Recurrent Energy Closes Project Financing for 119 MW Solar Project in Mexico

Rhea-AI Summary

Canadian Solar's subsidiary, Recurrent Energy, secures financing for its 119 MW Horus Solar project in Mexico. The project has a power purchase agreement and operates with high-efficiency modules.

Insights

Financial Analyst

The closure of non-recourse project financing for the Horus Solar project is a strategic financial move for Recurrent Energy and its parent company Canadian Solar Inc. The $51 million funding, with its tranche structure, enhances the project's financial stability and mitigates risk by limiting the lenders' recourse to the project's assets. This type of financing is particularly beneficial for Canadian Solar's balance sheet, as it does not increase the company's consolidated debt levels. The involvement of reputable financial institutions like Korea Eximbank and KEB Hana Bank could also provide a vote of confidence for investors, potentially impacting Canadian Solar's stock positively.

Furthermore, the power purchase agreement (PPA) secured during Mexico's third renewable energy auction locks in revenue for a significant portion of the electricity generated, providing predictable cash flows for 15 years. The sale of Clean Energy Certificates for 20 years adds another layer of financial predictability. The spot market sales for the remaining 25 percent of electricity introduce some revenue variability, but also offer the potential for higher margins during peak price periods. Overall, this financing deal could be seen as a positive development for Canadian Solar's financial health and future revenue streams.

Market Research Analyst

Recurrent Energy's successful operation of the Horus Solar project in Mexico aligns with the increasing global demand for renewable energy sources, which is a growing trend in the energy sector. The use of Canadian Solar's high efficiency BiHiku bifacial modules indicates a commitment to leveraging advanced technology to maximize energy production. This positions Canadian Solar as an innovative leader in the industry, potentially increasing its market share and competitiveness.

Additionally, the CEO's acknowledgment of Mexico's strong fundamentals for solar development highlights the strategic importance of geographical diversification. Mexico's solar market is attractive due to its high solar irradiance and supportive government policies for renewable energy. By establishing a foothold in this market, Canadian Solar is not only diversifying its revenue streams but also capitalizing on emerging markets with high growth potential. This could signal to investors the company's proactive approach to expansion and its potential for long-term growth.

Energy Sector Analyst

The Horus Solar project represents a significant advancement in the renewable energy landscape of Mexico, contributing to the country's clean energy goals. The project's completion and operation since March 2023 indicate that Canadian Solar, through Recurrent Energy, is effectively executing its project pipeline and delivering on its commitments. The collaboration with international partners such as KEPCO and Sprott, along with financial backing from South Korean financial entities, reinforces the global cooperation in the renewable energy sector.

Moreover, the strategic ownership structure, with Recurrent owning 49 percent and the rest split between KEPCO and Sprott, allows for shared risk and expertise, which could lead to better project outcomes. The project's success and operational efficiency could serve as a model for future international renewable energy projects, potentially influencing stakeholder sentiment and industry standards. As countries worldwide continue to prioritize renewable energy sources, the Horus Solar project's impact on the business landscape extends beyond immediate financial implications, highlighting the significance of sustainable and collaborative energy solutions.

GUELPH, ON, Feb. 27, 2024 /PRNewswire/ -- Recurrent Energy, a subsidiary of Canadian Solar Inc. (the "Company" or "Canadian Solar") (NASDAQ: CSIQ) and a global developer and owner of solar and energy storage assets, announced today that it has closed non-recourse project financing for its 119 MW Horus Solar project in the region of Aguascalientes, Mexico. Recurrent owns 49 percent of the Horus Solar project, while Korea Electric Power Corporation (KEPCO) and Sprott own 15 percent and 36 percent respectively. The non-recourse financing has been provided by Korea Eximbank (KEXIM), the official export credit agency of South Korea, and KEB Hana Bank, one of South Korea's largest banks.

The facility is split into two tranches, totaling $51 million: a $43 million facility provided by KEXIM and a $8 million facility provided by KEB Hana Bank.

During Mexico's third renewable energy auction, the Horus project was awarded a power purchase agreement (PPA) through which it will sell 75 percent of electricity generated for 15 years and Clean Energy Certificates for 20 years. The remaining 25 percent will be sold on the spot market. The project reached Commercial Operation Date (COD) in March 2023 and has been operating since then.

The 119 MW solar project was built using Canadian Solar's high efficiency BiHiku bifacial modules.

Ismael Guerrero, CEO of Recurrent Energy, said, "The Horus project is a great example of the high value projects that we aim to develop and finance across the world. Thank you to our partners at KEXIM and KEB Hana Bank, together with the project sponsors KEPCO and Sprott, for helping enable this solar project that will bring more emissions-free power to Mexico. We remain committed to the Mexican market that boasts some of the best fundamentals worldwide for solar development."

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
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

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; uncertainties related to the CSI Solar carve-out listing; 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
Wina Huang
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 involved in the Horus Solar project?

Recurrent Energy

Where is the Horus Solar project located?

In the region of Aguascalientes, Mexico

What percentage of the Horus Solar project does Recurrent Energy own?

49 percent

Which companies own the remaining percentage of the Horus Solar project?

Korea Electric Power Corporation (KEPCO) and Sprott

Who provided the non-recourse financing for the Horus Solar project?

Korea Eximbank (KEXIM) and KEB Hana Bank

What is the total amount of the financing for the Horus Solar project?

$51 million

What type of modules were used in building the Horus Solar project?

Canadian Solar's high efficiency BiHiku bifacial modules

When did the Horus Solar project reach Commercial Operation Date (COD)?

March 2023

For how long will the Horus Solar project sell 75 percent of its electricity under the power purchase agreement?

15 years

How long will the Horus Solar project sell Clean Energy Certificates?

For 20 years