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APPLICATION - Matanuska Electric Association REF Round 15 Application
MATANUSKA ELECTRIC ASSOCIATION, INC. • P.O. Box 2929 • Palmer, Alaska 99645 • t 907.745.3231 • f 907.761.9368 • www.mea.coop December 5, 2022 Grants Coordinator Alaska Energy Authority 813 West Northern Lights Blvd. Anchorage, AK 99503 RE: Matanuska Electric Association’s REF Round 15 Grant Application To whom it may concern: Matanuska Electric Association (MEA), along with the other interconnected Railbelt electric utilities, is working to understand potential paths forward to a reduced carbon footprint. As part of this process,1898, a Burns McDonnell company, was commissioned to study the most cost- effective methods of meeting recent Renewable Portfolio Standards (RPS) or Carbon Reduction Plans (CRP). A generation mix that featured a high level of combined wind energy and energy storage was identified as a potential path forward. Higher penetration levels of wind energy on the Railbelt grid suggested by RPS and CRP proposals will require a comprehensive approach in developing projects to minimize infrastructure development costs and regulation requirements. Thus, the Railbelt Wind Study was started as a collaborative effort between Matanuska Electric Association, Chugach Electric Association (CEA), Golden Valley Electric Association (GVEA), and Homer Electric Association (HEA). A Letter of Agreement to complete Phase I, the Railbelt Wind Reconnaissance Study, was executed on August 8, 2022. The Railbelt Wind Reconnaissance Study will create a permitting roadmap, land use study, and desktop reconnaissance level wind resource analysis and provide potential sites for additional analysis and data collection. This Phase 1 work is expected to be completed by April of 2023. MEA will manage Phase II of the Railbelt Wind Study starting in the spring of 2023, with funding and other aid from CEA, HEA, and GVEA. An award from Round 15 of the REF will allow for the completion of Phase II, which includes: the engineering, permitting, and erection of meteorological towers at locations identified through the Phase 1 work; detailed documentation of these wind resources across the Railbelt, analysis of the interrelationship of wind regimes, and wind generation forecast modeling. From this framework, a cohesive strategy for developing the high penetrations of wind can be created. MEA, as lead on this project for the Railbelt electric utilities, therefore, submits the attached REF grant application. Sincerely, Anthony M. Izzo Chief Executive Officer Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 1 of 33 10/04/2022 Application Forms and Instructions This instruction page and the following grant application constitutes the Grant Application Form for Round 15 of the Renewable Energy Fund (REF). A separate application form is available for projects with a primary purpose of producing heat (see Request for Applications (RFA) Section 1.5). This is the standard form for all other projects, including projects that will produce heat and electricity. An electronic version of the RFA and both application forms is available online at: https://www.akenergyauthority.org/What-We-Do/Grants-Loans/Renewable-Energy-Fund/2022- REF-Application. What follows are some basic information and instructions for this application: If you are applying for grants for more than one project, provide separate application forms for each project. Multiple phases (e.g. final design, construction) for the same project may be submitted as one application. If you are applying for grant funding for more than one phase of a project, provide milestones and grant budget for each phase of the project (see Sections 3.1 and 3.2.2). In order to ensure that grants provide sufficient benefit to the public, AEA may limit recommendations for grants to preliminary development phases in accordance with 3 Alaska Administrative Code (ACC) 107.605(1). If some work has already been completed on your project and you are requesting funding for an advanced phase, submit information sufficient to demonstrate that the preceding phases are completed and funding for an advanced phase is warranted. Supporting documentation may include, but is not limited to, reports, conceptual or final designs, models, photos, maps, proof of site control, utility agreements, business and operation plans, power sale agreements, relevant data sets, and other materials. Please provide a list of supporting documents in Section 11 of this application and attach the documents to your application. If you have additional information or reports you would like the Authority to consider in reviewing your application, either provide an electronic version of the document with your submission or reference a web link where it can be downloaded or reviewed. Please provide a list of additional information; including any web links, in Section 12 of this application and attach the documents to your application. For guidance on application best practices please refer to the resource-specific Best Practices Checklists; links to the checklists can be found in the appendices list at the end of the accompanying REF Round 15 RFA. In the Sections below, please enter responses in the spaces provided. You may add additional rows or space to the form to provide sufficient space for the information, or attach additional sheets if needed. If you need assistance with your application, please contact AEA’s Grants Coordinator by email at grants@akenergyauthority.org or by phone at (907) 771-3081. Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 2 of 33 10/04/2022 REMINDER: AEA is subject to the Public Records Act AS 40.25, and materials submitted to AEA may be subject to disclosure requirements under the act if no statutory exemptions apply. All applications received will be posted on the Authority web site after final recommendations are made to the legislature. Please submit resumes as separate PDFs if the applicant would like those excluded from the web posting of this application. In accordance with 3 AAC 107.630 (b) Applicants may request trade secrets or proprietary company data be kept confidential subject to review and approval by AEA. If you want information to be kept confidential the applicant must: o Request the information be kept confidential. o Clearly identify the information that is the trade secret or proprietary in their application. o Receive concurrence from the Authority that the information will be kept confidential. If the Authority determines it is not confidential, it will be treated as a public record in accordance with AS 40.25 or returned to the applicant upon request. Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 3 of 33 10/04/2022 SECTION 1 – APPLICANT INFORMATION Please specify the legal grantee that will own, operate, and maintain the project upon completion. Name (Name of utility, IPP, local government, or other government entity) Matanuska Electric Association, Inc. Tax ID # 92-0007954 Date of last financial statement audit: 12/31/2021 Mailing Address: Physical Address: 163 E. Industrial Way 163 E. Industrial Way Palmer, AK 99645 Palmer, AK 99645 Telephone: Fax: Email: 907-761-9300 907-761-9352 meacontact@mea.coop 1.1 Applicant Point of Contact / Grants Coordinator Name: Josh Craft Title: Grid Modernization Manager Mailing Address: 163 E. Industrial Way Palmer, AK 99645 Telephone: Fax: Email: 907-761-9355 907-761-9352 josh.craft@mea.coop 1.1.1 Applicant Signatory Authority Contact Information Name: Anthony Izzo Title: Chief Executive Officer Mailing Address: 163 E. Industrial Way Palmer, AK 99645 Telephone: Fax: Email: 907-761-9211 907-761-9352 tony.izzo@mea.coop 1.1.2 Applicant Alternate Points of Contact Name Telephone: Fax: Email: Ed Jenkin 907-761-9346 907-761-9352 edward.jenkin@mea.coop Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 4 of 33 10/04/2022 1.2 Applicant Minimum Requirements Please check as appropriate. If applicants do not meet the minimum requirements, the application will be rejected. 1.2.1 Applicant Type ☒ An electric utility holding a certificate of public convenience and necessity under AS 42.05 CPCN #18, or ☐ An independent power producer in accordance with 3 AAC 107.695 (a) (1) CPCN #______, or ☐ A local government, or ☐ A governmental entity (which includes tribal councils and housing authorities) Additional minimum requirements ☒ 1.2.2 Attached to this application is formal approval and endorsement for the project by the applicant’s board of directors, executive management, or other governing authority. If the applicant is a collaborative grouping, a formal approval from each participant’s governing authority is necessary. (Indicate yes by checking the box) ☒ 1.2.3 As an applicant, we have administrative and financial management systems and follow procurement standards that comply with the standards set forth in the grant agreement (Section 3 of the RFA). (Indicate yes by checking the box) ☒ 1.2.4 If awarded the grant, we can comply with all terms and conditions of the award as identified in the Standard Grant Agreement template at https://www.akenergyauthority.org/What-We-Do/Grants-Loans/Renewable-Energy- Fund/2022-REF-Application (Any exceptions should be clearly noted and submitted with the application.) (Indicate yes by checking the box) ☒ 1.2.5 We intend to own and operate any project that may be constructed with grant funds for the benefit of the general public. If no please describe the nature of the project and who will be the primary beneficiaries. (Indicate yes by checking the box) Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 5 of 33 10/04/2022 SECTION 2 – PROJECT SUMMARY 2.1 Project Title Provide a 4 to 7 word title for your project. Type in the space below. Railbelt Wind Feasibility Study and Conceptual Design 2.2 Project Location 2.2.1 Location of Project – Latitude and longitude (preferred), street address, or community name. Latitude and longitude coordinates may be obtained from Google Maps by finding you project’s location on the map and then right clicking with the mouse and selecting “What is here? The coordinates will be displayed in the Google search window above the map in a format as follows: 61.195676.-149.898663. If you would like assistance obtaining this information, please contact AEA’s Grants Coordinator by email at grants@akenergyauthority.org or by phone at (907) 771- 3081. Latitude Longitude This project will encapsulate the whole of the Railbelt Electrical Grid and evaluate up to ten sites within 100 miles of Railbelt infrastructure for suitability to develop a wind energy generation project. Potential sites for placement of met towers will be determined during the ongoing Railbelt Wind Reconnaissance Study and be finalized in the initial tasks of this project considering permitting, land use agreements, and cost estimates. 2.2.2 Community benefiting – Name(s) of the community or communities that will be the beneficiaries of the project. All communities served by Homer Electric Association, Chugach Electric Association, Matanuska Electric Association, Golden Valley Electric Association, and Seward Public Utilities may benefit from this project. Some communities served by these Utilities include Delta Junction, Salcha, Fairbanks, Nenana, Healy, Talkeetna, Willow, Houston, Wasilla, Palmer, Chickaloon, Eagle River, Anchorage, Tyonek, Whittier, Seldovia, Port Graham, Seward, Kenai, Soldotna, Nanwalek, and Homer. 2.3 Project Type Please check as appropriate. 2.3.1 Renewable Resource Type ☒ Wind ☐ Biomass or Biofuels (excluding heat-only) ☐ Hydro, Including Run of River ☐ Hydrokinetic ☐ Geothermal, Excluding Heat Pumps ☐ Transmission of Renewable Energy ☒ Solar Photovoltaic ☒ Storage of Renewable ☐ Other (Describe) ☐ Small Natural Gas 2.3.2 Proposed Grant Funded Phase(s) for this Request (Check all that apply) Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 6 of 33 10/04/2022 Pre-Construction Construction ☐ Reconnaissance ☐ Final Design and Permitting ☒ Feasibility and Conceptual Design ☐ Construction Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 7 of 33 10/04/2022 2.4 Project Description Provide a brief, one-paragraph description of the proposed project. Higher penetration levels of wind energy on the Railbelt grid suggested by recent Renewable Portfolio Standard and Carbon Reduction Plan proposals will require a comprehensive approach in developing projects to minimize infrastructure development costs and regulation requirements. The Railbelt Wind Study began as a collaborative effort between Matanuska Electric Association (MEA), Chugach Electric Association (CEA), Golden Valley Electric Association (GVEA), and Homer Electric Association (HEA). A Letter of Agreement to complete Phase I, the Railbelt Wind Reconnaissance Study, was executed on August 8, 2022. The Railbelt Wind Reconnaissance Study will create a permitting roadmap, land use study, a reconnaissance level desktop wind resource analysis, and provide potential sites for additional analysis and data collection. The work is expected to be complete by April of 2023. For this project, the Railbelt Wind Feasibility and Conceptual Design (considered part of phase II of the Railbelt Wind Study), MEA will manage a collaborative effort to evaluate the feasibility for wind energy generation projects across the Railbelt and understand the relationships between wind resources therein. This project will consider and leverage the efforts of GVEA and HEA funded through Round 14 of the REF and HEA’s offshore platform Lidar study requested in Round 15, to eliminate redundant data collection efforts. The feasibility study will begin with economic analysis of the potential sites recommended in the Railbelt Wind Reconnaissance Study and install up to ten (10) meteorological (met) towers, collect data for up to three years, and analyze the feasibility of each individual site for development. Pyranometers can be installed at each met tower to measure the solar resource and determine the potential for solar PV standalone projects or co- located wind and solar PV. The number of sites will be given precedence over multiple towers at one site to fully quantify the interrelationship of wind resources across the Railbelt. Met towers may be moved based on low measured wind energy, high turbulence, or other reasons. Additional funds may be allocated to this project by the Utilities and other grant funding will be pursued. Therefore, as funding allows a conceptual design for wind development across the Railbelt will be prepared that considers the interrelationship of the wind resources available, infrastructure development costs, and cost to regulate the wind energy, including the possible need for energy storage. Additionally, a Railbelt Wind Energy Generation Forecasting Model may be started and could provide the framework for a Statewide wind generation forecasting model. 2.5 Scope of Work Provide a short narrative for the scope of work detailing the tasks to be performed under this funding request. This should include work paid for by grant funds and matching funds or performed as in-kind match. MEA will issue a Request for Proposals to competitively bid the proposed work and will provide project management and technical assistance to the project. A detailed scoping exercise will be the first task completed in the Railbelt Wind Feasibility and Conceptual Design Project. Cost estimates for infrastructure will then be developed for sites proposed by the Railbelt Wind Reconnaissance Study. Site selection will be finalized based on these cost estimates, the Railbelt Wind Reconnaissance Study, and site visits as necessary. For these selected sites, land use agreements will be negotiated and permitting obtained. Permitting will account for local, state, and federal jurisdictions and include, but is not limited to, Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 8 of 33 10/04/2022 special use permits, FAA No Hazard to Navigation Determinations, and USFW Consultations. Site selection may be iterative based on the ease and cost of negotiating land use and permitting specific sites. Up to ten (10) met towers will be purchased, shipped, and installed, and up to three- year data collection campaigns completed. It is anticipated that met towers may be purchased or land use agreements and permitting completed in advance of a REF award and/or the State fiscal year so that installations may take place immediately upon receipt of grant funds. Met tower maintenance and wind resource analysis are intended to be performed quarterly for each site during the data collection campaign and decisions to move a met tower will be made based upon funding availability and the results of the analysis. A feasibility study will be performed, and report prepared for each site that details the wind resource, infrastructure cost estimates, and turbine selection criteria. As funding allows, a Railbelt Wind Conceptual Design will be prepared and will consider the interrelationship of the wind resources available, infrastructure development costs, and cost to regulate the wind energy, including the possible need for energy storage. Additionally, a Railbelt Wind Energy Generation Forecasting Model may be started and could provide the framework for a Statewide forecasting model. 2.6 Previous REF Applications for the Project See Section 1.15 of the RFA for the maximum per project cumulative grant award amount Round Submitted Title of application Application #, if known Did you receive a grant? Y/N Amount of REF grant awarded ($) N/A N/A Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 9 of 33 10/04/2022 SECTION 3 – Project Management, Development, and Operation 3.1 Schedule and Milestones Please fill out the schedule below (or attach a similar sheet) for the work covered by this funding request. Be sure to identify key tasks and decision points, including go/no go decisions, in your project along with estimated start and end dates for each of the milestones and tasks. Please clearly identify the beginning and ending of all phases (I. Reconnaissance, II. Feasibility and Conceptual Design, III. Final Design and Permitting, and IV. Construction) of your proposed project. See the RFA, Sections 2.3-2.6 for the recommended milestones for each phase. Add additional rows as needed. Task # Milestones Tasks Start Date End Date Deliverables 3 REF Grant Awarded Project Scoping and Contractor Solicitation 7/1/23 7/15/23 Final Scope of Work and Schedule 4 REF Grant Executed Cost Estimates 7/15/23 7/31/23 Site selection report 5 Site Selection report complete Land use and Other Agreements 8/1/23 9/30/23 Site agreements and contracts 6 Site Selection report complete Permitting 8/1/23 10/31/23 Permits (special use permits, FAA, USFW Consultation, etc.) 7 Site agreement and permitting complete Met Tower Studies 9/1/23 8/31/26 Site Feasibility Studies 7.1 Met Tower Installation Commissioning Reports 7.2 Met Tower Maintenance and Data Collection Maintenance logs and data files 7.3 Met Tower Moves Commissioning reports 7.4 Met Tower demolition Decommissioning reports 8 Feasibility Studies complete Conceptual Design 9/1/24 12/31/26 Conceptual Design Report 9 Sire agreements and permitting complete Forecast Model 9/1/24 12/31/26 Forecast Model Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 10 of 33 10/04/2022 3.2 Budget 3.2.1 Funding Sources Indicate the funding sources for the phase(s) of the project applied for in this funding request. Grant funds requested in this application $1,833,333 Cash match to be provideda $500,000 In-kind match to be provideda $50,000 Energy efficiency match providedb $ Total costs for project phase(s) covered in application (sum of above) $2,383,333 Describe your financial commitment to the project and the source(s) of match. Indicate whether these matching funds are secured or pending future approvals. Describe the impact, if any, that the timing of additional funds would have on the ability to proceed with the grant. The MEA Board of Directors meets on December 12, 2022, to approve MEA’s annual budget. Upon approval of the AEA Grants Coordinator and REF Program Manager, MEA intends to supply a board resolution committing our matching funds for this project by close of business on December 13, 2022 to AEA. MEA staff has budgeted $550,000 towards starting Phase II of the Railbelt Wind Study in 2023 (which would include this project) and additional funds are anticipated from our partner Utilities. MEA intends to use $500,000 of the budgeted $550,000 as cash match to this grant. MEA personnel time will act as an additional $50,000 of in-kind match for a total match of $550,000. a Attach documentation for proof (see Section 1.18 of the Request for Applications) b See Section 8.2 of this application and Section 1.18 of the RFA for requirements for Energy Efficiency Match. 3.2.2 Cost Overruns Describe the plan to cover potential cost increases or shortfalls in funding. As a multi-year project, cost increases and shortfalls in funding can be addressed through: additional funding in future budget years by MEA and the other Utilities, additional funding from the Bipartisan Infrastructure Law (BIL) and/or other grants, decreasing the number of sites being investigated and thus met towers installed, decreasing the extent to which the conceptual design covers energy storage and other factors, and/or reducing or eliminating the forecast model development at this stage of the project. 3.2.3 Total Project Costs Indicate the anticipated total cost by phase of the project (including all funding sources). Use actual costs for completed phases. Indicate if the costs were actual or estimated. Reconnaissance [Actual/Estimated] $ 180,000 Feasibility and Conceptual Design [Actual/Estimated] $ 2,500,000 Final Design and Permitting [Actual/Estimated] $ 120,000,000 Construction [Actual/Estimated] $ 1,200,000,000 Total Project Costs (sum of above) Estimated $1,322,680,000 Metering/Tracking Equipment [not included in project cost] Estimated $ Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 11 of 33 10/04/2022 3.2.4 Funding Subsequent Phases If subsequent phases are required beyond the phases being applied for in this application, describe the anticipated sources of funding and the likelihood of receipt of those funds. State and/or federal grants Loans, bonds, or other financing options Additional incentives (i.e. tax credits) Additional revenue streams (i.e. green tag sales or other renewable energy subsidies or programs that might be available) MEA, and our partner Utilities, can access any number of funding avenues including traditional financing and/or bonds. Recuperation of capital project funds can be included in our existing rate structures though every effort will be made to access state and/or federal grants. New guidance from the Internal Revenue Service is expected regarding the Inflation Reduction Act and Bipartisan Infrastructure Law and financing mechanisms available to Cooperative Utilities that were not previously available. Any Renewable Portfolio Standard or Carbon Reduction Plan may also provide incentives or other funding mechanisms. The decision may be made to explore including independent power producers in the construction and operations of different conceptual designs to leverage private sector tax credits or other incentives. Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 12 of 33 10/04/2022 3.2.3 Budget Forms Applications MUST include a separate worksheet for each project phase that was identified in Section 2.3.2 of this application — I. Reconnaissance, II. Feasibility and Conceptual Design, III. Final Design and Permitting, and IV. Construction. Please use the tables provided below to detail your proposed project’s total budget. Be sure to use one table for each phase of your project, and delete any unnecessary tables. The milestones and tasks should match those listed in 3.1 above. If you have any question regarding how to prepare these tables or if you need assistance preparing the application please feel free to contact AEA’s Grants Coordinator by email at grants@akenergyauthority.org or by phone at (907) 771-3081. Phase 2 — Feasibility and Conceptual Design Milestone or Task Anticipated Completion Date RE- Fund Grant Funds Grantee Matching Funds Source of Matching Funds: Cash/In- kind/Federal Grants/Other State Grants/Other TOTALS (List milestones based on phase and type of project. See Sections 2.3 thru 2.6 of the RFA ) Project Scoping and Contractor Solicitation 7/15/23 Cost Estimates 7/31/23 $38,462 $11,538 Cash/in-kind $50,000 Land use and Other Agreements 9/30/23 $76,923 $23,077 Cash/in-kind $100,000 Permitting 10/31/23 $76,923 $23,077 Cash/in-kind $100,000 Met Tower Studies 8/31/26 $1,371,792 $411,538 Cash/in-kind $1,783,330 Conceptual Design 12/31/26 $115,385 $34,615 Cash/in-kind $150,000 Forecast Model 12/31/26 $153,846 $46,154 Cash/in-kind $200,000 TOTALS $1,833,330 $550,000 $ 2,383,330 Budget Categories: Direct Labor & Benefits Travel & Per Diem $15,385 $4,615 $20,000 Equipment $769,231 $230,769 $1,000,000 Materials & Supplies $15,385 $4,615 $20,000 Contractual Services $533,330 $160,000 $693,330 Construction Services $500,000 $150,000 $650,000 Other TOTALS $1,833,330 $550,000 $2,383,330 Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 13 of 33 10/04/2022 3.2.4 Cost Justification Indicate the source(s) of the cost estimates used for the project budget, including costs for future phases not included in this application. MEA used informal quotes from NRG Systems along with recent work from GVEA and HEA to estimate the costs for the met tower installations. The construction, contractual, and other cost estimates are based on recent experience, the project team’s experience in wind development, and prudent industry practice. A study was performed by 1898 Co, a part of Burns McDonnell, which evaluated different scenarios using natural gas with carbon capture, hydro, nuclear, and wind to meet the goals of the proposed Renewable Portfolio Standards and Carbon Reduction Plan proposals; the wind scenario was the lowest cost. The study projected wind would need to be installed with equal parts energy storage and the cost of doing so would be $2,400/kW of nameplate capacity with O&M for 500- megawatts costing $3.4 million per year. 3.3 Project Communications 3.3.1 Project Progress Reporting Describe how you plan to monitor the progress of the project and keep AEA informed of the status. Who will be responsible for tracking the progress? What tools and methods will be used to track progress? MEA will hold regular meetings with its contractor and project partners. MEA will use established accounting and project management procedures to track project progress, schedule, and budget. MEA will use AEA’s project and financial reporting tools on the agreed upon schedule to communicate the status of the project and will be available to talk directly to AEA personnel as needed throughout the project. 3.3.2 Financial Reporting Describe the controls that will be utilized to ensure that only costs that are reasonable, ordinary and necessary will be allocated to this project. Also discuss the controls in place that will ensure that no expenses for overhead, or any other unallowable costs will be requested for reimbursement from the REF Grant Program. The MEA Project Manager has extensive experience in wind project development and arctic construction and will review all invoices to ensure expenses are reasonable, ordinary, and necessary. MEA also has a dedicated controller and experienced accounting team. MEA’s financial and accounting procedures are audited yearly. Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 14 of 33 10/04/2022 SECTION 4 – QUALIFICATIONS AND EXPERIENCE 4.1 Project Team Include resumes for known key personnel and contractors, including all functions below, as an attachment to your application. In the electronic submittal, please submit resumes as separate PDFs if the applicant would like those excluded from the web posting of this application. 4.1.1 Project Manager Indicate who will be managing the project for the Grantee and include contact information. If the applicant does not have a project manager indicate how you intend to solicit project management support. If the applicant expects project management assistance from AEA or another government entity, state that in this section. Josh Craft is MEA’s Grid Modernization Manager and will be the Project Manager. josh.craft@mea.coop o. 907-761-9355 m. 907-795-8801 4.1.2 Project Accountant Indicate who will be performing the accounting of this project for the grantee. If the applicant does not have a project accountant indicate how you intend to solicit financial accounting support. MEA’s accounting department will be responsible for accounting of this project. 4.1.3 Expertise and Resources Describe the project team including the applicant, partners, and contractors. For each member of the project team, indicate: the milestones/tasks in 3.1 they will be responsible for; the knowledge, skills, and experience that will be used to successfully deliver the tasks; how time and other resource conflicts will be managed to successfully complete the task. If contractors have not been selected to complete the work, provide reviewers with sufficient detail to understand the applicant’s capacity to successfully select contractors and manage complex contracts. Josh Craft will act as the Project Manager and holds overall responsibility for this project. Mr. Craft holds a B.S. in Mechanical Engineering, an M.S. in Engineering Management, is a certified Project Management Professional, and has over 13 years of experience in wind project development in Alaska, including time as the Wind Program Manager for AEA. Jason Hann holds a B.S. in Mechanical Engineering and will serve as the construction manager for MEA and oversee the land use agreements, permitting, and met tower installations under the direction of the Project Manager. MEA will issue a Request for Proposal’s to select a contractor who will be responsible for executing the scope of work. Josh Craft from MEA and one representative from HEA, GVEA, and CEA will serve as the review panel for proposals received from the RFP in the same way a contractor was Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 15 of 33 10/04/2022 selected for the Railbelt Wind Reconnaissance Study. For the Railbelt Wind Reconnaissance Study the review panel consisted of: Keith Palchikoff, GVEA Grid Modernization Manager, David Thomas, HEA Director of Strategic Services, and Sean Skaling, CEA Sr. Manager of Business and Sustainable Program Development. The selected contactor and/or any sub-contractors will demonstrate sufficient knowledge, skills, and experience to deliver the tasks. They will also need to demonstrate the necessary time and resources to complete the tasks. 4.2 Local Workforce Describe how the project will use local labor or train a local labor workforce. MEA personnel supporting this project consist of both bargaining and non-bargaining tradesmen and professionals based out of MEA headquarters in Palmer. Installation of 80-meter towers requires special certification. It is anticipated that a local ontract crew will need to acquire this certification. Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 16 of 33 10/04/2022 SECTION 5 – TECHNICAL FEASIBILITY 5.1 Resource Availability 5.1.1 Assessment of Proposed Energy Resource Describe the potential extent/amount of the energy resource that is available, including average resource availability on an annual basis. For pre-construction applications, describe the resource to the extent known. For design and permitting or construction projects, please provide feasibility documents, design documents, and permitting documents (if applicable) as attachments to this application (See Section 11). Likelihood of the resource being available over the life of the project. See the “Resource Assessment” section of the appropriate Best Practice Checklist for additional guidance. According to studies such as the 2013 NREL report titled “Renewable Energy in Alaska” there is and abundance of wind energy across the Railbelt. Accessing this energy in an economically viable manner is the true challenge. The proposed Renewable Portfolio Standards or Carbon Reduction Plans would require hundreds of megawatts of wind to be installed across the Railbelt. There are three operational wind farms totaling 34-megawatts of installed capacity and HEA and GVEA are investigating sites through REF Round 14 funding which could increase the total to 150- megawatts. There has been little other wind data collection performed, as such there is a dearth of actual wind data across the Railbelt that would give Utilities and developers the information needed to install wind at the suggested levels. This project will begin a comprehensive and complimentary approach to wind development. The wind across the Railbelt is not acting as a singular resource and when wind is blowing in one area, it may not be in another. By having multiple met towers spaced across the Railbelt we can examine the potential of multiple smaller wind projects versus fewer larger wind projects and determine if we can decrease regulation and infrastructure costs through leveraging different wind regimes. We have begun this investigation through the Railbelt Wind Reconnaissance Study and will use existing MESO scale wind data and other point data resources to identify locations on or near existing infrastructure in the Railbelt. While higher wind energy locations are preferred, the vicinity to existing infrastructure (i.e., roads and transmission) will have significant impact on the Levelized Cost of Energy and a lower wind energy resource located near on or near the road and/or transmission system may have a better economic value that a high energy resource located further away. 5.1.2 Alternatives to Proposed Energy Resource Describe the pros and cons of your proposed energy resource vs. other alternatives that may be available for the market to be served by your project. A study was performed by 1898 Co, a part of Burns McDonnell, which evaluated different scenarios using natural gas with carbon capture, hydro, nuclear, and wind to meet the goals of the proposed Renewable Portfolio Standards and Carbon Reduction Plan proposals; the wind scenario was had the potential lowest cost. The study projected wind would need to be installed with equal parts energy storage and the cost of doing so would be $2,400/kW of nameplate capacity with O&M for 500-megawatts costing $3.4 million per year. If Alaska adopts a Renewable Portfolio Standard or Carbon Reduction Plan, the commercially viable renewable alternatives are solar PV and Hydro. Alternatives such as geothermal have been investigated near the Railbelt in multiple locations but an economically viable project has not been Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 17 of 33 10/04/2022 found. Tidal energy technology is still developing; however, no commercially viable alternative is yet available; demonstration projects are planned. Micro-nuclear reactors are also not yet commercially available. Large hydro projects such as Susitna-Watana have been investigated for decades with no significant progress made. Solar PV has seen a significant uptick in installations over the past several years but have significant drawbacks during our peak load times in the winter; they produce very little to no energy. At the scale required for high penetration renewables, they will also produce much more power than required during their peak production in the summer. Significant long-term energy storage is needed and is not economically viable at this time. Alaska wind resources are typically stronger in the winter during our peak electrical load periods and weaker during the summer when we have minimum electrical loads. Like solar PV, wind is a variable resource though the ramp rates tend to be less digital since there is inherent inertia in the rotating blades of the turbine versus cloud covering a solar array. Wind is more readily deployed versus a hydro resource and the capital costs can be far less. 5.1.3 Permits Provide the following information as it may relate to permitting and how you intend to address outstanding permit issues. See the “Environmental and Permitting Risks” section of the appropriate Best Practice Checklist for additional guidance. List of applicable permits Anticipated permitting timeline Identify and describe potential barriers including potential permit timing issues, public opposition that may result in difficulty obtaining permits, and other permitting barriers Each individual location may have slightly different permitting requirements and the Railbelt Wind Reconnaissance Study is creating a permitting roadmap for different jurisdictions. Among the known possible permits are a Federal Aviation Administration Determination of No Hazard, a United States Fish and Wildlife Consultation that will address migratory birds, eagles, and endangered species, special use permits for tall structures, Archaeological impact study, wetlands permit. The timing of these permits will depend largely on the actual site, with the USFW Consultation having the largest range of time required depending on any Environmental Impact Assessments that will need to be completed. Any of these permits will take a minimum of 30 days and could take multiple years in the case of the USFW Consultation. In this case, we would most likely eliminate the site from contention without significant cause for reconsideration. 5.2 Project Site Describe the availability of the site and its suitability for the proposed energy system. Identify potential land ownership issues, including whether site owners have agreed to the project or how you intend to approach land ownership and access issues. See the “Site control” section of the appropriate Best Practice Checklist for additional guidance. Individual site selection will be an integral and iterative task early in this project and will build on the Railbelt Wind Reconnaissance Study work. Land use agreements will need to be negotiated for each site and the complexity will depend on the land ownership. MEA has extensive experience in Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 18 of 33 10/04/2022 negotiating land use agreements and will provide support to the contractor chosen through the RFP process. 5.3 Project Technical & Environmental Risk 5.3.1 Technical Risk Describe potential technical risks and how you would address them. Which tasks are expected to be most challenging? How will the project team reduce the risk of these tasks? What internal controls will be put in place to limit and deal with technical risks? See the “Common Planning Risks” section of the appropriate Best Practice Checklist for additional guidance. The technical risks associated with met tower deployment includes anchor failure and/or extensive icing causing the met tower to fall. All efforts will be made to inspect met towers on a quarterly basis to identify anchor weakness and/or the extent of icing. The project team will use anchors of the appropriate type installed to the met tower manufacturers specifications. The potential for icing exists in most Alaska locations and part of the met tower deployment is to determine the extent to which this phenomenon will impact wind energy generation. As such, icing is an inherent unknown and extensive icing could lead to a site being disqualified from consideration and the met tower moved. To minimize the loss of data from an equipment or instrumentation failure, every effort will be made to use remote communications so data may be retrieved as proof the met tower is operational. Monthly data downloads will be performed. The largest technical risk from a task perspective is the installation of the met towers as these are tall pieces of equipment that can fall along a large area. Only certified or otherwise qualified personnel will be chosen to install the met towers and all industry prudent practices will be employed. 5.3.2 Environmental Risk Explain whether the following environmental and land use issues apply, and if so which project team members will be involved and how the issues will be addressed. See the “Environmental and Permitting Risks” section of the appropriate Best Practice Checklist for additional guidance. Threatened or endangered species Habitat issues Wetlands and other protected areas Archaeological and historical resources Land development constraints Telecommunications interference Aviation considerations Visual, aesthetics impacts Identify and describe other potential barriers The exact environmental risks will be site specific and each of the bulleted risks will be addressed in the site selection and permitting processes. The Railbelt Wind Reconnaissance Study will begin identifying where these issues become barriers to development and sites may be eliminated from contention as a result. The contractor chosen through the RFP process will be responsible for identifying and pursuing appropriate permitting and land use agreements. MEA has extensive experience in addressing these environmental risks and will provide technical support as needed. Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 19 of 33 10/04/2022 5.4 Technical Feasibility of Proposed Energy System In this section you will describe and give details of the existing and proposed systems. The information for existing system will be used as the baseline the proposal is compared to and also used to make sure that proposed system can be integrated. Only complete sections applicable to your proposal. If your proposal only generates electricity, you can remove the sections for thermal (heat) generation. 5.4.1 Basic Operation of Existing Energy System Describe the basic operation of the existing energy system including: description of control system; spinning reserve needs and variability in generation (any high loads brought on quickly); and current voltage, frequency, and outage issues across system. See the “Understanding the Existing System” section of the appropriate Best Practice Checklist for additional guidance. MEA owns and operates the Eklutna Generation Station (EGS) consisting of ten (10) 17-megawatt Wartsila generators, receives a portion of the State’s Bradley Lake Hydroelectric facility generation, and receives power from the Eklutna Hydroelectric Project. Additionally, MEA receives power from the one-megawatt Willow Solar PV facility and from our members enrolled in net metering with a combined capacity of 2.475-megawatts. In late 2023, the Houston Solar PV facility is expected to be in operation with a nameplate capacity of six-megawatts. The MEA system uses both Supervisory Control and Data Acquisition, an Outage Management System, and EGS has extensive control systems located on site. EGS can provide all spinning reserve needs and there are no issues with variability in generation or load. There are no current, frequency, and voltage issues on MEA’s system. 5.4.2.1 Existing Power Generation Units Include for each unit include: resource/fuel, make/model, design capacity (kW), minimum operational load (kW), RPM, electronic/mechanical fuel injection, make/model of genset controllers, hours on genset Unit 1: Eklutna Generation Station, 10 17 MW gensets, natural gas is primary with capability to operate from diesel, Wartsilla model 18V50DF, 17,000 kW, minimum load of 45% of nameplate capacity (7,650 kW), between 27,000 and 49,000 hours on each individual genset. Unit 2: Bradley Lake Hydroelectric Project (Hydro), Fuji generators, Andritz hydro runners, design capacity 64 MW per unit (MEA 13.8 % share), no minimum operational load, RPM 300, Emerson Ovation DCS Unit 3: Eklutna Hydroelectric Facility 44 MW with 16.67% ownership and 35.71% share via PPA with MOA Unit 4: Unit 5: Unit 6: 5.4.2 Existing Energy Generation Infrastructure and Production In the following tables, only fill in areas below applicable to your project. You can remove extra tables. If you have the data below in other formats, you can attach them to the application (see Section 11). Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 20 of 33 10/04/2022 5.4.2.2 Existing Distribution System Describe the basic elements of the distribution system. Include the capacity of the step-up transformer at the powerhouse, the distribution voltage(s) across the community, any transmission voltages, and other elements that will be affected by the proposed project. MEA operates an extensive distribution system servicing over 65,000 meters at line voltages from 12.5-megawatts to 35-megawatts. It is anticipated that any wind energy facility developed because of this project will tie directly into the transmission system via existing or new substation. An interconnection study would be conducted for each wind site chosen for development. 