Table of Contents

•

geopolitical turmoil and natural disasters within any of the countries in which we operate;



•

foreign currency fluctuations, particularly in Euro, RMB,British pounds, Renminbi, Canadian dollar, Japanese yen and Japanese yen;Euro;



•

our ability to establish and expand customer relationships;



•

changes in our manufacturing costs;



•

the timing of new products or technology introduced or announced by our competitors;



•

fluctuations in electricity rates due to changes in fossil fuel prices or other factors;



•

allowances for doubtful accounts and advances to suppliers;



•

inventory write-downs;



•

long-lived asset impairment;



•

depreciation charges relating to under-utilized assets;



•

loss on firm purchase commitments under long-term supply agreements;



•

construction progress of solar power projects and related revenue recognition; and



•

anti-dumpingantidumping and countervailing duty costs and/or anti-dumpingantidumping and countervailing duty true-up charges.

        We base our planned operating expenses in part on our expectations of future revenues. A significant portion of our expenses will be fixed in the short-term. If our revenues for a particular quarter are lower than we expect, we may not be able to reduce our operating expenses proportionately, which would harm our operating results for the quarter. As a result, our results of operations may fluctuate from quarter to quarter and our interim and annual financial results may differ from our historical performance.

Fluctuations in exchange rates could adversely affect our business, including our financial condition and results of operations.

        The majority of our sales in 2014, 2015, 2016 and 20162017 were denominated in U.S. dollars, Canadian dollarsRenminbi and Japanese yen, with the remainder in other currencies such as Renminbi,Canadian dollars, Euros and Australian dollars.Brazilian real. Our Renminbi costs and expenses are primarily related to the sourcing of solar cells, silicon wafers and silicon, other raw materials, including aluminium and silver paste, toll manufacturing fees, labor costs and local overhead expenses within the PRC. From time to time, we enter into loan arrangements with Chinese

Table of Contents

commercial banks that are denominated primarily in Renminbi or U.S. dollars. Most of our cash and cash equivalents and restricted cash are denominated in Renminbi. Fluctuations in exchange rates, particularly between the U.S. dollar, Euro, British pound, Renminbi, Canadian dollar, Euros, British pound and Japanese yen, may result in foreign exchange gains or losses. We recorded net foreign exchange losses of $32.2 million in 2014, and net foreign exchange gain of $22.9 million and $25.4 million in 2015 and 2016, respectively.respectively, and net foreign exchange loss of $23.4 million in 2017.

        The value of the Renminbi against the U.S. dollar, the Euro and other currencies is affected by, among other things, changes in China's political and economic conditions and China's foreign exchange policies. In late 2005, China amended its policy of tracking the value of the Renminbi to the U.S. dollar to instead fluctuate against a basket of foreign currencies, which caused the Renminbi to appreciate significantly against the U.S. dollar over the following three years. In June 2010, the PRC government announced that it would allow greater flexibility for the Renminbi to fluctuate against the U.S. dollar, which resulted in further appreciation of the Renminbi, although in 2014, the value of the Renminbi depreciated against the U.S. dollar. In 2015, the PRC government changed the way it

Table of Contents

calculates the mid-point price of Renminbi against the U.S. dollar, requiring the market-makers who submit for the People's Bank of China's reference rates to consider the previous day's closing spot rate and foreign-exchange demand and supply, as well as changes in major currency rates. This change resulted in further depreciation of the Renminbi against the U.S. dollar. In 2016, the Renminbi continued to depreciate against the U.S. dollar, in response to which the Chinese government imposed restrictions on capital outflows. In October 2016, the International Monetary Fund added the Renminbi into the Special Drawing Rights currency basket. However, the status of the Renminbi as an international currency is still being tested by the market. We cannot provide any assurances that the policy of the PRC government will not affect or the manner in which it may affect the exchange rate between the Renminbi and the U.S. dollar or other foreign currencies in the future.

        Since 2008, we have hedged part of our foreign currency exposures against the U.S. dollar using foreign currency forward or option contracts. In addition to collateral requirements to enter into hedging contracts, there are notional limits on the size of the hedging transactions that we may enter into with any particular counterparty at any given time. The effectiveness of our hedging program may be limited due to cost effectiveness, cash management, exchange rate visibility and downside protection. We recorded gains on change in foreign currency derivatives of $19.7 million in 2014, losses on change in foreign currency derivatives of $3.7 million in 2015, and gains on change in foreign currency derivatives of $4.8 million in 2016.2016, and losses on change in foreign currency derivatives of $2.6 million in 2017. The gains or losses on change in foreign currency derivatives are related to our hedging program.

        Volatility in foreign exchange rates will hamper, to some extent, our ability to plan our pricing strategy. To the extent that we are unable to pass along increased costs resulting from exchange rate fluctuations to our customers, our profitability may be adversely impacted. As a result, fluctuations in foreign currency exchange rates could have a material and adverse effect on our financial condition and results of operations.

A change in our effective tax rate can have a significant adverse impact on our business.

        A number of factors may adversely impact our future effective tax rates, such as the jurisdictions in which our profits are determined to be earned and taxed; changes in the valuation of our deferred tax assets and liabilities; adjustments to provisional taxes upon finalization of various tax returns; adjustments to the interpretation of transfer pricing standards; changes in available tax credits; changes in stock-based compensation expenses; changes in tax laws or the interpretation of such tax laws (for example, proposals for fundamental U.S. international tax reform); changes in U.S. GAAP; expiration of or the inability to renew tax rulings or tax holiday incentives; and the repatriation of non-U.S. earnings for which we have not previously provided for U.S. taxes. A change in our effective tax rate due to any of these factors may adversely influence our future results of operations.

Table of Contents

Seasonal variations in demand linked to construction cycles and weather conditions may influence our results of operations.

        Our business is subject to seasonal variations in demand linked to construction cycles and weather conditions. Purchases of solar power products and services tend to decrease during the winter months in our keyseveral markets, such as Canada, due to adverse weather conditions that can complicate the installation of solar power systems and negatively impact the construction schedules of our solar power projects. Demand from othersome countries, such as the U.S. and China, may also be subject to significant seasonality. Seasonal variations could adversely affect our results of operations and make them more volatile and unpredictable.

Table of Contents

Our future success depends partly on our ability to maintain and expand our solar components manufacturing capacity, which exposes us to a number of risks and uncertainties.

        Our future success depends partly on our ability to maintain and expand our solar components manufacturing capacity. If we are unable to do so, we may be unable to expand our business, maintain our competitive position, and improve our profitability. Our ability to expand our solar components production capacity is subject to risks and uncertainties, including:

•

the need to raise significant additional funds to purchase raw materials and to build additional manufacturing facilities, which we may be unable to obtain on commercially reasonable terms or at all;



•

delays and cost overruns as a result of a number of factors, many of which are beyond our control, including delays in equipment delivery by vendors;



•

delays or denial of required regulatory approvals by relevant government authorities;



•

diversion of significant management attention and other resources; and



•

failure to execute our expansion plan effectively.

        If we are unable to maintain and expand our internal production capacity, we may be unable to expand our business as planned. Moreover, even if we do maintain and expand our production capacity, we might still not be able to generate sufficient customer demand for our solar power products to support the increased production levels.

We may be unable to generate sufficient cash flows or have access to external financing necessary to fund planned operations and make adequate capital investments.

        We anticipate that our operating and capital expenditures requirements may increase. To develop new products, support future growth, achieve operating efficiencies and maintain product quality, we may need to make significant capital investments in manufacturing technology, facilities and capital equipment, research and development, and product and process technology. We also anticipate that our operating costs may increase as we expand our manufacturing operations, hire additional personnel, increase our sales and marketing efforts, invest in joint ventures and acquisitions, and continue our research and development efforts with respect to our products and manufacturing technologies.

        Our operations are capital intensive. We rely on working capital financing substantially from Chinese banks for our manufacturing operations. We cannot guarantee that we will continue to be able to extend existing or obtain new working capital financing on commercially reasonable terms or at all. See "—Our dependence on Chinese banks to extend our existing loans and provide additional loans exposes us to funding risks, which may materially and adversely affect our operations." Also, even though we are a publicly-traded company, we may not be able to raise capital via public equity and debt issuances due

Table of Contents

to market conditions and other factors, many of which are beyond our control. Our ability to obtain external financing is subject to a variety of uncertainties, including:

•

our future financial condition, results of operations and cash flows;



•

general market conditions for financing activities by manufacturers of solar power products; and



•

economic, political and other conditions in the PRC and elsewhere.

        If we are unable to obtain funding in a timely manner and on commercially acceptable terms, our growth prospects and future profitability may be adversely affected.

        Construction of our solar power projects may require us to obtain project financing. If we are unable to obtain project financing, or if it is only available on terms which are not acceptable to us, we may be unable to fully execute our business plan. In addition, we generally expect to sell our projects

Table of Contents

to tax-oriented, strategic industry and other investors. Such investors may not be available or may only have limited resources, in which case our ability to sell our projects may be hindered or delayed and our business, financial condition, and results of operations may be adversely affected. There can be no assurance that we will be able to generate sufficient cash flows, find other sources of capital to fund our operations and solar power projects, make adequate capital investments to remain competitive in terms of technology development and cost efficiency required by our projects. If adequate funds and alternative resources are not available on acceptable terms, our ability to fund our operations, develop and construct solar power projects, develop and expand our manufacturing operations and distribution network, maintain our research and development efforts or otherwise respond to competitive pressures would be significantly impaired. Our inability to do the foregoing could have a material and adverse effect on our business and results of operations.

We have substantial indebtedness and may incur substantial additional indebtedness in the future, which could adversely affect our financial health and our ability to generate sufficient cash to satisfy our outstanding and future debt obligations.

        We have substantial indebtedness and may incur substantial additional indebtedness in the future, which could adversely affect our financial health and our ability to generate sufficient cash to satisfy our outstanding and future debt obligations. Our substantial indebtedness could have important consequences to us and our shareholders. For example, it could:

•

limit our ability to satisfy our debt obligations;



•

increase our vulnerability to adverse general economic and industry conditions;



•

require us to dedicate a substantial portion of our cash flow from operations to servicing and repaying our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and for other general corporate purposes;



•

limit our flexibility in planning for or reacting to changes in our businesses and the industry in which we operate;



•

place us at a competitive disadvantage compared with our competitors that have less debt;



•

limit, along with the financial and other restrictive covenants of our indebtedness, among other things, our ability to borrow additional funds; and



•

increase the cost of additional financing.

        In the future, we may from time to time incur substantial additional indebtedness and contingent liabilities. If we incur additional debt, the risks that we face as a result of our already substantial indebtedness and leverage could intensify.

Table of Contents

        Our ability to generate sufficient cash to satisfy our outstanding and future debt obligations will depend upon our future operating performance, which will be affected by prevailing economic conditions and financial, business and other factors, many of which are beyond our control. We cannot assure you that we will be able to generate sufficient cash flow from operations to support the repayment of our current indebtedness. If we are unable to service our indebtedness, we will be forced to adopt an alternative strategy that may include actions such as reducing or delaying capital expenditures, selling assets, restructuring or refinancing our indebtedness or seeking equity capital. These strategies may not be instituted on satisfactory terms, if at all. In addition, certain of our financing arrangements impose operating and financial restrictions on our business, which may negatively affect our ability to react to changes in market conditions, take advantage of business opportunities we believe to be desirable, obtain future financing, fund required capital expenditures, or withstand a continuing or future downturn in our business. Any of these factors could materially and adversely affect our ability to satisfy our debt obligations.

Table of Contents

We must comply with certain financial and other covenants under the terms of our debt instruments and the failure to do so may put us in default under those instruments.

        Many of our loan agreements include financial covenants and broad default provisions. The financial covenants primarily include current ratios, quick ratios, debt to asset ratios, contingent liability ratios and minimum equity requirements, which, in general, govern our existing long-term debt and debt we may incur in the future. These covenants could limit our ability to plan for or react to market conditions or to meet our capital needs in a timely manner and complying with these covenants may require us to curtail some of our operations and growth plans. In addition, any global or regional economic deterioration may cause us to incur significant net losses or force us to assume considerable liabilities, which would adversely impact our ability to comply with the financial and other covenants of our outstanding loans. If our creditors refuse to grant waivers for any non-compliance with these covenants, such non-compliance will constitute an event of default which may accelerate the amounts due under the applicable loan agreements. Some of our loan agreements also contain cross-default clauses, which could enable creditors under our debt instruments to declare an event of default should there be an event of default on our other loan agreements. We cannot assure you that we will be able to remain in compliance with these covenants in the future. We may not be able to cure future violations or obtain waivers of non-compliance on a timely basis. An event of default under any agreement governing our existing or future debt, if not cured by us or waived by our creditors, could have a material adverse effect on our liquidity, financial condition and results of operations.

Our dependence on Chinese banks to extend our existing loans and provide additional loans exposes us to funding risks, which may materially and adversely affect our operations.

