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:
● 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 the CSI Solar’s ability to conduct its operations in China;
● 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 a material change to CSI Solar’s operations;
● 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; and
● Renminbi currency exchange restrictions may limit CSI Solar’s ability to utilize its revenues and cash effectively.
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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.
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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.”
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A [Reserved]
B Capitalization and Indebtedness
Not applicable.
C Reasons for the Offer and Use of Proceeds
Not applicable.
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:
● 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 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;
● 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;
● 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;
● 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;
● 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 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;
● 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;
● 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;
● Our industry is highly competitive, and many of our competitors have greater resources than we do or may be more adaptive;
● We face economic and operational risks associated with maintaining and expanding our international business;
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● We may experience issues with our manufacturing capacity expansion and operational initiatives;
● 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;
● 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;
● Our revenues and results of operations are subject to significant fluctuations, which make our financial performance difficult to predict;
● We need a significant amount of cash to fund manufacturing expansion, project development and construction;
● Our substantial indebtedness and reliance on short-term financing could limit our financial flexibility and competitive position;
● Failure to comply with financial and other covenants in our debt instruments could adversely affect our liquidity;
● 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 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;
● Defects or performance issues in our products could result in warranty claims that could impose significant costs on us;
● Our dependence on a limited number of customers may cause significant fluctuations or declines in our revenues;
● 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;
● 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;
● Our failure to comply with environmental, health and safety laws could result in significant costs, adverse publicity, fines and business disruption;
● Laws, regulations and government actions on sustainability could result in significant additional costs and expose us to additional liabilities;
● Corporate sustainability may impose additional costs and create new compliance challenges;
● Interruption, security breaches or failures of information technology, control and communication systems could disrupt our business and expose us to liability;
● Weaknesses in our internal control over financial reporting could undermine investor confidence and adversely affect 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;
● 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;
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● We have granted, and may continue to grant, various share-based incentive awards which may increase our share-based compensation expenses;
● We may encounter difficulties with acquisitions and divestitures, which could harm our business;
● We face risks related to private securities litigation; and
● 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.
In addition, CSI Solar is subject to risks and uncertainties related to doing business in China, including, but are not limited to, the following:
● 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;
● 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;
● 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; and
● Renminbi currency exchange restrictions may limit CSI Solar’s ability to utilize its revenues and cash effectively.
In addition to the risks described above, we are subject to 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;
● The market price of our common shares is highly volatile;
● Your right to participate in any future rights offerings may be limited, which may cause dilution of your holdings;
● Our articles contain certain provisions that may adversely affect the rights of holders of our common shares;
● You may have difficulty enforcing judgments obtained against us;
● 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; and
● 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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
For additional details, please refer to “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal and Administrative Proceedings.”
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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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 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 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.
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Risks Related to Doing Business in China
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.
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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.
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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.
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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.
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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.”