Australia - ACT Renewable Energy Reverse Auction.
Legal News & Analysis - Asia Pacific - Australia - Energy & Project Finance
24 October, 2019
Following on from the four reverse auctions held between 2012 to 2016, the ACT Government has announced a new renewable energy reverse auction (the Reverse Auction) to “safeguard the delivery of sourcing 100% renewable electricity by 2020 from within the ACT or across the National Electricity Market”.
The successful proponent(s) will be awarded with a 10-year contract to provide up to 250 megawatts (MW) of renewable electricity.
The Request for Proposal (RFP) is being driven by the ACT Environment, Planning and Sustainable Development Directorate (the Directorate).
Proponents will be able to enter their bids to the Advisory Panel on 15 November 2019 and the Reverse Auction will remain open until 4:00pm on 7 February 2020.
After 7 February 2020, proponents will be able to rebid a lower feed-in tariff price to increase the likelihood of their bid being accepted. This period will end at the discretion of the ACT Government once no further significant rebidding is anticipated. To enable proponents to make an informed decision as to whether they wish to rebid, the ACT Government will publish pricing guidelines.
WHO IS ELIGIBLE?
The Reverse Auction is open to any renewable generation type (i.e. solar, wind, hydro, wave or geothermal). For a proposal to be considered, the proponent must:
- have a generation capacity of no less than 20 MW of wind generation (wind-equivalent capacity or WEC), which equates to 25 MW of solar photovolataic (PV);
- provide the ACT Government with the large-scale generation certificates created over the 10-year contract;
- deliver 0.1 MW, 0.2 MWh of battery for each MW of WEC delivered;
- submit a new (greenfields) generation proposal only;
- if successful, contribute $100,000 per MW of WEC in industry support contributions to the ‘Renewable Energy Innovation Fund’ (REIF). REIF is an industry-funded mechanism created in December 2015 to support the ACT’s renewable energy industry. The REIF provides funding to organisations via ‘REIF Direct Grants’ to support innovation and emerging technologies in Canberra’s renewable energy innovation ecosystem (see link to the ACT Government website here); and
- contribute and engage with the ACT’s local renewable energy industry and be assessed on their local community engagement plan.
More than one proponent may be accepted for this project and any combination of generation may be accepted to deliver up to 200 MW of WEC (which equates to 250 MW of solar PV) over the course of the year (i.e. 100MW of wind 125MW of solar PV).
The Reverse Auction is not open to proponents who have commenced installation of renewable energy equipment (i.e. installing wind turbines) or proponents who have taken steps in preparation for construction (i.e. excavation in preparation to construct a wind turbine).
EVALUATION OF PROPOSALS
Proponents will have their proposals reviewed by an Advisory Panel that is informed by expert analysis undertaken by technical and financial consultants. The Secretariat of the Directorate will facilitate the process. Upon receiving a recommendation from the Advisory Panel and the Directorate, the Minister will decide which proposal is considered to be ‘value for money’ when assessed against the evaluation criteria.
Unlike previous auctions, proponents will be assessed against “the degree of integration with the ACT renewable energy ecosystem”. This criterion will be assessed on:
- opening or expanding ACT offices;
- the use of ACT supply chains; and
- collaboration with ACT industry and tertiary institutions, data sharing and other opportunities.
Generally, proponents will be evaluated against a range of criteria and weightings as described below.
|Evaluation||Weighting||What must the proponent submit?|
|Risks to timely project completion||50%||Detailed project plans, budgets, financial models and risk management plans.|
|Local Community Engagement||20%||A Local Community Engagement plan setting out both best practice engagement practices and outcomes.|
|ACT Economic Development Benefits||20%||A Local Investment Plan outlining how they will contribute to the ACT’s local investment priorities.|
|Compensation cap amounts||10%||Proponents must set out at what level compensation will be capped in the event of a future change in Territory law.|
COMMUNITY SUPPORT AND ENGAGEMENT
The ACT Government has emphasised the importance of promoting community engagement processes and outcomes for proponents. To deliver their proposals, proponents should consider:
- the Clean Energy Council’s ‘Community Engagement Guidelines for the Australian wind industry’; and
- the Australian Renewable Energy Agency’s ‘Establishing the social licence to operate large-scale solar facilities in Australia: insights from social research for industry’.
The auction will be open for bids from 15 November 2019. Complete auction documentation, including a request for proposal and a draft deed of feed-in-tariff entitlement, will be available on or before 15 November 2019.
Proponents can register for more information about the Reverse Auction and receive notification when the auction is open by emailing email@example.com
For further information, please contact:
Gerard Pike, Partner, Herbert Smith Freehills