A long-term supply contract for solar wafers, initiated in 2006 has been cancelled between SunEdison and Taiwan-based solar cell producer, Gintech Energy Corporation.
In an SEC filing, SunEdison, formerly MEMC said that despite repeated contract amendments last undertaken in 2011, neither company could agree on wafer pricing and volume purchase obligations since that time and have agreed to terminate the wafer supply deal. Long-term take-or-pay contracts were common due to severe polysilicon supply constraints when the PV market boomed in Europe.
However, although SunEdison said it would keep US$21.94 million of a deposit as part of the supply deal termination but would also repay Gintech a total of $35.12 million of the deposit beginning in December 31, 2013 and continuing on a quarterly basis through June 30, 2016.
“We are pleased to have reached a mutually agreeable conclusion to our 2006 solar wafer supply agreement with Gintech,” commented Ahmad Chatila, SunEdison's Chief Executive Officer. “Gintech has been and continues to be an important strategic partner. We look forward to resuming a mutually beneficial commercial relationship with them.”
A leading PV energy provider (PVEP), SunEdison sub-contracts solar cell and module manufacturing to third parties, which in turn are used in its PV power plant project business, often leveraging its upstream polysilicon/wafer production to lower end-product costs.
The fabless company had previously purchased solar cells from Gintech, while also acquiring less than 10% of Gintech’s common stock when the wafer supply deal was initially establish.
SunEdison recently said that it was planning to significantly increase its PV project installations in 2014 as the company becomes increasingly focused on the PV downstream market.