First Solar Moves Closer to Delayed China Project

UPDATED. First Solar’s (s FSLR) big plan to eventually build 2 GW of solar power plants in China’s Inner Mongolia has moved ahead. The company signed a memorandum of understanding with China Guangdong Nuclear Solar Energy Development Co. on Wednesday to develop the first phase, 30-MW project.

First Solar will supply its cadmium-telluride solar panels (and advice) to China Guangdong for the engineering and construction – as well as the operation and maintenance – of the power plant, First Solar said.

UPDATE: The company is working on finalizing details of the project and hoping to get approval to start construction in 2011, said First Solar spokesman, Alan Bernheimer, via an email. Completion will then be set for 2012.

Previously, First Solar had hoped to start construction by June 2010 on the project. The company signed an MOU for the 2-GW master plan in September 2009, as well as a framework agreement with Ordos officials in November of that year to further outline the scope of the overall project.

But June 2010 came and went, and the construction work hadn’t started on the 30-MW project. Government approval of key steps of the project was to blame. The Chinese government was supposed to approve solar electricity pricing for the project by the end of 2009, but didn’t. Without guaranteed solar electric rates, or feed-in tariffs, First Solar didn’t want to move ahead as quickly.

The Chinese government approved a pre-feasibility study for the 30-MW project last September, First Solar said. But it still doesn’t appear that the pricing issue has been resolved. A First Solar executive told the AP in Beijing on Wednesday that First Solar and China Guangdong will submit a business plan to the government in order to ask for feed-in tariffs.

Bernheimer confirmed that the project has yet to receive feed-in tariffs.

“An appropriately set national feed-in-tariff structure would allow market participants to secure a reasonable rate of return to make further investment in technology and cost reductions.  In our view this is critical to the development of a sustainable and long-term solar market in China, just as it is in other countries. First Solar’s mission, however, is to help drive the transition towards sustainable energy markets free of subsidies,” Bernheimer wrote.

Initially, First Solar had hoped to complete phase 2 and 3 of the project, totaling 970 MW, by 2014. It wanted to finish the last phase of 1 GW by 2019. First Solar describes its agreement with Ordos as “the first large-scale solar collaboration between China and the United States and an example of China-U.S. bilateral cooperation on renewable energy.”

China is a potentially large solar market, but many non-Chinese companies believe they are at a disadvantage if they want to sell their equipment to, or develop projects in, China because the Chinese government is more likely to support goods and services from domestic companies, such as Suntech Power, Trina Solar and Yingli Green Energy. That sentiment has made First Solar’s 2-gigawatt plan all the more remarkable. But getting it done, of course, hasn’t happened as speedy as expected.

First Solar is eager to diversify its market reach beyond Europe. Germany has been its largest market, but the country’s solar incentives are declining. First Solar CEO Rob Gillette has talked about exploring markets in India, Africa and the Middle East.  Last December, the company said it had signed a deal to sell 15 megawatts of solar panels to ACME Tele Power in India.

First Solar also is developing many projects in North America. On Wednesday, it announced Plutonic Power Corp. and GE Energy Financial Services (s ge) will buy three, yet-to-be-built power plants totaling 50 megawatts from the company. First Solar will build the projects in Ontario, Canada. The companies didn’t disclose the sale price. Plutonic plans to contribute about $6 million Canadian ($6.03 million USD) in equity to the project, which will require debt financing.

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Photo courtesy of Herry Lawford