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First Solar to Jointly Develop a Green Project With APS


First Solar Inc. FSLR announced that it is partnering with Arizona Public Service (“APS”), subsidiary of Pinnacle West Capital Corp. PNW, to develop a 50-megawatt (MW) solar-fueled battery project in Arizona. First Solar will also build and operate a 65-MW solar field to charge the battery.

Arizona Public Service has signed a 15-year power-purchase agreement with First Solar. This agreement will enable APS to supply energy stored in the battery. The battery will store power when the sun is high and help APS to deliver it to customers between 3 and 8 p.m. when the sun is on its way down, but energy use is peaking.

Rising Renewable Usage

Per a U.S. Energy Information Administration (EIA) report, renewable sources accounted for nearly 50% of the 25 gigawatts (GW) of new utility-scale electric generating capacity to have been added to the power grid during 2017.

EIA expects solar projects in the United States to grow by 127 GW and utility-scale storage capacity to improve by 34 GW within 2020 to 2050 time period.

The rising renewable projects will pave the way for battery projects, as it helps to stabilize and store the excess power produced from the projects to be used, when demand peaks.

Battery Storage in the United States

Battery Storage projects are gradually being installed across the United States. Per the EIA release, more than 700 megawatt (MW) of battery storage projects were installed in the United States.

The projects not only help in the storage of renewable power but also improve the grid reliability and efficiency. We expect more battery projects to come up, as it helps to neutralize the variability of electricity generation from the utility-scale solar projects. A decline in the cost of storage projects will also promote growth in battery storage projects.

Southern California Edison, a subsidiary of Edison International EIX, is also involved in various projects that promote the usage of battery storage systems.

Price Movement

In the last six months, First Solar has returned 27.9% compared with industry’s rally of 3.4%.

Zacks Rank

First Solar carries a Zacks Rank#2 (Buy). Another top-ranked stock in the same industry, sporting a Zacks Rank #1 (Strong Buy), is Sunrun Inc. SUN. You can see the complete list of today’s Zacks #1 Rank stocks here.

Sunrun reported positive earnings in the last four quarters, with an average positive surprise of 75.67%. Its 2017 and 2018 Zacks Consensus Estimate moved up 48.4% and 50%, respectively, over the last 60 days.

Our View

The primary drawback of the solar projects is their inability to produce electricity when the sun is down. However, the ongoing improvement in advanced battery technology will address this issue by storing power and help utilities serve customers with clean electricity, even when the sun is down.

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