SOURCES SOUGHT
99 -- Purchase of electricity from renewable sources not located on GSA property
- Notice Date
- 11/3/2011
- Notice Type
- Sources Sought
- NAICS
- 221119
— Other Electric Power Generation
- Contracting Office
- General Services Administration, Public Buildings Service (PBS), Energy Center of Expertise (WPE), 7th & D Street, SW, Room 4004, Washington, District of Columbia, 20407
- ZIP Code
- 20407
- Solicitation Number
- GS-00P-12-BSC-0867
- Archive Date
- 6/1/2012
- Point of Contact
- Ken J. Shutika, Phone: (202) 260-9713
- E-Mail Address
-
ken.shutika@gsa.gov
(ken.shutika@gsa.gov)
- Small Business Set-Aside
- N/A
- Description
- Request for Information U.S. General Services Administration Power Purchase Agreements (PPA) Issues Grid Based Projects BACKGROUND: In order to meet agency goals and respond to increasing demand for renewable energy, stemming from renewable goals established in the Energy Policy Act of 2005, Executive Order 13423, and the Energy Independence and Security Act of 2007, the U.S. General Services Administration (GSA) is attempting to facilitate project development through the purchase of electricity from new renewable sources not located on GSA property. GSA defines "new renewable resources" as renewable resources that are not in service as of the date any resultant contract were to be signed. Incremental new renewable resources defined as new expansions of existing renewable resources not in service as of the date any resultant contract were to be signed would be considered "new renewable resources" for the purposes of this initiative. In addition, only resources that meet the definition of "renewable energy" contained in the Energy Policy Act of 2005 will qualify renewable resources. One means of facilitating the development of new renewable resources is through the use of long term Power Purchase Agreements (PPAs), whereby a third party funds, develops, operates, maintains and owns a renewable energy project, and GSA commits to purchase the energy, capacity and/or renewable energy certificates (RECs) from the project owner. The cost of the project is amortized over a longer term with the expectation of achieving a power price in the PPA that is relatively constant for the life of the contract. While the PPA contracting vehicle is an attractive solution to help GSA meet its renewable and other goals, GSA believes that there may be issues/barriers to implementing PPAs. This RFI identifies some of these issues/barriers and seeks private sector input regarding how to best address them. PURPOSE AND NEED FOR INFORMATION The purpose of this Request for Information (RFI) is to solicit input from industry for GSA's consideration in order to develop and/or improve potential future PPA procurements. GSA is interested in information on topics such as contract term limitations, delivery date, termination for convenience and indicative pricing. This is solely a request for information and not a Request for Proposal (RFP). 1. Issue: Contract Term Limitations Many renewable PPA projects require a long term (often 20 years) contract in order to be financially viable. A longer term contract allows the PPA provider to charge a lower energy price since there is more time to recoup capital costs and make a profit. Outside of a few longer term contract options, GSA is limited by the Federal Acquisition Regulation's (FAR) Part 41 ten (10) year contract authority. The following potential solutions to improve project viability within the ten (10) year contracting limitation are being explored based on current statutes and regulations: 1) Ten (10) year PPA contract (using FAR Part 41). At the end of the PPA contract, the contractor and GSA would have no further contractual obligations to each other. 2) Ten (10) year PPA contract (using FAR Part 41), with ten (10) year option. This option must be a "true" option, requiring: 1) No assumption that the option will be exercised and 2) No penalties if the option is not exercised. The price could be negotiated at the time of the option or established in the original contract. NOTE: The GSA is still investigating whether this is a legal and viable option under FAR Part 41 and other binding laws and regulations; however, GSA would like input from industry on this topic. 3) Ten (10) year PPA contract (using FAR 41) with a series of shorter term (1-5 year) options. At the end of the PPA contract, the options would be "true" options but option terms could be from 1 to 5 years in length and total no more than 10 years. Questions: a) Can a ten (10) PPA be developed at or near current market prices? b) What are the cost impacts of a ten (10) year term? c) What are the cost impacts of a ten (10) year PPA contract with a ten (10) year option? d) Could these options help to reduce the PPA price and/or alleviate the financing risk? e) What would the optimal financing term be for the type of renewable resource that your firm is interested in developing? f) What are other potential solutions to overcome the current ten (10) year contract term limit? g) What are other potential risks associated with these options? 2. Issue: Delivery Date for Supply from the Renewable Project GSA realizes that an exact delivery date is difficult to specify. Therefore, GSA proposes that the contract term of ten (10) years begin within 24 months of the execution of the final contract. To allow for the uncertainties associated with project development, GSA is willing to allow the Contractor to delay the start date by 12 months provided GSA receives 6 months advance notice. The ten (10) year contract term start would be delayed by any contract start date delay. Questions: a) Will the flexible start date assist project development? b) How long do your project(s) typically take to develop? c) What is a reasonable start date range for the type of renewable resource your firm is developing? 