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Renesola (SOL) Connects 180MW Solar Rooftop Grids in China

Renesola Ltd. SOL recently announced that it has successfully completed grid connection of solar rooftop projects worth more than 180 megawatts (MW), in China. According to this solar project developer, projects with the capacity of more than 170 MW will provide power to the utility grid under the Feed-in-Tariff of $0.14/kWh (RMB 0.98/ kilowatt-hours).

Notably, the company has set a target of installing more than 300 MW of solar rooftop projects in China by end of this year. Renesola has already achieved more than half of its target.

We believe that these successful grid connections will enable Renesola to benefit from the enormous potential prevalent in the markets of China.

China’s Focus on Solar Power

According to Bloomberg, China's output from photovoltaic plants went up as much as 80% within the first quarter of 2017.

While President Trump pulled out of the Paris climate pact in May 2017, countries like China and India stated that they will continue with their efforts to reduce pollution by focusing on renewable power. Within the first three months of 2017, China's solar power generation touched a high of 21.4 billion kilowatt-hours. The country plans to continue adding more solar power to its portfolio in the future, thereby attracting solar module providers like ReneSola to expand their business in there.

The Current Scenario in Solar Industry

According to experts, renewable energy is the solution for increasing demand for power supply in the world. Although, thermal energy remains a top choice when it comes to power generation, it causes considerable damage to the environment. Therefore, more utility service providers are shifting their focus towards renewable energy.

Apart from nullifying the usefulness of renewable sources, Trump directed his focus toward the augmentation of the coal industry. This in turn affected the U.S. solar companies. Relaxation of environmental regulations worsened the scenario. In fact, shares of some major solar players, including SunPower SPWR, Canadian Solar CSIQ and First Solar FSLR nosedived when Trump decided to leave the Paris climate agreement.

Though the strict environmental restrictions like the Clean Power Plan are being lifted from the utility service providers, most companies are still investing in increasing their renewable portfolio. This is because renewable is the future of energy production. Any investment in coal-fueled plants might not go well with the future government policies.

With the U.S. out of the scenario, large economies of the Asia-Pacific region like China, Japan and India are currently offering a large market for expansion of solar power. The recently accomplished grid connections are an example of the same. Since ReneSola is based in China, we can expect it to make more solar installations in the country, going forward.

Price Movement

In the last one month, ReneSola’s shares lost 1.1% compared with the Zacks categorized Solar Industry’s gain of 11.6%.

The company faces tough competition from the U.S. Solar power manufacturers who are still getting the benefit of tax credit. Additionally, the external module shipments by the company for the first quarter of 2017 declined 23.9% year over year. These factors might have been the reason behind the company’s underperformance

Zacks Ranks

ReneSola currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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