaic)
power plant design. The strategic tie-up with an industry
behemoth like General Electric boosted the confidence of First
Solar shareholders with the shares jumping 20.6% to $69.40 at the
close of trading on March 19, 2014.
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The commercial partnership will combine First Solar's thin-film
CdTe (Cadmium telluride) modules with General Electric's new 4MW
ProSolar 1500 Volt inverter/transformer system. The CdTe modules
incorporate advanced technologies for optimal performance across
1500Volt DC (direct current) applications. When this is combined
with the ProSolar inverter/transformer stations, it increases the
magnitude of the solar array served by each inverter.
This in turn reduces the number of inverter/transformer stations
required for each plant for power conversion from DC to AC
(alternating current) to feed electricity to a commercial
electrical grid. Consequently, the new power plant engineering
design will be able to generate high power at low installation
and maintenance costs.
The recent collaboration is a logical extension of the
partnership forged in August 2013, when General Electric had
traded its thin-film solar panel technology to First Solar for a
minority stake in the latter. The technological collaboration was
a win-win deal for both the participating companies and benefited
the overall solar panel manufacturing industry through cost
reduction from operational synergies.
First Solar had then acquired an indigenous technology from
General Electric to make advanced thin-film solar panels to
counter stiff competition from cheap alternatives available in
the market. This improved the efficiency of the panels and
reduced costs of solar electricity produced, thereby gaining
significant cost-advantage against its competitors.
On the other hand, as a trade-off, General Electric gained 1.75
million shares of First Solar, which equated to about 2% of the
then total outstanding shares. General Electric is likely to
retain the shares for at least three years. In addition, General
Electric collaborated with First Solar R&D to develop newer
technologies to further advance CdTe solar technology.
First Solar also continued to purchase inverters from GE Energy
Management for global solar deployments for optimum electrical
balance of manufacturing plants. The combination of complementary
technologies from General Electric and First Solar greatly
improved solar grid integration with a competitive cost
Given a thriving solar industry and its strategic partnerships
with General Electric, First Solar expects revenues to increase
21% year over year in 2014. The company currently anticipates
revenues of $3.7 billion to $4.0 billion in 2014.
Both First Solar and General Electric have a Zacks Rank #3
(Hold). Other companies in the diversified machinery industry
that are worth mentioning include
), both carrying a Zacks Rank #2 (Buy).