PRE-BID CONFERENCE Wind-generated electricity Block of 450 MW Call for tenders A/O 2013-01
PRE-BID CONFERENCE AGENDA Introduction (15 minutes) ; Presentation (60 minutes) ; Pause (15 minutes) ; Question period. 2
PLAN OF THE PRESENTATION 1. Context ; 2. Needs and requirements ; 3. Selection process ; 4. Connection of the wind farm to the transmission system ; 5. Main contractual commitments ; 6. Communications and timetable ; 7. Question period. 3
PRE-BID CONFERENCE - 450 MW Wind Context
ROLE OF THE DIRECTION APPROVISIONNEMENT EN ÉLECTRICITÉ Launch calls for tenders (short and long term) ; Administer the Distributor's electricity supply contracts ; Prepare the electricity supply plans. 5
ROLE OF HYDRO-QUÉBEC TRANSÉNERGIE IN THIS CALL FOR TENDERS Conduct the exploratory studies and the connexion studies of the wind farms to the system ; Perform system connection work; Upgrade and reinforce the transmission system. 6
ROLE OF THE RÉGIE DE L'ÉNERGIE IN THIS CALL FOR TENDERS Monitor the application of the Call for Tenders and Contract Award Procedure (the Procedure) and the Code of Ethics, both approved by the Régie de l'énergie ; Approve the weighting table for criteria used for ranking bids for the present call for tenders ; Approve the electricity supply contracts resulting from the call for tenders. 7
ROLE OF THE OFFICIAL REPRESENTATIVE Raymond Chabot Grant Thornton & Cie acts as Official Representative in the present call for tenders. Its role consists of : Assisting the Distributor in the call for tenders process ; Advising the Distributor on the application of the Procedure ; Participating to communications between bidders and the Distributor. 8
PRE-BID CONFERENCE - 450 MW Wind Needs and requirements
ELIGIBILITY The new wind farms must be located in Québec. The new wind farms must be connected to Hydro- Québec's main transmission system. Hydro-Québec's main transmission system excludes the Iles-de-la-Madeleine system and off grid systems. 10
ELIGIBILITY (CONTINUED ) To be eligible to submit a bid, a bidder must register to the call for tenders in accordance with the requirements of section 3.2 of the call for tenders document. A bid may only be related to one wind farm but the same bidder may submit many bids. The participation to the call for tenders is reserved to all suppliers who demonstrate that : the local environment holds a participation representing 50 % or more of the control of the project ; and the project is recognized by a resolution adopted to that end by every Regional County Municipality (RCM) and by every local municipality where the project takes place. 11
ELIGIBILITY (CONTINUED ) DEFINITION OF LOCAL ENVIRONMENT Local environment is defined as having one or more of the following constituents : a RCM ; a local municipality ; a Native community ; an intermunicipal board ; a cooperative the majority of whose members have their domicile in the administrative region where the project takes place. 12
ELIGIBILITY (CONTINUED ) DEFINITION OF NATIVE COMMUNITY The term Native community is defined as one of the following components : one of the eleven (11) nations recognized by the National Assembly; a Native community is a Native group recognized as such by one of the eleven (11) nations recognized by the National Assembly and the Gouvernement du Québec. 13
ELIGIBILITY (CONTINUED ) The following generating facilities or wind farm projects are not eligible for this call for tenders: Those retained in whole or in part, following an earlier HQD call for tenders ; Those where the generation is under contract for part or all of the period covered by the present call for tenders ; Those that share a same delivery point, a same interconnection point or a same switchyard with an existing wind farm the generation of which is under contract and the contractual capacity of which will not have been fulfilled at the start of delivery of the project being submitted ; Those for which a connection agreement is signed between December 18, 2013 and before the public announcement of the bids retained ; 14
ELIGIBILITY (CONTINUED ) The following generating facilities or wind farm projects are not eligible for this call for tenders: Those for which a request for connection to the system has been submitted after December 18, 2013 (excluding the exploratory study); Those for which such a study is currently under way at HQT, unless the bidder waives the priority attributed to it within 90 days after this call for tenders has been launched (i.e. before March18, 2014). 15
SIGNING OF BID Each constituent of the local environment participating in the bid must sign the bid ; Reference to section 3.13 of the call for tenders document for more details regarding the entity or entities that constitute the local environment ; The bidder must designate a person for purpose of communications with the Distributor. 16
REQUESTED PRODUCT AND QUANTITIES The quantity requested is 450 MW of installed capacity and is comprised as follows of: 300 MW resulting from projects from the Bas-Saint- Laurent and Gaspésie Îles-de-la-Madeleine regions ; and 150 MW resulting from projects from across Quebec. Commencement of deliveries and allocation of the quantities : 100 MW no later than December 1, 2016 ; 350 MW no later than December 1, 2017. 17
