Collaborative Procurement for Sustainability Projects

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Collaborative Procurement for Sustainability Projects. CGSA Conference April 2, 2014. Agenda . Intro Why collaboration? What weve done Lessons learned Q&A . Sustainability at Alameda County . Why Collaboration? . Competitive pricing - PowerPoint PPT Presentation

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<p>PowerPoint Presentation</p> <p>Collaborative Procurement for Sustainability ProjectsCGSA Conference April 2, 2014</p> <p>CGSA Conference </p> <p>Alameda County1Agenda Intro Why collaboration? What weve done Lessons learned Q&amp;A </p> <p>CGSA Conference #Alameda County2Sustainability at Alameda County </p> <p>CGSA Conference #Alameda CountyAbout 20% of overall fleet is hybrid, EV, or 30+ MPG. 3Why Collaboration? Competitive pricingImproved regional cooperation/efficiency to advance common goalsParticipating agencies benefit by finding support despite lack of expertise, bandwidth, and funding for these projectsMore streamlined processes for bidders </p> <p>#CGSA Conference Alameda CountyAlameda County4Collaborative Procurement Projects</p> <p>Local Government EV Fleet Demonstration Project</p> <p>CGSA Conference #Alameda County5InSearch of aCreative SolutionIn a time of shrinking budgets and scarce staff resources,how do we increase the use of renewable energy at public facilities to save on energy costs and reduce greenhouse gas emissions from government operations?</p> <p>#CGSA Conference Alameda CountyAlameda CountyThe benefits of the use of renewable energy at publicly-owned facilities are clear - the result is not only a reduction in energy costs, but also a reduction in greenhouse gas emissions from government operations. However in a time when most agencies can no longer afford to pay for projects with General Fund dollars, and staff resources are becoming more and more scarce, its necessary to find creative solutions in order to adopt renewable energy.</p> <p>6Agencies across four counties collaborating on the procurement of distributed renewable energy systems for public facilities</p> <p>#CGSA Conference Alameda CountyAlameda CountyOne such solution is collaborative procurement of renewable energy by public agencies. The Regional Renewable Energy Procurement Project is an Alameda County led collaborative procurement of renewable energy for public agencies that includes cities, counties and special districts throughout four Bay Area counties. 7Utilize Proven ModelSilicon Valley Renewable Energy Procurement (SV-REP)</p> <p>Completed in 2010Led by Santa Clara County and Joint Venture Silicon Valley Network9 Agencies70 Sites</p> <p>CGSA Conference #Alameda CountyThis model was successfully executed in Silicon Valley (Silicon Valley Renewable Energy Procurement) several years ago. The project was led by Santa Clara County and Joint Venture Silicon Valley Network. There were 9 agencies and 70 sites included in that collaborative procurement. Using this proven model, the County of Alameda has executed the largest public agency procurement of renewable energy to date in the United States.</p> <p>8R-REP Project TeamLead Agency Conveners19 Public AgenciesCities (11)Special Districts (4)Counties (3)Educational Institutions (1)Participating AgenciesConsultants</p> <p>CGSA Conference #Alameda CountyLead Agency conducted outreach and lead the solicitation.Conveners Assisted with outreach and educational materials.Participating Agencies Included sites in the solicitation; contributed to writing key terms included in the template contract documents from the RFP.Consultants Technical and financial advisors (more on their role later in the presentation).</p> <p>9R-REP Sites19 Agencies186 Sites31 MW</p> <p>#CGSA Conference Alameda CountyAlameda CountyEach red dot on the map above represents the approx. 186 sites that were included in the solicitation.10R-REP TimelineOutreach phase beginsSeptember 2011Feasibility studies completedFebruary 2013Consultants engagedMarch 2013RFP releasedSeptember 2013Vendors selectedMarch 2014 Contracts taken to Councils/BoardsSpring Summer 2014Site installations/site commissioning activitiesSummer Fall 2014 Project completionWinter 2014 Spring 2015 </p> <p>CGSA Conference #Alameda CountyOutreach for this project began in the fall of 2011. The County led the Participating Agencies through feasibility assessments (IRFQ); numerous workshops and conference calls to educated agencies and maintain stakeholder engagement; legal review of contract documents, and review of RFP prior to posting. At this time, the project is about to enter the negotiations phase. 