REQUEST FOR EXPRESSIONS OF INTEREST (RFEI)
TO SUPPORT THE PREPARATION OF A
REQUEST FOR PROPOSALS (RFP) FOR A 100 MW SOLAR POWER INITIATIVE IN NEW YORK STATE
1 INTRODUCTION
The New York Power Authority ("NYPA" or the “Authority”) is the nation's largest state-owned power supplier, providing low-cost electricity to government agencies, municipal electric systems, rural electric cooperatives, manufacturers and to private utilities for resale—without profit—to their customers across New York State. NYPA operates 18 generating facilities and more than 1,400 circuit-miles of transmission lines. NYPA is also a national leader in promoting energy efficiency and the development of clean and renewable energy technologies, committing over $100 million a year to energy services.
The Authority’s mission is to provide clean, economical and reliable energy consistent with its commitment to safety, while promoting energy efficiency and innovation for the benefit of its customers and all New Yorkers. Through this mission, it provides low-cost electric power to state and local governments, businesses, municipal electric systems and to other utilities for resale to consumers at cost.
As part of its commitment to the environment and in support of New York State’s clean energy goals, NYPA, on behalf of its customers, is interested in purchasing up to 100 MW of power and related energy produced by solar photovoltaic generating systems (“SPGS”) to be installed at numerous locations at the facilities of certain NYPA customers. This initiative is expected to begin in 2010 with completion of the build out by 2012.
It is NYPA’s intention that this initiative will foster the development of PV technologies and stimulate the New York State economy. Respondents shall provide information regarding the potential regional economic development requirements or preferences that could be supported in an RFP, particularly opportunities for local component manufacturing and assembly. Such economic benefits could include opportunities to manufacture PV components in New York State, particularly Western New York, as well as fostering green jobs in Western New York that would be associated with installing, operating and maintaining the PV facilities and other related support functions. NYPA would like to solicit feedback on the effect of a New York State PV panel, component and/or labor content requirement on energy pricing.
It is anticipated that the following categories of NYPA customers will have facility roofs and/or ground space suitable for these purposes: public and private schools, municipalities, municipal and rural cooperative electric utilities, businesses and state agencies. NYPA customer locations at which SPGS would be installed are referred to herein as “Host Sites”.
All SPGS equipment installed at Host Sites will be owned and operated by the solar provider (“Seller”), who will be responsible for all SPGS costs associated with design, permitting, equipment, materials, and labor, including installation and operation and maintenance. The energy produced by such SPGS will be sold to NYPA (“Buyer”), as set forth in a solar power purchase agreement (“SPPA”) to be executed between NYPA and the Seller.
Prior to issuing a formal Request for Proposals (RFP) for solar power, NYPA is issuing this Request for Expressions of Interest (RFEI). The purpose of the RFEI is to solicit information from the solar power industry in order to prepare an RFP with appropriate terms, conditions, evaluation criteria and other information to encourage the submission of high quality proposals from experienced solar power developers.
A decision on whether or not to proceed with an RFP will depend to a great extent on the information provided in response to this RFEI. In light of the amount of time required for respondents to provide such information and for NYPA to evaluate it, a decision as to whether to proceed with an RFP would not be expected prior to the fourth quarter of 2009.
It should be noted that in the event that NYPA issues an RFP in connection with this project, such RFP will not be binding on NYPA and NYPA will have the right, in its sole discretion, to withdraw or modify the RFP and to reject any and all proposals for any reason, including the projected economics of a proposed project.
While it is understood that that sources of renewable energy typically incur a price premium, NYPA operates within the competitive electricity market of New York State. It is not financially supported by the State and has no taxing authority. Rather, it raises capital through the issuance of Revenue Bonds which are repaid from revenues from the sale of its power services. In the event that NYPA ultimately elects to purchase energy from this project, it will seek to incorporate such purchase into its portfolio of resources for the benefit of its present and/or future customers, to the extent authorized by current law, or pursuant to other legislation as may be subsequently adopted. If NYPA enters into a PPA for the purchase of solar energy, it will seek to use the output of the project to meet the needs of customers within the competitive framework of New York State at prices that are economical, stable and predictable over the long run, and, therefore, would expect the project owner/operator to adhere to the high reliability standards demanded by the consumers of electricity. Therefore, the RFP evaluation criteria will include, but not be limited to, the following (not necessarily in order of importance): Evaluated price of RFP respondent’s proposal and the extent to which the offered pricing proposal will provide value within the competitive electricity market in New York State.
