Establish your RES project team of identified internal stakeholders and define high-level timeframes for the project.
Cost-effective decarbonisation: How to procure Renewable Energy Systems (RES)
Distributed Renewable Energy Systems (RES) are a critical part of the future global energy infrastructure. They are cost-effective, low carbon, and provide resilience in environments where grid structures may be poor or non-existent.
Integrate to Zero, a climate not-for-profit organisation focussed on integrating RES for consumers, has partnered with Efficio, the world’s largest specialist procurement and supply chain consultancy, to develop a RES procurement guide. This guide will help prospective buyers through the entire process of assessing the opportunity of installing their own integrated Renewable Energy System to procuring a solution.
Renewable Energy Systems (RES)
Renewable Energy Systems (RES) are site-level, distributed, integrated energy systems; they enable the local integration of renewable energy generation, such as solar and wind, with energy storage through batteries, as well as the powering and heating of buildings and charging of electric vehicles (EVs).
This integrated approach helps to reduce costs, increase flexibility, and cut emissions faster. They are cost-effective, low-carbon, and provide resilience in environments where grid structures may be poor or non-existent.
Decarbonising operations across buildings, fleet and energy is greater than the sum of its parts, providing up to:
- 30% cost savings through energy efficiency
- 25-30% CapEx and OpEx reductions through increased productivity
- 20% CO2 footprint reduction, increasing sustainability and building resilience
RMI's analysis of solar PV combined with battery storage across diverse locations in the US found that this integrated approach can deliver energy bill savings for large commercial and industrial users with high demand charges.
In New Bern, North Carolina, the simple payback for a solar plus storage system is only six years, faster than for a standalone solar PV installation. For businesses with high demand charges, like in Piqua, Ohio ($16/kW), integration reduces the payback by nearly 50%: from 14 years to eight years. Find out more.
This RES procurement guide can be used flexibly according to your specific needs
This guide is aimed at supporting small-medium organisations in the procurement of RES; however, the guide could easily form a toolkit for smaller or larger organisations. Organisations may already have ESG and sustainability objectives and targets, which the RES installations can help to achieve. Feel free to pick and choose the content and steps that work best for you. Users are likely to be from facilities, operations, procurement, or sustainability teams. The guide is annotated with the teams that might be involved at each stage of the process.
Users of this procurement guide may fall under various groups:
- An "economic user", who is more focussed on the cost-saving opportunities that RES can bring to their business through fossil-fuel switching. The budget and business case from Steps 1 and 2, as well as the negotiated costs and contract requirements from Steps 4 and 5, would be of greater interest to this user.
- For the "green champion", impact on sustainability and the environment factor in more heavily. This user might be more interested in the energy and CO2-saving potential of the RES solution identified in steps 1 and 2.
- Some users may be more concerned about "security of supply" and value the access to independently-sourced power that RES solutions offer. When specifying requirements and comparing RES solutions with suppliers in steps 2 to 4, they might be more interested in each solution’s impact on energy security.
- Others may take a more "balanced" approach and want the best of all worlds.
The guide is split into five steps, with each step providing a list of actions supported by guidance, tools and templates, and signposting to relevant third-party information sources. Before you begin the procurement process, you should already have identified the key internal stakeholders to provide support through these steps. This guide does not aim to be exhaustive, but acts as a one-stop shop to securing a RES. If you have suggestions for ways we can further develop or improve this guide, please do get in touch.
STEP 1: Is RES right for you?
Assess whether a Renewable Energy System (RES) is right for your business.
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Renewable Energy Systems can include different technologies such as solar PV, battery or thermal storage, electric vehicle charging, and smart meters1. System specifications will depend on your needs, capacity, and preferences. Using the checklists and toolkits provided, you can assess your requirements and constraints to determine which RES technologies might be right for your business. Before you begin, ensure you have identified the key internal stakeholders to support the procurement process and provide you with the necessary information.
1. Establish project team
2. Assess feasibility
Use the RES feasibility checklist provided in the "Templates" section below to assess the suitability of the different system components for your business.
3. Get appropriate permissions
Identify where approvals, such as planning permission or landlord/lease owner approval, are needed and begin the process to gain approval, where applicable.
4. Establish budget
Create an outline budget for the system (technology and installation costs), using the signposted indicative cost calculators and decide if you want to purchase, lease, or opt for a ‘servitisation’2 model.
You may choose to conduct this assessment for a pilot site or group of sites before doing so across your entire business. But bear in mind that there are efficiencies to be gained by sourcing RES across sites: labour and installation efficiency, increased purchasing power and leverage, and reduced administrative processes. Regardless of the approach, the principles remain the same: each site should be assessed for the suitability of each RES component.
