Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
(Mark One)
☐
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2025.
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report
For the transition period from to
Commission file number: 001-33107
CANADIAN SOLAR INC.
(Exact name of Registrant as specified in its charter)
N/A
(Translation of Registrant’s name into English)
Ontario
(Jurisdiction of incorporation or organization)
4273 King Street East, Suite 102
Kitchener, Ontario, N2P 2E9
Canada
(Address of principal executive offices)
Xinbo Zhu, Chief Financial Officer
Tel: 1 519-837-1881
Fax: 1 519-837-2550
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol
Name of Each Exchange on Which Registered
Common shares with no par value
CSIQ
The NASDAQ Stock Market LLC
(The NASDAQ Global Select Market)
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
67,810,136 common shares issued and outstanding which were not subject to restrictions on voting, dividend rights and transferability, as of December 31, 2025.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒
Accelerated filer ☐
Non-accelerated filer
Emerging growth company
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing: U.S. GAAP ☒
International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ Other ☐
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 ☐ Item 18 ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
INTRODUCTION
1
FORWARD-LOOKING INFORMATION
3
PART I
5
ITEM 1
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
ITEM 2
OFFER STATISTICS AND EXPECTED TIMETABLE
ITEM 3
KEY INFORMATION
ITEM 4
INFORMATION ON THE COMPANY
32
ITEM 4A
UNRESOLVED STAFF COMMENTS
51
ITEM 5
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
ITEM 6
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
66
ITEM 7
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
85
ITEM 8
FINANCIAL INFORMATION
86
ITEM 9
THE OFFER AND LISTING
91
ITEM 10
ADDITIONAL INFORMATION
92
ITEM 11
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
108
ITEM 12
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
109
PART II
110
ITEM 13
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
ITEM 14
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
ITEM 15
CONTROLS AND PROCEDURES
ITEM 16A
AUDIT COMMITTEE FINANCIAL EXPERT
112
ITEM 16B
CODE OF ETHICS
ITEM 16C
PRINCIPAL ACCOUNTANT FEES AND SERVICES
ITEM 16D
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
113
ITEM 16E
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
ITEM 16F
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
ITEM 16G
CORPORATE GOVERNANCE
ITEM 16H
MINE SAFETY DISCLOSURE
ITEM 16I
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
ITEM 16J
INSIDER TRADING POLICIES
ITEM 16K
CYBERSECURITY
PART III
115
ITEM 17
FINANCIAL STATEMENTS
ITEM 18
ITEM 19
EXHIBITS
SIGNATURES
116
i
Unless the context otherwise requires, references in this annual report on Form 20-F to:
This annual report on Form 20-F includes our audited consolidated financial statements for the years ended December 31, 2023, 2024 and 2025 and as of December 31, 2024 and 2025.
Our reporting currency is the U.S. dollar. We use exchange rates set forth in the H.10 statistical release of the Federal Reserve Board to translate Renminbi, Euros, British pounds, Japanese yen, Canadian dollars, Australian dollars, Thai baht, Brazilian reals and South African rand to U.S. dollars not otherwise recorded in our consolidated financial statements and included elsewhere in this annual report on Form 20-F. Unless otherwise stated, the translation of Renminbi, Euros, British pounds, Japanese yen, Canadian dollars, Australian dollars, Thai baht, Brazilian reals and South African rand into U.S. dollars was made at the rate in effect on December 31, 2025, which was RMB 6.9931 to $1.00, €0.8521 to $1.00, £0.7437 to $1.00, ¥156.8000 to $1.00, C$1.3712 to $1.00, AUD 1.4995 to $1.00, THB 31.4900 to $1.00, BRL 5.4770 to $1.00 and ZAR 16.5496 to $1.00. We make no representation that any Renminbi, Euros, British pounds, Japanese yen, Canadian dollars, Australian dollars, Thai baht, Brazilian reals, South African rand or U.S. dollars amounts referred to in this annual report on Form 20-F could have been or could be converted into U.S. dollars, Euros, British pounds, Japanese yen, Canadian dollars, Australian dollars, Thai baht, Brazilian reals, South African rand or Renminbi, as the case may be, at any particular rate or at all.
2
This annual report on Form 20-F contains forward-looking statements that relate to future events, including our future operating results, our prospects and our future financial performance and condition, results of operations, business strategy and financial needs, all of which are largely based on our current expectations and projections. These forward-looking statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these statements by terminology such as “may”, “will”, “expect”, “anticipate”, “future”, “ongoing”, “continue”, “intend”, “plan”, “potential”, “prospect”, “guidance”, “believe”, “estimate”, “is/are likely to” or similar expressions. Forward-looking statements involve inherent risks and uncertainties. These forward-looking statements include, among other things, statements relating to:
Known and unknown risks, uncertainties and other factors may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. See “Item 3. Key Information—D. Risk Factors” for a discussion of some of the risk factors that may affect our business and results of operations. These risks are not exhaustive. Other sections of this annual report may include additional factors that could adversely influence our business and financial performance. Moreover, because we operate in an evolving industry, new risk factors may emerge from time to time. We cannot predict all risk factors, nor can we assess the impact of all or any of these factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those expressed or implied in any forward-looking statement. We do not undertake any obligation to update or revise the forward-looking statements except as required under applicable law.
4
ITEM 1 IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2 OFFER STATISTICS AND EXPECTED TIMETABLE
ITEM 3 KEY INFORMATION
Our Corporate Structure and Operations
Canadian Solar Inc. is a corporation governed by the laws of the province of Ontario, Canada, with operations in North America, Asia Pacific, Europe, Australia, South America, the Middle East and Africa through our operating subsidiaries in which we have equity ownership. Through the equity ownership in our subsidiaries, we primarily conduct our manufacturing operations in the U.S. and Asia Pacific, including China. We have also made investments in solar power and battery energy storage systems and projects across the U.S., Europe and Asia Pacific, including China. In addition, on December 1, 2025, we announced a strategic initiative to resume direct oversight of our U.S. operations. We have formed a new joint venture with our majority-owned subsidiary, CSI Solar, by holding a 75.1% controlling stake in CS PowerTech, which operates U.S.-based manufacturing and sales of solar modules, solar cells and advanced energy storage systems. Following the consummation of this strategic initiative, Canadian Solar’s business is organized into two segments: (i) Manufacturing, comprising CS PowerTech, which focuses on manufacturing and sales of solar products, battery energy storage products, and other power technology products for the U.S. market, and CSI Solar, which serves all other global markets; and (ii) Recurrent Energy, which focuses on solar power and battery storage project development, asset sales, power services, and electricity revenue from its operating portfolio. See “Item 4. Information on the Company—C. Organizational Structure” for additional information on our corporate structure, including a list of our significant subsidiaries. Investors in our common shares thus are not purchasing equity interests in our operating subsidiaries, but instead are purchasing equity interests solely in our Canadian parent company. As used in this annual report, references to “CSI”, “we”, “us”, “our company” or “our” are made as to Canadian Solar Inc. and its consolidated subsidiaries; references to “Canadian Solar Inc.” are made as to the Canadian parent company only.
Risks Related to Doing Business in China
Canadian Solar Inc. has a direct ownership interest in CSI Solar Co., Ltd. through its holding of approximately 64% of the outstanding shares of CSI Solar Co., Ltd. Shareholders of Canadian Solar Inc. do not directly hold equity interests in CSI Solar Co., Ltd. The business of CSI Solar Co., Ltd. is exposed to legal and operational risks associated with having a significant portion of its manufacturing operations in China. CSI Solar is subject to risks arising from the PRC legal system, including the uncertainty in the interpretation and enforcement of the evolving PRC policies, laws and regulations. In recent years, the PRC government has implemented a series of regulatory actions and issued statements to regulate business operations in China with little advance notice. These include measures related to regulatory approvals on anti-monopoly regulatory actions, and oversight on cybersecurity and data privacy. Implementation of industry-wide regulations in this nature may cause the value of our securities to significantly decline or be worthless. These risks include, but not limited to, the following:
For further details, see “—D. Risk Factors—Risks Related to Doing Business in China” and “—D. Risk Factors—Risks Related to Our Common Shares.”
Permissions Required from the PRC Authorities for CSI Solar’s Operations
CSI Solar’s operations are governed by PRC laws and regulations. CSI Solar is required to obtain or complete construction enterprise and engineering qualifications, electric power business permit, work safety license, registration of foreign trade operators, and registration certificates of customs declaration entity to operate its business. As of the date of this annual report, we believe that CSI Solar and its subsidiaries have obtained and completed all requisite permissions and registrations for its operations in all material aspects from relevant PRC authorities and none of the requisite permission or registrations for its PRC operations in all material aspects have been denied by relevant PRC authorities. However, given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by government authorities, we cannot assure you that CSI Solar has obtained all the permits or licenses required for conducting its business in the PRC.
If CSI Solar (i) does not receive or maintain any permission or approval required of it or its PRC subsidiaries, (ii) inadvertently concludes that certain permissions or approvals have been acquired or are not required, or (iii) is required to obtain permissions or approvals in the future in the event of a change to the applicable laws, regulations, or interpretations, but it fails to obtain such permissions or approvals in a timely manner, or at all, CSI Solar may face adverse actions or sanctions by PRC regulatory authorities, which may include fines and penalties on its PRC operations, order to suspend its subsidiaries’ businesses, and other actions that could have an adverse effect on its business. Furthermore, CSI Solar’s ability to offer or continue to offer securities to investors may be significantly limited or completely hindered, which could cause the value of our securities to significantly decline or become worthless. For a detailed discussion of the related risks, see “—D. Risk Factors—Risks Related to Doing Business in China.”
Cash and Asset Flows through Our Organization
We conduct operations in North America, Asia Pacific, Europe, Australia, South America, the Middle East and Africa through our operating subsidiaries in which we have equity ownership. We primarily conduct our manufacturing operations in the U.S. and Asia Pacific, including China.
A significant and growing portion of our revenue is generated in the U.S. In 2023, 2024 and 2025, 19.5%, 46.3% and 49.6%, respectively, of our consolidated revenue was generated in the U.S., reflecting the continued expansion of our U.S. operations. During the same periods, 28.3%, 20.4% and 12.7%, respectively, of our consolidated revenue was generated in China.
In addition, we have made substantial investments in expanding our U.S. manufacturing and project development business. As of December 31, 2023, 2024 and 2025, 12.3%, 25.3% and 26.8%, respectively, of our consolidated long-lived assets were located in the United States, compared to 55.8%, 45.2% and 38.2%, respectively, in China, reflecting our increased capital deployment in the U.S.
Cash may be transferred within our consolidated group by way of funds to our subsidiaries, either in the form of capital contributions, working capital cash advances or working capital payable, directly or through intermediate holding companies. Canadian Solar Inc. may provide loans to its subsidiaries and vice versa, and our subsidiaries may make dividends or other distributions to Canadian Solar Inc., directly or through intermediate holding companies. These cash transfers factor the capital and liquidity needs of our subsidiaries, and are subject to our internal approval processes and funding arrangements, taking into account local regulations and tax laws. We have not faced restrictions or limitations in our ability to transfer cash between subsidiaries in countries where we earn and hold significant cash, or continue to make significant investments.
In 2023, 2024 and 2025, no cash transfers were made to CSI Solar and its subsidiaries. CSI Solar’s operations are generally funded through cash flows generated from the international sales of solar modules, battery energy storage solutions and solar system kits, as well as domestic borrowings.
No cash proceeds nor distribution was received from CSI Solar in 2023. Canadian Solar Inc. received an aggregate of $34.7 million and $27.0 million in cash, net of $3.9 million and $3.0 million in withholding tax, from dividends distributed by CSI Solar in 2024 and 2025, respectively.
6
Canadian Solar Inc. transferred aggregate cash of $84.4 million, $16.5 million and $2.4 million in the form of capital contributions and loans to our Recurrent Energy subsidiaries in 2023, 2024 and 2025, respectively, primarily to fund solar power and battery energy storage projects. Canadian Solar Inc. received aggregate cash of $245.0 million and $46.7 million in 2023 and 2024, respectively, and transferred aggregate cash of $23.8 million in 2025, related to net working capital advances to our Recurrent Energy subsidiaries.
Canadian Solar Inc. received aggregate cash of $69.2 million, $32.3 million and nil in 2023, 2024 and 2025, respectively, from repayment of loans by our Recurrent Energy subsidiaries. Canadian Solar Inc. transferred aggregate cash of $232.7 million, $44.6 million and $9.8 million in 2023, 2024 and 2025, respectively, related to net working capital payable to our Recurrent Energy subsidiaries.
In addition, we conduct regular procurement transactions with CSI Solar’s subsidiaries related to purchase of modules and battery energy storage solutions for our Recurrent Energy projects.
Dividends, if any, can be paid by CSI Solar to its shareholders, including Canadian Solar Inc., in accordance with applicable PRC law and CSI Solar’s articles of association. CSI Solar may pay dividends only from retained earnings and is required to set aside no less than 10% of profit after tax as appropriations to a general statutory reserve until such reserve cumulatively reaches 50% of its registered capital. The statutory general reserve and registered share capital are not distributable as cash dividends except in the event of liquidation, and requires approval from the local authorities. Accordingly, CSI Solar’s statutory general reserve and registered share capital are considered restricted net assets, amounting to $1,483.0 million as of December 31, 2025. Furthermore, CSI Solar is subject to restrictions on currency exchange. Under existing foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade-related transactions, can be made in foreign currencies without prior approval from the People’s Bank of China and State Administration of Foreign Exchange (“SAFE”) by complying with certain procedural requirements. However, the relevant PRC governmental authorities may limit or eliminate CSI Solar’s ability to purchase foreign currencies in the future for current account transactions. Since a significant portion of CSI Solar’s cash and cash equivalents and restricted cash are denominated in Renminbi, any existing and future restrictions on dividend or currency exchange may limit CSI Solar’s ability to utilize its cash to fund its business activities outside of the PRC.
In other countries where we earn and hold significant cash, or continue to make significant investments, we believe there are no significant restrictions or limitations on foreign exchange, our ability to transfer cash between entities across borders or to U.S. investors, or our ability to distribute earnings from our subsidiaries.
The Holding Foreign Companies Accountable Act
Pursuant to the HFCAA, which was enacted on December 18, 2020 and further amended by the Consolidated Appropriations Act, 2023 signed into law on December 29, 2022, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB, and that we are a Commission-Identified Issuer under the HFCAA for two consecutive years, the SEC will prohibit our common shares from being traded on a national securities exchange or in the over-the-counter trading market in the U.S. In the event of such determination, the Nasdaq is expected to delist our common shares.
On December 16, 2021, the PCAOB issued a report to notify the SEC its determinations that it was unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong. Our auditor, Deloitte Touche Tohmatsu Certified Public Accountants LLP, an independent registered public accounting firm located in China, was subject to that determination. On May 26, 2022, we were conclusively identified as a “Commission-Identified Issuer” under the HFCAA following the filing of our annual report on Form 20-F for the fiscal year ended December 31, 2021.
On December 15, 2022, the PCAOB vacated its previous determinations issued on December 16, 2021 that it was unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong. Therefore, our auditor is currently able to be fully inspected and investigated by the PCAOB. For this reason, we were not identified as a Commission-Identified Issuer under the HFCAA after we filed our annual report on Form 20-F for the fiscal year ended December 31, 2022, and do not expect to be so identified when we file this annual report on Form 20-F for the fiscal year ended December 31, 2025. There are no PCAOB determinations currently in effect. Accordingly, we are not currently at risk of having our securities subject to an initial trading prohibition under the HFCAA. However, the PCAOB is required to reassess, at least annually, whether changes in facts and circumstances would support making new determinations. On February 21, 2025, the U.S. administration undertakes, among other things, to determine if adequate financial auditing standards are upheld for companies covered by the HFCAA. The delisting or prohibition of trading of our common shares, or the threat of their being delisted or prohibited from trading, may materially and adversely affect the value of your investment. For a detailed discussion of the related risks, see “Item 3. Key Information—D. Risk Factors—Risks Related to Our Company and Our Industry—The delisting or prohibition of trading of our common shares pursuant to the HFCAA, or the risk or perception that such action may occur, could materially and adversely affect the value of your investment.”
7
A
[Reserved]
B
Capitalization and Indebtedness
C
Reasons for the Offer and Use of Proceeds
D
Risk Factors
Summary of Risk Factors
An investment in our common shares involves significant risks. Below is a summary of material risks we face, organized under relevant headings. These risks are discussed more fully in “Item 3. Key Information—D. Risk Factors.”
Risks and uncertainties related to our company and industry include, but are not limited to, the following:
8
9
In addition, CSI Solar is subject to risks and uncertainties related to doing business in China, including, but are not limited to, the following:
In addition to the risks described above, we are subject to risks related to our common shares:
10
Risks Related to Our Company and Our Industry
We may be adversely affected by volatility in the solar power and battery energy storage market and industry conditions; in particular, the demand for our solar power and battery energy storage products and services may not grow as expected or may decline.
Our business is affected by conditions in the solar power and battery energy storage markets and industries. While we expect continued growth in global electricity demand and increasing adoption of solar and battery energy storage technologies, these markets may experience periods of volatility, grow more slowly than anticipated, or decline. For example, the solar power sector may from time to time experience periods of excess manufacturing capacity and oversupply, leading to significant pricing pressure across the value chain. Excess manufacturing capacity and oversupply can negatively impact selling prices, margins and profitability for manufacturers, including us. Our shipments of solar modules increased in 2023, followed by a marginal increase in 2024 and a decline in 2025. The average selling prices for our solar modules decreased in each of 2023, 2024 and 2025. If the supply of solar modules grows faster than demand and if governments reduce financial support for the industry or impose trade barriers for solar power products, demand and pricing for our products could be adversely affected.
The battery energy storage market continues to evolve, and future demand for battery energy storage products and services is uncertain. Market data for the battery energy storage industry is not as readily available as for more established industries, where trends are more reliably assessed from data gathered over a longer period of time. In addition, demand for battery energy storage products and services in our largest end markets, including the U.S., U.K., Canada, Australia, Europe and China, may not materialize to the extent or on the timeline we anticipate. We are actively pursuing growth opportunities in battery energy storage, given its importance in enhancing the reliability and resiliency of energy grid infrastructure, and integrating intermittent renewable energy power systems. If demand in our key markets slows, competition intensifies, or we fail to capitalize on growth opportunities, our battery energy storage business may not grow as anticipated. Furthermore, while we are working to improve the cost-efficiency and performance of our battery energy storage systems, there can be no assurance that we will achieve our desired outcomes.
The viability of solar power and battery energy storage technologies depends on several factors, including (i) the cost-effectiveness, performance and reliability of our products compared to conventional and other renewable energy sources; (ii) the availability of government incentives and policy support; and (iii) the availability and cost of capital, including long-term debt and tax equity financing for solar power and battery energy storage projects. Competitive dynamics from other renewable technologies, such as wind, hydro, hydrogen, geothermal and biomass, also affect the attractiveness of solar power and battery energy storage technologies. Fluctuations in economic and market conditions, including price trends of oil, gas and other fossil fuels, may affect the competitiveness of renewable energy relative to conventional energy sources. Capital investment patterns of end users, which tend to decrease during economic slowdowns, may also affect demand. Changes in electricity demand patterns, including increased demand associated with data centers and AI-related computing infrastructure, may also influence market dynamics. In addition, the existence and consistency of favorable regulatory framework for solar power and battery energy storage within the broader energy sector are important to the continued adoption of these technologies.
If solar power and battery energy storage technologies are not adopted as broadly or as quickly as we expect, or if demand weakens or becomes more volatile, our revenues, profitability and growth prospects may be materially and adversely affected.
Our ability to sustain our project development activities depends on effectively balancing long-term ownership of solar and battery energy storage assets with selective project sales to generate operating cash flows, which subjects us to market, financing, execution risks and uncertainties.
Historically, our project development activities have primarily consisted of developing solar and battery energy storage assets for sale to third parties. We have been transitioning towards retaining ownership in certain projects, particularly in markets with perceived stable long-term fundamentals, and generating revenues from the sale of electricity, capacity and ancillary services from operational projects.
Our business requires ongoing capital allocation decisions in response to market conditions, cost of capital, liquidity requirements and leverage considerations. While we continue to seek long-term asset ownership, we also intend to place greater emphasis on the sale of project assets or ownership interests at times to generate operating cash flows, manage capital requirements and reduce indebtedness.
11
Project ownership, operations and development involve risks and uncertainties. These risks include delays and cost overruns due to factors that are often beyond our control, such as construction and procurement price inflation, regulatory and permitting approval delays, grid interconnection constraints, supply chain disruptions or component availability, trade restrictions, construction, installation, and performance acceptance testing issues. Our projects may also be subject to delays or denials of required regulatory or permitting approvals by government authorities. In addition, we may need to raise significant additional funds, which we may be unable to obtain on commercially reasonable terms or at all. We may also fail to advance our project development pipeline plan as planned. Energy production for the projects we own and operate may be uncertain due to factors beyond our controlling, including weather conditions, grid congestion and curtailment. Project ownership, operations and development may also require the diversion of significant management attention and other resources.
Many solar power and battery energy storage projects, including our own, depend on a mix of equity capital, tax equity and project financing to fund development and construction. A higher cost of capital may materially reduce the internal rate of return for these projects. Furthermore, there is no guarantee that tax equity investors will be available or willing to provide funding on acceptable terms, or that the tax incentives and benefits that are needed to make tax equity funding available will remain in place. Moreover, as a result of the effects of inflation in the global economy, certain governmental authorities responsible for administering monetary policy have sustained a higher central bank interest rates, which could increase the costs to obtain debt financing in the future or refinance current indebtedness. In addition, higher bond yields could result in increased return expectations for solar power and battery energy storage projects, which would result in lower valuation for these assets.
The availability and cost of funding of these projects are determined in part based on the perceived counterparty creditworthiness or sovereign credit risk of the country where a particular project is located. We cannot make assurances that financial institutions will continue to offer funding to solar power and battery energy storage project developers and owners at reasonable costs. An increase in cost of capital and interest rates or a decrease in available funding within the global financial market could make it more difficult to fund solar power and battery energy storage systems. If we are unable to manage the balance between long-term project ownership and project asset sales, maintain sufficient liquidity, reduce leverage or advance our project development pipelines, our business, results of operations, financial condition and prospects may be materially and adversely affected.
Our sale of solar power and battery energy storage projects depends heavily on our ability to find third-party buyers for our projects in a timely manner and on favorable terms and conditions.
Our project development activities have significantly expanded to North America, Europe, Latin America, Japan, Australia, and other countries of the Asia Pacific region over the past several years. Upon completion of development, we either operate our solar power or battery energy storage projects, with a majority of our aggregate capacity contracted under power purchase agreements, virtual power purchase agreements, tolling agreements, or other contractual arrangements with offtakers, or sell them to third-party buyers. As we balance ownership and operation of solar and battery energy storage assets with selective project sales, revenues from our sale of solar power and battery energy storage projects decreased by $242.4 million, or 60.7%, from $399.1 million in 2023 to $156.7 million in 2024, and then increased by $19.3 million, or 12.3%, to $176.0 million in 2025.
For solar power and battery energy storage projects that we decide to sell, there is no assurance whether or when we will be able to realize their estimated resale value. From time to time, we may reclassify project assets as solar power systems if our intention transitions to holding these projects on our balance sheet for the purpose of generating long-term electricity income.
Our sale of solar power and battery energy storage projects may be subject to significant period-over-period fluctuations for a variety of reasons, including but not limited to the unpredictability of the timing of development and construction of our projects, changes in market conditions after we have committed to projects, availability of financing for our projects, changes in government regulations and policies, changes in the creditworthiness of our contractual counterparties, equipment damage or failures, and weather events, all of which may result in the cancellation of or delays in the development of projects, inability to monetize or delays in monetizing projects or changes in amounts realized on monetization of projects. If a project is canceled, abandoned or deemed unlikely to occur, we will charge all prior capital costs as an operating expense in the period in which such determination is made, which could materially and adversely affect our operating results.
Some classes of investors compare the returns of solar power and battery energy storage projects to bond yields and expect a similar or higher internal rate of return, adjusted for risk and liquidity. Higher bond yields could result in increased return expectations for solar power and battery energy storage projects, which would result in lower sale prices for these assets, which may materially and adversely affect our business, results of operations, financial condition and prospects.
12
Oversupply of polysilicon, solar wafers, cells and modules may cause substantial downward pressure on the prices of our products and reduce our revenues and earnings.
The solar industry has been experiencing significant fluctuations in the supply and pricing of polysilicon, solar wafers, cells and modules. Global silicon production capacity has expanded rapidly in recent years, leading to an oversupply and subsequent decline in polysilicon prices. This oversupply has exerted substantial downward pressure on prices of solar wafers, cells and modules throughout the value chain. The average selling prices of our solar modules decreased from $0.23 per watt in 2023 to $0.16 per watt in 2024 and remained at $0.16 per watt in 2025. While the persistent oversupply and price reductions have benefited customers through lower prices, they have intensified competition among solar manufacturers and contributed to lower industry utilization rates. Although we believe that balancing our production capacity with demand has helped protect our margins, a prolonged supply of polysilicon, solar wafers, cells, and modules in excess of market demand may result in further downward price pressure, including on our products. Increasing competition could also result in us losing sales or market share. In addition, we are exposed to inventory risk that may adversely affect our earnings as a result of unfavorable product pricing changes.
On the other hand, demand for solar products may continue to increase, driven by various factors such as the global efforts toward clean, renewable energy sources, decarbonization initiatives, and increasing electricity demand associated with data centers and AI-related computing infrastructure, which could result in increased costs of and difficulties in sourcing raw materials to support the increased production levels due to capacity limitations. Due to fluctuations in the supply and pricing of solar power products throughout the value chain, we may not be able to consistently procure silicon, solar wafers and cells at reasonable costs if any of the above factors materialize. If we are unable to obtain these materials at reasonable prices or increase the price of our solar modules to cover our manufacturing and operating costs, our revenues and margins may be adversely impacted due to higher costs compared to our competitors. In addition, our market share could decline if our competitors are able to price their products more competitively.
Governments may revise, reduce or eliminate incentives and policy support schemes for solar power and battery energy storage, including those contained in the IRA and OBBBA.
Historically, the renewable power and clean energy industries, and the overall growth of the solar power and battery energy storage market, have generally benefited from government subsidy programs and economic incentives. Government incentives vary by geographic market. Governments have provided incentives in the form of tax credits, renewable portfolio standards, auctions for CfD, FIP, FIT, rebates and other forms of support. Governments in many countries have implemented mandates to promote the use of renewable power and clean energy, encouraging end-users, power producers and utilities to adopt the use of solar energy solutions and to reduce dependency on other forms of energy. However, many of these government mandates and incentives have been or are scheduled to be reduced or eliminated altogether, and it is likely that incentives for solar and alternative energy technologies will eventually be phased out completely. Changes in energy laws or policies could also undermine the economic returns of new and existing projects.
While the cost of solar power and battery energy storage products has generally declined in recent years and the industry has become less dependent on government incentives, continued support remains important for market growth. For example, governments in some of our largest markets, including the U.S. and a number of the states of the European Union have continuing incentives and policy support schemes for various forms of “green” energies, including solar power and battery energy storage.
In the U.S., renewable energy projects benefit from various federal, state and local governmental incentives, such as Investment Tax Credit (“ITC”), Production Tax Credit (“PTC”) and Renewable Portfolio Standards (“RPS”) programs, accelerated tax depreciation, and other incentives provided for under the Inflation Reduction Act of 2022 (“IRA”), signed into law on August 16, 2022. The provisions of the IRA are intended to, among other things, incentivize domestic clean energy investment, manufacturing and production. The IRA enhances the ITC program, allows solar energy projects to utilize the PTC program, and provides a refundable or transferable advanced manufacturing tax production credit pursuant to Section 45X of the Internal Revenue Code for solar modules and solar module components manufactured in the United States and sold to third parties. The IRA also offers additional credits for projects located in energy communities and projects satisfying domestic content requirements. In June 2023, the United States Internal Revenue Service (“IRS”) issued temporary and proposed regulations related to tax credit transferability and direct pay provisions of the IRA. The final regulations became effective, and prior temporary regulations were replaced, beginning in May 2024.
13
On July 4, 2025, Public Law 119-21, the One Big Beautiful Bill Act (“OBBBA”), was enacted. The OBBBA shortened time periods for energy projects to qualify for ITCs and PTCS and added and amended provisions of the U.S. Internal Revenue Code that can reduce or disallow certain U.S. clean energy tax credits based on involvement of a prohibited foreign entity (“PFE”), including where a taxpayer is a prohibited foreign entity or where a facility, energy storage technology, or eligible component is treated as receiving material assistance from a PFE. The OBBBA also authorizes the U.S. Secretary of the Treasury to prescribe guidance to implement these provisions. On February 12, 2026, the U.S. Treasury and the U.S. IRS issued Notice 2026-15, providing guidance on the application of material assistance restrictions and details of safe harbors for calculating a material assistance cost ratio (“MACR”). We have made compliance with the OBBBA’s PFE provisions a core operational priority and have actively taken steps intended to support continued eligibility for applicable tax credits for us and our customers. If tax credits applicable to our manufacturing activities or our customers’ projects are reduced or become unavailable, our profitability and our customers’ project economics could be adversely affected. Such impacts may cause certain projects to be postponed, restructured or abandoned, which could, in turn, reduce demand for our products and adversely affect our business, financial condition and results of operations.
In Europe, a number of member countries (including, Italy, France, Germany and Spain) continue to support realization of solar projects through incentive schemes and auctions, with additional limitations and regulations on agricultural land as compared to industrial and commercial zones, and the enactment of new laws in order to simplify the permitting process and enhance administrative resources to promote renewable energy sources. The European Union revised the Renewable Energy Directive, which entered into force on November 20, 2023, that may provide additional support for solar and battery energy storage development. As part of the revised directive, EU member states are required to implement permitting reforms by mid-2024 and to designate renewables acceleration areas by February 2026 to streamline project approvals and facilitate faster deployment.
The demand for solar power and battery energy storage products, services and projects may be affected by the availability and size of such government incentives, as well as, changes in energy laws and policies. The revision, reduction or elimination of these incentives and negative changes in energy laws and policies could therefore materially and adversely affect the growth of one or more of our markets, deter investment in clean energy, reduce customer demand, or result in increased price competition, either of which could cause our revenues to decline and harm our financial results.
Global economic conditions, including inflationary pressures and higher interest rates, may have an adverse impact on our business prospects, results of operations and cash flows.
Our operations are subject to the effects of global economic conditions, including inflation, interest rates, and foreign exchange rates, which consequently may affect demand for electricity and the supply and prices of other energy products, such as oil, natural gas and coal. Economic downturn could result in a decrease in global energy prices and demand for electricity, which could place downward pressure on the price of solar power and battery energy storage systems, and weaken demand.
Inflationary pressures may increase supplier costs, wages, operating costs and financing costs, which could reduce our profitability and cash flows if we are unable to pass along these costs to our customers. Inflation may also adversely affect foreign exchange rates, further affecting our results of operations. In addition, higher interest rates could have a dampening effect on overall economic activity and weaken our customers’ financial condition, reducing demand for our products and services. These factors, alone or in combination, could materially and adversely affect our business prospects, financial condition, results of operations and cash flows.
Our project construction activities may not complete on time, and our development and construction costs could increase to levels that cause the return on our investment in the projects to be lower than expected.
The development and construction of solar power and battery energy storage projects can take many months or years to complete and may be delayed for reasons beyond our control. There can be no assurance that the projects can be completed on time or within projected costs. Furthermore, we may become constrained in our ability to simultaneously fund our other business operations and invest in other projects. In contrast to producing and selling solar modules and battery energy storage products, developing solar power and battery energy storage projects requires more management attention to negotiate the terms of our engagement and monitor the progress of the projects which may divert management’s attention from other matters.
14
The development and construction of solar power and battery energy storage projects involve known and unknown risks, many of which are not under our sole control. For example, we may be required to invest significant upfront investments in land and interconnection rights, permitting and engineering, and may incur legal and other expenses before we can determine whether a project is feasible. Additionally, in certain cases, we may need to order equipment with lengthy lead time, such as substation transformers, in order to meet start-of-construction or other timing requirements under U.S. tax incentive programs. This may require us to make upfront commitments before project feasibility, permitted or financing has been fully secured.
Success in developing a particular project is contingent upon, among other things, (i) securing land rights and related permits, including satisfactory environmental assessments; (ii) receiving required land use, construction and operational permits and approvals; (iii) receiving rights to interconnect to the electric grid; (iv) obtaining transmission capacity, accurately estimating, and where possible mitigating, upgrade costs to the transmission grid and other system constraints; (v) securing economically feasible cost of interconnection and other deposits (some of which are non-refundable); (vi) avoiding or mitigating impacts to archaeological, historical or cultural resources, and/or protected or endangered species or habitats, migratory birds, wetlands or other water resources; (vii) negotiating tax incentives and property tax abatement, whenever applicable; (viii) negotiating satisfactory EPC or balance of plant agreements, and mitigating the solvency or financial conditions of our EPC contractors, suppliers or other third parties that we engage; (ix) obtaining equity, tax equity and project financing; and (x) timely and satisfactory execution and performance by the third parties that we engage.
Successful completion of a particular project may be adversely affected by numerous factors, including (i) changes in laws, regulations and policies and shifts in trade barriers and remedies, especially tariffs; (ii) failure in obtaining and complying with required governmental permits and approvals and the inability to renew or replace permits and approvals that expire or are terminated in a timely manner and on reasonable terms; compliance with domestic content and labor requirements; (iii) disputes and potential challenges from local residents, environmental organizations, and others who may not support the project; unforeseen engineering problems, subsurface land conditions, construction delays, cost over-runs, labor strikes, equipment and materials supply shortages or disruptions; (iv) shortage of skilled and licensed labor on the part of our contractors; (v) failure to enter into offtake contracts or capacity and ancillary services contracts, on terms favorable to us, or at all; (vi) additional complexities when conducting project development or construction activities in foreign jurisdictions, including compliance with local laws and customs; and (vii) force majeure events, including adverse weather conditions, pandemics, supply chain disruptions, hostilities and other events beyond our control.
Any of these factors could lead to construction delays and construction costs in excess of our expectations. These circumstances could prevent our solar power and battery energy storage projects from commencing operations on time or achieving our anticipated return on our investments. In addition, failure to meet agreed-upon system level capacity, energy output guarantees, warranties or other contract terms, could lead to contract terminations, grid interferences or project related damages. Depending on the specified terms of the EPC agreements, the offtake, capacity and ancillary service contracts or other agreements related to the project, we may be subject to significant damages, penalties, and other obligations, including obligations to repair, replace or supplement materials for the project. If a third-party EPC contractor is terminated, resigns, becomes insolvent or files for bankruptcy, we may be forced to take on additional risks, such as cost inflation, project delays and construction responsibilities that would otherwise be covered by the contractor. There is no assurance that disputes with third-party EPC contractors will not arise in the future. Any of these events could materially and adversely affect our business, results of operations and financial conditions.
We face a number of risks involving offtake contracts, including failure or delay in entering into contracts, defaults by counterparties and contingent contractual terms such as price adjustment, termination, liquidated damages, buy-out, acceleration and other clauses.
In our solar power and battery energy storage project development business, we enter into a wide range of offtake contracts, including but not limited to PPAs, VPPAs, tolling agreements, and other contracts for capacity and ancillary services. There is a limited, but growing, pool of potential buyers for electricity generated and services provided by our solar power and battery energy storage projects since the transmission and distribution of electricity is often regulated or highly concentrated in many jurisdictions. The willingness of buyers to enter into contracts with independent power producers such as us depends on a number of factors beyond pricing and supply reliability. Failure to enter into offtake contracts on favorable terms, or at all, could negatively impact our revenue and our decisions regarding the development of future projects. Delays in entering into offtake contracts, or an inability to renew or replace expiring contracts with comparable terms and conditions, may adversely affect our ability to finance project construction and realize cash flows from our projects, and the affected site may temporarily or permanently cease operations, or face exposure to more uncertain merchant electricity pricing, which could materially and adversely affect our financial condition, results of operations and cash flows.
15
We are exposed to the creditworthiness of the purchasers of power under these contracts, and there is no guarantee that our counterparties will be able or willing to fulfill their related contractual obligations. If they refuse to accept delivery of the power or services delivered thereunder or they otherwise terminate them prior to their expiration, our results of operations and cash flows could be materially and adversely affected. Further, to the extent any of our power purchasers are, or are controlled by, governmental entities, our facilities may be subject to legislative or other political action that may impair their contractual performance or contain contractual remedies that do not provide adequate compensation in the event of a counterparty default.
Some of our offtake contracts are subject to price adjustments over time. If the price under a contract falls below a level that makes a project economically viable, our results of operations and cash flows could be materially and adversely affected. In addition, certain inflation-based price adjustments are made only yearly, which may not allow us to pass on additional costs in a timely manner. Certain offtake contracts may contain provisions that allow the counterparty to terminate or buy out the project, or require us to pay liquidated damages in the event of delays in achieving commercial operation or meeting other contractual milestones, and upon the occurrence of specific events. If these provisions are exercised, our financial condition, results of operations and cash flows could be materially and adversely affected. To the extent the output of a project is not fully subject to offtake contracts, the electricity generated will be exposed to merchant price risk. Additionally, some project-level financing arrangements include provisions that allow the lenders or investors to accelerate repayment in the event that a related offtake contract is terminated or if certain operating thresholds or performance measures are not achieved within specified time periods. Certain of our offtake contracts and financing arrangements include, and in the future may include, provisions that would permit the counterparty to terminate the contract or accelerate maturity in the event we own, directly or indirectly, less than 50% of the combined voting power or, in some cases, if we cease to be the majority owner, directly or indirectly, of the applicable project subsidiary. The termination of any offtake contracts or acceleration of financing maturity as a result of a change-in-control event could materially and adversely affect our financial condition, results of operations and cash flows.
Our global operations are subject to complex and evolving laws, regulations, policies, trade restrictions and geopolitical risks, which could increase compliance costs, disrupt operations, delay project execution and adversely affect our business, financial condition and results of operations.
We are subject to a wide range of national, regional and local laws, regulations and policies across the markets where we do business, including energy regulations, export and import restrictions, customs rules, tariffs, antidumping and countervailing duties, tax laws, labor laws, supply chain requirements, construction and interconnection regulations, safety standards and environmental standards. These may conflict across jurisdictions and are frequently subject to change, which may increase compliance costs, disrupt operations, delay project execution, or adversely impact our ability to compete globally. We also face trade barriers and trade remedies, such as tariffs and antidumping and countervailing duties, which could increase our product costs and impact our competitiveness. See “—Antidumping and countervailing duty determinations in the United States could adversely affect us.”
New regulations governing safety, interconnection, environmental standards and construction may result in significant additional costs to us and our customers, which could cause a significant reduction in demand for our solar power and battery energy storage products. In addition, we face regulatory risks from transmission providers and operators, including regional transmission organizations and independent system operators. These entities may adopt or amend rules that limit transmission grid access or allocate capacity in ways that curtail the ability of solar power and battery energy storage projects to deliver power.
As we expand internationally, we face increasing exposure to diverse regulatory environments and government policies, including those that may favor domestically manufactured products or restrict international trade. Shifts in government attitudes towards free trade, tariffs, or international cooperation could adversely affect the demand for our products, increase our costs or tax liabilities, or hinder our market access.
Sustained geopolitical tensions could significantly undermine global economy stability. Hostilities and political conflicts, such as the Russia-Ukraine conflict, the Israel-Gaza conflict, and the heightened tensions with Iran, including any other continued hostilities in the Middle East, create global security concerns and impact international business. The duration and outcome of these factors remain highly unpredictable.
16
Despite our zero tolerance towards forced labor in our own manufacturing facilities and throughout our supply chain, we may be subject to risks related to forced labor allegations. We monitor our manufacturing facilities, enforce an equal opportunity policy, prohibit discrimination of any kind, and adhere to the employment laws and regulations of the jurisdictions in which we operate. In June 2021, the U.S. Customs and Border Protection issued a Withhold Release Order pursuant to Section 307 of the Tariff Act of 1930 on products whose upstream silica-based products (such as polysilicon) are sourced, or are suspected of being sourced, from Hoshine Silicon Industry Co. Ltd. and its subsidiaries. This restriction was further expanded by the Uyghur Forced Labor Prevention Act, which took effect in the United States on June 21, 2022 and imposes broader forced labor-related import restrictions. There can be no assurance that we will not experience adverse consequences arising from the impact of such restrictions on our products and supply chain.
In addition, we are subject to anti-corruption laws such as the United States Foreign Corrupt Practices Act of 1977 (“FCPA”), which prohibits improper payments or benefits to government officials, political parties and private-sector recipients. Although investigations and enforcement actions under the FCPA were temporarily paused for 180 days by an executive order on February 10, 2025, the FCPA law remains in effect (and similar laws remain effective in other jurisdictions in which we operate). On June 9, 2025, the U.S. administration issued the Guidelines for Investigations and Enforcement of the Foreign Corrupt Practices Act, setting forth updated criteria for FCPA actions and ending the enforcement pause. We may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities in the course of our business (for example, to obtain approvals, permits and licenses from applicable government authorities and to sell power to government-owned entities).
If any new legislation, executive orders, tariffs, laws and/or regulations are implemented, or if existing trade agreements are renegotiated, such changes could have an adverse effect on our business, financial condition and results of operations. If we fail to comply with applicable laws, face challenges in regulations and enforcement practices, or are unable to manage associated risks effectively, our business, financial condition and results of operations could be materially and adversely affected.
Our industry is highly competitive and many of our competitors have greater resources than we do or may be more adaptive.
We face intense competition from a large number of module competitors, such as First Solar, Inc., LONGi Green Energy Technology Co. Ltd., Trina Solar Limited, JinkoSolar Holding Co., Limited, JA Solar Co., Limited and Tongwei Solar Co., Ltd., and battery energy storage companies such as Tesla, Inc., Fluence Energy, Inc. and Sungrow Power Supply Co., Ltd. Some module competitors are developing or are currently producing products based on new technologies that may ultimately offer lower costs or better performance than our products. These include products based on Interdigited Back Contact (“IBC”) PV technology, which reduces shading by locating metal contacts at the cell to the rear side and increasing power density through larger area for photo absorption. To effectively compete, our products and production capacity are undergoing continuous transformation. For example, while crystalline silicon cell modules have become the market mainstream, we have significantly upgraded our production to N-type and Tunnel Oxide Passivated Contact (“TOPCon”) technologies, which is focused on further improving the photoelectric conversion efficiency and reducing the manufacturing cost. Our judgment of the development trend of technologies and products may prove inaccurate, and we may fail to invest sufficiently in research and development in the technology with the most market potential. Consequently, we may be exposed to the risk of lagging in technological advancements.
The competitiveness of our battery energy storage solutions is dependent on a number of factors, including safety and reliability, cost and performance. If we cannot effectively manage growth, take advantage of market opportunities, or respond to competitive pressures, we may face increased costs, difficulties in introducing new products, or other operating challenges.
In our project development business, we compete with international and domestic developers and operators of solar power and battery energy storage projects, including infrastructure funds, power companies focused on renewable energy generation and other renewable energy companies. Some of our competitors may have advantages over us in terms of greater experience or resources in the operation, capital, financing, technical support and management of solar power and battery energy storage projects, in any particular markets or in general.
As the solar power, battery energy storage and renewable energy industry grows and evolves, we will also face new competitors who are not currently in the market. Our failure to adapt to changing market conditions and to compete successfully with existing or new competitors would limit our growth and could have a material adverse effect on our business and prospects.
17
We face economic and operational risks associated with maintaining and expanding our international business.
Operating in international markets requires significant resources and exposes us to a range of risks that could adversely affect our business, including fluctuating sources of revenue; difficulty managing our sales channels effectively as we expand beyond distributors to include direct sales to systems integrators, end users and installers; difficulty managing the development, construction and sale of our solar power and battery energy storage projects on a timely and profitable basis as a result of technical difficulties, commercial disputes and regulatory changes; challenges and costs of complying with the different commercial, legal and regulatory requirements; increased cost of understanding local markets and establishing effective customer service, marketing and distribution network; difficulties and costs associated with staffing and managing overseas operations; failure to develop appropriate risk management and internal control structures tailored to overseas operations; inability to obtain, maintain or enforce intellectual property rights; exposure to fluctuations in foreign currency exchange rates; differing tax regimes across various markets; and unanticipated changes in prevailing economic conditions. Our failure to manage these risks effectively could harm our international operations, overall business and results of operations.
Our revenue sources have fluctuated significantly over recent years, and a significant and growing portion of our revenues are generated in the U.S. For example, the Americas contributed 34.4%, 51.8% and 56.4% of our revenues in 2023, 2024 and 2025, respectively; Asia contributed 41.0%, 30.0% and 22.3%, respectively; and Europe and other regions contributed 24.6%, 18.2% and 21.3%, respectively. As we shift the focus of our operations between different regions, we have limited time to address the related risks. Furthermore, some of these risks, such as currency fluctuations, will increase as our revenue contribution from certain regions becomes more prominent. This may potentially and adversely affect our financial performance.
We may experience issues with our manufacturing capacity expansion and operational initiatives.
We have undertaken several operational initiatives to align our manufacturing capacity with market demand. We employ a flexible vertically integrated business model that combines internal manufacturing capacity with direct material purchases of ingots, wafers and cells. We believe this approach has benefited us by allowing us to grow in a capital-light manner, while giving us significant flexibility to respond to short-term demand changes. Our global solar module, cell, wafer and ingot annual production capacities were 51.3 GW, 32.4 GW, 37.0 GW and 31.0 GW, respectively, as of December 31, 2025. Our global annual battery energy storage system and battery cell manufacturing capacity was 15.0 GWh and 3.0 GWh, respectively, as of December 31, 2025. Battery energy storage system and battery cell capacities are presented on a single-shift and double-shift annualized basis, respectively.
As part of our commitment to expanding our manufacturing capabilities and supporting domestic production in the U.S., we have undertaken significant investments in new manufacturing facilities across several states. In June 2023, we announced the construction of a solar module manufacturing facility in Mesquite, Texas, with an initial annual production capacity of 5 GW. This facility commenced production in late 2023 and is expected to double in capacity to 10 GW, serving as a key component of our U.S. supply chain. The Mesquite facility has also created a substantial number of manufacturing and technical jobs to support its operations and planned expansion. In October 2023, we announced a substantial investment in a solar photovoltaic cell manufacturing facility in Jeffersonville, Indiana. Upon full completion of both phases, the Jeffersonville facility will contribute 6.3 GW of annual solar cell production capacity to support our U.S.-based module production and is expected to create a significant number of additional high-tech jobs. We also plan to invest in a new manufacturing and R&D hub for our utility-scale battery energy storage business in Shelbyville, Kentucky.
Even if we expand our manufacturing capacity as planned, there is no guarantee that we will be able to manage our growth effectively, generate sufficient customer demand for our products, or successfully integrate our overall manufacturing capacity to achieve operational efficiency, which could adversely affect our business, financial condition and results of operations.
Antidumping and countervailing duty determinations in the United States could adversely affect us.
The Group’s exports to the U.S. could be adversely impacted by the U.S. Department of Commerce’s (the “USDOC”) determinations in the various ongoing antidumping and countervailing duty investigations and orders on crystalline silicon photovoltaic (“CSPV”) cell and module imports. These risks are partially mitigated by the Group’s compliance with the USDOC’s various certification regimes.
18
On August 17, 2023, USDOC issued affirmative final determinations of circumvention with respect to CSPV products from Cambodia, Thailand, Malaysia, and Vietnam. The USDOC also made company-specific affirmative determinations with respect to several companies, including Canadian Solar International Limited (“CSIL”). The Group defended its interests in these proceedings.
While the determination under the USDOC’s regulations typically imposes antidumping duty (“AD”) and countervailing duty (“CVD”) liability from the date of initiation (here, April 1, 2022), the USDOC published a final rule that delayed AD/CVD liability for CSIL’s exports from Thailand in the solar circumvention proceedings (the “Solar Moratorium”) in response to Proclamation 10414 issued by the U.S. government on June 6, 2022, which suspended AD/CVD requirements on eligible product imports through June 6, 2024. To qualify for the Solar Moratorium, imports must have entered the U.S. by June 6, 2024, and be utilized in solar energy projects within 180 days of that date. The USDOC also implemented a certification mechanism for exporters and importers to demonstrate that merchandise is not subject to circumvention requirements in light of (i) the Solar Moratorium, or (ii) limited reliance on Chinese-origin components (including wafers).
Accordingly, the Group’s exports from Thailand to the U.S. market could be treated as Chinese-origin and be subjected to significant AD/CVD deposit rates, adversely affecting our competitiveness in the U.S., and harming our financial condition and results of operations. However, the Group’s compliance with USDOC certification requirements reduces this risk.
In 2025, the U.S. Court of International Trade (“USCIT”) sustained USDOC’s Thailand circumvention determination, and the Company has appealed to the U.S. Court of Appeals for the Federal Circuit. Also in 2025, the USCIT overturned and vacated the USDOC’s Solar Moratorium. This decision by the USCIT was appealed to the Federal Circuit in September 2025 and that appeal remains ongoing.
On July 17, 2025, the Alliance for American Solar Manufacturing and Trade filed petitions for antidumping and countervailing duty orders on CSPV cells and modules imported from India, Indonesia, and Laos. The Group is also defending its interests in these proceedings.
For additional details, please refer to “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal and Administrative Proceedings.”
Other trade measures such as Section 232 and Section 301 tariffs could adversely affect us.
The Group’s exports to the U.S. could be adversely impacted by the ongoing Section 232 investigation on polysilicon and its derivatives, and the Section 301 investigations on U.S. imports from nearly all countries including from China and Southeast Asia. Announcements with respect to these investigations are expected later in 2026.
Tariffs and other trade barriers, including reciprocal tariffs under the International Emergency Economic Powers Act on imports into the United States, could adversely affect us.
On February 1, 2025, the U.S. government issued an Executive Order pursuant to the International Emergency Economic Powers Act (the “IEEPA”) imposing a 10% tariff on all imports from China, effective February 4, 2025. On March 3, 2025, the U.S. government amended the Executive Order increasing the tariff to 20%, effective March 4, 2025. The 20% tariff applies in addition to any other duties, fees, exactions, and charges applicable to the covered imports from China.
On April 2, 2025, the U.S. government issued an Executive Order pursuant to IEEPA imposing an indefinite reciprocal 10% tariff on almost all goods imported into the U.S., effective April 5, 2025, and individualized higher IEEPA tariffs (11% to 50%) starting April 9, 2025 on goods originating from 57 countries with trade surpluses with the U.S., including China, Thailand, and Vietnam, among other countries. On April 9, 2025, the U.S. government issued a further Executive Order increasing the IEEPA reciprocal tariff on China to 125% effective April 10, 2025. Concurrently, the U.S. government announced a temporary suspension of the country-specific reciprocal tariff measures targeting most U.S. trading partners for a 90-day period, or until July 9, 2025. This sequence of actions underscored a strategic recalibration of the U.S. trade policy, emphasizing heightened pressure on international trade.
19
In August 2025, the U.S. Court of Appeals for the Federal Circuit ruled against certain of the U.S. tariffs that have been implemented. On February 20, 2026, the U.S. Supreme Court rendered a decision invalidating tariffs imposed under the IIEPA.
We are closely monitoring potential changes in international trade policy, as it remains unclear what additional actions, if any, will be taken by the U.S. or other governments with respect to international trade agreements, the imposition of tariffs on goods imported into the U.S., tax policy related to international commerce, or other trade matters. If any new tariffs, legislation and/or regulations are implemented, or if existing trade agreements are renegotiated or, in particular, if the U.S. government takes retaliatory trade actions due to the recent U.S.-China trade tension, such changes could have an adverse effect on our business, financial condition and results of operations.
Our revenues and results of operations are subject to significant fluctuations, which make our financial performance difficult to predict.
Our revenues and results of operations have historically fluctuated and are likely to continue fluctuating from quarter to quarter and year to year due to a number of factors, many of which are beyond our control. Factors contributing to these variations include, among others, changes in the average selling prices of our solar modules, fluctuations in shipment volume and customer demand, timing of revenue recognition for battery energy storage products and services, timing and pricing of project sales, loss or addition of significant customers, availability of government incentives, regulatory changes, and variations in manufacturing and material costs, including high-purity silicon, lithium cells, solar cells and wafers. We also experience seasonality in demand linked to construction cycles and weather conditions. Moreover, besides seasonality, there are many other factors that may affect our customers’ order patterns, including expectations of future price movements, inventory adjustments, grid-connection and offtaker deadlines, government policy changes and tariff adjustments. These factors may reduce or strengthen the impact of seasonality on our products and services.
As we scale our battery energy storage business, we may enter into turnkey EPC contracts and commit to a fixed project price based on preliminary cost estimates. If actual costs exceed our estimates due to unforeseen factors such as material price increases, supply chain shortages or labor constraints, we may be unable to recover those costs, which could negatively impact profitability. Delays or performance issues involving third parties may also result in penalties or additional obligations. These factors contribute to fluctuations in our revenues and results of operations.
We are exposed to fluctuations in foreign currency exchange rates. While the majority of our sales and cash are denominated in U.S. dollars, Renminbi and Euros, we also transact in various other currencies. A significant portion of our manufacturing costs are denominated in Renminbi, making us particularly sensitive to its appreciation against the U.S. dollars and other currencies. Such appreciation could increase our operating expenses and impact our cost competitiveness. In addition, we maintain loans in multiple currencies, including Renminbi, U.S. dollars, Euros, Japanese yen and Brazilian reals, further exposing us to exchange rate volatility. Although we engage in hedging activities to mitigate near term foreign exchange risk, these hedges may not fully offset the longer-term impact of foreign currency fluctuations.
