Canadian Solar Inc. CSIQ recently announced that it started the commercial operation of its 56.3 megawatt-peak (MWp) solar project located in Japan in May 2018. The plant is expected to annually generate around 66,000 megawatt-hour (MWh) of electricity via solar power.
Details of the Project
The company has converted an abandoned 27-hole golf course into a 56.3 MWp solar plant, likely to provide solar power energy to thousands in the region for many decades to come. The electricity generated from this project will be bought by Chugoku Electric Power Company, Inc. through a 20-year feed-in-tariff contract at the rate of ¥36.0 (32 cents) per kWh.
This is the largest solar project built by the company in Japan, reflecting its capability and demand for its services in the East Asian island country. Currently, the company operates 141.9 MWp solar power plant in Japan.
International Portfolio: An Upside
Currently, the company has multiple late-stage 2.3 gigawatt-peak (GWp) utility-scale solar power projects in its pipeline including those under construction. On the global front, the company caters to a geographically-diverse customer base spread across the key markets in the United States, China, Japan, the U.K. and Canada as well as the emerging market opportunities in Brazil, India, Mexico, South Africa and the Middle East. To further diversify its utility scale of solar power project pipeline, Canadian Solar has been setting its foothold in Australia, South Korea and Argentina on realization of additional growth opportunities across these countries.
To that end, this May, the company announced acquisition of the exclusive rights to develop 8 MWp solar photovoltaic (PV) project in Gangwon Province, South Korea. Earlier in March, Canadian Solar announced that it acquired a 97.6 MWp solar photovoltaic project in Cafayate, Salta Province, Argentina.
Also, the company informed that it introduced three of its next generation solar modules at Intersolar Europe held from Jun 20 to Jun 22 in Munich, Germany. The three modules introduced are BiKu, HiKu poly and HiDM (High-Density Module) modules.
Such a robust portfolio expansion is likely to boost the company’s revenue generation capability, evident from its recently released first-quarter results wherein Canadian Solar witnessed a skyrocketing 111% top-line improvement. Considering the commencement of its latest project in Japan as well as other project mentioned above coupled with the launch of new solar modules, we may anticipate the company to continue with a strong revenue growth momentum in the upcoming quarters as well.
Prospects of the Project in Japan
With the United States having walked out of the Paris accord last year and President Donald Trump directing his focus toward flourishing the country’s coal industry, the utility operators have shifted gears to concentrate more on availing of opportunities in the Asia-Pacific zone. Countries like China, Japan and India are currently dishing out a huge market for solar power expansion, which would emerge as a key growth-driver for all solar power developers.
Per U.S. Energy Information Administration, Japan is setting sights on increasing usage of renewable energy sources like solar, wind, geothermal and biomass for power generation. In 2015, 3% of the total energy consumption and 8% of the total electricity generation came from the renewable source of energy in Japan. Japan has plans to drive energy generation via renewable to nearly 22-24% by 2030.
Price Movement
In the past month, shares of Canadian Solar have underperformed the Zacks Solar industry. The stock has lost 27%, wider than the industry’s decline of 2.4%.
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Zacks Rank & Stocks to Consider
Canadian Solar currently carries a Zacks Rank #3 (Hold). Some other top-ranked stocks from the Zack Oil-Energy Sector are Delek US Holdings, Inc. DK, HollyFrontier Corporation HFC and Eni SpA E, each sporting a Zacks Rank of #1 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Delek’s earnings are expected to grow at 10% over the period of 3-5 years. In the last 30 days, per the Zacks Consensus Estimate, the earnings for 2018 have moved up from $4.96 per share to $5.40 by 8.9%.
HollyFrontier’s earnings are expected to grow at 8.9% over the period of 3-5 years. In the last 30 days, per the consensus estimate, the earnings for 2018 have moved north from $5.10 per share to $5.88 by 15.3%.
Eni’s earnings are expected to grow at 19.8% over the period of 3-5 years. In the last 30 days, per the consensus estimate, the earnings for 2018 have moved north from $2.66 per share to $2.93 by 10.2%.
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