Canadian Solar Unit Signs Agreement for 60MW Solar Power

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Canadian Solar Inc. 's CSIQ wholly owned subsidiary Recurrent Energy, and the Sacramento Municipal Utility District (SMUD) has signed a 20-year Power Purchase Agreement ("PPA") for 60 megawatts ("MW") solar power.

Details of the Agreement

Canadian Solar's 60 MW Tranquillity 8 Verde solar photovoltaic (PV) project, which is located in Fresno County, CA, will provide electricity to SMUD. By early 2018, the company has scheduled to deliver electricity to the latter.

It is anticipated that the construction of the project will commence in mid-2017. The project is expected to produce sufficient electricity to power approximately 15,000 homes.

Recurrent Energy is developing Tranquillity 8 Verde, a part of the 200 MW Tranquillity 8 project. MCE, PG&E Corporation PCG and Southern California Edison (SCE), which is a unit of Edison International EIX are expected to purchase the remaining 140 MW under long-term PPAs.

Recurrent Energy-SMUD Relationship

Tranquillity 8 Verde marks Recurrent Energy's fifth solar project with SMUD. Earlier in 2012, Recurrent Energy completed a portfolio of four projects, which delivered electricity to SMUD under a number of 20-year PPAs.

The latest agreement with SMUD will support Canadian Solar's Solar Shares program and other renewable energy goals.

SMUD was the first California-based utility that derived 20% of its power supply from renewable sources. It is focusing to meet the state mandate requiring utilities to increase their renewable portfolio to 33% by 2020.

Solar Industry Outlook

Throughout 2016, the solar industry has grappled with challenges like declining solar panel prices, weaker power plant contracting activity and increasing regulatory stringency. The industry-wide downturn was also due to a looming supply glut of solar panels. As solar players continued to step up production in an effort to seize a higher market share, panel supply outweighed the demand significantly.

Moreover, strong project build-up in the U.S. in anticipation of the Dec 2016 expiration of the solar investment tax credit (which was eventually extended) also played a major role in curbing activity in this space, as developers have more time to build their projects now.

This had a material impact on solar companies such as First Solar, Inc. FSLR and Enphase Energy, Inc. ENPH .

Additionally, the unexpected victory of Donald Trump in the Presidential election also did not bode well for the renewable energy space. The new President has not only vowed to revive the coal industry, but has even called the climate change a "Chinese Hoax".

Canadian Solar Inc. Price

Canadian Solar Inc. Price | Canadian Solar Inc. Quote

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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 Nasdaq, Inc.

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

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