Emeren Group Ltd (SOL) 2021 Q3 法說會逐字稿

Hello, ladies and gentlemen, thank you for standing by for ReneSola Power's Third Quarter 2021 Earnings Conference Call. (Operator Instructions) After the speaker's presentation, there will be a question-and-answer session. (Operator Instructions) Please note that we are recording today's conference call.

I'll now turn the call over to Mr. Gary Dvorchak, Managing Director of the Blueshirt Group Asia. Please go ahead, Mr. Dvorchak.

So thank you, Tara, and hello, everyone. Thank you for joining us on today's call to discuss our third quarter 2021 results. We released our shareholder letter after the market closed today. It's available on the website. There's also a supplemental deck posted on the website that we will reference during our prepared remarks.

On the call with me today are Mr. Yumin Liu, Chief Executive Officer; Mr. Ke Chen, Chief Financial Officer; and Mr. John Ewen, CEO of North America.

Before we continue, please turn to Slide 2. Let me remind you that remarks made during this call may include predictions, estimates or other forward information that might be considered forward-looking. These forward-looking statements represent ReneSola Power's current judgment for the future. However, they are subject to risks and uncertainties that could cause actual results to differ materially. Those risks are described under risk factors and elsewhere in ReneSola Power's filings with the SEC. Please do not place undue reliance on these forward-looking statements, which reflect ReneSola Power's opinions only as of the date of this call. ReneSola Power is not obliged to update you on any revisions to these forward-looking statements. Also, please note that unless otherwise stated, all figures mentioned in the conference call are in U.S. dollars.

With that, let me now turn the call over to Mr. Yumin Liu. Yumin?

Thank you, Gary, and thank you, everyone, for joining the call. Before we dive into the quarterly results, I need to address the misleading short report that was published last week. I'll use the report to present you some more insights and details about our business. The report was erroneously and misleading, obviously, written by an author with legal understanding of the solar project development, but with a motivation to unfairly drive down our stock price. We will discuss the report today and answer any questions you may have. We will also follow up with any of you as desired. Once you understand how the author manipulates some data points to draw incorrect conclusions, we believe you will have even greater confidence in ReneSola Power, and this junk report will be quickly dismissed and forgotten.

The report basically makes 3 claims. First, they claim that we have fake projects, what they call "ghost" projects. Second, they point out that many of our projects are delayed. And third, they infer that there is some sort of hidden risks from the Mr. Li family's ownership and support of the company. I want to address all 3 of these issues now.

First of all, the author presents many discontinued projects as if they are fake. Project development is a portfolio business, and we terminate projects all the time for a variety of reasons. Many of the projects they cite fall into this category. We cancelled them and moved on to better opportunities. They are not non-existent. Similarly, some of the projects they cite as fake are still very much alive. I'm giving you examples, Castillo in Spain includes 3 projects totaling 24 megawatts and is in late-stage development with RTB, our sales targeted for the second half of 2022.

They also cite the Tenergie project. We not only won the tender in cooperation with Tenergie, but also are in-charge of the project development activities, having a development service agreement with them. Similarly, the author disparages our development partners in Italy, demonstrating a lack of knowledge about typical industry partnerships. Most local development partners are small businesses. Our hyper local model seeks out small, energetic and capable businesses with close ties to their communities, such as MP Sicily and Terra Aurea mentioned in the report. We have over 10 different development partnerships in the EU countries, and most of the partners can be categorized as small companies.

We had compelling reasons to partner with MP Sicily and Terra Aurea. MP Sicily is the Italian development arm of the Austrian investment company, Menasa & Partners, known as MP. Terra Aurea is related to MP Sicily. We have partnered with MP in Poland, who helped us win 40 of the 172 projects we have secured there and successfully build them. MP is a great partner, and it is natural for us to work with them in other European countries. So far, the 2 Italian partnerships we have already built for new projects in Italy. The report is completely off-base in chastising us for these partnerships. The author's math on our pipeline disclosures over time is irrelevant to their fraud thesis. Projects will go into and out of our pipeline constantly as we prune and optimize our portfolio. You should expect us to always upgrade our pipeline with smart resource allocation and robust net growth.

