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HomeMy WebLinkAboutBristol Bay Power Plan Findings and Recommendations 1986Be/ Alaska Power Authority 040 LIBRARY COPY Alaska Power Authority Findings and Recommendations Bristol Bay Power Plan February 3,1986 BRISTOL BAY REGION POWER PLAN Table of Contents PAGE EXCCUGHVOE SSUNMMANY:| circ cicicicic co 00 c1c1c 01008 6 eg. clvlcitic viclccleleing cies scicre 1 T.0 Intrroduicton) <0. .0 2c cc ccc cece ccc cicccncevccscecccccccore 2 2.0 SOOO Ge MRIS IS cc .cicre 0 6 6 0 «icivicic'g +0 ie vlelsivipic 6 eleleisie o's eielcle 7 3.0 (PROGMCTEDERCTIDRION 6101000000010 00,5 + sitfeleinje ce sleiciee cece vices 8 3.1 Diesel Base Case .......csccccesccccccces aielele Sisiotsrs 8 3.2 Tazimina Run-of-River Project ....ccccccccccccccce 8 GD = MOG HSE PGR “olciciele ciclele oletele(e(elcivisig'e © cle eioieieleic\eisisioiercic eicielsle 9 Gel FANON YSIS PONEMECENS «010.0 0.0'sis.c10 cielc'0'e's 0101010 80:0 ocicle 9 GZ OSE DOE fe 10.006 010 occ c elcinsiele. cele osicls cine eislelelele.erejoro 10 4.3 Present Worth Analysis ..... atelateieleretolore eieleleleferers(elorers 11 50 CONCHUSTON .).cccicvcccdecccccvviececssecinvscecsveveseece 12 TABLES: Table 1 - Summary of Project Present Worth Costs (1982) .... 3 Table 2 - Present Worth of Alternative Projects (1982) ..... 4 Table 3 - 1985 Project Economic Update ........cceeeeeeceeee 4 Table:4 = Vilage) Profites: oo... ccc siecle deccccccccctcccccces 6 Table 5 - Cost of Electrical Energy Supply (1985) ......... 5 11 2408/520(2) i BRISTOL BAY POWER PLAN Port Aleworth TAZIMINA LAKES oe Twin Hille Levelook S> e =. Brook's Camp Becharof Leke BRISTOL BAY Existing Transmission Lines -sssss+«« Legend Existing Transmission Lines —_s Proposed Transmission Lines -—— Potential Transmission Lines —s“****"* Port Alsworth EXECUTIVE SUMMARY The Bristol Bay Region meets its electrical energy and space heating needs with fossil fuels. By 1979, rising oil prices had prompted the Alaska Legislature to direct the Power Authority to begin investigation of potential hydroelectric sites and other alternate energy sources. The direction at the time was to develop a large scale regional energy system to meet the energy needs of the following villages: Aleknagik Igiugig Naknek Clarks Point Iliamna Newhalen Dillingham King Salmon New Stuyahok Egegik Levelock Nondalton Ekuk Manokotak Portage Creek Ekwok South Naknek Preliminary studies indicated that the 16 MW Lake Tazimina Hydroelectric Project was a viable alternative for meeting regional needs or that the Lake Elva Hydro Project would meet the needs of Dillingham alone. Further analysis determined that the Lake Elva Project was only marginally feasible. Geotechnical concerns caused the 16 MW Lake Tazimina Hydroelectric Project to be dropped from consideration. Attention shifted to the nearby 16 MW Newhalen River Project which appeared to be most economic regional project. Review by Power Authority staff concludes that in light of falling oil prices and the magnitude of the expense of the Newhalen project and each of the regional projects proposed, none of the projects are economical at the present time. Additional load growth, higher fuel prices, or lower project costs would be required to make a regional project economical. It was determined that a subregional approach to the Bristol Bay Power Plan would be more cost effective. The first phase of the study includes dividing the Region into areas (subregions) surrounding the three largest organized utilities: Dillingham (Nushugak Electric Cooperative, Inc.), Iliamna (Iliamna, Newhalen and Nondalton Electrical Cooperative), and Naknek (Naknek Electric Association, Inc.). The Power Authority is concentrating on each subregion and the development of separate alternate generation sources and intertie systems. The first result of the analysis is a FERC preliminary permit application for detailed feasibility investigations of the 1.4 Tazimina Run-of-River Hydroelectric Project to serve the Iliamna/Lake Clark area alone. Although a regional power grid system for a power supply system could still be the long term answer for reliable power for the Bristol Bay Region, current electrical loads are too low to justify the magnitude of the capital investment required. Review and analysis of the Dillingham and Naknek areas is ongoing. A power plan for the entire Region will be before APA's Board of Directors during 1986. 