Submission of proposals - Department for Energy and Mining · Web viewGeneral Instructions. The...

TABLE OF CONTENTS

1 Submission of proposals....................................................................................................3

1.1 General Instructions...................................................................................................3

1.2 Proposal Template Structure.....................................................................................3

1.3 Proposal Requirements.............................................................................................3

1.4 Proposal Format........................................................................................................4

1.5 Proposal Closing Time and Date...............................................................................5

1.6 Amendments to the Investment Guidelines...............................................................5

1.7 Interaction with Applicants.........................................................................................5

1.8 Post Proposal Submission Activities..........................................................................5

1.9 Grant Amounts...........................................................................................................6

1.10 Debrief for Unsuccessful Applicants..........................................................................6

PART A – ESSENTIAL ELIGIBILITY CRITERIA......................................................................7

Applicant Information............................................................................................................7

Principal Contact..................................................................................................................7

Authorised Officers...............................................................................................................7

Applicant Financial Capacity................................................................................................8

PART B – PROPOSAL REQUIREMENTS.............................................................................10

Project overview......................................................................................................................10

Assessment Criteria 1: Contribution to Objectives..................................................................11

Assessment Criteria 2: Managerial and Organisational Capability.........................................13

Assessment Criteria 3: Financial Capacity.............................................................................15

Assessment Criteria 4: Technical Viability of the Project........................................................17

Assessment Criteria 5: Financial Viability and Funding Requirements of the Project............20

Assessment Criteria 6: Economic Contribution to the State...................................................27

Assessment Criteria 7: Project Delivery Capability.................................................................30

Assessment Criteria 8: Project Risk........................................................................................32

PART C – DATA BOOK..........................................................................................................33

PART D – SUPPORTING DOCUMENTATION......................................................................34

Appendix 1 – Financial Model Instructions.............................................................................35

Grid Scale Storage Fund 2 Proposal Template (version 1.0)

1 SUBMISSION OF PROPOSALS

1.1 General Instructions

The purpose of the Proposal Template is to enable an Applicant to the Grid Scale Storage Fund (Fund) to develop a Project Proposal (Proposal) that provides comprehensive detailed information and records required to demonstrate the Project’s alignment with the Fund Objectives and Key Assessment Criteria.

The information provided in the Template must be clear, succinct and in a manner which demonstrates an understanding of the Fund Objectives.

The Proposal Template should be read in conjunction with the Grid Scale Storage Fund Investment Guidelines released online on Monday, 19 November 2018 by the Department for Energy and Mining (DEM).

1.2 Proposal Template Structure

The Proposal Template comprises the following Returnable Schedules and Appendices:

(A) Part A – Essential Eligibility Criteria – mandatory detail that is required to move through to the assessment process

(B) Part B – Proposal Requirements – This schedule is to be completed in word format

(C) Part C – Data Book – This schedule is to be completed in Excel format and should link with the Applicants Financial Model submitted

(D) Part D – Supporting Documentation – as requested

(E) Appendix 1 – Financial Model Requirements

1.3 Proposal Requirements

The Proposal Requirements presented in Part B contain the Assessment Criteria and a list of matters that DEM will consider when assessing each Proposal. The Proposal Requirements have been structured to align with the Assessment Criteria detailed in the Investment Guidelines.

Applicants should ensure their Proposals clearly outline how they meet the Fund Objectives, Assessment Criteria and associated considerations.

Table 1: Fund Objectives

Fund Objective 1

Catalyse private sector investment in grid scale storage infrastructure assets within the State that will deliver improved affordability, reliability and security outcomes to South Australian electricity consumers.

Fund Objective 2Demonstrate a new or substantially improved technological application and contribute to improving the economics of storage technologies.

Table 2: Key Assessment Criteria

Assessment Criteria 1 Contribution to Objectives, the extent to which the Project will contribute to achieving one or more of the objectives of the


Fund

Assessment Criteria 2 The Managerial and Organisational Capability of the Applicant to implement the Proposal

Assessment Criteria 3 The Financial Capacity of the Applicant to implement the Proposal

Assessment Criteria 4 The Technical Viability of the Project

Assessment Criteria 5 Financial Viability and Funding Requirements of the Project

Assessment Criteria 6 The level of Economic Contribution to South Australia

Assessment Criteria 7Project Delivery Capability, as measured by the State of Readiness of the Project to commence implementation and operations

Assessment Criteria 8Project Risks, the risks of the successful delivery of the Project, including the extent of significant technical, regulatory or other risks

1.4 Proposal Format

Each Applicant’s Proposal must:

respond to all sections of this template within the specified fields, in the format requested

be in English

comply with all applicable laws

express financial amounts in Australian dollars and be exclusive of Goods and Services Tax

include any other additional supporting material that has been requested and/or the Applicant considers necessary to fully describe its Proposal

be made electronically in Word, Excel and PDF formats. No hard copy submissions will be accepted

be provided in A4 portrait format (unless otherwise specified)

limit font size to Arial 10

abide by the word limits as documented within the schedules

provide concise responses that clearly address the information requested. Excessively long answers will only be considered at the discretion of the evaluation team

provide a response in the specified format in the cells provided for instances where template tables have been provided

Before submitting a Proposal, the Applicant must be satisfied that all information in the Proposal is:

a) accurate, correct, sufficient and complete at the date on which the Proposal is submitted


b) not misleading

c) complies in all respects with the Investment Guidelines and the requirements of all applicable laws.