A secondary objective of this RFEI is to explore the technical and economic feasibility of large scale solar power at distributed locations. Accordingly, a major aspect of NYPA’s evaluation (and the decision on whether to proceed to the RFP stage) is to assess the level of incentives and subsidies that would be available from federal, state and local agencies to improve the economics of these projects. Respondents are encouraged to comment on the current availability of such incentives and their applicability to the project described in this RFEI.
Responses are due by July 7, 2009. Please direct all questions about this RFEI and all responses to this RFEI to:
John Markowitz
Research and Technology Development
New York Power Authority
123 Main Street
White Plains, NY 10601
Fax: 914-681-6860
NYPA will entertain telephone discussions with regard to any sensitive information. However, NYPA prefers to receive as much information in writing as possible, so that it can be shared accurately with the NYPA staff and consultants who will develop the RFP.
Neither NYPA nor its customers will be responsible for any costs or expenses incurred in preparing and submitting information in response to this RFEI. All material submitted will become the property of NYPA. Submitters are cautioned to clearly label as proprietary and confidential any specific information or other material that is considered to be confidential. NYPA is subject to the New York State Freedom of Information Law (“FOIL”) which provides, as a general rule, that NYPA records are accessible to the public, subject only to specific exceptions which include a trade secret exception. If NYPA were to receive a FOIL request, the submitter would be notified, and NYPA, to the fullest extent permitted by FOIL, would seek to deny access to any information marked as proprietary and confidential.
2 KEY ITEMS FOR RESPONDENT FEEDBACK
NYPA seeks information from entities that are knowledgeable and experienced in the successful design, installation, operation and maintenance of SPGS. Information, feedback, clarifying comments, questions and specific suggestions from these entities on any and all of the following sections is welcome. These responses will help NYPA develop an RFP that addresses key concerns and facilitates high quality proposals.
Respondents are requested to provide a point of contact and background information about their company or organization and whether or not they intend to respond to the subsequent RFP.
2.1 SPPA Build-out and Pricing
NYPA has initiated an evaluation of initial Host Sites for implementation of SPGS projects in 2010 under one or more SPPAs with a combined capacity of approximately 10 MW. These locations will be chosen based on availability of ground and/or roof space, electric load and age of roof membrane, and will be included in the RFP as Appendix A – RFP Host Site List. The Host Site list will be subject to change. Additional Host Sites for the implementation of approximately 90 MW of SPGS capacity by 2012 will be identified in cooperation with the Seller(s).
NYPA intends to request pricing broken down by fixed annual price of energy delivered each month [$/MWh], for an SPPA term of service of 20 years (each Host Site) for each of the following two categories:
2.1.1 Firm pricing for the first set of identified Host Sites outlined in RFP Appendix A, representing approximately 10 MW of SPGS capacity to be installed with a commercial operation date (“COD”) of 2010. NYPA is interested in receiving comments on the Host Site list including (i) what Host Site information should be included in the RFP; (ii) if site inspections will be required as part of the RFP process; and (iii) what proposers will want to see at each Host Site as part of the site inspection.
2.1.2 Pricing for the yet to be identified Host Sites in each of the following five SPGS project increments: 100 kW, 250 kW, 500 kW, 1 MW and 5 MW per site. NYPA is interested in receiving comments as to (i) how pricing would be estimated for the sites yet to be identified:(ii) what variables and assumptions should be allowed in setting the prices; and (iii) how final pricing should be established once the sites are identified.
2.1.3 Pricing for a large scale SPGS with a capacity of 10-50 MW to be interconnected directly into a utility distribution grid. It is expected that a large scale SPGS would be ground mounted and may be sited on vacant land designated as brownfield.
NYPA intends to allow a 20 year term of service for one, multiple or all sites starting years 2010, 2011 and 2012, but will also consider various terms of service for each site. With respect to pricing, NYPA is seeking fixed prices (in $/MWh) in the form of a flat price that would be effective for the full term or a base price for the first year with a specified annual escalation percentage or index to be effective in subsequent years. NYPA is willing to consider a range of payment structures, including buyout terms, and is interested in receiving information about various options recommended by responders as well as a summary of the rationale generally used to justify indexed pricing.
