By Gerard Wynn
LONDON May 9 U.S. solar module maker and
project developer First Solar illustrates wider
industry efforts to secure new markets in a shift away from the
United States and Europe.
That was before the U.S. and European imposed and planned
import duties against Chinese products, which may hinder
exporters seeking to tap one of the world's fastest growing
The European solar market shrank last year for the first
time this century, and this year will be less than half the
global market for the first time since 2003, according to data
and forecasts from the trade body, the European Photovoltaic
Industry Association (EPIA). (See Chart 1)
Meanwhile meteoric U.S. market growth of some 76 percent in
2012 will slow, exposing First Solar which derived 56 percent of
total net sales last year from utility-scale projects in
Arizona-based First Solar is one of the world's largest PV
module manufacturers and also builds utility-scale projects for
financial and energy company buyers after its acquisition of two
leading U.S. developers.
It has signalled a shift away from Europe, in particular
after Germany scrapped support for large-scale projects, closing
its manufacturing operations in Frankfurt at the end of 2012.
"We continue to shift our selling efforts from the European
markets, in which we have historically generated a significant
portion of our net sales, to new markets, in which we have not
historically generated any meaningful portion of our net sales,"
it said in February.
It is instead targeting a combination of sun-belt and high
growth markets, such as China, India, the Middle East, South
Africa and Chile, which it terms "new sustainable markets".
It defines these as markets where: "demand for power that
exceeds current supply; high existing power prices; and abundant
sunshine", in its 2012 annual report.
The strategy reflects the desperate need of the global
industry to find new demand to mop up a global glut in modules,
where subsidised markets in Europe and the United States are
waning or slowing and anyway fail to match product supply.
Chart 1: (page 34)
Chart 2: (page 51)
First Solar presently has a U.S. pipeline of massive
projects which it expects to complete by 2015.
They are: a 550 megawatt (MW) project in San Luis Obispo
County, California (Topaz Solar Farm); a 550 MW project west of
Blythe, California (Desert Sunlight Solar Farm); a 290 MW
project in Yuma County, Arizona (Agua Caliente); and a 230 MW
project located just north of Los Angeles, California (Antelope
Valley Solar Ranch One, or "AVSR1").
The grid-connected portion of the uncompleted Agua Caliente
project is already the largest operating PV power plant in the
world, it says.
Beyond 2015, the United States will continue to represent a
significant portion of the company's sales.
It has added over the past year new permitted projects in
California and New Mexico which are all smaller than the above,
including: Campo Verde (139 MW); PNM II (22 MW); Macho Springs
(50 MW); Lost Hills (32 MW); and Cuayama (40 MW).
Its less advanced project pipeline, where it has executed
power purchase agreements but not yet secured permits, includes
bigger projects including the 300 MW Stateline project in
California and the 250 MW Silver State South project in Nevada.
(See Chart 2)
First Solar announced at the end of 2011 its long term
strategic plan (LTSP) "to transition primarily to sustainable
opportunities" by the end of 2016.
"Execution of the LTSP will entail a reallocation of
resources around the globe, in particular dedicating resources
to regions such as Latin America, Asia, the Middle East, and
Africa where we have not traditionally conducted significant
business to date," the company said in an update three months
ago in its 2012 annual report.
A year ago, First Solar had a presence in the United States,
Canada, India, Europe and Australia.
As of its first quarter results, earlier this week, it said
it had added South America, China, the Middle East and North
Africa to the list.
Some of these new initiatives are necessarily limited, as
early stage ambition.
China was the world's second biggest solar market after
Germany last year, installing some 5,000 MW, according to the
In December, First Solar announced its first commercial
demonstration project, in a collaboration to supply 2 MW of
modules to local developer Zhenfa New Energy Science &
Technology Co. Ltd.
In the United Arab Emirates, First Solar was selected by the
Dubai Electricity & Water Authority to construct a 13 MW power
plant near Dubai, the first stage in the Emirate's plans for a
solar park with 1,000 MW capacity by 2030.
In its most significant expansion, it announced in January
its acquisition of Solar Chile, a Santiago-based solar
development company with a portfolio of projects at various
stages totalling approximately 1,500 MW in northern Chile,
including the sun-drenched Atacama Desert region.
First Solar itself acknowledges the wider risks to its
strategic plan of focusing on new regions, including: grid
stability in emerging economies; local content policies limiting
module imports; the availability of local skilled staff; and
Regarding local content, South Africa has ambitious targets
for renewable energy by 2030 in its Integrated Resource Plan.
Published data show rising local content at 29 percent and
48 percent in bidding rounds one and two of the plan which
together allocated 1,049 MW of solar PV.
Regarding inertia, the Middle East presents uncertainty over
the timing of implementing ambitious targets.
A Saudi government advisory body last year recommended a
target for about 41,000 MW of solar energy by 2032, but the
country has installed less than 15 MW.
"While the expected potential of the MENA (Middle East and
North Africa) markets is significant, policy promulgation and
market development are especially vulnerable to governmental
inertia, political instability, geopolitical risk, fossil fuel
subsidization, potentially stringent localization requirements
and limited available infrastructure," First Solar said in