Mechanisms to implement wind energy projects “egyptian experience”

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Knowledge Exchange Workshop on Wind Projects Planning …

Knowledge Exchange Workshop on Wind Projects Planning
May 9, 2013
Beirut, Lebanon

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  • 1. ‫الريبح‬ ‫طبقت‬ ‫مشروعـبث‬ ‫إوشــبء‬ ‫آليــبث‬“‫املصريت‬ ‫التجربت‬“Mechanisms to Implement Wind Energy Project“Egyptian Experience”‫اخليـبط‬ ‫مصطفى‬ ‫حممد‬‫واملتجددة‬ ‫اجلديدة‬ ‫الطبقت‬ ‫هيئت‬mohamed.elkhayat@yahoo.comwww.energyandeconomy.comRCREEE - Beirut, May 8-9, 2013
  • 2. Contents-(A) : TENDERS- Introduction- Contents of Tender Documents- Part I: Invitation for Bids- part II: I ) Instructions to BiddersII ) Contract FormIII) General ConditionsIV) Special ConditionsV ) Technical SpecificationsVI) Annexes- (B) : AUCTIONS- Auction Procedures- Applicant/Bidder Methodology- How could Risks be Reduced?-(C) : PRODUCTION COST
  • 3. IntroductionWind Farm ProjectsPublic UtilityCompetitive Tenders“BOO”AuctionsIPPTenders(International / Tied)Owner Private Sector Private Sector Public UtilityOperator Private Sector Private Sector Public UtilityOff-taker Grid Private Sector Grid
  • 4. (A): Tenders
  • 5. ‫األخرى‬ ‫المجاالت‬ ‫مع‬ ‫المتجددة‬ ‫الطاقة‬ ‫مشروعات‬ ‫فى‬ ‫االستثمار‬ ‫يتشابه‬Investment in renewable energy is similar to others‫األخرى‬ ‫للمشروعـات‬ ‫نظيرتها‬ ‫مع‬ ‫المتجددة‬ ‫الطاقة‬ ‫مشروعـات‬ ‫مناقصــات‬ ‫تتشابه‬IntroductionTendering is the process of making an offer,bid or proposal,or expressing interest in response toan invitation or request for tender
  • 6. IntroductionTender Means Relation Between Two PartiesFirst Party- Employer/OwnerSecond PartySupplier/Contractor/Consultant/..etc
  • 7. Step (1)• Tender Process Is Determined: the organization requesting the tender will determinethe type of tender that will be used, as well as what will be involved in the tenderprocess.Step (2)• Request For Tender Is Prepared: the request for tender outlines what is required, thecontractual requirements and how Applicant/Tenderer should respond.Step (3)• Tenders are Launched: the value, complexity and business category determine howtenders are invited.Step (4)• Applicants Respond: you should first offer all relevant documentation. Then invitethem to:•Clarify any uncertainties•Visit site location•Attend pre tender briefing sessions•Submit their response in the right format, on time and at the right locationThe Seven Main Steps in the Tender Process :Introduction
  • 8. Step (1)• Tender Process Is Determined: the organization requesting the tender will determine the typeof tender that will be used, as well as what will be involved in the tender process.Step (2)• Request For Tender Is Prepared: the request for tender outlines what is required, thecontractual requirements and how Applicant/Tenderer should respond.Step (3)• Tenders are Launched: the value, complexity and business category determine how tendersare invited.Step (4)• Applicants Respond: you should first offer all relevant documentation. Then invite them to(Clarify , Visit , Attend , and Submit).Step (5)• Evaluation And Selection: each tender will be checked for compliance through evaluationprocesses against the criteria specified in the tender documentation. The tender that offersaccepted quality and best value for money will win the business.Step (6)• Notification And Debriefing: when a contract has been awarded, the successful Tenderer willbe advised in writing of the outcome. Unsuccessful Tenderers are also advised.Step (7)• Contracts Established And Managed: generally a formal agreement will be required betweenthe successful Tenderer and the your Agency.The Seven Main Steps in the Tender Process :
  • 9. Contents of a Tender Document
  • 10. Contents of Tender DocumentsInvitation for BidsI ) Instructions to BiddersII ) Contract FormIII) General ConditionsIV) Special ConditionsV ) Technical SpecificationsVI) Annexesa.The Bid Formb.Price Schedulec.The Delivery Scheduled.The Bid Securitye.Performance Security Formf. Declaration of Local Agent (s)g.Warranty FormPART IPART II
  • 11. PART I: Invitation for Bids
  • 12. Invitation for BidsTender No. : EL ZAYT – 200 MW WIND FARM PROJECT BMZ No: 200666016Bid Submission :- Last Date : Aug. 12, 2013- Place : NREA Headquarter, Address.- Time : @ 12:00 CMTCost of Bid Document (EGP/US$/Euro) : ??,???Bid Bond:- Amount (EGP/US$/Euro) : ???,???- Validity Period : 180 days from the date of bid submission
  • 13. Invitation for Bids•NREA reserves the right to carry out the following without becoming liableto any Bidder or giving rise to any obligation to inform any Bidder of theground for its conduct;a- Reject or accept any application; andb- Cancel the qualification process and reject all applicationsc- Not return the submitted qualification documentationd- To amend the qualification terms and conditions in the tenderdocumentation and extend the deadline for the submission of theapplications accordingly; such amendment to be carried out priorto the deadline for submission of the applications.•Each Bidder shall bear the costs associated with its application forparticipation in the tender process and with preparation of his bid.
