This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk01: Ladies and gentlemen, thank you for standing by. Welcome to Canadian Solar's second quarter of 2021 earnings conference call. My name is Rachel and I'll be your operator for today. At this time, all participants are in listen-only mode. Later, we'll conduct a question and answer session. As a reminder, this conference is being recorded for replay purposes. I'd like to turn it over to Isabel Zhang, IR Director at Canadian Solar. Please go ahead.
spk04: Thank you, Operator, and welcome everyone to Canadian Solar's second quarter 2021 conference call. Please note that we have provided slides to accompany today's conference call, which are available on Canadian Solar's Investor Relations website within the events and presentation section. Joining us today are Dr. Sean Chu, Chairman and CEO, Yan Zhuang, President of Canadian Solar's Majority-Owned Subsidiary, CSI Solar, Dr. Huifeng Chang, Senior VP and CFO, and Ismael Guerrero, corporate VP and president of . All company executives will participate in the Q&A session after management's formal remarks. On this call, Sean will go over some key messages for the quarter. Ken and Ismael will respectively review the highlights of the CSI solar and global energy businesses, followed by Huifeng, who will go through the financial results. Sean will conclude the prepared remarks with the business outlook. after which we will have time for questions. Before we begin, may I remind listeners that management's prepared remarks today, as well as their answers to questions, will contain forward-looking statements that are subject to risks and uncertainties. The company claims the protection of the safe harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from management's current expectations. Any projections of the company's future performance represent management's estimate as of today. Canadian Solar assumes no obligation to update these projections in the future unless otherwise required by applicable law. A more detailed discussion of the risks and uncertainties can be found in the company's annual report on Form 20F, filed with the Securities and Exchange Commission. Management's prepared remarks will be presented within the requirements of SEC Regulation G regarding generally accepted accounting principles, or GAAP. Some financial information presented during the call will be provided on both a GAAP and a non-GAAP basis. By disclosing certain non-GAAP information, management intends to provide investors with additional information to permit further analysis of the company's performance and underlying trends. Management uses non-GAAP measures to better assess operating performance and to establish operational goals. Non-GAAP information should not be viewed by investors as a substitute for data prepared in accordance with GAAP. And now, I would like to turn the call over to Canadian Solar's Chairman and CEO, Dr. Sean Chu. Sean, please go ahead.
spk02: Thank you, Isabel. Hi, everyone. Welcome and thanks for joining us today. During the second quarter of 2021, we delivered record module shipments and record revenue. We also delivered gross margin well ahead of our guidance. We focused on profitability and improved the performance of our CSI solar business division, which helped us deliver net income of $11 million and diluted earning per share of 18 cents. Before I turn to Ian, Ismael, and Huifeng to go over a more detailed review of our performance, I would like to highlight three key messages. Please turn to slide three. The first point, I'm pleased that our CSI solar business has turned corner in the margin trajectory, delivering Canadian solar growth margin of 13 percent, which is well ahead of our guidance. We expect Q3 margins to be better than Q2, back to the mid-teen range. We focused on the factors under our control, and especially on profitability, even if it meant that we had to forego certain short-term opportunities. We expect profitability at CSI Solar to continue to improve through the year. Demand remains strong, and Canadian solar's leadership position gives us a competitive advantage to capture profitable growth opportunities. We will continue to gain market share this year and believe that any demand push out due to supply chain constraints will set the stage for an even stronger 2022 and beyond. Let's turn to slide four. The second point, global efforts towards a clean energy transition are generating a surge in demand for battery storage capacity to support more reliable power grid. We made big progress in Q2 by delivering our first battery storage shipment approximately 300 megawatt hours or around $70 million in revenue. At the same time, we continue to grow our global energy total pipeline of storage projects. reaching 19 gigawatt hours in Q2, of which 1.5 gigawatt hours is under construction. Storage represents another major long-term growth opportunity for us. We are well positioned with bankable solutions, strong customer demand, and expect meaningful growth. The third point, please turn to slide five. We recently published our latest ESG sustainability report. Our team has been analyzing, understanding, and improving on our ESG practices. We have set up structures to incorporate environmental, social, and governance factors in all our major business decisions. For example, one of these decisions is the expansion of our upstream manufacturing capacity. We decided to construct this facility in Qinghai as this province is nearly fully powered by renewable energy. Almost 90% of its installed power capacity is solar, wind, our hydropower. By locating energy intensive ingot manufacturing there, we can further reduce the carbon footprint for our solar module. Actually, based on our estimates, Greenhouse gas emissions payback time for our existing module is 1.1 years. This means our modules become carbon neutral assets that can last for 30 to 40 years or even longer. We are now making further efforts to bring the module greenhouse gas payback time even lower. This is just one of the many examples that underscores Canadian solar's commitment to sustainability and ESG improvement. Now, let me turn over to Ian, who will talk about the performance of our CSI solar business in more depth. Ian, please go ahead.
