First Solar: Year In Review

First Solar, one of the world’s largest vertically integrated solar companies, had an interesting year. While the company’s financial performance was decidedly mixed, with revenues and gross margins for the first 9 months coming in lower year-over-year due to lower revenue recognition on solar projects, the company performed reasonably well on the business development, manufacturing and technology front. In this note, we take a look at some of the key developments in First Solar’s business during 2014.

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Trefis has a $64 price estimate for First Solar, which represents a 45% premium to the current market price.

Bolstering Presence In Emerging Solar Markets

First Solar has seen much of its growth in recent years come from large-scale solar projects such as the Desert Sunlight and the AVSR project located in the United States. However, contracting activity in the U.S. market is poised to slow down, as several utility companies already have projects lined up to meet their renewable energy portfolio standards requirements. Now, First Solar has been increasingly looking towards emerging solar markets to drive growth. The company recently announced that it would be developing its first independent project in India with a total capacity of 45 MW. In Chile, the company commenced work on its 141 MW Luz del Norte power plant after securing a financing package for the project. The company also signed an agreement to provide engineering, procurement and construction services for the 52.5 megawatt Shams Ma’an photovoltaic power plant in the Kingdom of Jordan. While projects in these markets are unlikely to be as lucrative as First Solar’s U.S. mega-projects, they should provide opportunities for sustainable growth since these markets are often characterized by relatively high electricity prices and good solar radiation levels, which make solar economically viable. As of Q3 2014, the company’s potential booking opportunities stood at 13.7 GW. About 56% of the company’s potential pipeline now comes from overseas, and close to a third of the opportunities come from markets such as Latin America, the Middle East and India.

 

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