First Solar (Nasdaq: FLSR) made two big announcements today. First, 50 megawatts of the solar it’s installing in Ontario was purchased. Second, it will start construction on the first phase—30 MWs—of a 2 gigawatt solar farm in China.
The 2 gigawatt solar farm has been in the works for a while now. First Solar announced that project in September 2009. It signed a memorandum of understanding (MOU) with Chinese officials in Inner Mongolia to build the 25-square mile solar farm in Mongolia in Sept. 2009. However, The Washington Post reported last August that Chinese solar companies complained about not being considered for the contract, which was valued at between $5 billion and $6 billion.
First Solar spokesperson Alan Bernheimer explained the delay a bit differently.
“The delay is really the result of two things,” he said. “We wanted to establish a partnership with a local company. Also the national government has not established a feed-in tariff. Our MOU with the city is still in place. It’s not imperiled by any competitive forces.”
First Solar found a partner in China Guangdong Nuclear Solar Energy Development Co., Ltd. (CGN), First Solar said in a press release. The companies will develop Phase 1 of the Ordos photovoltaic plant.
CGN will be the majority project owner and operator, and will engineer and build the project using First Solar’s modules.
Construction on the first phase is expected to start in 2011, according to Bernheimer. Subsequent phases will start construction in later years. The plant was previously slated for completion in 2019.
In Ontario, Canada, the company reached an agreement to sell 50 MWs of solar plants to Plutonic Power Corp. (Nasdaq: PUOPF) and General Electric (Nasdaq: GE) unit GE Energy Financial Services. The companies agreed to pay $6 million Canadian to acquire three photovoltaic farms, First Solar said in a press release.
“They’re all in the province of Ontario, in different towns,” Bernheimer said.
Despite this deal and building arguably the world’s largest photovoltaic plant in Ontario earlier this year, this is likely the last project in that region, Bernheimer said.
“In Ontario, there is a problem,” he said. “The plants were developed under an old program. Under the new program, there’s a domestic content requirement, and we don’t manufacture our modules in Canada.”
Under the new program, he continued, First Solar installations can no longer qualify for the province’s feed-in tariff, making such projects uneconomically viable.
“We would look at other provinces,” he said, “but right now, not Ontario.”
Lux Research Analyst, Jason Eckstein said, “Without those subsidies, it makes no sense there.” He added that the payback period would take too long.
Construction on the Ontario plants is expected to start in 2011 and be finished by the year’s end, according to Bernheimer.
Image courtesy of First Solar.