        We require significant cash flow and funding to support our operations. As a result, we rely on short-term borrowings to provide working capital for our daily operations. Since the majority of our short-term borrowings come from Chinese banks, we are exposed to lending policy changes by the Chinese banks. In 2014, 2015, 2016 and 2016,2017, we successfully extended our short-term borrowings and, as of December 31, 2016,2017, we had outstanding short-term borrowings of $611.7$676.8 million with Chinese banks. Between January 1, 20172018 and March 31, 2017,2018, we obtained new borrowings of approximately $364.9$250.1 million from Chinese banks, including $48.1$63.9 million with due dates beyond December 31, 2017.2018. Also, between January 1, 20172018 and March 31, 2017,2018, we renewed existing bank facilities of approximately $325.3$193.3 million from Chinese banks with due dates beyond December 31, 2017.2018.

        If the Chinese government changes its macroeconomic policies and forces Chinese banks to tighten their lending practices, or if Chinese banks are no longer willing to provide financing to solar power companies, including us, we may not be able to extend our short-term borrowings or make additional

Table of Contents

borrowings in the future. As a result, we may not be able to fund our operations to the same extent as in previous years, which may have a material and adverse effect on our operations.

Cancellations of customer orders may make us unable to recoup any prepayments made to suppliers.

        In the past, we were required to make prepayments to certain suppliers, primarily suppliers of machinery, silicon raw materials, solar ingots, wafers and cells. Although we require certain customers to make partial prepayments, there is generally a lag between the due date for the prepayment of purchased machinery, silicon raw materials, solar ingots, wafers and cells and the time that our customers make prepayments. In the event that our customers cancel their orders, we may not be able to recoup prepayments made to suppliers, which could adversely influence our financial condition and results of operations.

Table of Contents

Credit terms offered to some of our customers expose us to the credit risks of such customers and may increase our costs and expenses, which could in turn materially and adversely affect our revenues, liquidity and results of operations.

        We offer unsecured short-term or medium-term credit to some of our customers based on their creditworthiness and market conditions. As a result, our claims for payments and sales credits rank as unsecured claims, which expose us to credit risk if our customers become insolvent or bankrupt.

        From time to time, we sell our products to high credit risk customers in order to gain early access to emerging or promising markets, increase our market share in existing key markets or because of the prospects of future sales with a rapidly growing customer. There are high credit risks in doing business with these customers because they are often small, young and high-growth companies with significant unfunded working capital, inadequate balance sheets and credit metrics and limited operating histories. If these customers are not able to obtain satisfactory working capital, maintain adequate cash flow, or obtain construction financing for the projects where our solar products are used, they may be unable to pay for the products for which they have ordered or of which they have taken delivery. Our legal recourse under such circumstances may be limited if the customer's financial resources are already constrained or if we wish to continue to do business with that customer. Revenue recognition for this type of customer is deferred until cash is received. If more customers to whom we extend credit are unable to pay for our products, our revenues, liquidity and results of operations could be materially and adversely affected.

Our dependence on a limited number of suppliers of silicon wafers, cells and silicon, and the limited number of suppliers for certain other components, such as silver metallization paste, solar module back-sheet, and ethylene vinyl acetate encapsulant, could prevent us from delivering our products to our customers in the required quantities or in a timely manner, which could result in order cancellations and decreased revenues.

        We purchase silicon raw materials, silicon wafers and solar cells, from a limited number of third-party suppliers. Purchases from GCL, our largest supplier of raw materials by dollar amount of purchases, accounted for approximately 19.6%23.4%, 23.4%18.9% and 18.9%15.9% of our total raw materials purchases in 2014, 2015, 2016 and 2016,2017, respectively.

        In 2016,2017, we purchased the majority of the silicon wafers used in our solar modules from third parties. Our major silicon wafer suppliers were GCL (which accounted for 58.2% of our silicon wafer purchases) and Yichang CSG Polysilicon Co., Ltd., or Yichang.supplier was GCL. Our major supplierssupplier of solar cells in 2016 included2017 was Inventec Corporation, or Inventec, and Motech Industries, Inc., or Motech.Inventec. These suppliers may not always be able to meet our quantity requirements, or keep pace with the price reductions or quality improvements, necessary for us to price our products competitively. Supply may also be interrupted by accidents, disasters or other unforeseen events beyond our control. The failure of a supplier, for whatever reason, to supply silicon wafers, solar cells, silicon raw materials or other

Table of Contents

essential components that meet our quality, quantity and cost requirements in a timely manner could impair our ability to manufacture our products or increase our costs. The impact could be more severe if we are unable to access alternative sources on a timely basis or on commercially reasonable terms, and could prevent us from delivering our products to our customers in the required quantities and at prices that are profitable. Problems of this kind could cause order cancellations, reduce our market share, harm our reputation and cause legal disputes with our customers.

We are developing and commercializing higher conversion efficiency cells, but we may not be able to mass-produce these cells in a cost effective way, if at all.

        Higher efficiency cell structures are becoming an increasingly important factor in cost competitiveness and brand recognition in the solar power industry. Such cells may yield higher power outputs at the same cost to produce as lower efficiency cells, thereby lowering the manufactured cost per watt. The ability to manufacture and sell solar modules made from such cells may be an important

Table of Contents

competitive advantage because solar system owners can obtain a higher yield of electricity from the modules that have a similar infrastructure, footprint and system cost compared to systems with modules using lower efficiency cells. Higher conversion efficiency solar cells and the resulting higher output solar modules are one of the considerations in maintaining a price premium over thin-film products. However, while we are making the necessary investments to develop higher conversion efficiency solar power products, there is no assurance that we will be able to commercialize some or any of these products in a cost effective way, or at all. In the near term, such products may command a modest premium. In the longer term, if our competitors are able to manufacture such products and we cannot do the same at all or in a cost efficient manner, we will be at a competitive disadvantage, which will likely influence our product pricing and our financial performance.

We may be subject to unexpected warranty expense that may not be adequately covered by our insurance policies.

        Our warranty against defects in materials and workmanship is for ten years and, effective June 2015, we warrant that, for a period of 25 years, our polycrystalline modules will maintain the following performance levels:

•

during the first year, the actual power output of the module will be no less than 97.5% of the labeled power output;



•

from the second year to the 24th year, the actual annual power output decline will be no more than 0.7%; and



•

by the end of the 25th year, the actual power output of the module will be no less than 80.7% of the labeled power output.

        Effective June 2015, we warrant that, for a period of 25 years, our monocrystalline modules will maintain the following performance levels:

•

during the first year, the actual power output of the module will be no less than 97% of the labeled power output;



•

from the second year to the 24th year, the actual annual power output decline will be no more than 0.7%; and



•

by the end of the 25th year, the actual power output of the module will be no less than 80.2% of the labeled power output.

Table of Contents

        In addition, effective August 2016, we lengthened the warranty against decline in our Dymond modules to 30 years. We warrant that, for a period of 30 years, our Dymond polycrystalline modules will maintain the following performance levels:

•

during the first year, the actual power output of the module will be no less than 97.5% of the labeled power output;



•

from the second year to the 29th year, the actual annual power output decline will be no more than 0.5%; and



•

by the end of the 30th year, the actual power output of the module will be no less than 83% of the labeled power output.

        Effective August 2016, we warrant that, for a period of 30 years, our Dymond monocrystalline modules will maintain the following performance levels:

•

during the first year, the actual power output of the module will be no less than 97% of the labeled power output;

Products Offered in Our ModuleMSS Segment

Standard Solar Modules

        Our standard solar modules are arrays of interconnected solar cells in weatherproof encapsulation. We produce a wide variety of standard solar modules, ranging from 3 W to over 345375 W in power and




Table of Contents

using multi-crystalline or mono-crystalline cells in several different design patterns. Our mainstream solar modules include standard CS6V (50 full cells), CS6P/CS6K (60 full cells), CS6X/CS6U/CS6XACS6U (72 full cells), CS3K(120 half-cells), CS3U(144 half-cells), Dymond CS6K-P-FG (60 cells, double-glass) and Dymond CS6X-P-FG (72 cells, double-glass) modules, all using 6-inch solar wafers with the majority being multi-crystalline. The mainstream modules are designed for residential, commercial and utility applications. Small modules are for specialty applications.

        We launched our Quartech modules in March 2013. Quartech modules use 4-busbar solar cell technology which improves module reliability and efficiency. We produced and shipped Quartech modules in large volume in 2014. CS6P (6 × 10 cell layout) Quartech modules have power output between 255 W and 270 W, which enables us to offer customers modules with high power. We launched and started shipping Dymond modules in October 2014. Dymond modules are designed with double-glass encapsulation, which is more reliable for harsh environments and ready for 1500V solar systems.

        We launched and started shipping SmartDC modules in September 2015. SmartDC modules feature an innovative integration of our module technology and power optimization for grid-tied PV applications. By replacing the traditional junction-box, SmartDC modules eliminate module power mismatch, mitigate shading losses and optimize power output at module-level. SmartDC modules also provide module-level data to minimize operational costs and to permit effective system management.

        In March 2016, we launched our new Quintech SuperPower mono-crystalline modules. Quintech SuperPower mono-crystalline modules are made of cells with PERC technology and significantly improve module efficiency and reliability. CS6K (6 × 10 cell layout aligned with mainstream dimensions) Quintech SuperPower mono modules have a power output between 285 W and 300 W and arewith high efficiency and high reliability. We started commercial production of Quintech CS6K and CS6U modules in the second quarter of 2016. These modules have features such as 5 busbar cells, standardized module dimensions and cell and module improvements, resulting in higher wattage production and better performance. These modules are intended for broad base introduction, which covers mono-crystalline cells, multi-crystalline cells and mono-crystalline PERC cells.

        In July 2016, we launched the new 1500V System Voltage crystalline solar module portfolio. The 1500V System Voltage crystalline module provides a robust and cost-efficient system solution by adding more modules in a string, which decreases the number of combiner boxes, direct current homeruns and trenching. This unique product design improves the overall system performance and efficiency and reduces labor cost and installation time.

        At the beginning of 2015, we started commercial production of Onyx cells with our in-house developed black silicon technology, Onyx technology. Onyx technology employs a nano-texturing process to make the multi-crystalline cell almost fully black, increasing cell efficiency and module wattage at the same time. We started increasing the production volume of Onyx cells in 2016, which have been incorporated into our Quartech and Quintech module families.

        In July 2016, we launched the 1500V System Voltage crystalline solar module portfolio. The 1500V System Voltage crystalline module provides a robust and cost-efficient system solution by adding more modules in a string, which decreases the number of combiner boxes, direct current homeruns and trenching. This unique product design improves the overall system performance and efficiency and reduces labor cost and installation time.




Table of Contents

        In 2017, we launched the Ku module series which results in 100% improvement in failure redundancy with innovative cell matrix interconnection technology. The module power output is enhanced by up to 10 Watt per module while reducing the module working temperature. We design ourdeveloped P4 cell technology, which is multi-crystalline PERC technology. The combination of P4 cell and Ku module technologies enable us to offer customer higher wattage and more reliable multi crystalline module products. We also launched and shipped HDM (High Density Module) product to some markets this year. The HDM offers high wattage, high module efficiency and pleasant aesthetics for residential applications.

        Our standard solar modules are designed to be durable underendure harsh weather conditions and easy to transportbe transported and install.installed easily. We began selling our solar module products in March 2002 and sell our standard solar modules primarily under our brand name. Since we began selling our solar module products in March 2002, we have increased our annual module production capacity to 6.17 GW as of December 31, 2016.

Specialty Solar Products

        Our specialty solar products are mainly Andes Solar Home System, or Andes SHS, and Maple Solar System, or Maple SS.

        Andes SHS is an off-grid solar system, designed to provide an economical source of electricity to homes and communities without access to grid electricity or where electricity supply is scarce. The Andes SHS is portable, light-weight, and easy to set-up, making it ideal for situations where emergency power is required.




Table of Contents

        Maple SS is an economical, safe and clean energy solution for families who burn kerosene for lighting when darkness falls. It is a very convenient mobile power source for outdoor activities, such as camping, boating and hiking. Maple SS includes a solar panel, energy-efficient LED lights, Li-ion batteries and multiple cell phone charger plugs.

Solar System Kits

        A solar system kit is a ready-to-install package consisting of solar modules produced by us and components, such as inverters, racking system and other accessories, supplied by third parties. We began selling solar system kits in 2010 and in 20162017 sold them primarily to customers in Japan, Europe, and the U.S. and China.

O&M Services

        Our O&M services include inspections, repair and replacement of plant equipment, site management and administrative support services. In the second half of 2012, we started to provide O&M services for solar power projects in commercial operation. In 2017, we provided O&M services primarily in the North American, Australia and Japan markets.

Products and Services Offered in Our Energy Segment

Solar Project Development and Sale

        We develop, build and sell solar power projects. Our solar project development activities have grown over the past several years through a combination of organic growth and acquisitions. Our global solar power project business develops projects primarily in Canada, Japan, the U.S., China, Brazil, India, Mexico, the United Kingdom and Australia. OurWe have a team of experts specializeswhich specialize in project development, evaluations, system designs, engineering, managing, project coordination and organizing financing. Our project sales team actively identifies and pursues suitable buyers for our solar power projects. See "—Sales, Marketing and Customers—Energy Segment—Solar Project Development and Sale" for a description of the status of our solar power projects.