In addition, we base our operating expenses in part based on expected future revenues, and a significant portion of those expenses are fixed in the short-term. If actual revenues are lower than we expected, we may not be able to adjust our operating expenses proportionately. As a result, our financial performance may continue to fluctuate significantly, and historical results should not be relied upon as an indicator of future performance.
Furthermore, our financial results and effective tax rates could change due to shifts in the mix of profits earned in countries with different tax rates, changes in the valuation of our deferred tax assets and liabilities, adjustments to provisional taxes upon finalization of various tax returns, adjustments to the interpretation of transfer pricing standards, the availability of tax credits, or changes in tax laws or interpretations, including tax holidays or tax incentives. Recent developments include international tax reforms proposed by the Organization for Economic Co-operation and Development (“OECD”) as part of its Base Erosion and Profit Shifting (“BEPS”) project. These include the allocation of profits among tax jurisdictions in which companies do business and the implementation of a global minimum tax rate of 15%, referred to as Pillar One and Pillar Two, respectively. Several tax jurisdictions have enacted or are in the process of implementing Pillar Two legislation, a 15% global minimum tax on profits, including Hong Kong, Canada and the U.K., which enacted such legislation on June 6, 2025, June 20, 2024 and July 11, 2023, respectively. The OECD and participating countries continue to issue administrative guidance on its applications, which may impact our tax obligations. In the U.S., the IRA included provisions that will impose, among others, a minimum tax on the book income of certain large corporations. Pending further regulatory guidance, these changes could increase our future tax liabilities.
20
We need a significant amount of cash to fund manufacturing expansion, project development and construction.
Our manufacturing and project development businesses are capital intensive, and we anticipate that our capital requirements will continue to increase. To develop new products, support growth, improve production cost efficiencies, and maintain product quality, we need to invest in manufacturing capacity, facilities, equipment, product and process technology. In addition, significant cash resources are required for the development and construction of our solar power and battery energy storage projects. In 2023, CSI Solar raised RMB 6.91 billion ($966.9 million) from public investors in connection with its STAR Listing on the Shanghai Stock Exchange. In 2024, an entity managed by BlackRock invested $500.0 million in Series A Preferred Shares of Recurrent Energy B.V.. In 2025, we issued $200.0 million of convertible senior secured notes due 2029 to PAG. In January 2026, we raised $230.0 million of convertible senior notes due 2031.
The preferred shares and convertible notes may include redemption rights, conversion features, dividend obligations, or other terms that could require or incentivize cash payments, refinancing or repurchase at or prior to maturity, upon the occurrence of specified events or at the election of the holders. The timing and magnitude of any such obligations could increase our future cash requirements and reduce the cash available for manufacturing expansion, project development and construction.
If we are unable to generate sufficient cash flows, obtain adequate funding, or find alternative sources of capital on commercially acceptable terms, our ability to fund manufacturing operations and project development business would be significantly impaired. This could have a material and adverse effect on our business prospects, financial condition, liquidity and results of operations.
Our substantial indebtedness and reliance on short-term financing could limit our financial flexibility and competitive position.
As of December 31, 2025, our total debt, including financing liabilities, was approximately $6.5 billion, of which $2.2 billion was non-recourse debt. Our substantial indebtedness increases our vulnerability to adverse economic and industry conditions, and requires significant cash flow for debt service, thereby reducing funds available for working capital, capital expenditures and other general corporate purposes. These obligations could limit our financial flexibility to respond to business changes, pursue business opportunities we believe to be desirable, or compete effectively against competitors that have less debt. In addition, restrictive covenants in our debt agreements may constrain our ability to incur additional debt, further constraining financial flexibility.
Our ability to generate sufficient cash to satisfy our outstanding and future debt obligations depends on future operating performance, which is affected by economic conditions and other factors beyond our control. If we are unable to generate sufficient cash flow from operations to service our indebtedness, we may need to take alternative measures that may include actions such as reducing or delaying capital expenditures, selling assets, restructuring or refinancing our debt, or seeking equity capital. There is no assurance that these measures could be instituted on satisfactory terms, if at all. Any of these events could materially and adversely affect our ability to manage our debt obligations, which could materially and adversely affect our business, financial condition and results of operations.
Failure to comply with financial and other covenants in our debt instruments could adversely affect our liquidity.
Many of our debt instruments contain financial covenants and broad default provisions, including interest and debt coverage ratios, loan to equity value of designated projects and debt to asset ratios, and minimum equity requirements. These covenants could restrict our ability to respond to market conditions, meet capital needs and pursue growth plans. Adverse economic conditions or industry changes may cause us to incur significant losses or force us to assume considerable liabilities, which could impair our ability to comply with these covenants. If we fail to comply and our lenders refuse to grant waivers, an event of default could be triggered, which may accelerate repayment obligations under the applicable debt instruments and result in the foreclosure of security interests, including pledges of equity interests in material subsidiaries.
Some of our debt agreements also contain cross-default clauses that enable lenders to declare an event of default if we breach covenants under other debt agreements. Our ability to meet these restrictive financial ratios and covenants can be impacted by events beyond our control and we may be unable to do so. If we are unable to cure violations or obtain waivers of non-compliance in a timely manner, we may face significant liquidity constraints, which could materially and adversely affect our financial condition and results of operations.
21
Supply chain disruptions, cost increases or performance issues could adversely affect our business and relationship with customers, particularly given our dependence on a limited number of key suppliers.
We rely on third-party suppliers for key materials, components and equipment, including high-purity polysilicon, ingots, wafers, cells, silver-based metallic pastes, glass, metal frames, ethylene vinyl acetate, junction boxes, polymer back sheets, lithium iron phosphate battery cells, inverters, trackers, mounting hardware, and grid interconnection equipment. Given our dependence on a limited number of suppliers, we are vulnerable to supply chain disruptions. If suppliers fail to meet our quantity, quality or cost requirements, we may face increased costs, production delays, or non-compliance with customer agreements, potentially leading to order cancellations, contractual liabilities, and revenue shortfalls.
Supply chain risks are further exacerbated by inflationary pressures, rising input costs, and production delays. Prices for certain key raw materials, including polysilicon, silver-based metallic pastes and lithium carbonate, have historically been volatile, and increases in the cost of these inputs could adversely affect our manufacturing costs and margins, particularly where pricing under customer contracts does not permit timely pass-through of such increases. Although we may build buffer inventories, there is no assurance that these buffer inventories will fully mitigate supply disruptions or cost increases. Supply interruptions may also result from accidents, energy shortage, natural disasters or other unforeseen events beyond our control.
If we are unable to secure alternative suppliers on commercially reasonable terms, or if increased costs cannot be passed on to our customers, our market position, customer relationships and results of operations could be materially and adversely affected.
We are developing and commercializing higher conversion efficiency cells, but we may not be able to mass-produce these cells in a cost-effective way, if at all.
Higher efficiency cell structures are increasingly vital for cost competitiveness and brand recognition in the solar power industry, as they can yield higher power outputs at the similar production costs, thereby lowering the cost per watt. Manufacturing and selling modules made from such cells offer a competitive advantage, enabling system owners to generate more electricity without additional infrastructure or systems.
We have focused our research on advanced technologies, including N-type Heterojunction (“HJT”) and TOPCon cells, and other technologies such as interdigitated back contact (“IBC”) cell. In mid-2022, we launched HJT module products for high-end roof-top application. In early 2023, we began mass production of TOPCon modules. While we are investing in the development of higher conversion efficiency solar modules, there is no assurance that we will be able to commercialize these technologies cost-effectively, if at all. In the near term, products with such technologies may command a modest premium. In the longer term, if competitors are able to manufacture these products more cost-effectively, we may experience a competitive disadvantage, which could affect our product pricing and our financial performance.
Defects or performance issues in our products could result in warranty claims that could impose significant costs on us.
We may incur significant costs due to warranty claims if our products fail to perform as expected or are alleged to have defects. Our standard warranties cover defects in materials and workmanship for periods ranging from 1 to 30 years, depending on the product type. Additionally, we provide performance warranties ensuring a specified power output over time. Given these extended warranty periods, we are exposed to the risk of substantial claims long after product shipment and revenue recognition.
While we conduct rigorous quality testing, our products have not been operational for their full warranty durations, and unforeseen issues may arise over time, potentially harming our reputation and financial results. Furthermore, as we expand and diversify our product offerings, our exposure to warranty and product liability may increase. Although we maintain reserves for warranty expenses based on various factors, actual costs may differ significantly from our estimates, leading to unexpected volatility in our results of operations.
We have historically entered into agreements with a group of insurance companies to cover a portion of our solar module warranty obligations. The insurance policies were designed to match our solar module product warranty terms, and the insurance companies were obliged to reimburse us for actual product warranty costs, subject to claim limits and deductibles. However, warranty claims may exceed coverage limits, and the claims process can be lengthy and uncertain, with outcomes that may not align with our expectations. If claims are delayed, disputed, or denied, our results of operations could materially and adversely affected.
22
Our dependence on a limited number of customers may cause significant fluctuations or declines in our revenues.
We sell a substantial portion of our solar module and battery energy storage products to a limited number of customers. Our top five customers by revenues accounted for approximately 15.8%, 17.8% and 17.4% of our net revenues in 2023, 2024 and 2025, respectively. We expect our dependence on a limited number of customers to continue for the foreseeable future.
The loss or reduction in sales to any major customer, if not replaced in a timely manner, could materially reduce our revenue and affect our results of operations. As we expand our business and product offerings, our customer base may shift, and there is no assurance that we will establish a stable or diversified customer base.
Our founder, Dr. Shawn Qu, has substantial influence over our company and his interests may not be aligned with the interests of our other shareholders.
As of January 31, 2026, Dr. Shawn Qu, our founder, Chairman and Chief Executive Officer, beneficially owned 14,054,888 common shares, representing 20.7% of our outstanding shares. Dr. Qu also serves as the chairman of CSI Solar and as a member of the board of directors of Recurrent Energy B.V. As a result, Dr. Shawn Qu has substantial influence over our business, including decisions regarding mergers and acquisitions, consolidations, asset sales, the election of directors and other significant corporate actions. This concentration of ownership may discourage, delay, or prevent a change in control of our company, which could deprive our other shareholders of an opportunity to receive a premium for their shares in the sale of our company and might reduce the price of our common shares.
Our inability to protect our intellectual property rights or defend against patent infringement or other intellectual property claims, could undermine our competitive position, adversely affect our business and impose significant costs.
We retain intellectual property rights to some of the technologies that we develop in solar power and battery energy storage products, As of December 31, 2025, we held 2,314 patents and had 636 patent applications pending across several jurisdictions. We have registered the “Canadian Solar” trademark in multiple jurisdictions, with pending application in additional countries. As of December 31, 2025, we held 325 registered trademarks and had 72 trademark applications pending across several jurisdictions. While we take measures to protect our intellectual property, these rights afford only limited protection and may not prevent third-party infringement.
Additionally, our success depends on our ability to develop and use our technology and know-how without infringing third-party intellectual property rights. Patent and intellectual property disputes are inherently uncertain and often involve complex legal, scientific, and factual issues. Defending such claims can be costly, time-consuming and may divert management and technical resources. Furthermore, we use third-party equipment in our production lines, sometimes without sufficient supplier guarantees that our use of such equipment does not infringe third-party intellectual property rights. This creates a potential source of litigation or infringement claims. An adverse determination in any such litigation or proceedings to which we may become a party could subject us to significant liability, require us to seek licenses, pay ongoing royalties, redesign products or comply with injunctions prohibiting the manufacture, sale or use of our technologies. Protracted litigation could deter customers from purchasing our products until disputes are resolved. While we have resolved claims and disputes in the past without material impact on our financial position, we cannot guarantee that future disputes will not have a material adverse effect on our business and results of operations.
Our failure to comply with environmental, health and safety laws could result in significant costs, adverse publicity, fines and business disruption.
We are subject to national and local laws governing environmental protection, health and safety. We believe we comply with all applicable regulations, including those related to noise, wastewater, air emissions, hazardous substances and industrial waste. Beyond what is required by environmental laws, we have implemented measures to reduce our environmental impact, including promoting a circular economy to maximize material and energy efficiency and minimize waste generation, and setting rolling five-year targets to lower the intensities of manufacturing GHG emissions, energy and water consumption, and waste generation. We have also strengthened supplier scrutiny on ESG requirements and implemented ESG compliance audits across our supply chain. If we fail to comply with current or future environmental regulations, we may incur substantial fines, production suspensions or operation closures. Stricter regulations in the future could significantly increase compliance costs. Our solar power and battery energy storage products must meet environmental standards in the jurisdictions in which they are installed, and compliant-related design and manufacturing costs could impact our competitiveness.
23
The ownership, construction and operation of our solar power and battery energy storage projects are subject to environmental, health and safety laws in each jurisdiction where our projects operate or plan to operate. Some projects may require environmental impact assessments and programs to identify and understand their potential environmental impacts, allowing us to plan and design projects that minimize harm to ecosystems and communities. If such programs are unsuccessful, our projects could face increased mitigation requirements, operational curtailments, penalties or permit revocation.
Our costs of complying with current and future environmental, health and safety laws, regulations and permit requirements (or other similar requirements), and any liabilities, fines or other sanctions resulting from violations, could have a material adverse effect on our business and results of operations.
Laws, regulations and government actions on sustainability could result in significant additional costs and expose us to additional liabilities.
Our operations emit greenhouse gases, and evolving laws and regulations may require us to obtain permits, undergo environmental review, and implement monitoring programs. For instance, the SEC adopted rules on March 6, 2024, mandating public companies to disclose climate-related risks and GHG emissions in their annual reports starting in the fiscal year 2025. However, the implementation of these rules has been stayed due to legal challenges, and as of March 27, 2025, the SEC ceased defending the rules in court, creating uncertainty regarding their future applicability. The European Corporate Sustainability Reporting Directive (“CSRD”) requires companies to report on a broad range of ESG factors. A central feature of the CSRD is the concept of double materiality, which mandates companies to identify sustainability matters that are most material to the organization and its stakeholders. Recent legislative developments have led to proposed amendments that may delay the implementation of the CSRD’s reporting requirements. On April 3, 2025, the European Parliament voted to postpone the application of certain sustainability reporting rules, allowing lawmakers additional time to renegotiate exemptions. As a result, reporting requirements for certain companies are postponed until 2027, with first reports due in 2028. On December 16, 2025, the European Parliament adopted the Omnibus I proposals. The Omnibus I proposals are subject to further legislative negotiations, and their final form and implementation timeline remain uncertain. Given these developments, we are closely monitoring the evolving regulatory landscape to determine the specific impact on our reporting obligations under the CSRD. In China, regulatory authorities have recently introduced ESG disclosure guidelines requiring public companies to report on material ESG topics, including the integration of double materiality assessments. CSI Solar, as a public company listed on the STAR Market, will be required to comply with these guidelines by April 30, 2026, for disclosures covering the fiscal year 2025.
Since 2020, we have been measuring GHG emissions from our operations, including manufacturing. We have also set rolling five-year targets to reduce GHG emissions, energy and water consumption, and waste intensities, which are updated annually. Our commitment includes the goal of powering all our operations with renewable energy by 2030. In addition, we are committed to setting science-based near-term and net-zero targets and decarbonizing our operations and value chain, and our targets were formally validated and approved by the Science Based Targets initiative (“SBTi”) in December 2025. While these initiatives are expected to meaningfully reduce our GHG emissions in the future, their successful execution may be subject to policy, market or cost barriers in the locations where we operate. Our business model supports global decarbonization by enabling customers to reduce their carbon footprint through solar energy and battery energy storage solutions. However, evolving carbon pricing mechanisms, emission regulations, and government decarbonization targets could increase our compliance costs, impact operations, or require additional investments in emission reduction equipment and technologies. The financial and operational impact of such regulatory developments remains uncertain and cannot yet be determined.
Corporate sustainability may impose additional costs and create new compliance challenges.
Public ESG and sustainability reporting has become more broadly expected by investors, shareholders, customers and other stakeholders. Investors and customers may consider a company’s sustainability performance as a reputational or other factor in making an investment or purchase decision. Our failure to meet established ESG standards or achieve acceptable ratings could lead to reputational damage, increased costs, and potential disadvantage relative to our competitors.
We actively monitor sustainability-related key performance indicators, and have set meaningful targets to ensure that we manage our business in a responsible way and maintain a responsible supply chain. See “Item 4. Information on the Company—B. Business Overview—Environmental, Social and Governance Initiatives.” However, implementing our sustainability strategy may result in increased costs and could have a material adverse effect on our business and results of operations. In addition, evolving sustainability standards may impose more stringent requirements on us and our suppliers. As such, there is no certainty that we will be able to meet our sustainability or other objectives efficiently and in a timely manner, if at all.
24
Interruption, security breaches or failures of information technology, control and communication systems could disrupt our business and expose us to liability.
We rely on our information technology systems and network infrastructure, some of which are managed by third parties, to process, store and transmit electronic information. Our information technology systems and those of critical third-party providers are vulnerable to cybersecurity incidents, including power outages, system failures, unauthorized access, malware, ransomware, data breaches and other cyber threats. Despite the security measures we have implemented, we have experienced cyberattacks in the past, including business email compromise, and we expect the frequency and sophistication of cyberattacks and other security incidents to continue to increase in the future. In addition, cyber treats targeting the energy and infrastructure sectors continue to increase in frequency and sophistication. We cannot guarantee that our defenses and those of critical third-party providers will prevent cybersecurity incidents, detect intrusions in a timely manner or enable full recovery. Cybersecurity breaches may lead to data theft, loss or misuse of proprietary and personal information, exposing us to legal claims, regulatory penalties, compliance costs and significant financial and reputational damage. Our cybersecurity costs may increase as regulatory requirements evolve and the threat landscape expands. If we fail to adequately prevent, detect, or mitigate cybersecurity threats, our business, operations, and financial results could be materially and adversely affected.
In addition, evolving global data protection laws impose compliance burdens. Regulations such as the EU GDPR and Canada’s Québec Privacy Act require companies handling personal data to meet stringent security and privacy standards. Noncompliance may result in fines, operational restrictions, legal claims and heightened regulatory scrutiny.
Given the growing complexity of cybersecurity threats and regulatory obligations, we may need to allocate significant financial and operational resources to enhance data protection and ensure compliance. If we fail to prevent or mitigate cybersecurity incidents, or comply with evolving data protection laws, our business, reputation and financial condition may be materially and adversely affected.
Weaknesses in our internal control over financial reporting could undermine investor confidence and adversely affect the value of our common shares.
As a public company, we are required by Section 404 of the Sarbanes-Oxley Act to include a management report on, among other things, the effectiveness of our internal control over financial reporting in our annual report. As of December 31, 2025, management concluded that our internal control over financial reporting was effective. Our independent registered public accounting firm will also evaluate and report on the effectiveness of our internal control over financial reporting. However, we cannot guarantee that material weaknesses will not emerge in the future. Any such weaknesses could lead to delays in our periodic reporting, material misstatements in our financial statements, and a loss of investor confidence, leading to an adverse effect in the value of our common shares.
Although CSI Solar completed the STAR Listing, we may not achieve the results contemplated by our business strategy. In addition, it is difficult to predict the effect of CSI Solar’s STAR Listing on our common shares.
Although CSI Solar completed its initial public offering and listing (the “STAR Listing”) on the Science and Technology Innovation Board (the “STAR Market”) of the Shanghai Stock Exchange in 2023, we may not realize the anticipated benefits. CSI Solar’s completion of its STAR Listing may not have the anticipated effects of strengthening CSI Solar and its market leadership position. CSI Solar has broad discretion over the use of the proceeds from the STAR Listing, and it may not spend or invest those proceeds in a manner that results in its operating success or with which holders of our common shares agree. CSI Solar’s failure to leverage its STAR Listing could adversely impact its results of operations and, in turn, the market value of our common shares.
CSI Solar is subject to the listing and securities law regime of the Shanghai Stock Exchange. The Shanghai Stock Exchange and Nasdaq have different trading hours, trading characteristics (including trading volume and liquidity), trading and listing rules, and investor bases, including different levels of retail and institutional participation. As a result of these differences and given the fact that CSI Solar will remain one of our significant subsidiaries, fluctuations in the price of the shares of CSI Solar due to circumstances peculiar to the STAR Market or otherwise could in turn affect the price of our common shares. Furthermore, investors may choose to invest directly in CSI Solar rather than our shares listed on the Nasdaq Global Select Market, which could result in reduced demand and market value for our common shares.
25
CSI Solar’s status as a publicly traded company that is controlled, but less than wholly owned, may create complexities and adversely affect our financial results.
Canadian Solar Inc. has a direct ownership interest in CSI Solar Co., Ltd. through its holding of approximately 64% of the outstanding shares of CSI Solar Co., Ltd. CSI Solar operates under a separate board of directors and officers whose fiduciary duties extend to all of its shareholders. In fulfilling these duties, they may take actions that may be contrary to our best interests. CSI Solar Co., Ltd. and Canadian Solar Inc. are independently listed on the Shanghai Stock Exchange and the Nasdaq Global Select Market, respectively, and are subject to differing regulatory, accounting standards and disclosure requirements. These differences may create inconsistencies in financial reporting, timing of disclosures and investor communications, which may lead to potential confusion or uncertainty among investors.
In addition, CSI Solar may undertake capital raises, share repurchases and share-based compensation for its directors, officers and employees, which could dilute or increase our ownership interest, affect cash flows, and increase share-based compensation expenses in the future. In April 2024, CSI Solar launched a share repurchase program of RMB 500.0 million up to RMB 1,000.0 million ($70.4 million up to $140.8 million) to reserve shares for future share-based awards. In December 2024, CSI Solar launched a further share purchase program of RMB 500.0 million up to RMB 1,000.0 million ($70.4 million up to $140.8 million) to reduce its registered capital. In 2024 and 2025, CSI Solar repurchased 52.7 million and 45.1 million shares, representing 1.43% and 1.22% of its total shares, for RMB 566.2 million ($79.6 million) and RMB500.6 million ($70.1 million), respectively.
We have granted, and may continue to grant, various share-based incentive awards which may increase our share-based compensation expenses.
Under our 2006 share incentive plan, we grant restricted shares, options and restricted share units to eligible employees, directors and consultants. In addition, CSI Solar granted performance-based restricted share units to directors and key employees, with vesting tied to the its STAR Listing date and subsequent anniversaries. See “Item 6 Directors, Senior Management and Employees—B. Compensation of Directors and Executive Officers” for more details. CSI Solar adopted a restricted share incentive plan in 2024, granting options to its officers, directors and employees to purchase shares of CSI Solar, subject to service and performance vesting conditions. We recognized $21.4 million and $24.4 million in share-based compensation expenses in 2024 and 2025, respectively.
We consider share-based compensation critical for attracting, retaining and motivating key personnel and expect to continue issuing such share-based incentive awards. However, these grants may increase our share-based compensation expenses. In addition, performance-based awards may cause greater period over period fluctuations compared to time-based awards.
We may encounter difficulties with acquisitions and divestitures, which could harm our business.
We have completed several acquisitions in the past and may continue to acquire additional business in the future to improve our market position, expand our products and services, or achieve other business objectives. However, these activities could subject us to a number of risks, including challenges associated with integrating the acquired operations, personnel, services, internal controls and financial reporting into our existing operations. If we fail to successfully integrate acquisitions, it could result in disruptions to our business operations, loss of key personnel, or failure to realize anticipated synergies or other benefits. Divestitures also involve significant risks, such as difficulties in finding buyers on acceptable terms and within a reasonable timeframe, and agreed terms could be renegotiated due to changes in business or market conditions. Divestitures could adversely affect our profitability and may require us to record impairment charges or losses as a result of the transaction.
There can be no assurance that we will be able to make acquisitions and investments and successfully integrate them into our operations, or establish strategic relationships with third parties that will prove to be effective for our business or make divestitures. Our inability to do so could materially and adversely affect our market penetration, our revenue growth and our profitability.
26
We face risks related to private securities litigation.
There is no guarantee that we will not become party to lawsuits from time to time. If we were involved in a class action suit, it could divert significant attention and resources from our business and operations, and require us to incur significant expenses to defend the suit. In addition, we are generally obligated, to the extent permitted by law, to indemnify our directors and officers in such matters. Adverse outcomes in such litigation could lead to significant judgments or settlements that materially and adversely affect our financial condition or results of operations.
The delisting or prohibition of trading of our common shares pursuant to the HFCAA, or the risk or perception that such action may occur, could materially and adversely affect the value of your investment.
Pursuant to the HFCAA as amended by the Consolidated Appropriations Act, 2023, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the Public Company Accounting Oversight Board, or the PCAOB, and that we are a Commission-Identified Issuer under the HFCAA for two consecutive years, the SEC will prohibit our common shares from being traded on a national securities exchange or in the over-the-counter trading market in the U.S. In the event of such determination, the Nasdaq is expected to delist our common shares.
On December 15, 2022, the PCAOB vacated its previous determinations issued on December 16, 2021 that it was unable to inspect or investigate completely PCAOB-registered public accounting firms headquartered in mainland China and Hong Kong. Therefore, our auditor is currently able to be fully inspected and investigated by the PCAOB. For this reason, we were not identified as a Commission-Identified Issuer under the HFCAA after we filed our annual report on Form 20-F for the fiscal year ended December 31, 2022, and do not expect to be so identified when we file our annual report on Form 20-F for the fiscal year ended December 31, 2025. There are no PCAOB determinations currently in effect. Accordingly, we are not currently at risk of having our securities subject to an initial trading prohibition under the HFCAA. On February 21, 2025, the U.S. administration undertakes, among other things, to determine if adequate financial auditing standards are upheld for companies covered by the HFCAA.
However, it is uncertain whether the PCAOB will continue to be able to satisfactorily inspect and investigate registered public accounting firms in mainland China and Hong Kong, among other jurisdictions. If in the future, PCAOB finds that it is unable to completely inspect and investigate registered public accounting firms in mainland China and Hong Kong, the PCAOB may act immediately to consider the need to issue a new determination, and we may be identified as a Commission-Identified Issuer again. In accordance with the HFCAA as amended by the Consolidated Appropriations Act, 2023, our securities would be prohibited from being traded on a national securities exchange or in the over-the-counter trading market in the U.S. if we are identified as a Commission-Identified Issuer for two consecutive years. Furthermore, we cannot assure you whether Nasdaq or regulatory authorities would apply additional and more stringent criteria to us after considering the effectiveness of our auditor’s audit procedures and quality control procedures, adequacy of personnel and training, or sufficiency of resources, geographic reach or experience as it relates to the audit of our financial statements. In addition, any additional actions, proceedings, or new rules resulting from these efforts to increase U.S. regulatory access to audit information could create some uncertainty for investors, adversely affect the market price of our ordinary shares, and we could be delisted if we and our auditor are unable to meet the PCAOB inspection requirement or are required to engage a new audit firm, which would require significant expense and management time. The delisting or prohibition of trading of our common shares, or the threat of their being delisted or prohibited from trading, may materially and adversely affect the value of your investment. If our common shares are prohibited from trading in the United States, there is no certainty that we will be able to list on a non-U.S. exchange or that a market for our shares will develop outside of the United States. A prohibition of being able to trade in the United States would substantially impair your ability to sell or purchase our common shares when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of our common shares. Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which could have a material adverse impact on our business prospects and financial condition.
27
The rules and regulations in China can change quickly with little advance notice. Uncertainties with respect to the PRC legal system, as well as changes in any government policies, laws and regulations, could affect the addressable industry of CSI Solar and CSI Solar’s ability to conduct its operations in China, which could result in material changes to CSI Solar’s operations and the value of our securities.
CSI Solar conducts a portion of its operations in China. Its PRC operations are governed by PRC laws and regulations. The PRC legal system, based on written statutes, differs from common law systems, as prior court decisions may be cited for reference but have limited precedential value. The PRC legal system continues to rapidly evolve and the implementation, interpretation and enforcement of its laws, regulations and rules may be inconsistent and change quickly with little advance notice, which may limit legal protections available to us. In addition, any litigation in China may be protracted and may result in substantial costs and divert CSI Solar’s resources and the attention of its management. Moreover, because these laws and regulations are subject to varying interpretations, their application in practice may evolve over time as new guidance becomes available.
The revised PRC Company Law, effective on July 1, 2024, introduced substantial changes to the capitalization requirements, the corporate governance and the duties of directors, supervisors and senior management. If CSI Solar fails to comply with these regulations and any subsequent changes, it may be subject to penalties and our business may be harmed.
CSI Solar’s operations are also subject to China’s foreign investment regime under the Foreign Investment Law and its Implementation Rules. According to these regulations, foreign investments shall be conducted in line with the “negative list” and obtain relevant approvals issued by the State Council from time to time. The “negative list” sets special administrative measures for foreign investment access in specific industries. Foreign investors are not allowed to invest in prohibited industries as specified in the “negative list” and subject to certain restrictions when investing in the restricted industries as specified in the “negative list.” The National Development and Reform Commission (“NDRC”) and the Ministry of Commerce (“MOFCOM”) jointly issued the Catalogue of Encouraged Industries for Foreign Investment (2025 Edition), which took effect on February 1, 2026 and includes photovoltaic power generation equipment manufacturing as an encouraged industry. However, it is uncertain whether CSI Solar will be subject to future foreign investment restrictions or prohibitions, although it is not currently subject to such restrictions under the existing “negative list.” We cannot assure you that future interpretation or implementation of the Foreign Investment Law by relevant authorities will not materially impact CSI Solar’s corporate structure, governance, industry or business operations.
In addition, the PRC government has strengthened anti-monopoly and competition laws recently, including heighten scrutiny of consolidation, pricing management and capacity coordination in certain segment of the solar photovoltaic industry, such as polysilicon, amid ongoing industry oversupply. Although we believe CSI Solar’s operations comply with existing anti-monopoly and competition regulations, there remain uncertainties regarding their interpretation and enforcement. We cannot guarantee that regulators will agree with CSI Solar or that CSI Solar’s business operations comply with such regulations and authorities’ requirements in all respects. If any non-compliance is raised by relevant authorities and determined against CSI Solar, it may be subject to fines and other penalties.
The PRC government exercises substantial control over the economy and may intervene in or influence CSI Solar’s operations at any time, which could result in material changes to CSI Solar’s operations and the value of our securities.
The PRC government exercises substantial control over the economy through regulation and state ownership. CSI Solar’s ability to operate in China may be impaired by changes in its laws and regulations, including those governing the industry in which it operates, its taxation, land use rights and foreign investment restrictions. In addition, central and local governments may impose new or stricter regulations or reinterpret existing regulations that would require additional compliance measures and costs. Any such government intervention, regulatory action or policy change could require significant changes to CSI Solar’s operations, which could in turn affect the value of our securities.
28
Failure to comply with PRC regulations and other legal obligations concerning cybersecurity, privacy, data protection and informational security may materially and adversely affect CSI Solar’s business, as it routinely collects, stores and uses data during the conduct of its business.
CSI Solar routinely collects, stores and uses data during its operations including but not limited to the demand and pricing of solar and battery energy storage products, location and capacity of its production facilities, operational and performance data of solar and battery projects that it provides services to, and the information related to its employees, customers and suppliers. CSI Solar is subject to PRC laws and regulations governing the collecting, storing, sharing, using, processing, disclosure and protection of data on the internet, mobile platforms and cybersecurity.
In recent years, PRC authorities issued a number of laws and regulations governing cybersecurity, data security, critical information infrastructure protection, personal information protection and cross-border data transfers, including requirements that may impose cybersecurity reviews, security assessments or other regulatory procedures where data processing activities affect or may affect national security. The interpretation, application and enforcement of these requirements remain uncertain and may evolve further, and compliance may require additional approvals, certifications, filings or operational adjustments.
If CSI Solar is required to go through cybersecurity reviews, security assessment of outbound data transfer or other regulatory procedures, or if PRC authorities determine that its data-related activities do not comply with the applicable laws and regulations, CSI Solar will receive a notice on assessment result after completion of the assessment, and CSI Solar may be notified to terminate the outbound data transfer or make rectification as required. In addition, CSI Solar has to regulate its outbound data transfer activities in accordance with the applicable laws and regulations on the security management of outbound data transfer and the relevant requirements specified in the notice on assessment result.
As of the date of this annual report, CSI Solar has not been informed that it is identified as a critical information infrastructure operator by any governmental authorities. CSI Solar will closely monitor the relevant regulatory environment and will assess and determine whether it is required to apply for the cybersecurity review with the advice of its PRC counsel.
Renminbi currency exchange restrictions may limit CSI Solar’s ability to utilize its revenues and cash effectively.
The PRC government regulates Renminbi convertibility into other currencies and, in certain cases, restricts the remittance of currency out of China in cross-border transactions and capital flows. Certain of CSI Solar’s revenues and expenses are denominated in Renminbi. If CSI Solar’s revenues denominated in Renminbi increase or its’ expenses denominated in Renminbi decrease, CSI Solar may need to convert a portion of its revenues into other currencies to meet foreign currency obligations.
Under the relevant foreign exchange regulations, conversion of Renminbi for current account transactions, which includes dividends, interest, trade and service-related foreign exchange transactions, is permitted without prior approval from SAFE by complying with certain procedural requirements.
Conversion of Renminbi for capital account transactions, including foreign direct investments and loans, is subject to significant foreign exchange controls and requires approval of or registration with PRC authorities. If CSI Solar finances its PRC subsidiaries through capital contributions, approval of or the record-filing with PRC authorities, including the Ministry of Commerce or its local counterparts, is required. If CSI Solar’s subsidiaries obtain foreign debt through medium and long-term loans or bonds issuance, approval may be required from the NDRC. Foreign exchange controls on capital account transactions could limit CSI Solar’s ability to obtain foreign exchange, pay capital expenses in currencies other than in Renminbi or use Renminbi capital converted from foreign registered capital.
The PRC government may impose stricter foreign exchange policies and increase scrutiny of cross-border capital movements. If these restrictions prevent CSI Solar from utilizing its revenues generated in Renminbi or cash held in China to meet cash or financing requirements outside China or to pay future dividends, its business could be harmed.
29
Risks Related to Our Common Shares
The issuance by us of additional common shares or equity-linked securities may cause existing shareholders to experience dilution and could adversely affect the market price of our common shares.
From time to time, we may issue additional common shares or equity-linked securities for a number of reasons, including to finance our operations and business strategy (including in connection with acquisitions, strategic collaborations or other transactions), to satisfy our obligations for the repayment of existing indebtedness, to adjust our ratio of debt to equity, or for other reasons. For example, in 2025, we issued $200.0 million in convertible senior secured notes due 2029 to PAG. In January 2026, we issued $230.0 million of convertible senior notes due 2031. These notes are convertible into common shares at an initial conversion price of $18.20 and $27.63, respectively. Future issuances of such securities may cause existing shareholders to experience dilution of their ownership interest and may adversely affect the market price of our common shares. We cannot predict the timing, size or terms of any future issuances or sales of common shares or equity-linked securities, nor their effects on the market price of our common shares. In additional, market conditions could require us to accept less favorable terms in future offerings. In addition, our future issuance of securities may be subject to regulatory approval or filling procedures, which may affect our ability to conduct future offerings in a timely manner.
The market price of our common shares is highly volatile.
The market price for our common shares is highly volatile and has been subject to wide fluctuations, which could result in substantial losses to investors. In 2025, our share price fluctuated between a high of $34.59 and a low of $6.57. The stock market in recent years has experienced significant price and volume fluctuations that have affected the market prices of companies, including solar companies. These fluctuations have often been unrelated to or disproportionately impacted by the operating performance of these companies. The market for our common shares has been and may in the future be subject to similar volatility. Factors such as fluctuations in our operating results, announcements of technological innovations or events affecting other companies in the solar industry, currency fluctuations, general market fluctuations, and macro-economic conditions may cause the market price of our common shares to decline.
Your right to participate in any future rights offerings may be limited, which may cause dilution of your holdings.
We may from time to time distribute rights to our shareholders, including rights to acquire our securities. However, we cannot make these rights available in the U.S. unless we register the rights and the securities to which the rights relate under the Securities Act or an exemption from the registration requirements is available. We are under no obligation to file a registration statement with respect to any such rights or securities or to endeavor to cause a registration statement to be declared effective. Moreover, we may not be able to establish an exemption from registration under the Securities Act. Accordingly, you may be unable to participate in our rights offerings and may experience dilution in your holdings.
Our articles contain certain provisions that may adversely affect the rights of holders of our common shares.
Certain provisions in Canadian Solar Inc.’s articles may deprive our shareholders of the opportunity to sell their common shares at a premium over the prevailing market price by delaying or preventing a change of control of our company. Our board of directors has the authority to issue an unlimited number of preferred shares, in one or more series, without approval from the shareholders. Our board of directors may determine the number of preferred shares issued and set the designation, rights, privileges, restrictions and conditions of each series of preferred shares. See “Item 10. Additional Information—B. Articles—Preferred Share Rights” for a more detailed description of the attributes of the preferred shares.
In addition, our board of directors may fix or change the number of directors within the minimum of three and maximum of ten allowed under our articles. Our board of directors may appoint additional directors, who shall hold office for a term expiring not later than the close of the next annual meeting of shareholders, but such appointments may not exceed one-third of the elected directors from the previous annual meeting of shareholders.
30
You may have difficulty enforcing judgments obtained against us.
Canadian Solar Inc. is a corporation governed by the laws of the province of Ontario, Canada, with operations in North America, Asia Pacific, Europe, Australia, South America, the Middle East and Africa. We primarily conduct our manufacturing operations in the U.S. and Asia Pacific, including China. A majority of our directors and officers are residents of countries other than the United States, principally Canada. As a result, it may not be possible for you to effect service of process within the United States upon those persons. Furthermore, it may not be possible for you to enforce against us or them, in the United States, judgments obtained in United States courts, because a substantial portion of our assets and all or a substantial portion of the assets of those persons are located outside the United States. In addition, our constituent documents do not contain provisions requiring that disputes, including those arising under the securities laws of the United States, between us, our officers, directors and shareholders, be arbitrated. As a result, it may be difficult for you to effect service of process within the United States upon us or such persons, or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States.
If a United States person owns at least 10% of our shares, such person may be subject to adverse United States federal income tax consequences.
If a United States person is treated as owning (directly, indirectly or constructively) at least 10% of the value or voting power of our shares, such person may be considered as a “United States shareholder” with respect to each “controlled foreign corporation,” or CFC, in our group. Where our group includes one or more United States subsidiaries that are corporations for United States federal income tax purposes, in certain circumstances we could be treated as a CFC and certain of our non-United States subsidiaries could be treated as CFCs (regardless of whether or not we are treated as a CFC).
A United States shareholder of a CFC may be required to annually report and include in its United States taxable income its pro rata share of “Subpart F income,” “net CFC tested income” and investments in United States property by CFCs, whether or not we make any distributions. An individual who is a United States shareholder with respect to a CFC generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a corporation that is a United States shareholder. A failure to comply with these reporting obligations may subject a United States shareholder to significant monetary penalties and may prevent starting of the statute of limitations with respect to such shareholder’s United States federal income tax return for the year for which reporting was due. We do not intend to monitor whether we are or any of our non-United States subsidiaries is treated as a CFC or whether any investor is treated as a United States shareholder with respect to us or any of our CFC subsidiaries, or to furnish to any United States shareholders information that may be necessary to comply with the aforementioned reporting and tax obligations. An investor who is a United States person should consult its tax advisor regarding the potential application of these rules to its particular circumstances.
We may be classified as a passive foreign investment company, which could result in adverse United States federal income tax consequences to United States Holders of our common shares.
We will be a passive foreign investment company, or PFIC, for United States federal income tax purposes in any taxable year if, applying applicable look-through rules, either (a) at least 75% of our gross income for such year is passive income or (b) at least 50% of the value of our assets (generally determined based on an average of the quarterly asset values for such year) is attributable to assets that produce or are held for the production of passive income. Based on the value of our assets and the nature and composition of our income and assets, we do not believe we were a PFIC for the taxable year ended December 31, 2025, though there can be no assurances in this regard. PFIC status is determined annually, involves extensive factual analysis, including ascertaining the quarterly fair market value of all of our assets and the characterization of each item of income that we earn, and is subject to various uncertainties. Moreover, we cannot guarantee that the IRS will agree with any positions that we take. Accordingly, we cannot assure you that we will not be treated as a PFIC in any taxable year or that the IRS will not take a position contrary to any position that we take.
31
Changes in the value of our assets and/or the nature or composition of our income or assets may cause us to be more likely to be a PFIC. The determination of whether we are a PFIC for any taxable year may also depend in part upon the value of our goodwill and other unbooked intangibles not reflected on our balance sheet (which may depend upon the market value of our common shares from time to time, which may be volatile) and also may be affected by how, and how quickly, we spend our liquid assets and cash generated from our operations. Among other matters, if our market capitalization declines, we may be more likely to be a PFIC because our liquid assets and cash (which are for this purpose considered assets that produce passive income) may then represent a greater percentage of the value of our overall assets. Further, while we believe our classification methodology and valuation approach are reasonable, it is possible that the IRS may challenge our classification or valuation of our goodwill and other unbooked intangibles, which may result in our being or becoming a PFIC for the current taxable year or one or more future taxable years.
If we are classified as a PFIC in any taxable year during which a United States Holder (as defined in “Item 10. Additional Information—E. Taxation—United States Federal Income Taxation”) holds our common shares, that holder could be subject to adverse United States federal income tax consequences. See “Item 10. Additional Information—E. Taxation—United States Federal Income Taxation—Passive Foreign Investment Company.”
ITEM 4 INFORMATION ON THE COMPANY
Canadian Solar Inc. was incorporated under the laws of the Province of Ontario, Canada in October 2001, and became a publicly traded company on the Nasdaq under the ticker symbol “CSIQ” following its initial public offering (“IPO”) on November 9, 2006. Since its incorporation, the Company has undergone several jurisdictional continuances: (i) a continuance from Province of Ontario jurisdiction to Canadian federal jurisdiction on June 1, 2006; (ii) a continuance from Canadian federal jurisdiction to Province of British Columbia jurisdiction on July 23, 2020; and (iii) a continuance from Province of British Columbia jurisdiction back to Province of Ontario jurisdiction on July 29, 2022. Canadian Solar Inc. is currently governed by the Business Corporation Act (Ontario), or the OBCA.
In June 2023, CSI Solar completed its STAR Listing on the Shanghai Stock Exchange, raising gross proceeds of RMB 6.01 billion ($842.6 million). In July 2023, the full over-allotment option was exercised, raising an additional gross proceeds of RMB 0.9 billion ($124.3 million). All U.S. dollar equivalents are based on the exchange rate on the respective transaction dates. CSI Solar issued 622,217,324, representing approximately 17% of its outstanding shares post-IPO. As of the date of this annual report, we own approximately a 63% equity interest in CSI Solar.
In January 2024, Canadian Solar Energy Group B.V. and Recurrent Energy B.V., our subsidiaries, entered into a purchase and sale agreement with GRP IV UK Holdco Limited (“GRP IV”), which is managed by BlackRock, Inc.’s climate infrastructure business (“BlackRock”) to issue Series A preferred shares of Recurrent Energy B.V. (“Series A Preferred Shares”) to GRP IV. GRP IV subsequently assigned its rights, liabilities and obligations under the agreement to GRP IV Rose Bidco Ltd. (“Investor”), an affiliated entity that is also managed by BlackRock. Following initial and subsequent closings in May and September 2024, respectively, BlackRock’s total investment reached $500.0 million, representing 20% of Recurrent Energy B.V.’s fully diluted shares on an as-converted basis as determined immediately upon closing. See “Item 4. Information on the Company—B. Business Overview—Recurrent Energy Key Development.”
For details on our corporate structure and significant subsidiaries, see “—C. Organizational Structure.”
Our principal executive office and principal place of business is located at 4273 King Street East, Suite 102, Kitchener, Ontario, N2P 2E9, Canada. Our telephone number at this address is 1-519-837-1881 and our fax number is 1-519-837-2550. Our agent for service of process in the United States is CT Corporation System, located at 111 Eighth Avenue, New York, New York 10011.
All inquiries to us should be directed to the address and telephone number of our principal executive office set forth above. Our website is www.canadiansolar.com. This website address is provided only as an inactive textual reference. The information contained on, or accessible, through our website does not form part of this annual report.
Overview
We are one of the world’s largest solar technology and renewable energy companies, a leading manufacturer of solar photovoltaic modules, a provider of battery energy storage solutions, and a developer of utility-scale solar power and battery energy storage projects. As of December 31, 2025, we had delivered approximately 174 GW of solar modules to customers worldwide and shipped more than 18 GWh of battery energy storage solutions. Our global footprint spans North America, Asia Pacific, Europe, Australia, South America, the Middle East and Africa.
Strategic Initiative Relating to Our U.S. Business Operations
On December 1, 2025, we announced a strategic initiative to resume direct oversight of our U.S. operations. We have formed a new joint venture with our majority-owned subsidiary, CSI Solar, by holding a 75.1% controlling stake in CS PowerTech, which operates U.S.-based manufacturing and sales of solar modules, solar cells and advanced energy storage systems.
Manufacturing
CS PowerTech and CSI Solar
Our Manufacturing segment primarily focuses on the design, development and manufacturing of solar ingots, wafers, cells, modules and battery energy storage products. We operate manufacturing facilities in the U.S. and Asia Pacific, including China.
We employ a flexible vertically integrated business model that combines internal manufacturing capacity with direct material purchases of ingots, wafers and cells. We believe this approach has benefited us by allowing us to grow in a capital-light manner, while giving us significant flexibility to respond to short-term demand changes. Our global solar module, cell, wafer and ingot annual production capacities were 51.3 GW, 32.4 GW, 37.0 GW and 31.0 GW, respectively, as of December 31, 2025. Our global annual battery energy storage system and battery cell manufacturing capacities were 15.0 GWh and 3.0 GWh, respectively, as of December 31, 2025. Battery energy storage system and battery cell capacities are presented on a single-shift and double-shift annualized basis, respectively.
We believe that we offer one of the most comprehensive crystalline silicon solar power product lines in the industry, encompassing modules with medium to high power outputs. Our products include advanced N-type TOPCon modules. These modules are designed for use across residential, commercial, industrial, and utility-scale solar power generation systems. We market our solar modules under the “Canadian Solar” brand to distributors, system integrators, project developers, and EPC companies worldwide.
Our e-STORAGE provides integrated utility-scale battery energy storage solutions, including turnkey and bankable system solutions across various applications, long-term service agreements and future battery capacity augmentation services. As of December 31, 2025, e-STORAGE had a contracted backlog, including long-term service agreements, of approximately $3.6 billion.
In 2022, we introduced SolBank, our propriety lithium iron phosphate (“LiFePO4”) battery system designed for utility-scale applications. In 2023, we introduced SolBank 3.0, featuring a 5 MWh capacity, an active balancing battery management system (“BMS”), advanced liquid cooling and humidity control, and compliance with the latest international safety and compliance standards.
In 2022, we also introduced EP Cube, our residential battery energy storage product in the U.S., and have since expanded to new markets, including Europe and Japan.
Recurrent Energy
Recurrent Energy primarily develops, builds, sells, and operates solar power and battery energy storage projects, while also providing power services (O&M) and asset management. Prior to the rebranding of the Recurrent Energy segment, we referred to this segment as Global Energy until April 2023.
33
Recurrent Energy develops solar power and battery energy storage projects globally, including in North America, Europe, Latin America, Japan, Australia, and other countries of the Asia Pacific region. As of December 31, 2025, we managed approximately 15.0 GW of solar and battery storage projects under O&M contracts. We focus on capturing greater asset value and retaining ownership of projects in select markets to increase long-term revenues through recurring income, primarily from the sale of electricity and other related services generated by our operating portfolio. Our solar and storage pipelines reflect our project development strategy, allowing us to capitalize on demand for renewable energy projects and enhance long-term revenue generation.
Recurrent Energy Key Development
In January 2024, Canadian Solar Energy Group B.V. and Recurrent Energy B.V., our subsidiaries, entered into a purchase and sale agreement with GRP IV UK Holdco Limited (“GRP IV”), which is managed by BlackRock, Inc.’s climate infrastructure business (“BlackRock”) to issue Series A preferred shares of Recurrent Energy B.V. (“Series A Preferred Shares”) to GRP IV. GRP IV subsequently assigned its rights, liabilities and obligations under the agreement to GRP IV Rose Bidco Ltd. (“Investor”), an affiliated entity that is also managed by BlackRock. The expected purchase and sale transaction has been completed following an initial closing in May 2024 and a subsequent closing in September 2024. As agreed between the parties, with these closings, BlackRock’s total investment has reached $500.0 million, representing 20% of the outstanding fully diluted shares of Recurrent Energy B.V.’s fully diluted shares on an as-converted basis as determined immediately upon closing.
Dividends
Pursuant to the transaction documents, either (a) Recurrent Energy shall, to the extent permitted by law and specifically authorized and declared by Recurrent Energy’s board of directors in respect of a given calendar quarter, pay in cash to the holders of Series A Preferred Shares dividends in respect of each outstanding Series A Preferred Share at a per annum rate equal to 9% of the Stated Value of such share or (b) to the extent of any portion of the dividend not paid in cash, such amount will automatically be added to the Stated Value of the Series A Preferred Shares. Amounts added to the Stated Value as described above (“Accretion Amounts”) will continue to accrue at the same 9% annual rate and compound on a quarterly basis, subject to certain adjustments. The “Stated Value” referred to above generally represents the original purchase price of the Series A Preferred Shares plus the compounded Accretion Amounts plus any accumulated preferred return that has not been paid in cash or added to the Stated Value as an Accretion Amount and is determined as of each calendar quarter. Subject to the foregoing, the transaction documents place limitations on the payment of dividends absent the unanimous approval of the shareholders.
Voting Rights
The holders of the Series A Preferred Shares are generally entitled to vote, on an as-converted basis, on all matters upon which holders of ordinary shares have the right to vote in the general meeting of Recurrent Energy (voting together as a single class with the holders of the ordinary shares of Recurrent Energy). Holders of the Series A Preferred Shares are entitled to appoint one director to the board of Recurrent Energy. So long as any Series A Preferred Shares are outstanding, the prior written consent of any holders of at least 60% of the Series A Preferred Shares will be required before Recurrent Energy or its subsidiaries take certain actions.
Liquidation Events
The Series A Preferred Shares rank senior to Recurrent Energy’s ordinary shares with respect to rights upon the voluntary or involuntary liquidation, dissolution or winding up of Recurrent Energy or upon a deemed liquidation event (collectively, a “Liquidation Event”). Deemed liquidation events include, among other events, a sale of 50% or more of the assets of Recurrent Energy or a merger, consolidation, equity sale or similar transaction involving the transfer of beneficial ownership of 50% or more of the voting power or economic interest of the outstanding capital stock of Recurrent Energy, subject to certain limitations (a “Company Sale”), and the occurrence of an Exit Demand (as defined below).
34
Upon a Liquidation Event, the holders of Series A Preferred Shares then outstanding shall be entitled to be paid out of the assets of Recurrent Energy available for distribution to its shareholders, or otherwise received by shareholders in connection with such Liquidation Event, before any payment shall be made to the other shareholders, an amount per Series A Preferred Share equal to the greater of (i) 1.3 times the Stated Value, and (ii) such amount distributable per ordinary share had all Series A Preferred Shares been converted into ordinary shares immediately prior to such Liquidation Event (the “Preferred Liquidation Amount”). If the assets of Recurrent Energy available for distribution to its shareholders shall be insufficient to pay the full Preferred Liquidation Amount, the holders of Series A Preferred Shares shall share ratably in any distribution of the assets available for distribution.
Exit Rights
At any time on or after the fifth anniversary of the first closing (i.e., May 31, 2024), Investor shall be entitled to cause Recurrent Energy to use commercially reasonable efforts to effect (1) a Company Sale resulting in proceeds in respect of the Series A Preferred Shares equal to at least the Preferred Liquidation Amount (an “Investor Exit”) or (2) a qualified primary public offering of the ordinary shares of Recurrent Energy (an “IPO”), by delivering a written notice (an “Exit Request”) to Recurrent Energy. If an Investor Exit or qualified IPO is not consummated within two years of the delivery of an Exit Request, Investor shall have the right to cause Recurrent Energy and its affiliates to effect an Investor Exit or qualified IPO (an “Exit Demand”). In the event of the closing of an IPO, all outstanding Series A Preferred Shares shall automatically be converted into a number of ordinary shares of Recurrent Energy equal to the greater of (i) the original liquidation preference of the Series A Preferred Shares divided by the conversion price in effect at such time and (ii) 1.3 times the Stated Value divided by the fair market value of such shares, with such fair market value being deemed to be equal to the public offering price per share disclosed in the final prospectus for such IPO.
The original liquidation preference shall initially be equal to the purchase price, subject to adjustment for share splits, share dividends or returns, reverse splits, combinations, recapitalizations and similar transactions. The conversion price shall initially be equal to the purchase price, subject to anti-dilution adjustment as provided in the terms of the Series A Preferred Shares.
Redemption and Conversion Rights
On and after the five-year anniversary of the first closing (or an earlier Exit Demand pursuant to an ESG Default in accordance with the shareholders’ agreement), the Series A Preferred Shares may be redeemed, in whole or in part, at the option of Recurrent Energy upon 30 days’ prior written notice delivered to all holders of Series A Preferred Shares (an “Optional Redemption Notice”).
Following receipt of the Optional Redemption Notice, any holder of Series A Preferred Shares may elect, in its sole discretion, to convert all or any number of the shares subject to redemption into ordinary shares at the then effective conversion price, in which case Recurrent Energy shall not redeem such Series A Preferred Shares (i.e., the number of Series A Preferred Shares to be redeemed by Recurrent Energy shall be reduced by the number of Series A Preferred Shares so converted). In addition, each holder of Series A Preferred Shares shall have the option to convert all or any of its Series A Preferred Shares upon the occurrence of a Company Sale and certain other monetization events, into a number of ordinary shares of Recurrent Energy equal to the greater of (i) the original liquidation preference of the Series A Preferred Shares divided by the conversion price in effect at such time and (ii) 1.3 times the Stated Value divided by the fair market value of such shares.