OTHER CONDITIONS Environmental attributes belong to HQD ; Damages to pay if delivered energy < 95% of contract energy over a 3-year period after the commencement date of deliveries (section 30.2 of the Standard Contract) ; Transfer to HQD of 75% of the incentive received under the EcoENERGY program (similar or futur program). 18
GUARANTEED COMMENCEMENT DATES OF DELIVERIES Two (2) guaranteed commencement dates of deliveries are allowed ; It is the bidder's advantage to offer these two (2) possible dates ; One (1) offer, including these two (2) dates, is considered as two (2) different bids which are mutually exclusive bids ; For each bid retained, HQD will choose the date that allows it to form the best bid combination. 19
ADMISSIBLE PRICING FORMULAS Based on the energy delivered (MWh) ; Ceiling price of 9,0 /kwh (in 2014$) indexed to CPI : indexed annually at 100% of the CPI for the term of the contract; a bidder may offer a price that is less than the ceiling price, to increase its competitiveness. Equivalent to be determine (in 2014$) indexed to CPI: indexed annually at 100% of the CPI before the guaranteed commencement date of deliveries; and indexed annually at 20% of the CPI after the guaranteed commencement date of deliveries. In the event of a delay, indexation is suspended. 20
REGIONAL CONTENT AND QUEBEC CONTENT At least 35% of the expenses related to the wind turbine costs must be incurred in the RCM of Matanie and the administrative region of Gaspésie-Iles-de-la-Madeleine. At least 60% of the expenses related to the wind farm total costs must be incurred in Quebec. Penalties applicable if the percentages mentioned above are not complied with. Rules and procedures are defined in Appendix VI of the Standard Contract. 21
TERM OF THE CONTRACTS Contract term set at 20 years or 25 years (bidder s choice) ; The wind turbines must be certified for a lifespan of at least the term of the contract ; A list of recognized certification companies is provided in the call for tenders document (section 1.4). 22
FINANCIAL SECURITIES Commencement of deliveries security Upon execution of the contract : 10 000 $/MW ; 18 months prior to the guaranteed commencement date of deliveries, the security must totalized 20 000 $/MW. Operating security On the commencement date of deliveries, the security must totalized 40 000 $/MW ; After a confirmation of the fulfilment of the supplier's contractual commitments, the security must totalized 25 000 $/MW ; On the 10th anniversary of the commencement date of deliveries, the security must totalized 40 000 $/MW. 23
FINANCIAL SECURITIES (CONTINUED ) Dismantlement security On the 10th anniversary of the commencement date of deliveries ; Amount to be determined by a firm of independent experts. 24
PRE-BID CONFERENCE - 450 MW Wind Selection process
SELECTION PROCESS Step 1 The bids submitted are evaluated based on eleven (11) minimum requirements hereafter mentioned. Step 2 Each bid is evaluated in relation to a set of seven (7) criteria (price and six non-monetary criteria) ; The bids are ranked according to their total score. Step 3 Selection of the winning combination based on the lowest total cost including transmission costs of the combination of bids. 26
STEP 1 : MINIMUM REQUIREMENTS Eleven (11) minimum requirements Site control ; Price of electricity (respect of ceiling price) ; Interest in the control of the project ; Firm amounts paid to the local municipalities, RCM and Native communities ; Bidder's experience ; Technological maturity ; Time required for the connection and integration of the generating facilities ; Wind turbines designed to withstand cold climates and designation of the wind turbine manufacturer ; Guaranteed regional content of the wind farm ; Guaranteed Quebec content of the wind farm ; Wind measurements and forecast generation. 27
STEP 2: RANKING OF BIDS The weighting table for non-price criteria used in step 2 for ranking bids has been submitted for approval to the Régie de l'énergie (petition R- 3866-2013) WEIGHTING Cost of electricity 40 Regional content beyond the min. requirement (35%) 15 Québec content beyond the min. requirement (60%) 5 Manufacturing of strategic components in Québec 20 Financial strength 7 Project feasibility 9 Relevant experience 4 28
MANUFACTURING OF STRATEGIC COMPONENTS IN QUÉBEC The points allocated to each of the strategic components are presented below. Up to a maximum of twenty (20) points are awarded to bids in which the bidder presents a commitment from the designated wind turbine manufacturer. POINTS Electronic converter 4 Generator ** 3 Control system 2 Braking system ** 1 Gearbox ** 9 Rotor s hub 1 Nacelle orientation system 1 Pitch system 2 ** : a direct drive generator (annular generator) is considered to be composed of the three (3) following strategic components: the generator, the braking system and the gearbox. 29
STEP 3 - SIMULATION OF BID COMBINATIONS 1. Simulation of combinations composed of the retained bids at step 2 to form the block of 450 MW requested. 2. The same bid can be in different combinations. 3. Selection of the winning combination based on the lowest total cost including the transmission costs of the bids combination. 30
PRE-BID CONFERENCE - 450 MW Wind Connection of the wind farm to the transmission system
EXPLORATORY STUDY Submission of a request for an exploratory study to Hydro-Québec TransÉnergie (HQT) (see Appendix 6 of the call for tenders document for more details) ; The request is optional ; Intended to avoid having significant costs incurred in the preparation of a bid that may not be competitive ; Deadline : February 28, 2014. 32