2408/520(3) =]. Bristol Bay Regional Study Findings and Recommendations 1.0 Introduction At the direction of the Legislature, the Alaska Power Authority initiated the Bristol Bay Regional Study in 1979. The purpose of the study was to determine the most economical and environmentally feasible solution for providing energy to the following villages: Aleknagik Igiugig Naknek Clarks Point Iliamna Newhalen Dillingham King Salmon New Stuyahok Egegik Levelock Nondalton Ekuk Manokotak Portage Creek Ekwok South Naknek Under the Power Authority's direction, Stone & Webster Engineering Corporation (SWEC) produced an Interim Feasibility Assessment, a comprehensive document which investigates energy demand, a number of alternative means of producing energy (wind, interties, waste heat, oil, coal), and community concerns. This investigation resulted in twenty-one different alternatives being evaluated at a reconnaissance level. Table 1 presents a summary of the present worth costs of those alternatives. 2408/520(5) , -2- TABLE 1 SUMMARY OF PROJECT PRESENT WORTH COSTS (1982 Dollars) Scenario Description — Worth Ranking 1,000 Base Plan (BP-1) Diesel Only 291,700 20 Alternative A (A-1) Tazimina Regional 213,700 2 Alternative B-1 Beluga Transmission 279 ,600 1§ Alternative B-2 Newhalen and Large Kukaklek 301,000 21 Alternative B-3 Newhalen and Medium Kukaklek 276,300 14 Alternative B-5 Tazimina Run-of-River, Medium Chikuminuk and Medium Kukaklek 270,700 13 Alternative B-8 Medium Chikuminuk and Medium Tazimina 266 ,000 9 Alternative B-9A 16 MW Coal-Fired 281,000 16 Alternative B-9B 16 MW 0i1-Fired 388 ,500 25 Alternative B-9C 16 MW Coal Gasification 269,300 uk Alternative B-11 Coal-fired at Dillingham and Newhalen 281,300 17 Alternative B-13A Large Chikuminuk and Tazimina Run-of-River 261,500 8 Alternative B-13B Large Chikuminuk and local Newhalen 267 ,100 10 Alternative B-14 Newhalen Regional - Power Only 189,900 1 Alternative B-14B Newhalen Regional Power and River Diversion 222,200 3 Alternative B-15 Diesel Clusters 340 ,400 23 Alternative B-16 Diesel Clusters and Transmission 338,900 22 Alternative B-17 Diesel Regional Transmission Interconnected 367 ,900 24 Alternative B-18A Tazimina Run-of-River and Kontrashibuna 270,200 12 Alternative B-18B Kontrashibuna 226 ,800 4 Alternative B-19A Diesel Local and Waste Heat 249,500 7 Alternative B-19B Diesel Local and Wind 287 ,900 19 Alternative B-19C Diesel Local - Waste Heat and Wind 249,200 6 Alternative B-19D Diesel Local and Organic Cycle 283,900 18 Alternative B-19E Tazimina Local, Diesel Local, Waste Heat + Wind 242 ,500 5 1. No cost evaluations were made for scenarios B-4, B-6, and B-7, which included the development of the King Salmon River. 2. Alternative B-10, a coal-fired plant at Naknek, has the same present worth as B-9A. 3. Alternative B-12, a coal-fired plant at Naknek with a subregional Newhalen hydroelectric development, has the same present worth as B-11. 