Ladies and gentlemen, thank you for standing by. Welcome to Canadian Solar's Third Quarter 2022 Earnings Conference Call. My name is Melissa, and I will be your operator for today. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to Isabel Zhang, Investor Relations Director at Canadian Solar. Please go ahead.

Thank you, Melissa, and welcome, everyone, to Canadian Solar's third quarter 2022 conference call. We have provided slides to accompany today's conference call, which are available on Canadian Solar's Investor Relations website, within the Events and Presentations section. Joining us today are Dr. Shawn Qu, 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 Canadian Solar's wholly-owned subsidiary, Global Energy. All company executives will participate in the Q&A session after management's formal remarks. On this call, Shawn will go over some key messages for the quarter. Yan 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. Shawn 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 20-F as amended 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 views these 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 call over to Canadian Solar's Chairman and CEO, Dr. Shawn Qu. Shawn, please go ahead.

Thank you, Isabel. Hi, everyone. Welcome, and thanks for joining us today. Please turn to slide 3. This slide provides a summary of our key performance metrics. We achieved strong results in the third quarter of 2022. The headline for ESG, 57% year-over-year revenue growth, 18.8% gross margin, and net income of $1.12 per diluted share. Profitability in both our CSI Solar and Global Energy businesses improved meaningfully as we continued to focus on solidifying our leadership position and driving profitable growth. Our team executed across the board and made Q3 one of our strongest quarters since the beginning of COVID. As always, Yan, Ismael, and Huifeng will go through our performance in more detail. Before that, let me highlight some key messages. Please turn to Slide 4. First, we made significant progress in our battery storage business across all our verticals. This includes CSI Solar's utility-scale and residential battery storage product teams and our Global Energy's battery storage project development fees. On our CSI Solar side, we continue to be pleased with the level of engagement of our SolBank products for utility-scale storage applications, which we launched a few months ago. Yesterday, we announced a new 2.6 gigawatt hour multiyear supply agreement. This underscores the very healthy demand we are seeing and our favorable competitive position. We will continue to provide updates for our contracted pipeline as we move forward. I'm also very pleased with the positive customer response to CSI Solar's residential energy storage product, the EPQ. This was showcased during the RE+ conference in the US, and we expect this to be a multiyear contributor for our sales. Our global energy team, supported by our CSI energy storage team made significant progress in completing one of the largest battery storage projects in the world, the 1.4 gigawatt hour Crimson Project. I'm very pleased to report that the Global Energy team continued to expand the storage pipeline reaching 40 gigawatt hours at the end of Q3. When you take a step back, you can clearly see that battery storage has become a very strong growth driver for our business. Our customers are excited about the variety of battery storage solutions, and we are excited about the growth opportunity ahead of us. Second, the US remains one of our core markets, and we are strongly committed to service our customers and partners there. We believe the US will remain one of the most important and attractive clean energy markets in the world. Efforts in the US to decarbonize and the passing of the Inflation Reduction Act have provided important lessons for other countries in our common fight against climate change. With that in mind, we are planning on investing in US domestic manufacturing across the solar supply chain. We have expanded our US fleet in preparation and are now in the final stages of our site selection process. While there are many challenges, we know the market well. We are proud of our 20 years of market leadership. We are confident in our ability to build upon our long-term track record and expand the level of support to our customers and partners in the US even further with the planned US domestic manufacturing activity. Lastly, please turn to the next slide. After a short procedural pause, CSI Solar's carve-out IPO is back on track and is awaiting the completion of the registration with the China Securities Regulatory Commission. While the process has taken longer than we initially expected, we are on track and working to complete the carve-out within Q4 or in Q1 next year. With that, let me now turn over to Yan who will provide details on our CSI Solar business. Yan, please go ahead.