Table of Contents

EPC and Development Services

        Our EPC services include engineering, procurement and construction work for solar power projects owned either by us or by third-parties. In late 2010, we began providing EPC services primarily in Canada and China. We began providing development services in the U.S. after we acquired Recurrent in 2015. In 2016, we provided EPC services for 5.2 MW of solar projects in Canada and Australia. The EPC services in China wereare provided through our affiliated company, Suzhou Gaochuangte New Energy Sources Development Co., Ltd., or Gaochuangte, in which we own aowned an 40% equity interest.

O&M Services

        Our O&M services include inspections, repairinterest before June 30, 2017 and replacement of plant equipment, site management and administrative support services. In the second half of 2012, we started to provide O&M services for solar power projects in commercial operation. In 2016, we provided O&M services primarily to the North American market.become our 80% owned subsidiary since July 1, 2017.

Operating Solar Power Projects and Sales of Electricity

        In the fourth quarter of 2014, we began to operate certain of our solar projects in China and generate income from the sale of electricity. Although somemost of these solar projects are developed for sale, we may operate them prior to selling. As of February 28, 2017,2018, we had a fleet of solar power plants in operation with an aggregate capacity of approximately 1,195.51,211.1 MWp.

Supply Chain Management

ModuleMSS Segment

        Our moduleMSS segment depends on our ability to obtain a stable and cost-effective supply of polysilicon, solar ingots, wafers and cells. Our silicon wafer agreements set forth price and quantity information, delivery terms and technical specifications. TheseWhile these agreements usually set forth specific




Table of Contents

price terms. However,terms, most agreements also include mechanisms to adjust the prices, either upwards or downwards, based on market conditions. We have entered into a number of long-term supply agreements with several silicon and wafer suppliers in order to secure a stable supply of raw materials to meet our production requirements. These suppliers included GCL, Neo Solar,LONGI, Deutsche Solar LDK and a UMG-Si supplier.LDK. In 2009 and thereafter, we amended our agreements with certain of these suppliers to adjust the purchase price to prevailing market prices at the time we place a purchase order and to reduce the quantity of products that we are required to purchase. Under our supply agreements with certain suppliers, and consistent with historical industry practice, we make advance payments prior to scheduled delivery dates. These advance payments are made without collateral and are credited against the purchase prices payable by us. In 2016,2017, we purchased the majority of the silicon wafers used in our solar modules from third partiesparties. Our major silicon wafers suppliers were GCL and Yichang.supplier was GCL. Since 2011, the supply of polysilicon and silicon wafers has generally exceeded demand, particularly polysilicon. Polysilicon prices significantly decreased from approximately $20.6 per kilogram at December 31, 2014 to $13.7 per kilogram at December 31, 2015 due to oversupply but then started to increase in the third quarter of 2016, reaching approximately $19.0 per kilogram by December 31, 2016.2016 and $19.7 per kilogram by December 31, 2017. We plan to increase our in-house solar wafer manufacturing capacity and expect to diversify our external wafer and polysilicon suppliers.

        We purchase solar cells from a number of international and local suppliers, in addition to manufacturing our own solar cells and having toll manufacturing arrangements with our solar cell suppliers. Our solar cell agreements set forth price and quantity information, delivery terms and technical specifications. These agreements generally provide for a period of time during which we can inspect the product and request the seller to make replacements for damaged goods. We generally require the seller to bear the costs and risks of transporting solar cells until they have been delivered to the location specified in the agreement. We currently do not have any long-term supply agreements for solar cells with fixed price or quantity terms. In 2016,2017, our major supplierssupplier of solar cells included Inventec and Motech.was Inventec. As we expand our business, we expect to increase our solar cell manufacturing capacity and diversify our solar cell supply channel to ensure we have the flexibility to adapt to future changes in the supply of, and demand for, solar cells.

        For risks relating to the long-term agreements with our raw material suppliers, see "Item 3. Key Information—D. Risk Factors—Risks Related to Our Company and Our Industry—Long-term supply




Table of Contents

agreements may make it difficult for us to adjust our raw material costs should prices decrease. Also, if we terminate any of these agreements, we may not be able to recover all or any part of the advance payments we have made to these suppliers and we may be subject to litigation."

Energy Segment

        Our moduleMSS segment supplies part of the solar modules used in our energy segment. For the solar power projects that we develop, we have the option of either using our own engineering and operation teams or hiring third partythird-party contractors to build and operate the projects prior to sale.

Manufacturing, Construction and Operation

ModuleMSS Segment

        We assemble our solar modules by interconnecting multiple solar cells by tabbing and stringing them into a desired electrical configuration. We lay the interconnected cells, laminate them in a vacuum, cure them by heating and package them in a protective lightweight anodized aluminum frame. We seal and weatherproof our solar modules to withstand high levels of ultraviolet radiation, moisture and extreme temperatures.

        We selectively use automationautomated equipment to enhance the quality and consistency of our finished products and to improve the efficiency of our manufacturing processes. Key equipment in our manufacturing process




Table of Contents

includes automatic laminators, simulators and solar cell testers. The design of our assembly lines provides flexibility to adjust the ratio of automated equipment to skilled labor in order to maximize quality and efficiency.

Energy Segment

        We develop, construct, maintain, sell and/or operate solar power projects primarily in Canada, Japan, the U.S., China, Brazil, India, Mexico, the United Kingdom and Australia. We engage in all aspects of the development and operation of solar power projects, including project selection, design, permitting, engineering, procurement, construction, installation, monitoring, operation and maintenance. We also provide EPC and O&M services to third-parties.

        Our solar power projects development process primarily consists of the following stages:

•

Market due diligence and project selection.  We search for project opportunities globally with the goal of maintaining a robust and geographically diversified project portfolio. Our business team closely monitors the global solar power projects market and gathers market intelligence to identify project development opportunities. Our development team prepares market analysis reports, financial models and feasibility studies to guide us in evaluating and selecting solar power projects. As we consider undertaking new solar power projects, we weigh a number of factors including location, local policies and regulatory environment, financing costs and potential internal rate of returns.



•

Project financing.  We typically include project financing plans in our financial models and feasibility studies. We finance our projects through our working capital and debt financing from local banks or international financing sources that require us to pledge project assets.



•

Permitting and approval.  We either obtain the permits and approvals necessary for solar projects ourselves or we acquire projects that have already received the necessary permits and approvals. The permitting and approval process for solar power projects varies from country to country and often among local jurisdictions within a country.



•

Project design, engineering, procurement and construction.  Our engineering team generally designs solar power projects to optimize performance while minimizing construction and operational




Table of Contents

costs and risks. The engineering design process includes the site layout and electrical design as well choosing the appropriate technology, in particular module and inverter types. We use solar modules produced by us and by third partythird-party manufacturers, and procure inverters and other equipment from third partythird-party suppliers. We generally construct solar projects in China through Gaochuangte, our affiliate in which we own aowned an 40% equity interest before June 30, 2017 and engage third-party contractors in some other countries.become our 80% owned subsidiary since July 1, 2017.

        Currently, we operate and maintain solar power projects in the United Kingdom, the U. S., China, Japan, India, Brazil, Australia, Africa and Spain. We signenter into grid-connection agreements and/or PPAs with the local grid companies. After a project is connected to the grid, we regularly inspect, monitor and manage the project site with the intention to maximize the utilization rate, rate of power generation and system life of the project.

        We operate a monitoring center in Guelph, Ontario, Canada, which adopts the global monitoring platform (CSEye) to manage system alarms and reports. Our proprietary algorithms analyze the performance of the third party power plants that we operate and maintain on a daily basis and identify potential problems. For example, they raise alarms when inverters or strings are under-performing.

Quality Control and Certifications

        We have registered our quality control system according to the requirements of ISO 9001:2008 and ISO/TS 16949 standards. TUV Rheinland Group, a leading international service company that




Table of Contents

documents the safety and quality of products, systems and services, audits our quality systems. We inspect and test incoming raw materials to ensure their quality. We monitor our manufacturing processes to ensure quality control and we inspect finished products by conducting reliability and other tests.

        We have obtained IEC 61215 and IEC 61730 (previously TUV Class II safety) European standards for sales in Europe. We have also obtained certifications of CAN ORD-UL 1703 and UL 1703, which allow us to sell products in North America. In 2009, we obtained the necessary certifications to sell our modules in Japan, South Korea and Great Britain and to several of the Chinese solar programs in China, including Golden Sun. In 2011, we completed IEC 61215, IEC 61730 and UL1703 certification for modules designed to be assembled from metal wrap-through cells. We also completed DLG ammoniac resistance testing and obtained the salt mist certification for our leading module CS6P-P in 2011. In 2012, we achieved the highest ratings possible in the two most significant standard tests for ammonia resistance of solar modules, which were the IEC 62716 draft C ammonia corrosion test and the DLG standard test. In 2013, we extended the salt mist certification under IEC 61701 ed.2 Severity 1 to all of our standard modules at VDE (Verband Deutscher Elektrotechniker). In addition, during the same year, we were able to register more key module types at JET for Japan;Japan, and we enhanced the maximum system voltage up to 1000V for our CSA (Canadian Standards Association) certification (North America), allowing significant cost reduction for our EPC partners; andpartners. We also again raised the ranking of CEC PTC ratings. In 2013, we extended our IEC and UL certifications to cover higher-power modules, up to 275 W for 60 cell models and 330 W for 72 cell models, through key technology improvements such as introduction of 4 busbar cell design. We also again improved our CEC PTC ratings for the spearhead CS6P-P model, and have demonstrated suitability of our product portfolio for reliable long-term operation under various climates, through SGS IEC 60068-2-68 sand blowing certification and extensive Potential Induced Degradation, or PID, resistance testing at respected laboratories, such as Fraunhofer ISE, VDE and TUV SUD (Technischer Überwachungs-Verein Südteil Deutschland).

        In 2012, the new half-cell module designed by our R&D team was fully certified by CSA and VDE, two worldwideinternationally recognized certification bodies. We also started providing our customers with third-party-approved PAN files (testing per IEC 61853-1) for all our key module series, allowing more accurate energy yield simulation and better return-on-investment analysis for their projects. In 2013, we




Table of Contents

obtained certifications for double glasses and DC-to-AC module designs. With the emergence of new markets that we are expanding into, we have made efforts to comply with new certification schemes that apply to us, such as INMETRO for Brazil and the UNI9177 fire test for Italy that we haveare now complied with.

        In 2014, we received JET certification for our new high efficiency module series CS6V targeting the residential market, and also extended the highest power range of our mainstream CS6P-P model to 275 W in JET. We also completed full certification for our new Quartech (4 busbar cells), covering VDE/CSA/MCS-BBA/JET, which allows us to launch these products worldwide. Several state-of-the-art demonstration trials were implemented, such as a 5 kW system located in the desert-like environment of Australian Alice Springs DKASC center.

        In 2015, we received several product certifications that support our new product launches. Our 60 and 72 cell double glass module series were certified by VDE, CSA and MCS-BBA, which allows us to launch these products worldwide. We also completed VDE and TUV-Rheinland certification (IEC61215/61730) of our new PERC mono 5 busbar premium module series. The PV connector T4 designed by us was certified by TUV-Rheinland and CSA to satisfy the latest and most stringent standards, namely IEC61852 and UL6703. We have updated our mainstream modules Life Cycle Analysis evaluation and have been granted verification certificate from TUV SUD to meet the PAS2050 and ISO14067 standards.




Table of Contents

        To support our energy segment, we started implementing a state-of-the-art OPCT (On-going Performance Characterization Testing) program in cooperation with PVEL-DNVGL laboratory in 2015, which delivered extensive module performance characterization per IEC61853 series standards.

        In 2016, we received JET certification for our new PERC mono 5 busbar premium module series. We also extended our VDE and CSA certifications to cover 1500V maximum system voltage on all of our major module products, providing significant system cost reduction opportunities for our customers. We implemented full salt mist, ammoniac and PID certification schemes as standard offer for all of our module series, striving for the highest reliability objectives. Our standard and Dymond module series were granted SGS sand blowing qualification for installation in desert environment. Our in-house designed junction boxes B20S and B12S were successfully certified by TUV-Rheinland and CSA to satisfy the latest and most stringent international standards, IEC62790 and UL3730. For all of our new module product series targeted for launch in or after 2017, we have started implementing certification to meet the latestnew IEC61215 and IEC61730 standards (2016 version).

        In 2017, we implemented the new IEC standards as our basic standards for all new products. We received the new IEC certification (VDE) for Ku modules, Ku Dymond modules, poly Generation 4, and expect to completeHDM modules. All the new module products have also passed UL1703 testing, and received CSA certification. And all the new products have achieved high CEC PTC ratings. We received the JET certification for HDM modules; and for Ku modules, we extended the certifications to many countries, including CEC in Australia, FSEC in America, MCS-BBA in UK, INMETRO in Brazil, and KS in Korea. In 2017, the National Energy Administration of China announced the new Top runners' efficiency requirement, and most of our Generation 3 polycrystalline CS6U-P modules inmain products have passed the first quarter of 2017.CQC, orChina Quality Certification Center, Top runners certification.