Our Products and Services
We market our products primarily under our own brand names, including “Canadian Solar”, “CSI”, “CS PowerTech”, “CSI Solar”, “Recurrent Energy”, “e-STORAGE”, “SolBank”, “KuBank” and “EP Cube.”
Solar Modules
We offer high-efficiency solar modules with power outputs ranging from 450W to 740W, using mono-crystalline cells in various configurations. We introduced module products utilizing 210 mm x 210 mm square wafers and 182 mm x 210 mm rectangular wafers. Our mainstream solar modules include (i) CS7N-TB-AG (TOPCon, 132 half-cells, 210 mm x 210 mm wafer, bifacial), (ii) CS6.2-66TB (TOPCon, 132 half-cells, 182mm x 210 mm wafer, bifacial), and (iii) CS6.2-66HB (HJT, low carbon module, 132 cells, 182mm x 105 mm wafer, bifacial). These products are designed for residential, commercial and utility-scale applications. We are committed to providing customers with high-efficiency and reliable PV module products and related services.
35
During the period from 2021 to 2024, we mass-produced TOPCon and HJT cells and modules. In 2025, we developed the next-generation TOPCon SMBB-Ultra technology for the TOP(Bi)HiKu6 products, which optimizes cell and module technologies to achieve higher module power. In addition, we enhanced optical absorption by introducing total-reflection interval films and ultra-high-transmittance anti-reflective coatings on the PV-glass surface. Through these improvements, the module power output of CS6.2-66TB has been increased up to 655W, with module efficiency of 24.2%, which may contribute to lower levelized cost of electricity (“LCOE”) at the system level.
Based on the technology platform of TOP(Bi)HiKu6 products, we have developed a series of differentiated PV module products. For example, our anti-dust PV modules are designed to reduce the accumulation of dust at the edges of the module during long-term use through special structural design, which may increase electrical power generation. Our sound barrier PV modules have been installed along the highway. Our anti-glare PV modules have been used in environments requiring low light reflection. Aesthetic and insulated composite frames have also been introduced in our module products and used in rooftop projects.
We have developed CS6.2-66TB-HP anti-hail PV module, which can pass a 55 mm hail test to meet hail resistance requirements for the U.S. market. The CS6.2-66TB-HP also provides improved load resistance and fire resistance compared with conventional PV modules.
In 2025, we launched the CS 6.2-66HB-H product for utility-scale applications, with HJT cell size of 182mm x 105 mm and module power of up to 640W. This product features high efficiency, high bifaciality, a low temperature coefficient and lower carbon emissions, and is suitable for both utility-scale and rooftop applications.
Battery Energy Storage
Our battery energy storage solutions provide proprietary high-performance, safe and reliable energy storage systems for utilities, independent power producers, and commercial and industrial business. These solutions provide the balance of energy delivery with energy consumed, including absorption of excess energy in the systems and release for when it is needed, and enhance power resilience across multiple applications.
Battery energy storage demand is growing across various utility and grid opportunities and applications including energy arbitrage, reserve capacity, flexible peaking, resource adequacy, grid frequency regulation and voltage control. We have introduced our high-energy and high-power storage power block with integrated lithium iron phosphate (“LiFePO4” or “LFP”) battery system designed to meet market demand for 1 to 4 hours of energy storage duration. We offer turn-key solution, integrating battery storage, power conversion system and energy management system, complemented by long-term service agreements, including operation and maintenance, capacity augmentation, system performance optimization, warranty, and other services throughout the system operational life. We also provide comprehensive services and capabilities with project installations, including consulting and project engineering, procurement, and construction (“EPC”) management.
To drive growth and innovation in battery energy storage, we have invested significantly into developing proprietary products, technologies, and manufacturing processes. In 2021, we began designing DC battery storage systems, including battery modules and packs, under the “SolBank” brand. In 2022, we launched SolBank 1.0, featuring a LiFePO4 battery system for utility-scale applications, with capacity of up to 2.967 MWh. In 2023, we launched SolBank 3.0, with power up to 2.35 MW and capacity of 5 MWh. SolBank 3.0 integrates high energy density cells, advanced safety system, smart liquid cooling and active balance system controls. Housed in a 20-ft container, SolBank 3.0 provides up to 45% increase in product-level capacity and up to 40% decrease in commissioning time compared to its previous generation. SolBank 3.0 is equipped with a pack and electrical redundancy protection system, abnormal performance detection, multi-level fire alarm and suppression protection system designed to enhance product safety. Its optimized thermal management lowers auxiliary power consumption by up to 30% compared to its previous generation. Its flexible, modular design enables compatibility with various power conversion systems (“PCS”). In addition, SolBank 3.0 has passed large-scale fire testing conducted in accordance with applicable international standards, including UL 9540A test methodologies, demonstrating its ability to mitigate thermal propagation and enhance system-level fire safety performance.
In 2022, we launched our residential battery energy storage product, EP Cube, an all-in-one residential battery energy storage solution designed to optimize solar self-consumption. Initially introduced in the U.S., it has since expanded to Europe and Japan. The EP Cube system offers scalable capacities ranging from 9.9 kWh to 19.9 kWh per unit, with full system capacity up to 119.9 kWh.
36
In 2025, we launched FlexBank 1.0, a modular utility-scale energy storage system designed for large-scale applications. FlexBank 1.0 delivers up to 8.36 MWh of energy capacity and features a modular open-frame architecture that enables each cabinet to serve as an independent building block, simplifying logistics, installation and site layout. Built on our 314 Ah LFP cell technology, FlexBank 1.0 incorporates a multi-tiered protection system, including heat barriers, a three-level electrical protection system and advanced cell-level precision management. The FlexBank platform also serves as a foundation for future battery technologies featuring higher amperage cell formats and improved performance characteristics. The system is expected to be ready for deployment in 2026.
In 2025, we expanded our commercial and industrial energy storage portfolio with the launch of KuBank 2.0, a modular LFP battery energy storage system designed for commercial, industrial and similar applications. KuBank 2.0 features an integrated battery management system and a scalable architecture that allows multiple units to be connected in parallel to meet varying power and energy requirements. KuBank 2.0 delivers up to 277 kWh of energy capacity. The system is designed for outdoor operation, incorporates multi-level safety protections and thermal management, and is certified to applicable international safety and performance standards. It supports applications use cases such as peak shaving, demand management and energy optimization.
As of December 31, 2025, e-STORAGE had a contracted backlog, including long-term service agreements, of approximately $3.6 billion.
Solar System Kits
Our solar system kit is a ready-to-install package consisting of solar modules produced by us and third-party components, such as inverters, racking system and accessories. These kits cater to various applications, including residential and commercial rooftops.
Power Electronic
We began developing residential inverters in 2017 and launched our first inverter products in 2019. Our power electronic products cover a comprehensive range of inverters tailored for residential, commercial, industrial and utility-scale solar and energy storage applications. Our product lineup include the 3-5 kW and 7-9 kW residential inverter models, the 15-25 kW, 40-60 kW and 75-125 kW C&I inverter models, the 320kW, 333kW and 350kW utility-scale inverter models, and 200kW and 215 kW models power conversion system (“PCS”) for energy storage. In 2022, we introduced our first internally developed and manufactured 3-phase string inverter for commercial and small utility-scale applications. In 2023, we launched our 1500Vdc 320 kW string inverter and 1500Vdc 200 kW string PCS products, which further enhance our offerings in the utility-scale and energy storage markets.
EPC Services
CSI Solar provides turnkey EPC services in China for ground-mounted solar power and battery energy storage projects, as well as large-scale distributed systems for C&I customers. Our services encompass system design, procurement, installation, testing and commissioning.
Long-term Service Agreements (LTSA)
The LTSA, all previously executed by our e-STORAGE platform, support the long-term operation and maintenance of the battery energy storage systems, contributing to grid reliability and stability.
37
Solar Power and Battery Energy Storage Asset Sales
We develop, build and sell solar power and battery energy storage projects. Our project development activities encompass site selection, land acquisition, securing interconnection, structuring PPA or similar offtake contract, obtaining permits, and managing procurement and construction. We actively pursue suitable buyers for our projects. See “—Sales, Marketing and Customers—Recurrent Energy.”
Revenue from Electricity and Battery Energy Storage Operations
We operate select solar power and battery energy storage projects, generating revenue through electricity sale and related services. The majority of electric power generated by our solar power projects is contracted under long-term PPA, VPPA, or contracts for capacity and ancillary services, with public utilities, licensed suppliers, corporate offtakers and commercial, industrial or government end users.
Power Services (O&M)
Our power services include monitoring, inspections, repair and replacement of project equipment, site management and administrative support services for projects in operation. We leverage advanced technologies such as semi-automated module washing, autonomous vegetation management, machine-learning predictive maintenance and drone inspections. We continue to enhance our service offerings with ongoing technological investments.
Supply Chain Management
Our manufacturing operations depends on a stable and cost-effective supply of polysilicon, solar ingots, wafers, cells and lithium battery cells. We have entered into long-term agreements with various silicon raw material and wafer suppliers, particularly during periods of tight upstream supply. These agreements specify price, quantity, delivery terms and technical specifications. While they usually include specific price terms, most of them also incorporate upward or downward price adjustment mechanisms based on market conditions. In line with industry practice, we make advance payments without collateral for scheduled deliveries, which are credited against purchase prices. We sourced all silicon raw materials from third parties and continue to diversify our polysilicon, wafer, cell and lithium battery cell suppliers.
For risks related to the long-term supply agreements, see “Item 3. Key Information—D. Risk Factors—Risks Related to Our Company and Our Industry—Oversupply of polysilicon, solar wafers, cells and modules may cause substantial downward pressure on the prices of our products and reduce our revenues and earnings” and “—Supply chain disruptions, cost increases or performance issues could adversely affect our business and relationship with customers, particularly given our dependence on a limited number of key suppliers.”
Recurrent Energy procures solar modules and battery energy storage products from CS PowerTech and CSI Solar in transactions intended to be priced on an arm’s length basis, as well as from certain third-party suppliers. We have centralized procurement operations to optimize project construction costs and secure competitive terms with key suppliers, enhancing our ability to compete on cost given the large procurement quantities.
38
Manufacturing, Construction and Operation
Our solar module manufacturing process integrates automation and quality control to enhance efficiency and product consistency. We assemble modules by interconnecting solar cells by tabbing and stringing them into a desired electrical configuration, laminate them under vacuum, cure them by heating, and package them within protective lightweight anodized aluminum or steel frames to withstand the environment. We seal and weatherproof our solar modules to withstand high levels of ultraviolet radiation, moisture and extreme temperatures. Key manufacturing equipment includes automatic laminators, simulators and solar cell testers. Our flexible production lines balance automation and skilled labor to optimize efficiency.
We primarily use in-house manufactured silicon ingots, wafers, solar cells, with a portion sourced from third parties, for our solar module production. Our solar module manufacturing costs in China, including purchased polysilicon and wafers, decreased from $0.169 per watt in 2023 to $0.106 per watt in 2024, and further decreased to $0.09 per watt in 2025. We continue to focus on cost reduction through improvements in solar cell conversion technology and efficiency, manufacturing yields and material sourcing.
We develop, build, sell and operate solar power and battery energy storage projects across North America, Europe, Latin America, Japan, Australia, and other countries of the Asia Pacific region. We manage all aspects of project development and operations, including site selection, design, permitting, engineering, procurement, construction and operations, utilizing in-house teams or third-party contractors based on project requirements and resource availability.
The development process for our solar power and battery energy storage projects consists of the following key stages:
Currently, we have owned and operated solar power and battery energy storage projects in the U.S., Europe, Latin America, Japan and other countries in the Asia Pacific region. Once connected to the grid, our projects regularly undergo inspections, monitoring, and management to maximize utilization, power generation and system lifespan.
We operate a real-time monitoring center in Ontario, Canada, overseeing operational performance and managing power services (“O&M”). The system is designed to raise alerts for underperforming inverters or strings, ensuring timely interventions. Our cloud-based platform utilizes our proprietary systems and algorithms for predictive maintenance for both self-owned and third-party projects, tracking work orders, warranty claims, spare parts, health and safety incidents, and operational reports.
39
Quality Control and Certifications
We have registered our quality control system in compliance with ISO9001:2015 and IEC62941 standards. TÜV Rheinland Group, a leading international service provider for safety and quality certifications audits our quality systems. We inspect and test incoming raw materials, monitor our manufacturing processes, and conduct reliability and other tests on finished products to ensure quality control.
We maintain various international and domestic certifications for our solar modules. For example, we have obtained IEC61215/ IEC61730 certifications for sales in Europe, UL61730 certifications for North America, and other necessary certifications for China, Japan, Korea, India, Brazil, Australia, Colombia, Israel, Italy, the U.K. and Indonesia. IEC certifications are issued by Verband Deutscher Elektrotechniker, or VDE, while UL certifications are issued by the Canadian Standards Association, or CSA. Our module products comply with the latest standards, including IEC 61215:2021, IEC61730:2023 and UL61730 Ed.2-2022, and meet regional regulations. Our module products have achieved high California Energy Commission, or CEC, PVUSA test condition ratings. Further, our module products have passed extended stress program qualifications, such as salt mist testing and ammonia testing, as well as extra-standard or high-frequency testing programs on multiple quality factors with PVEL and RETC. We have continuously improved our silicon, ingot, wafer, cell and module production processes to maintain a competitive carbon footprint certification for the French solar tender requirements. Our TOPCon modules obtained certification under the French Programmation Pluriannuelle de l’énergie (“PPE2” & “PPE2 V2”) solar tender program.
Our PV test laboratory is accredited by the China National Accreditation Service for Conformity Assessment (the “CNAS”) under ISO17025 quality management standard, and has been approved into various Data Acceptance Program, namely CSA, VDE, TÜV SÜD, Dekra and China General Certification, or CGC. This allows us to conduct a portion of the product certification testing in-house, reducing time-to-market and certification costs, and performing exhaustive product and component reliability research to enhance product durability.
Our Power Conversion System (“PCS”) has obtained GB/T34120 and GB/T34133 certifications in China. We also maintained various certifications according to local business requirements for our PV inverters, including IEC62109 and IEC62116 safety certifications and CQC certification in China, KSC 8565 and KSC 8567 in Korea, RS097 in South Africa, 140 and 515 in Brazil, and EN50549-1, EN50549-2, CEI0-21, CEI0-16, RD1699, NTS2.1, VDE4105 and PPDS in Europe.
Our energy storage products comply with the regulatory requirements and industry standards of major global markets. For example, we have obtained certifications from TÜV Rheinland for compliance with the EU’s Low Voltage Directive, Electromagnetic Compatibility Directive, Battery Regulation, as well as the RoHS and REACH regulations. In addition, our products hold relevant IEC certifications, including but not limited to IEC 62619, IEC 62477 and IEC 62933. For the Chinese market, our products meet the requirements GB/T 36276 and GB44240. In North America, we have obtained UL 9540A, UL 1973 and UL 9540 certifications, and also obtained NFPA 68 and NFPA 69 simulation reports issued by TÜV Rheinland. To meet the requirements of the latest NFPA 855:2026 standard, our SolBank product completed the Large-scale fire test, with the entire process witnessed by the Energy Storage Response Team and the Canadian Standards Association.
Our remaining products are undergoing certification processes before entering relevant markets to ensure compliance with global regulatory and grid connection requirements.
Sales, Marketing and Customers
Our large and diversified customer base includes active customers in more than 160 countries. Our revenue sources have fluctuated significantly over recent years, and a significant and growing portion of our revenues are generated in the U.S. For example, the Americas contributed 34.4%, 51.8% and 56.4% of our revenues in 2023, 2024 and 2025, respectively; Asia contributed 41.0%, 30.0% and 22.3%, respectively; and Europe and other regions contributed 24.6%, 18.2% and 21.3%, respectively.
Our primary customers are distributors, system integrators, project developers, installers and EPC companies. Historically, a small number of customers have accounted for a significant portion of our net revenues. In 2023, 2024 and 2025, our top five customers accounted for 13.4%, 17.8% and 17.4% of our total net revenues, respectively, while our largest customer in these years accounted for 3.5%, 5.4% and 4.5%, respectively. We market and sell solar modules worldwide for residential, commercial and utility-scale solar applications. Sales are primarily executed through our direct sales team operating globally.
40
Our marketing initiatives include brand sponsorships, digital marketing, social media engagement, and channel marketing programs to support customers in promoting our products and business. We provide product training, sales training and new product briefings to enhance customer engagement. Our marketing team also focuses on public relations and crisis management to protect and strengthen our brand image. By collaborating closely with our sales teams and leading solar research firms, we are well positioned to deliver up-to-date market insights on a continuous basis to support sales strategies and decision-making.
Our strong brand reputation is reinforced by multiple industry awards and recognitions, reflecting our commitment to quality and innovation. In 2024, we were ranked first among Energy & Utility companies in Newsweek’s World’s Most Trustworthy Companies list and were named a Top 10 Battery Energy Storage System Integrator by S&P Global. We also received the Top Brand PV Award USA 2024 from EUPD Research, recognizing our leadership in the photovoltaic sector. In 2025, we were ranked second in Wood Mackenzie’s Solar Module Manufacturer Ranking and were designated as a Tier 1 Solar Company by BloombergNEF. In the energy storage sector, we were recognized as a Tier 1 Energy Storage Manufacturer by BloombergNEF and as a Tier 1 Battery Energy Storage System Supplier by S&P Global. Additionally, EP-Cube, our proprietary energy storage cell technology, received the 2025 iF Design Award and the Gold 2025 iF Design Award, recognizing its design and technological excellence. These accolades reinforce our market positioning and strengthen customer trust in our products and solutions globally.
As we expand our manufacturing capacity and enhance our brand with broader system solutions, we continue to develop new customer relationships across diverse geographic markets to reduce dependency on any single market. We continuously engage with a broad array of industry participants, including utilities, independent power producers, developers, EPCs, distributors, and corporate offtakers. We plan to further invest in research and development to introduce more compatible, reliable and cost-effective products and solutions, strengthening our competitive position in the global solar modules and battery energy storage market.
In addition, we target our sales and marketing efforts for specialty solar products at companies in selected industries, including automotive, telecommunications and LED lighting. As standard solar modules become increasingly commoditized and technology advancements enable broader off-grid solar applications, we intend to increase our sales and marketing efforts on specialty solar products. Our sales and marketing team collaborates with our specialty solar product development team to adapt to evolving customer preferences and market demands, ensuring our sales and marketing team’s effective communication to customers of product developments and innovations. As the specialty solar market grows, we aim to expand into additional sectors and establish new relationships.
We are also expanding our direct sales channel to sell modules and other solar system components, both as system packages and stand-alone components, to EPCs, developers, contractors and installers. This expansion reduces customer concentration risk, while mitigating payment and demand fluctuations. To reach smaller contractors and installers which we do not directly serve, we maintain strong sales channels and relationships with key distribution partners. Concurrently, we have expanded our key account and utility-scale sales channels, selectively increasing our market share amid growing demand for mid-scale to large-scale solar power plants. This expansion is driven by our high-efficiency, large-format module portfolio, which optimizes LCOE for large commercial and utility-scale projects.
We leverage our extensive customer and supply chain network to provide competitive stand-alone battery energy storage solutions and integrated “Photovoltaic + Storage” hybrid solutions. Our ongoing investments in research and development and our advancements in battery energy storage products and technology, strengthen both our downstream product offerings and upstream integrated battery energy storage manufacturing capabilities.
We develop, build, sell and operate solar power and battery energy storage plants across North America, Europe, Latin America, Japan, Australia and other countries of the Asia Pacific region. Our customers include utilities, independent power producers and energy investors, while our power services (O&M) and asset management customers include other solar and battery storage project developers and owners. To expand market reach and strengthen project sales, we conduct market due diligence, engage regularly with industry operators and investors, and participate in industry conferences and events.
Our sales pipeline reflects our project development strategy, allowing us to capitalize on demand for renewable energy projects and providing flexibility to pursue a balance of project sales and project ownership, depending on market conditions and capital availability.
41
The following table presents our total solar pipeline:
Total Solar Pipeline by Region as of December 31, 2025 (in MWp)
Under
Advanced
Early-Stage
Region
Construction
Backlog
Development
Total
North America
276
556
427
3,923
5,182
EMEA
674
1,687
1,033
4,995
8,389
Latin America
128
374
352
6,256
7,110
Asia Pacific
492
616
546
2,080
3,735
1,570
3,233
2,358
17,254
24,415
Note: Total project pipeline represents the gross MWp size of the projects owned by us (including through our investments in affiliates), and includes 63 MWp under construction and 441 MWp in backlog partially sold to third parties.
The following table summarizes our battery energy storage pipeline:
Total Storage Pipeline by Region as of December 31, 2025 (in MWh)
600
200
21,540
22,940
43
2,590
3,829
31,955
38,417
—
1,320
4,645
5,965
162
2,640
2,981
10,380
16,163
805
5,430
8,730
68,521
83,485
Note: Total project pipeline represents the gross MWh size of the projects owned by us, and includes 13 MWh under construction and 1,194 MWh in backlog partially sold to third parties.
Backlog projects are late-stage projects that have passed their risk cliff date and are expected to start construction within the next 1-4 years. A project’s risk cliff date is the date on which the project passes the last perceived high-risk development stage and varies depending on the country where it is located. Typically, this occurs after the project receives all required environmental and regulatory approvals and enters into interconnection agreements and offtake contracts, including FIT and PPA. A significant portion of backlog projects are contracted (i.e., have secured FIT or PPA), while the remaining projects have a reasonable assurance of securing PPAs.
Advanced development projects are mid-stage projects that have either secured or have more than 90% certainty of securing an interconnection agreement. Early-stage development projects are early-stage projects controlled by Recurrent Energy that are in the process of securing interconnection rights.
We actively develop both stand-alone battery energy storage projects and hybrid solar-plus-storage projects. Most of our projects under development includes the co-hosting of battery energy storage systems with solar power facilities on shared land, improving efficiency through a single interconnection point for each project to serve the solar and battery energy storage energy load. This strategy enhances project economics for us and our investors.
In addition, our track record includes several storage tolling agreements with a variety of power purchasers, including community choice aggregators, investor-owned utilities, universities, public utility districts and development services agreements to retrofit operational solar projects with battery energy storage, many of which were previously developed by us.
42
Our projects business is capital intensive and requires significant investment in the development, construction, ownership of solar power and battery energy storage assets, including equity investments in project affiliates. These projects typically involve multi-year development cycles and construction cycles and require substantial upfront expenditures, such as grid interconnection deposits and letters of credit, land acquisition, permitting, legal, equipment procurement and construction costs, before projects achieve commercial operation and any returns are realized. The scale and timing of these investments may be affected by project execution risks, regulatory or policy developments (including changes in trade measures or tariffs), and supply chain constraints. In addition, our capital requirements may vary depending on the pace of development, construction progress, and our strategy with respect to balancing project sales and asset ownership. If existing sources of financing are not sufficient to support planned development, construction, or asset acquisitions, we may seek additional equity financing, adjust the timing or scope of investments, or pursue alternative project structures. Certain of our projects are developed through joint ventures, in which we rely on our partners to fund their proportionate share of capital contributions. Delays in project completion or asset monetization, or changes in financing or partnership arrangements, could affect the timing of returns and the capital available for reinvestment in our projects business.
Customer Support and Service
We are committed to delivering high-quality products through our comprehensive warranty coverage and customer support services. We typically offer a 15 or 25 years warranty against defects in materials and workmanship for our standard solar modules. We offer a 25 to 30 years linear power performance warranty that guarantees the actual power output of our modules.
Our battery energy storage products come with a warranty covering performance and manufacturing defects. The standard warranty typically ranges from 1 to 5 years from the date of installation and is structured as an assurance-type warranty, guaranteeing quality within specified usage parameters. Customers have the option to separately purchase extended warranties and performance guarantees for up to an additional 15 years. To support these warranties, we have obtained warranty backing from our suppliers.
For solar power and battery energy storage projects built under our EPC contracts, we provide major equipment warranties and limited workmanship or balance of system warranties against defects in engineering, design, installation and construction under normal use, operation and service conditions generally for a period of two to five years following project commissioning. To resolve warranty claims, we may repair, refurbish or replace equipment as needed. We have obtained similar warranty backing from our suppliers.
Our customer support and service function handles technical inquiries and warranty-related issues, ensuring that our customers receive timely and professional assistance. We have expanded our capacity in this area to enhance our responsiveness and efficiency in resolving warranty claims.
Historically, we have agreements with a group of insurance companies to reduce some of the risks associated with our warranties. See “—Insurance” below.
Competition
The markets for solar power and battery energy storage products are highly competitive and continually evolving. We face intense competition from companies, such as First Solar, Inc., LONGi Green Energy Technology Co. Ltd., Trina Solar Limited, JinkoSolar Holding Co., Limited, JA Solar Co., Limited and Tongwei Solar Co., Ltd, and battery energy storage companies, such as Tesla, Inc., Fluence Energy, Inc. and Sungrow Power Supply Co., Ltd. Some module competitors are developing or are currently producing products based on new technologies that may ultimately offer lower costs or better performance than our products. These include products based on IBC PV technology, which reduces shading by locating metal contacts at the cell to the rear side and increasing power density through larger area for photo absorption. To compete effectively, our products and production capacity are undergoing continuous transformation. For example, while crystalline silicon cell modules have become the market mainstream, we have significantly upgraded our production to N-type and TOPCon technology, which is focused on further improving the photoelectric conversion efficiency and reducing the manufacturing cost. Some competitors operate vertically integrated models, spanning upstream polysilicon manufacturing to downstream solar system integration. The solar power market also competes with other sources of renewable and alternative energy as well as conventional power generation.
We believe that competition in the solar power and battery energy storage markets is driven by multiple factors, including pricing, the ability to deliver products to customers on time and in required volumes, product quality and customer service, nameplate power or capacity and other performance parameters such as power tolerances, value-added services such as system design and installation, value added features that make products easier or cheaper to install, availability of bundled system components such as mounting systems, brand equity and reputation, including the willingness of banks to finance projects using products produced by a particular supplier, customer relationships and distribution channels, and the aesthetic appearance of products.
In the immediate future, our competitiveness will depend on our ability to deliver cost-effective products in a timely manner and to develop and maintain a strong brand based on high-quality products and strong relationships with customers. Our competitiveness also depends on effectively managing our cash flow and balance sheet and maintaining relationships with financial institutions that fund solar power and battery energy storage projects. We believe that the solar industry is experiencing accelerated market concentration by large players. We believe that such industry concentration will benefit us in the long term. To compete successfully, we aim to produce innovative, high-quality products at competitive prices and develop an integrated sales approach that includes services, ancillary products, such as mounting systems and inverters, and value-added product features. Our goal is to offer our customers products that deliver the lowest LCOE or Levelized Cost of Storage (“LCOS”), focusing particularly on high-priced markets and segments, such as the distributed generation market, which includes commercial, industrial and residential applications. We also believe that a robust marketing program and strong relationships with customers and suppliers will support us in this competitive environment.
Our primary competitors are local and international developers, operators of solar power and battery energy storage projects, financial investors and certain utility companies. Our business is capital-intensive with numerous participants. These competitors vary in size, geographic focus, financial resources and operating capabilities. The commercial and regulatory environments for solar power and battery energy storage project development, sale and operation vary significantly across regions and countries. We develop and build and, in some cases operate and maintain, solar power and battery energy storage projects in various regions including North America, Europe, Latin America, Japan, Australia and other countries of the Asia Pacific region. While local policy frameworks on battery energy storage remain relatively new, many new entrants are seizing market opportunities.
We believe that competition in the global solar power and battery energy storage project development is influenced by several factors, including greenfield development capabilities, scale of secured solar power and battery energy storage interconnection pipelines, geographic diversification of project pipelines, degress of vertical integration with upstream manufacturing, reputation and track record, relationships with government authorities and local stakeholders, and knowledge of local policies. Competitive positioning is also affected by access to working capital and relationships with local and international banks, and, in select markets, tax equity investors, and the experience of management teams, technical personnels, and capabilities in managing construction and operations.
We cannot, however, guarantee that some of our competitors do not or will not have advantages over us in particular markets or in general, including greater operational, financial, technical, management or other resources.
For further discussion of the competitive risks that we face, see “Item 3. Key Information—D. Risk Factors—Risks Related to Our Company and Our Industry—Our industry is highly competitive and many of our competitors have greater resources than we do or are more adaptive.”
Insurance
We maintain insurance against some, but not all, potential risks and losses associated with our industry and operations. For some risks, we may not obtain insurance if we believe the cost of available insurance is excessive relative to the risks presented. In addition, pollution and environmental risks generally are not fully insurable. We maintain property insurance policies with reputable insurance companies to cover our equipment, facilities, buildings, inventories and buildings under construction. The coverage of these insurance policies includes losses due to natural hazards and losses arising from unforeseen accidents. Certain of our manufacturing facilities are covered by business interruption insurance. In addition, our solar power and battery energy storage projects are supported by a broader insurance program tailored to construction and operational risks, although, any material damage or interruption to any of our manufacturing facilities or operational assets could still have a material and adverse effect on our results of operations. We also maintain commercial general liability, including product liability coverage, as well as insurance covering certain operational, contractual and technology-related risks. We have been purchasing credit insurance from insurers for certain of our accounts receivable trade in order to reduce our exposure to credit loss. Risks related to marine and air for the export of our materials and products are covered under cargo transportation insurance. We also maintain directors and officers’ liability insurance.
44
Environmental Matters
Our major manufacturing operations are certified under ISO14001 (Environmental Management) and ISO45001 (Occupational Health and Safety) standards, with select facilities also certified under ISO50001 (Energy Management). Additionally, Recurrent Energy’s O&M business is certified under the ISO45001 standards. These certifications require adherence to waste reduction, energy conservation, injury reduction and other environmental, health and safety procedures and objectives. In addition, our solar power and battery energy storage project developments undergo environmental assessments to evaluate and mitigate potential impacts.
Our solar products comply with environmental regulations in the jurisdictions where they are installed. We ensure compliance with EU Regulation (“EC”) No 1907/2006 concerning the Registration, Evaluation, Authorization and Restriction of Chemicals (“REACH”). While solar modules are exempt from EU’s Restriction of Hazardous Substances (“RoHS”) Directive 2011/65/EU and its amendments, our solar system solutions including string inverters, are subject to and comply with RoHS. We also strictly adhere to Toxicity Characteristic Leaching Procedure (“TCLP”) testing for our solar modules portfolio to monitor the presence of toxic metals, including arsenic, barium, cadmium, chromium, lead, mercury, selenium and silver, according to TCLP Standard EPA Test Method 1311, as issued by the U.S. Environmental Protection Agency (“EPA”) under the Toxic Substances Control Act (“TSCA”) for landfill disposal of solar modules.
Our battery energy storage products are designed to fully comply with all applicable environmental regulations. With the professional support of TÜV Rheinland and TÜV SÜD, our energy storage products offerings have obtained official reports for RoHS, REACH, and the EU Battery regulation 2023/1542. We also enforce strict compliance requirements on our suppliers, ensuring that core components including battery cells and air conditioning units all meet RoHS and REACH standards. In addition, we maintain proactive and ongoing communication with third-party certification bodies to ensure our products align with the latest relevant regulatory requirements at all times.
Our manufacturing operations are subject to regulation and periodic monitoring by local environmental protection authorities. Our solar power and battery energy storage project developments require various environmental related licenses, permits and approvals. We proactively minimize the environmental and ecological impacts of our project development activities. We integrate environmental and ecological impact assessments, along with community engagement, into our internal approval process early in the project development cycle to enhance project sustainability and minimize project delays related to such factors. Non-compliance could result in fines, production suspensions or operational shutdowns. Except as disclosed in the “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China,” we believe we have obtained the necessary environmental permits and passed relevant assessments to operate our manufacturing facilities.
Environmental, Social and Governance Initiatives
We integrate ESG principles into our business operations and strategic decision-making and continuously to improve our practices to ensure long-term sustainability. Our key focus areas include:
45
In 2023, we joined the United Nations Global Compact (“UNGC”), the world’s largest corporate sustainability initiative. Through this commitment, we support and adhere to the Ten Principles of the UNGC on human rights, labor, environment, and anti-corruption, and take actions to contribute to the United Nations Sustainable Development Goals (“SDGs”), particularly SDG 7 (Affordable and Clean Energy) and SDG 13 (Climate Action).
In 2023, we submitted a commitment letter to the Science Based Targets initiative (“SBTi”), pledging our intention to set near-term and net-zero science-based climate targets to decarbonize our operations and value chain, and these targets were formally validated and approved by the SBTi in December 2025. SBTi is a global body enabling businesses to set ambitious emissions reduction targets in line with the latest climate science. The SBTi’s goal is to accelerate companies across the world to support the global economy to halve emissions before 2030 and achieve net-zero before 2050. The near term and over all net-zero targets were successfully approved and published by SBTi Services in December of 2025 after regirous validation.
We are committed to achieving the goal of powering all our operations with renewable energy by 2030. To achieve this goal, we will reduce our electricity and energy consumption on a per watt basis while increasing the use of renewable energy. These initiatives may be subject to policy, market or cost barriers in the locations where we operate. We intend to reduce our energy intensity by leveraging our expertise and strength in product technologies, manufacturing process know-how, and energy savings to minimize environmental impact as we grow our business. We will also install rooftop solar power on our manufacturing facilities for self-consumption, procure green energy from third parties and acquire green certificates.
We aim to establish a sustainable, efficient and responsible supply chain that meets our needs and the interests of our stakeholders. We maintain a procurement management strategy which follows a centralized procurement approach, managed at the group level and supported by each division. We require all suppliers to adhere to our Supplier Code of Conduct (“Code”), which sets rigorous standards for human rights, environmental, health, safety responsibilities, and business ethics. We have implemented an ESG auditing program to ensure that our suppliers adhere to our ESG standards as outlined in the Code and to effectively manage ESG risks across our supply chain.
We are committed to proactively protecting biodiversity and minimizing environmental and ecological impact in our project development activities. We integrate environmental and ecological assessments, along with community engagement, early in the project development cycle. These efforts have helped us minimize project delays related to environmental and ecological impacts or community engagement.
46
In connection with our sustainability reporting, we align our disclosures with the Global Reporting Initiative (“GRI”) and Sustainability Accounting Standards Board (“SASB”) frameworks, with reference to the standards issued by the International Sustainability Standards Board (“ISSB”).
Environmental, Social Responsibility and Corporate Governance Policies
We have adopted a comprehensive set of environmental, social responsibility and corporate governance policies that provides a framework for our sustainability commitments and responsible business practices. These policies are publicly available on our website. Our Environment, Occupational Health and Safety Policy outlines the principles and guidelines to environmental protection, workplace safety, and the well-being of employees and others who are affected by our business. To uphold social responsibilities, we have adopted our Labor and Human Rights Policy, Equal Employment Opportunity Policy, Anti-Modern Slavery Policy, Supplier Code of Conduct, and Conflict Minerals Policy. In addition, to maintain the highest ethical standards in the way we conduct our business, we have implemented the following: Corporate Governance Guidelines, Code of Business Conduct and Ethics, Whistleblower Policy, Insider Trading Policy, Clawback Policy, Antitrust Policy, Policy on Related-Party Transactions, Prohibition Against Giving Bribes, and Prohibition Against Accepting Bribes.
Environmental Regulations
At various stages of our manufacturing process, we generate noise, wastewater, gaseous waste and other industrial waste. Our expansion of manufacturing operations heightens the risk of facility incidents that could negatively affect the environment. We are subjected to a wider range of environmental, health and safety laws and regulations governing the storage, use, handling and disposal of hazardous materials, emissions to air and water, waste management and environmental permitting.
In the U.S., we operate a manufacturing facility in Mesquite, Texas and are developing an additional manufacturing facility in Jeffersonville, Indiana. Our U.S. manufacturing operations and facilities are subject to U.S. federal, state and local environmental, health and safety laws and regulations. These regulations govern, among other things, air emissions, wastewater discharges, hazardous and non-hazardous waste management, chemical storage and reporting, occupational health and safety, and environmental permitting.
In addition, CSI Solar’s operations are subject to environmental laws and regulations, including the Environmental Protection Law, Law on the Prevention and Control of Noise Pollution, Law on the Prevention and Control of Air Pollution, Law on the Prevention and Control of Water Pollution, Law on the Prevention and Control of Solid Waste Pollution, Law on Environmental Impact Assessment, Law on Promotion of Clean Production, and Regulations on the Administration Environmental Protection in Construction Projects. Some of CSI Solar’s subsidiaries are located in Suzhou, China, adjacent to Taihu Lake, a nationally protected water body, and are therefore subject to additional environmental protection requirements, including basin-specific water pollution control regulations and enhanced monitoring and compliance obligations.
Government Regulations
CSI Solar’s business activities in China are subject to the PRC Company Law, Renewable Energy Law, Energy Law, Foreign Investment Law and its Implementation Rules, national development plans, industrial policies and other government directives issued by relevant governmental authorities, including the National Development and Reform Commission, the National Energy Administration, the Ministry of Commerce and the State Administration of Foreign Exchange.
Dividend Distribution
The principal regulations governing distribution of dividends paid by CSI Solar include the Company Law and the Foreign Investment Law. Under these regulations, CSI Solar may pay dividends only from retained earnings and is required to set aside no less than 10% of profit after tax as appropriations to a general statutory reserve until such reserve cumulatively reaches 50% of its registered capital. The statutory general reserve and registered share capital are not distributable as cash dividends except in the event of liquidation, and requires approval from the local authorities.
47
Employment
Employment relationships in China are primarily governed by the Labor Law and the Labor Contract Law, which require mandatory written labor contracts, regulated termination procedures, remuneration, severance compensation, and social insurance contributions. Employees with fixed-term contracts are entitled to an indefinite-term contract if they have either renewed a fixed-term contract twice or worked for the employer for a consecutive ten-year period. Under social laws and regulations in the PRC, employers are required to contribute, on behalf of their employees, to various social security funds, including funds for basic pension insurance, unemployment insurance, basic medical insurance, occupational injury insurance, maternity leave insurance, and to housing accumulation funds. These contributions are made to local administrative authorities, and failure to comply may result in fines and orders to remediate unpaid contributions.
Enforceability of Civil Liabilities
Canadian Solar Inc. is a corporation governed by the laws of the province of Ontario, Canada with operations in North America, Asia Pacific, Europe, South America, the Middle East and Africa. We primarily conduct our manufacturing operations in the U.S. and Asia Pacific, including China.
A majority of our directors and officers are residents of countries other than the United States, principally Canada, and a substantial portion of the assets of these persons are located outside the United States. As a result, it may not be possible for you to effect service of process within the United States upon those persons. Furthermore, it may not be possible for you to enforce against us or them, in the United States, judgments obtained in United States courts, because a substantial portion of our assets and all or a substantial portion of the assets of those persons are located outside the United States. In addition, our constituent documents do not contain provisions requiring that disputes, including those arising under the securities laws of the United States, between us, our officers, directors and shareholders, be arbitrated. As a result, it may be difficult for a shareholder to effect service of process within the United States upon us or such persons, or to enforce against us or them judgments obtained in United States courts, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States.
There are defenses that can be raised to the enforceability, in original actions in Canadian courts, of liabilities based upon the federal securities laws of the United States and to the enforceability in Canadian courts of judgments of United States courts obtained in actions based upon the civil liability provisions of federal securities laws of the United States, such that the enforcement in Canada of such liabilities and judgments is not certain. Therefore, it may not be possible to enforce in Canada those actions against us, our directors and officers.
48
The following table sets out our principal subsidiaries, including those that are significant under Rule 1-02(w) of Regulation S-X, together with their place of incorporation and our ownership interest:
Place of
Ownership
Name of entity
incorporation
interest
CS PowerTech Inc.
USA
%*
Mesquite Modules Corporation
Jeffersonville PVcells Corporation
CS Power Systems Inc.
Canadian Solar Energy Storage (USA) Inc.
Canadian Solar US Renewable Energy Corporation
64
%**
Canadian Solar US Module Manufacturing Corporation
Canadian Solar US Cell Manufacturing Corporation
Canadian Solar SSES (US) Inc.
Canadian Solar (USA) Inc.
Recurrent Energy, LLC
100
%***
Recurrent Energy B.V.
Netherlands
Canadian Solar New Energy Holding Company Limited
Hong Kong
Canadian Solar UY Holding LATAM
Uruguay
%
Canadian Solar Brasil I Fundo de Investimento em Participacoes – Multiestrategia
Brazil
Canadian Solar Solutions Inc.
CSI Solar Co., Ltd.
PRC
CSI Cells Co., Ltd.
Canadian Solar Manufacturing (Luoyang) Inc.
Canadian Solar Sunenergy (Baotou) Co., Ltd.
CSI Solar Technology (Xining) Co., Ltd
Canadian Solar Manufacturing (Changshu) Inc.
Canadian Solar Sunenergy (Jiaxing) Co. Ltd
Canadian Solar Sunenergy (SuQian) Co., Ltd.
Canadian Solar International Limited
Canadian Solar Manufacturing (Thailand) Co., Ltd.
Thailand
*
As of December 31, 2025, none of CS PowerTech Inc., Mesquite Modules Corporation, Jeffersonville PVcells Corporation, CS Power Systems Inc., or Canadian Solar Energy Storage (USA) Inc. each of which is an operating entity formed in connection with our U.S. strategic initiative (see “—B. Business Overview—Strategic Initiative Relating to Our U.S. Business Operations”), met the definition of a “significant subsidiary” under Rule 1-02(w) of Regulation S-X.
**
Significant subsidiaries (as defined in Rule 1-02(w) of Regulation S-X) held through CSI Solar Co., Ltd. in which CSI owned approximately 64% interest as of December 31, 2025.
***
BlackRock invested $500.0 million in the Series A preferred shares of Recurrent Energy B.V. which are subject to conversion rights into ordinary shares of Recurrent Energy B.V. (see “—B. Business Overview—Recurrent Energy Key Development”).
49
The following summarizes our material properties, including manufacturing facilities, solar power and battery energy storage systems, and office buildings as of the date of this annual report on Form 20-F:
50
Except as disclosed in the “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China,” we believe we have obtained the environmental permits necessary to conduct the business currently carried on by us at our manufacturing facilities. For more details, see “B. Business Overview—Environmental Matters.”
ITEM 4A UNRESOLVED STAFF COMMENTS
None.
ITEM 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and accompanying notes included elsewhere in this annual report on Form 20-F. The following discussion contains forward-looking statements based on current expectations that involve risks and uncertainties. Our actual results may differ materially as a result of various factors, including those set forth under “Item 3. Key Information—D. Risk Factors” or in other parts of this annual report on Form 20-F.
For year-over-year comparisons between 2024 and 2023, refer to “Item 5. Operating and Financial Review and Prospects” in our Form 20-F for the year ended December 31, 2024, filed with the SEC on April 30, 2025.
Key Factors Affecting Our Results of Operations
Our operating results are affected by a number of factors, including (i) global economic conditions such as inflationary and interest rate pressures, and currency volatility; (ii) supply and demand dynamics in the solar power and battery storage energy industry, including seasonality; (iii) mix of products and services we provide, as well as the timing and scale of project sales; (iv) pricing of solar power and battery energy storage products; and (v) the costs of raw materials, including solar ingots, polysilicon, wafers, silver-based metallic pastes, cells and lithium-ion components relative to the selling prices of modules and battery energy storage products. Our operating results may also be affected by (i) raw materials availability and supply chain constraints; (ii) effects that current credit, interest rate and market conditions could have on the value of our project assets; and (iii) changes in trade regulations and treaties, including renewable energy incentives, including those contained in the IRA and OBBBA, government grants, antidumping and countervailing duties. We also are subject to other risks as outlined in “Item 3. Key Information—D. Risk Factors.”
We are closely monitoring macro-economic developments, including inflation, interest rates, monetary policy changes and foreign currency fluctuations, as well as elevated geopolitical tensions, hostilities and political conflicts around the world, and how they may adversely impact our and our customers’, contractors’, suppliers’ and partners’ respective businesses. In particular, weak economic conditions or unfavorable changes in any of these general factors could materially and adversely affect our results of operations.
Our business and revenue growth depend on the increasing demand for solar power, driven by its increasing cost competitiveness with other power generation technologies, its advantages over other renewable sources, and expanding battery energy storage deployment to reduce intermittency of renewables generation. Public support for renewable energy, driven by energy security and environmental concerns, continue to accelerate industry adoption. Although solar technology has been available for decades, significant market expansion has occurred only recently. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Company and Our Industry—We may be adversely affected by volatility in the solar power and battery energy storage market and industry conditions; in particular, the demand for our solar power and battery energy storage products and services may not grow as expected or may decline.” Industry demand is affected by seasonality. Demand tends to be lower in winter, when adverse weather conditions can complicate the installation conditions. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Company and Our Industry—Our revenues and results of operations are subject to significant fluctuations, which make our financial performance difficult to predict.”
In addition, grid interconnection constraints have heightened the need for battery energy storage integration in order to shift the feed of electricity into the grid to benefit from peak demand periods and overcome limitations in grid transmission capacity. The current electricity and capacity market design and rules may not adequately compensate for the integration of battery energy storage systems, and as such may hinder, slow down or limit the growth rate of solar power or battery energy storage adoption and implementation.
Our solar module pricing is based on the actual flash test results or nameplate capacity, expressed in watts-peak, and is affected by market demand and supply, module efficiency and power output. Higher efficiency modules usually command premium pricing. The average selling prices of our solar modules decreased from $0.23 per watt in 2023 to $0.16 per watt in 2024 and remained at $0.16 per watt in 2025. We anticipate further price reductions driven by industry trends. Our battery energy storage pricing is based on storage capacity, expressed in watts-hour, and is affected by market demand, storage capacity and material costs. Higher storage capacity and longer duration products generally command higher price premium.
Our profitability is highly dependent on the cost of silicon raw materials, solar ingots, wafers, cells, silver-based metallic paste and lithium-ion components relative to the selling prices of our solar modules and battery energy storage products. We produce solar modules, which comprise interconnected solar cells encased in a weatherproof frame. Solar cells are the most important component of solar modules. Our solar cells are primarily made from mono-crystalline silicon wafers through multiple manufacturing steps, including the application of N-type and TOPCon technologies. The solar cell manufacturing processes involve the formation of electrical contacts on the front and rear surfaces of the solar cells, which are typically produced using silver-based metallic pastes. As a result, silver is a critical input material in solar cell metallization and contributes to the overall cost of solar cell production. Solar wafers are the primary material used to make solar cells. Solar ingots are the key material for making solar wafers. If we are unable to procure silicon raw materials, solar ingots, wafers and cells at input costs that aligns with the declines in selling price of our solar modules, our revenues and margins could be adversely impacted, either due to higher manufacturing costs than our competitors or write-downs of inventory, or both. We may lose market share if our competitors are able to offer better pricing than we do. We manufacture our battery energy storage products. The costs of lithium iron phosphate (“LFP”) cells, battery modules, and associated electronics are a significant portion of our total cost structure for energy storage products. If we are unable to procure lithium ion battery components input costs that aligns with the decline in line with the pricing of our battery energy storage products, or if supply chain disruptions result in cost inflation or delays, our margins may be compressed, and our competitiveness in the energy storage market could be adversely impacted.
Our revenues from the sale of solar power and battery energy storage projects are affected by the timing of project completion and our monetization strategy, which includes balancing the long-term ownership and operation of certain assets with selective project sales. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Company and Our Industry—Our sale of solar power and battery energy storage projects depends heavily on our ability to find third-party buyers for our projects in a timely manner and on favorable terms and conditions” and “Item 4. Information on the Company—B. Business Overview—Sales, Marketing and Customers—Recurrent Energy” for a description of our solar power and battery energy storage pipelines. Rising interest rates, tightening credit conditions, and changing investor return expectations could place downward pressure on asset valuations across the renewable infrastructure sector, including our projects. Certain classes of investors benchmark solar power and battery energy storage project returns against bond yields, and increases in those yields can lead to higher required internal rates of return (“IRRs”) on infrastructure investments. As a result, we may face reduced sale prices for our projects, extended sales cycles, or the need to hold completed projects on our balance sheet for longer periods, potentially reducing liquidity and delaying revenue recognition. Project sales may also be adversely affected by construction delays, changes in government policy or permitting requirements, counterparty credit deterioration, grid curtailment, equipment failures, and extreme weather events. These factors may lead to project cancellations, impairments, or reclassification of assets from held-for-sale to held-for-use. In such cases, we may be required to expense prior capitalized development costs or impair our project investments, which could materially affect our operating results for the relevant period.
52
While the cost of solar and battery energy storage technologies have generally declined, continued government support remains important to sustain industry growth and investment returns. Our business performance and market demand are influenced significantly by the availability, size, and stability of government incentives, regulatory frameworks, and trade regimes in the countries where we operate. Governments in many of our key markets, including the United States and a number of the states of the European Union (including, Italy, France, Germany and Spain) continue to provide incentives that support solar power and battery energy storage deployment. In the United States, the IRA significantly enhanced and extended tax-based incentives for renewable energy. These include expanded ITC and PTC eligibility, additional bonus credits for projects located in energy communities or meeting domestic content thresholds, and advanced manufacturing production tax credits under Section 45X of the Internal Revenue Code. The IRA also introduced mechanisms for credit transferability and direct pay, which were clarified through temporary and proposed IRS regulations issued in June 2023 and finalized in May 2024. These incentives, however, remain subject to regulatory and compliance requirements, including those arising under the OBBBA. In the European Union, several member states continue to implement incentive schemes, including national auctions and tax benefits to support renewable development. Additionally, the revised Renewable Energy Directive, which entered into force on November 20, 2023, aims to further streamline permitting processes and reinforce regulatory support for solar and battery energy storage deployment. However, some member states have enacted land-use limitations and zoning restrictions, particularly in agricultural zones, which may limit project development opportunities. As part of the revised directive, EU member states are required to implement permitting reforms by mid-2024 and to designate renewables acceleration areas by February 2026 to streamline project approvals and facilitate faster deployment. Despite overall government support, many of these incentive programs are subject to change, reduction, or phase-out over time. Revisions, reductions, or eliminations of subsidies and favorable regulations could materially and adversely affect demand for our products and services, particularly in developing or price-sensitive markets. In addition, unfavorable changes in energy laws or policies could deter customer investment, increase competition, or reduce expected returns on our projects.
For a detailed discussion of the impact of government subsidies and incentives, possible changes in government policy and associated risks to our business, see “Item 3. Key Information—D. Risk Factors—Risks Related to Our Company and Our Industry—Governments may revise, reduce or eliminate incentives and policy support schemes for solar power and battery energy storage” and “Item 3. Key Information—D. Risk Factors—Risks Related to Our Company and Our Industry—Our global operations are subject to complex and evolving laws, regulations, policies, trade restrictions and geopolitical risks, which could increase compliance costs, disrupt operations, delay project execution and adversely affect our business, financial condition and results of operations.”
We have been in the past, and may be in the future, subject to international trade policies, including the imposition or expansion antidumping and countervailing duty rulings, tariffs, and other trade remedies. In particular, we have been subject to antidumping and countervailing duty rulings in the U.S., the EU, and Canada and have, as a result, been party to lengthy proceedings related thereto. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Company and Our Industry—Antidumping and countervailing duty determinations in the United States could adversely affect us,” “—Other trade measures such as Section 232 and Section 301 tariffs could adversely affect us,” and “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal and Administrative Proceedings.” The U.S., the EU, the U.K. and Canada are important markets for us. Ongoing proceedings relating to, and the imposition of any new, antidumping and countervailing duty rulings and orders or safeguard measures in these markets may result in additional costs to us and/or our customers or limit our access to important markets. Pending investigations, safeguard measures, and retroactive rulings could also result in supply chain disruptions or unanticipated liabilities.
The COVID-19 pandemic previously posed significant challenges to many aspects of our business, including our operations, customers, suppliers and projects. On May 5, 2023, the World Health Organization announced that COVID-19 was no longer a public health emergency. Pandemic-related impacts have since largely subsided.
Overview of Financial Results
We evaluate our business using a variety of key financial measures.
53
Net Revenues
Our business is organized into two segments: (i) Manufacturing, comprising CS PowerTech, which focuses on manufacturing and sales of solar products and battery energy storage products, and other power technology products for the U.S. market, and CSI Solar, which serves all other global markets; and (ii) Recurrent Energy, which focuses on solar power and battery energy storage project development, asset sales, power services, and electricity revenue from its operating portfolio. The following table sets forth, for the periods indicated, the components of our revenues by amounts and percentages of our total revenues:
For the years ended December 31,
2024
2025
(in thousands of $, except percentages)
Net revenues
Manufacturing:
Solar modules
4,281,178
71.4
3,377,706
60.4
Battery energy storage solutions
814,604
13.6
1,370,590
24.5
Solar system kits
398,173
6.7
224,621
4.0
EPC and others
181,422
3.0
227,855
4.1
Recurrent Energy:
Solar power and battery energy storage asset sales
156,686
2.6
175,987
3.1
Power services
69,972
1.2
75,486
1.3
Revenue from electricity, battery energy storage operations and others
91,374
1.5
142,862
5,993,409
100.0
5,595,107
Our revenues from Manufacturing are primarily affected by average selling prices per watt and unit volumes shipped of solar power products, as well as the average selling price per watt-hour and unit volumes shipped of battery energy storage solutions products. Revenues from sales to customers are recorded net of sales taxes, goods and services taxes, value added taxes, and estimated returns. Our revenues from our Recurrent Energy are primarily affected by the timing of the completion and the timing and strategy of monetization of solar power and battery energy storage projects.
Our revenue recognition policies for sales of battery energy storage products and solar power and battery energy storage asset sales are described in “—Critical Accounting Estimates—Revenue.”
