First Solar, Inc. (FSLR), SunPower Corporation (SPWR)…Did This Stock Just Upend the Solar Industry?

The top cell and module efficiencies I’ve highlighted above also don’t account for a majority of sales at solar manufacturers. The multicrystalline lines from Trina and Yingli Green Energy Hold. Co. Ltd. (ADR) (NYSE:YGE) would be closer to an average efficiency of around 15% for most Chinese modules.

What First Solar has done is flip its position in the industry. Instead of playing a constant game of catch-up with Chinese competitors it may now have a slight lead. Let’s keep in mind that the production modules I’ve highlighted above are in production and they’ll likely improve before we ever see a crystalline module from First Solar. So the lead First Solar appears to have above may shrink before production begins.

The untapped market for First Solar
What may be most important for First Solar isn’t passing industry leaders in efficiency, but building a presence in commercial and residential solar. First Solar is relying almost entirely on its systems business for revenue and the drop in backlog last quarter was a warning shot for investors. Giant utility-scale projects are harder to come by these days and utility demand will be choppy, making for a risky market to rely on. Residential and commercial solar have grown steadily as costs have fallen, and this will give First Solar a foothold in both of those markets.

Changing the investment proposition
For investors, what First Solar did yesterday was give hope that it has a plan for its module business beyond CdTe panels. Investors haven’t been giving much value to these thin-film panels because they don’t have a lot of value in a world that demands high efficiency.

First Solar has a lot of work to do in building out plans for manufacturing and supply to exploit TetraSun’s technology, but it has the capability to do it. This could be a game changer for First Solar, turning its weak strategic position in residential and commercial solar upside down.

The article Did First Solar Just Upend the Solar Industry? originally appeared on Fool.com.

Motley Fool contributor Travis Hoium manages an account that owns shares of SunPower. Travis Hoium personally owns shares of SunPower and has the following options: Long Jan 2015 $7 Calls on SunPower, Long Jan 2015 $5 Calls on SunPower, and Long Jan 2015 $15 Calls on SunPower. The Motley Fool has no position in any of the stocks mentioned.

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