Summary of Global Energy Storage Conference Call Industry Overview - The conference call focused on the **Energy Storage System (ESS)** industry, particularly in **China**. - The demand for ESS is experiencing significant growth, driven by various factors including declining battery prices and supportive government policies [1][13][9]. Key Points and Arguments 1. **Battery Price Decline**: - China's ESS battery prices have decreased by **50%** since 2023, reaching **RMB0.54/Wh (USD76/kWh)** year-to-date. Recent prices have further dropped to **RMB0.47/Wh (USD66/kWh)**, or **RMB1.00 (USD140/kWh)** including EPC costs [1][14]. - This reduction in battery prices is a primary driver for the growth of ESS [13]. 2. **Levelized Cost of Electricity (LCOE)**: - The LCOE for solar and storage (4-hour) has fallen by **25%** to **$68/MWh** since 2023. A modeled 1GW/4GWh solar plus storage project in Xinjiang shows an estimated LCOE of **$68/MWh** at an IRR of **8%** [2][60]. - With local government capacity compensation schemes, the LCOE can be reduced to **$60/MWh** [3][61]. 3. **Competitive Economics**: - Solar plus storage projects are economically attractive, with costs around **$43/MWh** for a 2-hour storage system and **$57/MWh** for a 4-hour system, compared to coal-fired power generation prices ranging from **USD35-65/MWh** [4][65]. - The cost advantage of solar plus storage highlights significant growth potential in the sector [4]. 4. **Forecast for ESS Demand**: - Global ESS demand is projected to increase by **93%** to **581GWh** in 2025 and reach **1588GWh** by 2030, representing a **23% CAGR** [6]. - The integration of large-scale solar and wind power systems will necessitate more storage to maintain grid stability [6]. 5. **Government Policies and Incentives**: - Local governments are enhancing returns on ESS investments through capacity compensation schemes, with nearly **20 provinces** expected to adopt such policies by the end of the year [3][20]. - Capacity compensation rates vary by region, with Inner Mongolia offering **RMB0.35/kWh** for projects commissioned in 2025 or earlier [20]. 6. **Key Players**: - **CATL** and **Sungrow** are identified as key beneficiaries of the ESS demand boom, with CATL being the top pick in the battery sector [7][9]. 7. **Market Dynamics**: - Despite concerns over policy changes, ESS tenders in China grew by **167%** year-on-year, indicating robust demand [10][12]. - The Inner Mongolia market showed particularly strong demand, completing **18.5GWh** of ESS project procurement [10]. Additional Important Insights - The ESS market is expected to evolve with the increasing penetration of renewables, which will require more storage solutions to manage supply and demand effectively [6][76]. - The growth trajectory of ESS is anticipated to follow that of developed economies, with ongoing installations and tender volumes expected to translate into new installations in the coming years [27]. - The analysis indicates that the ESS share will rise to **23%** of renewable capacity by 2030, up from **1%** four years ago [76]. This summary encapsulates the critical insights and projections regarding the ESS industry, emphasizing the significant growth potential and the factors driving this trend.

Financial Data and Key Metrics Changes - In Q2 2025, the company delivered 7.9 gigawatts of modules and 2.2 gigawatt hours of storage, with total revenue of $1.7 billion, impacted by project sales delays [7][8][32] - Gross margin was 29.8%, exceeding guidance, driven by a higher mix of North American module shipments [8][32] - Net income attributable to shareholders was $7 million, resulting in a net loss of $0.08 per diluted share due to preferred shareholder accounting [8][34] Business Line Data and Key Metrics Changes - CSI Solar achieved module shipments of 7.9 gigawatts and energy storage deliveries of 2.2 gigawatt hours, with revenue reaching $1.7 billion and gross margin expanding to 22.3% [16][17] - Recurrent Energy generated $106 million in revenue, with a gross margin of 32.4%, but faced an operating loss of $74 million due to elevated operating expenses [25][26] Market Data and Key Metrics Changes - The company reported a contracted backlog of $3 billion as of June 30, 2025, with a total pipeline of 27 gigawatts of solar and 80 gigawatt hours of storage globally [21][27] - The U.S. market remains a focus, with ongoing commitments to domestic manufacturing and project development [12][30] Company Strategy and Industry Competition - The company is committed to sustainability, having reduced greenhouse gas emissions and waste intensities significantly [13] - The long-term outlook for the solar industry remains strong, driven by rising electricity demand from AI and cryptocurrency applications [11] Management's Comments on Operating Environment and Future Outlook - Management highlighted challenges from the One Big Beautiful Bill Act, affecting both supply and demand in the U.S. market [9][10] - Despite near-term uncertainties, the company believes in the potential for new opportunities arising from industry challenges [11] Other Important Information - The company is expanding its battery storage capacity from 10 gigawatt hours to 