Submitting a bid to an opportunity is the first in an increasingly standardized process to acquire clean energy credits for your organization.
The bid is non-binding and sellers request multiple bids and set a deadline by which they’ll stop accepting bids. While the bid is non-binding, there is an expectation that if buyer and seller move to a term sheet, the bid’s terms will be reflected in the term sheet.
Exclusivity generally starts once a term sheet has been executed, but may take place earlier depending on the dynamics between the buyer and the seller.
The following is a representative timeline of going from bid to close:
- Bid – The bid is the first step in locking in the credit price, insurance, transaction timing, and fee payments. Some opportunities may result in counter offers from sellers and a best and final bid by a buyer.
- Acceptance and Introduction – Once the Seller accepts the EOI, both parties are generally introduced.
- Term Sheet Distribution and Negotiation – generally handled by the buyer and sellers’ law firms. The seller will share a data room to support term sheet execution
- Term Sheet Execution — generally this is the point at which exclusivity between a buyer and seller starts
- Diligence – this is generally handled by the buyer’s counsel at the seller’s cost up to a cap. Key diligence streams include (i) seller diligence, (ii) project(s) diligence. During this stage, the seller is expected to share a data room fully populated for the deal, eventually finalizing key documents such as appraisals and memos/opinions
- Insurance – In addition to reviewing project and seller documents, the buyer’s law firm will review the insurance policy and negotiate it on the buyer’s behalf.
- Transfer Agreement Execution — Concurrent to term sheet and diligence and insurance work streams, the transfer agreement is negotiated and executed
- Transaction Completion — Once the projects achieve their Placed in Service status for ITCs or the energy or manufactured goods are produced or PTCs, and the Transfer Agreement’s conditions precedent are met, the seller issues a transfer election statement to the buyer for execution to allow both sides to complete the transfer.
Common Forge helps organize this entire process to reduce overhead for buyer and seller alike. With our software, we manage each transaction as a project with private and public task managers, and with our network of insurers and law firms we’re ready to set up the ecosystem to get a transaction closed timely.