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HomeMy WebLinkAboutREF 2019 status report Electronic round 12 3.18.19RENEWABLE ENERGY FUND STATUS REPORT January 2019 2 | RENEWABLE ENERGY FUND STATUS REPORT For more than a decade, the REF has provided benefits to Alaskans by assisting communities across the state to both reduce and stabilize the cost of energy. The program has also created jobs, used local energy resources and kept money in local economies. The REF has provided funding for the development of qualifying and competitively selected renewable energy projects in Alaska. The program is designed to produce cost-effective renewable energy for both heat and power. As the program has matured, the quality of the proposed projects has grown, as has the knowledge base for designing, constructing and operating renewable energy projects in Alaska’s diverse climates and terrain. Operational REF projects have an overall benefits cost ratio of 2.5 based on total known project cost, of which State funding is only a portion. Investing in renewable energy provides price stability that will save Alaska communities millions of dollars for decades to come. INTRODUCTION CONTENTS: This 2019 status report has two primary parts and an online appendix: 1. A summary analysis of projects funded to date including the performance and savings associated with projects that were generating heat and power at the end of calendar year 2017 (pg. 6-7). 2. A summary of AEA’s recommendations to the legislature for consideration in FY20. Recommendations were developed in collaboration with the Renewable Energy Advisory Committee and include consideration of a future solicitation (pg. 9). The online appendix of individual project scopes and statuses for funded projects is available in searchable PDF form on AEA’s website at www.akenergyauthority.org. The original evaluations from all years, including application summaries and economic evaluations, are also available on AEA’s website. 0 5 10 15 20 25 30 35 2009 Actual 2010 Actual 2011 Actual 2012 Actual 2013 Actual 2014 Actual 2015 Actual 2016 Actual 2017 Actual 2018 Projected 2019 Projected 2020 ProjectedFuel Displaced (diesel equivalent, gallons)MillionsBiomass Heat Pump Heat Recovery Hydro Biofuel Solar Transmission Wind Wind to Heat FUEL DISPLACED (diesel equivalent, gallons)MILLIONSFigure 1 shows continued growth in energy generation and fuel displacement. Renewable Energy Fund projects saved Alaska communities more than 30 million gallons of diesel fuel (equivalent) in calendar year 2017, an annual savings of nearly $74 million. The majority of projects that came online in 2017 were heat projects which now comprise 26 percent of all projects. An additional 14 projects came online in calendar year 2018 including 12 heat and two electric generation projects statewide. 2010 ACTUAL 2011 ACTUAL 2012 ACTUAL 2013 ACTUAL 2015 ACTUAL 2016 ACTUAL 2017 ACTUAL 2019 PROJECTED 25 20 15 10 5 0 Wind / Heat Wind Transmission Biofuel Solar PV Hydro Heat Recovery Heat Pumps Biomass 2018 PROJECTED 30 2014 ACTUAL This status report is provided to the Alaska Legislature in accordance with the program’s legislative reporting requirements as per AS 42.45.045(d)(3). From 2008 to 2018, appropriations totaling $268 million were issued for Renewable Energy Fund (REF) projects. That State funding has been matched with hundreds of millions of dollars in funding from local, and other non-State sources, to develop projects designed to reduce and stabilize the cost of energy in Alaska. In 2016 and again in 2017, recognizing the State’s fiscal challenges and limited potential for new REF funding, Alaska En- ergy Authority (AEA), in consultation with the Renewable Energy Fund Advisory Committee (REFAC), made the decision to not release a solicitation for new applications for what would have been Rounds X and XI. Instead, the list of projects that was evaluated and recommended for funding after the 2015 solicitation was put forward initially in January 2016 and then again in 2017 and 2018. In 2016 and 2017, there were no State REF appropriations and no new projects were initiated. In calendar year 2018, $11 million in FY2018 excess earnings from the Power Cost Equalization (PCE) fund was appropriated per AS 42.45.085(d)(2) to the Renewable Energy Fund. Eight REF projects from the list recommended in 2016, 2017 and 2018 received $11 million in funding in the FY19 budget. 2020 PROJECTED JANUARY 2019 | 3 $0 $10 $20 $30 $40 $50 $60 $70 Millions Figure 4 shows cumulative grant funding by AEA energy region totaling $268 million in rounds I-IX. The three highest regional recipients to date are Southeast with $63.9 million, Lower Yukon-Kuskokwim with $38.6 million, and Railbelt with $28.9 million. $0 FUNDED GRANTS BY ENERGY REGION ($ millions) ROUNDS I-IX FUNDED GRANTS BY ENERGY RESOURCE ($ millions) ROUNDS I-IX Figure 2 below demonstrates the wide geographic distribution of REF projects across all areas of the state. Most funding is provided to high cost-of-energy communities. Figure 3 shows funding by energy resource, with wind and hydro grants combined making up just less than 70 percent of total funding. RENEWABLE ENERGY FUND PROJECTS ROUNDS I-IX Hydro $92.1 Biomass $27.0 Heat Recovery $21.1 Heat Pumps $17.2 Trans- mission $14.6 Ocean/ River $3.9 Solar $0.5 Other $0.1 Wind $91.6 Aleutians Bering Straits Bristol Bay Copper River/Chugach Kodiak Lower Yukon-Kusko North Slope NW Arctic Railbelt Southeast Statewide Y-K/Upper Tanana $10 $20 $30 $40 $50 $60 $70 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 PV Capital Cost PV Benefits$ MillionsBiofuel Biomass Heat Pumps Heat Recovery Hydro Solar Transmission Wind • The present value of the capital expenditures used to build the 81 projects that were operational by the end of calendar year 2017 is $583 million and the present value of benefits is $1.475 billion. Based on the present value of capital cost and future estimated benefits, these projects have an overall benefit-cost ratio of 2.53. • For every dollar invested, these projects have an estimated return of $2.53. It is important to note that the REF invested $171 million of total project costs in these 81 projects. The balance was invested from other sources. • For the first time, the technology with the largest number of generating projects is heat recovery, at 26 percent. These projects take heat from diesel powerhouse engines that would otherwise be wasted and put that heat to use in buildings and water systems, displacing thousands of gallons of costly heating fuel. • Biomass projects continue to come online and currently account for 20 percent of all active projects. Wind projects make up an additional 23 percent of operational projects. • The large majority of both capital cost and future benefit are from hydroelectric and wind projects. This is because of a handful of relatively large hydro and wind projects in more populated parts of the state including the Railbelt, Kodiak and Sitka. • Fourteen additional renewable projects have come online or first began reporting performance data in calendar year 2018. These projects include: seven heat recovery, four biomass, one heat pump, one hydroelectric and one wind. Performance of these projects will be included in next year’s report. Renewable Energy Fund Rounds I – IX Grant and Funding Summary •‘ˆ‡…‡„‡”ʹͺǡʹͲͳͺ–‡†‹–‡†ͳǤͳ͹Ǥͳͻ Round I Round II Round III Round IV Round V Round VI Round VII Round VIII Round IX Totals Applications received 115 118 123 108 97 85 86 67 52 849 Applications funded 80 30 25 74 19 23 26 10 8 295 Active grants by Round 4 2 3 8 6 8 11 9 3 54 Amount requested1 ($M) $ 453.8 $ 293.4 $ 223.5 $ 123.1 $ 132.9 $ 122.6 $ 93.0 $ 43.8 $ 49.7 $ 1,535.8 AEA recommended ($M) $ 100.0 $ 36.8 $ 65.8 $ 36.6 $ 43.2 $ 56.8 $ 59.1 $ 20.6 $ 36.1 $ 455.0 Appropriated ($M) $ 100.0 $ 25.0 $ 25.0 $ 26.62 $ 25.9 $ 25.0 $ 22.83 $ 11.54 $ 11.0 $ 272.9 Match Budgeted ($M)5 $ 31.1 $ 4.5 $ 12.4 $ 83.3 $ 9.1 $ 7.8 $ 10.7 $ 0.3 $ 6.2 $ 165.4 1. Total grant amount requested by all applicants, including those not recommended. 2. $26.6 Million was appropriated for Round IV, and an additional $10.0 million was reappropriated from rounds I, II and III for use in Round IV. 3. $20.0 Million was appropriated for Round VII, and an additional $2.8 million was reappropriated from previous rounds for use in round VII. 4. $9.5 million was reappropriated from Mt. Spurr Geothermal Project (FSSLA 2011 CH5, P137) for Round VIII and $2 million was reappropriated from previous rounds for use in Round VIII. 5. Represents only amounts recorded in the grant document and does not capture all funding needed to complete all phase of the project. 6. Round IX funds were requested for FY17 but there were no appropriations made until FY19. 1. Total grant amount requested by all applicants including those not recommended. 2. $26.6 million was appropriated for round IV, and an additional $10 million was re- appropriated from previous rounds for use in round IV. 3. $20 million was 4 | RENEWABLE ENERGY FUND STATUS REPORT PERFORMANCE & SAVINGS CURRENTLY OPERATING REF PROJECTS - 2017 GRANT AND FUNDING SUMMARY ROUNDS I THROUGH IX appropriated for round VII, and an additional $2.8 million was re-appropriated from previous rounds for use in round VII. 4. $9.5 million was re-appropriated from the Mt. Spurr geothermal project (FSSLA 2011 CH5, P137) for round VIII, and an additional $2.0 million was re-appropriated from previous rounds for use in round VIII. 5. Represents only amounts recorded in active and completed grants, does not capture all funding needed to construct the project. 6. Round IX funds were requested for FY17 but no appropriations were made until FY19. NOTES: Figure 5 shows the present value (PV) of the 81 REF projects that are operational end of calendar year 2017. GALENA BIOMASS SUCCESS STORY JANUARY 2019 | 5 The GILA school sits at the site of a former US Air Force Base, which was historically heated using imported heating oil. The aging heating system, coupled with a fuel cost of $6.00 per gallon, was costing the school a tremendous amount of money annually. This project revamped the school campus’ heating district in addition to installing a wood chip boiler, which utilizes local timber resources. During the 2017-2018 heating season, the wood chip heating system displaced roughly 113,000 gallons of imported heat- ing oil, worth roughly $618,000. The community instead spent roughly $385,100 on locally harvested wood chips, which equates to an annual fuel savings of $232,900. At the inception of this project, Sustainable Energy for Galena Alaska (SEGA) was formed as a joint effort between the Galena School District, The City of Galena, and the Louden Tribal Council. SEGA was able to create seasonal employment in the community including harvest operations, wood processing, and boiler operations. Looking to the future, SEGA is in the process of expanding the services it offers. SEGA wants to not only provide woody biomass fuel and heat to the school, but also to the community as a whole, through sale of surplus cordwood that does not meet the specifications required by the boiler. Further, SEGA is also starting to provide vocational and contractual services to the community. The majority of this project was implemented alongside a historic rebuilding ef- fort after a spring 2013 ice jam-induced 