Tender Design Principles
- Clarity of objectives: Define primary use cases explicitly (e.g., grid resiliency, renewable integration, peak shaving).
- Technology neutrality: Avoid restrictive specifications (e.g., lithium-ion-only mandates) to encourage innovative solutions.
- Flexible bid structures: Allow proposals for hybrid systems (e.g., solar-plus-storage, microgrids) and diverse ownership models.
Risk Allocation and Incentives
- Balanced risk-sharing:
- Use power purchase agreements (PPAs) or energy storage services agreements to guarantee revenue streams.
- For build-transfer agreements, define clear timelines and performance penalties for delays.
- Financial incentives:
- Incorporate tax credits (e.g., federal Investment Tax Credit for standalone storage).
- Offer rebates or grants to offset upfront capital costs.
Procurement Process
- Pre-tender engagement:
- Issue a Request for Information (RFI) to gather technical and cost data without locking in requirements.
- Host workshops to clarify expectations and address bidder concerns.
- Evaluation criteria:
- Prioritize levelized cost of storage (LCOS) and system lifetime over upfront costs.
- Include cyclical performance guarantees (e.g., round-trip efficiency after 10,000 cycles).
- Post-award support:
- Streamline permitting and interconnection approval processes.
- Provide access to government-owned land or grid infrastructure.
Example Framework
| Component | Best Practice |
|---|---|
| Contract Type | Hybrid PPA + performance-based incentives |
| Technical Requirements | Define duration (e.g., 8-12 hours) and cycling needs, not battery chemistry |
| Payment Terms | Offer milestone payments for construction and availability-based rewards |
By aligning tender structures with private sector risk tolerance and leveraging standardized checklists (e.g., DOE’s procurement guidelines), governments can reduce bid friction while ensuring grid-scale LDES deployments.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-are-the-best-practices-for-structuring-government-tenders-to-attract-private-investment-in-long-duration-energy-storage/
