Recurrent Energy Announces Initial Closing of Investment from BlackRock

Rhea-AI Summary

Recurrent Energy, a subsidiary of Canadian Solar (NASDAQ: CSIQ), announced the initial closing of a $500 million investment from BlackRock's Climate Infrastructure business. This investment, which represents 20% of Recurrent Energy's outstanding shares on an as-converted basis, was contingent on regulatory approval and other conditions that have now been met. The capital will aid Recurrent Energy in its strategic shift from a developer to a long-term owner/operator in markets such as the U.S. and Europe, aiming for stable long-term revenue and maximizing value from a diversified project pipeline. Recurrent Energy has developed over 10 GWp of solar power and 3.3 GWh of battery storage since 2009 and expects to have 4 GW of solar and 2 GWh of storage operational by 2026.

Positive

• Initial closing of $500 million investment from BlackRock.
• BlackRock's investment represents 20% of Recurrent Energy's outstanding shares.
• Recurrent Energy to transition from a developer to a long-term owner/operator.
• Potential for more stable long-term revenue in low-risk currencies.
• Strong track record: 10 GWp solar and 3.3 GWh battery storage developed since 2009.
• 26 GW solar and 56 GWh storage global project pipeline as of March 31, 2024.
• 4 GW solar and 2 GWh storage expected to be operational by 2026 in the U.S. and Europe.

Negative

• Initial closing only represents a majority of the planned capital, not the full amount yet.
• Investment was contingent on regulatory approvals, indicating potential regulatory risks.
• Investment diluted shares, with BlackRock now holding 20% of Recurrent Energy.

Insights

Financial Analyst

The $500 million investment by BlackRock into Recurrent Energy is a significant development for Canadian Solar. This capital infusion not only enhances Recurrent Energy's financial stability, but it also provides the necessary funding to support its strategic transformation into a long-term owner and operator of solar and energy storage assets.

Financially, this move diversifies Canadian Solar's revenue streams, promising more stable and predictable income over the long term. The transition from being solely a developer to also operating and owning assets allows for recurring revenue, which is appealing to investors looking for consistent returns. The fact that Recurrent Energy will maintain majority ownership also means that Canadian Solar retains substantial control, mitigating potential risks associated with this type of partnership.

Furthermore, the valuation implied by the investment (20% stake for $500 million) suggests a $2.5 billion valuation for Recurrent Energy, potentially providing a re-rating catalyst for Canadian Solar's stock. This valuation reflects confidence in the growth potential of Recurrent Energy's project pipeline, particularly in high-growth markets like the U.S. and Europe.

Market Research Analyst

This investment aligns with broader market trends towards renewable energy and sustainable infrastructure. The strategic support from BlackRock, a leader in climate infrastructure investment, underscores the growing demand for clean energy solutions. This is particularly relevant as governments and corporations globally continue to pursue aggressive climate goals, creating a favorable regulatory environment for solar and energy storage projects.

Recurrent Energy's strong development pipeline of 26 GW in solar and 56 GWh in storage positions the company well to capitalize on these trends. The ability to operate in low-risk currencies in markets like the U.S. and Europe adds an additional layer of security and attractiveness to investors. The partnership with BlackRock enhances Recurrent Energy's credibility and could potentially open up new opportunities for project financing and development.

Energy Sector Specialist

Recurrent Energy's shift to becoming a long-term owner and operator of solar and energy storage assets marks a strategic evolution in its business model. This transition is significant as it allows Recurrent Energy to capture more value from its projects over their lifecycle, rather than just at the point of sale. It aligns with industry trends where companies are looking to build and maintain control over renewable energy assets to ensure long-term sustainability and profitability.

The financial backing from BlackRock, a prominent player in climate infrastructure, is a testament to Recurrent Energy's robust project portfolio and execution capability. Additionally, the scale of projects already in development (26 GW in solar and 56 GWh in storage) signals a strong growth trajectory. Meeting these targets will require continued regulatory support and efficient project execution, but the partnership with BlackRock should provide additional resources and expertise to navigate these challenges.

NEW YORK and GUELPH, ON, June 3, 2024 /PRNewswire/ -- Recurrent Energy, a subsidiary of Canadian Solar Inc. ("Canadian Solar") (NASDAQ: CSIQ) and a global developer, owner, and operator of solar and energy storage assets, announced today the initial closing and funding of an investment in Recurrent Energy's platform by BlackRock through a fund managed by its Climate Infrastructure business ("BlackRock"). The initial closing of the transaction, first announced in January 2024, was contingent on requisite regulatory approvals and other conditions, which have now been met.

The initial closing represents the majority of the planned capital infusion. Once the transaction is fully complete, BlackRock's $500 million investment will represent 20% of the outstanding fully diluted shares of Recurrent Energy on an as-converted basis. Canadian Solar will continue to own the remaining majority shares of Recurrent Energy.

This milestone enables Recurrent Energy to advance investment in its high value project development portfolio, supporting its strategic transition from a pure developer to a developer plus long-term owner and operator in select markets including the U.S. and Europe. This transition will allow Recurrent Energy to generate more stable long-term revenue in low-risk currencies and capture greater value from its diversified global project development pipeline.

Recurrent Energy is one of the world's largest clean energy project development platforms with a strong and established track record, having developed, built, and connected over 10 GWp of solar power projects and 3.3 GWh of battery energy storage projects on six continents since 2009.

As of March 31, 2024, Recurrent Energy had a global project development pipeline of 26 GW in solar and 56 GWh in storage, of which 11 GW and 15 GWh respectively are projects with interconnections. Recurrent Energy expects to have 4 GW of solar and 2 GWh of storage in operation in the U.S. and Europe by 2026.

