A word about the impact on the potential tariffs resulting from this case on module pricing. While some may choose to reference triple-figure tariff rates and claiming that these types of rates will cause severe disruption in achieving our deployment goals, the reality is far different. Currently, Chinese AD and CVD rates range from 15% to 50% for most cooperating compare. Secondly, projects should not be affected as historical module pricing has already been baked into those project economics. Finally, from a supply standpoint, there is, contrary to the view expressed by some industry participants, more than sufficient product available to service current and anticipated U.S. demand through the combination of currently warehouse modules, fairly traded imports and the capacity of Western manufacturers such as First Solar.
As noted earlier, we expect to exit 2024 with over 21 gigawatts and 2026 with over 25 gigawatts of global nameplate capacity, all of which is available to serve the U.S. market. Time and again, we have heard about the detrimental effects of enforcing trade laws on the books of — on deployment. And yet time and again, we see annual records set for solar deployment in this country. In our view, the real risk for U.S. solar deployment comes from the long-term detrimental effects of allowing China’s unfair trade practice to continue, which could result in a decimated domestic solar manufacturing base, ceding all pricing power and a complete control of supply chain distribution to a highly adversarial nation. This represents a strategic risk to developers of solar assets, a clean energy transition and the U.S. energy independence economic prosperity.
U.S. energy independence isn’t just about producing electricity at home. It’s about having the supply chain and R&D for future advancements at our nation’s disposal as well. Historic once-in-a-lifetime policies like the IRA, while transformative of our country’s energy transition and our industry, are not enough to deliver independent due to China’s unfair trade practices. We believe the IRA must work in conjunction with strong and effective trade measures that level the playing field for investments it catalyzes. We must think of government policy in terms of a 3-legged stool. The first leg is industrial policy. In the U.S., demand continues to grow. But the domestic content bonus enhances this growth by creating a crucial parallel demand side driver to incentivize purchasing the output of these American factories.
Through the introduction of a bonus to the investment or production tax credit accessed by solar generation asset owners if projects procured domestically made on, including solar panels. The third leg is a level playing field that addresses anticompetitive market-distorting behavior, such as dumping and circumvention. While industrial policies such as IRA has the power to incentivize domestic investment and significantly growing this industry, the ability of those investments to endure is enabled by a corresponding trade policy. This level playing field ensures that domestic manufacturing investments incentivized by American taxpayer dollars are incubated as they scale. Take away any one of the legs and you render the whole apparatus unusable.
Look no further than Europe as but one example of an unsustainable environment for clean energy manufacturing, not just in solar but wind as well due to the lack of effective trade measures to support policies that seek to incentivize the growth of the domestic supply chain production base. There can be no doubt that trade policy is intrinsic to the efforts to build a resilient American solar value chain, and we believe this view has bipartisan support. This dynamic goes well beyond being just a risk to our company. It threatens the viability of all aspiring U.S.-based manufacturers who may never be able to finance the start-up of growth of their operations. Our support for the petition is founded on the thesis that we believe a level playing field, one that allows manufacturers to compete on the basis of their own merits, is essential for driving American innovation and competitiveness, promoting quality and enabling technology diversification that enhances developer choices.
We also believe that everyone benefits from a thriving, resilient domestic manufacturing industry, enabled by a level playing field and free of dependency on China. Apart from the positive impact on — of domestic investment, job creation and economic value, which is reflected in the economic impact study commissioned by us and conducted by the University of Louisiana Lafayette that was released in February, domestic manufacturing also insulates developers and their pipelines against the risk of disruption resulting from global supply chain issues or potential geopolitical crisis. As validated by our customers and our order book, domestic manufacturing supply chain, build resiliency into development pipelines, providing certainty of pricing and supply and ensuring continuity even in the face of widespread international supply chain disruption.
