How Can I Sign Colorado Banking RFP

How do i industry sign banking colorado rfp

and we're gonna run through the agenda quickly I'm gonna start with a brief presentation about key RFP proposal requirements we're then gonna go into your city work time then industry experts Q&A so we'll come back and we'll split into two rooms with the developers you have a little bit of a smaller chat and able to ask them about their thoughts on some of the questions that you come up with during your work session proposal requirement do's and don'ts so just another reminder we have the same three developers joining us is yesterday Eric from apex and Craig and Jared from Hackett Eve so they'll be around if you want them to jump into your work sessions if you have specific questions as well as will be on for a Q&A after great so I wanted to start off by walking through the standard components that are usually included in a proposal cover letter executive summary plan description a pricing proposal financial and business experience summary project team and experience overview a section on co-benefits opportunity for developers to submit an alternate proposal and regulations around that and then as well as some attachments or appendices these are a lot of sections to cover but some of them are more boilerplate than others so we're gonna talk through the four that I've just outlined in yellow specifically so we're gonna start with the plan description and timeline this is outlining kind of the exact project details that you are interested in seeing and I think I want to highlight that it's not just laying out what you want it also reminds the developer of your preferences or specifically lays that out what scenarios you're interested in reviewing so I'm gonna walk through some of the major things to include and then what kind of details that your say your county shouldn't in the description when asking for these sections so the first one the plan description what the what you guys should put in there are any details that you're interested in on this kind of high-level plan description besides size or technology we've seen from the RP responses is usually this will be a pretty high-level overview that states potential production size or capacity and then if it's wind or solar or if they're offering multiple options I'm second is location again we've talked about this in kind of the scope of work and in the project overview section but reiterating your restrictions or preferences around what ISO state or region you'd like the project Indian what you get back is usually an address location or a town's pending on where the project is development status so this will vary depending on your city or counties timeline at what kind of project you're looking for for example the city of charlotte for their off-site RFP that they released last year was aiming to be part of a Duke Energy green tariff program and so they had very specific requirements on when the project had to be in place by in order to qualify for that program they also to apply for the program you had to be at a certain stage in the interconnection process so not everyone will have that strict of requirements however if you do have near-term renewable energy goals you may want to kind of specify where in the development process you would like this project to be and because if there's projects that are kind of in the pipeline really early stages that could take you know many a few years to get through if there's projects that are you know already have interconnection agreements they are gonna be done sooner which is potentially great but if you are worried that your city council may take a long time it also allows the developers to understand what kind of timeline you're looking for and that will what they'll usually respond with is where they are and then our connection cue and the agreement permitting that may take a long time or things that they've argued achieved development risks so similar to the development status this is really highlighting the outstanding documents or assessments that you want to know but they still have to go through so really outlining what you're interested in seeing whether it's environmental site assessment well an LOI or at least on the land or ownership of the land and your insurance requirements and then again kind of interconnection if they're still kind of introduction or permitting that needs to be done just understand what the risks are to those development items plant schedule so what you as a city or county should think about is earliest and latest acceptable construction start dates or commercial operation dates when the projects are actually gonna be in generating again this is important if you are in some sort of program or working with your utility to sleeve a PPA depending on their interest and as well as any sort of renewable energy goals that you have if you have a you know 2022 municipal water Gigot that you're hoping this project will help achieve than that that needs to be put in the RFP just because developers will need to look at their their pipeline and their projects and see what could be placed in service by that time renewable attributes and the rec preferences if the city we talked about this earlier if the city will retire the racks should the developer retire in the city's behalf or if does he's open to a rec swap and they'll write that out and then expected output megawatt hour range minimum or maximum requested and then I'll walk through the attachments later but an eighty seven sixty is usually included um the pricing proposal is obviously one of the most important aspects of an RFP and so I want to walk through a few things that can help the developer streamline their pricing um that they give you and then you reviewing so some of the factors that go into pricing right the term was often between ten and twenty five years and some cities will ask for multiple scenarios for example 10-year term 15-year term and 20-year term I'm an escalator on the pricing or you