The second major claim that we are inflating our pipeline because of delays is laughable. The report cited a bunch of delayed projects without ever considering that the world was open lockdown for COVID since 2020. And lingering out bricks and supply chain issues have caused more delays this year across the whole world. In fact, the words "COVID" and "pandemic" do not even appear in the report. We believe that an accusation of delays with no acknowledgment of COVID has no credibility whatsoever. For example, they point out that our Caravaca project in Spain is delayed. Correct, Spain was locked down for months, causing delays in government approvals. Caravaca's environmental approval alone was delayed by about 18 months. It has now been approved and has moved into the sales process. We expect to close the sales soon. People knowledgeable with our industry understand that project development cycles are long. Small projects take 1 to 2 years from greenfield to NTP. To get to NTP for big utility scale projects can take 5 to 6 years in the U.S. and 2 to 3 years in most European countries. The development periods we see in our pipeline are totally normal.

In the final claim, the author attempts to create a sense of fear by calling out the Li family's participation in our company. The fact that Mr. Li is a large shareholder of our company is hardly news. It is not appropriate for us to comment on his personal affairs. We are a limited liability company. We are not impacted by the individual situation of any of our shareholders. We appreciate the Li Family's continuing support as a large shareholder. All of our shareholders give us a vote of confidence with their share ownership. The report also threw in some other small items, trying unsuccessfully to build their case. They criticize our non-GAAP adjusted EBITDA line -- fine, judge us on our GAAP numbers. They talked about our pursuing small projects, which is exactly part of our strategy. This report has no merit. Anyone that understands our business will see through the author's misleading conclusions and false accusations. We are proud of having the industry's best product pipeline disclosure. We are open, transparent and detailed. We have nothing to hide. The report tried to use our transparency against us, but failed miserably. Our shareholders appreciate our detailed level of disclosure, and we intend to continue this into the future.

Okay. Now let's move beyond that discussion and cover the important stuff, our third quarter results. We examined the quarter in detail in our shareholder letter posted on our website. So I'm just going to call out the highlights that you should study in the letter and also supplemental deck. The first key point is that we are comfortable with our performance this quarter. We were profitable again for the sixth consecutive quarter. Profit was a result of good gross margin at the high end of our guidance and good expense control. The gross margin strength shows the value of our strategy to sell projects at NTP, which is most profitable. We also generate high-margin recurring revenue from our IPP electricity sales. Against the good news, revenue was below our guidance. You should not be concerned. We are not.

On a quarterly basis, sales will move between periods. In Q3, 2 project sales we expected did not close, but we expect the sales to occur in Q4 or early next year. In general, we analyze our business on a yearly basis and do not worry about quarter-to-quarter timing issues. The second key point is that we are executing successfully on our pipeline building goals. At the start of the year, we targeted having 2 gigawatts by the year-end. We were close to that goal by the end of Q3 with over 1.8 gigawatts in the pipeline and 15 megawatt under construction. Our pipeline is dominated by Poland, the U.S., Spain and the U.K. Each of those countries, together with other territories we have activities represent multi-hundred megawatts of projects. These are attractive markets with strong investor base and good government support. So we anticipate more growth ahead. We expect to end the year with around 2.2 gigawatts and will soon set aspiring goals for 2022.

Let me now turn the call over to our CFO, Ke Chen, for comments and on our financial performance. Ke?

Thank you, Yumi, and thanks again, everyone, for joining us on the call today. Our shareholder letter and the supplemental slides contain all the figures and comparison you need. I'm not going to repeat every number. Instead, I'm going to focus on the factors that influenced results. As I speak, please keep in mind that we will discuss certain non-GAAP financial measures. We use non-GAAP measures because we believe they provide useful information about our operating performance that should be considered by investors, along with the GAAP measures. A non-GAAP to GAAP reconciliation is included in our shareholder letter.

Let's begin with our Q3 financial highlights on Slide 17. The revenue was up 59% year-over-year, while down a bit sequentially. Project development revenue consisted of sales of projects in Maine and Poland. IPP energy revenue came from the 49.4 million kilowatt hour generated by our rooftop DG project in China and in the U.S. The sequential decrease was caused mostly by the delayed project sales we mentioned earlier. Those sales are delayed into Q4 2021 and into 2022. I want to emphasize that we just mentioned about timing. Project sales are large with unpredictable timing, and the quarterly revenue will often fluctuate significantly. More importantly, we also avoid some high material costs and construction costs in Q3 2021. Again, we measure our success by focusing on profitability and growing our pipeline growth. Profitability was driven by 2 things: gross margin and expense control.

