First Solar, Inc. (FSLR - Analyst Report) has sold a 50-megawatt (MW) Silver State North photovoltaic (PV) project to Enbridge Inc. (ENB - Snapshot Report). Post-acquisition, Enbridge will have 100% ownership in the project developed and constructed by First Solar at Clark County, Nevada, near the community of Primm.
Silver State North will use more than 800,000 of First Solar's advanced thin film PV modules. It will also provide operations and maintenance services to Enbridge under a long-term contract. First Solar will start recognizing revenue from the project after final testing and commissioning which it expects in the second quarter of 2012.
The project will have a generation capacity of 122,000 MWh that will serve about 9,000 average Nevada homes per year. Under a 25-year power purchase agreement (“PPA”), the electricity generated from the project will be purchased by NV Energy Inc. . The company expects the solar plant to come on line by May 2012.
Like other energy companies, Enbridge is also focused on meeting its renewable energy goals. The project will help Enbridge in fulfilling its commitment to generate a kilowatt of renewable energy for every kilowatt of conventional electricity that the company consumes. The electricity generated would be eco-friendly and will displace about 42,000 metric tonnes of carbon dioxide annually which is equal to taking roughly 8,000 cars off the road.
Returning to First Solar, like its peers, it is witnessing an oversupply of photovoltaic products in the market, leading to a steep drop in Average Selling Prices. Also, the current macro scenario does not bode well for the solar industry, which thrives mainly on subsidies and grants.
First Solar expects the weak trend to continue in 2012. Though in order to counter this, it is focusing more on utility-scale electricity power projects, a volatile euro, apprehension over a reduction in European solar subsidies and falling crystalline silicon prices are matters of concern.
The company presently retains a short-term Zacks #3 Rank (Hold). We have a long-term Underperform recommendation on the stock.
First Solar Inc. designs, manufactures, and sells solar electric power modules using a proprietary thin film semiconductor technology. The company's solar modules employ a thin layer of cadmium telluride semiconductor material to convert sunlight into electricity. It sells its products to project developers, system integrators, and operators of renewable energy projects primarily in Europe with a distinct focus on Germany.