Unless there is a change in policy, the ITC will be reduced from 30% at present to 10%. The prospect of this step down is currently causing uncertainty within the utility scale segment in the U.S. post 2016. It has also had the effect of bringing forward project construction plans.
However thin film producer and project developer First Solar indicated late last month that it is optimistic regarding its ability to develop projects with an ITC of 10%. In announcing the companys Q3 earnings, First Solar CEO James Hughes said that it is developing a pipeline of projects that will be completed in 2017 or beyond.
Our total 1.7 GW of bookings since last earnings call are not only impressive in size, but also reflect some positive indications of utility-scale solar demand in the U.S. after 2016, said Hughes. Approximately 60% or over 1 GW DC of the total 1.7 GW DC booked are projects in the U.S. that have commercial operation dates after 2016.
After meeting with First Solar executives, Deutsche Bank analysts have reacted positively to these developments and to planned future cost reductions.
In the event that the 30% ITC is extended beyond 2016, Deutsche sees First Solar as one of the key beneficiaries.
In the event of either ITC extension beyond 2016 or commence construction language being introduced, First Solar would be one of the largest beneficiaries, in our view, the Deutsche Bank analysts wrote. We believe the company can push out a few projects from 2016 into 2017 and this would allow for more capacity to be allocated to other markets. A number of utilities that think they have missed the ITC window could come back to the table to have further discussions about projects beyond 2016.
With a view towards First Solars Analyst Day, scheduled for early 2016, Deutsche reports that it expects the company to highlight greater confidence in conversion efficiency roadmap, with efficiencies close to 18% being achieved in mass production towards the end of 2017. First Solar targets 3 GW of production capacity, achieved through capacity expansions at its Ohio facilities, and efficiency gains in 2016.
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