The solar industry is being battered by falling prices and tight credit.
First Solar is ready to cut prices and extend payment terms
Oversupply is trimming solar-cell prices at the same time as utilities can’t find bank financing to build large-scale solar farms, said First Solar CEO Michael Ahearn.
“The short-term outlook has never looked more difficult,” he said Tuesday on an earnings conference call. “We regard oversupply as a risk we need to monitor closely.”
Ahearn’s downbeat assessment of the industry came as he projected first-quarter sales at his company would fall from the fourth quarter or remain unchanged. First Solar’s fourth-quarter sales rose 24 percent sequentially.
The company’s dramatic change of fortune can only partly be blamed on the downturn, Ahearn said. The fourth quarter saw a surge of excess supply and lower prices as a result, he said.
While some manufacturers are showing signs they will curtail production, the situation is serious enough that Ahearn said First Solar will consider lowering prices to high-volume customers.
The company also decided to extend customer payment terms from 10 to 45 days as it increases production at its Malaysian plant.
The stimulus bill signed by the Obama Administration will expand the retail solar market in the U.S., but won’t have an immediate impact on large-scale utility projects, he said. These projects take years to plan and will more likely benefit from flexible vendor financing, he said.
Bank lending marginally improved in the first quarter, but “the global banking systems remains fragile,” Ahearn added.
First Solar announced that it is now capable of producing solar cells at a cost of 98 cents a watt, a goal it had been chasing for seven years. Ahearn sees manufacturing costs dropping as low as 65 cents a watt by 2012, raising the competitiveness of the cells.
Posted by Mark Boslet 
