ToR - Service provider contract for promoting rental model solutions in the solar energy sector in Lebanon

1. Background

Lebanon is facing a severe financial and economic crisis that has drastically devalued its currency and pushed many, including 1.5 million Syrian refugees, into poverty. With unemployment at unprecedented levels, the agricultural sector remains an important source of legitimate employment for both Syrian refugees and vulnerable Lebanese communities. However, the sector has been severely affected by the crisis.

The International Labour Organization (ILO) is therefore implementing the BOUZOUR project ‘Building Inclusive Markets and Decent Work for Lebanese host communities and Syrian refugees’ funded by the Swedish International Development Agency (Sida). The project focuses on the agriculture and agri-food sector as a key sector for the livelihoods of both Lebanese and Syrian vulnerable population groups and in particular women of both communities and aim to develop specific agricultural and agri-food value chains with potential for decent job creation that will benefit both groups. The project uses the ILO's Approach to Inclusive Market Systems (AIMS) to safeguard and create jobs in these sectors.

Within one component, the project focuses on developing an adequate offer of a solar energy system and promoting the adoption of this system to farms’ needs. This intervention will provide stable and affordable electricity access to farmers and agri-businesses while supporting solar energy system suppliers in reaching rural areas with systems adapted to the agriculture sector.

This is focused on increasing adoption of solar photovoltaic (PV) systems in agriculture applications (e.g. cold storage, agro-processing, etc.) as a means to improve both environmental and employment outcomes:

1. Improvement of environmental outcomes is expected to derive from reduced consumption of fossil fuels which would otherwise be used to produce energy for agricultural applications.
2. Improvement of employment outcomes is expected to derive from reduction of costs incurred for energy production by smallholder farmers (compared to those incurred from fossil fuel generated sources) as well as more stable access to energy (i.e. no shortages of energy, as might happen with fossil fuel powered sources)

In this context, the project will support increased adoption of solar PV systems in agriculture applications by stimulating both the supply and demand of such systems:

1. Support the supply of such systems by solar energy sector stakeholders to smallholder farmers and smallholder farmer cooperatives and small agri-enterprises by clarifying and showcasing the incentives (i.e. the business case) as well as the capacities needed by suppliers for doing so.
2. Support the demand of such systems by agricultural sector actors by clarifying and showcasing the incentives (i.e. the business case) as well as the capacities needed by agricultural sector actors to use such systems in agricultural applications.

2. Overall objective

This overall objective of this contract is to test if a service provider providing solar generated electricity to farmers through a rental model can serve as a sustainable and scalable business model innovation to enhance farmers energy access, productivity and incomes.

More specifically, this test will consist of an evaluation of “the resources and capacities required” and the “incentives / attractiveness present” in relation to rental of solar photovoltaic systems from the perspectives of both:

• the supplier of such systems, which may have a long-term commercial interest in offering solar energy through rental, hire purchase or payment by instalment business models, but who may also need to develop new processes/capabilities to successfully leverage these business models (compared to the sale of solar energy systems); and
• the cooperative and/or small enterprises that operate cold storage customer(s) of such systems, which may enable them to enhance their access to affordable energy and increase their productivity and incomes, but who may also need to develop new processes/capabilities to successfully leverage the offering of rental or hire purchase solar PV systems by such suppliers.

This evaluation will be conducted in real time, by one supplier, the service provider to the ILO, on at least two systems rented by the service provider to at least two customers, which can be cooperatives or small enterprises that operate cold storage systems. The number of systems can be extended depending on the cost and capacity of the service provider.

3. Service provider responsibilities

In broad terms, the service provider will be responsible for installing and maintaining at least two solar photovoltaic units for at least two small agri-enterprises or cooperatives and thereby (through the client’s operation of these units) ensuring their access to a source of electricity necessary for productive agricultural value chain uses by farmers. The service provider will further be responsible for documenting the performance and use of the units by the customers, as well as its own expenses and time spent in relation to the installation and maintenance of the Units, such that the ILO may evaluate and disseminate information about the business model for such services to both solar system installers and agricultural segment customers. Further details on the responsibilities of the service provider and associated activities are specified in the list below.

