07.03.14 Dsp - Msp V2
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MANUFACTURING SERVICE PROVIDER
MSP (Manufacturing Service Provider) Update
16 March, 2007 MSP team and SESI 1
Preamble - Module Manufacturing • The supply strategy of BP Solar envisages expansion of manufacturing capacity in wafer, cell & module manufacturing facilities to provide a leading edge to BP Solar in the market • The supply strategy envisages the need for module assembly plants to be closer to Market • The drivers for the above is reduced logistics, better product pricing and faster time to market among others • The module assembly capacity expansion can happen through the following optional routes: − Captive investments (Brown & Green fields) − Third party manufacturing service providers − Tolling agreements
• The Manufacturing Service Providers route for expansion of module assembly capacity is discussed in the slides below 2
Context – What are MSP’s • MSP are Mass manufacturer companies (10b$) with an excellent track record in Manufacturing, Operation excellence, quality, customer responsiveness and cost reduction. • They will set up and operate PV module assembly line capacity in its own facilities with its own people to supply BP customers • Most of World Class companies use MSP to manufacture their products. See list of MSP customers in the back up Slides. (SESI to include) • Manufacturing Service Providers are specialized in providing from pure manufacturing or assembly to full supply chain offer to OEM. • Market leaders in MSP are: − Solectron. Flextronics, Celestica, Jabil, Sanmina 3
Corporate overview short list candidates JABIL
CELESTICA
FLEXTRONICS
REVENUE
7.5 M $
9.8 M $
15.2 M $
EMPLOYEES
40.000
98.500
100.000
HEAD QUARTER
USA (FL)
CANADA (Toronto)
SINGAPORE
4
Model - MSP End game: Who is doing what? Supply & buy machines
Have ready a building: licence to operate all services & infrastructure
Provide training: machines installation, ramp up & operation
Define: HSSE spec BP Solar Acceptance test procedures BOM and preferred suppliers
Installation, commissioning & ramp up all machines MSP Run, operate and maintain the plant
Supply PV cells Boundaries: Modules BP branded Sites: TBD
Procure the BOM & assembly modules Ship modules to BPS 5
Factors to be considered • Pioneering effort in Photovoltaic Industry • Traditional financial metrics • Definition of the operational and economic design criteria (during the Pilot Project) • Fear of losing intellectual capital, expertise • Difficulty attracting good contract manufacturers for less desirable programs • Necessity of managing risk exposure (see next slide) • Management of relationship / contract (such as parts shortages, changes in orders) • Exit Strategy
6
Risks & Mitigation Risk
Mitigation
•
Lack of Supplier competitiveness
•
Yearly review of competitiveness process to be agreed with supplier
•
Leak of strategic BP Solar information to competitors through partner
•
A NDA design by our legal department is already signed as part of our RFI process to protect adequately against this possibility. MSP’s as part of their strategy protect IPR and information of their partners to have credibility in OEM market
•
Lack of performance of the supplier
•
Objective criteria based selection process exercised by multifunctional network. The existing track record in Quality give us enough assurance against this Risk
•
Lack of local presence of the MSP in the areas of interest resulting in impractical solutions being proposed
•
Local presence in the sites of interest to be included in the decision criteria. Multiple MSP agreement can be signed if all our strategic areas are not covered by only one partner.
