RFP_MLED_II_SOL-523-16-000005_FINAL.pdf

SOL-523-16-000005

Mexico Low Emissions Development II (MLED II) i

Table of Contents

SECTION B – SUPPLIES OR SERVICES/PRICES

B.1 PURPOSE

B.2 CONTRACT TYPE

B.3 ESTIMATED COST, FIXED FEE, AND OBLIGATED AMOUNT

B.4 BUDGET

B.5 INDIRECT COSTS

B.6 CEILING ON INDIRECT COSTS

B.7 COST REIMBURSABLE

B.8 PAYMENT OF FIXED FEE

B.9 CANCELLATION CEILING

SECTION C – DESCRIPTION/SPECIFICATIONS

C.1 BACKGROUND

C.2 MEXICO-US COOPERATION ON CLIMATE CHANGE

C.3 OBJECTIVE

C.4 OVERARCHING PRINCIPLES FOR IMPLEMENTATION AND MANAGEMENT

C.5 SCOPE OF WORK

C.6 GEOGRAPHIC FOCUS

SECTION D – BRANDING AND MARKING

D.1 BRANDING AND MARKING IMPLEMENTATION PLAN

D.2 BRANDING STRATEGY

D.3 AIDAR 752.7009 – MARKING (JAN 1993)

SECTION E – INSPECTION AND ACCEPTANCE

E.1 NOTICE LISTING CONTRACT CLAUSES INCORPORATED BY REFERENCE

E.2 INSPECTION AND ACCEPTANCE

E.3 PERFORMANCE STANDARDS

SECTION F – DELIVERIES OR PERFORMANCE

F.1 NOTICE LISTING CONTRACT CLAUSES INCORPORATED BY REFERENCE

F.2 PERIOD OF PERFORMANCE

F.3 PLACE OF PERFORMANCE

ii

F.4 REPORTS & DELIVERABLES

F.5 752.242-70 PERIODIC PROGRESS REPORTS (OCT 2007)

F.6 AIDAR 752.7005 SUBMISSION REQUIREMENTS FOR DEVELOPMENT EXPERIENCE

DOCUMENTS (SEP 2013)

F.7 REPORT ON NON-EXPENDABLE PROPERTY

F.8 USAID PROPERTY IN THE CUSTODY OF CONTRACTORS

F.9 REPORTING OF FOREIGN TAXES (July 2007)

F.10 ADS 302.3.5.22 SUBMISSION OF DATASETS TO THE DEVELOPMENT DATA LIBRARY

(DDL) (OCT 2014)

F.11 KEY PERSONNEL

SECTION G – CONTRACT ADMINISTRATION DATA

G.1 AIDAR 752.7003 Documentation for Payment (NOV 1998)

G.2 CONTRACTING OFFICER’S AUTHORITY

G.3 CONTRACTING OFFICER’S REPRESENTATIVE (COR)

G.4 TECHNICAL DIRECTIONS/RELATIONSHIP WITH USAID

G.5 ACCEPTANCE AND APPROVAL

G.6 PAYING OFFICE

G.7 CONTRACTOR’S PRIMARY POINT OF CONTACT

G.8 ACCOUNTING AND APPROPRIATION DATA

SECTION H – SPECIAL CONTRACT REQUIREMENTS

H.1 INTERNATIONAL TRAVEL APPROVAL

H.2 AIDAR 752.7004 EMERGENCY LOCATOR INFORMATION (JUL 1997)

H.3 FOREIGN GOVERNMENT DELEGATIONS TO INTERNATIONAL CONFERENCES

H.4 AIDAR 752.7027 PERSONNEL (DEC 1990)

H.5 AIDAR 752.225-70 SOURCE AND NATIONALITY REQUIREMENTS (FEB 2012)

H.6 INSURANCE AND SERVICES

H.7 AIDAR 752.228-70 MEDICAL EVACUATION (MEDEVAC) SERVICES (JULY 2007)

H.8 AUTHORIZED GEOGRAPHIC CODE

H.9 NONEXPENDABLE PROPERTY PURCHASES INF0 TECHNOLOGY RESOURCES

H.10 LOGISTIC SUPPORT

H.11 SUBCONTRACTING PLAN AND THE SF 294 – SUBCONTRACTING REPORT FOR INDIVIDUAL

CONTRACTS AND SF 295 – SUMMARY CONTRACTING REPORT

H.12 EXECUTIVE ORDER ON TERRORISM FINANCING

H.13 PROHIBITION AND ASSISTANCE TO DRUG TRAFFICKING

H.14 GRANTS UNDER USAID CONTRACT

H.15 AIDAR 752.7007 PERSONNEL COMPENSATION (JUL 2007)

H.16 PERSONNEL COMPENSATION

H.17 CONFIDENTIALITY AND OWNERSHIP OF INTELLECTUAL PROPERTY

H.18 USAID IMPLEMENTATION OF SECTION 508 OF THE REHABILITATION ACT OF 1973 AND

FEDERAL ACQUISITION CIRCULAR (FAC) 97-27 "ELECTRONIC AND INFORMATION

TECHNOLOGY ACCESSIBILITY

H.19 MANDATORY COMPLIANCE REVIEWS

A) Gender Equality Compliance and Reviews

B) Environmental Compliance and Reviews iii

C) Restrictions for police support

D) USAID Disability Policy

E) Participant Training

H.20 CONSENT TO SUBCONTRACT

H.21 ADS 302.3.5.9 NONDISCRIMINATION (JUNE 2012)

H.22 ADS 302.3.5.17 LIMITATION ON SUBCONTRACTING TO NON-LOCAL ENTITIES (JULY

2014)

H.23 CONFERENCE PLANNING AND REQUIRED APPROVALS (AUG 2013)

