Lessons learned from the development of Oakey and Longreach Solar Farms

2nd Annual Large Scale Solar Conference

April 3, 2017 | Renzo Gaggioli – Senior Project Manager, Energy Business

www.canadiansolar.com

Safe Harbor Statement

• This presentation has been prepared by Canadian Solar Inc. (the “Company”) solely to facilitate the understanding of the Company’s businessmodel and growth strategy. The information contained in this presentation has not been independently verified. No representation, warrantyor undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness ofthe information or the opinions contained herein. None of the Company or any of its affiliates, advisers or representatives will be liable (innegligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connectionwith the presentation.

• This presentation contains forward-looking statements and management may make additional forward-looking statements in response to yourquestions. Such written and oral disclosures are made pursuant to the Safe Harbor provisions of the U.S. Private Securities Litigation ReformAct of 1995. These forward looking statements include descriptions regarding the intent, belief or current expectations of the Company or itsofficers with respect to its future performance, consolidated results of operations and financial condition. These statements can be identifiedby the use of words such as “expects,” “plans,” “will,” “estimates,” “projects,” or words of similar meaning. Such forward-looking statementsare not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from expectations implied bythese forward-looking statements as a result of various factors and assumptions. Although we believe our expectations expressed in suchforward looking statements are reasonable, we cannot assure you that they will be realized, and therefore we refer you to a more detaileddiscussion of the risks and uncertainties contained in the Company’s annual report on Form 20-F as well as other documents filed with theSecurities & Exchange Commission. In addition, these forward looking statements are made as of the current date, and the Company does notundertake to update forward-looking statements to reflect future events or circumstances, unless otherwise required by law.

Table of Contents

3

• Canadian Solar Overview

• Oakey and Longreach Solar Farms Project Overview

• Lessons Learned:

o Development Timeline

o Approvals

o EPC-RFP process

o Grid Connection

o Technology

• Market Outlook

Normanton Solar FarmSize: 5 MWDCCOD: May 2017

IKEA RhodesSize: 0.5 MWDCCOD: Nov 2016

Sydney DHLSize: 0.5 MWDCCOD: Sept 2016

About Canadian Solar

• 2nd largest solar company globally by revenue and profits.

• Highest bankability approval rating of all solar companies.

• 5.7 GW manufacturing capacity in 2016.

• Global project pipeline >13 GW. In Australia success stories in C&I space with >5MW installed as head EPC and currently under O&M care.

• 9,000 employees globally; with a growing team in Australia (currently 20 staff between Energy Group and Module Business).

• Acquired Recurrent Energy and its project portfolio in March 2015. IKEA Logan

Size: 0.7 MWDCCOD: May 2014 4

Project Completed in 2016: Normanton Solar Farm

5

Project highlights:

o 5 MWdc – 4.5MWac

o 16,000 CS6X-310P Canadian Solar modules

o Yield – 8,750 MWh per annum.

o Very challenging site: cyclonic area, flood area and difficult access to site

ARENA Funded Project:

The project will demonstrate that there are meaningful technical and financial benefits of positioning distributed generation on an appropriate, moderate scale at the far end of the sub transmission (66kV) network. Successful application of this concept has the potential to catalyse a new wave of renewable energy investment in other fringe-of-grid locations, and will also provide valuable learnings for solar applications in remote, tropical locations.

o Formal inauguration in May 2017

Project Pipeline in Australia

6

Longreach Solar FarmSize: 17 MWDCCOD: Jan 2018

Oakey Solar FarmSize: 30 (+70) MWDCCOD: Q2-Q3 2018

Normanton Solar FarmSize: 5 MWDCCOD: May 2017

Project under development in New South Wales:

Size: 60 MWDCCOD: Q1 2019

Size: 90MWDCCOD: Q2 2019

Project under active development in WA:

Size: 120 MWDCCOD: Q3 2019

Size: 20MWDCCOD: Q4 2019

Project Overview: Longreach Solar Farm

7

Project Details

• Footprint in 30 hectares. Land is predominantly flat and cleared of vegetation. Flood and cyclone immune. Good access from Landsborough Hwy. Non-challenging soil conditions allows for standard piles to be used.

• Solar resource: 2,178 kWh/m2 weighted Mean between SolarGIS, BOM, 3TIER and Meteonorm.

• Development Application lodged in April 2016 and Approval granted in June 2016. Approval granted for both fixed tilt and SAT technology.

• Connection arrangement consist in a T-connection onto Barcaldine to Longreach 66 kV line.

• Due to location (quite west in the NEM), is capable to generate late in the afternoon. High specific yield leads to very low LCoE.

Snapshot Longreach SF

Project Capacity 17.4MW DC – 15 MW (AC)

Specific Yield 2,276 kWh/kWp

Solar Panels Canadian Solar CS6U-335M / 340M

BOP NEXTracker / SMA

Forecast output based (P50) 40 GWh

Expected Commercial Operating Date Q1 2018

Project Support / Offtake Successful under ARENA LSS and Solar 150

Locations

Location: Camden Park StationInformation: 10 minutes from Longreach

Longreach Solar Farm

17.4MW (DC)

Project Overview: Oakey Solar Farm

8

Project Details Locations

Location: A few kilometres West of Oakey on the “Dalmeny” farmclose to Oakey Power OCGT Station

Oakey Solar Farm

30MW (DC) – stage I

• Footprint in 60 hectares. Land use is agricultural, flat and cleared of vegetation. Flood and cyclone immune site. Good access from Warrego Hwy. 2 Hr drive from Brisbane.

