Emeren Group Ltd

Hello, ladies and gentlemen. Thank you for standing by for Renner Solar Power's third quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question at that time, you'll need to press star one on your telephone. Please note that we are recording today's conference call. I'll now turn the call over to Mr. Gary Dvorak, Managing Director of the Blue Shirt Group Asia. Please go ahead, Mr. Dvorak.

So thank you, Tara, and hello, everyone. Thank you for joining us on today's call to discuss our third quarter 2021 results. We released our shareholder letter after the market closed today. It's available on the website. There's also a supplemental deck posted on the website that we will reference during our prepared remarks. On the call with me today are Mr. Yumin Liu, Chief Executive Officer, Mr. Kuo Chen, Chief Financial Officer, and Mr. John Yuen, CEO of North America. Before we continue, please turn to slide two. Let me remind you that remarks made during this call may include predictions, estimates, or other forward information that might be considered forward-looking. These forward-looking statements represent Renicilla Power's current judgment for the future. However, they're subject to risks and uncertainties that could cause actual results to differ materially. Those risks are described under risk factors and elsewhere in Renicilla Power's filings with the SEC. Please do not place undue reliance on these forward-looking statements, which reflect Renicilla Power's opinions only as of the date of this call. Renicilla Power is not obliged to update you on any revisions to these forward-looking statements. Also, please note that unless otherwise stated, all figures mentioned in the conference call are in U.S. dollars. With that, let me now turn the call over to Mr. Yumin Liu. Yumin?

