5 success factors in an explosive solar market

For nearly the entire first decade since its founding in Arizona in 1999, First Solar, like many companies in the solar sector, rode a wave of soaring growth. Through 2008, it was expanding at a rate of 144% and continued to capture market share from competitors with its innovative “thin film” technology, which can produce electricity from sunlight in a wider range of light conditions than more traditional silicon-based technology.

Last year, however, First Solar lost 43% of its market value as investors fled. There were two consolations for the company in the midst of such a steep decline. First, the slump was widespread. Most renewable energy companies — not only in the solar sector — shrunk in value during the same period, and others fared much worse than First Solar. Q-Cells of Germany, for example, lost 73% of its market value and its CEO resigned as a result. Second, at the end of the shakeup, First Solar retained the highest market value among solar module makers, at US$9.4bn according to Nomura Securities’ renewable energy companies’ valuations list in May 2010.

Today First Solar is at the forefront of an industry that appears to be rebounding. After unprecedented difficulties in the last two years, analysts predict a bright future. Clean Edge, a research company, forecasts that revenues for the solar photovoltaics (PV) industry — the largest by far of the three main solar technologies — will increase more than three-fold by 2019, to US$116.5bn.