H.24 ADS 302.3.5.21 USAID IMPLEMENTING PARTNER NOTICES (IPN) PORTAL FOR

ACQUISITION (JULY 2014)

H.25 ADS 302.3.5.19 USAID-FINANCED THIRD-PARTY WEB SITES (AUG 2013)

H.26 LANGUAGE REQUIREMENTS

SECTION I - CONTRACT CLAUSES

I.1 NOTICE LISTING CONTRACT CLAUSES INCORPORATED BY REFERENCE)

I.2 AIDAR 752.219-70 USAID MENTOR-PROTÉGÉ PROGRAM (JULY 2007)

I.3 AIDAR 752.219-71 MENTOR REQUIREMENTS AND EVALUATION (JULY 2007)

I.4 AIDAR 752.228-3 WORKER'S COMPENSATION INSURANCE (DEFENSE BASE ACT)

I.5 AIDAR 752.245-70 GOVERNMENT PROPERTY-USAID REPORTING REQUIREMENTS

I.6 AIDAR 752.7018 HEALTH AND ACCIDENT COVERAGE FOR USAID PARTICIPANT

TRAINEES (JAN 1999)

I.7 AIDAR 752.7019 PARTICIPANT TRAINING (JAN 1999)

I.8 AIDAR 752.7032 INTERNATIONAL TRAVEL APPROVAL AND NOTIFICATION

REQUIREMENTS (APR 2014)

I.9 AIDAR 752.7101 VOLUNTARY POPULATION PLANNING ACTIVITIES (JUNE 2008)

SECTION J – LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACHMENTS

SECTION K - REPRESENTATIONS, CERTIFICATIONS AND OTHER STATEMENTS OF OFFERORS

K.1 NOTICE LISTING SOLICITATION PROVISIONS INCORPORATED BY REFERENCE

K.2 52.203-98, Prohibition on Contracting with Entities that Require Certain Internal Confidentiality Agreements-Representation (DEVIATION 2015-02) (AAPD 15-01) K.3 52.204-8 Annual Representations and Certifications. (FEB 2016) K.4 52.209-2 Prohibition on Contracting With Inverted Domestic Corporations-Representation. (NOV 2015) K.5 52.209-5 Certification Regarding Responsibility Matters. (OCT 2015) K.6 52.209-7 Information Regarding Responsibility Matters. (JUL 2013)

K.7 FAR 52.209-11 REPRESENTATION BY CORPORATION REGARDING A DELINQUENT TAX

LIABILITY OR A FELONY CRIMINAL CONVICTION (Deviation OAA-DEV-14-02c) (August 2014)

K.8 52.219-1 Small Business Program Representations. (OCT 2014) K.9 52.222-22 Previous Contracts and Compliance Reports. (FEB 1999) K.10 52.230-1 Cost Accounting Standards Notices and Certification. (OCT 2015) K.11 52.230-7 Proposal Disclosure--Cost Accounting Practice Changes. (APR 2005)

SECTION L – INSTRUCTIONS, CONDITIONS, AND NOTICES TO OFFERORS

L.1 52.252-1 Solicitation Provisions Incorporated by Reference (FEB 1998)

L.2 52.204-6 DATA UNIVERSAL NUMBERING SYSTEM (DUNS) NUMBER (JUL 2013)

L.3 52.204-7 System for Award Management. (JUL 2013) L.4 52.215-1 INSTRUCTIONS TO OFFERORS - COMPETITIVE ACQUISITION. (JAN 2004) - Alternate I

(OCT 1997)

iv

L.5 52.216-1 Type of Contract. (APR 1984) L.6 52.233-2 Service of Protest. (SEP 2006)

L.7 GENERAL INSTRUCTIONS TO OFFERORS

L.8 PROPOSAL SUBMISSION

L.9 INSTRUCTIONS FOR THE PREPARATION OF THE TECHNICAL PROPOSAL

L.10 INSTRUCTIONS FOR THE PREPARATION OF THE COST/BUSINESS PROPOSAL

SECTION M - EVALUATION FACTORS FOR AWARD

M.1 52.252-1 SOLICITATION PROVISIONS INCORPORATED BY REFERENCE (FEB 1998)

M.2 GENERAL INFORMATION

M.3 EVALUATION CRITERIA

M.4 COST PROPOSAL EVALUATION

M.5 DETERMINATION OF THE COMPETITIVE RANGE AND CONTRACT AWARD

M.6 CONTRACTING SMALL BUSINESS CONCERNS DISADVANTAGED ENTERPRISES

M.7 BEST VALUE

ANNEXES

J.1 ANNEX GUIDANCE ON BRANDING STRATEGY AND MARKING PLAN

J.2 ANNEX USAID SMALL BUSINESS SUBCONTRACTING PLAN TEMPLATE

SECTION B – SUPPLIES OR SERVICES/PRICES

B.1 PURPOSE

USAID/Mexico’s Low Emissions Development II (MLED II) will support the GOM’s efforts to implement its Nationally Determined Contribution (NDC), strengthen its systems for monitoring, reporting and verification (MRV) of emissions across all emitting sectors of the economy, and scale up the deployment of grid-connected renewable energy. USAID has structured this activity to primarily focus on components IR 4.1 and IR 4.3 of its Country Development Cooperative Strategy (CDCS):

https://www.usaid.gov/sites/default/files/documents/1869/Mexico%20CDCS%202014%202018.pdf .

These two components will directly contribute to achieving the overarching Development Objective (DO) 4 goal of reducing GHG emissions in targeted sectors.

B.2 CONTRACT TYPE

The Government contemplates award of a Cost Plus Fixed Fee (CPFF) completion contract resulting from this solicitation.