100-year flood event decimated approxi- mately 90% of the village. This project is a testament to Alaska tenacity. Note: various energy ef- ficiency measures were undertaken alongside the main biomass boiler installa- tion, which further reduced the amount of heating fuel required. Handling the harvested timber to be used in the boiler in Galena Installing a wood chip boiler at the Galena Interior Learning Academy (GILA) school is displacing approximately 113,000 gallons of heating oil annually, while creating local jobs and fostering further local economic growth. REF AWARDS: $3,414,688 MATCHING FUNDS: $130,218 TOTAL PROJECT COST: $3.5 million EXPECTED PROJECT LIFE: 25 YEARS Galena loader moving chips to day-bin Technology Type Grantee Project Name Start date Electrical  (MWh) Thermal  (MMBtu) Diesel (Gal x  1000)  Value  ($ x 1000)   Electrical  (MWh)  Thermal  (MMBtu) Diesel (Gal x  1000) Value  ($ x 1000) 1 Hydro Chignik Lagoon Power  Utility Chignik Lagoon Hydroelectric 2015 Mar               551                       51                    175                1,759                    163                   628  2 Hydro Chugach Electric  Association, Inc. Stetson Creek Diversion/Cooper Lake  Dam Facilities Project 2015 Aug                 25                         3                        1                9,039                 1,210                   440  3 Hydro City & Borough Sitka Blue Lake Hydro Expansion Project 2014 Nov         60,209                 4,632             11,857          197,277             15,175            41,458  4 Hydro City of Akutan Akutan Hydro Repair/Upgrade 2014 Dec                 78                         9                     25                  199                     23                    73  5 Hydro City of Atka Chuniixsax Creek Hydroelectric 2012 Dec               319                       25                   111               1,697                   131                  661  6 Hydro City of Ketchikan Whitman Lake Hydro 2014 Oct            9,373                    721                1,979             28,272                2,175              7,161  7 Hydro City of King Cove Waterfall Creek Hydroelectric Project 2017 May            2,721                    184                   349               2,721                   184                  349  8 Hydro Copper Valley Electric  Association Allison Lake Hydro 2016 Sep         19,710                 1,577                4,060              20,591                 1,647               4,247  9 Hydro Cordova Electric  Cooperative Humpback Creek Hydroelectric  Project Rehabilitation 2011 Jul            3,044                    234                    531              21,533                 1,651               4,927  10 Hydro Gustavus Electric  Company Falls Creek Hydroelectric  Construction 2009 Jul            2,280                    175                    608              16,569                 1,240               4,397  11 Hydro Iliamna, Newhalen,  Nondalton Electrical  Tazimina Hydroelectric Project  Capacity Increase 2016 Jan            3,447                    257                 1,201                6,987                    521               2,437  12 Hydro Inside Passage Electric  Cooperative Gartina Falls Hydroelectric Project 2015 Jul            1,347                       91                    206                3,104                    210                   500  13 Hydro Kodiak Electric  Association, Inc. Terror Lake Unit 3 Hydroelectric  Project 2014 Jan       137,014                 9,787              29,164          388,847             27,731             91,858  14 Landfill Gas Muni of Anchorage Anchorage Landfill Gas Electricity 2012 Aug         48,857                 4,663                2,512          244,287             23,314            10,821  15 Solar PV Alaska Village Electric  Cooperative Kaltag Solar Construction 2012 Oct                   8                         1                        2                     42                       3                     11  16 Solar PV Alaska Power Eagle Solar Array Project 2016 Jan                 25                         2                       4                    45                       4                      8  17 Transmission Alaska Electric Light &  Power Company Snettisham Transmission Line  Avalanche Mitigation 2014 Jan               936                       72                    180                3,743                    288                   561  18 Transmission Alaska Power and  Telephone North Prince of Wales Island Intertie  Project 2011 Sep            1,867                    144                    303                7,612                    550               1,545  19 Wind/Trans Nome Joint Utility  System Nome Banner Peak Wind Farm  Expansion & Transmission 2010‐Oct   2013 ‐ Jul            1,968                    120                    260              15,208                    920               2,681  20 Wind Alaska Environmental  Power Delta Area Wind Turbines 2010 Sep            1,527                       99                    248              12,255                    773               1,974  21 Wind Alaska Village Electric  Cooperative Mekoryuk Wind Farm 2010 Nov               111                         8                      37                1,169                      80                   305  22 Wind Alaska Village Electric  Cooperative Toksook Wind Farm 2009 Aug               764                       56                    272                2,590                    187                   751  23 Wind Alaska Village Electric  Cooperative Quinhagak Wind Farm 2010 Nov               513                       39                    