First Solar To Build 2GW Chinese Solar Plant

First Solar (Nasdaq: FSLR) Tuesday announced a memorandum of understanding (MOU) with the Chinese government to build a 2 gigawatt (GW) solar power plant in Ordos City, Inner Mongolia, China.

The project in Ordos is the largest planned solar power farm in the world, and it is also the first major Chinese project announced by a U.S. cleantech firm. 

It is scheduled to be built over a multi-year period. Phase 1 will be a 30-MW demonstration project that will begin construction by June 1, 2010 and be completed as soon thereafter as practicable. Phases 2, 3 and 4 will be 100 MW, 870 MW, and 1,000 MW. Phases 2 and 3 will be completed in 2014 and Phase 4 will be completed by 2019.

“This major commitment to solar power is a direct result of the progressive energy policies being adopted in China to create a sustainable, long-term market for solar and a low carbon future for China,” First Solar CEO Mike Ahearn said at the signing ceremony. “We’re proud to be announcing this precedent-setting project today. It represents an encouraging step forward toward the mass-scale deployment of solar power worldwide to help mitigate climate change concerns.”

The project will operate under a feed-in-tariff which will guarantee the pricing of electricity produced by the power plant over a long-term period.

“The Chinese feed-in tariff will be critical to this project,” Ahearn said. “This type of forward-looking government policy is necessary to create a strong solar market and facilitate the construction of a project of this size, which in turn continues to drive the cost of solar electricity closer to ‘grid parity’–where it is competitive with traditional energy sources.”

The MOU contemplates that during the implementation of the initial phases of the project First Solar will actively review the possibility of module and supplier manufacturing sites in Ordos, and other considerations required to support a First Solar investment.

First Solar also intends to facilitate expansion of the supply chains in China for thin film photovoltaic module production and for the recycling of photovoltaic modules after use.

“We are very pleased to be partnering with one of the solar industry’s global technology leaders in a project of such significance to Ordos’s low carbon future,” said Cao Zhichen, vice mayor of Ordos Municipal Government. “Discussions with First Solar about building a factory in China demonstrate to investors in China that they can confidently invest in the most advanced technologies available.”

The MOU sets forth the agreement in principle of the parties concerning the project and related activities. Final agreement between the parties is subject to the negotiation and execution of definitive agreements among the parties.

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