Recurrent Energy, a subsidiary of Canadian Solar Inc. (“Canadian Solar”) (NASDAQ: CSIQ), has announced a significant milestone in its global renewable energy endeavors. The company revealed that Recurrent Energy B.V. has successfully secured a $500 million preferred equity investment commitment from BlackRock, a leading global investment management firm, through a fund managed by its Climate Infrastructure business.
This substantial investment, convertible into common equity, represents 20% of the outstanding fully diluted shares of Recurrent Energy on an as-converted basis. Following the closing of this investment, Canadian Solar will continue to retain the majority shares of Recurrent Energy.
The infusion of $500 million in capital aims to empower Recurrent Energy to expand its high-value project development pipeline. The company envisions transitioning from being solely a developer to a developer and long-term owner-operator, especially in key markets such as the U.S. and Europe. This strategic shift is anticipated to create a more diversified portfolio, offering stable long-term revenue in low-risk currencies and enabling Recurrent Energy to enhance the value of its project development pipeline.
Recurrent Energy stands out as one of the world’s largest and most geographically diversified utility-scale solar and energy storage project development platforms. Since its inception in 2009, the company has responsibly originated, developed, financed, and built around 9 GWp of solar and 3 GWh of battery storage power plants across six continents.
As of September 30, 2023, Recurrent Energy boasted a global development pipeline of 26 GW in solar and 55 GWh in storage, with 13 GW and 12 GWh, respectively, in projects with interconnections. The company aims to have 4 GW of solar and 2 GWh of storage in operation in the U.S. and Europe by 2026.
The transaction perimeter encompasses various countries, including the U.S., Canada, Spain, Italy, the U.K., France, the Netherlands, Germany, South Africa, Brazil, Chile, Colombia, Australia, South Korea, and Taiwan. Notably, the transaction excludes Canadian Solar’s project development business in Japan and China, along with specific assets in Latin America and Taiwan. The transaction is pending regulatory approvals and adherence to certain terms and conditions outlined in the transaction agreements.
Dr. Shawn Qu, Chairman and CEO of Canadian Solar, expressed enthusiasm about the partnership with BlackRock, Canadian Solar’s largest institutional investor. He said, “We started our global energy development business in 2009 and have since strategically grown Recurrent Energy as Canadian Solar’s premier renewable energy platform, forging a new path in developing, financing and constructing first-of-their kind solar and energy storage projects. We are now at an inflection point for renewable energy growth. The infusion of capital from our partner BlackRock, who is also Canadian Solar’s largest institutional investor, will provide the resources needed to further scale the Recurrent Energy platform and meet record clean energy power demand across the world.”
Ismael Guerrero, CEO of Recurrent Energy, echoed this sentiment, expressing “We are delighted to have the support of BlackRock, one of the largest and most sophisticated renewable energy investors in the world, as we scale Recurrent Energy in response to massive global demand for renewable energy and energy storage solutions. This investment will support our growth and continued ambition to make a difference by leading the renewable energy transition across the world. Our mission is to deliver clean, reliable, and affordable power to the world, today and tomorrow, and this milestone will help us continue to achieve this goal.”
David Giordano, Global Head of Climate Infrastructure and Chief Investment Officer of Transition Capital at BlackRock, stated “We are excited to partner on behalf of our clients with Recurrent Energy. We believe this partnership will help unlock the full potential of Recurrent Energy’s impressive renewable energy project development platform. Recurrent Energy is emblematic of our strategy of investing in leading renewable power generation assets and transition-enabling infrastructure, and we are pleased to make this first investment commitment from the fourth vintage of BlackRock’s Climate Infrastructure fund franchise.”
The investment comes at a pivotal time as global solar capacity is projected to nearly triple between 2022 and 2027, making solar energy the largest source of power capacity worldwide, according to the International Energy Agency. The surge in renewable energy growth, especially in the U.S. and Europe, is driving demand for energy storage solutions, contributing to the global cumulative deployments of energy storage projected to exceed 1,000 GWh by 2030, according to Wood Mackenzie.
BofA Securities, Inc. and Banco Santander, S.A. played crucial roles as financial advisors to Canadian Solar in this significant transaction.
