First Solar plans 2 GW solar power plant for China

Tempe, Ariz.-based thin-film solar maker First Solar (Nasdaq:FSLR) said today it signed a memorandum of understanding with the Chinese government to build a 2-gigawatt solar power plant in Ordos City in Inner Mongolia.

The project is expected to be the largest in the world when completed in 2019. The first phase calls for 30 megawatts, with construction slated to begin in June 2010. The second and third phases are expected to be completed in 2014, bringing the project to 870 then 1,000 MW. The fourth stage would double the capacity to 2,000 MW by 2019.

First Solar CEO Mike Ahearn attributed the project to China's progressive energy policies. The power plant is expected to operate under a feed-in tariff, which officials have yet to finalize.

However, the Chinese Ministry of Finance has already adopted a $2.90-per-watt subsidy for installed solar that is expected to halve the cost for installations 50 kilowatts or more (see New solar subsidies in China set to reduce installed cost by half). In July, the central government also announced the Golden Sun project to subsidize up to 70 percent of the costs of building solar farms with a total capacity of at least 500 MW by 2012, up from the country’s current capacity of 80 MW (see A-Power enters the solar market with $50M acquisition).

“The Chinese feed-in tariff will be critical to this project,” Ahearn said in a news release. “This type of forward-looking government policy is necessary to create a strong solar market and facilitate the construction of a project of this size, which in turn continues to drive the cost of solar electricity closer to grid parity.”

First Solar expects to reach 1,100 MW of manufacturing capacity this year (see Is 5N Plus losing traction with First Solar?). In July, the company said it reduced the manufacturing cost for its cadmium telluride thin-film modules to $0.87 per watt, down 6.5 percent from the previous quarter.

Under today's deal, the company plans to review the possibility of building a module factory in Ordos. In addition, First Solar plans to help expand recycling of used photovoltaic modules. Financial terms of the deal were still being determined.

The project still needs approval from the government's National Development and Reform Commission.

In other First Solar news, a new report from iSuppli says the thin-film giant will produce 1.1 GW of cells in 2009, becoming the largest solar cell producer in the world for the first time. The expanded production capacity could push First Solar past rivals Q-Cells and Sharp.

The estimate is up from First Solar's 503 MW produced in 2008 and would make First Solar responsible for nearly one third of all solar installations this year—28 percent of the projected 3.92 GW to be installed. Consequently, First Solar's market share is expected to increase to 12.8 percent.