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Canadian Solar (CSIQ) to Build 381 MWp Project in Brazil

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Canadian Solar Inc. CSIQ recently announced that its Global Energy business group clinched a power purchase agreement (PPA) with Usinas Siderurgicas de Minas Gerais S.A, involving the building and development of a solar project in Brazil. The move is in sync with Canadian Solar’s aim at capitalizing on the growing solar market in Brazil.

Details of the Agreement

Per the agreement, CSIQ is accountable for the development of the 381 megawatt-peak Morada do Sol project in the State of Goiás, where Canadian Solar's high-efficiency bifacial modules will be installed. The project, which is expected to commence construction in the first quarter of 2024, marks Canadian Solar’s first corporate PPA industrial customer agreement and further solidifies its position in the Brazilian solar market.

Moreover, the project is likely to begin its operations by January 2025 and is expected to produce nearly 790 gigawatt-hour of clean energy annually, thus supporting the Brazilian clean energy goal. To this end, it is imperative to mention that the project has the capability to reduce approximately 118,500 tons of CO2 emissions.

Additionally, the energy generated will be enough to meet the annual electricity consumption of approximately 432,700 Brazilian households. Undoubtedly, the agreement entails Canadian Solar’s capability to produce highly efficient modules to meet such high energy demands. This, in turn, opens avenues for CSIQ to win more such contracts and boost its profitability, going forward.

Growth Prospects in the Brazilian Solar Market

Brazilian solar market growth prospects are expected to increase manifold, buoyed by favorable weather conditions and the increased penetration of the solar market in the region. Per the report from Mordor Intelligence, the Brazilian Solar market is anticipated to witness a CAGR of 5.5% during the 2022-2027 period, thus exhibiting strong prospects for solar companies like Canadian Solar to capitalize and prosper on strong demand.

In a bid to expand in the Brazilian solar market, Canadian Solar raised the $100 million financing facility with Brazilian banks to support its development and construction of solar projects in Brazil in July 2021. Such strategic moves, including the latest PPA, by the company entails its ability to flourish on the growth opportunity that the Brazilian Solar market epitomizes.

Peer Moves

The Brazilian renewable energy landscape exemplifies immense growth opportunities for solar players. In this context, several solar companies have tapped the region to gain from bright prospects.

For instance, in December 2021, JinkoSolar’s JKS subsidiary, Jinko Solar Co. Ltd, signed a distribution generation agreement with Aldo Solar to provide nearly 4 million photovoltaic modules in 2022 in Brazil. JinkoSolar’s shares have appreciated 30.2% in the past year.

The Zacks Consensus Estimate for JinkoSolar’s 2022 earnings is pegged at $3.59 per share, which implies a growth rate of a solid 149% from the prior-year figure. The Zacks Consensus Estimate for JKS’ 2022 sales suggests a growth rate of 45.1% from the prior-year figure.

In September 2021, Enphase Energy ENPH announced its expansion in Brazil with the introduction of its IQ 7+ microinverters in the region.

The Zacks Consensus Estimate for Enphase Energy’s 2022 earnings has been revised upward by 2.6% in the past 60 days. The Zacks Consensus Estimate for ENPH’s 2022 sales suggests a growth rate of 45% from the prior-year figure. Enphase Energy has gained 9.3% in the past year.

In 2019,SolarEdge Technologies SEDG had announced its expansion in the Brazilian PV market, with the introduction of three phase inverters with synergy technology up to 100 kilowatt-peak that fit the 127/220, 220/380 and 277/480 grid types.

SolarEdge boasts a long-term earnings growth rate of 21.5%. The Zacks Consensus Estimate for SolarEdge’s 2022 earnings has improved by 1.8% in the past 60 days. SEDG has returned 22.7% to its investors in the past year.

Price Movement

In a year, shares of Canadian Solar have declined 28.3% compared with the industry’s decline of 28.2%.

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Zacks Rank

Canadian Solar currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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JinkoSolar Holding Company Limited (JKS) : Free Stock Analysis Report

Canadian Solar Inc. (CSIQ) : Free Stock Analysis Report

Enphase Energy, Inc. (ENPH) : Free Stock Analysis Report

SolarEdge Technologies, Inc. (SEDG) : Free Stock Analysis Report

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