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First Solar Inks Deal to Supply Solar Modules in Pakistan

First Solar, Inc. FSLR recently announced that it has entered into an agreement with Zorlu Holding, to supply over 860,000 of its thin film modules that will be installed in a utility-scale photovoltaic (PV) solar power plant in Pakistan.

Per the deal, First Solar's film modules will be used to power the 100 megawatt (MW) AC facility. Notably, the plant has been developed by Zorlu Enerji, a Pakistani subsidiary of Zorlu Holdings.

The power facility is expected to be connected to the electricity grid by the first half of 2018. Upon completion, the facility will enhance Zorlu Enerji’s installed capacity in the country to 156.4 MW. Further, it is anticipated to generate approximately 180 million kilowatt-hours of electricity per year, which will be able to light-up 140,000 homes (on average) in Pakistan.

Will First Solar Benefit from the Deal?

First Solar already enjoys a strong partnership with Zorlu Holding. In February 2017, the two companies signed a collaborative sales agreement, under which Zorlu Solar agreed to distribute First Solar’s PV modules in 26 markets including Turkey, Afghanistan, Albania, Bosnia, Bulgaria, Cyprus, Georgia, Kosovo, Macedonia, Pakistan, Romania, Serbia, Turkmenistan, Ukraine, and the Commonwealth of Independent States.

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The latest deal to supply First Solar’s module at one of Zorlu Holdings’ power plant will allow the former to further exploit Zorlu’s commercial expertise. Considering Zorlu Holding’s strong presence in the Turkish market along with 25 other countries, strengthening ties with it will definitely expand First Solar’s footprint.  

Per management, the latest deal will expand First Solar’s existing portfolio capacity beyond existing markets where the company already serves. Further, due to almost desert-like weather conditions in Pakistan, the company's solar modules are expected to return over 8% more energy than conventional crystalline-silicon panels.

Notably, with this deal First Solar stepped into the untapped solar market of Pakistan. Keeping in mind the aforementioned developments, we believe, First Solar will be able to tap the benefits of the growing solar market in Pakistan, going ahead.

Our View

Realizing the harmfulness of the carbon emissions from the consumption of fossil fuel, demand for alternative energy sources has been on the rise. In particular solar energy has gained the maximum popularity due to its easy and cheap availability as well as declining price of solar panels.

Per a report from GTM Research, the global solar market will hit 85 GW in 2017 nearly doubling the installed capacity of 2014. To capture larger share of this expanding market, solar companies like First Solar have already started enhancing their overseas base and the latest deal is one such instance.

However, the solar market remains very competitive owing to the presence of other solar majors like JA Solar Holdings, Co., Ltd JASO, Canadian Solar, Inc. CSIQ and SunPower Corporation SPWR, among others.

In response to the highly competitive and dynamic PV market environment and customer demand for higher efficiency modules, First Solar unveiled its next-generation PV module — Series 6 — at the beginning of this month. This new module can deliver up to 8% more watts per connection than conventional silicon modules.

Now, First Solar has already set the industry benchmark for its modules with over 17 gigawatts (GW) installed worldwide and a proven performance advantage over conventional crystalline silicon solar modules. Going ahead, we may expect the launch of its advanced PV module, will allow First Solar to ink more such deals like the one it inked with Zorlu Holding, which in turn will bolster its growth trajectory.

Price Performance

First Solar has returned 85.7% over the last six months, outperforming the 41.7% rally of the industry it belongs to. This can be attributed to the increasing demand for the company’s renowned PV modules.

Zacks Rank

First Solar currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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JA Solar Holdings, Co., Ltd. (JASO) : Free Stock Analysis Report
 
First Solar, Inc. (FSLR) : Free Stock Analysis Report
 
SunPower Corporation (SPWR) : Free Stock Analysis Report
 
Canadian Solar Inc. (CSIQ) : Free Stock Analysis Report
 
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