•
Underestimate timeline to deliver partnership vehicle
•
Create an internal multifunctional team tasked with landing the agreement by H1 2007. An Implementation Plan is requested under our current RFI process. 7
Strategic Fit: Value added for each party − BP Solar: • Switch fixed cost to variable cost • Reduce capital investment (50%+) • Accelerate time-to-market & time-to-volume • Optimize and reduce time for MODCO implementation • Reduce product and total landed costs • Achieve world class metrics • Lower manpower liability & easier exit strategy
− MSP: • Big opportunity to apply manufacturing excellence to a new business • Secured material turn over • PV Market knowledge and entry door to material renewable energy
8
Draft structure of the agreement • Type of contract: Manufacturing agreement • Pilot plant site: Spain, Italy or Germany • Commercial arrangement: − Price: per module conversion cost or per W − Finished good will be delivered EX-WORKS − Subsidies should be part of the agreement − NCM to be procured by MSP in accordance with BPS AVL − BPS PV cells shall be delivered DDP, MSP site − Guarantee: workmanship − Duration of the pilot contract: 1 to 5 years • Reporting and management of the contract: Technical Officer and Contractual Officer 9
MSP price example (Conversion Cost) 1€=1,3$
ANNUAL
100.000.000
TOTAL Selling Price Material MVA Direct Expenses:
Unit
$/Watt
TOTAL
300.000.000
$/Watt
TOTAL
$/Watt
Percent $ 69.938.454
0,70
$ 130.299.816
0,65
$ 189.221.340
62%
$ 43.700.000
0,44
$ 83.030.000
0,42
$ 120.808.650
0,403
38%
$ 26.238.454
0,26
$ 47.269.816
0,24
$ 68.412.690
0,228
22%
$ 15.466.456
0,15
$ 29.091.807
0,15
$ 42.533.048
0,142
$ 9.025.021
0,09
$ 16.245.038
0,08
$ 23.284.554
0,078
$ 180.500
0,00
$ 324.901
0,00
$ 465.691
0,002
Material cost
$ 4.000.000
0,04
$ 8.000.000
0,04
$ 12.000.000
0,040
Material cost
$ 2.260.934
0,02
$ 4.521.869
0,02
$ 6.782.803
0,023
$ 3.633.080
0,04
$ 5.802.498
0,03
$ 8.271.538
0,028
$ 1.869.687
0,02
$ 2.534.414
0,01
$ 3.163.041
0,011
$ 46.134
0,00
$ 92.269
0,00
$ 138.403
0,000
Direct labor:
Persons
Consomables Scrap Warranty
% D.L
Indirect Expenses: Indirect labor Technical services Receiving+Warehouse SCM Inbound Freight Depreciation* Building lease Occupancy (building improvement invest) Indirect expenses (Facilities&machinery) SG&A Allocations Corpor./Reg. allocation Mat.Management corpor EBIAT
200.000.000
5%
0,631
Persons Persons Persons Material cost Rent
$ 468.000
Electricity Persons V.A
0% 4%
Materia cost
Outbound * Not included machinery depreciation (0,9 c$)
5%
$ 258.494
0,00
$ 461.818
0,00
$ 560.618
0,002
$ 1.458.764
0,01
$ 2.713.997
0,01
$ 3.941.476
0,013
$ 227.435
0,00
$ 341.153
0,00
$ 454.870
0,002
$ 3.607.427
0,04
$ 5.793.671
0,03
$ 7.981.122
0,027
$ 2.823.427
0,03
$ 4.304.071
0,02
$ 5.793.762
0,019
$ 784.000
0,01
$ 1.489.600
0,01
$ 2.187.360
0,007
$ 3.304.056
0,03
$ 6.240.687
0,03
$ 9.172.112
0,031
$ 1.214.277
0,01
$ 2.428.553
0,01
$ 3.642.830
0,012
10
MSP price example (Logistic Center) LOGISTIC CENTER (60 Stock days 72 cells)
VOLUMES(W)
Selling Price MVA Total Expenses: Indirect labor Logistic Headcount(invoicing) Receiving Warehouse
2,00 5,00 5,00 12,00
Freight Depreciation/Investment Building lease Utility Movement between warehouse(B2 to B3) Insurance(exemption 100000 $ )
SG&A
Corpor./Reg. allocation Mat.Management corpor EBIAT
100.000.000
200.000.000
