Sign Colorado Banking RFP Fast

Industry sign banking colorado rfp fast

hi everyone welcome to the third workshop of our rp gym session so we have some developers joining our workshop today so i'm going to introduce myself again my name is ewing new and my associate on the city renewables accelerator team at rocky mountain institute so i've already met many of you virtually through the previous offsite ppa cohort webinars and i'm very happy that you all can join our rv gym session and keep moving forward in a renewable energy procurement process together so the goal of this workshop is to understand how to write a scope of work in an offset renewables ppa rfp and to provide opportunity for cities and counties to get some insights directly from renewable energy developers i'd like to thank eric and kat from fx clean energy and craig and jared from hecate energy for joining our developer panel discussion today later they will share their insights into how to write a scope of work for an offsite ppa project during this workshop we will cover the following topics first we will have a 10-minute presentation to introduce the top 8 things to include in the scope of work section and next we'll have a 30-minute developer panel discussion with fx clean energy and hecate energy to talk about some do's and don'ts afterwards you and your city or county colleagues will have 15 minutes to fill out the scope of work section in the rrp template in the end every city or county will report out their lessons learned so let's jump to the presentation first a scope of work essentially means what a selective developer must fulfill there are usually eight things you should consider when rewriting the scope of work section of an offset ppa rfp the first thing is size for example how many megawatts or megawatt hours per year are you requesting the second is which renewable energy technology you would prefer we will consider proposals that include storage locations are also important is there any specific area you want the project to be in you should also specify whether you want a physical or virtual pp as well in your scope of work it's also crucial to tell proposers the range of acceptable operation start date and contract length some other important questions include if you would prefer a fixed or escalating rate what mechanical availability you require and what permits and or approvals the project should secure so there are four things i want to highlight among those top eight items to include in a scope work the first one is about size it is very critical to specify the acceptable range of the total size of renewable energy and associated racks if you are seeking uh you're seeking other than megawatts and annual megawatt hours you can also mention the proportion of the total city or county load also remember to point out how many projects your local government will select here's an rfp example from the city of philadelphia so they were open to proposals that aggregate multiple projects to provide a more balanced and stable load curve you can also show your interest in signing a ppa with other potential buyers if you want to purchase from a larger project if your local government intends to acquire racks from output you should also mention related information the second thing i wanted to highlight was technology an offsite ppa allows cities and counties to be open to one or multiple renewable energy technologies including solar wind geothermal wave tidal and biomass energy for energy storage you should specify if it's a mandatory requirement for example the city of houston was open to any proposal that included energy storage systems but they also mentioned that failure to include energy storage component will not disqualify a proposal another thing i wanted to talk about was locations so of the ppas have more geographic flexibility than on-site generation but a project closer to your city or county can provide more local co-benefits this flexibility requires cities and counties to specify their project location preferences this is why some local governments show their strong preference on a certain iso or rto some local governments would like the project projects to be as close to their city or counties as possible and some others prefer facilities located on one or more sites owned by the local government ppa pricing structure is also a very important part of the scope work section there are two types of structures one is escalating rate the other is a flat rate by using an escalator developers can usually start the price lower however citizen counties must be aware so if the ppa escalator is greater than the rate at which utility prices increase over time the ppa price could conceivably be greater than the utility tariff in a few years just like this example from city of denton's rfp please specify if your local government has any preference on ppa pricing structure if you prefer an escalating rate remember to ask developers to propose and end your escalator and this ends my presentation i know some of you may have questions related related to the scope of work so we have invited speakers from two renewable energy development development companies airports and hackathee to answer all of your questions and share their experience before our developer panel discussion i'd like everyone to type your questions on this blank slide using the text tool in an annotation feature so if you go to the top of the screen you can see view options and use a text to to write down any questions you have for developers and later we'll cluster those questions and ask developers in the next 30 minutes cool thank you everyone so next we will have our developers joining our panel discussion to talk about their insights about into how to write the scope of work and share their experience in reviewing or writing rp so we'll give each developer speakers around three to four minutes to first introduce themselves and also share some of their key viewpoints about musical work and after the introduction part we'll have around 20 minutes to answer all the questions we collected through this whiteboard annotation so um jared do you want to start um my name is jared wren i'm a development associate with hecate energy i've been with the company since 2014 i am based in central ohio in columbus ohio uh my primary work in hecate