193                3,541                    268               1,051  24 Wind Alaska Village Electric  Cooperative Emmonak/Alakanuk Wind 2011 Sep               376                       27                    138                2,960                    210                   820  25 Wind Alaska Village Electric  Cooperative Shaktoolik Wind Construction 2012 Apr               255                       20                      71                1,518                    117                   434  26 Wind Golden Valley Electric  Association GVEA Eva Creek Wind Turbine  Purchase 2012 Oct         60,868                 4,286              11,241           367,306             25,867             55,233  27 Wind Kodiak Electric  Association, Inc.Pillar Mountain Wind Project 2010 Sep         24,155                 1,701                 3,886           178,153             12,540             35,696  28 Wind Kotzebue Electric  Association Kotzebue High Penetration Wind‐ Battery‐Diesel Hybrid 2012 May            3,991                    272                    653              17,078                 1,162               3,589  29 Wind NW Arctic Borough Buckland, Deering, Noorvik Wind 2016 Jan               103                         8                     41                  269                     21                    87        386,442                   ‐                  29,261              70,308        1,556,369                ‐              118,360           274,701  30 Biomass Alaska Gateway  School District Tok Wood Heating 2010 Oct               128          12,331                     119                    270                   873       44,923                    427               1,162  31 Heat Recovery City of Unalaska Unalaska Heat Recovery 2014 Sep               686                       43                     93               1,804                   129                  270  32 Hydro City of Pelican Pelican Hydroelectric Upgrade 2013 Mar            1,190                       85                   271               5,341           431                   386              1,423  33 Wind Alaska Village Electric  Cooperative Surplus Wind Energy Recovery for  Chevak Water System Heat 2015 Jul               581                  30                          0                        1                2,181            229                        2                     12  34 Wind Alaska Village Electric  Cooperative Surplus Wind Energy Recovery for  Gambell Water System Heat 2015 Jul               556                  29                          0                        1                2,006            343                        3                     13  35 Wind City of St. George Saint George Wind Farm 36 Wind to Heat Aleutian Wind Energy Sand Point Wind 2011 Aug               651                       48                    126                5,225            773                    384               1,663  37 Wind to Heat Kwigillingok Power  Company Kwigillingok High Penetration Wind‐ Diesel Smart Grid 2012 Feb               371                       29                      83                1,474            743                    119                   392  38 Wind to Heat Puvurnaq Power  Company Kongiganak High Penetration Wind‐ Diesel Smart Grid 2010 Dec               318                234                        26                      70                1,820         2,288                    160                   565  39 Wind to Heat Tuntutuliak Comm  Svcs Assoc Tuntutuliak High Penetration Wind‐ Diesel Smart Grid 2013 Jan               215                       17                      40                   943         1,044                      73                   256  40 Wind to Heat Unalakleet Valley  Electric Co Unalakleet Wind Farm 2009 Dec               709                       51                    134                7,222            779                    519               1,765             5,405          12,624                     418                 1,090              28,888       51,553                 2,201               7,521  41 Biomass Chilkoot Indian  Association Haines (Chilkoot) Central Wood  Heating System Construction 2011 Oct           852                        8                     19  42 Biomass City of Craig Craig Biomass Fuel Dryer Project 2015 Feb            3,708                       27                     80        3,708                     27                    80  43 Biomass City of Galena Louden Tribal Council Renewable  Energy 2017 Feb         15,724                     113                    618      15,724                    113                   618  44 Biomass City of Kobuk Upper Kobuk River Biomass 2016 Jan               450                         3                     18           830                       7                    41  45 Biomass City of Tanana City‐Tribe Biomass Energy  Conservation 2014 Jan            1,417                        10                      44        5,669                      51                   200  46 Biomass Copper River School  District Kenny Lake School Wood Fired Boiler Cumulative Total (2009 ‐ 2017)Calendar Year 2017 Energy Production Fuel Displaced Energy Production Fuel Displaced ELECTRICAL & HEAT PROJECTS HEAT PROJECTS ELECTRICAL PROJECTS ELECTRICAL & HEAT PROJECTS SUBTOTAL ELECTRICAL PROJECTS SUBTOTAL JANUARY 2019 | 7 Technology Type Grantee Project Name Start date Electrical  (MWh) Thermal  (MMBtu) Diesel (Gal x  1000)  Value  ($ x 1000)   Electrical  (MWh)  Thermal  (MMBtu) Diesel (Gal x  1000) Value  ($ x 1000) 47 Biomass Delta/Greely School  District Delta Junction Wood Chip Heating 2011 Sep            2,416                        