The solar market is alive and well, and First Solar, Inc. (NASDAQ:FSLR) is one of the biggest beneficiaries in 2017. The company not only crushed expectations in the second quarter but raised guidance for the full year. It also explained how it's going to squeeze as much value it can out of existing production as it upgrades to a new product called Series 6.

The earnings beat wasn't entirely shocking based on the information we had about solar module and project prices rising in 2017. But the scale and breadth of the good news was a huge development for investors.

First Solar's headline numbers

There's a lot to get into, but here are the headline numbers from First Solar's second quarter.

Metric Q2 2017 Q2 2016 Change Net sales $623.3 million $1.02 billion (38.7) Gross margin 17.8% 17.9% 10 basis points Net income $52.0 million ($11.4 million) N/A EPS $0.50 ($0.11) N/A

As usual, year-over-year numbers can often be skewed because of the timing of project sales. What's important above are the strong gross margin and net income reported this quarter.

Why earnings were so strong

Strength in the second quarter was driven by First Solar's ability to sell all of the Series 4 modules it could make in the quarter. And short term, that's due to the strong demand for modules from solar developers, which is driving prices higher. It should be noted that the $150 million increase in expected sales and non-GAAP earnings in 2017 (to a range of $3.0 billion to $3.1 billion and $1.55 to $2.20 per share, respectively) was due to rising project values -- not more orders.

First Solar sold the 179 MW Switch Station in the second quarter and expects to sell California Flats and Cuyama later this year. All of these projects are selling for more than management was previously expected at the beginning of the year. Not only does that help the bottom line now, but it could help the value of any sale of 8point3 Energy Partners (NASDAQ:CAFD).

Long term, the demand environment seems to be strong and pricing is stabilizing. In the first three months of the year, First Solar booked 1.1 GW of systems and third-party module sales, but in the first 27 days of July, it's booked 1.0 GW. In total, the backlog is 3.7 GW today, up from 2.8 GW at the end of 2016.

The next phase for First Solar

While 2017 is stronger than expected, some of the positives hitting financials today will be short-lived. The company is moving away from systems development, so it won't have the same windfall from project sales in the future as it will in 2017. And the jump in module demand recently will end when the company shuts down production to upgrade equipment to its Series 6 product. Management will probably squeeze as much as they can from Series 4 in the meantime, but when the first Series 6 product rolls off the production line late this year or early in 2018, the sole focus will be on that product. Economics on the new product is expected to be better than Series 4, but time will tell just how good they are.

The biggest takeaways

Solar project values are up, which is good for First Solar's results this year and should be good for 8point3 Energy Partners' sale process, no matter what they decide to do.

Bookings in the third quarter were strong, indicating longevity of demand. There was some concern in the solar industry that a surge in demand in the second quarter was driven solely by China's subsidies and the Suniva trade case, which were short-term drivers of module sales in the second, and potentially third, quarter. But the demand appears to be more robust than a short-term bump.

Finally, according to management, module prices should be flattish throughout the year and demand for high-quality, high-efficiency modules is strong. That indicates that SunPower should be in for a good quarter as well, something that we'll find out about next week.