Canadian Solar's $5 Billion in Projects Shine Light on Demand for Green Energy, Storage

Researched by Industrial Info Resources (Sugar Land, Texas)--Canadian Solar Incorporated (NASDAQ:CSIQ) (Guelph, Ontario) is in a sunnier spot than most other players in North America's roiled energy market, with third-quarter revenues and solar module shipments exceeding the company's own expectations. A series of big-ticket agreements and a growing demand for energy storage are expected to further fuel growth in the coming year. Industrial Info is tracking nearly $5 billion in active Canadian Solar projects worldwide, including about $3.6 billion worth in the U.S. and Canada.

For the third quarter, Canadian Solar reported solar module shipments totaling 3.2 gigawatts (GW) in capacity, exceeding its guidance of 2.9 to 3.1 GW, while revenues grew 31% from third-quarter 2019 to $914 million, beating its guidance of $840 million to $890 million. Net income attributable to Canadian Solar in third quarter 2020 was $8.8 million, down from $20.6 million in the same period last year, due to a $12.6 million withholding tax expense in China related to a special dividend distribution from Canadian Solar's Module and System Solutions subsidiary.

Company executives expect 2021's full-year module shipments to total 18 to 20 GW, with manufacturing capacities nearly doubling by the end of the year to support accelerating growth, with significant capacity contribution starting in the second quarter. Early in third-quarter 2020, Canadian Solar subsidiary Recurrent Energy LLC closed $282 million of debt financing to construct its Maplewood and Maplewood 2 solar projects in Pecos County, Texas, near the heart of the Permian Basin.

Click on the image at right for a map of Canadian Solar subsidiary Recurrent Energy's active projects in Texas.

Maplewood's $200 million Phase A, which would kick off in fourth-quarter 2021, would generate up to 100 megawatts (MW), while the $400 million Phase B, which would kick off in first-quarter 2022, would generate 200 MW. The projects are designed to provide clean energy for 50% of Anheuser-Busch's (NYSE:BUD) (Leuven, Belgium) U.S. operations under a power-purchase agreement, contributing to the brewer's 2025 sustainability goals, and for Energy Transfer LP (NYSE:ET) (Dallas, Texas) under another 15-year power-purchase agreement. This is Energy Transfer's first dedicated solar contract. For more information, see Industrial Info's project reports for Phase A and Phase B.

Recurrent Energy is continuing to seek permits for the proposed, $200 million Phase C and $200 million Phase D, each of which are designed to generate 100 MW. If approved, neither would begin construction until fourth-quarter 2022 at the earliest. For more information, see Industrial Info's project reports for Phase C and Phase D.

Canadian Solar also recently closed $93 million of financing for its estimated $116 million Tastiota Solar Plant in Hermosillo, Mexico, now under construction. The facility will generate 100 MW for Mexico's Federal Electricity Commission (CFE) under a 15-year power-purchase agreement for energy and capacity, and a 20-year power-purchase agreement for clean-energy certificates. For more information, see Industrial Info's project report.

Not surprisingly, one of the most fertile places for Canadian Solar's project slate is the state that has moved more aggressively on renewable energy than any other: California. The Recurrent subsidiary recently received a notice-to-proceed on its Scarlet Solar Energy project in Tranquillity, California, which includes a $330 million initial phase and a $330 million unit addition, each of which is expected to generate 200 MW. Following completion of the initial phase, Recurrent hopes to begin construction on a proposed, $250 million battery energy storage system with an eventual capacity of 400 MW. For more information, see Industrial Info's project reports on Scarlet's initial phase, unit addition and battery storage system.

Click on the image at right for a map of Recurrent's active projects in California.

"We also have a large backlog of 1.2 gigawatt-hours--and an additional pipeline of 4.8 gigawatt-hours in storage projects--under development," said Shawn Qu, the chief executive officer of Canadian Solar, in a quarterly earnings-related conference call. "We expect energy storage to start contributing to both revenue and profit over the next few quarters and become a material-earnings driver going forward."

"As global decarbonization efforts intensify, and solar energy continues to improve its competitiveness, we expect more stable and sustainable demand growth," added Yan Zhuang, the chief operating officer. "This is why we're shifting our strategy towards growing market share facing vertical integration to better control our manufacturing costs."

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 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.