First Solar (NSDQ: FSLR) and EDF Energies Nouvelles are teaming up to build a solar panel factory that could be the largest in France.

The factory would have an initial capacity to produce at least 100 megawatts of thin-film solar panels per year. Tempe, Ariz.-based First Solar is the world's largest thin-film solar panel maker, using cadmium telluride as the main semiconductors for converting sunlight into electricity.

EDF Energies Nouvelle (Euronext: EEN) has been largely focused on wind farm development in Europe and the United States. But the company recently said it also would step up its investment in solar. State-owned EDF Group is the largest shareholder, owning 50 percent of the company.

EDF Energies Nouvelle said it had raised than €500 million in 2008 to support its foray into solar, and plans to install 500 megawatts of photovoltaic power plants by 2012.

The 100-megawatt factory would cost more than €90 million to build, and EDF Energies Nouvelle would put in half of the capital and factory startup costs, First Solar said. That investment would entitle the French company to all of the factory's products for the first 10 years. Update: EDF Energies Nouvelle would provide the capital cost in the form of a low interest loan, wrote Steve O'Rourke of Deutsche Bank in a research note. The French government also is likely to provide incentives to complete the factory plan, though what they are would depend partly on the location of the factory, he added.

The two companies plan announce the location of the factory over the next few months. First Solar said the new solar panel factory is scheduled to reach full production in the second half of 2011. 

France hasn't seen much of large-scale solar power installations, but the government has created initiatives to boost them. France has a feed-in tariff policy that requires utilities to buy solar electricity at premium prices set by the government. Such policy has helped to turn Germany and Spain into the world's two largest solar markets.

France installed 88 megawatts of solar power in 2008, and could add another 186 megawatts in 2009, said Daniela Schreiber, an analyst at EuPD Research, at a conference in San Francisco in June.

EDF Energies Nouvelle has been First Solar's customer. Last December, EDF Energies Nouvelle said it had commissioned mainland France's largest solar power plant, which is equipped with 7 megawatts worth of First Solar panels.

First Solar has factories in Ohio as well as in Germany and Malaysia, and has been expanding its facilities in Malaysia. Back in March this year, the company said it would have more than 1 gigawatt of production capacity by the end of this year.

First Solar's shares rose about 5.5 percent to reach $159.57 per share in recent trading.

 

Tags: edf, first solar, france