interested we talked a little bit about this yesterday but are you interested in a flat rate so it doesn't escalate at all or are you interested in you know one percent or a two percent escalator um rack option who's a really only applicable if you're open to swapping or selling the racks to the developer because that will impact your PPA price if you're gonna retain them or retire them directly that should be noted but it won't impact the different pricing scenarios and then settlement preference understanding your appetite for a basis risk whether you want to settle at a hub or a node which for a virtual PPA many cities and corporations will like to settle at a hubs it's a little bit less risky and understanding kind of what you are appetite for these risks are will help the developer plan the risk into their pricing because it will impact the PPA rate that they are able to offer depending on the risk that they have to take on so this is a screenshot from the bid sheet that I'll walk through in a minute but this is kind of what you can ask for kind of a few different scenarios and different escalators that will lay out different PPA rates and just one tip here we I know we've talked about pricing a few times I wanted to link the scenario the section the end of the day yesterday on scope of work to point 1.5 in your template under project details the pricing that you asked for in this section should match that co-benefits so one of the things we have to system and a lot of time in the kind of an overview and purpose sections is why else you're doing these projects besides the renewable energy medicine specifically so this is an excerpt from the city of Charlotte's RFP which in its proposal requirements essentially had a section that said we want you to talk about the co-benefits and we want you to describe the local or economic or community benefits resulting from the project implementation and then listed a few examples of things they were looking for so again if you if this is an important part of your proposal and one anything that you you know your council or mayor or someone who's approving it will be interested in seeing and this is important to include I mean again we've talked about the co-benefits a few times so I just wanted to highlight that these three sections 2.2 4.2 which is when we're talking about right now and the evaluation criteria section which we started on yesterday that's all where these clothes out intimates should be mentioned and they should generally be aligned throughout so the attachments are not something that we're gonna walk through in depth in this 2-day workshop but I wanted to highlight a few options and all of the RFP examples which we will have links for you will likely have some sort of attachments or appendices and they you can usually find them and they're pretty generic sometimes we usually request a financial model so the city or county can help understand what the pricing will look like long time sometimes there's a template for that usually people either provide a draft APA or a draft term she that highlights kind of most important terms to them and that allows the developer to look see what you're looking for and then provide you a redline to copy back so they can actually go in and edit it or say you know this is something we need to discuss or you know these are all fine so that's sometimes helpful up front a city energy profile for cookies that are kind of looking or more open to different types of projects this is important I think the city of Philadelphia included one that was a pretty detailed kind of historical hourly look at their energy I mean if you're in a retail state that you might want to get physical delivery or the energy this is more important than if you're looking for a virtual a great man city legal or general services forms I think talking to people in your procurement team they'll probably know more about this than I do but most of the PPAs we've seen have a kind of a few pages of just general legal forms some cities have like two or three four and the developers have to sign on so just noting that you should look talk to your procurement team about that and last an excel-based RFP bid sheet we've seen people kind of been continuing to include these as a way just to make sure that there's a standard format for developers to respond for some of the more data-driven elements and I'm actually to share my share that on my screen we've created a pretty high-level template based on one that Charlotte had used that we helped them create last year can you guys see my Excel yep okay let me I'm gonna zoom in just a little bit as I didn't okay zoom size maybe a little bit longer so what we're looking at right now it's only three tabs it's pretty high level this first one is pretty generic information just contact informations you can look at this sheet separately this project info tab works number two is the project related so again it should have your the project name if it has one the capacity these things in red are the things that you as a city or county need to update so if there's a preference for solar or wind write that here just so that they remember and if there's a preference for buying at the hub or the node or settling at the hub or the node again write that here and then what you usually get back is a latitude and longitude or a hub name a rec options like I mentioned this is only um important if you're interested in scenarios in which the developer can keep or swap the racks for you if not you can just out like that but delete that section and I want to all start with this blue box over here this is just some instructions it goes through a lot of the information that I just walks through but you can read through it and then delete it before actually issuing and lastly this screenshot you saw before you can lay out different baseline terms but you're interested in if you are interested in having an escalator so this one has no and then to escalator options and so you can kind of build out