Thank you, Gary, and thank you, everyone, for joining the call. Before we dive into the quarterly results, I need to address the misleading short report that was published last week. I'll use this report to present you some more insights and details about our business. The report was erroneously and misleading obviously written by an author with little understanding of the solar project development, but with a motivation to unfairly drive down our stock price. We will discuss the report today and answer any questions you may have. We will also follow up with any of you as desired. Once you understand how the author manipulated some data points to draw incorrect conclusions, we believe you will have even greater confidence in renewable power. And this junk report will be quickly dismissed and forgotten. The report basically makes three claims. The first, they claim that we have fake projects, what they call ghost projects. Second, they point out that many of our projects are delayed. And third, they infer that there is some sort of hidden risks from the Mr. Li family's ownership and support of the company. I want to address all three of these issues now. First of all, the author presents many discontinued projects as if they are fake. Project development is a portfolio business, and they terminate projects all the time for a variety of reasons. Many of the projects they cite fall into this category. We cancel them and move on to better opportunities. They are not non-existent. Similarly, some of the projects they cite as fake are still very alive. Giving you examples, Castillo in Spain includes three projects totaling 24 megawatts and is in late stage development with RTB, or sales targeted for the second half of 2022. They also cite the Tenergy project. We not only want the tender in cooperation with Tenergy, but also are in charge of the project development activities, having a development service agreement with them. Similarly, the author disparages our development partners in Italy, demonstrating a lack of knowledge about typical industry partnerships. Most local development partners are small businesses. Our hyper-local model seeks out small, energetic, and capable businesses with close ties to their communities, such as MPCC and Terra Aurea mentioned in this report. We have over 10 different development partnerships in the EU countries, and most of the partners can be categorized as small companies. We had compelling reasons to partner with MP Sicily and Terra Aurea. MP Sicily is the Italian development arm of the Austrian investment company Mesna and Partner, known as SMP. Terra Aurea is related to MP Sicily. We had partnered with MP in Poland, who helped us win 40 of the 172 projects we have secured there and successfully build them. MPs are great partners and it is natural for us to work with them in other European countries. So far, the two Italian partnerships we have already built four new projects in Italy. The report is completely off base in chastising us for these partnerships. The author's mass on our pipeline disclosures over time is irrelevant to their fraud thesis. Projects will go into and out of our pipeline constantly as we prune and optimize our portfolio. You should expect us to always upgrade our pipeline with smart resource allocation and robust net growth. The second major claim that we are inflating our pipeline because of delays is laughable. The report cited a bunch of delayed projects without ever conceding that the world was open lockdown for COVID since 2020. And lingering outbreaks and supply chain issues have caused more delays this year across the whole world. In fact, the words COVID and pandemic do not even appear in the report. We believe that an accusation of delays with no acknowledgement of COVID has no credibility whatsoever. For example, they point out that our Caravaca project in Spain is delayed. Correct. Spain was locked down for months, causing delays in government approvals. Caravaca environmental approvals alone was delayed by about 18 months. It has now been approved and has moved into the sales process. We expect to close the sale soon. People knowledgeable with our industry understand that project development cycles are long. Small projects take one to two years from Greenfield to NTP. To get to NTP for big utility-scale projects can take five to six years in the U.S., and two to three years in most European countries. The development periods we see in our pipeline are totally normal. In the final claim, the author attempts to create a sense of fear by calling out the Lee family's participation in our company. The fact that Mr. Lee is a large shareholder of our company is hardly news. It is not appropriate for us to comment on his personal affairs. We are a limited liability company. We are not impacted by the individual situation of any of our shareholders. We appreciate the Lee family's continuing support as a large shareholder. All of our shareholders give us a vote of confidence with their share ownership. The report also threw in some other small items. trying unsuccessfully to build their case they criticize our non-gap adjusted ebeta fine judge us on our gap numbers they talk about our pursuing small projects which is exactly part of our strategy this report has no merit Anyone that understands our business will see through the author's misleading conclusions and false accusations. We are proud of having the industry's best project pipeline disclosure. We are open, transparent, and detailed. We have nothing to hide. The report tried to use our transparency against us, but failed miserably. Our shareholders appreciate our detailed level of disclosure. We intend to continue this into the future. OK, now let's move beyond that distraction and cover the important stuff, our third quarter results. We examined the quarter in detail in our shareholder letter posted on our website. So I'm just going to call out the highlights that you should study in the letter and also supplemental deck. The first key point is that we are comfortable with our performance in this quarter. We were profitable again for the sixth consecutive quarter. Profit was a result of good gross margin at the high end of our guidance and good expense control. The gross margin strength shows the value of our strategy to sell projects at NTP, which is most profitable. We also generate high margin recurring revenue from our IPP electricity sales. Against the good news, revenue was below our guidance. You should not be concerned. We are not. On a quarterly basis, sales will move between periods. In Q3, two project sales we expected did not close, but we expect the sales to occur in Q4 or early next year. In general, we analyze our business on a yearly basis and do not worry about quarter to quarter timing issues. The second key point is that we are executing successfully our pipeline building goals. At the start of the year, we targeted having two gigawatts by the year end. We were close to that goal by the end of Q3 with over 1.8 gigawatts in the pipeline and 15 megawatts under construction. Our pipeline is dominated by Poland, the US, Spain, and the UK. Each of those countries, together with other territories we have activities, represent multi-hundred megawatt projects. These are attractive markets. with strong investor base and good government support. So we anticipate more growth ahead. We expect to end the year with around 2.2 gigawatts and will soon set aspiring goals for 2022. Let me now turn the call over to our CFO Ke Chen for comments and on our financial performance.

