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Canadian Solar (CSIQ) Arm Acquires Energy Storage Projects

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Canadian Solar Inc.’s CSIQ subsidiary, Recurrent Energy, recently acquired two standalone energy storage projects from Black Mountain Energy Storage (BMES) in the Electric Reliability Council of Texas (ERCOT) market. The move is in sync with Recurrent Energy’s aim to rapidly grow its business in the ERCOT market and boost its storage pipeline portfolio.

Details of the Acquisition

The projects, which are sited at the South Load Zone of the ERCOT market, claim a storage capacity of 200 megawatt-hour each. Recurrent Energy will be engaged in the next stage of developing the projects, finalizing entitlements and designs, selecting and procuring equipment, raising project financing as well as constructing facilities.

The two projects are estimated to reach the notice to proceed in 2023, while the operation is expected to commence in the second quarter of 2024.

Benefits of the Acquisition

The ERCOT region boasts ample wind and solar potential, which further supports the development of solar and wind projects in the region. This, in turn, leverages the expansion of corresponding energy storage projects in the region. Impressively, the annual deployments of grid-scale storage almost tripled year over year to more than 3.5 gigawatts in 2021, with California and Texas leading the growth, per the report from Wood Mackenzie's U.S. Energy Storage Monitor.

Hence, the region that entails such development capacity provides an edge for solar companies like Canadian Solar to benefit from the expanding market.

Also, Recurrent Energy has developed 2.9 gigawatt-hour (GWh) of energy storage projects and has an additional pipeline of 15.5 GWh of projects under early to mid-stage development. The two energy storage projects, which will be operational as merchant projects in the ERCOT market, add to its development project pipeline portfolio.

Such a solid pipeline of projects is likely to bolster CSIQ’s revenue generation prospects in the long haul.

Peer Moves

Companies make strategic acquisitions to stimulate their growth trajectory and expand their businesses. In this context, solar companies that have engaged in valuable acquisition strategies are:

In October 2021,SunPower SPWR acquired Blue Raven Solar to quickly expand in the solar market to serve more customers in underpenetrated areas, including the Northwest and Mid-Atlantic regions.

The Zacks Consensus Estimate for SunPower’s 2022 earnings is pegged at 36 cents per share, which implies a growth rate of a solid 414.3% from the prior-year reported figure. SPWR shares have rallied 8.1% in the past month.

In March 2022, Enphase Energy ENPH announced the acquisition of SolarLeadFactory, with the objective of substantially increasing lead volumes and conversion rates to help drive down customer acquisition costs for installers.

The Zacks Consensus Estimate for Enphase Energy’s 2022 earnings suggests a growth rate of 51.2% from the prior-year reported figure. ENPH has rallied 10.5% in the past year.

In April 2021,Sunnova Energy International NOVA completed its acquisition of SunStreet Energy Group and became Lennar’s exclusive residential solar and storage service provider for the new home communities with solar power across the country.

The Zacks Consensus Estimate for Sunnova’s 2022 earnings indicates a growth rate of 44.1% from the prior-year reported figure. NOVA has returned 12% to its investors in the past month.

Price Movement

In a year, shares of Canadian Solar have rallied 5.1% compared with the industry’s growth of 7.8%.

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Zacks Rank

Canadian Solar 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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