First Solar’s 2GW China Project Hits Snag


Looks like bad news for First Solar (s FSLR). The Washington Post reported Thursday that the thin film solar PV leader may not have actually secured that 2-gigawatt solar farm planned for China’s desert, which it announced back in September of 2009.

A Chinese official from the Inner Mongolia region where the project is planned to be built told the Post that the project, expected to cost $5 billion to $6 billion, was now being opened to competitive bidding, which will no doubt include many of the Chinese solar companies that have complained of being shut out of the process.

First Solar told the Post that it was “still negotiating the economic framework conditions for the project with our local partners,” but also said that the project’s start date was being pushed from this year to 2011.

The news highlights the challenges facing greentech companies seeking to do business in China. The country is expected to pour some $400 billion into clean technology over the next five years, and while the country’s position as the world’s top producer of solar panels and wind turbines has up to this point largely been built on exports, its domestic solar is burgeoning. The same goes for wind power, smart grid systems, electric vehicles and a host of other green markets.

At the same time, the Chinese government is known for creating “buy Chinese” mandates for big projects within its borders. Analysts have said that Chinese wind farm projects often require that at least 70 percent of a wind turbine’s parts be sourced domestically to be considered, for example.

In First Solar’s case, the September announcement of a partnership agreement with Chinese government officials to build the project was met with an immediate outcry by Chinese solar firms, the Post reported. Other commenters noted that the First Solar-China deal, touted at a November summit between President Barack Obama and Chinese President Hu Jintao, came at the same time that Chinese companies were pushing to build a $1.5 billion wind farm in Texas with all-Chinese turbines, a move that has drawn complaints from U.S. lawmakers.

First Solar is no doubt seeking to salvage the project by working with Chinese partners — a wise move, according to green technology investors and entrepreneurs. That pattern can be seen in the raft of Chinese-American partnership in the green vehicle and energy storage sectors, such as Santa Monica, Calif.-based Coda Automotive’s partnership with Chinese battery cell giant Lishen Battery Power and Indiana-based Ener1’s joint venture with Chinese auto parts giant Wanxiang. In the smart grid space, both General Electric and IBM have made inroads into China with partnerships and demonstration projects, GE with the city of Yangzhou and IBM with State Grid Corporation of China and other partners.

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