B.3 ESTIMATED COST, FIXED FEE, AND OBLIGATED AMOUNT

(a) The estimated cost for the performance of the work required hereunder, exclusive of fixed fee, if any, is $________. The fixed fee, if any, is $_________. The estimated cost plus fixed fee, if any, is

(b) Within the estimated cost plus fixed fee, if any, specified in paragraph (a) above, the amount currently obligated and available for reimbursement of allowable costs incurred by the Contractor (and payment of fee, if any) for performance hereunder is $__________. The Contractor shall not exceed the aforesaid obligated amount.

(c) Funds obligated hereunder are anticipated to be sufficient through _____________.

B.4 BUDGET

The following budget table captures the final negotiated cost elements for the performance of the work required hereunder:

The Total Estimated Cost of this contract is $______ for a five year period.

The summary budget for the 5 year period is as follows:

Direct Labor $ ___________________ Other Direct Costs* $ ___________________ Indirect Costs $ ___________________ Grants Fund $ 6,000,000.00 Fixed Fee $ ___________________ Total Estimated Cost plus Fixed Fee $ ___________________

* Other Direct Costs include: Travel, Allowances, etc.

NOTE: The Contractor will not be paid any sum in excess of the total estimated cost. The only person authorized to commit or obligate additional funds is the Contracting Officer. Incurrence of costs in excess of the total amount obligated based on directions received from any individual other than the Contracting Officer, and without prior Contracting Officer’s approval, shall not be reimbursed to the Contractor.

LIMITATION OF FUNDS

The ceiling price of this contract is $________. In accordance with FAR clause 52.232-22, funds currently obligated under this contract are limited to $________. The contractor is not authorized to incur expenses in excess of $_________ and shall notify the Contracting Officer in writing whenever it has reason to believe that the costs it expects to incur under this contract in the subsequent 60 days, or when added to all costs previously incurred will exceed 75% of the total obligated amount.

B.5 INDIRECT COSTS

For the Prime Contractor:

Pending establishment of revised provisional or final indirect cost rates, allowable indirect costs shall be reimbursed on the basis of the following negotiated provisional or predetermined rates and the appropriate bases:

Description Rate Base Type Period

TBD 1/ 1/ 1/

1/Base of Application:

Type of Rate:

Period:

For Major Subcontractor(s)*:

Pending establishment of revised provisional or final indirect cost rates, allowable indirect costs shall be reimbursed on the basis of the following negotiated provisional or predetermined rates and the appropriate bases:

Description Rate Base Type Period

TBD 1/ 1/ 1/

1/Base of Application:

Type of Rate:

Period:

* “Major subcontractor (s)” is those subcontractors whose proposed costs exceed 20 percent of the contract value.

B.6 CEILING ON INDIRECT COSTS

For the Prime Contractor:

(1) Reimbursement for indirect costs shall be at the lower of the negotiated final rates or the following ceiling rates:

Description Rate Base Type Period

TBD 1/ 1/ 1/

TBD 2/ 2/ 2/

(2) The Government will not be obligated to pay any additional amount should the final indirect cost rates exceed the negotiated ceiling rates. If the final indirect cost rates are less than the negotiated ceiling rates, the negotiated rates will be reduced to conform to the lower rates.

(3) This understanding shall not change any monetary ceiling, obligation, or specific cost allowance or disallowance. Any changes in classifying or allocating indirect costs require the prior written approval of the Contracting Officer.

For the Major Subcontractor(s):

(4) Reimbursement for indirect costs shall be at the lower of the negotiated final rates or the following ceiling rates:

Description Rate Base Type Period

TBD 1/ 1/ 1/

TBD 2/ 2/ 2/

(5) The Government will not be obligated to pay any additional amount should the final indirect cost rates exceed the negotiated ceiling rates. If the final indirect cost rates are less than the negotiated ceiling rates, the negotiated rates will be reduced to conform to the lower rates.

(6) This understanding shall not change any monetary ceiling, obligation, or specific cost allowance or disallowance. Any changes in classifying or allocating indirect costs require the prior written approval of the Contracting Officer.

The Contractor is allowed to recover applicable indirect costs (i.e., overhead, G&A, etc.) on other direct costs (ODCs), if it is part of the Contractor’s usual accounting procedures, consistent with FAR Part 31, and Negotiated Indirect Cost Rate Agreement (NICRA). Indirect costs shall not be allowed for organizations that do not have a NICRA.

B.7 COST REIMBURSABLE

The U.S. dollar costs allowable shall be limited to reasonable, allocable and necessary costs determined in accordance with FAR 52.216-7 Allowable Cost and Payment, FAR 52.216-8 Fixed Fee, if applicable, and AIDAR 752.7003 Documentation for Payment.

B.8 PAYMENT OF FIXED FEE

Within 60 days (or earlier, but prior to the payment of any fixed fee), the Contractor must submit a Fixed Fee Payment schedule as subject to FAR 52.216-8. Fixed Fee shall be allocated based on concrete measurable progress towards the targets set forth in the approved Annual Work-plan and associated Monitoring and Evaluation Plan. Payment of the Fixed Fee, subject to FAR 52.216-8, may then be made upon receipt of a proper invoice.

B.9 CANCELLATION CEILING

In the event that the Government cancels requirements for services in subsequent program years under this contract, the following conditions will apply.

(a) If cancellation under the clause at 52.217-2, ― “Cancellation Under Multi-year Contracts” occurs, the Contractor will be paid a cancellation charge not over the cancellation ceiling defined as follows:

The cancelation ceiling shall be the amount allotted to this contract under the Limitation of Funds clause (FAR 52.232-22) at the time the cancellation notice is issued by the Contracting Officer.

(b) In accordance with the Cancellation Under Multi-year Contracts clause, the cancellation charge will cover only:

(1) Costs-

(i) Incurred by the Contractor and/or subcontractor;

(ii) Reasonably necessary for performance of the contract; and

(iii) That would have been equitably amortized over the entire multi-year contract period but, because of the cancellation, are not so amortized; and

(2) A reasonable profit or fee on the costs.

