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Procurement Guidance Menu

Large-Scale Renewables Aggregation Guidance

Establish a Governance Structure

It is important for procurement groups to develop a governance structure early on that establishes how key decisions are made. Effective governance structures for aggregation will enable efficient decision-making during deal negotiations with a project developer.

Buyer-led aggregated deals can take on many different forms, but they generally fall into three categories: the anchor offtaker model, the equal offtaker model, and the tiered model (see Exhibit 7).

  • Anchor Offtaker Model

    One buyer decides to pursue a large-scale renewable procurement and invites others to join. The anchor buyer plays a critical role in creating momentum for the deal and moving the project forward. The anchor buyer often purchases a larger portion of output and makes key decisions about the project on behalf of the group, although smaller buyers can also serve as an anchor by convening and facilitating a group.

  • Equal Offtaker Model

    Multiple buyers make key decisions jointly and tend to split the project’s output more evenly.

  • Tiered Model

    A core group of partners take primary responsibility for managing the procurement and decision-making of a broader group. This approach of centralizing decision-making authority can be particularly useful to help larger groups continue to make steady progress. However, when new parties are invited to join, the core group of decision makers should clearly communicate this structure and explain which terms have been decided and which are negotiable.

procurement group models
Procurement Group Models (Source: RMI)

The video below provides an overview of the three different procurement group governance structures and presents a case study for each.

When setting up a procurement group, participants should do the following things collectively:

  • Establish who will facilitate or project manage the ongoing procurement. This can be a single buyer, a sub-group of buyers, or a third-party consultant.
  • Establish a meeting schedule and communication norms. Procurement groups will likely have weekly or biweekly conference calls, which will be most productive if they have a clear agenda and effective facilitation.
  • Determine who makes what decisions, when and how they are made, and how decisions are communicated to the group.
  • Identify deadlines for all partners to obtain official sign-off from senior decision makers for the deal.
  • Clarify who will issue the RFP, review responses, and ultimately select a project. Past procurement groups have had RFPs evaluated by a single buyer, a sub-group of buyers, all buyers, or a consultant. Having more people review the RFP responses will generate more alignment and acceptance of the results but will also increase the amount of time required.
  • Establish whether outside experts or consultants will be required to help with the procurement, how they will be selected, and how any potential costs will be shared.
  • Decide whether other buyers can be invited to “piggyback” and join the procurement after the RFP is issued.
  • Determine how the group will handle the announcement of a deal, including press coverage.

The video below presents three examples of procurement group processes and governance structures.