$ 2.100.959,63 $/W 0,02 $ 2.100.959,63
$ 3.099.219,48 $/W 0,02 $ 3.099.219,48
$ 4.121.751,60 $/W 0,01 $ 4.121.751,60
$ 1.570.127,72 $ 509.200,84
$ 2.315.223,44 $ 907.251,68
$ 3.078.896,69 $ 1.305.302,53
2,50 10,00 10,00 22,50
42.433 $ 73.954,40 $ 468.000,00 $ 240.032,00 $ 218.400,00 $ 60.540,48
0,50
300.000.000
$ 37.905,83
3,00 15,00 15,00 33,00 $ 125.288,80 $ 468.000,00 $ 256.802,00 $ 436.800,00 $ 121.080,96
0,75
$ 56.858,75
$ 194.420,72 $ 468.000,00 $ 274.352,00 $ 655.200,00 $ 181.621,44
1,00
$ 75.811,67
$ 234.913,49
$ 346.531,39
$ 460.863,23
$ 258.012,59
$ 380.605,90
$ 506.180,02 11
Value added for each party: Strategic fit • BP Solar: • Switch fix cost to variable cost • Reduce capital investment • Accelerate time-to-market & time-to-volume • Optimize and reduce time to MODCO implementation • Potential Reduce product and total landed costs • Potential better response to Changes • Achieve world class metrics
• MSP: • Big opportunity to apply manufacturing excellence to a new business • Secured material turn over • PV Market knowledge and entry door to material renewable energy • Huge support from senior management 12
Conclusions – MSP Option
• The MSP option is found to be a viable and feasible business model
• Better definition through a pilot and possible up scaling based on demonstration of the pilot. • BP Solar to retain governance and management control in initial years with the MSP’s till relationship stabilizes • Established product range to be outsourced to MSP’s • High volume to be ensured to derive better costs • New product introduction till stabilization to be through Captive manufacturing facility of BP Solar
13
RFI Process & Outcome
14
RFI Selection Process • Objective of RFI: − Explore the potential to consider an agreement with a MSP company as part of the MODCO implementation strategy. • Broad Scope: − MSP to set up and operate PV module assembly line capacity in its own facilities with its own people to supply BP Solar customers − Use BP Solar owned manufacturing equipment in a first phase, potentially transitioning into its own equipment for further expansions − Manufacture BP Solar branded modules under BP Solar designs and manufacturing process definition, potentially transitioning into its own manufacturing process definition in the future
• Approach − Initiate a 40 MW pilot Project to understand & define the business model − On success of pilot, initiate large scale deployment of MSP approach
15
RFI Status • Process: − Capabilities meeting to select short list of candidates. Done − Preparation and submission of RFI’s. Done. − Definition of selection criteria and evaluation matrix. Done. − Visit to MSP sites. Last one concluded week 7. − Visit to SSR with all MSP candidates. Last one concluded week 9. − Dead line to receive final information. Week 11 − Evaluation of information. Expected week 12
16
Key Indicators for MSP evaluation
• Business proposal with economic model • Pilot proposal: scope and liabilities/exit gates • Technical capabilities & business improvement plan • MSP end Consumer satisfaction • Strategic fit for MSP and BPS • Financial capabilities • Geographical deployment • Factory visit to MSP site 17
Flextronics – Summary of Offer Highlights
Drawbacks
18
Operations map
Supply & buy process machines
Define
Execute
Audit
Observations
BPS
BPS
BPS
At least for the pilot. BP asset.
