Canadian Solar Inc. (NASDAQ: CSIQ) is getting a $93.8 million cash infusion from China to help fund its transformation into a solar project developer.
The world’s third biggest solar panel manufacturer will use a five-year loan from China Development Bank to help finance its $186.6 million acquisition of a majority interest in 16 solar projects owned by Ontario developer SkyPower Ltd.
Those projects have an estimated generating capacity of 190-200 megawatts (MW), and are covered 20-year power purchase agreements under Ontario’s feed-in tariff program.
"Our new credit agreement underscores Canadian Solar’s bankability and strong competitive position. We are pleased to have the support of one of the world’s largest banks as we continue to execute on our business and advance our goal to generate 40% of our revenue from total solutions, which include solar power generation project development, facilitation of financing arrangements, EPC services and total hardware kit sales," says Shawn Qu, chairman and CEO of Canadian Solar.
Canadian Solar is one of several solar panel-makers that are diversifying into project development and management, in an effort to avoid what’s become a cut-throat, low-margin panel business. CSIQ is based in Ontario, Canada and manufactures in China.
A similar strategy has been used to great effect by First Solar, which provided a rare financial bright spot among solar panel manufacturers with its second quarter earnings report in July.
Although the loan from China Development Bank is its first, Canadian Solar’s balance sheet includes $88 million in long-term debt from Agricultural Bank of China Ltd., Bank of Communications CO. and Export-Import Bank of China. China Development Bank has put up $47.3 billion since 2010 to the country’s wind and solar manufacturers.
Canadian Solar estimates that projects will make up about 25% of its total revenue in 2012, up from 10% in 2011. The company owns 122 MW of utility-scale solar plants in the US, and has about 340 MW under construction in Canada.