Canadian Solar President Yan Zhuang joined TaiyangNews Managing Director Michael Schmela for an exclusive interview during SNEC 2025 in Shanghai, the world’s largest solar trade show, as part of the TaiyangNews & SNEC Solar Leadership Conversations series. 

TaiyangNews: Yan, welcome to the TaiyangNews & SNEC Solar Leadership Conversations 2025. Let’s talk about the solar market, where things are not so pleasant. We know that the solar roller coaster goes in different ways. At the moment, for quite a while, it has been going down. We are seeing record-low prices. The market has been growing, though, and it is probably slowing down this year. We have huge overcapacities. Many manufacturers are presenting red numbers. And there's no end to the overcapacities in sight. So Yan, when will we see the light at the end of the tunnel? 

Yan Zhuang: Well, I have always said, since more than a year ago, maybe 2 years ago, when the downturn started, that I'm against the statement that we are going through just another cycle, and we should not continue stating that we are going through a cycle. This is not a repeat of previous cycles. This is a fundamental transition of our industry. 

Our industry has entered a commoditized period. While people talk about overcapacity and geographical decoupling of the supply chain, they overlook something more important – the real crisis comes from the value of the module to investors. 

In the past, the cost of a module used to be 60% of the total EPC cost, some 15 to 20 years ago. A few years ago, it dropped to 30%. Last year, for utility-scale, it was under 20%, and with an average of 3-hour storage to the system, module cost is below 10% of total EPC cost. Meanwhile, storage accounts for 45%-47% of total cost. 

But manufacturing a module – full supply chain from silicon to module – the CapEx makes it more expensive than a 3-hour storage. Investors now place much less value on the module compared to storage. Yet we've over-invested in module manufacturing. 

That’s why this is a fundamental transition. When you ask me, where do I see the light at the end of the tunnel? I don’t see it this year or next year. Not sure about the year after that. But I do know that consolidation will go deep. Only long-term players willing to wait to create value will remain. The module share of system cost is so low now that any tech innovation takes much longer to create meaningful value. This is the reality. 

TaiyangNews: So, we won’t see quick entries anymore – like in the past, where companies bought turnkey equipment and were able to produce decent high-efficiency products at a reasonable cost? 

Yan Zhuang: Technology differentiation now takes more time. A 1% efficiency gain is harder and more expensive today than it was 10 years ago, and its value creation is lower. 

When we talk about consolidation, people think of bankruptcies, but that happens slowly in China. You have active capacity that continues to operate and win orders even without profit, while idle capacity remains untouched. After 2 years, idle capacity simply fades out. This is why I say we won’t see a recovery this year or next. This is a slow consolidation. 

TaiyangNews: Even if it's slow, there will be winners and losers. What does a company need to look like to be a winner? 

Yan Zhuang: Winners must be financially strong to endure a longer cycle of value creation. Secondly, they must continue to invest in R&D and upgrade capacity despite slower returns. Technology value creation is migrating downstream.  

The return on a solar asset is now less dependent on the income cost. It's more dependent on the trading price. It's the revenue side that matters more to the return on investment. So, what's valuable now is storage, power electronics, energy management systems (EMS), trading algorithms, and system integration for hybrid/off-grid setups. 

Third, cultural value – cross-cultural leadership – is vital to navigate geopolitical decoupling. It’s very difficult, especially for most Chinese companies. And lastly, business model innovation. You need innovation beyond technology in how you operate your business. The reason we have been profitable is due to our profits come from our US business and our early investment in storage, our business model innovation that began 10 years ago. 

TaiyangNews: You were one of the first to invest in development, like when you acquired Recurrent Energy. Do you believe companies now must also sell kilowatt-hours, not just modules? 

Yan Zhuang: Yes. Solar is a young and rapidly expanding industry. Unfortunately, most investments go into module manufacturing, but they cannot have a longer vision into the industry movement. That’s why we invested in storage. We started utility-scale storage development 6 years ago through Recurrent, recognizing the opportunity early. Back then, everyone else was still ramping up manufacturing. We acquired a skilled R&D team in the US, built up from system integration to containerization, PCS, EMS, and even battery cells. It’s a long journey – the first 3 years were investment-heavy, but now it pays off. 

TaiyangNews: But how do you manage doing so many things – modules, storage, inverters, EMS, battery chemistry – without losing focus? 

Yan Zhuang: It’s true they require different skill sets. But we’re still addressing the same projects, the same investors. The industry is expanding rapidly, and we’ve evolved accordingly. 

Being overly focused on just modules made many companies blind to where the industry was going. We need a sustainable strategy. We’ve always had a long-term vision, been patient, and invested despite early losses. Now, we have a strong portfolio: modules, PCS, inverters, EMS, and even our own battery cells – certified and running well. 

TaiyangNews: Still, auto battery makers are larger and more R&D-heavy. How do you remain competitive? 

Yan Zhuang: A few years ago, there was a severe battery cell shortage – even contracts weren’t honored. That taught us the strategic importance of controlling technology and manufacturing. It does not mean we will completely replace third-party suppliers, but we want partial in-house capacity so that whenever it's needed, we can expand the capacity quickly. 

And also, since we plan to do that in the US, whoever can do a battery cell in the US will be in high demand, so we cannot rely on other people. That’s why we first started with battery cell production in China. Now our 3 GWh battery cell line is running well. We plan to replicate this in the US, where domestic battery cell supply will be critical. It’s about risk control. 

TaiyangNews: Let’s talk markets. China was 55% of global demand last year. But new policies changed that outlook. What’s your view? 

Yan Zhuang: 
China remains important, but our revenue comes more from overseas. The recent policy change has triggered investors to pause, so I expect lower 2nd-half installations. In the long term, the new policy could benefit storage – making it more functional, not just mandatory. Also, growth in China over the last few years was irrational; it shouldn’t be expected now. It would be encouraging speculation. I always anticipated this irrational growth to transition into rational growth. It is finally happening. 

TaiyangNews: And the US? Still a core market for you? 

Yan Zhuang: We have been navigating the US trade policies since 2012. It's unpredictable – we're adjusting plans frequently due to political changes. Still, renewables have long-term potential. The House Reconciliation Budget bill isn't encouraging, but we hope the Senate takes a more rational stance. We’ve prepared for worst-case scenarios with backup plans, so risks are manageable. 

TaiyangNews: Can you summarize your current US plans? 

Yan Zhuang: We have 3 factories in the US. We have a 5 GW module factory in Dallas that's performing well, partly why we were profitable in Q1. We’re building a cell factory in Indiana and a battery cell and storage system factory in Kentucky. These 2 will start operating next year. 

TaiyangNews: Finally, when we meet again at SNEC next year, how do you expect the market and Canadian Solar to look? 

Yan Zhuang: A year later, I expect we’ll still be profitable. Consolidation will continue, but more companies will try to differentiate themselves. Storage markets in Europe and Japan will expand. We have a 91 GWh pipeline and a $3.2 billion storage backlog to be delivered this year and the next. Our residential storage will scale up next year. 

We’re glad consolidation is happening; it should have come earlier. The industry is becoming healthier. We’re more in control now. 

TaiyangNews: Thanks for your view. Thanks for the conversation. That was great, Yan.