Thank you, Yumin, and thanks again, everyone, for joining us on the call today. Our shareholder letter and the supplemental slides contain all the figures and comparison you need. I'm not going to repeat every number. Instead, I'm going to focus on the factors that influence results. As I speak, please keep in mind that we will discuss certain non-GAAP financial measures. We use non-GAAP measures because we believe they provide useful information about our operating performance that should be considered by investor, along with the gap measures. A long gap-to-gap reconciliation is included in our shareholder letter. Let's begin with our Q3 financial highlights on slide 17. Revenue was up 59% year-over-year, while down a bit sequentially. Project development revenue consisted of sales of projects in Maine and Poland. IPP energy revenue came from the 49.4 million kilowatt hour generated by our rooftop DG project in China and the US. The sequential decrease was caused mostly by the delayed project sales we've been mentioning earlier. Those sales are delayed into Q4 2021 and into 2022. I want to emphasize that we may just mention about timing. Project sales are large. with unpredictable timing and quarterly revenue will often fluctuate significantly. More importantly, we also avoid some high material costs and construction costs in Q3 2021. Again, we measure our success by focusing on profitability and growing our pipeline growth. Profitability was driven by two things, gross margin and expense control. Growth margin was at a high end of guidance. Growth margin was driven by our focus on high margin NTP sales supported by high margin IPP electricity sales. Growth margin was a little bit lower than both Q2 and last year because growth margin was unusually high in both those periods. We were effective in controlling expense. Operating expense was down sequentially and up only modestly year-over-year. The main element of OPEC's general and administrative costs was up sequentially and year-over-year as we stepped up to support growth. GNA growth was less than pipeline growth, showing that our spending is effective and we have good operating leverage. The strong margin and discipline spending resulted in operating income around 70% of revenue. Non-operating spends were mainly net interest and foreign exchange losses, which reduced our net income. Our bottom line net income attributed to shareholder were approximately 5% of our revenue. This is our sixth consecutive profit quarter. Now let's review the balance sheet shown on slide 20. Our financial position is strong and we have the ability to fund any number of initiatives and opportunities. Cash was down slightly over the quarter due to investment in the project pipeline. Debt was unchanged. Our debt-to-asset ratio was 15.8%, a rig low over the past year. Given the financial strength and our confidence in the prospect of strong goals, yesterday our board of directors authorized a $50 million share repurchase program. We intend to buy shares in the open market when we think they are trading below the intrinsic value of the company. Now let's cover 2021 guidance, as shown on slide 25. In the fourth quarter, we expect revenue of $21 to $27 million and a gross margin in the range of 30% to 40%. Revenue expectations refer to our assessment of which project sales will close, including those that split from Q3. We also assume stable electricity production from our IPP assets. Given this, we expect to be comfortably profitable in Q4. We do acknowledge the risk of delays from the new COVID Omicron variant. The Q4 guidance put the full year at 77 to 83 million of revenue and the full year gross margin better than 40%. We're not yet giving 2022 guidance, but our earlier budgeting process is targeting bottom line growth of at least 30%. We will give robust new pipeline growth target on our next call. We would now like to open the call for any questions that you may have for us. Operator, please go ahead.

Thank you. We will now begin the question and answer session. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you need to cancel your request, please press the pound or hash key. Our first question comes from Amit Dayal at HCW. Please go ahead.

Thank you. Good afternoon, everyone. Yumin, just to begin with, maybe on the IPP revenue side, with the China projects potentially coming online in the near future, how should we think about IPP revenues on a quarterly basis in 2022?

Okay. At the last earning call last quarter, we guided that we have the target to complete 100 to 150 megawatts by the end of next year. We have built the pipeline in China, as you see the deck, and also I mentioned, over 110 megawatts. And also we have, in the under construction and we have also completed or connected three megawatts in the last quarter that will continue I will provide you periodically the quarter by quarter our progress in China but I do believe that the number will absolutely go up and we will provide you the updates more sound updates in the next couple of quarters when we see the progress from China.

Okay, thank you. And then just the competitive environment, can you just speak about how you are positioned in terms of the projects you are looking at and your opportunities to win some of these projects in the US and Europe?

Okay, absolutely everybody in the industry all feel lucky that we have strong support from all over the world, all the governments, the market, we have activities. Not only in the US, not only in China, but also we have almost every good policy support in the countries we operate in Europe, okay? They just give you one example that Germany just a couple weeks ago announced their target to grow the pipeline to 200 gigawatts by 2030. We are building our strong pipeline, our talented local team now. And we have a growth target in the very important European market, including Germany, as one example as I give. and we will provide you the aspiring and robust target for the pipeline growth in the next quarter. We do believe our fundamental of the strong pipeline growth will be there, supported by all the tailwinds as we see from all the governments.

Okay, understood. And then just finally, in terms of the cash balance, it's pretty strong. You're applying some of that for potential share buybacks. What are the plans in terms of using this balance sheet to continue finding maybe acquisition opportunities or leveraging the balance sheet for other growth-related efforts? Just to get a sense of what you plan to do with this balance sheet to drive the opportunities that you are looking at.

Thank you. Absolutely, we continue developing organically our pipeline through our partnerships, through our greenfield development in multiple markets. At the same time, we have been actively acquiring projects we are strategically considering acquiring not only projects but also platforms in strategic markets. And we are in the process reviewing several targets for the platform and portfolios in both U.S. and Europe. And acquiring projects is a continuous activity throughout the years. In the past year, we have done funds of those acquisitions or project portfolios or projects. But we are also strategically planning to acquire beyond the portfolio or projects, but also capable platforms in both US and Europe.