[END OF SECTION B]

SECTION C – DESCRIPTION/SPECIFICATIONS

C.1 BACKGROUND

With a rapidly growing economy (one estimate is that Mexico will have the 7th largest worldwide economy by 2050), Mexico is currently the 13th largest emission of greenhouse gases (GHG) in the world.

As Mexico’s economy continues to grow, Mexico will continue to face a number of challenges to successfully attain its international commitment of reducing GHG emissions (including black carbon) by at least 25 percent below business-as-usual by 2030.

Encouragingly the Government of Mexico (GOM) is fully committed to reducing its greenhouse gas emissions and is rapidly taking on new responsibilities across a spectrum of issues related to climate change and energy reform:

● In 2015, the Environment Ministry (SEMARNAT, Spanish abbreviation) implemented a mandatory

GHG emission register that covers emission sources greater than 25,000 tons of carbon dioxide equivalent (CO2-e) per year, as well as a voluntary register for emission reductions.

● The Ministry of Energy (SENER, Spanish abbreviation) is working to meet the GOM’s goal of producing 35 percent of its electricity from clean energy sources by 2024. In turn, this will require new approaches to integrating the electricity grid’s intermittent renewable energy sources; such as solar and wind.

● To help meet Mexico’s clean energy goal, The National Electricity Regulator (CRE, Spanish abbreviation) is developing new market regulations, including an innovative financial market for clean energy certificates.

It is believed that the energy sector will be a key contributor to reducing Mexico’s GHG emissions. With the change in December 2013 of the Mexican Constitution, and the subsequent passage of secondary legislation and new regulations, Mexico is in the process of making the most significant changes to its energy sector in 80 years. The electricity sector, long dominated by its vertically integrated utility, the Federal Electricity Commission (CFE, Spanish abbreviation), is being deregulated and a new wholesale electricity market has become operational in 2016.

To achieve its goal of 35 percent clean energy by 2024, Mexico will not simply be able to add new capacity, but instead will need to address a number of challenges in how it operates its electricity grid:

● Aligning the development of new clean electricity generation sources with priority grid transmission expansion. A key component of this work is the Development Program for the National Electricity Grid (PRODESEN, Spanish abbreviation).

● Identify cost-effective pathways for achieving high penetration levels of variable renewable energy, while maintaining system stability and reliability.

● Develop and institutionalize improved renewable energy forecasting methods and integrate forecasts into electric grid operations.

● Modernize grid codes and interconnection standards to optimize renewable energy integration.

● Assess demand response options and incentives for end-users to participate in demand–side management programs. Incorporate actions such as demand-side bidding into electricity markets.

● Assess the potential for battery storage technologies and explore use of storage options, such as pumped storage hydropower, optimized to flexibility needs instead of its traditional use as a peak/off-peak resource.

● Reduce technical and non-technical losses (currently over 18 percent), twice the level in many other countries. Improve capacity for advanced distribution management systems to minimize production and distribution losses, load imbalance, and improve voltage quality.

● Enhance the capabilities of the grid operator to gather and process information from the electricity grid, as well as other activities outlined in Mexico’s smart grid roadmap.

● Identify research priorities for newly-created national energy innovation centers.

To address these challenges it will likely require enhancing the capacity of staff within the government of Mexico, particularly in SENER, CRE, and National Center for Energy Control (CENACE, Spanish abbreviation). In addition, it will be useful to increase the capacities of state and municipal governments to more fully participate in developing both renewable energy and energy efficiency projects. Finally, it will be crucially important to increase coordination and collaboration between different government ministries, as well as between different levels of government.

As the country transitions from preparation to implementation of global climate change (GCC) policies, state and municipal governments will become increasingly important stakeholders. Several Mexican states and municipalities have already made significant progress in climate change planning but they will still require additional assistance to implement their proposed GHG emission reduction actions. Other Mexican states and municipalities with the political will and basic institutional framework to reduce GHG emissions will require assistance to begin to formulate and implement their local climate change action plans.

Finally, Mexico will also need to continue to look for ways of increasing energy efficiency, as the use of fossil fuels will be required to provide energy in Mexico’s economy for many more years. There are many opportunities for efficiency, including improvements to buildings, lighting, transportation, and industrial processes.

Currently key emission sources include transportation, energy production, agriculture, land-use change, industry, and wastes (Figure 1). Mexico’s national climate strategy looks to: accelerate the transition to clean energy; reduce the energy intensity of the economy; have more sustainable cities through more efficient buildings, transport, and waste management; promote better agricultural and forestry practices to conserve carbon sinks; and reduce short-lived climate contaminants, such as black carbon.

Figure 1. GHG Emissions in Mexico by Sector (percent of total)

C.2 MEXICO-US COOPERATION ON CLIMATE CHANGE

Mexico and the U.S. cooperate closely on a variety of climate and energy issues, and this can be seen in a number of national and subnational programs. At the national level, the U.S. Forest Service (USFS) provides assistance to reduce forest-related emissions; the Environmental Protection Agency is working to reduce emissions associated with landfills and wastewater treatment plants; and the Department of State and the Department of Energy are working on a variety of energy and industrial sector projects, as well as working with the GOM on the Bilateral Climate and Energy Taskforce. At the US state level, California is a leading partner with Mexico on climate and energy issues.

USAID/Mexico coordinates closely with these U.S. Government (USG) entities and brings a comparative advantage, due to its large presence in country and close relations with local stakeholders.

USAID/Mexico’s climate program aims to accelerate Mexico’s transition to climate-resilient, low emission, sustainable economic development. Mexico is a priority country for both clean energy and sustainable landscapes programming within President Obama’s Global Climate Change Initiative.