spk07: Thanks, John. In Q2, we delivered 3.7 gigawatts of module shipments and $1.18 billion in revenues, both record quarterly highs. Gross margin improved by 340 basis points to 13.1 percent, which was above our expectations. I'm pleased by our team's strong execution in challenging market circumstances and thank them for their relentless efforts. Please turn to slide six. As Sean said, we remained focused on factors within our control, navigating the current supply chain environment. A big part of this is executing on the margin improvement roadmap we previously laid out. First, we continued to raise prices on our solo modules in Q2. which are now 15 to 20 percent higher than the lowest point last year. We believe module pricing is likely to remain strong for the rest of the year as well. We also expanded our market presence in China, which was our top market by shipment volume during the quarter. This helped us mitigate some of the pressure from higher shipping costs and uncertainty over foreign exchange moves. We're also starting to benefit from our investment in state-of-the-art capacity and upstream integration. And we continue to focus on the higher value distributed generation segment, which accounted for more than 50 percent of our Q2 shipments. Taken together, these factors have allowed us to deliver a notable improvement on last quarter's performance. We also adjusted our procurement strategy. Given the turn of events from a deflationary to an inflationary market environment, we have tactically and proactively built inventory from raw materials to finished goods to take advantage of more favorable costs and continued ASP increases. This is proving to be critical in our supply chain and margin management. At the same time, We're also holding more inventory due to the global logistic bottleneck. So more inventory is waiting to be shipped or it is in transit. Overall, larger shipment volume also requires inventory. So our turnover days have not moved up much. Longer term, we are executing on our capacity expansion and vertical integration strategy to better control our costs. and ensure greater supply chain stability. Slide seven, please. Importantly, we continue to focus on strengthening our long-term competitive positioning, even as we navigate a dynamic near-term supply chain environment. On the module side, we unveiled our new heater junction module product during the SNAC exhibition in Shanghai. and we're now making final certification and production preparations aiming to start deliveries in October. On battery storage and system integration, Sean mentioned that we delivered our first batch of 300 megawatt-hour battery storage shipments last quarter. On the next slide, you can see pictures of our Mustang Solo Plus battery storage project located in Kings County, California. As a reminder, this was a 100 megawatt solar project developed and built by Recurrent a few years ago, which Canadian Solar sold back in 2019. Last year, we signed the 300 megawatt-hour battery storage retrofit contract, and last quarter, in Q2, we delivered on the battery shipments. All the equipment has been installed, and the team is finalizing the project due to commission this month. Turning to slide nine, this is the Slate Solo Plus battery storage project of 300 megawatts plus 561 megawatts hour, which is currently under construction. We have been delivering the battery shipments from the current quarter and expect to complete the project before year end 2021. This adds to our confidence that our battery storage shipment volume will reach 861 megawatts megawatt-hour for 2021. Overall, our team continues to do a great job in the fluid market. We continue to leverage our competitive advantage, strong brand, bankability, and well-established global market channels while expanding our technological moat to bring additional value to our customers. With that, Let me pass it on to Ismael, who will talk about Canadian Solar's global energy business. Ismael, please go ahead. Thanks, Jan.
