How Did First Solar Start?

The solar energy industry has experienced rapid growth over the past few decades as concerns over climate change and dependence on fossil fuels have increased. Solar panels, which convert sunlight into electricity, provide a clean and renewable source of power. The development of photovoltaic (PV) technology that converts sunlight directly into electrical energy has driven much of the expansion of solar. While solar accounted for only about 1% of U.S. electricity generation in 2010, by 2021 that number had grown to over 3%. Many companies have emerged as leaders in manufacturing solar panels and developing utility-scale solar farms to meet the rising demand for solar energy.

First Solar, founded in 1999, would become one of the world’s largest solar panel manufacturers and a major player in utility-scale solar projects. Headquartered in Arizona, it was one of the first solar companies to use thin-film technology and has been a pioneer in making solar energy cost-competitive with conventional power sources.

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Founding of First Solar

First Solar was founded in 1990 as Solar Cells, Inc by inventor Harold McMaster in Toledo, Ohio. In 1993, he partnered with JD Polk to officially incorporate the company as First Solar, Inc (the Florida Corporation) in Phoenix, Arizona. McMaster had previously worked at NASA’s Glenn Research Center and held over 25 patents related to thin film solar technology. He aimed to commercialize the technology by founding First Solar. Polk was an investor who helped provide early funding.

According to the First Solar website, “The company’s breakthrough came in 2005, when First Solar became the first company to produce fully “cadmium telluride” (CdTe) solar modules with a total area exceeding 1 gigawatt (GW)” https://www.firstsolar.com/About-Us/Overview. This early technology breakthrough allowed First Solar to begin ramping up commercial production and sales.

Early Technology

First Solar was founded in 1999 by inventor Harold McMaster and businessman Harold Hoette. The company first began developing a thin-film cadmium telluride (CdTe) solar cell technology. In 2001, First Solar acquired Solar Cells Inc., which owned the CdTe technology that would become the foundation of First Solar’s solar panels (https://www1.eere.energy.gov/solar/pdfs/solar_timeline.pdf).

CdTe technology offered several advantages over traditional crystalline silicon solar cells that dominated the market at the time. CdTe cells can be manufactured at lower temperatures, reducing energy costs. They also use a very thin layer of semiconductor material, reducing material costs. Additionally, CdTe has an ideal bandgap for capturing energy from sunlight and converting it to electricity (https://www.smithsonianmag.com/sponsored/brief-history-solar-panels-180972006/).

While CdTe technology showed promise, it faced challenges with low conversion efficiencies in the early years. First Solar focused on research to improve the technology and make it commercially viable at scale (https://en.wikipedia.org/wiki/Timeline_of_solar_cells).

Early Funding and Growth

First Solar was founded in 1999 by Harold McMaster and backed by venture capital firms True North Partners and the Quercus Trust [1]. In 2004, the company received $6 million in funding from Advantage Capital Partners [2]. This helped finance early research, technology development and initial manufacturing capacity.

By 2006, First Solar had raised over $100 million in venture capital funding from firms like Goldman Sachs, Madrone Capital and JWMA [3]. This influx of capital allowed the company to rapidly scale up production and establish international operations.

In late 2006, First Solar received $50 million in project financing from GE, which was used to build its first commercial-scale manufacturing plant in Ohio [4]. This plant helped First Solar become a leading supplier of solar modules.

Going Public

First Solar went public with an initial public offering (IPO) on November 17, 2006, when it began trading on the NASDAQ exchange under the ticker symbol “FSLR” [1]. The company offered 10.8 million shares at an initial price of $20 per share, raising around $216 million in the IPO [2].

Due to strong demand, First Solar increased the number of shares offered to 12.7 million shares several days before the IPO [3]. The IPO share price valued First Solar at around $1.1 billion at the time. On its first day of trading, First Solar shares opened at $25 and closed at $28.70, showing strong interest in the solar startup.