When completing the RES feasibility checklist, you may require input from other business stakeholders or external experts. If you do not have sufficient information to fully define your RES solution at this stage, your potential suppliers will be able to assist with determining which system components are suitable for your sites in Step 3.
It is helpful to be aware of any landlord/lease owner approval or planning permission timelines and potential roadblocks, as these may impact the project’s feasibility and implementation. Review your local planning authority website to understand what’s needed in your region.
The costs from the calculators are a starting point and will vary depending on location. These should only be used for initial budgeting and should be updated with supplier costs once available.
RES Feasibility Checklist
Users can go through the checklist of questions provided for each RES technology type to reveal a recommendation for which RES components to consider for their business or site(s).Download the template
Delve Solar PV Calculator
A Google Earth-powered calculator to estimate solar photovoltaics (PV) array size, generation capacity, and output, as well as costs and potential payback. Be aware that costs from this tool are based on US financial data. The tool can be used for free during a 30-day trial period.
Spirit Energy Battery Storage Calculator
Once you have an idea of PV installation size, this easy-to-use battery storage calculator lets you compare cost benefits for different integrated battery system options. You will need to input your electricity tariffs, annual consumption, and select a usage profile from a list of options. This is a UK-based tool with UK costs; however, the principles remain the same and input options are flexible.
1. A Frontier Economics study assessing supermarket, dairy farm, and fast food restaurant cost savings and paybacks for Mexico, Kenya, Spain, UK, and Australia found payback periods ranging from 3 to 9 years for businesses investing in Renewable Energy Systems (referred to as DES in the study).
More information available here
2. Some suppliers may offer a servitisation model, where the integrated RES installation is offered to businesses as a service. The SET Alliance is a global body working with diverse stakeholders to accelerate the deployment of sustainable and energy efficient solutions through the servitisation business model. More details available from: Set Alliance - Net Zero Together
STEP 2: Identify requirements
Gather the information you'll need to prepare a draft specification and set out your RES requirements, including financing needs.
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Once you have identified suitable RES components for your site(s), the next step is to gather the information you need to prepare a draft specification and tender requirements. We have provided templates to help with gathering the required information, as well as references to online toolkits to help with system sizing.
5. Gather requirements
Engage relevant business stakeholders to support with the requirements and specification development.
6. Build specification
Complete the technical specification and tender requirements templates provided with the help of key stakeholders, using inputs from referenced toolkits where needed.
7. Business case
Use the indicative costs from Step 1 to determine the business case for the RES installation.
If you don’t have access to all the required information to complete the technical specification and tender requirements, simply start where you can with the signposted sizing toolkits and benchmark calculators. These will give you an indication of a system size for your high-level business case, which can then be updated as you go through Steps 3 and 4.
When defining the specification and requirements, consider what level of performance you would like the system to achieve. Standard RES components may be more cost-effective; however, components with optimised performance outputs may be preferred. For example, tracking monocrystalline PV modules that maximise generated electricity and DC electric vehicle chargers with empty-to-full charging times of less than one hour.
The business case for each RES component and the system as a whole will be driven by the benefits associated with fuel switching from your current scenario to the RES solution, taking into account any impact on business operations. Non-financial considerations such as energy security and commitments to reduce pollution and address climate change may also factor into your business case.
Once an outline of the costs is established, financing options need to be considered: in particular, whether the system will be procured outright, leased, or contracted on a ‘servitisation’ model. The latter two options are useful where available capex is limited.
Technical Specification Template
Input your RES requirements in the specification template.Download the template
Renogy Solar Sizing Calculator
The off-grid calculator can be used to size a solar PV installation to suit your electricity demand, where space is not a constraint.
Delve Solar PV Calculator
Google Earth-powered calculator to estimate solar PV array size, generation capacity, and output, as well as costs and indicative payback. Be aware that costs from this tool are based on US financial data. The tool can be used for free during a 30-day trial period.
European Commission Solar PV Calculator
For locations in Europe, once you’ve sized your PV system, you can use this tool to visualise how much electricity you can expect to generate from the installation.
Spirit Energy Battery Storage Calculator
If you’ve got an indicative PV installation size, this easy-to-use battery storage calculator allows you to compare cost benefits for different integrated battery system options. You will need to input your electricity tariffs and annual consumption and select a usage profile from a list of options. This is a UK-based tool with UK costs; however, the principles remain the same and input options are flexible.
CIBSE Energy Benchmarking Tool
This tool is helpful if you don’t have access to your utility bills or meter readings. It provides energy consumption benchmarks for various building types, which you can use to estimate your site energy consumption, where this is unknown.
Quantifying EV Charging Requirements
The number of EV chargers required will depend on several factors, including sector. You will need to know how many EVs you expect to cater for, accounting for current and future demand. You will also need to consider who will be using your charging infrastructure, how their vehicles will be used, how often a charge may be required, and whether vehicles are also being charged elsewhere (e.g. at home). These details can be finalised in conversation with your shortlisted suppliers in Steps 3 and 4.