spk08: This quarter, we closed over 300 megawatts in project sales and added $281 million in revenue. This is in line with our forecast. We are having a very solid year from a project execution standpoint and experiencing significant growth. Please turn to slide 10. One of the key trends we've seen over the past several quarters is the large increase in demand for solar and battery storage projects, both from existing and new investors who have low cost of capital and ambitious climate mandates. We believe this is a sign that the capital pool for clean energy infrastructure assets is broadening and deepening as quote-unquote big money is now coming into the clean energy sector. We are strongly positioned to benefit as we supply the market with quality solar and battery storage projects, which are becoming increasingly scarce assets. Strong underlying demand, large capital availability, and low cost of capital in our business means that we can capture more of the value creation from the project. while exiting earlier, thereby reducing our capital needs. Meanwhile, PPAs are starting to move up across various markets, which is helping to offset the impact from higher equipment costs. Moving to slide 11. All in all, the structural market forces are very strong, and we can't develop projects fast enough. Our total pipeline currently stands at 22 gigawatts for solar and 19 gigawatt hours for battery storage, which are both significant increases compared to this time last year, which were 15 gigawatts and 5 gigawatt hours respectively. In Japan, we recently won 86 megawatts in the latest solar auction. This accounted for approximately a quarter of the total volume auctioned and solidified our position as the number one solar developer in Japan. Thanks to our strong market presence and execution, we are now negotiating new PPAs in Japan and see attractive opportunities for growth once the market is fully transitioned away from subsidies and feed-in tariffs. That said, We still have a meaningful portfolio of projects under construction or development, which have secured high-fitting tariffs, with nearly 50% of our total portfolio of over 400 megawatts contracted at more than $20 cents per kilowatt hour. In the EMEA region, or Europe, Middle East, and Africa, we also signed several new PPAs and have been meaningfully growing our pipelines. currently at a total of over 4 gigawatts from 2.5 gigawatts this time last year. We are already seeing an acceleration in demand growth for renewable energy, particularly in light of the recent European Union climate-related legislation. Importantly, we continue to make significant progress on our battery storage projects. A few days ago, we announced the signing of the phase two of our Green Zone project, also located in California. Crimson is a standalone utility scale battery storage project of 1.4 gigawatt hours, one of the largest in the world. We previously signed an 800 megawatt hours storage contract with Southern California Edison. And a few days ago, we signed the resource adequacy agreement with Pacific Gas and Electric, or PG&E. The project is set to start commercial operation by the summer of 2022 to help improve California's grid reliability. So we have a very tight deadline for a project of this magnitude. We see significant growth in demand for battery storage across all global markets. The U.S. is currently the largest and most advanced market, but we see significant opportunities worldwide given the widespread need for grid reliability. particularly with growing penetration of clean energy and the increasing occurrence of extreme weather events. For instance, we won the first battery storage project in Colombia a few weeks ago. The project has a capacity of 45 megawatts and 45 megawatt hour. It will help strengthen northern Colombia's transmission network and support greater share of renewable energy. Most of our work in battery storage project development to date has been in the contracted markets to provide capacity or resource adequacy services. We are also exploring alternatives to participate in uncontracted markets, such as power trading, where we believe there is more long-term value. Separately, turning to slide 12. We continue to make progress on our strategy to raise the share of recurring income in our global energy business. We continue to proactively grow our services platform in operations and maintenance, or ONM business, and investment vehicles in Brazil and Europe. Both vehicles remain on track to be launched as planned. Now, let me turn the call over to Hufem, who will go through the financial results in greater detail. Hufeng, please go ahead.
