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First Solar Inc. (FSLR - Analyst Report) has applied for a permit license from Chile’s environmental licensing agency Servicio de Evaluacion Ambiental to build a photovoltaic power plant worth approximately $370 million.

Located in Atacama Desert in northern Chile, the Luz del Norte plant will have an electric generation capacity of 162.4 megawatt (“MW”). With the help of 1.7 million solar panels, the project has the capacity to produce 480,000 gigawatt hours (GWh) of electricity on an annual basis.

This move will strengthen the company’s position in Chile. In Jan 2013, the company acquired Solar Chile, a Santiago-based solar development company. Solar Chile has a portfolio of early-to-mid stage utility-scale photovoltaic power projects totaling about 1.5 GW in northern Chile, including the Atacama Desert region.

The share price of the company yet again experienced a hike of 5.5% over the last day’s trading price of $47.65. On Jun 25, 2013, First Solar’s shares surged 7.8% to $44.48 driven by President Obama’s proposal to reduce emissions from coal plants.

As per a recent report from the U.S. Energy Information Administration, 20% of the total power to be generated in 2040 will come from renewable sources and solar photovoltaic will play a major role in it. Solar generation capacity is expected to increase by a whopping 1000% to 46 gigawatt (GW) in 2040 from 2011 levels.

To this end, the company continues to execute its strategy by diversifying globally with a focus on increasing bookings and improving its costs. First Solar is receiving a steady flow of orders from domestic as well as international clients for solar modules and other allied services.

However, we remain concerned about the currency risk and ongoing crisis in the Eurozone that would lead to tight-fisted subsidies in the form of lower feed-in tariffs, rebates, tax incentives and other incentives. The company presently retains a short-term Zacks Rank #3 (Hold).

However, stocks to look out for in the solar space are JinkoSolar Holding Co., Ltd. (JKS - Snapshot Report), Yingli Green Energy Holding Co. Ltd. (YGE - Snapshot Report) and SunPower Corp. (SPWR - Analyst Report), all with a Zacks Rank #2 (Buy).


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