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Sean Swentek: Hello, and welcome back to The Future Current. I’m your host, Sean Swentek. Today, I’m speaking with Sébastien Prioux, head of C&I Systems and Solutions Americas for the commercial and industrial projects arm of Canadian Solar. Sébastien, thank you for joining me today.

Sébastien Prioux: Thanks, Sean. I’m very excited to be here with you.

Sean Swentek: My wife can speak some French. I cannot, so I hope that accent was acceptable. You’ll have to tell me later if not.

Sébastien Prioux: It’s very good.

Sean Swentek: Now, Sébastien, you have developed clean energy projects all across Europe, Asia, and now you’re really focused here in the Americas. What do you think is critical to getting a commercial solar storage deal done no matter the country? And maybe you can also share what role incentives play across geographies.

Sébastien Prioux: It’s a good question because C&I is very variable depending on the type of projects and the location of the project. The main topic would be the risk allocation understanding. If you face a customer that really understands that the energy project is a twenty-year infrastructure project on their facility, and they understand not only the cost of the equipment, but the operational risk — the performance guarantee that you can provide along the life cycle of the project — that’s usually a game changer for the end user, and that’s how you can close a deal with a commercial or an industrial end user. Whether you’re in Asia or in the US, it’s pretty much about how you make it clear in your contract with your customer that that’s the full design system, those are the savings it would generate, and that’s how you can operate the system in total safety over twenty years. So I would say it’s the risk allocation.

Sean Swentek: And what role have you seen incentives play, and does it vary by geography? Is there anything that’s different here in the Americas?

Sébastien Prioux: The incentives are still a key element in the profitability — the financial design of a project. In Asia, we didn’t really have strong incentives for solar and storage in the last three years where I was. You could just do behind-the-meter — a deal between you and the end user. So it was all based on how the investment would generate savings at the end of the day. But in the US, it’s a different story. You still have the ITC that applies for energy storage. In Europe, you also have a lot of incentives that are still on the table, which affect the profitability and how aggressive you can be with your customer. At the end of the day, I still believe that the need for reliability, safety, supply of power, and predictability is the decision maker. So with or without incentives, there are more and more projects happening. The incentives will eventually go away, but I believe the number of projects would still be very massive.

Sean Swentek: And not to mention here in the US, for the last few years, we’ve seen energy costs consistently rising through the utility. From one state to the other, you have some differences. What are you seeing?

Sébastien Prioux: I used to be based in Wisconsin for some time where the electricity prices are more affordable. But here in California and in different states, the price of electricity is rising. The demand charge is rising. The requests we face here at Canadian Solar every day — whether you’re a school owner, a hotel general manager, or factory owner — the demand is everywhere because people see their electricity bill rising every month, plus power interruptions. There are some shortages, and people can’t afford to lose power even for one or two minutes. All these parameters together create a huge demand on the market.

Sean Swentek: So for critical infrastructure — hospitals, especially — they’re protecting against those outages and at the same time saving on their electric bill by going solar plus storage.

Sébastien Prioux: That’s where storage makes a big difference. People always challenge the total investment cost of solar and how much savings it will generate. But when it comes to storage and reliability — ensuring no interruption in your facility — people don’t care much about the return on investment. They just don’t want any interruption. This is where storage has a key role to play in the energy ecosystem.

Sean Swentek: Can you talk a little bit overall about what you do at Canadian Solar and their activities in the US, especially as it relates to C&I solar plus storage? A lot of listeners, when they hear the name Canadian Solar, immediately think of a module manufacturer. Can you talk a little bit about the specific business line you’re in and their activities in the US today?

Sébastien Prioux: It’s a good point, Sean, because as you said, Canadian Solar is very well known for the module manufacturing side. But the storage capabilities are now becoming our core business. In the US, Canadian Solar is now a truly vertically integrated manufacturer on US soil. We have multiple billion dollars invested in US territory — in Texas, in Indiana, and in Kentucky. Texas is for the module manufacturing. In Indiana, we have a five-gigawatt solar cell factory. The next step is the one we are building in Kentucky, which is the large-scale battery manufacturing. So from solar cells to modules to batteries, it’s a total vertical integration. We build these facilities to better serve customers in the US.

