CASE STUDY

Adopting Best Contract Negotiation Levers and Reducing Supply Costs by 17% for a Solar Energy Firm

Aug 15, 2019

Solar Energy Industry Overview

Solar energy procurement has now become a key aspect of businesses in US. Companies have become increasingly proactive in their transition to clean energy sources. Not only this, over 150 companies in the US have signed on to the American Business Act on Climate Pledge to extend their support for the initiative. Despite such positive signs, there are several challenges such as contract negotiations, oversupply of solar panels, and rising inventory costs facing the solar energy industry.

Business Challenges Faced

The client, one of the leading companies in the solar energy industry was facing predicaments due to increasing inventory costs. The oversupply of solar panels was driving down the cost of purchasing a system and costing investors millions.  Also, asymmetry of information was working against the client and suppliers were gaining an upper hand in contract negotiations due to the technical nature of the solar energy industry. The client, therefore, decided to leverage SpendEdge’s expertise in profiling supplier and contract management.

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Our Research Approach

To help the client reduce supply and inventory costs, the experts at SpendEdge examined the reputational aspects of suppliers. They analyzed their strengths and weaknesses and shortlisted suppliers who could provide best value for the money. While profiling suppliers, the experts compiled information across a wide array of proprietary sources such as paid industry databases, engagement and pricing models, and relationship of key suppliers with competitors. This helped the client to assess risks associated with suppliers and service providers and helped them regulate costs associated with compliance.

The customized solar energy industry offered further helped the client to analyze suppliers’ pricing, cost structure and market dynamics. This helped the client to adopt best negotiation levers and realize cost reduction opportunities.  The detailed insights gained also helped the client to easily contract with a range of suppliers within a structured and consistent environment.

Engagement Outcome

The solution offered helped the client to select the best suppliers and reduce supply costs by 17%. They were able to better negotiate with suppliers and save $ 1.5 million in three months. Also, the report offered helped them to predict supplier risks and develop an effective contingency plan.  

Predicting supplier risks and developing an effective contingency plan is vital for companies to achieve cost savings in the solar energy industry. Subscribe now to enjoy free access to our web-based platform for industry-specific insights.

Solar Energy Industry Trends

Emerging state policies

Recent government initiatives are likely to promote solar energy industry growth. Federal and state policies are supporting battery storage development and different communities in the United States have adopted goals to transition to 100 percent renewable energy.

Advancing technologies

As solar-plus-storage installations are increasing, comprehensive energy software platforms incorporating solar, storage, and home energy management systems are also gaining popularity. This is likely to open new business and revenue models for companies in the solar energy industry.

Increasing investments

Falling renewable costs, corporate social responsibility, and changing climate is driving interest of oil and gas companies to the solar energy sector. They are finding opportunities in areas where their expertise can help them succeed, such as ultra-large tenders for solar PV and offshore wind.

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