Loading...
HomeMy WebLinkAboutREFAC Meeting agenda and minutes 4-4-2012[= ALASKA. @@D ENERGY AUTHORITY RENEWABLE ENERGY FUND ADVISORY COMMITTEE MEETING Centennial Hall Convention Center, Egan Room 101 Egan Drive, Juneau, Alaska April 4, 2013 11:30 - 1:30 pm AGENDA . Call to Order Beltrami Roll Call (Committee Members, Staff, Public, Phone) Welcome New Committee Members Beltrami Agenda Comments (changes/additions/deletions) Approval of Meeting Minutes — January 8, 2013 RE Fund Program Update & Performance Briefing Skaling Suggested Changes for Round 7 Skaling 1 2 3 4 5. Public Comments (limit of 2 minutes) 6 7 8 9. Next Meeting Date Beltrami 1 0. Adjournment Beltrami To participate via teleconference dial 1-800-315-6338 and when prompted enter 3074#. 813 West Northern Lights Boulevard Anchorage, Alaska 99503 1 907.771.3000 Toll Free (Alaska Only) 888.300.8534 F 907.771.3044 Renewable Energy Fund Advisory Committee Meeting January 8, 2013 Alaska Energy Authority Board Room, Anchorage, Alaska i, Call to Order MINUTES The Renewable Energy Fund Advisory Committee (REFAC) convened at 10:08 a.m., with Vice Chair Chris Rose presiding. 2: Roll Call Committee Members Vice Chair Chris Rose Brad Reeve (phone) Jim Posey Jodi Mitchell 3. Public Comments No public comments were made. 4. Agenda Comments AEA Staff Teri Webster Shawn Calfa Sandra Moller Alan Baldivieso Doug Ott Josh Craft Emily Binnian Yolanda Inga Sean Skaling Chris Gobah Jed Drolet Nick Szymoniak Devany Plentovich Rich Stromberg (phone) Sara Fisher-Goad No comments on the agenda were made. 5. Approval of meeting minutes - November 15, 2012 Other Participants Representative Paul Seaton (phone) Pat Walker, Senator Hoffman's Office (phone) Darwin Peterson, Senator Stedman's Office (phone) Donovan Walker, Accu- Type Depositions Brian Bjorkquist, Department of Law MOTION: Ms. Mitchell moved to approve the meeting minutes from November 15, 2012, Renewable Energy Fund Advisory Committee meeting. Seconded by Mr. Posey. The minutes were unanimously approved. Renewable Energy Fund Advisory Committee Meeting Minutes Page 2 of 5 January 8, 2013 6. Review AEA Round 6 Recommendations Mr. Skaling explained the methodology AEA used in determining the list of recommended projects for Round 6. He provided members a prepared methodology document titled "Alaska Renewable Energy Fund Round 6, Method for Proposal Evaluation and Grant Recommendation." Mr. Skaling recommended the Committee respond by Thursday with comments and he is also available to answer questions at this point. Vice Chair Rose asked Mr. Skaling how public support is measured for a project. Mr. Posey asked Vice Chair Rose to clarify his question regarding public support for what REFAC does or local support for the individual project. Vice Chair Rose stated his question is about local support for the project. Mr. Skaling directed the Committee to page 13 of the report. He stated there are different points given for numbers of letters of support or a resolution from the city or village council. Mr. Skaling said letters of opposition do not count toward the measurement. He believes there could be a better way to do this, but doesn't have a recommendation now as to what that would be. Vice Chair Rose requested to see if there are any examples of where there was both opposition and support of a project. Ms. Mitchell asked Mr. Skaling if the term "local entity" included individuals. Mr. Skaling read from the document, "support demonstrated by a local entity, other than applicant, or support by two local entities or three local entities." He read the footnote, "letters of support from legislators do not count toward the criterion." Mr. Posey asked Mr. Skaling if there has been a problem of local opposition with any of the projects funded so far. Mr. Skaling could not think of any. Mr. Skaling stated with the regional spreading, sometimes projects are taken from down deep on the list and ranking them up high and he wonders if that is displacing good projects or if they are going to be projects that succeed. Mr. Skaling said it is better for a project to have a high benefit/cost ratio. Mr. Posey asked why the solar project has a low benefit/cost ratio. Mr. Skaling stated this was different add on because it is a solar thermal connecting to a biomass and boiler system. Vice Chair Rose asked for clarification from Mr. Skaling whether he is asking the Committee to approve a project list that has 25 million dollars or a project list that has 50 million dollars of more. Mr. Skaling agreed the Committee needs to approve either a project list of 25 million dollars or a project list of 50 million dollars or more. Mr. Posey asked Vice Chair Rose what the legislation asks the Committee to do. Vice Chair Rose stated the legislation doesn't require the Committee to approve any amount. Mr. Posey suggested approving the project list of 50 million