Heat from the sun has always provided the energy to grow food on this planet but until recently harnessing that heat for human needs has been too expensive.
According to the U.S.-based International Energy Agency, the cost of solar panels has been halved since 2010, putting solar costs lower than natural gas, oil or wind.
Increased solar development, motivated in part by subsidies in some countries, contributed to lower costs and returns of six per cent on investment in solar.
Technology in 10 years has increased the amount of energy captured by solar to 23 per cent from 18, improving efficiency and reducing cost.
Solar installations globally are estimated to double in the next five years. In Australia, 21 per cent of rooftops are solar, compared with 2.5 per cent in the U.S.A. and even less in Canada.
Solar is the next big thing in energy. Saskatchewan would do well to realize that and adopt more solar instead of shutting out solar with restrictive policies.
A number of strong publicly-traded companies compete in the solar industry but Bizworld has chosen to target one based in Guelph, Ontario, even if only traded on a U.S. exchange.
Canadian Solar Inc. started in 2001 and has grown to 13,000 employees operating 17 manufacturing plants across the planet.
The company has two divisions providing $3.2 billion revenue last year.
The integrated operation, building everything from panels, inverters, cells, modules, solar storage and so on, accounts for three quarters of revenue. Building power projects and operation make up the rest.
Canadian Solar has over 1,000 megawatts installed and operating with 512 under construction this year. The backlog runs at 3,700 megawatts with another 1,170 in the pipeline — assuring lots of business in future years.
Almost half of existing installations are in China, with Japan and Asia Pacific at one-fifth. Most of the rest is in North America and Latin America.
Two-thirds of the backlog is in the Americas and three-quarters of the pipeline work is in the Americas — reducing reliance on China.
The company’s debt seems at a reasonable level — one-quarter of assets.
Listed in 2006 on the Nasdaq Exchange, Canadian Solar shares have performed well entering 2010 at $10.38US, hitting a high of $41.75 in early 2014, and recently priced at $17.90.
Most remarkable is the ratio of price to earnings, currently a low 3.6 times earning, almost unheard of for a growing company. The share price is less than two times cash flow.
The market sees risks ahead: COVID-19 delays, reduced government subsidies and low oil prices. In the March collapse, shares fell from $25.19 to $14 and change.
The company views low oil and natural gas prices as a benefit as they reduce the investment return on fossil fuel and make solar returns look better.
Canadian Solar is financially strong, profitable, and has a 19-year track record of growth, creating a great candidate for investment.
CAUTION: Remember when investing, consult your adviser and do your homework before buying any security. Bizworld does not recommend investments.
Ron Walter can be reached at [email protected]
The views and opinions expressed in this article are those of the author, and do not necessarily reflect the position of this publication.