5.4.2.4 Annual Electricity Production and Fuel Consumption (Existing System) Use most recent year. Replace the section (Type 1), (Type 2), and (Type 3) with generation sources Month EGS (kWh) Eklutna Hydroelectric Facility (kWh) Bradley Lakes Hydroelectric Facility (kWh) Fuel Consumptio n [Other] Pea k Loa d Minimu m Load January 76,824,556 4,135,000 4,664,000 February 74,823,778 - 3,962,000 March 69,613,971 - 3,953,000 April 63,211,344 65,000 5,777,000 May 42,168,199 1,119,000 6,688,000 June 39,365,389 2,518,000 5,523,000 July 40,147,088 2,105,000 7,521,000 August 40,394,503 1,280,000 5,871,000 September 55,845,361 4,967,000 3,950,000 October 57,587,583 6,410,000 2,973,000 November 59,837,132 700,000 3,636,000 December 70,709,770 420,000 4,058,000 Total 690,528,674 23,719,000 58,576,000 5.4.3 Future Trends Describe the anticipated energy demand in the community, or whatever will be affected by the project, over the life of the project. Explain how the forecast was developed and provide year by Is there operational heat recovery? (Y/N) If yes estimated annual displaced heating fuel (gallons) No 5.4.2.3 O&M and replacement costs for existing units Power Generation Thermal Generation i. Annual O&M cost for labor $3,100,000 ii. Annual O&M cost for non-labor $5,550,000 iii. Replacement schedule and cost for existing units Overhaul rebuild at 36,000 hours cost $700,000. Catastrophic replacement is $10-12 Million Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 21 of 33 10/04/2022 year forecasts. As appropriate, include expected changes to energy demand, peak load, seasonal variations, etc. that will affect the project. MEA sold over 750 million kilowatt-hours to over 50,000 members in 2021 and we forecast a growth of approximately .92% annually. This load growth does not include increases due to beneficial electrification such as electric vehicles or heat-pumps, but initial estimates show an additional 1% annual growth could occur from electric vehicles alone. MEA has initiated studies to determine the effects of electric vehicles on load growth and peak load as well as seasonal variation in load. Additional generation from wind resources will serve to mitigate impacts of this load growth, particularly since it is anticipated that energy storage will be a part of the overall energy mix. 5.4.4 Proposed System Design Provide the following information for the proposed renewable energy system: A description of renewable energy technology specific to project location The total proposed capacity and a description of how the capacity was determined Integration plan, including upgrades needed to existing system(s) to integrate renewable energy system: Include a description of the controls, storage, secondary loads, distribution upgrades that will be included in the project Civil infrastructure that will be completed as part of the project—buildings, roads, etc. Include what backup and/or supplemental system will be in place See the “Proposed System Design” section of the appropriate Best Practice Checklist for additional guidance. The data necessary to propose a system design will be gathered as part of this project. This project intends to begin a comprehensive approach to integrating high levels of wind generation into the Railbelt by quantifying the wind resources available and the relationships between the wind regimes to minimize infrastructure development costs and regulation requirements. The amount of wind generation that can be installed on the Railbelt will, in large part, be an outcome of this project. For ground sourcing economic and technical evaluations, the Railbelt grid uses approximately 5.3 million megawatt-hours annually. Wind energy with a nameplate capacity of 500 megawatts with an average capacity factor of 30% would generate 1.3 million megawatt-hours providing approximately 25% of the Railbelt’s energy needs. In general, modern horizontal axis wind turbines will be integrated into the Railbelt transmission system via existing or new sub-stations. A goal of this project is to find wind regimes which minimize the amount of new infrastructure (i.e. roads and transmission lines) and regulation requirements while maximizing the base loading capability of wind through geography diversification. 5.4.4.1 Proposed Power Generation Units Unit # Resource/ Fuel type Design capacity (kW) Make Model Expected capacity factor Expected life (years) Expected Availability Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 22 of 33 10/04/2022 5.4.5 Basic Operation of Proposed Energy System To the best extent possible, describe how the proposed energy system will operate: When will the system operate, how will the system integrate with the existing system, how will the control systems be used, etc. When and how will the backup system(s) be expected to be used See the “Proposed System Design” section of the appropriate Best Practice Checklist for additional guidance. To meet any potential Renewable Portfolio Standards or Carbon Reduction Goals, it is expected that renewables will need to be the first energy onto the grid and regulation resources such as MEA’s EGS will supply spinning reserve and/or regulation capacity in conjunction with energy storage. Energy storage may also be necessary to limit curtailment. It is expected that wind resources can supply power year-round with lower production in the summer months at average capacity factors of 30% or greater. Existing operational infrastructure can dispatch the wind and regulation resources. The Railbelt Utilities already have generation assets in place which can meet current and future loads for some time and if there is no wind generation then these conventional assets will be called upon. 5.4.3.1 Expected Capacity Factor >30% 5.4.5.2 Annual Electricity Production and Fuel Consumption (Proposed System) Month Generation 500 MW of installed wind at 30% CF (kWh) Fuel Consumption (Diesel- Gallons) Fuel Consumption [Other] Secondary load (kWh) Storage (kWh) January February March April May June July August September October November December Total 1,314,000,000 Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 23 of 33 10/04/2022 5.4.6 Proposed System Operating and Maintenance (O&M) Costs O&M costs can be estimated in two ways for the standard application. Most proposed renewable energy projects will fall under Option 1 because the new resource will not allow for diesel generation to be turned off. Some projects may allow for diesel generation to be turned off for periods of time; these projects should choose Option 2 for estimating O&M. Option 1: Diesel generation ON For projects that do not result in shutting down diesel generation there is assumed to be no impact on the base case O&M. Please indicate the estimated annual O&M cost associated with the proposed renewable project. $ Option 2: Diesel generation OFF For projects that will result in shutting down diesel generation please estimate: 1. Annual non-fuel savings of shutting off diesel generation 2. Estimated hours that diesel generation will be off per year. 3. Annual O&M costs associated with the proposed renewable project. 1. $ 2. Hours diesel OFF/year: 3. $13,000,000 annual estimate 5.4.7 Fuel Costs Estimate annual cost for all applicable fuel(s) needed to run the proposed system (Year 1 of operation) Diesel (Gallons) Electricity Propane (Gallons) Coal (Tons) Wood Other Unit cost ($) Annual Units Total Annual cost ($) 5.5 Performance and O&M Reporting For construction projects only 5.5.1 Metering Equipment Please provide a short narrative, and cost estimate, identifying the metering equipment that will be used to comply with the operations reporting requirement identified in Section 3.15 of the Request for Applications. N/A 5.5.2 O&M reporting Please provide a short narrative about the methods that will be used to gather and store reliable operations and maintenance data, including costs, to comply with the operations reporting requirement identified in Section 3.15 of the Request for Applications Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 24 of 33 10/04/2022 N/A SECTION 6 – ECONOMIC FEASIBILITY AND BENEFITS 6.1 Economic Feasibility 6.1.1 Economic Benefit Annual Lifetime Anticipated Diesel Fuel Displaced for Power Generation (gallons) Anticipated Fuel Displaced for Heat (gallons) Total Fuel displaced (gallons) Anticipated Diesel Fuel Displaced for Power Generation ($) Anticipated Fuel Displaced for Heat ($) Anticipated Power Generation O&M Cost Savings Anticipated Thermal Generation O&M Cost Savings Total Other costs savings (taxes, insurance, etc.) Total Fuel, O&M, and Other Cost Savings Average of $30,000,000 NPV $600,000,000 6.1.2 Economic Benefit Explain the economic benefits of your project. Include direct cost savings and other economic benefits, and how the people of Alaska will benefit from the project. Note that additional revenue sources (such as tax credits or green tags) to pay for operations and/or financing, will not be included as economic benefits of the project. Where appropriate, describe the anticipated energy cost in the community, or whatever will be affected by the project, over the life of the project. Explain how the forecast was developed and provide year-by-year forecasts The economic model used by AEA is available at https://www.akenergyauthority.org/What-We- Do/Grants-Loans/Renewable-Energy-Fund/2022-REF-Application. This economic model may be used by applicants but is not required. The final benefit/cost ratio used will be derived from the AEA model to ensure a level playing field for all applicants. If used, please submit the model with the application. Given the limited availability and rising cost of natural gas in the Railbelt, coupled with potential Renewable Portfolio Standards or a Carbon Reduction Plan, wind energy is likely to be an economically attractive option. This project is a critical-path task in the development of a Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 25 of 33 10/04/2022 comprehensive approach to developing wind energy at significant penetration levels on the Railbelt. The data and studies prepared by this project will be publicly available and help reduce the cost for infrastructure development and regulation costs. Wind energy is expected to offset hydrocarbon generation and be supplemented and supported by the installed hydro on the Railbelt in addition to potential energy storage. Wind will also serve to diversify the energy portfolio of the Railbelt Utilities and provide downward pressure on rates due to a decrease in long term fuel purchases. 6.1.3 Economic Risks Discuss potential issues that could make the project uneconomic to operate and how the project team will address the issues. Factors may include: Low prices for diesel and/or heating oil Other projects developed in community Reductions in expected energy demand: Is there a risk of an insufficient market for energy produced over the life of the project. Deferred and/or inadequate facility maintenance Other factors There are a great number of uncertainties in the supply chain and hydrocarbon (i.e., natural gas) market that could affect future wind projects. Costs of steel and rare earth minerals used in tower and turbine manufacturing could cause prices to rise but whether the rate of change would exceed the trending increases in natural gas prices is also uncertain. Changes in the political landscape could lead to an increased supply of natural gas or see Alaska continue without an RPS or CRP. There are several technologies still under development which may overtake wind as an economic option such as tidal or micro-nuclear, but those technologies are years from commercial marketability and make wind energy likely to be an important part of the Railbelt’s energy generation portfolio for the foreseeable future. Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 26 of 33 10/04/2022 6.1.4 Public Benefit for Projects with Direct Private Sector Sales For projects that include direct sales of power to private sector businesses (sawmills, cruise ships, mines, etc.), please provide a brief description of the direct and indirect public benefits derived from the project as well as the private sector benefits and complete the table below. See Section 1.6 in the Request for Applications for more information. Renewable energy resource availability (kWh per month) Estimated direct sales to private sector businesses (kWh) Revenue for displacing diesel generation for use at private sector businesses ($) Estimated sales for use by the Alaskan public (kWh) Revenue for displacing diesel generation for use by the Alaskan public ($) 6.2 Other Public Benefit Describe the non-economic public benefits to Alaskans over the lifetime of the project. For the purpose of evaluating this criterion, public benefits are those benefits that would be considered unique to a given project and not generic to any renewable resource. For example, decreased greenhouse gas emission, stable pricing of fuel source, won’t be considered under this category. Some examples of other public benefits include: The project will result in developing infrastructure (roads, trails, pipes, power lines, etc.) that can be used for other purposes The project will result in a direct long-term increase in jobs (operating, supplying fuel, etc.) The project will solve other problems for the community (waste disposal, food security, etc.) The project will generate useful information that could be used by the public in other parts of the state The project will promote or sustain long-term commercial economic development for the community While this project aims to limit the amount of new infrastructure needed, there will undoubtedly be new roads, transmission lines, substations, and other infrastructure developed. New substations may allow development of before unprofitable sections of land within Utilities service areas due to their distance from distribution lines. This project also aims to begin the groundwork for a wind generation forecast model that could be expanded for other communities to use in their wind generation framework. The number of wind turbines needed to meet higher penetration levels of wind will create new business opportunities and industry in Alaska. Wind technicians will need to be Alaska based, larger cranes will need to be permanently located in Alaska, and a significant number of temporary and permanent jobs will be created. Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 27 of 33 10/04/2022 SECTION 7 – SUSTAINABILITY Describe your plan for operating the completed project so that it will be sustainable throughout its economic life. At a minimum for construction projects, a business and operations plan should be attached and the applicant should describe how it will be implemented. See Section 11. 7.1.1 Operation and Maintenance Demonstrate the capacity to provide for the long-term operation and maintenance of the proposed project for its expected life Provide examples of success with similar or related long-term operations Describe the key personnel that will be available for operating and maintaining the infrastructure. Describe the training plan for existing and future employees to become proficient at operating and maintaining the proposed system. Describe the systems that will be used to track necessary supplies Describe the system will be used to ensure that scheduled maintenance is performed Every effort will be made to install remote monitoring capabilities on the met towers in order for data to be collected and in turn confirm the operability of the instruments and tower. Quarterly visits to the met towers will be planned to confirm anchor stability and monthly data reads will be made even on towers without remote capabilities. This work may be done with some MEA personnel at sites within our service territory but for those others the selected contractor will be responsible for maintenance of the towers and data collection. It is expected that extended warranties and/or O&M contracts may be purchased along with the wind turbines to ensure their long-term health. There is potential for Utility personnel to work alongside the contractor to learn the O&M procedures and eventually take over this work as the turbines age out of the warranty periods. The Utilities have a vast amount of knowledge and experience in otherwise maintaining the transmission lines, substations, roads, and other infrastructure needed to operate electrical generation. 7.1.2 Financial Sustainability Describe the process used (or propose to use) to account for operational and capital costs. Describe how rates are determined (or will be determined). What process is required to set rates? Describe how you ensure that revenue is collected. If you will not be selling energy, explain how you will ensure that the completed project will be financially sustainable for its useful life. Rate setting is performed through established Regulatory Commission of Alaska guidelines and Utility tariffs. Accounting for the operational and capital costs is also similarly established. MEA and the other Railbelt Utilities have Member Service and Collections departments to ensure revenue is collected. 7.1.2.1 Revenue Sources Briefly explain what if any effect your project will have on electrical rates in the proposed benefit area over the life of the project. If there is expected to be multiple rates for electricity, such as a separate rate for intermittent heat, explain what the rates will be and how they will be determined Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 28 of 33 10/04/2022 Collect sufficient revenue to cover operational and capital costs What is the expected cost-based rate (as consistent with RFA requirements) If you expect to have multiple rate classes, such as excess electricity for heat, explain what those rates are expected to be and how those rates account for the costs of delivering the energy (see AEA’s white paper on excess electricity for heat). Annual customer revenue sufficient to cover costs Additional incentives (i.e. tax credits) Additional revenue streams (i.e. green tag sales or other renewable energy subsidies or programs that might be available) At the feasibility stage of a wind project, it is difficult to predict a cost-based rate but any project constructed would mostly likely need to compete with the projected avoided fuel costs for the Railbelt Utilities. Wind energy, as a capital-intensive fuel free generator, would have a downward pressure on rates if it was determined to be economically viable. 7.1.2.2 Power Purchase/Sale The power purchase/sale information should include the following: Identification of potential power buyer(s)/customer(s) Potential power purchase/sales price - at a minimum indicate a price range (consistent with the Section 3.16 of the RFA) Identify the potential power buyer(s)/customer(s) and anticipated power purchase/sales price range. Indicate the proposed rate of return from the grant-funded project. Include letters of support or power purchase agreement from identified customers. N/A SECTION 8 – PROJECT READINESS 8.1 Project Preparation Describe what you have done to prepare for this award and how quickly you intend to proceed with work once your grant is approved. Specifically address your progress towards or readiness to begin, at a minimum, the following: The phase(s) that must be completed prior to beginning the phase(s) proposed in this application The phase(s) proposed in this application Obtaining all necessary permits Securing land access and use for the project Procuring all necessary equipment and materials Refer to the RFA and/or the pre-requisite checklists for the required activities and deliverables for each project phase. Please describe below and attach any required documentation. A study was performed by 1898 Co, a part of Burns McDonnell, which evaluated different scenarios using natural gas with carbon capture, hydro, nuclear, and wind to meet the goals of the proposed Renewable Portfolio Standards and Carbon Reduction Plan proposals; the wind scenario was had the potential lowest cost. The study projected wind would need to be installed with equal parts energy storage and the cost of doing so would be $2,400/kW of nameplate capacity with O&M for 500-megawatts costing $3.4 million per year. Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 29 of 33 10/04/2022 Subsequently, the Railbelt Utilities have begun the Railbelt Wind Reconnaissance Study to begin mapping out permitting and land use requirements to select sites for a feasibility study. This work should be complete by April 2023. It is anticipated that work on the Railbelt Wind Feasibility Study and Conceptual Design will begin in spring of 2023, in advance of the REF Grant being executed. This work would most likely include economic analysis of potential sites, securing land use agreements and beginning the permitting processes. It is intended that met towers be installed in the fall of 2023, but this will heavily depend on funding availability, lead times for delivery of met towers, and the completion of the permitting processes. 