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Canadian Solar (CSIQ) Sells 80% Stake in Crimson Solar Project

Canadian Solar's (CSIQ) subsidiary, Recurrent Energy, sold its 80% stake in the Crimson storage project to Axium Infrastructure. The solar plant has a...

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This story originally appeared on Zacks

Canadian Solar Inc’s. CSIQ subsidiary, Recurrent Energy, recently sold its 80% stake in the Crimson storage project to Axium Infrastructure. By retaining the remaining 20% stake, we may expect Canadian Solar getting a share of revenues earned from the plant, thereby bolstering its top line.

- Zacks

The solar plant, with generation capacity of 1.4 GWh (Gigawatt hours), is expected to be operational by summer 2022.

The plant already holds two energy storage contracts with Edison International’s EIX Southern California Edison and PG&E Corp.’s PCG Pacific Gas and Electric, under a 10 month and 15-year period, respectively.

Project Monetization: A Profitable Strategy

With the accelerated transition of the electricity generation industry toward a carbon-free environment, solar bigwigs have been aggressively expanding their presence in the rapidly growing solar market, by augmenting their existing scale of operations and diversifying geographically. To capitalize on the trend, solar project developers like Canadian Solar have been engaging in a strategy known as project monetization, which entails developing solar projects and selling them off, thereby boosting their revenues. The latest stake sale in the Crimson project is an example of that.

Canadian Solar has been rapidly expanding its business in overseas markets like the United States, China, Japan, the U.K. as well as emerging markets like Italy, India, Mexico and Germany, among others. With a global battery storage project pipeline of 19 GWh, as of June 2021, a strategy like project monetization will definitely boost the profitability of Canadian Solar. The sale proceeds from such divestitures can be invested by the company in other projects, thereby rapidly expanding its footprint in the solar market.

As part of the strategy, in July, Canadian Solar sold its 328 MWP (Mega-Watt peak) solar project to a leading U.S. annuity and life insurance company in Texas. In August, the company completed the sale of two operational projects totaling 61 MWp to Canadian Solar Infrastructure Fund for $283 million. Earlier, in January, Recurrent Energy completed the sale of the 144 MWac Pflugerville Solar project to Duke Energy Renewables.

Peer Moves

Other solar companies have also been rapidly adopting the project monetization strategy in order to boost their profitability and growth.

For instance, in July 2021, ReneSola Ltd SOL completed the sale of a 38 MW portfolio of solar projects in Poland and another project worth 12 MW in Hungary in April, to Obton.

Price Movement

In the year-to-date period, Canadian Solar’s shares have gained 17.5% compared with the industry’s growth of 18.9%.

 

Zacks Investment Research

Image Source: Zacks Investment Research

Zacks Rank

Canadian Solar currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.



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