It is the sole responsibility of the Applicant to ensure that its Proposal is received before the Closing Date. DEM reserves the right, in its absolute discretion, to accept or reject any Proposal lodged after the Closing Date.

DEM also in its absolute discretion, may reject a Proposal that does not include all the information requested or that is provided in a modified or the wrong format.

1.5 Proposal Closing Time and Date

A Proposal must be emailed to the below email address and clearly endorsed by DEM via an email of acknowledgement by no later than the Closing Date.

Email: [email protected]

The Closing Date and Time for Proposals is 5:00pm (ACDT) on Thursday 7 February 2019.

1.6 Amendments to the Investment Guidelines

DEM may amend any aspect of the Investment Guidelines and/or Proposal Template at any time by issuing a notice outlining the amendment (Notice to Applicants). Amendments will automatically become part of the Proposal documents and must be complied with by Applicants.

1.7 Interaction with Applicants

DEM wishes to ensure that Applicants have access to the information needed to complete Proposals according to DEM requirements. To facilitate this, all communication by Applicants must be via email to the below address.

Email: [email protected]

1.8 Post Proposal Submission Activities

Proposals that meet the essential eligibility criteria specified in the Investment Guidelines will be assessed. During assessment DEM may, in its absolute discretion:

conduct interviews or workshops with Applicants

request presentations from one or more Applicants

seek clarification or ask for additional information via written requests and / or interviews

undertake reference or referee checks

require an Applicant to attend any meeting DEM considers necessary to assess or clarify the Proposal

allow an Applicant to correct an unintentional or inadvertent clerical or administrative error in its Proposal (including where that error becomes apparent or known after the Closing Date) where DEM is satisfied the correction will not materially alter the substance of the Proposal.

The Applicant should not, however, rely upon being invited to make presentations or to provide further information during the assessment process.


mailto:[email protected]

mailto:[email protected]

1.9 Grant Amounts

Following assessment of Proposals, selected Applicant(s) may be offered the grant amount requested in their Proposal(s) or a lesser amount. If a lesser amount is offered, an Applicant may withdraw its Proposal or accept the lesser grant amount.

1.10 Debrief for Unsuccessful Applicants

Unsuccessful Applicants will have the opportunity to participate in a debrief session following the conclusion of the assessment and award process.

Applicants wishing to participate in a debrief session should submit a request in writing to DEM.


PART A – ESSENTIAL ELIGIBILITY CRITERIA

Note: the information below is mandatory for further consideration in the process.

Applicant Information

Table 3: Company Detail

Trading Name [insert name]

Registered Name [insert name]

ACN [insert number]

ABN [insert number]

Address of registered office [insert address]

Place of business in South Australia (if relevant) [insert address]

Type of entity (e.g. company, trust, partnership, sole trader, other)

[insert entity]

[Provide Australian Certificate of Incorporation or other in Part D - Supporting Documentation]

GST Registration [Provide GST Registration certificate in Part D - Supporting Documentation]

Project Location in SA [Provide map of location included in Development Approval in Part D - Supporting Documentation]

Principal Contact

Applicants are to provide the key contact person’s details in the table below (Table 4).

Table 4: Contact details

Applicant Contact Person [insert name]

Organisation [insert name]

Position [insert position]

Address [insert address]

E-mail [insert email address]

Telephone [insert phone number]

Authorised Officers

Applicants are to provide the key contact of person(s) with authority to commit the Applicant organisation to the terms of this proposal and execution of legal documents in the table below (Tables 5-6). Create additional tables as required for multiple Authorised Officers.


Table 5: Contact details Officer 1

Applicant Authorised Officer 1 [insert name]



Specified Authority [insert authority details of this officer]




Table 6: Contact details Officer 2

Applicant Authorised Officer 2 [insert name]



Specified Authority [insert authority details of this officer]




Applicant Financial Capacity

This section is to confirm the Applicants financial capacity to receive grant funding under the terms of the Fund and the financial eligibility criteria specified in the Investment Guidelines.

Applicant Financial Information

Applicants are required to provide fully audited financial statements detailing financial performance over the past three financial years. Where the Applicant is part of a consortium please provide financial statements for each Applicant member.

DEM Note: Please note that financial statements are a mandatory requirement. Applicants are to provide one clearly named pdf file for each financial statement as an electronic attachment in Part D – Supporting Document of the Proposal Template.

Please provide further information if required to explain any changes in corporate structure that may affect the continuity of the provision of the financial statements.


