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Tempe, Ariz.-based comprehensive photovoltaic (“PV”) solar systems provider First Solar Inc. (FSLR - Analyst Report) is focused on its mission of developing emission-free renewable set-ups. Recently the company announced the beginning of construction of Phase I of a 22- megawatt (MW) solar power plant west of Fort Stockton in Pecos County, Texas. The share price of First Solar edged up 0.4% to $52.04 yesterday during daily trading on the news.

The solar plant in question – Barilla Solar – will be built on almost 200 acres of land and is expected to come online as early as June this year. First Solar plans to sell the output to local utilities, cooperatives and industrial customers through the state’s deregulated market. The large land holding of the project will allow First Solar to add more capacity if required in the future.

With the capacity to power approximately 2,000 homes, the uniqueness of Barilla Solar lies in the fact that its developers are moving ahead without signing a power purchase agreement (“PPA”). The PPA generally guarantees a buyer for the energy generated from a power plant. First Solar is not too preoccupied with these considerations. Its confidence stems from the fact that the company has strong ties with the U.S. utilities and wins contracts at a fairly steady pace. For the moment, the output from Phase I will be put directly to the grid.

Globally, the demand for renewable power is gradually rising mainly due to a growing awareness among the masses about its benefits; thereby influencing utility providers to shift to solar, wind and water. We view this growing demand for solar powered energy as a catalyst for First Solar’s future operating as well as financial results.

We note that most of the U.S. states have rolled out renewable portfolio standards for electricity generation or have laid down targets for the future. The utility providers continue to diversify their power generation assets while adding new renewable infrastructure to their portfolio.

With no dearth of solar resources in West Texas, the Barilla project will contribute to Texas' immediate energy requirements, thereby helping to meet the state’s rising energy demand, particularly during critical peak hours. It is worth mentioning that this venture has major competitors like CPS Energy's Alamo project in San Antonio and Austin Energy’s 30 MW Webberville facility. The Alamo project has a capacity of 41 MW and has plans for more plants that would bring the total to 400 MW.

The third quarter of 2013 was an excellent one for the U.S. solar market. 2013 on the whole is expected to be even more vibrant. It is likely that for the first time in more than 15 years the U.S. has installed more solar capacity than the world leader Germany.

The results were driven by a record level of residential installations and a strong quarter in the utility segment, thanks to solar giants like First Solar, SolarCity Corp. (SCTY - Snapshot Report) and SunPower Corp. (SPWR - Analyst Report).

First Solar’s recent collaboration with General Electric (GE - Analyst Report) could significantly help the company’s long-term prospects. By giving General Electric a 2% stake in the company, First Solar now has access to General Electric’s thin film manufacturing technology.

Zacks Ranked #1 (Strong Buy) First Solar’s steady effort in improving product quality and service standards will help it to become an important solar product provider in the U.S. as well as global solar industry.

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