← Business Metric: Industry Specific (Infrastructure, Transport & Utilities) (all topics)
Module cost pass-through
What it is
Solar modules are typically 40-50% of project cost and their prices move sharply with global supply, ALMM listing and duty changes. Contracts either pass module cost through to the developer or fix it at bid
The choice determines who carries the price risk between bid and procurement
Impact on industries
- Pass-through contracts turn the EPC into a fee-for-execution business insulated from module price swings
- Fixed-price contracts leave the contractor exposed between bid and purchase, and module prices have moved violently in both directions
- ALMM restricts sourcing to listed domestic manufacturers for supported projects, so the contractor cannot buy the cheapest global module to recover a squeeze
- Falling module prices benefit whoever holds the risk, so the same clause can be a windfall or a loss depending on direction