Since SOURCE’s inception, we have discussed request for proposals (RFPs) at length from the developer’s perspective. We provided local developers with advice for competing with national installers who generally have a lower cost of capital and can build with lower margins, and discussed why storage is increasingly a hot topic in RFPs, though it is only viable in a few limited markets. We have also discussed the inherent “race to the bottom” problem with RFPs, and how developers should choose RFP opportunities wisely.
But, now, with Sol Systems doing development work with specific commercial clients, and we realized we’ve never discussed RFPs from the customer perspective. Until now….
You have gotten to the stage of “yes, we [insert the name of your awesome company here], are going to release an onsite solar RFP.” It’s likely been a long road for you. And by simply arriving here, you have accomplished a lot. You’ve herded a lot of cats to obtain all kinds of unexpected internal approvals! So have yourself an adult beverage. Pat yourself on your back. And take a deep breath. Now the real work begins.
Because you’ve put in so much sweat equity thus far, you should be aware of some common misconceptions and pitfalls that can threaten the success of your RFP. In the spirit of sharing some love, our Director of Development Engineering, Mark Cooper, shares seven common mistakes made in issuing RFPs.
1. Certification Requirements
- You will need to specify if your construction labor must be union or not. This is one of the largest variable cost drivers in solar construction.
- Resist the temptation to require solar industry certifications (NABCEP) or local contractor registrations. A quality solar vendor can be identified by a history of successfully installing similar projects. Experience is the best qualification. Solar install firms have specific skills and partnerships established for a successful install. Requiring special certifications or something similar will reduce the efficiency of that team. NABCEP is the most well-known, but there are other just as good, so there is no specific reason to requires NABCEP. Focus on experience. Not just in “winning bids” but in completing projects on-time and on- budget.
- On the contracting side, some states have published lists of ‘Renewable Energy Professionals’ or similar. Some RFP require that bidders be on this list. When you check the list online, many of the companies are bankrupt and others are in the lighting efficiency business. What started out sounding like a reasonable requirement just limits access to the best PV partners.
2. Equipment Requirements
- Require that the installed system meet all local building and electrical codes, and that all equipment be UL listed. Beyond that, specific requirements will increase cost and possibly prevent the solar firm from designing with the newest and safest equipment.
-Example: Solid aluminum or stainless steel can be replaced at lower cost with zinc or aluminum plated steel.
-Example: Module technology (thin film vs. polycrystalline vs. monocrystalline) should be at the discretion of the PV firm
-Example: Inverter technology (micro vs. string vs. central) should be at the discretion of the PV firm
- Don’t specify particular manufacturers. Trust your PV supplier to know the best combination of equipment to allow for a safe and efficient install at your particular site. If you don’t feel like your team has the engineering expertise to validate your PV supplier’s choices, consider leveraging an internal engineer within your company or ask them for a recommendation on a third-party engineering firm to help.
3. Thinking Big is Better
- Don’t let big names or a stock symbol wow you. Focus on the history of the work. And work that is relevant to your scope and needs.
- While many companies might have established operations in many states and many projects completed, these features might be a sign of high overhead and low rate of actually building contracted projects. A smaller firm with a track record of success on the projects they carefully select may be the right choice.
- Your best chance of success is with a firm that that has reliable financing options and a history of successful installs.
4. “Consultant”: Valuable or Not?
- Do you need a third party for sheer bandwidth, management, and risk management? The time and added cost might make sense for you.
- Margins in the solar industry are very thin. A consultant fee can easily be enough to prevent a project from providing both a benefit to the offtaker and a breakeven situation for the PV firm.
- The time lost when a consultant runs a complex RFP process often allows local incentives to decline to the point that a project is no longer beneficial. We have seen this happen many times.
- If you have a consultant, be a part of the process. Reach out to a small number of quality PV partners to discuss the project before you issue an RFP. Your best chance for long-term savings is to move forward ASAP with partners who can provide moderate energy savings with a high probability of rapid install. Plus, your consultant will appreciate it as well, as they will have a clear understanding of your expectation of results and what success looks like.
5. Multiple RFP Winners
- Margins in the solar industry are very thin (have we mentioned that yet?). Reduced administrative costs and increased economies of scale that come from a single award are often critical in making a portfolio of projects pencil. So, awarding your entire portfolio to single firm can potentially create added value and savings.
- That being said, each PV firm is going to have different strengths and weaknesses and perhaps some markets where they are more competitive than others. Depending on the size and scale of your portfolio, and the responses you receive, it’s okay to share some of the wealth… giving your 10 sites on the East Coast to one company… and 10 sites on the West Coast to another company.
- If you decided to share the wealth, just remember to scale. If you don’t have a large national portfolio, it likely doesn’t make sense to share. If you do have the size to spread the love, don’t award by individual site, award by region.
- No matter the size of your portfolio, don’t spread your portfolio across more than 2 or 3 winners Even with a massive portfolio, you are still going to lose economies of scale. Which means a higher PPA price for you. And that would not be cool for you.
6. Dictating System Type: Rooftop vs Ground Mount vs Carport
- We know you’ve done your research. So, it’s a good opportunity to have your PV firm weigh in on the possibilities. Beware of putting them in a box—help them (us!) help you!
- Provide all options and rely on your PV firm to propose the best system for you.
7. Dictating Locations
- Again, we know you are smart and have done the research. Just remember we live this work every day. You may or may not think something will pencil. But let us show you. Give us all your locations (roof, ground, parking lots) — and let us do the heavy lift on the opportunity. We have in-depth policy knowledge, track opportunities in new and emerging markets, and it is our job to advise you, the customer, on strategy. It’s your PV partner’s job to make you look good.
- Developers LOVE data. Give them as much as possible…locations of utility meters and as much information you have about the load at each of those meters: Yearly is good, monthly is better, 15-minute intervals is best. Seriously, it makes our day to receive 15-minute intervals (#nerdalert).
- All this data will help a developer maximize project opportunities and custom-fit them to a state’s individual net metering policy.
Well, there you have it. Best of luck with your solar RFP release, and we hope this knowledge will make you look like a rock star. Feel free to reach out for advice or even just to grab an adult beverage. We won’t charge a consulting fee. And if you are nice, we might even pay for your drink.
This is an excerpt from the February 2017 edition of The SOL SOURCE, a monthly electronic newsletter analyzing the latest trends in renewable energy based on our unique position in the solar financing space. To view the full Journal, please subscribe or e-mail email@example.com.
ABOUT SOL SYSTEMS
Sol Systems, a national solar finance and development firm, delivers sophisticated, customized services for institutional, corporate, and municipal customers. Sol is employee-owned, and has been profitable since inception in 2008. Sol is backed by Sempra Energy, a $25+ billion energy company.
Over the last eight years, Sol Systems has delivered more than 500MW of solar projects for Fortune 100 companies, municipalities, universities, churches, and small businesses. Sol now manages over $650 million in solar energy assets for utilities, banks, and Fortune 500 companies.
Inc. 5000 recognized Sol Systems in its annual list of the nation’s fastest-growing private companies for four consecutive years. For more information, please visit www.solsystems.com.