May 2012 Renewable Auction Mechanism

1. What if a developer is using products and services from Diverse Business Enterprises (DBEs)?  Are credits given? 

SDG&E is working with the CPUC to give greater credit for DBE products and services.  At this time, no preference is given to products and services. 

2.   Does having Diverse Business Enterprise certification help?  

See page 19 of the RFO document regarding details of DBE certification.  At this time, if all things are equal between two Power Purchase Agreements, but one is 51% owned by a woman, minority or disabled veteran, the “DBE contract” would be given preference over a non-DBE owned project as a “tie” breaker.   The project must be competitive on all other grounds.

3. Why does slide 14 of the bid conference presentation say that SDG&E is aiming to complete PPAs by March 2012?

This is a typo.  SDG&E intends to complete PPAs by Sept. 2012.

4. Will SDG&E host RAM RFOs periodically?

Yes, two more RAM auctions are scheduled, one in November of this year and one in May of 2013.

5.  Is SDG&E looking for more MWs in this RFO compared with last year’s RFO? 

SDG&E targeted 20 MW during the November RAM RFO, and is now targeting 45 MW during the May RAM RFO.

6. Is SDG&E only looking for biomass and geothermal in the baseload category?

No, see slide 16 of the bidder’s conference presentation for details of what projects qualify for each product category.  SDG&E is soliciting bids for biomass, geothermal, wind, solar, and other technologically proven generation.

7. Must a bidder be CEC eligible and when?  

The bidder should apply for a CEC “precertification” prior to bidding, but this is not required.  See page 8 of the RFO document for more details.  The resource must be CEC-certifiable as an eligible renewable resource.  Certification occurs after the developer reaches commercial operation.

8.  How does SDG&E measure the 20 MW size?

Projects cannot exceed 20 MWs of nameplate capacity as measured in alternating current (“ac”).  DC-rated bids will not be accepted.

9.  When determining what makes a distinct project, is land the limiting factor or is it different interconnections?  Can a project be divided into more than one separate project?

A project is considered distinct from another project if the projects have no shared facilities, including separate interconnection requests and separate CAISO meters.  In addition, projects with no shared facilities that are located on contiguous pieces of land will be ineligible unless the total combined nameplate capacity of both projects is 20 MWs or less.  

10. If you have a 125 MW project, must it all be sold to SDG&E?

This project would not qualify for the RAM because it exceeds the 20 MW capacity limit.  For projects that are eligible for the RAM, the entire output must be dedicated to SDG&E.  The RAM RFO states that “[r]esources must sell its entire output to SDG&E.  Selling partial output from a large system shall not be permitted” (See RAM RFO Section 3.0(A) regarding Participation and Eligibility Criteria).  This requirement was established by the CPUC in the RAM Decision (See D.10-12-048, Section 8.2). 

11.   Can you offer projects that provide both a peaking and a non-peaking profile?

Two offers (options) can be made, but the bidder should clearly indicate how the two bids are related and if only one can be accepted.  If one option is accepted and another on the same property is not, the first may be rejected if they cannot be separated into two.  Only one pricing option per operating profile is allowed.

12. Can a developer bid a new addition to an existing baseload facility?

Yes, the new capacity is eligible as long as the new total nameplate capacity of the facility does not exceed the 20 MW cap and meets all other RAM criteria. 

13.  What are the aggregation rules?

You can aggregate up to 10 (500 KW minimum) projects.  See section 3 of the RFO document for more details.

14.   What if the nameplate capacity is 35 MW but after the inverter it is reduced to 20 MW? 

The size needs to be measured after inverter, and must be AC 20 MW or less.

15.   Can we refinance an existing facility and bid into the RAM?

Yes you can bid a refinanced existing facility.

16.  Can we bid fully deliverable or energy only? 

Bidders may provide bids for energy only projects or fully deliverable projects, or they may provide an energy only option and a fully deliverable option for the same project. 

17.   What does it mean to be fully deliverable (FCDS)?

To be fully deliverable, a project must have a deliverability study from the CAISO that shows it is deliverable through the transmission system. An “Energy only” study only indicates whether the generator can be interconnected safely, not that it flows over the system. Please visit CAISO website for additional information: (http://www.caiso.com).

18. Is there added value if the peaker has backup firming?  

A gas fired peaker does not qualify for the RAM as it is not a renewable resource.

19.  What about using battery backup charged by a solar facility? 

The most recently posted revision of the Renewables Portfolio Standard Eligibility Fifth Edition Lead Commissioner Draft Guidebook states on page 10 that “Methods of storing renewable energy that are integrated into the electrical generation facility as part of the generation process, such as thermal energy storage at a solar thermal facility, are considered part of the electrical generation facility and not a separate, independent storage facility for the purpose of RPS eligibility.”  As long as the nameplate capacity of the facility – including battery storage capacity – does not exceed the 20 MW threshold, and the project meets all CEC eligibility requirements, battery storage may be used.

20. Can the project change hands once the project is online?

Yes, with restrictions.  See the RAM PPA for assignment provisions. 

21. Do the projects have to be in-state?

The projects not only have to be in-state, but also have to be located within the service territories of PG&E, SCE, or SDG&E.  Projects located in IID, for example, are not eligible.

22.  Do you evaluate the bids based on developers’ experience?

Respondents must meet the requirements for developer experience set forth in Section 3 of the RAM RFO.  The evaluation process does not distinguish between levels of developer experience, as long as the minimum criteria are met.

23. How is RAM different than FIT?

The Fit (feed in tariff) is available to projects sized at 1.5 MWs and below (and will soon change to 3 MWs and below).  The FIT provides a set price, which is currently the Market Price Referent (“MPR”), but is expected to change to a new pricing structure within the next few months.  The FIT has no RFO evaluation process and is first come first serve. 

24.  What is the purpose of the Independent Evaluator?

The purpose of the Independent Evaluator is to review all bids and ensure that the evaluation process is run fairly.

25.  What happens if less than the full amount of the solicited capacity is contracted?

If the capacity amount contracted for in this RAM process is less than the targeted level, the balance flows to the next RAM RFO.  The last RAM RFO resulted in less than the 20 MW requested, and the remainder has been rolled into future RAM solicitations.

26. What are other differences between this RAM and the last?

SDG&E has made many changes to the RAM process since the November solicitation.  These changes are summarized in SDG&E’s advice letter 2349-E which was filed with the CPUC on April 26th and is attached below for your reference. 

27. Does SDG&E use the same deliverability adder for all projects? 

No, SDG&E uses a different deliverability adder depending on where the project is located and the project generation profile.  Preference is given to projects that can provide local Resource Adequacy (“RA”), which is more valuable to SDG&E than system RA.   See pages 17 – 19 of the RFO document for more details.

28. How do you calculate an internal rate of return?

SDG&E uses an internal rate of return (IRR) of 8.4%.

29. Can you have 2 contracts, one for energy, and one for RA?

A contract with an energy-only provider does not lay claim to any RA attributes that the project may provide.  Any proposals for resource adequacy products from a renewable project would have to be bid into a separate RFO for resource adequacy and be evaluated against other resource adequacy bids. 

30. Can we get information regarding the pricing of successful RAM bids?

According to CPUC rules for confidentiality, RAM bid prices are confidential for 3 years.  The RAM contracts from the previous 2011 RAM RFO were approved by the CPUC on May 3, 2012,  so those prices are not yet public.

31. What do we fill out in the PPA? 

Please fill out all blanks and appendices, including the amount of security, contract term, capacity and price, and strike non-applicable items.

32. Can the equipment be under a 20 yr lease? 

There is no restriction on using a long term lease, but it must cover the term of the contract.

33.  Can we fill out two pricing forms?

Yes, bidders can provide two pricing forms per project; one option for energy only, and one for full deliverability.  Please provide only one price for each option.

34.   What is distribution level interconnection?

SDG&E’s distribution level is 12.47 kV and below.   More information about the distribution level interconnection process can be found at:
http: sdge.com/wdat   

35.   How do we lower our interconnection costs?

See http://sdge.com/builderservices/dgmap/  to get access to SDG&E’s interactive map of its distribution system, which is intended to give developers an idea of areas that may not require expensive upgrades.  The closer the project is to a substation, the better the chance that the project will have lower costs of interconnection. 

36. We have an existing gas generator and want to install a solar field.  If the interconnection capacity increases, then must we do a new study?

Yes.  Any time you change your technology or increase your generation production, a new study will need to be performed and new interconnection agreements will need to be signed.  Please submit the proposal to SDG&E if it is distribution level.  For transmission level projects, you must submit the proposal to CAISO to determine whether the change is considered a “material modification”. 

37. We have an existing 1.5 MW interconnection agreement and are currently using only 1 MW of that capacity.  Can we offer a project for the additional 500kV? 

This question cannot be answered without a detailed project-specific study.  There are many technical considerations, such adjacent projects, technology and integration risks, and other factors which could render such a proposal non-viable.