First Solar keeps tight rein on CapEx spend for 2015

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Leading thin-film PVEP First Solar is keeping tight control of capital expenditure (CapEx) in 2015, after a tough year, leading to flat sales and missed shipment guidance.

First Solar guided 2015 CapEx to be between US$225 million to US$275 million, compared to US$282.6 million in 2013 and US$379.2 million in 2012. 

CapEx spending for 2014 had been guided at between US$325 to US$350 million at its Analyst Day event held in mid-March 2014. 

The company noted that the majority of the planned CapEx would target upgrades to existing machinery and equipment, primarily to boost CdTe thin-film module conversion efficiencies. The majority of the spending would also be focused on upgrades at its main production plant in Malaysia. 

The CapEx goes inline with its roadmap for technology and production upgrades announced early last year at its Analyst Day event, which were highlighted in it latest earnings call as having led to CdTe module baseline conversion efficiency reaching 14.4% in the fourth quarter and that four lines had achieved module conversion efficiencies of 15.8%. 

Management noted in the call that it would upgrade further lines to the higher efficiencies in future quarters.

Module efficiency gains and existing line throughput improvements of its operating lines are the primary route for First Solar to add capacity in 2015. The company has been aggressively re-stocking its PV project pipeline in 2014 and expects strong shipment increases in 2015 and 2016. 

However, First Solar reported module shipments of 1.5GW for 2014, compared to previous full-year shipment guidance of between 1.8GW to 1.9GW, while achieving line utilisation rates of 84% on production of 509MW (DC) in the fourth quarter op 2014. Overall production and utilisation rates have inched-up through 2014. 

CdTe thin-film production 

First Solar is currently operating a total of 30 manufacturing lines after restarting some idled lines in Malaysia later last year. According to First Solar each line at the end of 2014 was able to produce approximately 2,500 modules per day, equating to around 70,000 modules in total. Put another way that is a module made every 1.2 seconds. 

However, when combining First Solar’s efficiency and throughput roadmap targets (the company has rarely missed such targets) it would have around 3GW of capacity from those 30 lines in operation in 2017, up from a nameplate capacity of around 1.8GW at the end of 2014. 

Therefore First Solar has room to expand capacity to meet a certain level of shipment growth and end market demand with relatively low CapEx requirements. 

Indeed, First Solar also has 10 lines in storage after closing its two manufacturing plants in Germany, equating to around 1.3GW of nameplate capacity as they stand. 

As a result of the excess warehoused capacity, First Solar has a potential manufacturing capacity of around 4.3GW. This would suggest CapEx requirements, excluding relocating the 10 stored lines perhaps for installing in a new facility in perhaps India, remain low for several years to come. 

First Solar has made a 5GW pledge to India’s 100GW installation target by 2022 and hinted at manufacturing in the country. 

In regards to its crystalline silicon cell/module plans with respect to its acquisition of start-up TetraSun, the company said it started production late last year at its facility in Kulim, Malaysia. Nameplate capacity is 100MW (55,000 156mm x156mm cells per day) but the company said in its earnings call that it expected to ramp to around 50MW in 2015 and would ramp further based on market demand. 

Management noted that that the N-type mono c-Si cells had an initial conversion efficiency of 20.5%. The company is planning to produce both 60-cell modules and 72 cell modules via an unnamed third party contract manufacturer.

R&D spending 

First Solar also reported that its R&D spending in 2014 reached US$143.9 million, up from US$134.3 million in 2013. 

The company noted that the small increase in R&D spending in 2014 was primarily due to the ongoing development of next-generation CdTe solar module technology, and partially due to the TetraSun process ramp. 

According to PV Tech’s annual R&D spending report, First Solar was the biggest spender on R&D activities amongst PV manufacturers in 2013. 

Early indications suggest it may have retained that ranking position in 2014, however only a few leading PV manufacturers have reported full-year results at time of publishing.

First Solar has recently achieved two new world records for CdTe cell efficiency, achieving independently verified 21.5% for lab-sized cells and total area module efficiency of 17.0%.

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