23                      39      19,281                    185                   540  48 Biomass Gulkana Village  Council Gulkana Central Wood Heating 2010 Oct               163                          2                        1        4,770                      44                   127  49 Biomass Interior Regional  Housing Authority Wood Heating in Interior Alaska  Communities 2016 Jan               750                          3                      29        2,582                      20                   112  50 Biomass Ketchikan Gateway  Borough Ketchikan Gateway Borough Biomass  Heating Project 2016 Aug            1,224                          9                      26        1,914                      15                     30  51 Biomass Lake and Peninsula  Borough Lake and Peninsula Borough Wood  Boilers 2015 Jan               225                          2                        5           325                        3                     10  52 Biomass Mentasta Traditional  Council Mentasta Woody Biomass  Community Facility Space Heating 2014 Oct               884                          8                      19        2,510                      23                     58  53 Biomass Native Village of Eyak Cordova Wood Processing Plant 2011 Dec               855                         7                     20        6,841                     55                  191  54 Biomass Southeast Island  School District Thorne Bay School Wood Fired Boiler  Project 2013 Jan            1,365                        10                      30        6,247                      54                   158  55 Biomass Village of Minto Biomass Heat for Minto Community  Buildings               450                        14                      71           450                      14                     71  56 Heat Pumps City and Borough of  Juneau Juneau Airport Ground Source Heat  Pump 2011 May            6,400                        46                    127      42,517                    312               1,026  57 Heat Pumps City and Borough of  Juneau Juneau Aquatic Ctr. Ground Source  Heat Pump 2011 Apr            4,216                        36                      54      22,405                    190                   409  58 Heat Pumps City of Seward Alaska Sealife Center Ph II Seawater  Heat Pump Project 2011 Nov            4,558                        44                      46      22,513                    216                   447  59 Heat Pumps Cook Inlet Housing  Authority Seldovia House Ground Source Heat  Pump Project 2016 Jan               562                          4                      15        1,124                        8                     30  60 Heat Recovery Alaska Village Electric  Cooperative Stebbins Heat Recovery Project 2016 Dec            1,223                          4                      23        1,223                        4                     23  61 Heat Recovery Atmautluak  Traditional Council Atmautluak Washeteria Heat  Recovery Project 2015 Aug               610                          4                      25           744                        6                     33  62 Heat Recovery City and Borough of  Wrangell Wrangell Hydro Based Electric Boilers 2011 Feb            6,695                        68                    184      46,867                    477                   931  63 Heat Recovery City of Ambler Ambler Heat Recovery 2013 Oct               461                         5                     24        1,927                     20                  135  64 Heat Recovery City of Emmonak Emmonak Heat Recovery System 2016 Dec            1,876                       14                     70        1,876                     14                    70  65 Heat Recovery City of Marshall Heat Recovery for the Water  Treatment Plant & Community Store 2015 Sep            1,070                          9                      40        2,773                      24                   120  66 Heat Recovery City of Noorvik Heat Recovery for the Water  Treatment Plant for Noorvik 2016 Dec            2,585                          8                      39        2,585                        8                     39  67 Heat Recovery City of Nunam Iqua Nunam Iqua Heat Recovery Project            2,502                       18                     90        2,502                     18                    90  68 Heat Recovery City of Saint Paul  Electric Utility Saint Paul Fuel Economy Upgrade 2015 Feb            4,729                        43                    144      15,209                    137                   566  69 Heat Recovery City of Savoonga Savoonga Heat Recovery ‐ Power  Plant to Water Plant 2014 Oct            1,223                          9                      40        2,437                      18                     86  70 Heat Recovery Golden Valley Electric  Association North Pole Heat Recovery 2009 Nov            2,829                        34                      96      21,075                    332                   926  71 Heat Recovery Inside Passage Electric  Cooperative Hoonah Heat Recovery Project 2012 Aug            6,950                        50                    158      28,705                    242                   914  72 Heat Recovery McGrath Light &  Power Company McGrath Heat Recovery 2010 May            2,529                        18                    110      18,869                    172               1,104  73 Heat Recovery Native Village of  Kwinhagak Heat Recovery for the Water  Treatment Plant and Washeteria of 2015 Dec            1,973                        14                      72        2,961                      