Tips for developing a solid biodiesel RFP
At the National Biodiesel Conference in San Diego last month, Dolores Santos with OPIS spoke about how to develop a solid request for proposal (RFP).
She said the on-again, off-again federal biodiesel tax credit and lack of infrastructure at the rack have been real problems for biodiesel. “We need consistent supply at competitive pricing,” Santos said. “The infrastructure investment won’t come until demand increases.”
Santos said to specifically define in the RFP the biodiesel type (e.g., corn oil-based biodiesel) you will buy or sell.
Define the city or market and price benchmark index you will use to price the fuel, and have a backup city or alternative price formula written into the contract.
Clearly define the product specifications, she said, and specify whether BQ-9000 is a requirement, and if routine testing will be conducted.
Determine whether the RINs associated with the fuel will be transferred to the buyer, or if the value of the RINs are included in the price. “You need to know how it works,” Santos said.
If the California market is at play, Santos said there needs to be an understanding whether the LCFS carbon intensity (CI) value is included in fuel, or if the supplier is selling you nonobligated product.
Regarding benchmarking, Santos said to do your research—find out what cities will be used, and if there is there more than one supplier in the identified location. “Most only have one or two suppliers,” she said. “Know who your supplier is.”
Santos also suggested using a combination of rack posting and swap prices to develop your RFP.