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First Solar Inc. (FSLR - Analyst Report), the largest manufacturer of thin-film solar panels in the world, is all set to construct one of its major solar projects. The New Mexico Public Regulatory Commission approved of a power purchase agreement (PPA) that clears the way for First Solar to supply 50 megawatts (MW) of solar power for 25 years to El Paso Electric Co. (EE - Snapshot Report).  

With this approval First Solar can now initiate the construction of New Mexico's largest solar power plant, Macho Springs, on 500 acres of State Trust Land in Luna County.

First Solar’s proposed Macho Springs project − acquired from Element Power Solar earlier this year − will generate enough energy to power over 18,000 average New Mexico homes. The venture will eradicate more than 40,000 metric tons of carbon-dioxide that corresponds to 7,500 cars been taken off the road.

First Solar has already submitted its final development plan that is yet to receive various required permits. Once approved, construction is expected to begin in Jul 2013. The company will construct the Macho Springs facility using its advanced thin-film PV modules that boast the smallest carbon footprint and shortest energy payback time of any solar technology currently available.

The price of this solar power PPA is at $57.90 per MW-hour. El Paso Electric has thus agreed to buy the power for 5.79 cents a kilowatt-hour. This is less than half of what has typically been paid for projects of this nature.

First Solar is looking to expand in other regions including Japan. In Apr 2013 the company announced its intention to acquire TetraSun from JX Nippon Oil & Energy Corporation for an undisclosed amount. We note that JX Nippon is the largest oil company in Japan. Post-acquisition, both the parties intend to produce and market TetraSun products in Japan. The acquisition is expected to complete in the second quarter of 2013. The acquisition would be a strategic fit as Japan is expected to become the second-largest market for solar products in 2013 after China.

First Solar presently retains a short-term Zacks Rank #3 (Hold). In the near term, solar companies that look more promising and worth buying now include JA Solar Holdings Co., Ltd. (JASO - Analyst Report) and Yingli Green Energy Holding Co. Ltd. (YGE - Snapshot Report), both with a Zacks Rank #2 (Buy).

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