Arizona solar business under pressure from global forces

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By Catherine Holland By Catherine Holland

TEMPE, Ariz. -- Capturing energy from the sun is a promising technology, but global market pressures and cash strapped governments are leading First Solar to take a step back.  The Tempe company is laying off 30 percent of its global work-force which amounts to about 2,000 people, including at least 20 in Arizona.  Experts say the company and solar energy are by no means dead, but the time isn't right.

APS opened a solar farm near Gila Bend six months ago. First Solar built the facility.  Secretary of the Interior Ken Salazar was here in January, taking a look at solar projects.

“We now have permitted over 6,000 megawatts of power,” Salazar said.  “Thousands of jobs have been created all across America.”

Solar may be an energy of the future, but the fact is, it takes tax dollars to make it the energy of the present.

“The energy markets have gone into kind of turmoil really,” said Professor Tim James from Arizona State University's WP Carey School of Business.

James said competition from Chinese manufacturers and political turmoil are affecting the business.  Demand for solar panels is also dropping as European governments struggle financially.  That is where First Solar is cutting back.

“They needed to rationalize their production facilities,” James said. "They've done that where they started off in Germany and Malaysia where the growth is now slowest.”

First Solar's CFO explained the situation to investors on a conference call Tuesday.

“Last week, Italy for instance, proposed laws that effectively eliminate the market for large scale solar plants in the country,” Mark Widmar said.

The company had big plans for a production facility in Mesa, but the new plant won't be cranking out solar panels this year. 

James said it's just a question of time. Oil and natural gas will eventually cost more than what we now call alternative energy.  And with the right planning, Arizona could be an industry leader.

“Our big advantage is really the level of solar insulation, there's a lot of sunshine here,” James said.  “If there was a place we could lead the world, it would be producing energy by capturing it from the sun.”

James called solar a fledgling industry which will see a lot of winners and losers over time.

First Solar stock went up today after the restructuring plan was announced.