India’s Rajasthan state is inviting bids to set up about 100 MW of photovoltaic solar power projects.  According to the state-run firm inviting bids, companies will be allowed to import the equipment and required technology for the projects. We believe that this could provide an opportunity for First Solar (NASDAQ:FSLR), the world’s largest thin film solar panel manufacturer, which has been steadily increasing its presence in the Indian market.
Why India Is An Important Market For Solar Products
India, which is one of the world’s fastest growing economies, offers solid prospects for solar power as it faces an acute shortage of electricity and growing concerns of carbon emissions. The country also has relatively high prices of electricity which would allow solar power to reach grid parity sooner. As of last year, the country had about 0.4 GW installed solar capacity and the national government’s National Solar Mission aims to boost that to 20 GW grid connected power by 2022. This is creating strong demand for solar products in the country.
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- How Expanding Systems & Modules Margins Could Impact First Solar’s Valuation
Why First Solar Is Poised To Benefit
We believe First Solar is well positioned to gain from the new bids due to four reasons:
1) Technology: Rajasthan, which is located in North Western India, receives among the highest levels of solar irradiance in the country. Higher temperatures generally cause the performance of solar panels to decline. First Solar’s panels are manufactured using cadmium telluride (Cd-Te) thin film technology and experience lower performance degradation in hotter climates compared to polysilcion based panels.
2) Presence In Indian Market: First Solar has a strong marketing reach and has already won several panel supply contracts in the country. In the last three months alone, the firm won separate contracts for supplying about 75 MW of panels to two projects in Rajasthan.
3) Track Record And Capacity: First Solar has extensive experience in delivering large scale solar power projects with the current systems project pipeline of about 3 GW. Considering the projects in Rajasthan need to be executed within a year, First Solar also has adequate manufacturing capacity (about 2.4 GW) to supply the panels in time.
4) Price: First Solar’s Cd-Te thin film technology are marginally cheaper than polysilicon panels, which could give them a slight edge in the Indian market.
We have a price estimate of about $27 for First Solar, which is about 1% below the current market price.Notes:
- Rajasthan Invites Solar-Power Bids After 11-Month Delay, Bloomberg [↩]