Already a Bloomberg.com user?
Sign in with the same account.
First Solar jumped more than 5 percent in early trading Tuesday after it announced Pacific Gas & Electric Co. would purchase the electricity generated by two solar power plants that First Solar is developing in California.
THE SPARK: First Solar announced that PG&E will buy the electricity generated by two solar farms that will have a combined capacity of 72 megawatts. First Solar said the 32-megawatt Lost Hills project in Kern County and the 40-megawatt Cuyama project in Santa Barbara County are expected to create 600 jobs during peak construction and produce enough electricity to power 24,000 typical California homes.
THE BIG PICTURE: First Solar is one of the world's biggest makers of solar panels, but it has taken steps in recent years to grow the part of its business that develops and builds large solar panel farms. Worldwide panel prices have collapsed because of a huge amount of excess manufacturing capacity, especially in Asia; lower raw material costs; and declining government subsidies in Europe, which is by far the world's biggest solar market. Developing and building solar projects, however, remains profitable.
THE ANALYSIS: First Solar is developing a few enormous solar projects in the West and Southwest that were planned years ago when First Solar made the cheapest panels in the world. Analysts have worried that First Solar will not be able to repeat its success selling new projects because competitors' panels are now at least as cheap as First Solar's. While this deal was relatively small, it still gave investors hope that First Solar could still win new business.
SHARE ACTION: Shares of First Solar Inc. rose to $21.86, a gain of 5.15 percent, in morning trading. The company's shares plummeted from a high of $93.64 in September of 2011 to $11.77 on June 1, 2012. First Solar's shares set a more recent high of $25.70 on August 28.