The No-BS Guide to a Solar RFP
I have a confession to make. My marketing team’s “Solar RFP Best Practices Guide” is intended to guide the reader to include language in their solar RFP that favors Borrego Solar over the competition. Shocking, I know!
I like our guide because it embodies the key elements to success our firm has learned over 35 years developing solar energy projects. But I also know organizations that are working hard to put together a solar project are also looking for objective guidance.
So, here they are—Five brutally honest tips for preparing your solar RFP.
1) Don’t Do It
If I could give one piece of advice on preparing an RFP for solar, it would be not to write one in the first place. As if life were that easy, right? Since that is not an option for some, then I’d say definitely don’t put an RFP out on the street until it is good and ready. If ever there was a time to “measure twice and cut once,” this would be it. For most organizations—especially in the public sector—issuing a RFP significantly constrains their ability to introduce new information and innovative (and proven) approaches to solar, which is exactly what you want high-quality bidders to offer in their responses. But once the scope has been defined and metrics established, it can be very difficult for a solution that will deliver the desired outcomes to be designed to the predetermined (and sometimes unrealistic) specifications outlined in the RFP. In a rapidly evolving market and technology landscape, locking in the requirements too early can be a mistake, wasting time and resources for all parties involved. Why design a round hole if the square peg is actually what you want? Use RFIs or informal discovery to understand the options for your project before committing to a formal procurement process—if at all.
2) Demand Solutions
It is an article of faith in the procurement world that if you can commoditize it, you can get it for less. Squeezing out vendors’ wiggle room should get them to compete on price. This works well when your organization possesses a lot of knowledge about the product it is procuring, like a hospital buying disinfectant. If it is core to your operation and used every day, then you should know a lot about what you want and don’t need. Contrast that with a solar project, which is most likely a one-time effort that is not worth you becoming an expert on. With a complex technology like solar, one must question whether this is the place to commoditize. Instead, let the vendors bear the burden of keeping up with the solar-Joneses (technology, regulatory, and market environments) and provide that knowledge to you in a well-developed solution.
3) Hire a Consultant—or Don’t
There is no single right answer to the question of whether to bring in a consultant to evaluate the solar project proposals you’ve received. We work very well with a number of consultants who provide a lot of value to their clients, but we also see situations where the consultant’s value-add is minimal. What should be understood in all cases is that consultants’ fees make the project more expensive. Even if the consultant technically receives their fee from the installer, it is a cost that must be carried by the project and the thin margins prevalent in the industry don’t leave a lot of room for padding. With that understanding, the question you should be asking is, what role do you want the consultant to play?
If the consultant is providing solar expertise to develop the project, then there is a lot of overlap with a quality solar company that will include the development work and education in their cost structure and deliverables when they bid on the project. Redundancies are a waste of time and money, and even a well-versed consultant is likely to have less exposure to technology, design, permitting, utility-rate structures, and market changes than a top solar company that develops and constructs dozens of projects simultaneously across multiple permitting authorities. On the other hand, if the consultant is filling a gap in the organization itself—such as RFP writing, bid evaluation, or management of the entire procurement process—then the cost may very well be justified. Define clear roles for consultants that encourage solar vendors to put their best, most creative solutions forward rather than limiting them to a solution that may not actually deliver the greatest value.
4) Use Results-Based Metrics
The closer the metrics in a RFP are to the drivers of your organization’s success, the more likely you are to get the greatest value solution. Conversely, the closer the metrics are to technical specs, the more likely you are to get trees and not a forest. For example, the most common metric the solar industry uses to determine the cost of a project is $/watt. However $/watt means very little to the end user—more relevant metrics are cumulative savings, internal rate of return (IRR), net present value (NPV), and % of energy bill saved. Different technologies and configurations yield different quantities of energy per installed watt so the $/watt comparison is a false one. Even for the same number of kilowatt-hours (kWh), one system may be configured to better take advantage of a certain rate, tariff, or physical location. Using unassailable metrics like projected annual savings, the vendor’s track record, or production guarantees that are easy to compare will benefit you the most.
5) Be Prepared
To get the best solutions and best pricing from your bidders, it is essential that they have access to all the information and data they need to develop their offer. Many of the delays we see in projects—both pre and post contract—are caused by delays in getting customer-supplied information. Information gaps will adversely impact your project; vendors cannot develop optimal solutions without the right inputs and they have to build buffers into their pricing to account for unknowns. At a time when the solar industry is working at a speed to meet market demands, your project may even be de-prioritized by vendors who have to pick the best opportunities to focus on. Customers who respond quickly and provide all the necessary information up front send a signal of seriousness to the top tier developers—the people you ultimately want to bid on your project. With a full data set, quality developers can turn full information into a solution in short order, which in some cases means ensuring your project will be finished in time to qualify for more lucrative subsidies.
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