The way we approach battery storage is very different from just providing equipment. We want to provide a full service to our customers — whether it’s engineering design, commissioning with on-site engineers, or the integration of the batteries. We offer long-term service agreements to operate the batteries and supervise the charge, discharge, and different dispatch designed for each project. The mindset of Canadian Solar around battery storage is not just providing hardware and going away — it’s providing a service over the project lifetime. That’s what we do in the C&I team.

You can see behind me — QBank is the name of the battery storage equipment we manufacture for the commercial and industrial space. We have a lot of services around that. We have what we call a QBank Care program for twenty years. We have a supervision program and performance guarantees that we provide to our customers. So it’s really about the service more than just the equipment.

Sean Swentek: So that transition from just an equipment provider to a true solution and service provider — how does that turnkey mindset change the way a C&I solar project is developed and executed?

Sébastien Prioux: When we used to sell to some EPCs that focused on delivering a project and providing maybe one year of performance before going away, we realized that all the value of the project comes with the operation over the twenty years. If we are not involved in that operation phase, we leave all the value on the table. We wanted to be part of that with our customers — to be closer to them.

We recently commissioned a project on a fire station in Washington State. The customers want the manufacturer to be there — to see how you operate the battery, how you charge and discharge, to make sure the maintenance plan is done properly. That’s where this mindset evolved on our side. We can’t just sell equipment. We need to provide long-term warranties, and the best way to do that is to provide services along the way. Now we have a team taking care of engineering, maintenance, and commissioning. The team has boots on the ground — truly an end-to-end turnkey solution.

Sean Swentek: And you mentioned that even down through operations and O&M, you’re providing services throughout the life of the system?

Sébastien Prioux: Correct. We have a monitoring room here, and we are able to see remotely how a customer is operating the battery system on a daily basis. We dispatch maintenance people for the maintenance plan and preventive maintenance. We don’t do that alone — we have an ecosystem of partners, whether you’re in Texas, Illinois, New York, or Washington, that can come on-site within a limited timeline for intervention. We provide the full service to our customers so that they feel safe over twenty years because, compared to a solar panel that you just plug together on a string, your battery system is charged and discharged every day, sometimes multiple times a day. So it’s something that needs to be monitored.

Sean Swentek: For those folks with enterprise businesses who maybe have a handful of solar sites or have done a single battery storage project but are looking to actually scale across their portfolio, what are the things they need to be thinking about to make sure they get right and don’t get wrong?

Sébastien Prioux: That’s a key point about C&I portfolio projects when you want to scale. Many people believe that it’s about the pipeline. I think the difference between one hundred projects and one thousand projects is the repeatability. How you make sure that the contract structure you sign with your customer is always the same type of template — the contract management, the way you select your customers and your offtakers, the way you build the system and operate it — it all has to be repeatable. It’s a copy-paste discipline you need to have.

If you have one hundred projects but they all have different contracts, different terms, and different liabilities, then when you go in front of a bank, a lender, or an investment fund, it looks like one hundred individual one-off problems. But if you have the same template that you can duplicate over and over, it makes the portfolio easier to manage in terms of risk mitigation — and more appealing to investors down the line.

In Asia, that’s what we did. We went from zero to two hundred projects in four years. What made the portfolio valuable in front of an investor was that it was the same type of contract for all two hundred sites. That’s what we try to do here as well — the same template, the same process, and the same long-term O&M service.

Sean Swentek: Really de-risking the overall portfolio, making it easier to manage for investors.

Sébastien Prioux: It’s not easy because each customer has different requirements, and each project has a different design depending on the load of the facility. But the contract management is the key part of a portfolio approach to make it attractive.

Sean Swentek: What do you think is one of the bigger misconceptions that a C&I company might have about integrating both solar and storage into their operations?