Financial History

Are there any significant events, matters or circumstances which have arisen within the past 12 months that could significantly affect the Applicant’s operations?

[Word limit no more than 200 words]

Are there or have there been any:

bankruptcy and/or de-registration actions insolvency proceedings (including voluntary administration, application to wind up, or

other like action)either actual or threatened, against the Applicant in the past three years? If so, what (if any) remedial action has been taken?


Is the Applicant currently in default of any agreement, contract, order or award that would or would be likely to adversely affect its financial capacity to meet the requirements of this Proposal?


Are there any other factors that could adversely affect the financial capacity of the Applicant to successfully perform the obligations contemplated by the Proposal?



PART B – PROPOSAL REQUIREMENTS

Project overview

Applicants are to provide a high level overview of the proposed Project including:

a) Project description

b) investment stream applied for

c) key activities

d) outcomes of the Project including justification for funding.



Assessment Criteria 1: Contribution to Objectives

Assessment Criteria

DEM will assess: The extent to which the Project will contribute to achieving one or more of the Objectives of the Fund

In assessing this criterion the key factors for consideration are:

The extent to which the Applicant demonstrates that it will achieve one or more of the Fund Objectives.

Proposal Requirement 1A: Achieving Fund Objective 1

Applicants are to provide a statement explaining their overall strategy and approach to deliver and support the achievement of Fund Objective 1 including:

a) How they will catalyse private sector investment in grid scale storage infrastructure


b) How they will improve Affordability outcomes to the South Australian electricity consumers


c) How they will improve Reliability outcomes to the South Australian electricity consumers


d) How they will improve Security outcomes to the South Australian electricity consumers


Applicants are to include any detail and outcomes from any early development projects and / or pilots undertaken to date to demonstrate the proposed Project’s ability to meet Fund Objective 1.

Proposal Requirement 1B: Achieving Fund Objective 2

Applicants are to provide a statement explaining their overall strategy and approach to delivering and supporting the achievement of Fund Objective 2.


Applicants are to include any detail and outcomes from any early development projects and / or pilots undertaken to date to demonstrate the proposed Project’s ability to meet Fund Objective 2.



Assessment Criteria 2: Managerial and Organisational Capability

Assessment Criteria

DEM will assess: The managerial and organisational capability of the Applicant to implement the project


The proposed managerial and organisational structure of the Applicant, including:

o the appropriateness of the structure overall

o the appropriateness of the organisational structure for each Phase of the Project

o the skills and experience of nominated individuals (with a particular focus on the key personnel)

o the Applicant’s proposed approach to managing relationships during the Development, Construction and Operations and Maintenance (O&M) phases

o Experience in delivering projects of a similar nature within Australia.

Proposal Requirement 2A: Management Philosophy Statement

Applicants are to provide a high level statement explaining their overall strategy and approach to deliver the Project. The statement is to include:

a) the approach to support achievement of the Fund Objectives

b) the strategy to develop a cohesive and fully resourced structure from day one and thereafter during each Phase of the Project

c) the approach to managing internal conflict.


Proposal Requirement 2B: Corporate Structure

Applicants are to provide a corporate structure showing the contractual relationship between the Applicant and its key subcontractors, financiers, equity investors and any other key contractual arrangements including a high level text description of each relationship.

[Include chart and no more than 200 words]

DEM Note: Applicants may submit a corporate structure chart as Supporting Documentation in Part D of the Proposal Template.


Proposal Requirement 2C: Management and Organisational Structure

Applicants are to provide a description of the Applicant’s management and organisational structure for the Development, Construction and O&M phases of the Project. This must include:

a) a resource organisational diagram showing job position and the identified resource

b) a summary position description for each key individual identified in the organisational diagram.

DEM Note: Please replicate the below table (Table 7) for each key individual identified.

Table 7: Key Managerial Individuals

Name [insert name]

Qualifications [insert name]

Skills [insert number]

Relevant Experience [insert address]

Availability at Commencement Date [insert availability]

Project Role [insert role]

DEM Note: Applicants may submit a resource management and organisational chart as Supporting Documentation in Part – D of the Proposal Template.

Proposal Requirement 2D: Previous Project Experience

Applicants are to provide a description of their previous project experience delivering similar projects within Australia. Where no similar projects have been delivered within Australia please provide international project examples.

DEM Note: Please replicate the table below (Table 8) for each applicable Project.

Table 8: Company Project Experience

Project Name [insert name]

Project Summary [insert summary of project i.e. location, technology etc. 50 word limit]

Timetable [insert key project dates]

Partners [insert partners on the project i.e. key stakeholders, financiers etc.]

Outcome [insert summary of the outcomes for delivering the project. 50 word limit


Assessment Criteria 3: Financial Capacity

Assessment Criteria

DEM will assess: The financial capacity of the Applicant to deliver the Project in its entirety


The approach to deliver a robust and sustainable financial structure to deliver all aspects of the Project

The financial strength of the Applicant to fulfil and bear the risk associated with its contractual obligations

The level and appropriateness of financial support provided to the Applicant, including credit enhancements, bonding and parent company guarantees and the financial strength of the entities providing support.

