Under the terms of their agreement, Canadian Solar will acquire a majority interest in 16 photovoltaic projects in Ontario, worth between 190 to 200 MW, from SkyPower. Of the 16 projects, 15 have been approved under the provinces feed-in tariff program, while the remaining one was issued as part of Ontario’s Renewable Energy Standard Offer Program.
According to a statement released, all have secured a 20 year power purchase agreement from the Ontario Power Authority and are said to be in the advanced permitting stage. Construction is slated to start next year, with the plants scheduled to begin operations in 2014. Overall, Canadian Solar expects the projects to generate US$ 800 million in revenue.
In addition to their Canadian plans, the two companies have agreed to focus on developing photovoltaic projects in "select" emerging markets. Each will have an equal stake in the new venture which, says Canadian Solar, will start generating revenue within the next two to three years.
In the statement, Canadian Solar commented, "The transaction price is approximately C$185 million (US$185 million) to be paid at certain milestones. Canadian Solar will assume certain security deposits, which are typical with FIT contracts. In conjunction with the transaction, a five-year warrant is being issued to SkyPower for 9.9 percent of Canadian Solar’s outstanding shares, with a strike price of US$ 5.00."
Over the past year, Canadian Solar says it has built three projects for SkyPower in Ontario. Shawn Qu, chairman and CEO added that the agreement will enable the company to reach its goal of achieving 40 percent of revenue from solar power plants and total system solutions in 2013.
"Importantly," he said, "while the total mega wattage in the transaction is significant, at approximately 190 to 200 MW, the actual project sizes are directly aligned with our strategy of concentrating on smaller utility scale projects that individually are less risky to finance and execute on. We remain open to larger projects should the opportunity be matched with our ability to obtain financing and construct the projects and we are excited about the opportunity to expand our relationship with SkyPower in select international markets through our new joint venture."
According to its website, SkyPower owns Canada’s first utility-scale fully operating solar park, First Light I. Furthermore, it has installed 27.7 MW worth of solar projects, and has 38.3 MW currently under construction.
No further details have been released.
In related news, the Toronto Sun has reported that Canadian Solar Inc. has denied reports in the Chinese media that China National Offshore Oil Co Ltd (CNOOC) was negotiating to buy the solar panel maker.
"Canadian Solar is not currently in discussion with China National Offshore Oil Corp regarding a potential strategic transaction between the two companies," a company spokesman said in an email to the newspaper.