Cost of Revenues
The cost of revenues for Manufacturing includes direct and indirect costs associated with the manufacture and delivery of solar modules, and battery energy storage products. These costs primarily consist of key materials and components, including high purity polysilicon, ingots, wafers, cells, silver-based metallic pastes, glass, metal frames, ethylene vinyl acetate, junction boxes, polymer back sheets, lithium iron phosphate battery cells and inverters. Additional costs include production labor (salaries and benefits for manufacturing staff), warranty expenses, and overhead related to utilities, equipment maintenance, and factory support. Depreciation and amortization of manufacturing equipment and facilities are also included and have increased in line with the expansion of our manufacturing footprint. Furthermore, our cost structure reflects exposure to global trade regulations and compliance-related expenses, including antidumping, countervailing and other duty costs, as well as inventory impairment charges.
The cost of revenues for Recurrent Energy primarily reflects solar power and battery energy storage project expenditures associated with development, construction and key equipment. These include the cost of acquiring project rights and sites, interconnection and permitting fees, procurement for equipment, including trackers, mounting hardware, and grid interconnection equipment, and construction services. Interest capitalized during construction also forms a portion of the costs. Additionally, this segment may recognize impairments on project assets due to adverse changes in market conditions, regulatory uncertainty, or project-specific performance.
Gross Profit
Gross profit is affected by a number of factors, including but not limited to, the performance and contribution of both of our segments, the average selling prices and unit volumes of our solar power and battery energy storage products, our product mix, our ability to cost effectively manage our vertical integration, manufacturing capacity and supply chain, inventory write-downs, tariffs, antidumping and countervailing duties, the timing and pricing of project sales and the impairment of project assets. As a result of these various factors, our gross margin varies from period to period.
54
Operating Expenses
Selling and Distribution Expenses
Selling and distribution expenses consist primarily of transportation and shipping costs for delivery of our products, salaries and benefits, sales commissions for our sales agents, advertising, promotional and trade show expenses, and other sales and marketing expenses. We have implemented cost management initiatives across our logistics, sales and marketing functions. We expect to continue managing these expenses through improved logistics management, disciplined hiring and targeted marketing programs to strengthen our position as a leading global brand.
General and Administrative Expenses
General and administrative expenses consist of salaries and benefits for our corporate, finance, legal, IT and other administrative functions, as well as expenses for consulting, professional service fees, government and administrative fees and insurance fees. We have reduced headcount related costs through disciplined workforce management and tighter control over discretionary spending, while continuing to support the operations of our two segments. From time to time, general and administrative expenses may also include one-time costs and non-cash impairment changes related to manufacturing equipment and held-for-use energy assets.
For a description of the stock options, restricted share units and restricted shares granted, including the exercise prices and vesting periods, see “Item 6. Directors, Senior Management and Employees—B. Compensation of Directors and Executive Officers—Share Incentive Plans.” We recognize share-based compensation expense based on the fair value of equity awards at the grant date. Expense for time-based awards is recognized over the requisite service period, while performance-based awards are recognized upon occurrence of certain contingent conditions. We estimate expected forfeitures based on historical and anticipated employee retention and adjust these estimates prospectively.
Research and Development Expenses
Research and development expenses consist primarily of costs of raw materials used in our research and development activities, salaries and benefits for research and development personnel and prototype and equipment costs related to the design, development, testing and enhancement of our products. Refer to “—C. Research and Development” for further details of our research and development activities. We expect to continue managing research and development expenditures in line with project timelines and technological priorities.
Other Operating Income, Net
Other operating income, net, primarily reflects non-core operating items that are not directly attributable to our primary revenue generating activities. This includes government grants received and gains or losses from disposal of held-for-use energy assets and manufacturing equipment. The amount and timing of other operating income can vary depending on the receipt of government incentives, asset management strategies, and external environmental factors.
Interest Expense
Interest expense relates to interest incurred on our short and long-term borrowings from banks and other financial institutions, green bonds, and convertible notes. The level of interest expense is influenced by prevailing interest rates, total outstanding debt balances, and the currency composition of our financing sources.
Loss on Change in Fair Value of Derivatives
We utilize derivative instruments as part of our risk management strategy to mitigate exposures to fluctuations in foreign currency exchange rates, raw material prices, and interest rates. These instruments include foreign exchange forward contracts, commodity hedges, and interest rate swaps. Changes in the fair value of these derivatives that are not designated as accounting hedges are recognized in earnings and may result in gains or losses depending on market movements. These fair value adjustments can introduce volatility to our financial results.
55
Income Tax Benefit (Expense)
We recognize income tax expense or benefit based on taxable income for the period, as well as deferred tax assets and liabilities arising from temporary differences between the financial reporting and tax bases of assets and liabilities. Deferred tax assets are subject to valuation allowances when management cannot conclude that it is more likely than not that they will be realized. The effective tax rate may fluctuate from period to period due to changes in the geographic mix of income, tax holidays or incentives, changes in valuation allowances, or other nonrecurring tax adjustments.
Results of Operations
The following table sets forth, for the periods indicated, certain of our consolidated results of operations and each item expressed as a percentage of our total net revenues. Our historical results presented below are not necessarily indicative of the results that may be expected for any future period.
Manufacturing segment
6,460,003
107.8
5,612,124
100.3
Recurrent Energy segment
323,469
5.4
403,620
7.2
Elimination
(790,063)
(13.2)
(420,637)
(7.5)
Cost of revenues
4,994,090
83.3
4,568,881
81.7
5,272,722
88.0
4,669,608
83.5
257,976
4.3
320,166
5.7
(536,608)
(9.0)
(420,893)
Gross profit
999,319
16.7
1,026,226
18.3
1,187,281
19.8
942,516
16.8
65,493
1.1
83,454
(253,454)
(4.2)
256
0.0
Operating expenses:
Selling and distribution expenses
487,947
8.1
382,591
6.8
General and administrative expenses
515,204
8.6
581,807
10.4
Research and development expenses
120,792
2.0
90,685
1.6
Other operating income, net
(94,543)
(1.6)
(72,013)
(1.3)
Total operating expenses
1,029,400
17.2
983,070
17.6
Income (loss) from operations
(30,081)
(0.5)
43,156
0.8
Other income (expenses)
Interest expense
(137,468)
(2.3)
(178,166)
(3.2)
Interest income
88,470
46,054
Loss on change in fair value of derivatives, net
(51,400)
(0.9)
(42,422)
(0.8)
Foreign exchange gain (loss), net
46,750
(16,751)
(0.3)
Investment income, net
1,427
7,390
0.1
Total other expenses
(52,221)
(183,895)
(3.3)
Loss before income taxes and equity in losses of affiliates
(82,302)
(1.4)
(140,739)
(2.5)
Income tax benefit (expense)
16,576
0.3
(14,149)
Equity in losses of affiliates
(12,136)
(0.2)
(28,875)
Net loss
(77,862)
(183,763)
Less: Net loss attributable to non‑controlling interests and redeemable non-controlling interests
(113,913)
(1.9)
(79,637)
Net income (loss) attributable to Canadian Solar Inc.
36,051
0.6
(104,126)
56
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
Net Revenues. Our net revenues decreased by $398.3 million, or 6.6%, from $5,993.4 million in 2024 to $5,595.1 million in 2025. The decline was primarily attributable to lower sales volume of solar modules as we continued to prioritize margin over volume. This impact was partially offset by higher sales of battery energy storage systems, which increased their contribution to total revenue during the year. Total module shipments decreased to 24.3 GW in 2025 from 31.1 GW in 2024, while battery energy storage solutions continued to grow significantly, reaching 7.8 GWh in shipped volume in 2025, which represents an increase of over 18.6% compared to 2024. Of total shipments in 2025, approximately 1,122 MW were delivered to our own utility-scale solar, compared to approximately 803 MW in 2024.
Our net revenues related to Recurrent Energy increased by $76.3 million, or 24.0%, from $318.0 million in 2024 to $394.3 million in 2025, mainly attributable to an increase in revenue generated from project sales, reflecting a higher volume of project monetization completed during 2025. Project sales contributed 3.1% of total revenue in 2025, compared to 2.6% in 2024. In 2025, revenue contributions from power services and electricity, battery energy storage operations and others were 1.3% and 2.6%, respectively, up from 1.2% and 1.5% in 2024.
Cost of Revenues. Our cost of revenues decreased by $425.2 million, or 8.5%, from $4,994.1 million in 2024 to $4,568.9 million in 2025. The decrease was primarily attributable to lower manufacturing costs and lower inventory write-downs. These decreases were partially offset by higher costs associated with battery energy storage deployment, which carry different cost dynamics. Additionally, higher volume of solar power and battery storage asset sales, partially offset by lower impairments related to solar assets held for use in Recurrent Energy impacted the segment’s cost contribution for 2025.
Gross Profit. Our gross profit increased by $26.9 million, or 2.7%, from $999.3 million in 2024 to $1,026.2 million in 2025. Gross margin improved year-over-year from 16.7% to 18.3%, driven primarily by a higher mix of battery energy storage systems, which generally provide higher margins than solar modules, and the benefit from a U.S. anti-dumping and countervailing duty true-up adjustment based on final affirmative determinations made by the ITC. Despite pressure from declining solar modules ASPs and trade related duties, we mitigated some margin compression through continued reductions in manufacturing costs and improved operational efficiencies, including workforce reduction. Our diversification into battery energy storage has also enhanced the resilience of our gross profit.
Operating Expenses. Our operating expenses decreased by $46.3 million, or 4.5%, from $1,029.4 million in 2024 to $983.1 million in 2025. Operating expenses represented 17.6% of net revenues in 2025, compared to 17.2% in 2024.
Selling and Distribution Expenses. Our selling and distribution expenses decreased by $105.4 million, or 21.6%, from $487.9 million in 2024 to $382.6 million in 2025, primarily due to lower shipping and handling costs. Selling and distribution expenses represented 6.8% of net revenues in 2025, compared to 8.1% in 2024.
General and Administrative Expenses. Our general and administrative expenses increased by $66.6 million, or 12.9%, from $515.2 million in 2024 to $581.8 million in 2025. The increase was mainly attributable to a $48.5 million day-one loss resulting from the non-cash classification of a battery energy storage project as a sales-type lease, $54.0 million impairment charge on manufacturing equipment and $19.7 million in personnel and severance expenses. General and administrative expenses represented 10.4% of net revenues in 2025, compared to 8.6% in 2024.
Research and Development Expenses. Our R&D expenses decreased by $30.1 million, or 24.9%, from $120.8 million in 2024 to $90.7 million in 2025, reflecting cost optimization initiatives. R&D expenses represented 1.6% of net revenues in 2025, compared to 2.0% in 2024. See “—C. Research and Development” for additional detail on our R&D activities.
Other Operating Income, Net. Our other operating income, net, decreased by $22.5 million, or 23.8%, from $94.5 million in 2024 to $72.0 million in 2025, mainly reflecting lower government grants received.
Interest Expense, Net. Our interest expense, net, increased by $83.1 million, or 169.6%, from $49.0 million in 2024 to $132.1 million in 2025. Our interest expense increased by $40.7 million, or 29.6%, from $137.5 million in 2024 to $178.2 million in 2025. The increase was primarily attributable to a higher average level of outstanding debt during the year, which mainly related to non-recourse borrowings. In 2025 and 2024, we capitalized interest costs related to the construction of qualifying assets totaling approximately $107.0 million and $108.9 million, respectively. The remaining interest expense was recognized in current period operations.
57
Our interest income decreased by $42.4 million, or 47.9%, from $88.5 million in 2024 to $46.1 million in 2025, reflecting a reduction in our average balance of cash, cash equivalents, and restricted cash during 2025 compared to 2024. In 2025 and 2024, we earned nil and $18.9 million of interest benefits, respectively, from anti-dumping and countervailing duty deposit refunds and supplier settlements.
Loss on Change in Fair Value of Derivatives, Net. We recorded a loss of $42.4 million in 2025 from changes in the fair value of derivative instruments, compared to $51.4 million in 2024. The loss was primarily due to unfavorable movements in the RMB, Euro, JPY and BRL exchange rates.
Foreign Exchange Gain (Loss), Net. We recognized a loss of $16.8 million in 2025, compared to a gain of $46.8 million in 2024, primarily due to the unfavorable movements in the RMB, Euro and JPY exchange rates.
Investment Income, Net. We recorded net investment income of $7.4 million in 2025, as compared net investment income of $1.4 million in 2024, primarily due to increase in fair value of our investments in China.
Income Tax Benefit (Expense). We recognized an income tax expense of $14.1 million in 2025, compared to an income tax benefit of $16.6 million in 2024. The change primarily reflected differences in pre-tax earnings, jurisdictional income mix, valuation allowances, and other permanent tax items.
Equity in Losses of Affiliates. Our share of the earnings of affiliates resulted in a net loss of $28.9 million in 2025, compared to a net loss of $12.1 million in 2024. The year-over-year decline was primarily due to weaker performance from certain investees in Latin America.
Net Loss Attributable to Non-Controlling Interests and Redeemable Non-Controlling Interests. Our net loss attributable to non-controlling interests and redeemable non-controlling interests decreased to $79.6 million in 2025 from $113.9 million in 2024. The decrease was primarily driven by the recognition in income attributable to our consolidated tax equity partnerships under the hypothetical liquidation at book value (“HLBV”) method of $90.8 million in 2025 and $164.3 million in 2024. This was partially offset by lower net income attributable to noncontrolling shareholders of CSI Solar.
Recently Issued Accounting Pronouncements
See “Item 17. Consolidated Financial Statements—Note 2—Recently Issued Accounting Pronouncements.”
Liquidity and Capital Resources
As of December 31, 2025, we had $1,370.4 million in cash and cash equivalents and $570.0 million in restricted cash. Restricted cash represents amounts held by banks as security for short-term notes payable, letters of guarantee, letters of credit or bank borrowings. These amounts are unavailable for general use until the related obligations mature or are repaid, at which point the funds become unrestricted. We intend to fund our existing and future material cash requirements for at least the next 12 months, including working capital, capital expenditures, investment requirements, subsidiary share repurchases, and debt repayments, through available cash and cash equivalents, monetization of project assets, anticipated cash flow from operations, and drawdowns under our credit note facilities. From time to time, we may also seek additional financing, refinancing, or equity transactions, including open market purchases and privately negotiated transactions, and acquisitions or investments in other companies and businesses that we believe could expand our operations, augment our market coverage, enhance our technical capabilities, or otherwise offer growth opportunities. The timing and amount of any such transaction will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors, and the amounts involved may be significant.
Our future cash flows and working capital needs will depend on many factors. We intend to expand and upgrade our solar modules and battery energy storage production capacities and to remain competitive in production technology. See “Item 4. Information on the Company—B. Business Overview—Manufacturing—CS PowerTech and CSI Solar.”
58
In June 2023, CSI Solar completed its STAR Listing on the Shanghai Stock Exchange, raising gross proceeds of RMB 6.01 billion ($842.6 million). In July 2023, the full over-allotment option was exercised, raising an additional gross proceeds of RMB 0.9 billion ($124.3 million). All U.S. dollar equivalents are based on the exchange rate on the respective transaction dates. CSI Solar issued 622,217,324, representing approximately 17% of the its outstanding shares post-IPO. As of the date of this annual report, we own approximately 63% equity interest in CSI Solar.
Cash Flows and Working Capital
As of December 31, 2025, we had approximately $8,772.0 million in contractual credit facilities, with $5,158.4 million drawn as borrowings, $811.5 million utilized through bank guarantees, letters of credit and short-term notes payable. Of the total contractual credit facilities, approximately $2,356.5 million was available for drawdown to support our manufacturing operations and working capital requirements, and approximately $430.0 million was available in connection with our projects business. In addition, we had uncommitted credit facilities totaling approximately $1,988.4 million, with $568.6 million drawn as borrowings and $639.3 million utilized under similar banking arrangements as of December 31, 2025.
As of December 31, 2024 and 2025, $997.4 million and $2,168.5 million of borrowings under Recurrent Energy were non-recourse. These borrowings are typically long-term, asset- or portfolio-specific, and denominated in the domestic currency of the respective project subsidiary. These are secured by the assets and equity of each project, and lenders have no recourse to Canadian Solar Inc. in the event of a default.
Our short-term borrowings mature between the first and fourth quarters of 2026 and bore a weighted average interest rate of 3.3% as of December 31, 2025. Although these facilities do not include automatic renewal provisions, we have historically been able to repay or refinance these short-term borrowings on similar terms prior to or upon maturity.
As of December 31, 2025, borrowings of $3,925.2 million were secured by property, plant and equipment with a carrying amount of $285.9 million, land use rights of $63.5 million, restricted cash of $437.2 million, equity interests of $573.1 million, project assets of $888.9 million, and solar power and battery energy storage systems of $1,181.0 million. These borrowings were classified as short-term borrowings of $793.2 million, long-term borrowings of $473.9 million under Manufacturing, and short-term borrowings of $71.1 million, non-recourse borrowings - current of $600.1 million, long-term borrowings of $491.0 million and non-recourse borrowings of $1,495.9 million under Recurrent Energy.
Our long-term borrowings mature between the first quarter of 2026 and the third quarter of 2047. A portion of these borrowings, relating to solar power and battery energy storage project assets expected to be sold within one year, are classified as current liabilities and have maturities ranging from the first quarter of 2026 to the third quarter of 2029. Our long-term borrowings carried a weighted average interest rate of 5.2 % as of December 31, 2025.
In 2024, we entered an investment agreement with a subsidiary of Pacific Alliance Group, or PAG, for the issuance of $200.0 million of convertible senior secured notes due 2029. We issued the $200.0 million convertible senior secured notes in 2025.
In April 2025, Recurrent Energy B.V. completed a refinancing of its credit facilities with Banco Santander, S.A., Intesa Sanpaolo S.p.A New York Branch, Rabobank, New York Branch, and Morgan Stanley Senior Funding, Inc. The refinanced $415.0 million credit facility consists of term loan facilities of €83.8 million ($90.5 million) and $59.5 million, and a $265.0 million revolver, maturing in April 2028 and extendable by one year subject to lender consent. We provided guarantee of up to $325.0 million in connection with the facility. In 2025, the term loan was increased by $82.5 million and €10.8 million ($12.7 million), and revolver was increased by $45.0 million, with MUFG, Norddeutsche Landesbank and Nomura Corporate Funding Americas, LLC. As of December 31, 2025, $552.4 million was outstanding.
59
In January 2026, we issued $230.0 million of convertible senior notes due 2031 to qualified institutional buyers in a private placement transaction pursuant to Rule 144A under the Securities Act. The convertible notes are senior unsecured obligations of our company and accrue interest at a rate of 3.25% per annum, payable semi-annually in arrears on January 15 and July 15 of each year, beginning on July 15, 2026. The convertible notes will mature on January 15, 2031, unless earlier repurchased, redeemed or converted in accordance with their terms prior to such date. Holders of the convertible notes may convert all or part of their notes at their option at any time prior to the close of business on the third business day immediately preceding the maturity date. Upon conversion, we will deliver to such converting holders, a number of our common shares equal to the applicable conversion rate as of the relevant conversion date, together with a cash payment in lieu of any fractional share. The initial conversion rate is 36.1916 common shares per US$1,000 principal amount of such notes, which represents an initial conversion price of approximately US$27.63 per common share. The conversion rate and conversion price for the notes will be subject to adjustments upon the occurrence of certain events. On or after January 22, 2029, we may redeem for cash all or part of the notes, at our option, if the last reported sale price of our common shares has been at least 130% of the conversion price then in effect on each of at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately prior to the date we provide notice of redemption. In addition, the notes will be redeemable, in whole and not in part, at our option at any time following the occurrence of certain tax related events. The redemption price in the case of a tax redemption or an optional redemption will be equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the related redemption date.
Most of our long-term borrowings and credit facilities contain financial covenants, including interest and debt coverage ratios, loan to equity value of designated project ratios, debt to asset ratios, and minimum equity requirements. We were in compliance with these covenants as of December 31, 2025.
The following table sets forth a summary of our cash flows for the periods indicated:
(in thousands of $)
Net cash used in operating activities
(885,324)
(252,741)
Net cash used in investing activities
(1,962,257)
(1,503,490)
Net cash provided by financing activities
2,319,771
1,347,505
Operating Activities
Net cash used in operating activities was $252.7 million in 2025, compared to net cash used in operating activities of $885.3 million in 2024. The improvement was mainly due to significantly lower working capital outflows, including improved accounts receivable, lower expansion of inventories reflecting reduced raw material costs, and lower expansion of project asset investments, partially offset by the losses recorded in 2025.
To manage working capital, we require certain customers to make partial prepayments, which totaled $246.2 million and $181.2 million as of December 31, 2024 and 2025, respectively. Advances to suppliers totaled $242.6 million and $322.4 million as of December 31, 2024 and 2025, respectively.
Investing Activities
Net cash used in investing activities was $1,503.5 million in 2025 compared to $1,962.3 million in 2024. The decrease was mainly due to lower purchases of property, plant and equipment and intangible assets, as certain phases of global capacity expansion outside the United States were executed in the prior period. Purchases of solar power and battery energy storage systems also decreased to $429.2 million in 2025 from $757.6 million in 2024, attributable to timing of construction, which is subject to various project development factors. These reductions were partially offset by higher investments in bank time deposits and structured deposits in 2025.
Financing Activities
Net cash provided by financing activities was $1,347.5 million in 2025, compared to $2,319.8 million in 2024. The decline was mainly due to higher net repayments of short-term borrowings and repayment of convertible notes in 2025, and the absence of preferred share issuance proceeds recorded in 2024. These impacts were partially offset by higher long-term borrowings and the issuance of new convertible notes in 2025.
60
For disclosures related to interest rates, refer to “Item 5. Operating and Financial Review and Prospects—A. Operating Results.”
Material Cash Requirements
Our material cash requirements as of December 31, 2025 and any subsequent period primarily include obligations related to borrowings, green bonds, convertible notes, construction, lease liabilities, purchase commitments, financing liabilities, and associated interest payments.
Our purchase obligations arise in the normal course of business and include binding purchase orders for inventories and capital expenditures. As of December 31, 2025, we had inventory purchase commitments, primarily for silicon raw materials, totaling $1,226.4 million, of which $636.0 million is expected to be paid in 2026. Capital expenditures were focused on expanding our manufacturing capacity, totaling $1,106.2 million and $962.3 million in 2024 and 2025, respectively. As of December 31, 2025, our commitments for property, plant and equipment purchases were $315.8 million, of which $251.7 million is expected to be paid in 2026. As of December 31, 2025, our commitments for the construction and development for solar power, and battery energy storage systems and project assets were $174.2 million, of which $141.2 million is expected to be paid in 2026.
As of December 31, 2025, we had $3,621.2 million in long-term borrowings and $2,389.0 million in short-term borrowings. Scheduled principal payments on long-term borrowings are $1,685.2 million in 2027, $997.5 million in 2028, $229.3 million in 2029, $347.4 million in 2030, and $361.8 million in 2031 and thereafter. Long-term borrowing may have fixed or variable interest rates. For borrowings with variable-rate interest, interest payments are estimated based on projected market interest rates for various floating-rate benchmarks received from third parties. Expected interest payments on long-term borrowing are $186.6 million in 2026, $37.0 million in 2027, $23.6 million in 2028, $4.6 million in 2029, $3.7 million in 2030, and $31.9 million in 2031 and thereafter. Interest on short-term borrowings in 2026 is expected to be $79.1 million. Future changes in interest rate environment may materially affect our estimate of interest payments in the future.
As of December 31, 2025, we had outstanding convertible notes with principal amount of $200.0 million, bearing an annual interest rate of 6.0%, which will mature on December 31, 2029. Assuming no conversion, regular interest obligations on convertible notes as of December 31, 2025 are $12.0 million in 2026, $12.0 million in 2027, $12.0 million in 2028 and $12.0 million in 2029.
As of December 31, 2025, financing liability totaled $99.5 million, with scheduled repayments expected through 2030. Operating lease liabilities were $381.3 million, of which $34.7 million matures in 2026 and finance lease liabilities totaled $141.5 million, with $36.8 million maturing in 2026.
In the normal course of business, our subsidiaries provide letters of credit through their banks for purposes including, but not limited to, guarantees for accounts payable, debt service reserves, capital reserves, construction completion and performance. Letters of credit provided by our subsidiaries totaled $733.1 million as of December 31, 2025.
We have contingent contractual obligations in the ordinary course of developing solar power and battery energy storage projects. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Company and Our Industry—Our project construction activities may not complete on time, and our development and construction costs could increase to levels that cause the return on our investment in the projects to be lower than expected” and “—We face a number of risks involving offtake contracts, including failure or delay in entering into contracts, defaults by counterparties and contingent contractual terms such as price adjustment, termination, liquidated damages, buy-out, acceleration and other clauses.” These obligations are designed to cover specific risks and are only triggered upon the occurrence of certain events, such as construction delays, cost overruns, change of control, subsidiary defaults, political or tax risks, sale indemnities, energy delivery shortfalls, sponsor support and liquidated damages. While we do not expect to make material payments under these contingent contractual obligations, many of the triggering events are outside our control, and we can provide no assurance that we will be able to fund these obligations if we are required to make substantial payments thereunder.
Research and Development
We conduct research and development activities in the following areas: i) ingot growth and wafering, ii) solar cells, iii) modules, iv) battery energy storage, v) energy solutions, vi) power electronics, vii) system performance analysis, and viii) reliability testing.
61
As of December 31, 2025, we had 1,318 employees engaged in research, product development and engineering.
Our research and development activities include:
62
In the future, we expect to focus on the following research and development initiatives that we believe will enhance our competitiveness.
63
Trend Information
Other than as disclosed elsewhere in this annual report on Form 20-F, we are not aware of any trends, uncertainties, demands, commitments or events that are reasonably likely to have a material adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would render reported financial information to be not necessarily indicative of future operating results or financial conditions.
E
Critical Accounting Estimates
Our significant accounting policies are described in “Note 2. Summary of Principal Accounting Policies” to our consolidated financial statements included elsewhere in this annual report on Form 20-F. The preparation of these financial statements in accordance with U.S. GAAP requires us to make estimates and judgments that affect the reported amount of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities. Critical accounting estimates are those that involve significant judgment or uncertainty and could materially impact our financial condition or results of operations if different assumptions or conditions were to occur. The following represent our most critical accounting estimates.
We are not aware of any specific events or circumstances that would require updates to our estimates and judgments or require us to revise the carrying value of our assets or liabilities from what had been assumed when the financial statements were prepared. These estimates may change as new events occur and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.
Revenue
We recognize revenue from sales of battery energy storage products at a point in time when the customers obtain control of the products, typically upon shipment or delivery depending on contract terms. Revenue from turnkey battery storage solutions and EPC services is recognized over time using the percentage-of-completion method, based on actual costs incurred relative to total estimated costs to determine progress towards contract completion. Revenue recognition involves significant estimates and assumptions, including the effects of performance incentives, liquidated damages and other contractual adjustments. These estimates and assumptions are reassessed periodically. Changes in estimated costs or revenues result in a cumulative effect recorded in the period of change. If estimated total project costs indicate a loss, the total amount of such loss, excluding general and administrative expense, is recognized immediately.
We recognize revenue from sales of solar power and battery energy storage projects at a point in time when customers obtain control of the projects. These projects are typically held in special purpose legal entities, partnerships or trusts, which we refer to as project companies. Significant judgment is involved in assessing whether deconsolidation of the project companies is appropriate upon transfer of equity interest to customers, identifying performance obligations, and estimating variable considerations as part of the transaction price.
Impairment of Long-lived Assets, Project Assets and Solar Power and Battery Energy Storage Systems
We evaluate our property, plant and equipment, and solar power and battery energy storage systems for impairment whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. These require significant judgment in determining whether such events or changes have occurred. We consider factors such as asset group utilization, process and equipment technologies, temporary idling of capacity and the expected timing of placing this capacity back into production to evaluate impairment on our property, plant and equipment. We examine factors such as changes in energy curtailment, environmental, permitting, grid interconnection, capital cost, electricity merchant pricing and regulatory conditions that may cause the costs of the project to increase or the selling price of the project to decrease.
In 2025, we recorded impairment losses of $54.0 million for property, plant and equipment, $60.2 million for project assets and $11.1 million for solar power systems.
Inventories
We value our inventories at the lower of cost and net realizable value, based upon assumptions about future demand, market prices and production costs. We assess product-specific facts and circumstances for inventory impairment, particularly when market conditions turn unfavorable, and production costs and estimated costs to sell exceed expected selling price, including trends in polysilicon pricing. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Company and Our Industry—Oversupply of polysilicon, solar wafers, cells and modules may cause substantial downward pressure on the prices of our products and reduce our revenues and earnings.”
In 2025, we recorded an inventory impairment of $74.0 million to reflect the lower of cost and net realizable value.
Redeemable Non-controlling Interests in Subsidiaries, including Tax Equity Partnerships
We finance a portion of the costs of our recently constructed U.S. solar energy and battery energy storage projects through tax equity partnerships. We account for our contractual relationships with tax equity investors using the Hypothetical Liquidation at Book Value (“HLBV”) method. These tax equity partnerships are typically consolidated as variable interest entities (“VIEs”) in which we hold a variable interest and are deemed the primary beneficiary.
Under the terms of these arrangements, tax equity investors are generally entitled to substantially all of the accelerated depreciation tax deductions and investment tax credits associated with the projects, together with a portion of the distributable cash. Their entitlement to these benefits typically declines to a residual interest after a predefined flip point is reached, typically the expiration of a time period or the achievement of a target yield. Because the allocation of tax attributes and cash flows is not proportionate to initial capital contributions or ownership percentages, these arrangements represent substantive profit-sharing arrangements. In order to reflect the substantive profit-sharing arrangements under the HLBV method, the income or loss attributable to redeemable noncontrolling interests reflects the changes in the amounts that tax equity investors would hypothetically receive upon liquidation of the applicable partnerships at the beginning and end of each reporting period, after considering any capital transactions, such as contributions or distributions, between our subsidiaries and tax equity investors. The hypothetical liquidation assumptions are periodically reviewed to reflect significant events or changes in circumstances that could affect the distribution or liquidation priorities, including changes in expected flip dates, anticipated tax equity partnership period, or other events that may alter the expected duration and future cash flows of the partnership and its underlying assets. Attributing income or loss to the tax equity investors under the HLBV method requires significant assumptions and estimates to calculate the amounts that tax equity investors would receive in a hypothetical liquidation over the expected partnership duration. Changes in these assumptions and estimates can materially affect the income or loss allocated to the tax equity investors.
In 2025, we recorded a HLBV adjustment of $90.8 million to reflect the changes in the tax equity investors’ interest in the net assets of the relevant tax equity partnerships. In 2024, we classified Recurrent Energy B.V.’s preferred shares as redeemable non-controlling interests. The carrying value of the redeemable non-controlling interest is not accreted or adjusted to redemption value unless the redemption of such preferred shares by our subsidiary becomes probable, which involves significant judgment.
Warranties
We provide warranties on solar products and battery storage systems covering performance, manufacturing defects, and degradation. We have established procedures to monitor trends in warranty support, replacement and repair costs, historical claims experience, expected failure rates based on quality reviews and other relevant assumptions. These estimates are revised as necessary to reflect new information. We also assess expected future product performance through quality and reliability testing, and actual field operating information. In 2025, we accrued warranty provisions of $70.1 million. As of December 31, 2025, our accrued warranty liability was $138.4 million.
65
ITEM 6 DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A Directors and Senior Management
The following table sets forth information regarding our directors and executive officers as of the date of this annual report on Form 20-F.
Name
Age
Position/Title
Dr. Shawn (Xiaohua) Qu
Chairman of the Board and Chief Executive Officer
Professor Harry E. Ruda
67
Independent Director
Andrew L.C. Wong
68
Lauren C. Templeton
Leslie Chang
71
Lead Independent Director
Colin Parkin
Director and President
Yuan Z. Qu
Director
Xinbo Zhu
Chief Financial Officer
Dylan Marx
Chief Operating Officer
Yu Chen
Lead General Counsel and Chief Compliance Officer
Pauline W. Wong
Corporate Secretary and General Counsel
Dr. Shawn (Xiaohua) Qu founded Canadian Solar Inc. in Guelph, Ontario, Canada in 2001 and has been the chairman and chief executive officer of our company since then. He is also the Chairman of CSI Solar, and has been serving as a director of CSI Solar since September 2020. Canadian Solar went public on the Nasdaq in 2006 and is one of the world’s largest solar technology and renewable energy companies, with approximately 17,000 employees globally. We are a leading manufacturer of solar photovoltaic modules, provider of solar energy and battery energy storage solutions, and developer of utility-scale solar power and battery energy storage projects with a geographically diversified pipeline in various stages of development. Over the past 23 years, our products and services have benefited thousands of customers in over 160 countries, and provided clean electricity to millions of households. Prior to founding Canadian Solar, Dr. Qu worked at ATS Automation Tooling Systems in Canada and its subsidiary Photowatt International in France. Before that, Dr. Qu was a Research Scientist at Ontario Hydro (now Ontario Power Generation). Dr. Qu received the EY Sustainability Excellence Award 2023 for individuals and was named an Innovator on the TIME100 Climate List of the 100 most influential leaders driving business climate action of 2024. Dr. Qu received a BSc degree from Tsinghua University, an MSc degree in Physics from the University of Manitoba and a PhD degree in Materials Science from the University of Toronto. Dr. Qu continued working as a postdoctoral researcher at the University of Toronto, focusing on semiconductor optical devices and photovoltaic cells. Dr. Qu has been a fellow of Canadian Academy of Engineering since 2019.
Professor Harry E. Ruda has served as an independent director of our company since July 2011. He is the Director of the Centre for Advanced Nanotechnology, the Stanley Meek Chair in Nanotechnology and Professor of Applied Science and Engineering at the University of Toronto, Canada. From 1982 to 1984, he developed one of the first theories for electron transport in selectively doped two-dimensional electron gas heterostructures, while working as an IBM post-doctoral fellow. From 1984 to 1989, he was a senior scientist at 3M Corporation, developing some of the first models for electronic transport and optical properties of wide bandgap II-VI semiconductors. Professor Ruda joined the faculty of the University of Toronto in 1989 in the Materials Science and Engineering and Electrical and Computer Engineering Departments. His research interests focus on the fabrication and modeling of semiconductor nanostructures with applications in the fields of optoelectronics, energy and sensing. Professor Ruda was one of the founders of a Canadian National Centre of Excellence in Photonics. He has served on the Natural Sciences and Engineering Resesarch Council of Canada and on other government panels, including those of the Department of Energy, Environmental Protection Agency, National Science Foundation in the U.S. and the Royal Academy of Engineering and Engineering Physical Sciences Research Council in the United Kingdom. Professor Ruda is a Fellow of the Royal Society of Canada, a Fellow of the Institute of Physics, a Fellow of the Institute of Nanotechnology, and a Fellow of the Canadian Academy of Engineering. He obtained his Ph.D. in semiconductor physics from the Massachusetts Institute of Technology in 1982.
Mr. Andrew L.C. Wong has served as an independent director of our company since August 2014. Previously, he served as an independent non-executive director and vice-chairman of Huazhong In-Vehicle Holdings Company Limited from 2015 to 2025. Mr. Wong served as an independent non-executive director of Chubb Life Insurance Company Ltd. between 2008 and 2024, a director and a member of the audit committee, nomination and remuneration committee of China CITIC Bank Corporation Limited between 2013 and 2018. Mr. Wong was the director of Intime Retail (Group) Co. Ltd. between 2013 and 2014, and was the director and a member of audit committee, risk management committee, nomination and remuneration committee of China Minsheng Bank from 2006 to 2012. From 1982 to 2006, Mr. Wong held senior positions at the Royal Bank of Canada, the Union Bank of Switzerland, Citicorp International Limited, a merchant banking arm of Citibank, Hang Seng Bank Limited and DBS Bank Limited, Hong Kong. Mr. Wong was awarded the National Excellent Independent Director by the Shanghai Stock Exchange in 2010 and received the Medal of Honour (Hong Kong SAR) from the Hong Kong SAR Government in 2011. Mr. Wong obtained his Bachelor of Social Sciences (Honours) degree from the University of Hong Kong in 1980 and a Master of Philosophy degree from Hong Kong Buddhist College in 1982.
Ms. Lauren C. Templeton has served as an independent director of our company since January 2020. Ms. Templeton is the founder and President of Templeton & Phillips Capital Management, LLC, a global investing boutique located in Chattanooga, Tennessee. She is also an independent director and member of the audit committee of Fairfax Financial Holdings Limited, a financial holding company engaged in property and casualty insurance and reinsurance and associated investment management, and its publicly-traded subsidiary, Fairfax India Holdings Corporation. Ms. Templeton serves on a number of non-profit organizations, including serving as Chairperson of the Board of Trustees of the John Templeton Foundation. She is a member of the Templeton World Charities Foundation and the Templeton Religion Trust. She also serves on the Board of Overseers at the Atlas Economic Research Foundation. Ms. Templeton is the former President of the Southeastern Hedge Fund Association, based in Atlanta, Georgia. She is also the co-author of “Investing the Templeton Way: The Market Beating Strategies of Value Investing’s Legendary Bargain Hunter”, which has been translated into nine languages. Ms. Templeton holds a Bachelor of Arts Degree in Economics from the University of the South, Sewanee.
Mr. Leslie Chang has served as an independent director of our company since September 2020 and has served as a director of CSI Solar since December 2020. Mr. Chang is the lead independent director of our company. Mr. Chang is currently an independent non-executive director, chairman of the audit committee, and a member of the remuneration committee and nomination committee of Huzhou Gas Company Limited. From March 2014 to June 2025, Mr. Chang served as Senior Advisor to CITIC Capital (Holdings) Limited. Prior to that, Mr. Chang served as a senior corporate executive and board director at several companies listed on the Hong Kong Stock Exchange. He joined CITIC Pacific Limited (now known as China CITIC Limited) initially as General Manager, Finance in 1994 and later became the Executive Director and Deputy Managing Director of the company responsible for the Group’s financial management, accounting, and treasury functions. Mr. Chang also served as the Executive Director and Chief Executive Officer of HKC (Holdings) Limited; Executive Director and Vice Chairman of China Renewable Energy Investment Limited; Alternate Director on the board of Cathay Pacific Airways Limited and Independent Non-Executive Director of Pou Sheng International (Holdings) Limited, among other senior executive roles. Mr. Chang started his career after graduating from George Mason University business school in 1984 and joined the New York Office of KPMG. He became a partner of the firm specializing in the financial services industry and served as the Director of the Chinese Practice. Mr. Chang served as a certified public accountant in the State of New York. He is a member of the American Institute of Certified Public Accountants, New York State Society of Certified Public Accountant, Chartered Global Management Accountants, and the Hong Kong Institute of Certified Public Accountants.
Mr. Colin Parkin has served as a director of our company since December 2025. He is the President of our company and continues to serve as President of e-STORAGE, our utility-scale energy storage division. At e-STORAGE, Mr. Parkin leads global strategy for advanced battery technologies, overseeing research and development as well as the establishment of global battery cell and battery system manufacturing facilities in the United States, Thailand, and China. Under his leadership, e-STORAGE has become a recognized global leader in delivering turnkey battery energy storage solutions. Previously, Mr. Parkin served as Vice President of our Energy Group, now Recurrent Energy, where he expanded the company’s international solar project development pipeline to 8 GWp and managed major project financing and asset sales with leading global investors. His earlier roles include General Manager of Canada and Vice President of Engineering and Projects, developing the country’s largest utility-scale solar projects and managing the domestic solar panel and medium voltage equipment manufacturing operations. Mr. Parkin began his career in advanced manufacturing and automation, having held leadership roles at Photowatt International and Automation Tooling Systems (ATS). He was also the Founder and CEO of Integrated Manufacturing Technologies (IMT), which was later acquired by Magna International. Mr. Parkin studied Manufacturing Engineering at Fanshawe College in London, Ontario.
Ms. Yuan Z. Qu has served as a director of our company since June 2025. She is the Vice President of Strategy and Innovation of one of our U.S. subsidiaries and plays a leading role in the development of our U.S. operations. Ms. Qu is based in Walnut Creek, California, and leads strategic initiatives focused on growth, innovation, and long-term competitiveness across global markets. She is responsible for evaluating organizational performance, identifying key development opportunities, and guiding strategic decision-making in coordination with internal leadership. Prior to rejoining our company in 2024, Ms. Qu was a Consultant at McKinsey & Company in San Francisco, where she advised clients in a variety of sectors, primarily in energy and infrastructure. She led market entry strategies in renewables, conducted buy-side diligence across emerging technologies, and advised early-stage climate tech companies. From 2016 to 2019, Ms. Qu worked in our New York office in the Mergers and Acquisitions group, where she managed strategic sales of over $600 million in solar projects across the Americas and led investor relations efforts in Latin America and Asia. She holds an MBA from the Haas School of Business at the University of California, Berkeley, and a Bachelor of Arts in Asian Studies and Sociology from Swarthmore College.
Mr. Xinbo Zhu has served as our Senior Vice President and Chief Financial Officer since May 2024. He also served as a director of our company from May 2024 to June 2025. Mr. Zhu has also served as the Special Advisor to the board of directors and a member of Infrastructure and Energy Advisory Committee of Republic Technologies Inc. (CSE: DOCT) (OTCQB: DOCKF) since February 2026. He previously served as chief supply and risk officer of Recurrent Energy, oversaw global procurement and chaired the investment committee. Before that, he was vice president of operations and project finance for our project development business before it was rebranded as Recurrent Energy in 2023. Mr. Zhu also served as finance controller of the company from 2018 to 2020, having been finance controller of the project development business from 2016 to 2018. Mr. Zhu joined the company in 2014 as special assistant to the CEO, responsible for corporate strategy. Before joining our company, he worked for multinational companies including Vishay, American Power Conversion and Royal Philips Electronics. Mr. Zhu earned his MBA from Rotman School of Management, University of Toronto, and his M.S. in electronic engineering and B.S. with double majors in telecommunication engineering and mechanical engineering from Shanghai Jiao Tong University.
Mr. Dylan Marx has served as our Chief Operating Officer since December 2025. He also serves as the corporate vice president of operations and the president of operations and maintenance for Recurrent Energy. Mr. Marx began his career at the company in 2013 as director of project management within our Energy Group, which later became Recurrent Energy. Mr. Marx brings deep experience across renewable energy, automation, and manufacturing. Prior to joining our company, he held engineering leadership roles at ATS in Canada, overseeing high-volume manufacturing for automotive, healthcare, and renewable energy applications. He later joined BlackBerry, where he supported device manufacturing and hardware quality operations. Mr. Marx holds a diploma in Mechanical Engineering, Design, and Analysis from Conestoga College and an MBA from the University of Windsor.
Ms. Yu Chen has served as Lead General Counsel of our company since December 2023, as Chief Compliance Officer since March 2025, and as Vice President since January 2026. In these roles, she leads the company’s global legal strategy and oversees its legal and compliance functions. Prior to joining our company, Ms. Chen was Senior Commercial Counsel at NIO, an electric vehicle company, where she managed commercial contracting and provided legal guidance on export controls, strategic transactions, technology licensing, privacy, and other key legal matters. Previously, Ms. Chen served as Assistant General Counsel at Kurt J. Lesker Company, a Pittsburgh-based manufacturer of vacuum deposition products. She began her legal career at the international law firms Arnold & Porter and Sidley Austin, where she focused on corporate and securities law, advising on corporate governance, mergers and acquisitions, SEC reporting and compliance, and capital markets transactions. Ms. Chen received her undergraduate education at Peking University and Dartmouth College and received her J.D. from Georgetown University Law Center.
Ms. Pauline W. Wong has served as Corporate Secretary since December 2025. Since 2022, she has also held the title of General Counsel to Canadian Solar Inc. Prior to that, she supported Recurrent Energy and its Operations & Maintenance business. From 2020 to 2021, Ms. Wong served as Associate General Counsel to Global EPC Turnkey Services under the Module and Systems Solutions business. Pauline began her career at Canadian Solar in 2014 as Legal Counsel in the headquarters located in Guelph, Canada. Before joining our company, Pauline held positions as Legal Counsel for Tim Hortons and as Visiting Professor at Osgoode Hall Law School (York University). Pauline began her legal career as an Associate at Blake, Cassels & Graydon LLP, a leading law firm in Toronto, Canada. Pauline earned her dual LL.B. and B.C.L. in the common law and civil law traditions from McGill University and a B.A.Sc. in Systems Design Engineering from the University of Waterloo.
Duties of Directors
Under the OBCA, Canadian Solar Inc.’s directors are required to manage, or to supervise the management of, the business and affairs of our company. Pursuant to the OBCA, every director and officer of Canadian Solar Inc. in exercising his or her powers and discharging his or her duties to us shall act honestly and in good faith with a view to our best interests and shall exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. A shareholder has the right to seek damages if a duty owed by our directors is breached.
The functions and powers of our board of directors include (i) convening shareholder meetings and reporting to shareholders at such meetings, (ii) declaring dividends and authorizing other distributions to shareholders, (iii) appointing officers and determining the term of office of officers, (iv) exercising the borrowing powers of our company, and (v) mortgaging the property of our company and approving the issuance of shares.
Every director and officer of Canadian Solar Inc. has a duty to comply with the OBCA and the regulations made thereunder and with our articles and by-laws. No provision in a contract or in the articles or by-laws of Canadian Solar Inc. or a resolution of our board of directors relieves a director or officer from the duty to act in accordance with the OBCA and the regulations made thereunder or relieves him or her from liability for a breach thereof.
However, a director will not be liable for breaching his or her duty to act in accordance with the OBCA in certain circumstances if the director exercised the care, diligence and skill that a reasonably prudent person would have exercised in comparable circumstances, including reliance in good faith on the following:
B Compensation of Directors and Executive Officers
Cash Compensation
We paid our directors, executive officers and key management personnel aggregate cash remuneration, including salaries, bonuses and benefits in kind, of approximately $11.8 million for 2025. Of this amount, we paid approximately $0.3 million to our four independent directors, approximately $3.5 million to our executive officers and $8.0 million to key management personnel. The total amount set aside or accrued by us and our subsidiaries to provide pension, retirement or similar benefits for our directors and executive officers was approximately $0.4 million in 2025.
69
The following table summarizes the base compensation of our executive officers and key management personnel for the year ended December 31, 2025. Target performance-based compensation is calculated as a percentage of base salary. The actual bonus payable may be more or less than the annual target bonus, depending on the achievement of both corporate and individual performance goals.
Base Salary
Shawn (Xiaohua) Qu
962
542
282
459
349
290
185
Canadian Solar Inc. executives(1)
2,914
CSI Solar executives(2)
1,772
7,755
(1)Includes nine key management personnel across various corporate functions of Canadian Solar Inc.
(2)Includes five key management personnel across various corporate functions of CSI Solar.
Share Incentive Plans
In March 2006, we adopted a share incentive plan (the “Plan”).
The purpose of the Plan is to promote the success and enhance the value of our company by linking the personal interests of the directors, employees and consultants to those of the shareholders and providing the directors, employees and consultants with an incentive for outstanding performance to generate superior returns to the shareholders. The Plan is also intended to motivate, attract and retain the services of the directors, employees and consultants upon whose judgment, interest and effort the successful conduct of our operations is largely dependent.
In September 2010, the shareholders approved an amendment to the Plan to increase the maximum number of common shares which may be issued pursuant to all awards of restricted shares, options and restricted share units under the Plan to the sum of (i) 2,330,000 plus (ii) the sum of (a) 1% of the number of our outstanding common shares on the first day of each of 2007, 2008 and 2009 and (b) 2.5% of our outstanding common shares on the first day of each calendar year after 2009. In June 2020, the shareholders approved an amendment to the Plan to extend the term of the Plan for a further ten-year period. As a result, the Plan will expire on, and no awards may be granted after June 30, 2029. As of January 31, 2026, the maximum number of common shares which may be issued pursuant to all awards of restricted shares, options and restricted share units under the Plan was 27,181,000 common shares, of which 566,190 restricted shares, 3,283,393 options, and 10,488,600 restricted share units (in each case net of forfeitures) have been awarded, leaving 12,842,817 common shares available to be issued.
The following describes the principal terms of the Plan:
Types of Awards. We may make the following types of awards under the Plan:
Plan Administration. The Compensation Committee of our board of directors administers the Plan. The Compensation Committee or the full board of directors, as appropriate, determines the provisions, terms, and conditions of each award.
Award Agreement. Awards are evidenced by an award agreement that sets forth the terms, conditions and limitations for each award.
70
Eligibility. We may grant awards to employees, directors and consultants of our company or any of our related entities, which include our subsidiaries and any entities in which we hold a substantial ownership interest. We may, however, grant options that are intended to qualify as incentive share options only to our employees.
Acceleration of Awards upon Corporate Transactions. Outstanding awards will accelerate upon a change-of-control where the successor entity does not assume our outstanding awards. In such event, each outstanding award will become fully vested and immediately exercisable, the transfer restrictions on the awards will be released and the repurchase or forfeiture rights will terminate immediately before the date of the change-of-control transaction.
Exercise Price and Term of Options. In general, the Compensation Committee determines the exercise price of an option and sets out the price in the award agreement. The exercise price may be a fixed or variable price related to the fair market value of our common shares. If we grant an incentive share option to an employee who, at the time of that grant, owns shares representing more than 10% of the voting power of all classes of our share capital, the exercise price cannot be less than 110% of the fair market value of our common shares on the date of that grant and the share option is exercisable for no more than five years from the date of that grant.
The term of an award may not exceed ten years from the date of the grant.
Vesting Schedule. In general, the Compensation Committee determines the vesting schedule.
Restricted Share Units
The following table summarizes, as of January 31, 2026, the restricted share units that we had granted under the Plan to our directors, executive officers and certain other individuals.
Restricted
Share Units
Granted
Vested
Forfeited
Date of Grant
Directors:
6,154
(1)
May 8, 2011
13,706
(2)
May 20, 2011
75,075
March 16, 2012
67,024
March 9, 2013
11,983
May 4, 2014
8,274
May 3, 2015
20,216
July 8, 2016
121,951
(3)
November 6, 2016
22,607
May 17, 2017
77,289
November 5, 2017
18,018
May 13, 2018
83,805
November 10, 2018
15,690
May 13, 2019
26,691
November 9, 2019
15,748
May 23, 2020
11,924
August 22, 2020
26,073
(4)
December 30, 2020
250,000
(6)
August 10, 2020
12,330
9,247
May 23, 2022
7,585
3,792
May 23, 2023
18,326
4,581
May 20, 2024
32,531
May 12, 2025
1,020
July 1, 2014
800
October 1, 2014
1,274
January 1, 2015
880
April 1, 2015
993
July 1, 2015
1,820
October 1, 2015
January 1, 2016
1,572
April 1, 2016
2,051
July 1, 2016
2,228
October 1, 2016
2,411
January 1, 2017
2,562
April 1, 2017
1,901
July 1, 2017
1,818
October 1, 2017
1,767
January 1, 2018
1,802
April 1, 2018
2,458
July 1, 2018
2,056
October 1, 2018
2,096
January 1, 2019
1,623
April 1, 2019
1,381
July 1, 2019
1,486
October 1, 2019
1,361
January 1, 2020
1,883
April 1, 2020
1,587
July 1, 2020
908
October 1, 2020
588
January 1, 2021
639
April 1, 2021
20,000
693
July 1, 2021
883
October 1, 2021
969
January 1, 2022
843
April 1, 2022
942
July 1, 2022
796
October 1, 2022
989
January 1, 2023
770
April 1, 2023
809
July 1, 2023
1,203
October 1, 2023
1,157
January 1, 2024
1,602
April 1, 2024
1,953
July 1, 2024
1,955
October 1, 2024
2,629
January 1, 2025
3,180
April 1, 2025
2,731
July 1, 2025
2,303
October 1, 2025
1,246
January 1, 2026
Andrew (Luen Cheung) Wong
610
August 7, 2014
72
Leslie Li Hsien Chang
73
7,634
5,249
21,000
3,975
11,078
2,769
January 10, 2024
Directors as a group
1,279,235
1,131,622
74
Employees
Hanbing Zhang
1,538
5,482
21,021
18,767
2,796
2,344
4,717
5,275
4,204
3,661
2,542
1,931
6,739
11,304
9,009
7,845
7,874
5,962
120,000
6,165
4,624
3,793
1,896
12,217
3,054
21,687
2,625
5,000
4,110
3,082
2,528
1,264
6,109
10,870
7,625
3,812
March 9, 2024
10,844
1,556
May 8, 2016
1,050
525
795
199
596
Other employees and certain individuals as a group
10,742,724
(5)
7,539,588
1,925,210
Various dates from May 8, 2011 to January 1, 2026
Total Restricted Share Units
12,414,931
9,884,693
1,926,331
75
We grant each of our independent directors restricted share units quarterly in advance on the first day of July, October, January and April in each year of service. The number of restricted share units granted quarterly is determined by dividing $30,000 by the average of the closing price of our common shares on each of the five trading days preceding the date of the grant. Each restricted share unit will entitle those directors to receive one of our common shares upon vesting. These restricted share units vest on the earlier of the date that the director ceases to be a member of our board of directors for any reason and three years after the grant date. We agree to issue common shares to those directors as soon as practicable, and in any event within 60 days, after the granted restricted share units vested.
CSI Solar Share Incentive Plan
In November 2024, CSI Solar adopted a restricted share incentive plan that provides for the grant of equity awards, including options to purchase CSI Solar shares to its directors, officers and employees. The awards are subject to service-based and performance-based vesting conditions, as determined by the board of directors of CSI Solar.
On November 28, 2024, CSI Solar granted options to purchase an aggregate of 54,004,000 CSI Solar shares, with an exercise price of RMB 5.56 ($0.77) per share. The grants include the following awards to certain of our director, executive officer and related persons:
Share
Options
Director:
2,520,000
(7)
November 28, 2024
Employees:
840,000
(7)
CSI Solar share options are subject to time-based and performance-based vesting conditions and will vest in three tranches over a four-year period, beginning 12 months after the grant date. 33% of the options will vest between months 12 and 24, an additional 33% will vest between months 24 and 36, and the remaining 34% will vest between months 36 and 48, subject to continued employment and the achievement of applicable performance criteria.
