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Renewable Certificate Purchasing Initiative Stage 2: Solar Certificate Tender

Renewable

Affordable

Reliable

Information Slides for potential Tenderers

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• 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.

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• 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



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• 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)



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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



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Photo Courtesy of RayGen

PROBITY GUIDELINES



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• 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



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• 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



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PROCUREMENT PROCESS



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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



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• 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



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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



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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



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KEY FEATURES OF CONTRACTUAL ARRANGEMENTS



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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



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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



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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


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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



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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



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NEXT STEPS



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• Please submit any queries to:

[email protected]

• 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.

mailto:[email protected]

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