Expansion

First Solar has rapidly expanded its manufacturing operations in recent years to meet the growing demand for solar panels. In July 2023, the company announced plans to invest $1.1 billion in building its fifth U.S. manufacturing facility in Alabama, which will have an annual capacity of 3.5 gigawatts (GW) and increase First Solar’s U.S. capacity to over 14 GW (Reuters).

Earlier in 2022, First Solar invested $1.2 billion to expand its two existing factories in Ohio, which will boost its total U.S. capacity to 8 GW by 2025 (First Solar). The company is rapidly expanding to meet demand as solar power adoption grows in the U.S. and globally.

Acquisitions

First Solar has made strategic acquisitions to expand its technology and market reach. In 2021, the company acquired the Italian Cadmium Telluride (CdTe) PV module manufacturer Evolar S.p.A for an undisclosed amount. Evolar specialized in developing and manufacturing CdTe PV modules and had over 1 GW of module manufacturing capacity in Italy and Bulgaria (First Solar Press Release). This allowed First Solar to expand its CdTe PV module capacity and presence in Europe.

According to Tracxn, First Solar has made a total of 5 acquisitions, mostly focused on expanding its technology capabilities in thin-film and solar energy (First Solar – 5 Acquisitions – Tracxn). Key acquisitions include Spectrolab in 2006, a manufacturer of solar cells for space and terrestrial applications, expanding First Solar’s technology expertise. In 2015, the company acquired TetraSun to integrate their high efficiency solar cell technology.

Recent Innovations

First Solar has continued to innovate and develop new solar technologies and products in recent years. In June 2023, First Solar announced a limited production run of the world’s first bifacial thin film photovoltaic module [1]. This new module features advanced thin film technology and will allow First Solar to produce full-size prototype modules. First Solar’s thin film and tandem PV technologies offer advantages like higher efficiency and lower degradation compared to traditional crystalline silicon panels [2].

Additionally, First Solar continues to make advancements with its Series 7 thin film modules, which offer high efficiency and improved temperature coefficient and spectral response [3]. The Series 7 modules are designed for utility-scale and commercial rooftop applications.

Financial Performance

First Solar has experienced significant growth in revenue and profitability over the years. According to Macrotrends, First Solar’s revenue increased from $2.1 billion in 2010 to $3.5 billion in 2019. The company’s revenue for Q3 2023 was $801 million, representing a 27% increase year-over-year.

In terms of profitability, First Solar has seen ups and downs over the past decade. The company reported a net income of $664 million in 2010, which then declined to $87 million in 2012. Net income rebounded to $406 million in 2014 before falling again. Most recently, First Solar reported a net income of $351 million for 2021 and $268 million for Q3 2023. According to Macrotrends, this represented a 645% decline year-over-year.

First Solar’s stock price reflects the company’s financial performance over the years. After trading below $20 per share in 2012, First Solar’s stock climbed to over $50 by 2014 and over $80 by 2018. The stock hit an all-time high above $100 in 2020 before declining to around $60 at the end of 2022.

Impact and Legacy

First Solar has had a significant impact as an innovator and leader in the solar energy industry. The company helped make solar photovoltaic energy cost-competitive with conventional energy sources (Corporate Responsibility). Its thin-film PV technology generates electricity with 89-98% less lifecycle greenhouse gas emissions compared to conventional sources, according to First Solar’s own analysis (SUSTAINABILITY REPORT 2021).

Beyond its technology, First Solar has aimed to demonstrate responsible and sustainable business practices. It seeks to operate ethically and with minimal environmental impact, as evidenced by its commitments to responsible solar and supply chain transparency (Responsible Solar). The company has been recognized as a leader in corporate sustainability.

With over 25 gigawatts installed worldwide, First Solar’s solar modules provide clean energy to millions. The company helped catalyze the growth of the solar industry and demonstrated the viability of solar photovoltaics as a mainstream energy source. First Solar’s innovations, achievements and responsible business practices have helped elevate the reputation of the solar industry.