11Alameda County as Regional LeaderAchieving policy objectives</p> <p>Increasing the use of renewable energyReducing greenhouse gas emissions from County operationsRegional leadership</p> <p>Leader in renewable energy adoption 14 solar projects in operations at its facilities</p> <p>CGSA Conference #Alameda CountyThe Countys decision to lead this program stems not only from its desire to move forward its policy objectives of increasing the use of renewable energy and reducing greenhouse gas emissions from County operations, but also to show regional leadership. The County has been a leader in renewable energy adoption for quite some time already has 14 solar projects in operations at its facilities, 4 MW total capacity. The Countys Climate Action Plan for Government Services and Operations Resolution (Adopted in 2010) put forth a blueprint for achieving at least 15% greenhouse gas emissions reductions by 2020 and 80% by 2050. </p> <p>12The challenges of renewable energy adoption are weighing public agencies down$$$ComplexityTimeRenewable EnergyPublic Agency</p> <p>#CGSA Conference Alameda CountyAlameda CountyAfter hearing a bit of background on the R-REP, lets now discuss exactly how collaborative procurement allows public agencies to overcome many of the challenges of renewable energy adoption. Renewable energy procurement is complex and for many agencies uncharted territory. Determining where to pursue renewable energy; how to evaluate the feasibility and economics of a project; and writing an RFP can be very challenging and very time-consuming. </p> <p>There are many challenges to public agency adoption of renewable energy:</p> <p>High upfront costs associated with purchase and installation;Significant transaction costs and admin time; andA lack of understanding of renewable energy economics; financing options; available incentives; and complex technical considerations.</p> <p>These challenges are weighing agencies down and preventing more wide-spread adoption of renewable energy.</p> <p>13Collaboration allows public agencies to tip the scalesPublic AgencyComplexityTime$$$Renewable EnergyPublic AgencyPublic AgencyPublic Agency</p> <p>#CGSA Conference Alameda CountyAlameda CountyWhen public agencies band together and collaborate, however, the essentially tip the scales back in their favor. 14Leverage Investment of the Lead AgencyLeverage prior experience of lead agency in renewable energy procurement</p> <p>Lead agency invests significant staff resources, participating agencies save resources:SV-REP Agencies saved 75-90% in admin costs and time ComplexityTime</p> <p>CGSA Conference #Alameda CountyLeveraging the invest of time and money put forward by the Lead Agency allows the Participating Agencies to break through the challenges of complexity and staff resources. The Countys prior experience in renewable energy procurement provides an advantage to those participating agencies with little or no prior experience in that they are able to help them navigate many of the challenges posed by renewable energy adoption. The lead agency also invests significant staff resources and thus saves participating agencies from investing their own precious resources.</p> <p>15Leverage Investment of Lead AgencyOutreachNegotiated MOUIRFQ for sites assessmentsRFP for consultantsManaged consulting teamRFI - Vendor outreach </p> <p>CGSA Conference #Alameda CountyTo help illustrate the significant time invested by the Lead Agency, here are some of the key project milestones accomplished by the Lead Agency over the last 2.5 years.Conducted significant outreach to generate interest among agencies to participate in the projectNegotiated an MOU by and between the Participating AgenciesPosted an IRFQ to qualify engineering/consulting firms to perform feasibility analyses for the agencies participating in the project. The IRFQ contained a specified scope of work and we established a not to exceed amount for the scope so that agencies were guaranteed a certain price for their feasibility analyses.We then posted an RFP for consulting services and once the consulting team was on-board weve managed the teamWe also posted an RFI to query the vendor community on certain elements of the RFP and also to generate interest in the project with the goal of attracting increased competition. </p> <p>16Leverage Investment of Lead AgencyWrote RFQ/PGathered detailed information on sitesStandardized template documentsLed evaluation of bids </p> <p>CGSA Conference #Alameda CountyIn its role, the County also took the lead on writing the RFP. This required extensive data gathering on a majority of the sites included in the solicitation. This included: utility data, as-builts, geotech info and all of the general conditions and unique contracting requirement document for each of the agencies that participated in the project.</p> <p>The County convened a selection committee comprised of staff people from R-REP to and facilitated their evaluation process.The County included both a standard PPA template (which was reviewed by all Participating Agencies). </p> <p>Finally, the County led workshops, conference calls and provided education materials. </p> <p>17Leverage Investment of the Lead AgencyConsulting team funded through Countys Designated Energy Fund incentives from past energy projects and rebates from current projects</p> <p>$$$</p> <p>CGSA Conference #Alameda CountyAnother way that Participating Agencies leveraged the investment of the Lead Agency is that consultant fees were funded through the Countys Designated Energy Fund, which was established by the County in 1993, originally to roll the incentives that it receive through PG&amp;Es Power Savings Partners program into a fund that could be used for future energy and efficiency projects. The Power Savings Partners program was designed to incent public and private organization to reduce load. Over 10 years, the County received $3 Million in incentives from PG&amp;E through this project. The fund is now replenished by other incentives and also from rebates. 