First Solar Sells Massive Solar Projects to Utilities

Massive 550 MW Project Sold

First Solar (Nasdaq: FSLR) got a $1.46 billion partial loan guarantee for the Desert Sunlight Project, a 550 MW project that’s expected to be one of the world’s largest solar PV plants. 

Located on 3800 acres of public land in eastern Riverside County, California, its 8.8 million cadmium telluride thin film modules will  provide electricity for over 160,000 homes. 

It’s being built in two phases. Phase I will generate 300 MW  which will be sold to Pacific Gas & Electric, and Phase II will generate 250 MW, which will be sold to Southern California Edison. 

The $1.46 billion in loans that are partially guaranteed by DOE will be funded by a group of investors led by lead lenders  Goldman Sachs and Citigroup. 

Within hours of DOE’s commitment, First Solar announced it would sell the project to NextEra Energy Resources (NYSE: NEE) and GE Energy Financial Services, which will each have a 50% stake.

Construction began this month, and the solar farm is expected to operate by early 2015. It’s expected to have an indirect financial impact of $336 million, employing over 500 people whose combined $200 million in wages, will be spent in the local economy. The company is focused on hiring people locally, especially those who have been through solar training programs. It will also generate about $27 million in county sales and property taxes.

Exelon Buys 230 MW California Project

Exelon Corp, one of the biggest utilities in the US, is buying the 230 MW Antelope Valley Solar Ranch One.

The thin film solar PV project is under development in northern Los Angeles County, California. The first phase is expected to come online in late 2012 and full operation is planned for late 2013.

3.8 million solar panels will power 75,000 average homes through a 25-year power purchase agreement (PPA), approved by the California Public Utilities Commission, with Pacific Gas & Electric for the full output of the plant.

It’s being built on 2,100 acres of fallow farmland near Lancaster, California in the Antelope Valley area of the Western Mojave Desert, 80 miles north of Los Angeles. 

First Solar advanced tracking system is being used for a portion of the project – they increase electricity output by tilting the solar panels to track the daily path of the sun. The project also features innovative inverters with voltage regulation and monitoring technologies, which provide more stable and continuous power, increasing the project’s efficiency and reliability.

"The project gives Exelon real scale in solar power," says John Rowe, Exelon CEO. "As the nation continues its transition to a clean energy future, our experience with AV Solar Ranch One will give us a clear competitive advantage."

Exelon expects its $1.36 billion investment to produce revenue in 2013, with stable long term earnings from the power purchase agreeement. 

The U.S. Department of Energy (DOE) finalized a federal loan and loan guarantee of $646 million on September 28 in support of the project. It is one of a group of projects that received support before the program expired at the end of the month.

Exelon also owns Exelon City Solar, the largest urban solar plant in the US, in Chicago’s South Side. It’s been operating since 2010.

In April, Exelon announced it would merge with utility Constellation Energy, which is developing solar projects in California. 

Exelon plans to invest nearly $5 billion in clean energy projects from 2010-2015, but that includes nuclear upgrades. In 2010, it acquired John Deere Renewables (now Exelon Wind), which added 735 MW to its portfolio.

First Solar, which primarily makes thin film solar panels, has been building projects to jump start the market, not because it wants to own them long term. They develop them, site them and get the permits and power purchase agreements and then look to sell them. They will operate and maintain the projects long-term, however.

The DOE loan guarantee makes it easier to find lenders and buyers. It provides assurance to lenders that they’ll get their money back even if the project fails, but taxpayers don’t actually pay for the project. That makes it a low risk project with reliable revenue streams.