First Solar, Inc.
FSLR
recently inked a supply agreement with National Grid Renewables for 1.6 gigawatts (GW) of Series 7 thin-film solar modules. Before this, in June 2022, the company inked a deal with National Grid Renewables for 2 GW of modules.
Thus, the latest agreement takes the alliance between the two companies for more than 4 GW of solar modules. Moreover, National Grid and First Solar have been partners for a decade over multiple solar projects.
Benefits of the Agreement
National Grid boasts a portfolio of solar, wind and energy storage projects throughout the United States. With the rising demand for solar-based energy, National Grid may expand its footprint with solar energy projects.
In such a scenario, First Solar may witness an inflow of orders for solar modules, mainly due to the long-standing partnership between the two companies and the remarkable features of these modules. Additionally, the wide footprint of National Grid across the United States opens avenues for FSLR to ink long-term supply agreements on a large scale, ensuring a steady inflow of revenues.
First Solar’s Growth Prospects
First Solar enjoys strong demand for its solar module due to its advanced thin-film PV modules that have set industry benchmarks for quality, durability, reliability, design and environmental performance.
To meet the growing demand, the company is investing heftily to scale up its operational capabilities. First Solar plans to invest $1.3 billion to expand its Ohio manufacturing footprint, as well as for a new manufacturing facility in Alabama.
Such strategic investment plans are likely to take First Solar’s total investment in American manufacturing to more than $4 billion, thus expanding its U.S. manufacturing capacity to more than 10 gigawatts-direct current by 2025.
Additionally, the company intends to upgrade its research and development expertise by investing $270 million in a dedicated research and development innovation center in Perrysburg, Ohio.
Such capacity expansion and a smart investment strategy are likely to boost First Solar’s ability to manufacture products at an increased pace and capitalize on the growing demand. These will also enhance its footprint in the global solar market.
U.S. Solar Market Boom & Peer Moves
Electricity generation from renewable sources is increasing manifold in the United States. Per the latest report from the Energy Information Administration, 24% of U.S. utility-scale electricity generation came from renewable sources in the first six months of 2022 compared to 21% in the same period last year. Further, the report suggests that another 13 GW of solar capacity will come online by the end of 2022.
Such a strong demand scenario is likely to benefit solar companies like First Solar, which are continuously striving to expand in the U.S. solar market. Solar players that may benefit from the increased solar demand are as follows:
Enphase Energy
ENPH
enjoys a valuable position in the solar market by manufacturing fully integrated solar-plus-storage solutions. It holds a strong position as a leading U.S. manufacturer of microinverters.
Enphase boasts a long-term earnings growth rate of 47.4%. Shares of ENPH have surged 66.1% in the past year.
SunPower
SPWR
is one of the most forward-integrated solar companies, having more than a decade of experience in designing, manufacturing and supplying large-scale solar systems. The company continues to witness growth in residential and commercial markets.
The Zacks Consensus Estimate for SunPower’s 2022 earnings suggests a growth rate of a solid 371.4% from the prior-year reported figure. SPWR has returned 1.7% to its investors in the past year.
ReneSola
SOL
continues to expand in the United States. As of Sep 30, 2022, the company had IPP projects of nearly 24 MW in the United States.
The Zacks Consensus Estimate for ReneSola’s 2022 sales indicates an improvement of 9.5% over the prior-year reported figure. The Zacks Consensus Estimate for SOL’s 2023 earnings has been revised upward by 13.8% in the past 60 days.
Price Movement
In the past year, shares of First Solar have surged 74% compared with the
industry
’s growth of 21.7%.
Image Source: Zacks Investment Research
Zacks Rank
First Solar currently carries a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
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