TotalEnergies, Trina Solar Head To Court In US Over 900 MW Of Missed Module Deliveries

French energy major Totalenergies and Chinese solar manufacturer Trina Solar, find themselves in court after Totalenergies alleged breach of contract over a 900 MW modules order that its US subsidiaries placed with Trina.

The case was filed by Totalenergies in  Alameda County, California for orders, all deliverable in the US.

Interestingly, all the orders were signed in July last year at a negotiated price of US$0.32c/W DDP for deliveries starting in February 2022. Currently, comparable prices are closer to US$0.37-38c/W DDP or higher, in our view.

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Readers will be aware that the PV market has been roiled by disruptions since then, especially on the manufacturing side, with first, electricity shortages in China, followed by spikes in key input prices, and of course, in the case of the US, the uncertainty wrought by the launch of a Department of commerce investigation into claims of dumping. Current prices are the highest ever for Polysilicon, for instance.

Trina Solar, it seems, cited each and every one of these issues at various times after the signing of the order to seek a force majeure cancellation/ and/or, higher payments than the contracted amount from Totalenergies. In each case, Totalenergies proceeded to reject the contentions, and finally accused Trina of failing to provide traceability documentation after promising it.

It claims a loss due to delays of $100 million in higher prices, and further losses of $100 million due to business losses caused by the project delays now.

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Trina has promised to defend itself vigorously, denying any of the accusations it faces.

The dispute underlines the ongoing fallout of the volatility on the broader solar market from the price hikes manufacturers have sought to pass on, leading to many contractual disputes, developers absorbing heavy losses and more. For leading EPC developers like Sterling and Wilson Renewable Energy along with others, it has also meant a complete relook at the nature of their contracts, where they have sought to include provisions for sharp price movements going forward. This happened due to the ‘new normal’ of perennially stable or falling solar prices that was witnessed between 2016-2020. Prices, where they rose at all, were usually matched with higher efficiency modules, limiting the risk for developers. But since 2021, we have seen price rises of upto 30%, without commensurate rise in efficiencies or even assured supplies. The only saving grace, lower financing costs, has also reversed now, leaving many developers  facing heavy losses or much lower margins.

Many developers have chosen to declare bankruptcy over such projects, while others have been forced to cut back and pick projects more carefully.

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