Gross margin was at the high end of guidance. Gross margin was driven by our focus on high-margin NTP sales, supported by high-margin IPP electricity sales. Gross margin was a little bit lower than both Q2 and last year because gross margin was unusually high in both those periods. We were effective in controlling expense. Operating expense was down sequentially and up only modestly year-over-year. The main element of our OpEx, general and administrative costs, was up sequentially and year-over-year as we staffed up to support growth. G&A growth was less than pipeline growth, showing that our spending is effective, and we have good operating leverage. The strong margin and a disciplined spending resulted in operating income around 17% of revenue. Non-operating expense were mainly net interest expense and foreign exchange losses, which reduced our net income. Our bottom line net income attributed to shareholders were approximately 5% of revenue. This is our sixth consecutive profit quarter.

Now let's review the balance sheet shown on Slide '20. Our financial position is strong, and we have the ability to fund any number of initiatives and opportunities. Cash was down slightly over the quarter, due to investment in the project pipeline. Debt was unchanged. Our debt-to-asset ratio was 15.8%, a rate low over the past year. Given the financial strength and our confidence in the prospective of strong growth, yesterday, our Board of Directors authorized a $50 million share repurchase program. We intend to buy shares in the open market when we think they are trading below the intrinsic value of the company.

Now let's cover 2021 guidance, as shown on Slide 25. In the fourth quarter, we expect revenue of $21 million to $27 million and gross margin in the range of 30% to 40%. Revenue expectations reflect our assessment of which project sales will close, including those that slipped from Q3. We also assume stable electricity production from our IPP assets. Given this, we expect to be comfortably profitable in Q4. We do acknowledge the risk of delays from the new COVID Omicron variant. The Q4 guidance puts the full year at $77 million to $83 million of revenue and the full year gross margin better than 40%. We're not yet giving 2022 guidance, but our early budgeting process is targeting bottom line growth of at least 30%. We will give robust new pipeline growth target on our next call.

We would now like to open the call for any questions that you may have for us. Operator, please go ahead.

Thank you. We will now begin the question-and-answer session. (Operator Instructions) Our first question comes from Amit Dayal at HCW. Please go ahead.

Okay, the -- at the last earnings call, last quarter, we guided that we have the target to complete 100 megawatts to 150 megawatts by the end of next year. We have built the pipeline in China as you see the deck and also I mentioned, over 110 megawatts and also, we have under construction, and we have also completed or connected 3 megawatts in the last quarter, okay? That will continue, and we'll provide you periodically the quarter-by-quarter our progress in China, okay? But I do believe that the number will absolutely go up. And we will provide you the updates -- more sound updates in the next couple of quarters when we see the progress from China.

Okay, okay. Thank you. And then just the competitive environment, can you just speak about how you are positioned in terms of the projects you're looking at and your opportunities to win some of these projects in the U.S. and Europe?

Okay. The -- absolutely, everybody in the industry all feel lucky that we have strong support from all over the world, all the governments that the market we have activities, not only in the U.S., not only in China, but also we have almost every good part policy support in the countries we operate in Europe, okay? To just give you one example that the Germany, just a couple of weeks ago announced their target to grow the pipeline to 200 gigawatts by 2030, okay? We are building our strong pipeline, our talented local team now, okay? And we have a growth target in the very important European market, including Germany as one example as I give, and we will provide you the aspiring and robust target for the pipeline growth in the next quarter, okay? We do believe our fundamental of the strong pipeline growth will be there, supported by all the tailwinds as we see from all the governments.

Okay. Understood. And then just finally, in terms of the cash balance, it's pretty strong. You're applying some of that potential share buybacks, but what are the plans in terms of using this balance sheet to continue for finding maybe acquisition opportunities or leveraging the balance sheet for other growth related efforts? Just to get a sense of how -- what you plan to do with this balance sheet to drive the opportunities you see are looking at?