Thank you, Shawn. Please turn to slide six. In Q3, the CSI Solar division delivered six gigawatts of solar module shipments and 570 megawatt-hours of battery storage shipments, of which 300 megawatt-hours were to our own projects. Total revenue reached close to $2 billion, and importantly, our gross margin continued to improve, reaching 17.3% in Q3. This was up 140 basis points quarter-over-quarter and from an absolute standpoint, doubled year-over-year to $341 million. Several factors contributed to our improved performance. First, our manufacturing costs declined further in Q3, led by an increased contribution from the expanded upstream ingot, wafer, and cell capacity with a higher degree of vertical integration and greater control over costs and supply chain. We've been able to improve our cost structure and profitability. This is in line with the strategy we previously outlined. While we did a great job controlling what is within our control, input costs remained a headwind in Q3. In fact, average polysilicon pricing remained at elevated levels and was flat or even slightly higher than the previous quarter, as you can see on Slide 7. So the improvement was mostly organic. We believe polysilicon prices have finally reached a peak, and we expect input costs may start to come down over the next few weeks. Although we won't really see a benefit until probably next year. Given the strength in end market demand, we still believe input costs will only come down gradually. Second, our gross margin benefited from currency fluctuations, led by the strong US dollar relative to the RMB. With a large part of our costs being in RMB relative to a large part of our revenues in US dollars, our costs depreciated relative to our revenues. However, this was partially offset by the weakness in most other currencies relative to the US dollar. Net-net, the ASPs of all our non-USD markets were lower sequentially, which had an impact on our aggregate revenue number. Third, unit shipping costs came down further in Q3. As we said before, there is significant room for logistic costs to come down, which we started to see in Q2. We believe there is further room for improvement, given we're still above historical normal levels. And there is no reason to believe that logistics costs are structurally higher than pre-COVID times. Please note that logistics costs do not impact gross margin and are recorded in selling and distribution expenses. All of these factors combined helped drive a tripling of our operating profit year-over-year to $97 million. Q3 was a record quarter for CSI Solar, which showed the strength of our brand and resilience of our business despite the tough market environment. Please turn to Slide 8. On the technology front, we're making significant progress on our latest N-Type TOPCon cell technology. As you know, we've been working on several N-Type pilot lines, covering both Heterojunction and TOPCon technologies. We believe the time is right for mass production. Therefore, all of the new cell capacity we're now adding will use our TOPCon technology. The first TOPCon products will be delivered early next year. We believe our product is best-in-class and will have approximately 1.5 percentage points of higher conversion efficiency than the average mainstream product in the market today. TOPCon will also be margin accretive once we start production. It was developed to contribute positively to our pricing power due to its ability to lower our customers' levelized cost of electricity. Meanwhile, our growth in manufacturing costs for TOPCon will be similar to our current mainstream product, even though the power wattage will be much higher. We expect N-type TOPCon cell products to account for roughly 30% of our 2023 solar module shipments. Please turn to slide 9. In terms of battery storage, we're on track to achieve our full year target of 1.8 to 1.9 gigawatt hours. Our new utility-scale SolBank product is gaining significant traction with customers. We recently signed a 2.6 gigawatt hour multiyear supply agreement with UBS for the US market with SolBank product. This gives us significant visibility over our long-term growth beyond just one or two years. We've also been expanding our market offering across more geographies, expanding from the US into the UK, Canada, and China, with more markets currently under expansion. One of our key competitive advantages is our strong partnerships with upstream battery cell producers, which helps ensure long-term security of supply for our customers. With that, our CSI Solar's battery storage turnkey pipeline more than doubled quarter-over-quarter, at nearly 25 gigawatt hours globally as of the end of Q3. While certain projects in this pipeline overlap with global energy storage development pipeline, the value creation and services provided by the two storage teams are distinct and separate. Therefore, the two storage pipelines should be viewed independently. On the residential EP Cube product reception, from customers during the RE+ conference was overwhelmingly positive, and the initial shipments to the US market are already underway. We're confident that EP Cube is one of the best, easiest-to-install products in the market. We are excited about this product and believe it will be a highly competitive residential solution. Now, let me pass it on to Ismael for an overview of the Global Energy business. Ismael, please go ahead.

