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Renewable Certificate Purchasing Initiative Stage 2: Solar Certificate Tender
Renewable
Affordable
Reliable
Information Slides for potential Tenderers
2
• In August 2015, the Victorian Government announced
an initiative to source renewable energy certificates
from new projects in Victoria to bring forward investment
in large scale renewable energy projects
• In August 2016 two separate projects, Kiata and Mt
Gellibrand wind farms were awarded contracts for a
total of $220 million of investment, resulting in the
creation of hundreds of jobs
• In the first half of 2017, the Government aims to
undertake a tender process for the procurement of
Large Generation Certificates (LGCs) for up to 75MW of
Solar Projects as Stage 2 of the initiative
• Around 35MW of Stage 2 will be linked to Solar Trams
Renewable Certificate Purchasing Initiative – Stage 2
Important disclaimer: this pre-tender presentation is for information only. The content of this document does not reflect the
Government’s final position or policy on the Renewable Certificate Purchasing Initiative and is subject to change without notice.
3
• Alert industry to the upcoming Solar Certificate Request
For Tender (RFT)
• Outline key details of the tender process and proposed
contract
• In addition to these slides, the Pre-Tender package
includes a series of Q&A’s relevant to the tender
• Provide interested parties an opportunity to understand
the scope of the initiative prior to tender release
Note: Finalised and full details will be available when the
tender officially opens on TendersVic shortly
Pre-Tender Information Package Objectives
Important disclaimer: this pre-tender presentation is for information only. The content of this document does not reflect the
Government’s final position or policy on the Renewable Certificate Purchasing Initiative and is subject to change without notice.
4
• Victoria needs a modern energy system to support our economy and way of life, built on the
key pillars of being Renewable, Affordable and Reliable
• The RCPI (including Solar Farms) is one of a raft of initiatives being implemented by the
Andrews Labor Government to assist with this transition
A Modern Energy Future for Victoria – How we got here
June 2015
Renewable Energy
Roadmap
New Energy Technologies
Sector Strategy
New Energy Jobs Fund - $20 million
Committed to setting Victorian targets
Committed to Renewable Energy
Action Plan
Committed to setting
Victorian targets
Energy Efficiency and Productivity Statement
Committed to Renewable Energy
Action Plan
Victorian 2020/2025 Renewable
Targets
$9 billion in new capital expenditure
Up to 11,000 energy sector jobs
Two new windfarms
$220M investment
Windlab
ACCIONA Energy
August 2016
20MW Energy Storage
Competitive Tender Process
Solar Farms $150M
investment
January 2017
Up to 75MW in new Solar Projects
Solar Trams - 35MW
Renewable
Certificate
Purchasing
Initiative (RCPI)
Important disclaimer: this pre-tender presentation is for information only. The content of this document does not reflect the
Government’s final position or policy on the Renewable Certificate Purchasing Initiative and is subject to change without notice.
5
Why a Stage 2 Initiative – Solar Powered Trams
• An open Tender for 75MW is proposed, of which around 35MW will be linked to Melbourne’s Tram Network via the voluntary surrender of LGCs created
• This initiative is expected to help bring forward approximately $150 million in new Solar project investment in Victoria and generate up to 300 new construction jobs
• The initiative is demonstrating the Andrews Labor Government’s leadership in renewables and contribution to the Victorian Renewable Energy Target
Important disclaimer: this pre-tender presentation is for information only. The content of this document does not reflect the
Government’s final position or policy on the Renewable Certificate Purchasing Initiative and is subject to change without notice.
6
Photo Courtesy of RayGen
PROBITY GUIDELINES
Important disclaimer: this pre-tender presentation is for information only. The content of this document does not reflect the
Government’s final position or policy on the Renewable Certificate Purchasing Initiative and is subject to change without notice.
7
• Probity in the context of the RFT process means procedural integrity
• The RFT will be conducted pursuant to Victorian Government Probity Principles that require assessments to be fair, objective and impartial
• All persons on the government RFT team are required to demonstrate high standards of behaviours and actions in their conduct, avoid conflicts of interest and maintain supplier confidentiality
• Both an independent Probity Advisor and Probity Auditor will be engaged to monitor, advise and report on the RFT process from a probity perspective
Probity Overview
Important disclaimer: this pre-tender presentation is for information only. The content of this document does not reflect the
Government’s final position or policy on the Renewable Certificate Purchasing Initiative and is subject to change without notice.