BPS
BPS
Machines FAT Plant design
BPS BPS
MSP
BPS
Factory Planning Vendors/BPS to procure support & training
Machines HOOK-UP and installation BPS
MSP
BPS
Machines SAT
BPS
MSP
BPS
PV lines ramp up
BPS
MSP
BPS
Supply PV cells
BPS
BPS
MSP
Integrity management & HSSE
BPS
MSP
BPS
Acceptance Test Procedures: Modules
BPS
MSP
BPS
BOM and preferred suppliers
BPS
MSP
BPS
Building and facilities
BPS
MSP
BPS
Permitting and licences
MSP
MSP
BPS
Operation of the MODCO assembly plant
MSP
MSP
BPS
Shipping modules to BPS/Customers
BPS
MSP
BPS
Engineering company to be considered
19
Celistica – Summary of Offer Highlights
Drawbacks
20
Jabil – Summary of Offer Highlights
Drawbacks
21
Source of Value - Assessment Source of Value
Flextronic s
Celestica
Jabil
Observatio n
22
Selection Criteria
MSP SELECTION CRITERIA MATRIX
Item 1 2 3 4 5 6 7 8 9
DESCRIPTION Business proposal with economic model Pilot proposal: scope and liabilities/exit gates Technical capabilities & business improvement Plan MSP end customer satisfaction Strategic fit for MSP Strategic fit for BP Financial Capabilities Geographical deployment Factory visit and questionnaire FINAL SCORE (No weight) FINAL SCORE(weighted)
Score 1= bad Score 5=excellent Score 1-5 Score 1-5 Score 1-5 FLEXTRONICS CELESTICA JABIL
COMMENTS See High Level Plan
See High Level Plan 0% 0%
0% 0%
Assumption Weight(1 to 3) 2 3 1 3 2 3 1 2 3
0% 0%
23
Conclusion of the selection Process
24
Draft structure of the agreement I • Type of contract: Manufacturing agreement • Pilot plant site: Spain, Italy or Germany • Commercial arrangement: − Price :per module conversion cost − Finished good will be delivered EX-WORKS − Subsidies should be part of the agreement − NCM to be procured by MSP in accordance with BPS AVL − BPS PV cells shall be delivered DDP, MSP site − Guarantee: workmanship − Duration of the pilot contract: 1 to 5 years • Reporting and management of the contract: Technical Officer and Contractual Officer 25
Draft structure of the agreement II • Volumes: − Products: Only for big modules with ARC glass (72 or 60 cells) − Quantities: 2 lines, 40 MWp • IPR: specific clause will be considered. • Management of changes & improvements: specific clause will be considered • Exit gates: − Termination by convenience 90 days − Hand over to a replacement third party will be considered • Exclusivity: Not a standard practise but could be considered 26
Backup Slides
27
MSP Technical Assumptions Appendix II
MSP TECHNICAL ASSUMPTIONS
MWp Production Area(m2) Clean Room Facilities (HVAC, Power, Compresssed Air) Indirect Service Area Number of Modules per year PV Modules Dimesions (aprox) PV Module weight (kg) Number of PV cells per module Cost of Machinery(m$) Electrical Power needs (MVA) Direct Labor (people) Production days Working Hours per day (multiple shift) Module conversion cost: * Cells (supply by BP Solar in boxes of 50u) * Non Cell materials (<20) * Manufacturing Added Value Prefered Locations & sites Prefered Locations & sites
Cases 1 to 5 100 2400 NO YES 2400 570,000 1000x1750mm 15 72 10 1.2 250 350 24
Cases 6-10 200 TBD NO YES TBD 1,140,000 1000x1750mm 15 72 20 2.4 TBD 350 24
Cases 11-15 300 TBD NO YES TBD 1,710,000 1000x1750mm 15 72 30 3.6 TBD 350 24
-
60% 60% 60% 40% 40% 40% California, Germany, Spain, California, Germany, Spain, California, Germany, Spain, China, India China, India China, India
28
BOM Non Cell Material for MSP
29
Schedule
RFI
23-29
16-22
9-15
2-8
26-1
19-25
12-18
5-11
9
Mar. Apr. 10 11 12 13 14 15 16 17 26-4
Manufacturing Service Provider
8
19-25
5
Feb. 6 7
12-18
Status
5-11
Activities
29-4
Group
Preparation Expression of Interest + Confidential Agreement Appraise & define list of candidates + capabilities meeting Send Confidential Agreement to all candidates Check Autorization To Negotiate is signed Send RFI package Preparation of proposal for RFI Evaluation of proposal Post Tender Clarification + Site survey Agree short list Final negotiation with 2 Final candidates Stakeholders meeting to agree awarded company Contract preparation + negotiation Due diligence + Financial Memorendum signed Legal clearance Contract signature + first Purchase Order
