First Solar 'Outsources' New Facility to the USA

First Solar (FSLR) issued a press release on Monday announcing a major expansion of its manufacturing facility in Toledo, Ohio. At a time when we are used to hearing about companies shuttering their US manufacturing in favor of low cost overseas factories, First Solar is doing the opposite.

The move relies on incentives offered by state and local government officials to help offset the cost of the expansion. Politically, this is a win-win for the politicians. With this move, they can claim credit for creating 134 new jobs in Ohio while supporting "green" technologies that help reduce America's dependence on foreign oil. That should be worth some votes in the next election.

Ohio's Governor, Ted Strickland, was quoted in the press release as saying, "The state of Ohio is proud to support industry leaders like First Solar who are using renewable energy to power the future." US Senators Voinovich and Brown echoed similar sentiments, saying "Solar energy reduces greenhouse gas emissions and strengthens our national and energy security. Ohio is proud of its partnership with First Solar – and that partnership has been a resounding success. This is a great example of how we can harness Ohio's manufacturing base to become the Silicon Valley of alternative energy."

The move, says First Solar, will reduce the cost per watt of the solar panels produced at the Ohio plant to a level "comparable to our lowest cost facility in Malaysia." In today's environment of outsourcing, that's quite an accomplishment. The company expects to produce 192 megawatts of solar panels when the expansion is completed during the first half of 2010. Rather than using silicon-based photovoltaic cells like much of their competition, First Solar uses a Cadmium Telluride solar cell.

The announcement came after the market close on Monday which saw First Solar's shares drop 3% to $256.92/ share. Despite the fall, First Solar shares have tripled their 52 week low of $79.23 from August of 2007. In May of this year First Solar traded as high as $317/ share.

Just a few days earlier, Pacific Gas & Electric (PCG) announced an 800 megawatt solar energy project in California which will supply enough power for nearly 240,000 homes. The contract for the plant was awarded by PG & E to two of First Solar's competitors, SunPower (SPWR) and the privately held OptiSolar. Even though this contract benefits First Solar's competitors, the move was seen as a positive for First Solar as well since it signals a first step in the conversion of a major portion of the country's electrical generation to solar power. 800 megawatts is roughly equivalent to the output of a typical coal-fired power plant.

Stock position: none.

Comments

[Zenfar:]

Where is OptiSolar's manufacturing based? It seems like US companies will benefit a lot from trends in my opinion and that major US utilities expect those jobs to be in the US or no deal, IMHO.

Long ENER and SOLR.

2008 Aug 21 08:27 AM

[David Martin:]

In common with most commentators, the author hopelessly confuses installed capacity with output - the sun does not shine at night!
You can reckon on the average output of a solar plant in a good location being around 1/5th of installed capacity, so the 800MW mentioned would come down to around 160MW - a fraction of the output of most coal plants.
Similar considerations apply to many published cost figures - often installed capacity figures are quoted, and you actually get a lot less power for a lot of money.
The renewable energy field is full of sharks.

2008 Aug 21 10:15 AM

[Kamal Ahuja:]

In reply to Zenfar's question, I read that the Optisolar amorphous-Si thin-film based solar panels will be manufactured in Hayward and Sacramento, California. I also believe AMAT could be a beneficiary of this announcement since their Sunfab line is based on amorphous-Si thin film solar panel production.

2008 Aug 21 04:46 PM

[FWallace:]

? What not a mention of another major contract awared to SATC from Boston's Atlantic City (Atlantic City Convention & Visitors Authority) this week. It's one of the largest commercial US project to provide Solar power technology......hmmmmm...
boston.bizjournals.com...

2008 Aug 21 10:32 PM

[buystocks:]

Long CSIQ, TSL. These two are the best solar stocks now.

2008 Aug 22 01:10 AM