Appendix B - NYPA Preferred Power Purchase Agreement (“PPA”) is attached for reference. NYPA intends to include its preferred PPA as part of the RFP. NYPA is seeking comments on how the requirements of the PPA would affect proposals. NYPA is also seeking suggestions on specific changes to this document which may result in a more favorable PPA, as it would be NYPA’s preference not to accept material changes to the l preferred PPA from winning proposer(s).
2.2 Other Pricing Assumptions
2.2.1 NYPA intends to request pricing with and without environmental attributes, i.e. the Renewable Energy Credits (REC), and with and without carbon credits. NYPA is interested in comments on how pricing with and without these attributes and credits will affect pricing.
2.2.2 NYPA is interested in receiving comments as to whether (i) a single energy price ($/MWh) incorporating all products (e.g., energy, RECs and carbon credits) should apply or (ii) individual pricing for each product supplied by Seller should apply.
2.2.3 NYPA is interested in receiving clarification on how clean energy tax credits may be applied to SPGS installed on customer property, how these tax credits will impact SPPA pricing, and any potential circumstances which could jeopardize the tax credits and any associated liabilities.
2.2.4 NYPA shall require that pricing reflect the use of prevailing wages pursuant to New York State Labor Law Section 220 for all on-site labor in implementation of all SPGS projects.
2.2.5 Taxes and Permitting Fees: Generally, NYPA’s non-business customers are exempt from all New York State and local taxes and they do not pay any real estate taxes for sites whether owned or leased. In addition:(i) some NYPA customers are exempt from local building codes, but; (ii) in some instances they voluntarily comply with New York State and local building codes; and (iii) in general and subject to exceptions, the code compliance function normally performed by a local jurisdiction is performed by designated customer’s Code Compliance staff.
NYPA and its customers cannot guarantee that a Proposer’s installation at a customer site will be exempt from local real estate or, if applicable, personal property taxes. If such taxes are assessed, Proposer will be responsible for and pay all such taxes. Proposals should include: (i) price estimates for sites located on real property that is exempt from such taxes; and (ii) an assessment of the likelihood that such taxes will be imposed on its installations and the estimated cost thereof. A Respondent should set forth its assumptions about how such compliance would affect SPGS costs and schedule.
2.2.6 In the event that a Host Site is identified by a respondent as potentially suitable but for the condition or age of the roof, NYPA may request that the respondent include a plan and methodology for performing roof repair and/or replacement work, as well as the costs of such work, including materials and labor. NYPA is interested in receiving comments on how this option may be priced and how it may affect proposals and pricing.
2.2.7 NYPA generally requires a form of security such as a performance and payment bond or a letter of credit to ensure timely completion of projects and to ensure that the SPGS is removed from the Host Site at the expiration of the term of service. NYPA is interested in receiving comments on how this requirement may affect proposals and pricing.
2.2.8 Installation of SPGS at Host Sites will follow one of three operational strategies: (1) “behind the meter” operation in which the SPGS is designed so that the entirety of its energy output is consumed by the customer on site; (2) net metering operation in which the SPGS may, under some circumstances, export power to the grid; and (3) grid support operation in which the SPGS is installed to feed the local distribution grid rather than a specific customer load. NYPA is seeking comment and guidance on the applicability of various SPGS technologies, installation techniques, and site selection methods for each of these operational scenarios.
2.2.9 As indicated in Appendix A, there are expected to be approximately nine categories that will describe the entirety of SPGS installations in this program. NYPA will not have identified the full 100 MW of potential Host Sites by the time the RFP is released. In the RFP phase, respondents may be asked to supply an annual price of energy ($/ MWh) for each of these site categories. NYPA is interested in feedback on allowing separate pricing for each category. Also, if it is felt that pricing for sites yet to be identified can vary within a given category. NYPA would be interested in a list of parameters that could cause such variability. NYPA is also interested in suggestions on how to standardize such price quotations so they can be evaluated on a consistent basis.
2.2.10 NYPA would consider the possibility of an up-front capital infusion in this project if it resulted in a significant reduction in the price of energy over the term of the PPA. RFEI responses should include estimates of the capital infusion required to substantially affect the price of energy from a 100 MW SPGS over a 20 year term.
2.2.11 Respondents shall summarize the assortment of external subsidies (federal, state, local or other) that may be available for this solar power project and how each can affect the annual cost per MWh. NYPA may identify various brown fields available in New York suitable for Host Sites and is interested in feedback on additional subsidies that may be available to develop SPGS on these sites.
