Like the ancient Egyptians who worshiped Ra, First Solar looks to the sun for rising fortunes. The company manufactures photovoltaic (PV) modules for converting sunlight into electricity. Using a thin-film semiconductor process, a piece of glass is transformed into a complete solar module in less than three hours. The technology is cheaper and produces more electricity under real-world conditions than conventional solar panels with similar power ratings. Founded in Ohio, more than half of sales come from outside the US, primarily from solar project developers and system integrators in France, Germany, India, and Italy. First Solar also provides solar power plant project development services.
One of the world's leading PV solar module manufacturers, the company has long-term supply contracts with European project developers and system integrators. Customers of its components business are solar power project developers, systems integrators, and operators and include Belectric and EDF EN Development. NRG Energy accounts for the majority of sales in its systems business, which sells to investor-owned utilities, independent power producers, and commercial and industrial enterprises.
The solar industry had a rough 2011, with pricing pressures, subsidy reductions, and capacity that far outstripped demand. The conditions led to the bankruptcy of several solar companies, while others closed or slowed manufacturing operations. As the industry's troubles continued into 2012, First Solar announced it would restructure, shuttering its manufacturing operations in Germany and idling four production lines at its plant in Malaysia. The company also announced layoffs of about 30% of its global workforce, primarily affecting personnel in Europe and the US.
First Solar considers that the market in Europe has deteriorated to the point of not being sustainable; it plans to operate through business partners in Europe and focus its resources instead on developing markets such as the Latin America, Asia, Middle East, and Africa regions. Its long-term strategy is to pursue utility-scale solar opportunities in areas the company considers to have high growth potential and sustainable markets. As part of this strategy, First Solar announced it would form an operating company in India to take advantage of opportunities in the country, which has abundant solar resources and significant energy demand. Indeed, in fall 2012 First Solar entered into an agreement to supply its technology for two power plants to be build in Rajasthan, India. In early 2013 it acquired Chilean solar development firm Solar Chile.
In 2011 overall sales were up nearly 8%, but the company reported a net loss after several years of profits. Higher operating costs and production start-up expenses contributed to the loss, along with impairment of goodwill related to its components segment and restructuring charges related to cost reductions announced at the end of 2011.
As part of its effort to bring the cost of solar electricity in line with retail electricity, the company has reduced the average manufacturing cost of its solar module. (First Solar's reliance on low-cost thin-film cells helped the company avert a silicon shortage, which slashed the bottom line of its solar rivals.) Its average manufacturing costs for solar modules in 2011 were about $0.75 per watt. The company plans to compete directly with traditional fossil fuel-based power generators, particularly in regions with high demand and abundant solar resources, such as the US, China, and India.
Expanding beyond the utility and system integrator markets, First Solar entered the residential market for solar power, investing in companies such as SolarCity Corporation. First Solar has a five-year supply agreement with SolarCity, a company that lets small businesses and homeowners lease solar panels, rather than make expensive panel purchases. First Solar is targeting residential customers in Arizona, California, and Oregon -- where demand for electricity from alternative energy sources is growing -- as it looks to expand into other states.
In 2010 First Solar acquired NextLight Renewable Power, a developer of utility-scale solar projects in the southwestern US, for about $297 million in cash. The San Francisco-based firm has a solar project pipeline totaling 1,100MW. First Solar sees NextLight's project portfolio as complementary to its own; most of the projects are planned for privately owned land.
In addition to complete project development, First Solar provides engineering and procurement services to independent power project developers and operating and maintenance services under long-term service agreements for plants it has developed and built. In 2010 the company acquired a portion of Edison Mission's project development portfolio, bolstering its utility-scale power project operations in California and the southwestern US.
In 2010 First Solar sold four small PV projects in Canada to NextEra Energy; it sold another two Canadian projects totaling 40 MWs to NextEra in 2012; the electricity generated is sold to the Ontario Power Authority. It also sold the 290 MW Agua Caliente solar project in Arizona to NRG Energy. Agua Caliente will be finished in 2014 and provide power for Pacific Gas and Electric. Continuing the divestments in 2012, First Solar sold the 50 MW Silver State North photovoltaic project in Clark County, Nevada to Enbridge.
The estate of the late John Walton (of the Wal-Mart Waltons) owns about 31% of First Solar.