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First Solar in strategic shift, buys TetraSun

Jonathan Fahey, AP Energy Writer

NEW YORK (AP) -- First Solar Inc., in a major strategic shift, will begin making a type of solar panel it has long competed against in an effort to win new customers.

First Solar announced Tuesday it would acquire TetraSun, which has developed a design for high-efficiency solar panels, from JX Nippon Oil & Gas Energy Corp. FirstSolar hopes to begin commercial-scale production in the second half of next year. Terms of the deal were not disclosed.

The company hopes to reach customers who aren't interested in its low-cost thin film panels because they aren't as energy-efficient as other designs.

The move comes as a glut of panels has eliminated the profits of many panel makers, with some struggling to stay afloat. Last month, Suntech Power Holdings Co. Ltd., one of the world's biggest makers of crystalline silicon panels, was forced into bankruptcy.

TetraSun's technology is based on traditional crystalline silicon cells, but First Solar hopes TetraSun's unique design will make it more efficient at turning the sun's rays into electricity at relatively low cost.

With TetraSun panels, First Solar will target homes and businesses that have limited space — such as a rooftop — to produce solar-powered electricity. First Solar now sells panels used in large solar farms that generate wholesale power that is sold to utilities.

First Solar, based in Tempe, Ariz., became one of the world's biggest solar companies by competing against traditional silicon panels with its panels made from thin films of cadmium-telluride. Though not very efficient, the thin film panels for years were the cheapest way to generate solar power. It worked like this: In order to generate a certain amount of electricity, a solar developer would need to buy more First Solar panels than traditional panels. But First Solar panels were so much cheaper that the total cost of the project would be less.

When the market changed dramatically in recent years, First Solar was forced into new lines of business. Traditional panels plummeted in price because raw material costs fell, worldwide manufacturing capacity grew quickly, and government clean energy subsidies began to wane.

That reduced the cost advantage of First Solar's thin film panels. First Solar responded by becoming a major solar farm developer and builder, hoping to create markets for its panels and benefit from an increase in installations brought about by lower panel prices.

First Solar's acquisition of Tetrasun allows it to take on rivals such as SunPower, based in San Jose, that it couldn't before. The company must first figure out how to produce these highly-efficient panels at commercial scale and sell into a market that analysts say remains over-supplied.

FirstSolar shares surged 46 percent Tuesday to $39.35 after the company announced during a meeting with investors that it expected to post profits in 2013 far above Wall Street expectations. First Solar announced the TetraSun deal at the end of the meeting.

Follow Jonathan Fahey on Twitter at https://twitter.com/JonathanFahey .