First Solar (FSLR 1.33%) isn't known as a high-efficiency module maker but the company announced a major step toward catching up with the rest of the industry today. The U.S. Department of Energy's National Renewable Energy Laboratory has confirmed that First Solar has created a 16.1% efficient solar module. This is more efficient than many multicrystalline modules and can even compete with mono-crystalline modules produced today.  

A boost in efficiency
We shouldn't expect this module to flood the market today, but First Solar is upping its planned efficiency from 12.9% today to 15%-16.2% by 2015, and 16.4%-17.1% by 2017. These efficiencies compare to Yingli Green Energy's (NYSE: YGE) peak of 16.5% today and a typical efficiency by Trina Solar (NYSE: TSL) of around 15%. These companies are two of the largest suppliers in the world and their more efficient modules have become attractive as costs have fallen near to where First Solar's costs are.

At the very least, this may be enough for First Solar to keep up with the increasing efficiency of competitors' modules and keep the company's module business afloat. A strong balance sheet and big backlog of utility-scale projects has kept First Solar's stock afloat as solar module prices have tumbled, but its modules haven't been competitive in commercial and residential markets. Increased efficiency could bring them back to a competitive level, especially if the company can continue to reduce costs.

Still playing catch-up on efficiency
While this is a big step forward for First Solar and the stock, the company is far from an industry leader in efficiency. SunPower (SPWR -55.01%) announced the launch of a 21.5% module, called the X-Series, and GT Advanced Technologies (NASDAQ: GTAT) is releasing its next generation PV equipment that could allow Chinese manufacturers to build modules that exceed 20% efficiency.

A lot can happen between now and 2015 so what appears to be a great catalyst for First Solar's stock today could just be the company keeping up with the competition. From an investment perspective, if First Solar can at least keep pace with efficiency gains that its competitors achieve it would be a boost for the stock. Investors (including myself) aren't putting much value in the module business but these efficiency gains could squeeze a lot more cash out of existing equipment than we ever thought.