1. The service provider will identify and select at least two small agri-enterprises or cooperative customers in consultation with the ILO. The service provider shall investigate the energy needs of no less than six small agri-enterprises or cooperatives and selecting at least two for further support. The process of selection of the customers will be conducted in close collaboration with the ILO (see "ILO responsibilities" in the Section 4, below) and be guided both by potential for future commercial sustainability of such a service (e.g. credit-worthiness of Customers; feasibility of using solar PV for enhancing productive use of energy among Customer) and future development impact of such a service (e.g. potential for generating cost-savings among Customer).
2. The service provider will share with the ILO information on the technical specifications of the Units and the costs associated with their implementation in the cooperatives or agri-businesses.
3. The service provider may foresee conducting rapid energy assessments or audits with the selected beneficiaries to pinpoint energy-saving opportunities that reduce overall consumption, potentially lowering the capacity needed for a new or rented solar system. The need for this activity will be discussed with the ILO during the inception phase of the assignment.
4. The service provider will install at least two solar photovoltaic units (henceforth referred to as “the Units”) in line with industry best practices for the previously identified customers and thereby then provide the solar-generated electricity for powering agricultural processing and/or cold storage facilities for a minimum duration of 3.5 months.
5. The service provider will provide basic training to the customers on operating the Units such that the customers have the ability to use the Units efficiently. The training should also be geared towards enabling the customers to identify problems that may arise with the operation of the Units, such that the customers may alert and inform the service provider of any malfunctions to the Units.
6. The service provider will be responsible for the normal operation/functioning of the Units, including repair and maintenance of the Units should there be any unintended significant negative deviations[1] in the performance of the Units. Should any unintended negative deviations in the performance of the Units be imputable to mismanagement or tampering imputable to the Customers, the service provider may request payment for repair and maintenance of the Units from the Customers.
7. The service provider will collect information and develop a business model case study in collaboration with the ILO on how solar companies are able to save small agri-enterprises/cooperatives money and other lessons learned from reaching rural populations with solar photovoltaic systems. This will involve the service provider monitoring the use and performance of the installation as well as its own expenses/level of effort in relation to the delivery of the service. The service provider will also include assessing metrics such as CO₂ reductions, cost savings, and productivity improvements,
8. The service provider will explore the feasibility of testing a rental model for other solutions for reaching small agri-business or cooperatives, such as for portable cooling or hydrocooling solutions.

Relationship between the Service provider and the Customers

This present contract concerns the contractual relationship between the Service provider and the ILO. In parallel, in order to test the commercial viability of the intervention, the Service provider will be allowed to enter in a commercial relationship with the Customers. Nevertheless, this will be authorized under certain conditions, as specified below.

1. The service provider may request a fixed monthly payment from the Customers, albeit under certain conditions, but no other type of payment unless expressly authorized by the ILO. This fixed monthly payment will be set at a price that is below the monthly cost that the Customers would have incurred for powering their equipment in a business-as-usual (BAU) scenario (i.e. with their previous source of energy, at price levels prevailing at the time of signature of the contract with the Customers). The service provider may not request any other payment from the Customers unless expressly agreed to by the ILO or expressly allowed within the terms of this contract.
2. The service provider will share with the ILO a copy of all contracts concluded with the Customers or their affiliates, including chiefly those relating directly or indirectly to the Units and their operation.

4. ILO responsibilities

The ILO’s responsibilities include:

1. Development of an initial set of “Customer” selection criteria and related information in consultation with the service provider, to be agreed to with the service provider before the performance of service provider activity number 1 (see above section 3 on service provider responsibilities).
2. Provision of relevant research held by the ILO to the service provider for the performance of the contract including information in its possession on potential customers and other on energy demand/needs in the agriculture sector in Lebanon.

5. Schedule and reporting set

The service provider’s responsibilities as specified in the above list of service provider responsibilities will last for a duration of 5 months, from December 2024 until June 2025.

Kindly review the schedule in attached ToR.

5. Completion criteria

Service provider outputs

The acceptance of the services of the service provider to the ILO will be conditional on the provision of a series of “outputs”:

• Output 1: Report on

1. Customer shortlisting process. This will include information on 1. the 6 “long-listed” potential Customers, how they were identified, and their energy needs; 2. The 2 “short-listed” Customers, how/why they were selected, and more in-depth information on shortlisted Customers’ energy needs and how they will use the Units.
2. Technical specifications of the Units. This will include information on the components as well as a summary of the process of manufacturing which will notably specify the human resources and skillsets used throughout that process as well as the overall cost of manufacturing incurred.

