First Solar to expand manufacturing capacities, but no yieldco


The financial metrics reported by First Solar in the third quarter of 2014 were largely unremarkable. The company brought in US$889 million in revenues, something of a mid-point in its roller coaster ride over the last few years, with fluctuations due to uneven timing of project completion.

The company also reported a 9.4% operating margin, and a healthy profit of $88.4 million. What was more telling was the company’s announcements for the future. During its earnings call First Solar CEO Jim Hughes reported that the company will both restart idled module lines in Malaysia and adding two new lines in its factory in the U.S. state of Ohio.

When combined with greater utilization of existing lines, First Solar estimates that its manufacturing capacity could increase up to 46% in 2015, rising from its current around 1.8 GW annually to around 2.6 GW.

“It’s not a mystery to everybody that the step-down of the investment tax credit in the U.S. market at the end of 2016 continues to pull demand forward,” explained First Solar CEO Jim Hughes. “We want to maximize our ability to capture that demand.”

This is particularly ambitious given that First Solar only ran at 77% capacity utilization during the third quarter. First Solar notes that less than full capacity utilization was in part due to ongoing technology upgrades.

The company also expects greater demand for its offerings going forward due to technology improvements. First Solar increased its fleet average efficiency to 14.2% in during the quarter, and during October its best line produced 14.6% efficient modules.

In addition to anticipating increased business in the U.S., First Solar is also expanding its geographic presence. During the quarter over 40% of the project capacity booked by the company was located outside of the United States, a new record.

The company named India and Latin America as important markets. During the third quarter First Solar closed on financing on its 141 MW Luz del Norte PV project in Chile, which is larger than any plant currently in operation in the region.

The other major announcement made during the call is that First Solar will not be pursuing a yieldco at this time, an option which it has been openly considering for several quarters.

However, First Solar is not selling all of the projects which it develops, rather holding some in a manner similar to SunPower’s “Holdco” strategy. “We are self-developing projects, and those projects continue to be lucrative assets for us,” notes CEO Hughes. “In certain circumstances we are retaining an interest in those projects where we think it makes sense.”

In 2015, First Solar will report retained assets as a separate segment.