Dive Brief:
- First Solar’s revenue declined 10.8% in Q3 down to $887 million, driven by temporary manufacturing issues with some module cells and several terminated contracts, according to a Q3 earnings call.
- The U.S. solar manufacturer’s sales were also down, impacted by competitive pressures in the Indian market, including price dumping by China-based producers.
- In total, the Arizona-based solar maker reduced its full-year volumes sold guidance to about 14.4 gigawatts, a 1.2 GW reduction from its last projection.
Dive Insight:
The solar manufacturing industry is facing a slew of challenges — with everything from antidumping trade regulations to a slowdown in U.S. clean energy deployment.
“As we approach the end of 2024, we remain pleased with the progress made across our business, navigating against a backdrop of industry volatility and political uncertainty, with a continued focus on balancing growth, profitability, and liquidity,” First Solar CEO Mark Widmar said in a Q3 earnings press release.
The rollout of the Inflation Reduction Act’s section 45x tax credits remains unclear as President-elect Donald Trump enters office in January. While the IRA passed with zero Republican support, and Trump has pledged to rescind unspent IRA funding if re-elected, a full or partial repeal of the bill is deemed unlikely by some industry experts.
Given the political ambiguity, First Solar CFO Alex Bradley said the company will be highly selective with new bookings this year. The solar company is working through approximately 37.3 gigawatts of contracted volume, the majority of which will be recognized between 2026 and 2028, Bradley said.
During the quarter, First Solar had several contracts terminated prematurely, one for .4 GW from NY-based electrical equipment manufacturing company Plug Power, as well as two contracts in India. While the company’s gross profit and net sales increased year-over-year for the quarter, the reasons were primarily due to termination payments from these contracts, according to the Q3 securities filing.
Bradley said on the call some customers have requested to shift delivery volume timing out due to project development delays, impacting the company’s revenue as well.
”In some cases, we are enforcing our contractual rights to ship modules to warehouses in the event that customers are not ready to receive the product as scheduled under the contract,” Bradley said. “In other cases, we are able to accommodate schedule shifts either through reallocation to another customer or through interim storage of the module.”
First Solar incurred a $50 million warranty cost due to performance issues in some modules, impacting revenue and margins, but the company has since resolved the problems by improving its glass cleaning process and correcting an error in predicting engineering performance margins, according to Widmar.
Yet the solar manufacturer stressed it’s focused on future growth — with its Alabama facility starting operations in September as well as a Louisiana facility set to open in H1 2025.
The manufacturing moves “keeps us on course to achieve our projection of over 14 gigawatts of annual U.S. nameplate capacity and over 25 gigawatts of global nameplate capacity by 2026,” Widmar said.