23                   115  74 Heat Recovery North Slope Borough Point Lay Heat Recovery 2013 Aug               792                         7                     13        5,604                     53                  150  75 Heat Recovery Sleetmute Traditional  Council Sleetmute Heat Recovery ‐ Power  Plant to Water Plant 2014 Nov               399                          4                      20           974                        9                     48  76 Heat Recovery Southwest Regional  School District New Stuyahok Heat Recovery 2016 Sep            1,240                        11                      30        1,240                      11                     30  77 Heat Recovery Tatitlek Village IRA  Council Tatitlek Heat Recovery Project 2017 Feb               834                          6                      18           834                        6                     18  78 Heat Recovery Venetie Village Venetie District Heating 2016 Feb               319                         2                     20           754                       7                    58  79 Solar Thermal Golden Valley Electric  Association McKinley Village Solar Thermal 2010 Jun           762                        7                     46                   ‐            86,206                     689                 2,457                      ‐       320,183                 2,931               9,670        391,846          98,830                30,368              73,855        1,585,257     371,736            123,492           291,892  Cumulative Total (2009 ‐ 2017)Calendar Year 2017 Energy Production Fuel Displaced Energy Production Fuel Displaced HEAT PROJECTS SUBTOTAL GRAND TOTAL Notes: - The power and heat generation presented in this table is the annual amount produced by projects that have received REF investment through the construction phase. In certain cases the interactions between REF funded and previously existing or subsequently built projects cannot be separated. These cases are noted and total renewable generation is reported. - Values for projects that are no longer required to provide performance reporting are estimated based on prior performance and engineer’s estimates when community information is unavailable. All other performance data are derived from either direct reporting from the project owner or past performance coupled with engineer’s estimates. - Line 2: Stetson Creek Diversion/Cooper Lake Dam facilities performance is low due to siphon repair that required lowering the lake level in 2016 and subsequently reducing use to get the lake level back up in 2017 after the repair was complete. - Line 3: Blue Lake Expansion: production numbers shown are for the whole system. - Line 13: Terror Lake Hydro: REF funded installation of turbine three. The production numbers shown are for the whole system. - Line 19: Nome Banner Peak Farm Expansion and Nome Banner Peak Wind Transmission project reporting has been combined into one project. - Line 20: Delta wind performance values are for REF funded turbines only, not the whole wind farm. - Not operational in 2017 – McKinley Village Solar Thermal, City of St. George Wind Farm, Chilkoot Central Wood Heating System, and Kenny Lake School Wood Fired Boiler. Note that in facilities with biomass systems facility operators have the option of converting back to heating fuel in years when oil prices are comparatively low. 8 | RENEWABLE ENERGY FUND STATUS REPORT WATERFALL CREEK HYDRO SUCCESS STORY Diesels-off is the ideal toward which most Alaska communities interested in renewable energy aim their efforts. Achieving this notable milestone, however, is not easy to achieve. It requires a proximal, feasible resource, suitable and sufficient funding, and some degree of tenacity to stick with the highs and lows of developing a project in often remote, isolated communities. In 2017, the Aleutians East Borough community of King Cove joined the handful of Alaska communities that can - for the majority of the year - generate power without diesel and without compromising quality of electric service. Their story has become a go-to example of what it takes to reach energy independence despite the inherent challenges of developing projects in rural Alaska. The Waterfall Creek Hydro Project is King Cove’s second small in-river hydro project. The first project, Delta Creek Hydro, was built in the 1994 and has been providing about 50% of the community’s electric needs. Seeing the success of this proj- ect, the community decided to invest further in a second hydro project. Waterfall Creek is located 5 miles north of King Cove; the project consists of a small diversion dam and intake, a 4,500 foot penstock, turbine and 5,000 feet of access roads. The powerhouse is an expansion of the existing Delta Creek powerhouse with both hydro projects using the same trans- mission infrastructure. The two hydro resources are expected to meet nearly 80 percent of the annual community energy demand. Although two Renewable Energy Fund grants totaling $2.8 million provided a substantial portion of the needed funds, the city still had to find additional funding elsewhere. Much of this need was debt financed: $1.51 million from the Alaska The Waterfall Creek Hydro project in King Cove, commissioned in 2017, is saving the community about 60,000 gallons of diesel per year. Combined with the community’s first hydro project on Delta Creek, King Cove is now saving more than 200,000 gallons of diesel per year and frequently meets their 2MW demand in the silence of diesels-off. REF AWARDS: $2.8 million MATCHING FUNDS: $3.72 million total: $1.42 million Power Project Fund loan $1.51 million Alaska Municipal