[Guest Klothilde]

http://www.bloomberg.com/news/2013-01-31/first-solar-s-new-mexico-project-may-get-less-than-coal.html Horrible news for the Solar 11: FS signed a PPA for 5.79 uscents/kWh, which is less than the LCOE of new coal plants. Nice try to fool people with your "long-term" unsubsidized PPA price goal of 10-14 cents, FS !!! 5.79 uscents has the ITC in it, but take it out and you still get 8.3 uscents.

[explo 648]

Ok, just to straighten this out; what IRR at what subsidy free price would such a New Mexico plant achieve with FS modules?

[Guest eysteinh]

Klothilde how is this horrible news for the solar 11? First solar undercutting prices and getting little income for watts sold. Is not this a desperate move to still keep building new projects imho? Also I would like to see the economics of this. How the plant owner expect to turn a profit. Interesting news for sure. I am just not sure what to make of it yet.

[Guest Klothilde]

Ok, just to straighten this out; what IRR at what subsidy free price would such a New Mexico plant achieve with FS modules?

I ran a quick and dirty calculation WITHOUT ITC For a single-axis installation:

PPA rate: 8.3 uscent/kWh escalated at 3%/year for 20 years

Capex: $2140/kWdc, this includes 25% gross margin for FS (plant COGS= $1712/kWdc)

Opex: 1% of Capex, escalated at 2% annually

Yield: 2188 kWh/kWdc, annual degradation of 0.5%

Project IRR: 6.8%

Equity IRR: 10.1% at 80/20 Debt/Equity and Debt cost of 6%

I will try and do an in-depth LCOE comparison between FS and c-Si over the next weeks and would also appreciate your feedback/input

[odyd 1,340]

If we use efficiency as the leverage this is still good for everyone in the industry as the pv silicon is more efficient then thin-film. I think Klothilde is somewhat sarcastic, this is a great news for all of them. Finally Bloombergs are typing news which makes oil and coal magnates to sweat profusely and reach quicker for their scotch.

[Guest Klothilde]

@odyd: efficiency doesn't matter by itself. Ultimately it all comes down to LCOE or cost per kWh. Who provides the cheaper electricity, FS or c-Si from China? We will know over the next weeks. For now I just wanted the c-Si investors to panic a little bit.

[odyd 1,340]

@Klothilde, certainly, but wasn't the case in the past to build up 20% of more install to meet the plant expectation just in case? <p> Was there performance issues at stake as well. At the dawn of Chinese EPC, they will undercut any EPC project, and LCOE will follow. <p> FS margins will suffer a lot when they will go on with this model. Just from the floor perspective FS could be heading down while the Chinese seem to have way up only ahead of them, my two cents. Would like to see your analysis on costs in a short while. I am excited for FS.

[explo 648]

Thanks. I'll give it a detailed look later.

PPA rate: 8.3 uscent/kWh escalated at 3%/year for 20 years

I'm not very familiar with PPA structure, but is 3% inflation adjuster common in these agreements as opposed to FiT where price is fixed, giving a frontloaded discounted cashflow for the owner, allowing quicker ROI on these capex intense projects. From the purchaser side there's no capex so they can accept backloaded return on the (FiT) agreement.

[Guest Klothilde]

Screw you GE. Nobody does efficiency like FS ! http://files.shareholder.com/downloads/FSLR/2331822632x0x638729/b4ffa41c-6e79-476e-90a7-5879a96dda75/Q412_Earnings_Call_Presentation_FINAL.pdf

[Pop2mollys 416]

First solar losing market share to silicon Chinese solars... Ha ha what's new... Losing market share every Q...