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Why First Solar Will Continue To Dominate In The Solar Industry

Summary

First Solar's latest efficiency record for cadmium telluride (CdTe) thin-film solar PV stands at 22.1%, delivering on its promise to hit a 22 percent research cell by 2015.

CdTe and other thin film modules offer a higher yield per watt then standard crystalline silicon, particularly in hot climates, making them increasingly competitive.

First Solar is producing panels for as little as 40 cents a watt. In 2019, First Solar's module costs could be as low as 25 cents a watt.

Average fleet efficiency is improving 3 times faster than mc-Si.

First Solar (NASDAQ:FSLR) is continuing to make impressive strides on its technology road map. Due to the lack of a guidance for 2017, the stock declined around 16% off its 52-weeks high. This development has resulted in an attractive entry point. The conservative growth plans of the company are seen as a negative by some, I would say that the conservative nature of First Solar is extremely positive, considering the capital-intensive nature of the Devco and the recent disastrous collapse of SunEdison (NYSE:SUNE).

Looking at the chart, the stock has tested support around $60, providing for an attractive entry point for long-term investors in one of the most well-run solar companies.

Source: Finviz.

Investment thesis

First Solar's gains on the efficiency-front are impressive, reaching 22.1% in a laboratory cell this year, an improvement that eventually will be applied at its plants. First Solar uses a different technology than multi-crystalline polysilicon, a thin film of cadmium-telluride, which has a lot more room to improve compared to multicrystalline silicon. The theoretical peak is at around 30%. The semiconductor material used in First Solar's thin film modules has the highest theoretical efficiency of any PV material known today, significantly higher than crystalline silicon. The efficiency improvements, combined with the lowest inherent manufacturing costs, makes First Solar an increasingly competitive player.

Source: Company website.

The curve shown above is known as the S-Q limit, it illustrates the thermodynamic efficiency limit for single-junction conversion of the solar spectrum. The semiconductor material utilized in First Solar's thin film module technology is sourced from byproducts of the zinc and copper industries. Cadmium is a waste byproduct of zinc refining, and tellurium a byproduct of copper refining, and are together formed into a stable CdTe compound. Recently there have been 5 world records in efficiency in CdTe technology, compared with relatively slow progress in single crystal and multicrystalline silicon. The existing gap between First Solar's top research cell of 22.1% and the theoretical limit of 30% provides tremendous opportunity for improvement.

Source: First Solar investor presentation.

As an example for the continuing progress on the efficiency front of CdTe solar cells, I would like to take a short side path to recent developments in CdTe technology. Researchers recently improved the maximum voltage available from a cadmium telluride (CdTe) solar cell, overcoming a practical limit that has been pursued for six decades and is key to further improving efficiency. The work was published in the Feb. 29 issue of Nature Energy.

Currently silicon solar cells represent around 90 percent of the solar cell market, but it will be very difficult to significantly reduce their manufacturing costs. As noted, CdTe solar cells offer a low-cost alternative to silicon solar cells. CdTe technology has the lowest carbon footprint in solar technology and performs better than silicon in real world conditions, including in hot, humid weather and under low light conditions. Until very recently however, CdTe cells...


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