Canadian Solar Inc. CSIQ has further extended its footprint in the renewable energy space in Japan after receiving an 86 megawatt peak (MWp) contract at the country’s 8th solar energy auction. This contract includes three projects that are expected to enter commercial operation between 2024 and 2026. All of these projects will enter into a 20-year power purchase agreement with Tohoku Power Electric Company at a weighted average rate of 9.8 cents per kWh (10 , 77). It sort of secures long-term income for Canadian Solar.
The company has extensive experience in operating the energy market in Japan and has successfully participated in and won contracts under the feed-in tariffs auction program in Japan. These new projects will add to its 450 MWp of large-scale projects that are operational or under construction in Japan.
Canadian Solar caters to a geographically diverse customer base in key markets in the United States, China, the United Kingdom and Canada, as well as the emerging markets of Brazil, India, Mexico, United Kingdom and Canada. ‘Italy, Germany, South Africa and the Middle East.
Japan’s emission reduction target
After the nuclear power plant accident in 2011, the government of Japan changed its energy policy, emphasizing the production of electricity from clean energy sources like natural gas and renewables. Last year, the Japanese government unveiled plans to reduce greenhouse gas emissions to net zero by 2050.
Japan will achieve its goal of carbon neutrality by reducing the use of fossil fuels like coal and adding cleaner sources to the power generation portfolio. According to the report from Japan’s Ministry of Economy, Trade and Industry, Japan’s coal-fired power generation will drop to 26% of its energy mix in fiscal year 2030-2031, indicating a decrease from 31% in fiscal year 2019-20.
A report from RTS Corporation suggested action plans for more than 150 GW of PV solar panel deployment in Japan by 2030. This will create more opportunities for solar operators like Canadian Solar to further increase their presence in Japan. Japan and take advantage of the country’s carbon neutrality goal. It is quite evident that Canadian Solar will continue to apply for future solar auctions in Japan and win more contracts to further expand its operations in the country. Another leading global supplier of complete solar photovoltaic energy solutions, First solar FSLR is involved in a few solar projects in Japan. The huge demand in Japan is expected to create more opportunities for this business.
The solar market in Japan is large enough to accommodate energy operators like TotalEnergies TTE in the field of clean energy. TotalEnergies is also developing its renewable activities in Japan through its units, Total Solar and SunPower Corporation SPWR. At present, the company has more than 100 MWp of large-scale projects that are operational or under construction in Japan.
In the past month, shares of Canadian Solar have gained 19% against the industrygrowth of 24.3%.
Image source: Zacks Investment Research
Canadian Solar currently holds a Zacks Rank # 5 (strong sell).
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