European Best Practices: Tendering Public Charging Infrastructure for Electric Vehicles Best Value Procurement in the city of Arnhem Authors: Peter Swart, Arnhem City Roos van der Ploeg, MA legal & EV advisor Fleur Elfrink, EV advisor 18 oktober 2016 Charging point in Arnhem
1 Introduction Many European cities foresee, or already experience, a rapid increase in demand for public charging infrastructure for electric vehicles. Organizing public charging services via a tender is often a difficult, cumbersome but mandatory process. The city of Arnhem, in the Netherlands, has a great deal of experience after 2 successful tendering procedures on EV charging infrastructure. Last year the City finalised its second successful tender using the innovative Best Value Procurement (BVP) approach. The main idea behind the BVP method is to contribute to a free market and select the contractor offering the highest quality instead of the lowest price. This paper elaborates on the way the city of Arnhem constructed the BVP tender for public charging services with the goal of providing other European cities the tools and ideas to develop their own public charging service tenders. 2 Arnhem: providing public charging services With the project Energy Made in Arnhem the city of Arnhem aims to become a green energy example city for Europe. The project focus is to integrate large scale solar and wind electricity with electric trolley buses and electric passenger cars. With this in mind, the city recognized the need to stimulate electric transportation by providing public charging services to electric vehicle (EV) owners without private parking. Therefore, in 2013 it organized one of European s first public charging infrastructure tenders in the form of a concession. During 2 years, the winning contractor developed a public charging network of demand driven charging locations which they are allowed to operate for until 2020. In 2015 a new trajectory for commissioning charging infrastructure in 2016 and subsequent years was required. Although the business case for public charging infrastructure in the Netherlands has become more attractive, high public charging prices would result without support from the local or national government. To keep stimulating electric mobility, the city of Arnhem organized a second tender for public charging infrastructure. This tender involves a commissioning period of two to three years and an operation period of four to eight years. 2 9
3 Tender objectives The city of Arnhem (from now on the city ) aims to stimulate electric transportation for four reasons: 1) improve local air quality, 2) reduce CO2 emissions, 3) reduce noise, and 4) strengthen the local sustainable economy. With the recognition of the (future) demand for public charging infrastructure the city defined three main objectives for the tender: 1. To facilitate charging infrastructure for electric drivers without private parking possibilities 2. To unburden the city from the organization and responsibilities related to public charging within the city 3. To find a contractor that proactively searches for and experiments with smart- charging solutions and future ready technologies and reduces the impact of public charging on public space. 4 Tender procedure The tender was a public European tender for a concession of public charging services for electric vehicles in the city of Arnhem. These services include construction, maintenance, operation and exploitation of public charging stations. Because traditional tender methodologies focus primarily on price, the city decided to follow the Best Value Procurement (BVP) methodology. This allowed focus on quality and let the market come up with solutions based on their expertise and the public charging demand. The following points distinguish the BVP methodology from traditional tenders: Finding the contractor with most expertise Incentivize performance instead of defining present boundaries that limit performance Incentivize maximum information exchange Focus on value instead of costs Minimize management and control Commitment on the contractor s side, as he/she is part of the offered solution 3 9
The BVP methodology can achieve these points through a variety of strategic procedures. The procedures used by the city for the public charging services include: Selection based on Past Performance information (in the form of fit- demand) The concession is functionally described (as opposed to defining a strict scope and targets), allowing contractors to differentiate with quality instead of price. Applicants are to define at least three project risks with potential solutions for minimization. Defined risks from all contractors are taken into account in later stages of the tender. Applicants are asked to describe their added value Interviews are conducted with several key project individuals from the applicant. A verification trajectory with the highest scoring contractor after the interviews is implemented. Additionally, 22 general tender rules (treating elements as costs, language, disclaimers and documentation) and 4 specific rules (allowing the city to exclude contractors with manipulative, non- realistic or suspicious applications from the tender) were used. 5 Organization and planning The tender was organized through the online platform Complete Tender Management (CTM), which implies digital subscription, communication and documentation. Figure 1 displays the planning of the tender process. Interviews and presentations Feedback on questions Reveal contractor with highsest score Reveal temporary tender Information conference Deadline subscriptions Start verification trajectory End verification trajectory Publication Deadline questions tender procedure and content Reveal selection and interview invitations Definite tender Week 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Figure 1: Tender Timeline 4 9