2408/520(6) -3- Since the price of fossil fuels had decreased following the work completed in 1982, the Power Authority decided in 1985 to have the previous analysis updated to review the top five alternatives and the base case. The following table presents a summary of the economically more attractive alternatives originally presented in 1982. TABLE 2 PRESENT WORTH OF ALTERNATIVE PROJECTS (1982 Dollars) Present Worth Economic Description Scenario No. Ratio Rank il Newhalen Regional - Power Only B-14A 1.54 2 Tazimina Regional A-1 1.36 3 Newhalen Regional - Power and River Diversion B-14B No 4 Kontrashibuna Regional B-18B 1.29 5 Local Diesel, Waste Heat, Wind, and Local Tazimina B-19E 1.20 20 Base Plan (Continued Diesel) BP-1 1.00 (Base) Power Authority staff dropped the Kontrashibuna Regional alternative, because it is located within the Lake Clark National Park and Preserve. Also eliminated was the Newhalen Regional Power and River Diversion, since resource agencies expressed continuing concerns over fishery issues. An updated analysis completed by SWEC indicated the results presented in Table 3. TABLE 3 ECONOMIC UPDATE BRISTOL BAY REGIONAL STUDY (1985 Dollars) Economic Present Worth Present Worth Scenario Ranking Cost $000 Ratio Tazimina Local Diesel Waste Heat, Wind (B-19E) 1 160,977 1.09 Diesel Base Case (BP-1) 2 175,859 1.00 Newhalen Regional (B-14A) 3 207 ,212 0.85 Tazimina Regional (A-1) 4 252,595 0.70 2408/520(7) ahs Although the 1985 analysis updated the 1982 work, it still evaluated the entire region with an interconnected system. Power Authority staff reviewed SWEC's updated analysis and determined that a subregional approach is more appropriate than looking at the whole region. A subregional approach to power supply in the Bristol Bay Region aids in resolving numerous problems affecting the regional system. The widely dispersed villages and the difficult terrain magnifies construction costs for a transmission system. These high costs coupled with the small electrical loads most often encountered in the villages cause the regional projects to be uneconomic. Total capital costs would be substantially reduced by intertying several villages to a geographically closer generation source rather than constructing a regional grid to serve all of the villages. This allows each subregion to take advantage of greater generation efficiencies and economies of scale. Obtaining rights-of-way for the construction of power projects and transmission lines in rural Alaska is a persistent problem. On a smaller scale, it becomes more manageable. The subregional approach corresponds with input from Bristol Bay residents who felt that subregional power plans are more compatible with regional attitudes and values. For villages a great distance from a generation center, continuing diesel generation for electrical energy with the addition of waste heat recovery systems might be the best investment of capital. The villages in the Bristol Bay Region are catalogued in the following table in relation to geographic proximity. When villages are intertied, they are listed together with the generation source first. The brief profile includes population figures, installed diesel generation capacity, approximate load, and potential for waste heat. 2408/520(8) -5- TABLE 4 VILLAGE PROFILE VILLAGE(S) POPULATION CAPACITY SCHOOL LOAD WASTE HEAT (KW) (KW) (MWH) Clarks Point 79 40 150 620 (Sea Alaska) 225 Dillingham, Aleknagik (NEC) 1670 3850 --- 12,000 Installed Egegik 75 --- --- 335 Ekuk 7 --- --- 800 Ekwok 79 100 150 --- Igiugig 33 --- --- 200 Iliamna, Newhalen 427 1050 --- 1800 Nondalton (INNEC) Keyes Point (1986) a 250 we ae Koliganek 117 40 75 Levelock 80 270 136 = Installed Manokotak 293 600 -- 450 Not feasible Naknek, S. Naknek King Salmon (NEA) 1000 6170 --- 15,000 Installed New Stuyahok (AVEC) 330 240 --- 400 Not feasible Pedro Bay 33 185 100 200 Portage Creek 50 75 150 --- *6 months operation The three natural subregions in Bristol Bay center around the generation sources at Iliamna (Iliamna-Newhalen-Nondalton Electrical Cooperative CINNEC]), Dillingham (Nushagak Electric Cooperative, Inc. [NEC]), and Naknek (Naknek Electric Association, Inc. [NEA]). INNEC, NEC, and NEA are the largest organized utilities in the Region. Each of the three is 2408/520(9) b= 2.0 the nucleus of a cluster of smaller villages. These clusters are delin- eated by natural geographic boundaries. Aggregating the electrical