Canadian Solar Inc. (CSIQ) and SkyPower Limited have announced an engineering, procurement and construction (EPC) agreement to build a 10.5 MW solar park in Thunder Bay, Ontario.
This is their third agreement, as the two companies in December 2010 signed two EPC agreements to build two more solar parks. The companies have already entered into a financing agreement with Deutsche Bank AG (DB) for the first two solar parks.
The first two solar parks are a 10.5 MW solar park in Napanee, home to First Light I, and an 8.5 MW solar park located on Thunder Bay International Airport Authority land. Once fully operational, the three projects would account for approximately 30 MW of capacity.
Canadian Solar expects construction of all three projects to reach completion by the third quarter of 2011. Together, they are expected to generate approximately 28 million KWh in their first full year of operation and almost 600 million kWh total over the next 20 years.
SkyPower is Canada’s largest owner and developer of solar energy projects. The company also has one of North America’s most impressive pipelines of solar projects. With 260 MW power purchase contracted, 30 MW of installed operating capacity, 50 MW actively under construction and over 1.4 GW at advanced stages of development across North America, SkyPower prospects, develops, manages, finances, owns and operates solar energy projects from initial discovery stages through to commercial operation.
Canadian Solar is a vertically-integrated manufacturer of silicon ingots, wafers, cells, solar modules and custom-designed solar power applications. The company sells its products to customers worldwide, spread across Germany, Spain, the U.S., France, the Czech Republic, Italy, South Korea, Canada and China.
Canadian Solar offers one of the broadest crystalline silicon solar module product lines in the industry, ranging from modules made of medium power, low-cost upgraded metallurgical-grade silicon, to high efficiency, high power output mono-crystalline modules, along with a range of specialty products.
Canadian Solar’s standard solar modules are sold to distributors and system integrators. Specialty solar modules and products are sold to various manufacturers, who integrate these solar modules into their own products or sell and market them as part of their own product portfolio.
Canadian Solar’s China-based manufacturing assets have a distinct cost advantage over its peers. The company also pursues a balanced and diversified supply channel mix by entering into long-term supply contracts and toll manufacturing arrangements. In addition to in-house solar cell, wafer and ingot manufacturing, it is also ramping up its internal solar cell capacity to cut back its reliance on third party solar cells for the manufacture of solar modules.
Looking ahead, the prospects for Canadian Solar are favorable based on a geographically-diversified customer base, ongoing capacity expansion programs, improving operating efficiencies, rising margins and material cost savings through its vertically integrated manufacturing operations.
However, in the near-term its shipments were curtailed by higher solar cell prices in the market, which were eating into its margins. The company is addressing this by ramping up its captive solar cell capacity. However, it will take some time before the company becomes self-sufficient for its solar cells requirements.
Canadian Solar currently is trading at a premium compared to its peers in terms of forward earnings estimates. Thus in the near term, we believe the Zacks #1 Rank (Strong Buy) peers like JinkoSolar Holding Company (JKS), and SunPower Corporation (SPWRA) offer more promise compared to the Zacks #4 Rank (Sell) Canadian Solar stock.
CANADIAN SOLAR (CSIQ): Free Stock Analysis Report
DEUTSCHE BK AG (DB): Free Stock Analysis Report
JINKOSOLAR HLDG (JKS): Free Stock Analysis Report
SUNPOWER CORP-A (SPWRA): Free Stock Analysis Report
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