In a strategic move that greatly enhances its penetration into the U.S. utility solar power market, First Solar said it will buy the solar project pipeline assets of OptiSolar. The deal, a $400 million all-stock transaction, will give the thin-film PV leader nearly 21 GW of current and potential projects as well as integrate OptiSolar's 30-person core development group with First Solar's existing team. The transaction is scheduled to close in the second quarter of this year.
The acquired projects include the 550-MW Topaz site in San Luis Obispo county in central California, which is under a power purchase agreement with Pacific Gas & Electric; a group of another 1.3 GW of development deals in the pipeline, which are in negotiation with Western U.S. (mostly California) utilities; and strategic land rights to some 136,000 acres of land with the potential to deploy as much as 19 GW of utility-scale solar power stations.
The deal does not include the purchase of any of OptiSolar's amorphous-silicon thin-film PV manufacturing assets.
First Solar says that it expects to build solar power plants developed under the acquired solar power project pipeline over the next several years and sell them to a combination of regulated utilities, diversified energy companies, and other independent power producers. Project development could start as early as 2010.
"OptiSolar has created an impressive and well-designed development pipeline," said Mike Ahearn, First Solar's chairman/CEO. "Adding these resources, along with their development team, to First Solar is our next logical step to delivering multi-GW of solar power to U.S. utilities over the next several years. As First Solar continues to drive down its manufacturing and EPC costs, OptiSolar's project pipeline and the ability of our team to continually expand our existing pipeline, will enable us to bring solar energy on-line quickly and further reduce greenhouse gas emissions from the grid."
"We are particularly excited to deploy utility-scale solar installations in California," Ahearn continued. "The state of California has been a leader in solar technology, and the Topaz project will be an important aspect of meeting the state's renewable goals."
During the conference call to discuss the deal, Ahearn characterized it as a "watershed acquisition for First Solar, and one that will change our trajectory and catapult us to a whole new league when it comes to the U.S. utility market."
The agreement provides "an opportunity to get large projects under way relatively quickly." He said that more than 6 GW of projects are "already in the interconnection queues in advanced approval positions. This package in total would be very hard to replicate."
Although the company did not announce any factory expansion plans during the call, Ahearn did acknowledge that First Solar "will want to build more factories....But we don't want to be premature" in making those decisions before the project development timelines are established.
In terms of the first project on tap--the 550-MW Topaz site--he said that the company has the installation "modeled now over roughly three years" to complete.
When asked about how the company intends to handle system integration for the projects, Ahearn said that "the way that we're thinking about construction and deployment is similar to our factory-build model with copy smart, where we lock down standard designs, the procurement, and methodologies for installations at a pretty granular level.
"Once you create a program like that, you have something than can be replicated and it can be leveraged with other contractors, subcontractors, and installers. That's really the only way practically to get to gigawatts per year with the deployment."
Noting the rare opportunity the deal provides to add large volume to First Solar's pipeline, Ahearn said "there aren't any backlogs like this, not of this size, not of this position in the queue, and (not of this) quality, in terms of location. If you combine that, it's a unique deal."
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