C Board Practices
In 2025, our board of directors held 12 meetings and passed 52 resolutions by unanimous written consent.
Terms of Directors and Executive Officers
Our officers are appointed by and serve at the discretion of our board of directors. Our current directors have not been elected to serve for a specific term and, unless re-elected, hold office until the close of our next annual meeting of shareholders or until such time as their successors are elected or appointed.
Committees of the Board of Directors
Our board of directors has established an audit committee, a compensation committee, a nominating and corporate governance committee, a technology committee and a sustainability committee.
76
Audit Committee
Our audit committee consists of Mr. Leslie Chang, Professor Harry E. Ruda and Mr. Andrew L.C. Wong, and is chaired by Mr. Chang. Mr. Wong was appointed to serve on our audit committee effective July 17, 2024. Under applicable Nasdaq rules, we are required to have at least three members on the Audit Committee. Mr. Chang qualifies as an “audit committee financial expert” as required by the SEC. Professor Ruda and Mr. Wong are “financially literate” as required by Nasdaq rules. Each member of our audit committee satisfies the “independence” requirements under Nasdaq corporate governance rules. The audit committee oversees our accounting and financial reporting processes and the audits of our consolidated financial statements.
The audit committee is responsible for, among other things:
In 2025, our audit committee held seven meetings and did not pass any resolutions by unanimous written consent.
Compensation Committee
Our compensation committee consists of Mr. Andrew L.C. Wong, Professor Harry E. Ruda and Ms. Lauren Templeton, and is chaired by Mr. Wong. Each member of our compensation committee satisfies the “independence” requirements of Nasdaq corporate governance rules. The compensation committee assists the board of directors in reviewing and approving the compensation structure for our directors and executive officers, including all forms of compensation to be provided to our directors and executive officers. Members of the compensation committee are not prohibited from direct involvement in determining their own compensation. Our chief executive officer may not be present at any committee meeting during which the compensation of whom is deliberated.
The compensation committee is responsible for, among other things:
77
In 2025, our compensation committee held five meetings and did not pass any resolutions by unanimous written consent.
Nominating and Corporate Governance Committee
Our nominating and corporate governance committee consists of Ms. Lauren Templeton, Mr. Andrew L.C. Wong and Mr. Leslie Chang, and is chaired by Ms. Templeton. Each member of our nominating and corporate governance committee satisfies the “independence” requirements of Nasdaq corporate governance rules. The nominating and corporate governance committee assists the board of directors in identifying individuals qualified to become our directors and in determining the composition of the board of directors and its committees.
The nominating and corporate governance committee is responsible for, among other things:
In 2025, our nominating and corporate governance committee held eight meetings and did not pass any resolutions by unanimous written consent.
Technology Committee
Our technology committee consists of Professor Harry E. Ruda and Dr. Shawn Qu, and is chaired by Professor Ruda. The technology committee advises the board of directors and management on technology and innovation matters in support of our overall strategy and performance.
The technology committee is responsible for, among other things:
78
In 2025, our technology committee held one meeting and did not pass any resolutions by unanimous written consent.
Sustainability Committee
Our sustainability committee consists of Ms. Lauren Templeton, Mr. Leslie Chang and Professor Harry E. Ruda, and is chaired by Ms. Templeton. Professor Ruda was appointed to serve on our sustainability committee effective July 17, 2024. The sustainability committee oversees management’s ESG plans.
The sustainability committee is responsible for, among other things:
In 2025, our sustainability committee held one meeting and did not pass any resolutions by unanimous written consent.
Interested Transactions
The OBCA contains provisions that relate to a scenario where a director or officer of Canadian Solar Inc. is a party to a material contract or transaction or proposed material contract or transaction with our company, or is a director or an officer of, or has a material interest in, any person who is a party to a material contract or transaction or proposed material contract or transaction with our company, as summarized below.
A director or officer of Canadian Solar Inc. who is a party to a material contract or transaction or proposed material contract or transaction with our company, or is a director or an officer of, or has a material interest in, any person who is a party to a material contract or transaction or proposed material contract or transaction with our company, shall disclose in writing to Canadian Solar Inc. or request to have entered in the minutes of meetings of directors the nature and extent of his or her interest. In the case of a director, such disclosure shall be made (a) at the meeting at which a proposed contract or transaction is first considered; (b) if the director was not then interested in a proposed contract or transaction, at the first meeting after he or she becomes so interested; (c) if the director becomes interested after a contract is made or a transaction is entered into, at the first meeting after he or she becomes so interested; or (d) if a person who is interested in a contract or transaction later becomes a director, at the first meeting after he or she becomes a director. In the case of an officer who is not a director, such disclosure shall be made (a) forthwith after the officer becomes aware that the contract or transaction or proposed contract or transaction is to be considered or has been considered at a meeting of directors; (b) if the officer becomes interested after a contract is made or a transaction is entered into, forthwith after he or she becomes so interested; or (c) if a person who is interested in a contract or transaction later becomes an officer, forthwith after he or she becomes an officer. Where a director or officer of Canadian Solar Inc. is required to make such disclosure in respect of a material contract or transaction or proposed material contract or transaction that, in the ordinary course of our business, would not require approval by the directors or shareholders, the director or officer shall disclose in writing to Canadian Solar Inc. or request to have entered in the minutes of meetings of directors the nature and extent of his or her interest forthwith after the director or officer becomes aware of the contract or transaction or proposed contract or transaction. A general notice to the directors by a director or officer disclosing that he or she is a director or officer of or has a material interest in a person, or that there has been a material change in the director’s or officer’s interest in the person, and is to be regarded as interested in any contract made or any transaction entered into with that person, is sufficient disclosure of interest in relation to any such contract or transaction.
79
A director who is required to make such disclosure in respect of a material contract or transaction or proposed material contract or transaction shall not attend any part of a meeting of directors during which the contract or transaction is discussed and shall not vote on any resolution to approve the contract or transaction unless the contract or transaction is (a) one relating primarily to his or her remuneration as a director of our company or an affiliate; (b) one for indemnity or insurance under the OBCA; or (c) one with an affiliate of our company. If no quorum exists for the purpose of voting on a resolution to approve a contract or transaction only because a director is not permitted to be present at the meeting for such reason, the remaining directors shall be deemed to constitute a quorum for the purposes of voting on the resolution. Where all of the directors are required to make such disclosure in respect of a material contract or transaction or proposed material contract or transaction, the contract or transaction may be approved only by the shareholders.
Where a material contract is made or a material transaction is entered into between our company and a director or officer of Canadian Solar Inc., or between our company and another person of which a director or officer of Canadian Solar Inc. is a director or officer or in which he or she has a material interest, (a) the director or officer is not accountable to our company or our shareholders for any profit or gain realized from the contract or transaction; and (b) the contract or transaction is neither void nor voidable, by reason only of that relationship or by reason only that the director is present at or is counted to determine the presence of a quorum at the meeting of directors that authorized the contract or transaction, if the director or officer disclosed his or her interest in accordance with the OBCA, and the contract or transaction was reasonable and fair to our company at the time it was so approved.
A director or officer, acting honestly and in good faith, is not accountable to our company or to our shareholders for any profit or gain realized from any such contract or transaction by reason only of his or her holding the office of director or officer, and the contract or transaction, if it was reasonable and fair to our company at the time it was approved, is not by reason only of the director’s or officer’s interest therein void or voidable, where, (a) the contract or transaction is confirmed or approved by special resolution at a meeting of the shareholders duly called for that purpose; and the nature and extent of the director’s or officer’s interest in the contract or transaction are disclosed in reasonable detail in the notice calling the meeting or in the information circular required by the OBCA.
Subject to those exceptions, where a director or officer of Canadian Solar Inc. fails to disclose his or her interest in a material contract or transaction in accordance with the OBCA or otherwise fails to comply with the relevant provisions of the OBCA, Canadian Solar Inc. or a shareholder of Canadian Solar Inc. may apply to the court for an order setting aside the contract or transaction and directing that the director or officer account to Canadian Solar Inc. for any profit or gain realized and upon such application the court may so order or make such other order as it thinks fit.
In 2025, we did not enter into any interested transactions other than those described in this “Item 6. Directors, Senior Management and Employees” and “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions.”
Remuneration and Borrowing
Our directors may determine the remuneration to be paid to them. The compensation committee will assist the directors in reviewing and approving the compensation structure for our directors.
Pursuant to the OBCA, Canadian Solar Inc.’s articles are deemed to state that our directors may, without authorization of the shareholders, (a) borrow money upon the credit of the corporation; (b) issue, reissue, sell or pledge debt obligations of the corporation; (c) give a guarantee on behalf of the corporation to secure performance of an obligation of any person; and (d) mortgage, hypothecate, pledge or otherwise create a security interest in all or any property of the corporation, owned or subsequently acquired, to secure any obligation of the corporation.
Employment Agreements
We have entered into employment agreements with each of our executive officers.
All of the employment agreements with our executive officers are for an indefinite term. Under the employment agreements, we may terminate the employment of an executive officer at any time by giving written notice of termination to the executive officer. An executive officer may terminate his employment at any time by giving 30 days’ written notice of termination to us.
80
If we terminate the employment of an executive officer for any reason other than cause or disability, or the executive officer terminates his employment for good reason, in both cases other than within 12 months after a change of control, (a) the unvested RSUs held by the executive officer immediately before the date of termination of the employment that would otherwise vest within 12 months after the date of termination of the employment will be deemed to have vested immediately before the date of termination of the employment; (b) the executive officer is entitled to receive his target bonus for the year in which the date of termination of the employment occurs; and (c) the executive officer is entitled to continue to receive his base salary and benefits for a period of six plus N months following the date of termination of the employment provided that he continues to comply with his confidentiality, inventions, non-competition, non-solicitation and assistance obligations described below. “N” is the number of years (including part years) that the executive officer was employed by us and our subsidiaries during the period beginning on January 1, 2007 and ending on the date of termination of the Employment but not exceeding 12.
If we terminate the employment of an executive officer for any reason other than cause or disability, or the executive officer terminates his employment for good reason, in both cases within 12 months after a change of control, (a) all unvested RSUs held by the executive officer immediately before the date of termination of the employment will be deemed to have vested immediately before the date of termination of the employment; (b) the executive officer is entitled to receive an lump sum amount equal to the sum of: (1) his target bonus for the year in which the date of termination of the employment occurs, (2) his annual base salary and (3) the estimated annual cost of his providing his benefits multiplied by a fraction, the numerator of which is 12 plus N and the denominator of which is 12.
Each executive officer has agreed: (a) not to disclose or use any of our confidential information, including trade secrets and information concerning our finances, employees, technology, processes, facilities, products, suppliers, customers and markets, except in the performance of his duties and responsibilities or as required pursuant to applicable law; (b) to disclose in confidence to us all inventions, designs and trade secrets which he may conceive, develop or reduce to practice during his employment and to assign all right, title and interest in them to us; (c) during and within one year after the termination of his employment, (1) not to communicate or have any other dealings with our customers or suppliers that would be likely to harm the business relationship between us and our suppliers; (2) not to provide services, whether as a director, officer, employee, independent contractor or otherwise, to a competitor; and (3) not to solicit, whether by offer of employment or otherwise, the services of any of our employees; and (d) at our request, to answer our requests for information about those aspects of our business and affairs in which he was involved and assist us in prosecuting or defending claims or responding to investigations or reviews by any regulatory authority or stock exchange in relation to events or occurrences that took place during the employment. “Competitor” is a person that, directly or indirectly, carries on business in any jurisdiction where we and our subsidiaries carry on business if that person or any subsidiary or division of that person generates more than 10% of its revenues from solar power products and services similar to those provided by us and our subsidiaries.
Our compensation committee is required to approve the employment agreements entered into by us with our executive officers.
Director Agreements
We have entered into director agreements with our independent directors, pursuant to which we make payments in the form of an annual cash retainer, payable quarterly, and quarterly grants of restricted share units to our independent directors for their services. See “—B. Compensation of Directors and Executive Officers.”
Indemnification of Directors and Officers
The OBCA contains provisions that relate to indemnification by Canadian Solar Inc. in favor of an individual who is a present or former director or officer or an individual who acts or has acted at our request as a director or officer, or an individual acting in a similar capacity, of another entity, as summarized below.
81
Canadian Solar Inc. may indemnify any individual who is a present or former director or officer or an individual who acts or has acted at our request as a director or officer, or an individual acting in a similar capacity, of another entity, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with us or other entity. Canadian Solar Inc. may advance money to such an individual for such costs, charges and expenses of a proceeding, but the individual shall repay the money and Canadian Solar Inc. shall not indemnify any such individual unless the individual acted honestly and in good faith with a view to our best interests or, as the case may be, to the best interests of the other entity for which the individual acted as a director or officer or in a similar capacity at our request. In addition, if the matter is a criminal or administrative action or proceeding that is enforced by a monetary penalty, Canadian Solar Inc. shall not indemnify such an individual under the OBCA unless the individual had reasonable grounds for believing that the individual’s conduct was lawful.
Canadian Solar Inc. may, with the approval of a court, indemnify such an individual, or advance moneys to such an individual, in respect of an action by or on behalf of Canadian Solar Inc. or other entity to obtain a judgment in its favor, to which the individual is made a party because of the individual’s association with Canadian Solar Inc. or other entity, against all costs, charges and expenses reasonably incurred by the individual in connection with such action, if the individual acted honestly and in good faith with a view to our best interests or, as the case may be, to the best interests of the other entity for which the individual acted as a director or officer or in a similar capacity at our request.
Any such individual is entitled to indemnity from Canadian Solar Inc. in respect of all costs, charges and expenses reasonably incurred by the individual in connection with the defence of any civil, criminal, administrative, investigative or other proceeding to which the individual is subject because of the individual’s association with Canadian Solar Inc. or other entity, if the individual seeking an indemnity (a) was not judged by a court or other competent authority to have committed any fault or omitted to do anything that the individual ought to have done; (b) acted honestly and in good faith with a view to our best interests or, as the case may be, to the best interests of the other entity for which the individual acted as a director or officer or in a similar capacity at our request, and (c) if the matter is a criminal or administrative action or proceeding that is enforced by a monetary penalty, the individual had reasonable grounds for believing that the individual’s conduct was lawful.
Under Canadian Solar Inc.’s by-laws, Canadian Solar Inc. shall indemnify our directors and officers and former directors and officers and such other individual who acts or acted at our request as a director or officer, or in a similar capacity, of another entity, to the greatest extent permitted by law.
We have entered into indemnity agreements with each of our directors agreeing to indemnify them, to the fullest extent permitted by law, against all liability, loss, harm damage cost or expense, reasonably incurred by the director in respect of any threatened, pending, ongoing or completed claim or civil, criminal, administrative, investigative or other action or proceeding made or commenced against him or in which he is or was involved by reason of the fact that he is or was a director of our company.
Our directors and officers are covered by directors’ and officers’ insurance policies.
As of December 31, 2023, 2024 and 2025, we had 22,234, 17,113 and 12,587 full-time employees, respectively. The following table sets forth the number of our employees categorized by our areas of operations and as a percentage of our workforce as of December 31, 2025.
As of December 31, 2025
Number of Employees
Percentage of Total
Manufacturing and operations
7,314
General and administrative
3,321
Research and development
1,318
Sales and marketing
634
12,587
82
As of December 31, 2025, we had 2,061 employees at our facilities and offices in the U.S., 9,187 in Asia Pacific, including China, and 1,339 in Europe and other regions. Our employees are not covered by any collective bargaining agreement. We consider our relations with our employees to be good. From time to time, we also employ or engage part-time employees or independent contractors to support our manufacturing, research and development and sales and marketing activities.
Our culture has always been to put people first and treat everyone with fairness and dignity. We are committed to maintaining an environment where all individuals are treated equally and provided with the opportunity to contribute and thrive. Best practices are implemented locally in keeping with our global strategies across our operating operations, from manufacturing to sales and project development. See “Item 4. Information on the Company—B. Business Overview—Environmental, Social and Governance Initiatives.”
Continuous learning is the cornerstone of our human capital development strategy. Employees across all functions and levels of us are offered participation in the Canadian Solar education courses and programs, which are designed to support their career development through an extensive suite of resources, including classroom training, e-learning, coaching, mentoring and on-the-job training. We partner with professional consultants such as Development Dimensions International to establish leadership standards and create tailor-made development programs.
Training programs for junior positions are focused on developing technical and professional skills, including, but not limited to, areas such as project development, permitting, asset management, financing, sales management, order management and operations, supply chain management, marketing, technical services and support. This is complemented by specific training sessions designed to develop soft skills and nurture a culture of continuous self and mutual learning.
For more senior-level employees, our in-house training program is more targeted towards developing leadership and managerial skills. The Leadership Foundation Program focuses on executive strategy, effective decision-making, coaching for peak performance, delegation, and other leadership skills. Global workshops on key business topics such as PPA and storage are organized to help our leaders continue to learn. We also selectively sponsor key talents to attend top MBA programs.
We regularly carry out global succession planning reviews to identify high-potential talents and follow up with individual development plans for them. Our succession planning calls for a robust leadership development program. Initiatives such as the Business Leader Development Program, where we partner with prestigious universities to provide online lectures, webinars and project assignments, meet this need by providing training and development opportunities for all different levels of leadership. We also have a Middle Manager Development Program and a Frontline Leadership Program, where we partner with Franklin Covey to deliver leadership, individual effectiveness and business execution training to our business leaders.
We strive to create a culture of openness and transparency, which values and promotes two-way communication between management and team members. Feedback is both encouraged and appreciated, as we consider it a key driver for employee engagement.
We consider the turnover rate a valuable metric to measure the effectiveness of our programs and to assist in developing new programs. Our employee turnover for 2024 and 2025 was 28% and 26%, respectively. We believe the combination of training and development programs, regular performance reviews, competitive compensation, and the redesign of our company culture to better inspire employees, as well as career growth and development opportunities, has helped reduce voluntary turnover.
Share Ownership
The following table sets forth information with respect to the beneficial ownership of our common shares as of January 31, 2026, the latest practicable date, by:
The calculations in the table below are based on the 67,816,724 common shares outstanding as of January 31, 2026.
83
Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of common shares beneficially owned by a person and the percentage ownership of that person, we have included common shares that the person has the right to acquire within 60 days from January 31, 2026, including through the vesting of any restricted share unit, or the exercise of any option, warrant or other right or the conversion of any other security. These shares, however, are not included in the computation of the percentage ownership of any other person.
Common Shares
Beneficially Owned(1)
Number
Directors and Executive Officers: (2)
Dr. Shawn (Xiaohua) Qu (3)
14,054,888
20.7
All Directors and Executive Officers as a Group
14,291,500
20.9
Principal Shareholders:
PAG (4)
10,989,020
16.2
Venture Holding S.a.r.l. SPF (5)
6,000,000
8.8
D. E. Shaw & Co., L.P. (6)
4,366,760
6.4
* The person beneficially owns less than 1% of our outstanding shares.
84
None of our shareholders have different voting rights from other shareholders as of the date of this annual report on Form 20-F. We are currently not aware that we are directly or indirectly owned or controlled by another corporation, by any foreign government or by any other natural or legal person severally or jointly and we are currently not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.
F
Disclosure of A Registrant’s Action to Recover Erroneously Awarded Compensation
ITEM 7 MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A Major Shareholders
Please refer to “Item 6. Directors, Senior Management and Employees—E. Share Ownership.”
B Related Party Transactions
Sales and Purchase Contracts with Affiliates
We sold solar modules to Marangatu Holding S.A. and Panati Holding S.A., our 30% owned affiliates in Brazil, in the amounts of $100.9 million and $67.5 million, respectively, in 2023, and $0.2 million and nil, respectively, in 2024. There were no similar transactions in 2025. In 2023, 2024 and 2025, we delivered battery energy storage solutions to RE Crimson Holdings LLC, our 20% owned affiliate in the U.S., totaling $17.2 million, $5.3 million and $13.0 million, respectively. In 2023, 2024 and 2025, we provided asset management services to Canadian Solar Infrastructure Fund, Inc., our 14.9% owned affiliate, totaling $10.0 million, $5.5 million and $5.0 million, respectively, and provided power services totaling $7.0 million, $7.6 million and $8.9 million, respectively.
See “Item 6. Directors, Senior Management and Employees—C. Board Practices—Employment Agreements.”
See “Item 6. Directors, Senior Management and Employees—B. Compensation of Directors and Executive Officers—Share Incentive Plans.”
C Interests of Experts and Counsel
ITEM 8 FINANCIAL INFORMATION
A Consolidated Statements and Other Financial Information
We have appended audited consolidated financial statements filed as part of this annual report.
Legal and Administrative Proceedings
U.S. Trade Proceedings
Solar 1 China
On October 17, 2012, the U.S. Department of Commerce, or the USDOC, issued final affirmative determinations with respect to its antidumping and countervailing duty investigations on crystalline silicon photovoltaic, or CSPV, cells, whether or not incorporated into modules, from China. On November 30, 2012, the U.S. International Trade Commission, or the USITC, determined that imports of CSPV cells had caused material injury to the U.S. CSPV industry. The USITC’s determination was subsequently affirmed by the U.S. Court of International Trade, or CIT, and the U.S. Court of Appeals for the Federal Circuit, or Federal Circuit. As a result of these determinations, we were required to pay cash deposits on Chinese-origin CSPV cells imported into the U.S., whether or not incorporated into modules. The rates applicable to us were 24.48% (antidumping duty) and 15.24% (countervailing duty). We paid all the cash deposits due under these determinations. The rates at which duties are assessed and payable are subject to administrative reviews. The first through tenth administrative reviews have been completed and the decisions are final, with the exception of the sixth antidumping duty administrative review, which is on appeal at the Federal Circuit.
The eleventh antidumping duty and countervailing duty administrative reviews were initiated in February 2024. The USDOC published the final results of the eleventh antidumping duty administrative review on December 23, 2025. The USDOC determined that the Canadian Solar entities subject to the eleventh antidumping duty administrative review had no shipments during the period of review and, therefore, our antidumping duty rate (0.00%) will remain unchanged for our Solar 1 CSPV products. The USDOC issued the final results of the eleventh countervailing duty administrative review in January 2026. The USDOC determined that the Canadian Solar entities subject to the eleventh countervailing duty administrative review had no shipments during the period of review and therefore, the USDOC is rescinding the review with respect to Canadian Solar. Accordingly, our countervailing duty rate, is expected to remain the same at 15.87%.
The twelfth antidumping duty and countervailing duty administrative reviews were initiated in January 2025 and are currently underway. The USDOC recently selected Canadian Solar International Limited as a mandatory respondent in the antidumping duty administrative review. Preliminary results are scheduled to be issued on June 1, 2026.
In December 2025, USDOC provided interested parties, including Canadian Solar, the opportunity to request reviews as part of the thirteenth antidumping duty and countervailing duty administrative reviews. USDOC initiated these reviews on February 20, 2026.
In February 2024, the USDOC and USITC initiated the second five-year sunset reviews of the Solar 1 antidumping and countervailing duty orders. Those sunset reviews were concluded by the USDOC and the ITC in June and September 2024, respectively, with both agencies finding that the orders should be maintained for another five years.
Solar 2 China
On December 31, 2013, Solar World Industries America, Inc. filed another trade action with the USDOC and the USITC accusing Chinese producers of certain CSPV modules of dumping their products into the U.S. and of receiving countervailable subsidies from the Chinese authorities. This trade action also alleged that Taiwanese producers of certain CSPV cells and modules dumped their products into the U.S. Excluded from these new actions were those Chinese-origin solar products covered by the Solar 1 orders described above. We were identified as one of a number of Chinese producers exporting the Solar 2 subject goods to the U.S. market. “Chinese CSPV products subject to Solar 2 orders” refers to CSPV products manufactured in Chinese mainland using non-Chinese (e.g., Taiwanese) CSPV cells and imported into the U.S. during the investigation or administrative review periods of Solar 2. “Taiwanese CSPV products subject to Solar 2 orders” refer to CSPV products manufactured outside of Chinese mainland using Taiwanese CSPV cells and imported into the U.S. during the investigation or review periods of Solar 2. On December 23, 2014, the USDOC issued final affirmative determinations with respect to its antidumping and countervailing duty investigation on these CSPV products. On January 21, 2015, the USITC determined that imports of these CSPV products had caused material injury to the U.S. CSPV industry. As a result of these determinations, we are required to pay cash deposits on these CSPV products, the rates of which applicable to our Chinese CSPV products were 30.06% (antidumping duty) and 38.43% (countervailing duty). The antidumping cash deposit rate applicable to our Taiwanese CSPV products subject to Solar 2 orders varied by solar cell producer. We paid all the cash deposits due under these determinations. There is no countervailing duty order on Taiwan Solar 2 products. The rates at which duties will be assessed and payable are subject to administrative reviews. The first through nineth administrative reviews have been completed. The USDOC initiated the tenth administrative review of the Solar 2 China antidumping duty order in March 2025 with respect to certain of the Canadian Solar entities. The USDOC rescinded the tenth administrative review of the Solar 2 China antidumping duty order in December 2025. Therefore, our antidumping duty rates will remain unchanged for our Solar 2 China CSPV products. The USDOC did not initiate the tenth administrative review of the Solar 2 China countervailing duty order because no parties requested reviews. Therefore, our countervailing duty rates (33.58%) will remain unchanged for our Solar2 China CSPV products. The USDOC initiated the tenth administrative review of the Solar 2 Taiwan antidumping duty order in March 2025, however, the review was not initiated with respect to Canadian Solar and therefore, our antidumping duty rates will remain unchanged for our Taiwanese CSPV products. In August 2025, the USDOC and USITC initiated the second five-year sunset reviews of the Solar 2 antidumping and countervailing duty orders, and the reviews are currently underway.
Solar 1 Circumvention Investigations on CSPV products from Southeast Asia
On August 17, 2023, the USDOC issued affirmative final determinations of circumvention with respect to CSPV products from Cambodia, Thailand, Malaysia, and Vietnam. The USDOC also made company-specific affirmative determinations with respect to several companies, including CSIL. The Group defended its interests in these proceedings.
USDOC’s regulations typically impose antidumping duty and countervailing duty liability from the date of initiation (here, April 1, 2022). In this instance, however, the USDOC published a final rule that delayed liability for CSIL’s exports from Thailand (and also Vietnam) in these solar circumvention proceedings, or the Solar Moratorium, in order to implement Proclamation 10414 issued by the President Biden on June 6, 2022, which suspended antidumping and countervailing duty requirements on eligible product imports through June 6, 2024. To qualify for the Solar Moratorium, imports had to enter the U.S. by June 6, 2024, and be utilized in solar energy projects by December 3, 2024. The USDOC also implemented a certification mechanism for exporters and importers to demonstrate that merchandise was not subject to circumvention requirements in light of (i) the Solar Moratorium, or (ii) limited reliance on Chinese-origin components (including wafers) (i.e., non-circumventing material).
In October 2023, Canadian Solar appealed the USDOC’s circumvention final determination with respect to Thailand to the CIT. In May 2025, the CIT sustained the USDOC’s Thailand circumvention final determination. We appealed the CIT decision to the Federal Circuit in July 2025. The Group is defending its interests in this ongoing appeal.
In addition, in December 2023, Auxin Solar, Inc. and Concept Clean Energy, Inc. challenged the USDOC’s Solar Moratorium to the CIT. In August 2025, the CIT overturned and vacated the USDOC’s Solar Moratorium. This decision by the CIT was appealed to the Federal Circuit in September 2025, and we are currently participating in the appeal at the Federal Circuit. The CIT’s decision and vacatur of USDOC’s Solar Moratorium is stayed pending the final and conclusive resolution of the Federal Circuit appeal.
87
Solar 3 Southeast Asia
On April 24, 2024, the American Alliance for Solar Manufacturing Trade Committee, or the Committee, filed petitions for antidumping and countervailing duty orders on CSPV cells and modules imported from Cambodia, Malaysia, Thailand, and Vietnam. Certain Canadian Solar entities entered an appearance in these proceedings before the USDOC and USITC. On May 15, 2024, the USDOC initiated the Solar 3 antidumping duty, or AD, and countervailing duty, or CVD, investigations with respect to all four countries, and the USITC preliminarily voted to continue its investigations on June 7, 2024. The USDOC rendered final affirmative determinations with respect to all four countries on April 18, 2025. In the Solar 3 Thailand investigations, the final countervailing duty rate (all others) applicable to Canadian Solar is 255.39%, and the final antidumping duty rate (all others) applicable to Canadian Solar is 111.45%. In the Solar 3 Vietnam AD/CVD investigations, the final countervailing duty rate (all others) applicable to Canadian Solar is 124.57%, and the final antidumping duty rate (all others) applicable to Canadian Solar is 271.28%. In June 2025, the USITC made an affirmative determination as to the threat of material injury by imports from Thailand, inclusive of a negative determination as to “critical circumstances.” This resulted in refunds issued by U.S. Customs for all AD/CVD cash deposits made by Canadian Solar as a result of the preliminary affirmative determinations through the date of the final determination. The USDOC’s and USITC’s final determinations in the Solar 3 AD/CVD investigations were appealed to the CIT in July 2025. The Group is defending its interests in these ongoing appeals.
Solar 4 India, Indonesia, and Laos
On July 17, 2025, the Alliance for American Solar Manufacturing and Trade filed petitions for antidumping and countervailing duty orders on CSPV cells and modules imported from India, Indonesia, and Laos. Certain Canadian Solar entities entered an appearance in these proceedings before the USDOC and USITC. On August 12, 2025, the USDOC initiated the Solar 4 AD/CVD investigations with respect to all three countries, and the USITC preliminarily voted to continue its investigations on September 5, 2025. On February 26, 2026, the USDOC made affirmative preliminary countervailing duty determinations with respect to India, Indonesia, and Laos, including affirmative “critical circumstances” determinations with respect to India and Indonesia. The USDOC’s AD preliminary determinations are expected in April 2026. The USDOC’s final AD/CVD determinations and the USITC’s material injury determinations are expected in late-2026. The Group is defending its interests in these proceedings.
Section 201 Safeguard
On May 17, 2017, following receipt of a petition from Suniva, Inc., which was later joined by Solar World Americas, Inc., the USITC instituted a safeguard investigation to determine whether there were increased imports of CSPV products in such quantities as to be a substantial cause of serious injury, or the threat thereof, to the domestic industry producing like or directly competitive products. On September 22, 2017, the USITC determined that CSPV products are being imported into the United States in such increased quantities as to be a substantial cause of serious injury to the domestic industry.
On January 23, 2018, the U.S. government imposed a safeguard measure on imports of CSPV cells, whether or not partially or fully assembled into other products such as modules, consisting of (1) a tariff-rate quota for four years on imports of CSPV cells not partially or fully assembled into other products, with (a) an in-quota quantity of 2.5 gigawatts, and (b) a tariff rate applicable to over-quota CSPV cells of 30%, declining annually by five percentage points to 25% in the second year, 20% in the third year, and 15% in the fourth year; and (2) a 30% tariff for four years on CSPV modules, declining annually by five percentage points to 25% in the second year, 20% in the third year, and 15% in the fourth year. This safeguard measure, which became effective on February 7, 2018, applies to CSPV products imported from all countries, except for certain developing country members of the World Trade Organization.
The safeguard measure was extended by the U.S. government in February 2022, with its terms subsequently adjusted on several occasions. The safeguard measure terminated on February 6, 2026.
88
On November 16, 2021, the CIT held in Solar Energy Industries Association et al. v. United States, or the SEIA that the U.S. government acted outside of its statutory authority in issuing Proclamation 10101 and enjoined the Government from enforcing that proclamation. This judgment had the effect of reinstating the exclusion of bifacial modules from the safeguard tariffs and lowering the fourth year safeguard tariff to 15% ad valorem. On January 14, 2022, the Government filed a notice of appeal of SEIA to the Federal Circuit. In November 2023, the Federal Circuit reversed and remanded the CIT’s judgment, finding that the U.S. government had acted lawfully in issuing Proclamation 10101. The Federal Circuit denied the Appellees’ petition for en banc rehearing in August 2024, and the SEIA appeal became final in May 2025. In October 2022, Canadian Solar filed an appeal at the CIT challenging U.S. Customs and Border Protection’s erroneous collection of certain Section 201 safeguard duties on bifacial panels pursuant to Proclamation 10101. Canadian Solar dismissed its appeal in June 2025, following the Federal Circuit’s decision in SEIA.
Section 232 Investigation into U.S. Imports of Polysilicon and its Derivative Products
On July 1, 2025, the Secretary of Commerce initiated an investigation to determine the effects on the national security of U.S. imports of polysilicon and its derivative products, including wafers, solar cells, and solar modules. The USDOC’s Section 232 investigation could lead to the President’s imposition of tariffs and/or other measures with respect to imports of these products. Canadian Solar timely submitted comments to USDOC and is otherwise defending its interests in the proceeding.
U.S. Antidumping and Countervailing Duty Investigation into U.S. Imports of Active Anode Material, or AAM, from China
On January 8, 2025, the USDOC initiated antidumping duty and countervailing duty investigations of AAM imported from China. AAM is contained in certain batteries and downstream energy storage products exported by Canadian Solar. On February 11, 2026, USDOC determined that AAM contained in downstream battery products will not be covered by the scope of potential antidumping and countervailing duties. On March 12, 2026, the USITC made a negative finding of material retardation, and thus, the USDOC will not enter an AD/CVD order on imports of this product from China.
Other Broad-Based Tariff Measures under IEEPA, Section 122, and Section 301
In 2025, the U.S. government imposed broad-based tariffs under the International Economic Emergency Powers Act (“IEEPA”) on nearly all U.S. imports at various country-specific tariff rates. On February 20, 2026, the U.S. Supreme Court found these tariffs unlawful, and the USCIT subsequently ordered refunds for all such tariffs paid under IEEPA. Canadian Solar filed suit in the USCIT to preserve its rights to refunds for such tariffs. This litigation and that concerning the extent of available refunds for IEEPA tariffs remains ongoing.
In February 2026, the U.S. government imposed Section 122 tariffs on nearly all U.S. imports at 10% for 150 days. These tariffs remain in effect and are currently expected to expire in July 2026.
In March 2026, the U.S. government announced new Section 301 investigations on U.S. imports from various countries, including China and Thailand. Announcements with respect to these investigations are expected to be issued concurrently with the expiry of the temporary Section 122 tariff measures later in 2026.
89
Patent Disputes
On March 25, 2024, Maxeon Solar Pte. Ltd., or Maxeon, filed a patent infringement lawsuit against Canadian Solar Inc. in the U.S. District Court for the Eastern District of Texas, or Texas Litigation. Maxeon alleges that by manufacturing, importing, selling, or offering for sale of its TOPCon (Tunnel Oxide Passivated Contact) solar modules in the United States, Canadian Solar Inc., via its affiliates, has directly and indirectly infringed and continues to infringe upon three patents currently held by Maxeon. The three patents asserted by Maxeon are U.S. Patent Nos. 8222516, 8878053, and 11251315. Maxeon’s complaint requests the Court to grant, among other relief, a permanent injunction enjoining Canadian Solar Inc. from the alleged infringement, and a judgment for monetary damages and fees. The specific amount of monetary damages has not been identified. Based on our assessment, we believe that our TOPCon solar modules do not infringe Maxeon’s asserted patents and are vigorously defending ourselves in the lawsuit. In response to the lawsuit, in June 2024, Canadian Solar Inc. filed petitions for Inter-Partes Review, or IPR, before the U.S. Patent and Trademark Office, or USPTO, challenging the patentability of the three asserted patents. The USPTO instituted review against all three patents on January 14, 2025. On May 28, 2025, Maxeon withdrew its infringement claim for U.S. Patent No. 11251315 in the Texas Litigation, and this claim was dismissed with prejudice. The District Court Judge also stayed the Texas Litigation on July 1, 2025 pending the resolution of the IPRs. On January 12, 2026, the Patent Trial and Appeal Board (“PTAB”) issued Final Written Decisions in Canadian Solar’s IPR and invalidated all claims in the two remaining patents (‘516 and ’053) in the Maxeon Texas Litigation except for Claim 12 of the ‘516 patent. However, Claim 12 of the ‘516 patent was not asserted in the Texas Litigation. Canadian Solar Inc. will move for the Texas Litigation to be dismissed entirely. Maxeon has asked the court to lift the stay so it can amend its complaint to add Claim 12 of the ‘516 patent. No decision has been made. Maxeon has appealed the IPR decision for the ‘516 patent (claims 1-11), but it did not appeal the IPR invalidity decision for the ‘053 patent.
On February 10, 2025, CSI Solar was notified of two lawsuits filed against it by Trina at the Jiangsu Province High Court, alleging infringement of two patents and seeking approximately RMB 1.1 billion ($153.0 million) in damages. The patents in question are Patent No. ZL201710975923.2, titled “Solar Cell Module,” or Patent 1, and Patent No. ZL201510892086.8, titled “Solar Cell and Its Manufacturing Method,” or Patent 2. Based on our assessment, we do not believe our proprietary technology infringes on the patents asserted by Trina and we are vigorously defending ourselves in these proceedings. In October 2024, Trina also filed a patent lawsuit against Canadian Solar Inc.’s US subsidiaries in the U.S. District Court for the District of Delaware, or Trina Delaware Litigation, and against Canadian Solar Inc., CSI Solar Co., Ltd., and its US subsidiaries in the U.S. International Trade Commission, or ITC, concerning the U.S. counterparts of Patent 2. On December 6, 2024, the Delaware District Judge stayed the Trina Delaware Litigation. On April 3, 2025, the ITC investigation against all Canadian Solar related entities was terminated upon motion by Trina and granted by the Administrative Law Judge, which was affirmed on April 21, 2025. On April 28, 2025, Canadian Solar (USA) Inc. filed petitions for IPR before the USPTO challenging the patentability of the U.S. counterparts of Patent 2 that were “copy-cat” IPRs filed by Runergy Alabama Inc. and Runergy USA (“Runergy”), and which had been granted on April 21, 2025. On October 29, 2025, the USPTO granted review of Canadian Solar (USA) Inc.’s IPR and Canadian Solar (USA) Inc.’s motion to join Runergy’s IPR. Oral arguments on the joint IPRs were held on January 29, 2026. The Delaware Litigation continues to be stayed pending the resolution of the IPR. In addition, Canadian Solar Manufacturing (Changshu) Inc., a subsidiary of CSI Solar, initiated patent invalidation proceedings before China’s National Patent Office, challenging Patent 1 in August 2024 and Patent 2 in November 2024.
On May 9, 2025, First Solar, Inc. filed a patent infringement lawsuit against Canadian Solar Inc., CSI Solar, and various other Canadian Solar-related manufacturing entities (“Canadian Solar”) in the U.S. District Court for the District of Delaware, or First Solar Delaware Litigation. First Solar alleges that Canadian Solar makes TOPCon solar cells overseas using methods covered by U.S. Patent No. 9130074 and infringes the patent by importing these TOPCon solar cells and modules into the U.S. and selling them in the U.S. First Solar’s complaint requests the Court to grant, among other relief, a permanent injunction enjoining Canadian Solar from the alleged infringement and a judgment for monetary damages and fees. The specific amount of monetary damages has not been identified. Based on our assessment, we do not believe our proprietary technology infringes on the patent asserted by First Solar, and we are vigorously defending ourselves in the lawsuit. On August 28, 2025, Canadian Solar filed a petition for IPR before the USPTO challenging the patentability of the U.S. Patent No. 9130074. On December 18, 2025, the USPTO summarily denied institution of the IPR based on discretionary considerations without a written order and without deciding validity on the merits of the IPR. On October 2, 2025, the Delaware District Judge set a case schedule and trial to be held starting on March 27, 2028. Discovery is currently ongoing in the First Solar Delaware Litigation. On February 24, 2026, First Solar filed a Complaint with the USITC against the Company and nine other manufacturers of modules incorporating TOPCon technology. First Solar seeks a general exclusion order, limited exclusion order, and a cease-and-desist order. The USITC has instituted the case. We will vigorously defend against the claims. A final resolution is not expected until the second half of 2027.
90
From time to time, we face patent infringement claims and other disputes, which are inherently uncertain. Although we have been able to resolve such claims and disputes in the past without leaving a material adverse effect on our financial position, we cannot guarantee that any ongoing or potential disputes, if resolved unfavorably to us, will not have a material adverse effect on our business and results of operations. See also “Item 3. Key Information—D. Risk Factors—Risks Related to Our Company and Our Industry—Our inability to protect our intellectual property rights or defend against patent infringement or other intellectual property claims, could undermine our competitive position, adversely affect our business and impose significant costs.”
Dividend Policy
We have never declared or paid any dividends on our common shares, and have no present plans to declare or pay any dividends on our common shares in the foreseeable future. We currently intend to retain our available funds and any future earnings to operate and expand our business.
Our board of directors has complete discretion over whether to declare and pay dividends, subject to the requirements of the OBCA. Even if our board of directors decides to declare dividends, the form, frequency and the amount will depend upon our future operations, earnings, capital requirements, available surplus, overall financial condition, contractual restrictions, and any other factors that our board of directors deems relevant.
We are a holding company incorporated under the laws of the Province of Ontario, Canada, and we rely primarily on dividends and other income from our majority-owned operating subsidiaries, CS PowerTech, CSI Solar and Recurrent Energy, to meet our cash, investment and financing requirements. CSI Solar is required to comply with applicable PRC regulations when paying dividends to us. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China.”
B Significant Changes
We have not experienced any significant changes since the date of our audited consolidated financial statements included in this annual report.
ITEM 9 THE OFFER AND LISTING
A Offering and Listing Details
B Plan of Distribution
C Markets
Our common shares have been listed on the Nasdaq since November 9, 2006 under the symbol “CSIQ.”
D Selling Shareholders
E Dilution
F Expenses of the Issue
ITEM 10 ADDITIONAL INFORMATION
A Share Capital
B Articles
General
On July 29, 2022, Canadian Solar Inc. filed articles of continuance to change our jurisdiction from the provincial jurisdiction of the Province of British Columbia to the provincial jurisdiction of the Province of Ontario. As a result, Canadian Solar Inc. is governed by the OBCA, and its affairs are governed by its articles and by-laws. Canadian Solar Inc.’s Ontario corporation number is 1497760.
Our authorized share capital consists of an unlimited number of common shares, no par value, and an unlimited number of preferred shares, no par value, issuable in series.
The following are summaries of certain of the material provisions of Canadian Solar Inc.’s articles and by-laws and the OBCA. This summary is not intended to be complete and is qualified in its entirety by reference to Canadian Solar Inc.’s articles, by-laws and the OBCA. The information set forth in Exhibit 2.2 to this Annual Report on Form 20-F is incorporated herein by reference.
Objects and Purposes of Our Company
Canadian Solar Inc.’s articles and by-laws do not contain any stated objects or purposes and do not place any limitations on the business that we may carry on. Pursuant to the OBCA, Canadian Solar Inc. has the capacity and the rights, powers and privileges of a natural person, and the capacity to carry on its business, conduct its affairs and exercise its powers in any jurisdiction outside Ontario to the extent that the laws of such jurisdiction permit.
Voting on Proposals, Arrangements, Contracts or Compensation by Directors
Other than as disclosed in “Item 6. Directors, Senior Management and Employees—C. Board Practices—Interested Transactions”, neither the OBCA nor our articles or by-laws restrict a director’s power to (a) vote on a proposal, arrangement or contract in which the director is materially interested or (b) to vote compensation to themselves or any other members of their body in accordance with the OBCA.
Borrowing Powers of Directors
Qualifications of Directors
Canadian Solar Inc.’s articles and by-laws do not contain any requirements for qualifications of directors.
Pursuant to the OBCA, the following persons are disqualified from being a director of Canadian Solar Inc.:
Pursuant to the OBCA, a director of Canadian Solar Inc. ceases to be a director when:
Common Share Rights
All of our common shares are fully paid and non-assessable. Our common shares are issued in registered form and may or may not be certificated although every shareholder is entitled at their option to a share certificate that complies with the OBCA. Except as provided in the Investment Canada Act (Canada), there are no limitations on the rights of shareholders who are not residents of Canada to hold and vote common shares.
Subject to the prior rights of the holders of the issued preferred shares, if any, the holders of the common shares are entitled to receive dividends declared by our board of directors. Pursuant to the OBCA, the board of directors shall not declare and Canadian Solar Inc. shall not pay a dividend if there are reasonable grounds for believing that (a) Canadian Solar Inc. is, or after the payment, would be unable to pay its liabilities as they become due; or (b) the realizable value of Canadian Solar Inc.’s assets would thereby be less than the aggregate of its liabilities, and its stated capital of all classes. All holders of common shares will share equally on a per share basis in any dividend declared by the board of directors on the common shares. The dividend entitlement time limit will be fixed by the board of directors at the time any such dividend is declared.
The holders of common shares are entitled to receive notice of and to attend and vote at all meetings of our shareholders and each common share confers the right to one vote in person or by proxy at all meetings of our shareholders, except meetings at which the holders of the issued preferred shares, if any, are entitled to vote separately as a class or series. All directors stand for re-election annually.
Liquidation
Subject to the prior rights of the holders of the issued preferred shares, if any, the holders of the common shares are entitled to receive the remaining property of Canadian Solar Inc. in the event of our liquidation, dissolution or winding up, whether voluntary or involuntary, or in the event of any other distribution of the property or assets of Canadian Solar Inc. among the shareholders for the purpose of winding up our affairs, whether voluntary or involuntary.
93
Other
The common shares are not convertible or redeemable and have no preemptive, subscription or conversion rights. In the event of a merger or consolidation, all common shareholders will be entitled to receive the same per share consideration. There are no provisions in our articles discriminating against any existing or prospective shareholder as a result of such shareholder owning a substantial number of our common shares. Our common shares are not subject to liability for further capital calls by our Company. Also, no provisions or rights exist in our articles regarding our common shares in connection with exchange, redemption, retraction, purchase for cancellation, surrender or sinking or purchase funds.
Preferred Share Rights
The preferred shares may include one or more series and, subject to the OBCA, our board of directors may issue one or more series of preferred shares at any time and from time to time. Before it issues any series of preferred shares, our board of directors shall fix the number of preferred shares in, and determine the designation, rights, privileges, restrictions and conditions attaching to the preferred shares of, such series, including without limitation:
“Junior Shares” means the common shares and any other of our shares ranking junior to the preferred shares with respect to the payment of dividends and with respect to the distribution of assets in the event of our liquidation, dissolution or winding up, whether voluntary or involuntary, or in the event of any other distribution of our property or assets among our shareholders for the purpose of winding up its affairs, whether voluntary or involuntary.
94
Except where the rights, privileges, restrictions and conditions attaching to a series of our preferred shares otherwise provide, the holders of our preferred shares shall not be entitled as such to receive notice of, or to attend or vote at, a meeting of our shareholders. Except where the rights, privileges, restrictions and conditions attaching to a series of our preferred shares otherwise provide, on any poll taken at any meeting of the holders of preferred shares, whether as a class or a series or two or more series, each holder of preferred shares entitled to vote at the meeting shall have one one-hundredth of a vote in respect of each C$1.00 (or its equivalent in a foreign currency at the date of issuance) of the issue price for each preferred share held. Except where the rights, privileges, restrictions and conditions attaching to a series of our preferred shares otherwise provide, the formalities to be observed with respect to the giving of notice of, and voting at, any meeting of holders of preferred shares, including without limitation, the quorum therefor, shall be those from time to time prescribed by our by-laws or by standing resolutions of our board of directors with respect to meetings of shareholders.
Creation of Additional Classes and Other Matters
Subject to the rights, privileges, restrictions and conditions attaching to a series of our preferred shares, we may, without the approval or consent of the holders of the preferred shares voting separately as a class or series, at any time and from time to time:
In the event of our liquidation, dissolution or winding-up, whether voluntary or involuntary, or in the event of any other distribution of our property or assets among our shareholders for the purpose of winding up our affairs, whether voluntary or involuntary, before any amount shall be paid to, or any property distributed among, the holders of our common shares, the holders of our preferred shares shall be entitled to receive:
After payment of the amounts payable to them, the holders of our preferred shares shall not be entitled to share in any further distribution of our property and assets.
No Pre-Emptive Rights
The holders of our preferred shares shall not be entitled as such to subscribe for, purchase or receive any part of any issue of our securities, now or hereafter authorized, or any rights to acquire the same, otherwise than in accordance with any conversion, exchange or other rights which may from time to time be attached to any series of preferred shares.
95
Procedures to Change the Rights of Shareholders
Other than as disclosed in “Item 10. Additional Information—B. Articles—Preferred Share Rights”, Canadian Solar Inc.’s articles and by-laws do not provide for us to be able to change the rights of Canadian Solar Inc.’s shareholders.
The OBCA provides for certain avenues for the rights of Canadian Solar Inc.’s shareholders to be changed including:
96
Shareholder Meetings
Each director holds office until our next annual general meeting or until his or her office is earlier vacated in accordance with the provisions of the OBCA. A director appointed or elected to fill a vacancy on our board also holds office until our next annual general meeting.
Pursuant to the OBCA, we must hold an annual meeting of our shareholders at a time and place determined by our board of directors, provided that the meeting must not be held later than 15 months after the preceding annual meeting. Our directors may, whenever they think fit, call a special meeting of our shareholders. A meeting of our shareholders may be held by telephonic or electronic means and a shareholder who, through those means, votes at the meeting or establishes a communications link to the meeting shall be deemed for the purposes of the OBCA to be present at the meeting.
For the purpose of determining shareholders entitled to receive notice of a meeting of shareholders, the directors may fix in advance a date as the record date for such determination of shareholders, but the record date shall not precede by more than 60 days or by less than 30 days the date on which the meeting is to be held. Where no record date is fixed, the record date for the determination of shareholders entitled to receive notice of a meeting of shareholders shall be at the close of business on the day immediately preceding the day on which the notice is given, or if no notice is given, the day on which the meeting is held.
We must send notice of the date, time and location of any meeting of shareholders, in the manner provided in our by-laws and the OBCA, to each shareholder entitled to vote at the meeting and to each director and to our auditor not less than twenty-one days and not more than sixty days before the meeting. A notice of a meeting is not required to be sent to shareholders who were not registered on the records of our transfer agent on the record date, but failure to receive a notice does not deprive a shareholder of the right to vote at the meeting.
All business transacted at a special meeting of shareholders and all business transacted at an annual meeting of shareholders, except consideration of the minutes of an earlier meeting, the financial statements and auditor’s report, election of directors and reappointment of the incumbent auditor, shall be deemed to be special business. Notice of a meeting of shareholders at which special business is to be transacted shall state or be accompanied by a statement of the nature of that business in sufficient detail to permit the shareholder to form a reasoned judgment thereon, and the text of any special resolution or by-law to be submitted to the meeting.
Unless otherwise required by the OBCA or the articles and by-laws of Canadian Solar Inc., (a) all questions proposed for the consideration of the shareholders shall be determined by the majority of the votes cast; (b) the chairman presiding at a meeting of shareholders may, with the consent of the meeting and subject to such conditions as the meeting decides, adjourn the meeting from time to time and from place to place subject to certain limits set out in the OBCA; and (c) the chairman or, in his absence, the present or, in their absence, a director designated by our board of directors shall act as chairman of each meeting of shareholders, but if no such officer is present within thirty minutes after the time appointed by the holding of the meeting, the persons present and entitled to vote at the meeting shall choose one of their number to be chairman of the meeting.
A shareholder and any other person entitled to attend a meeting of shareholders may in any manner and at any time waive notice of a meeting of shareholders, and attendance of any such person at a meeting of shareholders is a waiver of notice of the meeting, except where such person attends a meeting for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called. The only persons entitled to attend a meeting of shareholders shall be those entitled to vote thereat, our auditors and others who, although not entitled to vote, are entitled or required under any provision of the OBCA or the by-laws to be present at the meeting. Other persons may attend a meeting of shareholders only with the consent of the chairman of the meeting or the shareholders present, or deemed to be present, in person or by proxy at the meeting. Subject to the OBCA, any person entitled to attend a meeting of shareholders may participate in the meeting by means of a telephonic, electronic or other communication facility made available by us that permits all participants to communicate adequately with each other during the meeting. The persons participating in a meeting of shareholders by such means shall be deemed for the purposes of our by-laws to be present at the meeting. If our board of directors or shareholders call a meeting of shareholders pursuant to the OBCA, our board of directors or shareholders, as the case may be, may determine that the meeting shall be held, in accordance with the OBCA, entirely by means of a telephonic, electronic or other communication facility that permits all participants to communicate adequately with each other during the meeting.
97
A registered holder of shares entitled to vote or a beneficial owner of shares that are entitled to be voted at a meeting of shareholders may, submit to us notice of a proposal; and discuss at the meeting any matter in respect of which the registered holder or beneficial owner would have been entitled to submit a proposal. Subject to certain exceptions set out in the OBCA, where we receive notice of a proposal, (a) if we provide a management information circular, it shall set out the proposal in the management information circular or attach the proposal to that circular; (b) if we do not provide a management information circular, it shall set out the proposal in the notice of meeting for the shareholders’ meeting at which the matter is proposed to be raised or shall attach the proposal to such notice of meeting; and (c) at the request of a person who submits notice of a proposal, we are required to include in the management information circular or the notice of meeting, as the case may be, or shall attach to it, the person’s statement in support of the proposal and the person’s name and address. The exceptions include if the notice of the proposal is not submitted to us within certain time restrictions set out in the OBCA, if it clearly appears that the primary purpose of the proposal is to enforce a personal claim or redress a personal grievance against us or our directors, officers or security holders, and if it clearly appears that the proposal does not relate in a significant way to our business or affairs. The proposal and the statement in support of it shall together not exceed 500 words. A proposal may include nominations for the election of directors if the proposal is signed by one or more holders of shares representing in the aggregate not less than five percent of the issued shares or five percent of the issued shares of a class or series of shares entitled to vote at the meeting to which the proposal is to be presented. This description of the provisions of the OBCA relating to shareholder proposals does not purport to be complete. For complete details, refer to the OBCA.
