First Solar sells plant to NRG Energy

First Solar Agua Caliente draws up to $800 million from NRG for a 290-megawatt photovoltaic plant, leveraging thin-film cadmium telluride modules, pending a US DOE loan guarantee and aiming for grid parity with natural gas.

First Solar Inc. forecast higher-than-expected 2011 profit as its sales continue to rise, and said it had sold a planned Arizona solar plant to power company NRG Energy.

NRG will invest up to $800 million in the 290-megawatt Agua Caliente solar plant — likely to be the world's largest — and First Solar expects to begin recording revenue on the deal in the second quarter, pending approval of a U.S. loan decision by the U.S. Department of Energy.

First Solar, the world's biggest solar company by market value, is hoping to create a strong pipeline of solar power projects like Agua Caliente as a channel for its thin-film panels in utility-scale projects.

The company's cadmium telluride photovoltaic modules that convert sunlight into electricity are the lowest cost panels in the industry. It expects to keep trimming prices as it moves solar power toward price parity with natural gas-fired power plants in 2014, a potential breakthrough in solar costs industrywide, Chief Executive Rob Gillette told a conference call.

"Our advanced thin-film module is expected to maintain a cost advantage of at least 30 percent in 2011, compared with crystalline silicon competitors," Gillette said, referring to panels made by Chinese rivals.

The Tempe, Arizona-based company forecast 2011 earnings of $8.75 to $9.50 per share and said its sales would grow by about 46 percent to between $3.7 billion and $3.9 billion.

Analysts have forecast its earnings per share would be $8.61 on revenue of $3.63 billion, according to Thomson Reuters I/B/E/S.

Earlier this month, Suntech Power Holdings Co also topped analysts' forecasts by saying it expected to ship 2,200 megawatts of modules in 2011, up from 1,500 MW this year, boosting its revenue to between $3.4 billion to $3.6 billion.

That is about 10 percent more modules than the 2,000 First Solar expects to produce next year.

Demand for photovoltaic solar modules has surged this year on rising demand in Germany and other European countries, boosting solar sales in the nascent industry.

But rising global manufacturing capacity and shrinking subsidies in Germany, Italy and the Czech Republic have sparked fears that prices for the renewable energy systems could tumble in 2011, creating new challenges and pressuring profit margins.

Gillette said a module manufacturing plant planned for France could be delayed or scrapped because of uncertainty after the government there suspended a key subsidy, but noted a plant re-energized precedent in other regions.

"We hope to resolve this uncertainty with the French government as soon as possible," he said.

First Solar's profit forecast was based on expected module sales of $2.8 billion to $2.9 billion, plus $900 million to $1 billion of power plant development sales.

The company, which currently has a pipeline of more than 2 gigawatts of power projects under development, expects to announce more plant sales and new projects, including a 550 MW solar project in California, in the coming months.

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