Thank you. Absolutely, we continue developing organically our pipeline through our partnerships, through our greenfield development in multiple markets. At the same time, we have been actively acquiring projects. We are strategically considering acquiring not only projects, but also platforms in strategic markets, and we are in the process reviewing several targets for the platform and portfolios in both U.S. and Europe. And acquiring projects is a continuous activity throughout the years. In the past year, we have done bunches of those acquisitions or project portfolios or projects. But we are also strategically planning to acquire beyond the portfolio of projects, but also capable platforms in both U.S. and Europe.

Excuse me, so that -- what does that imply? I mean, when we suggest platform, is it -- does it mean you're moving a little bit more into the technology side? Any clarity on what you mean there?

When I mean platform is we are opening up -- considering opening up some new market in Europe. We are also considering to open up our project portfolios with -- let's put it this way. We are acquiring projects. And now, we are also acquiring the development platforms, I'm talking about, the talented, capable developers who, together with the portfolios of projects. That is the target we are also looking at.

I'll take my other question.

More development pipelines and together with the development platforms with the capable developers.

Amit, we are also -- Amit, we add -- again, we'll also penetrate further in solar plus storage area.

Yeah, I can take this offline as well.

Our next question comes from Pavel Molchanov at Raymond James.

Thanks for taking the question. You referenced a minute ago, the new German coalition government and its 200 gigawatt solar target for 2030. As I look at your existing project pipeline, Germany is a very small amount, only 2% or 37 megawatts. Are you more enthusiastic about potentially expanding your footprint in Germany, given the new political environment?

Absolutely. Thank you. You asked a very good question. Yes, we do have the plan. We're not only aggressively expanding our team locally, but also actively building up our partnerships as we have been doing in the European markets.

Let me also touch on supply chain. I think everybody understands what's been happening with module prices, steel costs, inverters, every commodity over the past 12 months. Are you noticing perhaps in the last 6 weeks, some loosening of the supply chain, for example, reduction in module pricing, which seems to be what the benchmarks are suggesting?

Absolutely, you are right. We do have noticed that. In the last -- about over a month's time since early November, late October, we start to see the comments or announcement by the big module manufacturers and even other suppliers of the industry cutting their price target are indicating the price will go down. And our European team and China team, as you know that although we focus on the NTP sale for most of our projects, we do have portfolios in Europe and China, not only in China, we are building them and holding them for IPP model. But even for Europe, we sold projects, and we work for the partner we sold project to as the EPC management company. So we are responsible for those construction and procurement of the modules and the whole balance of the system. So because the high price are caused by the delays of the supply chain, we managed to delay the construction of some European projects. That also have some indirect or direct impacts on our Q3 numbers, but we believe that's the right thing to do.

And now, we have both recognized the price of the modules, for example, to European market and China both go lowered as much as over 10% only in last one month. And we have used up our early purchase project in stock early this year at a low price, but we are planning to buy more modules starting early next year, especially, we see the prices going down now.

Okay. My last question is about the -- your relationship to China, your stock has been trading along with other companies perceived to have a Chinese connection because of the restrictions in Beijing and so forth. Can you just clarify as -- where is ReneSola domiciled? And what is your relationship with China beyond simply having those -- that small amount of recurring revenue assets that are operating in the Chinese market?

Thank you. This is a very good question. We are a very international company. It is true, the company was founded back in China about 17 years ago. And that time, we were focusing on manufacturing. But since 4 years ago, the company split the option in downstream and the downstream part, which is SOL is a very international company. Not only we have our over 90% of the product portfolios, as you can see from the deck or letter to the shareholder is outside of China, but also, we expect the growth -- the strong growth from Europe and U.S. will continue dominating our whole company growth in the long term in the future.

Second, we do believe that the China presents us some very good opportunities on high margins from the China projects we are developing and building. And that attractive margin can be recognized as a business operator. And we love it. But we are very disciplined, not only controlling our quality of the projects, but also we have high standard, a critical standard for our economic hurdle for the China projects. The link to China, it was all because that we were founded in China. But now, I will say, I'm the CEO. I'm in the U.S., our Ke Chen, our CFO, in the U.S., and the headquarter of the company is the U.S., where I am sitting in the Stamford, Connecticut, half an hour away from New York. And our operations, once again, is an international company. We do have China operation, as many companies do, but China is only one of the countries we develop projects, representing about less than 10% of our growth of the company. The portfolio of the IPP in China does represent a high-margin recurring revenue, but that is the strategic economic consideration of the company as those deals are providing very high-margin to the company.

