First and Last Solar: Can It Adapt Quickly Enough
The poster child for US manufacturing of thin film solar modules has lost a lot of its shine lately. We hope that the naysayers are wrong but the recent report that First Solar is closing its factory in Germany and is cutting back on 30% of its work force does not bolster confidence in thin film manufacturing or for manufacturing of solar panels in the United States for that matter. Just a year ago, First Solar, one of the stocks in the S&P 500, was sailing along at $145 and today it will close at around $18, a stomach churning 88% decline in its price.
Some of First Solar's woes have less to do with its strategy than with the cost of raw materials of competing crystalline technologies. Bloomberg reports that an analyst with Maxim has claimed that "First Solar's pricing advantage ‘evaporated' as polysilicon costs fell 69 percent in the past year." Bloomberg quotes the analyst as saying that "We believe it has entirely lost its competitive edge. The bull case for First Solar now rests solely on hope, not reality [and the company] needs a wholesale change in business model and valuation."
Greentech Media summarizes the state of thin film manufacturing with this morose conclusion: "Is Thin-Film Solar Dead? Well, not dead, but in dire need of a transfusion." The current head of First Solar Mike Ahearn probably agrees that First Solar needs to make some significant changes to adapt to the rapidly changing market. He was quoted on the Energy Collective as saying: "The solar market has fundamentally changed, and we are quickly adapting our market approach and operations to maintain and build upon our competitive advantage. After a period of robust growth, First Solar is scaled to operate at higher volumes than currently exist following the reduction of subsidies in key legacy markets." Whether First Solar can adapt quickly enough is the big question and one that its investors are no doubt wondering every day.