6 Scope The scope of the tender included public charging services and everything that is necessary to enable electric vehicle owners to charge publicly. Additionally, it included an option to take over several existing charging locations that are currently property of the city. The responsibilities of the contractor are listed below. The demands were complemented with detailed descriptions in additional documents. A charging point is to be realized within 10 weeks after location confirmation and the acknowledgement of complementing permits If the charging location applicant (e- driver) satisfies certain criteria* the contractor must approve the application Delivering continuous and professional charging services The organization of requesting permits, announcements and grid connections Management of the request and realization scheme for charge points The required communication concerning the construction of charging locations The delivery of data (usage and availability of the charging infrastructure network) Communication towards users and transparency regarding price and charging regulations Arranging the back office for billing of the charging services *The criteria defined by the city are: 1) the applicant does not have private property to charge its electric vehicle, 2) the applicant either lives in the city or works there for at least 18 hours per week Key to the above demands is that the operationalization of it is not prescribed. Applicants are expected to design their own market model based on their expertise, the market demand and the state of technology. This is typical in BVP tenders, in which a common analogy is that the applicants are mountain guides (experts) with the city being tourists taking a hiking tour. The city knows which mountain it wants to climb but it does not plan the route. After all, the mountain guide has experience and can determine which route best fits the situation, avoiding difficult passages and raging rivers. 5 9
The length of the concession agreement is set at a maximum of 10 years. Only during the first two years (the commissioning period) the contractor is responsible for the development of new public charging locations. The city has the possibility to extend this commissioning period with one year. Accordingly, the contractor operates its infrastructure for an additional four to eight years. This construction has two major advantages: 1. It allows the contractor to build a business case for the charging services for a period of ten years 2. The city has the possibility to employ a different contractor and define another tender contract after two years 7 Applicant qualifications The city decided to set minimal qualifications to also offer the application opportunity to new and relative small businesses. Accordingly, it demanded demonstrable experience with the exploitation of at least 10 charging locations. The other qualification criteria included proof of: Financial health Legal health Adequate business insurance Quality certificates Environmental and sustainable business model 8 Programme requirements The city defined a small amount of demands for the public charging services. These demands are divided into six categories: 1. Charging services Charging services should be suitable for all electric vehicles at around 3,5 kw Charging services comply with international standards The grid connection of the charging location is contracted by the contractor Only sustainable produced electricity is used for the charging services 6 9
Minimum impact on public space (colour, shape, integration) The construction work when realising a charging location occurs within one day 2. Operation and availability The charging objects are in a well maintained state at the end of the concession agreement The availability of the charging locations are real- time publically available A minimum down time of 1% per month Malfunctions are addressed and repaired within 2 hours after being reported (24hrs a day) The plug can be unplugged from distance on request of the EV- owner The charging service starts within at most 8 seconds after identification A user can connect within 2 minutes after a previous user disconnected 3. Charging tariff A maximum kwh price is defined by the city The charging price is clearly communicated to the EV- owners 4. Ownership and transfer After the concession period the public charging services are to be transferred to the city or another party without additional costs The contractor is obliged to cooperate in the transfer at the end of the concession agreement Suppliers of the charging infrastructure are to provide maintenance for a minimum of 3 years after termination of the concession agreement Charging objects en related systems (such as software) are free of any property rights and should operate according to the OCPP 1.5 protocol All complementary documentation is provided by the contractor at termination of the concession agreement 5. Data and performance reports The city is owner of all data regarding the public charging services The contractor provides monthly performance (usage and malfunctions) reports 7 9
6. Grid operator The grid connection of the charging locations are in accordance with de demands of the grid operator 9 Procurement methodology The applicant receiving the most points in the procurement will enter the verification trajectory. Each application is reviewed by a committee consisting of three members: a council advisor from the city s department of public quality, an administrator from the city s department of product administration and a senior advisor from EVConsult. In the procurement a maximum of 85 points on can be received on quality and 40 points on price. The points on quality can be earned with four distinct plans of action (see table below) and during the interviews. PROCUREMENT CRITERIUM MAXIMUM POINTS Quality 85 Plan 1: Charging solution 25 Plan 2: Organization and financing 20 Plan 3: Services for EV- owners 10 Plan 4: Risk assessment and value added 10 Presentation and interviews 20 Price 40 Price per charging location at charging tariff of 0,28 7 Price per charging location at charging tariff of 0,30 20 Price per charging location at charging tariff of 0,32 7 Price per charging location at charging tariff of 0,34 2 Price per charging location at charging tariff of 0,36 2 Price for removal of charging location 2 8 9
10 Verification procedure and tender closure A three- week verification trajectory is meant for the city and the applicant to get to know each other and agree on the charging solution proposed by the applicant. If the charging solution or the applicant does not satisfy the city s demands, the city can decide to chose another applicant. For Arnhem the verification trajectory was completed successfully. It revealed the temporary results and a few weeks later the contract was made definite. 9 9