dc.description.abstract | The problems of climate changes and energy crisis, along with high oil price, have become a serious global concern. In order to fight the problems, many governments support legislation and policies in “Renewable Energy” and “Green Energy”, which help to reduce dependence on fossil fuels and nuclear power. The purpose is to conserve energy while taking security into account. Renewable energies from the nature include solar, wind, tidal, and geothermal energy.
The phenomenal growth of the solar industry comes primarily from preferential policies and subsidies from governments, such as FiT (Feed-In-Tariff). Encouraged by the renewable energy policies in the European Union, solar power installation scaled 20 times from 2006 to 2011. This unprecedented growth resulted in imbalanced demand and supply. Companies in the solar energy industry adapt multiple material sources, including in-house capacity, contract material and supply from spot market as tools for hedging, and almost everyone engaged in long term agreement to secure stable supply.
However, aggressive capacity expansion, together with the financial crisis in 2008 reversed the industry from shortage to surplus. From 2011, European governments such as Italy, Spain cut their Feed-In Tariff deeply to relief themselves from financial deficit. Due to these reasons, solar supply chain prices fluctuate seriously. Hence, many players in the industry are locked in by over-priced Long Term Agreements.
This study analyzes the problem, and proposes how enterprises should manage their Long Term Supply Agreement under intense price volatility. Requirements include compliance to International Accounting Standards (IAS), under which enterprises must have risk assessment of Long Term Agreement as well. The contents of the Supply Agreement, cases of termination lawsuit or amendment in year 2012~2013 are also analyzed in this study. Various business models and alternatives to manage contract materials and disposition to supply chain partners are discussed. Finally, this study makes recommendations to those who have, and who plan to engage in Long Term Agreements. | en_US |