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One of the world's largest solar companies, Canadian Solar Inc. ( CSIQ - Analyst Report ) has entered into an agreement to supply 17 MW of solar photovoltaic (“PV”) modules to Potentia Solar Inc. (Potentia). Potentia is an Independent Power Producer in Ontario, generating electricity through its 100% solar-powered energy systems.
Per the agreement, Canadian Solar will supply its best-selling module, the CS6P to Potentia to power several commercial rooftop solar systems that will be installed on commercial, industrial and institutional buildings in major urban areas of Ontario. The modules will be used for the development of more than one hundred rooftop solar projects. The company expects the projects to be completed in 2013. The solar modules will be delivered to Potentia on a per project basis.
Post completion, the solar systems will be able to generate sufficient electricity to power 1,700 homes annually. The systems will utilize Canadian Solar’s high-performance PV Panels resulting in the generation of clean energy.
Canadian Solar is a vertically-integrated manufacturer of silicon ingots, wafers, cells, solar modules, panels and custom-designed solar power applications. The company designs, manufactures and delivers solar products and solar system solutions for both on-grid and off-grid use by customers worldwide. It mainly focuses on delivering best value in solar with recognized high-performance modules.Canadian Solar has its module agreements spread worldwide. Recently, in May, the company delivered its solar modules for a photovoltaic plant in the German city of Dreieich-Buchschlag. The plant has a generation capacity of 8 megawatt.
Being a low cost solar module producer, Canadian Solar focuses on delivering high-performance modules. The prospects for Canadian Solar look favorable based on a geographically-diverse customer base and improving operating efficiencies through its vertically-integrated manufacturing operation.
However, in the near term, we are concerned about the industry-wide oversupply, leading to sharply falling Average Selling Prices, tepid module demand in Europe and rising competition in the market. Moreover, given the industry wide high inventory level, we do not foresee any short-term improvement in margins of the company. The company retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock. It mainly competes with First Solar, Inc. ( FSLR - Analyst Report ) and Suntech Power Holdings Co. Ltd. ( STP - Analyst Report ) .
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