The largest photovoltaic (PV) panel manufacturer in the U.S., First Solar Inc. (FSLR) received approval from the Overseas Private Investment Corporation (OPIC), the U.S. government’s development finance institution and International Finance Corporation or IFC for a 141-megawatt (MW) AC solar project in northern Chile. Shares of First Solar were trading higher yesterday on the news, finally closing at $71.47 per share, up 1.84%.
The solar project – Luz del Norte – to be constructed near the city of Copiapo in the Atacama Desert will be the largest PV solar power plant in Latin America and the first of its kind in Chile. The boards of the U.S. OPIC and the IFC have approved loans of $230 million and $60 million, respectively. Other financial terms of the deal were not disclosed.
Chile’s Atacama Desert absorbs some of the planet’s solid concentration of direct sunlight that makes it a perfect place for solar power generation. Luz del Norte will mark a significant progress in the Chilean energy landscape. This venture will help in achieving Chile’s plan to boost green energy to 20% of total generation capacity by 2025. The power generated from the solar farm will feed into the Chilean Central Interconnected System.
In 2013, First Solar 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 gigawatt (GW) in northern Chile, including the Atacama Desert. This gave First Solar a solid pipeline of Engineering, Procurement, and Construction (EPC) projects in Chile.
First Solar is the only standalone solar player in the S&P 500 Index. Based in Tempe, AZ, the company 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.
Though First Solar’s solar cells convert sunlight to electricity less efficiently than traditional silicon PV modules, thin film PV cells enjoy the advantage of producing electricity even in lower light. This ability to produce electricity under a wide range of light conditions makes these cells attractive for utility companies that require stable large-scale, utility-sized renewable energy production.
With a market cap of $7.16 billion, First Solar has already installed more than 8 GW of solar energy worldwide. Though First Solar is subject to intense competition, it is poised to develop economically sustainable businesses as it has an established expertise and meaningful PV generation solutions in other areas of the solar value chain, such as, project development, EPC, and Operations & Maintenance (O&M) services.
First Solar currently holds a Zacks Rank #3 (Hold). Better-ranked peers in the renewable energy space include JA Solar Holdings Co., Ltd. (JASO), Covanta Holding Corporation (CVA) and Yingli Green Energy Holding Co. Ltd. (YGE). While JA Solar and Covanta sport a Zacks Ranks #1 (Strong Buy), Yingli Solar carries a Zacks Rank #2 (Buy).
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