The recent news that First Solar, Inc. (NASDAQ:FSLR) experienced a 52% increase in revenue had many investors wondering if this was a sign of promise for the solar-energy industry. First Solar sets itself apart from others in the field by providing solar panels at an affordable rate. Let’s take a look at the market for solar.
Stiff competition
Until First Solar came along, JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO) seemed like it controlled the market, serving as the largest producer and seller of crystalline silicon solar cells. First Solar, Inc. (NASDAQ:FSLR) switched crystalline silicon for cadmium telluride to save manufacturing costs, giving consumers a cost savings not provided by other solar energy providers.
But First Solar wasn’t the only issue JA Solar faced. The company dealt with a sharp decline in the solar energy industry, eventually making the switch to solar cells in order to increase profit margins. By centralizing manufacturing to its own operations and growing its Asian market share, JA Solar Holdings Co., Ltd. (ADR) (NASDAQ:JASO) was able to begin making a serious dent in First Solar, Inc. (NASDAQ:FSLR)’s share of the market.
JA Solar reported a 6% increase in revenue in its most recent quarter, with shipments exceeding guidance during that time frame. The company reported success in Japan, a market that has a higher average selling price than other areas. However, sales in China were down for the quarter due, in part, to the company’s decision to focus on areas with more rewarding profit margins.
On the rise
By contrast, First Solar hit quite a few “watch” lists with its impressive 52% quarterly revenue increase. Recently, the Solar Energy Industries Association announced that solar energy now accounts for 48% of all new energy installations in the U.S. This is an all-time high for the industry, leading experts to predict that the solar photovoltaic market will hit $155 billion by 2018.
First Solar, Inc. (NASDAQ:FSLR) is leading the way, but the company is by far not alone. SunPower Corporation (NASDAQ:SPWR) , considered one of the top solar module makers in the country, is exceeding expectations by far. The company announced a year-over-year earnings gain of 350% last year, putting it atop watch lists alongside automaker Tesla as a stock of the future.
The downside
Solar energy still has some obstacles to tackle before reaching widespread adoption. While it makes up less than 1% of worldwide energy consumption, experts believe solar energy could make up one-third of all energy use by 2060.
But for investors, solar energy still faces competition from other renewable-energy sources, like wind and biofuels, which are both serious contenders in the worldwide effort to go green. Environmentalists have expressed concern about the industrialized footprint of large-scale solar-energy installations. Consumers are also concerned about the cost of subsidies, which inevitably come from taxpayer dollars.