8
• Adhere to the process, terms and conditions as set out
in the tender documentation
• Do not seek to obtain an unfair favour or advantage
over other respondents through:
• Approaching Victorian Government staff for
assistance with tender preparation;
• Attempting to gain preferential access to decision
makers;
• Lobbying politicians or Government officials;
• Making any comments to the press; and/or
• Collusion with other tenderers.
Probity Expectations of Tenderers
Important disclaimer: this pre-tender presentation is for information only. The content of this document does not reflect the
Government’s final position or policy on the Renewable Certificate Purchasing Initiative and is subject to change without notice.
9
Photo Courtesy of RayGen
PROCUREMENT PROCESS
Important disclaimer: this pre-tender presentation is for information only. The content of this document does not reflect the
Government’s final position or policy on the Renewable Certificate Purchasing Initiative and is subject to change without notice.
10
Procurement Process Overview & Indicative Timing
Pre-tender Information Package
Request for Tender
(Open for 7 weeks) Tender Evaluation
Government deliberation /
Decision Making
Contract negotiation / execution
Signing of LGC Supply and
Purchase Agreement (Aug/Sept 2017)
• An information forum was run in December 2015 to present key features
of the tender. This second tender will be run in a similar fashion
• This Information Package provides an update on this tender which is
focused on solar projects
Important disclaimer: this pre-tender presentation is for information only. The content of this document does not reflect the
Government’s final position or policy on the Renewable Certificate Purchasing Initiative and is subject to change without notice.
11
• Assessment Process consistent with Stage 1
• Tender must firstly demonstrate adherence to Mandatory Criteria (Validity of Tender and minimum Project Criteria)
• Tender will then be assessed against their responses to the Merit Criteria and Value For Money
Evaluation Process Overview
Assessment Process:
CONTRACT EXECUTION
EVALUATION PROCESS
RELEASE RFT
RECEIVETENDERS
MANDATORYCRITERIA
EVALUATION
MERIT CRITERIAEVALUATION
VALUE FORMONEY
LGC SUPPLY ANDPURCHASE
AGREEMENT
EXIT PROCESS
Important disclaimer: this pre-tender presentation is for information only. The content of this document does not reflect the
Government’s final position or policy on the Renewable Certificate Purchasing Initiative and is subject to change without notice.
12
The Project must be for a new (yet to be constructed)
Facility, to be located in Victoria
The renewable energy technology must be Solar as
defined by the Renewable Energy (Electricity) Act (2000)
The Facility must be connected to the NEM in Victoria
The Facility must be operational on or before the 31st
October 2018
Each Facility must commit to a contract volume of at least
20,000 LRECs and no more than 81,000 LRECs per
annum (these limits refer to the annual P50 energy yield
forecast for the project),
Projects must specify a minimum contract volume, this
must not be less than 70% of the proposed contract
volume
Project Mandatory Criteria
Important disclaimer: this pre-tender presentation is for information only. The content of this document does not reflect the
Government’s final position or policy on the Renewable Certificate Purchasing Initiative and is subject to change without notice.
13
For tenderers that comply with the Mandatory Criteria, additional
evaluation will refer to the following categories:
Merit Criteria
• Ability to successfully implement the Project
• Suitability of the Technical solution against the RFT specification
• Financial viability of the Project
• Levels of Community Engagement and Local Content
• Ability to provide a reliable ongoing Supply of LGCs
Value For Money
Tenderers will be assessed on Value For Money by considering:
• Strong, detailed responses to the Merit Criteria with due
consideration of pricing levels, risk management and performance;
• Competitive price levels for the length of the Supply Contract; and
• Level of risk the State is exposed to (particularly with regard to any
modifications in the Supply Contract)
Merit Criterion and Value For Money
Important disclaimer: this pre-tender presentation is for information only. The content of this document does not reflect the
Government’s final position or policy on the Renewable Certificate Purchasing Initiative and is subject to change without notice.
14
Photo Courtesy of RayGen
KEY FEATURES OF CONTRACTUAL ARRANGEMENTS
Important disclaimer: this pre-tender presentation is for information only. The content of this document does not reflect the
Government’s final position or policy on the Renewable Certificate Purchasing Initiative and is subject to change without notice.
15
Key Term Current Position
LGC Delivery –
Minimum (Firm)
Volumes
• Buyer requires minimum 70% of contracted volumes
• 70% min volume subject to FM relief
• Substitute LGCs can be used to make-up shortfalls in
project LGCs (at the end of each calendar year)
• Tenderers must use reasonable endeavours to supply
Substitute LGCs from a Solar source in Victoria
• Failure to deliver minimum volumes triggers LDs
(based on tax affected penalty under the Act)
LGC Delivery –
Firm Start Date
• Seller is required to supply 70% min volume LGCs for
a nominated Anticipated Supply Date to occur on or
before 31 Oct 2018
• Obligation to supply (min volumes) in place for 5 years
• Buyer has termination right if project not complete by
12 months after the Anticipated Supply Date
LGC Sale and Purchase Agreement – Key Terms
Important disclaimer: this pre-tender presentation is for information only. The content of this document does not reflect the
Government’s final position or policy on the Renewable Certificate Purchasing Initiative and is subject to change without notice.