Again, I want to be clear, we invite competition and free trade. All we seek is that the competition and trade is fair, enabled by a level playing field where all companies can compete on the basis of their own merits. This petition is about enforcing the rule of law and holding rule-breakers to account, enabling a level playing field for domestic manufacturing and supporting the efforts to scale American solar value chains. Importers of solar panels from manufacturers playing by the rules and operating in compliance with U.S. trade laws have little to fear from this petition and any potential investigation. Internationally, oversupply and dumping of modules at prices below cost also adversely impacts the Indian and European markets, both of which are seeking — are seeing record levels of imports and low pricing.
Referring to my earlier comments about thinking of policy as a 3-legged stool, the principle also applies to India, which offers supply-side drivers in the form of production-linked incentive programs, deployment targets that offer demand drivers and nontariff barriers such as the Approved List of Module and Manufacturers, or ALMM. We are pleased that the government has decided to revive the mandate of its ALMM program, and First Solar was added to this list on April 29. We believe that enforcing this vital nontariff barrier will support the effort to level the playing field for domestic manufacturers, especially if combined with a similar program focused on cell manufacturers that could materialize as more domestic cell capacity comes online in the country.
However, we remain concerned about the level of dumping in India and its potential to undermine the country’s manufacturing ambitions. While ALMM applies to fully assembled modules, it does not safeguard the market against the dumping of solar cells or other upstream components, which undermine efforts to scale vertically integrated domestic manufacturing in the country. With this in mind, we are seeking an investigation into the dumping of solar cells in the India market. We believe that investigation is necessary to unfair, market-distorting behavior that denies domestic manufacturers in India a level playing field on which to compete as the industry scales. Finally, moving to Europe, which lags the U.S. and India in its response to dumping and consequently continues to deepen its near total dependency on Chinese-made solar panels.
While Europe currently appears to not have the political will to consider trade barriers that could address dumping, we are encouraged by decisions to EU’s foreign subsidies regulations to investigate potentially illegal subsidies to Chinese solar and wind manufacturers. We continue to monitor developments in Europe and engage with stakeholders there as we seek out opportunities to advocate for a level playing field in that market. To conclude, Alex will now summarize the key messages from today’s call on Slide 11.
Alex Bradley: Demand continues to be robust with 2.7 gigawatts of net bookings year-to-date with an ASP of $0.313 per watt before adjusters, leading to a resilient contracted backlog of 78.3 gigawatts. Our continued focus on manufacturing technology excellence resulted in a record quarterly production of 3.6 gigawatts, and our Alabama and Louisiana factories and our R&D innovation center perovskite development line remain on schedule. We continue to anticipate launching CuRe at our lead line factory in Ohio in Q4 of this year. In addition, we’re increasing CapEx by $0.1 billion this year to accelerate CuRe conversion at our Vietnam facilities as well as at our third Perrysburg facility with a view to advancing global fleet replication by more than 1 year from our assumptions at our recent Analyst Day.
Financially, we earned $2.20 per diluted share, and we earned — ended the quarter with a gross cash balance of $2 billion or $1.4 billion net of debt, maintaining our full year 2024 volumes sold and P&L guidance, including forecasted full year earnings per share — per diluted share of $13 to $14. And with this, we conclude our prepared remarks and open the call for questions. Operator?
Operator: [Operator Instructions] We’ll go over to Mark Strouse, JPMorgan.
Mark Strouse: Appreciate all the color. Obviously, a lot going on right now. Mark, I wanted to start with your comments on India. So good to see you’re added to the ALMM list. I know it’s still somewhat early, but can you just talk about what you’re seeing as far as pricing in that market since the ALMM went back into effect? And how are you weighing shipments to that market versus potentially shipping back to the U.S.?
