You could argue that General Electric (GE 0.02%) saved First Solar (FSLR -0.88%) when it sold the solar manufacturer its solar technology in 2013. At the time, First Solar was struggling to make its thin film solar technology competitive with the rapidly falling cost of Chinese solar panels, which were more efficient than First Solar's product.

The combination of First Solar's scale with GE's technology brought First Solar back from the brink. And it made a lot of sense, because GE didn't want to make a bet on one solar technology and get into the project development business that First Solar was betting on at the time.

But the solar industry is changing, and it may make more sense than ever for GE to get back into solar -- by buying First Solar. 

Utility scale solar installation by First Solar.

Image source: First Solar.

How solar has changed in the last four years

Four years ago, solar manufacturers like First Solar, SunPower (SPWR -3.89%), and Canadian Solar (CSIQ -0.99%) were trying to survive the flood of solar panels from China that caused a sharp drop in panel prices and build a business that had captive demand. Each of these three companies invested heavily in developing its own pipeline of solar projects, which would ensure demand for solar panels no matter the ups and downs of the development cycle. At the time, the strategy made a lot of sense because the money in solar wasn't in solar manufacturing, but in project development. 

But in 2017 the solar development sector has become highly competitive as solar companies, utilities, and third party project developers have delved into the business. And the profit has all but dried up, leaving companies like First Solar and SunPower transitioning away from project development to pre-engineered solar solutions. And this is why it's time for GE to get back into solar. 

Where GE could fit into solar today

If First Solar executes its Series 6 upgrade as planned, the company will be in a position where it can offer a full suite of products to product developers. It will make the solar panels, which is the core of the business, but it will also provide racking, design services, inverters, energy storage, and other necessary pieces of the value chain. This is similar to the component sales GE has for everything from lightbulbs to substations. 

GE could easily fold in First Solar's products to its portfolio and may even be able to use its balance sheet and financing arm to provide more services to developers. It could offer loans, like it does in power plant development, or tax equity capital for financing solar projects, as it is doing today. 

Adding First Solar would just build out GE's product portfolio into solar, and could add easier integration for inverters and even new energy storage products. 

First Solar is the company GE should buy

There are a number of solar companies GE could buy, but First Solar makes the most sense financially. It's expecting to have over $1.5 billion of net cash on the balance sheet at the end of this year, and also expects to report a non-GAAP profit of $0.25 to $0.75 per share, despite a down year in the industry and upgrading a large portion of its equipment. 

With First Solar, GE could move deeper into the booming solar industry supply chain and augment its existing business. That's a great reason to acquire the company and is a very different position from where First Solar was when GE sold it its thin film technology four years ago. Instead of abandoning its solar ambitions, it's time to jump into a maturing solar industry while it's cheap to do so.