dollars. Mr. Reeve agreed with Mr. Posey and stated if we are still seeing good projects that area surfacing during every round, then we should ask for the higher amount. Ms. Mitchell stated she agreed, as long as these are all good projects. Renewable Energy Fund Advisory Committee Meeting Minutes Page 3 of 5 January 8, 2013 Vice Chair Rose agreed and will now focus on the pages that have the raw rankings and the rankings in regional order. Mr. Posey asked Vice Chair Rose how often the Legislature has selected something on the list different from what the Committee recommended. Vice Chair Rose stated he doesn't know of any time that has happened. Vice Chair Rose asked the Committee if the recommendation should be limited to 50 million dollars or to the 57 million dollars of recommend projects. Mr. Posey suggested giving the entire list of recommended projects of 57 million dollars. Vice Chair Rose asked Mr. Skaling if a project is really viable if it doesn't receive the full funding they ask for. Mr. Skaling gave an example of giving partial funding for a project in order to break the project up in steps. The request from the project would be to see the final design first in order to gain confidence before providing them with the entire amount for the project. Vice Chair Rose asked Mr. Skaling to give the explanation for the partial funding recommendations for the Shishmaref project and the Allison Creek project. Mr. Skaling said regarding the Shishmaref project, the state does not have a policy on investing infrastructure in communities that are likely to move, but he believes that Shishmaref is building a transportable bulk fuel facility. He stated this funding would be for a feasibility study and not infrastructure. Mr. Reeve commented Shishmaref is trying to design a moveable tank farm system, but leaves many open questions. Vice Chair Rose asked Ms. Moller whether or not Shishmaref has actually chosen another location for the community. Ms. Moller state they are working on a relocation plan now and believes they have narrowed it to three different locations inland, but the funding for the infrastructure has not been identified. Mr. Skaling asked Mr. Craft whether the projected Shishmaref feasibility study where they are located now would work for where they would be located later. Mr. Craft stated it depends on where the new location of the community is and there is not enough information to determine whether the feasibility study would work for the relocation. Vice Chair Rose recommended the Committee discuss the issues regarding funding projects in communities that are actively looking to move. Mr. Posey commented sustainability is part of the selection process and includes viability of the community. Mr. Ott responded to Vice Chair Rose's question regarding the Allison Creek hyrdro-electric project. He stated the project has been at FERC for 10 months and the issuance of the license to construct should be issued within a few months. Mr. Ott believes it is a solid project. Vice Chair Rose requested Mr. Skaling to explain one of the concerns raised with the West Creek Hydroelectric Project. Vice Chair Rose asked what process is AEA going to use to determine when they stop funding reconnaissance and feasibility projects that compete for the same load. Mr. Skaling said it is a challenging question they have struggled with and the focus Renewable Energy Fund Advisory Committee Meeting Minutes Page 4 of 5 January 8, 2013 of the analysis is on technical economic feasibility, clear power sales agreements and community support versus opposition. Vice Chair Rose asked for an explanation why there is a recommendation for full funding for the West Creek Hydroelectric Project, but there is a list of four different concerns. Mr. Ott said that as a project manager and working with the scoring, the merits of each project is looked at according to the guidelines. Mr. Ott stated in this particular case, it is near the bottom of the recommended list and not within the 50 million-dollar list. Vice Chair Rose stated he wasn't trying to pick on this project in particular, but raising it as an example where there are competing projects and how does AEA reconcile competition. He noted at some point there has got to be a process for reconciling that competition. Mr. Ott stated they try to be consistent in the scoring with the previous rounds and see if there is any new information in the application that is helpful. Ms. Mitchell asked for an explanation regarding the Walker Lake Hydro Feasibility Project's recommendation. Mr. Ott stated there were four reasons concerning the scoring and overall perspective on Walker Lake. He said the most significant reason was the amount of diesel to be displaced by this project was actually quite low and that is why it scored low. Vice Chair Rose asked Mr. Skaling to explain how the B/C analysis