2.2.12 While it is understood that sources of renewable energy, such as solar, usually incur a price premium, the Authority operates within the competitive electric market in New York State. It is not financially supported by the State and has no taxing authority; rather, it raises capital through the issuance of Revenue Bonds, which are repaid from revenues from the sale of its power services. The Authority will seek to incorporate these purchases into its portfolio of resources for the benefit of its present and/or future customers, to the extent authorized by current law, or pursuant to other legislation as may subsequently be adopted. The Authority will seek to use the output of the SPGS to meet the needs of customers within the competitive framework of New York State at prices that are economical, stable and predictable over the long run and, therefore, will be expecting the SPGS owner/operator to adhere to the high reliability standards demanded by the consumers of electricity. Therefore, evaluation criteria will include, but not be limited to, the following (not necessarily in order of importance): Evaluated price of Respondent’s proposal and the extent to which the offered pricing proposal will provide value within the competitive electricity market in New York State.
2.2.13 NYPA may want to purchase a small portion of the 100 MW capacity under a design-build offering. For example, under the initiative the Seller may be asked to install a SPGS at a location and sell it to NYPA upon completion of installation. NYPA is interested in suggestions as to how this option may be priced.
2.2.14 NYPA may decide to include facilities in the RFP site list that are not NYPA electric customers. NYPA may also include electric customers with short-term NYPA contracts set to expire during the term of the 20 year PPA. Therefore responses to this RFEI should include a discussion on the effect on energy pricing of having multiple PPAs for the 100 MW of SPGS. It is anticipated that the majority of the 100 MW would be contracted through a PPA directly with NYPA. The number of PPAs with separate entities would be limited. The majority of these PPAs would be with state or city government agencies.
2.3 Occupancy Agreement and Liability
As the SPGS will be located on the property of NYPA customers, it will be necessary for the successful respondent(s) to the RFP to execute occupancy agreements with the NYPA customer that controls the specific Host Site. Accordingly, NYPA is requesting the following information with respect to an occupancy agreement:
2.3.1 Sample Occupancy Agreement. Please provide copies of occupancy agreements (redacted, if necessary) that respondent has determined to be acceptable in connection with prior solar energy projects.
2.3.2 Terms and Conditions. Please provide a breakdown of the pertinent terms and conditions that should be included in an occupancy agreement.
2.3.3 Host Activities that Affect SPGS Operation. Please advise as to how the occupancy agreement should treat instances in which the Host, in conducting its core business, finds it necessary to cause the SPGS to be completely or partially moved or removed from service on a temporary or permanent basis.
2.3.4 Host Site Categories. As it is anticipated that (i) there may be different categories of SPGS mounting arrangements, e.g., roof mount, ground mount, and (ii) different types of customer categories, e.g., public schools, municipal buildings, transportation facilities, factories, please advise if different forms of occupancy agreements would be required to accommodate the various categories and please advise to the required distinctions among such agreements, if any.
2.3.5 Host Security Requirements. Please advise as to the level of security that should be posted by the Seller with the Host to ensure that the SPGS is removed at the end of the term and that the Host Site is restored to its original condition.
2.3.6 Site Access. Please advise as to the level of site access that developer, its contractors and its lenders will require during the (i) installation process, (ii) the term of service and (iii) the SPGS removal period.
2.3.7 Lay-Down Area. Please advise as to the lay-down and storage requirements during the construction and operating periods.
2.3.8 Seller Lost Revenue. Please advise as to how the occupancy agreement should deal with any PPA revenue foregone by Seller in connection with actions by the Host.
2.4 Technical Specifications
For the first set of Host Sites with COD 2010, to be listed in the RFP Appendix A, NYPA intends to require that proposals submitted in response to the RFP include:
2.4.1 Performance: for each Host Site describe the performance of the SPGS, including: (a) anticipated monthly energy and peak power values for the duration of proposed term(s); (b) identification and discussion of any variables identified that would affect the response to (a), and the impact thereof, such as system degradation, scheduled and unscheduled system downtime, and (c) where applicable, proposed approaches to minimizing the adverse impact of the variables.