As part of the background information for the development of USAID/Mexico’s clean energy program, two reports were conducted to assess barriers and opportunities to reducing GHG emissions through greater use of renewable energy, energy efficiency, and other GHG reduction measures. The two reports are as follows:

Watson et al (2015) National Renewable Energy Laboratory Renewable Energy Opportunity

Assessment For USAID Mexico. Prepared for USAID/Mexico by: National Renewable Energy Laboratory. November. URL: http://pdf.usaid.gov/pdf_docs/pbaad897.pdf

Crown Agents and Abt Associates (2015) Mexico Energy Efficiency Assessment for Greenhouse Gas Emissions Mitigation: Final Report. Prepared for USAID/Mexico. Contract No.: AID-OAA-I- 12-00038, Task Order: AID-OAA-TO-14-00007. November. URL:

http://pdf.usaid.gov/pdf_docs/pa00kzcr.pdf

U.S. Global Climate Change Initiative

President Obama made GCC a top priority for foreign policy through the U.S. Global Climate Change Initiative, which is disaggregated into three pillars that correspond to the USG priorities and current efforts of USAID programs:

● Clean Energy: Activities that reduce, mitigate, and/or sequester emissions of GHGs in the energy, industry, urban and transport sectors;

● Sustainable Landscapes: Activities and projects that promote forest conservation, improved forest management, agro-forestry, soil conservation, and sustainable agriculture; and

● Adaptation: Activities where climate vulnerability and adaptation are an explicit part of project analysis and design.

USAID’s Clean Energy programs and activities reduce climate change by promoting low carbon planning, the deployment of renewable energy and energy efficient end-use technologies. The primary objective is to reduce, mitigate, and/or sequester emissions of GHGs. In addition, GCC funded investments in clean energy:

● Assist the achievement of climate-resilient and low emissions development through support for national strategic plans on climate change, which will lead to significant reductions in carbon emission over the long-term, relative to business-as-usual trajectories.

● Include an explicit objective to seek climate change-related outcomes of reducing, mitigating, and/or sequestering emissions of greenhouse gasses.

● Monitor impact using one or more USAID climate change indicators.

C.3 OBJECTIVE

USAID/Mexico is developing the Mexico Low Emissions Development II program as the cornerstone of its continuing Clean Energy work. MLED II will support the GOM’s efforts to implement its Nationally Determined Contribution (NDC), strengthen its systems for monitoring, reporting and verification (MRV) of emissions across all emitting sectors of the economy, and scale up the deployment of grid-connected renewable energy. As illustrated in the strategic framework graphic below, USAID has structured this activity to focus on components primarily within two of the three intermediate results (IR 4.1 and IR 4.3 – highlighted in yellow) that contribute directly to achieving the overarching Development Objective (DO) 4 goal of reducing GHG emissions in targeted sectors.

This activity will achieve these objectives through a multi-sectoral approach that engages a broad set of stakeholders. This includes assistance to the GOM in developing, adopting, and implementing policies, regulations, and/or administrative procedures at the national and subnational level that provide real reductions in GHG emissions while strengthening the technical and institutional capacity of GOM agencies. Partnerships with civil society, academia, and other relevant institutions will be developed that will enhance the country’s overall capacity for low emissions development, as well as relationships with the private sector that will result in GHG emissions mitigation and accountability.

C.4 OVERARCHING PRINCIPLES FOR IMPLEMENTATION AND MANAGEMENT

In addition to goals established through USAID/Mexico’s Country Development Cooperation Strategy, this Activity will be implemented in accordance with the guiding principles under USAID’s Policy Framework and USAID Forward.1 The principles detailed below will be critical to the successful implementation and management of this Activity:

Gender

USAID/Mexico is committed to supporting and implementing the Agency’s Gender Equality and Female Empowerment Policy, including integrating gender and female empowerment objectives throughout the Program Cycle. In response to agency guidelines regarding gender analysis as well as guidance received from the Office of Gender Equality and Women Empowerment, USAID has identified gender gaps relevant to climate mitigation, and especially in the energy sector.

In the energy sector, women have traditionally been underrepresented, and are often excluded from employment opportunities. The program must ensure that all implementing partners provide the maximum opportunities for women’s participation in the “grid integration economy”, referring to the

1 Policy Framework:

http://www.usaid.gov/sites/default/files/documents/1870/USAID%20Policy%20Framework%202011‐2015.PDF, and USAID Forward: http://www.usaid.gov/usaidforward.

occupations related to system operations, transmission, generation management, and related IT and equipment industries that support grid integration.

Disproportionate impacts must be considered by the contractor during all stages and in each activity. A gender equity plan must be prepared by the contractor before start of activities, see Section F. All activities must promote gender equity and must be integrated throughout the proposal. Gender is not just about numbers, it is a careful review of interventions to determine how outcomes could impact men and women differently. As part of a gender analysis, prior to an intervention it must be determined if there will be any negative impacts on one gender or another.

Coordination Between Other USAID and USG Projects

MLED II is the primary vehicle for USAID/Mexico Clean Energy program and must ensure that actions carried out by other USAID implementing partners are coordinated and integrated into the overall USAID/Mexico Clean Energy Program. This should include the projects listed below, which contribute to USAID/Mexico’s Clean Energy program:

● Enhancing Capacity for Low Emission Development Strategies (EC-LEDS) is a whole of USG initiative supporting Mexico’s efforts to reduce greenhouse gas emissions by helping to eliminate barriers to greater use of renewable energy, including technical assistance from the U.S.

Department of Energy national laboratories, particularly the National Renewable Energy Laboratory (NREL).

● USAID/Mexico’s Emerging Markets Development Advisers Program (EMDAP) will provide technical assistance on issues related to Mexico’s national emissions register, international coordination, and the design of a potential emissions trading system.

