First Solar Gets Solar Off on the Right Foot

Just a few days into the new year and we are already getting a small taste of what the year might be like for solar stocks.

First Solar (Nasdaq: FSLR  ) is spreading its wings in China, signing a memorandum of understanding for phase 1 of the 2-gigawatt Ordos facility announced in 2009. This phase is only 30 MW, but it is a small step in a key project for First Solar.

With Chinese manufacturers like Trina Solar (NYSE: TSL  ) and Yingli Green Energy (NYSE: YGE  ) already in China, why wouldn't China choose a homegrown manufacturer? The answer comes down to expertise. U.S.-based First Solar has a history of building large solar projects and the Chinese can learn from that in this first go-around.

The Chinese are known for bringing in experts to teach them industry-leading techniques and then taking over themselves when they've learned enough. Think Lenovo, when you think a U.S. company may be taking hold in China.

The next frontier: Canada
With everyone worried that solar demand will die down this year, we may need to focus our attention on an unlikely source of demand from Canada. Ontario is becoming a hotbed for solar investment, opening the 80-MW Sarnia Solar Project last year and becoming a renewable energy mecca.

Yesterday, First Solar found a buyer for 50 MW of projects in Ontario that will start construction this summer. Plutonic Power Corp. and GE (NYSE: GE  ) will purchase the power plants with First Solar arranging the debt.

Last year, SunPower (Nasdaq: SPWRA  ) agreed to sell a 20-MW project in Ontario, so the Canadian love is being spread around the solar industry.

These sales don't really tell us if solar is going to fall off a cliff in 2011, but they at least get us off on the right foot. Solar companies will have to prove they can take a few more steps before Wall Street buys into the solar story this year.

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Fool contributor Travis Hoium is a renewable energy junkie and owns shares of First Solar and SunPower. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

First Solar is a Motley Fool Rule Breakers selection. 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.


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