Note: Listing in the Host Site List does not constitute a warranty or representation by NYPA or its customers that such site is suitable for a respondent’s purposes. NYPA intends to arrange for a walkthrough of each Host Site and to require that the respondent be responsible for evaluating and determining the suitability of a specific Host Site for installation of the SPGS based upon its own independent inspection and investigation. A respondent may submit a request for additional information about a specific Host Site to the NYPA point of contact. The Host Site List is subject to change. As part of this RFEI, NYPA is interested in feedback on (i) how multiple Host Site inspections should be coordinated: (ii) what Host Site facility information should be provided for the various installation types, ie roof, ground and brownfield: and (iii) which parts of each facility should be inspected. In addition, NYPA is interested in feedback about the suitability of the categories listed in Appendix A for installation of an SPGS.
2.4.2 Design and Schedule: Appendix C – Implementation Scope of Work is attached for reference. NYPA intends to include a photo-voltaic (PV) implementation scope of work similar to Appendix C in the RFP. Please comment on this document highlighting any concerns about how this document would affect proposals.
2.4.3 A full and complete description of respondent’s operation and maintenance plan (e.g., company and/or individuals involved; how such operation will be performed; type of access required to the Site; anticipated role of the customer in the operation and maintenance phase).
2.4.4 Detailed plans for interconnection, net metering (if applicable) and billing. NYPA intends to require that the Seller be responsible for all interconnection costs, requirements and risks and for completing all requisite interconnection arrangements with the applicable transmission/distribution owner (generally the local utility in whose service area the Host Site is located). NYPA seeks comments on this requirement and also on a potential requirement for the Seller to identify any impact to the Host Site’s existing electric utility bills incurred as a result of the expected operation of the SPGS.
For Host Sites that will be identified in partnership with the winning proposer and NYPA and its customers to be implemented in 2011 and 2012, NYPA intends to require that proposals include the following:
2.4.5 Performance for each of five SPGS project increments; 100 kW, 250 kW, 500 kW, 1 MW and 5 MW per site, including: (a) anticipated monthly energy and peak power values; (b) identification and discussion of any variables identified that would affect the response to (a), and the impact thereof, such as site specific location/condition, system specifications, system degradation, weather, and scheduled and unscheduled system downtime, and (c) where applicable, proposed approaches to minimizing the adverse impact of the variables.
3 ADDITIONAL ITEMS
3.1 NYPA is interested in learning about solar PV technologies that may be suitable for installation at customer facilities. These technologies may be installed as part of a PPA or under an equipment purchase contract only. Examples include technologies specifically designed for ground mounting, carports, membrane integrated PV, etc.
3.2 NYPA is interested in receiving information about the status of the solar power industry as it relates to availability of solar panels, inverters and qualified labor in order to complete the build-out plans of this initiative.
3.3 NYPA is interested in the potential of this anticipated 100 MW project to stimulate the New York State economy by providing jobs for installers and/or manufacturers of photovoltaic panels or related components. The incorporation in the RFP of a requirement that the project include local content and be constructed and maintained by local workers would likely encourage economic development within the region. As such, NYPA is requesting comments on the following:
· a requirement in the RFP that a specified portion of the material comprising the project be sourced locally;
· a requirement in the RFP that local labor represents a specified portion of the workforce charged with developing and constructing the project and the entire workforce charged with operating and maintaining the project after commercial operation;
· a stated preference in the RFP for proposals that would establish a PV component manufacturing and technology industry in New York State, particularly in Western New York;
· a stated preference in the RFP for projects that encourage and support the development of green jobs in Western New York;
· a stated preference in the RFP for proposals that would develop regional PV industry maintenance facilities and/or training centers in New York State.
· effects of such requirements or preferences on the project schedule and the price of energy.
Appendix A – RFEI Host Site List
Sample Installations
- Sample school site with rooftop PV installation in upstate NY location.
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- Sample school site with rooftop PV installation in New York City metropolitan area.
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- Sample school site with ground-mounted PV installation in upstate NY location.
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- Sample municipal building site with rooftop PV installation in upstate NY location.
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- Sample municipal building site with ground-mounted PV installation in upstate NY location.
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- Sample municipal building site with rooftop PV installation in metropolitan New York City location.
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- Sample grid support site with rooftop PV installation in metropolitan New York City area.
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- Sample grid support site with rooftop PV installation in upstate New York.
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- Sample grid support site with ground-mounted PV installation in upstate metropolitan New York City area.
- Location: -------
- Aerial photo.