16
LGC Sale and Purchase Agreement – Key Terms
Key Term Current Position
RET Repeal • Buyer will continue to pay LGC price for each MWh of
electricity generated by the project (capped at 70% min
volume)
• Price decreased by any future carbon price/impact
Credit Support • No credit support required from Seller
• Buyer is Victorian Government (assignment with
consent)
• Buyer will undertake detailed due diligence on bidding
projects (as part of evaluation process)
Financial
Close –
Termination
after Target
Date
• State has termination right if the selected Tenderer cannot
achieve Financial Close within six months of signing the
Supply Contract
Important disclaimer: this pre-tender presentation is for information only. The content of this document does not reflect the
Government’s final position or policy on the Renewable Certificate Purchasing Initiative and is subject to change without notice.
17
LGC Sale and Purchase Agreement – Key Terms
Key Term Current Position
Indemnity Seller indemnifies Buyer in respect of losses arising from:
• any claims against Buyer in relation to acts or omissions
of Seller (including consequential loss)
• any act or omission of Seller, including breach of any
term of the SPA (other than where LDs are payable)
Consequential loss is otherwise excluded
Seller Events
of Default
• Loss of authorisations, approvals, licences etc (which
affects Seller’s ability to comply with its SPA obligations)
• Failure to pay LDs
• Insolvency
• Failure to comply with material terms
• Failure to comply with publicity and promotion
requirements
• Failure to comply with any Local Content commitments
made during the Tender Selection process Important disclaimer: this pre-tender presentation is for information only. The content of this document does not reflect the
Government’s final position or policy on the Renewable Certificate Purchasing Initiative and is subject to change without notice.
18
A number of Changes were made to the Supply and Purchase Agreement
(SPA) from Stage 1, based on Industry Feedback and the focus on Solar
Technology. The key changes are summarised in the table below:
Summary of Changes Supply and Purchase Agreement
Key Term Changes from Stage 1
LGC Supply
Obligation
Suppliers must nominate a start date for commencement of
operation on or before 31st October 2018
Termination
after Final
Close
The State can terminate the SPA if Financial Close isn’t
achieved in six months from signing the SPA (previously
nine months)
Volume Some minor changes have been made to the timing of LGC
transfers to better reflect the time taken to create and
register them
Substitute
LGCs
Suppliers must use reasonable endeavours to provide
Substitute LGCs from Solar sources in Victoria
Important disclaimer: this pre-tender presentation is for information only. The content of this document does not reflect the
Government’s final position or policy on the Renewable Certificate Purchasing Initiative and is subject to change without notice.
19
Key Term Changes from Stage 1
Local Content Failure to comply with any Local Content obligations stated
during the Tender Selection process by the Supplier is listed
as an Event of Default, allowing termination by the State
Confidentiality Suppliers are now permitted to disclose Confidential
Information to the Suppliers Body Corporate and proposed
Funding Providers
Force Majeure Force Majeure due to High temperatures has been limited to
a few specific cases. Events due to weather, seismic etc.
related to the design criteria of the Facility will not be
captured as Force Majeure
Summary of Changes Supply and Purchase Agreement
Important disclaimer: this pre-tender presentation is for information only. The content of this document does not reflect the
Government’s final position or policy on the Renewable Certificate Purchasing Initiative and is subject to change without notice.
20
Photo Courtesy of RayGen
NEXT STEPS
Important disclaimer: this pre-tender presentation is for information only. The content of this document does not reflect the
Government’s final position or policy on the Renewable Certificate Purchasing Initiative and is subject to change without notice.
21
• Please submit any queries to:
• Feedback will be considered and responses will be
provided as appropriate in line with probity
requirements
• Tender will be run in the first half of 2017
Thank You
Next Steps
Important disclaimer: this pre-tender presentation is for information only. The content of this
document does not reflect the Government’s final position or policy on the Renewable Certificate
Purchasing Initiative and is subject to change without notice.
Tenderers will need to await the terms and conditions of the finalised RFT package, including the
LGC Sale and Purchase Agreement, in order to comprehensively consider the Solar Certificate
Tender and the preparation of any tender.