ReneSola (SOL) Closes Sale Of 1.2 MW Power Plant In Japan

ReneSola Ltd. (NYSE:SOL) has closed the sale of a 1.23-megawatt (“MW”) solar facility in Ibaraki, Japan for an undisclosed amount. Revenue proceeds from the transaction will be recognized in the third quarter.

Other Projects in Japan

ReneSola is developing solar PV projects of 31.5 MW in Japan, 29.6 MW of which are already in later stages of development and are expected to be monetized in the upcoming quarters.

Business Strategy

ReneSola has been working actively on its long term business strategy. ReneSola remains focused on developing, operating and selling high-quality solar power projects. The company is shifting away from being only a solar product manufacturer to a multi-faceted participant across the value chain. It is shifting to downstream operations and scaling back its module business.

Thanks to its new business strategy, at the end of second quarter, the company had a global solar power project pipeline of 938.2 MW, of which 323.8 MW are in late stage.

U.S. Industry Outlook

We note that increasing awareness of the drawbacks of fossil fuels is spurring the demand for renewable sources of power generation, particularly solar. Per a U.S. Energy Information Administration report (EIA), total renewables used in the electric power sector of the U.S. are expected to increase 10.5% in 2016 and 4.3% in 2017.

Consumption of renewable energy, other than hydropower, is forecasted to grow 12.9% in 2016 and 9.6% in 2017. Solar energy will constitute 1% of the total U.S. utility-scale generation in 2017, indicating immense room for growth. Solar companies are thus benefitting significantly from the boom.

Third-Quarter Guidance

The company expects third-quarter 2016 revenues to be approximately $200 million and gross margin of around 10%. The guidance reflects the impact of high polysilicon prices and declining wafer prices.

Zacks Rank &Key Picks

ReneSola carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the same space include Sunrun Inc. (NASDAQ:RUN) , Sunworks, Inc. (NASDAQ:SUNW) and Yingli Green Energy Holding Co. Ltd. (NYSE:YGE) . Sunrun sports a Zacks Rank #1 (Strong Buy), while both Sunworks and Yingli Energy carry a Zacks Rank #2 (Buy).