First Solar’s $215M Manufacturing Mishap

first solar charges First Solars $215M Manufacturing Mishap

In the early part of First Solar’s rise to the top as U.S. solar module maker, the firm encountered a glitch in its manufacturing process that compromised the performance of a small portion of its modules.

An estimated four percent to eight percent of the cadmium telluride (CdTe) thin film modules manufactured by First Solar between June 2008 and June 2009 had a “process control” issue which resulted in a potential “premature power loss once in the field,” according to First Solar Chair and Interim CEO Mike Ahearn.

The process control issue involved global production and all three of First Solar’s CdTe manufacturing facilities at the time (in Ohio, Germany, and Malaysia). The issue was identified in June 2009 and the process factor was “addressed.” Subsequently, First Solar has been fulfilling its warranty obligations with its customers. “The vast majority were in Europe,” said First Solar’s Vice President of Communications Ted Meyer. Most were in Germany, where the bulk of First Solar’s modules were being sold at the time.

First Solar’s remediation program includes module removal, testing, replacement and logistical services and additional compensation payments to customers under certain circumstances.

“A large volume of claims made under the remediation program were processed in the fourth quarter,” Ahearn said during the presentation of the Q4 2011 financials. The amount expended by First Solar in that quarter to remove and replace modules was $23.9 million, bringing First Solar’s to-date total for such costs to $99.7 million.

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