Pavel, I want to add, again, our company is domiciled in BVI. We don't have VIE structure. So every shareholder, we're holding the same rights of the asset of this company. So it's very clean. And like Yumi mentioned, again, 70% of revenue and the gross profit is coming from U.S. and Europe. So again, we are focused on the growth of this area.

And I also want to go back to your question about the cost. Again, people focus on costs. Yes, the cost did went up. But I would also want to emphasize the PPA price went up as well, even at an -- even higher multitude across 3 markets we operate on. Europe, U.S., including China, PPA price went up. So I think those will benefit us in the long term.

(Operator Instructions) Our next question comes from Philip Shen at Roth Capital Partner.

Thank you also for the straightforward Q3 letter and opening comments addressing the Grizzly Short report and the disclosures, overall. You did provide a lot of information, and I think it's helpful. On the buyback, you guys put that in place after the Short report, and there was some damage from the Short report with the stock price. I think you highlight your cash per share is basically $4 a share, which is interesting relative to the current $6 share price with a book value of also $6 per share. Given that, can you share with us right now how much of the buyback -- $50 million of buyback approval, how much have you used?

Phil, we just approved this. So we're in the process of, again, starting this buyback process.

We have done zero at this time, Phil, as we are not -- we could not do this before the earnings call.

Got it. Okay. That makes sense. And so I can imagine you might be using it sometime soon. Actually, what is your view on the opportunity right now?

Yes, Phil, I think we are going to be aggressive here. First of all, again, as I mentioned, our stock is undervalued. And secondly, we see a lot of growth here, and we have a strong pipeline, strong balance sheet. So we're proud of what we're doing, and we see a lot of potential for our growth here. So we're confident.

Great. Okay. That's really helpful. Let's look into 2022. I know you talked about issuing more detailed information in your year-end shareholder letter. That said, I think this year, I think through Q2, you guys had done 65 megawatts, I think, of sales. I don't exactly recall seeing in the Q3 materials what you sold in Q3. So if you can talk about that, that would be great. And then basically, it seems like maybe it's about 100-ish megawatts for this year. But when I look at the COD information in your detailed PowerPoint, there's a lot of 2022 COD or NTP, if you will. And so I'm thinking 2022 is a 250- or 300-megawatt level of sales. Am I off base on that? Are we in the right ballpark?

I think you touched on 2 points. One is our 2021 number, one is 2022, okay? I think the -- what you just said mostly are -- both are right in the core -- in the ballpark. Number one, on 2021, we are -- in the last two years, Ke and I and also other senior management of the current senior management all came on board about two years ago. One of our focuses is to build a solid, strong pipeline to secure the growth -- long-term growth of the company. And we are getting there. We built 1 gigawatt last year. We have 2 gigawatts target this year and now we have 2.2 gigawatt target this year. And looking at our quality portfolio with a very high success rate of the portfolio as lots of risks have been minimized, the project got the -- to certain level derisked. The development cycles are monetized in each cycle from today to the time we sell the projects will be two to four years. And do a simple math, what you said for the 2022 and beyond will continue to grow, not only at one side, grow our development pipeline, but also at the other side, grow the megawatts we will sell each year. 200 megawatts to 250 megawatts is a reasonable but low end estimate as we see growing from next year.

And this year, as we mentioned, in this year, we delayed our two project sales, one in the U.S., one in Europe, in Spain, okay? Those two together, that is about 60, 70 megawatts right there. And we hope we can close them in Q4 or no later than Q1 next year. So that's the overall picture of our sales and project closings.

Great. And so at the beginning of this year, you gave the target to reach and add 2 gigawatts to your pipeline or at least reach 2 gigawatts for the pipeline. What do you think you could see at the end of 2022, given Germany as you discussed with Pavel just now? It's a new wide open market that could see very nice and aggressive growth and there is just a robust potential outlook. The U.S. market could get a boost from the build back better plan. So what's your sense as to where the pipeline could end up? Could we see 3 gigawatts or maybe even more?

