Recurrent Energy, a subsidiary of Canadian Solar (CSIQ) and a prominent global developer and owner of solar and energy storage assets, has recently made a significant announcement. The company secured a substantial $500 million preferred equity investment commitment from BlackRock through one of its Climate Infrastructure business-managed funds. This investment, convertible into common equity, marks a significant move for Recurrent Energy and the renewable energy industry as a whole.
BlackRock’s Investment Commitment
BlackRock’s commitment of $500 million represents a substantial financial injection into Recurrent Energy. This investment is set to account for 20% of Recurrent Energy’s outstanding fully diluted shares on an as-converted basis. Importantly, Canadian Solar will maintain its majority ownership of Recurrent Energy even after the transaction is completed.
Fueling Growth and Strategy Transition
The infusion of capital from BlackRock will play a pivotal role in fueling the growth of Recurrent Energy. The company’s strategy is to transition from being solely a developer to becoming a developer and long-term owner and operator in select markets. This strategic shift aims to enhance the diversity of Recurrent Energy’s portfolio while ensuring more stable long-term revenue streams in low-risk currencies. By retaining ownership of projects in its development pipeline, Recurrent Energy seeks to maximize value creation.
Recurrent Energy’s Impressive Track Record
Recurrent Energy has earned its reputation as one of the world’s largest and most geographically diversified utility-scale solar and energy storage project development platforms. Since its establishment in 2009, the company has demonstrated a strong track record in responsibly originating, developing, financing, and constructing approximately 9 GWp of solar and 3 GWh of battery storage power plants across six continents.
As of September 30, 2023, Recurrent Energy boasts an impressive global development pipeline, featuring 26 GW in solar and 55 GWh in storage, including projects with interconnections. By 2026, the company anticipates having 4 GW of solar and 2 GWh of storage in operation in the U.S. and Europe.
Expansive Reach and Strategic Exclusions
The scope of the investment transaction encompasses various regions, including the U.S., Canada, Spain, Italy, the U.K., France, the Netherlands, Germany, South Africa, Brazil, Chile, Colombia, Australia, South Korea, and Taiwan. However, certain areas, such as Canadian Solar’s project development business in Japan and China, as well as specific assets in Latin America and Taiwan, are excluded from the transaction. The successful completion of the transaction hinges on regulatory approvals and the fulfillment of specific terms and conditions as per the transaction agreements.
Leadership Perspectives
Dr. Shawn Qu, Chairman and CEO of Canadian Solar, expressed enthusiasm about the partnership with BlackRock and its role as a significant institutional investor in Canadian Solar. He emphasized the significance of the capital infusion from BlackRock in advancing Recurrent Energy’s growth and supporting the increasing demand for clean energy worldwide.
Ismael Guerrero, CEO of Recurrent Energy, highlighted the company’s commitment to addressing the global demand for renewable energy and energy storage solutions. He expressed gratitude for BlackRock’s support and its contribution to Recurrent Energy’s mission of delivering clean, reliable, and affordable power worldwide.
David Giordano, Global Head of Climate Infrastructure and Chief Investment Officer of Transition Capital at BlackRock, underlined the strategic importance of the partnership with Recurrent Energy. He emphasized BlackRock’s commitment to investing in leading renewable power generation assets and infrastructure that facilitates the transition to sustainable energy.
The Future of Renewable Energy and Storage
The investment in Recurrent Energy comes at a pivotal time for the renewable energy industry. Solar energy is emerging as the most cost-effective means of electricity generation globally. Projections from the International Energy Agency indicate that global solar capacity will nearly triple between 2022 and 2027, making it the world’s largest source of power capacity.
Moreover, the growing adoption of renewable energy, especially in the U.S. and Europe, is driving the demand for energy storage solutions. Energy storage plays a crucial role in providing dispatchable and reliable power to the grid. Wood Mackenzie forecasts that global cumulative energy storage deployments will exceed 1,000 GWh by 2030, highlighting the significant role that energy storage will play in the transition to a sustainable energy future.
In conclusion, BlackRock’s substantial investment in Recurrent Energy represents a significant milestone in advancing the growth and development of renewable energy and energy storage assets. This partnership underscores the pivotal role that renewable energy solutions will play in meeting the world’s growing energy needs while contributing to a more sustainable and environmentally friendly future.
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