Canadian Solar Breaks Own World Record on Conversion Efficiency

Canadian Solar (NASDAQ:CSIQ) announced on Tuesday (September 17) that it has set a new world record on its P5 silicon solar cells, breaking a former record it had achieved as recently as May.

Reaching a 22.8 percent conversion rate, the company’s p-type large area multi-crystalline silicon solar cells — a form of cast mono technology — broke its previous record of 22.28 percent, the Institute for Solar Energy Research in Germany confirmed to Canadian Solar in September.

The most recent world record signifies that the company has a leg up in both solar panel efficiencies and cost advantages.

By comparison, in May, solar panel competitor GCL Systems Integration (SZSE:002506) reported a 19.4 percent efficiency in its cast mono technology.

“This is a milestone for our P5 technology development,” said Shawn Qu, CEO of Canadian Solar, in a press release. “It proves that our multicrystalline silicon technology can achieve efficiencies very close to mono while still enjoying the cost advantage of multi.”

Cast mono technology is built from seeded cast silicon, which typically is less costly, less likely to get damaged and has superior performance features in the sun in comparison to multicrystalline silicon technology. According to the PV Manufacturing and Technology Quarterly Report, cast mono technology is anticipated to exceed the use of multicrystalline silicon technology, becoming a core technology in the solar photovoltaic (PV) industry into 2020.

The improved conversion performance has also coincided with a nearly 50 percent spurt in share prices for Canadian Solar year-to-date. Within the past two months alone, it has announced solar projects in Brazil, Australia and Argentina.

Along with this, Canadian Solar reported a fairly sturdy second quarter earnings report in August, as evidenced by its 7.01 percent margin, rising from 6.33 percent in 2018. Canadian Solar trades at price to earnings multiples of 6.72, and its earnings before interest, tax, depreciation and amortization (EBITDA) stands at US$346.92 million, a 10.88 percent EBITDA margin. The company reported that the cumulative resale value of it solar plants was US$1 billion.

Still, the company has negative US$100 million in free cash flow, a number that is little changed since 2018.

As the solar energy sector shows signs of growth, the Solar Energy Industries Association and Wood Mackenzie projected that US installed solar capacity is anticipated to double over the next five years. To that end, utility procurement, modest residential growth and policy developments are core pillars to solar market penetration.

Shares of Canadian Solar opened on Tuesday at US$21.46, climbing just under 2 percent to US$21.91 as of market close.

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Securities Disclosure: I, Dorothy Neufeld, hold no direct investment interest in any company mentioned in this article.