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Canadian Solar Wins Fund From Brazilian Bank for Solar Project

Zacks Equity Research

Canadian Solar Inc. CSIQ recently announced that it has secured a $120-million non-recourse financing from Brazilian bank — Banco do Nordeste do Brasil S.A. (“BNB”) — for its Francisco Sa and Jaiba solar projects. The Francisco Sa project with a capacity of 114.3 megawatts-peak (MWp) capacity and the 112.4-MWp Jaiba will be funded over 23 years during the construction and operation phases.

The projects are expected to start construction in the fourth quarter of 2019 and be operational by 2021. Under 20-year inflation-adjusted power purchase agreements (PPAs), the generated electricity will be purchased by Brazilian Electric Power Commercialization Chamber with a base price of $29 per megawatt hour (MWh).

Solar Prospects in Brazil

Brazil is currently one of the fastest growing solar markets in the world and is attracting a number of investors. Per a report by the Brazilian Ministry of Mines and Energy (MME), the nation has a total of 160 gigawatts (GW) in installed capacity, of which 77% is from renewable resources. While wind power is currently the second largest source of renewable energy in Brazil, new solar energy developments in the long term is likely to rival investments in wind power. It is imperative to mention that solar energy, which already accounts for 2.1 GW installed capacity in Brazil, is expected to reach 3.7 GW by 2022.

Moreover, investments in utility-scale solar energy projects are already contracted in the energy auctions, which will reach a value more of than $5 billion by 2022.  These indicate the government’s initiatives to rapidly boost the nation’s renewable footprint.

With Brazil being the largest electricity market in Latin America, solar module providers like Canadian Solar have ample opportunities to enhance business in the nation and expand in Latin America. In fact, BNB is funding in multiple projects of Canadian Solar's plan to build one of the largest high efficiency bi-facial solar power plants in Latin America.

In July 2019, the company won 51.1 MWP solar PV project in Brazilian auction. The construction of the project will start by early 2021 in the state of Minas Gerais. It is expected to be operational before January 2023. Also, a recent news indicates the Brazilian government’s preference for Canadian Solar as the nation’s module supplier.

Considering the expanding renewable market in Brazil, we may expect similar news to surface regarding Canadian Solar’s involvement in the Brazilian solar market in the upcoming days.  

Global Module Shipment

Apart from its expansion in the Brazilian solar market, the company caters to a geographically-diverse customer base spread across key markets in the United States, China, Japan, the U.K. and Canada as well as emerging markets in India, Mexico, Italy, Germany, South Africa and the Middle East.

Per a new research from Wood Mackenzie, global solar PV installations will reach a new high of 114.5 GW in 2019, up 17.5% on 2018. To reap the benefits of this expanding solar market, other solar players like Renesola Ltd SOL, First Solar, Inc FSLR and JinkoSolar Holding Company Limited JKS are also supplying solar modules globally.

Zacks Rank & Price Movement

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

Shares of Canadian Solar have surged 63.2% in the past 12 months compared with the industry’s growth of 46.4%.

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