Canadian Solar Unit Secures Major Ontario Battery Storage Contracts

e-STORAGE Secures 2.1 GWh Battery Storage Agreements in Ontario

Canadian Solar Inc. (NASDAQ: CSIQ), through its majority-owned subsidiary CSI Solar Co., Ltd.'s unit e-STORAGE, announced on October 1, 2025, that it has entered into Battery Storage Agreements (BSA) and 20-year Long-Term Services Agreements (LTSA) with Aypa Power. These agreements pertain to the Elora and Hedley battery energy storage projects located in Ontario, Canada. The combined capacity of these projects will contribute 420 megawatts (MW) and 2,122 megawatt-hours (MWh) of new storage capacity to Ontario's electrical grid, positioning them among the largest energy storage facilities currently under development in the province. The projects will deploy e-STORAGE's proprietary SolBank product.

Delivery of the SolBank systems is scheduled to commence in the first quarter of 2026, with commercial operations for both projects anticipated to begin in the first half of 2027. The 20-year LTSAs accompanying these agreements are structured to provide continuous monitoring, preventive maintenance, and performance guarantees, ensuring high system availability and predictable service revenues through 2047.

Market Response and Financial Implications

Following the announcement, Canadian Solar (CSIQ) experienced a 14.04% increase in its stock price, signaling positive investor sentiment. This reaction reflects optimism regarding the long-term, predictable revenue streams generated by the 20-year LTSAs, which are expected to offer higher-margin recurring revenue compared to one-time equipment sales. This deal structure is anticipated to improve Canadian Solar's long-term financial profile and mitigate earnings volatility.

As of June 30, 2025, e-STORAGE reported having shipped over 13 gigawatt-hours (GWh) of battery energy storage solutions globally and maintains a substantial contracted backlog of $3 billion. While the specific financial terms, including total estimated revenue from these 20-year contracts, remain undisclosed, the nature of the agreements points to strengthened future earnings visibility.

Broader Context and Industry Trends

This partnership underscores a broader trend within the renewable energy sector toward establishing stable, recurring revenue models. The Elora and Hedley projects are critical investments for Ontario's energy system, designed to provide the flexible capacity necessary to meet rising demand and maintain grid reliability, aligning with the IESO's Long-Term 1 (LT1) Resource Adequacy framework. Aypa Power, a Blackstone portfolio company, operates 30 energy storage and renewable energy projects across North America and has a development pipeline exceeding 22 gigawatts. This is not the first collaboration between the entities, with Aypa Power having previously ordered 1.8 GWh of batteries from e-STORAGE in March 2025 for projects in California and Texas.

Despite the positive momentum from this deal, Canadian Solar's overall financial health presents a mixed picture. The company reported a 3-year revenue growth of 5.3% and net revenues of $1.7 billion in Q2 2025, a 42% sequential increase. However, it also reported a negative EPS of -0.44 and a net margin of -0.12%. The company manages a substantial debt position of $6.5 billion, alongside a current ratio of 1.09. Its Price-to-Book (P/B) ratio of 0.35 sits below the industry median, and GuruFocus assesses the stock as "Modestly Undervalued" with a GF Value of $16.54, suggesting potential upside for investors. Conversely, an Altman Z-Score of 0.63 indicates potential financial distress, though a Beneish M-Score of -2.48 suggests the company is unlikely to be engaging in financial manipulation.

Expert Perspectives

Moe Hajabed, CEO of Aypa Power, emphasized the strategic importance of the initiatives, stating, > "The Elora and Hedley projects represent critical investments in Ontario's energy system, providing the flexible capacity needed to meet rising demand and maintain a reliable grid."

Colin Parkin, President of e-STORAGE, reiterated the commitment to the Canadian market, commenting, > "We are proud to expand our partnership with Aypa Power through the Elora and Hedley projects. These projects will provide reliable capacity through the IESO's Long-Term 1 ("LT1") Resource Adequacy framework and reaffirm our long-term commitment to the Canadian market."

Outlook and Future Considerations

This agreement solidifies Canadian Solar's position as a key player in the expanding North American energy storage market and is expected to significantly contribute to its future revenue and growth trajectory. The increasing demand for grid-scale battery storage solutions, driven by renewable energy integration and grid stability requirements, is likely to create further opportunities for companies like Canadian Solar. Key factors to monitor in the coming quarters include the progress of these projects, Canadian Solar's ability to manage its debt, and the broader trends in global energy storage demand and pricing. The company's extensive development pipeline, including 27 GWp of solar and 80 GWh of battery energy storage capacity, positions it for continued growth in the renewable energy sector.