First Solar and China’s Empty City of Ordos

In early September, First Solar (FSLR) signed a deal with Ordos City, Inner Mongolia, China for a major solar farm project whose 4 phases will run until 2019. This week, FSLR and Ordos City signed a “Cooperation Framework Agreement” which…

“…spells out additional project details and localsupport that advance the development of the 2 gigawatt (GW) solar powerplant and confirm the June 1, 2010 expected construction start date forthe 30 megawatt (MW) Phase 1. First Solar and Ordos also agreed toestablish two committees to ensure the successful execution of theproject and to develop a new energy industry in Ordos.”

Massive construction projects are not new to Ordos. For example,over the past five years, the Chinese government built an entirely newcity with a capacity for one million residents. The gleaming new citystands largely empty waiting for the day that the current residents ofthe old city, some 18 miles away, pick up their belongings and move. Ihave seen news reports of an empty shopping mall in Guangzhou (the world’s largest shopping mall) and empty skyscrapers in China, but not an entirely empty city.

The news story below from Al Jazeera (English) describes Ordos asChina’s “Texas” given the number of overnight millionaires who haveprofited from the massive coal deposits in the area. Ordos has China’ssecond highest per capita income.

Needless to say, given the tremendous government largess already ondisplay in Ordos, it will be interesting to see how quickly the solarfarms develop. It will also be interesting to see how China uses thepower given the ready availability of coal in the area.


Be careful out there!

Full disclosure: net short FSLR