ReneSola Ltd (NYSE:SOL) recently signed a contract to sell 11 rooftop DG projects to a China state-owned enterprise, specializing in the solar energy industry. With an aggregate installed capacity of 20.6 megawatts (MW), these projects are located in Zhejiang Province.
In addition to these 11 projects, the company has decided to sell three small-scale DG projects with a combined capacity of 1.7MW, located in Shanghai.
Solid DG Prospect in China
The rooftop solar market took a hit when the government of China announced its plan to reduce subsidies on May 31, 2018. Notably, China had announced a cut in feed-in tariffs (FiTs) on utility-scale solar projects and a cap on distributed generation (DG) projects.
However, the National Energy Administration’s (NEA) decision to offer subsidies to the nation’s centralized solar power projects in 2019, undertaken this July, was a breather for the solar project developers of China like ReneSola. In this context, it is imperative to mention that while utility-scale solar continues to dominate the solar market in China, distributed solar is witnessing rapid growth. Globally, ReneSola aims to connect nearly 361.6 MW of DG and grid-parity projects through 2019-2020.
In July, China’s NEA announced that the nation will allocate $435 million of subsidies for new solar projects in 2019. Of this, $109 million will be awarded to household projects, with a combined capacity of 3.5 GW. The balance will be directed to solar power stations.
ReneSola is optimistic about the latest subsidy announcement for solar projects. This fund will help the company to rapidly develop new DG projects in China. The latest divestment of rooftop DG projects by ReneSola is a further testament to that.
Global Solar Footprint
The global solar market has been rallying since the beginning of 2019. This reflects a significant improvement from last year. Wood Mackenzie Power & Renewables now projects global solar PV installations to reach a new high of 114.5 gigawatts in 2019, up 17.5% over 2018.
Apart from its dominating position in the solar market of China, ReneSola is currently expanding its business in the overseas markets like Spain, Canada, Poland, Hungary, France, Vietnam and Turkey. Also, this solar project developer is actively pursuing opportunities in the new markets that include South Korea and India.
Given the aforementioned growth prospect of the global solar market, significant expansion of ReneSola’s project portfolio internationally should boost profitability through monetization of its projects.
ReneSola apart, other prominent solar players like First Solar (NASDAQ:FSLR) , SolarEdge Technologies (NASDAQ:SEDG) and Canadian Solar (NASDAQ:CSIQ) are expected to benefit from the global solar market’s growth.
Price Movement
In a years’ time, shares of ReneSola have declined 28% against the industry’s 51.7% rally.
Zacks Rank
ReneSola currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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