Monocrystalline vs Polycrystalline Solar Panels: What’s The Difference?
Although more expensive, monocrystalline solar PV panels have a typical efficiency of 15-20%. Depending on how much installation space you have available, these could prove more cost-effective than polycrystalline options with efficiency range 13-16%. The seemingly small efficiency difference can have significant impact when multiplied across several solar panels.
STEP 3: Find suppliers
Find potential, suitable suppliers in your area.
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With a constantly growing renewable energy supplier base offering a variety of products and services, it can be difficult to know where to begin. It is important to filter potential suppliers based on accreditation and ability to deliver technical requirements, as well as the different contracting options they offer if financial flexibility is important.
The process for identifying suppliers provided here will help to streamline your RES market research and quickly identify local suppliers with recognised capabilities.
8. Identify suppliers
Use the supplier lists3 provided to identify suppliers that serve your area and can deliver your RES solution.
9. Email suppliers
Modify the Request for Information (RFI) email template provided as appropriate and reach out to potential suppliers to assess their interest and availability.
10. Request a site visit
Invite interested suppliers to conduct a site assessment and verify your high-level RES feasibility assessment from Step 1 and requirements and specification from Step 2.
11. Supplier short-list
Create a preferred shortlist of three to five suppliers based on feedback from the RFI and the site survey.
Start by identifying a list of suppliers that are accredited by relevant bodies in your jurisdiction. For example, suppliers in the UK should be certified with the Microgeneration Certification Scheme (MCS), whilst Reconnu Garant De L’Environnement (RGE) would be the equivalent in France. Next, investigate suppliers listed by publicly sponsored independent sources and specialist RES organisations and consultancies. Some links to example lists are provided here: these resources are only a starting point, and you may require additional research depending on your region.
Take some time to review supplier websites to understand their offerings and capabilities and only engage suppliers that are accredited with the relevant bodies within your region. Your business stakeholders may also have some recommendations for you to include in your supplier RFI.
The site assessment will be crucial to verify the final requirements that go into the tender document. Work with the supplier to minimise potential surprises during the installation phase. Ensure you cross-reference feedback from suppliers and standardise your request to keep your supplier options open ahead of requesting a formal supplier bid.
When shortlisting suppliers to invite to tender, consider ones that can deliver the full RES solution, as well as others that may only deliver some of the RES components. This will enable you to review responses from both generalist and specialist technology providers. If you are interested in a leasing or ‘servitisation’ model for your RES installation, this will inform your shortlist as not all suppliers offer these financing options.
RFI email template
Pro forma email template for requesting information from RES suppliers, which can be adapted to suit your specific business needs.Download the template
3. Suppliers list
The resources provided here are not exhaustive and will vary depending on region, but the approach remains the same.
1. Search for accredited suppliers in your region. For the EU, click on the link to view a database of certification schemes in the EU
2. Identify suppliers from credible independent sources. For example: Sustainable Energy Authority of Ireland (SEAI) Registered One Stop Shop Providers
3. Identify suppliers from specialist organisations and consultancies like Integrate to Zero - Suppliers Database — Integrate to Zero
STEP 4: Select suppliers
Select the supplier(s) with the most favourable offering based on cost and service.
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Selecting the right supplier is as much about the commercial value they provide, as it is about their ability to deliver high-quality work. This is particularly relevant for long-term installations such as renewable energy systems, which should last 15 years or more with good installation of quality systems and regular maintenance. The tender and analysis templates provided will enable you to easily compare supplier offerings and select the most suitable one.
12. Issue tender
Develop and issue a simple tender document for your RES using the tender requirements template provided.
13. Evaluate responses
Analyse and compare supplier responses on cost and capability with the evaluation template provided.
Make clarifications where necessary to ensure like-for-like comparison.
15. Negotiate & Select
Negotiate and select a supplier.
For smaller tenders, you can issue a tender with the pricing template and a shorter capability questionnaire that addresses the relevant topics for your business.
The evaluation would normally be carried out jointly between procurement and stakeholders in Facilities Management, Sustainability & ESG etc. Do keep stakeholders engaged throughout the tender evaluation process as their insights will be key to selecting suppliers with the right capabilities and working practices, to ensure a successful RES implementation.
Consider appropriate demand and supply levers when negotiating with suppliers4, ensuring all costs associated with the RES design, installation, and maintenance over its expected life (i.e., total cost) are accounted for. Businesses considering RES installations across several sites may take advantage of volume consolidation, whilst others seeking installation as well as maintenance services from the same supplier may choose to offer longer term contracts.
