Despite fears the project wouldnt get off the ground after the thin film manufacturer failed to secure a U.S. Department of Energy loan, and due to permitting delays, work finally got underway last week, meaning that it can now qualify for the 30 percent tax grant program, which is expiring at the end of 2011.
As Jefferies points out in a company note issued, the move is a "modest positive" as it "signals all regulatory hurdles have been cleared".
Overall, the Topaz project is expected to be built over a period of around three years. Currently, First Solar is using its own balance sheet to fund the project, however it is looking for a buyer. Jeffries further notes, "No project sale will be recognized until the project is sold, but it can book revenue per its PPA with PG&E (PCG, $37.21, Hold) as the project comes online and produces electricity. Modules going into the project are accounted as inventory until the project is sold."
The power purchase agreement has been in place since August 2008, four months after the project was first proposed by OptiSolar. It is estimated that the project will cost around $1 billion to execute.
First Solar has already completed a number of large-scale solar projects, including the 48 MW Copper Mountain system, the 30 MW Cimarron system and, currently the world's largest, the 80 MW Sarnia system in Ontario.
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