I think we absolutely will present you a more robust and inspiring pipeline growth target by -- when we release the year end result. But we think it will be great as the fundamental support from all the governments and other policies. Just to give you one example that, as we mentioned, the four top markets providing most megawatts to our company's portfolio at this time are U.S., Poland, U.K. and Spain. We have many more megawatts in those countries and also in other countries, too. We all have many more of those, we call, early-stage projects. In countries, as I mentioned, those four countries, sometimes we not only give a big attention from our management to build up the team, as Pavel mentioned, about how we build up the team in Germany, how we expand the team in Poland, in Spain, in U.K. and U.S. But at the same time, we are actively developing or maturing our current portfolios at early stage.

One small example I want to give you is we cited 300 megawatts in Spain. What's the status of this 300 megawatts? In Spain, typically, we see five things. You have the land lease, then you have the application for the interconnection, then you put the deposit, then you get -- the fourth one is you get the confirmation from the utility to say the capacity will be available to your application. The last one will be you are approved for your applied capacity. Some of the portfolio of the 300 megawatts already have all the five steps done, and we are working on the final step, which is the environmental approval. And another about 270 megawatts, we have put in the total 300 megawatts, we already have the four steps done, just waiting for the final confirmation of the approved capacity. Just to give you one example that we have more than a lot bigger early-stage portfolio, we also put in the application, but we are waiting for the final confirmation of the available capacity, just one example.

And also, as I mentioned earlier, we have over 10 different partnerships in Europe. And every one of them, we believe, is capable of bringing new projects to us. For example, I mentioned earlier, we have two development partnerships in Italy. They have brought us four new projects in total. We have not included in Q3 as they are, we consider, maybe middle-stage projects. But we will refresh our pipeline quarter-by-quarter and year-by-year, and we see great potential in every market we are developing projects, and that pipeline can be very promising.

Great. Thank you, Yumin. As it relates to the WRO enforcement action in the U.S., we are seeing limited module availability from Jinko, Trina and I believe, LONGi. And so I was wondering what kind of impact you could see in 2022 installations as a result of that. Have you -- maybe you already addressed that in your prior answer, apologies if I missed it. But to what degree have you been able to diversify away from the impacted module suppliers? And have you been able to substitute those modules with other ones? Or are you still in the process of doing that?

Phil, it's John. So the answer has a couple of different answers. One, just right off the bat, it's absolutely true, ultimately, that if the projects get more expensive on the EPC side, eventually, that works its way up to us. But fundamentally, the strategy of being an NTP seller, we are insulated through that process because one subtlety of that, that is important to appreciate is, at any one project sale, we don't walk into that project with locked-in financing, locked-in EPC or locked-in procurement. And we're able to take -- for the moment, we have the luxury of being able to take the most competitive bid in that market for that project, for that COD date, for that market. And what that means is, on the ground, what we've seen is that some of the bidders have a view that they'll buy the project and by the time they build it six or nine months from now, they'll be in a different position, and they'll basically take some risk on EPC costs that they don't push to us. In other cases, we've dealt with buyers that have safe harbor procurement and a very solid subcontractor relationship network that they believe they can get the projects built on a labor front where they're not overly exposed. I'm sure there's some small movement.

It's a roundabout way of saying, we acknowledge that we have some exposure, but there's some derivatives to that, that we're a little bit insulated, and there's some real subtlety as to how that expresses itself. If panel prices stayed high for the next 10 years, ultimately, yes, obviously, would our margins be hit. But then like Ke said earlier, we've seen PPA prices creep up too. So there's some -- I go back to the same thing, and I'll end it here. But I'll go back to the same thing that I firmly believe that high-quality development is the rarest resource in renewables. And if we're controlling high-quality development and doing a good job of it, I think there will always be a strong bid for it. Now exactly how that translates or the transfer function between EPC pricing and our margin, ultimately, we are exposed, but we've seen a number of things that separate us at least in this recent short term, when I say -- recent quarters.

Yes. Appreciate that, John. And I think that is super important to highlight that you guys are much more insulated to -- and from the WROs because you're not making those module commitments per se. That said, your customers are -- and ultimately, they have that impact. And so you guys have mentioned that PPA prices have gone up. Can you just talk about the buyers environment? And have you seen any buyers step away, for example, or quite the contrary, have you seen more buyers possibly come into the market, so that can result in that pricing going higher? Maybe speak to some of those dynamics that are driving the PPA pricing higher. I know, obviously, supply chain is driving it, but what else might be supporting it?

