Canadian Solar Inc. (the "Company", or "Canadian Solar") (NASDAQ: CSIQ), one of the world's largest solar power companies, yesterday provided an update on the status of its Japanese pipeline to clarify its position in light of recent announcements by Kyushu Electric Power (Kyushu), to temporarily suspend grid connection approval pending evaluation of their respective grid capacity availability.
As previously indicated, Canadian Solar's late stage utility-scale project pipeline in Japan stood at 405MW (DC) as of the end of the second quarter of 2014. During the third quarter of 2014 the company successfully added 85.5MW of new projects to its portfolio, and increased its total late stage project pipeline in Japan to 490.5MW. Approximately 150MW these projects already have full grid connection approval (Keitou Renkei Shoudakusho), and are in the construction permitting stage. The Company is currently actively evaluating over 200MW of additional projects for acquisition, and maintains its goal to increase its late-stage pipeline in Japan to approximately 550-600MW by the end of 2014.
As reported in the news, Kyushu has temporarily suspended grid-connection approvals pending an evaluation of its available grid capacity, which it expects to complete by the second quarter of 2015. Projects that have full grid connection approval (Keitou Renkei Shoudakusho), are NOT suspended, and are moving ahead according to plan. Ten of the Company's projects within the Kyushu area representing a total of 95.6 MW have received full grid connection approval (Keitou Renkei Shoudakusho). The Company expects these ten projects to move ahead according to plan. Only one of the Company's projects in the Kyushu area, namely, "Shibushi-Uchinokura" totaling 2.3 MW has not received full grid connection approval, and as a result is affected by the temporary suspension.
Subsequent to Kyushu's announcement Hokkaido Electric Power (Hokkaido), Okinawa Electric Power (Okinawa), Tohoku Electric Power (Tohoku) and Shikoku Electric Power (Shikoku) also announced they are temporarily suspending grid connection approvals.
Canadian Solar has three projects in the Tohoku area totaling 135MW. The Company continues to work with Tohoku to develop these projects, and at this point it expects them to eventually reach approval. These three projects are originally targeted to reach commercial operation in late 2016 or 2017, and therefore allow sufficient time to accommodate the utility's grid capacity study.
The Company has no projects, and therefore no exposure to Hokkaido, Okinawa nor Shikoku utility areas.
The company has discussed the current situation with its module customers and does not expect the recent utility announcements to affect its near term solar module business.
"We remain confident on our position in the Japanese market, both as a module supplier and project developer," said Dr. Shawn Qu, Chairman and Chief Executive Officer of Canadian Solar Inc. "The recent announcements by electric utilities are not expected to slow down projects that have already been approved. Instead, we believe that it is ultimately beneficial to weed out some of the superficial projects so that those with good quality have better chance to advance. We expect to be on track for our Japanese project development business."