Proposal Requirement 3A: Financial Structure

In addition to the information provided in Part A, Applicants must demonstrate a robust and sustainable financial structure that provides certainty that the Applicant can deliver the Project in full and meet all of its financial and contractual obligations. As part of this response, commentary should provide the methodology that the Applicant has used to select its key project team members (i.e. financiers, equity providers) and the security and monitoring arrangements it has in place to implement and support the performance of the Applicant in delivering the Project.


Security and Guarantees

Applicants are to provide details of any performance or construction bonds in table below (Table 9).

DEM Note: Please replicate Table 9 as required.

Table 9: Performance Bonds

Detail Particulars

Bond Amount

Details of bond issuer

Timing of availability

Duration


Applicants are to provide the detail in the below tables (Table 10 and 11) for parent company guarantees contemplated in their commercial structure.


Table 10: Applicant Member financial information

Particulars

Contracting entity

Contracting entity ABN

Guarantor entity

Guarantor entity ABN


Duration of guarantee

Limitation on liability

Other information

Applicants are to provide the following details for any shareholder guarantees contemplated in their commercial structure.


Table 11: Shareholder Member Financial Information

Particulars

Details of each guarantor

Cap on amount of each guarantee


Duration of each guarantee

Terms and conditions of each guarantee


Assessment Criteria 4: Technical Viability of the Project

Assessment Criteria

DEM will assess: How the technical design will contribute to the proposed solution in accordance with the objectives of the Fund


Improving affordability through lowering energy prices for consumers (residential, commercial and industrial)

System security improvement in South Australia

Contribution to firming generation

Improve reliability of regional South Australia

Status of regulatory and other compliance

Improving the economics of storage technologies.

Proposal Requirement 4A: Details of the Technical Solution

Applicants are to provide a technical description of the proposed storage technology. As part of the response the following information should be captured either as text in field below or attached as Supporting Documentation in Part D of the Proposal Template:

a) description of the technology choice including concept design, power and energy storage capacity over the Design Life and performance characteristics

b) performance specification of the plant and equipment proposed at 15 Degrees Celsius and ambient pressure at mean sea level

c) terminal points (battery limits)

d) proposed grid connection point and voltage

e) preliminary plant layout and general arrangement

f) preliminary single-line diagram

g) proposed O&M philosophy of the project

h) technical risks

i) any actual or forecast constraints on charging or discharging the energy storage or system security device proposed.



Proposal Requirement 4B: System Security and Reliability

Applicants are to provide technical details of the proposed storage solution with quantifiable estimates on how it will improve the system security in South Australia. Applicants may attach further information to support their response as Supporting Documentation in Part D of the Proposal Template. An Applicant’s response could include, for example:

a) assessments (including third party advice) indicating an increase in the short circuit current ratio (SCR) at point of connection (as a measure of system strength)

b) capability to inject or absorb reactive power to assist with voltage control on the network

c) capability to inject or absorb real power to assist with primary frequency control on the network

d) capability to provide inertia or fast frequency response to slow the rate of change of frequency on the network

e) capability to provide frequency control and ancillary services (FCAS), including which markets the proponent can be registered in

f) capability to provide network ancillary services such as Network Loading Control Ancillary Service (NLCAS) and System Restart Ancillary Services (SRAS)

g) capability for low voltage, high voltage and frequency ride through; and

h) assessments (including third party advice) on how the Project will contribute positively to network reliability in regional South Australia, such as by increasing peak generation capacity or network capacity.


DEM Note: If the Project is not designed to target system strength and reliability, Applicant should respond with ‘not applicable’.

Proposal Requirement 4C: Firming Generation and Utilisation of Renewables in South Australia

Applicants are to demonstrate the capability of the proposed solution to provide dispatchable generation available on demand. Applicants may attach further information to support their response as Supporting Documentation in Part D of the Proposal Template. Information should include:

a) a description of how the proposed solution contributes positively to an increase in dispatchable generation capacity

b) a description of how the proposed solution contributes to the utilisation of intermittent renewables in South Australia



Project Requirements 4D: Regulatory compliance

Applicants are to demonstrate the nature and extent to which the proposed solution will meet all relevant regulations including:

a) a description of the grid connection process status, including status of the Generator Performance Standards (GPS) modelling, status of engagement with the relevant Network Service Provider (NSP)

b) the Generator Development Approval Procedure (version 1.1) finalised by the Office of the Technical Regulator in early July 2017

c) the Australian Energy Market Operator’s registration requirements and the Essential Services Commission of South Australia’s technical licensing requirements for connecting to the National Electricity Market

d) the connection requirements for ElectraNet and/or SA Power Networks as they relate to connecting to respective transmission and/or distribution networks.


Project Requirements 4E: Technology Readiness

Applicants are to specify the Project’s status (TRL 1 – TRL 9) on the Technology Readiness Level Index (a global benchmarking tool for tracking progress development).


