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Emeren (SOL) Inks Deal to Monetize 29 MW of Solar PV Projects

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Emeren Group Ltd (SOL - Free Report) recently clinched a deal to monetize 29 megawatts (MW) of the solar PV portfolio in Spain to Rubis Photosol. The monetization deal involves the sale of the three late-stage projects located in Spain.

Currently in the advanced phase of obtaining the Administrative Authorization for Construction, these projects are anticipated to reach commercial operation by the second half of 2025 and will have the capacity to produce nearly 57,000 MWh of clean energy.

Emeren’s Expansion Plans in Europe

Emeren has been eyeing expansion opportunities in Europe to reap the benefits of the growing solar demand in the region. Europe contributed 87% to the total revenues of the company in the last reported quarter.

The robust revenue contribution from the region is backed by diverse strategies employed for regional expansion. One such strategy includes developing solar projects in the region and monetizing the same, like the latest one. This leads to consistency in revenue inflows for Emeren, thereby boosting its margins and strengthening its cash flows.

The company monetized two major projects in Poland and Hungary for a total of 62 MW and closed the sale of an 11.5 MW solar project to the Swiss-based energy company, MET Group, in the second quarter of 2023. Also, the company had 5,620 solar projects in the pipeline under advanced-stage and early-stage development and owned and operated nearly 60 MW of power purchase agreement projects in Europe as of Jun 30, 2023.

In addition to its focus on project development, the company actively pursues merger and acquisition opportunities across Europe to leverage favorable market conditions. Such a formidable expansion strategy is poised to establish a significant presence in the region, ensuring a sustained influx of robust revenues for the company.

Peer Moves

Europe has been on the radar for expansion for many solar companies since the past few years as the region boasts immense opportunities for growth and revenue generation. Per the report by SolarPower Europe, new solar photovoltaic (PV) capacity is likely to exceed 50 gigawatts (GW) of deployment in 2023. The growth is also projected to double to 85 GW in 2026 from the current levels.

Considering such growth prospects, apart from SOL, other solar companies that have been significantly expanding in Europe are as follows:

Enphase Energy (ENPH - Free Report) : The company has been steadily expanding in Europe. In the third quarter of 2023, Enphase entered the U.K., Sweden, Denmark and Greece markets with both IQ8 microinverters and IQ batteries. Meanwhile, the Netherlands, France and Germany remain the three largest markets for Enphase.

The long-term earnings growth rate of Enphase is pegged at 20.2%. The Zacks Consensus Estimate for 2023 sales implies a growth rate of 2.8% from the 2022 level.

Canadian Solar (CSIQ - Free Report) : The company is steadily expanding its position in the European solar market either through new product introductions or strategic deals. In September 2023, its subsidiary, CSI Energy Storage, inked a supply agreement with Cero Generation and Enso Energy in Europe. The deal involves the delivery of 49.5 MW/99 MWh of turnkey battery energy storage solutions.

The Zacks Consensus Estimate for Canadian Solar’s 2023 sales calls for a growth rate of 15.6% from the prior-year reported figure. The Zacks Consensus Estimate for CSIQ’s 2023 earnings implies a growth rate of 80.5% from the prior-year reported figure.

SolarEdge (SEDG - Free Report) : The company has a strong presence in Germany, the United Kingdom and Switzerland. SolarEdge expects the momentum to continue to grow in Europe, particularly in Germany, where installation activity is anticipated to rise from 7.5 GW in 2022 to 10 GW in 2024.

SolarEdge boasts a long-term earnings growth rate of 18.7%. The Zacks Consensus Estimate for SolarEdge’s 2023 sales suggests a growth rate of 0.4% from the prior-year reported figure.

Price Movement

In the past year, shares of Emeren have dropped 47% compared with the industry’s fall of 61.4%.

Zacks Investment Research
Image Source: Zacks Investment Research

Zacks Rank

Emeren 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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