Configured provider not recognized inside module - terraform

Question

I am working on a Terraform configuration for a new project. The project consists of multiple microservices for which I've written modules. The project is supposed to be hosted on Digitalocean, so I installed the Terraform DigitalOcean Provider as a required provider:
# ./versions.tf
terraform {
required_version = ">= 0.14"
required_providers {
digitalocean = {
source = "digitalocean/digitalocean"
version = "2.3.0"
}
}
}
which is then 'initialized' in ./main.tf:
provider "digitalocean" {
token = var.do_token
}
However, when I try to run terraform init it fails because of error Error: Failed to query available provider packages.
terraform providers reveals that this happens because a module tries to require provider hashicorp/digitalocean instead of digitalocean/digitalocean:
├── provider[registry.terraform.io/digitalocean/digitalocean] 2.3.0
├── provider[registry.terraform.io/hashicorp/kubernetes] 1.13.3
├── provider[registry.terraform.io/hashicorp/kubernetes-alpha] 0.2.1
└── module.spaces
└── provider[registry.terraform.io/hashicorp/digitalocean]
I have tried to pass a the provider through the providers option in the module, but that didn't seem to make a difference:
module "spaces" {
source = "./Spaces"
providers = {
digitalocean = digitalocean
}
}
Is this a bug within Terraform 0.14 perhaps, or am I just misunderstanding?
Thanks.

Answer 1

It's failing when it's used in a submodule because you only have the required_providers configuration at the top level, you need to add it in each module.
This is explained in detail in this thread
The provider source needs to be declared in each module because an
interesting side effect of the provider source work is that we can now
use multiple providers with the same name in configuration. Each
module could use a provider named 'dns' with a different source.
Internally, terraform uses the source to create a FQN (fully-qualified
name) for each provider, so you could have for example three modules,
each using one of "mildwonkey/dns" "hashicorp/dns" and "yourname/dns".