Thanks, Yan. Please turn to slide 10. In Q3, we achieved $101 million in revenue with a 47% gross margin, making this a highly profitable quarter for us. We sold around 890 megawatts of projects in Japan, the US, and Brazil, which were mostly preconstruction and earlier stage projects, which meant relatively lower revenues at higher profitability. Recently, we had two major project completion milestones, which I'm incredibly proud of. Please turn to slide 11. The first one is the commercial operation of our landmark 1.4 gigawatt hours standalone battery storage project in California, the Crimson project. We completed this project in a very challenging environment of stringent COVID restrictions, which affected shipping schedules and led to project delays. However, we cooperated closely with our CSI Solar energy storage colleagues to bring this project to fruition, which is a testament to the synergies created among our business divisions. The Crimson project will provide critical reliability services to the California grid and allow the local grid to absorb more clean energy. We monetized 80% of the project to a long-term investment partner and retained a 20% long-term ownership. Meanwhile, we will continue to provide the operations and maintenance of the battery storage power plant. We are also expanding our capability in energy trading through this project, which we believe will be a key area of growth in the future. Please turn to Slide 12. The other major project completion is the commercial operation of our other flagship project in Japan, the Azuma Kofuji 100-megawatt solar power plant. The project is under JPY 36 FIT, roughly equivalent to US$0.24 per kilowatt hour based on current exchange rates, making it one of the world's most valuable projects. However, what I'm most proud of is that the project will contribute meaningfully to reinvigorate the local community and economy, which was devastated by the earthquake in 2011. This project is still fully owned by Canadian Solar. I highlight these two projects not to emphasize their uniqueness, but to show Canadian Solar's unparalleled track record in executing complex solar and battery storage projects across the world. We have one of the world's largest and strongest development platforms. Our goal is to develop more battery storage projects like Crimson and more solar projects like Azuma Kofuji. Turning to Slide 13. As of September 30, 2022, we had a total solar project pipeline of 25 gigawatts and a total battery storage pipeline of 40 gigawatts hours. This is the largest solar and battery storage pipeline in the world. Importantly, around half of our total pipeline has interconnection secured, which gives us significant confidence in our future ability to create value and growth. That said, you'll also notice that our solar pipeline declined slightly quarter-over-quarter. As you know, Canadian Solar is more than just size. We prioritize the quality and profitability of the pipeline we are building. We are selective on the projects that we decide to move ahead with, and we are not afraid to walk away from projects with a less attractive risk-return profile. Specifically, the combination of high inflation and high interest rates over the past few quarters has led to an adverse environment in some geographies. Thus, we invested in certain assets early and recovered our capital to set the stage to invest and grow in geographies with stronger fundamentals. It is important to note that we have delivered strong results through the challenging backdrop, which shows the resilience and strong performance of Global Energy's world-class platform. Please turn to Slide 14. Lastly, our strategy to increase the share of recurring income remains on track. On the operations and maintenance or O&M strategy, we now manage over 3.6 gigawatts of operational projects under long-term O&M agreements. We also have an additional 2.2 gigawatts of contracted projects expected to reach commercial operations soon. This makes us one of the largest project operators in the world in both solar and battery storage, and we will continue to grow this business. We will also continue to retain minority ownership in assets that we developed. Now, let me turn the call over to our CFO, who will go through the financial results in more detail. Huifeng, please go ahead.

Thank you, Ismael. Please turn to slide 15. In Q3, we delivered $1.93 billion in revenue, up 57% year-over-year. Gross margin was 18.8%, well ahead of our guidance of 15% to 16.5%. Q3 benefited from lower manufacturing costs, a net foreign exchange benefit from the strength of the US dollar relative to most other currencies, and higher margin project sales. Selling and distribution expenses were up 5% sequentially, primarily due to higher shipping expenses from the increase in shipping volume. However, unit shipping costs decreased, and we expect further decreases in the coming quarters. General and administrative expenses increased primarily due to a nonrecurring $30 million impairment of certain aged manufacturing assets. Net interest income in the third quarter was $4 million, up from net interest expense of $15 million in the prior quarter. The change was mainly driven by a one-time interest benefit of $17 million, which we received as interest income, generated by antidumping and conveying duty deposit refunds. The net foreign exchange and derivative gain was $39 million, compared to $6 million in Q2. The benefit was driven by the strong US dollar relative to most other currencies, but mainly related to R&D. Total net income was $102 million and a net income attributable to Canadian Solar shareholders was $78 million. This translates to base EPS of $1.22 and a diluted EPS of $1.12. The variance is primarily due to the adjustment for the dilutive effect of our outstanding convertible notes. Now, turning to cash flow and the balance sheet. Next slide, please. In Q3, the net CapEx payment was approximately $110 million, making it approximately $320 million for the first nine months of 2022. Given the delay in the IPO process, we are reducing our full-year 2022 CapEx expectations to $650 million from $850 million. Please note that this does not imply any changes to our capacity expansion projects, but rather an adjustment in the timeline and the pace of implementation of these projects. We ended Q3 with a total cash balance of nearly $2 billion and remain well positioned to capture future growth. Total debt was largely unchanged at $2.7 billion, but the share of our long-term debt increased to 45% from 40% this time last year. The 12-month trailing net debt to EBITDA, excluding restricted cash continued to decline this quarter to 2.7 times from 2.9 times the prior quarter. Now, let me turn the call back to Shawn, who will conclude with our guidance and the business outlook. Shawn, please go ahead.

