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Virtual Power Purchase Agreements

Develop a Request for Proposals (RFP)

Once you have identified your approach to the market and established your criteria, it is time to run a more formal RFP. This process may need to be conducted with the guidance of your procurement, finance, and legal departments. Some examples of RFPs developed by other cities include these by the City of Philadelphia, the District of Columbia and the City of Houston.

When developing a RFP, you should provide a standard set of information to developers. This encourages accurate, comparable bids. See the “Discover Providers and Pricing” section for more information. You may also want to ask for more details regarding:

  • Each project’s status (e.g., Have the permitting process and various inspections been concluded? Where in the interconnection queue—the schedule of interconnections to be built—is the project?)
  • The project developer’s history and capabilities (e.g., How many projects has the developer completed to date? What is the developer’s credit score and history of profitability? What level of credit support will be in place to protect the project?) 
  • Additional information regarding the developer’s proposal. Refer to Chapter 6 of the EPA’s Guide to Purchasing Green Power for more considerations. 
  • Before issuing the RFP, ensure that you have clearly defined your city’s priorities and risk tolerances, which were initially discussed in the “Getting Started: Clarify Priorities” and in the Build a Team” sections, respectively. If there are specific areas or aspects of the transaction that are nonnegotiable for your finance and legal team, you should communicate those in the RFP. Specific examples of such issues could include term length, operational date, or credit requirements. For more information, see ACORE’s Renewable Energy Guidebook, which provides an overview of PPA deal terms. Also consider including any special requests you may have, such as desired risk-mitigation options or specific requirements regarding communications in the future. Developer Screening Criteria:
    Chapter 6 of the EPA’s Guide to Purchasing Green Power outlines the key criteria to use when evaluating project developers and important contract terms.
    Example RFPs:
    The City of Philadelphia released a RFP for large off-site PPA contracts that also provided a project term sheet, energy use data, standard contract provisions, and other resources. The District of Columbia utilized a RFP to engage a technical consultant who would support their procurement through a solicitation for a PPA. The City of Houston ran a RFP for renewable energy as well.
    Key Contract Terms:
    ACORE’s Renewable Energy Guidebook provides an overview of key PPA deal terms.
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