The US Government’s Department of the Interior has finalized a road map, called the Programmatic Environmental Impact Statement (PEIS), for developing solar power projects in 17 zones across six southwestern states. The plan, which was approved last Friday, opens up 285,000 acres of federal land in the states of Arizona, California, Colorado, Nevada, New Mexico and Utah for the development of large-scale solar projects.  Developers will acquire rights to build projects on the Bureau of Land Management property and pay royalties to the US government based on the acreage of the land.
We believe that First Solar (NYSE:FSLR), a leading provider of photovoltaic solutions, will stand to benefit through increased PV panels and systems sales as the government’s road map takes effect.
Benefits For The US Solar Industry
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Land identification is an important and time-consuming phase of the solar project development cycle since it involves identifying areas with good solar resources and access to transmission lines. It also potentially entails overcoming regulatory and permit-related hurdles.
In its road map, the Department of Interior has said that companies that choose to develop projects in these zones will benefit from a faster and more streamlined permitting process, minimal environmental reviews, and attractive economic incentives. The demarcated solar energy zones will lie in areas that receive high solar insolation and have close proximity to existing and planned transmission lines. Since transmission is the backbone for utility-scale solar projects, a system level analysis of transmission requirements is also being carried out by the Bureau of Land Management.
The move by the government will help reduce uncertainty for solar developers and will enable faster project execution. The government estimates that if the projects are fully built out as planned, they could produce as much as 23.7 GW of solar energy. This could provide huge opportunities for solar panel manufacturers given that the United States currently has an installed capacity of just 4.5 GW. 
Positive For First Solar
We believe that First Solar, the world’s largest manufacturer of thin-film panels, stands to benefit significantly from the government’s plan. Thin-film technology is often preferred over polysilicon for utility scale projects due to its lower cost and versatile performance in a variety of lighting conditions.
First Solar is the cost leader in the solar industry with manufacturing costs for its cadmium-telluride based modules as low as $0.75 per watt. The company also has the scale to deal with large project orders, and at the end of Q2, it reported manufacturing capacity of 2.4 GW. The company has been focusing more on utility scale solar projects over the last two years.
At the end of Q2, First Solar had 2.9 GW of systems projects in the pipeline, of which more than 1.5 GW are located in California, Arizona and Nevada – the three key states in the PEIS plan.  We believe the company’s strong foothold in the southwestern region coupled with its large scale manufacturing facilities and economical pricing will give it a strong competitive advantage in winning utility scale contracts under the government’s road map.
We have a price estimate of $22 for First Solar, in line with the market price.Notes: