Victorian Renewable Energy Target 2017 Auction Industry Information Session
Agenda Agenda Item Presenter 08:30 – 09:00 Tea and coffee - 09:00 – 09:10 Welcome and session introduction Simon Corbell 09:10 – 09:20 Auction overview Paul Smith 09:20 – 09:50 Key contract features Matt Dickie 09:50 – 10:20 Questions Panel 10:20 – 10:50 Morning tea - 10:50 – 11:05 Eligibility / Evaluation Matt Dickie 11:05 – 11:20 Community engagement and benefit sharing Katrina Hermann 11:20 – 11:35 Economic development / VIPP Athena Andriotis 11:35 – 12:05 Questions Panel 12:05 – 12:15 Session recap and next steps Simon Corbell 12:15 Information session concludes - 12:15 – 13:00 Lunch - 2
Auction Overview Paul Smith Deputy Secretary Energy, Environment and Climate Change
Auction Context • The Renewable Energy (Jobs and Investment) Act 2017 (Vic) sets the Victorian Renewable Energy Targets (VRET) into legislation: – 25% renewable energy generation by 2020, and, – 40% renewable energy generation by 2025 • In Victoria, by 2025, the VRET will result in up to: – 10,000 jobs – $7.2 billion in new capital expenditure – $2.1 billion in additional economic activity 4
Auction Context • The 2017 VRET Reverse Auction was officially opened on 14 November 2017, and will: – deliver up to 650 MW (389,000 households), – incentivise up to $1.3 billion of investment – create 1,250 construction jobs over two years and 90 ongoing jobs • The auction offers long term Support Agreements (contracts) to proponents, to create the investment certainty required to build new energy generation capacity. 5
Auction Context • The design of the auction has been informed by extensive public and industry consultation by DELWP since the VRET targets were first announced in June 2016. Commercial & Legal Advice VRET Scheme Stakeholder Industry Consultation Auction Consultation Paper Workshops Design June 2016 2016 Summary Report of VRET Stakeholder Submissions December 2016 6
Auction Design • Bids for this competitive reverse auction from renewable energy projects are submitted under a formal Request for Proposal (RFP) process on tenders.vic.gov.au • Successful proposals will be awarded a Support Agreement (contract) with the State of Victoria, providing financial support over a 15-year period. • RFP opened 14 November 2017 • Proponents can request further information on the auction until 31 January 2018. • The RFP will give proponents 3 months to submit their proposals, closing on 14 February 2018. Evaluations will begin the next day. • It is estimated that successful proponents will be notified in July 2018. 7
Auction Design • Under the Support Agreement, successful proponents will be paid through a Hybrid payment mechanism, which is a mix of a fixed Base Amount and a variable Contract-for-Difference payment (CfD). • Proponents to bid the minimum Base Amount payment ($/MW/year) and minimum Payment Cap ($) in two scenarios: – LGCs transferred to State – LGCs retained by proponent 8
Auction Design • 550 MW of large scale renewable energy generating systems based on wind, solar or other energy sources declared by the Minister. • 100 MW of large-scale solar-specific renewable energy. • 13 mandatory eligibility criteria. • 5 evaluation criteria, that will assess value for money of each proposal, in conjunction with bid prices. 9
Thank you Paul Smith Deputy Secretary Energy, Environment and Climate Change
Key Contract Features Matt Dickie Director Renewable Energy Division
Payment Mechanism • Successful proponents will be awarded a Support Agreement (contract) with the State and paid through a Hybrid payment mechanism • Contract-for-Difference (CfD) State will set the CfD ‘strike price’ in $/MWh of eligible electricity - generated - Two way payment mechanism, paid monthly in arrears • Base Amount - Proponents bid for this component to be paid by the State to the Supplier on an annual basis ($/MW/Year) • Payment Cap - All projects will be subject to a project specific cap which applies to the CfD and the Base Amount payments - Proponents bid for this component 12
Contract-for-Difference How a Contract-for-Difference works Proponent pays State State pays proponent Floor price 13
Contract-for-Difference • Strike Price (referred to as ‘Contract Price’ in the RFP) as set for eligible technologies: – $56.52/MWh for wind projects; – $53.06/MWh for fixed plate solar projects; and – $56.85/MWh for single axis tracked solar projects. • Floor Price of $0/MWh. 14
Base Amount Payment • The Base Amount payment is a set price paid annually over the life of the contract • Proponents will bid for this component in the form of $/MW/year • The Base Amount payment is conditional on the facility having met availability thresholds over the year: – 90% of nameplate capacity for wind projects – 95% of nameplate capacity for solar projects 15
Payment Cap • All projects will be subject to a project-specific Payment Cap. • Once a project’s Payment Cap is reached, no further Support Payments will be made by the State to that project until any net CfD payments made to the State result in the cumulative net amount paid being below the Payment Cap. • The CfD payment component will continue to be calculated each month, and if the cumulative payments return to be below the cap, then payment from the State to proponents will resume. • Proponents are asked to bid the minimum Base Amount and Payment Cap they would require to support their project. 16
Large-Scale Generation Certificates • Proponents bid the minimum Base Amount payment ($/MW/year) and minimum Payment Cap ($) in two scenarios: – 100% of LGCs transferred to State – 100% of LGCs retained by proponent • The State will select the option that presents the best value for money 17
Support Agreement Support Agreement scope • Term – A Support Agreement will be for a length of 15 years under the 2017 auction – The anticipated supply date will be a date prior to 30 September 2020, agreed between the State and the Supplier during the tender process • Commitments made under the VIPP and the Major Projects Skills Guarantee will form a part of the Support Agreement 18
Conditions Precedent • The Support Agreement contains a number of Conditions Precedent that must be satisfied, including: – the State accepting the Supplier's Safety, Health & Environment Plan, Communications and Community Engagement and Benefit Sharing Plan, and Industrial Relations Management Plan; – The Supplier providing a Security to the State – the occurrence of financial close under the supplier’s financing documents. • Suppliers have 6 months to satisfy conditions precedent 19
Project Milestones • The Supplier is obliged to meet the key Project Milestones by specified Milestone Dates • The key Milestones are: – financial close; – submission of a draft Safety Health & Environment Plan, Community Engagement and Benefit Sharing Plan and Industrial Relations Management Plan; – commencement of construction; and – execution of the Connection Agreement. 20
Change in Law • If there is a change in law which increases or reduces the costs incurred or to be incurred by the supplier, the supplier is entitled to pass through 50% of the additional costs, and must pass through 50% of the reduced costs, as an adjustment to the Contract Price or the Base Amount. • This sharing mechanism is subject to a threshold of $500,000 • The Support Agreement also contemplates: – Repeal/amendment of the Federal RET – no change – NEM Design Changes – good faith negotiations – Market Disruption Events – good faith negotiations 21
Questions? Matt Dickie Director Renewable Energy Division
Eligibility and Evaluation Criteria Matt Dickie Director Renewable Energy Division
Proponent Eligibility Criteria • The eligibility criteria are designed to guarantee the capacity of generating systems, and a minimum standard of proponent and project quality and viability • 13 eligibility criteria in total • Proponents must comply with all of the eligibility criteria 24
Proponent Eligibility Criteria EL 1: The proponent must be a non-tax exempt Australian company or subsidiary under the Corporations Act 2001 (Cth) or a wholly or majority owned Commonwealth or Australian state or territory government body. EL 2: The proponent must propose one contracted entity to be legally responsible for the proponent’s proposal and Support Agreement. EL 3: The proponent and/or the contracted entity must not be, or become, bankrupt, insolvent, or be in, or enter into, administration, receivership or liquidation, or take advantage of any statute for the relief of insolvent debtors at any time during the RFP process. EL 4: The proponent and/or the contracted entity must not have had a judicial decision relating to employee entitlements made against it (not including decisions under appeal) and not have paid the claim. EL 5: The proponent and/or the contracted entity must not have been named as an organisation that has not complied with the Workplace Gender Equality Act 2012 (Cth). 25
Recommend
More recommend
