Canadian Solar's Unit Signs Largest Canadian EPC Contract - Analyst Blog


Canadian Solar Inc. 's ( CSIQ ) subsidiary Canadian Solar Solutions Inc. inked an Engineering, Procurement, and Construction (EPC) deal with Kingston Solar LP to build a 140-megawatt (MW) DC (100 MW AC) utility-scale solar energy farm in Ontario, Canada. The new contract is considered the largest Canadian EPC agreement.

Samsung Renewable Energy Inc. ("Samsung") developed a solar energy project called Kingston Solar LP. Canadian Solar will utilize over 464,000 Canadian Solar Maxpower CS6X high-performance modules in the solar farm. The company is scheduled to start the development of the plant in third-quarter 2014. The plant is expected to be operational in the third quarter of 2015.

The CS6X module demonstrates superior power output and higher system reliability. This module cuts current transmission path between cell fingers, decrease cell series resistance and improve module conversion efficiency.

After the completion of the project, the plant will provide emission-free power to approximately 16,409 homes annually. It will lower carbon dioxide emission by roughly 119,292 metric tons per year. Also, the project is expected to generate several new jobs during its development and construction phase besides creating more than 700 manufacturing jobs at Canadian Solar's manufacturing facilities.

Canadian Solar has strong business ties with Samsung as the company has supported many of the latter's projects. This is Canadian Solar's second EPC agreement relating to the solar ventures constructed by Samsung. It corresponds to Phase II solar project development followed by Phase I agreement related to building of the 130-MW DC Grand Renewable Energy Park in Haldimand County, totaling 300-MW AC, under Samsung's Green Energy Investment Agreement.

In addition, in Mar 2014, Canadian Solar and Samsung jointly opened a new manufacturing facility in London, Ontario. The facility produces solar photovoltaic (PV) modules and Medium Voltage Power Stations. The modules produced at the plant are delivered to Samsung for its Grand Renewable Energy Park in Haldimand County and the Sol-Luce Kingston Solar PV project in Kingston and Loyalist Township.

It is evident from Canadian Solar's order book that its solar modules are finding its way in projects ranging in size from a few kilowatts to multi-megawatts in markets across the globe. In May 2014, Canadian Solar announced that it will supply PV modules to the U.S. state of South Carolina's first solar farm, Colleton Solar Farm.

The latest agreement enables Canadian Solar to accumulate around $280 million (C$300 million) as revenues. Canadian Solar's strategy of winning solar module contracts besides signing EPC agreements will enable the company to generate secured revenues. The company can utilize these funds at several profitable ventures as well as for other corporate activities.

Canadian Solar currently has a Zacks Rank #3 (Hold). However, some better-ranked stocks in the same sector include JA Solar Holdings Co., Ltd. ( JASO ), Covanta Holding Corporation ( CVA ) and Yingli Green Energy Holding Co. Ltd. ( YGE ). While JA Solar and Covanta carry a Zacks Rank #1 (Strong Buy), Yingli Green holds a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: JASO , CSIQ , CVA , YGE

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