CONSOLIDATION IN SOLAR

First Solar buys rival utility project pipeline
Nicola Groom (w/Andre Grenon), March 3, 2009 (Reuters)

"First Solar Inc [will]…pay rival OptiSolar $400 million in stock for its pipeline of solar projects, including a major installation for California utility PG&E Corp and other nascent deals that will rapidly expand the company's presence in the U.S. utility market.

"The deal, which First Solar Chief Executive Mike Ahearn called a 'watershed acquisition' for the company, includes 1.3 gigawatts (GW) of solar development projects being negotiated with Western U.S. utilities and 136,000 acres of strategic land rights that have the potential to deploy up to 19 GW of additional solar projects…The addition of projects already at various stages of development will 'catapult us into a whole new league,' Ahearn said…"

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"The deal between First Solar and OptiSolar, expected to close in the second quarter, comes as the global credit crisis had dried up funding…California utilities, however, have been a bright spot in an otherwise gloomy solar market because they must comply with a state mandate to produce 20 percent of their power from renewables by 2010 and then 33 percent by 2020…[and] benefit from a 30 percent tax credit for building solar installations…

"Going forward, the projects included in the deal will incorporate First Solar's cadmium telluride solar panels rather than…OptiSolar's amorphous silicon panels. Both technologies are photovoltaic…[and] fall under the category of 'thin film' solar…[T]hey are cheaper to produce than traditional crystalline silicon panels…[but] produce less electricity than silicon-based rivals, making them less effective in small spaces such as residential rooftops."

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"Cheaper thin film panels have scored big deals with price-conscious utilities, however. Last year, OptiSolar made headlines when it secured a deal to build a 550-MW solar power plant in Central California for PG&E…SunPower Corp, a maker of silicon-based panels, inked a deal to build a 250-MW plant nearby.

"Then, at the beginning of this year, privately-held OptiSolar cut 300 jobs, or half its workforce, and halted the construction of a manufacturing plant because it could not secure the funding it needed…First Solar executives said the deal would add about $70 million to 2009 revenue, but would decrease earnings per share for the year by 35 cents to 40 cents a share…The deal is expected to add to earnings "modestly" in 2010…"