ReneSola Ltd ( SOL Quick Quote SOL - Free Report) recently signed a contract with Denmark-based solar investment company, Obton for divesting a portfolio of 20 solar plants in Hungary. The plants with a combined generation capacity of 12.3 megawatts (MW) are already in operation.
We expect the sale proceeds from this transaction to boost ReneSola’s operating cash flow in the near term. Investors reacted positively to the news as evident from the 29.1% surge in ReneSola’s share price since Jan 7.
ReneSola’s Prospects in Hungary
Hungary's solar photovoltaic (PV) power market has been witnessing notable improvement lately. Per a report by the Budapest Business Journal, Hungary’s latest combined energy and climate change plan targets a reduction in greenhouse gas (GHG) emissions of 40% compared to 1990 levels, and a minimum 21% share of renewable energy sources in gross energy consumption by 2030. Notably, installation of some 6,000 MW of PV capacity, almost six times the current installed solar capacity in the country, is part of the aforementioned plan.
This indicates the solid growth prospects that this nation offers to solar project developers like ReneSola. The latest portfolio sale is a bright example of that. Notably, in Hungary, the company also invests in small-scale DG projects. Its late-stage pipeline has a number of such micro projects, each with 0.5 MW of capacity, totaling about 12 MW.
In April 2020, ReneSola closed the sale of 25 solar plants with a combined capacity of 15 MW DG Projects in Hungary to Obton, despite challenging market conditions related to the COVID-19 pandemic. Such project pipeline and sale agreements should help ReneSola enhance its business significantly in Hungary’s growing solar market.
Project Monetization – A Profitable Strategy
Rapid monetization of projects has been significantly favoring solar players, thereby boosting their results. ReneSola has been rapidly expanding its business in overseas markets like Canada, Spain, Poland, Hungary, France, Vietnam and Turkey. Also, the solar project developer is actively pursuing opportunities in new markets that include South Korea and India.
Apart from the latest project sale in Hungary, ReneSola sold twin solar projects with a total generation capacity of 15.4 MW to Alternus Energy Group in Romania last month. Prior to that, the company sold its 16-MW portfolio of solar parks in Poland to Modus Asset Management. In November, the company sold its 4.3-MW community solar portfolio to Atmosclear Investments, comprising 1,509 residential rooftop projects. Such deals are likely to improve ReneSola’s profitability through the monetization of projects.
Another solar company following a similar strategy is
Canadian Solar ( CSIQ Quick Quote CSIQ - Free Report) , which recently completed the sale of the 144 megawatts alternate current (MWac) Pflugerville Solar project to Duke Energy Renewables, a subsidiary of Duke Energy Corp. ( DUK Quick Quote DUK - Free Report) . In December, Canadian Solar completed the sale of a Japan-based solar project Gunma Aramaki for $64 million. Peer Moves
The global solar market, which suffered a setback following the COVID-19 outbreak in March, is steadily recovering and approaching growth trajectory. This has been encouraging major solar industry players to engage in strategic transactions to expand their footprint in the global solar market.
In October 2020,
Sunrun ( RUN Quick Quote RUN - Free Report) acquired Vivint Solar, creating a company valuation of $22 billion. Zacks Rank & Price Performance
ReneSola currently has a Zacks Rank #2 (Buy). You can see
. the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
ReneSola’s shares have skyrocketed 535.3% in the past three months, outperforming the
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