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Canadian Solar-Menora Mivtachim JV Invests in Solar Projects

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Canadian Solar Inc.'s (CSIQ - Free Report) wholly-owned subsidiary has entered into a joint venture (JV) with a few subsidiaries of Menora Mivtachim Holdings Ltd., one of Israel's five largest insurance and finance groups. This venture seems to be in line with the company’s initiative to expand its overseas base.

The JV aims to invest in the development, financing, construction and ownership of solar power projects in Israel. Menora Mivtachim and Canadian Solar will each contribute an equal amount, totalling to $60 million, to invest in these projects. Notably, the JV will offer funds for the solar projects awarded by Israeli Electricity Authority in accordance to solar power tenders as well as other projects that will be developed under the partnership.

Per Canadian Solar, this JV will leverage its proven track record in developing and constructing solar power projects, apart from exploiting Menora Mivtachim's financial strength and credibility to produce an industry leader in the local market.

Canadian Solar’s International Solar Projects

Recently, Canadian Solar announced that it has entered into binding contracts to sell interests in three solar farms to Foresight Solar Fund Limited (FSFL) in Queensland, Australia. These farms have an aggregate capacity of 117 megawatt-peaks (MWp).

In August 2017, Canadian Solar announced that its 27.3 MWp solar photovoltaic (PV) power plant in Tottori Prefecture, Japan has initiated commercial operations. Additionally, the company successfully activated four solar power plants in Japan with combined capacity of 52.5 MWp of green energy in the month of July.

In June, Canadian Solar announced the divestment of 80% stake in Pirapora II solar energy project to EDF EN do Brasil, which is the Brazilian subsidiary of renewable energy market leader — EDF Energies Nouvelles — with commercial operations expected to begin in 2018.

Increasing Focus on Solar Energy

Alternative energy sources have been the primary target of utility service providers due to rising concerns regarding the consumption of fossil fuel and the subsequent carbon emission. To make most of the situation, each day more utilities are shifting their focus to generation of alternative energy.

Though President Trump is directing his focus toward the augmentation of coal industry, it is evident from projections of U.S. Energy Information Administration (EIA) release that the use of renewable energy (including solar) is going to increase in the United States in next few years. This uptick can be attributed to utility operators’ heavy potential investments in clean energy.

In fact, solar energy has emerged as the most popular one among all other alternative energy owing to its easy availability and declining price of solar panels. According to the EIA, the nation’s utility-scale solar power capacity will reach 31 gigawatts (GW) by the end of 2018 compared with 22 GW in 2016.

The international market for solar power is also expanding rapidly. Per a report from GTM Research, the global solar market will hit 85 GW in 2017, nearly doubling the installed capacity of 2014. Consequently, the solar companies like Canadian Solar are enhancing their overseas base and the latest JV is one such instance.

New Orders for Solar Companies

Realizing the importance of solar energy, major players in this space like Canadian Solar, ReneSola Ltd. (SOL - Free Report) and JinkoSolar Holding Company Ltd. (JKS - Free Report) have been inking agreements with domestic customers as well as foreign allies to expand their business manifold.

Evidently, JinkoSolar recently stated that it has supplied 12.7 mega-watts (MW) of PV modules to Hitachi Systems, Ltd, for installing them in a solar plant owned by Farmdo Corporation in Ulan Bator, Mongolia. Markedly, this power plant is the country's first utility scale solar plant and is anticipated to come online from November 2017.

In September, ReneSola announced that it has inked an agreement to sell a solar project in North Carolina to a subsidiary of Panda Green Energy Group Ltd., a leading investor and operator in the renewable energy sector.

Price Movement

Canadian Solar has underperformed the industry in the past year. The company’s shares have rallied 7.5% compared with the industry’s gain of 8.9%. This lacklustre performance might have been due to the market dislocation that the company is already experiencing with no improvement expected in near term.



Zacks Rank & Stock to Consider

Canadian Solar carries a Zacks Rank #4 (Sell). A better-ranked stock in the solar space is JA Solar Holdings Co., Ltd. (JASO - Free Report) sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

JA Solar's Zacks Consensus Estimate for the current-year earnings moved up to 61 cents from 1 cent in the last 60 days. Also, the company has delivered positive average earnings surprise of 716.67% in the last four quarters.

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