spk03: Thank you, Ismail. Please turn to slide 13. In Q2, we delivered record quarterly revenue of $1.43 billion. Gross margin was 12.9 percent, well ahead of our guidance of 9.5 to 10.5 percent. Q1 benefited from both volume and pricing increases in module shipments, as well as greater contribution from battery storage shipments and beyond module sales. We also made significant efforts to improve manufacturing efficiency and reduce unit costs. Selling and distribution expenses were flat quarter over quarter, but up year over year due to higher shipping costs. G&A expenses were also flattish quarter-over-quarter due to continued tight control on discretionary costs. Total operating expenses were up only 5% despite much faster revenue growth and now account for 11% of total revenue. The net foreign exchange loss in the second quarter was $3 million, down from a $7 million loss in the first quarter. We continued to optimize our currency hedges. The income tax benefit was $2 million in Q2 compared to a tax expense in Q1 of $40 million. The benefit was driven by a lower effective tax rate and a lower impact from high tax restrictions. Net income attributable to Canadian sole shareholders was $11 million, or 18 cents per diluted share. Slide 14, please. Now, turning to cash flow and the balance sheet. As Yan mentioned previously, we have adjusted our procurement and working capital management strategy to hold more inventory than we have traditionally. As a result, we increased the inventory by nearly $200 million this quarter. This strategy has helped us better manage our costs and mitigate supply chain pressures. We also had an increase in accounts receivable, which is reflective of higher shipments to China-based customers who generally require longer receivable days, netted out by increase in notes payable. After netting all the moving parts, we used approximately $61 million of cash in operating activities. Q2 CapEx was $138 million. We expect full-year CapEx to be approximately $650 million, unchanged from our previous guidance, as we support the higher global demand we are seeing across all markets. At the end of the second quarter, we raised approximately $60 million from the at-the-market equity offering program, and to date have raised around $110 million, roughly. The program is progressing well. Overall, our total cash position remains strong at $1.3 billion, giving us the financial flexibility to fund capital expenditures and long-term growth investments. Total debt declined moderately to $2.2 billion as we optimized our financing sources. We also lengthened the overall maturity profile of our total debt with long-term debt, including all long-term borrowings on project assets, accounting for only 40% of our total debt, down from 60% just two years ago. Net debt to EBITDA in Q2, excluding restricted cash, remains at a healthy level of 3.8 times. Now, let me pass it back to Xia. We'll conclude with our guidance and the business outlook. Xia.
spk02: Thanks, Guifeng. Let's turn to slide 15. Now, for the third quarter of 2021, we expect total module shipment to be in a range of 3.8 to 2 to 4 gigawatts, including approximately 275 megawatts of module shipment to our own project. Total revenue is expected to be in a range of 1.2 to 1.4 billion U.S. dollars. Gross margin is expected to be between 14 to 16%. The wider than usual revenue and profitability range for the third quarter reflect the timing of certain project sales, which may be recognized towards the end of this quarter or early in the following quarters, but should be recognized in the year of 2021. For the full year, 2021, we reiterate revenue guidance of $5.6 to $6 billion, with project sales of 1.8 to 2.3 gigawatts, and total battery storage shipment of 810 to 860 megawatt hours. We are slightly reducing module shipment guidance from 18 to 20 gigawatts to the new range of 16 to 17 gigawatts. We kept four-year revenue guidance unchanged as we expect higher module ASB to offset the impact of the slightly lower shipment guidance. This is reflective of marginally lowered global demand as a response to higher solar system equipment costs. We remain highly optimistic of the overall demand environment and expect growth to accelerate in 2022 and beyond. Now let's turn to slide 16. Finally, let me give an update on the progress of the planned cardboard listing of CSS orders. We have now moved toward the question and answer stage with Shanghai Stock Exchange. The feedback process typically takes a couple of months, so we are well on track. With that, I would like to open the call to our questions. Operator.
spk05: As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Once again, if you wish to ask a question, press star and the number 1 on your telephone keypad. Your first question comes from the line of JB Lowe of City. Please ask your question.
spk06: Hey, good morning everyone. My first question is on the module shipment guidance reduction. I'm just wondering if you could kind of give us a sense, if you could break it down between, you know, how much of the reduction was foregoing sales, you know, because you wanted to keep pricing higher, how much of it was demand driven, and how much of it, if any, was due to timing, if some shipments do you think are being pushed from 21 into 22?
spk00: Yeah.
