First Solar Continues to Ride Growth Streak Fueled by Incentives, Demand

U.S.-based solar panel manufacturer First Solar sees more sales on the horizon for 2025 as the solar sector continues riding a growth streak supported by incentives and high demand.

The company on Feb. 25 said it expects sales this year between $5.3 billion and $5.8 billion, the midpoint of which is about 32% higher than last year. Solar power has dominated new utility-scale electricity generation capacity in the U.S., driven by companies seeking lower-carbon energy sources and rising demand. But headwinds are in store.

“We believe that the age of electrification is upon us, where electricity is the lifeblood of the modern economy and the way of life,” First Solar CEO Mark Widmar said on the company’s latest earnings call. “While meeting this unprecedented demand for electricity is going to require diverse sources of energy generation, we believe that solar will be a key part of the solution mix, providing the opportunity to develop and commercialize the next generation of solar technologies.”

Meeting rising demand will not be without challenges given the time required to add power generation capacity and upgrade grid infrastructure.

About 128 gigawatts (GW) of new capacity will be needed by 2029 to meet high summer peak demand, he added. The rising electricity needs of data centers, manufacturers and an electrification surge are behind the expected demand increase.

“Given its attributes of low cost and speed to deployment relative to other sources of energy generation, solar should clearly be a significant part of the near-term solution mix,” Widmar said. “The administration and Congress must ensure that this unprecedented growth in power generation capacity does not deepen the country’s dependence on China and that American manufacturers have access to a level playing field.”

China concerns

Tariffs were imposed last year on solar panel imports from four Southeast Asian countries—Cambodia, Malaysia, Thailand and Vietnam—after American manufacturers accused certain companies of flooding the market with cheap products as U.S. manufacturers worked to boost domestic supplies. China was blamed for the global inundation of cheap solar panels, which led to an oversupply, price collapse and the tariff increase.

Widmar said many Chinese manufacturers have set up U.S. assembly shops importing oversea components to lock in billions of dollars in incentives. However, the Foreign Entity of Concern (FEOC) legislation prevents China from accessing U.S. taxpayer-funded incentives and reduces the cost of programs such as the 45X advanced manufacturing tax credit to ensure “value created by domestic manufacturing is retained in the U.S. and not remitted to China.”

He added the trade committee was pleased with results related to the antidumping and countervailing duty (AD/CVD) case involving the Southeast Asian countries and the recent revision of certain preliminary CVD rates stemming from an examination of cross-border subsidies tied to the Chinese wafer, glass and solar space.

“In Cambodia, as a result of this examination, four solar manufacturers’ imports now have post-preliminary CVD rates of 729% and a total AD plus CVD preliminary rate of nearly 850%, up from a rate of around 150% prior to this examination,” Widmar said. “We expect to see determinations from commerce in respect of such Chinese cross-border subsidizations concerning Malaysia and Vietnam in the near term, which may increase the CVD rates applicable subject crystalline silicon manufacturers in those countries.”

In other news, First Solar said it initiated legal action against Shanghai-based JinkoSolar on Feb. 25, alleging infringement of First Solar’s TOPCon crystalline silicon photovoltaic solar cells technology. The patents for TOPCon, which improves the efficiency of solar panels, was obtained when First Solar acquired TetraSun in 2013.

“We’ve been clear that we will actively defend our intellectual property rights in the U.S. and internationally. Unfortunately, our interaction with JinkoSolar has been unproductive and left us with no choice but to enforce our patent rights through legal action,” said Jason Dymbort, executive vice president, general counsel and secretary for First Solar. “Given the responses we received from other solar cell manufacturers in connection with our infringement investigations, we believe we have a strong TOPCon technology patent portfolio.”

Financial highlights

First Solar reported $393 million of net income for fourth-quarter 2024, up about 13% from a year earlier. Net sales for fourth quarter were $1.5 billion, up $600 million from the prior quarter.

The company ended 2024 with a contracted backlog of 68.5 GW valued at $20.5 billion, having sold a record 14.1 GW of modules.

“Our record net sales of $4.2 billion, in line with our prior earnings call guidance, represented a 27% increase year-on-year,” Widmar said. “Our full year diluted EPS, which included an after-tax impact of approximately $0.42 per share from the December sale of 2024 Section 45X tax credits, which was not included in our October guidance, came in below the low end of our guidance range at $12.02 per share.”

Growth continued on the manufacturing front as First Solar’s new Alabama facility went online and its Ohio facility was optimized. The company ended the year with about 21 GW of global nameplate manufacturing capacity, up 4 GW from 2023.

“Additionally, we continue to construct our $1.1 billion Louisiana manufacturing facility over the course of 2024, which remains on track to begin commercial operations in the second half of this year,” Widmar said. “Once ramped, it’s expected to increase our global nameplate manufacturing capacity to over 25 GW by 2026.”

Analysts called the results mixed. In a note Feb. 26, Jefferies analysts said fourth-quarter 2024 revenue was slightly above consensus but margins were below expectations.

“Similarly, [management] guided to top line of $5.55bn at midpoint, largely in line with cons but margins of ~47% coming in 500bps below expectations,” Jefferies said. “While the investor community may not give much credit, FLSR is trading closing to all-time lows on valuation. We see pressure on the stock as overdone and could view 4Q as a clearing event.”

First Solar also faces some cost pressure related to glass costs, aluminum tariffs, production ramp-up at the Alabama facility and costs associated with converting Indian modules to be tracker mount compatible—to name a few.

“Beyond ‘25, we see some pain points on costs and ASPs [average selling prices] to resolve itself, while some to linger going forward,” Jefferies analysts said, noting the firm lowered First Solar’s margin profile versus its prior estimates.

Near-term investor focus is expected to be on the overall macro environment—including the Inflation Reduction Act and tariffs—“with an eye on 2H results given FY guide is back-end weighted.”