in the last couple of years has been to work on our highland projects in southwestern ohio um that is one of the the the location that be utilized uh in the city of cincinnati but uh in terms of rfp processes um as a developer i've uh participated to and participated in and responded to rfps on multiple continents with a variety of counterparties uh municipalities um utilities corporate off takers um so i've uh had quite a bit of experience uh in this sort of general topic but um i'm happy to answer any questions or try to provide insight as it relates specific specifically to process um and i don't you know in terms of my you know a couple things i wanted to mention specifically and as governmental institutions i'll provide the following caveat i realize oftentimes in your procurement processes you're uh beholden to a specific set of processes that really have outside of your control largely in the way that you issue uh commercial contracts uh with potential counterparties in your city so with that caveat i would say as a developer and when we look at rfps uh you know the process is you know it can be cumbersome and can be streamlined and the rfps that are streamlined in my experience um just lead to better discussions among all the groups involved uh smoother uh negotiations with regard to commercial contracts and uh just generally uh serves everybody a much more efficiently and so i would say that as you you formulate rfp processes the the keep it simple is is as best advice as i can provide from a developer standpoint uh it makes everybody's life easier but um i realize that oftentimes you can only bake in so much of that into your your process given uh you know what you're required to do uh by your specific location but i would say um you know that in terms of websites uh ease of access uh file formats that are consistent or as simple as possible physical uh delivery of the rfp responses themselves um and and those type of issues can really help uh everybody involved um you know achieve what you know ultimately the goal the rfp is both in terms of the municipality but also and the folks that are responding so um i'll kick it to craig or whoever else on our brady bunch wall here wants to go um but i appreciate the opportunity to participate and and to meet with you guys uh in this forum thank you jared yeah i'm happy to take it if you'd like at this point in time this is craig overmeyer with hecate energy um i'm the vice president of operations and i've been with the company since 2013 uh one of one of the things with respect to putting out an rfp is it's an art it's not a science it's like writing any grant proposal it's how much do you put in in order to get the response that you want but how much do you not put in in order to lose your audience and therefore as you're starting out i have a feeling that there is a desire to try and put as much information in as possible and while that's okay it muddies the water our our objective is to try and understand what your objective is is it job creation okay if you're just using renewable energy in an attempt to create jobs tell us that tell us that up front and do a little homework find out if your public utilities commission is going to approve something that might be higher than the lowest rates available if we simply source from tier one suppliers wherever in the world we can access those items and give you the lowest cost project will your public utility commission actually approve something higher than that if along with that comes the prospect of jobs many people make the assumption that an economic development package is the best way to approach things because it shows so many good things that can be done as a result of the renewable energy project oftentimes those projects either get rejected or they end up going back for further negotiation at that sometimes yields a cost curve that isn't capable or isn't possible for the developer because you put the requirements of either local jobs or local equipment but you want the pricing of best possible in the world so start off with what the thing is that you really want if what you really want is to achieve 15 of your load or your megawatt hours through renewable energy um that should be just right up front in the rfp our goal is with this first rfp to source 15 of our megawatt hours through this process that will tell us all right if we're a developer and we think that 15 megawatt 15 of your load and let's use a 100 megawatt load um for instance not in hours but in size um if you're looking at 15 it may actually be cheaper to do it at 20 of your load because of the system requirements to build that project we might be able to use 20 uh the size of 20 megawatts a lot easier than 15 and give you a much better price so flexibility around what you're asking for and showing to the developer is also really helpful um one of the things that we have traditionally done at hecate is we'll answer an rfp but we'll also put a lot of responses in there to be discussed because when you look at that sheet of paper coming in it's got a lot of very just objective questions that don't allow us to put our fingerprint of the last 20 plus years of experience on the project for you so oftentimes our response is going to say yes we can probably achieve that but we would like to discuss this with you further we'll give an indicative price on that that will show how that would you know unfold over time but it's going to be subject to certain things that we would mutually have to agree upon and and the last point i'll make then is is that if we have the transparency of what you're trying to achieve and you have a little bit of flexibility around what those goals are that allows the developer to use some of their experience to hopefully give you the best possible project that's as close to what you have asked for i think you're going to end up with a lot more responses that get shortlisted and give you a much better playing field to choose from and if you are really really super specific about things and inflexible on those terms so i'll just leave that as my first comments thank you awesome thank you craig okay eric everyone can you hear me okay yep lots of thumbs up great um i'm eric hogg with apex clean energy we're a utility scale renewable energy development company based in charlottesville virginia