First Solar (NASDAQ: FSLR) has just announced that Pacific Gas & Electric Co. (NYSE: PCG) will buy all electricity generated by two First Solar plants under development in California. The news sent First Solar shares shooting up by more than 5 percent on Tuesday.
The 32-megawatt Lost Hills in Kern County and the 40-megawatt Cuyama facility in Santa Barbara County together will account for more than 600 jobs during construction and will generate enough power for 24,000 average Californian households. Pacific Gas & Electric will buy up all that power.
First Solar, of course, holds a formidable reputation as one of the world’s biggest manufacturers of solar panels, but the company has recently invested significant resources in developing large solar farms to power utilities. In large part, this shift has been in response to excessive solar panel manufacturing out of Asia, crashing raw material costs, and falling European government subsidies (Europe is still the world’s largest solar market).
Some years back, when First Solar was still making the cheapest panels in the world, the company laid out plans for some very large-scale solar projects in the American West and Southwest – projects that are now under development. Despite analysts’ worries that First Solar may not be able to keep selling new projects now that other solar panels are competitively priced, the current deal is an indicator that First Solar can still keep kicking.
First Solar shares rose 5.15 percent to $21.86 in daytime trading on Tuesday, and they were up 1.51% to $22.13 on Wednesday morning.