P2 Solar is focusing
on the lucrative global renewable energy market. The company develops solar
photovoltaic and mini-hydro power projects. Currently, the company is planning
to enhance its project portfolio, which includes three projects — the Langley Rooftop
Project in British Columbia and two others in India, the Rajgarh Mini-hydro and
the Tibba Mini-hydro, both located in Punjab. The company through its wholly
owned subsidiary, Jagat Energy Pvt. Ltd., acquired the rights to these two
hydro-power projects in India.
Initiating the
projects in India is important as electric demand in India is expected to grow
by 10% annually. These projects enabled P2 Solar to deepen its footprint in
India’s clean energy sector, which presents a $20 billion annual opportunity.
Further, the growth rate in India’s electric demand will generate a higher
long-term growth opportunity for P2 Solar.
Signing Agreement
with Indian Authority to develop power plant
In May 2014, P2
Solar signed an Implementation Agreement with Punjab Energy Development Agency
(PEDA), Punjab State’s governing authority on all renewable energy projects,
and the Punjab Irrigation Department (PID). In this agreement, the company will
establish, operate, and maintain the Rajgarh Mini-Hydro project on a build,
own, and operate basis. The cost of constructing this plant is estimated at
around $2.2 million. Along with this P2 Solar received permission to use the
canal water for power generation for the next 35 years, and after that with
mutual consent of PEDA and P2 Solar the agreement will either be extended or
PEDA will purchase the project outright at market price.
The company is
planning to hire an engineering, procurement, and construction (EPC) contractor
and expected to commence construction in the second quarter of this year.
Earlier P2 Solar
also received the rights to use the canal open space to develop the PV Solar
plant, which will generate a significant long-term growth expansion
opportunity. This one-megawatt (MW) PV solar project is in the first phase, and
the company expects to expand it to seven to ten MW. P2 Solar will be deploying
the necessary equipment and is expected to commission the solar project in
India during the fourth quarter of this year, while its hydro projects will
require a longer build time of around 10 months and will be operational by
2015.
By developing the
Rajgarh power plant in India, P2 Solar will have a greater future revenue
growth opportunity. The government of India is planning to enhance solar
capacity to five gigawatts by 2017 and 20 gigawatts by 2022. Solar power by
2022 will represent 10% of India’s total electric power-generating capacity.
The completion of the Rajgarh mini-hydro plant could help the company to
enhance its top line by more than $443,000 per year, while expanding the PV
solar project to the proposed 10-MW solar array will provide additional annual
revenue growth opportunity of around $2.95 million. Though developing the power
projects requires huge capital, the power projects can be operated with low
operating costs. Because of this, the company expects to generate significant
cash flows with EBITDA margins of around 95% and 93% for mini-hydro and solar,
respectively.
Developing power
projects in other locations
In addition to
India, P2 Solar is proactively focusing on energy project development
opportunities in countries with favorable solar energy regimes, including
Canada and Eastern Europe. Last year, the company completed the installation of
its 53-kilowatt (KW) solar PV rooftop project on Canada Ticket Inc.’s warehouse
rooftop in Langley. This is the largest solar PV facility ever to be connected
to the British Columbia Hydro’s electricity grid. To develop this project the
company charged around $158,900 and is expected to generate around 60-MW hours
of electrical power annually, which is nearly 10% of Canada Ticket electric
power requirements. Furthermore, the Canada Ticket project will generate
awareness and interest among potential new clients in British Columbia. This
will enable the company to gain more contracts and support its revenue in the
long run.
Conclusion
The higher demand
and the growth rate in India’s electric demand as well as P2 Solar initiation
of hydro and PV solar projects in India are expected to generate a greater
long-term revenue growth opportunity. Moreover, the contract with Canada Ticket
to develop the power plant will also generate growth in Canada. The success of
the Rajgarh projects will significantly boost the company’s top and bottom
lines, enabling investors to realize higher capital appreciation long-term.
For more information,
visit www.p2solar.com
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