Victorian Government’s Solar Certificate Tender

What is the Solar Certificate Tender?

On 2 March 2017, the Victorian Department of Environment, Land, Water and Planning (DELWP) released a Request for Tender (RFT) for the procurement of Large-scale Generation Certificates (LGCs) from up to 75 megawatts of new large-scale solar projects in Victoria under the Solar Certificate Tender process.  As part of this initiative, the Victorian Government aims to bring forward investment in new renewable solar energy projects in Victoria by procuring up to 152,000 LGCs per annum. 

The Solar Certificate Tender is an extension of the Renewable Certificate Purchasing Initiative, the first round of which in 2015 and 2016 drove the development of the 30MW Kiata Wind Farm by Windlab Ltd and 66MW Mt Gellibrand Wind Farm by Acciona Energy. Project sponsors should note that the Solar Certificate Tender is separate and in addition to the Victorian Renewable Energy Target auctions, which are expected to begin in the second half of 2017 (subject to the passing of enabling legislation). 

Key dates for the RFT

The RFT was issued on 2 March 2017 and requests for information are open until 5 April 2017. Bids for the RFT will close on 20 April 2017 and successful tenderers are expected to be notified in June 2017.

DELWP is seeking to enter into an LGC Sale and Purchase Agreement with successful tenderers for a period of 5 years, with a put option (held by the tenderer) and a call option (held by the State) to extend the term by 5 years to a total term of 10 years.

DELWP’s evaluation process requires that tenderers first demonstrate adherence to the mandatory criteria, following which tenderers will be assessed against their responses to the merit criteria and value for money.

The form of the LGC Sale and Purchase Agreement is available as part of the RFT package. It is anticipated that the LGC Sale and Purchase Agreements will be executed in August or September 2017.

Mandatory Criteria

Tenderers must comply with the following mandatory criteria:

1. the facility must be located in Victoria;
2. the project technology must utilise an eligible renewable energy source under the Renewable Energy (Electricity) Act 2000 (Cth), be based on a solar technology and supply electricity as the sole facility energy output;
3. the project must commit to contracting for the sale of a minimum of 20,000, and a maximum of 81,000, LGCs per annum and the proposed LGC annual volume cannot exceed the facility’s P50 LGC production forecast;
4. the proposed LGC minimum annual volume must not be less than 70% of the proposed LGC annual volume;
5. tenders must be for a ‘new’ project (i.e. a facility that has yet to reach financial close and has not substantially commenced construction or commenced the order of or installation of major equipment) or an expansion or augmentation of an existing project (in which case the LGCs must be clearly derived from the new, additional component of the project);
6. the project must be connected to the interconnected transmission and distribution system of the NEM; and
7. the project must achieve practical completion  on or before 31 October 2018.

Merit Criteria

The tenderers will be evaluated against the merit criteria set out below:

1. ability to achieve timely completion of the project, including:
2. capability and capacity of the tenderer to successfully implement the project;
3. financial viability of the project;
4. technology and performance of the project;
5. regulatory approval status of the project;
6. Victorian economic development benefits – such as by demonstrating how competitive local industry participation will be maximised;
7. local community engagement; and
8. LGC supply certainty.

What should tenderers be considering in preparing their tenders?

It is expected that the Solar Certificate Tender will attract proposals from a range of competitive renewable energy projects.

HSF has advised on the two successful projects in the Renewable Certificate Purchasing Initiative, Mt Gellibrand and Kiata Wind Farm. We know the risk allocation and key ‘bankability’ issues in the proposed form of LGC Sale and Purchase Agreement.

Our full service renewables team in Victoria can advise on all aspects of proponents’ bids, project development and funding.