  • 14. PART II: Instructions to Bidders
  • 15. PART II: Instructions to BiddersA: INTRODUCTIONGeneral Source of Funds : Loan (Source, Currency, date of signing Loan Agreement), orOwn resourcesCorruption : ----Definitions “APPROVED / APPROVAL” shall mean approval in writing by the “NREA”.“NREA” shall mean New and Renewable Energy Authority (hereinafter referred toas “the Employer”) .Day, Week, …. etc.Scope NREA wishes to receive Bids for a full turn-key wind farm with rated capacity of220MW, consisting of the following lots, all of which shall be combined togetheras a complete package:・ Lot 1: Wind Turbines・ Lot 2: Electrical Works・ Lot 3: Civil WorksEligibleBidders- An Applicant may be a single entity or any combination of entities in the form ofjoint venture or association (JVA) with the formal intent, as evidenced by a letterof intent, to enter into an agreement or under an existing agreement.- Qualifications (Manufacturing, Financial, Legal)Cost ofBiddingThe Applicant shall bear all costs associated with the preparation and submissionof its application. The Employer shall in no case be responsible or liable for thosecosts.
  • 16. B : BIDDING DOCUMENTSBiddingDocumentsNREA shall provide one electronic copy of Bid Document. The BiddingDocuments include:I. Instructions to BiddersII. Contract FormIII. General Conditions of ContractIV. Special Conditions of ContractV. Technical SpecificationsVI. AnnexesClassificationof BiddingDocumentsInterested eligible Applicants may obtain further information from andinspect the Prequalification Documents at the address given below from8:00 a.m. to 3:00 p.m.Amendmentof BiddingDocuments- At any time prior to the deadline for submission of applications, theEmployer may amend the Prequalification Documents by issuingaddenda.- Any addendum issued shall be part of the Prequalification Documents.Language ofBidThe application as well as all correspondence and documents relating tothe prequalification exchanged by the Applicant and the Employer, shall bein English.PART II: Instructions to Bidders
  • 17. C : PREPARATION OF BIDSDocumentsComprisingthe BidThe application shall comprise the following:(a) The Goods are substantially in compliance with the governingstandards and specifications of the Goods given in Section V of BidDocuments.(b) The documentary evidence to demonstrate that the bidder or hismanufacturer has the technical and production capacities toperform the contract.(c) The delivery schedule duly filled up.(d) Any other document required.Bid PriceBid Form The Applicant shall prepare One original of the documents comprising theapplication and clearly mark it “ORIGINAL”.The Applicant shall submit Three copies of the signed original applicationand clearly mark them “COPY”.Bid SecurityPART II: Instructions to Bidders
  • 18. D : SUBMISSION OF BIDSDeadline forSubmission ofBidsApplicants may always submit their applications by mail or by hand.Applications shall be received by the Employer at the address and no laterthan the deadline.Sealing of Bid The Applicant shall enclose the original and the copies of the applicationin two/three sealed envelopesLate Bids The Employer reserves the right to accept or reject late applications. TheEmployer shall prepare a record of the opening of applications that shallinclude, as a minimum, the name of the Applicant. A copy of the recordshall be distributed to all Applicants.PART II: Instructions to Bidders
