Recurrent Energy Closes $160 Million in Project Financing, Secures Microsoft as Customer for 127 MW Solar Project in Louisiana

Rhea-AI Summary

Recurrent Energy, a subsidiary of Canadian Solar Inc., secured $160 million in project financing for its 127 MWdc Bayou Galion Solar project in Louisiana. Microsoft will purchase 100% of the energy and renewable energy credits to support its goal to be carbon negative by 2030. The project will significantly expand renewable energy capacity in Louisiana, with Mitsubishi UFJ Financial Group, Inc. acting as Coordinating Lead Arranger for the financing.

Insights

Financial Analyst

The securing of $160 million in project financing for Recurrent Energy's Bayou Galion Solar project is a significant development for Canadian Solar Inc. The financial backing from a reputable institution like Mitsubishi UFJ Financial Group (MUFG) not only underscores the project's viability but also enhances the company's creditworthiness. It's important to note that project financing typically involves non-recourse or limited recourse financial structures where project debt and equity used to finance the project are paid back from the cash flow generated by the project, which can mitigate risk for Canadian Solar Inc.

For stakeholders, this financing indicates a strong commitment to expanding renewable energy capacity, which could lead to long-term revenue streams for Canadian Solar. The partnership with Microsoft Corporation to purchase 100 percent of the energy and renewable energy credits can be seen as a stable and predictable source of income for the project. This could be a positive signal to investors, reflecting a potential increase in Canadian Solar's profitability and stock valuation in the long run.

Energy Market Analyst

The collaboration between Recurrent Energy and Microsoft Corporation highlights a growing trend in the energy sector where large corporations are increasingly investing in renewable energy to meet their sustainability goals. Microsoft's goal to be carbon negative by 2030 represents a broader corporate movement towards sustainability, which can drive demand for renewable energy projects. This demand can incentivize further development in the renewable energy sector, potentially benefiting companies like Canadian Solar that are positioned to capitalize on this trend.

The Bayou Galion Solar project's contribution to Louisiana's renewable energy capacity is noteworthy. With the state's current capacity at 145 MW, the addition of 127 MWdc represents a significant increase, which could position Louisiana as a more attractive market for future renewable energy investments. This expansion may be a catalyst for job creation and economic growth within the region, thereby impacting local businesses and the broader economy positively.

Environmental Economist

The environmental impact of the Bayou Galion Solar project extends beyond the immediate financial implications. By providing a substantial increase to Louisiana's renewable energy capacity, the project contributes to the reduction of carbon emissions, aligning with global efforts to combat climate change. The environmental benefits of such projects often translate into economic advantages, as they can lead to improved public health and reduced healthcare costs, as well as mitigating the economic risks associated with climate change.

In the context of environmental economics, the project also represents a form of natural capital investment. By securing a long-term power purchase agreement (PPA) with Microsoft, Recurrent Energy ensures a steady cash flow that can be reinvested into further renewable projects, creating a virtuous cycle of investment and environmental benefit. This type of sustainable investment can be attractive to socially responsible investors who consider environmental impact alongside financial returns.

GUELPH, ON, Feb. 6, 2024 /PRNewswire/ -- Recurrent Energy, a subsidiary of Canadian Solar Inc. ("Canadian Solar") (NASDAQ: CSIQ) and a global developer and owner of solar and energy storage assets, announced today that it has secured $160 million in project financing for its 127 MWdc Bayou Galion Solar project, located in Morehouse Parish in Northeast Louisiana. The project is currently under construction and is expected to be operational by fall 2024.

Microsoft Corporation will purchase 100 percent of the energy and renewable energy credits produced by Bayou Galion Solar to support its goal to be carbon negative by 2030. The project will significantly expand the amount of renewable energy capacity installed in Louisiana. At the end of September 2023, Louisiana had 145 MW of operating wind, solar, and energy storage capacity.   

Mitsubishi UFJ Financial Group, Inc. (MUFG) acted as Coordinating Lead Arranger for the financing.