• Output 2: Report on

3. Installation of the Units. This will include information on the location of the Units (i.e. where they have been installed); summary information on the service provider’s own level of effort and expenses with regards to the installation of the Units; and a copy of the contracts signed with the Customers (as annexes).

• Output 3: Monthly reports (max 2 pages excluding annexes) on the performance and operation of the units by the Cooperatives or small enterprises. The service provider will make monthly reports to the ILO on the performance and use of the Units, to be delivered every 30 calendar days following installation of the Units. This will include a summary monthly summary timesheet recording number of days spent on different tasks and the challenges encountered by the service provider in operating and maintaining the Units. Moreover, should any significant deviations between intended and planned performance and/or use of the Units by the Customers come to the attention of the service provider, the service provider shall inform the ILO within four calendar days, and further report this occurrence in the relevant monthly report, explaining the cause of the occurrence and remedying actions taken by the Service provider and/or Customers.
  • Output 3.1 – monthly report number 1
  • Output 3.2 – monthly report number 2
  • Output 3.3 – monthly report number 3
  • Output 3.4 – monthly report number 4
• Output 4: Final report on the operation of the Units (max. 10 pages excluding annexes) including technical content for business model case study, as well as feasibility of other portable solutions explored. The nature of the technical content for the business model case study will be determined in consultation with the ILO. Nonetheless, it is expected to potentially include information on actual energy output levels against planned output levels; actual productive energy use of the Units against planned productive energy use; costs incurred by the Customers for use of the Units against forecasted costs under a BAU scenario; information on use of the Units by the Customers; lessons learned on developing portable PV rental business models.

It should be noted that the reports delivered under output 1 and output 3 may contain information proprietary to the service provider representing Intellectual Property or Trade Secrets in the form of technical, commercial, and business process information. Notwithstanding, the service provider will share this information with the ILO. However, the contents of the publication that will be shared with the wider public will be determined in consultation and in agreement with the service provider in order to ensure that it does not infringe on the service provider’s intellectual property and trade secrets (this will not apply to proprietary information acquired through the current contract). The service provider will not unreasonably withhold information relevant to this project's scope and objectives out with these boundaries.

Delivery and payment schedule

The present contract will commence on the November 2024 and end in June 2025.

• Payment of 20% upon satisfactory delivery of Output 1 tentatively by December 10, 2024.
• Payment of 20% upon satisfactory delivery of Output 2 tentatively by January 30, 2025.
• Payment of 60% upon satisfactory delivery of outputs 2.1, 2.2, 2.3 and output 3 by 30 June 2025.

Payment Terms:

• All payments shall be made in fresh USD by international wire transfer.
• A USD account in the name of the service provider must be available for wire transfers.

Management of the contract

The Service Provider will coordinate with the Project Technical Officer and National Officers in the ILO Beirut Office and with relevant technical departments involved in the ILO Beirut Office and ILO Headquarters. The service provider will designate a focal point from its side to manage the assignment.

Required Qualifications

This call is for service providers, specifically: registered companies, registered institutions, organizations, sole proprietorship with a legal identity. Individual consultants are not eligible to apply.

To apply for this assignment the service provider should possess the following qualifications:

• The service provider must be a registered company with at least 3 years of experience in the renewable energy sector, specifically in the design, installation, and maintenance of solar photovoltaic (PV) systems.
• Proven experience in developing, testing, or managing rental or pay-per-use business models in solar energy, particularly in agricultural or rural sectors.
• Experience working with enterprises, cooperatives, or agricultural entities in providing energy solutions.
• Must have expertise in solar PV installation, including designing and maintaining solar units.
• Capacity to conduct energy needs assessments and technical feasibility studies for agricultural enterprises or cooperatives.
• Ability to provide training and after-sales support to clients (small enterprises or cooperatives) on the operation and maintenance of solar PV systems.

Submittals and Deadlines for Application  

1. Proposal Submission:

• Financial Proposal: Provide a detailed budget breakdown and cost estimation.
• Company Profile: Include legal registration documents, organizational structure, and relevant experience.
• CVs of Key Team Members: Highlight educational background, relevant experience, and roles within the project.
• References: Contact information for at least two previous clients/projects demonstrating similar work.

2. Supporting Documentation:

• Copy of the registration certificate for companies and organizations.
• Copy of the tax registration certificate.
• Copy of a bank letter or bank account document showing full banking information is accurate and complete.