First Solar back to full-capacity utilisation in Q4

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Despite lower Q3 2012 revenue of US$839 million, down from US$957 million in the last quarter, First Solar said that CdTe thin-film module production increased 33% from Q2 levels reaching 490MW.

A strong project pipeline meant that the company would see production capacity utilisation rates reach between 90%-95%, effectively full-capacity in Q4. First Solar had utilisation rates of 63% in Q2 and reached 83% in Q3.

However, the company reiterated that its Frankfurt Oder manufacturing facility in Germany would continue production until the end of this year when production would be permanently shut down.

Production costs and module efficiencies

The high utilisation rates resulted in lower production costs in Q3. First Solar reported a module production cost per watt of US$0.67, down $0.05 quarter-over-quarter.

Management noted in a conference call to discus quarterly results that, if it had been running lines at full capacity,  the cost per watt would have been US$0.64.

Based on its best production line operations, the company had reduced production costs to US$0.62/W, US$0.10 lower than the same period a year ago. The company said its consolidated manufacturing cost and its best line cost per watt were forecasted to be US$0.64 and US$0.61, respectively, US$0.01 lower than previous estimates for consolidated cost per watt and US$0.02 better than its previous estimate for the best line cost per watt.

Mark Widmar, Chief Financial Officer at First Solar said, “As of the end of October, our best line is currently producing an average module efficiency of 13.2%. When this module efficiency gets combined with our lowest cost manufacturing plant, the module cost per watt would be US$0.59.”

Widmar also noted that the company expected consolidated manufacturing cost per watt to go below US$0.60 in late 2013, while he expected consolidated module efficiencies of 12.8%, by the end of year.

On a year-over-year basis, module efficiencies have increased by 0.9%. Best line module efficiency reached 13.2%, according to the CFO.

R&D update


According to James Hughes, Chief Executive Officer, the company had been investing heavily in R&D programs to boost module efficiencies as well as reduce overall LCOE with a targeted US$100 – US$140 per megawatt hour.

Hughes noted, “We have already partially rolled our changes to our laser scribe process that resulted in improvement to our module active area loss. We expect to complete the rollout by mid-2013. Improvements in our semiconductor absorber material through modifications to our deposition technology are expected to go into full volume production beginning in mid-2013. We are also working on a module design change that will reduce active area losses and improve uniformity which is also expected to be rolled out in the second half of 2013.”

However, Hughes noted that potentially the most significant technology development that is expected to boost module efficiencies were changes to the back contact of the module. Hughes said that this was targeted to be rolled-out into volume production in the second-half of 2014, though he didn’t mention what impact this change would have on average module efficiencies.

“This is very encouraging in an extremely competitive industry where the lowest cost providers with the most comprehensive and customized solutions will ultimately be the winners,” added Hughes.

Capital expenditure

Despite the return to full-capacity utilisation, First Solar continued to curtail capital expenditures. The company noted CapEx was US$57 million in Q3, down from US$100 million in Q2. Emphasis continues to be on module efficiency gains to boost capacity.

PV project pipeline

First Solar said that its solar power systems revenue, which includes EPC revenue and modules used in the systems business, increased from 86% of sales in Q2 to 95% of sales in Q3.

The company noted that year-to-date, new contracted orders booked for its system EPC and third-party module sales in the US had reached 644MW (DC), with its global project pipeline standing at 3GW (AC).

This equated to nearly US$9 billion of future, although this was US$500 million lower than at the start of the year as the company had recognised US$2.3 billion of revenue this year. New bookings through to the end of Q3 had reached US$1.8 billion.

Hurricane Sandy 


Management noted that several PV projects on the east coast had been disrupted by Hurricane Sandy and that the company was still assessing the impact of the aftermath would have on project deadlines. Though actual damage was not the issue, supply chain issues were the problem, especially for some supplier’s that were impacted by the hurricane.

As a precautionary measure, First Solar revised its full-year revenue guidance to between US$3.5 billion – US$3.8 billion compared to prior guidance of US$3.6 billion- US$3.9 billion.


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