8.2 Demand- or Supply-Side Efficiency Upgrades If you have invested in energy efficiency projects that will have a positive impact on the proposed project, and have chosen to not include them in the economic analysis, applicants should provide as much documentation as possible including: 1. Explain how it will improve the success of the RE project 2. Energy efficiency pre and post audit reports, or other appropriate analysis, 3. Invoices for work completed, 4. Photos of the work performed, and/or 5. Any other available verification such as scopes of work, technical drawings, and payroll for work completed internally. N/A SECTION 9 – LOCAL SUPPORT AND OPPOSITION Describe local support and opposition, known or anticipated, for the project. Include letters, resolutions, or other documentation of local support from the community that would benefit from this project. Provide letters of support, memorandum of understandings, cooperative agreements between the applicant, the utility, local government and project partners. The documentation of support must be dated within one year of the RFA date of October 4, 2022. Please note that letters of support from legislators will not count toward this criterion. The introduction of Renewable Portfolio Standards and Carbon Reduction Plans in this past legislative session have demonstrated general widespread support for renewables and wind in specific. Many communities, including the members, served by the Utilities have voiced support for renewables, particularly if renewables do not have a negative impact on rates. MEA is unaware of any strong opposition to the development of wind energy in general, though, as with any infrastructure development, site specific opposition could occur. Attached are letters of support from: Homer Electric Association Chugach Electric Association Golden Valley Electric Association Renewable Energy Alaska Project AK Renewables SECTION 10 – COMPLIANCE WITH OTHER AWARDS Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 30 of 33 10/04/2022 Identify other grants that may have been previously awarded to the Applicant by AEA for this or any other project. Describe the degree you have been able to meet the requirements of previous grants including project deadlines, reporting, and information requests. N/A SECTION 11 – LIST OF SUPPORTING DOCUMENTATION FOR PRIOR PHASES In the space below, please provide a list of additional documents attached to support completion of prior phases. Letter of Agreement for Railbelt Wind Study Phase I Railbelt Wind Reconnaissance Study Request for Proposals Railbelt Utilities C02 Compliance Cost Impacts Prefeasibility Analysis Renewable Energy in Alaska report by NREL SECTION 12 – LIST OF ADDITIONAL DOCUMENTATION SUBMITTED FOR CONSIDERATION In the space below, please provide a list of additional information submitted for consideration. Cover Letter Match Commitment Letter (Board resolution to be submitted as supplementary information) Corporate Certificate Business License Certificate of Public Convenience and Necessity Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 31 of 33 10/04/2022 SECTION 13 – AUTHORIZED SIGNERS FORM Community/Grantee Name: Matanuska Electric Association, INC Regular Election is held: N/A Date: 12/5/2022 Authorized Grant Signer(s): Printed Name Title Term Signature Ed Jenkin Chief Operating Officer N/A Josh Craft Grid Modernization Manager N/A I authorize the above person(s) to sign Grant Documents: (Must be authorized by the highest ranking organization/community/municipal official) Printed Name Title Term Signature Anthony Izzo Chief Executive Officer N/A Grantee Contact Information: Mailing Address: 163 E. Industrial Way Palmer, AK 99645 Phone Number: 907-761-9300 Fax Number: 907-761-9352 Email Address: meacontact@mea.coop Federal Tax ID #: 92-0007954 Please submit an updated form whenever there is a change to the above information. Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 32 of 33 10/04/2022 SECTION 14 – ADDITIONAL DOCUMENTATION AND CERTIFICATION SUBMIT THE FOLLOWING DOCUMENTS WITH YOUR APPLICATION: A. Contact information and resumes of Applicant’s Project Manager, Project Accountant(s), key staff, partners, consultants, and suppliers per application form Section 3.1, 3.4 and 3.6. Applicants are asked to provide resumes submitted with applications in separate electronic documents if the individuals do not want their resumes posted to the project web site. B. Letters or resolutions demonstrating local support per application form Section 9. C. For projects involving heat: Most recent invoice demonstrating the cost of heating fuel for the building(s) impacted by the project. D. Governing Body Resolution or other formal action taken by the applicant’s governing body or management per RFA Section 1.4 that: Commits the organization to provide the matching resources for project at the match amounts indicated in the application. Authorizes the individual who signs the application has the authority to commit the organization to the obligations under the grant. Provides as point of contact to represent the applicant for purposes of this application. Certifies the applicant is in compliance with applicable federal, state, and local, laws including existing credit and federal tax obligations. E. An electronic version of the entire application on CD or other electronic media, per RFA Section 1.7. F. CERTIFICATION The undersigned certifies that this application for a renewable energy grant is truthful and correct, and that the applicant is in compliance with, and will continue to comply with, all federal and state laws including existing credit and federal tax obligations and that they can indeed commit the entity to these obligations. Print Name Anthony Izzo Signature Title Chief Executive Officer Date 12/5/22 Renewable Energy Fund Round 15 Grant Application – Standard Form AEA 23046 Page 33 of 33 10/04/2022 Round 15 of the Renewable Energy Fund Application Attachments Section 9 Local Support Homer Electric Association Chugach Electric Association Golden Valley Electric Association Renewable Energy Alaska Project Alaska Renewables Section 11 Supporting Documentation Letter of Agreement for Railbelt Wind Study Phase I Railbelt Wind Reconnaissance Study Request for Proposals Railbelt Utilities C02 Compliance Cost Impacts Prefeasibility Analysis Renewable Energy in Alaska report by NREL Section 12 Additional Documentation Match Commitment Letter Corporate Certificate Business License Certificate of Convenience and Public Necessity Corporate Office Central Peninsula Service Center 3977 Lake Street 280 Airport Way Homer, Alaska 99603-7680 Kenai, Alaska 99611-5280 Phone (907) 235-8551 Phone (907) 283-5831 FAX (907) 235-3313 FAX (907) 283-7122 November 30, 2022 Email: grants@akenergyauthority.org Grants Coordinator Alaska Energy Authority (AEA) 813 West Northern Lights Blvd. Anchorage, AK 99503 Re: Support of Matanuska Electric Association’s REF Round 15 grant application Dear Grants Coordinator: Renewable Energy Goals and Carbon Reduction Plans at Railbelt Utilities and possible future state-wide Renewable Portfolio Standards will require a comprehensive approach in developing and integrating non-firm energy sources in the future. The Railbelt Wind Study was started as a collaborative effort between Matanuska Electric Association (MEA), Chugach Electric Association (CEA), Golden Valley Electric Association (GVEA), and Homer Electric Association (HEA), and a Letter of Agreement to complete Phase I, the Railbelt Wind Reconnaissance Study, was executed on August 8, 2022. The Railbelt Wind Reconnaissance Study will create a permitting roadmap, land use study, and desktop, reconnaissance level, wind resource analysis and provide potential sites for additional analysis and data collection. The work is expected to be complete by April of 2023. As a signatory on the Letter of Agreement, Homer Electric Association supports MEA’s application to Round 15 of the Renewable Energy Fund to manage Phase II of the Railbelt Wind Study, the Railbelt Wind Feasibility and Conceptual Design Project. HEA will provide advice and data, including HEA-collected meteorological data, and collaborate with MEA and our other project partners to complete this and future phase(s) of the project. Any work done now to identify those prospects with potential to offer economies of scale and/or lower integration costs can add tremendous value to all consumers on the Railbelt by helping offset current natural gas, naphtha, and coal consumption with the most cost-effective renewable energy projects. Sincerely, David B. Thomas, P.E. Director of Strategic Services, Homer Electric Association dthomas@homerelectric.com 907-252-2954 (mobile) November 28, 2022 Email: grants@akenergyauthority.org Grants Coordinator Alaska Energy Authority (AEA) 813 West Northern Lights Blvd. Anchorage, AK 99503 Re: Support of Matanuska Electric Association’s REF Round 15 grant application To whom it may concern: Higher penetration levels of wind energy on the Railbelt grid suggested by recent Renewable Portfolio Standard and Carbon Reduction Plan proposals will require a comprehensive approach in developing projects to minimize infrastructure development costs and regulation requirements. The Railbelt Wind Study was started as a collaborative effort between Matanuska Electric Association (MEA), Chugach Electric Association (CEA), Golden Valley Electric Association (GVEA), and Homer Electric Association (HEA), and a Letter of Agreement to complete Phase I, the Railbelt Wind Reconnaissance Study, was executed on August 8, 2022. The Railbelt Wind Reconnaissance Study will create a permitting roadmap, land use study, and desktop, reconnaissance level, wind resource analysis and provide potential sites for additional analysis and data collection. The work is expected to be complete by April of 2023. As a signatory on the Letter of Agreement, GVEA fully supports MEA’s application to Round 15 of the Renewable Energy Fund to manage Phase II of the Railbelt Wind Study, the Railbelt Wind Feasibility and Conceptual Design Project. GVEA will provide advice and data as appropriate and collaborate with MEA and are other project partners to complete this and future phase(s) of the project. Sincerely, Dan Bishop Director of Engineering Services 308 G Street, Suite 225, Anchorage, Alaska 99501 p: 907.929.7770 f : 907.929.1646 www.REalaska.org December 5, 2022 Alaska Energy Authority Anchorage, Alaska RE: MEA REF grant proposal for wind in the Railbelt Renewable Energy Alaska Project (REAP) supports the Renewable Energy Fund (REF) grant proposal led by Matanuska Electric Association (MEA) to install meteorological towers at locations in the Railbelt identified by the Railbelt utilities to locate appropriate sites for wind energy development in the region. REAP believes this request complements the REF grants awarded last year to support similar work on the Kenai Peninsula and in the Interior. REAP is a non-profit coalition of over 70 diverse organizations in Alaska that has been working to promote clean energy in the state since 2004. REAP has been instrumental in the establishment and funding of several state clean energy programs in Alaska, the creation and dissemination of science, technology, engineering and math (STEM) curricula to educate K-12 students and the development of workforce development pathways for clean energy. We have worked with state agencies and several national laboratories, and have been engaged in the effort to establish an electric reliability organization in the Railbelt. REAP is also engaged in an effort to establish a renewable portfolio standard (RPS) for the Railbelt that would require 80% of the region’s electricity to come from renewable sources by the year 2040. By way of disclosure, all of the Railbelt utilities are dues-paying members of REAP. In addition, I serve on the REF advisory committee. Please do not hesitate to contact me at 907-232-0908 if you have any questions. Sincerely, Chris Rose Executive Director December 5, 2022 Email: grants@akenergyauthority.org Grants Coordinator Alaska Energy Authority (AEA) 813 West Northern Lights Blvd. Anchorage, AK 99503 Re: Support of Matanuska Electric Association’s REF Round 15 Grant Application To whom it may concern: Alaska Renewables LLC (AKR) is a privately-held company seeking to develop wind projects around the Railbelt and is working with Chugach Electric Association and Matanuska Electric Association (MEA) on integration and interconnection studies while gathering project-specific wind data. Higher penetration levels of wind energy on the Railbelt grid will require a comprehensive approach in developing projects to minimize infrastructure development costs and regulation requirements. The Railbelt Wind Study was started as a collaborative effort between Matanuska Electric Association, Chugach Electric Association, Golden Valley Electric Association, and Homer Electric Association, and a Letter of Agreement to complete Phase I, the Railbelt Wind Reconnaissance Study, was executed on August 8, 2022. The Railbelt Wind Reconnaissance Study will create a permitting roadmap, land use study, and desktop, reconnaissance level, wind resource analysis and provide potential sites for additional analysis and data collection. The work is expected to be complete by April of 2023. AKR is particularly supportive of the analysis of the usefulness of geographical diversity on production. To reach large-scale penetration of wind, the Railbelt must leverage its transmission system’s weakness – size – as a strength, since geographically disparate weather systems produce power at very different times and help create a more balanced composite of wind production, thus reducing regulation costs. This is a very important part of this work. Alaska Renewables wind data will be available to MEA and CEA via a non-disclosure agreement for evaluation within the entirety of the Railbelt Wind Study. All resource assessment work done through REF grants become public information and AKR prefers that all parties – Independent Power Producers and possible off-takers such as Railbelt Cooperatives – have access to as much information as possible to identify and assess those prospects with the best potential to offer economies of scale and/or lower integration costs to all consumers on the Railbelt by helping offset current natural gas, naphtha, and coal consumption with the most cost-effective renewable energy projects. Alaska Renewables fully supports MEA’s application to the Renewable Energy Fund for collection of wind data across the Railbelt in support of further wind energy development. This is a critical path task towards widespread deployment. Sincerely, Matt Perkins CEO Alaska Renewables LLC DocuSign Envelope ID: 43D6D9AB-5B4F-444F-89B0-A91B55A35CB7 MATANUSKA ELECTRIC ASSOCIATION, INC. ● P.O. Box 2929, Palmer, Alaska 99645 ● t 907.745.3231 ● f 907.761.9264 ● www.mea.coop The Parties hereby agree to the terms and conditions set forth in the LOA: AGREED: MEA Representative Signature: Printed Name: Title: Date: AGREED: GVEA Representative Signature: Printed Name: Title: Date: AGREED: CEA Representative Signature: Printed Name: Title: Date: AGREED: HEA Representative Signature: Printed Name: Title: Date: David B. Thomas RFP No. 22-22299 REQUEST FOR PROPOSAL NO. 22-22299 TO PERFORM ENGINEERING SERVICES FOR WIND RECONNAISSANCE STUDY FOR RAILBELT WIND STUDY OCTOBER 2022 RFP No. 22-22299 TABLE OF CONTENTS I. NOTICE AND INSTRUCTIONS TO PROPOSERS.......................................................... 3 II. GENERAL INFORMATION ............................................................................................. 4 A. B. Purpose ......................................................................................................................... 4 Background.................................................................................................................... 4 C. Requirements .............................................................................................................. 4 III. SCOPE OF SERVICES AND SCHEDULES .................................................................... 5 A. Project Descriptions ..................................................................................................... 5 Phase 1 – Railbelt Wind Reconnaissance Study ................................................................ 5 Phase 2 – Railbelt Wind Feasibility Study .......................................................................... 7 Phase 3 – Railbelt Wind Conceptual Design Study ............................................................ 8 B. Services ....................................................................................................................... 8 1. Project Management ................................................................................................ 9 2. Permitting and Land Use Study ................................................................................ 9 3. Railbelt Wind Reconnaissance Desktop Study ......................................................... 9 4. Railbelt Wind Reconnaissance Study Report ..........................................................10 5. Assistance During Bidding .......................................................................................10 C. Schedules ...................................................................................................................11 Engineering Services RFP Submittal .................................................................................11 Engineering Services Contract Schedule ..........................................................................11 IV. SUBMISSION OF PROPOSALS ....................................................................................11 A. General Requirements ................................................................................................11 B. Format and Contents ..................................................................................................11 Proposer’s Organization ....................................................................................................12 Technical Qualifications.....................................................................................................12 Licensing ...........................................................................................................................12 Project Approach and Work Plan .......................................................................................12 Experience ........................................................................................................................12 Alaska Work ......................................................................................................................12 Compensation Proposal (separate submittal) ....................................................................13 C. Evaluation Criteria.......................................................................................................13 V. COMPENSATION PROPOSAL ......................................................................................14 APPENDIX A Railbelt Utilities Service Areas Map APPENDIX B Matanuska Electric Association, Inc. Professional Services Contract RFP No. 22-22299 Rev. 10/04/22 1 I. NOTICE AND INSTRUCTIONS TO PROPOSERS Matanuska Electric Association, Inc. (MEA) is soliciting Proposals to provide professional and engineering services for a Railbelt Wind Reconnaissance Study that is Phase I of the Railbelt Wind Study. The RFP and all attachments are available through MEA’s ShareFile Site. Access to the ShareFile site can be obtained by contacting Michelle Denney, Contract Program Manager, at michelle.denney@mea.coop or 1-907-761-9393. A confidentiality agreement must be executed by the Proposer prior to receiving the RFP Documents. Proposals are required to be submitted through MEA’s ShareFile site no later than 4:00 PM Alaska Standard Time (AKST), Wednesday, November 2nd, 2022. Access to the ShareFile site will be provided upon request to the Contract Program Manager. A pre-proposal conference will be held at 11:00 AM, AKST, Wednesday, October 12th, 2022, at MEA’s Headquarters, Member Service Conference Room, located at 163 E Industrial Way, Palmer, Alaska 99645. Attendance at this conference is optional. If Proposer is unable to attend in person and would like to join virtually via Zoom please contact Michelle Denney, Contract Program Manager, at michelle.denney@mea.coop or 1-907-761-9393 a minimum of 48-hours prior to the conference to request the Zoom meeting notice. Questions related to this RFP are due no later than, 12:00 Noon AKST, Wednesday, October 19th, 2022. Questions shall be submitted electronically (email) to FormalQuestions@mea.coop. Unless otherwise specified in this RFP, all communication from Proposer shall be in writing via email to Michelle Denney referencing RFP No. 22-22299 at FormalQuestions@mea.coop. Bidders are prohibited from contacting any employee, board member, agent, or other associate of MEA regarding this request except as outlined in this Notice and Instruction to Proposers. Responses to questions will be provided those who attended the preproposal meeting, by 5:00 PM, AKST, Wednesday, October 26th, 2022. Proposers shall specify in their response to this RFP in writing whether exceptions are taken to any of the terms and conditions of the attached Professional Services Contract. Exceptions taken at a later date may result in rejection of the proposal. MEA reserves the right to define and waive irregularities, to accept or reject any or all Proposals, in whole or part, and to reissue, withdraw or cancel the project in its entirety for any reason, including to perform the work in house, without liability of any type to Proposer, including but not limited to any costs associated with Proposal preparation and submittal. RFP No. 22-22299 Rev. 10/04/22 2 II. GENERAL INFORMATION A. Purpose This RFP will provide interested engineering firms, the “Proposers”, the opportunity to submit proposals for Phase I (Railbelt Wind Reconnaissance Study) of the Railbelt Wind Study. Integrating high penetration levels of wind energy on the Railbelt will require localized and macroscopic understandings of the resource. Localized wind resource data will be used to select likely turbine models, estimate revenue and costs to permit and interconnect to the Railbelt Grid, construct road and transmission infrastructure such that net-present values of potential projects throughout the study area can be estimated and compared to other locations. Production estimates from individual locations can be rolled into a system wide projection and inform the usefulness of geographic diversity on expected ramp rates, production capacity, and net-present value. The system wide projection will advise the need for, and selection of, energy storage from power and energy capacity perspectives. Additionally, a forecasting model will be created to allow the most efficient utilization of system resources. Cost estimates for infrastructure and site development for each potential location will be developed. In addition to the production estimates, groupings of projects will also be evaluated for their ramp rates, energy storage needs, infrastructure development needs, cost effectiveness, etc. The selection of these criteria and the weighting given to each will be developed through this study. It is assumed that all production and cost estimates will be consistent with a feasibility study and further refinement will be performed in subsequent design work. It is the intent of this RFP to award work for Phase 1. Future phases are presented for planning purposes. The right is reserved to award future phases to the Phase 1 contractor as deemed necessary or prudent. B. Background MEA is a Cooperative providing electric service to over 50,000 members in South Central Alaska. The Co-op generates most of its power requirements and operates a 115-kV transmission system that interties its generating plants to adjacent utilities and the distribution system in the population centers in Palmer and Wasilla. A joint Railbelt Utility Integrated Resource Plan (IRP) recognized a combination of wind energy and energy storage as a potential carbon reduction method. The Governor proposed a Renewable Portfolio Standard (RPS) that would have required 80% of power to be generated from renewable resources by 2040. As such, an RPS may be passed in future legislative sessions. As wind energy may play a significant role in meeting this target, the Railbelt Utilities have chosen to undertake a system-wide analysis of the available wind resources to qualify the technical and economic viability of wind energy to achieve carbon reduction and RPS goals. RFP No. 22-22299 Rev. 10/04/22 3 C. Requirements To be considered for selection, Proposers are expected to demonstrate their qualifications and approach to successfully carry out the permitting, wind resource studies, cost estimating, modeling, contract management, and project management to allow completion of Phase I of the project within the required schedule. Special consideration may be given to Proposers that demonstrate ability to complete all phases of the proposed work. Proposers shall indicate experience in: 1. Executing permitting and land use activities necessary to study and develop wind farms. 