DEM note: In addition to providing the details in Assessment Criteria 4 above, Applicants are required to complete the ‘Technical Data’ sheet included in Part C – Data Book (Excel document) to meet this Proposal Requirement.


Assessment Criteria 5: Financial Viability and Funding Requirements of the Project

Assessment Criteria

DEM will assess: The appropriateness and robustness of the cost, funding and revenue assumptions


The appropriateness of the proposed funding structure, including:

o the nature and source of each form of funding and its quantum

o the terms of the funding

o the level of gearing

o the timing of capital components coming into the funding structure

o the competitiveness of the pricing and other terms of the funding structure

o the financial robustness of the capital structure during the construction and O&M phases

o whether co-funding from ARENA’s Advancing Renewables Program has been requested or is in the process of being obtained

o how the funding structure will accommodate the proposed Grid Scale Storage Fund allocation

The degree of certainty that the Applicant can deliver the proposed debt and equity solution (with no conditionality or further due diligence)

Robustness of the financial model including:

o sensitivity to revenue stream assumptions

o the appropriateness of the proposed funding arrangements between the State and Applicant, including structure of the contributions.

The total CAPEX and OPEX costs of the Proposal (including proposed basis of escalation)

The appropriateness and sustainability of the financial assumptions, including:

o development costs

o construction costs

o operating and maintenance costs

o appropriateness of the accounting treatment

o appropriateness of the taxation proposal

Management and achievement of Financial Close


DEM note: Applicants must prepare the information requested below, as well as complete and submit Part C – Data Book (Excel document) and a Proposal Financial Model as Supporting Documentation in Part D of the Proposal Template.

Applicants should refer to Appendix 1 for Financial Model Requirements.

Where, due to the nature of your funding structure, the information requested is not applicable, Applicants are required to indicate why the information is not applicable and provide equivalent relevant information that supports the funding structure being proposed.

Proposal Requirement 5A: Funding Structure

Applicants must clearly demonstrate how the funding requirements of the Development and Construction phases will be met by their funding structure to Commercial Operation Date and the O&M phases after Commercial Operation Date. The information to be provided must include:

a) a description of the overall funding structure and strategy

b) a diagrammatic representation of the proposed funding structure during the Development, Construction and O&M phases

c) the key commercial and financial benefits of the proposed structure (where relevant, relative to other potential funding options that have been explored by the Applicant)

d) the legal identity of any party providing finance (including equity and underwriters or other parties who are otherwise involved with the financing for the Project), their roles, responsibility and relationship with the Applicant

e) details of the funding structure for the Development and Construction phases proposed including:

the source and nature of each funding element- shareholder's equity;- shareholder loans (or other quasi-equity instruments);- senior debt funding;- subordinated debt funding;- capital markets funding;- ARENA funding; and- any other funding proposed

f) details of the funding structure proposed for the O&M phase including:

the source and nature of each funding element- Grid Scale Storage Fund funding stream- operating revenue streams- any other proposed operational funding

g) a description of how the phase funding will be utilised to fund requirements during the relevant Development, Construction and O&M phases (including timing of drawdowns)

h) assumptions and/or hurdles required to secure the funding

i) any key terms.

[Word limit of 500 words]


DEM Note: Applicants are required to complete the ‘Financing Summary’ and ‘Finance Plan’ sheet included in Part C – Data Book (Excel document) to meet this Proposal Requirement.

Applicants must submit a Funding Structure Diagram as Supporting Documentation in Part D of the Proposal Template.

j) a description of any risks associated with the funding strategy and details of contingency arrangements and risk mitigation measures taken, or proposed, to minimise any negative consequences for Applicant or the State, including as a result of changes in financial market conditions.


Proposal Requirement 5B: Refinancing Strategy

Applicants are to demonstrate how the proposed funding structure minimises refinancing risk.


Proposal Requirement 5C: Deliverability and Certainty of achieving Financial Close

Applicants are to provide a strategy that demonstrates a high degree of certainty of delivering the proposed funding. The information to be provided should include:

a) the process to be adopted by the Applicant to efficiently manage the achievement of Contractual Close and Financial Close in accordance with the indicative Project timetable and otherwise provide the State with certainty on terms and conditions to Financial Close;


b) written confirmation that all equity financing is committed to the Project, including provision of an Equity Investor Commitment Letter from each Equity Investor submitted as Supporting Documentation in Part D of the Proposal Template.

If the equity financing is yet to be committed please advise of the status and / or provide other evidence of the certainty of funding (i.e. Letter of Intent);



c) written confirmation that all required debt financing is committed to the Project, including Financier Commitment Letters from each Financier submitted as Supporting Documentation in Part D of the Proposal Template.

If the debt financing is yet to be committed, please advise of the status and / or provide other evidence of the certainty of funding (i.e. Letter of Intent);


d) any qualifications on the availability of finance must be clearly stated in particular, any conditions precedent, pricing refresh, market flex or material adverse effect conditionality (if any).



