Symbiotic provide | Lightsource bp explains multi-year buying technique

By Brad Kramer June 21, 2023

As provide chain uncertainty has hampered large-scale solar growth within the United States, some corporations want to safe undertaking supplies nicely upfront of breaking floor. Lightsource bp has developed a method of putting multi-year offers with producers for solar modules, inverters and trackers to make sure “supply certainty,” says Stephen Barnes, senior VP of Americas development for the developer.

In February, Lightsource bp positioned an order for 4 GW of superior, ultra-low carbon thin-film PV solar modules from First Solar to be delivered between 2026 and 2028. This was on the heels of an identical settlement between the businesses introduced in November 2021, the place Lightsource bp ordered 4.4 GW of modules to be delivered between 2023 and 2025, along with 2 GW of modules delivered in 2021 and 2022, making the complete quantity greater than 10 GW between 2021 and 2028.

“The U.S. solar industry is at a pivotal moment, poised to expand at an exponential rate with the Inflation Reduction Act serving as the catalyst,” says Kevin Smith, CEO, Americas, for Lightsource bp. “We are seizing the opportunity by not just growing our 20 GW development pipeline across the United States, but also creating sizeable demand for our U.S.-based partner First Solar, which, in turn, is investing in innovation and manufacturing, and supporting thousands of direct and indirect American jobs.”

The deal consists of orders for First Solar’s Series 6 Plus and next-generation Series 7 modules, designed and developed at its R&D facilities in California and Ohio.

“Our relationship with Lightsource bp is a partnership in growth,” says Georges Antoun, chief business officer at First Solar. “We enable their growth with certainty through long-term pricing and supply commitments, and advanced technology, while they enable ours by providing the certainty of demand we need to invest in manufacturing.”

First Solar is increasing its U.S. manufacturing capability to satisfy demand, with a brand new manufacturing facility in Ohio and one other underneath development in Alabama that’s anticipated to be commissioned by 2025. Both factories will produce the Series 7 modules ordered by Lightsource bp. First Solar’s new $1.1 billion Alabama manufacturing facility and $185 million enlargement of its current manufacturing footprint in Ohio are anticipated to carry its complete funding in U.S. manufacturing to greater than $4 billion. The firm’s annual U.S. manufacturing capability is forecast to broaden to 10.6 GWdc by 2026.

The producer estimates that its new investments in Alabama and Ohio will add about 850 new manufacturing and greater than 100 new R&D jobs, rising its complete variety of U.S. jobs to greater than 3,000 by 2025.

First Solar being a U.S. producer is a vital consider Lightsource bp’s partnership, Barnes says. While First Solar is among the many largest solar module producers on the planet, avoiding U.S. Customs delays and qualifying for the home content material stipulations within the Inflation Reduction Act are main advantages. As famous on p. 19, no different U.S. module producer is near First Solar’s quantity of home content material.

“We have 14 projects totaling 1.7 GW under construction right now,” Barnes says. “We’re in the planning phase for next year with pre-construction development for another 2.5 GW of projects. Having that supply certainty with suppliers you can count on is critical. First Solar is one of our key strategic suppliers. They’re a U.S.-based manufacturer that we can count on for delivery.”

Lightsource bp First SolarLightsource bp officers go to a First Solar manufacturing facility.

Multiple years, a number of companions

Barnes explains that Lightsource bp has comparable agreements with three or extra companions to produce modules, inverters and trackers. In April, for instance, the corporate signed a quantity body settlement (VFA) with Siemens to produce solar inverter stations for a collection of tasks within the Midwest and Southeast United States. The settlement is for greater than 850 MW of Siemens inverters, with an possibility so as to add 200 MW extra, over the course of the following two years.

“When we’re looking at inverters, trackers or modules, it’s typically a three-year deal,” says Barnes, including that Lightsource bp leaves room for flexibility. “When we make these multi-year deals, we make sure it’s not going to tie up 100% of our spend. Instead, we’re looking to fill 60%-70% of our need.”
The purpose for that in-built flexibility, Barnes explains, is having the ability to work round allowing or interconnection delays and keep away from being tied to 1 know-how for too lengthy.

“With technology, you don’t want to go too far into the future as things can change fast,” he says. “Sometimes we’ll be making a deal for inverters that have not been announced yet. You have to balance the risk. If one partner ends up with advancements in technology or performance, we may end up with three different manufacturers, and one might get better performance or support.”

These multi-year buy agreements with a number of companions additionally assist make engineering, allowing and logistics administration simpler throughout undertaking growth, Barnes says.

“I know if I have so many gigawatts of First Solar modules or Array trackers procured, I can pull down that volume for a project,” he says. “I can select the best technology for a specific project location. Working with three different manufacturers, I can determine that this project makes more sense for Nextracker or this other one for Array, for example.”

This article initially appeared within the Q2 2023 challenge of Solar Builder journal. For extra unique professional perception from Solar Builder journal, entry the digital version and subscriber free of charge proper right here.

Risks and rewards

Barnes explains that there are a number of potential dangers concerned with these multi-year purchases for parts.

“The risks associated with these deals include making too big of a deal with a counterparty at the wrong time, then in the next three years, you’re either saddled with a price that’s too high or equipment that’s not optimally performing,” he says. “Or you might have a counterparty that doesn’t stand behind the contract. But you’re a hero if you time it just right.”

Some of Lightsource bp’s multi-year offers contain value flexibility associated to the price of manufacturing to keep away from publicity to the pricing fluctuation in metal, copper, gas or transport.

“Having multiple partners for each category helps manage that risk,” Barnes says. “In a perfect world, if I have 1 GW in projects, then I would buy 200 MW from three different partners, so that I have 600 MW confirmed, and I can then spot purchase 400 MW. The key is having those multi-year deals, but not going too big or too long with any of them.”

On the opposite hand, one other benefit of forming sturdy partnerships with suppliers, like First Solar, is that Lightsource bp then has “a seat at the table talking about technology advancements,” Barnes says. That perception about new merchandise hitting the market provides the corporate a “technology road map” for future tasks.

“We work with our manufacturing partners on innovation and in some cases to deploy new technology before other companies,” Barnes says. “With our suppliers, having a multi-year deal is good for them to have a backlog, knowing they have X number of components to produce per year. It helps with their planning.”

Bradley Kramer is managing editor of Solar Builder.

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Tags: First Solar, Lightsource BP, buy settlement, utility-scale

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