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Canadian Solar (CSIQ) Inks PPAs to Boost Brazil Solar Footprint

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Canadian Solar Inc. (CSIQ - Free Report) recently signed two power purchase agreements (PPAs) involving solar power projects in Brazil with a total generating capacity of 862 megawatt-peak (MWp). These enhanced the company’s backlog of solar projects in Brazil with PPAs (or equivalent) to almost 2.2 gigawatt-peak (GWp).

Canadian Solar's latest, high power series 7 bifacial modules of up to 665 Wp will be installed in each of the aforementioned projects.

Project Details

The company has signed one 12-year PPA with BTG Pactual, per which the former will supply solar energy from a cluster of projects with 170 MWp generating capacity to the state of Minas Gerais.

Per the terms of the second deal, under a 15-year PPA, Canadian Solar will supply solar energy to Furnas Centrais Elétricas from two solar projects, with total capacity of 692 MWp. Canadian Solar will construct the two solar plants in the states of Ceara and Piuai. Notably, Canadian Solar won these two projects through an auction held by Furnas, a subsidiary of Electrobras (EBR - Free Report) .

Growing Solar Prospects in Brazil

Brazil is currently one of the fastest-growing solar markets in the world, thereby attracting the interest of a number of foreign investors, multilateral development banks, energy companies and equipment manufacturers. This in turn has been boosting employment in the nation, which, in turn, is further bolstering installation of solar energy.

Per a recent report by ABSolar, the Brazilian Association for Solar Energy, solar has already brought more than $31 billion (in Brazilian real) in new private investments to the country and generated around 180 thousand jobs since 2012. Moreover, Brazil has crossed the 6-GW mark for installed solar power through large plants, and small and medium systems installed on roofs, facades and land.

Naturally, Brazil’s solar market offers a great profitable playground for solar project developer and module manufacturers like Canadian Solar to enhance their market share. The latest signed PPAs are a testament to that.
In fact, Canadian Solar has already established its footprint firmly in Brazil’s solar market. In June 2020, the company signed a couple of PPAs with Brazil-based corporations — Braskem BAK and COPEL Energia. The agreements authorized Canadian Solar to build two solar projects, with a total capacity of 274 MWp, and consequently supply the solar energy to Braskem and COPEL Energia.

In October 2019, the company secured the right to construct three solar photovoltaic (PV) projects, with a total output capacity of 393.7 MWp, from two local private corporate auctions. Prior to that, in July, the company won 51.1 MWP solar PV projects in an auction. These project developments, including the latest PPAs, reflect the predominance that Canadian Solar enjoys in the solar market of Brazil.

Global Solar Boom

The global solar market has been rallying over the past decade, thanks to rapid decline in cost of solar installations, along with growing solar investment from big corporate houses. Per a report by Fortune Business Insights, the global solar power market size is projected to reach 4766.8 MW in 2026 from 2019, exhibiting a CAGR of 30.7%.

To reap the benefits of this expanding global solar market, Canadian Solar and other solar players are making every possible effort. As of Sep 30, 2020, the company had 1,321 MWp of projects in construction and 11,199 MWp in the pipeline. This surely reflects the significant growth potential of the company.
Other solar players are also also looking to capitalize on the growth opportunities. First Solar (FSLR - Free Report) looks to increase its nameplate Series 6 manufacturing capacity to 6 GW by 2020 and 8 GW by year-end 2021.

Similarly, JinkoSolar (JKS - Free Report) projects its total solar module shipments to be in the range of 18-20 GW in 2020, compared with its record high module shipment of 14.3 GW in 2019.

Price Performance & Zacks Rank

In a year’s time, shares of Canadian Solar have gained 154.8% compared with the industry’s rise of 199.1%.

The company currently carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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