Bond Bank debt $500,000 Aleutians East Borough grant $291,000 other local cash match TOTAL PROJECT COST: $6.52 million EXPECTED PROJECT LIFE: 50 YEARS Municipal Bond Bank and $1.42 million from an AEA Power Project Fund (PPF) loan. The dynamic capital stack used to piece together project funding and ultimately lead to diesels-off power genera- tion is now frequently lauded as an example of how State dollars and good leadership can be leveraged to achieve energy goals. Even with a $245,000 annual debt payment, the reduced operational costs keep rates under the Power Cost Equalization (PCE) floor, reducing costs to local ratepayers and eliminating PCE payments to King Cove. Waterfall Creek Hydro, King Cove Alaska King Cove Powerhouse AEA and the REFAC do not have a list of specific projects to recommend for FY20 funding. The last solicitation for applications was issued in the fall of 2015 with recommendations made to the legislature in January of 2016. This so- licitation resulted in 52 applications for projects to serve 95 communities, of which 38 projects were recommended for funding. No funding was appropriated to REF projects in FY17 or FY18. This list of recommended projects is no longer valid, as it has surpassed its shelf-life. AEA, in collaboration with the REFAC, made the decision to solicit for new applications every two years rather than annually. This decision was based on a desire to avoid any unnecessary burden on communities that would come from soliciting complex and costly applications with little certainty of funding availability. Eight of the projects from the 2016 recommendations list received a total of $11 million in FY19. The 2016 list of recom- mendations is now more than three years old. Moving forward, AEA needs to solicit new applications so the REFAC and AEA can provide the legislature with an up-to-date list of well-vetted projects to recommend for future funding. If the legislature wishes to appropriate funds to renewable energy projects in FY20, AEA recommends that these appro- priations be placed into the Renewable Energy Fund account and held to allow AEA and the REFAC time to vet a new round of applications for renewable energy projects. The legislature could then appropriate out of the REF account in the next legislative session to specific projects based on AEA recommendations and legislative deliberations. A new solicitation for renewable energy grant projects will be released in March 2019. Evaluation will be complete in fall 2019, providing recommendations to the legislature for funding consideration in FY21 and FY22. Subsequent solicita- tions for grant applications will be made in March 2021 and every two years thereafter, allowing AEA to balance reduc- ing unnecessary burden on communities, utilities, and state workers with the value of having a current prioritized list of well-vetted renewable energy projects in Alaska to provide to the legislature and other potential funders. Should funding expectations change in future years, AEA may resume yearly solicitations for REF grant applications. JANUARY 2019 | 9 RECOMMENDATIONS REVIEW PROCESS Projects that are recommended for REF funding go through three stages of evaluation and scoring and a fourth stage where regional distribution is applied. The first three stages review, evaluate, and score: eligibility, technical and economic feasibility, cost of energy, experience and qualifications, and ranking based on criteria established in statute and regula- tion. The technical and economic evaluation is a thorough vet- ting process conducted by a team of AEA technical review- ers, independent economists, and staff at the Department of Natural Resources. Following the third stage of evaluation, AEA presents to the REFAC: 1) a ranked list of recommended projects, 2) a list of not recommended projects, and 3) a regional distribution recommendation to ensure that there is cumulative regional equity across all funding rounds. Together, AEA and the REFAC finalize a list of renewable energy projects to recommend to the legislature for funding.Anvik woodpile - photo credit: Devany Plentovich 10 | RENEWABLE ENERGY FUND STATUS REPORT The Renewable Energy Fund Advisory Committee is comprised of nine members, five of whom are appointed by the governor to staggered three-year terms, with representation from each of the following groups: • One member from a small Alaska rural electric utility: Meera Kohler, President and CEO of Alaska Village Electric Cooperative (AVEC) • One member from a large Alaska urban electric utility: Lee Thibert, CEO of Chugach Electric Association • One member from an Alaska Native organization: Jodi Mitchell, Vice Chair of Sealaska Board • One member from businesses or organizations engaged in the renewable energy sector: Chris Rose, Executive Director of Renewable Energy Alaska Project (REAP) • One member from the Denali Commission: Nils Andreassen, Commissioner • Four remaining members come from the legislature: • Two members of the House of Representatives, appointed by the Speaker of the House of Representatives, Rep. Sam Kito III (term expired, not yet replaced) and Rep. Adam Wool • Two members of the Senate, appointed by the President of the Senate, Sen. Lyman Hoffman and Sen. Anna MacKinnon (term expired, not yet replaced) RENEWABLE ENERGY FUND ADVISORY COMMITTEE In establishing the program, the REFAC worked with AEA to define eligibility criteria for the Renewable Energy Fund grants, to develop methods for ranking projects, and to adopt regulations identifying criteria to evaluate the benefit and feasibility of projects seeking legislative support. The REFAC continues to consult with AEA, offering