First Solar (FSLR) and its partner AEL Energy are set to go ahead with a $446 million solar project in Australia. According to a statement from New South Whales state resources minister, Australia will go ahead with the project.

The project will have a capacity of about 159 megawatts of electricity. Australia could become a major market for solar power panels, according to estimates by Suntech Power (STP). The Australian government is also introducing policy steps to make solar power more popular in the country. Solar panel manufacturers and systems installers are looking for new markets for solar power as government support for the industry is declining in Europe.

Australian project

The new First Solar project will be built at two sites and will generate enough electricity to power 30,000 households. The project, which is scheduled to be completed by 2015, will also receive a $129 million grant from the Australian government.

In a bid to boost renewable energy, the Australian government has come up with a Long Term Renewable Energy Target to provide financial incentives to the industry. According to the plan, the government hopes to increase the electricity generated from renewable sources from 10,400 gigawatt hours in 2011 to 41,850 gigawatt hours by 2020. Combined with the rapidly declining cost of solar, government support should result in a fast expansion of the solar industry in the country.

Suntech estimates that solar photovoltaic installations could reach 10 gigawatts by 2020, providing up to 5% of the country's power demand. According to the company, Australia could add around 2 gigawatts of solar capacity every year by that time. Markets such as Australia are becoming increasingly important for solar equipment manufacturers such as First Solar as global photovoltaic demand is set to fall in 2012.

We are looking to revise our $22 price estimate for First Solar, which is at a significant premium to its current market price.

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