2017 VRET Reverse Auction Industry Information Session

Melbourne Museum 28 November, 2017

Questions and answers

1. How does the Payment cap work? Let's say if the proponent exhausted the payment cap in year 3 but still has payment due from government to the proponent. However, in year 4 there's an amount payable from the proponent to government.Once the cap has been reached, if a payment is due from the State to the Proponent, the payment will not be made. The State will keep track of the balance, and if net payments made by the Proponent result in the cumulative net amount falling below the payment cap, then payments from the State will resume. *Note: The Department will provide worked examples of the payment cap on the Victorian Government Tenders System

2. Will the livestream recording of this session and the presentation slides be available following the conclusion of this event?Yes, these presentations will be available following the conclusion of the session. Link to recording of the session: https://www.youtube.com/watch?v=cBEJmY5SeNg&feature=youtu.beLink to presentation: https://www.energy.vic.gov.au/renewable-energy/victorian-renewable-energy-auction-scheme

3. Will a large-scale solar project with a capacity of 200 MW be able to benefit from both the 100 MW solar-only allocation as well as the 550 MW wider allocation?Yes. The reservation for the first 100 MW is intended to encourage solar technologies. Solar is also listed as an eligible renewable energy generating technology under Clause 2.1(c)(i) of the Specification in the RFP. Therefore, solar will also qualify for support for the remaining 550 MW if successful in the auction process.

4. The requirement for electrical connection and AEMO registration is understandable but, it takes time. How far along the process does a project need to be with these aspects when submitting the RFP?It is an eligibility criteria that the proponents have submitted a complete connection application to the connecting network service provider, and have at least commenced registration with AEMO as an Intending Participant or as a Registered Participant. However, those applications do not necessarily have to have been approved by the network service provider or AEMO to be eligible to bid into the auction.

5. Will the energy be covered by the Support Agreement if the plant commissions earlier than the anticipated supply date?No. However, the energy can be sold into the market by the proponent. The Support Agreement supply period will not start prior to the anticipated supply date that the proponent has bid in.

6. Can a project participate without having a planning permit in hand but very close? If so, at what stage of the process must the proponent have it?At the time the proponent submits their bid, they must have a live planning permit. That permit will need to cover all aspects of the project.

7. Is the Payment Cap in NPV?The payment cap that is bid must be in 2017 dollars, and the cap will be indexed at a rate of 4% per annum as set out in the contract.

8. Does the government have a preference for a small number of large projects taking all the capacity or is it keen to see a number of projects delivered through the scheme?The State will consider all projects, and will determine the best outcome for the State based on an assessment of all eligibility and evaluation criteria.

*Note: Only projects larger than 10 MW nameplate capacity are eligible to participate.

9. Is there any benefit to including storage?Evaluation Criteria 5 (Impact on Existing Electrical Network Infrastructure) looks specifically at network benefits. It may be that if a project adds storage, it will score better under Evaluation Criteria 5.

10. The plant availability maintained in the first year of the project may be lower if it is only operational for part of the year post-commissioning. How will that be calculated?Plant availability will be calculated based on the amount of time that the plant has been available since the commencement of supply. If the first supply year is only part of a calendar year, plant availability will be calculated for that part of the year since commencement.

11. You commented that Government will be able to trade any LGCs that it receives via projects that are generating before 2020 and have agreed to transfer LGCs to the Government. Can you confirm that the Government will be retiring the LGCs from projects that start generating after 2020, and not trading them in the market?

Proponents will be required to bid in an anticipated supply date which will need to be before September 30, 2020. If they dont meet that date, then the 15-year supply period will shorten. If the proponent is under an arrangement where they will transfer the LGCs to the State, they will be liable to pay liquidated damages if they do not supply LGCs to the state as per the agreement. Supplementary answer: The Support Agreement does not contain any provisions relating to what the Government will do with LGCs that it receives under any Support Agreement. The State has full discretion as to what it does with any LGCs received under the Agreement.

12. When the successful bidders are announced, and negotiations commence, is there going to be a list of eligible projects that sits underneath those successful bidders, in case of conditions precedent or some other reason for termination causes, a bidder drops out?Projects that dont meet all the eligibility criteria will not progress to the evaluation stage of the auction. The government will not be releasing further details regarding the methodology for the evaluation of eligible projects.

13. Is there a binding commitment for successful proponents to sign the Support Agreement with the State?Successful proponents should be prepared to enter into a Support Agreement with the State, based on the terms of their bid. Clause 6.9 (Part A) of the RFP states that Each Proposal constitutes an irrevocable offer by the Proponent to the State to enter into a Support Agreement for a particular Project required under, and otherwise to satisfy the requirements of Part B (Specification), terms and conditions of Part C (VRET Support Agreement) and subject to Part D (Proponent's Proposal) to this RFP.

14. Is there any form of bid bond that is required?No, there is no requirement for a bid bond.

15. When can the next auction for the remainder of the 1,500 MW happen to deliver the targets before 2020?This question is outside the scope of the Industry Information Session, which is focussed on the RFP. Under the Renewable Energy (Jobs and Investment) Act 2017, the Minister for Energy, Environment and Climate Change will be making a declaration that determines the capacity required to meet the 2020 target. This will occur before the end of 2017.

16. If a Proponent bids only part of a project into the process, and it commits to the larger part of the project, can it reference the larger part of the project in their Victorian Industry Participation Policy (VIPP) plan and related plans (Major Project Skills Guarantee)? The project will be assessed against the stated eligibility and evaluation criteria, purely on the amount (MW) that is to be contracted under the bid provided by the Proponents.

17. The weighting of the Evaluation Criteria is clear. Is there a clear weighting that can be given between Bid Price and total Evaluation Criteria score that will be used to select successful proponents?The government will not be releasing further details regarding the methodology for the evaluation of eligible projects.

18. Is there any clear methodology or formula to be used by the Evaluation Panel in order to rank the proposals by value for money (e.g. Weighted EV Criteria divided by Base Amount or Payment Cap)?The government will not be releasing further details regarding the methodology for the evaluation of eligible projects.

19. What is the consequence if the project doesn't meet the commissioning date of September 2020.The 15-year term of the Support Agreement begins from the anticipated supply date, which will be specified in the proponents proposal. Regardless of whether that date is close to 30 September 2020, if the anticipated supply date is missed, then the term of the Support Agreement will continue to decrease until supply commences. If the proponent has a liability to provide LGCs to the government as part of the Support Agreement, then liquidated damages could start to accrue.

20. Will there be a platform where businesses looking to tender can engage with community based business to help strengthen the community based criteria?The Victorian Government supports ICN in the delivery of the VIPP. The ICN Gateway platform has a project page for Victorian renewable energy projects, whereby both suppliers and project proponents can register. Details of potential suppliers are shared between suppliers and proponents.

21. How far reaching does the community engagement have to extend? To the neighbours of the development, the local town, the region?This question is addressed in the Community Engagement and Shared Benefits Guide. It is ultimately up to the Proponent to define the relevant local communities. The State does not wish to prescribe an approach. Your community will be a reference to the scale of your project and the context for that community, and how interested they are. We have defined hosts as those properties that have a generator on their land, and neighbours as those who live in close vicinity to the generating plant and then it is up to Proponents to define the broader community.

22. Apart from letters of support, how will the listed community consultation activities already undertaken be checked or tested for validity?We will have an engagement ex