Semiconductor and solar technology provider
MEMC Electronic Materials Inc.
) announced last week that its subsidiary SunEdison sold four
photovoltaic (PV) solar power projects to
Canadian Solar Inc.
) for a sum of $38.0 million. Canadian Solar offers solar wafer,
ingots, cells, modules and other related applications that are
used to generate electricity from solar rays.
Of the four proposed Ontario-based solar projects, only two
plants capable of generating 24 megawatts (MW) power have been
handed over to Canadian Solar while the other two projects with
an aggregate of 22.5 MW of capacity are in process. Apart from
this, the solar module maker has the option to buy a fifth one
from SunEdison at a later date.
Many solar projects are being initiated in Ontario, Canada, which
is making the state well known as a solar energy developing
region. Total energy generated increased from 20 MW in 2006 to
500 MW by the end of 2011. According to the specialized industry
analyst GlobalData's report, Ontario's capacity could grow up to
937 MW by 2020. The analyst firm also forecasts Canada to be one
of the most powerful solar generating regions by 2020. Apart from
Canada, the other leading generators will be Germany, Spain,
Italy, France, the U.S., India, China, Japan, and Australia.
To tap the opportunity, Canadian Solar plans to buy more projects
in the coming years. This could prove beneficial to SunEdison.
Earlier this month, SunEdison agreed to sell a 20 MW project to
Riverside Public Utilities for an undisclosed sum. The
construction work is set to commence in 2014 and the plant is
expected to be operational by 2015.
Apart from Riverside Public Utilities, SunEdison's rich
experience has prompted Southern California Edison (SCE) and San
Diego Gas and Electric (SDG&E) to opt for its solar energy
services. The MEMC unit will hand over 48 MW and 18.5 MW of solar
power generating plants to SCE and SDG&E, respectively.
Financial details of the deals were not made public.
Earlier this year, SunEdison sold a 20 MW solar photovoltaic
power plant to
) in July and a 30 MW plant to
) in February.
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 at the end of fiscal 2011.
Though pricing in the solar industry has lacked luster over the
past few quarters, there are indications that demand for solar
panel installations will ramp in the coming quarters. A report
published by GTM Research and Solar Energy Industries Association
in June indicated that the U.S. solar panel market could grow
75.0% this year. Hence, it can be inferred that pricing would
improve leading to better profitability.
We see MEMC's solar initiatives as a key driver for the long
term. But its debt-laden balance sheet keeps us concerned.
Currently, MEMC has a Zacks #3 Rank (Hold).
CANADIAN SOLAR (CSIQ): Free Stock Analysis
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