Phil, you made a very interesting comment on this. You already said the fact, I want to say. In the long term, not only we have -- we believe, the buyer has -- we have a big buyers pool, and they offer a long-term view into the solar industry, okay? But also, they have absolutely a big commitment, investing in the long ownership of the solar farms. Just to give you one example, I mentioned about the two delays of our project sales, one in Europe, Spain, one in U.S., actually U.S. is a portfolio projects. The Spain is also Caravaca, two projects, 12 megawatts, okay? That deal is supposed to close in Q3, the buyer was an EPC company, supposedly. With the supply chain issues, EPC companies could not continue the transaction as they see the margins are fading away. But we immediately restarted the process, and we found buyers who give us equal or a lot better pricing, and we are looking to close it in the next two weeks. And the buyers we are talking to now, literally speaking, are committing to invest in solar. And we have a serious buyers pool, and they are absolutely willing to work with us in a long-term basis. Many of them hope to become our strategic partner long term. And we enjoy the growth together with the long-term owners of the solar farms.

Our next question comes from Marisa Hernandez at Sidoti & Co.

Can you hear me?

Perfect. Yes.

Okay, great. I apologize, I don't have a great connection today. So first of all, thank you for your opening comments and the disclosures that you make that I as an analysts find very useful. And thank you also for the clarifications on your ownership structure. I apologize if these questions have been asked already. So number one, on the third quarter specifically, I got that you got a couple of projects delayed, 60 to 70 megawatts, but how many megawatts did you sell in the third quarter? And what was the mix of NTP and COD, please?

Ke, you want to take this?

Sure. Marisa, we sold about 6 megawatts in May, that's NTP; and we sold Poland 6 megawatts that's COD sales.

So total of 12 megawatts in the quarter?

Roughly. Yes. Yes.

Okay. And do you have a range of what you expect for the full 2021 in terms of megawatts? And I understand that there's a big mix component in there.

You are talking about how much we're going to sell in fourth quarter, yes, right?

Yes, yes, for full 2021, whichever you're referring?

Let's put it this way, Marisa, that we are in the process selling quite several portfolios in U.S. and Europe. As I mentioned earlier that we do -- we are in the process of selling those projects. And we target to close one of them, and we are in the closing mode on several projects, and we hope we can get them done all before Christmas time. But we also gave a wide range of guidance for the Q4 results as we're able to leave the -- some unpredictable events as of the holiday season. So although it's only a month away, but our team is every day, working hard in the closing mode for quite several portfolios in both U.S. and Europe.

So I understand, thank you, Yumin, for that. Now in terms of mix, can you make any comments? Are all of those targets you're working on of NTP, modality are all of them COD? Or is there a mix?

Most of them, if not all of them, will be NTP sales.

Got it. Okay. Thank you for that. And then in terms of the -- I thought I heard something about costs affecting your margins in the third quarter. At the same time, they were at the high end of guidance. As I said, sorry, I don't have a great connection today. Is there anything other than project delay rather deferred sales, that pushed out of sales in the third quarter leading to your results? Did you experience any unexpected cost increase?

Marisa, I think I mentioned that we're supposed to have some COD sales in Q3, but we didn't do it because high cost will affect us. So for those, we are pushing back maybe Q4 and in 2022.

Got it. Thank you for that. So moving on to pricing...

And also, Marisa, before you move to next question, just -- I want to mention to you that when I gave the remarks earlier that our revenue is on the low end, but we don't believe our investors need to be concerned as we are not either, because we are perfectly executing our NTP sales strategy. Every time we do NTP sales, we see a lower -- higher margin and lower revenue. While early in the year, every quarter, we expect -- we put an expectation, some buyers, they say, ReneSola, I want to buy your deal, but I want the transaction to be done at COD. So we put in some perspectives on the COD sale. But every time, when you see -- if we close the deal, every single one has NTP sale, just like last quarter in Q2, you will quickly see very high gross margin. Like last one, we have over 60% gross margin in Q2. And for this quarter, the margin goes lower to 40% because we have a mixture of NTP sale and COD sale.

Understood. Thank you for that, Yumin. The next question is related to pricing trends. I think it was mentioned earlier how you're seeing higher prices from buyers, which I'm very glad to hear about. You also mentioned that you have COD projects to sell later on. So my question is around, given all the cost inflation we've seen this year on the materials side, and now we are starting to see better PPA prices for your COD project, when do you think the margin can catch up? Is it going to be first half of '22? Is pricing good enough to offset the cost inflation that we've seen or you need for cost to go down or prices to go up further? Any flavor you can give us about that will be great.