loads in each of these subregions promotes economies of scale in generation efficiency. Replacement of small village diesel generation systems that have high diesel fuel and maintenance costs with a larger system having the ability to take advantage of lower bulk fuel prices and per unit maintenance costs or replacing them with a renewable resource (non-diesel system) accomplishes these efficiencies. In the future, the three subregions can be intertied to form a regional power grid system, but phased development appears more cost effective currently as the community loads are at lower levels. Development of the Kukalek Lake Hydroelectric Project was investigated by SWEC in the Interim Feasibility Assessment of the Bristol Bay Power Plan Detailed Feasibility Assessment. The project would serve the communities bordering the Kvichak River. Due to opposition from the communities of Levelock and Igiugig, the nearest neighbors to the project, the project was dropped from consideration as a viable alternative. The Lake Elva Hydroelectric Project was examined by R.W. Retherford and Associates (February 1980) and by R.W. Beck and Associates (April 1981) under the direction of the Power Authority and found to be a viable project to provide power to the Dillingham area. A FERC application was submitted in 1981 but withdrawn in July 1982, because further study had shown the project to be marginally feasible. The Power Authority is reviewing and updating analysis for the Bristol Bay Region with the focus on subregional power development. The first step of analysis has been to concentrate on the potential of the 1.4 MW Tazimina Run of River Hydroelectric Project for use as the primary power source in the Iliamna/Lake Clark area alone. The Tazimina alternative was developed by SWEC in 1982 in their efforts to produce a regional power system. The 1.4 MW project does not require the large dam necessary for the 16 MW Tazimina project and, therefore, avoids the geotechnical concerns associated with the larger project. The next step in the Power Authority's analysis will be to focus on the electrical energy needs of the two remaining subregions -- Dillingham and Naknek. Scope of Analysis Power Authority staff elected to conduct a subregional application analysis of the 1.4 Tazimina Run-of-River Project, because the project was so promising without the additional cost of regional interties. Changing the scope of the service area changed parameters affecting the analysis. One of the major factors was the price of fuel. In SWEC's regional analysis, the price of fuel averaged $1.03 per gallon. If the Iliamna area only is served, the price of diesel fuel is $1.52 per gallon. It therefore appears that some alternative to the current diesel generation would be attractive. 2408/520(10) A] 3.0 3.1 3.2 Two additional alternatives are considered, transmission lines to Pedro Bay and the development anticipated at Keyes Point in 1986. These are added, as an intertie is already under construction to Pedro Bay and the Keyes Point Development Corporation will construct an intertie to INNEC in 1986. Project Description This analysis is centered on electrical energy generation requirements for the Iliamna/Lake Clark area of the Bristol Bay Region. The analysis utilizes real 1985 (December) dollars and encompasses the planning period from 1985 to 2038 to allow for the full 50 year economic life of the hydroelectric project. Three alternative scenarios are investigated including: 1. Iliamna, Newhalen, and Nondalton 2. Iliamna, Newhalen, Nondalton, and Pedro Bay 3. Tliamna, Newhalen, Nondalton, Pedro Bay and Keyes Point. Diesel Base Case The diesel base case consists of the current electrical generation source, which in all cases is (or will be in the case of Keyes Point) diesel, and all of its attendant costs of operation, maintenance, re- placement, and fuel. Because there are three different scenarios for the hydroelectric alternative, there are three different corresponding base cases. The diesel base cases are carried throughout the entire 53 years of the analysis. Tazimina Run-of-River Project The proposed 1.4 MW hydroelectric project would develop the power poten- tial at Tazimina Falls on the Tazimina River near Iliamna. There are no existing facilities at the site. All the following facility sizes, elevations, and capacities described are based on the Interim Feasibility Assessment by Stone and Webster Engineering Corporation. 