"New Procurement Process for Large Renewable Projects: Two Important Updates"
Two Important Updates
We recently highlighted some of the anticipated features of the Ontario Power Authority’s (the “OPA”) new Large Renewable Procurement (“LRP”) process, a competitive procurement system for renewable energy projects generally larger than 500 kW. Since then, the OPA has published two new documents which together provide added clarity on the LRP roll-out.
1. Final Recommendations Report
After sustained community and stakeholder consultations, the OPA released its Final Recommendations Report for the LRP process to the Ontario Minister of Energy on February 28, 2014. This report builds on the OPA’s Interim Recommendations, which were initially revealed in August 2013, as well as the province’s recently released Long Term Energy Plan (which is also discussed here and here). The report also summarizes the results of a community engagement process that included multiple webinars and more than 35 meetings with First Nation and Métis communities, industry stakeholders and the general public.
Importantly, the report includes key details regarding the Request for Qualifications (“RFQ”) and the Request for Proposals (“RFP”) stages of the competitive procurement process.
Recommendations for the RFQ stage include requirements vis-à-vis appropriate financial capacity, appropriate energy development experience, regulatory approvals, and so on – details of which are outlined below. As the Ontario Minister of Energy noted in his follow-up Directive to the OPA on March 31, 2014, the goal behind the revised RFQ criteria is to ensure that the qualifications of applicants and their respective project teams are robust enough to minimize the risk that projects fail to reach commercial operation.
Recommendations for the RFP stage include a rated criteria system (rather than the priority points concept used in the FIT program) to assess the applicant’s development experience, financial capacity and project and environmental due diligence. The OPA suggests that RFP stage assessment thresholds under this system be set above the minimum levels required at the RFQ stage. The OPA also recommends that the applicant’s experience with engagement of municipalities and other stakeholders become a central feature of the RFP stage as opposed to the RFQ stage.
Some additional recommendations include:
- Projects should encourage Aboriginal and municipal participation through direct means (e.g. price adders) and indirect means (e.g. municipal support resolutions and community benefit agreements).
- Pricing mechanisms that reflect the level of electricity demand should be considered in addition to the applicant’s bid price.
Interestingly, no explicit limits will be placed on the size of projects on the assumption that sizing will be indirectly addressed by way of grid connection limitations and community engagement requirements.
2. Draft RFQ Guidelines
The OPA also published draft RFQ guidelines on April 8, 2014. The comment period for these RFQ guidelines ended on Friday, May 2, 2014.
A concise summary of the proposed RFQ criteria, including submission fees, tangible net worth and applicant and team experiences, can be found here.
Stay tuned for further updates.