TEMPE, Ariz. (
is making a big push into the large scale solar farm market in the U.S. However, some analysts, led by Wed bush Securities Christine Hersey, believe that delays and lawsuits will threaten the ambitious First Solar plans for solar farms on public lands.
It should come as good news to nervous First Solar investors, therefore, that the solar bellwether announced on Thursday a deal to acquire a pipeline of private land for development of U.S. solar farms, from
Edison Mission Group
Wedbush's Hersey, who could be known as the Bureau of Land Management Bear for the level of risk she sees in the
big public land deals being promised from First Solar, has uncovered evidence that permitting has not gone as planned, and that expected deadlines for some big First Solar projects of 500 megawatts and could be delayed.
First Solar noted in the announcement that its existing projects are largely sited on public land, and are mostly under contract with utilities. The Edison Mission projects that First Solar is acquiring are sited largely on private land, wiping out the threat of Bureau of Land Management headaches and tree-hugging lawsuits.
However, the Edison pipeline projects don't come near the size of the deals on public lands, with a range from 20 to 150 megawatts. The public land deals are as large as 550 MW. What's more, the Edison projects are not yet contracted with utilities.
While most of the big First Solar public land solar-farm projects are not expected to start producing and selling energy until 2012, a larger pipeline of private deals could help to mitigate any delay risks, as these private land deals could potentially be completed sooner. The Edison deal could also help First Solar to ramp up more quickly in the large-scale solar-farm market, where costs are higher than in the solar modules business, and scale is a big key.
First Solar is under pressure to bring more solar farms to market as its business mix tilts towards the large-scale systems side -- current estimates are for a three-to-one split in modules business versus large-scale business for First Solar in 2010. The large-scale business has much higher cost, and much lower gross margins.
The relationship between First Solar and Edison Mission is an extension of an existing venture. First Solar has provided engineering, procurement and construction (EPC) services for Edison, while Edison was responsible for land acquisition and permitting. Now First Solar will handle all development for these projects, including permitting.
First Solar is not alone in ramping up its U.S.-based solar business. Chinese rivals
Yingli Green Energy
Suntech Power Holdings
received funding from the Department of Energy last week to develop solar business in the U.S.
Financial terms of the transaction were not disclosed.
-- Reported by Eric Rosenbaum in New York.
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