Canadian Solar Inc.’s CSIQ subsidiary, Recurrent Energy recently completed the divestiture of its Slate project in California to Goldman Sachs Renewable Power. With a generation capacity of 300 megawatt-alternate current (MWac), Slate is Recurrent Energy's largest solar-plus-storage project.
Sale proceeds from the aforementioned transaction will boost Canadian Solar’s top line in the first quarter of 2021.
California’s Electricity Generation Aiding Slate Project
Per the California Energy Commission, in-state electricity generation from non-carbon dioxide emitting resources increased 3% year over year in 2019, with solar power contributing 12.3% to the generation mix.
No doubt such improved clean energy trends in the State of California offer solar projects like Slate project ample growth opportunities through electricity supply. Notably, expected to be one of the largest integrated solar-plus-storage projects in the United States, the Slate project has the capacity to generate sufficient low-cost, clean energy to power approximately 126,000 California homes.
Apart from offering benefits like job opportunities as well as indirect economic benefits that accompany solar project development like increased local spending in the service and construction industries, the Slate project is expected to boost tax revenues for Kings County.
Growth Prospects Boosting Project Monetization
As stated by Dr. Shawn Qu, chairman and CEO of Canadian Solar, solar-plus-storage installations in the United States are expected to have nearly tripled in 2020 and are projected to more than double in 2021. This surely offers bright growth opportunities for solar project developers like Canadian Solar, which are involved in construction of solar plus storage projects and thereafter sell those projects to earn profits.
To this end, it is imperative to mention that the Recurrent Energy team has successfully expanded the company’s storage pipeline in the United States to more than 4 gigawatts per hour (GWh).
Notably, Canadian Solar follows a disciplined strategy of project monetization to reap the benefits of the rapidly expanding global solar market. A few days back, Canadian Solar announced that Recurrent Energy completed the sale of the 144 MWac Pflugerville Solar project to Duke Energy Renewables, a subsidiary of Duke Energy Corp. DUK. In December, Canadian Solar completed the sale of a Japan-based solar project Gunma Aramaki for $64 million.
Another solar company following a similar strategy is ReneSola SOL. It recently signed a contract with Denmark-based solar investment company, Obton for selling a portfolio of 20 solar plants, with generation capacity of 12.3 MW in Hungary.
The global solar market, which suffered a setback following the COVID-19 outbreak in March, is steadily recovering and approaching growth trajectory. This has been encouraging major solar industry players to engage in strategic transactions to expand their footprint in the global solar market.
In October 2020, Sunrun RUN acquired Vivint Solar, creating a company valuation of $22 billion.
Zacks Rank & Price Performance
Canadian Solar currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Canadian Solar’s shares have surged 133.9% in the past year compared with the industry’s growth of 251.7%.
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