Canadian Solar and GCL announce major solar JV

TORONTO, CANADA: Canadian Solar Inc., one of the world's largest solar companies, and Suzhou GCL Photovoltaic Technology Co. Ltd, a subsidiary of GCL-Poly Energy Holdings Limited ("GCL", stock code: 3800.HK), announced a major solar joint-venture to build a 600 MW capacity wafer plant in Suzhou dedicated to Canadian Solar's requirements. The initial 600 MW can be expanded to 1.2 GW.

The total capital expenditure for the first phase of the project is approximately $77 million, which is expected to be financed 33.3 percent through the registered capital and 66.7 percent through debt. Under the terms of the agreement, GCL will contribute 90 percent of the registered equity, and Canadian Solar will contribute 10 percent.

Gongshan Zhu, chairman and CEO of GCL, said: "We are very pleased to be partnering with Canadian Solar on a long-term basis. This partnership with Canadian Solar, one of the industry's most innovative leaders worldwide, is central to our ability to strategically expand our manufacturing capacity and to reach our growth targets. We have worked together for three years now, sharing both a commitment to high-quality and service. Our teams boast industry leading technical expertise, customer support and sales acumen. Our respect for each other will help us achieve further success on this expanded scale."

Dr. Shawn Qu, chairman and CEO of Canadian Solar, said: "This is a major strategic development for Canadian Solar, GCL and the broader solar industry. This joint-venture will supplement our other wafer arrangements and make Canadian Solar fully prepared to compete at 2GW scale by early 2012. In GCL, we gain a valued long-term partner, with essential large scale manufacturing expertise. We expect this venture to help further lower our manufacturing costs from the first quarter of 2012 onwards, and further improve Canadian Solar's gross margins, with a minimal capital expenditure requirement. Importantly, by securing high-quality wafers we can support the increased demand levels for our high-quality solar module products which we are seeing from customers in solar markets worldwide. We look forward to a successful cooperation with GCL in the years ahead."

Canadian Solar remains on track to expand its annualized capacity for solar cells to around 1.3GW to 1.4GW by mid-2011. In addition, Canadian Solar also plans to announce a joint venture to build a 600MW solar cell facility that will enable it to reach approximately 2GW of internal solar cell capacity during the first quarter of 2012. It is also on track to reach 2GW of annualized capacity for module lamination by mid-2011. As a result, the Company is on track to achieve a 2GW 'virtual vertical integration' from wafer to cell and module at the beginning of 2012.

The company would like to reiterate that its internal cell and module capacities, which are 220MW and 350MW for the second quarter of 2011, respectively, are currently running at full utilization rates, reflecting the strong endorsement of Canadian Solar products in the marketplace. The percentage of third-party cells vs. internally produced cells in the second quarter of 2011 is expected to be higher than that in the first quarter of 2011 due to the full utilization of the Company's module capacity. However, it still expects to maintain a similar or improved blended gross margin in the second quarter of 2011 compared to the first quarter of 2011 based on its trend forecast for third party cell and wafer prices.