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Canadian Solar (CSIQ) Wins Solar PV Project in Brazil Auction

Zacks Equity Research

Canadian Solar Inc. CSIQ announced that it has secured a solar photovoltaic (PV) project in the Sixth Brazilian Federal Energy Auction (A-4) held on Jun 28, 2019. The construction of the project, which has a capacity of 51.1megawatts-peak (MWp), will start by early 2021. The project will be constructed in the state of Minas Gerais. It is expected to be operational before January 2023. 

Post completion, the solar power plant will generate annual electricity of approximately 107,748 megawatt hour (MWh). Under the two awarded 20-year power purchase agreements (PPAs), 50% of the generated electricity will be purchased by two utilities with average price of $19.37 per MWh. The remaining 50% will be purchased under a long-term private PPA.

Global Module Shipment

The company caters to a diverse customer base spread across key markets in the United States, China, Japan, the U.K. and Canada. It also offers its services in emerging markets like Brazil, India, Mexico, South Africa and the Middle East. Of late, the company has expanded its global late-stage project pipeline in nations like Argentina, Australia and South Korea, considering these as the markets where the next phase of industrial growth is expected.

In June 2019, the company signed a contract to supply 500 MW solar modules to Solarcentury's projects — Cabrera and Talayuela Solar — in Spain. During the first quarter of 2019, the company shipped around 1,575 megawatts of solar modules globally.

Solar Power Prospects in Brazil

Brazil is currently one of the fastest growing solar markets in the world, attracting a number of investors. Per Mordor Intelligence, Brazil has favorable conditions for the production of energy through photovoltaic systems, especially in the Northeast and Midwest regions. Per a report by Brazil Monitor, the country is expected to witness a 44% jump in solar installed capacity in 2019.

Per RENEWABLE ENERGY WORLD, Brazil is the second largest producer of hydroelectric power in the world. However, the company's 10-year energy expansion plan — Plano Decenal de Expansão de Energia (PDEE) 2027 — focuses on solar PV capacity. The PDEE 2027 expects installed solar PV capacity to increase to 8.6 gigawatt (GW) by 2027, up from 2.5 GW in February 2019.

We believe that Canadian Solar’s significant presence in Brazil and the recent deal will boost its operations in the country.

Other solar players like Renesola Ltd SOL,First Solar, Inc FSLR and JinkoSolar Holding Company Limited JKS are also expanding their business by suppling solar modules globally.

Zacks Rank & Price Movement

Canadian Solar carries a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks  #1 Rank (Strong Buy) stocks here.

Shares of Canadian Solar have surged 57.6% in the past 12 months compared with the industry’s growth of 29.9%.

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