spk07: Yeah, so if I'm hearing your question correctly, I think a majority of the projects, according to our information and our market feedback, is going to be still planned to be connected this year. So we have observing some signs of the market will mark. And although the module demand It's actually a change. The change on module side is always behind the upstream suppliers, upstream materials. So we think that in second half, the demand will remain to be strong, much stronger than first half.
spk06: Right, but I guess the reduction in guidance, I guess what was the main driver of it?
spk07: Oh, okay, the reduction. Yeah, yeah. So the reduction, we actually think that the second half, especially in Q4, we're expecting a very tight balance between ASP and supply chain cost. So we believe to maintain the right balance and optimize our margin, we need to have a more controlled pace on sales. So that's what we estimate. And also, yes, indeed, there are some volume pushing out to next year. But still, we need to make sure that the pricing can give us the volume with balanced pricing can give us the right margin.
spk02: Hi, JB. This is speaking. See, we only reduced the annual shipment guidance a little bit from previous 18 to 20 gigawatt to 16 to 17 gigawatt. So, well, it's just like two gigawatt adjustment, that's all. And I would say probably one-third of the reduction is due to our insistence on ASP and the profit. And maybe another one-third is due to some customers say, okay, we still want Canadian solar module, but let's wait for next year. So as you said, some project, some demand get pushed out to next year. And maybe another one-third is due to logistics. And because of the global logistic issues, the shipping time, and the time to deliver from our factory to the project site get much longer. So some of the December or even November shipment may not end up in the customer site before December 31st. So that become a 2022 shipment. So I would say maybe one-third, one-third, one-third. I hope this will give you more color other than what Yan just discussed.
spk06: Yeah, no, that's exactly what I was looking for. Thank you. My other question was just gross margins. I mean, the storage side is obviously becoming a bigger part of the business. what were the gross margins on storage in 2Q and what do you expect them to be to trend over the next couple of quarters?
spk07: Well, so, uh, first of all, uh, the storage revenue on the SSCS side, on the CSI solo side is, uh, is, uh, essentially right now, uh, mostly, uh, integration business and, uh, usually, uh, project, a deal actually includes two parts. One is the upfront installation, system integration installation. The other one is a long-term service agreement. So both have their revenues and their profits. So by nature, the system integration business, in terms of CAPEX and OPEX, are both low, much lower than module business. So on the gross margin side, it may not be that high, but the proportion of net profit is actually significantly better than module business. So, of course, from project to another, from project to project, you may see some variations on the profitability, but in general, they are significantly better than module business.
spk02: Hi, JB, this is Sean again. This is Sean again. Again, I would like to add some colors other than what Yen just discussed. Pure growth margin-wise, the battery storage, EPC, and total solution business for us, this moment will give us a low team to maintain growth margin. However, as Yen said, it's different because there's no capex, therefore no depreciation cost for this business. So we can turn a low-to-midting gross margin into a high single-digit net margin contribution. So it's pretty good. It's a different business module. And the net contribution is very, very good. And I also want to highlight that this is only the beginning. At the beginning, as you know, We always have higher cost in product certification, in bankability study, all that kind of stuff. And also, we are taking, you know, some problem, you know, some product on the battery storage product, OEM. Now, as we continue to grow this business, also continue to bring more of the manufacturing in-house. I expect the margin, both gross margin and net margin, for our battery storage business to increase.
spk06: All right, that was excellent. Thank you so much.
spk02: Thank you, JB.
spk05: Your next question comes from the line of Philip Shen of Roth Capital. Please ask your question.
spk11: Hi, everyone. Thank you for taking my questions. As a follow-up on the margins for the energy business, I was wondering if you could just talk about, give us a little bit more color on what happened with the 4% in the global energy business margin in Q2. Historically, you've gotten as high as 32%. So just a little bit more color as to why it may have been so low in Q2. And then, how do you expect that overall margin to trend in Q3 and Q4? And also, for the global energy business, can you talk about which countries you sold projects in in Q2? Thanks.
spk02: Philipp, I will let Ismail to answer your question.