Proposal Requirement 5D: Financial Model

Applicants are required to complete the Financial Summary table overview below (Table 12) and prepare and submit a detailed Financial Model as Supporting Documentation in Part D of the Proposal Template.

Applicants must also complete and submit the electronic Data Book (Excel document) in Part C and link the data provided with its Financial Model.

DEM Note: Applicants are to refer to Appendix 1 for the Financial Model Requirements.

Table 12: Financial Summary

Model Summary Value Comment

Project Cost

Development Cost

Construction Cost

Contingency

O&M Cost p.a.

Funding Contribution

Grid Scale Storage Fund

[include others as required]

Revenue Streams (see Table 13 for definitions)

Ramping Services Fee

Inertia Services Fee

Contribution to System Strength Fee

Voltage Support Services Fee

[include others as required]

Financial Model Summary

Project NPV

Project IRR

Equity IRR

Gearing Ratio

Payback Period

Project Term


Table 13: Revenue Definitions

Services Definition Proposed Metrics

Ramping services

The ability of the service provider to provide Frequency control in a timely manner in response to changes in demand or supply

Measured as provision of a ratio of active power per second (MW/s), in response to a dispatch signal. Timeframe between initiation and actual dispatch will be specified in seconds.

Inertia services The ability for the proposed technology to provide an inertial response which arrests Rate of Change of Frequency (df/dt) in the short term, and/or subsequent stabilisation/recovery of frequency in response to system events.

Measured as real inertia (MW.s) per MVA installed capacity for conventional generators or MW output within a response time measured in milliseconds (ms) for synthetic inertia.

Contribution to System Strength

Provision of an additional source of fault current at a bus on the power system. The service must provide an increase in fault levels without displacing other sources of fault current, for example synchronous generation.

Measured by the provided increase in fault current (kA) at a bus on the power system.

Voltage support services

Provision of a service to maintain voltages and voltage stability on the power system within required limits under steady state and contingency conditions.

Measured by provision of a quantity of reactive power (MVAr) necessary to achieve a required voltage (V) at a specific bus on the power system. Alternatively, provision of reactive power (MVAr) to ensure a pre-contingent reactive margin as a % of MVA fault level at a particular bus.

Proposal Requirement 5E: Appropriateness of Financial Assumptions and Financial Model

Applicants are required to explain the due diligence processes and analysis they undertook to satisfy themselves as to the robustness and sustainability of the key cost and revenue elements and assumptions of their Proposal and Financial Model, including:

a) CAPEX costs

b) O&M costs

c) Revenue streams including: GSSF grant, other government grants and any other sources of revenue

This must identify third party reviews of costings and all benchmarking activities undertaken.



Proposal Requirement 5F: Accounting

Applicants are required to provide, wherever possible:

a) a statement of general accounting principles applied in the Financial Model

b) confirmation that the Financial Projections in the Financial Model are prepared in accordance with Australian Accounting Standards

c) any accounting advice that confirms that the accounting assumptions, calculations and outputs (including financial statements) are in accordance with Australian Accounting Standards.


DEM Note: Where Applicants do not yet have this documentation, Applicants should provide a response that indicates there agreement to provide documentation to DEM when available.

Proposal Requirement 5G: Taxation

Applicants are to provide an overview of the material taxation issues arising in relation to the Project, including a summary of the tax conclusions, and the basis on which they are derived.



Assessment Criteria 6: Economic Contribution to the State

Assessment Criteria

DEM will assess: The level of economic contribution to South Australia compared to the competing Proposals


The overall value proposition to the State from the improved services delivered by the project and achievement of the fund objectives

The proposed benefits and development opportunities created by the Project:

o direct jobs created

o indirect jobs created

The proposed contribution to the energy market and competition

Potential future investment from the Applicant or others stemming from this investment

The level of local companies and content utilised in the development of the Project.

Proposal Requirement 6A: Project Value Proposition against Objectives

Applicants are to provide a statement explaining how the new or improved services to be provided by the Project will add value to the State’s energy network and market. For example the contribution the project creates to energy market competition including residential and commercial consumer outcomes and experiences.


Applicants are to justify the value proposition against the services delivered outlined as Revenue Streams in Table 12. Where appropriate Applicants are to quantify in dollar ($) terms the improvement impact to the States energy consumers.



Proposal Requirement 6B: Creation of Economic Development Opportunities

Applicants are to provide a statement explaining their overall strategy and approach to the proposed investment in South Australia and how this will benefit and create economic development opportunities for the State (including new employment opportunities and / or advancing the State’s relevant economic and regional priorities and potential for further investment).

Please identify third party reviews of economic contributions proposed.


Applicants are to complete the table below.

Table 14: Economic Development Contribution

Summary Total New Jobs (Full Time Equivalents)

Annual Economic Benefit ($ p.a.)

Direct Jobs Created

Construction

Operations

Indirect Jobs Created

Construction

Operations

Proposal Requirement 6C: Utilisation of local companies

Applicants are to list the names of South Australian-based companies intended to be utilised throughout the development of the Project (if known).


