First Solar (NASDAQ:FSLR) and SunPower (NASDAQ: SPWR), two of America’s largest solar firms, are making steady progress into Australia’s fledgling utility scale solar market. Australia has witnessed strong growth in rooftop solar market, with installations expected to touch 2.3 GW by the end of the year, up from 1.7 GW in July. The country’s clean energy regulator estimates that 10% of all households in the country have installed solar panels. 
Despite the strong residential rooftop installation numbers, Australia lags behind other developed countries in adopting utility scale solar energy. The country has just one utility scale installation in the 10 MW and above category while the United States has over 74 installations. This is quite surprising given that solar energy is fundamentally more viable in Australia than in many other parts of the world. A combination of the latitude and sunny weather means that solar insolation in the country exceeds levels seen in Europe and most parts of North America.
First Solar and SunPower’s Moves
Given the low penetration of utility scale projects and the highly conducive climatic conditions, we believe the Australian utility sector provides strong growth opportunities for firms like First Solar and SunPower.
First Solar, which has been increasingly focusing on solar systems over the last two years, is making its presence felt in the Australian utility-scale solar market. In June, the company was selected to supply panels and engineering, procurement and construction services to a 159 MW project being built by AGL Energy in New South Wales. The company also supplied 150,000 solar panels to Australia’s first utility scale project – the 10 MW Greenough River solar farm. The plant commenced operations earlier this week. First Solar will also provide operation and maintenance services for this project over the next 15 years.
SunPower announced Tuesday that it has picked up a 42% stake in Diamond Energy, an alternative energy project developer headquartered in Melbourne. The company will work with Diamond Energy to grow commercial and utility solar projects in Australia. 
The Australian government has also been playing a proactive role in nurturing the adoption of solar power in the country. Much of the growth in the residential rooftop market came from attractive feed-in-tariffs (FIT) provided by the state governments. However, due to cutbacks to the FIT programs in many states, the growth in rooftop installations is expected to slow down going forward. On the utility front, the government has a funding program, dubbed the Solar Flagships Project, to support large-scale projects. The First Solar-AGL Energy project was awarded funding of around AUD 196 million (US$200 million) under this scheme. ((Australia:Bridging Policies For Large Scale Solar Kicking In))
We have a price estimate of $22.13 for First Solar, which is about 5% ahead of its current market price.Notes: