15. Revenue from Contracts with Customers
We recognize revenue for module sales at a point in time following the transfer of control of the modules to the customer, which typically occurs upon delivery of the modules to the location specified in the terms of the underlying contract. Our customer contracts generally contain provisions that (i) require us to pay the customer liquidated damages if we fail to deliver modules by scheduled dates or if we fail to deliver modules that meet certain U.S. domestic content requirements and (ii) entitle us to a termination payment if the customer defaults on its contractual obligations and the contract is terminated. For sales of modules imported into the United States, our customer contracts generally include provisions that are intended to mitigate the adverse impact from changes in trade policy, such as tariffs. If a contract is terminated on the basis of these trade policy provisions, such contract would effectively be canceled without liability to either party, resulting in a corresponding reduction in future sales of solar modules related to such contract and the return of any customer deposit under the contract, if applicable. Our accounting policy associated with revenue recognition from module sales is further described in Note 2. “Summary of Significant Accounting Policies.”
The following table reflects the changes in our contract liabilities, which we classify as “Deferred revenue,” for the year ended December 31, 2025 (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 2025 | | 2024 | | Change |
| Deferred revenue | | $ | 1,819,404 | | | $ | 2,039,825 | | | $ | (220,421) | | | (11) | % |
During the year ended December 31, 2025, our contract liabilities decreased by $220.4 million primarily due to (i) the recognition of revenue for sales of solar modules for which payment was received in prior years and (ii) the recognition of revenue associated with certain customer contract terminations, partially offset by (iii) advance payments received or accrued in the current period for future sales of solar modules. During the years ended December 31, 2025 and 2024, we recognized revenue of $490.7 million and $433.6 million, respectively, that was included in the corresponding contract liability balance at the beginning of the periods.
During the year ended December 31, 2025, we terminated various master supply agreements with BP Solar Holding, LLC and its affiliate Lightsource Renewable Energy Trading, LLC due to the customers’ failure to cure several breaches of their contractual obligations. These terminations triggered certain contractual termination payment provisions, of which we recognized $61.0 million as revenue for the advance payments previously received. These terminations reduced our contracted backlog of solar modules by 6.6 GW at an aggregate transaction price of $1.9 billion.
As of December 31, 2025, we had entered into contracts with customers for the future sale of 50.1 GW of solar modules for an aggregate transaction price of $15.0 billion, which we expect to recognize as revenue through 2030 as we transfer control of the modules to the customers. This volume and transaction price exclude contracts with customers in India for which payment has not been fully secured. This transaction price also excludes estimates of variable consideration associated with (i) future module technology improvements, including enhancements to certain energy related attributes; (ii) sales freight in excess of defined thresholds; (iii) changes to certain commodity prices; (iv) the module wattage committed for delivery; (v) the volume of modules sold that meet certain U.S. domestic content requirements; and (vi) changes to certain tariff structures within a defined threshold, among other things. As a result, the revenue recognized from such contracts may increase or decrease in future periods relative to the original transaction price or may otherwise be impacted if a contract is canceled. These contracts may also be subject to amendments as agreed to by the parties to the contract. These amendments may increase or decrease the volume of modules to be sold under the contract, change delivery schedules, or otherwise adjust the expected revenue under these contracts.