30
MSP (Manufacturing Service Provider) Update
16 March, 2007 MSP team and SESI 1
Preamble - Module Manufacturing • The supply strategy of BP Solar envisages expansion of manufacturing capacity in wafer, cell & module manufacturing facilities to provide a leading edge to BP Solar in the market • The supply strategy envisages the need for module assembly plants to be closer to Market • The drivers for the above is reduced logistics, better product pricing and faster time to market among others • The module assembly capacity expansion can happen through the following optional routes: − Captive investments (Brown & Green fields) − Third party manufacturing service providers − Tolling agreements
• The Manufacturing Service Providers route for expansion of module assembly capacity is discussed in the slides below 2
Context – What are MSP’s • MSP are Mass manufacturer companies (10b$) with an excellent track record in Manufacturing, Operation excellence, quality, customer responsiveness and cost reduction. • They will set up and operate PV module assembly line capacity in its own facilities with its own people to supply BP customers • Most of World Class companies use MSP to manufacture their products. See list of MSP customers in the back up Slides. (SESI to include) • Manufacturing Service Providers are specialized in providing from pure manufacturing or assembly to full supply chain offer to OEM. • Market leaders in MSP are: − Solectron. Flextronics, Celestica, Jabil, Sanmina 3
Corporate overview short list candidates JABIL
CELESTICA
FLEXTRONICS
REVENUE
7.5 M $
9.8 M $
15.2 M $
EMPLOYEES
40.000
98.500
100.000
HEAD QUARTER
USA (FL)
CANADA (Toronto)
SINGAPORE
4
Model - MSP End game: Who is doing what? Supply & buy machines
Have ready a building: licence to operate all services & infrastructure
Provide training: machines installation, ramp up & operation
Define: HSSE spec BP Solar Acceptance test procedures BOM and preferred suppliers
Installation, commissioning & ramp up all machines MSP Run, operate and maintain the plant
Supply PV cells Boundaries: Modules BP branded Sites: TBD
Procure the BOM & assembly modules Ship modules to BPS 5
Factors to be considered • Pioneering effort in Photovoltaic Industry • Traditional financial metrics • Definition of the operational and economic design criteria (during the Pilot Project) • Fear of losing intellectual capital, expertise • Difficulty attracting good contract manufacturers for less desirable programs • Necessity of managing risk exposure (see next slide) • Management of relationship / contract (such as parts shortages, changes in orders) • Exit Strategy
6
Risks & Mitigation Risk
Mitigation
•
Lack of Supplier competitiveness
•
Yearly review of competitiveness process to be agreed with supplier
•
Leak of strategic BP Solar information to competitors through partner
•
A NDA design by our legal department is already signed as part of our RFI process to protect adequately against this possibility. MSP’s as part of their strategy protect IPR and information of their partners to have credibility in OEM market
•
Lack of performance of the supplier
•
Objective criteria based selection process exercised by multifunctional network. The existing track record in Quality give us enough assurance against this Risk
•
Lack of local presence of the MSP in the areas of interest resulting in impractical solutions being proposed
•
Local presence in the sites of interest to be included in the decision criteria. Multiple MSP agreement can be signed if all our strategic areas are not covered by only one partner.
•
Underestimate timeline to deliver partnership vehicle
•
Create an internal multifunctional team tasked with landing the agreement by H1 2007. An Implementation Plan is requested under our current RFI process. 7
Strategic Fit: Value added for each party − BP Solar: • Switch fixed cost to variable cost • Reduce capital investment (50%+) • Accelerate time-to-market & time-to-volume • Optimize and reduce time for MODCO implementation • Reduce product and total landed costs • Achieve world class metrics • Lower manpower liability & easier exit strategy
− MSP: • Big opportunity to apply manufacturing excellence to a new business • Secured material turn over • PV Market knowledge and entry door to material renewable energy
8
Draft structure of the agreement • Type of contract: Manufacturing agreement • Pilot plant site: Spain, Italy or Germany • Commercial arrangement: − Price: per module conversion cost or per W − Finished good will be delivered EX-WORKS − Subsidies should be part of the agreement − NCM to be procured by MSP in accordance with BPS AVL − BPS PV cells shall be delivered DDP, MSP site − Guarantee: workmanship − Duration of the pilot contract: 1 to 5 years • Reporting and management of the contract: Technical Officer and Contractual Officer 9
MSP price example (Conversion Cost) 1€=1,3$
ANNUAL
100.000.000
TOTAL Selling Price Material MVA Direct Expenses:
Unit
$/Watt
TOTAL
300.000.000
$/Watt
TOTAL
$/Watt
Percent $ 69.938.454
0,70
$ 130.299.816
0,65
$ 189.221.340
62%
$ 43.700.000
0,44
$ 83.030.000
0,42
$ 120.808.650
0,403
38%
$ 26.238.454
0,26
$ 47.269.816
0,24
$ 68.412.690
0,228
22%
$ 15.466.456
0,15
$ 29.091.807
0,15
$ 42.533.048
0,142
$ 9.025.021
0,09
$ 16.245.038
0,08
$ 23.284.554
0,078
$ 180.500
0,00
$ 324.901
0,00
$ 465.691
0,002
Material cost
$ 4.000.000
0,04
$ 8.000.000
0,04
$ 12.000.000
0,040
Material cost
$ 2.260.934
0,02
$ 4.521.869
0,02
$ 6.782.803
0,023
$ 3.633.080
0,04
$ 5.802.498
0,03
$ 8.271.538
0,028
$ 1.869.687
0,02
$ 2.534.414
0,01
$ 3.163.041
0,011
$ 46.134
0,00
$ 92.269
0,00
$ 138.403
0,000
Direct labor:
Persons
Consomables Scrap Warranty
% D.L
Indirect Expenses: Indirect labor Technical services Receiving+Warehouse SCM Inbound Freight Depreciation* Building lease Occupancy (building improvement invest) Indirect expenses (Facilities&machinery) SG&A Allocations Corpor./Reg. allocation Mat.Management corpor EBIAT
200.000.000
5%
0,631
Persons Persons Persons Material cost Rent
$ 468.000
Electricity Persons V.A
0% 4%
Materia cost
Outbound * Not included machinery depreciation (0,9 c$)
5%
$ 258.494
0,00
$ 461.818
0,00
$ 560.618
0,002
$ 1.458.764
0,01
$ 2.713.997
0,01
$ 3.941.476
0,013
$ 227.435
0,00
$ 341.153
0,00
$ 454.870
0,002
$ 3.607.427
0,04
$ 5.793.671
0,03
$ 7.981.122
0,027
$ 2.823.427
0,03
$ 4.304.071
0,02
$ 5.793.762
0,019
$ 784.000
0,01
$ 1.489.600
0,01
$ 2.187.360
0,007
$ 3.304.056
0,03
$ 6.240.687
0,03
$ 9.172.112
0,031
$ 1.214.277
0,01
$ 2.428.553
0,01
$ 3.642.830
0,012
10
MSP price example (Logistic Center) LOGISTIC CENTER (60 Stock days 72 cells)
VOLUMES(W)
Selling Price MVA Total Expenses: Indirect labor Logistic Headcount(invoicing) Receiving Warehouse
2,00 5,00 5,00 12,00
Freight Depreciation/Investment Building lease Utility Movement between warehouse(B2 to B3) Insurance(exemption 100000 $ )
SG&A
Corpor./Reg. allocation Mat.Management corpor EBIAT
100.000.000
200.000.000
$ 2.100.959,63 $/W 0,02 $ 2.100.959,63
$ 3.099.219,48 $/W 0,02 $ 3.099.219,48
$ 4.121.751,60 $/W 0,01 $ 4.121.751,60
$ 1.570.127,72 $ 509.200,84
$ 2.315.223,44 $ 907.251,68
$ 3.078.896,69 $ 1.305.302,53
2,50 10,00 10,00 22,50
42.433 $ 73.954,40 $ 468.000,00 $ 240.032,00 $ 218.400,00 $ 60.540,48
0,50
300.000.000
$ 37.905,83
3,00 15,00 15,00 33,00 $ 125.288,80 $ 468.000,00 $ 256.802,00 $ 436.800,00 $ 121.080,96
0,75
$ 56.858,75
$ 194.420,72 $ 468.000,00 $ 274.352,00 $ 655.200,00 $ 181.621,44
1,00
$ 75.811,67
$ 234.913,49
$ 346.531,39
$ 460.863,23
$ 258.012,59
$ 380.605,90
$ 506.180,02 11
Value added for each party: Strategic fit • BP Solar: • Switch fix cost to variable cost • Reduce capital investment • Accelerate time-to-market & time-to-volume • Optimize and reduce time to MODCO implementation • Potential Reduce product and total landed costs • Potential better response to Changes • Achieve world class metrics
• MSP: • Big opportunity to apply manufacturing excellence to a new business • Secured material turn over • PV Market knowledge and entry door to material renewable energy • Huge support from senior management 12
Conclusions – MSP Option
• The MSP option is found to be a viable and feasible business model
• Better definition through a pilot and possible up scaling based on demonstration of the pilot. • BP Solar to retain governance and management control in initial years with the MSP’s till relationship stabilizes • Established product range to be outsourced to MSP’s • High volume to be ensured to derive better costs • New product introduction till stabilization to be through Captive manufacturing facility of BP Solar
13
RFI Process & Outcome
14
RFI Selection Process • Objective of RFI: − Explore the potential to consider an agreement with a MSP company as part of the MODCO implementation strategy. • Broad Scope: − MSP to set up and operate PV module assembly line capacity in its own facilities with its own people to supply BP Solar customers − Use BP Solar owned manufacturing equipment in a first phase, potentially transitioning into its own equipment for further expansions − Manufacture BP Solar branded modules under BP Solar designs and manufacturing process definition, potentially transitioning into its own manufacturing process definition in the future
• Approach − Initiate a 40 MW pilot Project to understand & define the business model − On success of pilot, initiate large scale deployment of MSP approach
15
RFI Status • Process: − Capabilities meeting to select short list of candidates. Done − Preparation and submission of RFI’s. Done. − Definition of selection criteria and evaluation matrix. Done. − Visit to MSP sites. Last one concluded week 7. − Visit to SSR with all MSP candidates. Last one concluded week 9. − Dead line to receive final information. Week 11 − Evaluation of information. Expected week 12
16
Key Indicators for MSP evaluation
• Business proposal with economic model • Pilot proposal: scope and liabilities/exit gates • Technical capabilities & business improvement plan • MSP end Consumer satisfaction • Strategic fit for MSP and BPS • Financial capabilities • Geographical deployment • Factory visit to MSP site 17
Flextronics – Summary of Offer Highlights
Drawbacks
18
Operations map
Supply & buy process machines
Define
Execute
Audit
Observations
BPS
BPS
BPS
At least for the pilot. BP asset.
