First Solar Profit Up 54%; Expands Into Installation

In the United States, the recent passage of an eight-year solar investment tax credit will help to boost solar energy developments in the country. But with loans and equity investments more difficult to come by, it's hard to predict the growth in the U.S. market, Ahearn said.

Until now, the thin-film solar maker has sold panels to whole sellers or other developers, or that it acts as a developed for utilities as well. First Solar continues to great opportunities in these types of businesses, but decided recently to expand into the residential solar market.

Earlier in the day, First Solar announced it had invested $25 million in SolarCity and has agreed to supply thin-film panels to the solar financer and installer.

The deal calls for First Solar to deliver 100 megawatts worth of solar panels to SolarCity over five years beginning in the first quarter of 2009.

SolarCity, based in Foster City, Calif., installs solar-power systems on residential and small commercial properties in California, Arizona and Oregon. The company also offers leasing options, paying part of the upfront cost of a system, which could set homeowners back roughly $30,000.

The $25 million in funding is part of a $30 million round the company raised, with investors including JP Morgan (JPM Quote), Draper Fisher Jurvetson and DBL Investors. The round brings SolarCity's total capital to $56 million.

The thin-film maker's entry into the residential market -- and its interest in SolarCity -- is perhaps not surprising. Ahearn complimented SolarCity at the Solar Power International conference in San Diego two weeks ago during a panel that also included SolarCity CEO Lyndon Rive.

Speaking about the residential solar market, Ahearn said it wasn't far from being cost effective and efficient.

"You still have to be an enthusiast and get it done," he said. "SolarCity has done a better job than most."

Both Ahearn and Rive expressed concern that consumers might have trouble evaluating goods and services when the market is so new and new installers are popping up quickly.

"If you look at the warranties today, it will be difficult for consumers to understand where there is a claim proven and who's responsible," Ahearn said. "You can get wide-spread disappointment over time, and it will come back to bite us."

Some industry insiders expect the residential solar market to grow rapidly as a result of a recently passed federal tax credit, which can make a solar-energy system 30 percent cheaper. (Don't miss "Congress Finally Gives Solar Industry 'Policy Certainty'")

Residential solar installations may also see a boost from states and cities that are setting up their own incentive programs. San Francisco and Berkeley both set up financing programs this year that will make buying and installing solar energy systems more affordable for residents and businesses.

But whether more consumers will spend money on solar during the economic downturn remains to be seen.

SolarCity launched its residential leasing program in April 2008. By July, one of its executives said revenues from the program had surpassed all sales from 2007, when the company brought in $29 million in sales.

While the partnership with SolarCity marks First Solar's first announced deal with a residential installer, it's not its first foray into installation. First Solar in November acquired Ted Turner's company DT Solar, which installs commercial solar projects, for $34 million.