those scenarios that you're interested in there and then lastly a space for the developer to put in the hourly projected Generation profile of the project this is really important for virtual PBA's and any projects that will settle hourly so if you're working with utility and I'll give you an avoidant cost payment the last thing I wanted to highlight here we're move on to the next section is that while this looks really easy to kind of build out you know 50 different scenarios I'm sure the developers would echo the sentiment that only include scenarios they are actually interested in pricing you know there is someone on the developer side who is actually gonna go through and update their financial model and rerun it for every single scenario that's requested and so if there are some that are not that you know you're throwing in there because why not I would just take a look at what is most important to you and really request the most important scenario so that they can put their most of their effort into the ones that they know mean the most to you so I'm gonna end there you an a with the different developers so first I just wanted to give you guys two or three minutes to use the annotation text tool to type some of the questions that you have below so but feel free to ask any questions you have after you put a question on this light but we can't start from the question that has most dams next to it and we asked Eric from epics clean energy to answer those questions so I see the question next to the gigantic arrow does a project need to be fully subscribed for it to be proceeded sure yes for this one this has been an evolving piece in the market traditionally a project had to have a hundred percent off take secure and the off take needed to be for a longer term so 20 years with standard increasingly there are investors in the market that have they would like a higher rate of return on their investment and so they're willing to operate the project with a portion of it being merchants from the beginning of its operations and so we've we recently did a very large project in Texas called aviator wind it's the largest wind farm in the United States built as a single phase it's 525 megawatts any case a hundred and five of that so about twenty percent or so was operated merchant so the project owner will sell power directly into the market take those revenues they'll sell the recs directly in the market and take those revenues and can go at risk for the value of those rather than contracting so generally the percentage of split is is you need to have about eighty to eighty-five percent covered to secure financing awesome thank you Eric another question that sauce on the top left what terms to see is putting projects that developers find most problem the romantic so we already asked many questions about what to do to write a good RFP but we also want to hear more about some jokes and writing our piece so what's your opinion about this question this is one that sometimes can be just fine but sometimes can cause issues would be requirement of a binding binding offers or offers that require a bid bond or a posting of security and if you fail to deliver the if you're selected in the RFP and you fail to deliver then the city or the entity can sweep the the money that that's a pretty high bar for entry and it really limits how competitive we can offer pricing in a lot of cases because if if we really have to be a hundred percent sure that everything is going to work and there will not be any chance of a risk to us then the pricing will likely be higher or our ability to offer many projects or offer projects and multiple processes might be reduced so that's one that comes to mind I think another one is you know maybe like we were talking on the in the other room while you all were in your small group around leasing terms there's sometimes cases where a project is taking on a lease with the off-taker itself like if it's your city land and if you're leasing terms are 20 years but the project is a 30-year asset and that's a requirement then it means that it's really challenging for us to secure financing without a really you know high PPA price so I think there's there's a number of things like that where it's you have good intentions but it j st has unintended consequences that make sense and order you mentioned on binding bits versus non bunting bit and there's a relative question on ours like the text in pink so what do you think of the pros and cons of binding based versus non binding bit in a price proposal part yeah again I think sometimes I can be fine we we offer binding bids from time to time but what's pretty common is that you'll issue your RFP and let's say the time line is it's out there for one to two months for developers to respond and you evaluate those responses for several weeks and then you come back and maybe request additional diligence or shortlist a number of projects and then finally you select one well over the course of those weeks or potentially months a lot can change we can get traditional good news on projects or bad news and so if you're asking us for a binding bid upfront that doesn't have the ability to adjust upon selection or negotiation of the contract it means that we have to take on more risk and so likely the pricing will be less competitive on the other hand the good thing about a binding bid is that you can lock in to whatever the offers are at that moment in time if you expect as the off taker that prices are going up in the market or that there's not a large supply of available projects you may want to secure those bids now and have a penalty for people who can't support this bids over the course of your negotiation so I think with certain limitations and articulating why you're looking for a binding bid is is really helpful pricing is if longer PPA term usually means lower price it doesn't necessarily mean that I guess it might be helpful to talk for just a quick second about the different types of project owners that are in this