First Solar Gets Positive Sign on Project Appeal
(First Solar, Northrop Grumman story updated and corrected for Sempra ownership, incorrect reference to First Solar involvement)
NEW YORK (
) -- U.S. solar company
First Solar
(FSLR) - Get Report
has received what one analyst thinks is a good sign for future approval of a key solar project, the AV Solar Ranch One.
A Sempra solar energy project received approval on Tuesday from California's Kern Country to proceed, over objections from defense industry contractor Northrop Grumman.
Northrop Grumman had appealed to Kern County to block the solar project arguing that it would interfere with a company testing facility.
On Tuesday, Kern County approved a Conditional Use Permit for Sempra's 200 MW Rosamond Solar Project despite opposition from Northrop Grumman.
The ruling is a positive sign for First Solar because it has a read-through for another Northrop Grumman complaint lodged against a project being sold by the U.S. solar company. As First Solar relies more heavily on its sale of large-scale solar projects, there are ongoing concerns about potential delays with planned project sales and revenue recognition.
AV Solar Ranch One had been in the headlines of late after a Northrop Grumman appeal stoked concerns about another project hiccup. Several Street analysts had written that the Northrop Grumman AV Solar Ranch One appeal was likely to cause a delay for First Solar.
Christine Hersey, analyst at Wedbush Securities -- and the solar sector's version of a sleuthing Erin Brokovich, knocking on county office doors and sifting through reams of California documentation related to solar project approvals, delays and legal challenges, wrote in a note on Tuesday that, "Based on the favorable ruling for Sempra in Kern County and our review of the documents submitted, we believe L.A. County is likely to rule in favor of First Solar and issue a Conditional Use Permit for AV Solar Ranch One."
The Wedbush analyst wrote on Tuesday, "Although we expect a Conditional Use Permit will be granted for AV Solar Ranch One, it is unclear whether Northrop Grumman will pursue other options to contest the solar projects located within the Range 1 Keyhole."
It's not a done deal yet, though. The Av Solar Ranch One case won't be decided until Nov. 23 when LA County hears the Northrop Grumman appeal.
Additionally, Gordon Johnson, analyst at Axiom Capital and a long-time First Solar bear, noted that other solar project concerns and timing issues remain. A 150MW Sempra project for which First Solar may end up being a module supplier, the Mesquite Project, is being pushed back from its original construction timetable, according to comments made by Sempra on its earnings conference call on Tuesday. Approval from the California Public Utilities Commission, for one, may take longer than originally anticipated.
A smaller portion of the 150MW project than originally planned for 2011 construction is now expected to be completed. Sempra hasn't yet finalized purchase of solar modules, according to Wedbush's Hersey, who spoke with Sempra officials after the PPA agreement was signed with PG&E, though Sempra and First Solar have partnered in the past on large-scale solar projects.
-- Written by Eric Rosenbaum from New York.
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