Sébastien Prioux: The biggest misconception is that people still believe it’s plug and play. There might be a difference between solar alone and solar and storage, but as long as you get storage on board in the design of your project, it’s definitely not a plug-and-play solution. You always have a lot of different integration issues when you have a battery storage system connecting to a solar array, a generator, and the grid — especially if they want off-grid mode, seamless backup, or the battery adjusted depending on the dynamic rates of the utility. All of this has to be resolved during the integration.

In the US, people understand that quite clearly. In Brazil, for example, it’s different. People focus too much on the price of the equipment and believe they will operate it naturally — which is not the case. Long-term operation is very important.

Sean Swentek: Are you seeing companies that you’re working with still primarily looking at storage as just a backup option, or are they looking to actively participate in markets — using it for arbitrage, peak shaving, things like that?

Sébastien Prioux: It’s changing. Initially, with the first systems I deployed in the last two or three years, ninety percent of the cases were for time-of-use or arbitrage. People were charging the battery either with solar or when the utility tariff was cheapest, and discharging at peak tariff to save money on the electricity bill and reduce demand charges. Today, it’s very different. People understand that when you have a battery installed on your facility, if you can enroll it in a dispatch program or participate in a VPP program — which is becoming more and more popular in the US — it creates additional value stacking on the battery. Now people select their batteries anticipating that in five years it will still be used for arbitrage and demand charge reduction, but also enrolled in some VPP program, which creates additional value on the project.

Sean Swentek: You mentioned the big change on the C&I side is finally catching up to residential and utility in terms of attach rate. It used to be that C&I was just really focused on solar, and once in a while you’d see storage. Now these hybrid systems seem like almost every deal is hybrid, but those deals are still fraught with issues. What is the difference between a hybrid deal that gets done versus one that ends up on the cutting room floor?

Sébastien Prioux: There are a lot of parameters. The financing is a key criteria, and the permitting process is also very important — permitting goes hand in hand with interconnection. With C&I, you’re mostly behind the meter or light front of the meter. So the permitting process doesn’t have the same bottleneck you face with large utility-scale projects and the long queue. However, there’s still complexity when you deal with every AHJ. There’s a lot of back and forth in the permitting process around fire suppression systems and different regulations in different states. The time to permit can get very long even for C&I projects, and there’s a lot of education needed with state authorities around the battery system — how it operates and how you can ensure safety in the operation.

The second bottleneck is probably financing. The CapEx for solar plus battery storage is still significant. When it comes to financing in the US especially, it comes with different tax incentives around storage. A lot of discussions now get stuck at the question of whether the project is compliant to claim the ITC, or whether it’s safe-harbored, especially these days with the current regulatory environment. But if you look at the project itself in terms of savings, backup power, and reliability, it’s obviously a good deal. The question becomes about the tax accounting and financing considerations.

Sean Swentek: You raise a really good point because there are all these issues — interconnection queues, incentives, tariffs, all these different pieces — and there are different players in these transactions. Ultimately, it’s often on the CFO or some other financial decision maker whether a project gets over the line. How do you make this investment make sense?

Sébastien Prioux: When we talk to hotel general managers or people who own a facility with a huge electricity bill, most of the time what they want to control is the predictability of their electricity bills. It’s not primarily about the cost of the investment itself — they want to make sure that the system they invest in will give them predictability on electricity bills for the coming fifteen to twenty years. That’s why providing long-term operation services matters — if you provide performance guarantees, they get more comfortable with the contract.

Sometimes I say to people: you may not decide to do it now, but the energy volatility isn’t going away. Not making a decision today is itself a decision. The problem will come back around in the coming years — that’s for sure.

Sean Swentek: You mentioned them taking on the overall CapEx cost themselves. I assume most of your financing is the offtaker owning it themselves. How does that structure work for the companies you work with, especially with the added cost of battery storage? How does that conversation look when they talk about lease versus own?

Sébastien Prioux: There are a few options. We are not a PPA provider at Canadian Solar — our investment is on manufacturing the product and providing the service. We have partners we work with that can provide financing — a tax equity partner or a leasing company that can provide a PPA model to an end user. But most of the time, we try to sell the project as-is to the end user and show them that it’s an investment worth making in terms of savings to be generated in the coming years.

