Chile Holds Big Potential For First Solar, Inc.

Chile Holds Big Potential For First Solar, Inc.

First Solar, Inc. (NASDAQ:FSLR) is prepping to start work on its Lul del Norte power plant, to be built in Chile’s Atacama desert, after getting funding for the project. The Solar firm secured loans of $290 million from the Overseas Private Investment Corporation (a development finance institution run by the U.S. government) and the International Finance Corporation, which is a member of the World Bank Group.

Chile a potential market for First Solar

Even though the project is considerable smaller than company’s North America projects, it will assist to mark substantial presence in Chile’s budding but promising solar market. This is one of the first projects to commence from the company’s pipeline for the region and will be Latin America’s largest photovoltaic solar power plant.

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Chile is a potential market with a GDP growth rate of approximately 5.6% in 2012. With the increasing mining industry along with economic empowerment of the middle-class, the demand of electricity is surging in the market. Demand in Chile has exceeded the supply, and energy needs still depend upon the import, which in turn has increased the prices, according to Trefis Team. Chile has rich solar resource that can be decisive in meeting some of the country’s energy needs even without including subsidies. Atacama Desert has the highest level of solar radiation in the World. The government is working towards ramping up the country’s renewables capacity so that it accounts for about 20% of total generated power by 2025.

Funding, first step towards success

First Solar has finally received a business funding, which is often a complex process for projects based in Chile. The Financiers in the country are interested in funding the solar projects that have long-term power purchase agreements in place since they offer a stable cash flow. In Chile, customers who are high on electricity consumption prefer to buy electricity from the spot market rather than buying from the long-term agreements, since they grow doubtful that these projects would not produce enough electricity.

In the long-run, First Solar can gain substantial advantage in the nascent market for solar companies, believe Trefis Team. The company can draw benefit on the back of its Cd-Te thin-film panels, which show better performance compared to the silicon-based panels in extreme temperatures. First Solar can, also, gain insight into the countries complex and highly regulated electricity market after the acquisition of Solar Chile, a solar project developer based in Santiago.

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