Investors often talk about looking for a competitive moat that protects a business. In long-established businesses like Coca-Cola or McDonald's, a moat is easy to identify, but in the fast-changing solar business, it's harder to identify what's a lasting competitive advantage and what's a fleeting technology.

One company has managed to build a moat that has about as much staying power as any company in solar can claim, and that company is First Solar (Nasdaq: FSLR).

Years ahead of the curve
For years, First Solar's competitive advantage has been its industry-leading cost per watt. With module costs of just $0.75 per watt in the first quarter, First Solar is miles ahead of the competition.  Trina Solar (NYSE: TSL) and Hanwha SolarOne (Nasdaq: HSOL) are two of the few manufacturers that explicitly state their costs per watt, which are $1.16 and $1.27, respectively. They would have to cut costs drastically to catch First Solar.

Cost per watt is not the only factor that goes into the cost of energy, but First Solar's lead is so wide right now it isn't even within shouting distance of competitors.

Improving every day
In the last year, First Solar has spent $94.8 million on research and development to improve its products. That dwarfs competitors and will help First Solar lower costs and improve efficiency. Just last week, the company announced it had set an efficiency record for CdTe solar cells at 17.3%, 0.6% better than the old mark.

Developing its own demand
Another advantage First Solar has is a large project team that can create internal demand for the company's panels. SunPower (Nasdaq: SPWRA) and First Solar are leading the way in this trend, but other manufacturers are starting to follow slowly but surely. There's nothing quite like a head start, though, and both of the U.S.-based companies are miles ahead of their Chinese counterparts in project development.

The solar sector's earnings season starts with First Solar on Friday. Keep up with everything that happens by adding your favorite solar stock to My Watchlist.