First Solar, Inc. ( FSLR - Analyst Report ) has declared that 290 megawatts (MW) Agua Caliente solar project has accomplished a peak generating capacity of 250 MW AC. Located in Yuma County, Arizona, the plant is under construction and will be the world’s largest operating photovoltaic (PV) power plant.

Initial construction work of the project had begun at the end of 2010 and the solar module installation was started back in June 2011. Installation of solar module included modern system layout and design, optimized balance-of-system components, and integrated work-flow engineering.

Just after seven months of installation of solar module in January 2012, the project began generating 30 MW of clean electricity. It began generating more than 100 MW of grid-connected power this spring and 200 MW of power recently in summer 2012. The $1.8 billion project is expected to be completed in 2014.

The project is expected to create 400 to 450 construction jobs. When fully operational, the project will offset approximately 5.5 million metric tons of CO2 over 25 years, which is equivalent of taking over 40,000 cars off the road annually serving more than 225,000 homes.

First Solar is engaged in designing and constructing the project using its advanced thin-film photovoltaic modules. The plant is owned by NRG Energy Inc. ( NRG - Analyst Report ) and MidAmerican Energy Holdings Co. Under a 25-year agreement, the energy generated from the project will be sold to Pacific Gas and Electric Company, a subsidiary of PG&E Corporation ( PCG - Analyst Report ) . The Agua Caliente project is being financed with support from a loan guarantee from the U.S. Department of Energy’s Loan Programs Office.

As the project has already completed 85% of its construction before schedule and has met all of its contractual milestones to date and exceeded targets for the speed, quality and safety of the construction process, First Solar has stopped panel deliveries to the project. Till January 2013, the company will neither ship additional modules nor will install panels at the project.

First Solar Inc. designs, manufactures and sells solar electric power modules using a proprietary thin film semiconductor technology. This current achievement demonstrates the company’s knowledge gained over years of experience in designing, building and operating utility-scale solar projects for leading utilities and energy providers.

The company makes cadmium telluride glass substrate-based thin film photovoltaic panels. However, unlike silicon-based solar cell manufacturers (who produce crystalline silicon PV cells), First Solar makes thin-film PV panels on glass substrates. First Solar is the largest player by volume in this niche segment. Though First Solar’s solar cells convert sunlight to electricity less efficiently than traditional silicon PV modules, thin film PV cells have an advantage in producing electricity even in low light.

The company, however, is currently witnessing a steep drop in Average Selling Prices, like its peers Suntech Power Holdings Co. Ltd. ( STP - Analyst Report ) and SunPower Corporation ( SPWR - Analyst Report ) . Also, the current macro scenario does not bode well for the solar industry, which thrives mainly on subsidies and grants.

However, in order to counter the weak trend, the company is focusing more on utility-scale electricity power projects. Moreover, First Solar is partially compensating for its drop in margins through a major restructuring of its operations initiated in April.

The company presently retains a short-term Zacks #2 Rank (Buy). We have a long-term Neutral recommendation on the stock.