NEW YORK (AP) — Shares of First Solar Inc. jumped Wednesday after the company said it has reached a deal to sell a planned 550-megawatt solar energy farm in California to MidAmerican Energy Holdings Co.
THE SPARK: MidAmerican said that First Solar will complete construction of the Topaz Solar Farm in California's San Luis Obispo County by early 2015. Construction began last month. The farm is valued at more than $2 billion, but the companies didn't reveal the deal's terms. First Solar told The Associated Press it wouldn't reveal the sale price. MidAmerican did not return a call seeking comment. Topaz is one of the biggest solar energy projects in the world.
Pacific Gas and Electric Co. will buy electricity from the farm under a 25-year agreement. It's doing so to fulfill a state renewable energy requirement. The plant is expected to provide enough renewable energy to power about 160,000 average California homes.
THE BIG PICTURE: The deal shows that there's still an appetite for solar projects in the U.S. as electricity demand falls.
THE ANALYSIS: Jefferies analyst Jesse Pichel said he didn't believe investors had banked on First Solar being able to sell the farm after multiple delays, the loss of a Department of Energy load guarantee and the loss of a potential sale to Enbridge Inc. Pichel also noted the stated value of the farm is higher than investors expected. The sale also removes a risk First Solar would have carried on its balance sheet, the analyst said.
SHARE ACTION: Shares gained $3.29, or 7.1 percent, to $49.44 in afternoon trading, after earlier hitting as high as $51.89. The stock has lost more than half its value since July. It hit its year-high of $175.45 in February. It's traded as low as $40.05 in the past year.