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First Solar, Inc. (FSLR - Analyst Report) has begun the construction of the Macho Springs Solar Project. Last month, the company received approval that allowed it to initiate the construction of New Mexico's largest solar power plant, Macho Springs, on 500 acres of State Trust Land in Luna County.

Also, the approval of a power purchase agreement (“PPA”) cleared the way for First Solar to supply 50 megawatts of solar power for 25 years to El Paso Electric Co. (EE - Snapshot Report). The price of this solar power PPA was pegged at $57.90 per MW-hour. This is less than half of what has typically been paid for projects of this nature.

The project will utilize First Solar’s advanced thin-film PV modules, which boast of the smallest carbon footprint and shortest energy payback time of any solar technology currently available.

First Solar had acquired the project from Element Power Solar earlier this year. The project 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. On an annual basis, the project will save 340,000 metric tons of water consumption.

While fulfilling its corporate social responsibility, the state’s largest solar power plant will create 300 jobs during the construction phase. The construction is expected to be completed in May 2014.

Alternative energy sources are gradually making inroads into the global energy mix due to its clean burning nature and a growing awareness among the masses regarding its benefits. Solar companies are presently making the most of the positive sector fundamentals. Recently, Canadian Solar Inc. (CSIQ - Analyst Report) entered into an Engineering, Procurement and Construction agreement with Grand Renewable Solar LP for the construction of a solar power plant in Ontario.

First Solar’s share prices surged 3.3% on Jul 1 compared to the previous day’s price of $44.81 on the back of the Macho Springs Solar Project breaking ground. This followed a 7.8% increase in the share price on Jun 25 buoyed by President Barack Obama’s proposal to reduce emissions from coal plants.

The company continues to execute its strategy by diversifying globally with a focus on increasing bookings and improving its costs. However, we prefer to remain on the sidelines due to the current economic backdrop and foreign exchange risk. The company presently retains a short-term Zacks Rank #3 (Hold).

In the near term, we would advise investors to accumulate its short-term Zacks Rank #2 (Buy) peer JinkoSolar Holding Co., Ltd. (JKS - Snapshot Report).

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