by Paula Mints
In August, CdTe producer First Solar (FSLR) bought its North America O&M enterprise to NovaSource Power. According to First Solar CEO Mark Widmar, the choice was as a result of contracting O&M margins and buyer calls for for extra companies. The firm can be exploring jettisoning its EPC enterprise. First Solar plans to deal with its module manufacturing enterprise.
Comment: Apparently, First Solar lastly realized that O&M is low margin and that the EPC enterprise can also not have a lot margin cushion. Now the corporate can consider one other low margin sector of the solar manufacturing chain, manufacturing.
First Solar has sometimes confirmed prescient with its strategic strikes. It noticed the FiT-driven increase in Europe earlier than its opponents and rode the silicon scarcity to a management place. The firm accurately learn the tea leaves and exited the market in Europe earlier than it crashed to focus on the US market. First Solar was an early pioneer in O&M.
And then there may be all of that Walmart (WMT) cash that funded First Solar proper as much as, and after, its IPO.
So, First Solar may be forgiven for ignoring O&M’s harmful undervaluing and persistent low margins within the discipline. Or … possibly not. Underfunding O&M is rife within the solar business. Most assume that O&M prices will lower in time depressed together with the artificially low value of modules. O&M prices rise over time as methods age. Underfunded O&M is under-done O&M, and that is harmful for the way forward for the business.
Lesson: First Solar’s transfer is akin to the over-used excuse ‘I’m leaving to spend extra time with my household.’ Lesson – learn the tea leaves earlier.
Paula Mints is founding father of SPV Market Research, a basic solar market analysis follow targeted on gathering knowledge by way of main analysis and offering analyses of the worldwide solar business. You can discover her on Twitter @PaulaMints1 and browse her weblog right here.
This article was written for SPV Reaserch’s month-to-month e-newsletter, the Solar Flare, and is republished with permission.