BPS
BPS
Machines FAT Plant design
BPS BPS
MSP
BPS
Factory Planning Vendors/BPS to procure support & training
Machines HOOK-UP and installation BPS
MSP
BPS
Machines SAT
BPS
MSP
BPS
PV lines ramp up
BPS
MSP
BPS
Supply PV cells
BPS
BPS
MSP
Integrity management & HSSE
BPS
MSP
BPS
Acceptance Test Procedures: Modules
BPS
MSP
BPS
BOM and preferred suppliers
BPS
MSP
BPS
Building and facilities
BPS
MSP
BPS
Permitting and licences
MSP
MSP
BPS
Operation of the MODCO assembly plant
MSP
MSP
BPS
Shipping modules to BPS/Customers
BPS
MSP
BPS
Engineering company to be considered
19
Celistica – Summary of Offer Highlights
Drawbacks
20
Jabil – Summary of Offer Highlights
Drawbacks
21
Source of Value - Assessment Source of Value
Flextronic s
Celestica
Jabil
Observatio n
22
Selection Criteria
MSP SELECTION CRITERIA MATRIX
Item 1 2 3 4 5 6 7 8 9
DESCRIPTION Business proposal with economic model Pilot proposal: scope and liabilities/exit gates Technical capabilities & business improvement Plan MSP end customer satisfaction Strategic fit for MSP Strategic fit for BP Financial Capabilities Geographical deployment Factory visit and questionnaire FINAL SCORE (No weight) FINAL SCORE(weighted)
Score 1= bad Score 5=excellent Score 1-5 Score 1-5 Score 1-5 FLEXTRONICS CELESTICA JABIL
COMMENTS See High Level Plan
See High Level Plan 0% 0%
0% 0%
Assumption Weight(1 to 3) 2 3 1 3 2 3 1 2 3
0% 0%
23
Conclusion of the selection Process
24
Draft structure of the agreement I • Type of contract: Manufacturing agreement • Pilot plant site: Spain, Italy or Germany • Commercial arrangement: − Price :per module conversion cost − Finished good will be delivered EX-WORKS − Subsidies should be part of the agreement − NCM to be procured by MSP in accordance with BPS AVL − BPS PV cells shall be delivered DDP, MSP site − Guarantee: workmanship − Duration of the pilot contract: 1 to 5 years • Reporting and management of the contract: Technical Officer and Contractual Officer 25
Draft structure of the agreement II • Volumes: − Products: Only for big modules with ARC glass (72 or 60 cells) − Quantities: 2 lines, 40 MWp • IPR: specific clause will be considered. • Management of changes & improvements: specific clause will be considered • Exit gates: − Termination by convenience 90 days − Hand over to a replacement third party will be considered • Exclusivity: Not a standard practise but could be considered 26
Backup Slides
27
MSP Technical Assumptions Appendix II
MSP TECHNICAL ASSUMPTIONS
MWp Production Area(m2) Clean Room Facilities (HVAC, Power, Compresssed Air) Indirect Service Area Number of Modules per year PV Modules Dimesions (aprox) PV Module weight (kg) Number of PV cells per module Cost of Machinery(m$) Electrical Power needs (MVA) Direct Labor (people) Production days Working Hours per day (multiple shift) Module conversion cost: * Cells (supply by BP Solar in boxes of 50u) * Non Cell materials (<20) * Manufacturing Added Value Prefered Locations & sites Prefered Locations & sites
Cases 1 to 5 100 2400 NO YES 2400 570,000 1000x1750mm 15 72 10 1.2 250 350 24
Cases 6-10 200 TBD NO YES TBD 1,140,000 1000x1750mm 15 72 20 2.4 TBD 350 24
Cases 11-15 300 TBD NO YES TBD 1,710,000 1000x1750mm 15 72 30 3.6 TBD 350 24
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60% 60% 60% 40% 40% 40% California, Germany, Spain, California, Germany, Spain, California, Germany, Spain, China, India China, India China, India
28
BOM Non Cell Material for MSP
29
Schedule
RFI
23-29
16-22
9-15
2-8
26-1
19-25
12-18
5-11
9
Mar. Apr. 10 11 12 13 14 15 16 17 26-4
Manufacturing Service Provider
8
19-25
5
Feb. 6 7
12-18
Status
5-11
Activities
29-4
Group
Preparation Expression of Interest + Confidential Agreement Appraise & define list of candidates + capabilities meeting Send Confidential Agreement to all candidates Check Autorization To Negotiate is signed Send RFI package Preparation of proposal for RFI Evaluation of proposal Post Tender Clarification + Site survey Agree short list Final negotiation with 2 Final candidates Stakeholders meeting to agree awarded company Contract preparation + negotiation Due diligence + Financial Memorendum signed Legal clearance Contract signature + first Purchase Order
30
