First Solar to Sell Power in India

Brian Hicks

Written By Brian Hicks

Posted August 24, 2012

India recently hit the news for all the wrong reasons, with their historic power failure and blackout fiasco. Now, First Solar Inc. (NASDAQ: FSLR), which distinguishes itself by continuing to be the sole profitable solar panel manufacturer (among the top ten in that sector), will develop solar farms in the subcontinent.

So far, First Solar has just been a supplier. However, their Indian plans include taking over a minimum 20 percent share of photovoltaic sales in India, feeding growing demand from industrial and commercial buyers while trying not to rely on government subsidies.

Reuters reports:

“Our focus really is to create a new stream of demand in the market from industrial and commercial businesses,” [the firm’s head of India operations Sujoy] Ghosh said by phone. “That would require us to do a lot of the development” of projects, including building, arranging financing and supplying modules, he said.

It’s a wise move for the company, since they’ve chosen not to compete directly with Chinese manufacturers of solar panels. Last year, driven by absurdly cheap Chinese products, prices crashed by nearly 50 percent. India, for its part, has a 30 gigawatt backup power market to kick in during emergencies.

Currently, the country boasts 1,030 megawatts of solar electricity capacity, most of which was developed in just the past year. All of it was powered largely by government contracts, which mandates states to purchase power at above-market rates.

First Solar will aim to sell solar power directly to businesses, thereby bypassing the cumbersome state apparatus while also allowing businesses to lock in their own power backup sources and protect against the rising cost of power across the country.

The situation is quite different from that in Europe, where faltering government subsidies make for a treacherous market. Europe is, in fact, the world’s largest solar market. However, according to a Bloomberg study, German and Spanish demand for solar panels may drop by almost 75 percent in 2013.

First Solar has been doing relatively well. This August, the company reported a second-quarter net income of $111 million, or an 81 percent increase. This was spurred largely by a shift toward developing solar farms with the company’s modules. All nine of the world’s other largest solar panel manufacturers reported quarterly losses.

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