24 gigawatt hours by the end of 2026 [21] - The company has received multiple design awards for its residential energy storage system, indicating strong market recognition [23] Q&A Session Summary Question: Impact of PERC write-down on margins - The company wrote off $46 million related to PERC equipment, significantly impacting margins [41] Question: Safe harboring strategy - The company is familiar with safe harboring strategies and expects to achieve a strong pipeline of projects in the U.S. [44][45] Question: Compliance with OBBA - The company confirmed compliance with OBBA requirements and has plans to maintain compliance in future years [51][52] Question: Upstream supply chain strategies - The company is actively monitoring the supply chain and believes polysilicon should not be a national security concern [56] Question: Storage backlog and cancellations - The company clarified that while some projects were pushed to the second half due to tariffs, the overall pipeline value increased [87][88] Question: Current storage margins - The company is targeting 20% margins for storage solutions, despite normalization pressures [90]

Financial Data and Key Metrics Changes - In Q4 2024, the company shipped 8.2 gigawatts of solar modules, totaling 31.1 gigawatts for the year, with total revenue of $6 billion [11][12] - Net income for Canadian Solar shareholders was $34 million, or $0.48 per diluted share, impacted by inventory write-downs and project asset impairments [12][48] - The gross margin was significantly affected, with a reduction of over 950 basis points due to various factors including duties, tariffs, and impairments [45][46] Business Line Data and Key Metrics Changes - CSI Solar achieved full-year revenue of $6.5 billion with a gross margin of 18.4%, maintaining profitability in both module and energy storage segments [23] - Energy storage shipments reached 2.2 gigawatt hours in Q4, totaling 6.6 gigawatt hours for the year, marking a 500% year-over-year increase [27] - Recurrent Energy executed 1.3 gigawatts of solar projects and started construction on 1.4 gigawatts of solar and 1.8 gigawatt hours of battery energy storage systems [34] Market Data and Key Metrics Changes - The U.S. accounted for approximately 25% of global shipments, with strategic volume control to maintain higher blended prices despite falling average selling prices [24] - Polysilicon prices fell over 40% during the year, leading to a decline in module pricing at a similar or faster rate [25] - The company is expanding into new markets such as Mainland Europe and Japan, with a record pipeline of 79 gigawatt hours reflecting diversified global demand [30] Company Strategy and Development Direction - The company is focusing on energy storage growth, leveraging its technology to provide integrated solutions for various applications [16][18] - Canadian Solar is ramping up U.S. manufacturing capabilities, with a module factory expected to contribute 3 gigawatts of volume in 2025 [19][20] - The company anticipates continued consolidation in the solar market and is confident in navigating geopolitical uncertainties [56] Management's Comments on Operating Environment and Future Outlook - Management noted that 2024 was a challenging year for the solar industry, with intensified competition and structural overcapacity leading to a prolonged market downturn [13] - Despite challenges, the company remains resilient, with growing demand for energy storage and a strategic focus on high-margin solutions [15][16] - The company expects Q1 2025 module shipments to be between 6.4 gigawatts and 6.7 gigawatts, with full-year revenue guidance of $7.3 billion to $8.3 billion [52][56] Other Important Information - The company reported a net increase in cash of $682 million for 2024, with capital expenditures totaling $1.1 billion [50] - Management emphasized the importance of product innovation and comprehensive energy storage solutions to maintain competitive advantage [18][21] Q&A Session Summary Question: Can you talk about how you see margins trending for your energy storage systems? - Management indicated that while there are improvements in battery chemistry, the main structure remains the same, and they expect to pass on savings to customers while maintaining reasonable margins [60][61] Question: Can you discuss the guidance for module shipments and the factors driving it? - Management explained that the pricing trend is complicated, with stabilization in most markets, and they are ramping up U.S. manufacturing to help margins [69][72] Question: What are the impacts of tariffs on margins? - Management confirmed that tariffs are already factored into their cost structure, and they do not expect significant changes in margins moving forward [91][95] Question: How are you managing the impact of AD/CVD tariffs? - Management stated that they are using a combination of manufacturing strategies to mitigate the impact of tariffs, particularly by increasing domestic production [148][149] Question: What is the outlook for e-STORAGE margins? - Management confirmed that e-STORAGE margins are expected to remain intact in the 17% to 20% range, despite some downward pressure from increased competition [124][161]