I would address your question in two ways. One is on the immediate market reaction to the high price. For example, the high price, not only meaning the high price from the modules or BOS, okay, but also from the overall industry, the material cost, steel and everything, or energy cost. I came back from U.K. about three weeks ago, meeting a bunch of customers and also contacts. I know the spot market in U.K. goes as high as almost $0.20 per kilowatt hour. I haven't heard of that for years. But unfortunately, that's the spot market price in Europe. That represents the reaction of the market to the high energy price, high cost of raw materials and everything. And I don't expect that will continue, but the overall trend of the PPA absolutely reflect the near-term or last 12 months or maybe going on for another five, six months, high price in the solar industry, as we see not only in the U.S., but also in Europe, the PPA price continuously going up by 10%, 15%, 20% or more percent. In bunch of the PPA negotiations we have, we have seen that.

The second point is, we do believe there are many very active long-term investors in the solar industry. They carry their long-term commitment to invest in solar. And they not only will be supported by the developers like us but also by the supply chain. As we discussed earlier, the price of the modules start to go down. In the last one month only, we see more than 10%. And if you read the news from those big module companies, no matter Trina, Jinko or whoever, they have all forecasted that the price of modules will go down. Starting now going into Q1, Q2 and some aggressive estimate, it will go back to normal before too long or before the end of the year, next year. So whoever are our partners, literally -- more like to talk to our partners or the long-term investors in general, they commit to the solar industry. I believe they will benefit from it. Now is the best time to get into the project business and then harvest when the supply chain provides them the strong support for their profitability. And we want to be -- or we have been part of the success story.

Thank you for that, Yumin. I also wanted to ask about what you've seen about project delays because of the cost inflation this year on the COD-type of projects and the whole industry. Is that something that you would expect to start easing in the next couple of quarters? Or is it hard to tell?

In general sense, it's hard to tell. But two points I'd like to mention. One is, we have been pretty successful managing our project development process and managing the risk of the potential delays. Not only our team works hard, but also our partners. We are interacting with all different parties in the development process. We try to find creative ways working with them. Okay? And that is one part of the story. The second is we still -- people still rely on the supply chain coming down to the level people feel more comfortable. At this time, the good part of our development pipeline is we do not have PPAs, we have clear PPA guarantee COD date. If we have PPAs having the clear date, so-called guaranteed COD date, we would be in difficulties, but we are not in those positions at this time, okay?

And many customers or even many of the solar developers, as we know, they are also developing their strategies. And everyone, I hope, is supporting the growth of the solar industry with the hope the supply chain will come down. And I'm optimistic, as currently, if you do the math of the new installations of the manufacturing facilities for modules or even polysilicon wafers, everything, we will see overcapacity or oversupply in less than six months' time. The market will adjust itself for the price.

Got it. So you guys spoke about a wide range, perhaps 200, up to 300 megawatts, if I heard correctly, for next year sales. What is the assumption of mix behind that, NTP versus COD? Just reflecting on the fact that you said multiple times that if you do NTP, you should do more and vice versa.

Yes. I would say the majority of the sales will be NTP sales.

And if I can squeeze in a last one on the ownership structure. Thank you for reminding us of your BVI jurisdiction. I think at some point, you were talking about potentially becoming a 10-Q as opposed to a 6-K filer. What's the status with that?

Marisa, we are, again, starting the structure of our shareholder. Again, we will -- based on that study to decide how soon will shift to, I mean, not a foreign filer. Okay? We will update all the shareholders from here.

So that depends on the jurisdiction of the shareholders, yes?

Yes. Again, we believe, again, we're very close to more than 50% of shareholder here in the U.S., but we needed to do a short study to make sure that's the case.

Thank you. In the interest of time, let me turn the call back to Mr. Liu to conclude the call.

Thank you, operator. To conclude, we are committed to grow profitability, managing our operations efficiently and strengthening our financial position. We are energized by the opportunities in front of us and looking forward to updating you on our progress again in a few months. Thank you all again for your participation. This concludes our call today. You may all disconnect.