Proposal Requirement 6D: Utilisation of Australian steel

Applicants must provide an undertaking to use Australian certified steel products in the development of the Project, wherever possible.



Proposal Requirement 6E: Industry Participation Policy

Applicants must provide an undertaking to comply with the South Australian Industry Participation Policy including submitting an Industry Participation Plan as Supporting Documentation in Part D of the Proposal Template (if applicable).

Detail concerning South Australian Industry Participation Policy may be accessed via the following weblink: https://industryandskills.sa.gov.au/industry/south-australian-industry-participation-policy


Proposal Requirement 6F: Knowledge sharing

Applicants are to provide a statement explaining the approach to knowledge sharing/transfer throughout the Project.



https://industryandskills.sa.gov.au/industry/south-australian-industry-participation-policy

https://industryandskills.sa.gov.au/industry/south-australian-industry-participation-policy

Assessment Criteria 7: Project Delivery Capability

Assessment Criteria

The State will assess: The readiness of the Project to commence implementation and operations


The proposed project schedule including key milestones and underlying assumptions;

The Project Management Plan (covering the development, construction, commissioning and testing phases) including:

o objectives

o scope and deliverables

o stakeholder engagement

o organisation structure, roles and responsibilities

o key personnel, skills and experience

o key cost drivers and assumption

o procurement approach

o risk management approach

o health and safety approach

o quality management approach

o environmental management approach

o transition to operation approach.

The proposed operation and maintenance plan including availability, utilisation and cost assumptions and key risks identified.

Proposal Requirement 7A: Project Schedule

Applicants are required to submit an indicative project schedule with key milestones supported by a detailed schedule identifying all major milestones and activities, sequences and key dates covering the full duration of the development, construction, commissioning, testing and transition to operation phases. Applicants must submit a Project Schedule as Supporting Documentation in Part D of the Proposal Template.

Proposal Requirement 7B: Project Management Plan

Applicants are required to submit an explanation of their Project Management Methodology including details of how the project will be executed (i.e. EPCM, design and construction), the key project packages and contracts for procurement, stakeholder engagement requirements and detail of key milestones (i.e. approvals, procurements, construction).



Applicants must also submit an initial Project Management Plan as Supporting Documentation in Part D of the Proposal Template that, as a minimum:

a) defines how the project will be executed

b) details project packages and key contracts for procurement

c) identifies key project schedule milestones including underlying assumptions

d) defines how the project will be monitored and controlled

e) describes how it will comply with the requirements of the network operator

f) outlines required regulatory and external approvals including status

g) identifies all key stakeholders and stakeholder groups

h) identifies the project team structure through Development and Construction

i) outlines qualifications, experience, responsibilities, accountabilities and authorities for each key project management role

j) defines the safety management approach

k) defines the risk management approach

l) outlines approach to quality assurance or demonstration of systems that are reliant on AS/NZS ISO 9001

m) describes any other project management activities.

Proposal Requirement 7C: Operations and Maintenance Plan

Applicants are required to submit an initial O&M Plan as Supporting Documentation in Part D of the Proposal Template that describes the:

a) operations approach (i.e. administration, conduct, operator requirements, resourcing and risk management)

b) maintenance approach (i.e. administration, control systems, preventative maintenance, procedures and documentation)

c) engineering support approach (i.e. procedures and documentation, performance monitoring)

d) training approach (i.e. operator and maintainer

e) administration approach (i.e. management, industrial safety)


Assessment Criteria 8: Project Risk

Assessment Criteria

DEM will assess: The risks of successful delivery of the Project, including the extent of significant technical, regulatory or other risks


A demonstrated understanding of the Project’s risks and demonstration of associated mitigation strategies to manage and minimise these risks.

Proposal Requirement 8A: Project Risk Register

The Applicant is required to submit an initial Project Risk Register that includes, as a minimum:

identification of all risks as per section 5.4.2 of AS/NZS ISO 31000

analysis of all risks as per section 5.4.3 of AS/NZS ISO 31000

assessment of all risks as per section 5.4.4 of AS/NZS ISO 31000

control of all risks as per section 5.5 of AS/NZS ISO 31000.

The Project Risk Register must, as a minimum, include risks relating to the following:

a) safety

b) compliance

c) technical

d) delivery schedule

e) financial

f) environment and sustainability

g) interface

h) operations and maintenance

i) reputation

j) stakeholder relationships

k) industrial relations

l) subcontractors

m) certification.

Applicants are to utilise and populate the risk register included in Part C - Data Book (Excel document) when responding to the above Proposal Requirement.


PART C – DATA BOOK

Applicants are reminded to complete and submit the electronic Data Book (Excel document). The data provided in the Data Book must align/link to the Proposal Financial Model submitted.


PART D – SUPPORTING DOCUMENTATION

Applicants are to provide the following ‘Supporting Documentation’ as previously advised in the Part B – Assessment Criteria and Proposal Requirements.

