Update: First Solar set for change

Investors piled onto First Solar after it pivoted strongly to a new technology-focused strategy, unveiling an ambitious development plan for its Cadmium Telluride (CdTe) modules, and buying a California start-up focused on high-efficiency cells.

Shares in the US thin-film giant stormed up more than 45% on 9 April after chief executive Jim Hughes – handed the reins last spring – acknowledged past mistakes at the company, while insisting that CdTe is the right technology for the emerging subsidy-free era of PV.

Having lost money last year on its $3.4bn of sales, First Solar cheered investors by announcing it will return to profitability in 2013 on revenues of $3.8bn-$4.0bn – growing to $4.2bn-$4.8bn by 2015.

Hughes noted the perception among many analysts that First Solar has become too reliant on its systems and project-development divisions, but insisted that a heavier future emphasis will be placed on selling modules to a diverse base of external customers.

Key to that emphasis will be technological advancement.

Chief technology officer Raffi Garabedian, appointed at the same time as Hughes, says that until the past year, First Solar’s focus had been on “deploying our technology in its current state as quickly and broadly as possible”.

That strategy was tailored for the PV boom that lasted until 2011, when First Solar, like most of its keenest competitors, was racing to expand its manufacturing footprint to meet demand in feed-in tariff driven markets like Germany.

Today, however, the future of the global PV market looks very different, with traditional European markets tapering off, emerging markets opening up, and the industry aware that it must rapidly achieve competitiveness in the absence of subsidies. And technology is back on the front burner, Garabedian says.

In the future, roughly one-third of First Solar’s revenues will come from module sales, one-third from project development, and one-third from performing engineering, procurement and construction work, Hughes predicts.

As part of that strategy, First Solar announced it has purchased California-based PV start-up TetraSun from Japan’s JX Nippon Oil & Energy Corporation, a company whose technology First Solar claims is capable of making cells with conversion efficiencies higher than 21%.  

The acquisition will allow First Solar to target rooftop and other distributed-generation applications that favour high-efficiency modules, a segment of the market “which had been unserved” by First Solar in the past, Hughes says.

First Solar hopes to begin commercial-scale manufacturing using TetraSun’s technology by late 2014.

Hughes says there has been a “culture change” at the company under his leadership, including a move away from centralised management to a more regional approach, with bespoke solutions – and even prices – for clients in different parts of the world.

“One of our mistakes was offering a single product – and it was a Cadillac,” says Hughes. “As we’re entering new markets, we’re making a big effort to localise our product offering, and sometimes that means offering something like a Kia.”

Last year represented the high-water mark for First Solar’s rapid-expansion phase, with the tide rolling back in April 2012 after the company decided to abandon the factory it was building in Vietnam and walk away from its production lines in Germany. The following month Hughes was handed the reins.

Today, First Solar operates 28 production lines, with 85% of its output coming from Malaysia.

Among other announcements made, First Solar also said it has set a new record for conversion efficiency of a Cadmium Telluride (CdTe) module – at 16.1%. The previous record was held by General Electric, which last year iced its plan to build a CdTe factory in Colorado.

Garabedian claims First Solar will blow past the 18% mark in “three or four years”, by which time it will have “pretty significantly” surpassed most crystalline silicon (c-Si) modules. It can eventually reach 23%, he predicts.