2. Performing wind resource assessments from desktop studies and deployment of meteorological towers and/or other wind measurement devices. 3. Performing production estimates for various turbines based on wind resource data. 4. Providing cost estimates for wind farm development including necessary infrastructure to access remote sites and interconnecting to existing infrastructure. 5. Utilizing value engineering principles in making project choices. 6. Authoring studies and reports that will be used to make future project decisions. 7. Energy system modeling. Emphasis in the selection will be placed on: 1. Proposer’s ability to demonstrate proficiency in permitting analysis, negotiating and executing land use agreements, gathering and analyzing wind data for use in the selection of wind farm sites and wind turbines. 2. A clear demonstration of how the schedule will be met and how the various tasks will be staffed. 3. A demonstration of understanding how to work in remote, cold climates. 4. The amount of similar, recent work the Proposer has performed. 5. Availability of key personnel. III. SCOPE OF SERVICES AND SCHEDULES A. Project Descriptions Phase I – Railbelt Wind Reconnaissance Study Phase I will develop a basic understanding of the areas in the Railbelt where wind development is appropriate from a permitting, land use, resource, and cost perspective. The overarching goal of Phase I is to inform the Phase II effort to RFP No. 22-22299 Rev. 10/04/22 4 gather information on wind resources and project development. It is estimated that Phase I of the Railbelt Wind Study can be completed in six to nine months from Notice to Proceed. Deliverable: A Railbelt Wind Reconnaissance Study Report that offers the results of Task 1 (Permitting and Land Use Study) and Task 2 (Railbelt Wind Reconnaissance Desktop Study). The Railbelt Wind Reconnaissance Study Report must include: 1. an Executive Summary, 2. the results of the Permitting and Land Use Study 3. an overview of the data evaluated (the data must be supplied as appendices or other files as appropriate), 4. the analysis performed, 5. an evaluation of the usefulness of geographic diversity on wind energy production, 6. an assessment of project size on energy costs from each of the most promising locations. 7. recommendations for areas that may have promise but where there is a dearth of data, 8. recommendations for future work in Phase 2 based on the cumulative results of the Wind Reconnaissance and Permitting and Land Use Studies 9. cost estimates for the recommended future work under Phase 2. Task 1 – Permitting and Land Use Study The area around the Railbelt grid encompasses a variety of land and waters ownership structures and jurisdictions. An evaluation of the permitting required to deploy a wind farm in each instance will be developed for acreage within 100 miles of existing transmission lines, including potential offshore wind developments. The evaluation will include, but is not limited to, analysis of environmental, anthropological, land use, water use, and aviation issues that would preclude development of a wind resource. The goal of this task is not to obtain any permits but to understand the timelines, costs, and permitting requirements and eliminate various “no go” zones in the different areas on the Railbelt grid. This Study will also preclude areas that may be unsuitable for wind farm development (e.g., residential, or urban areas, State and National parks, etc.). The results of this work will reduce the scope of Task 2 (Wind Reconnaissance Study) and every effort should be made to do so. There are two goals associated with this task: Goal 1: Identify areas where wind development is not suitable. Goal 2: Create preliminary estimates of permitting costs and timelines for different ownership types (private, State DNR, USFS, Native Corporations, Native Associations, etc.). in the different areas of the Railbelt. RFP No. 22-22299 Rev. 10/04/22 5 Task 2 – Railbelt Wind Reconnaissance Desktop Study This task will be a desktop evaluation of the wind resource available within 100 miles of Railbelt infrastructure. This is a very large region, and this task will cast a wide net with the intention of identifying areas of further study, areas where further study may be warranted, and areas that are not suitable for development. The Permitting and Land Use Study should serve to identify areas where the Wind Reconnaissance Study should not investigate. Currently, there are three operating wind farms on the Railbelt grid and numerous other data sets (e.g., airports, weather stations, Alaska Department of Transportation Highway monitoring stations, Renewable Energy Fund Wind Feasibility Studies, and the Alaska Wind Map) that may be useful validating desktop modeling of wind speeds, wind shear, capacity factors and coincident power production at disparate locations. There may be areas where no data is available or where data is lacking. In these instances, recommendations on whether to pursue further data collection in these areas must be supplied. Cost estimates to collect site-specific metrological data in a future project phase will be prepared. There are three goals associated with this task: Goal 1: Evaluate the usefulness of geographic diversity on production. Goal 2: Narrow the focus of subsequent tasks and future work by developing cost layers for road access, transmission expansions, site prep and development and long-term maintenance costs for all the study area based on distances from roads and transmission, slope, cumulative rise, soil conditions, distance from port facilities, etc. Goal 3: Provide recommendations and cost estimates for future work. Future Phases of Work – Included for reference only and not to be included in current proposals. Phase II – Railbelt Wind Feasibility Study Phase II will develop a general understanding of wind resources on the Railbelt to meet varying levels of carbon reduction and/or RPS goals in the most cost- effective manner based on the results of Phase I and available funding. This scope of work will include the following tasks. Task 3: Scoping Task 4: Cost Estimates Task 5: Land Use and Other Agreements Task 6: Permitting Task 7: Meteorological (Met) Tower Studies Task 8: Forecast Modeling These tasks will be adjusted as necessary and additional tasks may be added because of Task 3, scoping. A detailed schedule for Phase II will also be developed through Task 3. RFP No. 22-22299 Rev. 10/04/22 6 Deliverable: A Railbelt Wind Feasibility Study Report that offers an overview and results of the Phase II work. The Report must include, but is not limited to: 1. An Executive Summary. 2. An overview of the work performed, and the sites studied. 3. Results of the permitting work that includes potential hurdles for the development of individual sites. 4. An overview of the Meteorological Studies performed and the results of the studies. 5. An analysis of the usefulness of geographical diversity on production versus the cost effectiveness of fewer but larger wind farms. 6. Recommendations for future work which may include further feasibility level work 7. Cost estimates for recommended future work. Phase III – Railbelt Wind Conceptual Design Study Based on the available funding, results of Phase II, and the operational make-up of the Railbelt grid, Phase III will create a conceptual design that uses wind, and energy storage as necessary, to meet varying levels of carbon reduction and/or RPS goals for the Railbelt Grid. This scope of work will include the following tasks. Task 9: Scoping Task 10: Selection Criteria and Weighting Development Task 11: Wind Project Analysis Task 12: Modeling Task 13: Project Selection These tasks will be adjusted as necessary and additional tasks may be added as a result of Task 9 (Scoping). Deliverable: A Railbelt Wind Conceptual Design Report that will include, but is not limited to: 1. An Executive summary. 2. A detailed description of the Selection Criteria and how each criterion is weighted and why. 3. A description of each project grouping evaluated. 4. An overview of the modeling and analysis performed. 5. The scoring of each project grouping and an overall ranking of each project. 6. Recommendations on project selection and future work along with cost estimates for recommended future work. B. Services The Project described under III.A is presented in three phases. Only services for Phase I, Tasks 2 and 3 of the project are currently required and detailed in III.B.1- 6. RFP No. 22-22299 Rev. 10/04/22 7 1. Project Management This service shall include overseeing all aspects of the Proposer’s scope of work, including but not limited to ensuring appropriate staffing levels to complete the work within the agreed schedule and budget, development and monitoring of schedules and cash flows, preparation of status reports as defined in the Contract (see Appendix B), scheduling of meetings and other project related activities as may be required. The Selected Proposer is expected to participate in the following meetings: a minimum two-hour Project kickoff, bi-weekly status updates, a minimum two-hour mid-project update, and a minimum two-hour project closeout. The meetings may be held in person at MEA headquarters or via video conference, with a preference for Microsoft Teams. For this RFP, Proposers should assume, in addition to the meetings noted above, that four additional meetings by Proposer’s staff shall be required. Deliverables for this service are as noted above in Section III.B.1. 2. Permitting and Land Use Study The Railbelt grid encompasses a variety of land ownership structures and jurisdictions. An evaluation of the permitting required to deploy a wind farm in each of these instances will be developed. The evaluation will be all encompassing and must include, but is not limited to, analysis of environmental, anthropological, land use, and aviation issues. The goal of this task is not to obtain any permits but to understand the timelines, costs, and permitting requirements in the different areas on the Railbelt grid. This Study will also identify areas that may be unsuitable for wind farm development (e.g., residential, or urban areas, State and National parks, etc.). The results of this work may serve to reduce the scope of Phase II and every effort should be made to do so. There are three goals associated with this service: 1. Identify areas where wind development is not suitable. 2. Create a road map for permitting in the different areas of the Railbelt. 3. Understand the timelines and costs for permitting in the different areas of the Railbelt. Deliverables for this service are as noted above in Section III.B.2. 3. Railbelt Wind Reconnaissance Desktop Study This task will be a desktop evaluation of the wind resource available within 100 miles of Railbelt infrastructure. This is a vast region, and this task will cast a wide net to identify areas of further study, areas where further study may be warranted, and areas that are unsuitable for development. The Permitting and Land Use Study should serve to identify areas where the Wind Reconnaissance Study should not investigate. Conversely, there are three operating wind farms on the Railbelt grid and numerous other data sets (e.g., airports, weather stations, Alaska Department of Transportation Highway monitoring stations, Renewable Energy Fund Wind Feasibility Studies, and the Alaska Wind Map), along with current wind resource RFP No. 22-22299 Rev. 10/04/22 8 assessments being performed by Homer Electric Association that will be useful for identifying areas to explore. Existing data sources will be identified and mined. There may be areas where no data is available or where information is lacking. In these instances, recommendations on whether to pursue further data collection in these areas must be supplied. Cost estimates will be prepared to thoroughly vet the wind resource in the areas for further study. There are three goals associated with this task: 1. Evaluate the usefulness of geographic diversity on production. 2. Narrow the focus of subsequent tasks and future work. 3. Provide recommendations and cost estimates for future work. Deliverables for this service are as noted above in Section III.B.3. 4. Railbelt Wind Reconnaissance Study Report A Railbelt Wind Reconnaissance Study Report will be prepared that offers the results of Service 2 (Permitting and Land Use Study) and Service 3 (Railbelt Wind Reconnaissance Desktop Study). The Railbelt Wind Reconnaissance Study Report must include: 1. an Executive Summary, 2. the results of the Permitting and Land Use Study, preferably in a spreadsheet, 3. an overview of the data evaluated (the data must be supplied as appendices or other files as appropriate), 4. the analysis performed, 5. an evaluation of the usefulness of geographic diversity on wind energy production, 6. recommendations for areas that may have promise but where there is a dearth of data, 7. recommendations for future work in Phase 2 based on the cumulative results of the Wind Reconnaissance and Permitting and Land Use Studies 8. cost estimates for the recommended future work under Phase 2. Deliverables for this service are as noted above in Section III.B.4. 5. Assistance During Bidding MEA may solicit bids for Phases II and III of this project. Under this service the Proposer shall assist with clarifications during the bidding period, attend the pre- bid conference and assist MEA in evaluating bids received. Deliverables for this service are as noted above in III.B.5. RFP No. 22-22299 Rev. 10/04/22 9 C. Schedules The following schedule is anticipated for the described engineering services: Item Completion Date Engineering Services RFP Submittal Submittal of Proposal Selection of Proposer November 2nd, 2022 November 9th, 2022 Engineering Services Contract Schedule Permitting and Land Use Study January 1st, 2023 Railbelt Wind Reconnaissance Desktop Study March 1st, 2023 Railbelt Wind Reconnaissance Desktop Study Report April 30, 2023 The above dates are tentative, and a detailed schedule must be submitted with the proposal showing individual tasks, their performance timeframe and cash flow requirements. A Gant chart schedule showing critical paths and completion milestones, if applicable, is preferred. Schedules should include a minimum of five (5) business days for MEA to review a submittal. This review time may be increased at MEA’s sole discretion. The dates noted above are tentative completion dates for the services outlined in section 3.B. The completion date of one service may actually overlap with the start date of another service. IV. SUBMISSION OF PROPOSALS A. General Requirements As stated in the Notice and Instructions to Proposers the following schedule shall be adhered to for this RFP. Proposal available on ShareFile October 5th, 2022 Optional Pre-Proposal Meeting (In Person or via Zoom) October 12th, 2022 Questions Submitted in Writing October 19th, 2022 (Questions to be submitted to Michelle Denney at FormalQuestions@mea.coop.) Answers to be provide on ShareFile October 26th, 2022 Proposals Due and Uploaded to ShareFile November 2nd, 2022 B. Format and Contents Proposers are encouraged to follow the guidelines given in this section when preparing their submittals. Information should be presented in a brief form but be accurate. Proposers should note that sections one through six below shall be submitted first with the Technical Proposal. MEA will evaluate the technical proposals and select the top three. Only the top three technical proposals will receive a request to submit the Compensation Proposal. Proposers shall not submit the Compensation Preproposal unless requested by MEA. Proposer’s Organization RFP No. 22-22299 Rev. 10/04/22 2 The Proposer shall provide a brief description of how their organization if set up. Proposer shall identify the persons responsible for: a. Technical management and quality control b. Administrative and contractual management, if different c. Individuals responsible for services listed in III.B Technical Qualifications This section should briefly describe the proposed project team and the geographic location of project offices involved in the work. Resumes of all proposed project managers and engineers in responsible positions shall be provided. Brochures and other information on the organization may also be included here. Licensing In this section, the Proposer shall list the following information, both for itself and for its subcontractor(s), if applicable: a. Alaska Business License (No. & Expiration Date) Project Approach and Work Plan A brief discussion of the Proposer's understanding of the Project and the steps required to accomplish the deliverables outline in each of the eight services specified in section III.B. Experience Recent experience in the areas of technical expertise relevant to the completion of this work shall be discussed. Examples of projects completed during the last five (5) years which are similar in scope and magnitude to the effort required for MEA, shall be listed with the following information: a. Description of Project b. Baseline completion date and actual completion date c. Percentage over or under original budget d. Client reference (name and current telephone number) Alaska Work Work performed recently in Alaska shall be described and related to the efforts necessary in performing this Project. Compensation Proposal (separate submittal) The evaluation process shall be broken into two separate parts. The first evaluation shall be of the Technical Proposals. Only the top three Technical RFP No. 22-22299 Rev. 10/04/22 3 Proposals will be requested to submit their Compensation Proposal. The Compensation Proposal shall include: a. Cover Sheet b. Rate Schedule (including subcontractor rates) c. Costs for E&O Insurance d. Cost Schedule in section V below. This Cost Schedule is for completion of services one through eight as described in section III. B “Services”. Compensation for work completed shall be in accordance with provisions in the Contract, see Appendix B. Each of the services outlined in section III.B shall have a Task Order associated with it through which the successful Proposer will be compensated for work completed. C. Evaluation Criteria All Technical Proposals will be evaluated and rated by the MEA Evaluation Committee, consisting of one representative from Matanuska Electric Association, Chugach Electric Association, Homer Electric Association, and Golden Valley Electric Association, per the Letter of Agreement for Railbelt Wind Study Phase I, with the weighted criteria listed below: Technical Expertise 25 points Project Management 15 points Prior Project Performance 20 points Total for Technical Proposal 60 points The Compensation Proposals will be requested from the three Proposers with the highest evaluated Technical Proposals. The Compensation Proposal will be with 40% of the overall evaluation, with the lowest cost Proposer receiving all 40 points and the other two receiving less than 40 points based on the ratio of their cost compared to the lowest cost Compensation Proposal. Total for Compensation Proposal 40 points Maximum Evaluated Score 100 points RFP No. 22-22299 Rev. 10/04/22 4 V. COMPENSATION PROPOSAL Company Name: ___________________________________________________ A. Railbelt Wind Study Phase I – Railbelt Wind Reconnaissance Study Service Estimated Costs 1. Project Management $ __________________ 2. Permitting and Land Use Study $ __________________ 3. Railbelt Wind Reconnaissance Desktop Study $ __________________ 4. Railbelt Wind Reconnaissance Study Report $ __________________ Total $ ================== RFP No. 22-22299 APPENDIX A RAILBELT UTILITIES SERVICE AREAS MAP ##* ##* ##* ##*##*##*##* ##* ##*##* ##* ##* ##* ##* ##*##* ##*##* ##* ##* ##* ##* ##* ##* ##* ##* ##* ##* ##* ##* ##*##*##*##*##*##*##* ##* ##*##* ##*##* ##* ##* ##* ##* ##* ##* ##*##* ##*##*##* ##* Fox Knik Eyak Hope Slana Minto Ester Healy Kenai Homer Indian Gakona Willow Sutton Palmer Seward Paxson Tanana Nenana Tyonek Telida Valdez Portage Gulkana Chitina Tonsina Eklutna Susitna Houston Wasilla Tazlina Nikiski Kasilof Cordova Girdwood Cantwell Big Lake Skwentna Portlock Nanwalek Dot Lake Kachemak Anderson Whittier Soldotna Nelchina Seldovia Tatitlek Salamatof Anchorage Fairbanks Big Delta Talkeetna Mendeltna Dry C reek Ninilchik Glennallen Chickaloon Moose Pass Kenny Lake Nikolaevsk Healy Lake North Pole Clam G ulch Chistochina Chenega Bay Petersville Port Graham Anchor Point Lower Tonsina Copper C enter McKinley Park Cooper Landing Delta Junction Lake Minchumina Chena Hot Springs Manley H ot Springs Arctic CircleInternational Date Li neq 0 50 100 15025 Miles This map was produced in ArcMap 9.3 SP1 (Build 1850) using USDA, ADOT, AKRR, and Chugach created datasets. The placement and location of substations and power plants is based upon GPS, Google Earth and Utili ty feedback. Submit comments to John Royce (907-762-4445) - john_royce@chugachelectric.com; Chugach does not warranty the accuracy or completeness of the information containedon this map. When accuracy is necessary for any purpose, it is the responsibility ofthe user to request a locate of the respective utilitiy's assets & facilities. Railbelt Service Areas Legend ##Substation !!Power Plant !n Hydro Dam ##*Communications Tower Sites Opera ting Voltage 230 kV138 kV115 kV69 kV34.5 kVService Area Chugach Electric AssociationCity of SewardCopper Valley Electric AssociationGolden Valley Electric AssociationHomer Electric AssociationMatanuska Electric AssociationMunicipal Light & PowerFEATURE \Ferry CrossingOther HighwayOther Through HighwayPrincipal HighwayAlaska Railroad State of Alaska Road System Water Type Inlet Lakes and Rivers (Copper Valley Electric Included as Reference) Alaska Vicinity Creation Document: J:\Gis\CEA_Misc\MXDs\Railbelt\MASTER - Railbelt_Utilities_Ser vice_Area_Map.mxd 0 100 200 30050 Miles Filename: J:\Gis\SYSTEM\RAILBELT\20120501_BlkWht_Railbelt_Utilities_Ser vice_Area_Map.pdf Copyright Chugach Electric Association, Inc. © 2005-2012 5/1/2012Created by: John Royce 01/03/2005 Last Modified by: John Royce 05/01/2012 Printed: "" ""## ## "" #### ## ## ## ## ## ## ## #### ## ## "" ## ## ## ""## "" ## "" ## "" ## ! ! ! ! ! ! ! ! ##* ##* ##*##* ##* ##* ##* ##* ##* ##* ##* ##* ##* ##*##*##* ##* A n c h o r a g eAnchorage ""## ## ######""## ## ## ## ########## #### ## ! ! ! !F a i r b a n k sFairbanks N o r t h P o l eNorth P o l e RFP No. 22-22299 APPENDIX B MATANUSKA ELECTRIC ASSOCIATION, INC. PROFESSIONAL SERVICES CONTRACT Legal Review/Update: 2/9/2021 S:\Materials\WE SHARE FILES\CONTRACTS\Contract Templates\Professional Services – without TO MATANUSKA ELECTRIC ASSOCIATION, INC. Billing Address: PO Box 2929, Palmer, AK 99645 _XXXXXXXXXXXXX CONTRACT NO. XXXXXXXX This Contract is made and entered into as of 03/25/2022 between Matanuska Electric Association, Inc., (hereinafter called “MEA”), Post Office Box 2929, Palmer, Alaska 99645 and XXXXXX, XXXXXXXX XXXXX (hereinafter called “Contractor”). 