might be different with transmission and feasibility studies. Mr. Skaling stated the B/C analysis gets more accurate the farther along in the stages of the project. He said they take into consideration the best information they have from the applicant and statewide modeling. Mr. Szymoniak wanted to get guidance on one of the projects which requested funds to build out a distribution system to connect a load and wanted to know if this is the intent of the program. Mr. Bjorkquist stated the statute includes both transmission and distribution. He believes the intent is transmission or distribution to connect a renewable energy project with the transmission or distribution system. Mr. Bjorkquist stated there has to be that link to the renewable energy project, but there's no distinction between transmission and distribution in the statutory language. Vice Chair Rose stated he was concerned this project, which would connect load to distribution, does not meet the requirements of the program and said this would open the flood gates to other potential applications that would also not conform to the statute. He asked for a clarification regarding if tidal energy is now considered commercial technology, but river technology is still under the EETF. Mr. Skaling stated that is a fair assessment. Ms. Fisher-Goad stated the goal is to make sure that one fund or the other covers these issues so there is no gap. Ms. Mitchell asked for clarification regarding methodology and any changes that have been made. Mr. Skaling stated the funding becomes available on July Ist. He stated that this year they have delayed when the applications are due by a month. Vice Chair Rose requested setting up another meeting in early March to discuss some of the recommendations that were made by the VEIC reports. Renewable Energy Fund Advisory Committee Meeting Minutes Page 5 of 5 January 8, 2013 MOTION: Mr. Posey moved to approve the recommended list of projects of 57 million dollars. Seconded by Ms. Mitchell. The recommended list was unanimously approved. 7. NEXT MEETING DATE Mr. Reeve requested to discuss issues regarding communities who may have good ideas, but may not have the resources to put together projects in the right form to get them to the next stage. Vice Chair Rose stated he will ask for that topic to be placed on the agenda for the next meeting. The next meeting will be scheduled for a date in March 2013, possibly held in Juneau, and then a follow-up meeting in May 2013. 9. ADJOURNMENT The meeting was adjourned at 12:41 p.m. DRAFT: Alaska Energy Authority Recommended Changes to Renewable Energy Fund Round 7 Request for Applications April 4, 2013 REFAC Meeting # Recommended Change 1 2 3 4 S 6 Heat RFA: Issue a separate RFA for heat projects. Set a target allocation of 30-40% (or $10M-$15M) of funding for heat projects. The application and scoring will be specific to heat projects. AEA will provide two recommendations lists to the legislature. Funding Limits: Better define project funding limits by phase. Funding Limits: Modify the list of locations with a $4M versus $8M construction funding limit. Geothermal Funding: Adjust funding limits on feasibility studies for geothermal projects. Heat Cost of Energy: When scoring heat projects for cost of energy, use the cost of heating fuels. Biomass Matching Funds: Allow points for biomass projects that harvest the first year’s supply of biomass during the design phases. Ceol aee) yu mte) Nr | Heating projects are different from electrical projects and should compete separately for funding. Heating represents 70-80% of non- transportation energy use in Alaska, yet represent only 8 percent of funding in Round 5, 10% in Round 6 if funded at $25M level. To provide more clarity to grant applicants. As cost of energy changes in parts of the state, the higher funding limits for higher cost areas should change as well. Heat projects should be based on heat costs. Unlike most resources where feasibility studies are relatively inexpensive as compared to final construction, the feasibility phase of geothermal projects typically involves drilling exploration wells to better understand the geology and hydrology. Previously used cost of electricity only. Rate heat projects based on heat costs. Encourage communities to harvest and season the first year’s wood fuel supply ahead of time by giving additional points in the match scoring. Ne) tty The RFA and scoring will be substantially the same, but adjustments can be made to better match the application type. Heat would include any project that produces heat as the primary energy output (biomass, heat recovery, geothermal for direct heat use, etc.). Two separate recommendation lists would be provided to the legislature, one for heat projects, one for all other projects. See note 1 below for proposed wording. See note 1. For heat RFA, $8M limit for communities without