So excuse me, what does that imply? When you suggest platform, does it mean you're moving a little bit more into the technology side? Any clarity on what you mean there?

When I mean platform, we are considering opening up some new market in Europe. We are also considering to open up our product portfolios with... Let's put it this way. We are acquiring projects, and now we are also acquiring the development platforms I'm talking about, the talented, capable developers who together with the portfolios or projects, that is the target we are also looking at. Okay, okay, understood.

Okay.

That's the last one. More development pipelines and together with the development platforms with the capable developers.

Amit, may I add, we are also, Amit, may I add, again, we also penetrate further in solar cross-storage area.

Okay. Okay, understood. Yeah, I can take these offline as well. Thank you.

Our next question comes from Pavel Molchanov at Raymond James. Please go ahead.

Thanks for taking the question. You referenced a minute ago the new German coalition government and its 200 gigawatt solar target for 2030. As I look at your existing project pipeline, Germany is a very small amount, only 2% or 37 megawatts. Are you more enthusiastic about potentially expanding your footprint in Germany, given the new political environment?

Absolutely. Thank you. It's a very good question. Yes, we do have the plan. We're not only aggressively expanding our team locally, but also actively building up our partnerships as we have been doing in the European markets.

Let me also touch on... supply chain. I think everybody understands what's been happening with module prices, steel costs, inverters, every commodity over the past 12 months. Are you noticing, perhaps in the last six weeks, some loosening of the supply chain? For example, a reduction in module pricing, which seems to be what the benchmarks are suggesting?

Absolutely, you are right. We do have noticed that. In the last about over a month's time, since early November, late October, we start to see the comments or announcement by the big module manufacturers and even other suppliers of industry cutting their price target are indicating the price will go down. And our European team and China team, as you know that although we focus on the NTP sale for most of our projects, but we do have portfolios in Europe and China, not only in China we are building them and holding them for IPP model, but even for Europe, we sold projects and we work for the partner we sold the project to as the EPC management company. So we are responsible for those construction and procurement of the modules and the whole balance of the system. So because of the high price or caused by the delays of the supply chain, we managed to delay the construction of some European projects that also have some indirect or direct impacts on our Q3 numbers, but we believe that's the right thing to do. And now we have also recognized the price of the modules, for example, to European market and China both go lowered as much as over 10% in the last one month. And we have used up our already purchased the project in stock early this year at a low price, but we are planning to buy more modules starting early next year. Especially, we see the price is going down now.

Okay. My last question is about your relationship to China. Your stock has been trading along with other companies perceived to have a Chinese connection because of the restrictions in Beijing and so forth. Can you just clarify as a, where is RenaSol domiciled and what is your relationship to China beyond simply having those, you know, that small amount of recurring revenue assets that are operating in the Chinese market?

Thank you. This is a very good question. We are a very international company. It is true the company was founded back in China about 17 years ago. And that time, we were focusing on manufacturing. But since four years ago, the company split the upstream and downstream, and the downstream part, which is SOL, is a very international company. Not only we have our over 90% of the project portfolios, as you can see from the deck or later to the shareholder, is outside of China, but also we expect the growth The strong growth from Europe and U.S. will continue dominating our whole company growth in the long term, in the future. Second, we do believe that China presents us some very good opportunities on high margins from the China projects we are developing and building. And that attractive margin can be recognized as a business operator. And we love it. But we are very disciplined, not only controlling our quality of the projects, but also we have high standard, a critical standard for our economic hurdle for the China projects. The link to China It was all because that we were founded in China. But now, I will say, I'm the CEO, I'm in the U.S., our co-chair, our CFO in the U.S., and the headquarter of the company is in U.S., where I am sitting in, the Stanford, Connecticut, half an hour away from New York. And our operations, once again, is international company we do have China operation as many companies do but China is only one of the countries we develop projects representing about less than 10% of our growth of the company the portfolio of the IPP in China does represent a high margin recurring Avenue But that is the strategic economic consideration of the company, as those deals are providing very high margin to the company.

