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Apple’s Newest Innovation: Partnership with First Solar

Apple has been an innovator from the day it was started, with Steve Jobs and Steve Wozniak turning dreams into reality. The company made a significant mark on 20th Century history, and now in the new Millennium it has announced another significant endeavor: developing solar energy.

According to this Forbes article, Apple is teaming up with American photovoltaic manufacturer First Solar to participate in a 2,900 acre, 280 Megawatt solar farm. Apple will be investing $850 million in this venture, to secure 25 years of inexpensive, sustainable energy.
[youtube http://www.youtube.com/watch?v=VXzPs89aMJ8&w=560&h=315]

About First Solar

First Solar manufactures solar panels, and provides utility-scale Photovoltaic power plants, as well as supporting services. These additional services include finance, construction, maintenance, and end-of-life panel recycling. First Solar uses a unique material to produce solar panels. That material is Cadmium Telluride. Using Cadmium Telluride as a semiconductor (as opposed to conventional crystalline silicone) has some distinct cost advantages. First Solar recognized this and made its own history by being one of the first manufacturers to lower its cost to a little less than $1 per watt, in 2009. Just recently, it was reported that First Solar broke the record and has been able to produce the Cadmium Telluride Panels with a 14% efficiency. This is a significant advantage over their competitors.

Apple's Newest Innovation:  Partnership with First Solar

Apple and The Math

How will this investment affect Apple’s share prices? Will this investment prove cost-effective over the next 25 years?

To understand the significance of this arrangement, let’s go deeper. Apple will not own any part of the installation, whic will be in Monterey County, California, but it will buy the electricity output of the plant (130mw of installed photovoltaic capacity, out of a total of 280mw). The $850m will not be paid up front, but spread out over the next 25 years, leaving the construction of the plant itself to First Solar and its financial backers and investors.

The actual amount of power Apple receives will not come close to 130mw. One of the most palpable limitations of solar panels is their ability to generate power only when the sun shines. This means that solar panels only generates a portion of their potential energy capacity. In California, Governor Jerry Brown would like to see California’s energy consumption depending on solar energy to the level of 33%. However, it isn’t like solar energy provides 100% of its own energy (100% being fully optimal conditions with maximum output).

The Forbes article breaks down the math of the impact of this cost to Apple, as well as a possible cost to consumers or Apple stockholders. According to Technology Review, this deal may be what they call a steal. The key thing to remember is that the cost of the solar power is very low, especially with First Solar’s track record of keeping costs down and efficiency up, with how they produce their solar energy. This makes it a sweet deal for Apple, being able to pay less for that solar energy. However, solar energy is not as inexpensive as the other options for energy and therefore, it is not what could be defined as “cheap.”

Crude oil is a finite resource, one which over the next 25 years will become more valuable, as demand increases and supply drops. Should federal carbon taxes be imposed, major companies will see their energy bills increase significantly. The distinct advantage Apple has is that, while the prices of crude oil are expected to rise continuously, the costs of generating electricity from Photovoltaics will likely remain unchanged. What does this mean? Over 25 years, Apple could make a significant savings on their investment, and also streamline all of the other costs and hassles associated with generating and paying for electricity. It may be that Apple just comes out on top… again.

About the author

Deborah Anderson

Deborah Anderson wears many hats and her addiction to acquiring knowledge in many areas is demonstrated through her vast experience. From professional training as a sound engineer at what is now the Los Angeles Film School, to graduating summa cum laude in software architecture (and project management) from Capella University, she likes to share through writing.