Troubled Sharp sells Recurrent Energy to Canadian Solar

Canadian Solar has bought Recurrent Energy from electronics giant Sharp for $265m.

According to a statement from Canadian Solar, the acquisition will increase the company’s total solar project pipeline from 4.0 GW to 8.5 GW. Canadian Solar’s late state pipeline is set to increase from 1.0 GW to 2.4 GW. The transaction is expected to be completed by the end of Q1 2015.

Dr. Shawn Qu, chairman and chief executive of Canadian Solar, said, "The acquisition of Recurrent is an important milestone for us as it significantly expands and strengthens our position in the North American market, and places Canadian Solar firmly among the leading global solar energy companies. By combining Canadian Solar’s global reach and experience with Recurrent’s proven solar energy development track record in the US and Canada, we are significantly expanding the scale of our solar energy development platform. At the same time, this transaction broadens our strategic options to extend our business model from development and construction into potential ownership and operation of solar power plants as we work to create additional value for our shareholders."

The sale of Recurrent Energy for $265m means that Osaka-based Sharp has sold the company for just 87 percent of the price it paid for it in 2010, according to a report in BloombergBusiness. The same report attributes the loss-making sale to Sharp’s current strategy to concentrate on the domestic market, referring to yesterday’s news that the Japanese giant is set to lose ¥30 bn this year. This follows the loss of Y900 bn in 2011 and 2012.

According to a report in Forbes, Sharp said that it is to continue producing solar panels but was moving out of the project business. One consequence of this has been the ending of a joint solar panel venture in Europe.

Sale a reflection of Sharp’s difficulties

Ash Sharma, senior director of solar research at IHS, told pv magazine that the sale was not a reflection on the market. Sharma said: “Our view is that the sale of Recurrent is probably more of a reflection of Sharp’s difficult financial position (as a business overall) in the past few years rather than it viewing solar negatively. Generating cash in the short-term appeared to be a driving factor, despite the longer-term benefits it could have drawn from the Recurrent business.”

Until recently, FIT rates in Japan had been among the most generous in the world at ¥42 per kWh. However, this was cut to ¥37.8 per kWH in 2013, then ¥32 per kWh in 2014, according to multiple reports in BloombergBusiness.

He added, “Despite changes to the FIT in Japan IHS does expect another strong year in 2015, though it’s unclear if this was factor behind Sharp’s decision to off-load Recurrent. In fact I believe they have indicated that they want to increase international module sales this year. Recurrent and Sharp were always run quite independently, though we expect it to become much more integrated (i.e. vertically) into the Canadian Solar business.”