Paul, I want to add again, our company is domiciled in BVI. We don't have VIE structure. So every shareholder will hold the same rights of the assets of this company. So it's very clean. And like Yumi mentioned, again, 70% of revenue and gross profit is coming from U.S. and Europe. So again, we are focused on the growth of this area. And I also want to go back to your question about the cost. Again, people focus on cost. Yes, the cost did went up. But I also want to emphasize the PPA price went up as well, even at an even higher multitude Of course, three markets we operate on, Europe, US, including China, PPA price went up. So I think those will benefit us in the long term.

Thank you very much.

Once again, if you wish to ask a question, please press star 1 on your telephone. Our next question comes from Philip Shen at Roth Capital Partner. Please go ahead.

Hi, everyone. Thanks for taking my questions. Thank you also for the straightforward Q3 letter and opening comments addressing the egregious short report and the disclosures overall. You do provide a lot of information, and I think it's helpful. On the buyback, You guys put that in place after the short report, and there was some damage from the short report with the stock price. I think you highlight your cash per share is basically $4 a share, which is interesting relative to the current $6 share price with a book value of also $6 per share. Given that, can you share with us right now how much of the buyback – $50 million of buyback approval. How much have you used?

Phil, we just approved this, so we're in the process of, again, starting this buyback process.

Okay.

We have done zero at the time, Phil, as we are not, we could not do this before the earning call.

Got it. Okay, that makes sense. And so I can imagine you might be using it sometime soon. Actually, what is your view on the opportunity right now?

Yes, Phil, I think we are going to be aggressive here. First of all, again, as I mentioned, our stock is undervalued. Secondly, we see a lot of growth here, and we have strong pipeline, strong balance sheet, So we're part of what we're doing and we see a lot of potential for our growth here. So we're confident.

Great. Okay. That's really helpful. Let's look into 2022. I know you talked about issuing more detailed information in your year-end shareholder letter. That said, I think this year, I think... Through Q2, you guys had done 65 megawatts, I think, of sales. I don't exactly recall seeing in the Q3 materials what you sold in Q3, so if you can talk about that, that would be great. And then basically it seems like maybe it's about 100-ish megawatts for this year, but when I look at the COD information in your detailed PowerPoint, there's a lot of 2022 COD. uh or ntp if you will and so um i'm thinking 2022 is a 250 or 300 megawatt uh level of sales am i off base on that am i are we in the right ballpark i i think the uh you touched on two two points one is our 2021 number one is 2022 okay uh i think the uh what you just said mostly

both are right in the ballpark. Number one, on 2021, we are, in the last two years, you know, Kuga and I and also all the senior management of the current senior management all came on board about two years ago. One of our focuses is to build a solid, strong pipeline to secure the growth, long-term growth of the company. And we are getting there. We built a gigawatt last year. We have two gigawatts target this year. And now we have 2.2 gigawatts target this year. And looking at our quality portfolio, with a very high success rate of the portfolio, as lots of risks have been minimized, or the project got to a certain level de-risked, Development cycle or monetization cycle from today to the time we sell the projects will be two to four years. And do a simple math, what you said for the 2022 and beyond will continue grow. Not only at the one side, grow our development pipeline, but also at the other side, grow the megawatts we will sell each year. 200 megawatts to 250 megawatts is a reasonable but low-end estimate as we see growing from next year. And this year, as we mentioned, let me finish this one. In this year, we delayed our two project sales One in the US, one in Europe, in Spain. Those two together, that is about 60, 70 megawatts right there. And we hope we can close them in Q4 or no later than Q1 next year. So that's the overall picture of our sales and project closings.

Great. And so at the beginning of this year, you gave the target to reach and add two gigawatts to your pipeline, or at least reach two gigawatts for the pipeline. What do you think you could see at the end of 2022, given, you know, Germany, as you discussed with Pavel just now, you know, it's a new wide open market that could see very nice and aggressive growth and there is just a robust potential outlook the US market could get a boost from the build back better plan so what's your what's your sense as to where the pipeline could end up could we see you know three gigawatts or or maybe even more I think the we absolutely will present you a more robust and aspiring

