Pursuant to the MOU, signed in the presence of Chairman Wu Bangguo of the Standing Committee of the National People's Congress of China, the solar project in Ordos will be built over a multi-year period. Phase 1 will be a 30 megawatt demonstration project that will begin construction by June 1, 2010 and be completed as soon thereafter as practicable. Phases 2, 3 and 4 will be 100 megawatts, 870 megawatts, and 1,000 megawatts. Phases 2 and 3 will be completed in 2014 and Phase 4 will be completed by 2019.
"This major commitment to solar power is a direct result of the progressive energy policies being adopted in China to create a sustainable, long-term market for solar and a low carbon future for China," First Solar CEO Mike Ahearn said at the signing ceremony. "We're proud to be announcing this precedent-setting project today. It represents an encouraging step forward toward the mass-scale deployment of solar power worldwide to help mitigate climate change concerns."
The project will operate under a feed-in-tariff which will guarantee the pricing of electricity produced by the power plant over a long-term period.
"The Chinese feed-in tariff will be critical to this project," Ahearn said. "This type of forward-looking government policy is necessary to create a strong solar market and facilitate the construction of a project of this size, which in turn continues to drive the cost of solar electricity closer to 'grid parity' – where it is competitive with traditional energy sources."
The MOU contemplates that during the implementation of the initial phases of the project First Solar will actively review the possibility of module and supplier manufacturing sites in Ordos, and other considerations required to support a First Solar investment. First Solar also intends to facilitate expansion of the supply chains in China for thin film photovoltaic module production and for the recycling of photovoltaic modules after use.
"We are very pleased to be partnering with one of the solar industry's global technology leaders in a project of such significance to Ordos's low carbon future," said Cao Zhiche, vice mayor of Ordos Municipal Government. "Discussions with First Solar about building a factory in China demonstrate to investors in China that they can confidently invest in the most advanced technologies available."
The MOU sets forth the agreement in principle of the parties concerning the project and related activities. Final agreement between the parties is subject to the negotiation and execution of definitive agreements among the parties.
Earlier this year, the Chinese Government announced the Golden Sun subsidies, covering up to 50% of large scale solar plants.