PURCHASING POWER Best Practices Guide to Collaborative Solar Procurement JENNA GOODWARD RACHEL MASSARO BENJAMIN FOSTER CAROLINE JUDY IN COLLABORATION WITH ALEX PERERA CHRISTOPHER LAUJENNA GOODWARD RACHEL MASSARO BENJAMIN FOSTER CAROLINE JUDY IN COLLABORATION WITH ALEX PERERA CHRISTOPHER LAU PURCHASING POWER Best Practices Guide to Collaborative Solar Procurement WORLD RESOURCES INSTITUTE A joint publication of the World Resources Institute and Joint Venture Silicon Valley NetworkHyacinth Billings Publications Director Cover Image Schroeder, Dennis. NREL Staff Photographer. Courtesy of DOE/NREL. Image is also on page 13 WRI gratefully acknowledges the use of photos from the DOE/NREL. No affiliation with DOE/NREL is implied. Title Page Image SunPower. Courtesty of DOE/NREL. Image is also on page 37 Interior Page Images Page 7 Craig Miller Productions and DOE. Courtesy of NREL. Page 15 Schroeder, Dennis. NREL Staff Photographer. Courtesy of NREL Page 18, 21, 35 iStockphoto Page 30 Baranowski, Ruth; NREL Staff. Courtesy of NREL. Page 47 SunPower previously known as, PowerLight Corporation. Courtesy of NREL. Suggested Citation Goodward, Jenna, Rachel Massaro, Benjamin Foster, and Caroline Judy. 2011. Purchasing Power Best Practices Guide to Collaborative Solar Procurement. Washington, DC World Resources Institute. The full report is available online at www.wri.org No photograph in this report may be used in another work without written permission from the photographer. Each World Resources Institute report represents a timely, scholarly treatment of a subject of public concern. WRI takes responsibility for choosing the study topics and guaranteeing its authors and researchers freedom of inquiry. It also solicits and responds to the guidance of advisory panels and expert reviewers. Unless otherwise stated, however, all the interpretation and findings set forth in WRI publications are those of the authors. Copyright 2011 World Resources Institute. This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivative Works 3.0 License. To view a copy of the license, visit http//creativecommons.org/licenses/by-nc-nd/3.0/ ISBN 978-1-56973-766-8Table of Contents Foreword 4 cutive Summary 6 Acknowledgments 8 About this Guide 9 Chapter 1 The Benefits of Collaboration 13 Chapter 2 Overview of Best Practices 15 Chapter 3 The 12-Step Process Best Practices Summary 18 Chapter 4 Step-by-Step Guidance Detailed Best Practices 21 Chapter 5 Public-Sector Case Study Silicon Valley Collaborative Renewable Energy Procurement Project 37 Chapter 6 Private-Sector Case Study The Collaborative Solar Project 47 Closing Thoughts 54 Glossary 56 Endnotes 57 References 58 About the Authors 59 Other Resources The following additional resources are available on our project web site www.wri.org/buying-solar 1. Supplementary ination relating to the SV-REP and TCSP case studies 2. Sample documents from the two initiatives studied 3. Solicitation documents and PPAs from other successful public-sector procurements of renewable energy 4. Links to online resources research studies, solar purchasing guides, financing options, incentive programs, etc.PURCHASING POWER BEST PRACTICES GUIDE TO COLLABORATIVE SOLAR PROCUREMENT 4 Foreword Moving renewable energy into the mainstream will require innovative strategies to deliver it at scale. This is arguably as important for the solar energy industry as Henry Ford’s assembly line was for the rapid commercialization of the Model T. Although solar photovoltaic PV electricity generation is a tried and tested technology, creative approaches from vendors and customers alike are necessary to reach broad market competitiveness. One of the key market drivers for solar PV systems in the past five years has been the introduction of the Power Purchase Agreement PPA, a third-party financing model where customers pay for generated power rather than purchasing a system outright. The popularity of PPA financing illustrates how better delivery models can rapidly expand solar markets and contribute, alongside technological progress, to accelerating deployment and working toward grid parity. Along with innovative approaches to financing, collaboration among solar market participants also has an important role to play, and is the subject of this guide. Group procurement of solar electricity can reduce transaction costs, enable economies of scale, and bridge ination gaps that prevent efficiency. In doing so, it can be both a catalyst for organizations to embark on solar projects and a key factor in making those projects viable. Additionally, a successful regional collaborative purchase can benefit not only the participants, but also the region as a whole by supporting local economic development. The