natural gas for heat, $4M for those with natural gas. For electrical RFA, $8M limit for communities with higher than average electrical costs, $4M limit for communities with lower than average electrical costs. AEA will produce a community list with the RFA. See note 1. Staff recommends allowing an additional $2M for the combined maximum expenditure for the reconnaissance and feasibility studies. The limit would still be 20% of anticipated construction cost, with a maximum of $4M. Any funding used over the typical $2M maximum would be deducted from the maximum funding available from the ensuing final design and construction phases so the maximum grant allowance _ remains the same for geothermal as other projects. The cost of energy is the single largest weighted factor in the Stage 3 review. Heat projects should be scored based on the cost of heating fuels instead of the cost of electricity, as is already performed in the economic analysis. # Recommended Change 7 Heat District: In RFA, address whether heat districts are qualified to apply. 8 Efficiency Requirement: Require that heat projects are applied to energy efficient buildings only. 9 Data Collection: Better define operational data required post- construction. 10 Non-Public Benefits: Better define how AEA will score the economic and public value of electrical sales to non- public markets, such as saw mills, cruise ships, mines, etc. 11 Transmission and Distribution: Better define eligible transmission and distribution projects. 12 Design Review: Add language to the RFP requesting wind design and final design documents 30 days prior to application deadline. 13. Matching Funds: Simplify the scoring of matching funds. 14 Scoring Local Support: Improve the method of measuring local support. Reason/Problem Solved Interested applicants have requested clarification regarding whether heating districts would be allowed to apply. _ RE projects should not waste the energy generated. Some projects are not reporting or able to report the data needed for precise measurement of impact, including house energy and accurate O&M costs. Clarify and formalize the approach to be clearer with applicants and to gather the appropriate information for the economic evaluation. Provide greater clarity to applicants. | Receiving design reviews early allows time for adjustments and discussion with AEA program managers and time for a thorough review prior to scoring. Current system is overly complex. The current system of counting letters of support may not correlate closely to the actual level of local support. Neh Additional work needed to check that this change is within statutory and regulatory parameters. The applicant would have to demonstrate that they meet certain criteria, such as land access, energy sales agreements, technical and economic feasibility, etc. Applicant would prove efficiency either through evidence of low energy use intensity (kBTU/square foot/year) or evidence of a recent energy _ audit and implemented measures. Grant agreement will now include project-specific data required to be reported for five years after startup. Possibly offer “black box” data logging and uploading. The application will request additional information from applicants with significant planned industrial energy sales so the economic value of the project can be better understood and calculated. The fund’s purpose is to | provide a public benefit, therefore only direct and indirect (to the extent known) public benefits will count toward the economic score. Other benefits are captured in separate scoring criteria. | The applications are now due a month later than in previous years, but the designs would maintain approximately the same due date as in previous years. Simplify to score on percentage basis mostly, with some weight for type of match (previous non-state investment in project, state grant, federal grant, private investment, in ascending order of preference). New measurement method in discussion. Note 1 Grant Funding Project Limits Table used in Round 6: Project Type/Phase Grant Limits Biofuel projects where the Applicant Limited to reconnaissance and does not intend to generate electricity or | feasibility phases only. heat for sale to the public. Biofuel is a solid, liquid or gaseous fuel produced from biomass. Final Design and Permitting $500,000 or no more than 20% |__ of anticipated construction cost Construction projects on the ‘Railbelt’, $4 million per project Juneau, Sitka, Ketchikan, Wrangell, and Petersburg electrical grids Construction in all other areas of the $8 million per project State not mentioned above Below is the revised table: Grant Limits by Location Phase Locations with natural gas (heat), | Locations without natural gas (heat), or cost or cost of electricity below state of energy above state average, see list average, see list (electrical) (electrical) Phase