Canadian Solar Solutions Inc., an operating division of Canadian Solar Inc. (CSIQ), struck a deal with a fund managed by BlackRock, Inc. (BLK), whereby the latter will purchase a 10-megawatt (MW) utility-scale solar farm in Ontario, Canada. The transaction is valued at par with other recent project sales concluded by the company on a per megawatt basis in the Ontario market.
Construction work has already begun at the Westbrook power plant while commercial startup is slated for the second quarter of 2014. Canadian Solar will offer turnkey engineering, procurement and construction ("EPC") services. It will also offer operations and maintenance services after project completion.
The solar plant will install roughly 47,160 Canadian Solar CS6X high-performance modules, which have been through rigorous formal inspections and testing and are internationally certified. The plant will provide emission-free power to approximately 1,650 homes annually. Per the Ontario Power Authority contract, the consumers will get emission free energy over a 20-year operational period from the power plant.
This and similar sales reflect a recent trend among solar module makers to venture into the more profitable solar project generation business. The company is poised to earn additional revenues from its sale of the Westbrook solar plant to BlackRock in the near term.
The latest deal follows two more utility-scale solar power plants –Demorestville and Taylor Kidd – sold to BlackRock in Sep 2013. Those two projects have a total electric generation capacity of 20 MW AC. The plants are located at Demorestville and Odessa in Ontario, Canada.
With the rapid uptake of renewable energy due to its clean nature and increasing awareness among the masses regarding its benefits, the utility providers are gradually shifting their power generation mode to solar, wind and water from traditional methods. This bodes well for solar companies like Canadian Solar, which are continuously diversifying their customer base geographically, across the North American and European markets, as well as the emerging markets of South Korea, Japan and China.
We view this growing demand for solar powered energy as a catalyst for Canadian Solar’s forthcoming operating as well as financial performance.
Canadian Solar currently has a Zacks Rank #3 (Hold). However, First Solar Inc. (FSLR) and Trina Solar Limited (TSL) are better ranked with a Zacks Rank #1 (Strong Buy).