This documentation will be relied upon as required by DEM.

Documentation Mandatory Format Provided (Yes / No)

Australian Certificate of Incorporation Yes PDF

GST Registration Certificate Yes PDF

Map of Project Location Yes PDF

Audited Financial Statements (past 3 years)

Yes PDF

Managerial and Organisational Capability

Corporate Structure Chart No PDF

Management and Organisational Chart No PDF

Technical Viability

Technical Solution No PDF

System Security and Reliability No PDF

Firming Generation and Utilisation of Renewable Energy

No PDF

Financial Viability

Financial Model Yes Excel

Funding Structure Diagram Yes PDF

Equity Investor Commitment Letter Yes PDF

Financier Commitment Letter Yes PDF

Economic Contribution to the State

Industry Participation Plan Yes - If applicable Word

Delivery Methodology

Project Schedule Yes PDF

Project Management Plan Yes PDF

Operation and Maintenance Plan Yes PDF


APPENDIX 1 – FINANCIAL MODEL REQUIREMENTS

General Financial Model Instructions

Applicants are required to submit a Financial Model in accordance (where relevant) with the following requirements:

a) the Financial Model must be provided in electronic form and compatible with Microsoft Excel 2010

b) all amounts must be in thousands of Australian dollars and must not be rounded

c) all Financial Model functions, formulae and linkages should be operational (including no circular references) and no part of the Financial Model should be password-protected (unless the password is clearly provided for each level of protection), nor any cells or worksheets containing input, calculations or output data hidden from view in any way, nor should any cells contain links to external workbooks or add-ins

d) there must be no hard-coded figures in the Financial Model apart from the assumptions used, and these should be clearly identified and located in a separate worksheet from the working calculations and outputs in the Financial Model

e) all Visual Basic macros must be fully documented to explain how the macros function and specify the relevant part of the Financial Model to which they relate

f) financial projections should be provided during the Development and Construction Phase (monthly) and the Operating Phase (monthly and yearly). The statements of financial position, financial performance and cash flow should also be summarised on an annual basis, assuming a 30 June year end.

Financial Model Assumptions

In the Financial Model, all:

a) amounts should be GST exclusive, with the GST payable to be shown separately

b) assumptions on any working capital, deposit and overdraft rates should be explicitly stated

c) where applicable Applicants should explicitly state any revenue stream assumptions (i.e. list of services) that align to the availability metrics included in the ‘technical data’ tab included in Part C - Data Book

d) where applicable, Applicants must explicitly state any assumptions regarding assumed Refinancing and must separately identify these in the Financial Model

e) the Financial Model should also use the following indexation rates for the applicable components of its cost base:

- CPI indexation over the Operation and Maintenance Phase 2.5% per annum; and

- WPI indexation over the Operation and Maintenance Phase 3.5% per annum.


Specific Requirements of Financial Model

The Financial Model should include the following schedules (if relevant):

a) a statement of the sources and uses of funds during the Development and Construction Phase (as per requested in Data Book)

b) funding schedules for each form of finance setting out drawdowns, interest accrued (and capitalised if applicable), repayment amounts and timing

c) projected statement of financial performance for the Term

d) projected statement of financial position for the Term

e) a cash cascade for the Term showing the priority of the distribution of cash flows

f) cash flow, balance sheet and income statement

g) debt service reserve account(s) for the Term

h) maintenance reserve account(s) for the Term

i) standby facilities for the Term

j) any other reserve accounts for the Term

k) projected taxation schedule (this should specifically show taxable income/(loss) for each period, cumulative tax losses (if any), losses utilised in a given period, and tax paid in the period)

l) a depreciation schedule for the Term.

The Financial Model should show a summary of each individual element of the cash cascade, on a nominal and NPV basis, including:

a) revenue streams

b) operating costs (including lifecycle maintenance costs)

c) movements in working capital

d) tax payments (including movements in GST cash flows)

e) movements in reserve accounts (including maintenance and debt service reserves)

f) financing drawdowns (for both debt and equity) and payments of interest and principal

g) distributions to Equity Investors

h) movements in cash balances.


The Financial Model should include a summary sheet that details the following (where relevant):

a) project internal rate of return (IRR) before financing and tax in both real and nominal terms on a cash and committed basis, over the Term

a) the pre- and post-tax return on equity

b) the gearing ratio immediately following payment of any contributions and any associated refinancing or release of reserves or contingencies or other support

c) the weighted average cost of capital

d) Average Debt Service Cover Ratio (DSCR) and Loan Life Cover Ratio (LLCR) for each period of each loan and in aggregate with minimum and average ratios

e) the average life of senior debt

f) any other ratios which are considered relevant to the proposed financial structure

g) the precise timing of any equity injections and details of the phasing if appropriate

h) the Financial Model should meet the expected requirements of Financiers and should be capable of being used to run sensitivities. Applicants will be required to provide the results of the sensitivities requested in Part C – Data Book (Sensitivities tab).


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