I, Reconnaissance The per-project total of Phase | and II is limited to 20% of anticipated construction Phase Il, cost (Phase IV), not to exceed $2M. Feasibility and Design Phase Ill, 20% of anticipated construction cost (Phase IV), and counting against the total Final Design and Permitting | construction grant limit below. Phase IV, S4M per project, including final $8M per project, including final design and Construction design and permitting (Phase III) permitting (Phase Ill) costs, above. costs, above. Exceptions Biofuel projects Biofuel projects where the Applicant does not intend to generate electricity or heat for sale to the public are limited to reconnaissance and feasibility phases only at the limits expressed above. Biofuel is a solid, liquid or gaseous fuel produced from biomass. Geothermal projects The per-project total of Phase | and II for geothermal projects is limited to 20% of anticipated construction cost (Phase IV), not to exceed $4M. Any amount above the usual $2M spent on these two phases combined shall reduce the total Phase III and Phase IV grant limit by the same amount, thereby keeping the same total dollar cap as all other projects. This exception recognizes the typically increased cost of the feasibility stage due to test well drilling. Alaska Energy Authority Recommended Changes to Renewable Energy Fund Round 7 Request for Applications April 4, 2013 REFAC Meeting # Recommended Change Reason/Problem Solved Notes 1 Heat RFA: Issue a separate RFA for Heating projects are different from The RFA and scoring will be substantially the same, but adjustments can heat projects. Set a target allocation _ electrical projects and should compete _ be made to better match the application type. Heat would include any of 30-40% (or $10M-$15M) of funding separately for funding. Heating project that produces heat as the primary energy output (biomass, heat for heat projects. The application and represents 70-80% of non- recovery, geothermal for direct heat use, etc.). Two separate scoring will be specific to heat transportation energy use in Alaska, yet | recommendation lists would be provided to the legislature, one for heat projects. AEA will provide two represent only 8 percent of funding in projects, one for all other projects. recommendations lists to the Round 5, 10% in Round 6 if funded at legislature. $25M level. 2 Funding Limits: Better define project | To provide more clarity to grant See note 1 below for proposed wording. funding limits by phase. applicants. 3. Funding Limits: Modify the list of As cost of energy changes in parts of See note 1. For heat RFA, $8M limit for communities without natural gas locations with a $4M versus $8M the state, the higher funding limits for for heat, $4M for those with natural gas. construction funding limit. higher cost areas should change as well. For electrical RFA, $8M limit for communities with higher than average Heat projects should be based on heat __ electrical costs, $4M limit for communities with lower than average costs. electrical costs. AEA will produce a community list with the RFA. 4 Geothermal Funding: Adjust funding Unlike most resources where feasibility | See note 1. Staff recommends allowing an additional $2M for the limits on feasibility studies for studies are relatively inexpensive as combined maximum expenditure for the reconnaissance and feasibility geothermal projects. compared to final construction, the studies. The limit would still be 20% of anticipated construction cost, with feasibility phase of geothermal projects a maximum of $4M. Any funding used over the typical $2M maximum typically involves drilling exploration would be deducted from the maximum funding available from the ensuing wells to better understand the geology __ final design and construction phases so the maximum grant allowance and hydrology. remains the same for geothermal as other projects. 5 Heat Cost of Energy: When scoring Previously used cost of electricity only. | The cost of energy is the single largest weighted factor in the Stage 3 heat projects for cost of energy, use Rate heat projects based on heat costs. review. Heat projects should be scored based on the cost of heating fuels the cost of heating fuels. instead of the cost of electricity, as is already performed in the economic analysis. 