First Solar Picks Up More Land for Projects

(MoneyWatch)  In an unusual move mirroring its purchase last year of failing thin-film solar company Optisolar's project portfolio, First Solar has bought part of the land and project pipeline of Edison Mission Group, which is a division of the large utility owner Edison International.

The projects it acquired range in size from 20 to 150 megawatts, according to First Solar. That suggests the total may exceed the 400MW that the company got from Optisolar. Along with scattered other projects, First Solar now has the land to place over a gigawatt of its own solar panels in the United States alone -- roughly equal to a full year's output at last year's production rates.

Project acquisitions give First Solar a way of cutting down the time it takes to start building on a site by several years, along with the actual land to build on. While it might be cheaper in the long run for the company to do the initial footwork itself, buying projects other companies have already been working on gives First Solar a quicker path to selling power.

I call the acquisitions "unusual" only because most solar panel makers keep their focus on manufacturing solar panels. For First Solar, along with a few other market leaders like SunPower, building solar farms is beginning to look like part of a long-term business plan.

That plan may have the company becoming its own biggest customer. While it's not clear whether it will use all of the land it has acquired, and its production capacity will certainly rise over the years it's building out the solar farms, First Solar may continue buying large chunks of land to develop.

Investors might take this news badly, as investing in building and operating solar farms will likely mean lower profit margins for the company than concentrating on producing more solar panels. But margins for panels have already been getting tighter, with inventories up from the recession and silicon-based solar panels becoming cheaper.

Not to mention, the Edison deal simply be a stop-gap measure to give First Solar private land to start developing on right now, while projects on public land are delayed by lawsuits and permitting problems. However much First Solar's backers would prefer the easy days of a few years ago, the solar market of today may require companies that can do more than just make panels.