1. a. Dam and Spillway - Because the proposed project is a run-of-river project with shoreline intake, no forebay dam or structure would be required. b. | Penstock - The penstock from the intake to the powerhouse would be 3-1/2 ft. diameter and approximately -1400 ft. long. The penstock would exit the intake structure and be buried along the river channel until the river bottom drops enough for it to emerge and be supported from the rock on the side of the canyon. c. Powerhouse - The powerhouse would be a prefabricated, insulated building on a_ reinforced concrete substructure located 2408/520(11) -8- approximately 700 ft. downstream of the falls. The approximate dimensions of the building would be 62 ft. long and 23 ft. wide. d. Tailrace - The tailrace would be an excavated concrete channel discharging directly into the natural channel of the Tazimina River. It would be approximately 20 ft. wide and 12 ft. long. e. The intake structure would be located approximately 700 ft. upstream of the falls and consist of a shoreline drop inlet with 6-1/2 ft. x 6-1/2 ft. trashrack and a similarly sized gate. 2. The proposed project does not have a reservoir; no storage is provided. Maximum water surface elevations in the river would not be increased. 3. Primary Transmission Line - A three phase 24 kV line would be constructed approximately 6.5 miles in length. This line would interconnect with the existing INNEC system by tying into the existing transmission line which runs along the existing road to Newhalen. 4. Turbines and Generators - Two turbines are presently proposed, each with a rated capacity of 800 HP and connected through a speed increaser to a synchronous generator with a rated capacity of 700 KW at 9.0 power factor. Estimated average annual energy produced would be 5.7 million kilowatt hours. The average net hydraulic head is approximately 100 ft. 4.0 Analysis Data 4.1 Analysis Parameters Load Information - Load refers to the electrical generation consump- tion for each village. These figures were derived from Power Cost Equalization data, information from the P.E. Company, and Alaska Electric Power Statistics (1984 Edition). Load Growth I-N-N Electrical Cooperative - 3% annual increase through 2002 Pedro Bay - 2% annual increase through 2002 Keyes Point* - Approximately 35% annual increase through 1989 Approximately 15% annual increase through 1991 Approximately 9% annual increase through 1998 Approximately 0% annual increase after 1998 * Based on figures supplied by Kijik Corp. (developer) 2408/520(12) -9- 4.2 Power Authority guidelines for economic analysis include: ° 1. ee Two scenarios for projected fuel escalation: -4% for 1985, 0% for two years, then 2% for 17 years. -4% for 1985, then 0% for 17 years. Cost of debt is 9% Real discount rate is 3.5% Inflation is held to 0% for purposes of the economic analysis s Economic Life of projects: Cost Data 4.2.1 4.2.2 2408/520(13) Hydroelectric Diesel Generator 50 Years 20 Years (Primary) 30 Years (Standby) Diesel - Installed cost per KW: $800 0&M (Generation Only): - $42,000/year for Primary diesel operation - $ 5,000/year for Standby diesel operation Interties Power Plant and Structures, including intake and penstock Reservoirs, Dams & Waterways Waterwheels, Turbines, Generators Accessory Electrical Equipment Misc. Power Plant Equipment Roads Substation Structures and Equipment Transmission Plant Camp Mobilization and