Robust Panel Demand Could Drive First Solar’s Q3 Results

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First Solar

First Solar (NASDAQ:FSLR) is expected to publish its Q3 2017 results on October 26, reporting on a relatively eventful quarter that likely saw its panel division benefit from strong U.S. demand and firm pricing, with its systems division also benefiting from the sale of some sizable projects. Below we take a look at some of the factors that likely drove First Solar’s results.

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Panel Demand And Price Realizations Could Be Driven By Section 201 Case

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First Solar’s panel sales and price realizations are likely to remain strong over the third quarter, driven by both U.S. and Chinese demand. In the U.S., project developers have been stocking up on panels in order to hedge against uncertainty relating to the Section 201 case that seeks to impose trade barriers in the solar industry. Last month, the U.S. International Trade Commission issued a preliminary ruling stating that cheap, imported solar panels have been hurting American manufacturers, giving President Donald Trump the authority to impose penalties (related: How First Solar And SunPower Could Be Impacted By The U.S. ITC Ruling). First Solar stands to benefit from this, as its panels use cadmium-telluride technology, which is not a target of the trade case. This could allow the company to improve bookings in the near term at the expense of other players, who could see their landed costs escalate.

Separately, China also saw robust demand for solar panels over the first half and early second half of this year. Solar installations in the country over 2017 are projected to stand at as much as 40 GW to 45 GW. Demand for tier-1 and high-efficiency solar products has also been growing in the country. While First Solar’s exposure to China is limited, this could lead to improving price realizations.

Systems Business Could Benefit From Project Sales

Price realizations for solar projects have been improving, particularly in the U.S., as utility companies have been increasing the solar component of their resource mix, while corporates are also looking to increase utility-scale solar exposure to better manage their energy costs. In mid-August, First Solar sold its 40 megawatt Cuyama project and the 280 MW California Flats projects, and it’s possible that these projects could help to drive the company’s quarterly results. While the 130 MW first phase of the California Flats project is expected to be commissioned in Q4 2017, the 150 MW second phase which is under construction is expected to be commissioned by the end of next year.

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