        Our PV test laboratory is registered with the ISO 17025 quality improvement program, and has been accepted for the Mutual Data Acceptance Program by the CSA in Canada, VDE in Germany, Intertek in the U.S. and CGCCQC in China (China General Certification Center).China. The PV test laboratory allows us to conduct some product certification testing in-house, which should decreasedecreases time-to-market and certification costs.




Table of Contents

Sales, Marketing and Customers

        The following table sets forth, for the periods indicated, certain information relating to our total net revenues derived from our customers categorized by their geographic locations for the periods indicated:

		Years Ended December 31,																			Years Ended December 31,
		2014						2015						2016							2015						2016						2017
Region		Total Net Revenues			%			Total Net Revenues			%			Total Net Revenues			%				Total Net Revenues			%			Total Net Revenues			%			Total Net Revenues			%
		(In thousands of $, except for percentages)																			(In thousands of $, except for percentages)
Asia			905,092			30.6			1,384,243			39.9			1,338,404			46.9				1,384,243			39.9			1,338,404			46.9			1,926,091			56.8
Americas			1,795,490			60.6			1,750,000			50.5			1,103,509			38.7				1,750,000			50.5			1,103,509			38.7			1,108,162			32.7
Europe and others			260,045			8.8			333,383			9.6			411,165			14.4				333,383			9.6			411,165			14.4			356,140			10.5
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total			2,960,627			100.0			3,467,626			100.0			2,853,078			100.0				3,467,626			100.0			2,853,078			100.0			3,390,393			100.0
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​

ModuleMSS Segment

        Our primary customers are distributors, system integrators, project developers and installers/EPC companies. A small number of customers have historically accounted for a majorsignificant portion of our net revenues. In 2014, 2015, 2016 and 2016,2017, our top five customers of MSS segment by net revenues collectively accounted for approximately 33.6%14.5%, 26.8%16.7% and 16.9%18.0%, respectively, of our total net revenues. Sales to our largest customer in those years accounted for 7.4%4.6%, 7.4%5.0% and 5.0%7.2%, respectively, of our total net revenues.

        We market and sell solar modules worldwide for residential, commercial and utility-scale solar energy projects and solutions. We primarily sell our products to distributors and large-scale installers through our own, home-grown sales teams, who operate throughout Europe, the Americas, the Middle East and the Asia-Pacific regions.

        Our marketing activities include brand sponsorship, social media discussions and digital marketing. Our teams also develop channel marketing programs to support our customers'customers in their marketing of our business and products, while alsoin addition to providing to them various services such as product training, new product




Table of Contents

briefing, and sales training. Additionally,Furthermore, our marketing team focuses heavily on public relations and crisis management to safeguard our public image. By working closely with our sales teams and other leading solar research companies, our marketing team provides up-to-date market information on a constant basis, supporting the efforts of our sales team. Our marketing staff is located throughout the Americas, China, Europe, India, Japan, Australia, South Africa and South Korea.

        We sell our standard solar module products primarily under three types of arrangements: (a) sales contracts to distributors; (b) sales to systems integrators, installers/EPC companies and project developers; and (c) OEM/tolling manufacturing arrangements.

        We target our sales and marketing efforts for our specialty solar products at companies in selected industry sectors, including the automotive, telecommunications and light-emitting diode, or LED, lighting sectors. As standard solar modules increasingly become commoditized and technology advancements allow solar power to be used in more off-grid applications, we intend to expandincrease our sales and marketing focusefforts on our specialty solar products and capabilities. Our sales and marketing team works with our specialty solar products development team to take into account changing customer preferences and demands to ensure that our sales and marketing team is able to effectively communicate to customers our product development changes and innovations. We intend to establish additional relationships in other market sectors as the specialty solar products market expands.




Table of Contents

        As we expand our manufacturing capacity and enhance our brand name, we continue to develop new customer relationships in a wider range of geographic markets to decrease our market concentration. In 2013, we significantly increased our total number of customers and achieved a leading market share in Canada, Japan, Thailand and the Central America, which we maintained in 2014. In 2015, we both maintained our leading market share in those markets and at the same time expanded our customer base ininto several emerging solar markets, such as Southeast Asia. In 2016, we achieved a leading market share in Brazil and maintained our leading market share in Canada, Japan, Thailand and India. WhileIn 2017, we expect to expand into new marketsmaintained our leading market share in Africa, weIndia, Japan, Brazil, Europe and Middle East. We expect that our near term major markets will be North AmericaEurope and the Asia Pacific region.

        In 2010, we commenced the sale of solar system kits. A solar system kit is a ready-to-install package consisting of solar modules produced by us and components, such as inverters, racking system and other accessories, supplied by third parties. In 2016,2017, we sold approximately 79.891.2 MW of system kits primarily in Japan, Europe, and the U.S. and China.

O&M Services

        Since 2012, we have started to provide O&M services for solar power projects in commercial operation. Our O&M services include inspections, repair and replacement of plant equipment, site management and administrative support services.

Energy Segment

        We develop, construct, maintain, sell and/or operate solar projects primarily in Canada, Japan, the U.S., China, Brazil, India, Mexico, the United Kingdom and Australia. We provide EPC and development services primarily in Canada, China, Australia, India and the U.S., and O&M services primarily in Canada. We sell our projects to large utility companies and other power producers. Customers offor our EPC and development services as well as O&M services areinclude solar project developers and owners.

        In order to continue to grow our energy segment, we conduct market due diligence, routinely meet with industry players and interested investors and attend industry conferences and events to identify project development opportunities. Our energy segment team has extensive industry expertise and significant experience in working with government authorities and developing new projects for our target markets.

Solar Project Development and Sale

        We divide our solar power project pipeline into early- to mid-stage pipeline andOur late-stage pipeline. Early- to- mid-stage pipeline includes projects that (a) are under assessment for co-development and acquisition, or are being developed by us, (b) have identified or secured the land for development, and

Table of Contents

(c) have signed energy off-take agreements or have a reasonable probability to sign such agreements. Late-stage pipeline includes nearly all projects that (a) havefor which energy off-take agreements have been entered into, and (b) that are (b) expected to be built within the next two to four years. However, some of theour late-stage projects may not be completed due to failure to secure permits or grid connection, among other risks. In March 2015, we acquired Recurrent, a leading solar energy developer with solar power projects located principally in California and Texas for approximately $261 million.

        As of February 28, 2017,2018, our late-stage utility-scale solar project pipeline totaled approximately 2.12.0 GWp, with 538.5 MWp in Japan, 401including 459 MWp in the U.S., 400435.7 MWp in Mexico, 410 MWp in China, 399362.2 MWp in Japan, 215.6 MWp in Brazil, 13259 MWp in India, 11824.2 MWp in Australia, 6818.4 MWp in Mexico, 26Chile and 8.2 MWp in the United Kingdom and 6 MWp in Africa.Kingdom.

In Canada

        During 2016,2017, we sold the 10 MW AC BeamLightthree solar farms, SSM1, SSM2 and 10 MW AC Alfred solar power plants to Concord Green Energy Inc. for C$152.5 million ($113.6 million). In February 2017, we completed the sale of three utility-scale solar farm holding companies, SSM 1 Solar ULC, SSM 2 Solar ULC and SSM 3 Solar ULC,SSM3, totaling 59.8 MW AC,72.2 MWp to Fengate SSM Holdco LP, an affiliate of Fengate Real Asset Investments for over C$257 million ($191.4 million).Assets Investments.

Table of Contents

In Japan

        During 2016,2017, we completed the construction and grid connection of eight11 solar power plants, with a total capacity of approximately 42 MWp. We105.5 MWp, and we sold three76.6 MWp solar power plants, of which 72.7 MWp was sold to third parties.Canadian Solar Infrastructure Fund, Inc., or CSIF. As of February 28, 2017,2018, our pipeline of late-stage utility-scale solar power projectsproject pipeline for which interconnection agreements and FIT have been secured totaled approximately 538.5362.2 MWp, including 211.8122.7 MWp in construction and 14.8239.5 MWp atunder development. We had an additional 9.4 MWp of projects in the ready-to-build stage.bidding process, which will be added to the list of late-stage projects once FIT has been secured.

        The expected schedule of commercial operation date, or COD, of our late-stage, utility scale solar power projects in Japan, as of February 28, 2017 is2018, was as follows:

        As of February 28, 2017, we had signed interconnection agreements for projects totaling 375 MWp that are in construction or under development. After February 28, 2017, we signed interconnection agreements for projects totaling an additional 28 MWp, which may be able to secure the current FIT contract if the COD deadline is met. Projects with a total capacity of 71.4 MWp are expected to participate in a bid for a utility upgrades and keep their current FIT while the bid process is underway.

In the U.S.

        During 2017, we completed and sold two solar farms, Tranquility 8 and IS 42, totaling 373 MWp to Sempra Renewables LLC, a unit of Sempra Energy (NYSE: SRE) and Falck Renewables S.p.A., respectively.

        Our late-stage, utility-scale solar project pipeline in the U.S. as of February 28, 2017 is2018 was as follows:

        In 2016, seven projects (Tranquillity, Mustang, Barren Ridge, Astoria 1, Astoria 2, Garland and Roserock) totaling 1,185.1 MWp commenced commercial operation. In addition, the new late-stage 92 MWp IS 42 project acquired during the fourth quarter of 2016 is under construction and expected to reach commercial operation by the end of 2017. Two other projects (Tranquillity 8 and Gaskell

Table of Contents

West 1) are currently under development and expected to reach commercial operation before the end of December 2018.

        In January 2017, 60 MWac of solar power plant Tranquillity 8 Verde signed a 20-year PPA with the Sacramento Municipal Utility District, or SMUD. This project is located in Fresno County, California and is expected to begin construction in mid-2017 and begin delivering power to SMUD by early 2018. Tranquillity 8 Verde is part of the 281 MWdc Tranquillity 8 project. The remaining volume will be purchased by Marin Clean Energy, Pacific Gas & Electric and Southern California Edison, or SCE, under long-term PPAs.

        In the fourth quarter of 2016, 28 MWdc of solar power plant Gaskell West 1 signed a 20-year PPA for with SCE. This project is expected to begin construction in late 2017 and begin delivering power to SCE by mid-2018. Gaskell West 1 is part of the 175 MWdc Gaskell West project located in Kern County, California.

In China

        During 2016, in China,2017, we connected twoseven solar power plants totaling 2161.4 MWp to the grid and completed the sale of twofive solar power projects totaling 113.5 MWp in Jiangsu Province to Shenzhen Energy Nanjing Holding Co., Ltd., or Shenzhen Energy, a subsidiary of Shenzhen Energy Group Co., Ltd., for approximately RMB223.5 million ($32.2 million). As of February 28, 2017,2018, our late-stage solar project pipeline in China totaled approximately 400410 MWp with expected COD by the end of 2017. In March 2017, we completed the sale of two solar power plants in China, totaling approximately 69.5 MWp, to Shenzhen Energy, for approximately RMB687.1 million ($99.0 million).2018.

In Brazil

        During 2017, we completed the construction and sold two solar farms, Pirapora I and Pirapora III, totaling 284 MWp to EDF En Do Brasil Participacoes.

Table of Contents

Our late-stage, utility-scale solar project pipeline in Brazil reached 399 MWp as of February 28, 2017, all of which were late-stage projects including the 1922018 was as follows:

In India

        During 2017, we completed the construction and sold 108 MWp SECI Maharashtra solar farm.

As of February 28, 2017,2018, we have secured PPAs of 25 years PPAs for an aggregate 96 MWp oftwo solar power projects, of 35 MWp and 24MW, respectively, with Solar Energy Corporation of India, an offtakeroff-taker affiliated with the government of India, in the state of Maharashtra.Karnataka. These projects are expected to commence operations by late 2017. Two other projects, each with a capacity of 18 MWp, are expected to commence operations in the first half of 2017.2018 and 2019, respectively.

In Australia

        As of February 28, 2017,2018, our late-stage solar project pipeline in Australia reached 11824.2 MWp, of whichincluding two solar power projects located in Longreach and Oakey, Queensland and totaling approximately 47 MWp were in ready-to-buildwhich are under construction stage and are expected to commencereach commercial operation by the second quarter ofin 2018.

Table of Contents

In Mexico

        In August 2016, we signed a PPA for the 63 MWpAs of February 28, 2017, our late-stage, utility-scale solar power plantproject pipeline in Aguascalientes, Mexico with the Federal Electricity Commission of Mexico, or CFE. This project is in development stage and expected to be connected to grid by September 2018. CFE,was as the off-taker under the PPA, has committed to purchase approximately 141,000 MWh of electricity each year for a 15-year period and an equivalent amount of Clean Energy Certificates (CEL) for a 20-year period. All electricity and CELs generated in excess of this amount will be available for merchant sales.follows:

In the United Kingdom

        During 2016,2017, we completed the construction of 11six solar power projects totaling approximately 6226 MWp. OurAs of February 28, 2017, our late-stage, utility scale pipeline of solar power projects totaled 26 MWp as of February 28, 2017, all of which are expected to be connected to the grid in 2017.8.2 MWp.

