First Solar signs deal to build plant in China

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Workers prepare solar panels at the First Solar plant in Frankfurt, Germany. The company plans to build a plant in China.

Field of panels will stretch for 25 miles

by Ryan Randazzo - The Arizona Republic

Tempe-based First Solar Inc. announced a plan Tuesday to build the world's largest solar power plant in China, opening the door for the manufacturer to serve one of the world's most rapidly developing economies.

The plan not only represents a milestone for alternative energy but a validation of the company's efficiency and low production costs. First Solar

faces at least five major solar-panel manufacturing competitors in China.

First Solar signed a memorandum of understanding with the Chinese government Tuesday to build a 2,000-megawatt plant in Ordos City, Inner Mongolia.

When finished in 2019, the field of black panels will measure 25 square miles. If built in a square, the field would stretch from Camelback Road to Phoenix Sky Harbor International Airport and from 32nd Street to Scottsdale Road.

The biggest solar-power plants using black panels such as First Solar's are in Spain, Portugal and Germany, ranging in size from 40 megawatts to 60 megawatts of capacity in direct sunlight.

The plant will have a higher capacity to generate electricity than a single nuclear reactor or coal-burning power unit, although unlike those plants, it won't operate around the clock. Solar panels can't make electricity after dark.

In direct sunlight, the plant would be able to power 500,000 homes at once in Arizona.

The plant would cost $6 billion if built in the United States, according to First Solar, but could be less expensive in China because the company could build a new manufacturing facility in China to supply the project.

It's unclear what the company's profit will be from the project because, as with all solar power, the project depends on subsidies.

China is expected to enact a "feed-in tariff" that guarantees an above-market rate for power from the plant. The company's profit will depend on how high that tariff is set.

"This major commitment to solar power is a direct result of the progressive energy policies being adopted in China to create a sustainable, long-term market for solar and a low-carbon future for China," said First Solar CEO Mike Ahearn, who recently announced he would step aside to be replaced by Honeywell Aerospace President Rob Gillette.

First Solar has plants in Ohio, Germany and Malaysia where it costs the company an average of 87 cents per watt of capacity to make panels. That means a 75-watt solar panel costs the company $61.50, less than any other company in the world.

Ahearn and other First Solar executives showed off their technology while giving a delegation of Chinese officials a tour of their Tempe headquarters during the holiday weekend.

"We are very pleased to be partnering with one of the solar industry's global technology leaders in a project of such significance," said Cao Zhichen, vice mayor of the Ordos Municipal Government. "Discussions with First Solar about building a factory in China demonstrate to investors in China that they can confidently invest in the most advanced technologies available."

At least one analyst noted on Tuesday that First Solar's industry-leading prices might be slipping, but said that breaking into the Chinese market was significant.

"This year First Solar is on parity with other . . . companies," Credit Suisse analyst Satya Kumar wrote in a research note. "That said, the positive is that First Solar is now tied to China demand."

First Solar shares closed up $12.94, or 10.7 percent, to $134.41 Tuesday.

The news sent stock prices higher for publicly traded Chinese competitors including Suntech Power, Yingli Green Energy, Trina Solar, LDK Solar Co. and JA Solar.

The First Solar announcement was part of an estimated $12.4 billion in contracts that the Chinese delegation acted upon during a U.S.-China Economic and Trade Cooperation Forum Tuesday including Gov. Jan Brewer and officials from Colorado, Idaho, Kansas and Nevada. Forty-one contracts were signed by business partners during the event, according to the Arizona Department of Commerce.

http://www.azcentral.com/business/articles...tsolar0909.html