First Solar in Large Power Projects - Analyst Blog
March 15 2012 - 10:45AM
Zacks
First Solar, Inc. (FSLR) has decided to build a
photovoltaic (PV) solar power project in Hagerstown, Maryland with
a generation capacity of 20 megawatt (“AC”). The company will have
full ownership of the Maryland Solar plant.
Under a contract, the electricity and renewable energy credits
will be sold to a unit of FirstEnergy Corporation
(FE). To generate clean and renewable energy, the plant will use
First Solar’s advanced thin film PV modules. The energy generated
on an average will be able to provide power to approximately 2,700
Maryland homes. The power from the eco-friendly plant will displace
approximately 23,000 metric tons of CO2 annually which is
equivalent to taking 4,400 cars off the road each year.
First Solar is expected to begin the construction of the power
plant in the second quarter of 2012 with completion scheduled for
the fourth quarter.
In a recent agreement, First Solar cut a deal with NRG
Energy, Inc. (NRG) under which it will build a 26 megawatt
Avra Valley solar project for the latter. Under a 20-year power
purchase agreement, the electricity generated from the project will
be sold to Tucson Electric Power.
In February 2012, the company reported fourth quarter and fiscal
2011 results. First Solar fell below the Zacks Consensus earnings
per share estimate of $1.57 by 31 cents to clock adjusted earnings
of only $1.26 in the reported quarter. First Solar’s
quarterly revenues were $660 million, up $50 million from $610
million in the fourth quarter of 2010. Quarterly revenue however
fell behind the Zacks Consensus Estimate of $812 million. On a
year-to-year basis, fourth quarter module Average Selling Prices
(“ASP”) decreased 2% and third-party ASPs declined 24%.
Like its peers, the company is witnessing an oversupply of
photovoltaic products leading to a drop in ASPs. Also, the current
macro scenario does not bode well for the solar industry, which
thrives mainly on subsidies and grants. In this scenario, the
aforesaid utility-scale electricity power projects would help
counter the headwinds facing solar module producers in general.
The company presently retains a short-term Zacks #3 Rank (Hold).
We have a long-term Underperform recommendation on the stock.
First Solar Inc. 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 also focuses on designing and deploying
commercial solar projects for utilities.
FIRSTENERGY CP (FE): Free Stock Analysis Report
FIRST SOLAR INC (FSLR): Free Stock Analysis Report
NRG ENERGY INC (NRG): Free Stock Analysis Report
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