spk08: Thank you, Sean. Thank you, Philipp, for your question. Looking in related to gross margin to project sales in EG is very tricky because it's fully dependent on how do you do the accounting treatment. So what you're seeing we are delivering in Q2 is the last stage of projects that were under construction. So most of the margin of those projects was already booked. What you should expect to see around the year is the typical solid gross margin that we usually get. as the average of the year. So please don't get fooled by the accounting treatment on Q2. All the projects that we booked were in the US, and they were all under construction already.
spk11: Okay. Thank you, Ishmael. In terms of the module business, I was wondering if you could comment on the geographic mix of the 3.7 gigawatts shipped in Q2. And then how do you expect that mix to change in Q3 and Q4? And what are your expectations for the geomix, geographic mix in 2022? Thanks.
spk07: So first of all, in terms of the split of the shipment, I want to add that It is as huge as in the past quarters that around half of the volume goes to the DG market, residential and DG market. In terms of geographical, so we have the leading market is China, actually. In Q2, we expand our presence in China to deal with the uncertainties on exchange rate and also the higher shipping costs, ocean shipping costs. So China became number one in Q2. So this is a little different from past quarters. And secondly, North America and EMEA are both more than 20%. So the rest is in the APAC and Latin America.
spk11: Thanks, Yan. And can you share what the percentage was in Q2 for China?
spk07: It was 27%.
spk11: Great. And then looking into Q3 and Q4, do you expect those mixes or percentages to remain the same?
spk07: Similar.
spk11: Great. And what about 2022?
spk07: 2022, I think it will probably stay or maybe slightly higher. That's my estimate. But I cannot be so clear for now. In general, we want to increase our presence in China, you know, given the high shipping cost and also the exchange rate trend. So, but however, I don't have detailed number for you. It's going to be like similar.
spk11: Got it. As it relates to the U.S., which sounds like it might be more than 20%, can you talk about if you've seen any changes in the U.S. market, whether it's with customers or with other aspects of shipping into the U.S. since the WRO on Hoshine was put in place? Again, whether it's customers or if you've changed your approach to the market, talk about the U.S. market a little bit. Thanks.
spk07: The demand we're seeing is high. So there's strong demand from U.S. and we have many customers, you know, talking, discussing with us or try to sign a supply agreement with us on multi-year large volume deals. So we see the demand is very strong. And in terms of RO, we're actually been working very hard to deal with that. And we're pretty confident that we can overcome that constraint.
spk11: Okay. Thanks for all the detail. I'll pass it on.
spk05: Once again, if you wish to ask a question, please press star and the number one on your telephone keypad. Your next question comes from the line of Colin Rush of Oppenheimer. Please ask your question.
spk10: Thanks so much, guys. Could you give us some insight into how non-silicon costs are trending and availability of materials? Are you seeing any significant tightness or changes in terms of cost and availability?
spk07: Yeah, so you're talking about processing costs, non-silicon processing costs, right?
spk10: No, I'm talking about glass, aluminum, silver paste, all those sorts of things that are going into the natural materials.
spk07: Okay, it was going up pretty fast from Q4 to Q1, and then Q2 actually came down. It's been stabilized and going down a little bit, so that's the overall trend.
spk10: Okay, and then in terms of your strategic focus around different system sizes, you talked about the distributed power. Mark Hamill, the better pricing, you know, as you see this going forward, you know, on the development side, you know, are you looking at the, you know, community solar kind of 10 to 50 megawatt type projects being a real growth market or are you still really highly focused on some of the larger systems?
spk07: I think in second half, we are observing that in mature and developed market that the rooftop market is actually warming up. It's coming back. It was affected more than the utility scale because of COVID. And now it's actually coming back. So that market will continue to be better on profit. So it will continue to be our focus. So you talked about like one or two megawatts ground mount. Did you say that? I couldn't hear.
spk10: No, more like 10 to 50. I'm talking about kind of the medium-sized ground mount systems and whether that's a real growth market where you can plug into the 65 kV lines or 64 kV lines and support the grid in a little bit different way.
spk07: Yeah, those size of project in terms of, if you're talking about EPC and module sales, we don't see that anything better than the large projects in terms of pricing for module. But on development side, Eastmill may have a different light in terms of development and investment.
