Competitive Solicitations and Unsolicited Proposals: Examples from Several State Funds on How to Balance and Refine the Process
How can the state clean energy funds balance a preference for competitive solicitations with the flexibility to consider unsolicited applications? How other funds have successfully balanced these approaches is a key administrative practice. Fund managers in most states have developed a range of competitive solicitations, from highly structured to more open competitive solicitations. Funds have also developed guidelines for unsolicited applications. Examples of how these administrative processes work are discussed in this case study. Innovative Features
- While openly stating its preference for making funding decisions through formal solicitation processes, the Massachusetts Technology Collaborative (MTC), which administers the Commonwealth's Renewable Energy Trust (RET), has acknowledged that from time to time there are extraordinary opportunities where the best interest of the Commonwealth ratepayers may warrant consideration of unsolicited proposals. As a result, MTC has developed a set of published guidelines for reviewing and recommending funding decisions related to proposals received that do not comply with formal solicitations.
- For competitive solicitations, the range of offerings and features varies from state to state. Some innovative features of these solicitations include:
- A highly structured wind production incentive in Pennsylvania (Phase I).
- A less-structured wind incentive offering in Pennsylvania where a wide range of debt and other project financing options are encouraged (PA Phase III).
- A less-structured solicitation where the fund did not rule out direct subsidy support for projects, but heavily favored more creative financing offerings by project proponents (CT fuel cell RFP).
- A structured series of solicitations that offered to pay for both feasibility studies and up to 25% of the capital costs of the project installation (MTC premium power (i.e. fuel cell) RFPs).
Results While no single ideal practice seems to have emerged from state experience so far, the examples offered in this case study suggest that highly structured competitive solicitations, less-structured solicitations, and a willingness to accept certain unsolicited applications all have merit in certain circumstances.
- The MTC guidelines for unsolicited proposals have brought more order to the evaluation and discretionary funding process.
- The PA Phase I structured solicitation produced several wind projects.
- The PA Phase III finance offering was issued in July 2002, with proposals due in September.
- The CT fuel cell "bonus" financing produced 31 project proposals.
- The MTC fuel cell feasibility study program has provided a valuable opportunity for a variety of organizations to explore their interest in and the viability of fuel cell applications. It has also provided MTC with the opportunity to better understand the costs and technical requirements for such projects. The capital cost buy-down program has not produced significant program results as of yet. Some program managers believe that it would have been more beneficial to phase the feasibility and capital costs programs, rather than issuing the solicitations simultaneously. However, in Connecticut's fuel cell program, greater outreach with targeted efforts to reach specific industry sectors resulted in more high-quality applicants; this approach might also have produced greater results in Massachusetts.