Well, it's official. Solar power is showing no signs of slowing. According to a just-released report from industry-watcher Solarbuzz, the global market for photovoltaics grew 62% in 2007.
The year's blistering market demand gave First Solar (Nasdaq: FSLR) the confidence, not to mention the customer commitments, to move forward with a Malaysian plant expansion, and then another, and another, and another. The first facility is set to ramp up later this year, so we're in for a series of stepped-up changes in revenue and earnings -- just not this quarter.
Because capacity was essentially the same as last quarter, save for an impressive 3% throughput improvement on existing manufacturing lines, there were no fireworks for First Solar this time around. As part of the company's plan to wean itself off of subsidies, annual pricing reductions are baked into the company's long-term contracts, so revenue declined slightly. A stronger euro did cushion the cut, by boosting sales from First Solar's German facility in dollar terms.
First Solar doesn't throw out many crumbs in its press releases, so you really have to tune into the conference calls to get the scoop.
A lot of analysts were curious about the firm's supply chain, because First Solar's thin-film cells are tricked out with tellurium. The company is pretty tight-lipped about its sourcing and consumption of the rare mineral, and would say only that it has long-term contracts with multiple suppliers. Management also had no comment on whether the company would consider vertically integrating into tellurium production. This is akin to the path that crystalline silicon players like Yingli Green Energy (NYSE: YGE) and Trina Solar (NYSE: TSL) have pursued, though the latter company recently canned its plan to produce polysilicon.
Another interesting discussion circled around the U.S. utility market, which First Solar is attempting to tap. The company's only announced project, with Edison International (NYSE: EIX) subsidiary Southern Cal Edison, is currently under review by state regulators. This is a modest project, nowhere near the scope of the solar thermal plans that keep popping up. Still, companies like First Solar, SunPower (Nasdaq: SPWR), and Google- (Nasdaq: GOOG) incubated eSolar all appear to have a fair crack at this market. So grab your ringside seat -- this is going to be a fun scrap to watch.
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With deals like this, Trina's trying to avoid supply-chain pain.
