First Solar signs MOU to develop 2GW of PV power plants in Inner Mongolia

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First Solar has signed a memorandum of understanding with the Chinese government to build a multiphase solar power plant project in Ordos City, Inner Mongolia, a site that will eventually reach 2GW in installed capacity. Once finalized, the agreement–the first of its kind between the Chinese authorities and a non-Chinese solar company–could also lead to the construction of First Solar moduling and supplier manufacturing facilities in the region.

The Ordos project’s first phase will be a 30MW demonstration installation that will begin construction by June 1, 2010, and be completed as soon thereafter as practicable. The second, third, and fourth phases will comprise 100MW, 870MW, and 1GW, respectively, with phases 2 and 3 scheduled for completion in 2014, and the final phase finished by 2019.

The MOU says that during the implementation of the initial phases of the project First Solar will actively review the possibility of module and supplier manufacturing sites in Ordos, and other considerations required to support an investment by the company. The thin-film firm also intends to facilitate expansion of the supply chains in China for thin-film PV module production and for the recycling of photovoltaic modules after use.

“This major commitment to solar power is a direct result of the progressive energy policies being adopted in China to create a sustainable, long-term market for solar and a low carbon future for China,” said company CEO Mike Ahearn during the signing ceremony on Tuesday. “We’re proud to be announcing this precedent-setting project today. It represents an encouraging step forward toward the mass-scale deployment of solar power worldwide to help mitigate climate change concerns.”

The project will operate under a feed-in-tariff which will guarantee the pricing of electricity produced by the power plant over a long-term period.

“The Chinese feed-in tariff will be critical to this project,” Ahearn explained. “This type of forward-looking government policy is necessary to create a strong solar market and facilitate the construction of a project of this size, which in turn continues to drive the cost of solar electricity closer to ‘grid parity’–where it is competitive with traditional energy sources.”

“We are very pleased to be partnering with one of the solar industry’s global technology leaders in a project of such significance to Ordos’s low carbon future,” said Cao Zhichen, vice mayor of Ordos Municipal Government. “Discussions with First Solar about building a factory in China demonstrate to investors in China that they can confidently invest in the most advanced technologies available.”

The MOU sets forth the agreement in principle of the parties concerning the project and related activities. Final agreement between the parties is subject to the negotiation and execution of definitive agreements among the parties.

(First Solar has filed a current report on Form 8-K with the SEC, dated Sept. 8, which contains additional information regarding the MOU referenced in its news release.)

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