RFP email template
Pro forma email template for requesting proposals from RES suppliers, which can be adapted to suit your specific business needs.Download the template
Tender requirements template
Input your RES requirements from Step 2 in the tender template to send to suppliers.Download the template
Use this template to compare supplier responses.Download the template
Decline and contract award email templates
Pro forma email template to respond to supplier proposals, which can be adapted accordingly, depending on decline and award reasons.Download the template
4. Sourcing levers comprise any actions that enable procurement functions to reduce overall cost and manage risks whilst meeting the business objectives. Demand levers refer to actions in the business control, whilst supply levers focus on the supplier. Consider various demand and supply lever actions, discarding opportunities that are not feasible. Be aware of any risks and complexities associated with your sourcing strategy, as well as their mitigation and potential impact on your business.
STEP 5: Enter into a contract
Put a clear and robust contract in place and begin installation.
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Before beginning any work, it is important to have a contract that is fair to both parties and simple to understand. To help with this, we have signposted some example contract types as well as things to consider within your contract. The type of contract you opt for will largely be driven by your project financing model, such as upfront expenditure, leasing, or servitisation.
16. Draft Contract
Draft a contract to share with your chosen supplier, including the key terms and proposed Service Level Agreements (SLAs) from the signposted contract templates, where suitable.
17. Project Plan
Work with your supplier to finalise the project implementation plan with key milestones.
18. Management and Improvement
Manage the supplier’s delivery of the RES installation and any subsequent maintenance services provided for the life of the system. Work with the supplier to continuously evaluate and improve its service.
Seek approval from your legal teams, as you would normally do, to ensure the contract is in line with your business standards. Contracts should include guarantees for equipment failure; these are typically passed onto the manufacturer by the installer.
In the energy services company (ESCO) model, energy efficiency projects such as RES installations are sometimes financed based on their energy and cost saving potential. These are usually governed by energy performance contracts, of which two types exist – guaranteed and shared savings contracts. Energy savings insurance (ESI) contracts offer a reduced-risk savings guarantee in the event that projected savings are not achieved.
For ‘servitisation’ agreements where your RES is procured as a service, the contract is for the duration of the service, at the end of which the RES assets remain the property of the service provider. Ongoing RES performance and maintenance is the responsibility of the service provider; terms of service and termination clauses should be clearly defined in the contract.
The implementation plan should clearly set out key activities and sub-activities, duration, and key milestones as well as governance structures to enable effective project delivery with regards to quality, time, and budget. Also align with the supplier on expectations for required support from business stakeholders.
To drive mutually beneficial value, work collaboratively with your supplier to manage their performance beyond the contract requirements by monitoring KPIs and identify renewable energy innovation opportunities that can help meet your business’s ESG goals.
Energy Savings Insurance (ESI) Contract
ESI provide a standardised contract template as well as guidance on specific requirements for the process.
EaaS Initiative Servitisation Model Contract
Efficiency as a Service (EaaS) provide an example servitisation model contract that can be adapted to suit.
Energy performance contracts ensure that your RES installation comes with a performance guarantee from the ESCO, along with defined terms for any upfront or ongoing payments, which should be less than the generated savings.
With guaranteed savings contracts, you, as the client, are responsible for financing the ESCO fees, whilst the ESCO takes on the technical risk by guaranteeing energy bill savings.
For shared savings contracts, ESCOs help to reduce the upfront/ongoing financial burden on businesses by providing RES financing. In this model, ESCOs take on financial as well as technical risk, and so energy bill savings are shared between the two parties.
See the IEA report on ESCO markets and contracts for more information: Energy Service Companies (ESCOs)
The Energy Savings Insurance (ESI) contract includes a set of defined parameters to mitigate risks associated with external factors as well as agreed fixed prices and usage profiles on which the performance calculations are based. For this type of contract, be aware that you will need to employ the services of a validation entity and take out energy savings insurance against the RES supplier failing to fulfil their contractual obligations.
ESI's objective is to have a low-cost insurance to guarantee the quality and reputation of the RES supplier, with a premium of 1% of the coverage value. This is enabled through the validation of energy savings performance by an independent technical entity.
For more information visit: How it works - GoSafe with ESI
Renewable energy systems: final thoughts
You should now have a better understanding of the key steps and actions to take for procuring your RES solution, from feasibility assessment through to contracting.
Special thanks to Integrate to Zero for their support and feedback during the development of this RES procurement guide. As previously mentioned, it is not intended to be exhaustive. If you have any feedback or suggestions on how we could improve the guide, please do get in touch.Download the PDF
This work was made possible through the support of the Climate Emergency Collaboration Group, a sponsored project of Rockefeller Philanthropy Advisors.
Sustainability improvement service
If your business requires support in sustainable procurement, including RES procurement, and category management – from roadmap development, target setting, and actioning improvement plans – please visit our Sustainability Improvement service page or contact Edward Cox