EPC and Development Services

        Beginning in late 2010, we started entering into EPC contracting arrangements, initially in Canada and China. Under these arrangements, the solar power project developer owns the projects and we are contracted to perform the EPC work. We complete the EPC contracts in China through Gaochuangte, our affiliated company, Gaochuangte,affiliate in which we own aowned an 40% equity interest.interest before June 30, 2017 and become our 80% owned subsidiary since July 1, 2017. Since 2014, we have been providing EPC services in Australia.

        In 2014, we completed approximately 180.5 MWp and 3.1 MW(DC) of solar system EPC contracts in Ontario, Canada and Australia, respectively.        In 2015, we completed approximately 152.1 MW(DC) and 1.4 MW(DC) of solar system EPC contracts in Ontario, Canada and Australia, respectively. In 2016, we completed approximately

Table of Contents

2.1 MW(DC) and 3.1 MW(DC) of solar system EPC contracts in Ontario, Canada and Australia, respectively.

        We began providing development services in the U.S. after we acquired Recurrent in 2015.

O&M Services

        Since 2012, we have started to provide O&M services for solar power projects in commercial operation. Our O&M services include inspections, repair and replacement of plant equipment, site management and administrative support services.

Operating Solar Power Projects and Sales of Electricity

        In addition to our late stage,late-stage, utility-scale solar project pipeline, we had a portfolio of solar power projects in operation totaling 1,195.5 MWp1.2 GWp as of February 28, 2017. The2018. Our revenue generated from sale of electricity revenue was $68.8$29.2 million in 2016.2017. The resale value of these projects was estimated at approximately $1.6$1.5 billion as of February 28, 2017.2018. For those projects that are subject to U.S. tax equity deals, only the value of the class B shares held by us was included in the aforementioned estimate of resale value. We are actively trying to monetize the majority of our solar power projects in operation and we expect a decrease in our revenue from sale of electricity revenue in 2017.2018.

        Our total portfolio of solar power projects in operation as of February 28, 20172018 was as follows:

        In March 2017,2018, we completed the sale of twothree solar power plantsprojects in China,operation in the U.S., totaling approximately 69.5309 MWp, to Shenzhen Energy,Korea Electricity Power Co. Ltd. or KEPCO, for approximately RMB687.1 million ($99.0 million).

Table of Contents$720 million.

Customer Support and Service

        We typically sell our standard solar modules with a ten-year warranty against defects in materials and workmanship and a linear power performance warranty that guarantees the actual power output of our modules.

        For solar power projects built by us, we provide a limited workmanship or balance of system warranty against defects in engineering, design, installation and construction under normal use, operation and service conditions for a period of up to five years following the energizing of the solar power project. In resolving claims under the workmanship or balance of system warranty, we have the option of remedying through repair, refurbishment or replacement of equipment. We have also entered into similar workmanship warranties with our suppliers to back up our warranties.

        As part of our energy business, before commissioning solar power projects, we conduct performance testing to confirm that the projects meet the operational and capacity expectations set forth in the agreements. In limited cases, we also provide for an energy generation performance test designed to demonstrate that the actual energy generation for up to the first three years meets or exceeds the modeled energy expectation.expectation (after adjusting for actual solar irradiation). In the event that the energy generation performance test performs below expectations, the appropriate party (EPC contractor or equipment provider) may incur liquidated damages capped at a percentage of the contract price. In certain instances, a bonus payment may be received if the energy generation performance test performs above expectations.

        Our customer support and service handles technical inquiries and warranty-related issues. In 2016, we expanded our capacity in these areas to better enable us to handle our customer's questions and concerns in a timely and professional manner.

        In 2016,2017, we renewed our product warranty insurance coverage to provide additional security to our customers. See "—Insurance" below. TheOur customer support and service function will continue to expand and to improve services we provide to our customers.

Table of Contents

Competition

ModuleMSS Segment

        The market for solar power products is competitive and evolving. We compete with American companies, such as First Solar and SunPower, and China-based companies such as Trina, Jinko, JA Solar and Hanwha Q Cells. Some of our competitors are developing or producing products based on alternative solar technologies, such as thin film PV materials, that may ultimately have costs similar to, or lower than, our projected costs. Solar modules produced using thin film materials, such as cadmium telluride and copper indium gallium selenide technology, generally have lower conversion efficiency but do not use silicon for production, compared to our crystalline silicon solar module products, and as such are less susceptible to increases in the costs of silicon. Some of our competitors have also become vertically integrated, from upstream polysilicon manufacturing to solar system integration. In addition, the solar power market in general competes with other sources of renewable and alternative energy as well as conventional power generation.

        We believe that the key competitive factors in the market for solar power products include:

•

price;



•

the ability to deliver products to customers on time and in the required volumes;



•

product quality and associated service issues;



•

nameplate power and other performance parameters of the module, such as power tolerances;



•

value-added services such as system design and installation;

Table of Contents

•

value-added features such as those that make a module easier or cheaper to install;



•

additional system components such as mounting systems, delivered as a package or bundle;



•

brand equity and any good reputation resulting from the above items, including the willingness of banks to finance projects using modules produced by a particular supplier;



•

customer relationships and distribution channels; and



•

the aesthetic appearance of solar power products.

        In the immediate future, we believe that our ability to compete depends on delivering aour ability to deliver cost-effective productproducts in a timely manner and developingto develop and maintainingmaintain a strong brand name based on high quality products and strong relationships with downstream customers. Our competiveness also depends on our ability to effectively manage our cash flow and balance sheet and to maintain our relationships with the financial institutions that fund solar power projects. Consolidation of the solar industry is already occurring and is expected to continue in the near future. We believe that such consolidation will benefit our company in the long-term. We believe that the key to competing successfully in the long-term is to produce innovative, high quality products at competitive prices and develop an integrated sales approach that includes services, ancillary products, such as mounting systems and inverters, and value-added product features. We believe that a good marketing program and the strong relationships that we are building with customers and suppliers will support us in this competitive environment.

Energy Segment

        Our energy segment is a capital intensive business with numerous industry participants. We face competition from a large and diverse group of local and international project developers, financial investors and certain utility companies. These competitors rangevaries in terms of size, geographic focus, financial resources and operating capabilities and are active in Canada, Japan, the U.S., China, Brazil,

Table of Contents

India, Mexico, the United Kingdom, Australia and other markets where we operate or intend to enter. We compete in a diversified and complicated landscape since the commercial and regulatory environments for solar power project development, sale and operation vary significantly from region to region and country to country. Our primary competitors are local and international developers and operators of solar power projects. We believe the key competitive factors in the global solar power project development industry include:

•

vertical integration with upstream manufacturing;



•

permit and project development experience and expertise;



•

reputation and track record;



•

relationship with government authorities and knowledge of local policies;



•

strong internal working capital and good relationship with banks and international organizations that enhance access to external financing;



•

experienced technicians and executives who are familiar with the industry and the implementation of our business plans; and



•

expertise and experience in providing EPC and O&M services.EPC.

        However, we cannot guarantee that some of our competitors do not or will not have advantages over us in terms of greater operational, financial, technical, management or other resources in particular markets or in general.

Table of Contents

        Currently, we operate and maintain solar power projects in the United Kingdom, the U.S., China, Japan, Brazil, India, Australia, Africa and Spain. We compete to supply energy to our potential customers with a limited number of utilities and providers of distributed generation in these markets. If we wish to enter into new PPAs for our solar power projects upon termination of previous PPAs, we compete with conventional utilities primarily based on cost of capital, generation located at customer sites, operations and management expertise, price (including predictability of price), green attributes of power, the ease by which customers can switch to electricity generated by our energy systems and our open architecture approach to working within the industry, which facilitates collaboration and project acquisitions.

        For further discussion of the competitive risks that we face, see "Item 3. Key Information—D. Risk Factors—Risks Related to Our Company and Our Industry—Because the markets in which we compete are highly competitive and quickly evolving, because many of our competitors have greater resources than we do or are more adaptive, and because we have a limited track record in our energy segment, we may not be able to compete successfully and we may not be able to maintain or increase our market share."

Insurance

        We maintain property risk insurance policies with reputable insurance companies to cover our equipment, facilities, buildings and inventories. The coverage of these insurance policies includes losses due to natural hazards and losses arising from unforeseen accidents. Our manufacturing plants in China and elsewhere are covered by business interruption insurance. However, significant damage or interruption to any of our manufacturing plants, whether as a result of fire or other causes, could still have a material and adverse effect on our results of operations. We also maintain commercial general liability (including product liability) coverage. We obtained credit insurance from China Export & Credit Insurance Corporation, or Sinosure. Credit insurance is designed to offset the collection risk of our account receivables for certain customers within the credit limits approved by Sinosure. Risks related to marine, air and inland transit for the export of our products and domestic transportation of

Table of Contents

materials and products are covered under cargo transportation insurance. We also maintain directordirectors and officerofficers liability insurance.

        In April 2010, we began entering into agreements with a group of insurance companies to reduce some of the risks associated with our warranties. Under the terms of the insurance policies, the insurance companies are obliged to reimburse us, subject to certain maximum claim limits and certain deductibles, for the actual product warranty costs that we incur under the terms of our warranty against defects in workmanship and material and our warranty relating to power output. The warranty insurance is renewable annually. We believe that our warranty improves the marketability of our products and our customers are willing to pay more for products with warranties backed by insurance.

Environmental Matters

        Except as disclosed in the "Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China," we believe we have obtained the environmental permits necessary to conduct the business currently carried on by us at our existing manufacturing facilities. We have also conducted environmental studies in conjunction with our solar power projects to assess and reduce the environmental impact of such projects.

        Our products must comply with the environmental regulations of the jurisdictions in which they are installed. We make efforts to ensure that our products comply with the EU's Restriction of Hazardous Substances Directive, which took effect in July 2006, by reducing the amount of lead and other restricted substances used in our solar module products.

Table of Contents

        Our operations are subject to regulation and periodic monitoring by local environmental protection authorities. If we fail to comply with present or future environmental laws and regulations, we could be subject to fines, suspension of production or cessation of operations.

Government Regulations

        This section sets forth a summary of certain significant regulations or requirements that affect our business activities in China or our shareholders' right to receive dividends and other distributions from us.

Renewable Energy Law and Other Government Directives

        In February 2005, China enacted its Renewable Energy Law, which became effective on January 1, 2006 and was revised in December 2009. The revised Renewable Energy Law, which became effective on April 1, 2010, sets forth policies to encourage the development and use of solar energy and other non-fossil energy and their on-grid generation. It also authorizes the relevant pricing authorities to set favorable prices for the purchase of electricity generated by solar and other renewable power generation systems.

        The law also sets forth the national policy to encourage the installation and use of solar energy water-heating systems, solar energy heating and cooling systems, solar PV systems and other solar energy utilization systems. It also provides financial incentives, such as national funding, preferential loans and tax preferences for the development of renewable energy projects subject to certain regulations of the relevant authorities.

        In November 2005, the NDRC promulgated the Renewable Energy Industry Development Guidance Catalogue, in which solar power figured prominently. In January 2006, the NDRC promulgated two implementation directives with respect to the Renewable Energy Law. In January 2007, the NDRC promulgated another related implementation directive. These directives set forth specific measures for setting the price of electricity generated by solar and other renewable power generation systems, for sharing additional expenses, and for allocating administrative and supervisory

Table of Contents

authority among different government agencies at the national and provincial levels. They also stipulate the responsibilities of electricity grid companies and power generation companies with respect to the implementation of the Renewable Energy Law.

        In August 2007, the NDRC promulgated the Medium and Long-Term Development Plan for the Renewable Energy Industry. This plan sets forth national policy to provide financial allowance and preferential tax regulations for the renewable energy industry. The Outline of the Thirteenth Five-Year Plan for National Economic and Social Development of the PRC, which was approved by the National People's Congress in March 2016, the Thirteenth Five-Year Plan for Renewable Energy Development, which was promulgated by the NDRC in December 2016, and the Thirteenth Five-Year Plan for Solar Power Generation, which was promulgated by the National Energy Administration in December 2016 also demonstrates a commitment to promote the development of renewable energy to enhance the competitiveness of the renewable energy industry, including the solar energy industry.

        China's Ministry of Housing and Urban-Rural Development (formerly, the Ministry of Construction) also issued a directive in June 2005 which seeks to expand the use of solar energy in residential and commercial buildings and encourages the increased application of solar energy in different townships. Similarly, China's State Council promulgated a directive in July 2005, which sets forth specific measures to conserve energy resources. In November 2005, China's Ministry of Housing and Urban-Rural Development promulgated the Administrative Provisions on Energy Conservation for Civil Constructions which encourages the development of solar energy. In August 2006, the State Council issued the Decision on Strengthening the Work of Energy Conservation which encourages the great development of the solar energy and other renewable energy. In addition, on April 1, 2008, the

Table of Contents

PRC Energy Conservation Law came into effect. Among other objectives, this law encourages the installation of solar power facilities in buildings to improve energy efficiency. In July 2009, China's Ministry of Finance and Ministry of Housing and Urban-Rural Development jointly promulgated "the Urban Demonstration Implementation Program of the Renewable Energy Building Construction" and "the Implementation Program of Acceleration in Rural Application of the Renewable Energy Building Construction" to support the development of the new energy industry and the new energy-saving industry.

