Canadian Solar To Sell Interests In 3 Australian Solar Farms

Canadian Solar Inc. (NASDAQ:CSIQ) has entered into binding contracts to sell interests in three solar farms in Queensland, Australia, to Foresight Solar Fund Limited (FSFL). The three plants have an aggregate capacity of 117 megawatt-peaks (MWp).

Details of the Acquisition

FSFL will acquire 49% interests in each of the 17 MWp Longreach Solar Farm and 30 MWp Oakey 1 Solar Farm. Currently, they are under construction and are projected to be connected to the grid in March and September 2018, respectively. Notably, these two farms hold 20-year off take agreements with the Queensland Government.

Meanwhile, FSFL will acquire 100% interest in the 70 MWp Oakey 2 Solar Farm. This solar farm is expected to be connected to the grid in October 2018. It will benefit from the sale of power and large-scale generation certificates (LGCs) under the Renewable Energy Target regulatory framework.

Notably, the completion of the acquisitions is dependent on certain conditions like consents from relevant stakeholders.

Canadian Solar in Australia

Canadian Solar is very well positioned in Australia with over 800 megawatts (MW) pipeline of early to late-stage developments. Consequently, these projects will directly contribute to the Federal Government's Renewable Energy Target and State Government initiatives in generating affordable clean energy.

Canadian Solar’s International Solar Projects

In August, Canadian Solar announced that its 27.3 MWp solar photovoltaic (PV) power plant in Tottori Prefecture, Japan has initiated commercial operations. The company also successfully activated four solar power plants in Japan with combined capacity of 52.5 MWp of green energy in the month of July.

In June, Canadian Solar announced the divestment of 80% stake in Pirapora II solar energy project to EDF (PA:EDF) EN do Brasil, which is the Brazilian subsidiary of renewable energy market leader — EDF Energies Nouvelles — with commercial operations expected to begin in 2018.

Increasing Focus on Solar Energy

Alternative energy sources have been the primary target of utility service providers due to rising concerns regarding the consumption of fossil fuel and the subsequent carbon emission. To make most of the situation, each day more utilities are shifting their focus to generation of alternative energy.

Though President Trump is directing his focus toward the augmentation of coal industry, it is evident from projections of U.S. Energy Information Administration (EIA) release that the use of renewable energy (including solar) is going to increase in the United States in next few years. This uptick can be attributed to utility operators’ heavy potential investments in clean energy.

In fact, solar energy has emerged as the most popular one among all other alternative energy owing to its easy availability and declining price of solar panels. According to the EIA, the nation’s utility-scale solar power capacity will reach 31 gigawatts (GW) by the end of 2018 compared with 22 GW in 2016.

The international market for solar power is also expanding rapidly. Per a report from GTM Research, the global solar market will hit 85 GW in 2017, nearly doubling the installed capacity of 2014. No doubt to make most of this opportunity solar companies like Canadian Solar, JinkoSolar Holding Co., Ltd. (NYSE:JKS) and Yingli Green Energy Holding Company Limited (NYSE:YGE) are enhancing their overseas base and the latest sale out is one such instance.

Price Movement

Canadian Solar has underperformed the industry in the past year. The company’s shares have rallied 8.7% compared with the industry’s gain of 9.8%.

This underperformance may have been impacted by the market dislocation that the company is already experiencing, with no improvement expected in near term.

Zacks Rank & A Key Pick

Canadian Solar carries a Zacks Rank #4 (Sell). A better-ranked stock in the solar space include JA Solar Holdings Co., Ltd. (NASDAQ:JASO) sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

JA Solar's 2017 estimates has moved up to 61 cents from 1 cent in the last 60 days. The company has delivered positive average earnings surprise of 716.67% in the last four quarters.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>