Mark Widmar: Yes. All right. Thanks, Mark. Look, since the ALMM has gone back into place, we are seeing pricing move up in the market. Again, ASPs, generally in India, are much lower than what we see here in the U.S. But they have moved up 5% or 10% from where we saw them before the ALMM, so moving in the right direction in that regard. I do think that with some of the other initiatives that we have in place and especially as we move forward, towards the latter half of this year, I think we could see even — from pricing as we exit this year going into next year, which is encouraging. In the interim, we are shipping a lot of product into the U.S. So this year, we’ll produce about 2.6 gigawatts of product in India. And we’ll be shipping about 1 gigawatt, maybe slightly north of that into the U.S. market.
And really most of the first half shipments that we’ll see, really into Q3 even, are going to be from India into the U.S. market at this point in time. So that continues to be an option for us. It’s also, like I said in our prepared remarks, as we scale up to 25, 26 gigawatts from a global fleet standpoint. All that product is really available to address and serve the needs of our U.S. customers. We’ll continue to figure out what’s the right optimal allocation in terms of how much state to the Indian domestic market and what comes into the U.S. But I do see pricing dynamics improving in India since ALMM has been put back in place.
Operator: The next question is Andrew Percoco, Morgan Stanley.
Andrew Percoco: So I guess, I mean, over the last few quarters, you guys have been highlighting that you expect bookings growth to slow. But I guess I’m just curious now that you’ve got some headlines around the potential removal of the bifacial exemption, the new AD CVD petition and Jean’s commentary on China, I mean, shouldn’t that be an accelerant for bookings? I get that you guys want to be selective because of your capacity position. But just curious on your updated thoughts on what you’re seeing and expecting for bookings for the remainder of the year now that policy seems to be moving in your favor, and you’ve also got growing demand for clean energy and some of the AI data center markets that you guys had alluded to earlier in the call.
Mark Widmar: Yes. So what I would say right now just in conversations with our commercial team and our Chief Commercial Officer, clearly, pricing in the market and it — has changed. As soon as there was an indication, really, it’s starting to increase $0.03, $0.04 since the beginning of April. And then we continue to see a little bit more momentum now that the petition has been announced and some of the other statements that have been made by the current administration, which are all very, very supportive and constructive. So we are seeing more activity, more engagement. We’re encouraged. We have taken our assumption around bookings down a little bit. We did that largely with a lens of being conservative, of waiting to see exactly what we’re starting to see, and the momentum is starting to pivot back in a more constructive way.
And we’ll see how that pans out. But a lot of engagement, a lot of customer meetings. I will be actually meeting with a number of customers next week as well with our commercial team, and we’ll get a better pulse at that point in time. But I’d say that the sentiment clearly has changed over the last 3, 4 weeks.
Operator: And up next is Philip Shen, ROTH MKM.
Philip Shen: First one is related to the termination of convenience clause. Can you talk about how much of a buffer you guys might have to meet your guide, even if all the terminations — termination for convenience clauses in ’24 and ’25 are exercised? And then secondarily, as it relates to pricing for future bookings, have you already started to see the benefits of the recently filed Southeast Asia AD/CVD petitions? My sense is pricing has already maybe started to move. Just curious if maybe you saw that in some of the bookings previously announced. And then finally, as it relates to the technology, we recently wrote about a Japanese start-up that announced a record perovskite in CIGS lab efficiency of close to 27%. Can you give us an update on your tandem technology research?
And specifically, when do you think you can make a definitive decision on the next-gen technology so that the commercialization path can be realized? Because our understanding is that it might take 3 full years. So you kind of need to maybe lock it in today in order to commercialize in the next 3 years.
Alex Bradley: Yes. So I’ll take the termination for convenience, then I’ll hand it over to Mark. We haven’t given a specific number related to this year. But if you note in the guide, we’re maintaining our volume sold guide at 15.6 to 16.3. So we’re working under the assumption that if this volume were to be terminated, which has not happened yet, we’ve just been having discussions with a customer who’s indicated that given the likely sale of their portfolio and the likely buyer being someone who already has volume from us and given the time frame of those deals pushing out a little bit that they are likely to — if those all happen, then they would be likely to exercise that termination for convenience right. But that’s a customer that we have a larger order book with they’ve already taken delivery of over 50% of the volume under that order.