Thanks, Huifeng. Let's turn to slide 17. For the fourth quarter of 2022, we expect total revenue to be in the range of $1.8 billion to $1.9 billion. Gross margin is expected to be between 16% to 18%. This reflects the elevated import costs in Q4, partially offset by benefits from manufacturing cost reductions. Continued foreign exchange volatility may affect pricing and margin. Also for Q4, solar module shipments recognized in revenue by CSI Solar are expected to be in a range of 6 to 6.3 gigawatts, including approximately 290 megawatts through our own projects. For the full year of 2022, we expect CSI Solar's total battery storage shipments to be in the range of 1.8 to 1.9 gigawatt hours, including approximately 300-megawatt hour through the company's own projects. Global energy project sales are expected to be in the range of 2.2 to 2.3 gigawatts. We are also introducing solar module shipment guidance for next year. For 2023, we expect solar module shipments to be in the range of 30 to 35 gigawatts, which represents approximately 56% year-over-year growth at the midpoint. Canadian Solar's strategy of profitable growth is one of our key differentiators; we continue to prioritize investing in long-term growth, which is positioning our business in strategic areas such as battery storage and leading in the deployment of technology innovation. This differentiates our products and adds value for our customers and partners, and is a key driver for our brand equity worldwide. All in all, we're continuing to focus on what we can control and on building our long-term competitive mode to create lasting value for our shareholders. With that, I would now like to open the call to your questions. Operator?

Thank you. We will now begin the question-and-answer session. Our first question comes from Brian Lee at Goldman Sachs. Please go ahead with your question.

Hey, guys. Thanks for taking the questions. I guess I had a couple just around the guidance. Shawn, Huifeng, you mentioned that gross margins, the guidance for Q4 implies a little bit of sequential decline. It sounded like input costs, logistics, polysilicon, all of that is trending in the right direction. So could you kind of walk us through what specifically is changing quarter-on-quarter to drive a little bit of a margin decline into the fourth quarter? And then also how you're thinking about that translating into sort of the early part of 2023, what trends we should expect on the gross margin line?

Brian, I want to start by highlighting that our guidance for Q4 gross margin is actually higher than what we projected for Q3. We had a fantastic Q3, achieving a gross margin of 18.8%, and now we are guiding for Q4 to be between 16% and 18%. So, regarding guidance, our Q4 forecast indicates an improvement over our Q3 outlook. I just wanted to emphasize that. Now, I would like Yan to elaborate further.

Hey, Brian, it's Yan. First of all, I want to say that when it comes to net growth, I am referring to gross margin, which is the price minus manufacturing costs. Q4 is not less than Q3, so that remains stable. However, we do not anticipate the same level of currency gains for Q4. So that's one point. Shawn, do you want to add anything?

Well, that's helpful color. I can take that question offline and maybe we'll dive more into the moving pieces. Maybe on that same topic, though, pricing is the first time, I think, in a while where module ASPs look like they have come down a little bit. And I think you mentioned that in your commentary as well. Can you kind of talk about your quoting activity? Are you starting to lower prices on modules? And what's your sort of view on module ASPs through Q4 as well as into 2023?

Yeah. So Brian, actually, for Q4, our ASP is quite stable comparing to Q4. We do not see any material price reduction from Q3 to Q4. There might be for some customers, some orders in some markets, we see some minor reduction, but it's not significant. In terms of 2023, we're already signing a lot of orders for next year. We also see some price reduction on some long-term orders, but it's not significant. It's $0.01 or $0.02 lower than what it is today. So that's the current price situation. But moving forward, we still believe the price reduction moving into 2023 is going to be more moderate and smooth in the longer transition period. The reason for that is, as we do – we all know that the end market is still growing rapidly. And also, the investors in the end market have a stronger affordability on high costs combined with the fact that the ingot capacity right now is more than the silicon capacity. So we believe there's certain resistance on the price reduction moving into next year. So, we do not anticipate any sudden drop in pricing; that's not going to happen.

Brian, I want to add one more comment that the ASP prices measured by US dollars may become a little bit less in local currency, for example, Japanese yen and euro and even Chinese RMB are not really declining. In some cases, the price actually is moving up. However, we are facing a situation where the US dollar is very strong. So when you look at it in US dollars, it seems like prices are going up, even if they are going down. Some of the local prices are quite stable and even going up.

