First Solar expects to generate $2.7 billion to $2.9 billion in annual sales and start adding 424 megawatts of annual production capacity in 2010.
The Tempe, Ariz.-based company (NSDQ: FSLR) sees Germany, its largest market, to continue to be a magnet forsolarenergy installations, especially for the first half of the year. Overall, First Solar anticipates the global demand for solar energy equipment to reach 7.5 gigawatts in 2010, said Robert Gillette, CEO of First Solar, in a meeting with analysts on Wednesday afternoon to discuss the company's 2010 outlook.
The discussion, broadcast over the web, represented the firs time Gillette helmed a public discussion of the company's finances and business plans since he took over the executive job in October this year. Michael Ahearn, who had been the CEO for a decade, stepped down to become executive chairman and focus on advancing solar-friendly policies.
Gillette and CFO Jens Meyerhoff highlighted the company's plan to expand manufacturing, which is critical for the company to stay competitive against rivals. Boosting the production capacity would enable First Solar to cut manufacturing costs and lowering the prices of its solar panels.
First Solar claims to be able to produce solar panels cheaper than just about anyone else worldwide, at 85 cents per watt. Selling its solar panels much more cheaply is necessary given that its chief rivals are those making solar panels that use materials that can convert sunlight into electricity at higher rates.
First Solar uses cadmium and tellurium for its solar cells while most of the major solar panel on the market today contain crystalline silicon cells. The company's chief competitors include Suntech Power, Yingli Green Energy and Sharp.
First Solar already has nearly 1.3 gigawatts of annual production capacity. The company plans to spend $365 million to build 8 new production lines of 53 megawatts each in Malaysia next year, and expects to start rolling out panels from those new lines in the first half of 2011. It also plans to build a two-line factory in France, and expects to start manufacturing there starting in 2012.
Together, the 10 new lines would boost the company's capacity by about 48 percent from the current levels, the company said. The total capacity would reach 1.8 gigawatts by then.
Other solar panel makers that have achieved 1 gigawatt of annual manufacturing capacity include Suntech Power and Sharp (the factories include those for crystalline silicon and amorphous silicon solar panels).
First Solar previously discussed building a factory in China (see First Solar Inks 2GW Power Plant Deals in China). But that plan won't take shape until the demand from the emerging Chinese market improves, the company executives said Wednesday.
While outlining the company's expansion plan, Gillette also acknowledged that supply is likely to continue to exceed demand in 2010. Solar panel makers and their suppliers had built up a huge production fleets before the economy crashed and the demand for solar equipment fell dramatically, starting in the fourth quarter of 2008.
As a result, prices for solar panels have plummeted by as much as 50 percent, particularly for crystalline silicon solar panel makers (see Suntech to SolarWorld: Careful What You Wish For).
Market conditions improved in the second half of this year, when project financing began to flow again and developers flocked to Germany to take advantage of its policy to subsidize solar energy generation. The prices for solar panels fell between 30 percent and 50 percent over the past year, thus giving project developers a meatier return on their investments.
The German government is looking at cutting the subsidies by the middle of next year to reign in growth. This anticipated move would only spur developers to complete their projects before then (see Adjustable Rates for Germany's FIT).