First Solar To Build 2-GW Solar Facility in China

First Solar has signed a memorandum of understanding (MOU) with the Chinese government to build a 2-gigawatt (GW) solar power plant in Ordos City, Inner Mongolia, China. Pursuant to the MOU, the project will be built over a multi-year period.

Phase 1 will be a 30-megawatt (MW) demonstration project that will begin construction by June of next year. Phases 2, 3 and 4 will be 100, 870 and 1,000 MW respectively. Phases 2 and 3 will be completed in 2014 and Phase 4 will be completed by 2019.

“This major commitment to solar power is a direct result of the progressive energy policies being adopted in China to create a sustainable, long-term market for solar and a low carbon future for China,” said Mike Ahearn, First Solar’s CEO. “We’re proud to be announcing this precedent-setting project today. It represents an encouraging step forward toward the mass-scale deployment of solar power worldwide to help mitigate climate change concerns.”

The MOU also calls for First Solar to review the possibility of module and supplier manufacturing sites in Ordos. First Solar also expects to facilitate expansion of the supply chains in China for thin film photovoltaic module production and for the recycling of photovoltaic modules after use. Final agreement between the parties is subject to the negotiation and execution of definitive agreements among the parties.

The project will operate under a feed-in-tariff which will guarantee the pricing of electricity produced by the power plant over a long-term period.

“The Chinese feed-in tariff will be critical to this project,” Ahearn said. “This type of forward-looking government policy is necessary to create a strong solar market and facilitate the construction of a project of this size, which in turn continues to drive the cost of solar electricity closer to ‘grid parity’ – where it is competitive with traditional energy sources.”

First Solar also announced that it has entered into a US $300 million senior secured revolving credit facility with a syndicate of nine financial institutions. The facility, which was oversubscribed, has a three-year term and is intended to be used for general corporate purposes, including the issuance of letters of credit.

J.P. Morgan Securities Inc. and Bank of America/Merrill Lynch served as Joint Lead Arrangers and Book Runners for the facility.

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