Canadian Solar Turns to U.S., China for Investments, After Weak Prices Hit 2016

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Researched by Industrial Info Resources (Sugar Land, Texas)--Canadian Solar Incorporated's (NASDAQ:CSIQ) (Guelph, Ontario) results for full-year 2016 show that, for all their differences, solar power and the oil & gas market share a significant problem: tepid prices. While strengthening demand led to record shipments for the company's solar modules, weak prices took a sizable bite out of its bottom line. Industrial Info is tracking $3.32 billion in active projects involving Canadian Solar.

Full-year net income was reported to be $65.2 million, down from $171.9 million in 2015; revenues stood at $2.85 billion, down 17.7% from $3.47 billion in the previous year. Canadian Solar reported 5.23 gigawatts (GW) in total solar module shipments for 2016, of which 5.2 GW were recognized in revenue, but a sharp decline in selling prices more than offset the otherwise upbeat sales numbers.

It's unclear how weak prices could affect projects proposed and under way. Recurrent Energy, a subsidiary of Canadian Solar, is proposing the construction of the RE Crimson PV Solar Park near Blythe, California, comprising a $412.1 million first phase and a $412.1 million second phase. The project is in its earliest study phases, but as currently envisioned, each phase would generate 225 megawatts (MW). It would be located on up to 4,000 acres of public lands and interconnect to the regional grid at Southern California Edison's (Rosemead, California) Colorado River Substation in Riverside County. For more information, see Industrial Info's project reports for Phase I and Phase II.

Solar power development has surged in North America over the last few years, aided by supportive state and federal policies in the U.S. and Canada; declining costs; and rising consumer and corporate support. For more information, see February 1, 2017, article - North American Solar Power Development Expected to Surge in 2017, 2018.

But Asia recently has been Canadian Solar's top destination, representing 62.7% of revenues for the fourth quarter of 2016, while the Americas only represents 20.7%; in fourth-quarter 2015, the two regions accounted for 41.1% and 51.9%, respectively. Canadian Solar's subsidiary in China is proposing the construction of several major facilities, including the $230 million Pingquan Photovoltaic Power Station in Chengde, Hebei, and the $180 million Etuoke Qi Photovoltaic Power Station in Ordos City, Nei Mongol. Currently, the projects are designed to generate about 150 and 100 MW, respectively, from 600,000 and 400,000 solar panels. For more information, see Industrial Info's project reports on the Pingquan and Etuoke Qi stations.

For 2017, Canadian Solar expects total module shipments of between 6.5 and 7 GW, and it expects to connect 1 to 1.2 GW of new solar projects globally. Total revenue is expected to be between $4 billion and $4.2 billion, roughly 50% to 60% of which will come from the solar module and components business. Lower production costs from new capacity coming online, particularly in China, also are expected to be a boon.

"We achieved record high total solar module shipments in the fourth quarter and full-year 2016," said Shawn Qu, the chairman and chief executive officer of Canadian Solar, in a press release. "Despite strong demand levels, our revenue for both the fourth quarter and full year was lower compared to the prior year's periods due to the industry-wide declines in average selling prices that have been persistent all year. We will continue to work to offset any negative impact of future declines in average selling price with the introduction of new products and through our supply chain and manufacturing efficiency programs."

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com/.