● USAID/Mexico’s global development alliance with the financial advisory firm Evensen Dodge International Incorporated will bundle infrastructure transactions, create a bond bank to facilitate the intermediation between the capital markets and sub-national entities, and facilitate financing of clean energy infrastructure projects.

● USAID/Mexico’s global development alliance with Green Hub/MDB Advisors will implement energy efficiency and renewable energy projects with water utilities in Baja California.

● USAID/Mexico’s cooperative agreement with the National Association of Regulatory Utility Commissioners (NARUC) will work with CRE to improve Mexico’s regulatory framework in the power sector and CRE’s institutional capacity.

● Development Innovation Venture with the Laboratorio de Investigación en Control Reconfigurable, which is developing a prototype for a “smart” electricity grid transformer, in order to help transform Mexico’s electricity grid.

In addition, the project will coordinate with the renewable energy and energy efficiency programs of the GOM, other donors, and multilateral development banks (see Objective 4 in Section C.5 below). These entities and activities include:

● 21st Century Power Partnership;

● Bilateral Climate and Energy Taskforce;

● German Aid Agency (GIZ);

● Danish Energy Agency;

● British Embassy;

● Environmental Defense Fund;

● World Bank; and

● Inter-American Development Bank.

Capacity Development

Development of human and institutional capacity is a critical task for the GOM, private sector, and civil society. In particular, with reductions in budgets of GOM climate, energy, and environment agencies are having difficulties maintaining adequate staffing and training. The project will design activities that involve placing experts to work with GOM agencies, such as National Institute for Ecology and Climate Change (INECC, Spanish abbreviation), SEMARNAT, CENACE, CRE, and SENER.

Program Activities Must be Designed with Expected GHG Reduction

All designed activities must think through how each activity will lead to reduced GHG emissions in the near and long-term, and must include an estimate of the expected reduction, where applicable, in the current fiscal year, to 2020, and to 2030.

Stakeholder Driven Process

Develop and implement activities in close coordination with all relevant stakeholders, including GOM established working groups and processes. This includes development of annual work plans and activity-specific actions.

C.5 SCOPE OF WORK

The MLED II program will address the following objectives:

● Increased Renewable Energy Deployment;

● Strengthened Climate Change Regulatory and Policy Environment;

● Innovative Approaches, Regulations, and Policies Demonstrated; and

● Enhanced Coordination of Clean Energy Efforts in Mexico.

Objective 1: Increased Renewable Energy Deployment

Large-scale use of its substantial renewable energy resources can strengthen Mexico’s energy security and enable significant progress in meeting its NDC obligations and increase electricity generated by clean energy sources to 35 percent by 2024. Experience with power systems, with high penetration of variable renewable energy (greater than 10 percent of energy), shows that the capacity of Mexico’s power grid to absorb increasing amounts of variable renewable energy could become a significant barrier.

Mexico’s renewable energy resources are concentrated (by region, season, and time of day) and their output (wind and solar), is more variable and less predictable than conventional power. Integrating significant levels of renewable energy will require the capacity to: deliver power from renewable energy-rich regions, provide a reliable, balanced and quality supply of power, and ensure adequate markets.

Distributed energy resources provide distribution and transmission capacity as demand increases in a particular region. This can enhance reliability; voltage and reactive power control schemes, and defer major infrastructure and equipment investments. Planning processes must include distributed energy resources to define how these resources integrate with utility voltage, reactive power schemes and reliability plans.

There are a number of ongoing activities in Mexico to develop new renewable energy projects and to increase the capacity of the electricity grid to integrate greater amounts of variable renewable energy.

Various donor agencies and multilateral development banks are supporting projects and the GOM is itself supporting work in this area, such as the newly developed center for electricity grid innovation (Centro Mexicano de Innovación en Redes Eléctricas Inteligentes, CEMIE-REDES, Spanish abbreviation).

Component 1.1: Improved Strategic Planning for High Renewable Energy Scenarios

Task 1.1.1: Improved Geospatial Data and Analysis used in Renewable Energy Planning

For Mexico to achieve its clean energy and GHG emission objectives, the Government must have adequate resource data, as well as storage and processing capacity to perform technical, market and policy analyses. This data will support the creation of national and regional policies, tools and mechanisms to promote private investment. Quality resource data are the backbone of operational modeling for integration of renewable energies.

The existing Mexican inventory of renewable energies, including the solar resource inventory, has a level of resolution that helped GOM set its long-term clean energy goals, but lacks the level of detail for the government to perform detailed modeling and analysis to create its renewable energy priority zones and complementary public policies, as well as perform detailed grid integration studies. This renewable energy inventory also lacks the appropriate platform and tools to facilitate private sector deployment and investment in clean energies.

Required Results:

● Up-to-date, accurate, and validated data used by GOM for strategic energy planning.

● GOM possesses state-of-the-art capability for data storage, processing, and analysis for strategic energy planning

Suggested Activities:

● Develop and populate database of wind and solar technology specifications

● Build and deliver to GOM partner agency data storage and processing capabilities, including multiple nodes, each with sufficient cores to support parallel processing, (with storage device(s) that are adequate for the generation of analytical results), allow for data redundancy, and provide room for future growth.

● Purchase or collection and validation of data identified through prior data gaps assessment.

Task 1.1.2: Support to Renewable Energy Zone Development

As directed by Mexican law, SENER must create a National Atlas of Feasible Zones for the Deployment of Renewable Energies. This will be a resource for private sector development of renewable energy projects. SENER will use the Atlas to develop methods to encourage and prioritize the development of renewable energy in specific geographic areas targeted for the large-scale deployment of renewable energies. Selection of areas will be based on resource quality, land-use regulations, land tenure, social and environmental impacts, transmission and distribution networks available and planned for expansion, potential reduction of GHG from fossil fuel generation, economic development, and financial commitments by private sector to these zones.

