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Abdalrahman Younes

Dr. Joseph Thompson

INTB 3354-Summer 2020

June 22, 2020

Leading the Way in Sustainability

For the last decade the world has begun to make a shift from using fossil fuels and

environmentally harmful non-renewable resources to sustainable eco-friendly energy

consumption. This “Clean Energy” movement has become very important as more and more

people learn about the harmful effects of traditional energy sources on the environment and

many companies have come forward with possible solutions such as solar energy. First Solar is

an American based company that has emerged as the largest worldwide producer of solar panels

in the solar energy sector. First Solar has experienced tremendous growth in the last decade but

their success was by no means an overnight success story. The company began in 1984 when

Harold McMaster, an inventor and entrepreneur, founded Glasstech Solar with the goal of

producing cost-effective solar arrays, but after six long years of research and development

McMaster could not find a cost effective way to make these thin film silicone solar panels so he

decided to try and find a different thin film technology. McMaster discovered that Cadmium

Telluride was a slightly less efficient alternative to the crystalline and polycrystalline silicone

that was being used at the time but he found that he could produce and maintain these new solar

cells at a fraction of the cost of the silicone cells[ CITATION Oas09 \l 1033 ]. McMaster quickly

became a clear industry leader in thin film photovoltaic technology, and soon after in 1999 he

sold his company to True North Partners, which was an investment arm of the Walton family the

owners of Wal-Mart, and they renamed the company First Solar as we know it today. Despite
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First Solar having this cost effective technology the company struggled for a while after the

change of ownership but by 2005 production had reached 25 MW and this was great news for the

company as it meant they were one of the world’s largest producers of solar energy[ CITATION

Oas09 \l 1033 ], but sadly the company still had a long way to go before it would claim the title

of world’s largest producer of solar panels.

First Solar experienced many problems in their early years, specifically they had trouble

growing in the American market. Despite the company having its headquarters in Tempe,

Arizona and their first production plant in Perrysburg, Ohio, First Solar’s success story is largely

thanks to European countries, specifically Germany. First Solar knew that since their Cadmium

Telluride PV technology was slightly less efficient than other solar technology they would have

to focus on price as that was going to be the company’s marketing differentiation. The company

created a streamlined production model that would give the company a cost/watt advantage over

other thin film producers, “based on the company’s predictions they knew that they could get

their production costs as low as $0.85/watt whereas the cost of thin film silicone is about $2-

3/watt”[ CITATION Ril10 \l 1033 \m Fir19]. But in order for First Solar to be able to achieve this

low production cost they needed to find a very large market so they could produce high volumes

to drive down the module price, but the company was not receiving support from Washington.

The United States at the time was not a very active supporter of the sustainable energy

movement and First Solar was not the only company in the industry that was having trouble

entering the American market because the United States had very “unstable government

incentive programs that start and stop every few years”[ CITATION Ril10 \l 1033 ]. Luckily for

First Solar other parts of the world were very far ahead of the United States in terms of

sustainable energy and the company decided that they would look at other markets in hope of
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finding a large enough contract to establish themselves as the leading global company for solar

energy. Around 2004 Germany had begun the world’s first solar “feed-in” program which meant

that utilities were required to purchase electricity from companies producing solar power at a rate

set by national law for 20 years which created a great opportunity for First Solar to enter this

large and now stable market. So in 2006 the company entered into a long term supply contract

with six European project developers and system integrators with the terms being First Solar

would manufacture and sell 795MW of solar modules by 2011[ CITATION Oas09 \l 1033 ].

Although this was the opportunity the company had been dreaming of this mega contract created

a new problem for First Solar because they did not yet have the facilities to cope with this

increasing demand. So the company decided that they were going to global and the company

built another production line in Ohio and expanded even more and built four lines in Germany

and sixteen lines in Malaysia[ CITATION Oas09 \l 1033 ], this global expansion solved their

production problem because it nearly tripled First Solar’s production capacity.