Demobilization Unadjusted Subtotal Adjustment for cost variation in Alaska @25% Adjusted Subtotal Allowance for Indeterminates (@15% on equip.) Allowance for Indeterminates (@25% on civil) Estimated Total Direct Cost (June 1985) Indirect and Distributable Costs @20% TOTAL COST (Rounded, Interest During Construction excluded) *stone and Webster Engineering Corporation (Reconnaissance level estimate) -10- * Tazimina River Hydroelectric Project (1.4MW) $1,326,700 396 ,300 764 ,800 179 ,600 54,700 828 ,000 37 ,300 220 ,000 250 ,000 $4,057,400 1,014,400 35,071,800 235 ,600 __ 875,300 $6,182,700 2 236,500 $7.5 Million Hydro plant O&M costs estimated at $119,000 per year. Intertie 08M costs estimated at $8,000 per year for line and $500 per mile to Pedro Bay and Keyes Point. 4.3 Present Worth Analysis The results of the economic analysis of the alternatives are sum- marized in Table 5. TABLE 5 COST OF ELECTRICAL ENERGY SUPPLY (December 1985 Dollars) 1985-2038 Planning Period 1 2 3 Iliamna Iliamna Newhalen Iliamna Newhalen Nondalton Newhalen Nondalton Pedro Pay Nondalton Pedro Bay Keyes Point Base Case Present Worth ($000) 14,300 16 843 25,154 Present Worth ($000) 11,293 12,229 18,616 Present Worth Ratio 1227 1.38 1535 In present worth analysis the base case is the standard against which all alternatives are measured. The present worth value for a given case is all of the associated costs over the study period discounted back to the base year. To obtain a present worth ratio, the present worth of the al- ternative is divided into the present worth of the base case. Ratios greater than 1.0 indicate that an alternative is economically more attractive than the base case (essentially the do-nothing case). Therefore, in each of the three alternative cases studied, the present worth costs of continuing the current diesel generation system for electrical energy generation is more costly than the alternative hydroelectric cases. Sensitivity analyses indicate that using the lowest scenario for projected fuel escalation rates (-4% for 3 years, then 0% for 17 years) or increasing the alternative capital costs by 20% show that the present worth costs of the alternatives are equal to or less than the diesel base case. 2408/520(14) ei 5.0 Conclusion On the basis of the economic analysis utilizing available feasibility level information, the best alternative power supply plan for the Iliamna/Lake Clark subregion of Bristol Bay appears to be the 1.4 MW Tazimina Run-of-River Hydroelectric Project. Installing hydroelectric generation and interties to Iliamna, Newhalen, Nondalton, Pedro Bay and Keyes Point costs significantly less than maintaining the present diesel generation. The preliminary permit application to FERC for feasibility and license of the Tazimina project should be pursued. Additionally, a feasibility level cost estimate, or a more exact cost estimate should be obtained to ensure that the Tazimina project is indeed viable. Comments on the preliminary permit application by resource agencies indicate a desire to obtain further fisheries and archaeological data on the site. The full power production capabilities of the hydroelectric project have not been’ fully exhausted. Therefore, investigation to identify more villages in the area with economic intertie potential should continue. These may include extensions of the system to Kokhanok on Lake Iliamna and Port Alsworth on Lake Clark. 2408/520(15) Ee REFERENCES R.W. Beck and Associates, Inc., 1981. Lake Elva Project Detailed Feasibility Analysis R.W. Retherford Associates, 1980. Reconnaissance Study of the Lake Elva and Other Hydroelectric Power Potentials in the Dillingham Area. Stone and Webster Engineering Corporation, 1982. Bristol Bay Regional Power Plan Detailed Feasibility Analysis, Interim eas ty Assessment. Stone and Webster Engineering Corporation, 1985. Updated Economic Evaluation of the Bristol Bay Regional Power Plan. 2408/520(16) -13-