Where the Sun Always Shines (Part 2 of 2)
In our last post, we outlined some of the motivating factors behind the Kingdom of Saudi Arabia’s ambitious new 54,000 MW renewable energy program. In this post, we provide a brief overview of the Kingdom’s competitive procurement process (CPP).
The Kingdom recently published a white paper that describes the proposed CPP. The process “will consist of an Introductory Round with pre-packaged sites identified by the King Abdullah City for Atomic and Renewable Energy (KA CARE), followed by additional procurement rounds conducted over a two to three year window that will target up to 7,000 MW capacity of contracted capacity.”
Each procurement round will follow a similar pattern: (i) issuance through an official procurement website of draft procurement documents, and the hosting of multiple technical workshops intended to invite input by proponents into the draft request for proposal (RFP) and draft power purchase agreement; (ii) an expression of interest and statement of opportunities, outlining the scale and timing parameters of the relevant procurement round; (iii) a request for qualification (RFQ); followed by (iv) a formal and binding RFP.
To qualify for the Introductory Round, the white paper reveals that a combination of financial and experiential factors will be evaluated. The proponent, for example, must satisfy financial capability requirements as follows:
- an investment grade credit rating; or
- a tangible net worth equivalent to no less than Saudi Riyal (SR) [400,000] per MW capacity (or roughly C$110,000) of the total proposed contract capacity at the end of the last two fiscal years; or
- net income equivalent to no less than SR [200,000] per MW capacity (or roughly C$55,000) of total proposed contract capacity at the end of the last two fiscal years.
The proponent must also be able to demonstrate that at least three of its designated team members have “(i) planned and developed, (ii) constructed, or (iii) operated at least one or more renewable generating facilities of similar size and technology to those being proposed”.
For the Introductory Round, qualified bidders will then be given six months to prepare their proposals. The evaluation process includes an assessment of completeness, evaluation of a set of mandatory criteria – including the inclusion of “local content” (such as labour and equipment) and the development of a sustainable domestic “energy value chain” – rated criteria, and price evaluation formulae.
Let us know if you have any questions about the CPP.
competitive procurement process energy value chain evaluation investment grade credit rating King Abdullah City for Atomic and Renewable Energy Kingdom of Saudi Arabia procurement round tangible net worth equivalent