  • 19. E : BID OPENING AND EVALUATIONOpening of Bids Date, Place, and Time.Clarifications To assist in the evaluation of applications, the Employer may, atits discretion, ask any Applicant for a clarification of itsapplication which shall be submitted within a stated reasonableperiod of time.Evaluation(Prequalification/ Technical/Financial)The Employer shall use the factors, methods, criteria, andrequirements defined in Section III.-Prequalification (PASS or FAIL)-Technical (Score) 60%, 70%, 80%-Financial (Score) 40%, 30%, 20%-Bid Final Score (weightedPART II: Instructions to Bidders
  • 20. F :AWARD OF CONTRACTNotification ofAwardThe LETTER OF ACCEPTANCE will constitute the formation of aCONTRACT, until the CONTRACT has been effected.Signing ofContractAt the time of LETTER OF ACCEPTANCE, NREA will send the successful Bidderthe Contract Form provided in these Bidding Documents, incorporating allagreement between the parties.Within fifteen (15) calendar days of receipt of such LETTER OFACCEPTANCE, the successful BIDDER shall execute the signing of theCONTRACT at the office of NREA at Office of the Executive Chairman,[Address].PerformanceSecurityWithin fifteen (15) calendar days of the receipt of the LETTER OFACCEPTANCE from NREA, the successful BIDDER shall furnish unconditionalPerformance Security acceptable to NREA in accordance with the Conditionsof CONTRACT in the form of a cash deposit or a Bank guarantee according toPerformance Security Form provided in the Bidding Documents.PART II: Instructions to Bidders
  • 21. PART II: Contract Form
  • 22. PART II: Contract FormThe Employer/Owner NameThe Bidder/Applicant NamePurpose of the ContractBrief regarding Scope of worksContact ValueSource of FinancingDocuments PriorityThis Contract FormSchedules of Quantities and PricesThe Addendum of the Tender DocumentSpecial ConditionsGeneral ConditionsTechnical Specs including AttachmentsDrawingsCommencement Date (Date of payment of the AdvancePayment)Applicable lawSignature
  • 23. PART II: General Conditions
  • 24. PART II: General Conditions
  • 25. PART II: General Conditions
  • 26. PART II: General Conditions
  • 27. PART II: General Conditions
  • 28. PART II: General Conditions
  • 29. PART II: Special Conditions
  • 30. PART II: Special Conditions
  • 31. PART II: Special Conditions
  • 32. PART II: Special Conditions
  • 33. PART II: Special Conditions
  • 34. PART II: Special Conditions
  • 35. PART II: Special Conditions
  • 36. PART II: Technical Specifications
  • 37. PART II: Technical Specifications
  • 38. PART II: Technical Specifications
  • 39. PART II: Technical Specifications
  • 40. (B) : AUCTIONS
  • 41. ‫الطــبقت‬ ‫عقــىد‬Energy Contracts
  • 42. ‫استخدام‬ ‫اتفاقية‬‫أرض‬LUA‫الطــبقت‬ ‫عقــىد‬Energy Contracts
  • 43. ‫استخدام‬ ‫اتفاقية‬‫أرض‬LUA‫الطاقة‬ ‫نقل‬ ‫اتفاقية‬InterconnectionContract‫الطــبقت‬ ‫عقــىد‬Energy Contracts
  • 44. ‫استخدام‬ ‫اتفاقية‬‫أرض‬LUA‫الطاقة‬ ‫نقل‬ ‫اتفاقية‬InterconnectionContract‫شراء‬ ‫اتفاقية‬‫الطاقة‬PPA‫الطــبقت‬ ‫عقــىد‬Energy Contracts
  • 45. Responsibilities for Auctions
  • 46. ‫ر‬AuctionforWhat?
  • 47. Criteria for Selecting an IPP
  • 48. Criteria for Selecting an IPP
  • 49. Criteria for Selecting an IPP
  • 50. ‫حنه‬‫هىب‬‫بدء‬‫خمبطبت‬‫البىىك‬‫ضمبن‬1%‫التعبقد‬‫شركت‬ ‫مع‬‫الىقل‬‫الرتخيص‬‫املرفق‬ ‫مه‬‫بدء‬‫الرتكيببث‬‫بدء‬‫اإلوتبج‬‫اجلزئى‬‫ضمبن‬2%‫بدء‬‫اإلوتبج‬‫الكلى‬‫تىقيع‬‫القرض‬‫ضمبن‬0,5%Project Implementation Schedule
  • 51. (Applicant/Bidder) Methodology
  • 52. (Applicant/Bidder) Methodology to deal with a Tender
  • 53. How could Risks be Reduced?