To ensure development will successfully take place, international best-practices dictate that successful determination of, and subsequent development of renewable energy zones must have a transparent and robust stakeholder process associated with it. SENER is currently working to develop a roadmap for this work, and the project will support the steps and process per this guidance.

● Stakeholder driven, inclusive process established for renewable energy zone development and implementation.

● Renewable energy zones identified and established by GOM.

● Private sector developers show financial commitment to solar and wind development in specified renewable energy zones.

● GOM power sector planning includes transmission scenarios based on renewable energy zones.

● Develop and/or support a renewable energy zone stakeholder group and engagement process.

● Assistance in conducting programmatic and site-specific environmental and social impact assessments.

● Assistance to GOM in identifying developer interest, including:

o Review of developer applications;

o Database for developer applications and information; and o Development and review of project development documents.

● Scenario development and identification of transmission elements for renewable energy zones.

● Support to national and state actors for streamlining of permitting processes.

● Assistance to GOM actors in conducting grid interconnection studies for specific renewable energy zone scenarios.

Component 1.2: Improved Integration of Variable Renewable Energy

Task 1.2.1: Power System Flexibility Solutions Identified and Prioritized

Variable renewable energy increases the need for flexibility of the system. Most typically, systems with significant amounts of variable renewable energies require flexible generators that can rapidly change output, operate efficiently at lower outputs, and operate for short durations. This flexibility in turn can reduce the need to curtail the output of solar and wind generated electricity; improve investor confidence and revenue streams; decrease the risk of negative market pricing; and reduce environmental impacts by increasing system efficiency and maximizing the utilization of variable renewable energies.

Energy storage, demand side resources and the use of forecasting tools are also important sources of flexibility that permit the integration of large amounts of variable renewable energies. This task will be performed in coordination with the U.S. EC-LEDS program analytical capabilities, which will support a Modeling Working Group (noted below) in performing production cost modelling and scenario development.

● Technical Advisory Committee and Modeling Working Group established and trained with necessary tools.

● Grid integration solutions identified, including timeline and sequencing of interventions for improved system flexibility and reliability.

● Development of, or support for an existing Technical Advisory Committee (TAC), consisting of a broad group of stakeholders from government and the private sector, on grid integration, and support for convening of TAC meetings.

● Establish a Modeling Working Group (MWG), consisting of a small (e.g., five) key GOM modelers from across relevant agencies, and provide capacity building and convening support.

● Procurement of modeling platform(s) and licenses (to be determined in coordination with the Modeling Working Group) for MWG

● Support data collection and storage for modeling needs

● Provision of one to three trainings on chosen modeling software that will underlie grid integration studies

● Establishment of a platform (virtual or in-person) for MWG meetings, and participation in these meetings to track progress and outcomes.

● Support for participation and travel by MWG members to U.S. National Laboratories and other modeling fora to facilitate knowledge exchange with international experts.

Task 1.2.2: Implementation of System Flexibility Solutions

Through the previous task, the project will identify system flexibility solutions that maximize variable renewable energy integration. These solutions will include a variety of institutional, policy, and technical interventions that will enable the integration of high penetration variable renewables into the grid. The project will provide technical assistance on one to three of the identified solutions as prioritized by the GOM grid integration process (Activities focused on piloting and, demonstration in partnership with the private sector will be covered under Task 3.1.).

● Implementation plans for grid integration roadmap developed for select interventions.

● Variable renewable energy forecasting incorporated into system operations.

● Improved regulations and system operations practices for variable renewable energy integration adopted and in-use.

● Variable renewable energy forecasting improvements:

o Assistance in setting up and designing vendor forecasting trials to determine optimal forecasting supplier for Mexico;

o Training to key forecasting providers and users;

o Meteorological and hydrological data inputs and support; and o Training for integration of forecasts into system scheduling and dispatch.

● Updated interconnection codes and standards for distributed and utility scale variable renewable energy to include data provision requirements and visibility

● Support in updating Power Purchase Agreements to include best practices in variable renewable energy generation, such as provision of Automatic Generation Control and grid services such as frequency response.

Objective 2: Strengthened Climate Change Regulatory and Policy Environment

While Mexico has made important strides in developing and implementing policies to boost clean energy and reduce its emissions, achieving the overall target will require additional efforts by the GOM in capacity development, policy analysis, and program planning, implementation and evaluation. It will also require effective coordination between national ministries and industries, as well as between the federal and local governments.

The UNFCCC Paris Agreement signed in December 2015 calls for a robust effort to improve transparency of climate change actions among the Parties. The Agreement establishes a Capacity-building Initiative for Transparency to support developing countries in meeting enhanced transparency requirements under Article 13, which calls for Parties to regularly provide both a national inventory report on emissions and information necessary to track progress made in implementing and achieving the NDCs.

The latter will be of particular importance in Mexico. GOM is a leader in developing and submitting its National Communications, and submitted its first Biennial Update Report to the UNFCCC in 2015;

however, the specific policies that will be used in each sector to achieve the anticipated reductions under the NDC have not been fully developed, and GOM has yet to set out clear benchmarks, timeframes, and milestones.

Component 2.1: Implementation of Climate Change Mitigation Strategies

USAID seeks to assist SEMARNAT, INECC, SENER, and other GOM institutions at the federal and local levels to support effective Nationally Determined Contribution (NDC) implementation

Task 2.1.1 Increased Transparency and Ambition of CC Mitigation Commitments

Mexico is a leader in the development and submission of its Intended Nationally Determined Contribution to the UNFCCC. This task will support any desired refinement in the ambition or sectoral targets of Mexico’s commitments, as well as the tracking of progress toward achieving its goals. To implement these commitments, it will be critical for these targets to be considered in sectoral planning and budgeting by line ministries, to ensure that their investments and policies reflect and contribute to commitments set forth in the INDC.