In the US, it’s a bit particular because you still have the capability to claim the ITC. If you talk to someone with a large tax bill, they see the benefit right away. Or there’s a tax equity partner that can swap the different benefits out of it. When you do a C&I project, you also look at the offtaker’s creditworthiness. In Asia, for example, we didn’t look at any project if the offtaker didn’t have ten million dollars in annual turnover for three consecutive years or didn’t show net profit for three consecutive years. We considered that customer too weak because solar and storage is a twenty-year infrastructure project — if your business isn’t stable, we believe your energy project won’t be stable either. The profile of companies we’re typically looking at are ones making a lot of revenue and profit, and they usually see immediate benefit from an investment in terms of tax deductions or tax credits on their balance sheets.

Sean Swentek: That’s really helpful. I know right behind you it says QBank — that’s your new battery storage system that orchestrates with PV and everything. You recently showcased how this works in the real world at an active fire station. What did that project show you about the real-world value of energy resilience, especially in critical infrastructure like that?

Sébastien Prioux: It was a fire station in Washington State. It was a funny story because we did the commissioning just before Christmas — the twenty-first of December last year — and we had a short timeline to complete the whole integration. Everything went well. The lesson number one for me and the team was that resiliency — especially for a fire station — has no cost. They would pay whatever was necessary to make sure that a power interruption would never happen. For a fire station, the reason is obvious: they cannot run out of power.

The way we designed the system — it had one hundred twenty-five kilowatt solar on the roof, about five hundred kilowatt-hour of battery storage installed together with the generator they had as a backup. The whole point of the design was to make sure the battery itself could provide power if there is a grid outage. The integration was key to this resiliency component. We added a third-party controller that we have access to remotely, ensuring the QBank batteries operate in a grid-forming mode at all times. So if there is a power outage, the batteries keep providing power to the facility. We did all the testing with the fire safety department, and everything went well. The resiliency discussion was central to every conversation we had for months on that project.

Sean Swentek: Some of the guests I’ve talked to in commercial real estate have concerns around solar and storage — they’ve talked to people who didn’t get the performance and return on investment they were expecting. When real-world performance of a system doesn’t match the pro forma, what usually went wrong in the design or execution phase?

Sébastien Prioux: Sometimes the assumptions you make when trying to sell a project to a customer are too optimistic. In my career — almost twenty years in this industry — sometimes we went wrong on assumptions. I remember some projects we did in Europe where we assumed the performance would be fine. There was a case near a cement factory where we assumed the cleaning requirements would be higher than usual but didn’t assume high enough. So the O&M cost requirements were much higher than expected, and it was affecting the performance of the system.

That case might seem obvious now, but it’s an example of what happens when you don’t take conservative assumptions in your business plan — whether it’s on the CapEx or, more importantly, on the OpEx. The customer is unhappy. You don’t generate the savings you expected, and that’s the root cause of underperformance that doesn’t match the initial proposal.

For me, the OpEx is the most important factor, especially in storage. It’s not about who owns the system — it’s about who has the capability to operate and supervise it every day. That’s what will make the difference over a twenty-year lifetime.

Sean Swentek: Nobody wants to get hit with those huge surprise OpEx bills for O&M they weren’t expecting. It’s so important to have a really good asset management plan in place — a robust monitoring and maintenance plan so that you can optimize these assets over that twenty-year period.

Sébastien Prioux: In the US, you see that value. We developed a program called QBank Care — a service to operate the QBank for our customers, do the maintenance, and organize dispatch on some VPP programs if they want. Actually, it’s not something we sell — it’s a request coming from customers most of the time. The fire station I mentioned, the cold storage factory we’re doing now in California — they want you to be involved to supervise how they operate the battery because they don’t want anything to go wrong. They want you to be able to react on time, at all times. It’s something that comes naturally from the end user.

Sean Swentek: There’s a piece of this puzzle — the energy service company model — that I know is adjacent to the EPC model. What does the ESCO model get right that maybe a traditional EPC development firm might miss, especially when you’re optimizing for that twenty-year lifespan of these assets?

