First Solar, Inc. (NASDAQ:FSLR)’s biggest drawback has been the panel efficiency issues. The company’s cadmium-telluride thin film panels are much less efficient than the polysilicon panels. But First Solar CEO James Hughes unveiled a new roadmap to improve panel efficiency and slash development costs. If the Tempe, Arizona-based company sticks to its new plan, it can easily challenge the low-cost Chinese producers while keeping an industry leading efficiency.

First Solar

First Solar’s conversion efficiency a big headache

Technological advances in energy cell efficiency will give First Solar, Inc. (NASDAQ:FSLR) a price advantage over companies like Yingli Green Energy and Trina Solar. Chinese panel makers reduced the price of solar panels by more than 64% from 2011 to 2012, thanks to the falling price of silicon they use in panels and an overwhelming government support. But First Solar now estimates to cut development costs to match those of Trina and other rivals by the end of this year. A big part of these savings will come from the patents First Solar purchased from General Electric Company (NYSE:GE) in 2013.

Conversion efficiency is the key feature of solar panels. A more efficient panel can produce more electricity from the same amount of sunlight. According to research firm Trefis, First Solar, Inc. (NASDAQ:FSLR)’s cadmium-telluride have a 13.4% efficiency rate. In contrast, the polycrystalline panels used by Trina Solar, Yingli Green Energy and other Asia companies offer 15%-16% efficiency. And the monocrystalline panels have a conversion efficiency of about 20%.

First Solar’s long-term conversion efficiency to be better than rivals

First Solar, Inc. (NASDAQ:FSLR)’s latest roadmap suggests that its panel efficiency will increase to 14.9% by the end of this year, and to 19.5% by the end of 2017. The cadmium-telluride research cells have demonstrated a panel efficiency of 20.4%. The company aims to reach 25% conversion efficiency over the long-term. As the company continues to seek major deals in international markets, it needs to boost panel efficiency and reduce development costs. Hughes said during the analyst event that the new plan will reduce the installed systems’ cost from $1.59 in 2013 to less than $1 in 2017, and below $0.40 by 2018.

First Solar, Inc. (NASDAQ:FSLR) shares ticked up 0.51% to $74.25 in pre-market trading Tuesday.