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CSIQ Receives Turkish Contract - Analyst Blog

Tuesday, November 13, 2012

Canadian Solar Inc. (CSIQ) has delivered its CS6P-P solar modules to Engineering, Procurement and Construction (“EPC”) contractor Gehrlicher Merk Solar A.S. for the photovoltaic project in a solar park at Izmir airport, Turkey.

This solar power plant when operational, will have a total capacity of 540 Kilowatt (“kW”), comprising 450 kW on-grid and 90 kW off-grid. This solar plant project is the first photovoltaic project at an airport in the region and also the nation’s largest solar power plant.

Gehrlicher Merk Solar A.S. is a joint venture between German photovoltaic company, Gehrlicher Solar AG and Turkish Akfel Group. Based in Istanbul, this company serves photovoltaic markets in Turkey and its neighboring countries.

CS6P-P is a high-performance module, featuring positive power tolerance, higher energy yield, a robust frame, anti-reflective with self-cleaning surface, and outstanding performance at low irradiance. The module carries a 10-year product warranty on materials and workmanship, and a 25-year linear power output warranty, among other things.

This is the second project that Canadian Solar and Gehrlicher Merk Solar are working jointly. Last September, Canadian Solar provided solar modules to Gehrlicher Merk Solar Enerji A.S. for Turkey's first and largest governmental solar photovoltaic project. This project has a total capacity of 96 kW and is supported directly by the Turkish Prime Minister's office.

We consider Turkey as one of the important future emerging markets for solar energy, as the country’s insolation rates and temperature conditions are favorable. Moreover, government's judgment toward greater emphasis on fostering renewable resources, particularly solar, along with diversifying energy portfolio will simplify the licensing process for power plant projects.

As a result, the Turkish government has recently implemented a new legislation called YEK with no licensing requirements. It is the maiden project under this newly incorporated regulation.

Future prospects for Canadian Solar look favorable based on a broadly diversified customer base and improving operating efficiencies through its well-integrated manufacturing operations.

However, we are skeptical about moderate module demand in Europe, higher degree of competition in the energy market with other variables of alternate energy and industry-wide over-supply of modules that has lead to a sharp fall in the average selling prices.

Canadian Solar Inc. currently has short-term Zacks #3 Rank (Hold rating). Over the longer run, we maintain our Neutral recommendation on the company.

Ontario, Canada-based Canadian Solar Inc. provides a geographically diversified customer-base stretched across its key territories in Germany, Spain and the U.S., as well as emerging market opportunities in France, the Czech Republic, Italy, South Korea, Canada, Japan and China. With a market capitalization of $116.10 million, the company has 9,087 full time employees. One of the peers of the company is SunPower Corporation (SPWR).


 
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