Return of ship’s captain to the helm of First Solar sets new course

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on reddit
Reddit
Share on email
Email

Capacity expansions are out, improving manufacturing line efficiencies and productivity is in, according to First Solar’s chairman Michael Ahearn, who took over the CEO role from ousted Rob Gillete last week. Capacity expansions had seen average module efficiencies rates increase modestly in 2011; on the downside, production cost per watt merely flat-lined. Almost unheard of was the fact that manufacturing line utilization rates had dipped below 100% as capacity outstripped demand. Back at the helm, Ahearn said that First Solar would re-focus on markets without energy subsidies such as the Middle East as well as markets with critical energy needs such as India, North Africa and China.

“Excess supply relative to demand has led to pricing and margin reduction because demand in the short term is inelastic, and by that, I mean lower prices might enable a company to take more share with declining subsidy pool, but they won't increase aggregate demand. Because of that, returns on capital have also declined,” commented Ahearn in the conference call to discuss third-quarter results.

“So for First Solar, the central task is to transition from these less attractive markets towards the market that will drive the future, and to do so in a manner that will allow for operational and financial stability,” he added.

Ahearn also revealed in the conference call that the company will postpone commissioning of its new factory in Vietnam. The facilities will be completed but not tool installed until improved market demand. 

However, he was quick to support the build-out and commissioning of its massive new plant in Mesa, Arizona which will support First Solar’s 2.7GW North American project pipeline requirements.

In separate news, First Solar officially opened its Frankfurt plant expansion, doubling production to 500MW.

Module efficiency and line productivity

With massive overcapacity impacting pricing across the PV supply chain, First Solar is to focus on efficiency gains. Management highlighted in the call that in the third quarter, some of its best-performing production lines had reached an average module conversion efficiency of 12.4%.

Ahearn noted that the company would further reduce the cost per watt to between $0.52 and $0.63, and plans to increase conversion efficiencies from 13.5% to 14.5% by the end of 2014.

Renewed focus on line productivity was also highlighted. Management expect average line throughput to increase from 63.5MW per line in the third quarter of 2011 to 70MW by the end of 2012.

“Now these cost reduction and conversion efficiency improvement plans are not without risk, but the plans are reasonable and the targets are feasible,” noted Ahearn in the call. “Achieving these goals would enable us to price solar electricity for as low as US$100 to US$120 a megawatt hour, which makes solar electricity affordable in many parts of the world.”

Q3 production

First Solar reported that module production in the third quarter was 551MW, up 58% versus the prior year, and up 14% quarter-on-quarter. The increase was due to the ramp of its expansion at KLM 6 in Frankfurt (Oder). Annual capacity per line increased by 1MW quarter-on-quarter to 63.1MW.

Project pipeline

The company has added 654MW of new contracts to its project pipeline so far this year, including 222MW in the third quarter alone. These included a 130MW EPC agreement with Tenaska, a 66MW EPC agreement with NRG and a 16MW agreement with Constellation Energy, and 10MW for the company’s first utility-scale project in Australia with Verve Energy and GE Energy Financial Services. Management noted in the call that it planned to install approximately 450MW (DC) of systems projects in North America in 2011.

The significant increase in quarterly sales reported last week were due primarily to the higher level of North American systems business, and in particular to one project, Agua Caliente. Net sales for the second quarter were just over US$1 billion, up US$533 million from last quarter.

The company reported module gross margin of 41.4%, up from 40.2% in the prior quarter. Operating margin for the quarter was 22.1% compared to 12.1% in the second quarter. Third quarter net income was US$197 million.

Financial guidance

Management guided that 2011 revenue would be in the range of US$3 billion to US$3.4 billion. However, the company said it would provide 2012 guidance in December. 

