First Solar Inc. (NASDAQ: FSLR) leads the U.S. solar power industry in both solar cell and solar panel production.
It held up well among the fizzling popularity of the solar industry and renewable power. In the second quarter of 2012, the company was one of the only companies on the BI Global Large Solar Index to report a profit.
But that's not to say it hasn't suffered. The company took a hit with the rest of the solar industry in the last few years when panel prices fell too quickly. Profit margins suffered, and a number of companies folded under the pressure.
Then cheap panels from China, subsidized by the government, were dumped into the U.S. and European markets, hitting the U.S. companies while they were down. Domestic companies couldn't compete.
But First Solar managed to make it through. Though prices are still low, First Solar is working to move back to its strongest days.
Like any company in the volatile industry, First Solar has had its ups and downs. But unlike many of the others (Solyndra is the most infamous example), it fought through every bump in the road and continues to come out on top, a testament to its strong history and solid foundation.
Where it Began
First Solar as we know it was formed in 1999. But the flourishing solar company actually has a much earlier history than that.
In 1984, glass specialist Harold McMaster founded Solar Cells Inc. The company was an early entry into the solar cell market, manufacturing cells from silicon as had been done by many companies before.
But silicon was expensive, and soon McMaster and partner James Nolan decided to try a different route, switching to cadmium telluride (CdTe). This cheaper material still worked efficiently but also helped the company save and thrive.
And thrive it did. In 1999, the company was purchased by True North Partners, LLC. It was then that it officially became First Solar, a whole new company that still maintained the technology developed by Harold McMaster himself.
By 2003, the company had $3.2 million in sales. By 2005—just two years later—that had grown fifteen times to $48.1 million.
The company launched its initial public offering on November 17, 2006 under CEO Michael J. Ahearn, formerly a member of True North Partners.
By that time, it had already lowered its costs to $1.50 per Watt from $1.59 per Watt in 2005. Meanwhile, the world was experiencing a shortage of silicon, boosting prices of the material and solar modules. First Solar, unique for its use of CdTe, avoided this squeeze.
The company's innovative technology and success amid a troubled industry helped it price above its $17 to $19 range at $20, raising $400 million.
Over the next few years, First Solar took off. From its starting price of $20, the share price broke $300 in April 2008, and for years the price bounced between the $100 and $200 range. Solar was the industry to watch, and First Solar was a frontrunner.
But even this successful company couldn’t withstand the drop in solar panel prices that rocked the industry in 2011. Between January and December 2011, the share price plummeted more than 70%.
The solar industry that had been so successful and highly watched for years had been something of a bubble. Panel makers were producing in high quantities, but soon that supply outpaced demand.
Panel prices fell as panel makers tried to sell the now-oversupplied panels. Meanwhile, Chinese companies were selling their even lower-priced panels in the U.S. and European markets, where domestic companies struggled to compete.
Many solar companies went bankrupt. Others struggled with losses, an oversupply, and prices too low to help.
And makers of polysilicon panels were hit the worst. Though First Solar’s panels weren’t quite as efficient, they were cheaper to produce. And that kept the company going.
This climate lasted for over a year. But First Solar held on through it all. And as solar companies began to come out of the dark, First Solar came out even stronger than before.
Products and Projects
First Solar is unique for the types of solar modules it produces. The cadmium telluride in its solar cells helped it survive the panel price crash when a number of companies using high-priced silicon folded.
The company’s thin film photovoltaic cells achieved 18.7% efficiency, setting a world record for the material. They’ve been determined to be more efficient than conventional solar modules at temperatures above 25 degrees Celsius, and they have proven superior plant performance in hot climates.
The company continues its research and development on solar cells and modules as well as solar plants, continuing to advance the efficiency of its products. First Solar’s worldwide production capacity has reached 7GW, and the company has nearly 3GW of projects in its pipeline.
And it isn’t stopping at solar cells and panels, either. It’s providing the installations and even plants to help power facilities and the grid.
First Solar has solar plants and farms in place all around the world—14 in North America, three in Europe, one in Asia, and one in Australia.
Its largest projects are the Desert Sunlight Solar Farm in Desert Center, California and the Topaz Solar Farm in San Luis Obispo, California, both with a 550MW capacity.
The Desert Sunlight farm became operational in 2015. Co-owners include NextEra Energy Resources, GE Energy Financial Services, and Sumitomo Corporation of America.
The Topaz Solar Farm is owned by Mid American Solar, the subsidiary of a company owned by Warren Buffett’s Berkshire Hathaway (NYSE: BRK.A, BRK.B). With 9 million modules, the project came online in 2014 and became one of the world's largest operational solar farms.
Before these two, First Solar's largest completed project was the Sarnia Solar Project in Sarnia, Ontario, Canada. With 80MW of capacity, the project is owned by Enbridge, Inc. (TSX: ENB) and is made up of 1.3 million modules. At its time of completion in October 2010, it was the largest operational photovoltaic facility in the world.
But the company’s Agua Caliente project near Yuma, Arizona, is yet another impressive feat. The project became operational in 2014, and with 5.2 million modules and 290MW of capacity connected to the grid.
And the company is likely to only continue to expand on these, breaking record after record on the size and capacity of its facilities, the efficiency of its modules, and the cost-effectiveness of its products.
The solar industry is undergoing a maturation process, and that means the weaker companies will be weeded out while the strong, though weakened in the pruning, will survive and grow into the industry leaders.
It is clear that First Solar has long been one of these industry leaders. It survived the Great Recession, actually thriving during that time, and it fought through the price crash that followed. Though it has yet to return to the $100-$200 price range it experienced during the years of solar hype, First Solar is stabilized and growing, building its reputation through its work on some of the world’s greatest solar projects.
Its continued research and development will allow it to innovate with the changing technology, and it certainly has the foundation and the resources to impact the global energy scene both as a major power supplier and a sustainable company.
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