First Solar's New Revenue Stream

First Solar (FSLR) is at it again. Along with its commercial and residential rooftop, and free field power plant segments, the thin-film solar module manufacturer has a lucrative new revenue stream. Call it the utility rooftop segment.

First Solar supplied modules and equipment for a Southern California Edison 2.2MW commercial rooftop project completed December 1^st of last year in Fontana, California. And as one of the solar industry’s leaders, won the supplier bid for the second utility rooftop project of 1 MW in Chino.

Instead of meeting its California state requirement for Renewable Portfolio Standards by building solar power plants or buying from developers, SCE has proposed 150 solar PV installations on existing Southern California commercial rooftops. SCE has proposed up to fifty projects a year of 1 to 2 MW over the next five years. And First Solar is going along for the ride – at least on the first two deals.

SCE envisions building 250MW over that five year period, and as the supplier on the first two projects, First Solar is well positioned to take advantage of what the utility calls an “innovative solar rooftop initiative.” Unlike other commercial rooftop projects, the host is not the offtaker – targeted rooftops do not qualify for the net energy metering tariff so all energy produced will flow to the grid.

Factoring into the selection of First Solar as supplier to the SCE Commercial Rooftop Initiative was their position as industry low cost manufacturer. As of its third quarter at the end of September, cost per watt was $1.08. And First Solar can pass those low costs on to the next link in the solar value chain – in this case SCE. The utility forecast that average installation costs will be $3.50 per watt – about half of what it would cost otherwise.

Check out First Solar’s fourth quarter earnings conference call on February 24^th right here on Seeking Alpha for more updates.

Disclosure: Contributor Chris Cather owns share in the Claymore/MAC Global Solar Energy Index ETF (TAN), which has holdings in FSLR.

Comments

[Fred W:]

When things looks too good to be true, quite often they are...at $3.50/W installed and $1.05 production cost of the modules--where are the margins for the EPC providers? The lowest first costs are not always the best solution...the race to the bottom can get ugly for participants.

Feb 20 10:07 AM

[Road Runner:]

Commercial rooftops in southern California look to be one of the "killer applications" that will greatly help move solar into the mainstream. This is great! FSLR is a great company.

Feb 20 12:14 PM

[Road Runner:]

Fred W., Please expand your explanation. I want to see your idea in detail.

Feb 20 12:15 PM

[mr clark:]

did u know FSLR mkt cap is more than all other solars on NYX and Nasdaq combined, including their debts?

price tgt $50 near term...

Feb 20 04:30 PM