NEW ENERGY: Canadian Solar, Apple Charge Up Recurrent and SunPower

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Bottom line: Major new financing for Recurrent Energy and Apple’s growing partnership with SunPower reflect technology advances that are making solar power plants increasingly competitive with traditional sources.

Recurrent wins financing for major new solar plant

Two solar power plant builders are in the headlines today, reflecting a shift that is seeing this new generation of companies take the spotlight from older solar panel makers that are desperately seeking new buyers for their products. The first headline has solar panel maker Canadian Solar (Nasdaq: CSIQ) announcing that its Recurrent Energy plant-building unit has secured financing for a major new US project, as Recurrent gets set for its own New York IPO as a separate company. The second story has US-based SunPower (Nasdaq: SPWR) emerging as the main partner for Apple’s (Nasdaq: AAPL) recent ambitious plans to build solar power plants in China.

The bigger picture behind both of these stories is that plant builders like Recurrent and SunPower could emerge as the next hot tickets in the solar energy sector. That’s because these companies are quickly gaining expertise in the field of solar plant construction and operation, and could benefit from a future boom when such plants should finally become commercially competitive with plants powered by traditional fossil fuels.

Let’s begin with the news on Recurrent Energy, which was purchased this year by Canadian Solar for $265 million, and earlier this month made its first filing for a separate listing in New York. (previous post) According to Canadian Solar, Recurrent Energy has just received a sizable $260 million in new financing for its 100 megawatt Astoria solar power project in California. (company announcement)

Financiers for the project include the new energy financing unit of General Electric (NYSE: GE), as well as a banking consortium that includes Spain’s Santander Bank and the Netherlands’ Rabobank. Completion of the plant is set for the end of next year, and I expect that much of the equipment for its construction will come from GE and Canadian Solar. Recurrent will become the plant’s long-term owner and operator upon completion.

This particular deal marks the fourth partnership for a US plant this year between Recurrent and Santander. Recurent’s growing stable of high-profile partners underscores its strong credentials as a major builder of solar power plants, and is undoubtedly aimed at raising its profile in the run-up to its IPO that could come by the end of this year.

SunPowered by Apple

Next there’s the SunPower news, which details the company’s role in Apple’s plans to become a major builder of solar plants in China. Apple first announced those plans back in April, saying it would build plants with 80 megawatts of capacity in partnership with SunPower. (previous post) It later sharply boosted that total, with a target of building plants with 200 megawatts of capacity. (previous post)

Now SunPower is coming out with its own announcement saying it will build 3 solar farms in China’s Inner Mongolia region with a total capacity of 170 megawatts. (English article) Upon completion of those plants, SunPower will become one of the long-term owners, alongside a Chinese investor and a third, unnamed party that is most likely Apple.

This particular announcement indicates that SunPower is likely to become one of the main partners in Apple’s unusual push into new energy. This initiative is someone unusual for Apple, better known for its smartphones and computers, but is part of a broader campaign to improve its image in China. If the strategy works well in China, SunPower could benefit if Apple decides to expand the program to other countries.

At the end of the day, both of these news items appear to show that solar plant construction is finally gaining some momentum, as reflected by backing from big names like Santander, Rabobank and Apple. That change reflects improving technology that is helping to boost solar energy’s competitiveness, and could help to power SunPower’s shares and also boost sentiment for Recurrent Energy’s upcoming IPO.

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