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After a year of nothing but bad news, First Solar (Nasdaq: FSLR ) is starting off 2012 on the right foot. The stock has benefited from increased demand in Germany and projections that China's solar market may be even larger than the 3 GW originally expected. But on the strategic front, the company is taking steps to increase efficiency and close the gap setting it apart from more efficient silicon-based module manufacturers.
Record setting effort
The National Renewable Energy Lab confirmed that a CdTe module made on production equipment in Ohio recently reached 14.4% total area efficiency. This compares with the company's expectation of 12.7% efficient modules in the fourth quarter and is a huge step closer to the efficiency of standard modules.
First Solar is still far behind industry leader SunPower (Nasdaq: SPWR ) , which has modules that are more than 20% efficient, but it still holds a wide lead in cost per watt.
I've said that First Solar is falling behind strategically because as module prices fall, the company's lower-efficiency modules lead to higher balance-of-system costs and a dwindling competitive advantage. Chinese firms like LDK Solar (NYSE: LDK ) , JA Solar (Nasdaq: JASO ) , and Renesola (NYSE: SOL ) , which are desperately trying to unload modules, are now selling at close to $1 per watt, and with higher efficiency than First Solar, they have an advantage unless First Solar can quickly increase efficiency.
Roadmap going forward
It will be a while until First Solar brings a module near 14.4% efficiency into full-scale production. The company's module efficiency roadmap doesn't reach that level until at least 2014. By then, silicon-based modules will likely also be more efficient, so it's unknown whether First Solar is really catching up or just staying in the game with this new record.
For now, I see this as a slightly positive sight, but if shares continue to bounce higher, I might take the opportunity to move my money into a company with more efficient modules.