valuable guidance and policy direction regarding the application and evaluation process, and final funding recommendations. The REFAC has been involved in the evaluation and ranking of all rounds of projects recommended to the legislature for funding. In 2016, the REFAC met to discuss a path forward in the absence of a legislative appropriation. In recognition of the State’s fiscal challenges and in an effort to not unduly burden potential applicants the REFAC supported the decision to not issue a request for new applications. With the exception of projects which were removed for various reasons, the same list of ranked projects were provided to the legislature for FY16, FY17 and FY18 funding consideration. In 2018, the REFAC recommended that AEA move forward with a new solicitation every two years, noting that the legislature needs an up-to-date list of recommended projects and that even in the face of uncertain State funding there is value in providing technical and economic vetting of potential renewable projects in the state. Jodi MitchellLee Thibert Rep. Kito Rep. Wool Sen. Hoffman Sen. MacKinnon Nils AndreassenChris RoseMeera Kohler JANUARY 2019 | 11 DEFINITIONS AND FREQUENTLY ASKED QUESTIONS DEFINITIONS RECONNAISSANCE: A preliminary feasibility study designed to ascertain whether a feasibility study is warranted. FEASIBILITY/CONCEPTUAL DESIGN: Detailed evaluation intended to assess technical, economic, financial, and opera- tional viability and to narrow focus of final design and construction. This category also includes resource assessment and monitoring. FINAL DESIGN AND PERMITTING: Project configuration and specifications that guide construction. Includes land use and resource permits and leases required for construction. CONSTRUCTION: Completion of project construction, commissioning, and beginning of operations. This category also includes follow-up operations and maintenance reporting requirements. DIESEL EQUIVALENT GALLON: Most REF communities are displacing diesel fuel (Diesel #2), however some projects displace natural gas, naphtha, propane or Diesel #1. In those instances the displaced fuel is converted to BTUs and then expressed as diesel equivalent gallons for reporting purposes. B/C: The B/C, or benefit/cost ratio is the total net present value of savings over the life of a project divided by the net present value of a project’s total cost. The assumed project life is 50 years for hydro and transmission, 30 years for solar PV and 20-25 years for all others. The B/C is one component of the overall project score; it is possible for a project to score high enough in other areas (e.g. being high cost of energy) to be recommended with a B/C of less than 1. B/C ratios are calculated using best available data appropriate for the project’s development phase. Early phase projects use assumptions based on prior similar experience, late phase projects use refined project models and are much more certain. AEA attempts to be as realistic as pos- sible when using assumptions for early phase projects, while also attempting to avoid rejecting potentially good early-phase projects due to overly conservative assumptions. TECHNICAL/ECONOMIC SCORE: This score is based on a project’s technical and economic viability. The technical score considers resource availability, maturity of the proposed technology, the technical viability of the proposed project, and the qualifications and experience of the project team. The economic score is based on the projected costs and benefits associated with the project including consideration of the future price of fuel, current and future local demand for energy and the abil- ity of the applicant to finance the project to completion. ENERGY COST BURDEN: Household heat and electric energy cost divided by household income. FREQUENTLY ASKED QUESTIONS WHAT IMPACT DO REF PROJECTS HAVE ON RATES? It depends. Some electrical projects will lower rates immediately and some may only stabilize rates and keep them from increasing over time due to inflation and changing fuel costs. Heating projects result in immediate and direct fuel savings costs to the building owners. DO POWER COST EQUALIZATION (PCE) COMMUNITIES BENEFIT FROM THE REF? Yes, in a number of ways: 1. Statewide, in PCE communities, about 30 percent of total kWhs sold are eligible for the PCE subsidy. That means that any savings from REF projects are passed directly to the other 70 percent of kWhs sold. Schools and privately owned businesses benefit greatly from reduced cost of electricity. 2. REF projects provide stability in the face of uncertain and often volatile fuel prices. 3. 100 percent of the value created by heat projects stays in the community. 4. REF projects create local employment opportunities and local energy independence. WHICH PROJECTS ARE THE BEST FIT FOR REF FUNDING? • Technically strong • Economically viable • Located in high energy cost communities • Provides public benefit • Matching funds provided SAFE, RELIABLE, & AFFORDABLE ENERGY SOLUTIONS ALASKA ENERGY AUTHORITY 813 West Northern Lights Blvd. Anchorage, Alaska 99503 Phone: (907) 771-3000 Fax: (907) 771-3044 Toll Free 888-300-8534 www.akenergyauthority.org Front cover: photo of Kotzebue Electric Association’s wind farm, taken in fall 2018. The first phase of turbines, all 66-kW, were installed in 1997. The larger turbines, both 900-kW, were installed as a later phase of the project with assistance from REF grants in Rounds I and III. Photo credit Devany Plentovich, AEA. This publication was produced by Alaska Energy Authority in accordance with AS 42.45.045(d)(3). This document was designed and created in-house and distributed in electronic format.