        On March 8, 2011, China's Ministry of Finance and Ministry of Housing and Urban-Rural Development jointly promulgated the Notice on Further Application of Renewable Energy in Building Construction, which aims to raise the percentage of renewable energy used in buildings.

        In September 2009, the PRC State Council approved and circulated the Opinions of the National Development and Reform Commission and other Nine Governmental Authorities on Restraining the Production Capacity Surplus and Duplicate Construction in Certain Industries and Guiding the Industries for Healthy Development. These opinions concluded that polysilicon production capacity in China has exceeded the demand and adopted the policy of imposing more stringent requirements on the construction of new polysilicon manufacturing projects in China. These opinions also stated in general terms that the government should encourage polysilicon manufacturers to enhance cooperation and affiliation with downstream solar product manufacturers to extend their product lines. However, these opinions do not provide any detailed measures for the implementation of this policy. As we are not a polysilicon manufacturer and do not expect to manufacture polysilicon in the future, we believe the issuance and circulation of these opinions will not have any material impact on our business or our silicon wafer, solar cell and solar module capacity expansion plans.

On August 21, 2012, China's Ministry of Finance and Ministry of Housing and Urban-Rural Development jointly promulgated the Notice on Improving Policies for Application of Renewal Energy in Building and Adjusting Fund Allocation and Management Method, which aims to promote the use of solar energy and other new energy products in public facilities and residences, further amplifying the effect of the policies for application of renewable energy in buildings.

        In June 2014, the General Office of the State Council issued its Notice on Printing and Distributing the Action Plan for the Solar projectEnergy Development Strategy (2014-2020), which requested accelerating the development of solar power generation, including promoting the construction of photovoltaic base construction, among others.

        In April 2015, China's Ministry of Finance promulgated the Interim Measures for Administration of the Special Fund for the Development of Renewable Energy Sources, which stipulated the division of regulation of special fund for the development of renewable energy sources and the main scopes to be supported.

        In December 2015, the NDRC issued the Circular on Improving the On-Grid Benchmark Price Policy for Onshore Wind Power and Photovoltaic Power, which aims to promote sound and healthy development of the onshore wind power and PV power industry by regulating the price of wind power and PV power.

        In April 2016, the NDRC and National Energy Administration issued the Notice on Printing and Distributing the Action Plan for Energy Technology Revolution and Innovation (2016-2030), which sets forth the focus, the main direction, the timetable and the route of energy technology innovation.

Table of Contents

        In November 2017, the NDRC issued the Opinions on Comprehensively Deepening the Reform of the Price Mechanism, which requested improving the price mechanism of renewable energy, including adopting the decrement mechanism on the on-grid benchmark price of new energy resources such as wind power and photovoltaic power.

Environmental Regulations

        As we have expanded our ingot, silicon wafer and solar cell manufacturing capacities, we have begun to generate material levels of noise, wastewater, gaseous wastes and other industrial waste. Additionally, as we expand our internal solar components production capacity, our risk of facility

Table of Contents

incidents that would negatively affect the environment also increases. We are subject to a variety of governmental regulations related to the storage, use and disposal of hazardous materials. The major environmental laws and regulations applicable to us include the PRC Environmental Protection Law, which became effective in 1989, as amended and promulgated in 2014, the PRC Law on the Prevention and Control of Noise Pollution, which became effective in 1997, the PRC Law on the Prevention and Control of Air Pollution, which became effective in 1988, as amended and promulgated in 1995, 2000 and 2015, the PRC Law on the Prevention and Control of Water Pollution, which became effective in 1984, as amended and promulgated in 1996, 2008 and 2008,2017, the PRC Law on the Prevention and Control of Solid Waste Pollution, which became effective in 1996, as amended and promulgated in 2004, 2013, 2015 and 2016, the PRC Law on Evaluation of Environmental Affects, which became effective in 2003, as amended and promulgated in 2016, the PRC Law on Promotion of Clean Production, which became effective in 2003, as amended and promulgated in 2012, and the Regulations on the Administration of Construction Project Environmental Protection, which became effective in 1998.1998, as amended and promulgated in 2017.

        Some of our PRC subsidiaries are located in Suzhou, China, which is adjacent to Taihu Lake, a nationally renowned and protected body of water. As a result, production at these subsidiaries is subject to the Regulations on the Administration of Taihu Basin, which became effective on 2011, the Regulation of Jiangsu Province on Preventing Water Pollution in Taihu Lake, which became effective in 1996 and was further revised and promulgated in 2007, 2010, 2012 and 2012,2018, and the Implementation Plan of Jiangsu Province on Comprehensive Treatment of Water Environment in Taihu Lake Basin, which was promulgated in February 2009.2009 and amended in 2013. Because of these regulations, the environmental protection requirements imposed on nearby manufacturing projects, especially new projects, have increased noticeably, and Jiangsu Province has stopped approving construction of new manufacturing projects that increase the amount of nitrogen and phosphorus released into Taihu Lake.Lake, except for those satisfy certain applicable statutory requirements.

Admission of Foreign Investment

        The principal regulation governing foreign ownership of solar power businesses in the PRC is the Foreign Investment Industrial Guidance Catalogue. Under the current catalogue, which was amended in March 2015June 2017 and became effective on April 10, 2015,July 28, 2017, the solar power related business is classified as an "encouraged foreign investment industry." Companies that operate in encouraged foreign investment industries and satisfy applicable statutory requirements are eligible for preferential treatment, including exemption from customs of certain self-used equipment and priority consideration in obtaining land use rights provided by certain local governments.

        While the 2004 catalogue only applied to the construction and operation of solar power stations, the 2007 catalogue expanded its application also applies to the production of solar cell manufacturing machines, the production of solar powered air conditioning, heating and drying systems and the manufacture of solar cells, and the 2011 catalogue, the 2015 catalogue and the current 20152017 catalogue also coverscover the manufacture of solar light collector glass and etc.

Table of Contents

Administration of Foreign Invested Companies

        The establishment, approval, registered capital requirement and day-to-day operational matters of wholly foreign-owned enterprises, are regulated by the Wholly Foreign-Owned Enterprise Law of the PRC, effective in 1986 and amended in 2000 and 2016, and the Implementation Rules of the Wholly Foreign-owned Enterprise Law of the PRC, effective in 1990 and amended in 2001 and 2014. The establishment, operation and management of corporate entities in China are governed by the Company Law of the PRC, or the Company Law, effective in 1994 and amended in 1999, 2004, 2005 and 2013. The Company Law is applicable to our PRC subsidiaries unless PRC laws on foreign investment stipulate otherwise.

Table of Contents

Income Tax and VAT

        PRC enterprise income tax is calculated based on taxable income determined under PRC accounting principles. Our major operating subsidiaries, CSI Solartronics (Changshu) Co., Ltd., or CSI Solartronics, CSI New Energy Holding, CSI Cells, CSI Solar Technologies Inc., or CSI Technologies, CSI Changshu Manufacturing and CSI Luoyang Manufacturing, are governed by the EIT Law, which became effective on January 1, 2008 and amended on February 24, 2017.

        Under the EIT Law, both foreign-invested enterprises and domestic enterprises are subject to a uniform enterprise income tax rate of 25%. The EIT Law provides for preferential tax treatment for certain categories of industries and projects that are strongly supported and encouraged by the state. For example, enterprises qualified as HNTEs are entitled to a 15% enterprise income tax rate, provided that such HNTEs satisfy other applicable statutory requirements. Another example, enterprises which engage in the business within the Western Catalogue, are entitled to a 15% enterprise income tax rate provided that such enterprise satisfies other applicable statutory requirements.

        Certain of our subsidiaries, such as CSI New Energy Holding, CSI Cells, CSI Luoyang Manufacturing, and CSI Changshu Manufacturing and Suzhou Sanysolar, once enjoyed preferential tax benefits, such as a reduced enterprise income tax rate of 12.5% or 15%, however, some of these benefits were expired. In 2016,2017, only our partially owned subsidiary, Suzhou Sanysolar, which was qualified as an HNTE and satisfied applicable statutory requirements, enjoyed a reduced enterprise income tax rate of 15%. In 2017, Suzhou Sanysolar, CSI Cells, and CSI Changshu Manufacturing areand Changshu Tlian Co., Ltd., which were qualified as HNTEHNTEs, and are expected to enjoyCanadian Solar Sunenergy (Baotou) Co., Ltd., which engaged in the business within the scope of the Western Catalogue, were benefited from a reduced enterprise income tax rate of 15%, subject to applicable statutory requirements. In addition, our wholly-owned subsidiary, Canadian Solar Sunenergy (Baotou) Co., Ltd. is now applying for preferential tax benefits. As most of the preferential tax benefits enjoyed by our PRC subsidiaries expired, their effective tax rates increased significantly.

        The EIT Law also provides that enterprises established outside China whose "de facto management body" is located in China are considered PRC tax residents and will generally be subject to the uniform 25% enterprise income tax rate on their global income. Under the implementation regulations, the term "de facto management body" is defined as substantial and overall management and control over aspects such as the production and business, personnel, accounts and properties of an enterprise. Circular 82 further provides certain specific criteria for determining whether the "de facto management body" of a PRC-controlled offshore incorporated enterprise is located in the PRC. The criteria include whether (a) the premises where the senior management and the senior management bodies responsible for the routine production and business management of the enterprise perform their functions are mainly located within the PRC, (b) decisions relating to the enterprise's financial and human resource matters are made or subject to approval by organizations or personnel in the PRC, (c) the enterprise's primary assets, accounting books and records, company seals, and board and shareholders' meeting minutes are located or maintained in the PRC and (d) 50% or more of voting board members or senior executives of the enterprise habitually reside in the PRC. Although Circular 82 only applies to offshore enterprises controlled by enterprises or enterprise groups located within the PRC, the determining criteria set forth in the Circular 82 may reflect the tax authorities' general position on how the "de facto management body" test may be applied in determining the tax resident status of offshore enterprises. As the tax resident status of an enterprise is subject to the determination by the PRC tax authorities, uncertainties remain with respect to the interpretation of the

Table of Contents

term "de facto management body" as applicable to our offshore entities. As a substantial number of the members of our management team are located in China, we may be considered as a PRC tax resident under the EIT Law and, therefore, subject to the uniform 25% enterprise income tax rate on our global income.

        Under the EIT Law and implementing regulations issued by the State Council, the PRC withholding tax rate of 10% is generally applicable to interest and dividends payable to investors from companies that are not "resident enterprises" in the PRC, to the extent such interest or dividends have their sources within the PRC. If our Canadian parent entity is deemed a PRC tax resident under the

Table of Contents

EIT Law based on the location of our "de facto management body," dividends distributed from our PRC subsidiaries to our Canadian parent entity could be exempt from Chinese dividend withholding tax. However, in that case, dividends from us to our shareholders may be regarded as China-sourced income and, consequently, be subject to Chinese withholding tax at the rate of 10%, or at a lower treaty rate if applicable. Similarly, if we are considered a PRC tax resident, any gain realized by our shareholders from the transfer of our common shares is also subject to Chinese withholding tax at the rate of 10% if such gain is regarded as income derived from sources within the PRC. It is unclear whether any dividends that we pay on our common shares or any gains that our shareholders may realize from the transfer of our common shares would be treated as income derived from sources within the PRC and subject to PRC tax.

        In addition, under Announcement 7, where a non-resident enterprise indirectly transfers properties, such as equity in Chinese resident enterprises, without any reasonable commercial purposes with the aim of avoiding payment of enterprise income tax, such indirect transfer shall be reclassified as a direct transfer of equity in a Chinese resident enterprise. Properties such as equity in Chinese resident enterprises mentioned in Announcement 7 mean the properties, or Chinese taxable properties, which are directly held by non-resident enterprises and subject the transfer income to enterprise income tax in China according to the provisions of Chinese tax law. Indirect transfers of Chinese taxable properties are transactions which transfer the equity of enterprises abroad that directly or indirectly hold Chinese taxable properties (not including Chinese resident enterprises registered abroad). To estimate reasonable commercial purposes, all arrangements related to the indirect transfer of Chinese taxable properties must be considered comprehensively and certain factors, such as whether the main value of the equity of enterprises abroad is directly or indirectly from the Chinese taxable properties, must be comprehensively analyzed. Except for the circumstances stipulated therein, the overall arrangements related to the indirect transfer of Chinese taxable properties that fall in any of the following circumstances simultaneously are deemed as having no reasonable commercial purposes: (a) more than 75% of the equity of enterprises abroad is directly or indirectly from Chinese taxable properties; (b) more than 90% of the total assets (not including cash) of enterprises abroad is directly or indirectly composed of investment in the territory of China at any time in the year before the indirect transfer of Chinese taxable properties, or more than 90% of the income of enterprises abroad is directly or indirectly from the territory of China in the year before the indirect transfer of Chinese taxable properties; (c) although the enterprises abroad and their subordinate enterprises directly or indirectly hold Chinese taxable properties have registered in the host country (region) in order to satisfy the organization form required by law, the functions actually performed and the risks undertaken are limited and are not sufficient to prove the economic essence; or (d) the burden of income tax of indirect transfer of Chinese taxable properties payable abroad is lower than the possible burden of taxation in China as for the direct transfer of Chinese taxable properties. However, a non-resident enterprise's income obtained from indirect transfer of Chinese taxable properties by purchasing and selling equity of the same listed enterprise abroad in the open market will not be taxed under Announcement 7.