PURPOSES OF AN EXPLORATORY STUDY Provide a parametric estimate of the costs related to a possible integration scenario for a wind farm; Analyze the delays related to the implementation of this scenario; Determine if it is preferable to connect the wind farm to the electrical distribution system or transmission system. Note : the exploratory study must not be interpreted as a final solution. 33
TRANSMISSION COST EVALUATION Once the bids have been submitted, HQT conducts studies to determine : the cost of system connection and reinforcement works ; and the applicable electrical loss rate. The results are used for the bids evaluation and selection. Bidders may not contact HQT to have an integration study done. 34
THE FIVE (5) TRANSMISSION COST ELEMENTS 1. Interconnection to the regional transmission (315 kv or less) or distribution system ; 2. The switchyard, including the transforming substation and wind farm collector system ; 3. The electrical losses associated with the wind farm ; 4. If applicable, the avoided costs associated with future transmission system investments ; 5. Reinforcement of the 735 kv bulk transmission system. 35
EXECUTION OF THE WORKS AND COST SHARING The supplier is responsible for the construction, maintenance and operation of the switchyard up to the connection point ; The construction cost is reimbursed to the supplier by HQT, including an allowance of 15% to cover the switchyard's maintenance and operating costs (applicable maximum amounts : section 1.9 of the call for tenders document) ; The supplier supports the portion of the costs that exceeds the maximum, along with the costs arising from modifications made to the switchyard after the bid was submitted, if applicable. 36
EXECUTION OF THE WORKS AND COST SHARING (CONTINUED ) The connection and system reinforcement works on the network are performed by HQT ; The associated cost are assumed by HQ ; The retained bidders shall sign a Connection Agreement with HQT (applicable securities other than those in the Standard Contract signed with the Distributor). 37
PRE-BID CONFERENCE - 450 MW Wind Main contractual commitments
CHARACTERISTICS OF THE CONTRACT TO INTERVENE This is a contract based on the Standard Contract (Appendix 11 call for tenders document). No changes will be made except those needed to reflect the specific characteristics of the bid, such as : control structure ; Appendix 1 of the contract ; contract quantities and dates ; term of the contract. 39
CONTRACTUAL COMMITMENTS Contract quantities Contract capacity (MW) ; Contract energy (MWh). Term of contract 20 years or 25 years. Guaranteed commencement date of deliveries December 1, 2016 ; or December 1, 2017. 40
LOCAL ENVIRONMENT S PARTICIPATION The bidder must demonstrate that the local environment holds a participation representing 50% or more of the control of the project (section 24.7 of the Standard Contract) ; and The project is recognized by a resolution adopted to that effect by every RCM and by every local municipality where the project takes place. 41
FIRM AMOUNTS PAID TO THE LOCAL MUNICIPALITIES, RCM AND NATIVE COMMUNITIES Payment to local municipality, RCM or Native community of an amount of 5 000 $ per MW installed in the territory of the local municipality, RCM or Native community. 42
VARIANTS A bidder may offer up to 2 variants, in addition to its main bid. The variants may pertain to : the installed capacity of the wind farm (MW) ; the price (variation based on the term of the contract or on the voltage level at which the project could be connected) ; the localization of the delivery point ; the designated wind turbine manufacturer ; the wind turbine model. All of the bids (main bid and variant) will be analyzed separately, for each year offered. A bidder may offer a variant which shares a connection point with another wind farm. 43
REQUIREMENTS REGARDING THE WIND TURBINE MANUFACTURER Agreement made between the bidder and its designated wind turbine manufacturer ; Certification of wind turbine lifespan ; Compliance with interconnection requirements, including the modeling of the wind turbine electrical behavior ; Normal operation of the wind turbines up to -30 o C ; Compliance with guaranteed regional content and guaranteed Québec content requirements ; Manufacturing of the wind turbine components in the plants described in the bid. 44
PRE-BID CONFERENCE - 450 MW Wind Communications and timetable
COMMUNICATIONS All communications related to the present call for tenders must take place through Hydro-Québec Distribution's website at : www.hydroquebec.com/distribution/en/marchequebecois 46
TIMETABLE Deadline for submitting the exploratory study February 28, 2014 request form Deadline for submitting a request for prior notice February 28, 2014 on HQ's telecommunication installations Deadline for submitting the Registration Form April 18, 2014 (Notice of Intent to Bid) (Notice of Intent to Act as Designated Wind Turbine Manufacturer) Deadline for submitting questions August 18, 2014 Bid submission deadline September 3, 2014 Bid opening September 4, 2014 Announcement of bids retained* December 18, 2014 * Tentative 47
PAUSE 15 MINUTES There will be a question period after the pause. Questions may be submitted in French and in English. 48