James Montgomery, Associate Editor, RenewableEnergyWorld.com
August 07, 2013 | 0 Comments
New Hampshire, USA -- Flexing its muscles yet again, thin-film solar PV leader First Solar has quietly acquired GE's similar solar intellectual property portfolio, but questions linger about whether and when the company will see the benefits.
The deal includes both a specific module purchase commitment plus a longer-term commitment with agreed-upon pricing "over an extended period of years," according to First Solar CEO Jim Hughes during the company's 2Q13 earnings results. GE, meanwhile, will supply inverters for First Solar's global deployments, technology acquired through French firm Converteam, and it will seek to sell solar PV into power plants alongside wind and thermal assets. (Such an example already exists, with GE helping Invenergy outfit adjacent solar and wind farms at its Grand Ridge projects in Illinois, a GE spokesperson pointed out.) Financially, GE also receives 1.75 million shares of First Solar common stock, making them one of FSLR's top-10 shareholders -- a roughly $82 million value at yesterday's market close, but currently down to about $70 million as First Solar's stock slumped in reaction to its other financial and project announcements (more about that on the next page).
GE and First Solar had been trading CdTe efficiency records lately. Both agree that thin-film solar PV and especially cadmium telluride (CdTe) have lots of room to improve conversion efficiency and better compete with silicon PV.
GE's CdTe technology is "distinctly different" from First Solar's CdTe process but nonetheless it is "consistent with our manufacturing platform," Hughes said in the call. Both sides, though, have yet to "fully determine how we best integrate their technology into our roadmap, determine the proper sequencing in terms of upgrading of equipment and what it means in terms of our profits," he said. An update on that evaluation likely won't come until First Solar's Analyst Day next spring, but he confidently stated that within two years some of GE's CdTe technology would be incorporated into First Solar's modules. GE currently has 19.6 percent cell efficiency in a research cell, beating FSLR's best lab cell mark by nearly a full percentage point, he noted, and GE's >450 issued patents and pending applications in CdTe effectively doubles FSLR's portfolio.
We asked First Solar for further clarification about the companies' CdTe methodologies and how they might be combined, but the company declined to comment.
First Solar has long been one of the bellwethers in the solar PV sector, and certainly the far-and-away leader in CdTe, with technology specifically geared toward large-scale solar deployments. (Solar Frontier holds a similar position on the CIGS side of thin-film PV). First Solar also was one of the first solar upstream manufacturers to extend further downstream into project development, creating a captive pipeline for its products.
But not everyone agrees this was a good deal for First Solar. "[It] appears defensive," writes Credit Suisse analyst Patrick Jobin in a research note. It's the second recent acquisition by First Solar (following Tetrasun and its C-Si technology) for solar PV technology that's "relatively early-stage," he points out, which perhaps suggests that the company's "core technology is not cost-competitive in today's low-poly environment." Deutsche Bank analyst Vishal Shah agrees, writing that GE's CdTe IP likely won't materially help First Solar's efficiency marks until 2017, and that the rest of the partnership likely will amount to merely "a few 100MWs of negotiated volume contracts."
With this deal, GE effectively bows out of the CdTe segment that it joined in 2011, with dreams to scale it up into a multibillion-dollar business alongside its wind business. Its planned $300 million, 400-MW factory in Aurora, Colorado was put on ice last summer, though, and now GE will "discontinue the build-out" of the plant entirely and seek to lease the space, according to a company rep. The original operation in Arvada is going away as well, with 50 employees affected, and future research going through GE's operations in New York.