Sébastien Prioux: The ESCO optimizes for the lifetime value of the project. I used to have my own EPC company when I was in France a long time ago. When you’re an EPC, you focus on delivering the project, provide usually a one-year performance warranty, and sometimes also O&M service. But as an EPC, you need to keep doing projects — you need to put your guys on the roof and keep your electricians busy. That’s the big difference.

The ESCO creates value over the twenty-year lifetime by operating the project, guaranteeing savings or guaranteeing performance or availability. Guaranteeing that the equipment on your roof and your parking will be available ninety-six percent of the time — that’s the ESCO model. The EPC doesn’t have the luxury of being involved long-term because they have to move their team to the next project, and that’s understandable. It’s a different business model. When it comes to battery storage, we want to be the partner for twenty years.

Sean Swentek: We’ve talked a little bit about this, but how are things like utility rate changes and grid access challenges actively shifting the C&I solar business model in America?

Sébastien Prioux: It’s reshaping the entire business. We were in Illinois a couple of weeks ago discussing new grid access challenges. The load from all these data centers is creating a big challenge for the grid to balance the needs. I see that as an opportunity. Export is getting harder. The utility rates are getting more volatile. It’s an opportunity for a company like us at Canadian Solar to provide a service for that.

When you’re a C&I customer — say you’re the general manager of a hotel — and your utility rates are getting higher and changing every quarter, you need to be able to control and predict that. The best tool to have that control is solar and storage. Some people just do storage to arbitrate and have more consistent visibility and control over their expenses.

Sean Swentek: As you look towards the future — beyond just getting more wattage out of a panel or better density in a battery — what do you think will be the big technology or software breakthrough that might fundamentally transform our industry in the next five years?

Sébastien Prioux: The big investment we are making on our side — and I believe it’s the game changer — is the EMS, the energy management system. Whoever controls the dispatch and the flexibility over the asset you put on your parking or your roof will win the game long-term. The main tool we have today to do that is the energy management system embedded in our battery system. Most manufacturers are investing a lot of resources there, and that’s how you make sure you get the best value from your battery over twenty years.

If you think about it — if I sell you a battery system, the hardware, and walk away — not only will you have to deal with it every day by yourself, but the control and the flexibility to dispatch is where you create the bigger value on the product. The only way to do that is with a strong integrated energy management system. We’re investing a lot of resources on the EMS, and that’s where everyone in the industry is now putting significant resources.

Sean Swentek: With your experience in Europe and other places — you’ve mentioned VPPs, virtual power plants, a few times. They’re quite mature and more proliferated in a lot of European nations. What do you think is going on with VPPs in America? Are we going to see them finally start to catch up and scale?

Sébastien Prioux: I’m observing a lot of new initiatives coming from different states. Many people probably have their eyes focused on Illinois at the moment. There is a new regulation that was recently passed called CRGA that will be applied for batteries behind the meter. When I was in Europe, it was also becoming popular, but mostly on the residential side — creating a network of residential batteries to serve the grid for some balancing services.

Here in the US, it’s becoming more and more popular. Illinois is one of them. You have initiatives in Virginia, Maryland. Here in California, you have SELF-GEN, of course, that everybody knows. Not all of them have the same profitability or incentives, but it’s becoming almost standard in every state to help the grid find its balance. As a battery provider, we want to be part of that — we want the battery to be able to serve the grid when necessary, and you get paid for that.

Sean Swentek: You talk to a lot of potential clients every day. You probably encounter some folks who are just on the fence about the final decision for their solar and storage system. What is the one thing that often convinces them to take the plunge?

Sébastien Prioux: For people who are very hesitant, stepping back, I tell them: doing nothing is a decision. If you don’t want to do solar and storage today for different reasons, it’s something you will have to reconsider next year or in two years, because the energy volatility is not going away. Usually, it’s not about the technology anymore — you know the repeatable brands that are available. It’s about the timeline, the financing, and the trust you build in your contract. The game changer comes from the trust you build with your partner and your customer, and how you make it clear in the contract who takes the risk and shares it with you over twenty years.

Sean Swentek: Speaking of building trust and transparency — when is solar and storage not right for someone? Is there ever a time where you say, hey, this investment doesn’t make sense for you?