19 August 2021
The utility-scale PV market is poised for exponential growth and yet the industry still has many fundamental opportunities to improve on standards and best practice. Tracker shade loss has been one of those topics that deserve more attention, but has been typically handled by derate factors rather than trying to accurately forecast the loss over the life of the system. Join Nextracker’s subject matter experts, Aron Dobos and Neelesh Umachandran, and Rounak Kharait, director of solar energy assessments at DNV, for a webinar about why shade modeling matters and recommendations on what the solar industry should do about it.
25 August 2021
Energy Next is a new industry exhibition focusing on the latest renewable energy and energy efficiency technology, which will be held for the first time in 2021 in Sydney, Australia alongside the Clean Energy Council’s Australian Clean Energy Summit, the peak gathering of leaders driving Australia's energy transformation. Organised by the same people behind Australia’s largest clean energy event, All-Energy Australia, Energy Next will give visitors two days of access to key suppliers in the industry, free-to-attend professional development and industry workshops, and networking opportunities to better understand clean energy issues and solutions and learn about the latest developments in this transformational, dynamic sector.
25 August 2021
The Intersolar Summit Brasil Nordeste takes place in Fortaleza, Brazil. It addresses leading local and international experts on solar power and renewable energy in the region. The Summit’s mission is to provide in-depth education, enable high-quality networking opportunities, expand the use of PV technologies at regional and national level and strengthen the local PV industry. The Intersolar Summit Brasil Nordeste is organized by Intersolar South America - Latin America’s largest exhibition and conference for the solar industry: Solar Promotion International GmbH, Pforzheim, Freiburg Management and Marketing International GmbH (FMMI) and Aranda Eventos & Congressos Ltda, São Paulo as co-organizer.
25 August 2021
Join us to hear directly from the CTOs and heads-of-research from the top-20 cell/wafer producers to the PV industry today. The event will focus on predicting the key metrics underpinning the next big shift to n-type with answers to the key questions: When will the transition to n-type happen? Which companies will be first to 10 GW capacity and production? Who will be the key equipment suppliers for the new production lines? Which n-type process flow/architecture will emerge as the front-runner? What will polysilicon purity and wafer thickness levels look like for optimized n-type manufacturing? What will the upstream poly/wafer supply-chain look like in 5 years from now?
26 August 2021
In this webinar, JA Solar will present its product portfolio based on the latest technologies to improve your PV projects, ensuring maximum reliability and performance. During the webinar we will receive insight from JA Solar about its solar technology roadmap and how the manufacturer is providing customers with innovative solutions to suit their needs, while we will also analyse how to determine the best product solution for each solar project.
6 September 2021
The 38th European Photovoltaic Solar Energy Conference and Exhibition will be held online from 6 - 10 September 2021, allowing PV experts from all around the globe to participate with just one click! The EU PVSEC is the world's leading forum for PV Research and Development and the biggest Conference on PV Solar Energy worldwide. That is why PV experts from all around the globe are keen on gathering together each year to be part of this specialist’s event, to present and discuss the latest developments in Photovoltaics, to network and to conduct business.

Read Next

July 30, 2021
First Solar has unveiled plans to construct a 3.3GWdc module assembly facility in India, bolstering its manufacturing footprint outside of the US.
July 30, 2021
Anglo-Australian mining company BHP, in partnership with Canada’s TransAlta Renewables, is to build two solar farms and a battery storage system to help power its Mt Keith and Leinster nickel mines in Western Australia
July 30, 2021
German energy giant RWE has upgraded its earnings forecast for 2021 after “exceptionally positive” earnings trend
July 29, 2021
Tracker and racking provider Arctech has delivered SkySmart II tracking system to a 575MW agriculture-sharing solar project located in Nangong City, Hebei Province, China.
July 29, 2021
Unigreen Energy, owned by Hevel majority shareholder Ream Management LLC, has broken ground on a wafer and cell manufacturing plant that will produce 1.3GW of silicon n-type monocrystalline ingots and wafers as well as 1GW of heterojunction technology (HJT) solar cells.
July 29, 2021
Meyer Burger has revealed plans to launch a solar roof tile product, expanding its rooftop solar product range.

Subscribe to Newsletter

Upcoming Events

Upcoming Webinars
August 19, 2021
At 9am (PT) | 6pm (CEST)
Solar Media Events
August 25, 2021
Solar Media Events
October 6, 2021
Solar Media Events
October 19, 2021
BRISTOL, UK