Semiconductor and solar technology provider
MEMC Electronic Materials Inc.
) recently announced that its subsidiary SunEdison has entered
into an agreement with Chile-based steel and iron ore supplier
CAP S.A. Financial details of the deal have not been disclosed.
The companies will jointly work to develop the largest solar
photovoltaic power plant in Latin America. The plant will be
located in Atacama Desert and have an installed capacity of 100
Founded in 1950, CAP has evolved into one of the most renowned
mining companies and manufacturer of steel products. Solar power
generated from the plant will meet 15.0% of its entire power
supply and reduce the burden on non-renewable sources of energy
to some extent. Also, with the power generated from a clean
source, CAP will be able to help its government to achieve its
goal of preserving non-renewable sources of energy.
During the past few months, SunEdison signed various deals
reflecting the growing demand for its solar energy services. In
Dec 2012, SunEdison agreed to sell a 20 MW solar photovoltaic
power plant to Riverside Public Utilities. Moreover, the company
sold four PV solar power projects to
Canadian Solar Inc.
) for a sum of $38.0 million. In Nov 2012, SunEdison entered into
an agreement with Standard Bank Group Ltd. and Futuregrowth Asset
Management to develop two Greenfield solar projects in Limpopo
Province, South Africa. The two projects at Witkop Solar Park and
Soutpan Solar Park will generate 58 MW of solar power.
SunEdison's rich experience has prompted Southern California
Edison ('SCE'), San Diego Gas and Electric ('SDG&E'),
) to opt for its solar energy services.
SunEdison currently has 116.8 MW of solar projects under
construction. Moreover, a 13.6 MW project is ready for sale in
Spain. As per recently concluded third quarter 2012 results,
SunEdison has a project pipeline of approximately 2.9 gigawatts
(GW), slightly down from 3.0 GW as of fiscal 2011.
MEMC is trying to leverage the solid increase in solar energy
usage and is hopeful that its investments will eventually pay
off. But the ramp in project sales could take some time, which
will continue to pressure margins.
We see MEMC's solar initiatives as a key driver for long-term
growth. But its debt-laden balance sheet keeps us concerned.
Currently, MEMC has a Zacks Rank #2 (Buy).
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