Delivering on its strategy to prioritize emerging markets with high-growth potential, First Solar is entering South America by acquiring a Chilean solar project developer.
Solar Chile SA has more than 1.5 gigawatts (GW) of early to mid-stage projects in its portfolio across four regions of Northern Chile.
Perhaps most important, the developer has a solid, established presence in the Atacama desert where the Chilean government plans to build South America's biggest solar installation.
The 50 megawatt (MW) project will be the first of many in the desert, which has the highest solar irradiance in the world.
Because banks have been reluctant to finance solar projects, the Chilean government is getting the ball rolling by backing this first one with a $20 million grant and a $400 million loan, reports Bloomberg. The European Union is also chipping in with an $18 million grant.
Currently, the biggest solar projects on the continent are two 22 megawatt plants developed by Spain-based T-Solar Global in Peru, according to New Energy Finance. There are three solar farms in Chile that total just 9 MW.
"First Solar's acquisition of Solar Chile is a milestone of enormous significance to our country," says Alvaro Fischer, President of Fundación Chile, an investor in Solar Chile. "It highlights the tremendous potential that solar PV energy has to change the demography and the economy of northern Chile, opening it up to new opportunities beyond mining and fishing, into water desalinization, hydrogen production or large green data centers."
But mostly the country needs more energy. Chile "has a stable economy that can support solar development, but whose growth is constrained by unmet energy demand, especially in the mining sector," Alan Bernheimer, a spokesman for First Solar told Bloomberg."Utility-scale photovoltaic solar is cost-competitive in this market."
Indeed, the controversial mining sector, the target of increasing protests, is gobbling up energy, draining rivers and pristine lakes, leaving indigenous people without water. The enormous mines scar the landscape.
"Solar energy provides a sustainable and clean energy source that takes advantage of our outstanding clear skies and irradiance. The growth of the solar industry and the arrival of First Solar validates Chile's position as a regional hub for entrepreneurship and innovation," says Hernán Cheyre, Executive Vice-President of CORFO, the Chilean government's economic development agency.
Chile imports up to 75% of its gasoline and diesel, and has been making attempts to diversify its energy mix. One of those plans, a massive dam project would wreak environmental havoc across Patagonia.
Other companies have filed for permits to build solar in the desert worth more than $9 billion, including Spain's Acciona and local utility AES Gener SA.
First Solar has a global development pipeline of 3 GW under contract to utilities, with 2 GW under construction. It has built over 600 MW of PV power projects worldwide.
Other promising markets for expansion include Peru, Brazil, Mexico, Panama and the Caribbean, says First Solar.
After restructuring last year, the biggest US solar company is trying to reduce its dependence on mature economies as revenue slows and projects near completion.
Because of the difficulties in the solar panel manufacturing business, First Solar has diversified into solar project development.
The company is expanding aggressively into India, where it hopes to claim up to 20% of the market, and in October 2012, it was selected to build the first solar farm in Dubai, a 13 MW installation. It's also involved in Australia's two biggest solar PV projects, and is focusing attention on Thailand and Indonesia.