A global oversupply of solar cells, the upcoming U.S. elections and pivots toward fossil fuels are causing angst for U.S. solar panel manufacturer First Solar, even as rising demand for its favored products pushes up profits.

First Solar’s second-quarter profit more than doubled year-over-year (yoy) to $349.4 million from $170.6 million in second-quarter 2023.

But First Solar CEO Mark Widmar expressed concerns about “externalities” during the company’s second-quarter 2024 earnings webcast on July 30.

“We have observed increasing constraints on access to capital, both for early stage solar technology companies seeking to finance the next stage of their growth as well as for the established companies looking to build domestic manufacturing capacity,” Widmar said. “Our financing parties wait to make investment decisions until they have a clear view of the policy picture.”

The industry has been challenged in recent years by trade and global market woes even as rising power needs have pushed solar to become one of the fast-growing sources of electricity in the U.S. But no one knows what the future will bring from politicians, China and profit seekers.

Widmar called out China and cell dumping that has led to artificially lower pricing. While he reflected on the positive steps taken in the U.S. recently to address overcapacity, including new tariffs on foreign-made solar modules, he said the “market-distorting practices have resulted in a 2024 year-end projected U.S. oversupply position of approximately 40 gigawatts.”

The market is also feeling pressure from multinational oil, gas, power and utility companies pivoting away from renewables to fossil fuels to capture higher returns.

Still, “we are seeing the potential for a significant increase in demand as the decade advances, driven in part by data center load growth,” Widmar said. “Ten of our largest customers have ongoing and future projects that are serving the nation’s largest hyperscalers, deploying our technology for the balance of the decade.”

First Solar recently signed a 620-megawatt module supply agreement with a new customer that will supply power to a hyperscaler.

Data from the U.S. Energy Information Administration show about 19 gigawatts (GW) of solar power was added to the U.S. grid in 2023, and 37 GW of power is expected to be added in 2024.

“While external factors such as the outcome and impact of the forthcoming election and the continued impact of the global Chinese-driven overcapacity on supply present challenges, First Solar continues to focus and deliver on our planned initiatives,” Widmar said. “Through continued execution, active policy engagement, utilizing our balanced approach to growth, profitability and liquidity and leveraging our points of differentiation, we believe we remain well-positioned to navigate these challenges.”

Project updates

Despite the uncertainty, First Solar continues to move forward with projects to expand its production capacity. Following the July commissioning of its Ohio expansion project and R&D facility, First Solar said it anticipates starting up its Alabama manufacturing facility in third-quarter 2024.

The facility will have a capacity of 3.5 GW and lift the company’s total U.S. capacity to 10.6 GW.

“In Alabama, we expect to complete the installation of tools, complete plant certification and commence production this quarter with the first commercial shipments from the plan expected in 4Q of 2024,” Widmar said. “We are pleased with the speed at which we’re able to construct, equip and commission the 2.4 million-square-foot facility, achieving this in approximately 24 months from the investment decision.”

The Louisiana manufacturing facility, which also will have a capacity of 3.5 GW, is on track for commercial startup in the second half of 2025. Once online, First Solar’s U.S. solar module production capacity will surpass 14 GW.

“In addition, we are on track to commission our new perovskite development line at our Ohio campus in the second half of 2024,” he added.

Quarterly highlights

For the quarter, First Solar’s net sales were about $1 billion, up from $810.7 million yoy, as the company sold more modules at higher average selling price per watt.

The company’s 2024 guidance is unchanged. It anticipates net sales of between $4.4 billion to $4.6 billion with between 15.6 GW and 16.3 GW volume sold. It anticipates spending to range between $1.8 billion and $2 billion.

First Solar’s year-to-date net bookings increased to 3.6 GW. Total contracted backlog stands at 75.9 GW, including orders through 2030.

A “substantial portion of our backlog includes opportunities to increase the base ASP [average selling price] through the application of adjusters, if we realize achievements within our current technology road map” at the time of expected delivery, First Solar CFO Alex Bradley said.

First Solar’s thin film Cadmium Telluride (CadTel) photovoltaic technology is described as having a lower cost, greater scalability and higher efficiency compared to conventional PV technology. The company continues to invest in U.S. thin film R&D infrastructure. Thin-film panels are more lightweight, flexible and thinner than typical crystalline silicon wafers, a market dominated by China.

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