  • 54. • Tendering• Turn Key or Lots ?• Lot 1: Wind Turbines and Foundations• Lot 2: Electrical Works• Lot 3: Civil Works• Currency (Local, Int. “Euro, US$, DK, Yen, ..”)• One Stage Three Envelops (PQ, T, & F)?OrTwo Stages One Envelope (PQ) then Two Envelops (T&F)?• Local Manufacturing (Obligation or Option)?How to Reduce Risk?
  • 55. • Wind Turbine• At least two wind farm projects (including roads, platforms and electricalMV network works) each with a capacity of at least 50 MW• More than 1,000 wind turbines of all types combined in service onSeptember 1st, 2012• Bidder offers a wind turbine as per IEC Class [to be defined], type certified,min. tip height 20 m, max. tip height 100 m, minimum capacity 800 kW,that can be made fit for operation under the site desert conditions andfulfills further conditions as specified• The Bidder has more than 100 WTGs of the type to be prequalified putinto service as of September 1st, 2012• More than 50 wind turbines, of the type to be prequalified, erected sinceSeptember 1st, 2010 (refer to Section VI for details of the prequalificationrequirements)• Bidder has a market presence of more than five (5) years outside his homemarket before September 1st, 2012• Bidder has an overall annual production capacity for the type of WTG to beprequalified of more than 220 MW as of September 1st, 2012How to Reduce Risk?
  • 56. • Financial Performance• Submission of Audited Balance sheets or if not required by the law of theApplicant’s country, other financial statements acceptable to the Employer,for the last three (3) years to demonstrate the current soundness of theApplicant’s financial position and its prospective long term profitability.• As a minimum, the Applicant’s net worth calculated as the differencebetween total assets and total liabilities shall be positive for the last threeyears.• Moreover, as a minimum requirement, the current ratio, i.e. the ratio ofthe current assets divided by the current liabilities at the end of the lastyear shall be >= 1.05.• Minimum Average Annual Turnover of five hundred million (500,000,000)euros, calculated as total certified payments received for contracts inprogress or completed, within the last three (3) years.How to Reduce Risk?
  • 57. (C) : PRODUCTION COST
  • 58. Site Area One square kilometer could host from 6 to 8 MWCapacity Factor (i.e. Zafarana - about 35% and Gulf of El-Zayt - about 45%)O&M Ranging between 1 – 2 % per annum of the investment cost.Overhaul Maintenance Ranging from 15-25% of the investment cost. Once per lifetime @year 10.Inflation Rate According to each countryDiscount Rate For energy projects it ranges between 7-10%Lifetime 20 YearsConstruction Period Around 2 YearsWarranty Period From 1 – 5 years (it will be reflected in the contract price)Revenues of the Project Energy Revenues,CERs, andFuel Savings.Parameters
  • 59.  Turbines (With foundations) 70 - 75% Civil Works 12 - 15% Electrical work 10 - 12% Control System 1 – 2% Transportation of 2 - 3% Customs (acc. to local laws) Sales tax of (acc. to local laws) Consultant 0.5 - 1% Insurance, ….etc.Share of Project Parameters
  • 60. Cash Flow: Most important and most difficult step in theanalysis of a capital project.Financial staff’s role includes:• Coordinating other departments’ efforts• Ensuring that everyone uses the same set of economicassumptions• Making sure that no biases are inherent in forecastsUncertainty (wind speed, equipment cost, … etc).Calculation of Production Cost
  • 61. The Cash Flow Cycle
  • 62. ‫فـى‬ ‫املتجددة‬ ‫املصبدر‬ ‫تتىافر‬ ‫أن‬ ‫جيب‬ ‫ال‬‫املىاطىني‬ ‫لكل‬ ‫الكهرببء‬ ‫تتىافر‬ ‫وال‬ ‫دولت‬Thank you‫ا‬‫ر‬‫ـك‬‫ش‬