First Solar Gets Indian Contract - Analyst Blog

First Solar Inc. (FSLR) won a contract to supply 15 MW panels to India's ACME Tele Power Ltd for a solar power plant to be constructed in the Indian state of Gujarat. First Solar will begin delivery of the modules in March 2011.

Based in Phoenix, Arizona, First Solar 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.

First Solar designs and manufactures solar modules using a proprietary thin-film-semiconductor technology, which allows it to reduce its average solar module manufacturing costs to one of the lowest in the world.

At the end of the first nine months of 2010, First Solar's average manufacturing cost amounted to $0.77 per watt; this is significantly lower than those of traditional crystalline silicon solar module manufacturers. However, the advantage is dwindling fast due to falling polysilicon prices.

First Solar's growth potential and that of the solar industry on the whole require a prudent long-term focus on technological enhancements, capacity build-out and cost minimization. Balancing all the three aspects will take some effort.

Going forward, the company will be ramping up its production capacity to further lower its cost of production through economies of scale. At the end of the third quarter of 2010, the company operated with an annualized global manufacturing capacity of approximately 1.4 GW.

The company expects to increase its manufacturing capacity to 46 production lines by the end of 2012, with an annualized manufacturing capacity of more than 2.7 GW.

First Solar will benefit from the steady recovery in the economy as well as favorable legislations supporting PV installations. The company is focused on capacity build-outs, technological enhancements and cost minimization, and also enjoys technological superiority over its silicon-based solar peers.

However, its short-term growth may be partially hampered by the volatile euro, apprehension over reduction in German subsidies, falling crystalline silicon prices and the overproduction of  modules.

Also competition in the industry is becoming tougher by the day for U.S. solar players such as First Solar, who have a huge German exposure in their top line compared to Suntech Power Holdings Company Ltd. (STP), SunPower Corporation (SPWRA) and ReneSola Ltd. (SOL) whose markets are more diversified.

We currently have a market 'Neutral' recommendation on the Zacks #3 Rank (Hold) First Solar stock.

 
FIRST SOLAR INC (FSLR): Free Stock Analysis Report
 
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