First Solar exits the EPC business

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Riding the wild success that has come with the company’s Series 6 module, First Solar has announced it will shed its engineering, procurement and construction (EPC) arm entirely. The company will now move to “leveraging third-party EPC services.”

Normally a successful company shedding an entire arm would be cause for alarm, but the focus by First Solar is not one of shedding to survive financially, but rather a shift in focus. Such a move also has precedents in other industries. A number of automotive companies have gone through similar redesigns, tightening their focus to engineering and constructing vehicles, while pushing the manufacturing of vehicle parts to third-parties, and then back to vertical integration.

In a beautiful, even enviable, move of narrative control the company offered the idea that the EPC arm is a victim of the company’s overall success, sharing in a press release: “While self-performed EPC was necessary to optimize our earlier generation modules, the seamless compatibility of Series 6 with industry systems and processes now allows us to leverage a much broader external ecosystem of knowledge and expertise.”

Translation: “We’re so successful that we’ve made a branch of our own company obsolete.”

The idea of a move towards specialization is also not new to the solar industry. In May of 2018, Sunpower chose to abandon its interests in utility-scale solar development to instead focus on manufacturing and distributed solar projects. Cypress Creek also announced earlier this year that the company would be stepping out of the EPC business to focus on diversifying its development business.

“We expect that this shift will allow us to concentrate on our core business of scaling, developing, and selling our world-class module technology while executing on our project development pipeline with the same level of service that our customers have come to expect,” said First Solar CEO Mark Widmar.

This also isn’t an entirely unexpected or surprising move. First Solar previously announced that it would be taking a step back from its focus on EPC. For the company that focus now shifts entirely to Series 6, Series 6 and Series 6 with First Solar’s second United States facility in Lake Township, Ohio expected to start production in early-2020. According to First Solar, this and factories in Malaysia and Vietnam will raise its aggregate Series 6 manufacturing capacity to 5.4 GW per year.

The unfortunate aspect of this move is that refocusing means resizing and resizing means downsizing. First Solar anticipates that the transition will impact approximately 100 associates, who will be laid off at various points over the course of the shift. Nobly, First Solar announced that it will provide those former employees with compensation and outplacement support.