First Solar (FSLR), the world’s largest maker of thin-film solar panels, just keeps on humming. The company produces solar systems in addition to panels. First Solar modules use cadmium telluride (CdTe), a thin film, to convert sunlight into electricity. Its competitors use silicon, which has proven to be more expensive. In addition, First Solar custom-builds and designs its manufacturing lines.
A bevy of patents protect that intellectual property, while 90 percent of silicon production utilizes industry standard equipment and technology, according to Morningstar research.
The U.S. Energy Department just granted First Solar loan guarantees worth $4.5 billion for three of its biggest power plants, in California. The projects are huge, with a total capacity of 1,330 megawatts, 30 percent more than a large nuclear power reactor.
The loans will greatly reduce the cost of building the plants and make them more profitable for First Solar. The company has jumped into the power plant construction process during the past few years to help guarantee demand for its panels.
The loan guarantees provide protection for investors who lend First Solar money to build the plants and will make it easier for the company to find buyers for them.
Can’t keep it down
“It’s hard to keep First Solar down — this belief held by most investors closely watching the largest U.S.-based solar sector company has been proven right once again with the . . . loan guarantees,” Trefis analysts write.
Investors had been worried about the company’s ability to sell its products as fast as it was making them, the analysts said, but no more.
Certainly, the industry suffers from excess capacity, and subsidy changes in Europe’s biggest markets that are putting a dent in demand. "Tighter industry economics are expected in the second half of 2011," First Solar CEO Rob Gillette said on a conference call with analysts.
But the company still expects sales to rise as much as 48 percent this year, to between $3.7 billion and $3.8 billion.
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