market and so there there are more traditional deregulated arms of utilities that purchase assets from renewable developers there's also more financial investors and then and those are looking for a higher rate of return than a utility investor and then finally there's an infrastructure investor and that would be things like a pension funds like Canadian pension funds European pension funds do a lot of project purchases or funds you know some level of developers themselves and and so they all have a different profile of what it is they're looking for pension fund has to pay a low a low return to its pension holders and so look for a longer term PPA and they're going to probably have a lower price in mind for that type of a product if it's something more like a financial investor like a like a part of a bank that's doing a deal Goldman Sachs is very active in the market they probably want something that is a shorter term kpa and they probably want it to be a slightly higher price so there's a dynamic here about who's gonna own your project and what are the investment requirements that that that type of investor has and how much do they value term or ie length of the contract versus exposure to the merchant revenues once the contract is expired awesome thank you Eric another question that has a heart next to it how many turn options and options are too many to ask for you know if and I was writing the RFP that I had to respond to I would probably say ask for the option that you want that you're most likely to transact on and then ask for the best price and so to me that that's that's the ideal way to gather you know what what am I looking for versus what is the market offering in the most efficient way it is common to see 12 15 and 20 for the term options increasingly we don't we don't see a lot of 20-year deals anymore so 12 to 15 is the sweet spot that we transact pretty typically under but if you have something else in mind if you want an eight-year term you can always throw that out there but I think it's also worth worth allowing the developer to field an offer that they feel is going to provide the best risk to their project getting financing and also offer the best competitive pricing to the off taker thank you and also another question do you want to explain your question about the RFP sizing the project size sure so we want to cover a hundred percent our electricity but we're planning to also reduce operations with energy efficiency projects so trying to think about the size limits since it's so unpredictable how do we address that and the RFP and are there penalties if we reduce our loads so much that we don't need the full amount that's interesting yeah usually I hear that the opposite way where a customer is expecting to build more and more load and so they want to be able to grow over time or ramp into an agreement there's no reason why necessarily that you couldn't ask for a decreasing amount annually or monthly or however however you're thinking about it so I guess I you know I would think of it as if you can predict where it's going to be over the long term then I would try to do a ramp down so you know 20 megawatts going down to 10 over 15 years if that is problematic to predict then you might also have like a range of output that you'll accept and one way that I've seen that done is you're going to get everything that the project generates for this particular amount of the capacity but if in an individual year we exceed a certain amount of production then that retains the project retains that amount so you almost set like a cap you'll never have to take too much so that's another way to sort of limit over purchasing and years where it's particularly windy or sunny and the last thing you can always do is that in the framework of a PPA there will be a section called assignment or you can assign your agreement to some other party down the line at any time and that doesn't need to be the entirety of the agreement it may be a portion of the agreement and so another option you have is to say well you know I'm gonna buy 20 megawatts now but in five years I realized I only need 15 so I'm gonna make sure that that assignment Clause allows me to transfer five megawatts out to someone else and so you would basically be reselling the offtake to some other customer at that point similar to us selling you know interesting thank you sure thank you so that's all we have on this slide right now I'm interesting if anyone else have other questions for Eric Eric I have a question for you without naming a developer that you may be familiar with in Blacksburg or in Virginia we were having conversations early on about potential PPA arrangements or PPA adjacent arrangements it was very opaque to us how the the risks that all parties were taking on and understanding those transparently as well as how everyone was either being made whole or you know what the benefits were in your experience maybe you can just speak on behalf of your firm how open are developers to really being having a transparent conversation about all everyone's risks and everyone's benefits yeah I think principally the the notion of transparency is at least what we strive for the I think it doesn't make any sense for us to enter a long term agreement with someone if they're going to be unhappy three or four years into that agreement it's not like you're selecting a vendor to purchase a widget from I mean we sell a commodity technically but these are infrastructure projects that are going to be you know you have a reputation and if your project does not run properly that affects negatively vice-versa if we mistreat our off taker or sneak us a commercial term in there that's really a gotcha that that's a long that's a long time to begin a bad relationship so I think it's worthwhile to explore and be upfront and open about our concerns and your concerns and kind of air them make sure everybody goes into a contract eyes wide open and that's easier said than done sometimes because ultimately we're