Yeah. And Brian, on top of that, we're quite confident that our margins can improve moving into next year because we're actually – we – as you know, we've been always stronger in more developed markets, high-priced markets, and particularly in the US market, we believe it will be quite strong next year. And we're still expanding our talent capacity. And channel-wise, we've been always strong. We're shipping half of our volume into DG markets. And given the electricity retail price has gone up so much, we're experiencing strong demand from that channel. Obviously, the price tolerance in that channel is getting very strong. So, we're quite confident that it's going to be a good year for us.

Okay. That's great. Super helpful. Last one for me, and I'll pass it on. I appreciate the updated thoughts around the US manufacturing plans. I think you had talked about recently looking at just module capacity. So, maybe if you could give us a bit more detail. Are you still thinking of building just a module-only facility? What would be the kind of scale and timeline? Would you have production online in 2023, or would it be more 2024? And then can you give us a sense of the CapEx dollars and funding strategy you would be putting behind it? Thank you.

We expect a volume guidance for 2023 of 30 to 35 gigawatts. By the end of this year, we will achieve 20 gigawatts of wafer internal ingot and wafer, 20 gigawatts of cell capacity, and 32 gigawatts of module capacity. In the coming year, we will expand our TOPCon capacity for cells, aiming for total cell production of 26 to 27 gigawatts. We will maintain over 20 gigawatts of ingot and wafer, and we anticipate an increase in module capacity, including an 8-gigawatt expansion in Thailand for cell production and 60 gigawatts for modules. This plan will ensure we have sufficient capacity to meet our volume guidance, complemented by cell purchases of around 8 to 9 gigawatts. We are actively investing in this capacity expansion.

I was wondering specifically about the US as well.

The US. We're actually in the process of site selection. We plan to secure a site that long-term can support 5 gigawatts of module capacity. But at the same time, we are actively assessing the economic viability, policy-wise, as well as upstream capacity such as ingot, wafer, and cell. We're still in the process of clarifying a lot of details on IRA with the Department of Commerce. So, it's a continuously changing process. On the module side of execution, we may execute in phases. So, this is the plan.

Okay. Thank you. I'll pass it on.

Hi everyone. Thanks for taking my questions. First one is on the IPO in China. I was wondering if you could give a little bit more color on the timing of that. I know in the deck, and you guys talked about maybe Q1 of 2023, but in addition to that, do you still expect to bring your poly plant online by mid-2024? What's the update on how that development is going? And how the IPO might be tied to some of your capacity expansion plans? Thanks.

Huifeng, do you want to address this question?

Sure. Hi, Phil. Let me first talk about what that short procedural pause in our IPO process. So on September 30, the Shanghai Stock Exchange changed the status of our IPO application to pause awaiting an update to the financial information. We submitted the requested information to the stock exchange in early October. As a result, on October 27, the stock exchange after reviewing our documents changed our IPO status back to in registration, and with the message that CSI Solar has submitted updated financial information. Since then we are not receiving any more requests. So our application is back on track. Thus, this process of about four weeks. Yes, the process is slower than our expectations. But at this point, I don't have a clear answer as to why, because in general, it is hard to know the details inside the government office. In our case, it's much harder due to the COVID restrictions on travels. But for management, we focus on managing business and deliver better results. Now the good news is that there is no deadline for our IPO. We just wait there. If there are questions from CSRC, we will answer them. Also, let me share some statistics: there are over 30 companies applying for Starboard listing that are in the same status with us called registration, and actually, one-third of that submitted applications before us. Also, there are 50 companies in the pause status. We continue to wait for the completion of registration and meanwhile, many JV businesses and make the company better for the listing. Thank you.

Great. Thanks, Huifeng. Shawn, please continue.

Hi, Phil. So you also asked about the schedule of our polysilicon project and whether that investment is tied to the IPO proceeds. The answer is yes. Polysilicon is a big project. We will only proceed with the polysilicon project after we complete our IPO.

Okay. Thanks, Shawn. In your…

In other capacity, I will say that the other capacity projects are not really tied to the IPO financing for other capacity projects, such as the new module, cells, or even wafer, more or less secured. So not really tied to the IPO.

Great. Thanks for that detail, Shawn. A quick follow-up on that. I was wondering if you could share what your expectations for CapEx would be for 2023? We have the details of expansion of ingot and wafer to 25 gigawatts, cell to 35 gigawatts, and module to 50. If you could share that CapEx, that would be helpful? And then you also gave 2023 shipment guidance, I was wondering if you could give expectations for project sales and battery shipments for 2023 as well? Thanks.