1. Term The Contract is for a term commencing on XX-XX-XXXX and continuing through XX-XX-XXXX, unless previously terminated in accordance with the terms of the contract. MEA may extend the contract with two (2), one (1) year renewal options. 2. Scope of Work Contractor to provide xxx as per RFQ/ITB/RFI XX-XXX. Contractor agrees to execute the work directed efficiently and diligently in strict conformity with this Contract, the schedules and terms set forth in the Contract, or any revisions to a Contract, and MEA's general specifications, safety and environmental standards and requirements, regulatory requirements, and in accordance with good industry safety and environmental practices. 3. Authorization and Supervision All services associated with this contract are to be coordinated through and subject to the approval of MEA’s xxx or via email at xxxxxx@mea.coop or designee. Contractor shall perform only those services authorized by this Contract. 4. Compensation MEA shall compensate Contractor in accordance with the terms and rates set forth in contractor’s estimate (dated (XXXXXXXXXX) for an amount not to exceed $ XXXXXXXX. Contractor shall not be compensated for any charges or costs associated with performing services outside of the specified Scope of Work without MEA's prior written approval. 5. Deficient Work Services provided by Contractor under this Contract will be performed in a manner consistent with that degree of care and skill ordinarily exercised nationally by members of the same industry currently practicing under similar circumstances. Upon notice to Contractor and by mutual agreement between the parties, Contractor will correct those services not meeting such a standard of care without additional compensation. MEA may suspend or terminate this Contract or any Contract, in whole or in part, at any time for any reason whatsoever by giving written notice to Contractor. Upon receipt of such notice, Contractor shall cease all work as of the date of suspension or termination. Contractor shall not be paid for any work performed after such suspension or termination date. If this Contract is so terminated, Contractor shall within seven (7) days of any such suspension or termination submit to MEA a progress payment or final invoice for all work completed through the date of suspension or termination. Such invoice shall cover the actual value of all work completed. Contractor shall be paid by MEA only for that portion of the work actually performed and for documented expenses incurred by Contractor and authorized by MEA prior to the date of suspension or termination. Matanuska Electric Association, Inc. Contract No. XXXX-XXX Page 2 of 8 Legal Review/Update: 2/9/2021 S:\Materials\WE SHARE FILES\CONTRACTS\Contract Templates\Professional Services – without TO Upon the date of termination, Contractor shall immediately submit to MEA all data, forms and documents related to the Contract Scope of Services. 6. Taxes, Duties, Permits and Fees In connection with Contractor’s performance under this Agreement, Contractor shall be responsible for any and all taxes, permits, licenses, fees and certifications and any other similar authorizations required or which may be required by any governmental body, except where laws, rules or regulations expressly require MEA to obtain such authorization. 7. Terms of Payment The Contract Number XXXX-XXX must appear on all documentation and invoices submitted to MEA by Contractor. Contractor is to send invoices to MEA Accounts Payable, PO Box 2929, Palmer, AK 99645 or via email at accountspayable@mea.coop. Payments will be issued within 30 calendar days of receipt of complete and undisputed billings. Payment of any invoice by MEA shall not be construed as an indication of MEA’s satisfaction with the performance of the services, or of MEA’s acceptance of the validity of any cost and shall not prevent MEA from questioning the accuracy or validity of the invoice. 8. Changes MEA shall have the absolute right to make changes in Contractor’s scope of Work. Such Changes include the addition, deletion and modification of Work. All such Changes must be made by written direction from MEA to Contractor. Contractor shall not rely on oral statements when performing changed Work. Contractor agrees and acknowledges that no one but the MEA Representative listed in Article 3: Authorization and Supervision of this Contractor has the authority to direct Contractor to make Changes. If any person directs the Contractor to make changes in the Work, Contractor shall immediately notify MEA. MEA shall not be obligated to pay Contractor for Changes that are not authorized in writing by MEA. 9. Insurance Requirements The Contractor selected, along with any subcontractors, will be required to maintain and provide evidence of the following insurance: 1. Worker’s Compensation insurance, in compliance with the laws of all applicable state and federal jurisdictions where the work is performed, covering all employees engaged in the performance of work specified in this Contract, including coverage for: a. Employer’s liability with limits of $1,000,000 each accident, $1,000,000 each person for disease, and $1,000,000 policy limit for disease. b. Waiver of Subrogation in favor of MEA. 2. Commercial General Liability Insurance with limits of not less than $1,000,000 per occurrence/$1,000,000 aggregate. This insurance must include MEA as an additional insured, and will be primary and noncontributory to any liability coverage carried by MEA. This insurance must also include a Waiver of Subrogation in favor of MEA. MEA shall be named as additional insured on all endorsements or similar coverages listed above. Matanuska Electric Association, Inc. Contract No. XXXX-XXX Page 3 of 8 Legal Review/Update: 2/9/2021 S:\Materials\WE SHARE FILES\CONTRACTS\Contract Templates\Professional Services – without TO 3. Automobile Liability Insurance covering owned, non-owned and hired vehicles used by the Contractor with limits of not less than $1,000,000 combined single limit. This insurance will include MEA as an additional insured, and will be primary and noncontributory to any liability coverage carried by MEA. This insurance must also include a Waiver of Subrogation in favor of MEA. MEA shall be named as additional insured on all endorsements or similar coverages listed above. 4. Professional Liability insurance in the minimum limit of $1,000,000, covering all errors, omissions or negligent acts of Contractor, or anyone directly or indirectly employed by them, made in the performance of this Contract, which results in financial loss to MEA. Coverage shall be maintained for the duration of this contract plus one year following the date of final payment. Failure to comply with this provision may preclude other contracts and agreements between Contractor and MEA. Contractor shall ensure that all subcontractors obtain and maintain identical coverage limits during the full term of this contract; otherwise Contractor shall provide the required insurance for them. Certificates of insurance certifying compliance with these requirements must be received by MEA prior to performing any work. Each policy of insurance shall provide that a minimum of thirty (30) days prior written notice shall be given to MEA in the event of cancellation and/or amendments to the policy/policies, which adversely change the coverage, scope or, amount of the policy/policies and/or coverage provided thereunder. Failure of MEA to demand certificates of insurance or other evidence of Contractor’s full compliance with these insurance requirements or failure of MEA to identify a deficiency in compliance from the evidence provided shall not be construed as a waiver of Contractor’s obligation to maintain such insurance. 10. Protection of Persons and Property The Contractor and the Contractor’s subcontractors, while on the work site, shall at all times take all reasonable precautions for the safety of employees, the safety of the public and to avoid any damage to property or pollution of environment. The Contractor shall comply with all applicable Federal, State and local laws and regulations, building and construction codes. When performing services onsite at MEA’s Eklutna Generation Station (EGS), the following requirements apply: 11. Confidentiality MEA may make available to Contractor confidential information necessary for the performance of the services. Contractor agrees to keep confidential and not to disclose to any person or entity, other than Contractor’s employees, sub-consultants, and subcontractors, if any, and if appropriate on a business-need-to-know basis, any data and information not previously known to and generated by Contractor or furnished to Contractor and marked CONFIDENTIAL by MEA. This provision shall not apply to information in whatever form that comes into the public domain, nor shall it restrict Contractor from giving notices required by law or complying with an order to provide information or data when such order is issued by a court, administrative agency, or other authority with proper jurisdiction or if it is reasonably necessary for Contractor to defend itself from any suit or claim. 12. Release of Information Matanuska Electric Association, Inc. Contract No. XXXX-XXX Page 4 of 8 Legal Review/Update: 2/9/2021 S:\Materials\WE SHARE FILES\CONTRACTS\Contract Templates\Professional Services – without TO Contractor shall not release any information for publication or advertising purposes relative to this Contract or the services furnished under this Contract or the business relationship between Contractor and MEA without the prior written consent of MEA. MEA, its employees, agents, and subcontractors shall not use Contractor’s name in any advertising, publications, and promotional material, or publicity release concerning the Work without prior written approval by Contractor. 13. Inventions and Improvements The parties agree that all original works of authorship (collectively referred to as “creative materials”) developed specifically for MEA under this Contract including, but not limited to, written reports, software, videos, manuals, charts, photographs and designs, are part of a collective work and, to the extent legally permissible, shall constitute a “work made for hire” under the U.S. Copyright Act of 1976 and MEA shall be considered to be the author and owner of all copyrights in any such works. If any creative material is not part of a collective work or otherwise does not constitute “work made for hire,” Contractor irrevocably assigns to MEA, without separate compensation, all right, title and interest in and to such creative material together with all associated United States and foreign patent, copyright, trade secret and other proprietary rights including the rights of registrations and renewal. Contractor shall not receive any intellectual property rights or licenses in any Work or work for hire or creative materials as a result of services performed under this Contract. All inventions, improvements and discoveries made, developed, suggested or conceived by employees or agents of Contractor in connection with the Work shall be promptly and fully disclosed to MEA in writing. 14. Compliance with Law In the performance of the services, Contractor and its subcontractors, shall observe and comply with all applicable laws, ordinances, codes and regulations of governmental agencies, including federal, state, municipal, and local governing bodies having jurisdiction over the work and in effect during the duration of the work governing the work. Contractor shall indemnify and save harmless MEA of and from any non-compliance or violation of such laws, ordinances, codes, and regulations to the extent arising from the professional services of Contractor and on a comparative basis of fault and responsibility with MEA and shall make timely payment of all taxes, duties, fees, levies, assessments, and other payments imposed in connection with the performance of the Work, unless caused by willful misconduct of MEA. Contractor employees and subcontractors will comply with all applicable MEA policies and procedures, including safety and environmental awareness, drug and alcohol, anti-discrimination and anti-harassment and electronic communication if working in MEA’s facilities. Contractor will also comply with all applicable MEA contract and/or project site-specific requirements. This contractor and subcontractor shall abide by the appropriate requirements of 41 CFR §§ 60-1.4(a), (b), 41 CFR §§ 60-4.2(d), 41 CFR §§ 60-4.3(a), 41 CFR 60-741.5(a), 41 CFR 60-741.5(d), 41 CFR §§ 60-300.5(a), and 41 CFR §§ 60-300.5(d) as applicable. This regulation prohibits discrimination against qualified individuals on the basis of disability and prohibit discrimination against all individuals based on their race, color, religion, sex, sexual orientation, gender identity, national origin, or for inquiring about, discussing, or disclosing information about compensation. Moreover, these regulations require that covered prime contractors and subcontractors take affirmative action to employ and advance in employment individuals without regard to race, color, religion, sex, sexual orientation, gender identity, national origin, or disability. Matanuska Electric Association, Inc. Contract No. XXXX-XXX Page 5 of 8 Legal Review/Update: 2/9/2021 S:\Materials\WE SHARE FILES\CONTRACTS\Contract Templates\Professional Services – without TO This contractor and subcontractor shall abide by the appropriate requirements of 41 CFR §§ 60-1.4(a), (b), 41 CFR §§ 60-4.2(d), 41 CFR §§ 60-4.3(a), 41 CFR 60-741.5(a), 41 CFR 60- 741.5(d), 41 CFR §§ 60-300.5(a), and 41 CFR §§ 60-300.5(d) as applicable. These regulations prohibit discrimination against qualified individuals based on their status as protected veterans or individuals with disabilities, and prohibit discrimination against all individuals based on their race, color, religion, sex, sexual orientation, gender identity, national origin, or for inquiring about, discussing, or disclosing information about compensation. Moreover, these regulations require that covered prime contractors and subcontractors take affirmative action to employ and advance in employment individuals without regard to race, color, religion, sex, sexual orientation, gender identity, national origin, protected veteran status or disability. Contractor/subcontractor agrees to comply with all the provisions set forth in 29 CFR Part 471, Appendix A to Subpart A (Executive Order 13496). 15. Limitation of Liability All services to be performed entirely at the Contractor’s risk, and in addition to the insurance provided in response to this request, the Contractor shall be solely responsible for any loss, injury, damage or liability resulting directly or indirectly from Contractor’s performance of any services provided for in this Contract. Contractor specifically agrees to defend, indemnify and save MEA, its officers, agents, and employees harmless from any and all claims, demands, costs, liability (including attorney fees and court costs), loss, damage, or other expense arising directly or indirectly out of Contractor’s operations, performances and activities in response to this Contract. Contractor’s obligations under this paragraph shall extend to the acts of Contractor, the acts of Contractor’s employees, officers, subcontractors, and agents, and the acts of any other party acting on behalf of Contractor. 16. Indemnification To the fullest extent permitted by law, Contractor agrees to indemnify and hold harmless MEA and its respective officers, directors, employees and representatives (“MEA Indemnitees”) from and against any and all claims, demands, losses, costs (including attorney fees and court costs),, expenses, suits, actions, judgments, penalties, fines and liabilities for property damage or personal injury, including death, to the extent arising from a negligent act, error or omission or willful misconduct by Contractor or Contractor’s subcontractors, employees or agents in connection with the performance of Contractor’s Scope of Work under this Contract. Under no circumstances shall Contractor be obligated to indemnify MEA against its own negligence and/or willfully wrongful conduct. NEITHER PARTY SHALL BE RESPONSIBLE OR HELD LIABLE TO THE OTHER FOR ANY INDIRECT, SPECIAL, OR CONSEQUENTIAL LOSS, DAMAGE, OR LIABILITY, INCLUDING, WITHOUT LIMITATION, LOSS OF PROFIT, LOSS OF INVESTMENT, LOSS OF PRODUCT, OR BUSINESS INTERRUPTION, FOR SERVICES PERFORMED UNDER THIS CONTRACT REGARDLESS OF THE NATURE OF THE FAULT OR WHETHER IT WAS COMMITTED BY THE CONTRACTOR OR BY MEA. 17. Independence The parties intend that Contractor shall be an independent Contractor and not an employee of MEA. MEA is interested only in the results to be achieved, and the conduct and control of the work shall lie solely with Contractor. Contractor and its employees shall not be entitled to any of the benefits that MEA provides to its employees. The parties agree that Contractor is free to provide similar services for other parties throughout the term of this Contract. 18. Right to Audit Matanuska Electric Association, Inc. Contract No. XXXX-XXX Page 6 of 8 Legal Review/Update: 2/9/2021 S:\Materials\WE SHARE FILES\CONTRACTS\Contract Templates\Professional Services – without TO MEA may inspect the records of Contractor and its subcontractors upon reasonable and written advance notice from time to time during the term of this Contract and for two (2) years after the date of its termination, or final payment, whichever occurs last. The cost of such audit shall be borne by MEA, except that if any audit reveals fraud on the part of Contractor, the cost of the audit shall be borne by Contractor. 19. Force Majeure Force majeure is an occurrence beyond the control and without the fault or negligence of the party affected and which the party is unable to prevent or provide against by the exercise of reasonable diligence, including, but not limited to acts of God or the public enemy, expropriation or confiscation of facilities, changes in applicable law, war, pandemic, rebellion, sabotage or riots, earthquakes, floods, unusually severe weather that could not reasonably have been anticipated; fire, explosions, or other catastrophes. Strikes and other labor-related delays shall not, in any event, be considered force majeure occurrences. In the event of a force majeure occurrence, Contractor shall promptly give notice to MEA. Contractor shall take all reasonable measures to minimize the effect of a force majeure occurrence upon the services and shall provide documentation of the impacts to MEA and Contractor. Rates and prices fixed by this Contract shall not be subject to adjustment as a result of a force majeure occurrence. Any delay or failure in performance by either party shall not constitute default or give rise to any claim for damages only if, and only to the extent, such delay or failure is caused by force majeure. 20. Dispute Resolution MEA and Contractor agree that they shall first submit any and all unsettled claims, counterclaims, disputes and other matters in question between them arising out of or relating to this Contract or its breach to good faith negotiation between the parties. Any dispute that remains after such good faith negotiation shall be submitted next to non-binding mediation. In the event of any dispute arising out of or relating to this Contract, the parties shall use the following procedure as a condition precedent to either party pursuing other available remedies: The party who believes a dispute exists (the "Disputing Party") shall put such dispute in writing to the other party (the "Responding Party"). Such writing shall briefly and clearly state the substance and scope of the dispute, the Disputing Party's position relative to the dispute and include any legal or factual justifications of which the party is aware and the remedy being sought. The Responding Party shall respond succinctly in writing to the Disputing Party within ten (10) business days of receiving the writing from the Disputing Party. The writing shall include the Responding Party's response to each of the items included in the Disputing Party's writing. A telephone or in-person conference shall be held within ten (10) business days between the representatives of the parties having decision-making authority regarding the dispute, to negotiate in good faith a resolution to the dispute. If within ten (10) business days after such telephone conference the parties have not succeeded in negotiating a resolution of the dispute, the parties' Representatives shall submit the dispute to a mutually acceptable mediator. The fees of the mediator shall be shared equally by the parties. The parties agree that the mediation provided for in this Section is a compromise negotiation for purposes of federal and state rules of evidence. The entire procedure will be confidential. All conduct, statements, promises, offers, views and opinions, whether oral or written, made in the course of the mediation by either party, its agents, employees, representatives or other invitees to the mediation and by the mediator (who is the parties' joint agent for purposes of these compromise negotiations) are confidential and shall, in addition and where appropriate, be deemed to be attorney MEA privileged. Such conduct, statements, promises, offers, views and Matanuska Electric Association, Inc. Contract No. XXXX-XXX Page 7 of 8 Legal Review/Update: 2/9/2021 S:\Materials\WE SHARE FILES\CONTRACTS\Contract Templates\Professional Services – without TO opinions shall not be discoverable or admissible for any purposes, including impeachment, in any litigation or other proceeding involving the parties and shall not be disclosed to anyone who is not an agent, employee, expert, witness, or representative for any of the parties. 