The RFP (request for proposal) process is the primary mechanism for municipalities to adopt solar energy and meet their sustainability goals. It defines project parameters and creates competition among solar manufacturers to offer the best system design and pricing that checks all the boxes specified in the RFP.
I’ve reviewed and responded to hundreds of RFPs since 2015 and learned a few things about how they should be structured to ensure projects are developed to meet clients’ objectives. Here’s what municipalities should consider about the solar RFP process and the developers who will respond.
Before we begin
Starting with a clear, well-defined goal is the most important thing organizations can do to ensure their RFPs are properly structured and well received. More than any other factor, a well-defined objective will influence the results of the buying process.
Trying to meet your sustainability goals? Or is this project primarily about creating economic value? Understanding the project’s goals will help developers determine the optimal design for the project. Often a choice must be made between a design that offers maximum savings or a design that offers maximum durability benefits.
Understanding the site
In addition to the primary objective, solar developers must understand the site and any limitations. The RFP should clearly identify where the site is, what specific areas the solar array is to be located in, and if known, the size of the desired system. It is surprising how many RFPs fail to adequately identify the subject site.
Keep in mind that most solar manufacturers will not be familiar with your site before receiving an RFP. All RFPs must begin with the site address or parcel number, along with satellite images depicting the areas where you wish to host the installation. Also, make sure you’re looking for a rooftop, parking deck, or ground-mounted installation.
If you’re looking for a system that pays for your facility’s load, you should at least provide annual electricity usage for the site, but it’s also ideal for including utility bills or interval data. If an energy storage system is desired, you must meet your utility bills and usage at 15-minute intervals for one year.
With accurate site definition and annual usage, solar developers can determine in minutes whether a site fits their business model and begin to spend time evaluating project details. If the RFP fails to identify a project, bidders may move on to other projects that more clearly fit their business model.
In addition to the basic details, you should include any additional relevant information such as utility bills, interval information, electrical plans for the site, meter locations and roof information. For roof installation, you need to consider whether the roof is in good enough condition to accommodate solar energy for 15-25 years. The developer will ultimately check this during the development process, but if the roof is 20 years old with no plans for replacement, it will kill the project, so it’s best to understand this as soon as possible.
Understanding economics and structure
RFPs should level out assumptions that are unknown or beyond bidders’ control to allow developers to demonstrate capabilities and achieve the best possible outcome for your project.
Most municipal solar proposals seek projects financed as power purchase agreements (PPAs) with a fixed price per kilowatt-hour (kWh) produced, or leases with the developer paying a fixed annual fee to the municipality. system. In any structure, numerous variables affect the final price provided to the customer, but most variables such as system size, manufacturing and installation costs are within the developer’s control.
Municipalities must balance assumptions beyond the developer’s control, such as who will receive the renewable energy certificates (RECs) generated by the project, any assumed incentive rates, interconnection upgrade costs, and whether union labor or prevailing wages are required. . In the case of RECs, the municipality can choose to buy the credits and pay a higher PPA price, or the developer can keep the RECs and charge a lower price. If the project will receive state or local incentives, the municipality should define the assumed incentive rate to prevent bidders from getting unrealistically optimistic results.
It is also important that the municipality defines any functional or aesthetic requirements for the project. For example, water, snow and ice management is necessary for parking lots in colder climates to prevent dangerous icicles or ice sheets from forming on parking lots. There are many solutions available to manage this risk, but they are expensive and can add more costs down the road if not explicitly stated in the RFP.
By leveling these assumptions, the municipality can evaluate the prices of tender participants on a buy-buy basis and measure their capabilities to meet specific requirements.
Understanding solar power producers
The main purpose of an RFP is to get bids from as many qualified bidders as possible, so it’s important to consider the developers who will respond. Not every developer has the bandwidth to take advantage of every good opportunity. The first RFPs that are often overlooked are those with a high degree of complexity.
Every bidder understands that municipalities typically have strict procurement requirements, including various certifications or tender forms. Some RFPs can run to hundreds of pages and require multiple hard copies to be mailed to the client. This length and format lead to a more time-consuming and costly process. Municipalities should review the requests and determine which questions are repetitive or redundant. Trying to tighten the length of the proposal and the amount of time required to complete a compelling presentation can result in a wider selection of quality proposals.
Much is at stake for municipalities
With the rapid expansion of the solar energy market, the RFP space will continue to be the primary forum for seeking solar energy projects that best meet the needs of municipalities. By developing an RFP that creates a clear mutual understanding of the project, municipalities can increase their chances of choosing the right partner and achieving the best outcome for their community.
Dan Smith has over seven years of experience in solar power generation for commercial, industrial and municipal customers. In his role as DSD’s RFP generation leader, Smith leads the RFP team and all RFP generation efforts. It evaluates available RFP opportunities and selects opportunities where DSD can offer an attractive solution. Prior to joining DSD in 2018, Smith generated successful RFP responses that resulted in the award of more than 200 MW of solar projects, including projects for Wal-Mart, Amazon and FedEx, as well as many projects for municipalities, school districts and utilities. Smith has experience developing projects in 11 states and the District of Columbia. He has in-depth knowledge of all active solar markets, covering all major project structures and incentives, including PPAs, direct purchases, leases, feed-in tariffs, community solar, contracts for differences and other innovative financing models.