We are required to prepare a list of shareholders entitled to receive notice of a meeting, arranged in alphabetical order and showing the number of shares held by each shareholder, which list shall be prepared, if a record date is fixed, not later than ten days after such record date, or if no record date is fixed, at the close of business on the day immediately preceding the day on which notice is given, or where no notice is given, on the day on which the meeting is held. A shareholder whose name appears on such list is entitled to vote the shares shown opposite the shareholder’s name at the meeting to which the list relates. A shareholder may examine the list of shareholders during usual business hours at our registered office or at the place where our central securities register is maintained, and at the meeting of shareholders for which the list was prepared.
A quorum for the transaction of business at any meeting of shareholders shall be two or more shareholders present, or deemed to be present, in person or by proxy at the meeting and together holding or representing by proxy shares carrying at least 33 1/3 percent of the votes entitled to be cast at the meeting. If a quorum is present at the opening of a meeting of shareholders, the shareholders present may, unless the by-laws otherwise provide, proceed with the business of the meeting even if a quorum is not present throughout the meeting. If a quorum is not present at the time appointed for a meeting of shareholders, or within such reasonable time thereafter as the shareholders present may determine, the shareholders present may adjourn the meeting to a fixed time and place but may not transact any other business.
Each of our common shares entitles the holder thereof to one vote at a meeting of shareholders. Where a body corporate or association is a shareholder, we will recognize any individual authorized by a resolution of the directors or governing body of the body corporate or association to represent it at meetings of our shareholders. Unless the by-laws otherwise provide, where two or more persons hold shares jointly, one of those holders present at a meeting of shareholders may in the absence of the others vote the shares, but if two or more of those persons are present, in person or by proxy, they shall vote as one on the shares jointly held by them.
At a meeting of shareholders, every motion shall, subject to the provisions of the OBCA, be decided by a show of hands, unless a ballot thereon is required by the chairman of the meeting or is demanded by any shareholder entitled to vote and present, or deemed to be present, in person or by proxy at the meeting. Upon a show of hands, every such person who is entitled to vote shall have one vote. Before or after a show of hands has been taken upon any motion, the chairman may require, or any shareholder entitled to vote and present, or deemed to be present, in person or by proxy at the meeting may demand a ballot thereon. Notwithstanding the foregoing, the vote on any motion may be held, subject to compliance with the OBCA, by means of a telephonic, electronic or other communication facility made available by us for such purpose. Unless a ballot thereon is demanded, a declaration by the chairman of the meeting that the vote upon a motion has been carried or carried by a particular majority or not carried shall be the decision of the shareholders upon the motion and an entry in the minutes of the meeting to the effect that the chairman of the meeting declared the motion to be carried or defeated is, in the absence of evidence to the contrary, proof of that fact without proof of the number or proportion of the votes recorded in favor of or against the motion. A demand for a ballot may be withdrawn at any time before the ballot is taken. If a ballot is required by the chairman of the meeting or is duly demanded by any shareholder entitled to vote and present, or deemed to be present, in person or by proxy at the meeting and the demand is not withdrawn, a ballot upon the motion shall be taken in such manner as the chairman of the meeting shall direct. Unless the OBCA or articles otherwise requires, upon a ballot, each shareholder who is present, or deemed to be present, in person or by proxy at the meeting shall be entitled to one vote for each share in respect of which he or she is entitled to vote at the meeting and the result of the ballot shall be the decision of the shareholders upon the motion.
98
Pursuant to the OBCA, the holders of not less than five percent of the issued shares of Canadian Solar Inc. that carry the right to vote at a meeting sought to be held may requisition the directors to call a meeting of shareholders for the purposes stated in the requisition. Upon receiving such a requisition, unless certain statutory exceptions apply the directors shall call a meeting of shareholders to transact the business stated in the requisition and if they do not do so within twenty-one days after receiving the requisition, any shareholder who signed the requisition may call the meeting. We are obligated to reimburse the shareholders for the expenses reasonably incurred by them in requisitioning, calling and holding the meeting unless the shareholders have not acted in good faith and in the interest of our shareholders generally.
If for any reason it is impracticable to call a meeting of our shareholders in the manner in which meetings of shareholders may be called or to conduct the meeting in the manner prescribed by the articles and by-laws of Canadian Solar Inc. and the OBCA, or if for any other reason the court thinks fit, the court, upon the application of a director or a shareholder entitled to vote at the meeting, may order a meeting to be called, held and conducted in such manner as the court directs and upon such terms as to security for the costs of holding the meeting or otherwise as the court deems fit.
A corporation, shareholder or director may apply to the court to determine any controversy with respect to an election or appointment of a director or auditor of the corporation. Upon an application under this section, the court may make any order it thinks fit including, without limiting the generality of the foregoing, (a) an order restraining a director or auditor whose election or appointment is challenged from acting pending determination of the dispute; (b) an order declaring the result of the disputed election or appointment; (c) an order requiring a new election or appointment and including in the order directions for the management of the business and affairs of the corporation until a new election is held or appointment made; and (d) an order determining the voting rights of shareholders and of persons claiming to own shares.
Limitations on Ownership of Securities
Except as provided below, there are no limitations specific to the rights of non-Canadians to hold or vote our shares under the laws of Canada or Ontario, or in our articles or by-laws.
Competition Act
Limitations on the ability to acquire and hold our shares may be imposed by the Competition Act (Canada). This legislation establishes a pre-merger notification regime for certain types of merger transactions that exceed certain statutory shareholding and financial thresholds. Transactions that are subject to notification cannot be closed until the required materials are filed and the applicable statutory waiting period has expired or been waived by the Commissioner of Competition, or the Commissioner. Further, the Competition Act (Canada) permits the Commissioner to review any acquisition of control over or of a significant interest in us, whether or not it is subject to mandatory notification. This legislation grants the Commissioner jurisdiction, for up to one year (in respect of a merger that is subject to mandatory notification) or three years (in respect of any other merger), to challenge this type of acquisition before the Canadian Competition Tribunal if it would, or would be likely to, substantially prevent or lessen competition in any market in Canada.
Investment Canada Act
The Investment Canada Act requires notification and, in certain cases, advance review and approval by the Government of Canada, through the Minister of Innovation, Science and Industry (the “Minister”), of an investment to establish a new Canadian business by a non-Canadian or of the acquisition by a non-Canadian of “control” of a “Canadian business”, all as defined in the Investment Canada Act. Generally, the threshold for advance review and approval will be higher in monetary terms for an investor who is controlled in a country that is a member of the World Trade Organization and who is not a state-owned enterprise. The Investment Canada Act generally prohibits the implementation of such a reviewable transaction unless, after review, the Minister is satisfied that the investment is likely to be of net benefit to Canada. The Investment Canada Act contains various rules to determine if there has been an acquisition of control. For example, for purposes of determining whether an investor has acquired control of a corporation by acquiring shares, the following general rules apply, subject to certain exceptions: (1) the acquisition of a majority of the voting shares of a corporation is deemed to be acquisition of control of that corporation; (2) the acquisition of less than a majority but one-third or more of the voting shares of a corporation is presumed to be an acquisition of control of that corporation unless it can be established that, on the acquisition, the corporation is not controlled in fact by the acquiror through the ownership of voting shares; and (3) the acquisition of less than one-third of the voting shares of a corporation is deemed not to be acquisition of control of that corporation.
99
In addition, under the Investment Canada Act, “national security” review on a discretionary basis may also be undertaken by the federal Canadian government in respect of a much broader range of investments by a non-Canadian to “acquire, in whole or in part, or to establish an entity carrying on all or any part of its operations in Canada”, with the relevant test being whether the Minister has “reasonable grounds to believe that an investment by a non-Canadian could be injurious to national security.” The Minister has broad discretion to determine whether an investor is a non-Canadian and therefore may be subject to “national security” review. Review on national security grounds is at the discretion of the federal government and may occur on a pre- or post-closing basis. If the Minister, after consultation with the Minister of Public Safety, considers that the investment could be injurious to “national security,” the Minister may impose interim conditions and/or undertakings on the investment during the national security review. Such measures could include (without limitation) restricting the investor’s voting or board appointment rights, restricting information sharing or other operational integration between the investor and the Canadian business and/or reporting obligations. If the Minister believes that the investment would or may be injurious to national security after consultation with the Minister of Public Safety, it may refer the investment to, the Governor in Council, who may take any measures in respect of the investment that it considers advisable to protect national security, including denying the investment, asking for undertakings, imposing terms or conditions for the investment, or ordering divestiture (if the investment has been completed). Any of these provisions may discourage a potential acquirer from proposing or completing a transaction that may have otherwise presented a premium to our shareholders. We cannot predict whether investors will find our company and our common shares less attractive because we are governed by foreign laws.
Provisions that would have an Effect of Delaying, Deferring or Preventing a Change of Control
The following provisions in Canadian Solar Inc.’s articles may deprive our shareholders of the opportunity to sell their shares at a premium over the prevailing market price by delaying or preventing a change of control of our company:
In addition, Canadian Solar Inc’s by-laws and the OBCA provide for minimum time periods for the calling and holding of meetings of shareholders. See “Item 10. Additional Information—B. Articles—Shareholder Meetings” for more information.
Otherwise, there are no provisions in Canadian Solar Inc’s articles or by-laws or in the OBCA that would have an effect of delaying, deferring or preventing a change in control of our company which would operate with respect to a merger, acquisition or corporate restructuring involving our company or any of our subsidiaries.
Provisions Governing the Ownership Threshold Above Which Shareholder Ownership Must be Disclosed
Canadian Solar Inc.’s articles and by-laws do not have any specific threshold requiring disclosure of ownership by holders of our shares. The OBCA and securities regulation in Canada requires that we disclose in our proxy information circular for our annual general meeting and certain other disclosure documents filed by us under such regulation, holders who beneficially own, directly or indirectly, or control or direct, voting securities of Canadian Solar Inc. carrying 10% or more of the voting rights attached to any class of outstanding voting securities. Most state corporation statutes do not contain provisions governing the threshold above which shareholder ownership must be disclosed. United States federal securities laws require us to disclose, in an annual report on Form 20-F, holders who own 5% or more of Canadian Solar Inc.’s issued and outstanding shares.
Conditions Imposed by Our Articles and By-Laws Governing Changes in Capital
The requirements imposed by Canadian Solar Inc.’s articles and by-laws governing changes in capital are not more stringent than is required by applicable laws, including the OBCA.
Material Contracts
We have not entered into any material contracts other than in the ordinary course of business and other than those described in “Item 4. Information on the Company” or elsewhere in this annual report on Form 20-F.
Exchange Controls
See “Item 4. Information on the Company—B. Business Overview—Government Regulations—Foreign Currency Exchange” and “Item 4. Information on the Company—B. Business Overview—Government Regulations—Dividend Distribution.”
Taxation
Principal Canadian Federal Tax Considerations
The following is a summary of the principal Canadian federal income tax implications generally applicable to a holder of our common shares who, at all relevant times, (a) is a resident of the United States for purposes of the Canada-United States Income Tax Convention (1980) (the “Convention”), is fully entitled to the benefits of the Convention, and did not, does not and will not have a fixed base or permanent establishment in Canada within the meaning of the Convention, and (b) for purposes of the Income Tax Act (Canada) (the “Canadian Tax Act”), (i) is not a resident, or deemed to be a resident, of Canada; (ii) holds such common shares as capital property and as beneficial owner; (iii) deals at arm’s length with and is not affiliated with us; (iv) does not use or hold, and is not deemed to use or hold, such common shares in the course of carrying on a business in Canada; (v) did not acquire our common shares by virtue of employment, and (vi) is not a financial institution, specified financial institution, registered non-resident insurer, authorized foreign bank, partnership or trust as defined in the Canadian Tax Act (a “U.S. Holder”).
This summary does not deal with special situations, such as the particular circumstances of traders or dealers, tax exempt entities, insurers or financial institutions, or other holders of special status or in special circumstances. Such holders, and all other holders who do not meet the criteria in clauses (a) and (b) above, should consult their own tax advisors.
This summary is based upon the current provisions of the Canadian Tax Act, and an understanding of the current administrative practices published in writing by the Canada Revenue Agency prior to the date hereof. This summary takes into account all specific proposals to amend the Canadian Tax Act publicly announced by, or on behalf of, the Minister of Finance (Canada) prior to the date hereof (the “Proposed Amendments”) and assumes that all Proposed Amendments will be enacted in the form proposed, although no assurance can be given in this regard. This summary does not otherwise take into account or anticipate any changes in law or administrative policy, whether by legislative, governmental or judicial decision or action, and does not take into account or consider any provincial, territorial or foreign income tax considerations.
For the purposes of the Canadian Tax Act, all amounts relating to the acquisition, holding or disposition of our common shares must generally be expressed in Canadian dollars. Amounts denominated in United States currency generally must be converted into Canadian dollars using the rate of exchange that is acceptable to the Canada Revenue Agency.
The Canadian federal income tax consequences of acquiring, holding and disposing of our common shares will depend on each U.S. Holder’s particular situation. This summary is not intended to be a complete analysis of or description of all potential Canadian federal income tax consequences, and should not be construed to be, legal, business or tax advice directed at any particular U.S. Holder or prospective purchaser of our common shares. Accordingly, U.S. Holders or prospective purchasers of our common shares should consult their own tax advisors for advice with respect to the Canadian federal income tax consequences of an investment in our common shares based on their own particular circumstances.
Amounts paid or credited, or deemed under the Canadian Tax Act to be paid or credited, on account or in lieu of payment of, or in satisfaction of, dividends to a U.S. Holder that has provided the requisite documentation regarding its entitlement to benefits under the Convention will be subject to Canadian withholding tax at the reduced rate of 15% under the Convention. This rate is further reduced to 5% in the case of a U.S. Holder that is a company for purposes of the Convention that owns at least 10% of our voting shares at the time the dividend is paid or deemed to be paid.
101
Disposition of Our Common Shares
A U.S. Holder will not be subject to income tax under the Canadian Tax Act in respect of any capital gain realized on a disposition or deemed disposition of our common shares that it holds unless, at the time of disposition, such common shares constitute “taxable Canadian property” of the U.S. Holder for the purposes of the Canadian Tax Act and the U.S. Holder is not otherwise entitled to an exemption under the Convention.
Provided that our common shares are then listed on a “designated stock exchange” for purposes of the Canadian Tax Act (which currently includes the Nasdaq), at the time of disposition, our common shares generally will not constitute taxable Canadian property of a U.S. Holder at that time, unless at any time during the 60 month period immediately preceding the disposition of the common shares (i) 25% or more of the issued shares of any class or series of the capital stock of our company were owned by, or belonged to, any combination of (a) the U.S. Holder, (b) persons with whom the U.S. Holder did not deal at arm’s length, and (c) partnerships in which the U.S. Holder or a person described in (b) held a membership interest directly or indirectly through one or more partnerships; and (ii) at such time, more than 50% of the fair market value of such shares was derived, directly or indirectly, from any combination of real or immovable property situated in Canada, “Canadian resource property” (as defined in the Canadian Tax Act), “timber resource property” (as defined in the Canadian Tax Act), or options in respect of, interests in, or for civil law rights in such properties, whether or not such property exists. Notwithstanding the foregoing, our common shares may also be deemed to be taxable Canadian property to a U.S. Holder for purposes of the Canadian Tax Act in certain circumstances.
U.S. Holders for whom our common shares are, or may be, taxable Canadian property should consult their own tax advisors with respect to the application of Canadian capital gains taxation, any potential relief under the Convention, and compliance procedures under the Canadian Tax Act, none of which is described in this summary.
Canada—United States Income Tax Convention
The Convention includes a complex limitation on benefits provision. U.S. Holders are urged to consult their own tax advisors to determine their entitlement to benefits under the Convention.
United States Federal Income Taxation
The following discussion describes certain material United States federal income tax consequences to a United States Holder (as defined below), under current law, of an investment in our common shares. This discussion is based on the federal income tax laws of the United States as of the date of this annual report on Form 20-F, including the United States Internal Revenue Code of 1986, as amended, or the Code, existing and proposed Treasury Regulations promulgated thereunder, judicial authority, published administrative positions of the IRS and other applicable authorities, all as of the date of this annual report on Form 20-F. All of the foregoing authorities are subject to change, which change could apply retroactively and could significantly affect the tax consequences described below. We have not sought any ruling from the IRS with respect to the statements made and the conclusions reached in the following discussion and there can be no assurance that the IRS or a court will agree with our statements and conclusions. Moreover, this discussion does not address the United States federal estate, gift, Medicare, and alternative minimum tax consequences, or any state, local and non-United States tax consequences, relating to an investment in our common shares. Except as explicitly described below, this discussion does not address any tax consequences or reporting obligations that may be applicable to persons holding our common shares through a bank, financial institution or other entity, or a branch thereof, located, organized or resident outside the United States, and does not describe any tax consequences arising in respect of the “Foreign Account Tax Compliance Act”, or FATCA, regime.
This discussion applies only to a United States Holder (as defined below) that holds our common shares as capital assets (that is, property generally held for investment) for United States federal income tax purposes. The discussion neither addresses the tax consequences to any particular investor nor describes all of the tax consequences applicable to persons in special tax situations such as:
102
If a partnership (including an entity or arrangement treated as a partnership for United States federal income tax purposes) holds our common shares, the tax treatment of a partner in the partnership generally will depend upon the status of the partner and the activities of the partnership. A partnership holding our common shares, or a partner in such a partnership, should consult its tax advisors regarding the tax consequences of investing in and holding our common shares.
THE FOLLOWING DISCUSSION IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT A SUBSTITUTE FOR CAREFUL TAX PLANNING AND ADVICE. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE UNITED STATES FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS, AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER THE FEDERAL ESTATE OR GIFT TAX LAWS OR THE LAWS OF ANY STATE, LOCAL OR NON-UNITED STATES TAXING JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.
For purposes of the discussion below, a “United States Holder” is a beneficial owner of our common shares that is, for United States federal income tax purposes:
103
Dividends and Other Distributions on the Common Shares
Subject to the passive foreign investment company rules discussed below, the gross amount of any distribution that we make to you with respect to our common shares (including any amounts withheld to reflect withholding taxes) will be taxable as a dividend, to the extent paid out of our current or accumulated earnings and profits, as determined under United States federal income tax principles. Such income (including any withheld taxes) will be includable in your gross income on the day actually or constructively received by you. Because we do not intend to determine our earnings and profits on the basis of United States federal income tax principles, any distribution paid generally will be reported as a “dividend” for United States federal income tax purposes. Such dividends will not be eligible for the dividends-received deduction allowed to qualifying corporations under the Code.
Dividends received by a non-corporate United States Holder may qualify for the lower rates of tax applicable to “qualified dividend income,” if the dividends are paid by a “qualified foreign corporation” and other conditions discussed below are met. A non-United States corporation is treated as a qualified foreign corporation (a) with respect to dividends paid by that corporation on shares that are readily tradable on an established securities market in the United States or (b) if such non-United States corporation is eligible for the benefits of a qualifying income tax treaty with the United States that includes an exchange of information program. However, a non-United States corporation will not be treated as a qualified foreign corporation if it is a passive foreign investment company in the taxable year in which the dividend is paid or the preceding taxable year.
Under a published IRS Notice, common shares are considered to be readily tradable on an established securities market in the United States if they are listed on the Nasdaq Global Market, as our common shares are, but we cannot guarantee that our common shares will always be so listed. In addition, we may be eligible for the benefits of the income tax treaty between the United States and Canada. If we are eligible for such benefits, then dividends that we pay to certain non-corporate United States Holders on our common shares would be, subject to applicable limitations, eligible for the reduced rates of taxation.
Even if dividends would be treated as paid by a qualified foreign corporation, a non-corporate United States Holder will not be eligible for reduced rates of taxation if it does not hold our common shares for more than 60 days during the 121-day period beginning 60 days before the ex-dividend date (disregarding certain periods of ownership while the United States Holder’s risk of loss is diminished) or if such United States Holder elects to treat the dividend income as “investment income” pursuant to Section 163(d)(4) of the Code. In addition, the rate reduction will not apply to dividends of a qualified foreign corporation if the non-corporate United States Holder receiving the dividend is obligated to make related payments with respect to positions in substantially similar or related property.
You should consult your tax advisors regarding the availability of the lower tax rates applicable to qualified dividend income for any dividends that we pay with respect to the common shares, as well as the effect of any change in applicable law after the date of this annual report on Form 20-F.
Any Canadian withholding taxes imposed on dividends paid to you with respect to our common shares (at a rate not exceeding any applicable treaty rate in the case of a United States Holder that is eligible for the benefits of a relevant treaty) generally will be treated as foreign taxes eligible for deduction or credit against your United States federal income tax liability, subject to the various limitations and disallowance rules that apply to foreign tax credits generally (including that the election to deduct or credit foreign taxes applies to all of your other applicable foreign taxes for a particular tax year). For purposes of calculating the foreign tax credit, dividends paid to you with respect to the common shares will be treated as income from sources outside the United States and generally will constitute passive category income, or in certain cases, general category income. The rules relating to the determination of the foreign tax credit are complex. You should consult your tax advisors regarding the availability of a foreign tax credit in your particular circumstances.
The amount of any dividend paid in currency other than the United States dollar will be the dividend’s United States dollar value calculated by reference to the exchange rate in effect on the date of receipt, regardless of whether the payment is in fact converted into United States dollars. A United States Holder may have foreign currency gain or loss, which generally will be United States source ordinary income or loss, if any dividend is converted into United States dollars after the date of receipt.
104
Disposition of the Common Shares
You will recognize gain or loss on a sale or exchange of our common shares in an amount equal to the difference between the amount realized on the sale or exchange and your tax basis in the common shares. Subject to the discussion under “Passive Foreign Investment Company” below, such gain or loss generally will be capital gain or loss. Capital gains of a non-corporate United States Holder, including an individual, that has held the common share for more than one year currently are eligible for reduced tax rates. The deductibility of capital losses is subject to limitations.
Any gain or loss that you recognize on a disposition of our common shares generally will be treated as United States-source income or loss for foreign tax credit limitation purposes. You should consult your tax advisors regarding the proper treatment of gain or loss.
A United States Holder that receives currency other than the United States dollar upon the sale or other disposition of our common shares generally will realize an amount equal to the United States dollar value of the foreign currency on the date of such sale or other disposition or, if our common shares are traded on an established securities market, in the case of cash basis and electing accrual basis taxpayers, the settlement date. If a United States Holder is not able to treat the settlement date as the realization date, the United States Holder generally will recognize currency gain or loss if the United States dollar value of the currency received on the settlement date differs from the amount realized. A United States Holder will have a tax basis in the currency received equal to the United States dollar amount at the spot rate on the settlement date. Generally, any gain or loss realized by a United States Holder on a subsequent conversion or disposition of such currency will be United States-source ordinary income or loss.
Passive Foreign Investment Company
Based on the value of our assets and the nature and composition of our income and assets, we do not believe we were a passive foreign investment company, or PFIC, for United States federal income tax purposes for our taxable year ended December 31, 2025, though there can be no assurances in this regard. PFIC status is based on an annual determination that cannot be made until the close of a taxable year, involves extensive factual investigation, including ascertaining the fair market value of all of our assets on a quarterly basis and the character of each item of income that we earn, and is subject to uncertainty in several respects. Moreover, we cannot guarantee that the IRS will agree with any positions that we take. Accordingly, we cannot assure you that we will not be treated as a PFIC for any taxable year or that the IRS will not take a position contrary to any position that we take.
We will be treated as a PFIC for United States federal income tax purposes for any taxable year if, applying applicable look-through rules, either:
For this purpose, passive income generally includes dividends, interest, royalties, rents and gains from commodities transactions (other than certain royalties, rents and commodities gains derived in the active conduct of a trade or business and not derived from a related person). We will be treated as owning a proportionate share of the assets and earning a proportionate share of the income of any other corporation in which we own, directly or indirectly, more than 25% by value of the stock. We hold a substantial amount of cash and other assets treated as producing passive income, and if the percentage of our assets treated as producing passive income increases, we may be more likely to be a PFIC for the current or one or more future taxable years.
Changes in the value of our assets and/or the nature or composition of our income or assets may cause us to be more likely to be a PFIC. The determination of whether we are a PFIC for any taxable year also may depend in part upon the value of our goodwill and other unbooked intangibles not reflected on our balance sheet (which may be determined based upon the market value of the common shares from time to time, which may be volatile) and by how, and how quickly, we spend our liquid assets and the cash we generate from our operations. Among other matters, if our market capitalization declines, we may be a PFIC because our liquid assets and cash (which are for this purpose considered assets that produce passive income) may then represent a greater percentage of our overall assets. Further, while we believe our classification methodology and valuation approach (including, if relevant, any approach taken with respect to our market capitalization) are reasonable, it is possible that the IRS may challenge our classification or valuation of our goodwill and other unbooked intangibles, which may result in our being or becoming a PFIC for the current taxable year or one or more future taxable years.
105
If we are a PFIC for any taxable year during your holding period for our common shares, we will continue to be treated as a PFIC with respect to you for all succeeding years during which you hold common shares, unless we were to cease to be a PFIC and you make a “deemed sale” election with respect to the common shares. If such election is made, you will be deemed to have sold the common shares you hold at their fair market value and any gain from such deemed sale would be subject to the rules described in the following two paragraphs. After the deemed sale election, so long as we do not become a PFIC in a subsequent taxable year, your common shares with respect to which such election was made will not be treated as shares in a PFIC and, as a result, you will not be subject to the rules described below with respect to any “excess distribution” you receive from us or any gain from a sale or other taxable disposition of the common shares. You are strongly urged to consult your tax advisors as to the possibility and consequences of making a deemed sale election if we are and then cease to be a PFIC and such an election becomes available to you.
If we are a PFIC for any taxable year during your holding period for our common shares, then, unless you make a “mark-to-market” election (as discussed below), you generally will be subject to special and adverse tax rules with respect to any “excess distribution” that you receive from us and any gain that you recognize from a sale or other disposition, including a pledge, of the common shares. For this purpose, distributions that you receive in a taxable year that are greater than 125% of the average annual distributions that you received during the shorter of the three preceding taxable years or your holding period for the common shares will be treated as an excess distribution. Under these rules:
If we are a PFIC for any taxable year during your holding period for our common shares and any of our non-United States subsidiaries or other corporate entities in which we directly or indirectly own equity interests is also a PFIC, you would be treated as owning a proportionate amount (by value) of the shares of each such non-United States entity classified as a PFIC (each such entity, a lower-tier PFIC) for purposes of the application of these rules. You should consult your tax advisor regarding the application of the PFIC rules to any of our lower-tier PFICs.
If we are a PFIC for any taxable year during your holding period for our common shares, then in lieu of being subject to the tax and interest-charge rules discussed above, you may make an election to include gain on the common shares as ordinary income under a mark-to-market method, provided that the common shares constitute “marketable stock.” Marketable stock is stock that is regularly traded on a qualified exchange or other market, as defined in applicable Treasury Regulations. Our common shares are listed on the Nasdaq Global Market, which is a qualified exchange or other market for these purposes. Consequently, as long as our common shares are regularly traded, and you are a holder of such common shares, we expect that the mark-to-market election would be available to you if we become a PFIC, but no assurances are given in this regard.
If you make a mark-to-market election, it will be effective for the taxable year for which the election is made and all subsequent taxable years unless our common shares are no longer regularly traded on a qualified exchange or other market, or the IRS consents to the revocation of the election. United States Holders should consult their tax advisors regarding the availability of the mark-to-market election and whether making the election would be advisable in such United States Holder’s particular circumstances.
Because a mark-to-market election cannot be made for any lower-tier PFICs that we may own, if we were a PFIC for any taxable year, a United States Holder that makes a mark-to-market election with respect to our common shares may continue to be subject to the tax and interest charges under the general PFIC rules with respect to such United States Holder’s indirect interest in any investments held by us that are treated as an equity interest in a PFIC for United States federal income tax purposes.
106
In certain circumstances, a United States shareholder in a PFIC may avoid the adverse tax and interest-charge regime described above by making a “qualified electing fund” election to include in income its share of such corporation’s income on a current basis. However, you may make a qualified electing fund election with respect to your common shares only if we agree to furnish you annually with a PFIC annual information statement as specified in the applicable Treasury Regulations. We currently do not intend to prepare or provide the information that would enable you to make a qualified electing fund election.
A United States Holder that holds our common shares in any year in which we are classified as a PFIC will be required to file an annual report containing such information as the United States Treasury Department may require. You should consult your tax advisor regarding the application of the PFIC rules to your ownership and disposition of the common shares and the availability, application and consequences of the elections discussed above.
Information Reporting and Backup Withholding
Information reporting to the IRS and backup withholding generally will apply to dividends in respect of, and the proceeds from the sale or exchange of, our common shares that are paid to you within the United States (and in certain cases, outside the United States), unless you furnish a correct taxpayer identification number and make any other required certification (generally on IRS Form W-9), or otherwise establish an exemption from information reporting and backup withholding. Backup withholding is not an additional tax. Amounts withheld as backup withholding generally are allowed as a credit against your United States federal income tax liability, and you may be entitled to obtain a refund of any excess amounts withheld under the backup withholding rules if you file an appropriate claim for refund with the IRS and furnish any required information in a timely manner.
United States Holders should consult their tax advisors regarding the application of the information reporting and backup withholding rules.
Information with Respect to Foreign Financial Assets
United States Holders who are individuals (and certain entities closely held by individuals) generally will be required to report our name, address and such information relating to an interest in the common shares as is necessary to identify the class or issue of which their common shares are a part. These requirements are subject to exceptions, including an exception for common shares held in accounts maintained by certain financial institutions and an exception applicable if the aggregate value of all “specified foreign financial assets” (as defined in the Code) does not exceed US$50,000.
United States Holders should consult their tax advisors regarding the application of these information reporting rules.
Dividends and Paying Agents
G
Statement by Experts
H
Documents on Display
We previously filed with the SEC our registration statements on Form F-1 (File Number 333-138144), initially filed on October 23, 2006, and registration statements on Form F-3 (File Number 333-208828), initially filed on January 4, 2016.
We are subject to the periodic reporting and other informational requirements of the Exchange Act. Under the Exchange Act, we are required to file reports and other information with the SEC. Specifically, we are required to file annually a Form 20-F within four months after the end of each fiscal year. Copies of reports and other information, when so filed, may be inspected without charge and may be obtained at prescribed rates at the public reference facilities maintained by the Securities and Exchange Commission at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. The public may obtain information regarding the Washington, D.C. Public Reference Room by calling the Commission at 1-800-SEC-0330. The SEC also maintains a web site at www.sec.gov that contains reports, proxy and information statements, and other information regarding registrants that make electronic filings with the SEC using its EDGAR system. As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of quarterly reports and proxy statements.
107
Effective March 18, 2026, directors and officers of foreign private issuers become subject to insider reporting requirements under Section 16(a) of the Exchange Act. Directors and officers of foreign private issuers will remain exempt from the short-swing profits rule under Section 16(b) and the short sale prohibition under Section 16(c), and significant shareholders of foreign private issuers who are not directors and officers will remain entirely exempt from Section 16.
Our financial statements have been prepared in accordance with U.S. GAAP.
We will furnish our shareholders with annual reports, which will include a review of operations and annual audited consolidated financial statements prepared in conformity with U.S. GAAP.
I
Subsidiary Information
For a listing of our significant subsidiaries, see “Item 4. Information on the Company—C. Organizational Structure.”
J
Annual Report to Security Holders
ITEM 11 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Foreign Exchange Risk
Our business transactions are carried out in various currencies, including the U.S. dollar, Renminbi, Euro, and others such as Brazilian real, British pound, Australian dollar, Japanese yen and Canadian Dollar. We continually evaluate our foreign currency exposure based on current market conditions and the locations in which we conduct business. We manage most foreign currency exposures on a consolidated basis, which allows us to net certain exposures and take advantage of natural offsets. Currency fluctuations may affect our cash flows, revenues, and expenses, particularly when transactions occur in currencies that differ from the functional currencies of our subsidiaries. We recorded foreign exchange gains of $46.8 million in 2024 and loss of $16.8 million in 2025. To mitigate currency risk, we use derivative instruments, primarily foreign exchange forwards or options, to hedge against U.S. dollar exposures. We incurred losses from changes in the fair value of foreign currency derivatives of $51.4 million in 2024 and $42.4 million in 2025.
As of December 31, 2025, we held approximately $206.1 million in net monetary liabilities denominated in various currencies. A 10% change in those currencies relative to their functional currencies would result in a foreign exchange impact of approximately $20.6 million, excluding the effect of hedges. We also face translation risk, as our consolidated financial statements are presented in U.S. dollars while some subsidiaries use other functional currencies. Appreciation or depreciation of these currencies may result in gains or losses upon disposal or sale of these subsidiaries. As we expand our international business, our foreign exchange exposure may increase further.
Interest Rate Risk
Our interest rate risk primarily arises from floating-rate borrowings and short-term investments. We use derivative financial instruments, such as interest rates swap, to manage some of our interest risk exposure. A hypothetical 1% increase in interest rates would have increased our annual interest expense by approximately $43.0 million based on floating-rate borrowings as of December 31, 2025, compared to $30.2 million based on floating-rate borrowings as of December 31, 2024.
Commodity Price Risk
We are exposed to price volatility in raw materials, components, logistics and energy costs used in the manufacturing and transportation related to our solar modules and battery energy storage products, and EPC costs related to our project constructions. Our reliance on a limited number of suppliers further heightens this exposure. Price increases, supplier disruptions or reduced availability of key materials could materially impact our costs and margins if not passed on to customers. We may use commodity hedging instruments and supplier diversification to mitigate these risks.
Certain of our manufacturing inputs, including lithium carbonate used in battery energy storage systems and silver used in solar cell metallization, are subject to commodity price volatility. To the extent that fixed or indexed pricing arrangements with suppliers are not available or do not provide sufficient price certainty, we may, in the future, seek to mitigate price risk through commodity hedging arrangements, supplier diversification, or other contractual mechanisms. There can be no assurance, however, that such risk management strategies will be available on acceptable terms, will effectively offset price volatility, or will not introduce additional costs, liquidity requirements, or counterparty risks.
For our supply chain management, see “Item 4. Information on the Company—B. Business Overview—Supply Chain Management.” For risks relating to the long-term agreements with our raw material suppliers, see “Item 3. Key Information—D. Risk Factors—Risks Related to Our Company and Our Industry—Supply chain disruptions, cost increases or performance issues could adversely affect our business and relationship with customers, particularly given our dependence on a limited number of key suppliers.”
In connection with our long-term ownership of solar power and battery energy storage projects, we are exposed to merchant power price fluctuations and power price volatility in the electricity markets, particularly during periods of grid congestion. Our participation in power trading activities could further increase our exposure to such market price volatility.
Inflation, particularly in the U.S. and Europe, has led to rising costs for transportation, labor and materials. While inflation has not historically had a material impact on our operations, continued or elevated inflation could adversely affect our cost structure. If our costs become subject to significant inflationary pressures, we may not be able to fully offset higher costs through price increases for our products and services. Our inability to do so could harm our business, financial condition and results of operations.
ITEM 12 DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
ITEM 13 DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
None of these events occurred in any of the years ended December 31, 2023, 2024 and 2025.
ITEM 14 MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
A Material Modifications to the Rights of Security Holders
See “Item 10. Additional Information—B. Articles” for a description of the rights of shareholders, which remain unchanged.
B Use of Proceeds
ITEM 15 CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our management, with the participation of our chief executive officer and chief financial officer, has performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report, as required by Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our management has concluded that, as of the end of the period covered by this annual report, our disclosure controls and procedures were effective in ensuring that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act was recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosures.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such item is defined in Rules 13a-15(f) under the Exchange Act, for our company. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements in accordance with generally accepted accounting principles and includes those policies and procedures that (a) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of a company’s assets; (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that a company’s receipts and expenditures are being made only in accordance with authorizations of a company’s management and directors; and (c) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of a company’s assets that could have a material effect on the consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As required by Section 404 of the Sarbanes-Oxley Act of 2002 and related rules as promulgated by the Securities and Exchange Commission, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2025 using criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concluded that our internal control over financial reporting was effective as of December 31, 2025.
Deloitte Touche Tohmatsu Certified Public Accountants LLP, an independent registered public accounting firm, who audited our consolidated financial statements for the year ended December 31, 2025, has also audited the effectiveness of internal control over financial reporting as of December 31, 2025.
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Canadian Solar Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Canadian Solar Inc. and subsidiaries (the “Company”) as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2025, of the Company and our report dated April 10, 2026, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
/s/ Deloitte Touche Tohmatsu Certified Public Accountants LLP
Shanghai, China
April 10, 2026
111
Changes in Internal Controls
Management has evaluated, with the participation of our chief executive officer and chief financial officer, whether any changes in our internal control over financial reporting that occurred during our last fiscal year have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on the evaluation we conducted, management has concluded that no such changes occurred during the period covered by this annual report on Form 20-F.
ITEM 16A AUDIT COMMITTEE FINANCIAL EXPERT
Our board of directors has determined that Leslie Chang qualifies as an “audit committee financial expert” as defined in Item 16A of Form 20 F. Each of the members of the audit committee is an “independent director” as defined in the Nasdaq Marketplace Rules.
ITEM 16B CODE OF ETHICS
Our board of directors has adopted a code of ethics that applies to our directors, officers, employees and agents, including certain provisions that specifically apply to our chief executive officer, chief financial officer, vice presidents and any other persons who perform similar functions for us. We have posted our code of business conduct on our website at www.canadiansolar.com. We hereby undertake to provide to any person without charge, a copy of our code of business conduct and ethics within ten working days after we receive such person’s written request.
ITEM 16C PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table sets forth the aggregate fees (in whole U.S. dollars) by categories specified below in connection with certain professional services rendered by Deloitte Touche Tohmatsu Certified Public Accountants LLP and its affiliates, our principal external auditors, for the periods indicated. We did not pay any other fees to our auditors during the periods indicated below.
For the years ended
December 31,
Audit fees(1)
$
1,579,000
1,000,000
Audit related fees(2)
1,565,265
581,000
Tax fees(3)
58,846
10,000
Others(4)
66,000
16,000
The policy of our audit committee is to pre-approve all audit and non-audit services provided by Deloitte Touche Tohmatsu Certified Public Accountants LLP and its affiliates, including audit services, audit-related services, tax services and other services as described above, other than those for de minimis services which are approved by the Audit Committee prior to the completion of the audit. We have a written policy on the engagement of an external auditor.
ITEM 16D EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
ITEM 16E PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
ITEM 16F CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
ITEM 16G CORPORATE GOVERNANCE
ITEM 16H MINE SAFETY DISCLOSURE
ITEM 16I DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
ITEM 16J INSIDER TRADING POLICIES
We have adopted an insider trading policy that governs the purchase, sale, and other dispositions of our securities by directors, officers and employees that is reasonably designed to promote compliance with insider trading laws, rules and regulations, as well as applicable listing standards. A copy of the insider trading policy is included as Exhibit 11.1 to this annual report on Form 20-F.
ITEM 16K CYBERSECURITY
Cybersecurity Risk Management
We collect and maintain information in digital form that is necessary to conduct operations and engage with our customers and business partners, and we are increasingly dependent on information technology systems and network infrastructure to operate our business. We rely on information technology systems to keep financial records, manage our manufacturing operations, maintain quality control, fulfill customer orders, facilitate our research and development initiatives, maintain corporate records, communicate with staff and external parties and operate other critical functions. We operate some of these systems, but we also rely on third-party providers for a range of software, products and services that are critical to our operations and business. Both our and our third-party providers’ information technology systems are vulnerable to threat from cyber intrusion, ransomware, denial of service, phishing, account takeover, data manipulation, and other cyber misconduct.
Our information technology organization seeks to employ best practices, including the implementation of a cybersecurity risk management program intended to protect the confidentiality, integrity and availability of our critical systems and information. Our cybersecurity risk management program includes several processes, including, but not limited to, the following:
We designed and assessed our program based on industry standards and framework, including ISO (“International Organization for Standardization”), NIST (“National Institute of Standards and Technology”), and ITIL (“Information Technology Infrastructure Library”). While this does not imply that we meet any particular technical standards, specifications or requirements, we use these industry standards and framework as a guide to assist us to identify, assess and manage cybersecurity risks relevant to our business.
We work with third party cybersecurity professionals to conduct security assessments of our enterprise-wide cybersecurity practices, including penetration testing, and identify areas for continuous improvement within the information security program.
Although we have implemented various measures to protect our information technology systems and mitigate cybersecurity threats, cybersecurity risk can never be eliminated, and we may from time to time be exposed to risks from cybersecurity threats. While we have not experienced any material cybersecurity threats or incidents as of the date of this Annual Report on Form 20-F, there can be no guarantee that we will not be the subject of future successful attacks, threats, or incidents that may materially affect us, including our business strategy, results of operations, or financial condition.
For more information regarding the risks associated with cybersecurity incidents, see “Item 3. Key Information—D. Risk Factors—Risks Related to Our Company and Our Industry—Interruption, security breaches or failures of information technology, control and communication systems could disrupt our business and expose us to liability”.
Cybersecurity Oversight and Governance
The board of directors oversees the Company’s risk management processes directly and through its committees. Our cybersecurity risk management program is integrated into our overall enterprise risk management program, and shares common methodologies, reporting channels and governance processes that apply across the enterprise risk management program to other legal, compliance, strategic, operational and financial risk areas.
The Nominating and Corporate Governance Committee oversees management’s implementation of our cybersecurity risk management program. The Nominating and Corporate Governance Committee receives periodic reports from management on our cybersecurity risks. In addition, our management updates the Nominating and Corporate Governance Committee, as necessary, regarding any material cyber security incidents, as well as any incidents with lesser impact potential. The Nominating and Corporate Governance Committee reports to the full board of directors regarding its activities, including those related to cybersecurity.
Our management supervises efforts to prevent, detect, mitigate and remediate cybersecurity risks and incidents through various means, which may include briefings from internal information technology personnel; threat intelligence and other information obtained, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the information technology environment. Our internal information technology personnel who support our information security program have relevant educational and industry experience, including holding similar positions at large companies.
114
ITEM 17 FINANCIAL STATEMENTS
We have elected to provide financial statements pursuant to Item 18.
ITEM 18 FINANCIAL STATEMENTS
The consolidated financial statements of Canadian Solar Inc. are included at the end of this annual report.
ITEM 19 EXHIBITS
ExhibitNumber
Description of Document
Certificate of Continuance and Articles of Continuance of Canadian Solar Inc. (incorporated by reference to Exhibit 1.1 of our annual report on Form 20-F for the year ended December 31, 2022 (File No. 001-33107), initially filed with the Securities and Exchange Commission on April 18, 2023)
2.1
Registrant’s Specimen Certificate for Common Shares. (incorporated by reference to Exhibit 2.1 of our annual report on Form 20-F for the year ended December 31, 2022 (File No. 001-33107), initially filed with the Securities and Exchange Commission on April 18, 2023)
2.2
Description of Securities of the Registrant’s Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 2.2 of our annual report on Form 20-F for the year ended December 31, 2022 (File No. 001-33107), initially filed with the Securities and Exchange Commission on April 18, 2023)
2.3*
Indenture, dated as of January 13, 2026, between Canadian Solar Inc. and The Bank of New York Mellon, as trustee
Amended and Restated Share Incentive Plan of the Registrant, effective on May 8, 2011 (incorporated by reference to Exhibit 4.1 of our annual report on Form 20-F for the year ended December 31, 2016 (File No. 001-33107), initially filed with the Securities and Exchange Commission on April 27, 2017)
4.2
Form of Director Indemnity Agreement (incorporated by reference to Exhibit 4.1 of our annual report on Form 20-F for the year ended December 31, 2008 (File No. 001-33107), as amended, initially filed with the Securities and Exchange Commission on June 8, 2009)
Employment Agreement between the Registrant and Dr. Shawn Qu (incorporated by reference to Exhibit 10.2 of our registration statement on Form F-1 (File No. 333-138144), as amended, initially filed with the Securities and Exchange Commission on October 23, 2006)
4.4
Form of Employment Agreement between the Registrant and its executive officers (incorporated by reference to Exhibit 4.7 of our annual report on Form 20-F for the year ended December 31, 2010 (File No. 001-33107), as amended, initially filed with the Securities and Exchange Commission on May 17, 2011)
8.1*
List of Significant Subsidiaries
11.1*
Insider Trading Policy
12.1*
CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
12.2*
CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
13.1**
CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.2**
CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
15.1*
Consent of Deloitte Touche Tohmatsu Certified Public Accountants LLP
97.1
Clawback Policy (incorporated by reference to Exhibit 97.1 of our annual report on Form 20-F for the year ended December 31, 2023 (File No. 001-33107), initially filed with the Securities and Exchange Commission on April 26, 2024)
101*
Financial information from registrant for the year ended December 31, 2025 formatted in Inline eXtensible Business Reporting Language (iXBRL):
(i) Consolidated Balance Sheets as of December 31, 2024 and 2025; (ii) Consolidated Statements of Operations for the Years Ended December 31, 2023, 2024 and 2025; (iii) Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2023, 2024 and 2025; (iv) Consolidated Statements of Changes in Redeemable Non-Controlling Interests and Equity for the Years Ended December 31, 2023, 2024 and 2025; (v) Consolidated Statements of Cash Flows for the Years Ended December 31, 2023, 2024 and 2025; (vi) Notes to Consolidated Financial Statements; and (vii) Additional Information—Financial Statements Schedule I
104*
Cover Page Interactive Data File (embedded within the Inline XBRL document)
Filed herewith.
Furnished herewith.
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
By:
/s/ Shawn (Xiaohua) Qu
Name:
Title:
Chairman and
Chief Executive Officer
/s/ Xinbo Zhu
Date: April 10, 2026
Consolidated Financial Statements of Canadian Solar Inc.
For the Financial Year Ended December 31, 2025
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 1113)
F-2
Consolidated Balance Sheets
F-4
Consolidated Statements of Operations
F-5
Consolidated Statements of Comprehensive Income (Loss)
F-6
Consolidated Statements of Changes in Redeemable Non-Controlling Interests and Equity
F-7
Consolidated Statements of Cash Flows
F-8
Notes to Consolidated Financial Statements
F-10
Additional Information — Condensed Financial Statements of Parent Company
F-51
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Canadian Solar Inc. and subsidiaries (the “Company”) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), changes in redeemable non - controlling interests and equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes and the financial statement schedule (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated April 10, 2026, expressed an unqualified opinion on the Company’s internal control over financial reporting.
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue Recognition of Battery Energy Storage Solutions, Refer to Note 2 (x) and Note 21 to the Financial Statements
Critical Audit Matter Description
The Company recognizes revenue for the delivery of battery energy storage solutions (“BESS”) over time based on the estimated progress toward satisfaction of the performance obligation. Management of the Company uses judgments to identify the performance obligation and to estimate progress toward satisfaction for the identified performance obligation. We identified revenue recognition for the delivery of BESS as a critical audit matter because of the extensive audit effort in performing procedures related to the revenue recognition of BESS as a result of the complexity associated with the judgment involved.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to revenue recognized over time in relation to battery energy storage solutions included the following, among others:
We have served as the Company’s auditor since 2006.
F-3
Canadian Solar Inc.
(U.S. dollars in thousands, except share data)
Assets
Including balances in variable interest entities (Note 10)
Current assets:
Cash and cash equivalents
1,701,487
1,370,418
Restricted cash
551,387
541,705
Accounts receivable trade, net
1,118,770
829,957
Accounts receivable, unbilled
142,603
228,393
Amounts due from related parties
5,220
17,959
1,206,595
1,133,539
Value added tax recoverable
221,539
252,251
Advances to suppliers, net
124,440
217,871
Derivative assets
14,025
15,002
Project assets
394,376
549,269
Prepaid expenses and other current assets
436,635
822,502
Total current assets
5,917,077
5,978,866
11,147
28,312
Property, plant and equipment, net
3,174,643
3,376,035
Solar power and battery energy storage systems, net
1,976,939
2,065,498
Deferred tax assets, net
473,500
634,160
118,124
104,518
Investments in affiliates
232,980
289,601
Intangible assets, net
31,026
31,981
889,886
1,481,486
Right-of-use assets
378,548
441,291
75,215
76,848
Other non-current assets
232,465
663,133
Total Assets
13,511,550
15,171,729
Liabilities, Redeemable Interests and Equity
Current liabilities:
Short-term borrowings
1,873,306
2,389,037
Convertible notes
228,917
Green bonds
153,152
Accounts payable
1,062,874
878,827
Short-term notes payable
637,512
939,549
Amounts due to related parties
3,927
7,484
Other payables
984,023
779,198
Advances from customers
204,826
162,586
Derivative liabilities
13,738
6,179
Operating lease liabilities
21,327
26,783
Other current liabilities
388,460
507,594
Total current liabilities
5,418,910
5,850,389
Long-term borrowings
2,731,543
3,621,232
195,313
146,542
Liability for uncertain tax positions
5,770
5,788
Deferred tax liabilities
204,832
296,719
271,849
354,508
Other non-current liabilities
582,301
578,152
Total Liabilities
9,361,747
10,902,101
Redeemable non-controlling interests
247,834
326,559
Commitments and contingencies (Note 20)
Equity:
Common shares: no par value, unlimited authorized, 66,954,634 and 67,810,136 outstanding, respectively
835,543
Additional paid-in capital
590,578
568,921
Retained earnings
1,585,758
1,481,632
Accumulated other comprehensive loss
(196,379)
(78,125)
Total Canadian Solar Inc. shareholders’ equity
2,815,500
2,807,971
Non-controlling interests
1,086,469
1,135,098
Total Equity
3,901,969
3,943,069
Total Liabilities, Redeemable Interests and Equity
The accompanying notes are an integral part of these consolidated financial statements.
Years Ended December 31,
(U.S. dollars in thousands, except share and per share data)
2023
7,613,626
6,333,643
1,279,983
369,670
440,488
100,844
(84,339)
826,663
453,320
Other income (expenses):
(114,099)
51,621
(27,504)
30,555
14,632
(44,795)
Income (loss) before income taxes and equity in earnings (losses) of affiliates
408,525
(59,501)
Equity in earnings (losses) of affiliates
14,610
Net income (loss)
363,634
Less: net income (loss) attributable to non-controlling interests and redeemable non-controlling interests
89,447
274,187
Earnings (loss) per share — basic
4.19
0.54
(2.50)
Shares used in computation — basic
65,375,084
66,616,400
67,368,537
Earnings (loss) per share — diluted
3.87
Shares used in computation — diluted
72,194,006
66,939,428
(U.S. dollars in thousands)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment
8,141
(112,941)
141,031
Gain (loss) on changes in fair value of available-for-sale debt securities
(3,487)
2,223
363
Loss on interest rate swap
(1,124)
(1,569)
(3,726)
Share of gain (loss) on changes in fair value of interest rate swap of affiliate
11,264
(2,304)
Comprehensive income (loss)
378,428
(189,456)
(48,399)
Less: comprehensive income (loss) attributable to non-controlling interests and redeemable non-controlling interests
90,829
(145,860)
(59,383)
Comprehensive income (loss) attributable to Canadian Solar Inc.
