A Check List for Local Government Green Power RFPs
Local governments seeking new power providers in a competitive
electricity market may be interested in issuing a Request For Proposals
(RFP) for "green" power supply options and prices. Since "green"
power is a new product offering, both buyers and sellers of green
power are still learning how to structure RFPs in order to best
satisfy each other's distinct market information needs.
Background:
Companies that compete to gain your business may be offering electricity
produced using cheaper or cleaner electricity. Though many local
governments have already released RFPs seeking a new power provider,
few have focused on how to best structure bidding requirements to
facilitate the purchase of clean, renewable energy supplies, also
referred to as "green" power. Those that have issued RFPs for green
power have not received viable, credible bids, in part, because
of the way the RFPs have been designed.
Local governments are learning that purchasing electricity is a
difficult process that will likely only result in savings of 1-4
percent off of the total bill [See Local
Government Power Supply RFP Status Report Case Study] .
Preparing a RFP is very complicated, time intensive, and expensive.
When it comes to renewable energy, the process is even more complicated
because of the difficulty of accounting for positive environmental
benefits associated with renewables but which have not been quantified
in most RFPs and the price premiums attached to these cleaner electricity
products.
Opportunities:
Local governments interested in promoting a more sustainable electricity
system have three choices:
- Inform: Include information about green power options in the
billing envelope for other municipal services.
- Buy: Purchase green power for your municipal facilities. For
example, the Governor's Mansion in Colorado is powered completely
by wind power.
- Aggregate: Aggregate residents to get better electricity rates
and to influence the mix of resources and services they receive.
Entire cities can "go green" under a municipal aggregation program.
If a local government wants to pursue the buy and/or aggregate
options, it will need to develop a RFP. If that is the path you
want to take, gather and evaluate critical data relating to your
own electricity consumption and collate information about the amounts,
patterns and costs of your constituents' electricity consumption.
The RFP process consists of these steps: identify energy requirements;
develop RFP; distribute to potential suppliers; review/analyze responses;
select short list of bidders and negotiate a power purchase deal.
Challenges:
The chief challenge associated with a green RFP is that renewable
energy costs more than generic sources of energy. Local governments
seeking alternative supplies typically are motivated by cost savings.
In order to sell green power to local decision-makers, the case
has to be made on the grounds of environmental responsibility, local
economic development, or an integrated package of energy services
that includes energy efficiency technologies to reduce power demand,
thereby lowering bills and offsetting the added expense of green
power.
Proposed Solutions:
When San Jose issued a RFP requesting information about renewables,
the open-ended nature of the bid frustrated sellers who required
more specific benchmarks and/or targets in order to submit a viable
and workable bid response. One solution to this problem is to keep
it simple when issuing an RFP. In addition, clear direction should
be provided to bidders about how you will evaluate the "green" portion
of a requested supply portfolio.
Something to keep in mind while developing a RFP is that California
currently derives 11 percent of its electricity supply from renewable
resources.
Your RFP should at least do no harm and, if possible, improve on
the existing mix. Weigh your options. One can base a RFP on a percentage
commitment to purchase renewables (e.g., specify 25 percent of our
electricity to be green), or on a cost-effectiveness test (e.g.,
commit to buy as much renewable energy as possible if it doesn't
raise the electricity bill from 1997 levels). At a minimum, make
certain that any non-renewable power contributes no more air emissions
or nuclear waste than the current mix.
Checklist:
Here is a short checklist of issues to consider when designing
and evaluating a RFP:
- Do you have a preference for a certain type of renewable energy?
- Do you have a preference for the location of the renewable energy
supply?
- Are there particular policy goals, such as economic development,
you want to accomplish with your purchase and how can achievement
of that goal factor into your bid evaluation?
- Do you want to incorporate energy efficiency into your green
power purchase as part of an integrated clean power energy management
program?
- Are you comfortable with the company offering the electricity?
- Which proposal has the best price?
For More Information:
Center for Energy Efficiency and Renewable
Technologies
Lori Jablonski
1100 11th St. #311, Sacramento, CA 95814
(916) 442-7785 • FAX (916) 447-2940
e-mail: lori@cleanpower.org
Lawrence Berkeley Laboratories
Ryan Wiser
1 Cyclotron Rd., MS 90-4000, Berkeley, CA 94720
(510) 486-5474 • FAX (510) 486-6996
e-mail: rhwiser@lbl.gov
Interstate Renewable Energy Council
Jane Weissman
15 Haydn St., Boston, MA 02131-4013
(617) 323-7377 • FAX (617) 325-6738
e-mail: weissmanpv@aol.com
Back to Case Studies/Fact Sheets
Index
|
