First Solar, Inc. (FSLR), SunPower Corporation (SPWR)…Did This Stock Just Upend the Solar Industry?

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When First Solar, Inc. (NASDAQ:FSLR) announced the acquisition of TetraSun yesterday it really announced a fundamental shift in the company’s strategy. It isn’t giving up on thin film, not yet, but it is laying the groundwork for a future without its familiar CdTe panels. TetraSun is an investment in crystalline silicon solar cells that First Solar, Inc. (NASDAQ:FSLR) has been fighting against for over a decade. Silicon has won the battle, and now even First Solar, Inc. (NASDAQ:FSLR) will join the crowd.

The claims of TetraSun
First Solar, Inc. (NASDAQ:FSLR) says it is buying technology that will allow it to make panels that are more efficient and cheaper than competitors. So, is that claim really true? There are a lot of unknowns.

The press release from First Solar, Inc. (NASDAQ:FSLR) claims that TetraSun can make 21% efficient cells at costs similar to those of conventional multicrystalline silicon solar cells. If we use Trina Solar Limited (ADR) (NYSE:TSL) as the proxy, that means manufacturing costs of about $0.64 per watt.

The challenge is that TetraSun’s cost structure and manufacturing process are only hypothetical; at least on the scale First Solar, Inc. (NASDAQ:FSLR) needs to operate on. There’s no evidence that any significant manufacturing exists and First Solar is entering uncharted territory. It has no expertise with silicon and there have been plenty of new solar technologies that never lived up expectations. Evergreen Solar, Inc. was supposed to have a better process for making silicon cells, amorphous silicon had high hopes, so did CIGS, and who can forget Solyndra, Inc..

But let’s assume that First Solar has a winner on its hands and TetraSun can produce 21% efficient cells at $0.60-$0.65 per watt. So what?

Another record in solar
We’ve been hearing about solar efficiency records for years. Yingli Green Energy Hold. Co. Ltd. (ADR) (NYSE:YGE) said that its Panda cells reached 19.89% efficiency way back in 2011. Trina Solar Limited (ADR) (NYSE:TSL)’s Honey technology can reach 19.6% efficiency. Then there’s the efficiency leader, SunPower Corporation (NASDAQ:SPWR), whose Maxeon cells can be 24% efficient, creating a 21.5% efficient production module.

The first thing to keep in mind with First Solar’s claims is that cell efficiency and module efficiency are two different things, so let’s not jump to First Solar creating a 21% efficient module just yet. Even if TetraSun’s claims are true, a module would only be 18%-19% efficient, which isn’t off the charts against today’s competition.

Top Cell Efficiency Top Module Efficiency
SunPower X-Series 24.0% 21.5%
First Solar TetraSun 21.0% ~18.0%-19.0%
Trina Solar Honey 19.6% 17.4%
Yingli Green Energy PANDA 19.9% 16.5%
Trina Solar Multicrystalline n/a 16.0%
Yingli Multicrystalline n/a 16.2%
First Solar CdTe Panel 18.7% 12.9%

Source: Company press releases and product datasheets.

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