George Jurgensen

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Fri Nov 30th 11:22 AM | Rating: 0 0
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First Solar's Rapidly Expanding Economies of Scale

Andrew,

your points are well taken. There are some risks. Honda Soltec is publishing modules of their CIGS products at 125 and 115 W, while FSLR is around 70. Sunpower, the market pv efficiency leader, publishes 220W plus with their silicon based product, so installations require less space even if at a higher cost per watt in the modules, saving some installation costs. Honda and other Japanese CIGS producers may prove to have the low cost technology. US CIGS including Daystar seem behind the curve. I don't yet have a good read of Honda's costs, but Honda indicates their cost will be well below polysilicon costs. Higher than expected efficiencies in manufacturing or in pv efficiency will boost their cost advantage.

Another analyst (Mark Anthony) at Seeking Alpha is publishing comments about risk at FSLR due to escalating Tellurium costs and shortages used in FSLR's CDTE product. I have been trying to evaluate this risk, but so far believe it is manageable, though the SA analyst brings up sharp risks if he is correct...I cannot confirm his 7-8/gm per module and suspect this is high, nor do I know FSLR's inventory. I believe price sensitive competing uses and additional supplies to the market of TE, FSLR's inventory and purchase contracts, and increasing manufacturing efficiency limiting TE requirements mitigate FSLR's risk in TE pricing, but we'll see.

Disclosure: I am currently long on FSLR in a Bull spread position and own Honda stock.
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