Canadian Solar Inc. CSIQ announced that its wholly owned subsidiary, Recurrent Energy, has signed a partnership agreement to sell its 51% controlling interest in the 157.5-megawatt (“MW’) Roserock solar photovoltaic (“PV”) project in Texas to Southern Power, a subsidiary of Southern Company SO. Canadian Solar will retain a 49% stake in the project.
The Roserock solar project, which is expected to be the largest of its kind in Texas, will begin commercial operations at 2016 end. It is projected to generate sufficient energy to power over 30,000 homes in the state. Electricity generated from the plant will be delivered to Austin Energy under a 20-year power purchase agreement (“PPA”).
Recurrent Energy has secured construction and term debt financing for the project from five banks, including Rabobank, Santander, NORD/LB, CIT and KeyBank serving as the Coordinating Lead Arranger. These banks will provide project-level construction debt, LC facilities and a back-leveraged term facility, valued at a total of about $275 million.
Approximately 0.7 million Canadian Solar CS6X-P PV solar modules have been utilized for the construction of Roserock. It is located on a 1,300-acre land in Pecos County, TX. McCarthy Building Companies is responsible for engineering, procurement and construction services for the project, while its layout was developed in cooperation with mineral operator, Apache Corporation APA.
According to Canadian Solar, the Roserock project, along with Recurrent Energy’s project pipeline in Texas, will help to achieve its target of developing over 13 gigawatts of solar capacity across the state by 2030.
The latest agreement marks the second partnership between Recurrent Energy and Southern Power. In Sep 2015, Recurrent Energy sold approximately 51% interest in the 200MW Tranquillity solar generation plant to Southern Power. Recurrent Energy retains the remaining stake in the project.
Canadian Solar caters to a geographically diverse customer base spread across key markets. The company also has a strong pipeline of projects, and carries out various acquisitions and strategies to further consolidate its position. The company acquired Recurrent Energy, LLC, a leading North American solar energy developer, during the second quarter of 2015. This acquisition expanded Canadian Solar’s total project pipeline to 8.5 GW, with approximately 2.4 GW of late-stage projects. The transaction will further strengthen Canadian Solar’s hold in the business of ownership and development of solar power plants in North America. The acquisition is expected to create an estimated revenue opportunity of at least $2.3 billion under a build-and-sell business model. This will significantly expand the scale of the company’s solar energy development platform, making it one of the foremost solar energy developers in the world.
Zacks Rank
Canadian Solar currently has a Zacks Rank #2 (Buy). JA Solar Holdings Co., Ltd. JASO is a favorably placed stock in the solar industry sporting a Zacks Rank #1 (Strong Buy).
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