287,599
(43,596)
10,984
Redeemable
Accumulated
Non-
Additional
Canadian Solar
controlling
Common
Paid-in
Retained
Comprehensive
Inc. Shareholders’
Controlling
Interests
Shares
Capital
Earnings
Loss
Equity
Amount
Balance as of December 31, 2022
64,506,055
1,127
1,275,520
(170,551)
1,941,639
365,055
2,306,694
Net income
6,759
1,382
Share-based compensation
46,981
8,354
55,335
Subsidiary’s shares under employee incentive plan
36,416
Exercise of RSUs
1,652,686
Subsidiary’s equity offering (1)
244,629
38,395
283,024
644,873
927,897
Acquisition of non-controlling interest’s ownership
(1,446)
Proceeds from non-controlling interests
5,910
Distributions to non-controlling interests
(3,990)
Change in fair value of available-for-sale debt securities
Change in fair value of interest rate swap
Share of change in fair value of interest rate swap of affiliates
Balance as of December 31, 2023
66,158,741
292,737
1,549,707
(118,744)
2,559,243
1,146,001
3,705,244
(132,475)
18,562
54,613
(80,994)
(31,947)
Subsidiary‘s repurchase of its common shares
(55,730)
3,824
(51,906)
(27,676)
(79,582)
Subsidiary‘s issuance of redeemable preferred shares (2)
153,374
330,682
(1,812)
328,870
Capital contributions from tax equity investors in subsidiaries
226,935
21,404
795,893
Acquisition of non-controlling interest
1,485
(9,569)
(8,084)
18,707
Distribution to non-controlling interests
(27,609)
Balance as of December 31, 2024
66,954,634
(122,565)
42,928
(61,198)
120,777
20,254
Subsidiary’s repurchase of its common shares
(52,479)
3,144
(49,335)
(20,800)
(70,135)
207,669
30,822
855,502
11,499
15,385
(6,379)
(20,637)
Balance as of December 31, 2025
67,810,136
Operating activities:
Adjustments to net income (loss):
Depreciation and amortization
307,040
501,443
555,053
Write-down of inventories
113,079
151,957
74,013
Allowance for credit losses
12,014
39,060
(1,449)
Impairment loss of property, plant and equipment
5,938
65,285
54,015
Impairment loss of project assets
16,239
33,052
60,245
Impairment loss of solar power systems
21,400
11,063
Impairment loss of investments in affiliates
24,412
Deferred taxes
(17,908)
(98,205)
(71,903)
27,504
51,400
42,422
Loss (gain) on change in fair value of other financial assets
(12,696)
590
(6,926)
Equity in losses (earnings) of affiliates
(14,610)
12,136
28,875
Non-cash operating lease expenses
18,844
35,893
51,995
Accretion of green bonds and convertible notes
2,145
3,413
4,381
Others
(2,206)
5,109
73,894
Changes in operating assets and liabilities:
Accounts receivable trade
58,985
(221,479)
327,540
(43,571)
(42,487)
(79,584)
182,767
(312,522)
(110,403)
(349,830)
(697,813)
(806,191)
Advances to suppliers
54,915
62,461
(86,214)
13,115
268,207
(216,979)
(590,418)
(221,218)
275,889
59,383
(184,262)
(44,638)
(22,277)
(99,716)
(248,521)
(5,985)
(65,211)
(19,634)
Net settlement of derivatives
(39,133)
(49,134)
(50,860)
169,944
90,841
4,670
Other liabilities
337,055
(104,328)
102,307
(14,687)
(75,338)
(16,450)
Net cash provided by (used in) operating activities
684,615
Consolidated Statements of Cash Flows (Continued)
Investing activities:
Purchase of property, plant and equipment and intangible assets
(1,116,461)
(1,112,834)
(962,254)
Purchase of solar power and battery energy storage systems
(408,999)
(757,577)
(429,192)
Investment in affiliates
(113,404)
(28,815)
(62,188)
Acquisition of subsidiaries, net of cash
(9,448)
(10,913)
(14,758)
Investment in bank time deposits and structured deposits
(64,650)
(119,494)
Proceeds from disposal of property, plant and equipment and right-of-use assets
46,582
Proceeds from disposal of solar power systems
45,506
(23,104)
12,532
(7,692)
(1,671,416)
Financing activities:
Proceeds from short-term borrowings
1,566,240
1,774,846
1,137,040
Repayments of short-term borrowings
(1,603,571)
(1,550,809)
(2,465,557)
Proceeds from long-term borrowings
1,016,931
1,449,754
2,618,354
Net proceeds from issuance of convertible notes and green bonds
121,023
193,256
Repayment of convertible notes
(230,000)
Repayments of finance lease obligations
(39,801)
(72,211)
(48,036)
Proceeds from subsidiary’s issuance of preferred shares
482,244
Proceeds from subsidiary’s offering of equity interests
Repurchase of shares by subsidiary
(27,016)
Proceeds from sales-leaseback arrangements
91,648
56,057
(23,549)
60,146
31,930
2,052,828
Effect of exchange rate changes
(89,098)
(154,601)
85,140
Net increase (decrease) in cash, cash equivalents and restricted cash
976,929
(682,411)
(323,586)
Cash, cash equivalents and restricted cash, beginning of year
1,969,503
2,946,432
2,264,021
Cash, cash equivalents and restricted cash, end of year
1,940,435
Supplemental disclosure of cash flow information:
Interest paid, net of amounts capitalized
121,665
130,964
170,497
Income taxes paid, net of tax refunds
83,077
113,911
149,713
Supplemental schedule of non-cash activities:
Reclassification of project assets to solar power and battery energy storage systems
119,067
312,773
Reclassification of inventories to solar power and battery energy storage systems
46,197
111,525
115,572
Borrowings assumed by third parties in connection with project asset sales
161,709
53,509
Property, plant and equipment costs included in other payables
933,029
478,573
226,680
The following table reconciles cash, cash equivalents, and restricted cash on the balance sheets to the amounts shown in the statements of cash flows.
Restricted cash — current
Restricted cash — non-current
Total cash, cash equivalents and restricted cash
F-9
All amounts in the Notes to Consolidated Financial Statements are in U.S. dollars in thousands, unless otherwise indicated.
1. Organization and Operations
Canadian Solar Inc. (“CSI”) and its subsidiaries (collectively, the “Company”) is one of the world’s largest solar technology and renewable energy companies, a leading manufacturer of solar photovoltaic modules, a provider of battery energy storage solutions, and a developer of utility-scale solar power and battery energy storage projects. The Company is incorporated under the laws of Ontario, Canada and its shares are listed on NASDAQ under the symbol “CSIQ.”
On December 1, 2025, the Company announced a strategic initiative to resume direct oversight of its U.S. operations. The Company formed a new joint venture with its majority-owned subsidiary, CSI Solar Co., Ltd. (“CSI Solar”), by holding a 75.1% controlling stake in CS PowerTech Inc. (“CS PowerTech”), which operates U.S.-based manufacturing and sales of solar modules, solar cells and advanced energy storage systems.
Following the consummation of this strategic initiative, the Company’s business is organized into two segments:
In 2020, the Company initiated the carve-out and initial public listing (“IPO”) of CSI Solar. In June 2023, CSI Solar completed its IPO on the Science and Technology Innovation Board (“STAR Market”) of the Shanghai Stock Exchange, raising net proceeds of RMB 6,628,683,000 ($927,897) after deducting offering expenses of RMB 277,929,000 ($38,995). In April 2024, CSI Solar launched a share repurchase program of RMB 500,000,000 up to RMB 1,000,000,000 ($70,416 up to $140,832) to reserve shares for future share-based awards. In 2025, 45,077,200 shares had been repurchased for RMB 500,608,600 ($71,222), reducing the non-controlling interest to 36.21%. As of December 31, 2025, the Company held 63.79% of the outstanding CSI Solar shares.
In January 2024, Canadian Solar Energy Group B.V. and Recurrent Energy B.V., subsidiaries of CSI, entered into a purchase and sale agreement with GRP IV UK Holdco Limited, managed by BlackRock’s climate infrastructure business, for the issuance of Series A preferred shares of Recurrent Energy B.V. Following initial and subsequent closings in May and September 2024, respectively, BlackRock’s total investment reached $500,000, before deducting issuance expenses of $17,756, and represented 20% of Recurrent Energy B.V. on a fully diluted, as-converted basis as determined immediately upon closing. See Note 26 for details.
2. Summary of Significant Accounting Policies
(a) Basis of presentation
The consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).
(b) Basis of consolidation
The consolidated financial statements include Canadian Solar Inc. and its subsidiaries where it holds a controlling financial interest or is the primary beneficiary of variable interest entities (“VIEs”). A controlling financial interest generally exists when the Company holds a majority voting interest in an entity, and the non-controlling shareholders or partners do not possess substantive participating or redemption rights, nor are there other conditions that would indicate the Company does not have control. Non-controlling interests in consolidated subsidiaries are reported as equity, unless redeemable outside the Company’s control, in which case they are classified as temporary equity. The strategic initiative disclosed in Note 1 is a transaction involving entities under common control.
The Company consolidates VIEs in which it is the primary beneficiary, with both power to direct the day-to-day operating activities that most significantly impact the VIE’s performance and the obligation to absorb losses or receive benefits that could potentially be significant. Consolidated VIEs include tax equity partnerships and similar structures where the Company, through its subsidiaries, acts as the managing member and controls day-to-day operations, silent partnerships and bankruptcy-remote structures used to hold project companies in Japan, where the Company does not hold a majority equity interest but is entitled to substantially all economic benefits and controls key operational decisions through asset management agreements. The obligations of these consolidated VIEs are non - recourse to the Company, except where contractual liquidity support or guarantee exists. Required contributions were made during the years ended December 31, 2024 and 2025 in accordance with the respective operating agreements.
Certain solar power and battery energy storage project companies of Recurrent Energy B.V. in the U.S. have issued Class A membership interests to third-party investors. Under the terms of these tax equity partnership arrangements, the investors are generally entitled to substantially all of the accelerated depreciation tax deductions and investment tax credits (“ITCs”) associated with the projects, together with a portion of the distributable cash, until a specified flip date, after which the majority of economics shift to Recurrent Energy B.V. These interests are redeemable and classified as temporary equity. As a result, the income tax benefit from the ITC and accelerated depreciation is reflected in the Company’s consolidated financial statements through the income and loss allocations to the redeemable non-controlling interests representing the tax equity investors’ share in the consolidated project companies. The allocation of income or loss to these interests is performed using the Hypothetical Liquidation at Book Value (“HLBV”) method. Under HLBV, the income or loss attributable to redeemable non-controlling interests reflects the changes in the amounts that tax equity investors would hypothetically receive upon liquidation of the applicable partnerships at the beginning and end of each reporting period, after considering any capital transactions, such as contributions or distributions, between these project companies and the tax equity investors. The hypothetical liquidation assumptions are periodically reviewed to reflect significant events or changes in circumstances that could affect the distribution or liquidation priorities, including changes in expected flip dates, anticipated tax equity partnership period, or other events that may alter the expected duration and future cash flows of the partnership and its underlying project assets.
Assets and liabilities of consolidated VIEs are disclosed separately if creditors do not have recourse to the Company, except where a financial guarantee exists. See Note 10 for details. As of December 31, 2024 and 2025, the Company guaranteed VIE obligations of $87,436 and $17,763, respectively.
Intercompany balances and transactions are eliminated upon consolidation.
(c) Use of estimates
Preparation of consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses during the reporting period and the disclosure of contingent assets and liabilities at the balance sheet date. Significant estimates include revenue recognition (including identification of performance obligations, determination and allocation of transaction price, use of the percentage-of-completion method, and estimates of variable consideration and total costs), allowance for credit losses, inventory valuation, asset impairments and useful lives, provisions for contingent liabilities, warranty accruals, fair value estimates of financial instruments and derivatives, deferred taxes, uncertain tax positions and income or loss allocations using the HLBV method and the redemption value of temporary equity instruments. Actual results may differ from these estimates.
(d) Cash, cash equivalents and restricted cash
Cash and cash equivalents are stated at cost, which approximates fair value, and includes cash on hand, demand deposits and money market funds that are unrestricted and have original maturities of three months or less when acquired. Restricted cash represents amounts held by banks as security for short-term notes payable, letters of guarantee, letters of credit or bank borrowings. These amounts are unavailable for general use until the related obligations mature or are repaid, at which point the funds become unrestricted.
(e) Contract assets and liabilities
Accounts receivable, unbilled represents a contract asset for revenue recognized prior to billing the customer. The Company uses a cost-based input method to recognize revenue from turnkey battery energy storage solutions and EPC services when revenue recognition criteria are met. Once billing criteria are satisfied, typically structured around construction milestones, and the right to consideration becomes unconditional, the Company bills the customer and reclassifies the unbilled amount to trade accounts receivable.
F-11
Advances from customers, including deposits for inventory purchases, are recorded as contract liabilities and recognized as revenue when the related performance obligations are satisfied.
(f) Allowance for credit losses
Trade accounts receivable, advances to suppliers, warranty insurance receivables, and other receivables are presented net of allowances for credit losses. Current expected credit losses (“CECL”) are estimated based on external and internal credit ratings, historical loss rates, and other relevant factors. Where individual credit risk evidence is not available, financial instruments are grouped by aging, size, industry, and other shared risk characteristics.
To mitigate credit risk, the Company obtains credit insurance for certain trade receivables. An allowance is recorded based on historical collection experience, receivable aging, and other available evidence, regardless of insurance coverage. When a claim is made, a receivable is recorded equal to the expected recovery, up to the specific allowance amount, with a corresponding reduction in general and administrative expenses. Receivables from insurers included in prepaid expenses and other current assets were $6,881 and $18,424 as of December 31, 2024 and 2025, respectively.
(g) Advances to suppliers
Prepayments to suppliers are recorded as advances. Amounts expected to be utilized within one year are classified as current assets and those expected to be utilized beyond one year are classified as non-current assets.
(h) Inventories
Inventories are stated at the lower of cost or net realizable value. Cost is determined using the weighted-average method. Inventory costs include direct materials such as high - purity polysilicon, ingots, wafers, silver-based metallic pastes, glass, metal frames, ethylene vinyl acetate, junction boxes, polymer back sheets, lithium iron phosphate battery cells, inverters, trackers, mounting hardware, and grid interconnection equipment. Applicable direct labor, tolling, and overhead costs incurred to bring inventories to their present location and condition are also included.
When indicators suggest that inventory carrying amounts may not be recoverable, such as obsolescence, damage, declining market prices, and reduced demand forecasts, the Company records inventory write-downs to net realizable value.
(i) Project assets
Project assets primarily consist of capitalized development and construction costs for solar power and battery energy storage assets intended for sale. These costs include pipeline and land acquisition, permitting, consulting, legal, grid and network connection, civil works, and equipment installation (including solar modules, lithium battery energy storage systems, inverters, energy stations, and power plant controllers), as well as interest, amortized deferred financing costs and capitalized indirect project costs.
Solar power and battery energy storage projects are classified as project assets unless the Company intends to retain and operate them to generate electricity or storage revenue, in which case they are classified as solar power and battery energy storage systems. In accordance with ASC 970, expenditures incurred during development phase are capitalized. These expenditures are classified as operating or investing activities in the consolidated statement of cash flows, depending on whether the assets are held for sale or for use. Project assets are typically held in separate legal entities or VIEs, referred to as “project companies,” and are consolidated in accordance with Note 2(b). Project assets are generally classified as non-current assets unless their sale is expected within one year, in which case they are presented as current.
Impairment testing is performed when events or changes in circumstances indicate carrying amounts may not be recoverable. A fully developed or constructed project is considered recoverable if it is expected to be sold for a profit. Otherwise, recoverability is assessed by comparing the anticipated net selling price to the carrying amount. Impairments are generally recorded if changes in environmental, regulatory, interconnection, capital cost, or market conditions adversely affect recoverability. Impairments are recognized within cost of revenues in the consolidated statements of operations.
F-12
Project assets are not depreciated. Any incidental revenue generated is accounted for as a reduction of the capitalized costs. If the Company later decides to retain the project for long-term operation, the asset is reclassified to solar power and battery energy storage systems at the lower of its carrying value adjusted for depreciation that would have been recognized had the asset been continuously classified as held for use, or its fair value at the date of reclassification.
(j) Business combination
Business combinations are accounted for using the acquisition method. Assets and liabilities assumed are recorded at their fair value as of the acquisition date. Any excess of the purchase consideration over the fair value of the net assets, including identifiable intangible assets, is recorded as goodwill. Acquisition-related costs not included in the purchase price, including legal, accounting, and other professional fees, and integration costs, are expensed as incurred within general and administrative expenses. Adjustments to provisional amounts are recognized as additional information becomes available regarding facts and circumstances that existed as of acquisition date. The measurement period ends when the Company obtains sufficient information to finalize fair value measurements, but no later than one year from the acquisition date. In 2025, the Company completed acquisitions that were not individually or in the aggregate material to its consolidated financial position, results of operations or cash flows.
(k) Asset acquisitions
When the assets acquired and liabilities assumed do not constitute a business, the transaction is accounted for as an asset acquisition. The consideration transferred, including transaction costs, is allocated to the acquired assets and assumed liabilities based on their relative fair values. Goodwill is not recognized, and no gain or loss is recorded unless the fair value of non-cash consideration differs from the carrying amount of the net assets acquired. If non-cash consideration is involved, it is measured at either the fair value of the net assets transferred or net assets acquired, whichever is more clearly evident and reliably measurable.
(l) Property, plant and equipment
Property, plant and equipment is recorded at cost, less accumulated depreciation. Cost comprises the purchase price and any directly attributable costs, including interest capitalized during the period in which the asset is brought to the condition and location for its intended use. Costs incurred in constructing new facilities, including progress payments and related expenditures, are capitalized and transferred to property, plant and equipment upon completion. Repair and maintenance costs are expensed as incurred.
Depreciation commences when the asset is placed into service. Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. Buildings are depreciated over 10 to 20 years. Leasehold improvements are depreciated over the shorter of the lease term or their estimated useful lives. Machinery and equipment are depreciated over 5 to 10 years. Furniture, fixtures, office equipment and motor vehicles are depreciated over 5 years. If property, plant and equipment placed into service are temporarily idled, the Company continues to record depreciation during the idle period. The estimated useful life of idled assets is reassessed and adjusted as necessary to reflect changes in expected usage.
(m) Solar power and battery energy storage systems
Solar power and battery energy storage systems comprise utility-scale facilities that the Company intends to hold for use. These systems are stated at cost, less accumulated depreciation. Cost comprises direct expenditures incurred during various stages of development prior to the commencement of operations. For self-developed solar power or battery energy storage systems, capitalized costs include expenditures related to power purchase agreements (“PPA”) or battery tolling agreements, application for performance-based energy incentives, permits, construction and equipment costs, land acquisition, capitalized interest, and other associated development costs. Expenditures for major additions and improvements are capitalized, while minor replacements, maintenance, and repairs are expensed as incurred. Upon retirement or disposal of a solar power and battery energy storage system, the cost and related accumulated depreciation are removed from the balance sheet, and any resulting gain or loss is recorded in the results of operations.
F-13
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets. Solar power systems are depreciated over a period of up to 35 years, while battery energy storage systems are depreciated over a period of up to 25 years. The Company regularly reviews the estimated useful lives of its solar power and battery energy storage systems. In 2024, based on internal analysis and market data reflecting advancements in solar technology, the Company determined that the actual service lives of certain solar power systems exceeded previous estimates. As a result, the Company revised the estimated useful life of its solar power systems from 30 years to 35 years and applied the change prospectively as a change in accounting estimate. This change does not apply to solar power systems subject to PPAs with term shorter than 35 years, where a transfer of ownership to the offtaker is expected at the end of the PPA term. In such cases, the useful life is aligned with the expected transfer date.
(n) Intangible assets
Intangible assets consist of customer-related intangible assets, including customer relationships and backlog, trademarks, technical know-how, and computer software purchased from third parties. These assets are recorded at fair value at the time of acquisition and are subsequently stated net of accumulated amortization, using the straight-line method over their estimated useful lives. Customer-related intangible assets are amortized over periods ranging from 7 to 20 years, trademarks are amortized over 20 years, technical know-how is amortized over 10 years, and computer software is amortized over periods ranging from 3 to 10 years.
(o) Land use rights
Land use rights are accounted for as operating leases in accordance with ASC 842. Amounts paid for land use rights are recorded as operating lease right-of-use (“ROU”) assets on the balance sheets. These amounts are expensed on a straight-line basis over the relevant periods, which are generally 50 years.
(p) Investments in affiliates
Investments in affiliates are accounted for using the equity method. Investments are initially recorded at historical cost and subsequently adjusted for the Company’s share of the investee’s profits or losses and other required equity method adjustments. Dividends received are recorded as reductions in the carrying amount of the investments. The portion of earnings considered as a return on capital is recognized accordingly, while any excess is treated as a return of capital.
Investments are evaluated for impairment when events or changes in circumstances indicate that the fair value may be less than the carrying amount. An impairment is recognized when the decline in fair value is determined to be other than temporary. In assessing whether a loss is other than temporary, the Company considers several factors, including the nature of the investment, the cause and duration of the impairment, the extent to which fair value is less than cost, the financial condition and near-term prospects of the investee, and the Company’s ability to hold the investment for a sufficient period to allow for recovery. For the years ended December 31, 2023, 2024 and 2025, the Company did not record any material impairment charges on its investments in affiliates.
(q) Impairment of long-lived assets
Long-lived assets, including property, plant and equipment, non-current project assets, solar power and battery energy storage systems, and intangible assets, are reviewed for impairment whenever indicators of impairment are identified. For impairment testing, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent. When indicators of impairment exist, the Company compares the asset group’s carrying amount to the sum of expected undiscounted future cash flows, including the estimated disposal value. If the sum of those cash flows is less than the carrying amount, the asset group is considered not recoverable, and the excess of carrying value over fair value is recognized as an impairment loss. Fair value is generally determined using quoted market prices, if available, or discounted cash flow analysis. The assessment also considers changes in asset group utilization, including temporarily idled capacity, the expected timing of placing this capacity back into production, capital investments, inflation, the terms of new or anticipated PPAs, eligibility for tax incentives, and long-term electricity and power price forecasts.
F-14
(r) Interest capitalization
The Company capitalizes interest costs that are directly attributable to the acquisition, development, or construction of certain assets during the period required to prepare the asset for its intended use or sale. Interest is capitalized when expenditures to acquire, construct, or develop an asset have been made and interest has been incurred. For property, plant and equipment, and solar power and battery energy storage systems, capitalized interest cost is depreciated over the asset’s estimated useful life once placed in service. For project assets, capitalized interest is included in cost of revenues when sold. Capitalization ceases when the project is substantially complete or when construction activities necessary to prepare it for its intended use are no longer in progress.
(s) Short-term notes payable
In certain jurisdiction, the Company enters into arrangements with banks whereby the banks issue notes to the Company’s materials and equipment vendors, effectively extending the payment terms of the related accounts payable. Vendors may present these notes to a bank, including the issuing bank, prior to the stated maturity date, generally at a discount to face value. The Company is typically required to maintain restricted cash deposits with the issuing banks, which are used to immediately repay the bank upon settlement of the notes. Given that the purpose of these arrangements is to extend the payment terms to suppliers, the Company records such amounts as short-term notes payable. Because the bank settlements are immediately repaid using the Company’s restricted cash and other deposits held at the same banks, the notes payable do not represent cash borrowings. As of December 31, 2024 and 2025, short-term notes payable totaled $637,512 and $939,549, respectively.
(t) Assets retirement obligation
In certain jurisdictions or under specific land lease agreements, the Company is required to remove its solar power and battery energy storage systems upon decommissioning. A liability for asset retirement obligation (“ARO”) is recognized at fair value in the period the obligation is incurred and can be reasonably estimated. The corresponding asset retirement cost is capitalized as part of the related long-lived asset. The liability is accreted over time to its expected future value, and the capitalized cost is depreciated over the asset’s useful life, or over the lease term if shorter. Upon settlement of the obligation, the liability is derecognized, and any difference between recorded amount and actual costs incurred is recognized as a gain or loss. ARO liabilities included in solar power and battery energy storage systems were $5,811 and $6,489 as of December 31, 2024 and 2025, respectively.
(u) Leases
The Company determines whether an arrangement contains a lease at inception based on the applicable facts and circumstances. Operating leases are recorded as right-of-use (“ROU”) assets and operating lease liabilities, while finance leases are included in property, plant and equipment and corresponding liabilities on the balance sheets. ROU assets represent the right to use an underlying asset for the lease term, while lease liabilities represent the obligation to make future lease payments. ROU assets and lease liabilities are measured as the present value of lease payments not yet paid, discounted using the rate implicit in the lease, if readily determinable. If the implicit rate is not readily available, the Company uses its incremental borrowing rate, based on information available at lease commencement. Lease payments exclude variable components, which are expensed when incurred. Operating lease ROU assets include lease prepayments, initial direct costs, and deferred rent, if applicable, and exclude lease incentives. Lease option to extend or terminate is included in the lease term only when it is reasonably certain the option will be exercised. Lease expenses for operating leases are recognized on a straight-line basis over the lease term. For finance leases, asset amortization is recognized over the shorter of the lease term or useful life within depreciation expense, and interest, including variable payments, is recognized in interest expense, in the consolidated statements of operations.
For sales-type leases related to battery energy storage systems, the book value of the leased assets is removed from the balance sheet and a net investment in sales-type lease is recognized at lease commencement. The net investment represents the present value of fixed payments under the tolling agreement and the estimated unguaranteed residual value of the battery energy storage systems at the end of the lease term, discounted using the rate implicit in the lease. The estimated unguaranteed residual value represents the estimated fair value of the battery energy storage systems at the end of the lease. The Company estimates the residual value of the battery energy storage systems by obtaining forward-looking product information such as expected technological performance and planned augmentation of battery storage capacity over the operating life. The net investment in sales-type lease is included in current and non-current other assets on the balance sheets. Interest income on the net investment in sales-type lease is recognized over the lease term in a manner that produces a constant rate of return on the net investment in the sales-type lease.
F-15
Short-term leases with initial terms of 12 months or less and no extension or purchase option reasonably certain to be exercised are not recorded on the balance sheets, and instead related lease payments are recognized on a straight-line basis over the lease term. Lease liabilities due within one year are classified as current liabilities. The Company’s leases do not include material residual value guarantees or restrictive covenants.
The Company reviews ROU assets for impairment when events or changes in circumstances indicate that the carrying amount may not be recoverable. If the undiscounted cash flows expected from the use and eventual disposition of the asset are less than its carrying amount, an impairment loss is recognized in the consolidated statements of operations for the difference between the carrying amount and asset’s fair value.
(v) Contingencies
Liabilities for loss contingencies arising from claims, assessments, litigation, fines, penalties and similar matters are recognized when it is probable that a liability has been incurred and the amount can be reasonably estimated. If a potential material loss contingency is not probable but is reasonably possible, or is probable but not reasonably estimable, the nature of the contingency, and if determinable, an estimate of the possible loss or range of loss is disclosed. The Company may be exposed to certain liabilities related to its business operations, including various international trade proceedings, government actions and ongoing patent litigations. The Company makes these assessments based on facts and circumstances that may change in the future resulting in additional expenses. See Note 20 for details. Legal costs associated with such contingencies are expensed as incurred.
(w) Income taxes
Deferred income taxes are recognized for temporary differences between the financial reporting and tax bases of assets and liabilities, and for net tax operating loss carryforwards and tax credits, using enacted tax rates expected to apply when the deferred tax assets or liabilities are realized or settled. A valuation allowance is established to reduce the deferred tax assets if it is more likely than not that some or all of the deferred tax assets will not be realized.
Income tax expense includes current tax expense, which represents amounts payable to or receivable from taxing authorities; deferred tax expense, which reflects changes in deferred tax assets and liabilities, including changes in valuation allowances; and non-current tax expense, which arises from changes in uncertain tax positions not settled with cash or other tax attributes.
The Company only recognizes tax benefits related to uncertain tax positions when such positions are more likely than not of being sustained upon examination. For such positions, the amount of tax benefit that the Company recognizes is the largest amount of tax benefit that is more than fifty percent likely of being sustained upon the ultimate settlement of such uncertain tax position. The Company records penalties and interests associated with the uncertain tax positions as a component of income tax expense.
The Company applies the flow-through method for ITCs related to energy project placed into service. Under this method, ITCs that are not part of a transaction with a tax equity investor are recognized as a reduction to income tax expense in the period in which the credit arises. This approach results in a basis difference between the tax and book value of the related asset, giving rise to a deferred tax liability, which is accounted for using the income statement method. For ITCs monetized through tax equity financing structures, the Company applies guidance under ASC 740 and ASC 810, as applicable, based on the structure and associated accounting model used for the tax equity partnership. Production Tax Credits (“PTCs”) are recognized as solar energy is generated and sold, based on applicable statutory rates, and reduce current income taxes payable or are recorded as deferred tax assets if utilization is limited.
(x) Revenue recognition
The Company recognizes revenue when it satisfies a performance obligation by transferring a promised good or service to the customer. Revenue is presented net of sales, value-added, and similar taxes, and estimated returns.
F-16
Solar power products
Revenue from solar modules, system kits, inverters, and related components is recognized at a point in time when the customers obtain control of the products, typically upon shipment or delivery, depending on the contract terms. Sales agreements generally include only assurance-type customary product warranties and do not include significant post-shipment obligations. Shipping and handling charges are included in revenue when billed. If collectability is not probable at the time of delivery, revenue is deferred and the products remain in inventory until collectability becomes probable.
Battery energy storage solutions and EPC services
Revenue from battery energy storage products is recognized at a point in time when customers obtain control of the products, typically upon shipment or delivery, depending on the contract terms.
Revenue from the delivery of turnkey battery energy storage solutions and EPC services is recognized over time based on estimated progress toward completion using a cost-based input method. Customer advances received for these solutions are recorded as deferred revenue on the balance sheets and subsequently recognized as revenue over time, based on the estimated progress to completion.
In applying the cost-based input method of revenue recognition, the Company measures progress towards contract completion based on actual costs incurred relative to total estimated contract costs. This method requires the Company to make significant estimates and judgments of total contract revenues and costs, including the impact of performance incentives, liquidated damages, and other variable payments. If at any point estimated total contract costs exceed total estimated revenues, the full amount of the expected loss is recognized immediately in the period the loss becomes known. Revisions to estimates of revenues or costs, including changes in contract scope or performance expectations, are recognized in the period in which the revisions are identified and are reflected as cumulative adjustments to revenue. For contracts that include variable consideration, the Company estimates the amount of consideration it expects to receive using either the most likely amount method or the expected value method, depending on which approach better predicts the amount of consideration to which it will be entitled. Variable consideration is included in the transaction price to the extent that it is probable that a significant reversal of revenue will not occur. The contracts do not contain significant financing component.
Revenue for long-term service contracts, such as those covering capacity guarantees, operating system performance, or battery augmentation, is recognized separately when the performance obligation is distinct. A performance obligation is considered distinct if the customer can benefit from the good or service either on its own or together with other readily available resources, and if the promise to transfer the good or service is separately identifiable within the context of the contract. The Company allocates the transaction price to each performance obligation based on relative standalone selling prices. These are determined using observables prices when available or estimated using judgment, taking into account market conditions, entity-specific factors, and customer-specific information.
Revenue from the sale of solar power and battery energy storage assets is recognized at a point in time when the customer obtains control of the asset. If the Company retains a non-controlling interest in the project, it recognizes the full amount of the consideration received as revenue, including the fair value of the retained interest, and defers any profit associated with that interest. These projects are typically held in separate legal entities, partnerships, trusts, or investment funds formed for the sole purpose of developing and constructing the assets, which the Company refers to as “project companies.” The Company applies ASC 810 to assess whether deconsolidation of a project company is appropriate upon the sale of equity interests. If deconsolidated, ASC 606 is then applied to evaluate performance obligations, determine transaction price, including variable consideration, and recognize revenue accordingly.
Revenue from power services, primarily Operations and Maintenance (“O&M”), is recognized over time, when the customer receives and consumes the benefits of the Company’s performance. Revenue is recognized based on the work completed to date that does not require significant re-performance, and related costs are expensed when incurred.
F-17
Electricity and battery energy storage operations
Revenue from electricity and battery energy storage operations is primarily generated from long-term PPAs, virtual power purchase agreements (“VPPAs”), tolling agreements, and performance-based energy incentives. Under PPAs, revenue is recognized when electricity is generated and delivered to the grid at the contractually stated prices. Performance-based energy incentives are recognized when conditions are met and collection is reasonably assured. For the years ended December 31, 2023, 2024 and 2025, the Company recognized $2,772, $2,542 and $2,010, respectively, from such incentives.
Revenue from uncontracted solar power projects and battery energy storage systems operating, in whole or in part, under merchant power pricing is recognized as revenue when the electricity or ancillary services are transferred to the market operator. Merchant projects earn revenue based on prevailing market prices or compensation for services such as frequency regulation or demand response. Revenue is recognized at the point of delivery, when performance obligations are satisfied and pricing is determinable.
The Company evaluates offtake contracts, including PPAs, VPPAs, tolling agreements, and long-term contracts, to determine whether they represent leases. If the customer is deemed to assume the principal risks and rewards of ownership, the arrangement is classified as a finance lease. In such cases, the Company derecognizes the assets and recognizes a finance lease receivable measured as the present value of future lease payments. Income is recognized over time using a constant rate of return. If the Company retains the principal risks and rewards of ownership, the arrangement is classified as an operating lease. The asset remains capitalized, and lease revenue is recognized either on a straight-line basis for the fixed payments or as contingent rent for variable payments linked to output.
The Company’s electricity revenue was as follows:
Electricity revenue by segment:
3,273
5,697
12,869
44,842
83,473
124,762
48,115
89,170
137,631
Certain PPAs are accounted for as operating leases, with revenue recognized as contingent rental revenue upon electricity delivery. Such revenue under ASC 842 totaled $4,434, $3,987 and $3,619 for the years ended December 31, 2023, 2024 and 2025, respectively. The remaining amounts of $43,681, $85,183 and $134,012 for the same periods, including performance-based energy incentives, was recognized in accordance with ASC 606. No finance lease revenue was recognized during these periods. The Company’s fixed-priced VPPAs are financially settled on a monthly basis. The Company concluded that its VPPA contracts do not meet the definition of a derivative under ASC 815, as they do not contain a notional amount.
Disaggregation of Revenue
Revenue from contracts with customers for the years ended December 31, 2023, 2024 and 2025 is disaggregated by timing of revenue recognition and segment. See Note 21 for additional details of revenues by product or service, and geographic location.
The following table presents revenue recognized at a point in time or over time:
Revenue recognized at a point in time
6,767,156
4,810,787
3,872,848
Revenue recognized over time
348,817
864,590
1,327,924
399,826
156,746
97,827
161,286
218,348
F-18
For the years ended December 31, 2024 and 2025, $645,727 and $412,961 of revenue, respectively, were recognized from contract liabilities outstanding as of January 1, 2024 and 2025. Contract liabilities of $456,108 as of December 31, 2025 are expected to be recognized within one year.
The contract assets and liabilities were as follows:
Contract Assets
Contract Liabilities
212,452
293,522
41,337
18,627
458,615
474,735
As of December 31, 2024 and 2025, current advances from customers totaled $204,826 and $162,586, respectively, and non-current advances totaled $41,337 and $18,627, respectively. These amounts are classified as current or non-current liabilities based on the expected timing of performance.
The Company applies the portfolio approach as a practical expedient for contracts or performance obligations with similar characteristics. The Company does not expect that the effects on the financial statements of applying the revenue recognition guidance to the portfolio would differ materially from applying the guidance to the individual contracts or performance obligations within that portfolio. The Company does not assess whether promised goods or services are performance obligations if they are immaterial in the context of the contract. When revenue is recognized for a performance obligation that includes such immaterial items before they are transferred to the customer, the related costs to transfer those items are accrued. The Company does not disclose the value of remaining performance obligations for contracts with an original expected duration of one year or less, and contracts where revenue is recognized in the amount to which the Company has a right to invoice. Revenue recognized in years ended December 31, 2023, 2024 and 2025 from performance obligations satisfied in prior periods were insignificant. Incremental costs of obtaining a contract are generally expensed in operating expense as incurred because the amortization period would be less than one year. Costs associated with contracts exceeding one year are not material.
(y) Shipping and handling
Amounts billed to customers for shipping and handling are included in net revenues. Related costs are generally included in selling and distribution expenses, and totaled $237,947, $330,909 and $233,039 for the years ended December 31, 2023, 2024 and 2025, respectively.
(z) Research and development
Research and development costs, including design, development, testing and product enhancements, are expensed when incurred.
(aa) Other operating income, net
Other operating income, net primarily includes gains and losses on the disposal of property, plant and equipment, solar power and battery energy storage systems, and government grants. For the years ended December 31, 2023, 2024 and 2025, the Company recorded net gains of $5,342, net loss of $896 and net loss of $5,213, respectively, on the disposal of property, plant and equipment.
F-19
Government grants include both unrestricted and restricted grants and subsidies. Unrestricted grants, which provide the Company with full discretion over the use of funds, are recognized when it is probable that all the conditions stipulated by governments, generally related to operating a business within a government’s jurisdiction and complying with specific policies promoted by the governments, have been satisfied. Restricted grants related to ROU assets, property, plants and equipment, and certain projects are recorded as deferred subsidies within other non-current liabilities and are amortized on a straight-line basis over the useful life of the related assets. In most cases, the conditions attached to such grants pertain to specific performance or time-based requirements, such as the construction or acquisition of property, plant and equipment, achievement of business development milestones, technological innovation, or human capital development. These conditions may be subject to review, audit and approval by the government authorities and, therefore, the actual amounts realized may differ from the amounts initially recorded. As of December 31, 2025, deferred government grants included in other non-current liabilities amounted to $150,119. The Company qualifies for refundable or transferable tax credits under Section 45X of the Internal Revenue Code for eligible solar modules and components manufactured in the United States and sold to third parties. These credits are treated as income-based grants and recognized as reduction to cost of revenues related to the activities that generated the benefit, when there is reasonable assurance that the Company will comply with the eligibility criteria and receive the credits, and are excluded from income taxes.
(ab) Product warranties and performance guarantees
The Company provides warranties and performance guarantees on its solar products, battery energy storage products, and EPC services. For its solar modules, the Company offers a defects in materials and workmanship warranty of up to 25 years and a performance guarantee against power degradation for periods of up to 30 years, depending on the module type and warranty terms.
The Company maintains warranty reserves based on its own and industry claim history, accelerated testing, failure rate estimates, and other reasonable assumptions. The warranty provision is typically 1% of revenue from solar module sales. Actual warranty claims are charged against the accrued warranty liability, and the accrual rate is revised prospectively if needed. For battery energy storage systems, the Company provides a standard assurance-type warranty covering performance and manufacturing defects, generally for one to five years, with separately sold extended warranties of up to 15 years, accounted for as separate performance obligations. Warranty reserves are accrued upon revenue recognition and evaluated continuously based on claims history, field monitoring, vendor data, reliability estimates, and industry benchmarks. The Company also obtains vendor and supplier warranties to back up a portion of its warranty obligations. For contracts that include performance guarantees and long-term service agreements, liquidated damages may apply if performance thresholds are not met.
In EPC contracts, the Company offers a limited workmanship or balance of system warranty against defects in engineering design, installation and construction under normal use, operation and service conditions, typically for two years post energization of the project. Claims under these warranties may be remedied through repair, refurbishment or replacement. The Company may enter into similar workmanship warranties from key subcontractors and suppliers.
The Company maintains insurance policies with a group of insurers to back up a portion of its warranty obligations. Under these policies, the insurers are obliged, subject to certain maximum claim limits and deductibles, to reimburse the Company for actual warranty costs incurred in accordance with the terms of its product warranties. Insurance premiums are recorded as prepaid expenses and amortized over the coverage period. The Company considers insured losses related to defective products shipped to customers as analogous to incurred but not reported claims. Accordingly, the Company recognizes an insurance receivable for the portion of incurred warranty losses that are probable of recovery, not to exceed the warranty costs, in accordance with ASC 410. As of December 31, 2024 and 2025, non-current insurance receivables were $56,000 and $47,203, respectively. Insurance receivable is evaluated for recoverability based on insurer credit quality, insurance policy terms, and written communications of claim acceptance. There can be no absolute assurance that the Company will collect all amounts recorded as probable of recovery from the insurers. To the extent that uncertainties arise regarding the solvency of insurance carriers or the legal sufficiency of claims (including if they became subject to litigation) were to arise, the Company will establish a provision for uncollectible amounts based on specific facts and circumstances, and the measurement of expected credit losses. Actual insurance recoveries could differ significantly from amounts currently estimated.
Warranty obligation and insurance receivables are presented gross on the balance sheets. The insurance receivable is classified as a non-current asset to the extent it aligns with the long-term nature of the related warranty obligation, with the portion expected to be collected within one year presented as a current receivable. The Company made upward adjustments of $32,019 to its accrued warranty liability for the year ended December 31, 2025 to reflect the net effect of an increase in average selling prices of solar modules and an increase in shipment volumes, which are two primary inputs into the estimated warranty costs. See Note 14 for accrued warranty costs included in cost of revenues.
F-20
(ac) Foreign currency translation
The Company uses the United States dollars (“U.S. dollars” or “$”) as its functional and reporting currency. Monetary assets and liabilities denominated in foreign currencies are translated at exchange rates in effect at the balance sheet date. Transactions in foreign currencies are translated at the exchange rates prevailing on the transaction dates. Resulting transaction gains and losses are recognized in the consolidated statements of operations. Gains and losses on foreign currency transactions between consolidated entities that are of a long-term-investment nature, that is, settlement is not planned or anticipated in the foreseeable future, are not recognized in the consolidated statements of operations, but are recorded in other comprehensive income or loss. For subsidiaries that use a local currency as their functional currency, assets and liabilities are translated at exchange rates at the balance sheet date, equity accounts are translated at historical exchange rates, and revenues, expenses, gains and losses are translated at average rates for the period. Resulting translation adjustments are reported as foreign currency translation adjustments and are presented as a separate component of other comprehensive income or loss in the consolidated statements of comprehensive income (loss).
(ad) Comprehensive income (loss)
Comprehensive income (loss) includes all changes in redeemable non-controlling interests and equity, other than those resulting from investments by or distributions to owners. For the periods presented, total comprehensive income (loss) comprises net income (loss), foreign currency translation adjustments, including gains and losses on foreign currency transactions between consolidated entities that are of a long-term-investment nature, unrealized gains or losses (effective portion) and de-recognition of derivative instruments designated as cash flow hedges, and unrealized gains and losses on available-for-sale debt securities.
(ae) Derivatives and foreign currency risk
The Company generates revenues, incurs expenses, holds cash and enters into financing arrangements in multiple currencies. These activities expose the Company to foreign currency risk, which may result in exchange gains or losses due to fluctuations in currency exchange rates. The Company is particularly exposed to foreign currency movements in countries where it has significant manufacturing, sourcing, or financing activities. To mitigate a portion of this risk, the Company uses foreign currency forward or option contracts as part of its hedging plan. These derivative instruments are accounted for in accordance with ASC 815, and changes in fair value that are not designated as hedges are recognized in the consolidated statements of operations within gain or loss on change in fair value of derivatives, net. The fair value of derivatives is determined using observable market inputs, including forward exchange rates. Fair value measurements are adjusted, as necessary, to reflect counterparty credit risk and the Company’s own nonperformance risk. Realized gains or losses on derivative settlements are classified within operating activities in the consolidated statements of cash flows, consistent with the nature of the economically hedged item. For derivatives designated as cash flow hedges, the Company formally establishes and maintains the hedging relationship, including the related risk management objective, at inception. The effective portion of changes in fair value is recorded in other comprehensive income (loss), net of tax and subsequently reclassified into earnings in the same period the hedged item impacts the income statement.
(af) Concentration of credit risk
Financial instruments that potentially expose the Company to concentrations of credit risk primarily include cash and cash equivalents, restricted cash, accounts receivable, advances to suppliers, and amounts due from related parties. All of the Company’s cash and cash equivalents are held with financial institutions of high credit quality. The Company performs credit evaluations of its customers and generally does not require collateral. An allowance for credit losses is recorded based on the age of receivables and specific credit factors. Advances to suppliers, primarily for raw materials and manufacturing equipment, are generally unsecured. The Company conducts ongoing evaluations of suppliers’ financial conditions and maintains a reserve for potential credit losses, which historically have been within expectations. As of December 31, 2025, the Company made prepayments to one individual supplier, which represented more than 10% of total advances to suppliers, in the amount of $40,581. As of December 31, 2024, three individual suppliers accounted for more than 10% of total advances to suppliers.
F-21
(ag) Fair value of financial instruments
The Company applies ASC 820 for fair value measurements of financial assets and liabilities. Fair value is defined as the exit price, the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The three-tiered hierarchy, which prioritizes which inputs should be used in measuring fair value and requires the use of observable market data when available in determining fair value, is comprised of:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities. The Company’s money market funds included in cash equivalent, restricted cash balance, mutual funds related to employee compensation plan, and listed equity securities are measured using Level 1 inputs.
Level 2 - Inputs other than quoted prices included in Level 1 that are observable, either directly or indirectly. These include quoted prices for similar assets in active markets or inputs corroborated by observable market data.
Level 3 - Unobservable inputs reflecting the Company’s own assumptions, consistent with those market participants would use when pricing the asset or liability.
(ah) Earnings per share
Basic earnings per common share is calculated by dividing net income attributable to common shareholders, after deducting cumulative dividends on any outstanding redeemable preferred shares of subsidiaries, by the weighted average number of common shares outstanding during the period. Diluted earnings per common share reflect the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted into common shares. The dilutive effect of share-based awards is calculated using the treasury stock method, while the effects of convertible notes is calculated using the if-converted method. Anti-dilutive common share equivalents are excluded from the dilutive earnings per share calculation. The Company is required to apply the two-class method when calculating basic and diluted earnings per share, if preferred shares of subsidiaries are considered participating securities under ASC 260.
(ai) Share-based compensation
The Company may grant restricted share units (“RSUs”) and share options to employees and directors. Awards with time-based vesting conditions are measured at grant date fair value and recognized as compensation expense, net of estimated forfeitures, over the requisite service period, which is generally the vesting period. For awards with both time-based and performance-based vesting conditions, compensation expense is recognized when it becomes probable that the performance condition will be met. The fair value of awards with performance conditions does not reflect the likelihood of achieving the performance condition and is recognized in accordance with ASC 718. Share-based compensation expense is allocated to cost of revenues, selling and distribution, general and administrative, and research and development expenses, based on the job function of the grantee.
(aj) Recently issued accounting pronouncements
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires enhanced disaggregation in the income tax rate reconciliation and additional disclosures by nature and jurisdiction for reconciling items exceeding a quantitative threshold. On January 1, 2025, the Company adopted the new standard. ASU No. 2023-09 affects financial statement disclosure in 2025, and its adoption did not affect the Company’s consolidated results of operations or financial condition.
In March 2024, the FASB issued ASU 2024-02, Codification Improvements—Amendments to Remove References to the Concepts Statements, which removes various references to concepts statements from the FASB Accounting Standards Codification. The new standard is effective for fiscal years beginning January 1, 2025, and its adoption did not have a material impact to the Company’s consolidated financial statements.
F-22
In November 2024, the FASB issued ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40), which requires additional disaggregation of specific expense categories in the statement of income. In January 2025, the FASB issued ASU 2025-01, which clarifies the effective date of ASU 2024-03. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact of the new standard on its consolidated financial statements.
In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient that all entities can use when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606, Revenue from Contracts with Customers, to assume that conditions as of the balance sheet date remain unchanged for the remaining life of those assets. Entities that elect the practical expedient and, if applicable, make the accounting policy election are required to apply the amendments prospectively. The new standard is effective for fiscal years beginning after December 15, 2025, with early adoption permitted. The Company is currently evaluating the impact of the new standard on its consolidated financial statements.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Improvements to the Accounting for and Disclosure of Internal-Use Software, which amends certain aspects of the accounting for and disclosure of software costs. The new standard is effective for fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of the updated standard on its consolidated financial statements.
In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements, which clarify certain aspects of the guidance on hedge accounting and to address several incremental hedge accounting issues arising from the global reference rate reform initiative. The new standard is effective for fiscal years beginning after December 15, 2026. The Company is currently evaluating the impact of the new standard on its consolidated financial statements.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarify interim disclosure requirements and the applicability of Topic 270. The new standard is effective for fiscal years beginning after December 15, 2027. The Company is currently evaluating the impact of the new standard on its consolidated financial statements.
3. ALLOWANCE FOR CREDIT LOSSES
The allowance for credit losses comprises allowances for accounts receivable-trade, advances to suppliers, warranty insurance receivable, and other receivables. Warranty insurance receivable is presented within other non-current assets and other receivables are included in prepaid expenses and other current assets.
The following tables summarize the gross balances, allowance for credit losses, and net carrying amounts:
Accounts receivable trade, gross
1,194,913
912,302
(76,144)
(82,345)
1,118,769
Advances to suppliers, gross
244,703
323,850
(2,141)
(1,461)
242,562
322,389
Warranty insurance receivable, gross
79,923
61,276
(23,923)
(14,073)
Warranty insurance receivable, net
56,000
47,203
F-23
Other receivable, gross
184,139
326,766
(13,901)
(18,063)
Other receivable, net
170,238
308,703
Changes in the allowance for credit losses were as follows:
Advances to
Suppliers,
Warranty Insurance
Accounts Receivable
Receivable and
Trade
Other Receivables
49,930
11,374
Provision for credit losses, net
7,381
4,633
Write-offs
(2,073)
(242)
Foreign exchange effect
1,564
(163)
56,802
15,602
14,289
24,771
(647)
5,700
(408)
76,144
39,965
(6,797)
5,348
(1,560)
(12,151)
14,558
435
82,345
33,597
4. INVENTORIES
Inventories consist of the following:
Raw materials
233,034
273,048
Work-in-process
157,290
80,296
Finished goods
816,271
780,195
The Company recorded inventory write- downs of $113,079, $151,957 and $74,013 in the year ended December 31, 2023, 2024 and 2025, respectively, to reflect lower of cost and net realizable value.
5. PROJECT ASSETS
Project assets consist of the following:
Development costs, including acquisition and land
907,526
1,286,434
EPC and other construction costs
376,736
744,321
1,284,262
2,030,755
Current portion
Non-current portion
The Company recorded impairment losses of $16,239, $33,052 and $60,245 on project assets for the years ended December 31, 2023, 2024 and 2025, respectively. Capitalized interest during development and construction was $27,676, $38,456 and $64,201 for the same periods, respectively.
F-24
6. PROPERTY, PLANT AND EQUIPMENT, NET
The components of property, plant and equipment, net were as follows:
Buildings
967,761
981,598
Leasehold improvements
188,780
208,240
Machinery and equipment
2,497,250
2,642,634
Furniture, fixtures and office equipment
192,081
153,955
Motor vehicles
15,678
18,290
Freehold land
56,234
77,212
Total costs
3,917,784
4,081,929
Accumulated depreciation
(1,322,347)
(1,769,545)
Subtotal
2,595,437
2,312,384
Construction in progress
579,206
1,063,651
Depreciation expense was $287,130, $462,254 and $493,948 for the years ended December 31, 2023, 2024 and 2025, respectively. Construction in progress primarily includes production facilities under construction and machinery and equipment pending installation. Capitalized interest during construction was $3,246, $168 and $10,836 for the same periods, respectively.
7. SOLAR POWER AND BATTERY ENERGY STORAGE SYSTEMS, NET
Solar power and battery energy storage systems, net consist of the following:
Systems in operation
1,270,389
1,490,144
Systems under construction
762,523
671,470
2,032,912
2,161,614
(55,973)
(96,116)
The Company reclassified $119,067, $312,773 and nil, from project assets to solar power and battery energy storage systems during the years ended December 31, 2023, 2024 and 2025, respectively, reflecting a change in intent to hold and operate these assets to generate electricity or storage revenue.
The Company recorded impairment losses on solar power systems of nil, $21,400 and $11,063 for the years ended December 31, 2023, 2024 and 2025, respectively. Depreciation expense was $14,266, $28,900 and $50,362 for the same periods, respectively. Capitalized interest during development and construction was $33,097, $70,487 and $42,812 for the same periods, respectively.
8. INTANGIBLE ASSETS, NET
The components of intangible assets, net were as follows:
Gross
Carrying
December 31, 2025
Value
Amortization
Net
Computer software
62,754
(37,373)
25,381
Customer-related intangible assets
5,704
(2,253)
3,451
Trademark
4,156
(1,007)
3,149
72,614
(40,633)
F-25
December 31, 2024
52,279
(29,148)
23,131
(1,402)
4,302
4,150
(557)
3,593
62,133
(31,107)
Amortization expense was $3,793, $7,993 and $8,284, for the years ended December 31, 2023, 2024 and 2025, respectively. Estimated future amortization expense for the years ending December 31, 2026 through 2030 and thereafter is approximately $9,025, $8,328, $4,253, $1,501, $940 and $4,866, respectively.
9. FAIR VALUE MEASUREMENT
The Company measures its financial assets and liabilities at fair value using a three-level hierarchy that prioritizes inputs to valuation techniques based on observability. Fair value represents the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at measurement date and incorporates adjustment for counterparty credit quality, the Company’s credit, liquidity, and when applicable, risk margins on unobservable inputs.
The Company uses foreign currency exchange forward and option contracts to mitigate the impact of exchange rate fluctuations on forecasted cash flows. These derivative contracts generally do not qualify for hedge accounting, therefore changes in fair value are recognized in the consolidated statements of operations. Derivative contracts involve currencies such as the Renminbi, Brazilian real, Euro, Japanese yen and South African rand. As these instruments are not exchange traded, fair value is determined using standard industry valuation models that incorporate observable market inputs, including spot and forward rates, credit risk and interest rate curves. These measurements are classified as Level 2 within the fair value hierarchy.
In 2024 and 2025, the Company entered into interest rate swaps to hedge floating-rate debt and to mitigate interest rate volatility. Fair value of interest rate swaps was also based on observable market data and classified as Level 2. Unrealized gains and losses on interest rate swaps that qualified as cash flow hedges were recorded in other comprehensive income (loss).
The fair value of derivative instruments and their impact on the consolidated financial statements were as follows:
Fair Value of Derivative Assets
Balance Sheet Location
Fair Value
Foreign exchange forward contracts
Derivative assets — current
Interest rate swaps
3,543
1,732
17,568
16,734
Fair Value of Derivative Liabilities
Derivative liabilities — current
6,063
9,654
19,801
15,833
Amount of Gain (Loss)
Recognized in Statements
of Operations
Location in
Statements of Operations
Gain (loss) on change in fair value of derivatives, net
(38,241)
(51,406)
(42,437)
Foreign exchange option contracts
10,712
Commodity hedge
F-26
Equity securities
The Company held equity securities listed on various stock exchanges, measured at fair value of $18,289 and $12,959 as of December 31, 2024 and 2025, respectively, and included in prepaid expenses and other current assets. Fair value losses of $2,826, $616 and $856 were recognized in investment income, net, for the years ended December 31, 2023, 2024 and 2025, respectively. Fair value was determined using quoted market prices on their respective stock exchanges and classified as Level 1.
The Company invested in unlisted equity investments, included in other non-current assets, that were carried at fair value of $21,034 and $33,674 as of December 31, 2024 and 2025, respectively. Unrealized gain of $1,515 and $2,733 were recognized in investment income, net, for the years ended December 31, 2024 and 2025, respectively. Valuations were based on unobservable market inputs and the Company’s own assumptions that were consistent with those of market participants and classified as Level 3.
Debt securities
The Company held available-for-sale debt securities, measured at $10,723 and $nil as of December 31, 2024 and 2025, respectively, and included in prepaid expenses and other current assets. The Company had bank time deposits and structured deposits with original maturity exceeding three months, measured at $64,650 and $241,698 as of December 31, 2024 and 2025, respectively, included in prepaid expenses and other current assets. Related gains or losses, recorded in investment income were insignificant for the years ended December 31, 2024 and 2025. Fair value was determined based on quoted pricing of similar debt securities and classified as Level 2.
