Canadian Solar Inc.
) announced that it has sold a utility-scale solar power plant to
Stonepeak Infrastructure Partners for approximately $48.4
million. As the developer responsible for engineering,
procurement and construction of the project, Canadian Solar built
the solar power plant to provide enough clean, renewable energy to
power more than 1,200 homes in eastern Ontario near the town of
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Named "Canadian Solar 1" (or "CS1"), the solar installation is now
connected to the grid and includes approximately 50,000 Canadian
Solar CS6M modules. Canadian Solar also won a 20-year
contract to provide operations and maintenance services to
Stonepeak for the utility-scale solar power plant.
Stonepeak Infrastructure Partners is an independently owned North
American infrastructure investment firm that spun out from
The Blackstone Group L.P.
) last year. Stonepeak Infrastructure Partners is based in New
York, and targets investments in the middle market, focusing on
lower risk infrastructure investments across utilities, water and
waste, energy, power and renewables, midstream and transportation
In recent times, Canadian Solar booked positive growth in Europe,
most notably Germany, which offset weaknesses in the U.S.
market. However higher volumes were more than offset by
steadily falling average selling prices. Average selling prices
continued to decline as the Euro weakened and Germany transitioned
to a new, lower feed-in-tariff regime.
Looking forward, the company is actively branching out aggressively
to capture new opportunities in key solar markets worldwide.
The company continues to see attractive opportunities for growth in
China, Japan and India, as well as other emerging markets in Asia,
Africa and Latin America. Moreover, its specialization at the
downstream total solutions business makes it a higher margin
In the second quarter of 2012, the company completed the
construction of an 11.5 MW power plant in Stone Mills, Ontario. By
focusing on such projects, the company would be able to reduce
financing and execution risks. Also, in 2011, the company started
to acquire, or enter into joint venture, approximately 140 MW of
utility-scale solar development projects in the U.S.
These transactions would give the company an expanded presence in
the U.S., which the company believes to be an attractive growth
market despite near-term headwinds. The company also recently
completed the acquisition of 16 solar projects from SkyPower and
launched an equally owned joint venture with SkyPower Limited,
called CSI SkyPower. The JV would allow the companies to more
rapidly expand its total solutions business in Africa, the Middle
East and South America.
However, in the near term, fortunes of Canadian Solar would be
impacted by the industry-wide oversupply glut leading to sharply
falling average selling prices, tepid module demand in Europe, and
rising competition in the market. Given the industry-wide high
inventory level, we do not foresee any short-term improvement in
margins of the company. The company presently retains a short-term
Zacks #3 Rank (Hold).
Canadian Solar Inc. is one of the world's largest solar companies.
As a leading vertically integrated provider of ingots, wafers,
solar cells, solar modules and other solar applications, the
company designs, manufactures and delivers solar products and solar
system solutions for on-grid and off-grid use to customers
With operations in North America, Europe, Australia and Asia,
Canadian Solar provides premium quality, cost-effective and
environmentally-friendly solar solutions to support global,
sustainable development. Over the longer run, we thus maintain our
Neutral recommendation on the stock.