Ismael Guerrero, CEO of Recurrent Energy, said, "With this financial and strategic support from BlackRock, Recurrent Energy is well-equipped to advance our development of key solar and energy storage projects globally. We value our partnership with BlackRock and appreciate their commitment to our mission of delivering clean, reliable, and affordable power to the world, today and tomorrow."

David Giordano, Global Head of Climate Infrastructure, BlackRock, added, "This investment from the BlackRock Climate Infrastructure Global Renewable Power Fund IV positions Recurrent Energy to grow the development, construction, and management of utility-scale solar and battery energy storage projects in core, high-growth markets.  We look forward to combining our strengths and expertise to build a leading, global independent power producer."

For more information, please refer to Form 6-K filed with the Securities and Exchange Commission on January 23, 2024 regarding this investment in connection with the initial transaction announcement.

About Recurrent Energy

Recurrent Energy is one of the world's largest and most geographically diversified utility-scale solar and energy storage project development, ownership and operations platforms, with an industry-leading team of in-house energy experts. Recurrent Energy is a subsidiary of Canadian Solar Inc. Additional details are available at www.recurrentenergy.com.

About Canadian Solar

Canadian Solar was founded in 2001 in Canada and is one of the world's largest solar technology and renewable energy companies. It is a leading manufacturer of solar photovoltaic modules, provider of solar energy and battery energy storage solutions, and developer of utility-scale solar power and battery energy storage projects with a geographically diversified pipeline in various stages of development. Over the past 23 years, Canadian Solar has successfully delivered over 125 GW of premium-quality, solar photovoltaic modules to customers across the world. Likewise, since entering the project development business in 2010, Canadian Solar has developed, built, and connected over 10 GWp of solar power projects and 3.3 GWh of battery energy storage projects across the world. Currently, the Company has over 1.2 GWp of solar power projects in operation, 6.5 GWp of projects under construction or in backlog (late-stage), and an additional 19.8 GWp of projects in advanced and early-stage pipeline. In addition, the Company has 600 MWh of battery energy storage projects in operation and a total battery energy storage project development pipeline of around 56 GWh, including approximately 4.3 GWh under construction or in backlog, and an additional 51.6 GWh at advanced and early-stage development. Canadian Solar is one of the most bankable companies in the solar and renewable energy industry, having been publicly listed on the NASDAQ since 2006. For additional information about the Company, follow Canadian Solar on LinkedIn or visit www.canadiansolar.com.

Safe Harbor/Forward-Looking Statements

Certain statements in this press release are forward-looking statements that involve a number of risks and uncertainties that could cause actual results to differ materially. These statements are made under the "Safe Harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by such terms as "believes," "expects," "anticipates," "intends," "estimates," the negative of these terms, or other comparable terminology. Factors that could cause actual results to differ include general business, regulatory and economic conditions and the state of the solar and battery storage market and industry; geopolitical tensions and conflicts, including impasses, sanctions and export controls; volatility, uncertainty, delays and disruptions related to the COVID-19 pandemic; supply chain disruptions; governmental support for the deployment of solar power; future available supplies of high-purity silicon; demand for end-use products by consumers and inventory levels of such products in the supply chain; changes in demand from significant customers; changes in demand from major markets, such as Japan, the U.S., China, Brazil and Europe; changes in effective tax rates; changes in customer order patterns; changes in product mix; changes in corporate responsibility, especially environmental, social and governance ("ESG") requirements; capacity utilization; level of competition; pricing pressure and declines in or failure to timely adjust average selling prices; delays in new product introduction; delays in utility-scale project approval process; delays in utility-scale project construction; delays in the completion of project sales; continued success in technological innovations and delivery of products with the features that customers demand; shortage in supply of materials or capacity requirements; availability of financing; exchange and inflation rate fluctuations; litigation and other risks as described in Canadian Solar's filings with the Securities and Exchange Commission, including its annual report on Form 20-F filed on April 26, 2024. Although Canadian Solar and Recurrent Energy believe that the expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, level of activity, performance, or achievements. Investors should not place undue reliance on these forward-looking statements. All information provided in this press release is as of today's date, unless otherwise stated, and Canadian Solar and Recurrent Energy undertake no duty to update such information, except as required under applicable law.

Canadian Solar Inc. Investor Relations Contact

Wina Huang
Investor Relations
Canadian Solar Inc.
investor@canadiansolar.com

Recurrent Energy Media Contacts
Inés Arrimadas
Recurrent Energy
comms@recurrentenergy.com

Ally Copple
Innovant Public Relations
713-201-8800
Ally@InnovantPR.com 

BlackRock
Christopher Beattie
646-231-8518
christopher.beattie@blackrock.com

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SOURCE Canadian Solar Inc.

FAQ

What is the investment amount BlackRock is making in Recurrent Energy?

BlackRock is making a $500 million investment in Recurrent Energy.

How much of Recurrent Energy's shares will BlackRock own?

BlackRock will own 20% of Recurrent Energy's outstanding shares on an as-converted basis.

What is the strategic shift Recurrent Energy is making?

Recurrent Energy is transitioning from being purely a developer to becoming a long-term owner and operator.

What is the global project development pipeline of Recurrent Energy?

As of March 31, 2024, Recurrent Energy has a global project development pipeline of 26 GW in solar and 56 GWh in storage.

How much solar and storage capacity does Recurrent Energy expect to have operational by 2026?

Recurrent Energy expects to have 4 GW of solar and 2 GWh of storage operational by 2026 in the U.S. and Europe.