First Solar (NASDAQ:FSLR) stock is leading market gains today, up 5.48% and trading on a volume of 4.38 million, two and a half times its 30-day average volume of 1.73 million. Three of the company’s solar generation projects, all located in California, have received $4.5 billion in federal loan guarantees through the Department of Energy. First Solar will build new solar plants for customers of Southern California Edison, a unit of Edison International (NYSE:EIX), and Pacific Gas & Electric (NYSE:PCG).
Once completed, the power plants are expected to generate clean, renewable power for 274,000 homes and create 1,400 local construction jobs and hundreds of factory jobs. With the news, S&P Equity Research upgraded the stock from “Hold” to “Buy”.
First Solar specializes in thin-film solar panels, which cost less to manufacture than traditional crystalline panels, giving the company a better outlook in terms of profit margins.
The Department of Energy’s loan program puts the government in danger of losing taxpayer money should the company default, but costs nothing if the loan is repaid as promised. It also allows companies to expand within the renewable energy market by giving them lower interest loans than they could find from private firms.
The DoE is offering a $680 million loan guarantee for the 230 megawatt Antelope Valley Solar Ranch, which will provide power for PG&E, $1.9 billion to the 550 megawatt Desert Sunlight project, which will provide for both PG&E and Southern California Edison, and $1.9 billion for the 550 megawatt Topaz Solar project, providing for PG&E. Institutional investors led by Goldman Sachs (NYSE:GS) and Citibank (NYSE:C) will be issuing the loans for the Desert Sunlight project.
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