GE, First Solar Collaborate for PV Power Plant - Analyst Blog


General Electric Company ( GE ) has recently extended its technical collaboration with specialized semiconductor manufacturer First Solar, Inc. ( FSLR ) 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.

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 structure.

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 3M Company ( MMM ) and CLARCOR Inc. ( CLC ), both carrying a Zacks Rank #2 (Buy).

CLARCOR INC (CLC): Free Stock Analysis Report

FIRST SOLAR INC (FSLR): Free Stock Analysis Report

GENL ELECTRIC (GE): Free Stock Analysis Report

3M CO (MMM): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: CLC , FSLR , GE , MMM

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