First Solar not launching Series 5

Solar panel prices have crashed by around 30% globally in 2016 which has made every major producer rethink their strategy with respect to expansion and growth. Many of the solar stocks have seen their prices fall by 40-80% in 2016, as a massively oversupplied market has resulted in prices going below costs for most companies. First Solar which is a thin film solar panel leader has made impressive gains in efficiency over the last few years. Its solar panels have reached an efficiency of 16.5%, making it equal to the multicrystalline solar panel efficiency. This has made First Solar remove its biggest disadvantage with respect to mainstream silicon solar panel companies such as Trina Solar and Jinko Solar. First Solar also claims to have a far better advantage in terms of energy generation in high temperate climates such as India and the Middle East. However, the recent crash in solar panel prices has made go back to the drawing board.

The company which was about to unleash its next generation Series 5 module with a very large form factor is being forced to rethink its plans. It is now thinking whether it would make sense to just move from Series 4 to Series 6.

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This will be done to reduce costs making it products more competition in this fiercely competitive market. Chinese solar companies have repeatedly surprised the market with their rapid cost and price reductions. This has made solar energy extremely competitive with other forms of energy and has wiped out competing solar technologies such as solar thermal and most thin film technologies. First Solar with its rapid technology improvements had thought that it has finally made it, but the sharp crash in solar panel prices has made it defer most of its solar system projects. The company has also stopped competing for a lot of solar panel supply contracts because it cannot make adequate margins. The company reported decent 20% plus margin this quarter, however the stock fell by more than 15% as the company reduced its full year guidance by more than $1 billion.

First Solar has managed to survive in this industry for more than 15 years, even as other leaders such as Suntech, Q-Cells and Yingli Green Energy have become bankrupt. It has done so by nimbly moving into high margin segments. Unlike the Chinese, it does not have unlimited amounts of debt financing that it can use to keep on running its factories at a loss. DOE programs have helped the company in the past but it won’t help it now. While First Solar continues to be run well with a great R&D team, it does face headwinds in the next year or so as a massive price war takes out a lot of companies.