i myself grew up in virginia so i'm excited to see a lot of virginia cities represented here i went to virginia tech as well so go go hokeys i've been uh in the energy industry for a little over 10 years i started in oil and gas actually in texas and left about five years ago to join apex and since then i've taken over leadership of our line of business that that signs off take agreements with mainly corporations but underneath of the umbrella of corporate customers we would also include new cities that are signing up for renewable energy goals as well as university clients so municipals universities corporates under that bucket you know i think it's a you all are in a unique position because cities have an immense amount of experience purchasing things going through your processes and knowing how to comply with those processes but at the same time renewable energy purchasing is a relatively new field and there's been a lot of lessons learned even since i joined apex in 2015 around what makes for a successful purchase what makes five years down the road the the purchaser of that energy happy with the product that they got and did they leave value on the table or did they they take too much risk on so a lot of what i think is important in designing your rfps is to know know what you want know what you don't want but also give enough flexibility to the developer i think i'm now echoing some prior comments around being precise where you can but being flexible to give us a chance to to show you what we've got one very quick example of that is that in 2016 apex won a an rfp with the us army in texas at fort hood which is the largest garrison of military in the world for the united states and the rfp specified that the army was interested in an on-site solar project on the base and that the purpose was to increase the resiliency in the case that there were grid outages or hacks or some other type of interruption well when we looked at pricing solar in 2016 it was considerably more expensive than it is today and so our response was completely non-compliant it included an on-site solar project that we would build but it also includes 50 megawatts of wind from another wind farm that we were building about 150 miles north of the base and by combining an on-site ppa that was physical with an off-site virtually settled or financial ppa we were able to subsidize the price and make it much more attractive than a lot of the other offers they received and in so doing the army asked us to actually be the provider of their physical electricity for all of the base so we now schedule power from the wind farm power from the solar and power from the grid when those technologies aren't operating and it created just a win-win for them in terms of getting something they didn't know they wanted but because they didn't throw our bid out when they saw it was partially non-compliant it gave us a chance to actually help everyone save a bit of money and obviously we were very happy to win the business so that's just one example of i think how telling us what you really want but then being open to maybe some other things is always valuable from a process perspective um and the other piece that i would mention that i think is is valuable for people in your positions is recognizing that it there are stories to be told or there are attributes for these purchases that go beyond i saved five million dollars over 15 years it could be i created jobs it could be i've secured through the developer funding for a 9-1-1 emergency service in a rural county it could be a number of things a lot of wind and solar farms have the like the unintended consequence in some cases of curtailing fossil fuel generators and when they do that we actually prevent or reduce the amount of water that's extracted from rivers and reservoirs as a result so there are all kinds of environmental and economic benefits that knowing what those are and identifying how your stakeholders at your cities will respond to those as being valuable is very helpful for us to know so i'd encourage you to do a little bit of exploration there to tell us how we can provide the best product to you maybe i'll stop there and turn it back so that we can get to some q a but but thank you again for the invitation to speak to you today thank you eric cool so earlier we got a lot of questions around permits approvals and all kinds of agreements that your developers should get for an offsite ppa project so the questions i have to ask um include what permits and approvals do developers usually need to apply for an opt-in for offsite renewable um energy projects and also do utilize project labor agreements what's your experience with non-disclosure agreements and all kinds of general conditions um so does anyone want to kick out the qa session non-disclosure agreements are are absolutely necessary um if we're providing some secret sauce if we're trying to add value to your specific circumstances there are certain things that generically we can translate from one project to another in our experience but the specifics about what you have asked for and how we're proposing to solve that problem for you it is really what we have to offer it's our intellectual property so even in an open process the last thing we want to see is until we're selected and our our proposal has to go in front of utility commission or its approval do we want to see kind of our approach shocked or put out in front of our competitors in the marketplace because we might be doing some things that allow us to lower the cost that others haven't necessarily thought of that comes from experience i guess i didn't do a very good job earlier of highlighting we've we've developed over three gigawatts of projects in things recently obviously we were selected for the city of cincinnati for their city project as well as for their aggregation project in a large off-site facility of 100 megawatts and we've done this for the city of houston also and i mentioned the two of those because both of them had a third party provider involved and so the experience that we learned in houston of how to deal with a three-party agreement between a provider of the electricity the city and ourselves as the developer was very useful for transferring that over as cincinnati has been trying to develop a way to balance those three things