World Resources Institute and Joint Venture Silicon Valley Network have each piloted ground- breaking collaborative purchasing projects for solar PV in California with the aim of developing models to scale deployment of clean, renewable energy. WRI and Joint Venture launched similar pilot projects based upon their respective organizational goals Joint Venture as a public-private partnership that brings together leaders from all parts of the community to work on collaborative solutions to issues facing Silicon Valley; and WRI as an environmental think tank that goes beyond research to implement solutions that protect the earth and improve people’s lives. Having both found through practical experience that the collaborative model has tremendous value, we co- wrote this 12-step guide to help other organizations leverage their aggregate buying power to make solar more economically feasible across the United States. The best practices provided here are ined by our experiences as well as by additional research and expert consultation. They serve as a plan of action from which to model collaborative purchasing initiatives in other regions, and can be adjusted to serve unique needs and circumstances. The U.S. Environmental Protection Agency’s Green Power Partnership has already launched an initiative in the metropolitan Washington, D.C. area using these best practices, and a similar initiative is being launched in Contra Costa County, California. Additionally, several other major metropolitan areas across the country are investigating the collaborative solar purchasing model for potential use in 2011. We hope that this guide will serve as a trusted resource to enable public and private sector organizations, and their regions, to benefit from investments in solar energy. Given the urgent need to address climate change, a monumental shift to renewable energy resources is crucial. This publication offers a pragmatic approach for consumers and regional organizations looking to go beyond the standard modes of energy procurement to create sustainable energy industries in their communities. Jonathan Lash President World Resources Institute Russell Hancock President reduce risks; increase the potential for favorable terms and conditions; and achieve faster deployment of solar or other renewable energy technologies. This guide provides a road map for success in purchasing solar power collaboratively through strategically aggregating individual sites into larger- scale “bundles”, even if the partners involved are not experienced with the technology. Who Should Use This Guide This guide is intended to be a user-friendly resource for commercial and government entities interested in organizing or participating in a collaborative purchase of solar power. A variety of regional leaders could organize such an effort, including nonprofit organizations, regional or national government agencies, industry associations, and economic development or environmental groups. Potential solar purchasers may be public- or private- sector organizations, whose considerations are much different from those of residential customers. Some examples include Public Sector Agencies and branches of local, regional, and federal government, particularly if they face a greenhouse gas reduction or renewable energy purchasing mandate. Properties suitable for solar installations may include office buildings, community facilities, schools, military bases, laboratories, and staff residences. Key personnel for this effort include procurement officers, facilities managers, energy managers, sustainability staff, and cutive officers. Private Sector Candidates include companies owning or occupying property such as warehouses, data centers, office buildings, manufacturing facilities, shopping centers, and sports facilities. Additionally, commercial property owners that rent to tenants have found that installing solar PV can provide a competitive advantage and deliver long- term energy savings. 1Key personnel for this effort include energy, facilities, and property managers; chief sustainability officers CSO’s; chief financial officers CFO’s, and public relations staff. How To Use This Guide This guide can be used to educate organizations’ internal stakeholders, whose support is required for launching and sustaining a collaborative solar purchasing initiative. The detailed descriptions of the sequence of actions and milestones that constitute best practice can also the basis of a work plan for initiatives in both the public and private sectors. Those readers who have already launched collaborative solar purchasing initiatives may choose to refer directly to the next milestone directly relevant to their situation. About this Guide