pipeline growth target by when we release the year end result but the we think it will be great as the fundamental support from all the governments and all the policies just give you one example that the as we mentioned the four top markets providing most megawatts to our company's portfolio at this time are US Poland, UK, and Spain. We have many more Omegas in those countries and also in other countries too. We all have many more of those we call early stage projects. In countries, as I mentioned, those four countries, sometimes we not only give a big attention from our management to build up the team, as Pavel mentioned about how we build up the team in Germany, how we expand the team in Poland, in Spain, in UK, in US. But at the same time, we are actively developing or maturing our current portfolios at the early stage. One small example I want to give you is we cited 300 megawatts in Spain. what the status of the 300 megawatts. In Spain, typically we see five things. You have the land lease, then you have the application for the interconnection, then you put the deposit, then you get the, the fourth one is you get the confirmation from the utility to say the capacity will be available to your application. The last one will be you are approved for your applied capacity. You know, some of the portfolio of the 300 megawatts already have all the five steps done. And we are working on the final step, which is the environmental approval. And another about 270 megawatts, we have put in the total 300 megawatts. We already have the four steps done. just waiting for the final confirmation of the approved capacity. Just give you one example that we have more than a lot bigger early stage portfolio. We also put in the application, but we are waiting for the final confirmation of the available capacity. Just one example. And also, as I mentioned earlier, we have over 10 different partnerships in Europe. and every one of them we believe is capable of bringing new projects to us. For example, I mentioned earlier, we have two development partnerships in Italy. They have brought us four new projects total. We have not included in Q3. As they are, we consider maybe middle stage projects. But we will refresh our pipeline quarter by quarter and year by year. And we see great potential in every market we are developing projects. And that pipeline can be very promising.

Great. Thank you, Yubing. As it relates to the WRO enforcement action in the U.S., We are seeing limited module availability from JNCO, Trina, and I believe Longji. And so was wondering what kind of impact you could see in 2022 installations as a result of that. Maybe you already addressed that in your prior answer. Apologies if I missed it. But to what degree have you been able to diversify away from the impacted module suppliers, and have you been able to substitute those modules with other ones, or are you still in the process of doing that?

Hey, Phil, it's John. So the answer has a couple of different answers. One, just right off the bat, it's absolutely true, ultimately, that if the projects get more expensive on the EPC side, you know, eventually that works its way up to us. But fundamentally, the strategy of being an NTP seller, we are insulated through that process because, you know, one subtlety of that that, you know, is important to appreciate is at any one project sale, we don't walk into that project with locked-in financing, locked-in EPC, or locked-in procurement And we're able to take, for the moment, we have the luxury of being able to take the most competitive bid in that market for that project, for that COD date, for that market. And what that means is, on the ground, what we've seen is that some of the bidders have a view that they'll buy the project and by the time they build it six or nine months from now, they'll be in a different position and they'll basically take some risk on EPC costs that they don't push to us. In other cases, we've dealt with buyers that have safe harbored procurement and a very solid subcontractor relationship network that they believe they can get the projects built on a labor you know, front where they're not overly exposed. I'm sure there's some small movement. You know, it's a roundabout way of saying we acknowledge that we have some exposure, but there's some derivatives to that that, you know, we're a little bit insulated. And there's some real subtlety as to how that expresses itself. You know, if panel prices stayed high for the next 10 years, ultimately, yes, obviously would our margins be hit. But then like Kurt said earlier, you know, we've seen PPA prices creep up too. So, you know, there's some, you know, I go back to the same thing, you know, and I'll end it here. But I go back to the same thing that I firmly believe that high quality development is the rarest resource in renewables. And if we're controlling, you know, high quality development and doing a good job of it, I think there will always be a strong bid for it. Now, exactly... how that translates or the transfer function between, you know, EPC pricing and our margin, you know, ultimately we are exposed, but we've seen a number of things that separate us, at least in this recent short term, you know, when I say, you know, recent quarters.

Yeah, appreciate that, John, and I think that's super important to highlight that you guys are much more insulated to and from the WROs because, again, you're not making those module commitments per se. That said, your customers are, and ultimately they have that impact. And so you guys have mentioned that PPA prices have gone up. Can you just talk about the buyer's environment? And have you seen any buyers step away, for example, or quite the contrary, have you seen more buyers possibly come into the market so that that can result in that pricing going higher? Maybe speak to... some of those dynamics that are driving the PPA pricing higher. I know, obviously, supply chain is driving it, but what else might be supporting it? Thanks.

