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November 08, 2007

The Walmart of solar power: First Solar

First Solar is the Google of solar companies. The Phoenix, Ariz.-based maker of cadmium telluride solar cells and panels has soared past the $200 a share mark. It was up to $230 today and is currently trading at about $219. They IPOd at $20 back in Nov 2006.

Analysts expected revenues of $120 million and earnings per share of 19 cents this quarter. The financial results were announced yesterday. There is some speculation fever built into the stock price. The price-to-earnings ratio currently hovers around 287, fairly high, even by 1998 Internet bubble standards.

Unlike silicon solar-cell makers or the armies of CIGS (copper indium gallium selenide) manufacturers, First Solar extracts electricity from thin films of cadmium telluride (a semiconductor made from cadmium and tellurium) on glass.

Although they are not as efficient as silicon cells, cadmium tellurium cells are comparatively cheap to make and are fairly robust. They operate in a wide temperature range and in a variety of light conditions, including dawn and dusk. In other words, cadmium telluride is the Honda Civic of solar-panel material.

The company isn't facing a material shortage, like silicon manufacturers, and it is producing product, unlike the vast majority of CIGS companies.

First Solar said this week that it has signed a deal to supply investment firm Babcock & Brown with solar modules in a deal that will bring it $1 billion in revenue between 2008 and 2009. Overall, First Solar has contracts to install more than 3 gigawatts of power through 2012.

When up and running, each plant will be capable of turning out 120 megawatts worth of solar panels a year, or 480 megawatts in total

The Walton family of the Wal-Mart fame funded the company from the beginning and still owns a large chunk of the stock.


At 480 MW per year, it would take 10 years to equal the energy production of a single 1GW nuclear power plant because of the lower operating efficiency of solar.

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