as well so ndas are crucial the second part of it being project labor agreements uh that's really dependent on again what the what this person offering the rfp is trying to achieve if if the end goal is the absolute lowest cost um whoever the epc is that we utilize to develop the project they will source the labor in whatever fashion that they need to whether that be through union or whether that is non-union labor they'll bring in the people that are qualified to do the project if in fact it is important to have it done through union labor we very definitely enter into plas the most complex of those was one we did for the los angeles department of water and power which was a five-way pla so that all five major unions were represented and had workers participating and getting a share of the work to be done and divided up and then smaller projects usually have one or two as far as permits i'll let that for someone else yeah i i could briefly uh with regard to permitting uh the short answer is it depends uh it depends on the project size um typically depending on your jurisdiction of specific project size will trigger a threshold that requires a different permitting regime in the state of ohio for example any project over 49.9 megawatts is under the jurisdiction of the ohio power siting board and then subject to their uh pretty rigorous uh environmental and comprehensive uh permitting regime that you know roughly takes nine to twelve months so um it's a it really depends the smaller the project size typically the the you know under that state permitting threshold it can impact your timeline that's why i mentioned it depends on the project so um for example if a municipality is is interested in a a large off-site facility as you craft your rfp um you know that has to be taken into consideration in terms of you know how long you can expect to have your your megawatts online whether it's a project that's you know in the process of permitting or or you know completed a permit and has a you know certificate um it can really depend so i i would say uh it ultimately will come down on what what is the preference of the the issue of the rfp and you know the timing that they would like to see a project come online thank you jared um so another question is around diversity and inclusion so uh we're interesting what kind of diversity inclusion efforts you have have been part of your projects um i could maybe start on this one um i guess i'll say first of all just to be frank the renewable energy space today is is overwhelmingly male and white it's nice to see that this audience has got maybe a little bit more diversity but typically at conferences or business meetings you end up seeing that there is a very uniform look to the room and that has to do with a number of factors so when you're asking in your rfps for these types of initiatives it's sometimes it can sometimes be frustrating to see the results but what i will say is we have seen recently some requests from companies asking for is there any contractor or subcontractor that could be a women-owned or minority-owned business and we always say of course we will attempt to do that but it's also helpful to know the priorities because if you tell us that local labor is more important than diversity then we'll take that into account both of those things can be important but it's it's helpful to prioritize if there is something that's of particular interest to you um we also have uh in the past done a lot with veterans like previous veterans who are labor on projects or are supporting projects apex has hired a lot of actually army veterans that now operate our assets either in the field or from here in charlottesville and it's our ceo is also a veteran so there's there's a lot of military experience that we typically say is something that's a little bit different than we have no answer for that um i like i said it is somewhat challenging but we we do answer the sort of um demographics question as well we'll sometimes say what you know tell us about your workforce today tell us about what you've done in the last 24 months and when you look at hiring three four years ago it's very different from today there's a much more concerted effort to bring in talent from universities that's much more diverse and fortunately these programs and universities are evolving so that there are more opportunities for people who previously didn't have them so we're seeing that field expand a lot it typically has not been the top priority for a lot of purchasers but it is something to consider and try to prioritize to the extent that you can also can i add just one more comment on the end of eric's there because i think we found that exact same thing um some of the rfps have asked for more than just a good faith effort la actually has you run job fairs they have you put it out there and publicize it you have to show a certain amount of effort over time as to what you have done in order to solicit wmpe um participation in the program city of houston made you actually track all of it who have you solicited who have you talked to what were their answers the thing that becomes interesting though is is if they are not a large-scale business the city may have requirements on things such as um minimum insurance amounts um bonding might have things for financial strength and some of the times that knocks out the very people you're trying to reach out to with the smaller business enterprises because they're not able to meet some of the financial thresholds that are being required by the city for the contracting side to get comfortable and inadvertently eliminating some of the people that you'd like to have participate that was all thank you chris you triggered me to just say one tiny quick thing which is um we also prioritize when we are on the site and constructing that site to use local food and like hotel supplies to the extent we can from businesses that are in these kind of special categories because that is something that's really easy when you say you've got 300 folks on site building a wind farm what are they going to eat there's got to be a way to spread some of the economic development that's going to come out of that for at least for the 12 months or the 8 months we're on site to be more broad about and considered about how we do that thank you eric so um