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Canadian Solar (CSIQ) Wins 18 MWp Solar Project in Japan

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Canadian Solar Inc. (CSIQ - Free Report) recently secured a project during Japan's inaugural solar energy auction. The project has a capacity of 17.87 megawatt-peaks (MWp).

About the Project

Located in Suzuhari City within Hiroshima prefecture, the project will utilize over 48,000 high-efficiency modules of Canadian Solar. Once the plant comes online by 2021, it will enter into a 20-year power purchase agreement with Chugoku Power Electric Company at a rate of 16 cents per kilowatt-hours (kWh).

Solar Projects in Japan

Japanese government has been trying to increase electricity generation from the renewable sources. In fact, following the introduction of feed-in tariffs (FIT) in July 2012, solar photovoltaic (PV) has scaled up fast in Japan. As a result, this nation has emerged as a profitable market for high quality solar solution provider like Canadian Solar.

In November, Canadian Solar has started constructing two Japanese solar power projects — Shizuoka Project with a capacity of 10.77 MWp and Miyagi Project with a capacity of 2.1 MWp.

In August, the company declared that its 27.3 MWp solar  PV power plant in Tottori Prefecture, Japan, has initiated commercial operations. Also, Canadian Solar successfully activated four solar power plants in the country with combined capacity of 52.5 MWp of green energy in July.

According to Dr. Shawn Qu, chairman and chief executive officer of Canadian Solar, the latest project shows the company’s capability to identify and secure high quality development opportunities in Japan's competitive solar market. Additionally, it is expected to improve on the cost competitiveness of solar power technology deployment in Japan.

We believe these developments including the latest project will aid Canadian Solar to capture increasing shares in the Japanese solar market.

Other International Solar Projects

Canadian Solar secured three solar power projects during Mexico’s third Long-term Auction for renewables held on Nov 15. Totaling 367 megawatt-peaks (MWp), these power projects will be developed and build in the Mexican cities of Aguascalientes, Hermosillo and Obregón.

In October, the company announced that its 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. The JV aims to invest in the development, financing, construction and ownership of solar power projects in Israel.

In the same month, Canadian Solar 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 June, Canadian Solar declared 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 owing to rising concerns related to 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.

With President Trump walking out of Paris agreement in a bid to boost the coal industry, the focus has temporarily shifted to large Asian markets like China, Japan and India where solar market seems to grow rapidly.

Per a report from GTM Research, the global solar market will hit 85 GW in 2017 nearly doubling the installed capacity of 2014. To capture larger share of this expanding market, solar companies like Canadian Solar have already started enhancing their overseas base and the latest JV is one such instance.

Price Movement

Canadian Solar has underperformed the industry in a year. The stock has rallied 38.1% compared with the industry’s gain of 43.8%. This lackluster performance might have been due to the current market dislocation with no improvement expected in near term.

Zacks Rank & Stocks to Consider

Canadian Solar carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the solar space include SolarEdge Technologies, Inc. (SEDG - Free Report) , SunPower Corporation (SPWR - Free Report) and JA Solar Holdings Co., Ltd. . While SolarEdge Technologies and SunPower flaunt a Zacks Rank #1 (Strong Buy), JA Solar holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here

SolarEdge Technologies delivered a positive earnings surprise of 20% in the third quarter. Its Zacks Consensus Estimate for 2017 moved up nearly 12.2% to $2.11 per share in the last 30 days.

SunPower came up with a positive earnings surprise of 158.33% in the third quarter. Its Zacks Consensus Estimate for fourth quarter of 2017 climbed nearly 45.5% to 16 cents per share in the last 30 days.

JA Solar pulled off positive earnings surprise in three out of the last four quarters, with an average beat of 574.07%. In the last 30 days, the consensus mark for 2017 earnings per share moved north by 6.6%.

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