• Solar resource: 1,941 kWh/m2 weighted Mean between SolarGIS, BOM, 3TIER and Meteonorm and onsite weather station.

• Development Application lodged in July 2014 and Approval granted in April 2015 for a staged project of a total capacity of ~ 100MW(DC) – 80MW(AC)

• Connection arrangement consist in constructing 8 km OHL to Oakey 33kV/110kV substation.

• Reactive soils will require to use a site specific foundation.

Snapshot Oakey SF

Project Capacity 29.7MW DC – 25 MW (AC)

Specific Yield 2,019 kWh/kWp

Solar Panels Canadian Solar CS6U-335M / 340M

BOP NEXTracker / SMA

Forecast output based (P50) 59,9 GWh

Expected Commercial Operating Date Q2 2018

Project Support / Offtake Successful under ARENA LSS and Solar 150

Project Development Timeline

9

2011 2015 2016 2017

Oakey Solar Farm

Longreach Solar Farm Farm

Project Inception

Project Inception

COD

2018

Connection Enquiry

Recurrent Energy Canadian Solar

DA NTP

NTPDA

Connection Enquiry

COD

PF

PF

Approvals

Several permits, licenses and approvals are required, however the Development Approval is one of the main milestones during the project development process.

Development Application requirements were slightly different between Oakey and Longreach SF. The documentation that was submitted to Councils as part of the application was defined during the pre-lodgment meetings. This led to different:

• Costs

• Timing and

• Approval conditions

Several studies were required to be undertaken: biodiversity assessments, cultural heritage, traffic impact plan, stormwater management, glare studies, screening and visual impact plan etc.

Lesson learned:• Engage early with the local Council. A competent site selection and initial due diligence allows for a trouble

free permitting with reduced risk of conditions and ongoing compliance requirements.

• Submit “flexible” conceptual plans to make changes throughout development.10

EPC Request for Proposals Process

11

RFP divided in “3 rounds”:

10 reputable EPCs invited. Australian based and International EPCs.

• 1st Shortlisting – Pricing and Term Sheet

• 2nd Shortlisting – EPC and O&M contracts

• Negotiation and selection

Lessons learned:

• Local EPCs had limited track record and international EPCs have no Australian Experience.

• Ensure bidders understand tendering documentation and requirements.

• Several iterations of EPC and O&M contract. Issued LNTP to ensure project meets timeline.

August ‘16 – October ‘16

April ‘16 – June ‘16

November ‘16 – March ‘17

Connection Process:

12

The connection process has proven to be the most challenging and time consuming milestone for both projects:

Lessons learned:

• Engage early with the NSP and allow significant financial commitment since project origination. From connection enquiry to COD: 3-3.5 years.

• Limited ability to negotiate the construction and connection contract.

• Unclear Power System study modelling requirements led to minor delays, allow significant buffer.

• Due to cost impact, the connection arrangement makes the difference in project economics.

Step # Details Lead Time Remarks/Comments

1 Preliminary / Detailed Enquiry Response 4-6 Months

SLD, half hourly generation profiles, conceptual protection scheme, proposed connectionarrangement and definition of scopes between NSP and proponent. Costs from the NSP $100k to$200k depending on connection arrangement. Scoping studies provide the cost associated with thegrid connection costs.

2 Application to connect 1-2 Months Costs associated with consultants modelling and data requests

3Generator Performance

Standards negotiation and Power System Study Review

4-6 Months Numerous back and forth for design reviews and RFIs with AEMO and NSPs.

4 Offer to connect - Down payment of grid connection construction and design costs as identified in the DER.

Technology

13

During the development process several concepts designs and technologies have been evaluated. ARENA Large scale Solar- Competitive Round required to have low LCoEs in order to be most competitive:

• East/West Fixed Tilt, North Facing fixed tilt and Single Axis Trackers.

• Same for the inverter selection, both projects will see a high density containerized MV power stations to be used, however a string inverter evaluation was initially undertaken.

• Module wattage was changed several times throughout development with 335Wp and 340Wp monocrystalline panels to be used.

Lessons learned:

• Maintain a flexible design to have the opportunity to switch to latest technology late in the development process.

• SAT / FT comparison: SAT is the clear winner between two solutions.

Market Outlook – System Capital Expenditure Decrease

Modules and BOS constitute for 60%-70% of project capex

Excluding import duties (not applicable here) and considering 2017 module ASP, projects with NTP in Q1-17 are reaching the 1,00-1,05 US/Wp target.

Source: GTM reports

14

Market Outlook – System Capital Expenditure Decrease

Plunge in system cost due to:

o New technologies (i.e. high efficiency passivated emitter and rear cell with half cell modules) and improved efficiencies in manufacturing will lead to sharp decrease in module CAPEX together with a maintained overcapacity.

With the success of the LSS-Competitive Round ARENA has played a key role in establishing and maintaining global players into the Australian Market with the business case for utility scale solar improving.

$0,9

015

www.canadiansolar.com