trying to manage a number of different project elements and risks and timing and ultimately we have to deliver what we sign up for so it's always to our advantage to have a longer period of time have a higher price to make a better profit and it's to your advantage to try to drive us to be efficient and you know lower price more competitive and I think that's the tension you want to be there to be healthy in the transaction but if there's elements that aren't getting discussed and and/or risks you don't understand it's sort of incumbent upon the seller to make you understand what they are and it's incumbent upon you to have enough resources that you can you can understand what to do with those risks and have a process through them it's not necessarily my job to tell you don't take a risk it's my job to tell you there is a risk and how do you want to proceed thank you thank you Eric so any other questions related to a proposal requirement or general RP format requirements yeah another question I have for Eric is that what's your advice on the format requirements in RP I know you leave cities and counties have different requirement how to use like how to respond to an RP using a standard format but what do you think of different formats and what's what do you think are the best like more ideal format or easier to respond format yeah one one thought on that is that when we work on utility proposals they tend to be they tend to be much more stringent in their requirements so there'll be requirements that we send them like a DVD or CD plus a written binder three copies of a binder plus a thumb drive or USB stick and I'm just like what are we doing guys like we have all this technology and we're trying to do something that is environmental in nature looks like can we just do it online and and almost all of the the cities and universities and corporate customers tend to be less formal in their processes now they still have compliance requirements to to meet their goals or to satisfy their purchasing requirements but it doesn't have to be sort of in an outdated type of way so I think digital is good Excel is good if it's a if it's a custom like procurement platform that is difficult to use or to have us use like to put multiple bids in it's just it's a hurdle that you don't want to be faced with if possible so I like to present a PowerPoint or a PDF that's created from a PowerPoint as a way to describe the project visually and with the high points as well as an excel sheet that contains all the pricing information and technical details that make it easy for the off taker to kind of get a full analysis without you know getting bogged down and too much narrative so there's there's a number of ways people do it there's no right way there's no wrong way but don't just don't make us mail stuff in and don't shut the deadline off at exactly 5:00 p.m. on a Friday or else you're you're excluded because because both of those things when they're combined can sometimes make for stress this is interesting because earlier in our previous workshop we mentioned the possible impact of Cobie 19 on the entire procurement process through ppas so I'm wondering so what do you think some virtual components that our people process it can have considering this difficult time yeah we'll certainly regardless of whether there's a limitation on in person meetings or not I think that the the notion of of some kind of an in-person or virtual the type of interaction between the two parties it's it's always very valuable what's typical that I see is you get down to a short list of three to five projects and then you're invited to an in-person meeting which would be one to two hours to review your proposal present the project allow lots of QA and for the parties to get to know each other and hear about each other's you know goals and firm so I think that that is incredibly useful since we've been in this weird lockdown scenario I've been taking a lot of zoom calls that include video even though historically they would have just been phone we're just trying to be more visual to connect with people so I think absolutely you know one last piece on this is we're we are having to consider declaring force majeure on our ability to deliver some contracts right now because of this crisis and one of the things that's one of the most common things that's causing us to consider that is that localities have shut down their their in-person meetings right and so a lot of our permits require that we have a town hall and get public input well if your government isn't allow that 110 people in the room and how are you going to have a town hall and get that permit it could be blowback on the city if if they rush or something through like this and don't you know adequately allow people time to give input so we're worried that that this whole scenario needs leadership at the municipal and county levels to figure out ways to meet and still get business done so that we don't you know we're not delayed as an industry we may be delayed on individual projects but we don't want to build half the renewables next year because of this crisis so that's kind of our our take on it is meet how you can and carry on yeah thank you Eric okay we do have one minute left any final question for Eric the matter is about the procurement process or any other question related to the entire off-site PPA procurement process or any other like format questions that's a quick question if you don't have a project in the interconnect bidding queue about how long would that take or does that matter about the size that you're requiring yeah and it depends on which market you're in should I assume you're in Cook County is that Illinois yes PJM okay PJ I'm so PJM takes a longer time to develop I'll say all of the queue generally is very very clogged right now so for PJM it usually takes us like like 7 years to develop a project or at scale if you're 20 megawatts is smaller it can be faster I see I'm getting a three-second warning here awesome thanks guys