You know, Phil, you made a very interesting comment on this. You already said the fact I want to say. In the long term, not only we believe the buyer has a big buyer's pool and they offer a long-term view into the solar industry, okay? but also they have absolutely a big commitment investing in the long ownership of the solar farms. Just to give you one example, I mentioned about the two delays of our project sales, one in Europe, Spain, one in U.S. Actually, U.S. is portfolio projects. Spain is also Caravoca, two projects, 12 megawatts. That deal is supposed to close in Q3. the buyer was a EPC company supposedly. With the supply chain issues, EPC companies could not continue the transaction as they see the margins are fading away. But we immediately restarted the process and we found buyers who give us equal or a lot better pricing and we are looking to close it in the next two weeks and the buyers we are talking to now literally speaking are committing to invest in solar and we have a serious buyers pool and they are absolutely willing to work with us in the long term basis Many of them hope to become our strategic partner long-term. And we enjoy the growth together with the long-term owners of the solar farms.

Okay. Thank you very much for taking my detailed questions. I'll pass it on.

Thank you, Phil.

Our next question comes from Marisa Hernandez at Sidoti & Co. Please go ahead.

Hi, good afternoon, and thank you for taking my questions.

Hi, Marisa. Hi, Marisa.

Can you hear me?

Perfect. Yes.

Okay, great. I apologize. I don't have a great connection today. So, first of all, thank you for your opening comments and the disclosures that you make that I, as an analyst, find very useful. And thank you also for the clarifications on your ownership structure. I apologize if these questions have been asked already. So number one, on the third quarter specifically, I got that you got a couple of projects delayed, 60 to 70 megawatts. But how many megawatts did you sell in the third quarter, and what was the mix of NTP and COD, please?

Claim to take this? Sure. We sold about 6 megawatts in Maine. That's NTP. And we sold Poland 6 megawatts. That's COD sale.

So total of 12 megawatts in the quarter?

Roughly, yeah.

Okay. And... Do you have a range of what you expect for the full 2021 in terms of megawatts? And I understand that there's a big mixed component in there.

You are talking about how much we're going to sell in fourth quarter, you're right?

Yes, yes, or full 2021, whichever you prefer.

Let's put it this way, Marisa. that we are in the process selling quite several portfolios in US and Europe. As I mentioned earlier that we are in the process of selling those projects and we target to close a bunch of them. And we are in the closing mode on several projects. And we hope we can get them done all before Christmas time. But we also give a wide range of guidance for the Q4 results, as we want to leave some unpredictable events as of the holiday season. So although it's only a month away, but our team is every day working hard in the closing mode for quite several portfolios in both U.S. and Europe.

So I understand. Thank you, Yumin, for that. Now, in terms of mix, can you make any comments? Are all of those targets you're working on of NTP modality or all of them COD or is there a mix?

Most of them, if not all of them, will be NTP sales.

Got it. Okay. Thank you for that. And then in terms of, you know, I thought I heard something about cost affecting your margins in the third quarter? At the same time, they were at the high end of guidance. As I said, sorry, I don't have a great connection today. Is there anything other than project delay, rather deferred sales, pushed out of sales in the third quarter leading to your results? Did you experience any unexpected cost increase?

Marisa, I think I mentioned that we're supposed to have some COD sales in Q3, but we didn't do it because high cost will affect us. So for those, we are pushing back maybe Q4 and in 2022.

Got it. Thank you for that. So moving on to pricing, you were speaking earlier about the CPA pricing. Yes.

Before you move to the next question, I want to mention to you that when I gave the remarks earlier that our revenue is on the low end, but we don't believe our investors need to be concerned, as we are not either, because we are perfectly executing our NTP sales strategy. Every time we do NTP sales, we see a lower, higher margin, a lower revenue. While early in the year, every quarter, we expect, we put an expectation. Some buyers, they say, really, Solar, I want to buy your deal, but I want the transaction to be done at the COD. So we put in some perspectives on the COD sale. But every time when you see, if we close the deal, every single one has NTP sale, just like last quarter in Q2, you will quickly see very high gross margin. Like last one, we have over 60% gross margin in Q2. And for this quarter, the margin goes lower to 40% because we have a mixture of NTP sale and COD sale.