        There is uncertainty as to the application of Announcement 7 and it is understood that the relevant PRC tax authorities have jurisdiction regarding reasonable commercial purposes. As a result,

Table of Contents

we may become at risk of being taxed under Announcement 7 and we may be required to expend valuable resources to comply with Announcement 7 or to establish that we should not be taxed under Announcement 7, which may materially adversely affect our financial condition and results of operations.

        Pursuant to a November 2008 amendment toUnder the Provisional Regulation of the PRC on Value Added Tax issued by the PRC State Council,amended in 2008, 2016 and 2017 and its implementation rules, which became effective in 2009 and were amended in 2011, all entities and individuals that are engaged in the sale of goods, the provision ofprocessing, repairs and replacement services, the sales of services, intangible assets or real estate, and the importation of goods in China are required to pay VAT. Gross proceeds from sales and importation of goods and provisionsales of labor services are

Table of Contents

generally subject to VAT at a rate of 17%, with exceptions for certain categories of goods that are taxed at a rate of 13%11%. Gross proceeds from sales of real estate are subject to VAT at a rate of 11%. Gross proceeds from sales of services and intangible assets are generally subject to VAT at a rate of 6%, with exceptions for certain categories of services or intangible assets that are taxed at a rate of 17% or 11%. When exportingengaging in exportation of certain goods or cross-border sales of certain services or intangible assets, the exporter or the seller is entitled to a refund of a portion or all of the VAT that it has already paid or borne.

        UnderIn March, 2018, the Provisional RegulationState Council decided to reduce the VAT rate of industries such as the PRC on Value Added Tax amended in 2008manufacturing industry from 17% to 16% and 2016the VAT rate of industries such as the transportation, construction and its implementation rules, which became effective in 2009basic telecommunication services and were amended in 2011, and relevant regulations, fixed assets (mainly including equipment and manufacturing facilities) are now eligible for credit for input VAT. Previously, input VAT on fixed assets purchases was not deductiblegoods such as agricultural products from the current period's output VAT derived from the sales of goods, but had11% to be included in the cost of the assets. The new rule permits this deduction except in the case of equipment purchased for non-taxable projects or tax-exempted projects where the deduction of input VAT is not allowed. However, the qualified fixed assets could also be eligible for input VAT if the fixed assets are used for both taxable projects and non-taxable projects or tax-exempted projects. Presently, no further detailed rules clarify under what circumstance the fixed assets are considered as being used for both taxable and non-taxable or tax exempt projects. Because of the new VAT rules, our PRC subsidiaries may benefit from future input VAT credit on our capital expenditures.

        Under the former rules, equipment imported for qualified projects was entitled to an import VAT exemption and domestic equipment purchased for qualified projects were entitled to a VAT refund. However, such exemption and refund were both eliminated as of January 1, 2009.10%.

Foreign Currency Exchange

        Foreign currency exchange regulation in China is primarily governed by the Foreign Currency Administration Rules, which became effective in 1996 and were amended in 1997 and 2008, and the Settlement, Sale and Payment of Foreign Exchange Administration Rules (1996), or the Settlement Rules.

        Currently, the Renminbi is convertible for current account items, including the distribution of dividends, interest payments, trade and service-related foreign exchange transactions. Conversion of the Renminbi for most capital account items, such as security investment and repatriation of investment, however, is still subject to limitation and requires the approval by or registration with SAFE.

        However, SAFE began to reform the foreign exchange administration system and issued the Notice on Reforming the Administrative Approach Regarding the Settlement of the Foreign Exchange Capitals of Foreign-invested Enterprises, or Circular 19, on March 30, 2015, which allows foreign invested enterprises to settle their foreign exchange capital on a discretionary basis according to the actual needs of their business operation and allows a foreign-invested enterprise with a business scope including "investment" to use the RMB capital converted from foreign currency registered capital for equity investments within the PRC. On June 9, 2016, SAFE issued the Circular on Reforming and Regulating Policies on the Control over Foreign Exchange Settlement of Capital Accounts, or Circular 16. Compared to Circular 19, Circular 16 provides that discretionary foreign exchange settlement applies to foreign exchange capital, foreign debt offering proceeds and remitted foreign listing proceeds, and the corresponding RMB obtained from foreign exchange settlement are not restricted from extending loans to related parties or repaying the inter-company loans (including advances by third parties).

        On February 13, 2015, SAFE promulgated the Circular on Further Simplifying and Improving the Policies Concerning Foreign Exchange Control on Direct Investment, or SAFE Circular No. 13, which delegates the authority to enforce the foreign exchange registration in connection with the inbound and outbound direct investment under relevant SAFE rules to certain banks and therefore further simplifies the foreign exchange registration procedures for inbound and outbound direct investment.

Table of Contents

        On January 26, 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration and Optimizing Genuineness and Compliance Verification, which sets out various measures that relaxes the policy restriction on foreign exchange inflow to further enhance trade and investment facilitation and that tightens genuineness and compliance verification of cross-border transactions and cross-border capital flow.

Dividend Distribution

        The principal regulations governing distribution of dividends paid by wholly foreign owned enterprises include the Wholly Foreign-Owned Enterprise Law of the PRC, effective in 1986 and amended in 2000 and 2016, the Implementation Rules of the Wholly Foreign-Owned Enterprise Law of the PRC, effective in 1990 and amended in 2001 and 2014, the Company Law effective in 1994 and

Table of Contents

amended in 1999, 2004, 2005 and 2013 and the EIT Law and its implementation rules, both effective in 2008.

        Under these laws, foreign-invested enterprises in China may pay dividends only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, a wholly foreign owned enterprise in China is required to set aside at least 10% of its after-tax profits determined in accordance with PRC accounting standards each year to its general reserves until the accumulative amount of such reserves reach 50% of its registered capital. These reserves are not distributable as cash dividends. The board of directors of a foreign-invested enterprise has the discretion to allocate a portion of its after-tax profits to staff welfare and bonus funds, which may not be distributed to equity owners except in the event of liquidation.

Employment

        The major laws and regulations governing the employment relationship, including wage and hour requirements, working and safety conditions, social insurance, housing funds and other welfare. The PRC Labor Law which became effective on January 1, 1995 and amended on August 27, 2009, the Labor Contract Law of the People's Republic of China, which became effective on January 1, 2008, and was later revised on December 28, 2012, its Implementing Regulation and the amendment thereunder, which became effective on September 18, 2008 and July 1, 2013, respectively, permit workers in both state-owned and private enterprises in the PRC to bargain collectively. The PRC Labor Law and the PRC Labor Contract Law provide for collective contracts to be developed through collaboration between the labor unions (or worker representatives in the absence of a union) and management that specify such matters as working conditions, wage scales, and hours of work. The PRC Labor Contract Law and its Implementing Regulation impose certain requirements with respect to human resources management, including, among other things, signing labor contracts with employees, terminating labor contracts, paying remuneration and compensation and making social insurance contributions. In addition, the PRC Labor Contract Law requires employers to provide remuneration packages that meet the relevant local minimum standards. The PRC Labor Contract Law has enhanced rights for the nation's workers, including permitting open-ended labor contracts and severance payments. It requires employers to provide written contracts to their workers, restricts the use of temporary labor and makes it harder for employers to lay off employees. It also requires that employees with fixed-term contracts be entitled to an indefinite-term contract after a fixed-term contract is renewed twice or the employee has worked for the employer for a consecutive ten-year period. According to the Interim Provisions on Labor Dispatching, which came into effect on January 3, 2014, the number of dispatched workers used by an employer shall not exceed 10% of its total number of workers.

        Under applicable PRC laws, rules and regulations, including the Social Insurance Law promulgated by the Standing Committee of the National People's Congress and effective as of July 1, 2011, the Rules on Implementing the Social Insurance Law issued by Ministry of Human Resource and Social Security and effective as of July 1, 2011, the Interim Regulations on the Collection and Payment of

Table of Contents

Social Security Funds promulgated by the State Council and effective as of January 22, 1999, the Interim Measures Concerning Maternity Insurance promulgated by the Ministry of Labor and effective as of January 1, 1995, the Regulations on Occupational Injury Insurance promulgated by the State Council and effective as of January 1, 2004 and amended on December 20, 2010, and the Regulations on the Administration of Housing Accumulation Funds promulgated by the State Council and effective as of April 3, 1999 and amended on March 24, 2002, employers are required to contribute, on behalf of their employees, to a number of social security funds, including funds for basic pension insurance, unemployment insurance, basic medical insurance, occupational injury insurance, maternity leave insurance, and to housing accumulation funds. These payments are made to local administrative authorities and any employer who fails to contribute may be fined and ordered to remediate on payments within a stipulated time period.

Table of Contents

C.    Organizational Structure

        The following table sets out our major subsidiaries, including their place of incorporation and our ownership interest, as of March 31, 2017.2018.

Table of Contents

Table

*

CSI Cells holds 3.23% equity rights of Contents

CSI Cells (Yancheng) Co., Ltd. A limited partnership fund, of which CSI Cells holds 37.33% shares as a limited partner and a wholly-owned subsidiary of CSI Solar Power Group Co., Ltd. holds 0.17% shares as a general partner, holds 96.77% equity rights of CSI Cells (Yancheng) Co., Ltd.

**

CSI Changshu Manufacturing holds 4% equity rights of CSI Modules (DaFeng) Co., Ltd. A limited partnership fund, of which CSI Changshu Manufacturing holds 14.93% shares as a limited partner and a wholly-owned subsidiary of CSI Solar Power Group Co., Ltd. holds 0.07% shares as a general partner, holds 96% equity rights of CSI Modules (DaFeng) Co., Ltd.

D.    Property, Plant and Equipment

        The following is a summary of our material properties, including information on our manufacturing facilities and office buildings as of the date of this annual report:report on Form 20-F:

•

CSI Changshu Manufacturing holds ahas the land use rights certificate forright to two pieces of land of approximately 40,000 square meters of landand 180,000 square meters, respectively, in Changshu, on which we have built manufacturing facilities of approximately 23,559 square meters. Production in these facilities began in April 2008. We also constructed a canteen, a dormitory for employees and a liquefied gas station in September 2010 with a total floor area of 11,316 square meters. The property ownership certificates were granted in 2011.



•

CSI Changshu Manufacturing also holds a real property rights certificate (a new certificate that covers both the land use rights and the property ownership) for approximately 180,000 square meters of land in Changshu, on which we have built two module manufacturing facilities, two warehouses and other buildings with a total floor area of approximately 60,576 square meters. Construction of the central warehouses was completed in April 2010. We completed the construction of a module manufacturing facility with an additional warehouse and three other buildings, which have approximately 46,539 square meters of floor area, in the first half of 2011. In November 2015, we completed the construction of another warehouse with total floor area of approximately 22,826164,817 square meters. We have obtained certificates for property ownership certificates for all of CSI Changshu Manufacturing's facilities.



•

CSI Luoyang Manufacturing holdshas a land use rights certificate forright to a piece of land of approximately 35,345 square meters of land in Luoyang (Phase I), on which we have constructed manufacturing facilities. The floor area of Phase I is approximately 6,761 square meters. The certificates for property ownership certificates were granted in June 2008. In 2008, CSI Luoyang Manufacturing obtained the land use rights forright to a piece of land adjacent of approximately 79,685 square meters of adjacent land (Phase II), on which we have constructed manufacturing facilities. The floor area of Phase II is approximately 29,811 square meters. The certificates for property ownership certificates were granted in September 2013. In 2016, CSI Luoyang Manufacturing obtained the land use rights forright to a piece of land of 159,961 square meters of land (Phase III), on which we have constructed manufacturing facilities with the floor area of approximately 39,15038,955 square meters. We are inhave obtained the process of obtaining thecertificates for property ownership certificates for Phase III.III in March 2018.



•

CSI Cells holds ahas the land use rights certificate forright to a piece of land of approximately 65,661 square meters of land in Suzhou. We completed the construction of our first solar cell manufacturing facilities on this site in the first quarter of 2007. The Phase I manufacturing facilities have 14,077 square meters, for which we obtained the certificate for property ownership certificate.ownership. The Phase II cell manufacturing facilities, with 30,102 square meters of workshop space, were completed in 2009. The Phase III cell manufacturing facilities, with a total floor area of approximately 21,448 square meters of manufacturing and office space, were completed in August 2011. We have passed the required inspection and are in the process of obtaining property ownership certificate from the competent government authority. CSI Cells merged with CSI Solar New Energy (Suzhou) Co., Ltd. in 2012. CSI Solar New Energy (Suzhou) Co., Ltd. had a2012,

and obtained the land use rights certificate forright to a piece of land of approximately 10,000 square meters of land in Suzhou and athe certificate for property ownership certificate for approximately 4,833 square meters of floor area. The process of recertification of the land use rights certificate and property ownership certificate have been completed and both are now registered under the name of CSI Cells.