As a result of the problems the company faced at home First Solar expanded globally and

became a true global company which ended up being an enormous benefit in the long run

because they became larger than all of the American solar manufacturers. As a result of this

global expansion 86% of First Solar’s net sales in 2009 were generated from customers

headquartered in the European Union[ CITATION Ril10 \l 1033 ], but the company still had their

eyes set on expanding the target market into the United States. So in November 2007 the

company completed the acquisition of Turner Renewable Energy which was a privately held

company that designed and deployed commercial solar projects for utilities in the United States,

this acquisition finally allowed First Solar to have a strong flow of customers in America and

from then the company experienced tremendous success and growth to the point where First
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Solar became the world’s largest solar energy producer in 2018[ CITATION Fir19 \l 1033 ].

Despite all the various problems the company faced they knew that their product had the

potential to take over the solar energy industry and the company’s choice to go global, their

competitive strategy and their amazing supply chain ultimately fulfilled their goal to become a

giant in the industry.

First Solar has created a niche for themselves in the constantly growing sustainable

energy industry by using multiple international business theories and concepts. Their supply

chain being globally structured with manufacturing facilities all around the world allowed First

Solar to take advantage of virtually untapped markets all around the world and more importantly

their standardized production line made it easy for the company to move to other countries and

replicate the system with success. Nevertheless First Solar still has a long way to go simply

because the sustainable energy sector in the entire world is still only a fraction of the

nonrenewable energy sectors such as oil and natural gas but First Solar has a “head start” on

most other solar cell producing companies because their Cadmium Telluride PV cells are the

most cost effective in the market and they have been improving their production even more

which will eventually lead to even cheaper production costs, also First Solar uses 1/100 of the

thickness and 1/10 of the manufacturing time that is required for other thin film cells[ CITATION

Zwe10 \l 1033 ]. While First Solar still has some competition in the solar energy sector their

main competition comes from nonrenewable energy competition but the projected future looks

favorable for the growth of the solar energy industry because of the rising price and falling

supply of competing nonrenewable energy sources, climate change, and politics related to

dependence on foreign oil and environmental sustainability[ CITATION Oas09 \l 1033 ]. All of

these factors increase the likelihood of further growth in the industry which also means more
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intense competition for First Solar but because they are already an established global company

with a solid track record and a culturally diverse workforce they will most likely remain at the

top of the industry for many years to come.

In conclusion, First Solar has grown into a massive global company with production all

across the world and access to the entire global market, the world is shifting towards sustainable

energy and luckily First Solar is at the forefront of this movement. Despite this no one can

accurately predict the future so First Solar is still striving to better themselves as a company and

improve their products to ensure their longevity in the industry. They have many strengths that

distinguish them from their competition such as their cost-per-watt advantage and their replicable

production facilities but they also have some areas where they need to focus and improve such as

expanding their raw material suppliers and the rarity of Cadmium Telluride in the world. Taking

these strengths and weaknesses into account, First Solar remains a strong global company whose

success is expected to continue into the near future. And if certain measures are taken such as,

aggressively lobbying to ensure that they receive the most subsidies from world governments

possible and continuing research and development to diversify their product line and invest in

new technology in the future then First Solar will continue to grow and remain an industry leader

for many years to come.

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Works Cited

First Solar. "2019 Corporate Fact Sheet/Annual Report." 2019. firstsolar.com. june 2020.

<http://www.firstsolar.com/-/media/First-Solar/Documents/Corporate-

Collaterals/FS_Corporate_Factsheet.ashx>.

First Solar . n.d. june 2020. <http://www.firstsolar.com/About-Us/Corporate-Responsibility>.

Oasis Consulting. Strategic Report for First Solar. Pomona, 2009.

Riley, Daniel. "First Solar." Analysis. Stanford University, 2010.

Zweibel, K. "The Impact of Tellurium Supply on Cadmium Telluride Photovoltaics". 2010.