6 Biomass Matching Funds: Allow Encourage communities to harvest and points for biomass projects that season the first year’s wood fuel supply harvest the first year’s supply of ahead of time by giving additional biomass during the design phases. points in the match scoring. # I 8 9 10 11 12 13 14 Recommended Change Heat District: In RFA, address whether heat districts are qualified to apply. Efficiency Requirement: Require that heat projects are applied to energy efficient buildings only. Data Collection: Better define operational data required post- construction. Non-Public Benefits: Better define how AEA will score the economic and public value of electrical sales to non- public markets, such as saw mills, cruise ships, mines, etc. Transmission and Distribution: Better define eligible transmission and distribution projects. Design Review: Add language to the RFP requesting wind design and final design documents 30 days prior to application deadline. Matching Funds: Simplify the scoring of matching funds. Scoring Local Support: Improve the method of measuring local support. Reason/Problem Solved Interested applicants have requested clarification regarding whether heating districts would be allowed to apply. RE projects should not waste the energy generated. Some projects are not reporting or able to report the data needed for precise measurement of impact, including house energy and accurate O&M costs. Clarify and formalize the approach to be clearer with applicants and to gather the appropriate information for the economic evaluation. Provide greater clarity to applicants. Receiving design reviews early allows time for adjustments and discussion with AEA program managers and time for a thorough review prior to scoring. Current system is overly complex. The current system of counting letters of support may not correlate closely to the actual level of local support. Tet Additional work needed to check that this change is within statutory and regulatory parameters. The applicant would have to demonstrate that they meet certain criteria, such as land access, energy sales agreements, technical and economic feasibility, etc. Applicant would prove efficiency either through evidence of low energy use intensity (kBTU/square foot/year) or evidence of a recent energy audit and implemented measures. Grant agreement will now include project-specific data required to be reported for five years after startup. Possibly offer “black box” data logging and uploading. The application will request additional information from applicants with significant planned industrial energy sales so the economic value of the project can be better understood and calculated. The fund’s purpose is to provide a public benefit, therefore only direct and indirect (to the extent known) public benefits will count toward the economic score. Other benefits are captured in separate scoring criteria. The applications are now due a month later than in previous years, but the designs would maintain approximately the same due date as in previous years. | Simplify to score on percentage basis mostly, with some weight for type of match (previous non-state investment in project, state grant, federal grant, private investment, in ascending order of preference). New measurement method in discussion. Note 1 Grant Funding Project Limits Table used in Round 6: Project Type/Phase Grant Limits heat for sale to the public. Biofuel is a solid, liquid or gaseous fuel produced Biofuel projects where the Applicant Limited to reconnaissance and does not intend to generate electricity or | feasibility phases only. State not mentioned above from biomass. | Final Design and Permitting $500,000 or no more than 20% of anticipated construction cost Construction projects on the ‘Railbelt’, $4 million per project Juneau, Sitka, Ketchikan, Wrangell, and Petersburg electrical grids Construction in all other areas of the $8 million per project Below is the revised table: Grant Limits by Location Phase Locations with natural gas (heat), or cost of electricity below state average, see list (electrical) Locations without natural gas (heat), or cost of energy above state average, see list (electrical) Feasibility and Design Phase |, Reconnaissance The per-project total of Phase | and II is limited to 20% of anticipated construction Phase Il, cost (Phase IV), not to exceed $2M. Final Design and Permitting | construction grant limit below. Phase Ill, 20% of anticipated construction cost (Phase IV), and counting against the total Phase IV, S4M per project, including final Construction design and permitting (Phase III) costs, above. S8M per project, including final design and permitting (Phase III) costs, above. Exceptions Biofuel projects Biofuel projects where the Applicant does not intend to generate electricity or heat for sale to the public are limited to reconnaissance and feasibility phases only at the limits expressed above. Biofuel is a solid, liquid or gaseous fuel produced from biomass. Geothermal projects The per-project total of Phase | and II for geothermal projects is limited to 20% of anticipated construction cost (Phase IV), not to exceed $4M. Any amount above the usual $2M spent on these two phases combined shall reduce the total Phase III and Phase IV grant limit by the same amount, thereby keeping the same total dollar cap as all other projects. This exception recognizes the typically increased cost of the feasibility stage due to test well drilling.