since we only have five minutes left and we still have a lot of questions we collected before um so i like to ask of cities and counties in his meeting room so what questions do you want to ask developers right now and the biggest questions you have hi yes my question was about what happens at the end of the 15 to 25 years of the ppa agreement if your panels then become owned by the city or county or if there are other ways that should be written into the rfp generally the answer to that is is no um there's there's one of maybe two typical outcomes one is that um there's going to be some type of investor group that that paid to actually construct the project and so they'll own the project for for the full life and once your contract expires they will go out and say well should we continue to operate this project and sell into the local power market or should we enter another contract with a with another off-taker counterparty and that largely depends on the economics at the time but that's that's pretty typical if it's a utility that owns the project it's kind of the same thing they're going to probably turn and say where how can we make the best use of this resource until the project is decommissioned however i'll say there are also some contracts i've seen that have purchase options and so you may be an off taker and have a fixed price ppa and up until some certain uh end of year in the contract it could be one year it could be 10 years it could be the end of the contract itself you have the option to purchase the project at a known residual price so that you can decide if you'd like to be a project owner the challenge there is that of course you're probably not going to have the capabilities to operate these projects so you would you need to ensure you could hire an asset management group an operations team or retain the team from the project owner originally awesome so any other important questions any citizen county thinker we need to address before we enter the individual work time um yeah i had my question is in the bottom right or is one of my questions i think um okay i won't speak for the other localities on the call but i think we have some pretty ambitious renewable energy and emissions reduction goals and where we know we're not going to get it all done in one project in fact we're looking for a relatively small proof of concept project to get the key decision makers in our locality comfortable with that as an instrument what would you recommend as a good proof-of-concept project for a local government i would say rather than building a stand-alone project and a small one which can be much more expensive on a megawatt basis it would be to look for someone who is building a larger project and to be able to contract for a portion of it it gets you through the whole contracting phase oftentimes it is further along in the permitting it's further along in the process so it's a quicker sale for you too to see the steps to get you to where you want to be at it gives you an opportunity to see what the pricing the benefits the environmental attributes are and the financial side of it so i think a small part of a larger project is one of the best places that you can enter the market great thank you thank you craig any other questions we still have time yeah if we still have time um i'm curious to hear about from the developer standpoint with um for localities especially in terms of being able to hedge our price risk do you have a preference for a straight per kilowatt hour sort of rate or if like a collar um like how from a developer perspective does that change i guess like the ease for you in terms of responding to rfps i can maybe give the example from a developer that we we don't typically retain 100 ownership of our projects once they're operating we we do operate most of them and sometimes we'll keep a small equity stake but we're not really capitalized to you know spend three billion dollars a year and then actually own all of those we have to sell down our interests to help recoup some of that expenses so as a result of that it means that when we're offering ppa pricing or all kinds of different commercial structuring we're not necessarily the benefactors of those deals so we have to be sure that we are putting forward commercial terms that are acceptable to a large potential pool of investors and we also have to make sure that there's a there is a particular investor on these projects we haven't talked about yet but tax equity the providers of the capital that have a sufficient u.s tax bill that they can monetize or take advantage of tax credits and so those are usually really big institutional investment banks like jp morgan and bank of america and and other entities of the like and so we're having to negotiate contract terms that are going to be acceptable to them when you think about gosh a that could be really complicated and all those banks might have diverging views about how they view the value of that collar if i put a floor price and a ceiling price and those things are too narrow or too wide or too high or too low it could just be very confusing and so from a pricing perspective it is more challenging for us to provide that product than a standard flat price or an escalating price product but i will say there's a lot of innovation in the space and more recently we've been pricing a lot of contracts that have a protection for us a floor so you agree to pay a minimum price and anytime the the price is above that we keep some of the value and we give you a discount so you end up um you end up giving away some of the economic benefit um in the form of that extra payment but but in exchange for that we take a lot more risk and we found success recently with structures like that it's just that a full collar if folks know what i'm talking about that is is pretty risky for a project to offer typically at the stages when we're making offers thank you eric so because because i only have a limited time we have to move on to the next session which is individual city or county work time but at the same time all the developers will stay in the main room with us so if you have any questions when you fill out your rv template just feel free to request for help and we can send one of our faculty or one of the developers to your breakout room to answer any questions you have