● NDC targets are integrated into at least one sectoral planning process.

● NDC targets are integrated into at least regulatory instrument (e.g., vehicle efficiency standard).

● GOM has improved capability to monitor NDC implementation progress.

● GOM MRV system is internationally compliant.

● Work with INECC, SEMARNAT, and other GOM entities to identify and support needed improvements in capacity to model, track and evaluate emissions in different sectors.

● Develop interim NDC implementation milestones for electricity and other sectors.

● Support sector-specific policy design and implementation, in particular regarding the development of fuel efficiency standards for motor vehicles (diesel and gasoline).

● Refine the software to assist tracking progress on Mexico’s Special Climate Change Program

(PECC, Spanish abbreviation), and develop additional software tools as needed for tracking progress with Mexico’s NDC and GHG reduction activities.

● Establish a process to identify policy and emissions gaps and estimate potential shortfalls in specific sectors and overall.

● Work with GOM entities to implement requirements for MRV of Mexico’s NDC progress under the United Nations Framework Convention on Climate Change (UNFCCC) to ensure that Mexico’s climate change efforts and MRV systems are internationally compliant.

● Work with SEMARNAT and INECC to update the PECC, so that it reflects legislation passed as part of Mexico’s energy reform (e.g., Ley de Transición Energética).

Task 2.1.2 Development of Subnational Climate and Energy Plans

Mexican states typically do not have the capacity to both develop, and implement climate action plans, which are designed to guide state-level climate mitigation activities.2 A number of Mexican states have climate action plans, but the implementation has been slowed by insufficient technical capacity to develop a well-designed project and to identify financing.

Similarly, a number of Mexican states are looking to develop clean energy programs with the goal of becoming centers of renewable energy development. This work might be best conducted in coordination with those areas of the country that are most likely to be renewable energy zones, and thus should be linked to activities conducted in Objective 1.

● In coordination with USAID, SEMARNAT, INECC, SENER, and other relevant GOM entities, assist two or more sub-national governments (state or municipal) with designing or updating climate and/or energy action plans, and ensuring their linkage to Mexico’s NDC.

● Assist sub-national entities to develop stakeholder driven, actionable climate and/or energy action plans in support of Mexico’s NDC.

● Utilize existing state and/or municipal networks to disseminate and scale up sub-national climate work.

● Assist sub-national entities to identify potential sources of financing, such as through USAID’s Global Development Alliance or other mechanism.

Component 2.2: Development and Deployment of Market Mechanisms for GHG Mitigation

Mexico has considered or pursued the use of market mechanisms, such as carbon taxes, emission trading systems, and clean energy certificates, to help achieve the goals and targets of the PECC and NDC.

Mexico has already developed the National GHG Emissions Register (RENE, Spanish abbreviation), an essential foundation for an emissions trading system, and it is working actively in a variety of international fora. Mexico signed memorandums of understanding with California and Quebec to, among other things, learn best practices in the design of cap and trade programs, and is a member of the International Coalition for Carbon Pricing.

Mexico implemented a partial tax on fossil fuels and is designing a clean energy certificate system that will start functioning in 2018. There also exists a voluntary emission reduction reporting mechanism

2 State climate action plans also include adaptation activities, however, the focus of the work in this activity is on mitigation.

(part of RENE), which could be used with California’s offset market or in Mexico’s proposed system of “bonos de carbono” (described in Article 5 of the Ley de Impuesto Especial Sobre Producción y Servicios).

GHG mitigation market mechanisms are a highly political and fast-moving topic. As a result, it is expected that the project will collaborate closely with the GOM as well as other USAID programs, GIZ, and others to ensure that the project is relevant to the GOM’s needs and complements other, ongoing activities.

Task 2.2.1 Improved National GHG Reporting and Tracking System

A key element in the development of a domestic carbon market is RENE, the register for mandatory GHG emission reporting and voluntary emission reductions. In addition, it will be important to work with GOM and the state of California to ensure compatibility of a new Mexican market with California’s cap and trade program, in order to enable potential linkage in the future. Finally, it will be important to ensure that key GOM institutions are involved and reach consensus on avenues of work.

● Improved and deployed emission reporting system (RENE), which includes both mandatory emissions and voluntary reductions components;

● RENE system is used by GOM as primary tool for carbon tracking, as part of market mechanism approach;

● Improved capacity of the private sector for GHG reporting and compliance.

● Gap and needs analysis of RENE improvements conducted in conjunction with SEMARNAT.

● Implementation of RENE improvements including but not limited to:

o Ensuring RENE is compliant to both domestic and international requirements;

o Software functionality and improvements; and o System management and verification capabilities.

● Dissemination of training and tools for validation and verification of emissions reporting.

● Dissemination of training and tools for private sector reporting and design of emission reduction options

Task 2.2.2 Design of Carbon Policies and Mechanisms

This task includes assistance with standard design elements, such as setting the cap levels, schedules and targets; covered sectors, entities; tracking and recording emissions trades; allocation of permits; and sectoral and macroeconomic analyses of different design options and scenarios. In addition, it will likely be important to analyze linkages with existing policies -- carbon taxes; clean energy certificates; and NDC goals. In general for any mechanisms developed, it will be important to develop consensus among key government stakeholders as well as the private sector in the appropriate mechanism in Mexico.

● USAID carbon pricing work coordinated with other international donors.

● Market mechanism research and analysis utilized by GOM policy-makers

● Stakeholder engagement and process established to gain GOM consensus on carbon market mechanisms (including carbon tax, bonos de carbono, carbon offsets, and emission trading system).

● Improved capacity of GOM for the design, implementation, and management of clean energy certificate market.

● Improved capacity of GOM for the design, implementation, and management of carbon pricing.

● Joint analysis on carbon-pricing in support of SEMARNAT, INECC, SHCP, and other GOM…