First Solar Inc. (FSLR:US), the biggest U.S. solar manufacturer, halted panel deliveries to the world’s largest photovoltaic power plant, which it’s building in Arizona, because construction is ahead of schedule and the company must slow down to meet contractual milestones.
First Solar won’t ship additional modules until January to the $1.8 billion Agua Caliente project and won’t install panels currently sitting on the ground at the site, said Fred Pech, the power plant’s construction manager. The solar farm is scheduled for completion at the end of 2013 and is 85 percent built.
The company, based in Tempe, Arizona, accelerated construction on Agua Caliente this year to use panels it produced as far away as Germany and Malaysia amid a global glut. Now it’s diverting shipments to other projects to prevent inventories from piling up, said Aaron Chew, an analyst at Maxim Group LLC in New York.
First Solar delivered panels to the project “because it was more profitable,” Chew said today in a telephone interview. “They overdid Agua Caliente.” Expanding its focus on power plants helped make First Solar the only profitable solar company in the Bloomberg Industries Global Large Solar Index in the the second quarter.
The shutdown probably won’t affect First Solar’s earnings this year, Chew said. “However, it does highlight the extent to which they’re pulling things forward, with bigger risks in 2013 and 2014.”
The decision to wind down installation for this year may be “related to contractors and construction crew, perhaps minimum number of hours,” Chew said.
First Solar shares fell 19 percent to $19.67 at the close in New York.
“We installed the last module for block 10 on Monday,” Pech said in an interview yesterday a the plant, located on 2,400 acres of desert about 120 miles (193 kilometers) west of Phoenix. There are two more blocks of panels planned for the site and “we could be done by the end of this year, but we’re way ahead of schedule.”
Dozens of boxes of unused panels are piled up at the site, covered in blue tarps to prevent degradation over the next four months while First Solar waits to resume installation.
The company has shifted panel deliveries to other solar projects, Ted Meyer, a spokesman, said in an e-mail today. There are about 200 workers at the Agua Caliente site doing work other than installing panels.
With 85 percent of its panels installed, Agua Caliente has about 247 megawatts of capacity, making it the the world’s largest operating solar farm. PG&E Corp. (PCG:US)’s Pacific Gas & Electric Co. is buying the power under a 25-year agreement.
The power plant was generating 249 megawatts of electricity yesterday at 11:30 a.m. local time and its output has reached as much as 251.3 megawatts under ideal sunlight conditions, Pech said.
The project received a $967 million loan guarantee from the U.S Energy Department in August 2011 and was expected to create 400 construction jobs and 10 permanent positions, according to the agency’s website. Damien LaVera, an agency spokesman, said the guarantee doesn’t include any specific requirements regarding construction or employment.
The plant is owned by NRG Energy Inc. (NRG:US) and MidAmerican Energy Holdings Co. Lori Neuman, an NRG spokeswoman, and Ann Thelen, a MidAmerican spokeswoman, didn’t return phone calls today.
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