Earlier this week, Recurrent Energy announced an agreement to buy approximately 180MW of solar PV modules for our Ontario projects. The module supply agreement is with Celestica, a well-known Toronto-based contract manufacturer.
Under the terms of the agreement, Celestica will build a PV module assembly plant in Ontario and Recurrent Energy will buy most of the plant's output over the next few years. It took our team about 15 months of negotiation with a number of potential suppliers to reach this solution. The agreement represents an important milestone for our company for a couple of reasons.
First, since winning our Ontario FIT contracts back in April of last year, a key focus of the company has been on securing modules that meet the domestic content requirement. The FIT contracts require us to source 60% of the equipment and services for the projects from within the province.
Meeting the domestic content requirement was probably the biggest single risk we took in signing up for the projects. Through our agreement with Celestica, we've now taken that risk off the table and cleared the path to their successful execution.
Second, the decision to work with a contract manufacturer reflects an important part of our strategy to maintain competitive advantage and bargaining power. As a developer, Recurrent Energy doesn't want to be simply a 'price taker' from our suppliers.
With this transaction, we're demonstrating we can push up into our supply chain to take a more direct role in making modules to meet our price targets and technical specifications. The capability to work with contract manufacturers gives us more options and more bargaining power when we're negotiating critical supply contracts.
Anyone who wants to raise the question of 'bankability' with this approach might take a moment to look at Celestica's balance sheet relative to many of the so-called 'Tier I' module suppliers whose credit sets the standard. I can tell you that none of our lenders raised an eyebrow when we discussed the strategy.
I'm proud of our team for putting together a smart deal that not only solves the immediate supply challenges of working under Ontario's domestic content rules, but also points the way towards a compelling strategy for the business.