Other fair value measurements
The Company recognized property, plant and equipment impairments of $5,938, $65,285 and $54,015 in the manufacturing segment for the years ended December 31, 2023, 2024 and 2025, respectively. The Company recognized solar power systems impairments of nil, $21,400 and $11,063 in the Recurrent Energy segment for the years ended December 31, 2023, 2024 and 2025, respectively. Fair value was measured using unobservable inputs, including indicative offers from unrelated third-parties, and classified as Level 3. Impairments were recorded in general and administrative expenses. Project asset impairments of $16,239, $33,052 and $60,245 were recorded as cost of revenues in the Recurrent Energy segment for the years ended December 31, 2023, 2024 and 2025, respectively. Fair value was measured using unobservable inputs, including indicative pricing or valuation reports from unrelated third parties, and classified as Level 3.
The Company also holds certain financial instruments that are not recorded at fair value, but whose fair values are required to be disclosed. The carrying amount of cash and cash equivalents, restricted cash, trade and other receivables, account and other payables, short-term notes payable, related party balances, current portion of customer advances, and short-term borrowings approximate fair value due to short maturities. Long-term borrowings totaled $2,731,543 and $3,621,232 as of December 31, 2024 and 2025, respectively, and approximate fair value since most of the borrowings contain variable interest rates. The carrying values of green bonds and convertible notes were $375,459 and $348,465 as of December 31, 2024 and 2025, respectively, and approximate fair value. Fair value of these instruments was determined using discounted cash flow, incorporating market-based inputs, and classified as Level 2.
F-27
10. VARIABLE INTEREST ENTITIES
The Company did not retain ownership interests or control in any non-consolidated VIEs.
As of December 31, 2024 and 2025, the carrying amounts of the major assets and liabilities of consolidated VIEs, excluding immaterial line items and intercompany balances elimination in consolidation, included in the balance sheets were as follows:
Cash
79,220
17,737
150,919
306,795
314,319
374,043
718,585
320,339
Other assets
90,139
536,407
Total assets
1,353,182
1,555,321
85,531
37,341
495,477
639,545
241,793
265,987
Total liabilities
822,801
942,873
62,650
173,184
Net income attributable to consolidated VIEs was insignificant to the Company’s consolidated financial statements for the years ended December 31, 2023, 2024 and 2025.
Cash flow activity attributable to consolidated VIEs were insignificant to the consolidated financial statements for the years ended December 31, 2023 and 2024. Cash flow activities attributable to consolidated VIEs for the years ended December 31, 2024 and 2025 were $159,926 and $68,829 used in operating activities, $634,608 and $54,697 used in investing activities, and $752,825 and $69,278 provided by financing activities, including $226,935 and $207,669 capital contributions from tax equity investors.
F-28
11. INVESTMENTS IN AFFILIATES
Investments in affiliates consist of the following:
Percentage
Lingang Frontier (Yangzhou) CSI New Energy Investment Fund, LP
54,254
44.9
74,789
39.2
Suzhou Financial Leasing Co., Ltd.
32,578
36,649
RE Crimson Holdings LLC
25,230
22,142
Panati Holding S.A.
21,199
19,372
Canadian Solar Infrastructure Fund, Inc.
17,078
14.9
18,479
14.5
Evacuación Tordesillas 400KV, Sociedad Limitada
3,373
46.2
18,072
Lavras Solar Holding S.A.
12,296
13,154
Tordesillas Renovables, S.L.
1,215
33.4
13,123
Marangatu Holding S.A.
19,640
5,966
46,117
1.8-49
67,855
In 2023, CSI Solar established Lingang Frontier (Yangzhou) CSI New Energy Investment Fund, LP. In 2015, CSI Solar jointly established Suzhou Financial Leasing Co., Ltd. One of its five board members is designated by CSI Solar. These investments are accounted for under the equity method due to CSI Solar’s significant influence over the investees. Following the fund raising, ownership interest declined from 44.9% to 39.2%. The effective ownership interests in these entities are presented in the table above.
In 2022, the majority interests in Marangatu Holding S.A. (“Marangatu”) and Panati Holding S.A. (“Panati”) were sold to unrelated third parties. The Company retained significant influence over Marangatu and Panati and continued to account for the investment under the equity method.
In 2017, Canadian Solar Infrastructure Fund, Inc. (“CSIF”) completed its IPO. As of December 31, 2024 and 2025, the Company held 65,672 units and 63,932 units in CSIF, respectively. One of three board members represents the Company. Given CSIF’s board structure and voting requirements, the Company is considered to have significant influence over the investee and applies the equity method.
Equity in earnings of affiliates was $14,610 for the year ended December 31, 2023, equity in losses of affiliates were $12,136 and $28,875 for the years ended December 31, 2024 and 2025, respectively.
12. LEASES
The Company leases manufacturing facilities in various regions where the Company operates. The Company also leases land for construction and operations of solar power and battery energy storage systems, and leases office space, office equipment and motor vehicles for its sales and administrative functions.
The Company capitalizes lease costs to its project assets and solar power and battery energy storage systems, when such costs qualify for capitalization as during periods in which activities necessary to get the property ready for its intended use are in progress.
The leases considered as ROU assets have various terms of up to 50 years. The Company also has certain leases with terms of 12 months or less, which are not recorded on the balance sheets.
F-29
The components of lease expense were as follows:
Finance lease cost:
Amortization of finance lease ROU assets
75,189
13,410
Interest on finance lease liabilities
8,986
8,713
Operating fixed lease cost
24,992
38,083
Short-term lease cost
467
1,508
Total lease expense
109,634
61,714
Supplemental balance sheet information for leases is presented below:
Assets:
Operating lease ROU assets
280,420
343,139
Land use rights, net
Right-of use assets
98,128
98,152
Total operating lease ROU assets
Finance lease ROU assets
178,151
159,192
Total finance lease ROU assets
Liabilities:
Operating lease
Operating lease liabilities – current
Operating lease liabilities – non-current
Total operating lease liabilities
293,176
381,291
Finance lease
54,287
30,791
132,106
110,729
Total finance lease liabilities
186,393
141,520
Other supplemental information related to leases is presented below:
Cash paid for amounts included in the measurement of lease liabilities
Operating cash outflows for finance leases
(8,986)
(8,713)
Operating cash outflows for operating leases
(15,032)
(14,012)
Financing cash outflows for finance leases
ROU assets obtained in exchange for new finance lease liabilities in non-cash transaction
89,787
ROU assets obtained in exchange for new operating lease liabilities in non-cash transaction
184,481
122,368
ROU assets disposed through early termination of operating leases in non-cash transaction
(954)
(7,655)
Weighted average remaining lease term - finance leases (in years)
Weighted average remaining lease term - operating leases (in years)
15.5
15.8
Weighted average discount rate - finance lease
5.3
5.6
Weighted average discount rate - operating lease
5.0
F-30
As of December 31, 2025, maturities of operating and finance lease liabilities were as follows:
Operating
Finance
Leases
Year Ending December 31,
2026
34,699
36,758
71,457
2027
34,064
26,504
60,568
2028
36,609
25,287
61,896
2029
39,614
24,061
63,675
2030
40,993
13,566
54,559
Thereafter
395,073
37,558
432,631
Total lease payments
581,052
163,734
744,786
Less: imputed interest
199,761
22,214
221,975
Present value of lease liabilities
522,811
Analysis as:
Short-term
57,574
Long-term
465,237
Total lease liabilities
13. BORROWINGS
Borrowings consist of the following:
Short-term borrowings related to project assets (1)
455,166
843,129
Other short-term borrowings
1,418,140
1,545,908
Total short-term borrowings
Long-term borrowings related to project assets
702,077
665,365
Other long-term borrowings
2,029,466
2,955,867
Total long-term borrowings
Total borrowings
4,604,849
6,010,269
Non-recourse short-term borrowings
412,962
601,542
Non-recourse long-term borrowings
584,472
1,566,943
Total non-recourse borrowings
997,434
2,168,485
As of December 31, 2024 and 2025, total borrowings were $4,604,849 and $6,010,269, respectively, including $2,264,767 and $2,417,322 related to CSI Solar, and $2,340,082 and $3,592,947 related to Recurrent Energy, respectively. CS PowerTech had no borrowings as of December 31, 2025. In addition, as of December 31, 2024 and 2025, the Company had $146,542 and $153,152 of green bonds related to Recurrent Energy and $228,917 and $195,313 of convertible notes, respectively.
As of December 31, 2024 and 2025, $997,434 and $2,168,485 of borrowings under Recurrent Energy were non-recourse. These borrowings are typically long-term, asset- or portfolio-specific, and denominated in the domestic currency of the respective project subsidiary. These are secured by the assets and equity of each project, and lenders have no recourse to Canadian Solar Inc. in the event of a default.
F-31
As of December 31, 2025, borrowings of $3,925,248 were secured by property, plant and equipment with a carrying amount of $285,875, land use rights of $63,489, restricted cash of $437,210, equity interests of $573,135, project assets of $888,894, and solar power and battery energy storage systems of $1,180,984. These borrowings were classified as short-term borrowings of $793,233, long-term borrowings of $473,976 under Manufacturing, and short-term borrowings of $71,139, non-recourse borrowings - current of $600,077, long-term borrowings of $490,971 and non-recourse borrowings of $1,495,852 under Recurrent Energy.
The Company’s significant borrowings were as follows:
In 2025, Recurrent Energy B.V. completed a refinancing of its credit facilities with Banco Santander, S.A., Intesa Sanpaolo S.p.A New York Branch, Rabobank, New York Branch, and Morgan Stanley Senior Funding, Inc. The refinanced $415,000 credit facility consists of term loan facilities of €83,800,000 ($90,500) and $59,500, and a $265,000 revolver, maturing in April 2028 and extendable by one year subject to lender consent. The Company provided guarantee of up to $325,000 in connection with the facility. In 2025, the term loan was increased by $82,500 and €10,769,178 ($12,650), and revolver was increased by $45,000, with MUFG, Norddeutsche Landesbank and Nomura Corporate Funding Americas, LLC. As of December 31, 2025, $552,381 was outstanding.
In 2025, RE Papago PV LLC, RE Desert Bloom LLC and Sun Dog Class B LLC obtained $505,949 in project financing for a battery energy storage project and solar project in Arizona, with Norddeutsche Landesbank, MUFG, CoBank and Siemens Financial Services. The financing includes a $265,697 non - recourse construction and term loan, a $171,927 tax equity bridge loan and a $68,325 letter of credit facility. The facility is secured by assets and equity interests in the subsidiaries. The non - recourse construction and term loan will mature in April 2046. As of December 31, 2025, the outstanding balance under the non - recourse construction financing and tax equity bridge loan was $343,696.
In 2024, RE Papago LLC and Papago BESS Class B LLC, obtained $513,312 in project financing for a battery energy storage project in Arizona, with MUFG and Norddeutsche Landesbank as lead arrangers. The facility includes a $248,664 non - recourse construction and term loan, a $163,560 tax equity bridge loan and a $101,088 letter of credit facility. The facility is secured by assets and equity interests in the subsidiaries. The non - recourse term loan will mature in April 2030. As of December 31, 2025, $244,800 of the non - recourse term loan was outstanding.
In 2024, Blue Moon Energy LLC and Blue Moon Class B LLC obtained $164,432 in project financing for a solar project in Kentucky, with U.S. Bank NA as lead arranger. The financing includes a $65,746 non - recourse construction and term loan, a $86,985 tax equity bridge loan and a $11,701 letter of credit facility. The facility is secured by assets and equity interests in the subsidiaries. The non - recourse construction and term loan will mature on the fifth anniversary of the term conversion date. As of December 31, 2025, $109,083 of the non - recourse construction loan was outstanding.
In 2023, North Fork Solar Project, LLC secured $109,087 in project financing for a solar project in Oklahoma, with Norddeutsche Landesbank and Rabobank as lead arrangers. The financing includes a $98,736 construction and term loan and a $10,351 letter of credit facility. The facility is secured by assets and equity interests in the subsidiary. The financing will mature in December 2043. As of December 31, 2025, the outstanding balance under the non - recourse term loan was $90,094.
In 2024, Canadian Solar UK Projects Ltd secured a €95,000,000 ($111,587) credit facility with Investec Bank Plc. The facility comprises a €40,000,000 ($46,984) term loan and a €55,000,000 ($64,603) revolver, which will mature in February 2027 and is guaranteed by the Company. As of December 31, 2025, $104,976 was outstanding.
In 2024, Canadian Solar Netherlands Cooperative U.A. secured a $100,000 credit facility with Nomura Securities International, Inc. In 2025, the credit facility was novated to Canadian Solar Holdings B.V. and amended to increase the commitment to $150,000 and extend the maturity to March 2027. The credit facility is secured by assets and is guaranteed by the Company. As of December 31, 2025, $124,984 was outstanding.
In 2024, Re Thorn Solar Capital, S.L.U. secured a €674,000,000 ($791,684) non - recourse credit facility from Banco Santander CIB, ING, ABN Amro, BBVA, Banco Sabadell, Rabobank, HSBC, Intesa Sanpaolo, Natwest and Norddeutsche Landesbank for Recurrent Energy’s solar projects in Spain. The financing includes a €555,000,000 ($651,906) Capex Facility, a €8,000,000 ($9,397) VAT facility, a €23,000,000 ($27,016) Debt Service Reserve Facility, and a €88,000,000 ($103,365) letter of credit facility. As of December 31, 2025, $607,566 was outstanding.
F-32
In 2023, Aurora 01 GK issued JPY18,500,000,000 ($118,080) in private placement of green bonds. The bonds will mature in September 2026 and are guaranteed by the Company. As of December 31, 2025, the carrying value net of unamortized issuance costs was $118,080, and is included as a component of green bonds.
In 2024, Akane 01 GK secured a JPY11,700,000,000 ($74,678) credit facility with Société Générale, Tokyo Branch, as lead arranger. The facility will mature in September 2027 and is guaranteed by the Company. As of December 31, 2025, $74,678 was outstanding.
In 2022, Canadian Solar New Energy Holding Co Ltd secured a $50,000 credit facility from ING Bank, which was subsequently amended to $35,000. In 2024, Canadian Solar Spain, Sociedad Limitada secured a EUR50,000,000 ($58,730), revolver from ING Bank, which was subsequently amended to EUR35,000,000 ($41,111). The two facilities, guaranteed by us, were extended to mature in July 2026. As of December 31, 2025, $76,111 was outstanding.
Between 2022 and 2024, six of the project companies in Brazil obtained project financings in the aggregate of BRL1,300,200,000 ($237,349) from various financial institutions, including BNB, Bradesco, Itaú BBA and Vortx Serviços Fiduciários Ltda. These facilities are secured by assets and equity interests in subsidiaries, with maturities set between 2033 and 2047 for the remaining facilities. As of December 31, 2025, $145,719 non-recourse financing and $53,864 recourse financing were outstanding.
As of December 31, 2025, the financial covenants related to these borrowings were met.
As of December 31, 2025, the Company had approximately $8,772,006 in contractual credit facilities, with $5,158,415 drawn as borrowings, $811,467 utilized through bank guarantees, letters of credit and short - term notes payable. Of the total contractual credit facilities, approximately $2,356,518 is available for drawdown to support manufacturing operations and working capital requirements, and approximately $429,972 is available in connection with projects business. In addition, the Company had uncommitted credit facilities totaling approximately $1,988,439, with $568,620 drawn as borrowings and $639,323 utilized under similar banking arrangements as of December 31, 2025.
In connection with the sale of project assets in the years ended December 31, 2023, 2024 and 2025, borrowings of $161,709, nil and nil, respectively, were assumed by buyers.
As of December 31, 2025, future principal repayments on borrowings are as follows (including $100,274 of current portion of long-term borrowings classified as current liabilities because these borrowings relate to project assets expected to be sold within one year):
1,685,215
997,513
229,296
347,378
361,830
Weighted average effective interest rates were as follows:
3.3
5.2
F-33
The Company capitalized interest on borrowings obtained to finance construction of project assets, solar power and battery energy storage systems, or property, plant and equipment, until the asset is ready for its intended use. Interest costs incurred were as follows:
114,099
137,468
178,166
Interest capitalized:
27,676
38,456
64,201
Solar power and battery energy storage systems
33,097
70,487
42,812
Property, plant and equipment
963
Total interest costs
175,835
246,411
285,179
14. ACCRUED WARRANTY COSTS
The warranty activity is summarized below:
Beginning balance
76,677
75,519
84,127
Warranty provision
27,944
35,694
70,129
Warranty costs incurred
(21,011)
(20,404)
(24,751)
(8,091)
(6,682)
8,881
Ending balance
138,386
15. RESTRICTED NET ASSETS
CSI Solar may pay dividends only from retained earnings determined in accordance with the local accounting standards and at least 10% of its annual after-tax income is required to be allocated to a statutory general reserve until such reserve cumulatively reaches 50% of its registered capital. Distribution of registered share capital also requires approval from the local authorities. As a result, a portion of CSI Solar’s net assets is restricted and cannot be transferred to the Company through dividends, loans or advances. Accordingly, the statutory general reserve and registered share capital of CSI Solar are considered restricted net assets, totaling $1,483,016 as of December 31, 2025.
There were no distribution received from CSI Solar in 2023. The Company received an aggregate of $34,667 and $26,958 in cash, net of $3,852 and $2,995 in withholding tax, from dividends distributed by CSI Solar in 2024 and 2025, respectively.
F-34
16. CONVERTIBLE NOTES
In September 2025, the Company repaid in full the $230,000 aggregate principal amount of convertible notes (the “2025 Notes”) upon their maturity. The 2025 Notes bore interest of 2.50% per annum.
In August 2024, the Company entered into a definitive investment agreement with a subsidiary of Pacific Alliance Group (“PAG”), pursuant to which PAG subscribed for $200,000 in aggregate principal amount of convertible notes issued by the Company (the “2029 Notes”). The 2029 Notes represent secured obligations of the Company. The 2029 Notes bear an interest rate of 6.0% per annum, payable quarterly in arrears, and will mature on December 31, 2029. Holders of the 2029 Notes also have the right to require the Company to repurchase the 2029 Notes shortly after December 31, 2027. Subject to the terms of the 2029 Notes, the 2029 Notes may be convertible into the Company’s common shares at the holder’s option at an initial conversion rate of 54.9451 share per $1,000 of principal, equivalent to an initial conversion price of $18.20 per share. The conversion rate is subject to market customary adjustments.
The 2029 Notes are secured against certain pledges provided by the subsidiaries of the Company.
As of December 31, 2024 and 2025, the carrying values of the convertible notes were $228,917 and $195,313, net of unamortized issuance costs of $1,083 and $4,687, respectively. The debt issuance costs for the 2025 Notes and 2029 Notes are amortized using effective interest method at a rate of 3.18% and 7.41%, respectively. The Company recorded amortization expense of $1,493 and $2,057 for the years ended December 31, 2024 and 2025, respectively. Coupon interest of $5,750 and $11,629 were recorded for the years ended December 31, 2024 and 2025, of which $1,438 and nil were not paid and was recorded in other payables as of December 31, 2024 and 2025, respectively.
See Note 27 for subsequent event relating to issuance of the 2031 Notes.
17. INCOME TAXES
The provision for income taxes is comprised of the following:
(61,704)
(38,474)
(15,399)
United States
(49,536)
(151,101)
131,620
Foreign
519,765
107,273
(256,960)
Current tax expense (benefit)
1,944
972
3,204
12,570
(16,750)
9,722
60,536
104,569
67,979
75,050
88,791
80,905
Deferred tax expense (benefit)
2,048
(8,799)
(967)
(4,176)
(31,637)
(1,219)
(117,990)
(64,931)
(64,570)
(15,549)
(105,367)
(66,756)
Total income tax expense (benefit)
3,992
(7,827)
2,237
8,394
(48,387)
8,503
47,115
39,638
3,409
59,501
(16,576)
14,149
On January 1, 2025, the Company prospectively adopted ASU 2023-09, that requires greater disaggregation of information in the rate reconciliation.
F-35
Reconciliation between the provision for income tax for the year ended December 31, 2025, as calculated by applying the combined Canadian federal and provincial statutory tax rate to income before income taxes and equity in earnings of affiliates, and the actual provision (or benefit) for income taxes is as follows:
Year Ended December 31,
Percent
Effective rate reconciliation:
Canada federal statutory rate
(35,185)
25.0
Provincial income taxes, net of federal abatement (1)
(231)
0.2
Foreign tax effects
Statutory tax rate difference
(5,265)
3.7
Changes in valuation allowances
(7,491)
Nontaxable and nondeductible items
(30,456)
21.6
(7,408)
China SAR, Hong Kong
(21,998)
15.6
1,433
(1.0)
Other jurisdictions
(760)
0.5
109,283
(77.6)
True-up
13,916
(9.9)
(1,689)
Income tax expense
(10.1)
(1) Provincial taxes in Ontario make up the majority of the tax effect in this category.
Reconciliation between the provision for income tax for the years ended December 31, 2023 and 2024, as calculated by applying the combined Canadian federal and provincial statutory tax rate to income before income taxes and equity in earnings of affiliates, and the actual provision (or benefit) for income taxes is as follows:
Combined federal and provincial income tax rate
Effect of permanent difference
(15)
Effect of different tax rate on earnings in other jurisdictions
(4)
(6)
Effect of tax holiday
(1)
Effect of true-up
Effect of cross-border tax
(2)
Tax credits
Change in valuation allowance
(29)
F-36
The components of deferred tax assets and liabilities were as follows:
Deferred tax assets:
Accrued warranty costs
11,200
14,911
14,928
14,104
Inventory write-downs
7,022
5,223
Future deductible expenses
33,656
37,216
Depreciation difference and impairment of property, plant and equipment, project assets, solar power and battery energy storage systems
40,359
60,271
Accrued liabilities
10,886
11,882
Government subsidies
48,473
37,004
Net operating losses carryforwards
233,329
467,705
Interest limitations
26,199
26,713
100,099
114,114
Total deferred tax assets, gross
526,151
789,143
Valuation allowance
(52,651)
(154,983)
Total deferred tax assets, net
Deferred tax liabilities:
Investments in partnerships
69,327
156,869
Depreciation difference of property, plant and equipment
59,729
54,348
75,776
85,502
Total deferred tax liabilities
Net deferred tax assets
268,668
337,441
Deferred tax assets
(204,832)
(296,719)
As of December 31, 2025, the Company had accumulated net operating loss carryforward of $2,138,313, including $512,948 of U.S. federal and state net operating loss carryforwards, which expire between 2027 and 2043.
A deferred tax liability is required for taxable temporary differences arising from the excess of financial reporting basis over tax basis of investments in foreign subsidiaries. However, a deferred tax liability is not recognized if the basis difference is not expected to reverse in the foreseeable future and is expected to be permanent in duration. As of December 31, 2025, the Company recorded $2,038 of withholding tax related to undistributed earnings of foreign subsidiaries, based on expected future distribution plan. The remaining undistributed earnings of approximately $818,751 are considered to be indefinitely reinvested. The unrecognized deferred tax liability on these earnings is estimated to range between $40,938 and $81,875, depending on applicable withholding tax rate that may apply to the future distributions.
F-37
The Company evaluates both positive and negative evidence in assessing the realizability of deferred tax assets, including the nature, frequency and severity of recent losses, forecasts of future profitability, the duration of statutory carryforward periods, the historical expiration of tax attributes and feasible tax planning alternatives. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which those temporary differences become deductible for tax purposes. The Company recognized a valuation allowance of $52,651 and $154,983 as of December 31, 2024 and 2025, respectively. Movement of the valuation allowance is as follows:
43,488
72,678
52,651
Additions (reversals)
28,819
(19,328)
101,792
371
(699)
540
154,983
The Company makes an assessment of the level of authority for each of its uncertain tax positions, if that position is more likely than not of being sustained upon examination, based on their technical merits, and has measured the unrecognized benefits associated with such tax positions. This liability is recorded as liability for uncertain tax positions on the balance sheets. The Company accrues and classifies interest and penalties associated with such unrecognized tax benefits as income tax expense. The amounts of interest and penalties accrued as of December 31, 2024 and 2025 were $941 and $937, respectively. Given the uncertainty in timing and outcome of the Company’s tax examinations, an estimate of the range of the reasonably possible change in gross unrecognized tax benefits within one year cannot be made at this time.
The following table summarizes the activity related to the liability for uncertain tax positions (excluding interest and penalties):
4,770
4,745
4,829
Additions
146
Reductions for tax positions from prior years and statute of limitations expirations
(24)
(63)
4,818
The cash paid for taxes, net of refunds, are as follows:
Canada federal and provincial
4,589
29,777
83,629
31,718
Cash paid for taxes, net of refunds
The Company file income tax returns in Canada and various jurisdictions. Generally, the Company’s taxation years from 2018 to 2025 are open for reassessment to the Canadian tax authorities. The Company is subject to taxation in the United States and various state jurisdictions. The Company is not currently under examination by the federal or state tax authorities. The Company’s income tax returns for 2020 through 2025 remain open to examination by the U.S. tax authorities.
F-38
18. EARNINGS PER SHARE
The following table presents the calculation of basic and diluted earnings per share:
Numerator:
Cumulative preferred share dividends in subsidiary
(64,434)
Dilutive effect of convertible notes
5,290
Net income (loss) attributable to Canadian Solar Inc. — diluted
279,477
(168,560)
Denominator:
Denominator for basic calculation — weighted average common shares — basic
Diluted effects of share number from RSUs
546,765
323,028
Dilutive effects of share number from convertible notes
6,272,157
Denominator for diluted calculation — weighted average common shares — diluted
Basic earnings per share
Diluted earnings per share
For the calculation of diluted earnings per share, the effect of the convertible notes and RSUs were excluded for the year ended December 31, 2025, as their inclusion would have been anti-dilutive. The anti-dilutive shares excluded for the periods indicated are summarized below:
RSUs and share options
48,598
241,652
380,886
11,247,002
19. RELATED PARTY BALANCES AND TRANSACTIONS
Related party balances
As of December 31, 2024 and 2025, current amounts due from related parties amounted to $5,220 and $17,959, respectively, and non-current amounts due from related parties amounted to $75,215 and $76,848, respectively. These primarily relate to receivables from the Company’s 49% owned affiliates in Mexico. As of December 31, 2024 and 2025, current and non-current amounts due from Horus Solar S.A. De Capital Variable were $34,742 and $35,273, respectively, and from Recursos Solares PV De México II S.A. De Capital Variable were $40,711 and $51,336, respectively.
Sales and purchase transactions with affiliates
The Company sold solar modules to Marangatu and Panati in Brazil, in the amounts of $173 and $Nil in 2024, respectively. There were no transactions in 2025. In 2023, 2024 and 2025, the Company delivered battery energy storage solutions to Crimson in the U.S., totaling $17,182, $5,300 and $13,008, respectively. In 2023, 2024 and 2025, the Company provided asset management services to CSIF totaling $10,004, $5,508 and $5,032, respectively, and provided power services totaling $6,974, $7,623 and $8,874, respectively.
F-39
20. COMMITMENTS AND CONTINGENCIES
a) Property, plant and equipment commitments
As of December 31, 2025, total commitments were $315,824, with payment schedule as follows:
251,663
19,387
385
44,389
315,824
b) Construction commitments
As of December 31, 2025, outstanding commitments for EPC and construction related to projects were $174,198, with payment schedule as follow:
141,238
18,547
12,033
1,016
1,364
174,198
c) Contingencies
Trade Proceedings and Litigations
The Company and its subsidiaries are subject to various international trade proceedings and government actions, including antidumping duty (“AD”), countervailing duty (“CVD”), safeguard measures and tariff regimes affecting imports into the United States and other jurisdictions. These proceedings may result in significant duty deposits, tariffs, or related compliance costs on imports from China, Taiwan, and Southeast Asia, particularly for crystalline silicon photovoltaic (“CSPV”) products and lithium battery components.
As of December 31, 2025, the Company’s applicable AD and CVD rates on Chinese-origin CSPV products under “Solar 1” and “Solar 2” orders remain in effect, and final results in recent administrative reviews have generally affirmed or reduced prior rates.
Under Solar 1, the Company’s current AD rate is 0.00%, and the applicable CVD rate is 15.87%, as of the conclusion of the tenth administrative reviews in 2024. The eleventh administrative reviews were completed with findings of no shipments and no change in rates, and the twelfth reviews are ongoing, with preliminary results expected in 2026. The second five-year sunset reviews concluded in 2024, with both the U.S. Department of Commerce (“USDOC”) and U.S. International Trade Commission (“USITC”) voting to continue the Solar 1 orders for another five years. Certain prior determinations remain subject to appeal.
Under Solar 2, the Company’s current AD and CVD rates for Chinese-origin products remain at 30.06% and 33.58%, respectively, following rescission of the tenth administrative review in December 2025, and no changes have been made to the Company’s rates. The Company was not subject to the most recent tenth administrative review of the Solar 2 Taiwan antidumping duty, and its current rates remain unchanged. In 2025, USDOC and USITC initiated the second five - year sunset reviews of the Solar 2 orders, which are ongoing.
The Company is also involved in circumvention proceedings relating to certain products from Southeast Asia. In 2025, the U.S. Court of International Trade (“USCIT”) sustained USDOC’s Thailand circumvention determination, and the Company has appealed to the U.S. Court of Appeals for the Federal Circuit.
F-40
In 2024, the USDOC and USITC initiated new AD and CVD investigations (“Solar 3”) against imports from Southeast Asia. In 2025, USDOC issued final affirmative determinations. Final AD and CVD rates applicable to the Company are 111.45% and 255.39%, respectively, on Thai-origin CSPV products. The USITC issued a final affirmative threat determination with respect to Thailand and a negative finding on critical circumstances, resulting in refunds of certain preliminary deposits. The Solar 3 determinations have been appealed and remain subject to judicial review.
In 2025, additional AD and CVD petitions (“Solar 4”) were filed covering imports from India, Indonesia and Laos, and investigations are ongoing.
In 2025, the USDOC initiated a Section 232 national security investigation covering polysilicon and derivative products, which could result in additional tariffs or other measures.
In 2025, AD and CVD petitions were filed on active anode materials (a lithium battery component) imported from China and the USDOC and USITC initiated investigations in 2025. On February 11, 2026, USDOC determined that AAM contained in downstream battery products will not be covered by the scope of potential antidumping and countervailing duties. These proceedings remain ongoing.
In 2025, the U.S. government imposed and escalated broad reciprocal tariffs under the International Emergency Economic Powers Act (“IEEPA”). The U.S. Supreme Court found these tariffs unlawful, and the USCIT subsequently ordered refunds for all such tariffs paid under IEEPA. The Company filed suit in the USCIT to preserve its rights to refunds for such tariffs. This litigation and that concerning the extent of available refunds for IEEPA tariffs remains ongoing.
The Company is party to ongoing patent litigation alleging infringement of various solar technologies. The Company believes the asserted claims lack merit and is vigorously defending these matters. However, the outcome of current or future litigation, particularly those seeking injunctive relief or significant damages, could materially impact the Company’s financial condition, results of operations, or cash flows.
In 2024, Maxeon Solar Pte. Ltd. (“Maxeon”) filed a U.S. patent infringement lawsuit, alleging infringement of solar-related patents. Maxeon seeks a permanent injunction and damages. Based on its preliminary analysis, the Company believes its modules do not infringe and intends to vigorously defend the case. Additionally, the Company filed an Inter Partes Review (“IPR”) with the Patent Trial and Appeal Board (“PTAB”). In 2025, in the lawsuit, Maxeon withdrew one of its patent infringement claims, and the claim was dismissed with prejudice. In January 2026, the PTAB issued a Final Written Decisions in the Company’s IPR action invalidating the remaining patents in the lawsuit.
In 2025, CSI Solar Co., Ltd. was notified of lawsuits filed in China by Trina Solar Limited (“Trina”), alleging infringement of solar-related patents. Trina also initiated U.S. litigation in the USITC and in Federal Court. The USITC investigation was terminated upon Trina’s motion, and, the Company subsequently filed petitions for IPR before the PTAB challenging the U.S. counterparts of certain patents. The PTAB granted review and joined the Company’s petition with previously instituted IPR proceedings. Concurrently, the Company has initiated patent invalidation proceedings before China’s National Patent Office, which remain pending. The Federal Court action is stayed pending a decision from the PTAB.
F-41
In 2025, First Solar, Inc. (“First Solar”) filed a patent infringement lawsuit against the Company in the U.S. District Court for the District of Delaware seeking injunctive relief and monetary damages. The Company filed a petition with the USPTO, which was denied in 2025 without a decision on the merits. In 2025, the court set a trial date for March 2028. Discovery is currently ongoing in this litigation. Based on our assessment, the Company does not believe its proprietary technology infringes on the patent asserted by First Solar, and the Company intends to vigorously defend the case. On February 24, 2026, First Solar filed a Complaint with the USITC against the Company and nine other manufacturers of modules incorporating TOPCon technology. First Solar seeks a general exclusion order, limited exclusion order, and a cease - and - desist order. The USITC has instituted the case. The Company will vigorously defend against the claims. A final resolution is not expected until the second half of 2027.
21. SEGMENT INFORMATION
As discussed in Note 1. Organization and Operations, the Company consummated a strategic initiative to resume direct oversight of its U.S. operations. The Company has formed new joint venture with its majority-owned subsidiary, CSI Solar, by holding a 75.1% controlling stake in CS PowerTech, which operates U.S.-based manufacturing and sales of solar modules, solar cells and advanced energy storage systems. There have been no changes to the Company’s reportable segment results for prior periods to conform to the current segment presentation.
The segments are determined in accordance with the management approach under ASC280. The Company’s chief operating decision maker (“CODM”), identified as the Chief Executive Officer, regularly reviews financial performance of Manufacturing and Recurrent Energy primarily through revenues, gross profit, operating expenses, income from operations and interest by segment to assess performance and allocate resources. Intersegment transactions, such as the sale of solar modules, EPC services, and battery storage systems from Manufacturing to Recurrent Energy, are conducted on terms comparable to those with unaffiliated third parties and are eliminated in consolidation. The Company does not review balance sheet information by segment and therefore does not present segment assets and liabilities. The segment structure is evaluated regularly to ensure consistency with internal management reporting and to reflect any organizational changes or changes in how the CODM allocates resources and evaluates performance.
F-42
The following table summarizes the segment financial results for Manufacturing (formerly disclosed as CSI Solar segment) and Recurrent Energy, including revenues, gross profit, operating expenses, income (loss) from operations and interest by segment. Intersegment eliminations reflect transactions between the two segments, including sales of modules, battery energy storage products and EPC, which are eliminated in consolidation. Unallocated items represent corporate-level income and expenses not directly attributable to either segment and include corporate overhead, professional service fees, and other centralized functions.
Year Ended December 31, 2025
and
Recurrent
Unallocated
Energy
Items
Operating expenses
743,959
236,111
3,000
198,557
(152,657)
(2,744)
Other segment items (1)
Supplementary information:
(64,284)
(99,114)
(14,768)
34,794
8,678
2,582
Depreciation and amortization, included in cost of revenues and operating expenses
498,026
57,027
Year Ended December 31, 2024
(253,455)
850,499
155,573
23,328
336,782
(90,080)
(276,783)
(63,698)
(63,465)
(10,305)
63,107
25,281
463,893
37,550
F-43
Year Ended December 31, 2023
7,230,550
497,653
(114,577)
6,121,332
292,926
(80,615)
1,109,218
204,727
(33,962)
653,135
108,106
65,422
456,083
96,621
(99,384)
Income before income taxes and equity in earnings of affiliates
(60,413)
(46,489)
(7,197)
43,788
7,797
290,346
16,694
The following table summarizes the Company’s net revenues generated from different geographic locations. The information presented below is based on the location of the customers’ global or regional headquarters, as appropriate:
The Americas:
1,485,919
2,776,124
2,777,463
846,387
190,925
229,041
283,839
136,726
151,732
2,616,145
3,103,775
3,158,236
Asia:
China
2,151,243
1,220,446
710,977
Pakistan
78,203
266,082
202,962
Japan
597,188
150,727
195,090
298,862
164,307
138,095
3,125,496
1,801,562
1,247,124
Europe and other regions:
United Kingdom
144,994
185,240
355,484
Australia
128,247
115,118
347,863
Spain
445,321
221,788
141,833
Germany
291,385
198,227
91,636
South Africa
218,596
75,467
56,590
643,442
292,232
196,341
1,871,985
1,088,072
1,189,747
Total net revenues
F-44
The following table summarizes the long-lived assets, including property, plant and equipment, solar power and battery energy storage systems, intangible assets and ROU assets, based on the major geographic location of the assets:
3,162,555
2,871,672
1,405,757
1,586,046
Europe
500,229
932,317
481,149
491,985
11,466
32,785
Total long-lived assets
5,561,156
5,914,805
Property, plant and equipment are allocated based upon physical location. Other assets and investments are allocated based on the location of the related operations.
The following table summarizes the revenues generated from each product or service:
5,941,345
245,173
679,350
250,105
399,098
40,636
57,919
22. MAJOR CUSTOMERS
No customers accounted for 10% or more of total net revenues for the years ended December 31, 2023, 2024 and 2025. No customers accounted for 10% or more of total net accounts receivable as of December 31, 2024 and 2025.
23. EMPLOYEE BENEFIT PLANS
In the U.S., the Company has a qualified 401(k) plan which provides retirement benefits to its eligible manufacturing and non-manufacturing employees. Under the 401(k) plan, the Company matches 100% of the first five percent of employee contributions. Employees in certain other jurisdictions participate in retirement schemes established under applicable local practice and regulations, which are essentially defined contribution schemes. Contributions for eligible employees are generally calculated as a percentage of the applicable payroll costs. The expense incurred by the Company for contributions schemes globally was $28,222, $37,090 and $37,445 for the years ended December 31, 2023, 2024 and 2025, respectively.
In addition, the Company contributed $20,702, $22,297 and $18,405 to defined benefit schemes for the years ended December 31, 2023, 2024 and 2025, respectively.
F-45
24. SHARE-BASED COMPENSATION
Share Incentive
In March 2006, the Company adopted a share incentive plan (“Share Incentive”). The purpose of the Share Incentive is to promote the success and enhance the value of the Company by linking the personal interests of the directors, employees and consultants to those of the shareholders and providing the directors, employees and consultants with an incentive for outstanding performance to generate superior returns to the shareholders. The Share Incentive is also intended to motivate, attract and retain the services of the directors, employees and consultants upon whose judgment, interest and effort the successful conduct of the Company’s operations is largely dependent. In September 2010, the shareholders approved an amendment to the Share Incentive to increase the maximum number of common shares which may be issued pursuant to all awards of options, restricted shares and RSUs under the Share Incentive to the sum of (i) 2,330,000 plus (ii) the sum of (a) 1% of the number of outstanding common shares of the Company on the first day of each of 2007, 2008 and 2009 and (b) 2.5% of the number of outstanding common shares of the Company outstanding on the first day of each calendar year after 2009. In June 2020, the shareholders approved an amendment to the Share Incentive to extend its term for a further ten years period. As a result, the Share Incentive will expire and no awards may be granted after June 30, 2029. Under the terms of the Share Incentive, options are generally granted with an exercise price equal to the fair market value of the Company’s ordinary shares and expire ten years from the date of grant.
RSUs Activities
The Company granted 206,067, 167,968 and 232,364 RSUs in 2023, 2024 and 2025, respectively. The RSUs entitle the holders to receive the Company’s common shares upon vesting. The RSUs were granted for free and generally vest over periods from one to four years based on the specific terms of the grants.
The RSUs granted in 2023, 2024 and 2025 had total grant date fair values of $7,785, $2,800 and $2,477, respectively, and are expensed ratably over the vesting period. As of December 31, 2025, total unrecognized share-based compensation related to unvested RSUs granted between 2021 and 2025 was $6,651, expected to be recognized over a weighted-average period of 2.3 years.
A summary of the RSU activity is as follows:
Weighted Average
Grant-Date
Number of
(in whole US dollars)
Unvested as of January 1, 2025
999,411
26.29
232,364
10.71
(855,502)
26.06
(21,678)
31.24
Unvested as of December 31, 2025
354,595
18.87
The fair value of RSUs vested during the years ended December 31, 2023, 2024 and 2025 was $57,298, $13,934 and $12,154, respectively.
CSI Solar Employee Incentive
In 2020, CSI Solar approved the CSI Solar employee incentive plan (“CSI Solar Employee Incentive”). Eligible CSI Solar directors and employees and board members subscribed for equity interest in the partnership for an aggregate of RMB 248 million ($36,342). Vesting conditions, which were met in 2023, include completion of the IPO and the service period. The plan was accounted for based on grant date fair value, which equals the value of the discount received by the participants. As of December 31, 2025, no awards granted were outstanding and no future grants may be available for issuance under this plan.
F-46
CSI Solar Restricted Share Incentive
In 2024, CSI Solar adopted a restricted share incentive plan (“CSI Solar Restricted Share Incentive”), which provides for the granting of options to purchase CSI Solar common shares to its officers, directors and employees. Under the plan, options are generally granted with an exercise price of RMB 5.47 ($0.76) per share. The options are subject to time-based and performance-based vesting conditions and will vest in three tranches over a four-year period, beginning 12 months after the grant date. 33% of the options will vest between months 12 and 24, an additional 33% will vest between months 24 and 36, and the remaining 34% will vest between months 36 and 48, subject to continued employment and the achievement of applicable performance criteria. A maximum number of 54,004,000 CSI Solar common shares may be issued under the CSI Solar Restricted Share Incentive. As of December 31, 2025, there was RMB 365,062,858 ($51,938) of total unrecognized share-based compensation related to unvested options granted in 2025, which is expected to be recognized over 1.9 years.
The following table presents the share-based compensation expense included in the consolidated statements of operations:
20,087
10,924
1,317
13,488
25. NON-CONTROLLING INTERESTS AND REDEEMABLE NON-CONTROLLING INTERESTS
In 2023, CSI Solar completed its IPO, raising net proceeds of approximately $927,897, of which, $644,873 was recorded in non-controlling interest, $244,629 in additional paid-in capital and $38,395 in accumulated other comprehensive loss. In 2025, CSI Solar had repurchased 45,077,200 shares for RMB 500,608,600 ($70,135) under its share repurchase program, reducing the non-controlling interests’ ownership from 36.86% to 36.21%.
The following schedule presents the effects of transfers from (to) non-controlling interests and redeemable non-controlling interests:
Transfers from (to) non-controlling interests and redeemable non-controlling interests:
Increase in paid-in capital from transfer of equity interest in subsidiary and subsidiary’s equity offering
Increase in paid-in capital from subsidiary’s issuance of redeemable preferred shares
Increase in paid-in capital from acquisition of non-controlling interest
Decrease in paid-in capital from subsidiary’s repurchase of its common shares
Net transfers from (to) non-controlling interests
276,437
Change from net income attributable to Canadian Solar Inc. and transfers from (to) non-controlling interests and redeemable non-controlling interests
518,816
312,488
(156,605)
The Company recorded net loss attributable to redeemable non-controlling interests of nil, $132,475, and $122,565 for the years ended December 31, 2023, 2024, and 2025, respectively.
F-47
26. REDEEMABLE NON-CONTROLLING INTERESTS
As the Recurrent Energy B.V. Series A preferred shares are redeemable upon the occurrence of conditions not solely within the Company’s control, the related non-controlling interest is classified as temporary equity on the balance sheets. As of December 31, 2025, Recurrent Energy B.V. was in compliance with the terms of the Series A preferred shares and as such, it was not probable that the non-controlling interest would become redeemable. The key terms of the Recurrent Energy B.V. Series A preferred shares are as follows:
Pursuant to the transaction documents, either (a) Recurrent Energy B.V. shall, to the extent permitted by law and specifically authorized and declared by Recurrent Energy B.V.’s board of directors in respect of a given calendar quarter, pay in cash to the holders of Series A Preferred Shares dividends in respect of each outstanding Series A Preferred Share at a per annum rate equal to 9% of the Stated Value of such share or (b) to the extent of any portion of the dividend not paid in cash, such amount will automatically be added to the Stated Value of the Series A Preferred Shares. Amounts added to the Stated Value as described above (“Accretion Amounts”) will continue to accrue at the same 9% annual rate and compound on a quarterly basis, subject to certain adjustments. The “Stated Value” referred to above generally represents the original purchase price of the Series A Preferred Shares plus the compounded Accretion Amounts plus any accumulated preferred return that has not been paid in cash or added to the Stated Value as an Accretion Amount and is determined as of each calendar quarter.
Subject to the foregoing, the transaction documents place limitations on the payment of dividends absent the unanimous approval of the shareholders.
The holders of the Series A Preferred Shares are generally entitled to vote, on an as-converted basis, on all matters upon which holders of ordinary shares have the right to vote in the general meeting of Recurrent Energy B.V. (voting together as a single class with the holders of the ordinary shares of Recurrent Energy B.V.). Holders of the Series A Preferred Shares are entitled to appoint one director to the board of Recurrent Energy B.V. So long as any Series A Preferred Shares are outstanding, the prior written consent of any holders of at least 60% of the Series A Preferred Shares will be required before Recurrent Energy B.V. or its subsidiaries take certain actions.
The Series A Preferred Shares rank senior to Recurrent Energy B.V.’s ordinary shares with respect to rights upon the voluntary or involuntary liquidation, dissolution or winding up of Recurrent Energy B.V. or upon a deemed liquidation event (collectively, a “Liquidation Event”). Deemed liquidation events include, among other events, a sale of 50% or more of the assets of Recurrent Energy B.V. or a merger, consolidation, equity sale or similar transaction involving the transfer of beneficial ownership of 50% or more of the voting power or economic interest of the outstanding capital stock of Recurrent Energy B.V., subject to certain limitations (a “Company Sale”), and the occurrence of an Exit Demand (as defined below).
Upon a Liquidation Event, the holders of Series A Preferred Shares then outstanding shall be entitled to be paid out of the assets of Recurrent Energy B.V. available for distribution to its shareholders, or otherwise received by shareholders in connection with such Liquidation Event, before any payment shall be made to the other shareholders, an amount per Series A Preferred Share equal to the greater of (i) 1.3 times the Stated Value, and (ii) such amount distributable per ordinary share had all Series A Preferred Shares been converted into ordinary shares immediately prior to such Liquidation Event (the “Preferred Liquidation Amount”). If the assets of Recurrent Energy B.V. available for distribution to its shareholders shall be insufficient to pay the full Preferred Liquidation Amount, the holders of Series A Preferred Shares shall share ratably in any distribution of the assets available for distribution.
F-48
At any time on or after the fifth anniversary of the first closing (i.e., May 31, 2024), Investor shall be entitled to cause Recurrent Energy B.V. to use commercially reasonable efforts to effect (1) a Company Sale resulting in proceeds in respect of the Series A Preferred Shares equal to at least the Preferred Liquidation Amount (an “Investor Exit”) or (2) a qualified primary public offering of the ordinary shares of Recurrent Energy B.V. (an “IPO”), by delivering a written notice (an “Exit Request”) to Recurrent Energy B.V. If an Investor Exit or qualified IPO is not consummated within two years of the delivery of an Exit Request, Investor shall have the right to cause Recurrent Energy B.V. and its affiliates to effect an Investor Exit or qualified IPO (an “Exit Demand”). In the event of the closing of an IPO, all outstanding Series A Preferred Shares shall automatically be converted into a number of ordinary shares of Recurrent Energy B.V. equal to the greater of (i) the original liquidation preference of the Series A Preferred Shares divided by the conversion price in effect at such time and (ii) 1.3 times the Stated Value divided by the fair market value of such shares, with such fair market value being deemed to be equal to the public offering price per share disclosed in the final prospectus for such IPO. The original liquidation preference shall initially be equal to the purchase price, subject to adjustment for share splits, share dividends or returns, reverse splits, combinations, recapitalizations and similar transactions. The conversion price shall initially be equal to the purchase price, subject to anti-dilution adjustment as provided in the terms of the Series A Preferred Shares.
On and after the five-year anniversary of the first closing (or an earlier Exit Demand pursuant to an ESG default in accordance with the shareholders’ agreement), the Series A Preferred Shares may be redeemed, in whole or in part, at the option of Recurrent Energy B.V. upon 30 days’ prior written notice delivered to all holders of Series A Preferred Shares (an “Optional Redemption Notice”).
Following receipt of the Optional Redemption Notice, any holder of Series A Preferred Shares may elect, in its sole discretion, to convert all or any number of the shares subject to redemption into ordinary shares at the then effective conversion price, in which case Recurrent Energy B.V. shall not redeem such Series A Preferred Shares (i.e., the number of Series A Preferred Shares to be redeemed by Recurrent Energy B.V. shall be reduced by the number of Series A Preferred Shares so converted). In addition, each holder of Series A Preferred Shares shall have the option to convert all or any of its Series A Preferred Shares upon the occurrence of a Company Sale and certain other monetization events, into a number of ordinary shares of Recurrent Energy B.V. equal to the greater of (i) the original liquidation preference of the Series A Preferred Shares divided by the conversion price in effect at such time and (ii) 1.3 times the Stated Value divided by the fair market value of such shares.
The carrying value of the Series A preferred shares of Recurrent Energy B.V. is not accreted or adjusted to redemption value unless it becomes probable that redemption will occur.
See Note 10 for details of tax equity investors classified as redeemable non-controlling interests on the balance sheets.
F-49
27. SUBSEQUENT EVENTS
In January 2026, the Company issued $230,000 of convertible notes due 2031 to qualified institutional buyers in a private placement transaction pursuant to Rule 144A under the Securities Act. The convertible notes are senior unsecured obligations of the Company and accrue interest at a rate of 3.25% per annum, payable semi - annually in arrears on January 15 and July 15 of each year, beginning on July 15, 2026. The convertible notes will mature on January 15, 2031, unless earlier repurchased, redeemed or converted in accordance with their terms prior to such date. Holders of the convertible notes may convert all or part of their notes at their option at any time prior to the close of business on the third business day immediately preceding the maturity date. Upon conversion, the Company will deliver to such converting holders, a number of common shares equal to the applicable conversion rate as of the relevant conversion date, together with a cash payment in lieu of any fractional share. The initial conversion rate is 36.1916 common shares per $1,000 of principal, which represents an initial conversion price of $27.63 per share. The conversion rate and conversion price for the notes will be subject to adjustments upon the occurrence of certain events. On or after January 22, 2029, the Company may redeem for cash all or part of the notes, at the Company’s option, if the last reported sale price of its common shares has been at least 130% of the conversion price then in effect on each of at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately prior to the date that the Company provides notice of redemption. In addition, the notes will be redeemable, in whole and not in part, at the Company’s option at any time following the occurrence of certain tax related events. The redemption price in the case of a tax redemption or an optional redemption will be equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the related redemption date.
In April 2026, Cobalt LLC secured $474,256 in project financing for a solar project in California, with Norddeutsche Landesbank as lead arranger. The financing includes a $190,466 construction and term loan, a $204,121 tax equity bridge loan, a $24,587 holdco loan and $55,082 in letter of credit facilities. The facilities are secured by assets and equity interests in the subsidiaries. The financing will mature in June 2047. As of the date of this report, the outstanding balance was $100,122.
F-50
The following condensed financial statements of Canadian Solar Inc. has been provided pursuant to the requirements of Rules 12-04(a) and 5-04(c) of Regulation S-X, which require condensed financial information as to financial position, cash flows and results of operations of a parent company as of the same dates and for the same periods for which audited consolidated financial statements have been presented as the restricted net assets of Canadian Solar Inc.’s consolidated and unconsolidated subsidiaries not available for distribution to Canadian Solar Inc. as of December 31, 2025 of $1,483,016, exceeded the 25% threshold.
The condensed financial information has been prepared using the same accounting policies as set out in the consolidated financial statements, except that the equity method has been used to account for investments in subsidiaries. The Company’s share of income from its subsidiaries is reported as equity in earnings of subsidiaries in the condensed financial statements. These statements should be read in conjunction with the notes to the consolidated financial statements of the Company. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted.
Financial Information of Parent Company
Balance Sheets
26,293
681
Amounts due from subsidiaries
317,561
369,236
20,031
14,408
363,885
384,325
Investments in subsidiaries
2,773,463
2,751,902
11,745
2,531
5,664
26,904
17,583
3,178,528
3,171,219
Liabilities and Equity
28,000
Amounts due to subsidiaries
111,731
119,858
6,471
4,347
347,119
152,205
10,285
10,088
5,624
5,642
363,028
363,248
Total Liabilities and Equity
F-52
General, administrative and other operating expenses
40,198
20,180
612
Loss from operations
(40,198)
(20,180)
(612)
(18,720)
(10,580)
(14,965)
22,862
15,569
13,569
(1,535)
2,700
(4,588)
(772)
(492)
255
Other income (expenses), net:
1,835
7,197
(5,729)
Loss before income taxes and equity in earnings (losses) of subsidiaries and affiliates
(38,363)
(12,983)
(6,341)
(6,775)
3,780
(1,960)
Equity in earnings (losses) of subsidiaries and affiliates
319,325
45,254
(95,825)
F-53
Statements of Comprehensive Income (Loss)
Other comprehensive income (loss), net of tax
13,412
(79,647)
115,110
F-54
Statements of Cash Flows
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Accretion of convertible notes
1,447
1,493
(33,604)
Loss (gain) on change in fair value of derivatives
1,535
(2,700)
4,588
Equity in losses (earnings) of subsidiaries and affiliates
(319,325)
(45,254)
95,825
28,410
4,256
2,932
Dividend received from subsidiary
38,519
29,976
5,180
(361)
(3,330)
245,001
46,719
(23,814)
(1,594)
(36,216)
5,623
12,933
9,321
(232,650)
(44,621)
(9,772)
4,377
(2,429)
(2,124)
(28)
(77)
(859)
1,262
5,681
9,575
(33,075)
(22,164)
(10,310)
(30)
Loans to subsidiaries
(62,226)
(6,162)
(2,320)
Repayment of loans to subsidiaries
69,150
32,271
Net cash provided by (used in) investing activities
(15,240)
15,799
(2,350)
Proceeds from short - term borrowings
(5,460)
277
(18,187)
(15,019)
25,651
(25,612)
Cash, cash equivalents and restricted cash at the beginning of the year
15,661
642
Cash, cash equivalents and restricted cash at the end of the year
Interest paid
11,586
10,768
13,067
F-55