They will continue to take delivery of some of the remaining, a little bit under 50%. But they will likely, if those then transpire, terminate a portion of that backlog now. As I said, we will look to either reallocate to others or resell that volume. But it is one of the reasons you’re seeing the cash guide come down a little bit is that just given we’re already into Q2, if we reallocate or resell now, it’s quickly not going to be until late Q3, earlier Q4 at best before we move that volume to someone else. So even though we’re maintaining that guide, we think we’ll be able to do that this year, it might impact the timing of the cash. But in general, what we’re seeing is, right now, the guide hasn’t changed. What we’re seeing this year, we think, is manageable with that range that we’ve given.
Mark Widmar: Yes. And then on the pricing side, so someone made the statement onto one of the earlier questions as well. We clearly are seeing the benefit as the market pricing has clearly firmed up and is moving up. If you look at just what we booked this last quarter before any of the adjusters, it’s $0.30. If you look at the graph that’s in the presentation slide, you can see that really none of that happened in April. So all that was really bookings that happened in the first quarter, which is really before any of the indications of this case started to get into the marketplace. So none of that really is reflected yet into — so none of that impacted the Q1 bookings that we just reported. But we are seeing movement into the market where pricing is firmed up, moving up.
And people obviously looking to move quicker than they would have otherwise because of the various uncertainties and trying to figure out the implications to the extent of further development pipeline and projects that they’re looking to build out over the next several years and also knowing that the order book is already tight with First Solar and we’re so still supply-constrained in the grand scheme of things. As it relates to the TAM technology, continue to move — progress that from a couple of different paths. One is our thin-film CIGS tandem product. The other is continuing to work on a thin-film crystalline technology and then still advancing work on perovskite. And as kind of alluded to in our comments about next-generation innovative, disruptive technology and the advantages of our R&D innovation, that is just — we’ll be starting up here by the end of this quarter, beginning of next quarter.
And then our perovskite pilot line, between the 2 of them, it’s almost $0.5 million investment that we made since we announced those decisions over a year ago. What I’d like to do right now is, I think those investments and getting those up and running are going to be clearly operational and informative of understanding of where we are with our technology as we produce full-size modules and then validate them in terms of their reliability. It’s one thing to produce a record cell or even a module. The other is how will it endure and stand up to the elements in terms of the conditions that we need to from a reliability standpoint. And no different in some of the reporting that’s coming out, and we’ve been hearing about this over the last 6 months with TOPCon.
TOPCon, and when you look at some of the field performance and reliability that we’re seeing right now, is significantly challenged and not hitting a performance level that would be anywhere close to acceptable to the market and we’re close to its prior technology perk. So we’ve got to be very careful and mindful. It’s not just working within the labs. It’s also been producing it at scale and then getting it into the field and testing and getting comfortable with long-term reliability and viability. So I don’t have a specific indication of time line. And what I would say, Phil, is we’re making good progress. I think some of the R&D innovation center and the perovskite pipeline that we’re working on right now, and that will be up and running.
We’ll have much better insights in terms of where we are in commercialization and time to market as we exit this year.
Operator: The next question is Brian Lee, Goldman Sachs.
Brian Lee: I guess — I know a lot of focus around the pricing commentary here, Mark. So I’m just going to ask another one around that, if I could. You said $0.03 to $0.04 roughly. You’ve been getting that set feedback since April, and then that doesn’t even include the more up-to-date kind of AD CVD feedback. So if we look at the bookings, $0.31 this quarter, not reflecting any of that, that’s to suggest you’re having discussions real time around kind of the mid-$0.30 per watt, maybe even going higher off of that. Is it fair assume that level is in play over the next couple of quarters as you think about booking future volume here, mid- to high 30s? And could we see it that quickly in the next couple of quarters? And then just secondly, Alex, you kind of quickly alluded to data center demand for electricity.