"MUFG is very pleased to support Recurrent Energy on this important project and to help Microsoft meet its climate objectives," said Fred Zelaya, Managing Director, Project Finance Americas at MUFG.

Recurrent Energy began development of Bayou Galion Solar in 2018 and commenced construction in December 2023. Recurrent Energy selected Primoris Renewables Energy, Inc. as its engineering, procurement, and construction partner. Once construction is completed, Recurrent Energy will own and operate the project as a part of its commitment to growing the number of renewable energy projects in its operating portfolio.

Ismael Guerrero, CEO of Recurrent Energy, said, "We are very pleased to announce the successful close of project financing and PPA signing for Bayou Galion Solar in Louisiana. This project represents an important milestone as we continue to advance our pipeline in new markets and increase project ownership. Bayou Galion Solar extends our relationship with our esteemed partners at MUFG and establishes a new relationship with Microsoft, one of the world's largest renewable energy power buyers."

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 wholly-owned subsidiary of Canadian Solar Inc. and functions as Canadian Solar's global development and power services business. Additional details are available at www.recurrentenergy.com.

About Canadian Solar Inc.

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 storage solutions, and developer of utility-scale solar power and battery storage projects with a geographically diversified pipeline in various stages of development. Over the past 22 years, Canadian Solar has successfully delivered over 110 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 around 9.3 GWp of solar power projects and over 3 GWh of battery storage projects across the world. Currently, the Company has around 850 MWp of solar projects in operation, nearly 7.8 GWp of projects under construction or in backlog (late-stage), and an additional 18.7 GWp of projects in advanced and early-stage pipeline. In addition, the Company has a total battery storage project development pipeline of approximately 55 GWh, including approximately 5 GWh under construction or in backlog, and an additional 50 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

About MUFG and MUFG Americas 

Mitsubishi UFJ Financial Group, Inc. (MUFG) is one of the world's leading financial groups. Headquartered in Tokyo and with over 360 years of history, MUFG has a global network with approximately 2,000 locations in more than 40 countries. MUFG has nearly 120,000 employees and offers services including commercial banking, trust banking, securities, credit cards, consumer finance, asset management, and leasing. The Group aims to "be the world's most trusted financial group" through close collaboration among our operating companies and flexibly respond to all the financial needs of our customers, serving society, and fostering shared and sustainable growth for a better world. MUFG's shares trade on the Tokyo, Nagoya, and New York stock exchanges.  

MUFG's Americas operations, including its offices in the U.S., Latin America, and Canada, are primarily organized under MUFG Bank, Ltd. and subsidiaries, and are focused on Global Corporate and Investment Banking, Japanese Corporate Banking, and Global Markets. MUFG is one of the largest foreign banking organizations in the Americas. For locations, banking capabilities and services, career opportunities, and more, visit www.mufgamericas.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 the Company's filings with the Securities and Exchange Commission, including its annual report on Form 20-F filed on April 18, 2023. Although the Company believes 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 undertakes no duty to update such information, except as required under applicable law.

Canadian Solar Inc. Investor Relations Contact

Isabel Zhang
Investor Relations
Canadian Solar Inc.
investor@canadiansolar.com

Recurrent Energy Media Inquiries

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

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SOURCE Canadian Solar Inc.

FAQ

What is the name of the subsidiary of Canadian Solar Inc. that secured project financing for the Bayou Galion Solar project?

Recurrent Energy

How much project financing did Recurrent Energy secure for the Bayou Galion Solar project?

$160 million

Who will purchase 100% of the energy and renewable energy credits produced by the Bayou Galion Solar project?

Microsoft Corporation

What is the expected operational date for the Bayou Galion Solar project?

Fall 2024

Who acted as Coordinating Lead Arranger for the financing of the Bayou Galion Solar project?

Mitsubishi UFJ Financial Group, Inc.

When did Recurrent Energy begin development of the Bayou Galion Solar project?

2018

Who did Recurrent Energy select as its engineering, procurement, and construction partner for the Bayou Galion Solar project?

Primoris Renewables Energy, Inc.

Who is the CEO of Recurrent Energy?

Ismael Guerrero