18Consultants Play Key RoleBundling strategyEconomic/technical analysis of sitesAssistance in writing RFP Advised on the evaluation of bids</p> <p>Leverage Investment of the Lead AgencyComplexityTime$$$</p> <p>CGSA Conference #Alameda County19The consultants were critical to the success of the project. The collaborative model uses a bundling strategy to group sites together, which was executed by the consultants. The consultants also performed additional economic/technical analysis of sites to help participating agencies determine which sites were best suited for inclusion in the solicitation. The consultants assisted in writing the RFP, providing guidance on the technical specifications to include in the bid documents, how to structure the bid forms and other aspects of the solicitation. Finally, the evaluation of bids (pricing, financial strength of vendors, review of technical specifications) would not have been possible without the consultants.Collaboration Leads to Lower PricingEconomies of scale leads to lower pricingStandardized procurement documents lowers transaction costsLower pricing translates to higher energy cost savings over the life of the project</p> <p>$$$</p> <p>CGSA Conference #Alameda CountyThe work of the consultants and the Lead Agency in vetting sites, bundling sites and assisting with the solicitation and contract documents has several key results that lead to cost savings:</p> <p>The economies of scale in the procurement mean that participants are able to achieve volume pricing discounts and the overall size attracts more competition from bidders. The SV-REP project resulted in costs savings 10-15% lower than go-it-alone (all PPA projects). Though pricing for R-REP cannot yet be shared (since we are still in the evaluation process), we did achieve favorable pricing (compared to go-it-alone).</p> <p>If we successfully standardize procurement documents and standard agreements across all participating agencies that translates into reduced transaction costs for the vendors and those savings may be passed along to agencies. This should also reduce the time necessary for negotiations, thus saving the agencies additional time/resources.</p> <p>Lower pricing translates to higher energy cost savings over the life of the project. Based on the economic analysis presented in the site assessment reports, which utilized 2012 Pacific Gas and Electric (PG&amp;E) electricity rates, the County would save approximately $26 million in electricity costs through the implementation of these projects, over the expected twenty-five (25) year life of the systems.</p> <p>20Financing ProjectsVendor asked to offer pricing under both a PPA and cash purchase.Most agencies interested in 3rd party ownership model.Workshops hosted for Participating Agencies on financing and renewable energy economics.</p> <p>ComplexityTime$$$</p> <p>CGSA Conference #Alameda CountyTo develop the projects, agencies can utilize a variety of financing mechanisms to fund their projects including: state and federal incentives using various mechanisms such as Clean Renewable Energy Bonds; Power Purchase Agreements; and Equipment Leases.Vendor asked to offer pricing under both a PPA and cash purchase.Consultants calculated levelized costs of energy (LCOE) to determine the best value for each Participating Agency.The County hosted several workshops to educate the Participating Agencies on various types of financing and the economics of renewable energy projects. Education was key throughout this project.</p> <p>21Environmental BenefitsAnnual emissions reductions across all sites:Equivalent to the CO2 emissions from the electricity use of over 6,300 homes in Alameda County</p> <p>CGSA Conference #Alameda CountyIf the projects across all Participating Agencies included in the solicitation were installed, the total GHG annual emission reduction would be 9,734 metric tons of carbon dioxide per year, or the equivalent to the CO2 emissions from the electricity use of over 6,300 homes in Alameda County for one year. For the twenty (20) sites the County is including in the solicitation, total GHG annual emission reduction would be 4,610 metric tons of carbon dioxide per year, or the electricity use of close to 3,000 Alameda County homes for one year.</p> <p>22Regional Economic GrowthRegional economic growth: If all projects paid for through a cash acquisition, total project costs would be an estimated $131.4 million.</p> <p>Job creation: 839 jobs created as a result of the initiative if all projects are developed.</p> <p>RFP included 40% GFE Workforce Requirement.</p> <p>CGSA Conference #Alameda CountyThe large scale of these collaborations means that we as a region are both stimulating economic activity and accelerating the deployment of renewable energy.If all projects included in the solicitation were paid for through a cash acquisiti...</p>