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First Solar Inc. (FSLR - Free Report) has begun the commercial operation of the 250 megawatt (“MW”) Moapa Southern Paiute Solar Project.

Details of the Project

Constructed and operated by First Solar, the facility is powered by over 3.2 million advanced First Solar thin film photovoltaic (“PV”) solar panels. This is equal to over 25 million square feet of solar panels, or adequate to cover over 450 National Football League (NFL) football fields.

The project will use solar energy, the use of which will help to evade about 341,000 metric tons of carbon dioxide emissions annually that would have been produced from fossil fuels-generated electricity.

It is expected that the facility will generate adequate clean energy to power around 111,000 homes. It has a long-term power purchase agreement (“PPA”) with Los Angeles Department of Water and Power (LADWP) to provide clean renewable energy to the customers of Los Angeles.

The Moapa Southern Paiute Solar Project marks the first and largest utility-scale solar power plant that has been built on tribal land. Located on the Moapa River Indian reservation, this solar energy project has offered economic development opportunities for tribal members and other Native Americans. The opportunities include − providing lease revenues to the members throughout the life of the project and roughly 115 construction jobs. At the same time, this project will also look forward to conserve their land as well as cultural heritage.

According to Reiko A. Kerr, Senior Assistant General Manager, LADWP Power System, the solar plant should extensively assist the City of Los Angeles toward achieving the target of deriving 33% of energy from renewable resources by 2020 and 50% by 2025.

First Solar's Plans

In the next two years, First Solar is expected to go through a major transition. In Nov 2016, the company had announced that it will ramp up the production of Series 6 solar modules in 2018, with expectations of producing roughly 3 gigawatts ("GW") in 2019. During 2017 and 2018, its existing production facilities will be converted to support Series 6 production and Series 4 and 5 solar modules will be eventually discontinued. This will help the company reduce costs and increase efficiency of each panel installed.

Our View

First Solar is able to develop economically sustainable businesses backed by its expertise in PV generation solutions as well as in other areas of the solar-value chain, such as project development, engineering, procurement and construction (EPC) capabilities and operation & maintenance (O&M) services. The company continues to focus on retaining its competitive edge and aims to further consolidate its position in the market.

Also, we believe First Solar's long-term industry-leading position has allowed it to generate profits consistently, in turn facilitating a strong balance sheet on the back of net cash balance of around $1.3 billion.

Price Movement

First Solar’s share price has declined 55.3% in the past twelve months, compared with the Zacks categorized Solar industry’s loss of 54.3%. The underperformance could have resulted from the victory of Donald Trump, which has created uncertainties for companies operating in the alternative energy space. Far from supporting the renewable sector with any kind of incentives, the President had promised to revive coal during his pre-election campaigns. Additionally, Trump said that he would change all solar policies. This had a major impact on almost all major solar companies. The company’s performance lagged behind the likes of Canadian Solar, Inc. (CSIQ - Free Report) , JA Solar Holdings Co., Ltd. (JASO - Free Report) and JinkoSolar Holding Co., Ltd. (JKS - Free Report) , who have all outperformed the industry.



Zacks Rank

First Solar currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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