•

The construction of cell manufacturing facilities (Phase I) of CSI-GCLCSI&GCL Solar Manufacturing (Yancheng) Co., Ltd.(Yan Cheng) Inc., or CSI-GCLCSI&GCL Solar Manufacturing, was completed in Yancheng in 2015. The floor area of Phase I is approximately 26,921 square meters. CSI-GCLCSI&GCL Solar Manufacturing currently leases the manufacturing facilities for Phase I but has the right and expects to purchase those facilities and obtain the land use rights between 2018 and 2020. CSI-GCLCSI&GCL Solar

Manufacturing commenced commercial production in the first quarter of 2016. In 2016, CSI-GCLCSI&GCL Solar Manufacturing obtained the land use rights forright to a piece of land of approximately 133,333 square meters of land (Phase II)II and Phase III). The construction of Phase II and Phase III cell manufacturing facilities with floor area of approximately 23,02022,121 square meters was completed in 2016 and we are in the process of obtaining the certificates for property ownership certificates for Phase II. CSI-GCLII and Phase III. In 2017, CSI&GCL Solar Manufacturing was established under a strategic partnership agreement with GCL-Poly Solar System Integration (China) Co., Ltd. and is 80% owned by us.

obtained the land use rights for approximately 33,664 square meters for the construction of Phase IV.



•

In Baotou of Inner Mongolia, we lease module manufacturing facilities with a floor space area of 10,190 square meters for a term of two years commencing in November 2016. This module manufacturing facility has commenced operation in the first quarter of 2017. In addition, we have built manufacturing facilities with a floor area of approximately 18,000 square meters on a piece of land of approximately 244,801 square meters to which we do not have obtained yet but plan to obtain the land use right, and the production has commenced in May 2017. We have also started the construction of other facilities producing poly ingots and mono ingots with a floor area of approximately 61,728 square meters on the same land.



•

In Suzhou, Canadian Solar Sunenergy (Suzhou) Co., Ltd. acquiredhas obtained the land use right to a piece of land of approximately 60,000 square meters and owns the module manufacturing facility thereon with a floor area of 28,355 square meters on a land area of approximately 60,000 square meters, which commenced production in the first quarter of 2017.



•

CSI Cells (Yancheng) Co., Ltd. has obtained the land use right to a piece of land of approximately 133,857 square meters (Phase I) located in National Yancheng Economic Technical Development Zone of Yancheng City, in November 2017, on which the construction of cell manufacturing facilities has started since August 2017. The floor area of cell manufacturing facilities (Phase I) is approximately 63,496 square meters and expected to complete and commence operations by the end of 2018.



•

CSI Modules (DaFeng) Co., Ltd. obtained the land use right to a piece of land of 200,006 square meters in Yan-Cheng Da-Feng Economic Development District in 2017. The module production facility of 67,800 square meters (Phase I) is under construction and expected to complete in the fourth quarter of 2018.



•

In Taiwan, we lease a plant facility of approximately 20,227 square meters located in Hukou Township of Hsinchu City with a five-year term in December 2017. The production of 200 MW module manufacturing is expected to commence in the second quarter of 2018.



•

In Ontario, we lease approximately 14,851 square meters of manufacturing facilities in Guelph, Ontario, Canada for a term of 10ten years commencing September 1, 2010 and approximately 8,685 square meters of manufacturing facilities in London, Ontario, Canada for a term of five years commencing October 1, 2013.2010. We also lease a warehouse of 7,912 square meters and an office building of 1,146 square meters on the same premises as the Guelph, Ontario, Canada manufacturing facilities for the same term.

Table of Contents

•

In Vietnam, we lease approximately 15,784 square meters of manufacturing facilities in Haiphong City, Vietnam for a term of three years commencing August 1, 2015. The renovation of the facility was completed and production began in the first quarter of 2016.



•

In Thailand, Canadian Solar Manufacturing (Thailand) Co., Ltd. purchased 287,788179.2 Rai (286,732 square metersmeters) of land. We have obtained anland with the ownership certificate for 223,552 square meters of the land and are in the process of obtaining ownership certificate for the remaining area.obtained. The construction of a cell manufacturing facility with a floor area of 19,139 square meters and a module manufacturing facility with a floor area of 29,723 square meters has been completed. Production of modules began in the third quarter of 2016 and production of cells is expected to beginhas begun in the second quarter ofApril 2017.



•

In Indonesia, we lease a total floor area of approximately 8,000 square meters for our module production facilities, through our 67% owned subsidiary, PT. Canadian Solar Indonesia, which was established under a strategic partnership agreement with PT Comtel Energi. Production commenced in the first quarter of��of 2016.

        Except as disclosed in the "Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China," we believe we have obtained the environmental permits necessary to conduct the business currently carried on by us at our existing manufacturing facilities. For more details, see "B. Business Overview—Environmental Matters."

ITEM 4A.    UNRESOLVED STAFF COMMENTS

        None.

ITEM 5.    OPERATING AND FINANCIAL REVIEW AND PROSPECTS

        The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes thereto included elsewhere in this annual report on Form 20-F. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results may differ

materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under "Item 3. Key Information—D. Risk Factors" or in other parts of this annual report on Form 20-F.

A.    Operating Results

Factors Affecting Our Results of Operations

        The most significant factors that affect our financial performance and results of operations are:

•

solar power products pricing;



•

costs of silicon raw materialmaterials and solar ingot, waferingots, wafers and cellcells relative to the selling prices of modules;



•

government subsidies and the availability of financing for solar projects;



•

industry and seasonal demand;



•

impact of certain of our long-term purchase commitments;



•

solar power project development and sale and EPC and development services;



•

anti-dumpingantidumping and countervailing duty costs and true-up charges; and



•

foreign exchange.

Table of Contents

Solar Power Products Pricing

        Before 2004, all of our net revenues were generated from sales of specialty solar modules and products. In 2004, we began selling standard solar modules. In 2014,2015, we generated 59.0%71.9% of our net revenues from our moduleMSS segment, which primarily comprises the design, development, manufacture and sale of solar power products, and solar system kits and 41.0%O&M services, and 28.1% from our energy segment, which primarily comprises solar power project development and sale, EPC and development services, O&M services and operating solar power projects and sales of electricity. In 2015,2016, we generated 71.8%96.2% of our net revenues from our moduleMSS segment and 28.2%3.8% from our energy segment. In 2016,2017, we generated 96.1%80.0% of our net revenues from our moduleMSS segment and 3.9%20.0% from our energy segment.

        Our standard solar modules are priced based on either the actual flash test result or the nameplate capacity of our modules, expressed in watts-peak. The actual price per watt is affected by overall demand for modules in the solar power industrymarket and increasingly by the total power of the module. Higher-powered modules usually command slightly higher prices per watt.

        We price our standard solar modules based on the prevailing market price at the time we enter into sales contracts with our customers, taking into account the size of the contract, the strength and history of our relationship with the customer and the costs of silicon raw materialmaterials and solar ingot, waferingots, wafers and cell.cells. During the first few years of our operations, the average selling pricesprice for standard solar modules rose year-over-year across the industry, primarily because of high demand. During the period from 2004 to 2008, the average selling price of our standard solar modules ranged from $3.62 to $4.23. Following a price peak in the third quarter of 2008, the industry-wide average selling price of standard solar modules declined sharply, as market demand declined and competition increased due to the worldwide credit crisis, reduction in government subsidies in certain solar markets and increased manufacturing output. In 2009, the average selling price of our standard solar modules continued to fall, with an average selling price of $1.93 per watt in the fourth quarter of 2009. Since 2009, the average selling price of our standard solar modules has generally continued to fall largely due to an oversupply of solar modules. In 2014 and 2015, the average selling price of our standard solar modules was approximately $0.67 per watt and $0.58 per watt, respectively,respectively; and, in 2016 and 2017, it was approximately

$0.51 $0.51 per watt.watt and $0.40 per watt, respectively. We expect the averaging selling price of our standard solar modules to continue to drop, albeit at a moderate rate.

Costs of Silicon Raw MaterialMaterials and Solar Ingot, WaferIngots, Wafers and CellCells Relative to the Selling Prices of Modules

        We produce solar modules, which are an array of interconnected solar cells encased in a weatherproof frame, and products that use solar modules. Solar cells are the most important component of solar modules. Our solar cells are currently made from mono-crystalline and multi-crystalline solar wafers through multiple manufacturing steps. Solar wafers are the most important material for making solar cells. Solar ingots are the most important material for making solar wafers. If we are unable to procure silicon raw materialmaterials and solar ingots, wafers and cells at reduced prices in line with the decreasing selling prices of our solar module,modules, our revenues and margins could be adversely impacted, either due to higher manufacturing costs than our competitors or write-downs of inventory, or both. Our market share could decline if our competitors are able to offer better pricing than we are.

Government Subsidies and the Availability of Financing for Solar Projects

        We believe that the near-term growth of the market for on-grid applications depends in large part on the availability and size of government subsidies and economic incentives, and the availability and cost of financing for solar projects.

        For a detailed discussion of the impact of government subsidies and incentives, possible changes in government policy and associated risks to our business, see "Item 3. Key Information—D. Risk

Table of Contents

Factors—Risks Related to Our Company and Our Industry—Governments may revise, reduce or eliminate subsidies and economic incentives for solar energy, which could cause demand for our products to decline." and "Item 4. Information on the Company—B. Business Overview—Sales, Marketing and Customers."

        For a detailed discussion of the impact of the continuing weak global economy and uncertain global economic outlook and associated risks to the availability and cost of debt or equity for solar power projects and our customers' ability to finance the purchase of our products or to construct solar power projects, see "Item 3. Key Information—D. Risk Factors—Risks Related to Our Company and Our Industry—The execution of our growth strategy depends upon the continued availability of third-party financing arrangements for our customers, which is affected by general economic conditions. Tight credit markets could depress demand or prices for solar power products and services, hamper our expansion and materially affect our results of operations."

Industry and Seasonal Demand

        Our business and revenues depend on the demand for solar power. Although solar power technology has been used for several decades, the solar power market has only started to grow significantly in the past few years. See "Item 3. Key Information—D. Risk Factors—Risks Related to Our Company and Our Industry—We may be adversely affected by volatile solar power market and industry conditions; in particular, the demand for our solar power products and services may decline, which may reduce our revenues and earnings." Industry demand is affected by seasonality. Demand tends to be lower in winter, particularly in Europe, wherewhen adverse weather conditions can complicate the installation of solar power systems, thereby decreasing demand for solar modules. Seasonal changes can also significantly impact the construction schedules of our solar power projects in countries such as Canada, the U.S. and China thereby also decreasing demand. See "Item 3. Key Information—D. Risk Factors—Risks Related to Our Company and Our Industry—Seasonal variations in demand linked to construction cycles and weather conditions may influence our results of operations."

Table of Contents

Impact of Certain of Our Long-term Purchase Commitments

        Currently, we acquire a large portion of our requirements of solar wafers and cells required for our production through purchasing arrangements. See "Item 3. Key Information—D. Risk Factors—Risks Related to Our Company and Our Industry—Long-term supply agreements may make it difficult for us to adjust our raw material costs should prices decrease. Also, if we terminate any of these agreements, we may not be able to recover all or any part of the advance payments we have made to these suppliers and we may be subject to litigation."

Solar Power Project Development and Sale and EPC and Development Services

        Revenues generated from our energy segment accounted for 41.0%28.1%, 28.2%3.8% and 3.9%20.0% of our net revenues in 2014, 2015, 2016 and 2016,2017, respectively. The majority of these revenues came from the sale of solar power projects and the provision of EPC and development services. We intend to monetize the majority of our current portfolio of solar power projects in operation that have an estimated resale value of approximately $1.6$1.5 billion as of February 28, 2017.2018. Our revenues from the energy segment are affected by the timing of the completion and sale of solar power projects. See "Item 4. Information on the Company—B. Business Overview—Sales, Marketing and Customers—Energy Segment—Solar Project Development and Sale" for a description of the status of our solar power projects.

        Solar power project development and sale and EPC and development services involve numerous risks and uncertainties. For a detailed discussion of these risks and uncertainties, see "Item 3. Key Information—D. Risk Factors—Risks Related to Our Company and Our Industry—Our future success depends partly on our ability to expand the pipeline of our energy segment in several key markets, which exposes us to a number of risks and uncertainties" and "Item 3. Key Information—D. Risk Factors—Risks Related to Our Company and Our Industry—Our project development and construction activities may not be successful, projects under development may not receive required permits, property

Table of Contents

rights, PPAs, interconnection and transmission arrangements, and financing or construction of projects may not commence or continue as scheduled, all of which could increase our costs, delay or cancel a project, and have a material adverse effect on our revenue and profitability."

Anti-dumpingAntidumping and Countervailing Duty Costs and True-up Charges

        In 2016,2017, we made approximately $144.3$7.6 million of cash deposits pursuant to anti-dumpingantidumping and countervailing duty rulings in the U.S., of which $132.2$7.3 million were charged to our cost of revenues. In addition, we booked a true-up provisionthe benefits of $44.1two reversals of $42.6 million and $15.0 million, primarily associated with prior years' module sales from China tobased on the U.S. following the announcement of the preliminary resultsfinal rates of the third administrative review of Solar 1 and the first administrative review of Solar 2 carried out by the U.S. Department of Commerce, of the import into the U.S. of Chinese origin solar products using Chinese origin solar cells.respectively.