spk10: Okay, that's super helpful, guys. Thanks so much.
spk05: Once again, if you wish to ask a question, you may put a star and the number 1 on your telephone keypad. Your next question comes from the line of Mark Strauss of JPMorgan. Please ask your question.
spk09: Yes, thank you very much for taking our questions. Most of them have been answered. I just wanted to see if you could give a bit more kind of high-level color on your capacity plans, right? you're taking down your module capacity in the second half of this year, but increasing your wafer and cells. Just as we think about that over the next several years, has this whole supply chain disruption kind of made you rethink your historical methodology of having significantly more module capacity?
spk07: Well, we actually... continue to believe in what we call that flexible vertical integration. We believe that the industry is in the stage that the P-type, the existing PERC technology has reached to a limit, while we still do not have consensus on the N-type. And starting from next year, we're going to see, you know, probably a strong oversupply on some of the materials. So we actually, of course, we will continue to go to execute on our existing CAPEX plan, as we have published in the past. However, we're not, in terms of next year's additional CAPEX, we still don't have a tangible plan yet. We try, we want to be more cautious. and while we will still grow our market share next year. So we had market share of 8% last year, 10% this year, and now market share will continue to grow year by year.
spk09: Okay, that's it for us. Thanks, Jan.
spk05: Your last question comes from the line of Philip Shen of Frog Capital. Please ask your question.
spk11: Hi, everyone. Thanks for taking my follow-ups here. In terms of storage, how much of, well, in terms of the 1.5 gigawatt hours under construction, can you give us a sense for how much might either COD or be sold by quarter in the coming quarters?
spk07: Oh. Yes, ma'am. Oh, no, it's not used to that. Okay, my question. Okay, so in terms of COD time, okay. So we have, but we had 300, no, we had a 300 megawatts hour shipped and installed in Q2, and the rest of the almost 900 megawatts hour would be connected in the second half of the year. So in terms of Q3 and Q4, I don't have the exact split yet. So the timing, you know, can be somehow uncertain.
spk02: Great. Thanks, Shannon. Phillip. Phillip, this is Sean speaking. We have the numbers, but I will follow up with you later to provide you some more detailed breakdown by borders.
spk11: Okay. Thank you, Sean. In terms of the cost inflation that we've seen, you guys obviously sell the modules, but then you also build projects, and we've seen inflation across the board. Just wondering if you've delayed any of your projects as a result of higher input costs, and if so, you know, what kinds of delays are we seeing, you know, maybe a quarter, maybe longer? And then are you, as a project developer, are you seeing asset owners, are they willing to take less return, you know, 50 basis points or something, you know, help meaningfully less to help absorb some of this cost inflation? Or are you seeing pushback from them? And is the preference, again, to delay projects and push out the CODs.
spk02: Philip, this is Sean speaking. Fortunately, we don't have much solar project to start NTP this year. So we are not much affected so far by the equipment cost increase. We do have some projects. We may reach NTP by the end of this year in the tent, so we'll see. We think we'll go ahead with those projects because the investors, you know, the investors or the project buyers are also willing to pay higher costs to us. Now, this is our situation. In terms of third-party project developers, I guess we see both. We do see some developers delay their project next year, but we also see some developers who are willing to take higher cost and build a project this year. Also, as we showed you, one of our site, we actually start to see the PPA, the power purchase agreement start to move up in recent months. As you said, the inflation is everywhere, so the inflation is on the electricity power price as well. So we seem to see that the PPA for renewable also responded.
spk11: Great. Thank you for the color, Sean, and I'll pass it on.
spk05: Seeing no more question in the queue, let me turn the call back to Dr. Sean Ku, Chairman and CEO for Close and Common. Please go ahead.
spk02: Yeah, thank you. And thanks, everyone, for joining us today. And also, thank you for your continued support. Now, if you have any questions, I would like to set up a call please contact our investor relations team. Take care and have a nice day.
spk05: This concludes today's conference call. Thank you for participating. You may now disconnect.
Disclaimer