Sometimes we forget about just how important the utility scale solar market is to the solar industry. According to Solar Market Insights Report: Q2 2013 by GTM Research and the Solar Energy Industries Association, 452 MW of the 832 MW installed during the second quarter was in utility scale projects. In fact, residential installations were flat quarter over quarter and commercial installations fell 11%, while utility scale installations grew 42%.
Most of the buzz in the industry is around residential solar and the explosive growth of SolarCity, but the two profitable solar companies -- SunPower (NASDAQ: SPWR ) and First Solar (NASDAQ: FSLR ) -- depend heavily on the utility space. That's actually where they get their profits from.
Utility scale solar isn't dead after all
I'll be the first to admit that I have largely written off First Solar because of its low efficiency panels, falling backlog, and a general trend away from utility projects in the U.S. But recently the company's momentum has turned around in the utility space.
Before last quarter's earnings call, First Solar announced the acquisition of 1.5 GW in pipeline projects from Element Power . Last month, it also sold 50 MW of projects to a partnership led by GE Energy Financial Service and signed a 32 MW power purchase agreement with the City of Roseville, California .
Today, First Solar announced the acquisition of a 250 MW project called Moapa Solar Project in Nevada . This is another large project that will help keep First Solar busy and profitable for the next couple of years.
Don't count out SunPower
When Total (NYSE: TOT ) took a majority stake in SunPower one of the advantages management pointed to was Total's global energy network, which was supposed to lead to more project wins for the pair of companies. Today, those synergies took a step in the right direction when Total announced it was building a 70 MW solar power plant in Chile.
The new plant will be 70% owned by Etrion, 20% by Total, and 10% by Solventua. The Overseas Private Investment Corporation, a U.S. Government development finance institution, will finance 70% of the $200 million project.
SunPower has been awarded with a contract to build the project and also a "long-term fixed price operation and maintenance agreement."
What's different about this project is that this is the world's largest solar plant to sell power into the spot market, not through a power purchase agreement or feed-in tariff, which dominate most solar installations. This is solar competing directly with the grid in Chile, a big step forward for the industry.
Utility scale solar is big business
First Solar and SunPower are two of the best ways to play utility scale solar and investors should keep in mind that this is really where the money is. With the contract signings in just the past few months this may be a new global growth spurt for the utility scale solar industry.
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