5 Things First Solar Inc.'s Management Wants You to Know

By Fool.com

First Solar has been in a tough strategic position since Chinese silicon solar manufacturers began building out tens of gigawatts of supply of solar panels. The company's solar panels weren't as efficient as silicon solar modules, and management was left scrambling once the cost of those commodity modules dropped below First Solar's costs.

But a renewed focus on research and development has changed that position and an upcoming yieldco could unlock even more value. Below is a selection of CEO Jim Hughes' thoughts on First Solar's position in the market and what he expects for the future that came from the company's first quarter earnings conference call.

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Efficiency has taken a huge step forward

Fourth-quarter 2014 fleet efficiency was 14.4% and the best line was 14.8% efficient, so the jump to 16.3% on the best line in April is huge. This puts First Solar ahead of conventional solar panels, reversing its weak competitive position of the last few years.

Improved efficiency lowers project costs and will drive more project wins just as the industry is beginning to grow sustainably. That's great news for investors.

Head of conventional solar panels

First Solar has often talked about its technology's advantage over silicon-based solar panels, but low efficiency negated those advantages. Now, First Solar should be able to sell those advantages to project developers and price projects in harsh environments based on this superior performance. But once again, it the improvement in technology is what makes this possible.

Ramping up growth

The U.S. investment tax credit, or ITC, is due to drop from 30% to 10% for commercial solar projects in 2017. Before it does there will be a huge surge in solar projects built domestically. To meet that growing demand -- which is now coming because of higher efficiency panels -- the company is stepping up utilization and turning on manufacturing lines that had been shut down. The result should be significant shipment growth through the end of next year.

International diversity provides stability

India has its sights on building 100 GW of solar by 2022 and should be one of the largest markets in the world this year. But it has also been hard for companies to penetrate because of previous local content requirements. First Solar is slowly breaking into the market; with the advantages its thin film panels provide in harsh environments this should be a growth market for many years.

International diversity provides stability

When the ITC does expire, the U.S. solar market could shrink dramatically overnight. So, it's important for First Solar to have a large pipeline outside the U.S.. Growth in India will help, but the company is doing business in dozens of markets around the world. That large percentage of foreign backlog should set up First Solar for success in a post-ITC world.

One of the best in solar I've had many questions about First Solar in recent years, but the execution on its technology road map and bullish moves to increase production should bring the company back to the forefront in solar. Add in the diverse set of regions the company is serving and I think it's one of the lowest-risk players in the industry.

Now is the time to jump on this solar giant before the rest of the market figures out how important the company's technology gains are.

The article 5 Things First Solar Inc.'s Management Wants You to Know originally appeared on Fool.com.

Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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