Sébastien Prioux: We want to deploy on every roof and every parking, but there are some sites that are not compatible — or at least not compatible yet. If you look at some factories that have a very small load profile with a lot of interruptions, or facilities with very low consumption where we couldn’t generate enough savings by putting solar or storage, those don’t work. Or sometimes they have a big load, but it doesn’t match the stability you’re looking for. People who have a lunch break and turn off all their production line during lunch, who don’t work over the weekend — if you want to maximize the impact of solar and storage, you’re looking for something that is stable and big.

The perfect example is always the cold storage factories because they run twenty-four-seven. You also look at the underlying business — you want something that doesn’t shut down in case of a pandemic, for example. Food retail, food factories in the Central Valley in California — this is the kind of business you can assume will be running whatever happens in the future. Some electricity loads just don’t match with solar, and that’s how it is.

Sean Swentek: I love the honesty — that’s really refreshing in our industry. For my listeners who love real-world examples, is there any story of a client you could share where they were on the fence, they finally went solar and storage, and they came back with actual savings data?

Sébastien Prioux: I have an example that was very stimulating for the whole team. We did ten sites on a supermarket chain in two steps. First, we did solar — on the roof and on the parking — and that was generating around twenty percent energy savings on the electricity bill. That was a success. The system was performing well.

We came back to the site last year to propose a retrofit by adding storage. The roof wasn’t fully covered with PV, so we came to the customer proposing we oversize the solar a little bit and add battery storage to be charged from the excess power coming from solar, which would increase the solar penetration in their electricity bill. The customer was very hesitant because it was an additional investment just two years after doing the initial phase one. We did it anyway, and we generated an extra twenty percent savings on the electricity bill. That was really a lesson for us.

Now we try to deploy this approach more broadly. We look at all the customers in our portfolio who purchased solar panels from Canadian Solar that have a system four or five years old, and we tell them: with the degradation and the capabilities we have today, we can install a QBank or a SolBank battery storage unit to maximize the outcome from the solar system. Customers are hesitant, but we show them the financial savings they’ll create — and we’re making deals. That’s very stimulating.

Sean Swentek: If I owned a company or a chain of businesses, I would be pretty excited about saving twenty percent off my bill every month. So, Sébastien, that is all I have for you today. For my listeners who want to learn more about Canadian Solar, QBank, and the work you’re doing, where’s the best place for them to go?

Sébastien Prioux: We are a bit everywhere in the US. I’m based near San Francisco, in Walnut Creek, and the whole team is here. I’m happy to be in touch with all potential partners or customers. I also want to thank all the people we work with — it’s not a story we build on our own. We have a lot of third-party partners, not only customers, but also integrators, software providers, and installers. We’re happy to be in touch with all potential partners on this journey in the solar and storage industry.

I want to thank you, Sean, because this kind of podcast creates momentum and spreads the message broadly. Getting this kind of business done is not easy, but the market demand is real, the numbers work, and you can find reliable technology today. The good partner you find is the one that will be on your side for twenty years. Don’t look only at the equipment — look at the service you can get with it. That’s what will make your project profitable.

Sean Swentek: Well, thank you for the kind words. I’m glad that we’re on this journey together trying to save the planet and do good for the environment and for our customers. If people might want to connect with you at an event, any industry events you’re planning to attend this year?

Sébastien Prioux: We’re trying to be almost everywhere, especially for battery storage, because we really try to increase our capability to deploy projects. All the Intersolar plus events you see in the northeast — we were in Houston two weeks ago. The next one is coming in Atlanta by the end of the month. We will also be attending the big Intersolar plus in Vegas in Q4. We also try to attend events that have nothing to do with our industry, such as automotive industry events and cold storage events, because those are all potential end users we’re trying to target.

Sean Swentek: It sounds like if someone’s going to be at an event, they should be able to find you or someone from your team at Canadian Solar. Sébastien, it was a pleasure to meet you. Thank you for being on the show. To all my listeners, thank you for tuning in to The Future Current. I’m your host, Sean Swentek. I will see you next time.