Specialist
Former executive at First Solar Inc
Agenda
- Demand outlook for First Solar (NASDAQ: FSLR), including cadmium telluride module pricing trends and US Treasury Department’s Domestic Content Notification
- Update on region, technology and product strategy following May 2023 Evolar acquisition
- Competitive positioning vs crystalline module manufacturers and long-term differentiators
Questions
1.
What is your demand outlook for First Solar for H2 2023?
2.
Do you expect significant upswing or downswing in cadmium telluride module pricing for H2 2023? If so, what key factors would be driving that view?
3.
How much did the cost gap historically have to be between cadmium telluride and crystalline for First Solar to keep sales growth intact? You noted the company has to drop cadmium telluride’s price 5% by year-end 2023 to stay competitive with crystalline.
4.
You pointed out that there’s a clear pricing constraint on cadmium telluride module pricing depending on what goes on with crystalline modules. Where is crystalline- or silicon-based solar module pricing headed in H2 2023?
5.
There was guidance recently from the US Treasury Department regarding the domestic content in solar development and what you need to get that bonus credit. Do you think the clarification ultimately will work in First Solar’s favour over the long term? I noticed that the stock traded up on the domestic content guidance.
6.
Do you think the lack of clarity around the Treasury Department guidance is providing a tailwind for First Solar, the fact that developers don’t know how much domestic content they need?
7.
If China-based module majors such as Longi or Trina Solar decide to manufacture locally in the US, do you think First Solar will still maintain a cost advantage? Do you think it’ll be viewed favourably by the White House or would it put punitive conditions on that move?
8.
You highlighted how you see a lot of developers in the US being on standby, so in the short term they might just source more of the First Solar modules, but long term, they’re waiting for more guidance. Will the purchase orders come in a bigger way once there is more guidance from the Treasury Department on that bonus credit? If the bonus credit guidance came in saying that no, you may as well source from the company or it’s more amenable to that, do you think they will put in larger purchase orders for First Solar product or they’ll just simply not develop?
9.
You referenced the facilities that First Solar is working on. There’s India, Ohio and Alabama. Do you think there’s a market for that extra capacity once those facilities come online, or is the company developing too much capacity at the moment?
10.
Do you think First Solar has a competitive product for the residential market?
11.
You noted how First Solar is working on something for residential. What power class would the module category need to be to be competitive in this space? What do you think is the cost-per-watt benchmark the company would have to achieve to have a competitive product in that particular vertical?
12.
We’re seeing Series 7 as part of the overall product mix growing, and First Solar highlights that. What do you see as the biggest impact of that growing upgraded product in the overall sales mix?
13.
It seems you see the Series 7 replacing the Series 6 more gradually, so the volume aspect of this growth story is pretty muted. What about the price element? Do you expect Series 7 to be price- and/or margin-accretive for First Solar?
14.
I’m curious about conventional improvements in efficiency factor and unit costs for First Solar’s cadmium telluride modules. Could we see improvements there without something drastic such as technological change, investing into perovskite, etc. Do you think the company can improve either variable much from here?
15.
What’s your take on First Solar’s May 2023 Evolar acquisition? Do you think this was about the technology and perovskite IP, about getting into Europe or both?
16.
Based on your comments, it seems that perovskite is meant to complement the core cadmium telluride product and combine with it to provide efficiency improvements. You don’t see it being an indication that the company wants to move away from cadmium telluride. Is that fair?
17.
Do you think First Solar would ever consider acquiring an existing player instead of a product-based penetration of the EU or ex-US market opportunities? Would the company consider acquiring a player that’s not in thin-film modules?
18.
What might a product-based entrance strategy into ex-US markets mean for First Solar’s R&D spending over the next few years? You talked about how with this perovskite acquisition, we’re seeing the company become more experimental and it signals to you that it might be trying to work it into cadmium telluride. Do you expect the R&D spending to grow?
19.
In our previous Interview [see First Solar – Technological Innovation & Competitive Positioning – 12 December 2022], we discussed whether First Solar will go past the module. Now the company is investing in perovskite, which is about improving the core module offering. Do you see any indications that it’s going to move past the module? I think you talked about how it might go into completions.
20.
Are there ways for manufacturers to reduce the gap between the cell- vs module-efficiency factor?