3. Issue: Termination for Convenience (T4C) Some renewable developers have expressed concern with Federal termination clauses. The GSA does not terminate for convenience without a legitimate reason/cause. All costs associated with a termination for convenience shall be resolved in accordance with FAR Part 49. Questions: a) What are your specific concerns with the GSA's standard termination for convenience (T4C) clause language in FAR 52.212-4(L)? b) What types of termination schedules are typical (e.g., early termination during construction; before tax credits are utilized; after tax credits are utilized; partial termination; other)? c) Are there any other comments or potential solutions regarding T4C and/or termination schedules? d) Is it possible to include a simple T4C schedule similar to an amortization schedule with a standard mortgage? 4. Issue: Indicative Pricing While GSA is interested in developing new renewable resources, GSA is price sensitive. Therefore, GSA requests that respondents provide GSA with non-binding indicative pricing for a ten (10) year term in response to this RFI. Respondents may also provide pricing for what the respondent considers an optimal contract term. Also, GSA is providing a sample Term Sheet that would encompass in a brief statement pricing elements of that GSA would expect in a typical pricing term sheet. GSA is also interested in any annual price escalation factors that the respondent would typically include in its contracts. Questions: a) What is the optimal contract term for your renewable projects? b) What is the best way to monetize the REC value from the renewable resource over a long term? Would it be best for GSA to guarantee a floor price for the RECs, but allow the RECs to be sold for shorter time periods to maximize potential REC value? Is there a market for long term RECs (i.e. longer than 5 years)? c) Besides the RECs, would GSA own any other environmental attributes, including any emissions credits, associated with the new renewable resource? d) From a settlement standpoint, GSA would prefer to receive blocks of around the clock (ATC) power deliveries for a specified number of MWs. Please explain if your firm would be able to deliver a specified ATC MW block from the new resource or if your firm would need to offer output on a unit contingent basis? e) One of the potential benefits of purchasing new renewable energy is that there can be no or limited input fuel costs and the pricing is primarily the cost of financing and profit for the project spread out over the term of the contract. Other than fairly minor adjustments for operations and maintenance and taxes, what reason would there be for an annual price escalation? Should the escalation be in any way linked to the market price of power? RESPONSE INSTRUCTIONS Responses may be of any length up to twenty (20) pages total. Include a brief, one (1) page or less summary of company background and PPA/renewable development project experience with your responses. The remaining pages shall be used to respond to the RFI questions and propose any project development ideas that your firm may have. Respondents may submit responses to all or a portion of the RFI questions. A copy of your boiler plate PPA contract language can be included as an attachment. DUE DATE Responses are required to be submitted no later than 2:00 p.m. Eastern Time, December 1, 2011. BUSINESS SENSITIVE, PROPRIETARY, OR OTHERWISE CONFIDENTIAL INFORMATION Because information received in response to this RFI may be used to structure future solicitations and/or otherwise be made available to the public, respondents are strongly advised NOT to include any information in their responses which may be considered business sensitive, proprietary, or otherwise confidential. However, if your company chooses to submit any business sensitive, proprietary, or otherwise confidential information, it must be marked as proprietary or restricted data in the response. Questions and Answers Questions regarding this RFI shall be submitted to Ken Shutika at GSA at ken.shutika@gsa.gov and marked RFI Questions. EVALUATION AND ADMINISTRATION BY FEDERAL AND NON-FEDERAL PERSONNEL GSA civil servant employees are subject to the non-disclosure obligations of a felony criminal statute, the Trade Secrets Act, 18 USC 1905. The GSA may seek the advice of qualified non-Federal personnel. The GSA may also use non-Federal personnel to conduct routine, nondiscretionary administrative activities. The respondents, by submitting its response, consent to GSA providing their response to non-Federal parties. Non-Federal parties given access to responses must be subject to an appropriate obligation of confidentiality prior to being given the access. Submissions may be reviewed by support contractors and private consultants. DISCLAIMER AND IMPORTANT NOTES This is an RFI issued solely for information and program planning purposes; this RFI does not constitute a formal solicitation for proposals or abstracts. Your response to this notice will be treated as information only. In accordance with FAR 15.201(e), responses to this notice are not offers and cannot be accepted by the GSA to form a binding contract. GSA will not provide reimbursement for costs incurred in responding to this RFI. Respondents are advised that GSA is under no obligation to acknowledge receipt of the information received or provide feedback to respondents with respect to any information submitted under this RFI. Responses to this RFI do not bind GSA to any further actions related to this topic.
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