Understood. Thank you for that, Yumin. My next question is related to pricing trends. I think it was mentioned earlier how you're seeing higher prices from buyers, which I'm very glad to hear about. You also mentioned that you have COD projects to sell later on. So my question is around, you know, given all the costs we've seen this year on the material side, and now we are starting to see better PPA prices. For your COD check, when do you think the margin can catch up? Is it going to be first half of 22? Is pricing good enough to offset the cost inflation that we've seen, or you need for costs to go down or prices to go up further, anything? can give us a value that will be great.

I would address your question in two ways. One is on the immediate market reaction to the high price. For example, the high price not only meaning the high price from the modules or BOS, but also from the overall industry, the material cost, steel and everything, or energy cost. You know, I came back from UK about three weeks ago. We did a bunch of customers and also contacts. I know the small market in UK goes as high as almost 20 cents per kilowatt hour. I haven't heard of that for years. But unfortunately, that's the small market price in Europe. That represents the reaction of the market to the high energy price, high cost of raw materials, and all everything. And I don't expect that will continue, but the overall trend of the PPA absolutely reflect the near term or last 12 months or maybe going on for another five, six months high price in the solar industry. As we see, not only in the US, but also in Europe, the PPA price continuously going up by 10, 15, 20 or more percent. In front of the PPA negotiations we have, we have seen that. The second point is we do believe there are many very active long-term investors in the solar industry. They carry their long-term commitment to invest in solar. And they not only will be supported by the developers like us, but also by the supply chain. As we discussed earlier, the price of the modules start to go down. In the last one month only, we see more than 10%. And if you read the news from those big module companies, no matter it's Trina, Jinko, or whoever, they have all forecasted the price of modules will go down. Starting now, going into Q1, Q2, and some aggressive estimate, it will go back to normal before too long or before the end of the year, next year. So whoever, our partners, literally I more like to talk to our partners or the long-term investors in general, they commit to the solar industry. I believe they will benefit from it. Now is the best time to get into the project business and then harvest when the supply chain provides them the strong support for their profitability. And we want to be, or we have been, part of the success story.

Thank you for that. I also wanted to ask about what you're seeing about project delays because of the cost inflation this year on the COD type of projects and the whole industry. Is that something that you would expect to start eating in the next couple of quarters or is it hard to tell?

In general sense, it's hard to tell, but on two points I'd like to mention. One is we have been pretty successful managing our project development process and managing the risk of the potential delays. Not only our team works hard, but also our partners, we are interacting with all different parties in the development process we try to find creative ways working with them and that is one part of the story the second is we still people still rely on the supply chain coming down to the level people feel more comfortable at this time the good part of our development pipeline is we do not have PPAs, we have cliff PPA guarantee COD date. If we have PPAs having the cliff date, so-called guarantee COD date, we would be in difficulties. But we are not in those positions at this time. And many customers or even many of the solar developers as we know they are also developing their strategies and everyone I hope is supporting the growth of the solar industry with the hope the supply chain will come down and I'm optimistic as currently if you do the math of the New installations of the manufacturing facilities or modules, or even polysilicon, wafers, everything. We will see overcapacity or oversupply in less than six months time. The market will adjust itself for the price.

All right. You guys spoke about a wide range, perhaps 200 up to 300 megawatts, if I heard correctly, for next year's sales. What is the assumption of mix behind that, NTP versus COD? Just reflecting on the fact that you said multiple times that if you do NTP, you should do more and vice versa.

Yes. I will say the majority of the sales will be NTP sales.

And if I can squeeze in a last one on the ownership structure. Thank you for reminding us of your BVI jurisdiction. I think at some point we were talking about potentially becoming a 10Q as opposed to a 6K filer? What's the status with that?

Marisa, we are, again, starting the structure of our shareholder. Again, we will, based on that study, to decide how soon we'll shift to, I mean, not a foreign filer. Again, we will update all the shareholders soon here.

So that depends on the jurisdiction of the shareholders, yes?

Yes. Again, we believe, again, we are very close to more than 50% of shareholders here in the U.S., but we needed to do a thorough study to make sure that's the case.

Understood. Thank you very much.

Thank you. In the interest of time, let me turn the call back to Mr. Liu to conclude the call.

Thank you, operator. To conclude, we are committed to grow profitability, managing our operations efficiently, and strengthening our financial position. We are energized by the opportunities in front of us and looking forward to updating you on our progress again in a few months. Thank you all again for your participation. This concludes our call today. You may all