Hi, Phil. We are still working on the CapEx plan. As I said, some of the projects will be tied to the cash flow, particularly capital injection, such as the IPO. We're planning to release the CapEx estimate in the March 2023 earnings call. But at the same time, as I said, the module and cell CapEx and the capacity expansion is more or less secured. So we will. Also, as you know, Canadian Solar has always been conservative, and we have a very strong and diversified customer base distributed around the world. So even without heavy polysilicon capacity expansion, we are still confident in reaching our volume sales target and also expanding the gross margin from today's level.

Great, thanks. I have another question. In relation to freight, could you provide the details for Q3? Specifically, what was your freight cost in terms of either total dollars or cents per watt? Additionally, while I understand that costs are expected to decrease, what do you predict for Q4 and possibly into Q1 of next year? Thank you.

So Phil, in Q3, it's about $0.023 and Q4 is coming down. It's about less than $0.02. So that's our estimate.

Can you discuss the operating expenses and EBITDA outlook for the next few years? How much operating leverage do you believe you have? It would be great if you could address both the operating expenses and EBITDA projections. Thank you.

Huifeng, do you want to address this question?

The OpEx number changed significantly. The big part is driven by the shipping cost, the selling, and other costs. However, other numbers have increased slightly because the size of our team has become larger as we ramp up capacity. But as we analyze OpEx ratioed by total revenue, I think going into the coming quarters, it will decline. It will be somewhere around the low teen.

Thanks so much. Guys, can you talk a little bit about the pricing dynamics for the energy storage market in the utility-scale side? Just curious how you're seeing that trend, given the growth in the backlog?

Hi, Colin, can you repeat your question?

Sure. With the robust growth in the utility-scale storage pipeline, could you discuss the pricing dynamics and what trends you are observing regarding pricing, especially in light of the changes in the energy markets and the utility-grade market?

Yes. Unfortunately, as you know, the storage pricing is more or less determined by the cost, and especially the lithium carbonate price. The lithium carbonate price is affected more by the electric vehicles rather than the storage because the EV still accounts for 90% of the lithium usage, and the storage is only 10%. If you talk about the pricing dynamics, the price is moving up, unfortunately, recently, but that's more because of the lithium carbonate price. That is more or less determined by EV rather than by the activities of general storage.

Yes. And Colin, one more comment is, for the projects we're signing, we actually secured supply and have control over pricing and with back-to-back deposit arrangements. Our strength in those projects is that we're providing turnkey service and long-term service, which is now in the market. There's actually a shortage of capacity; it's in high demand. So we have better control over pricing. It's not just additional revenue and profit on the turnkey service on long-term service, but also, this service helps us to have more bargaining power on the equipment pricing. So this is what we have achieved in the markets, especially in the US and European markets.

I agree with Yan and also want to comment that although the pricing is growing higher with storage products, the customer demand continues to be strong. That's because more solar and wind mean the market requires more and more reliable power; also, the energy price itself is going up, as you all know.

Yes. Given our rapidly growing pipeline, our pipeline is probably one of the biggest in the world, and such a pipeline helps us on the bargaining power on the supply chain. We have successfully secured multiyear supply agreements with our suppliers with our pipeline.

Thanks so much. Can you discuss your position in the interconnection queue in the US? These projects move through the queues as needed, but can you share the scale of that interconnection position and the current rate of project approvals?

No. Ismael, do you get this question? Do you want to address that?

Sure, Shawn. Thanks for the question, Colin. Look, what we are experiencing in general, not only in the US, but in general, is the rationing interconnections due to the longer lead times of equipment, especially high-voltage transformers. To give you an order of magnitude, in the past, a reasonable timeframe was six to nine months. We are now seeing lead times of up to 20 months. So as a result, interconnections are getting delayed. Even though your position in the queue might be good, the interconnection is getting delayed too. We have around 2 gigawatts of what we have in the US with pretty good interconnection queue positions. Some projects that are far away in the connection queues we are seeing that the economics might be changing dramatically, we are selling and sold some of those in the US this quarter. But that gives you an idea of where we are, I hope.

Yeah, that’s helpful guys. I’ll it there. Thanks so much.

Thank you for joining us today and for your continued support. As always, if you have any questions or would like to set up a call, please contact our Investor Relations team. I hope you all have a great Thanksgiving holiday, and take care.

Thank you. This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.