Solar Requests for Proposals
A request for proposal (RFP) is a solicitation device used by agencies looking to obtain products or services from potential providers.
This process is most often accomplished through bidding. A solar request for proposal outlines the photovoltaic (PV) product or service requirements, the contract terms, and bidding process. Once the proposals are received, they are evaluated according to the goals of the issuing agency and a vendor is selected.
Prior to launching the procurement process and issuing a solar RFP, local government agencies need to work through various project development steps to identify potential projects, collect the data to make an informed choice on which projects to pursue, and then select one or more projects to implement. Once those project development steps are complete, information needed to issue a solar request for proposal is assembled.
Procurement Process for Solar PV Systems
The procurement process involves five steps:
- Developing an RFP
- Issuing the RFP
- Administering the RFP (e.g. responding to bidder questions and concerns, receiving the bids, etc.)
- Evaluating bids based on predetermined criteria
- Selecting the winning bidder.
Some local government agencies who have a lot of experience in this area may handle the process on their own while others may decide to hire a consultant to assist with or manage the process.
Direct Buy Versus Power Purchase Agreement RFPs
Many local government agencies choose to directly fund their solar projects, especially if they are pursuing a single, small-scale project. When these agencies decide to direct fund, they issue an RFP to select a solar developer who will design, procure, install and commission a project. The agency will likely base this decision on who can provide the most competitive price along with certain other criteria.
It is also very common for local government agencies to enter into power purchase agreements (PPAs) where, rather than directly buying the PV system itself, the agency contracts with a solar developer to purchase electricity produced from the system. In this case, the agency will request bids that are based on the PPA price for electricity, the rate at which this electricity price increases over the life of a contract along with things like productions guarantees, buy-out options and end of term options. Once a solar PPA provider is selected, it is the solar company that will contract and pay for the actual installation of the system.
Solar RFP Best Practices
No two solar projects are exactly alike. Projects vary by size, locations, equipment, and goals. Likewise, the creation of solar RFPs varies from project to project. There are, however, a few best practices that should be kept in mind as a solar RFP is developed, issued, and managed. First, start with a clear goal, this will help both in the development of the RFP and the evaluation of proposals. Second, develop outcome-based RFPs focused on system performance rather than specific technical or equipment requirement. This will give all respondents much more leeway to design a system that will meet the local agency's needs. Note, however, this does not mean that the RFP shouldn't require that the vendor select equipment that has been certified. Third, it is important that the agency provide the respondents with as much information about the site or sites proposed for the installations possible. This will help potential respondents be more specific in their proposals. Finally, the issuing agency should disseminate the RFP as widely as possible. This will allow for the greatest number of respondents and give the agency the greatest number of options.
Solar RFP Elements
As already mentioned, solar project RFPs can be as varied as the project themselves. However, there are certain elements that should be included in most, if not all, solar RFPs. These elements are delineated below.
- Make obtaining the required permits, interconnection agreements and any other regulatory approval the responsibility of the contractor
- Provide copies of applicable county or city ordinances or unique regulatory requirements, detailed information on local permitting practices and any permit application forms
- Require experience and qualifications of the respondent (e.g. past projects completed, letters of reference, training, licenses, etc.)
- Require that equipment used in the system meet applicable product codes or standards
- Require a timeline of major project development for a construction event against which progress can be checked
- Require systems to meet both the national electric code and international building code as they apply
- Require technology warranty information
- Include any applicable labor and resourcing requirements (e.g. locally sourced products, union labor etc.)
- If a local government is planning on assuming operation responsibilities, it should include a requirement for the successful respondent to either hold a training session for maintenance staff or provide O&M manuals
- If a local government is using a third party owned system through a lease or a PPA, operation responsibilities the RFP should include a provision that the respondent provide some sort of performance monitoring program.
Solar project outcomes are tied to project goals this is why it is important to have clearly defined goals before issuing an RFP. Individual project goals will affect how each proposal is evaluated. For example, if the project goal is to use as many local resources as possible, more weight will be given to respondents who source all materials from within the community than respondents who bring in many outside resources. In contrast, if the goal is to complete the project as quickly and cost-effectively as possible, less weight may be given to local sources if outside sources can be found at a lower cost. In either case, the most important aspect of proposal evaluation is correlating a local government agency's goals to the selection criteria.
Solar Powering Your Community: Key Elements of Solar Requests for Proposal
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