Run the RFP

At stage 6, you proceed with the mechanics of the procurement process itself. The following information may be helpful guidance; however, you should be sure to tailor this guidance to the requirements of your company’s procurement policies and practices.

This page describes three topics:

• When and how to issue a request for information (RFI) as a first step.

• How to develop and issue your request for proposals (RFP).

• What to do with the proposals you receive.

The RFI as a first step

Many companies may find it difficult to coalesce internally around transaction preferences and risk tolerances when pursuing a PPA for the first time. Similarly, some companies may develop such preferences internally but, due to a lack of prior experience, lack certainty that these preferences are realistic in the market. In these cases, issuing an RFI as a first step can allow the company to better understand the range of options available that might meet its needs. In particular, an RFI might allow you to obtain indicative pricing for a given set of preferences. Responses to an RFI will be more general and high level than an RFP (requesting a specific project proposal), and can help identify developers that the buyers are interested in working with as well as shape the specific requirements or project details to be outlined in an RFP.

One option for issuing an RFI is via the BRC Canada’s Marketplace. If you issue an RFI through the Marketplace, it will be submitted to all project developers active in the system. They will then have a chance to respond through the Marketplace platform. One benefit of this platform is that you can also choose to remain anonymous if you desire.

The RFP

The primary step in this stage is to issue an RFP. If you have engaged a consultant or broker to assist you in the procurement, that firm may run the RFP process for you; this section is largely intended for those companies that are running the RFP process themselves.

The key to running a successful RFP process is to be appropriately specific; this will allow you to make apples-to-apples comparisons of the proposals you receive. Because the economics of a proposed transaction depend to a large extent on various terms, if you fail to specify your preferences then it will be exceedingly difficult to compare proposals.

However, you should consider also specifying that responses may also include non-conforming proposals if the project developer believes it has a particularly attractive alternative.

BRC Canada developed an RFP Template to provide buyers with a starting point from which they can understand the range of terms that they might consider including in an RFP issued to project developers.

Evaluating proposals

After you have received proposals in response to your RFP, you (with the help of a consultant or broker, if you have engaged one) must evaluate those proposals. This should involve two major considerations:

• Are the terms (including allocations of risks) in the various proposals the same such that you can directly compare the proposals?

• Do you have, or can you produce or acquire, information about the expected wholesale market prices relevant to each proposal?

At this point, you may be able to create a short list of contending proposals based on these considerations. Some buyers at that stage prefer to contact the short-listed project developers and ask for “best and final” pricing; other companies demand this in the RFP and hold to that.

In either case, you might be comfortable conducting more in-depth due diligence on one favorite or on the entire short list. This due diligence is likely to involve conducting or purchasing (from consultants or others) more substantial analysis of the economics of the proposal(s), including wholesale market price forecasts. The level of analysis depends on what you will need to provide to the relevant approver in stage 9.

One final question relating to this process is whether to award exclusivity to any project developer. We have seen different companies handle this differently. In the end, it is likely that your corporate procurement policies and practices will dictate your decision on this question.