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First Solar Reaches Efficiency Record

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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.

Interested in reading more about First Solar? Click here to add it to My Watchlist, which will find all of our Foolish analysis on this stock.

Fool contributor Travis Hoium owns shares of First Solar, SunPower, and has sold puts in SunPower. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

The Motley Fool owns shares of First Solar. Motley Fool newsletter services have recommended buying shares of First Solar. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (5) | Recommend This Article (2)

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  • Report this Comment On January 18, 2012, at 3:46 PM, pmilla1606 wrote:

    What about JA Solar's announcement from late last year?

  • Report this Comment On January 18, 2012, at 4:39 PM, DonSolar wrote:

    You mention that:

    "By then, silicon-based modules will likely also be more efficient"

    Silicon as almost at the theoretical limit. It can possibly squeeze out another .5% but it can’t do better than that. The most efficient production technology are systems using multi-junction solar cells like Amonix. The most efficient solar panels to date use a dichroic filter to split the light then directs it to two different triple-junction solar cells. Another high efficiency system is the Rainbow Concentrator by Sol Solution. It separates and concentrates the sunlight onto several lateral single junction solar cells.

    Pmilla1606 You are right, these by far not the most efficient cells, but the most efficient CdTe solar cells, which cost less than silicon. It is all about LCOE.

  • Report this Comment On January 19, 2012, at 1:34 PM, Brettze wrote:

    many people are making solar heat not solar electricity. So far, no manufacturers are interested probably because of bottom lines.. or loyality to Big Oil and Gas . Those HVAC guys who install heaters in your homes are not really thinking at all. They are just assembling ducts and insulation mindlessly.. You can manipulate nature and the elements to take advantage of the free commodity known as air whether it is cool or hot or sunny and get heat or chill out of it at the right times.. We are still not energy smart at all. Photovoltaics is nice but they are not the only game in town.. No way! I know this is investor analysis here not consumer smart analysis here.. Our economy is reeling mainly because of unreliable energy sources like oil and gas... despite Big Oil and Gas bragging that they are still the lowest cost and most competitive around .. We simply cannot plan our economy based on oil any more.. This is suicide!!

  • Report this Comment On January 19, 2012, at 1:45 PM, Brettze wrote:

    Several huge solar projects that was planned to use different solar technology called concentrated solar power that use solar parabolic (curved mirrors) to concnetrate sunlight to generate steam for turbine powered generators. Then suddenly they are dropped in favor of photovoltaics instead.. The real reasoning behind this is aluminium supply which we are still having plenty of but will eventually run out of supplies much sooner and aluminium prices will go up .. So the parabolic mirrors made of aluminium will become less economic despite the much higher efficiency like 50% or higher. meaning less land required to obtain same output as photovoltaics. Thanks to decades of neglect, our aluminium industry is shriveling. America produce only 2 or 3 millon tons of aluminium while China produce close to 20 millon tons... China is able to grow while America cannot becasue America is deficient in aluminium capability..Enviormentalists lambast our aluminium industry for the excess in electricity consumption for making new aluminium . Without concnetrated solar power and aluminium, America will not be able to reduce dependence on fossil fuels whether it be imported or produced here . We will buiild so much pipelines around us.. instead of making more aluminium that will help us become more eneergy independent and more clean as well as far more abundant.. Oil investors do not want us to become more energy independent because they want us to keep paying higher and higher prices for oil and gas... Oil prices has doubled in last ten years and will probably double in next decade... Without more aluminium, America is not coming back, period!

  • Report this Comment On January 19, 2012, at 1:47 PM, Brettze wrote:

    Oil investors think like cockroaches,, They wait until dark before scurrying around ...

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