First Solar (FSLR) Conference Call Highlights

Here are some highlights I extracted from First Solar’s conference call transcript provided by Seeking Alpha

Conference call highlights:

* Manufacturing cost declined to .93/watt a reduction from .98 over the year ago quarter
  Company roadmap calls for .65/watt by 2012

* 479 MW of new volumes in Q1 (361 MW in Europe)

* More opportunity in Germany coming once the snow melts
* Risk of customer defaults continues which could impact 10 – 15% of planned shipments for 2009 (situation hasn’t changed since last quarter)
* Germany seeing evidence of larger banks beginning to lend in some cases and actively underwrite and consider loans
* In Euope (outside Germany) situation less visible and more cautious due to unhealthy banking system
* Financing still an issue for larger projects outside of Germany
* First Solar not opposed to using the strength of its own balance sheet to step in and provide some financial support in select cases

* Over supply not impacting company in short term due to long term contracts

* building out US utility pipeline which could get deployed in significant volume beginning later next year (focusing on California for now)

* concerned about short term nature of injections from stimulus bill and reverting back to ITC structure in 2011
* Company searching for new CEO with Ahearn moving to Chairman to focus on external issues facing company and industry

CEO Michael Ahearn on government assistance:

Mike Ahearn

I think in the US, there are a few things I think would need to happen to create a real solar market in the US. One is that the incentive from the federal government, at least for large scale solar, needs to be higher than it is today, because with natural gas prices being at cyclical lows, these states are not in a position to fill subsidy gap. I just don’t believe that’s going to happen in size.

So, I think the incentive or the subsidy has to be higher. Providing that subsidy through the tax code in the form of an investment tax credit is extremely inefficient. It doesn’t allow for capital to form around project finance in any kind of visible way or in a low cost way. It narrowly constricts the pool of available financers on these projects. So, I think once this grant program expires in 2011, we’re kind of right back where we started. So that’s a problem.

The transmission constrain needs to be addressed, in terms of renewable transmission. There are opportunities to do smaller volumes at solar, around exiting grids, about to get serious about this and really moves at multi gigawatt levels there, will need to be multi state transmission that is basically moving power out of the areas, where it’s cheapest to make it, which is in the southwest and around the southwest and out of it. So, we have the transmission issue to be dealt with.

I think basically facilitating some kind of low cost project financing to put solar projects on parity with conventional power projects is going to be needed as well, at least for a while. We don’t think, I don’t think the loan guarantee program that’s presently structured is going to be particularly useful, because it’s a subjective program. It’s not available to the market in general.

The rules and criteria aren’t even developed let alone published and so when companies like us start thinking about how you put project finance in place to facilitate a large project, due late 2010 or beyond, we can’t rely on that program. There’s no visibility around it. No assurance, we will be entitled to participate.

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