21. Termination Contractor may terminate this Contract for cause, upon breach of any terms in this Contract, upon delivery of thirty (30) days prior written notice specifying such breach and intent to terminate the Contract. If the breach is cured within such thirty (30) days or other mutually agreed to period, such notice of termination shall expire and have no further force. If the breach is not cured during the specified time period, the Contract will automatically terminate. 22. Attorney’s Fees In the event MEA shall hire an attorney to enforce the terms of this Contract or to pursue any remedies it may have for breach of this Contract, Contractor agrees to pay MEA’s reasonable costs and attorney’s fees, including in house counsel. 23. Cumulative Remedies All remedies provided in this Contract are cumulative. In addition to any remedies provided for in this Contract, MEA may pursue any remedy allowed by law. 24. Modifications No alteration in any of the terms and conditions of the Contract will be effective without the prior written consent of MEA. 25. Waiver of Default Contractor agrees that MEA’s waiver or acceptance of any breach of any of the terms and conditions of this Contract shall not operate to release Contractor of its responsibility to comply with the remaining terms and conditions of this Contract. 26. Survivability The obligations set forth in this Contract concerning indemnification; liability, warranty, confidentiality and release of information shall survive the completion, termination or expiration of this Contract for any reason. 27. Binding Effect This Contract shall bind and inure to the benefit of the parties, their respective affiliates, heirs, personal representative, successors and assigns. 28. Governing Law This Contract shall be construed and interpreted in accordance with the laws of the State of Alaska and the laws of the United States. Any suit shall be brought in Superior Court in Palmer, Alaska. 29. Entire Contract This Contract, inclusive of the XXX, contains the entire contract between the parties with respect to its subject matter. All representations, promises and prior or contemporaneous understandings relating to the subject matter of this Contract are merged into and expressed in this instrument. These terms shall not be amended, modified or supplemented except in a written contract executed by the parties' Authorized Representatives, and all such amendments shall be consecutively numbered and attached to this Contract. Matanuska Electric Association, Inc. Contract No. XXXX-XXX Page 8 of 8 Legal Review/Update: 2/9/2021 S:\Materials\WE SHARE FILES\CONTRACTS\Contract Templates\Professional Services – without TO The terms and conditions contained in this Contract, together with any plans, specifications, job descriptions or warranties given with respect to the services to be performed, shall constitute the complete and exclusive Contract between Contractor and MEA. Contract documents consist of the following: a) XXX b) XXX c) XXX d) XXX IN WITNESS WHEREOF, the parties have caused this Contract to be executed by their duly authorized representatives. MATANUSKA ELECTRIC ASSOCIATION, INC. , Inc. By: Name: Title: Date: By: Name: Title: Date: © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.1DRAFTMarch 31, 2022 FINALRailbelt UtilitiesCO2 Compliance Cost ImpactsPrefeasibility Analysis © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.2DRAFTTable of ContentsIntroductionAnalysis ApproachInputs & AssumptionsCompliance Scenario ResultsSensitivity ResultsHigh Demand SensitivityHigh Wind Capacity Factor SensitivityConclusions & Findings © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.3DRAFTAbbreviationsAEA = Alaska Energy AuthorityCEA = Chugach Electric AssociationCC = Combined-cycleCO2 = Carbon-dioxideCT = Combustion TurbineGVEA = Golden Valley Electric AssociationHEA = Homer Electric AssociationIRP = Integrated Resource PlankV = KilovoltMEA = Matanuska Electric AssociationMW = MegawattsMWh = Megawatt-hourNREL ATB = National Renewable Energy Laboratory Annual Technology BaselineNG = Natural GasNPV = Net Present ValuePPA = Power Purchase AgreementREAP = Renewable Energy Alaska ProjectRPS = Renewable Portfolio StandardWACC = Weighted Average Cost of Capital © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.4DRAFTIntroduction © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.5DRAFTAnalysis OverviewObjective:Forecast high-level impacts on Railbelt region power supply costs and power supply resource mix from various CO2 compliance scenarios to be able to:Draw insights about possible compliance scenarios, including REAP proposalDraw insights about possible compliance portfolios, including costsIdentify policy positions that would balance reliability, production costs and environmental complianceThis prefeasibility analysis is not meant to be an IRP or hourly optimization of generation. © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.6DRAFTAnalysis OverviewForecast high-level impacts on Railbelt region power supply costs and power supply resource mix from various CO2 compliance scenarios. Railbelt Utilities include:Chugach Electric AssociationCity of SewardGolden Valley Electric AssociationHomer Electric AssociationMatanuska Electric Association © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.7DRAFTAnalysis Overview – ScenariosCO2 compliance scenarios evaluated include:1. Renewable Energy Alaska Project Proposal (REAP Case):Renewable Portfolio Standard energytargets of 20% by end of 2025, 30% by end of 2030, 55% by end of 2035 and 80% by end of 2040 (assumes all zero carbon emitting resources are renewable)2. CO2 Reduction Case #1 (medium compliance):45%reductions from 2022by 2030, 80%by 20503. CO2 Reduction Case #2 (mild compliance):50%reductions from 2022by 20404. CO2 Reduction Case #3 (extreme compliance):80%reductions from 2022by 2035 © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.8DRAFTAnalyses PerformedAll analyses were performed for the 4 compliance scenarios. Analyses performed include:Base Case:Resource planning to meet the 4 compliance scenarios with various portfolio focuses (e.g., wind + batteries, large hydro, nuclear)High Demand Sensitivity:Base case analyses, but with a 20% increase in demandHigh Wind Sensitivity:Base case analyses, but with higher assumed wind capacity factors © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.9DRAFTAnalysis Approach © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.10DRAFTAnalysis Overview - ApproachInputsPortfolio AnalysisSpreadsheet ModelMonthly granularityStacks least-cost generationMatches supply to load by utilityRespects planning and operating reservesRespects RPS and CO2 restrictionsScenarios/StrategiesRPS/CO2 target scenariosNew technology Levelized Cost of Energy analyses“Railbelt Vision”OutputsBy utilityAnnual costs to serve loadNPV of portfolio costsGeneration mix by yearEmissions by yearElectricity DemandExisting GenerationPPA’sPreviously Proposed GenerationTransmission CapacitiesPreviously Proposed TransmissionNew Generation TechnologiesFinancial AssumptionsAnalyses performed are high-level in approach and do not include hourly dispatch or optimization of generation and reserves. High-level assumptions were made to complete analyses. © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.11DRAFTSummary of Compliance Scenarios YearREAP Proposal CO2 Reductions from 2022% RenewableCO2 % Reduction 1/CO2 #1 CO2 #2 CO2 #32025 20% 10%2030 30% 27% 45%2035 55% 65% 80%2040 80% 81% 50%2050 80%The RPS (REAP) compliance requirements along with the three (3) CO2 reduction scenario compliance requirements are shown by percentage and year below1/ The % CO2 reduction under REAP was calculated based on a “wind + batteries” portfolio complying with the RPS under the REAP proposal. © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.12DRAFT“Anchor” New Carbon-free Generation PossibilitiesAnchor meaning large-scale generation with capacity of 30% or more of Railbelt Region peak loadSusitna-Watana Hydro• Shared resource• Mature technology• At 459 MW, creates the need for utilities to invest in assets for spinning reserves only• Fairly expensiveSmall Modular Nuclear Reactors• Shared resource• Developing technology• Economical• Comes with permitting and equipment production risk (no factories yet for components)Wind Plus Storage• Mature technology• Allows for distributing resources• May require less investment in transmission upgrades © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.13DRAFTInputs & Assumptions © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.14DRAFTGenerator Inputs & Assumptions•Wind resource location:No specific location assumed.•Hydro resource locations:Susitna-Watana and Martin River.•New resource capital costs:Burns & McDonnell Technology Assessment with capital cost “curve” shape from NREL ATB 2021 Forecast.•Monthly shapes (wind / hydro):Assumptions were made based on data received from utilities.•Wind capacity factors:35% for start of development period declining over 10 years to 25%.•Batteries in the Wind portfolios:Assumed to equal 100% of wind nameplate capacity.•Existing resource fixed and variable O&M incl. fuel:RUC 2020 Form 12 or provided by utility.•Existing resource fuel type:When HEA and MEA NG-fueled generation reaches 50% or less of 2022 NG-fueled generation, fuel is switched from NG to diesel. CEA is assumed to self-supply NG•Wind transmission interconnection cost for wind:Assumed $1M/mile per 70 MW of wind, 10 miles of transmission line, capitalized over 50 years at 5%.•Load growth:0.92% annually for MEA, 0% for other utilities.•Weighted average cost of capital:Assumed to be 5% for nuclear, hydro and transmission (for utilities) and 8% for wind (for developers).•Inflation rate:Assumed to be 2.5% annually. © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.15DRAFTGenerator Inputs & AssumptionsAdditional Considerations Related to Certain Inputs and Assumptions …•Wind resource location:No specific location assumed. The Railbelt Region includes potentially attractive wind locations which may not be easily accessible or may be located on protected lands. •Monthly shapes (wind / hydro):Assumptions were made based on data received from utilities. The assumed wind shapes are based on limited existing wind projects and may not reflect wind shapes that can be experienced across the Railbelt Region.•Wind capacity factors:35% for start of development period declining over 10 years to 25%. This range reflects existing wind projects and a limited understanding of wind potential throughout the Railbelt Region. Wind capacity factors in the Railbelt Region are very uncertain because sufficient wind assessments have not been performed to the extent needed to properly reflect wind potential throughout the Railbelt Region. •Batteries in the Wind portfolios:Assumed to equal 100% of wind nameplate capacity. This assumption is made due to the uncertainty around wind variability throughout the Railbelt Region. To gain an understanding of wind variability significant wind assessments will need to be performed across the Railbelt Region. © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.16DRAFTDemandLoad growth in the Base Case and High Wind Case is 0.92%/year energy demand growth for MEA and flat for all other utilities.In the High Load Sensitivity case, a 20% load growth occurring between 2030 and 2034 is applied to all utilities. 4,000 4,200 4,400 4,600 4,800 5,000 5,200 5,400 5,600 5,800GWhYearRailbelt Load Forecast Base and sensitivity scenariosSum of load in the Base case (GWh)Sum of load in the high load case(GWh) © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.17DRAFTExisting Generation - ThermalGenerators OwnerMax Capacity (MW)Historical Generation (MWh) 1/Aurora Energy LLC Chena Golden Valley Electric Association 25.7 188,212Beluga Chugach Electric Association332.0 17,313Bernice Lake Homer Electric Association71.0 3,468Delta CT Power Plant Golden Valley Electric Association 27.0 278Eklutna Generation Station Matanuska Electric Association 171.0 729,084George M Sullivan Chugach Electric Association125.9 536,840Hank Nikkels Chugach Electric Association66.1 354Healy #1 Golden Valley Electric Association 28.0 119,240Healy #2 Golden Valley Electric Association 62.0 229,178Healy IC Golden Valley Electric Association 2.8 9,715International GT Chugach Electric Association14.1 1,282Nikiski Combined Cycle Homer Electric Association82.0 404,613North Pole: CC Golden Valley Electric Association 65.0 385,999North Pole: CT Golden Valley Electric Association 124.0 159,359Seldovia Homer Electric Association2.2 0Seward Chugach Electric Association15.6 0Soldotna Homer Electric Association49.0 35,279Southcentral Power Project Chugach Electric Association203.4 823,779Zehnder Diesels Golden Valley Electric Association 5.6 137Zehnder CT Golden Valley Electric Association 35.4 15,364Totals1,507.8 3,659,4951/ Based on historical generation between 2016 and 2020. © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.18DRAFTExisting Generation - RenewableGenerators Owner Max Capacity (MW)Historical Generation (MWh) 1/Battery Energy Storage System Golden Valley Electric Association 40.0 0Bradley Lake (CEA) Chugach Electric Association 72.2 233,791Bradley Lake (GVEA) Golden Valley Electric Association 21.3 68,954Bradley Lake (HEA) Homer Electric Association 15.1 48,962Bradley Lake (MEA) Matanuska Electric Association 17.4 56,306Cooper Lake Chugach Electric Association 19.4 62,821Eklutna Hydro Project (CEA) Chugach Electric Association 28.5 89,570Eklutna Hydro Project (MEA) Matanuska Electric Association 15.9 49,752Eva Creek Wind Golden Valley Electric Association 24.6 73,958Fire Island Wind Chugach Electric Association 18.0 45,128IPP Solar Matanuska Electric Association 1.0 920MEA Energy 49 Solar Matanuska Electric Association 5.0 4,599Ram Valley Hydro Matanuska Electric Association 0.3 1,369Soldotna Battery Homer Electric Association 46.5 0Southfork Hydro Matanuska Electric Association 1.0 5,772Total326.2 741,9021/ Based on historical generation between 2016 and 2020. © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.19DRAFTNew Generation Options ConsideredNew generation costs and performance characteristics are from an 1898 & Co. Technical Assessment using public information and Burns & McDonnell proprietary information. The Technical Assessment assumed the following:• Costs in 2021 dollars• Inflation (when applied in the modeling) of 2.5% annually• Performance reflective of the Railbelt Region• Costs adjusted for the Railbelt Region• No significant transmission buildouts for interconnection (costs were added separately for wind projects)• Project sized to achieve a balance between economies of scale and development flexibility © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.20DRAFTNew Generation Options ConsideredItemOnshore WindOffshore Wind Geothermal Solar Hydro TidalLi-Ion BatteryNatural Gas + Hydrogen CT NuclearNatural Gas + Carbon Capture CCGTAssumed Size (MW)50 250 30 50 250 250 50 236 231 304Configuration12 x 4.2 MW42 x 6 MW 1 x 30MW N/A 2 x 125MW 10 x 25 MW LI Battery 1x GE 7F.05 SMR1x1 GE 7F.05Capacity Factor %30% 38% 80% local 44% 25% 16% 10% 85% 50%Availability Factor %95% 95% 95% 99% 79% 70% 97% 94% 89% 86%Technology RatingMature Developing Mature Mature Mature Developing Mature Developing Developing DevelopingAssumed Useful Life (years)20 20 20 20 40 20 20 35 30 35Year for Permitting / Construction1.5 5.0 7.0 2.0 9.0 9.0 2.0 3.0 7.0 4.0 EPC Project Costs, 2021 MM$$120 $1,173 $170 $79 $1,507 $752 $79 $221 $1,275 $699 EPC Project Costs, 2021 $/kW$2,400 $4,691 $5,651 $1,580 $6,029 $3,009 $1,580 $940 $5,520 $2,300 Fixed O&M Costs, 2021 MM$/year$1.7 $35.0 $5.4 $0.6 $8.3 $7.5 $1.6 $2.0 $26.6 $13.0 Non-fuel Variable O&M Costs, 2021 $/MWhn/a n/a n/a n/a n/a n/a n/a $1.5 $0.8 $5.0 Levelized Cost of Energy $/MWh (2040 $’s)$95.01 $177.95 $114.26 $139.16 $158.74 $198.15 n/a $234.99$107.43 $169.02 © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.21DRAFTTransmissionThe compliance Scenarios all assume the Railbelt transmission system would need to be upgraded to 230kV to accommodate additional zero-carbon generation. To satisfy this requirement, the transmission projects listed below are included in the power supply costs assuming annualized payments based on 50-year asset lives and 5% WACC.Project DescriptionCost ($'s in millions)Cost Year Source2022 Installed Cost ($M)Bernice Lake - BelugaNew 100 MW HVDC (partially underwater)$185.30 2016 AEA 3/2017 Study $214.89 Bradley Jct - Quartz Creek Convert to 230 kV $259.00 2021AEA Engineering subcommittee 11/21/2021$265.48 Quartz Creek - Dave's Creek Upgrade line/sub $16.20 2016 AEA 3/2017 Study $18.79 Dave's Creek - University Reconstruct existing / convert to 230 kV $93.80 2016 AEA 3/2017 Study $108.78 Lorraine - Douglas New 230 kV lines/stations $128.50 2016 AEA 3/2017 Study $149.02 Teeland - Fairbanks Convert 138 kV to 230 kV $90.00 2021 GVEA cost estimate $92.25 © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.22DRAFTOperating ReservesCurrent operating reserves based on existing generation is assumed initially in the analysis. Operating reserve assumptions for each portfolio are described below.Wind Portfolio:Batteries in the amount of 100% of wind nameplate capacity are assumed in the Wind portfolio. In addition, each utility is assumed to retain the most efficient thermal unit that, as its energy is displaced by wind energy, is available for energy balancing and operating reserves. As discussed more in slides below, uncertainty around wind generations, especially prolonged low wind events, along with uncertainty around fuel for thermal units operating as reserves needs to be thoroughly evaluated. Batteries can cover 100% wind reduction for 4 hours.Additional reserve requirements for prolonged low wind energy events will need to come from thermal units.Nuclear Portfolio:Each utility is assumed to retain the most efficient thermal unit that, as its energy is displaced by wind energy, is available for energy balancing and operating reserves. It is expected that a nuclear resource can also contribute to operating reserves for the utilities with a 230 kV system.Hydro Portfolio:Each utility is assumed to retain the most efficient thermal unit that, as its energy is displaced by wind energy, is available for energy balancing and operating reserves.An assumption for all portfolios is that when HEA and MEA NG-fueled generation reaches 50% or less of 2022 NG-fueled generation, fuel is switched from NG to diesel. © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.23DRAFTFossil Generation Retained Past ComplianceEach compliance scenario assumes that the most efficient thermal resource for each utility is retained to provide balancing dispatch and reserve capacity in addition to serving load. Additional units are also retained for reserves only. The retained resources for each utility include:Utility Reserve UnitsMax Capacity (MW)Chugach Electric AssociationGeorge SullivanSPP126203Golden Valley Electric AssociationNorth Pole CCNorth Pole CTDelta CTZehnder CT651242735Homer Electric Association Nikiski Combined Cycle 82Matanuska Electric Association Eklutna Generation Station 171 © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.24DRAFTBase Case Scenario Results © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.25DRAFTPortfolio CompositionHydro Portfolio Capacity (MW)Technology REAP CO2 #1 CO2 #2 CO2 #3New Hydro 613 613 613 613 New Nuclear 0 0 0 0 New Wind 47 51 15 51 New Batteries 0 0 0 0 Existing Thermal 780 780 780 780 Existing Renewable 234 234 234 234 Nuclear Portfolio Capacity (MW)Technology REAP CO2 #1 CO2 #2 CO2 #3New Hydro 110 110 110 110 New Nuclear 320 320 320 320 New Wind 78 121 15 107 New Batteries 0 0 0 0 Existing Thermal 780 780 780 780 Existing Renewable 234 234 205 234 Wind Portfolio Capacity (MW)Technology REAP CO2 #1 CO2 #2 CO2 #3New Hydro 110 110 110 110 New Nuclear 0 0 0 0 New Wind 1,034 1,046 500 1,065 New Batteries 1,034 1,046 500 1,065 Existing Thermal 780 780 780 780 Existing Renewable 234 234 234 234 © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.26DRAFTEnergy by TechnologyHydro Portfolio GWh’sTechnology REAP CO2 #1 CO2 #2 CO2 #3New Hydro 3,474 3,474 3,474 3,474 New Nuclear 0 0 0 0 New Wind 136 148 38 148 New Batteries 0 0 0 0 Existing Thermal 551 538 648 539 Existing Renewable 736 736 736 736 Nuclear Portfolio GWh’sTechnology REAP CO2 #1 CO2 #2 CO2 #3New Hydro 392 392 392 392 New Nuclear 2,523 2,523 2,523 2,523 New Wind 230 289 38 296 New Batteries 0 0 0 0 Existing Thermal 929 817 1,121 863 Existing Renewable 736 736 736 736 Wind Portfolio GWh’sTechnology REAP CO2 #1 CO2 #2 CO2 #3New Hydro 390 390 392 392 New Nuclear 0 0 0 0 New Wind 2,743 2,828 1,571 2,836 New Batteries 0 0 0 0 Existing Thermal 946 867 2,110 858 Existing Renewable 736 736 736 736 © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.27DRAFTCO2 EmissionsScenarioCO2 % Drop from 2022 to 2050BAU -2.9%REAP - Hydro 89.5%REAP - Nuclear 80.3%REAP - Wind+Storage 79.9%CO2 #1 - Watana 89.8%CO2 #1 - Nuclear 79.1%CO2 #1 - Wind+Storage 80.1%CO2 #2 - Watana 87.7%CO2 #2 - Nuclear 75.7%CO2 #2 - Wind+Storage 50.0%CO2 #3 - Watana 89.7%CO2 #3 - Nuclear 80.2%CO2 #3 - Wind+Storage 80.2%0500,0001,000,0001,500,0002,000,0002,500,0003,000,000CO2 Millions of Tons20222050 © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.28DRAFTCO2 Emissions Over Time – Wind Portfolio0500,0001,000,0001,500,0002,000,0002,500,0003,000,00020222023202420252026202720282029203020312032203320342035203620372038203920402041204220432044204520462047204820492050CO2 Millions of TonsBAUREAP - Wind+StorageCO2 #1 - Wind+StorageCO2 #2 - Wind+StorageCO2 #3 - Wind+Storage © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.29DRAFT0500,0001,000,0001,500,0002,000,0002,500,0003,000,00020222023202420252026202720282029203020312032203320342035203620372038203920402041204220432044204520462047204820492050CO2 Millions of TonsBAUREAP - HydroCO2 #1 - HydroCO2 #2 - HydroCO2 #3 - HydroCO2 Emissions Over Time – Hydro PortfolioWatana over-complies initially due to its size © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.30DRAFTPortfolio Costs – NPV’sREAP compliance scenario is the cheapest.Except for the REAP compliance scenario, Wind in the cheapest portfolio.Wind is the second cheapest portfolio.Hydro is significantly more expensive than other portfolios.Costs include existing resource operating costs, new resource capital and operating costs and transmission upgrade costs.PortfolioNPV of 2022-2050 Total Cost ($B) Percent Difference from BAUREAP CO2#1 CO2#2 CO2#3 REAP CO2#1 CO2#2 CO2#3Business-As-Usual $5.4 ---Hydro Portfolio $6.5 $8.2 $7.8 $7.9 19% 52% 44% 45%Nuclear Portfolio $5.3 $7.0 $7.0 $6.8 -2% 28% 29% 26%Wind Portfolio $5.8 $6.0 $5.8 $6.2 8% 10% 7% 14% © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.31DRAFTPortfolio Costs - 2050Costs include existing resource operating costs, new resource capital and operating costs and transmission upgrade costs.The Nuclear portfolio is cheaper than BAU in 2050 for all compliance scenarios.The Wind portfolio is higher than BAU for all compliance cases except CO2#2, which has lower compliance levels.Hydro is competitive with Wind, except for CO2#2 when Susitna-Watana is developed 10 years after the other cases, adding 10 years of project cost inflation to the large development cost.Portfolio2050 All-In Cost ($M) Percent Difference from BAUREAP CO2#1 CO2#2 CO2#3 REAP CO2#1 CO2#2 CO2#3Business-As-Usual $779.7 ---Hydro Portfolio $810.9 $808.3 $941.6 $852.1 4% 4% 21% 9%Nuclear Portfolio $639.1 $667.2 $688.4 $647.8 -18% -14% -12% -17%Wind Portfolio $861.2 $832.2 $764.1 $871.5 10% 7% -2% 12% © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.32DRAFTFindings – Base CaseFrom an NPV standpoint, the Wind portfolio is the cheapest.From an NPV standpoint, the Hydro portfolio is the most expensive.From a 2050 cost standpoint, the Nuclear portfolio is cheaper than BAU while the Wind and Hydro portfolios are 4% to 21% more expensive than BAU.The Hydro portfolio costs are influenced by over-compliance due to the need to develop Susitna-Watana well before the final compliance milestone.The Wind portfolio costs are influenced by fuel switching from NG to diesel for HEA’s and MEA’s dispatchable resources.Each of the portfolios include factors described on “Other Considerations” below that could impact value, such as:•Nuclear cost and feasibility uncertainty.•Wind capacity factors, low generation risk, reserve requirements and reserve fuel concerns. © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.33DRAFTSensitivity ResultsHigh Demand(20% Above Base) © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.34DRAFTSensitivity Definition – High DemandGoal:Evaluate impacts higher demand can have on RPS and CO2 compliance costs.Sensitivity Assumption:Demand increases 4% per year from 2030 through 2034 for a total demand impact of 20%.Rationale:Positive demand impacts can result from drivers such as electric vehicles and electrification. No specific demand impacts are intended to be model for this high-level assessment. Rather a total demand increase was selected that could reasonably occur during a period of CO2 compliance. Extreme demand impacts, such as complete electrification of new and existing heating and cooking load, should be considered in future studies. © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.35DRAFTPortfolio Composition – High DemandHydro Portfolio Capacity (MW)Technology REAP CO2 #1 CO2 #2 CO2 #3New Hydro 636 636 636 636 New Nuclear 0 0 0 0 New Wind 55 58 15 59 New Batteries 0 43 0 165 Existing Thermal 780 780 780 780 Existing Renewable 234 234 234 234 Nuclear Portfolio Capacity (MW)Technology REAP CO2 #1 CO2 #2 CO2 #3New Hydro 110 110 110 110 New Nuclear 338 338 338 338 New Wind 152 202 15 60 New Batteries 0 0 0 0 Existing Thermal 780 780 780 780 Existing Renewable 234 234 205 234 Wind Portfolio Capacity (MW)Technology REAP CO2 #1 CO2 #2 CO2 #3New Hydro 110 110 110 110 New Nuclear 0 0 0 0 New Wind 1,307 1,365 646 290 New Batteries 1,307 1,365 881 1,272 Existing Thermal 780 780 780 780 Existing Renewable 234 234 234 234 © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.36DRAFTEnergy by Technology – High DemandHydro Portfolio GWh’sTechnology REAP CO2 #1 CO2 #2 CO2 #3New Hydro 3,615 3,615 3,615 3,615 New Nuclear 0 0 0 0 New Wind 160 169 38 173 New Batteries 0 0 0 0 Existing Thermal 965 621 1,169 653 Existing Renewable 736 736 736 736 Nuclear Portfolio GWh’sTechnology REAP CO2 #1 CO2 #2 CO2 #3New Hydro 392 392 392 392 New Nuclear 2,665 2,665 2,665 2,665 New Wind 458 304 38 176 New Batteries 0 0 0 0 Existing Thermal 1,102 832 1,591 858 Existing Renewable 736 736 736 736 Wind Portfolio GWh’sTechnology REAP CO2 #1 CO2 #2 CO2 #3New Hydro 390 390 392 392 New Nuclear 0 0 0 0 New Wind 3,485 3,817 2,017 800 New Batteries 0 0 0 0 Existing Thermal 1,141 847 2,083 855 Existing Renewable 736 736 736 736 © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.37DRAFTCO2 Emissions – High DemandScenarioCO2 % Drop from 2022 to 2050BAU -22.8%REAP - Hydro 80.2%REAP - Nuclear 76.4%REAP - Wind+Storage 75.6%CO2 #1 - Watana 86.1%CO2 #1 - Nuclear 76.8%CO2 #1 - Wind+Storage 79.5%CO2 #2 - Watana 75.9%CO2 #2 - Nuclear 63.7%CO2 #2 - Wind+Storage 49.1%CO2 #3 - Watana 85.4%CO2 #3 - Nuclear 79.5%CO2 #3 - Wind+Storage 79.6%0500,0001,000,0001,500,0002,000,0002,500,0003,000,0003,500,000CO2 Millions of TonsCO2 Scenario - Portfolio20222050 © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.38DRAFTPortfolio NPV Costs – High DemandCosts include existing resource operating costs, new resource capital and operating costs and transmission upgrade costs.REAP is the cheapest of the compliance scenarios.The gaps between BAU and the compliance scenarios is less under High Demand, due in part to more reliance on dispatchable resources.Except for the REAP compliance scenario, the Wind portfolio is the cheapest.Mild compliance case CO2 #2 is still no cheaper than other compliance scenarios for Hydro and Nuclear.PortfolioNPV of 2022-2050 Total Cost ($B) Percent Difference from BAUREAP CO2#1 CO2#2 CO2#3 REAP CO2#1 CO2#2 CO2#3Business-As-Usual $5.9 ---Hydro Portfolio $6.9 $8.9 $8.5 $8.3 17% 50% 44% 41%Nuclear Portfolio $5.7 $7.7 $7.7 $7.0 -3% 31% 30% 19%Wind Portfolio $6.4 $7.3 $6.3 $6.2 8% 24% 6% 4% © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.39DRAFT2050 Portfolio Costs – High DemandCosts include existing resource operating costs, new resource capital and operating costs and transmission upgrade costs.With additional demand, more fuel is consumed with less efficient available generation, resulting in the BAU case being more expensive in 2050 than several compliance cases.The Nuclear portfolio is the cheapest portfolio under high demand.Portfolio2050 All-In Cost ($M) Percent Difference from BAUREAP CO2#1 CO2#2 CO2#3 REAP CO2#1 CO2#2 CO2#3Business-As-Usual$921.5 ---Hydro Portfolio$906.2 $872.6 $1,081.3 $921.0 -2% -5% 17% 0%Nuclear Portfolio$707.6 $717.5 $815.2 $657.8 -23% -22% -12% -29%Wind Portfolio$1,021.2 $920.9 $871.1 $811.9 11% 0% -5% -12% © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.40DRAFTFindings – High DemandHigher demand does not change the relative rankings of portfolios by costs.From an NPV standpoint, the Nuclear portfolio is the cheapest, but under REAP Nuclear would not be considered a renewable resource.From a 2050 cost standpoint, the Wind portfolio is less expensive than BAU in all compliance scenarios except REAP.As with the Base Case, each of the portfolios include factors described on “Other Considerations” below that could impact value, such as:•Nuclear cost and feasibility uncertainty.•Wind capacity factors, low generation risk, reserve requirements and reserve fuel concerns. © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.41DRAFTSensitivity ResultsHigh Wind © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.42DRAFTSensitivity Definition – High WindGoal:Evaluate impacts higher wind capacity factors can have on RPS and CO2 compliance costs.Sensitivity Assumption:Wind capacity factors assumed to equal 40% regardless of when the wind is developed. As compared to the Base Case, wind portfolio capacity factors are an additional 10% over the Base Case average capacity factor of 30%.Rationale:Wind capacity factors are a very significant unknown for the Railbelt Region. There are indications that capacity factors could be higher than the assumed Base Case average capacity factor of 30%. Higher wind capacity factors would result in less wind resources needing to be developed. © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.43DRAFTPortfolio Composition – High WindHydro Portfolio Capacity (MW)Technology REAP CO2 #1 CO2 #2 CO2 #3New Hydro 613 613 613 613 New Nuclear 0 0 0 0 New Wind 43 47 15 47 New Batteries 0 0 0 0 Existing Thermal 780 780 780 780 Existing Renewable 234 234 234 234 Nuclear Portfolio Capacity (MW)Technology REAP CO2 #1 CO2 #2 CO2 #3New Hydro 110 110 110 110 New Nuclear 320 320 320 320 New Wind 74 115 15 87 New Batteries 0 0 0 0 Existing Thermal 780 780 780 780 Existing Renewable 234 234 205 234 Wind Portfolio Capacity (MW)Technology REAP CO2 #1 CO2 #2 CO2 #3New Hydro 110 110 110 110 New Nuclear 0 0 0 0 New Wind 730 784 431 796 New Batteries 730 784 431 796 Existing Thermal 780 780 780 780 Existing Renewable 234 234 234 234 © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.44DRAFTEnergy by Technology – High WindHydro Portfolio GWh’sTechnology REAP CO2 #1 CO2 #2 CO2 #3New Hydro 3,474 3,474 3,474 3,474 New Nuclear 0 0 0 0 New Wind 134 148 38 150 New Batteries 0 0 0 0 Existing Thermal 553 539 650 537 Existing Renewable 736 736 736 736 Nuclear Portfolio GWh’sTechnology REAP CO2 #1 CO2 #2 CO2 #3New Hydro 392 392 392 392 New Nuclear 2,523 2,523 2,523 2,523 New Wind 243 288 38 289 New Batteries 0 0 0 0 Existing Thermal 915 772 1,121 870 Existing Renewable 736 736 736 736 Wind Portfolio GWh’sTechnology REAP CO2 #1 CO2 #2 CO2 #3New Hydro 390 390 392 392 New Nuclear 0 0 0 0 New Wind 2,734 2,869 1,546 2,827 New Batteries 0 0 0 0 Existing Thermal 954 835 2,135 866 Existing Renewable 736 736 736 736 © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.45DRAFTCO2 Emissions – High WindScenarioCO2 % Drop from 2022 to 2050BAU -2.9%REAP - Hydro 89.5%REAP - Nuclear 80.7%REAP - Wind+Storage 79.6%CO2 #1 - Watana 89.7%CO2 #1 - Nuclear 80.8%CO2 #1 - Wind+Storage 80.6%CO2 #2 - Watana 87.6%CO2 #2 - Nuclear 75.7%CO2 #2 - Wind+Storage 50.0%CO2 #3 - Watana 89.7%CO2 #3 - Nuclear 80.1%CO2 #3 - Wind+Storage 80.2%0500,0001,000,0001,500,0002,000,0002,500,0003,000,000CO2 Millions of TonsCO2 Scenario - Portfolio20222050 © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.46DRAFTPortfolio NPV Costs – High WindCosts include existing resource operating costs, new resource capital and operating costs and transmission upgrade costs.Under higher wind capacity factors, the Wind portfolio becomes the cheapest compliance portfolio.The Wind portfolio is slightly cheaper in the High Wind Case than in the Base Case on an NPV basis.As with the Base Case, the REAP compliance scenario is the cheapest.As with the Base Case, Hydro is significantly more expensive than other portfolios.PortfolioNPV of 2022-2050 Total Cost ($B) Percent Difference from BAUREAP CO2#1 CO2#2 CO2#3 REAP CO2#1 CO2#2 CO2#3Business-As-Usual $5.4 ---Hydro Portfolio $6.5 $8.3 $7.8 $7.9 19% 52% 44% 45%Nuclear Portfolio $5.3 $6.9 $7.0 $6.8 -2% 27% 29% 25%Wind Portfolio $5.5 $5.8 $5.8 $5.8 2% 8% 6% 8%Wind Portfolio - Base Case $5.8 $6.0 $5.8 $6.2 © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.47DRAFT2050 Portfolio Costs – High WindCosts include existing resource operating costs, new resource capital and operating costs and transmission upgrade costs.The Wind portfolio is cheapest portfolio in terms of 2050 costs.The Nuclear portfolios is still the cheapest 2050 portfolio for all compliance scenarios.As with the Base Case, Hydro is significantly more expensive than other portfolios.Portfolio2050 All-In Cost ($M) Percent Difference from BAUREAP CO2#1 CO2#2 CO2#3 REAP CO2#1 CO2#2 CO2#3Business-As-Usual $780.3 ---Hydro Portfolio $810.4 $807.3 $942.2 $850.1 4% 3% 21% 9%Nuclear Portfolio $635.3 $652.9 $688.4 $643.5 -19% -16% -12% -18%Wind Portfolio $726.0 $679.9 $734.7 $749.2 -7% -13% -6% -4%Wind Portfolio - Base Case $861.2 $832.2 $764.1 $871.5 © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.48DRAFTFindings – High Wind SensitivityAverage Wind portfolio capacity factors of 40% result in 30% less wind capacity in the REAP case, 25% less wind capacity in the CO2#1 and CO2#3 and 14% less wind capacity in the CO2#2.Higher wind capacity factors cause the Wind portfolio to be the cheapest compliance portfolio from an NPV standpoint.As with the Base Case, the Nuclear portfolio is cheapest in terms of 2050 costs while the Hydro portfolio is the most expensive.As with the Base Case, each of the portfolios include factors described on “Other Considerations” below that could impact value, such as:•Nuclear cost and feasibility uncertainty.•Wind capacity factors, low generation risk, reserve requirements and reserve fuel concerns. © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.49DRAFTConclusions & Findings © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.50DRAFTConclusions & FindingsOther Considerations (continued)1. Technology Maturity:• Nuclear based portfolio is attractive, but technology is not commercial, factories not built. Nuclear costs and timing could vary dramatically from analysis assumptions.• Wind technology is established and improving.• Hydro technology is established.2. Proposed Hydro Projects:• The Susitna-Watana Hydro project cost assumptions are based on dated information. The project costs as currently projected make the project uneconomical. The AEA should be encouraged to refine these cost based on current inputs.• The Martin River Hydro project costs are very preliminary and should be refined. These costs are currently lower than that of the generic hydro costs in the Technology Assessment. © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.51DRAFTConclusions & FindingsOther Considerations3. Wind Capacity Factors: • Wind capacity factors are assumed to start at 35% for early projects and decline to 25% as projects are developed across 10 years.• This assumption results in a roughly 30% wind capacity factor on average once all wind requirements are built out.• Wind capacity factors are a significant uncertainty, and thus the 30% capacity factor average may be conservative.4. Strategic Optionality:• Nuclear and Hydro portfolios require “one time” commitment decision.• Wind plus storage can be developed over time, allowing for changes in compliance strategy as technologies develop and improve. © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.52DRAFTConclusions & FindingsOther Considerations (continued)5. Operating Reserves:• Wind generation uncertainty is a significant risk with 4-hour batteries.• While enough batteries have been included to handle sudden wind decreases, batteries will not be able support prolonged decreased wind generation.• Existing generation can provide reserves, but natural gas supply may be problematic.• Existing generation fueled by diesel can provide reserves with fuel certainty.• Size of needed reserves will depend on measured wind generation uncertainty.6. Natural Gas Service:• The study assumes that the current levels of natural gas supply and transportation service will continue into the future. • Current natural gas supply and transportation infrastructure is of a limited scale.• Should natural gas become unavailable to fuel thermal generation, other options such as fuel switching to diesel fuel, development of liquified natural gas import facility, or development of a large-scale hydrogen production facility should be considered. © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.53DRAFTConclusions & FindingsRecommendations BASED ON WHAT IS KNOW TODAYIf compliance policies similar to those included in this analysis are implemented, start heading down the path of developing a “Wind + Batteries Anchor Portfolio”2050 Analysis Portfolio MW:Technology REAP CO2 #1 CO2 #2 CO2 #3New Hydro110 110 110 110 New Nuclear0 0 0 0 New Wind1,034 1,046 500 1,065 New Batteries1,034 1,046 500 1,065 Existing Thermal780 780 780 780 Existing Renewable234 234 234 234 Rationale:2ndmost economical portfolio behind Nuclear (with its risks)Proven and improving technology (especially batteries)Provides strategic flexibility – strategy can be changed as technologies developRisks:Wind generation uncertainty and hourly operating reserve requirementsWind capacity factors (very limited data exists; numerous studies need to be performed to better define capacity factors)Ability to use natural gas-fired generation for balancing energy and operating reserves © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.54DRAFTConclusions & FindingsOverall Finding & RecommendationsRecommended policy positions:Advocate for less than 100% carbon compliance Scenario studies here max out at 80% CO2 reductions. 100% reduction requirement would result in more costs and less resource flexibility, especially as they relate to reserves.Advocate for retention of dispatchable resources (EGS) as reservesMay require allowance to dispatch diesel in emergency situations Maintaining reliability is a primary responsibilityAdvocate for transmission upgradesPrime wind locations likely to be at elevations on Kenai Peninsula or Alaska RangeUtilities may be able to share operating reserves with a 230 kV systemSuggested Near-term Actions:• Identify attractive wind locations – perform thorough wind site assessments• Evaluate wind generation risks Railbelt Region-wide, consider portfolio effects with a diverse wind portfolio• Continue to evaluate hydro opportunities, including Susitna-Watana and Martin River / Dixon Glacier • Evaluate replacement options for current natural gas supply and transportation services © 2022 1898 & Co., a division of Burns & McDonnell Engineering Co. All rights reserved.55DRAFT NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency & Renewable Energy, operated by the Alliance for Sustainable Energy, LLC. Contract No. DE-AC36-08GO28308 Renewable Energy in Alaska WH Pacific, Inc. Anchorage, Alaska NREL Technical Monitor: Brian Hirsch Subcontract Report NREL/SR-7A40-47176 March 2013 NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency & Renewable Energy, operated by the Alliance for Sustainable Energy, LLC. National Renewable Energy Laboratory 15013 Denver West Parkway Golden, Colorado 80401 303-275-3000 • www.nrel.gov Contract No. DE-AC36-08GO28308 Renewable Energy in Alaska WH Pacific, Inc. Anchorage, Alaska NREL Technical Monitor: Brian Hirsch Prepared under Subcontract No. AEU-9-99278-01 Subcontract Report NREL/SR-7A40-47176 March 2013 This publication was reproduced from the best available copy submitted by the subcontractor and received minimal editorial review at NREL. NOTICE This report was prepared as an account of work sponsored by an agency of the United States government. Neither the United States government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. 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Table of Contents Sections Page # 1.0 Executive Summary – Opportunities for Renewable Energy Resources in Alaska 1 2.0 Introduction……………………………………………………………………………………………………………………….. 3 3.0 Alaska Energy Market Overview………………………………………………………………………………………….. 5 4.0 Fossil Fuel Energy Price Projections……………………………………………………………………………………... 24 5.0 Energy Efficiency Opportunities………………………………………………………………………………………….. 29 6.0 Renewable Energy Opportunities………………………………………………………………………………………… 32 7.0 Stranded RE Resource Opportunities………………………………………………………………………………….. 39 8.0 Market Evolution and Transformation…………………………………………………………………………………. 47 References ……………………………………………………………………………………………………………………….. 51 Figures Page # Figure 1: Alaska’s Energy Future: Incremental Efficiency and Renewable Energy…………………………. 6 Figure 2: Economics of Renewable Energy Projects in Alaska (MAFA Analysis, 2009) ………………………….. 8 Figure 3: Alaska Total Energy Consumption by Source………………………………………………………………. 13 Figure 4: Alaska Residential Energy Consumption by Source……………………………………………………… 14 Figure 5: Median Household End-Use Energy Consumption.……………………………………………………… 15 Figure 6: Residential Electric Consumption per capita, by region……………………………………………….. 16 Figure 7: Alaska Commercial Energy Consumption by Source……………………………………………………. 17 Figure 8: Alaska Industrial Energy Consumption by Source………………………………………………………… 18 Figure 9: Alaska Transportation Energy Consumption by Source………………………………………………… 19 Figure 10: Alaska Electric Energy Consumption by Source…………………………………………………………. 20 Figure 11: Natural Gas Price Projection – CONUS (2009$ / mmbtu)………………………………………… 24 Figure 12: CONUS Crude Oil Import Price (2009$ / bbl)………………………………………………………… 25 Figure 13: CONUS Emissions Cost Projections (2009$ / tonne)………………………………………………… 25 Figure 14: Natural Gas Wellhead Price = State: U.S. Ratios………………………………………………………. 26 Figure 15: Natural Gas Residential Price = State: U.S. Ratio…………………………………………………….. 27 Figure 16: Alaska to U.S. Price Ratios – No. 2 Distillate (a.k.a. diesel fuel oil)……………………………… 28 Figure 17: Alaska System Peak Demand Forecasts by Scenario……………………………………………………. 30 Figure 18: Projected Railbelt Electrical Energy Requirements (GWh)………………………………………….. 31 Figure 19: Supply Curve for Rural Alaska Wind Energy – estimated bus-bar energy costs………………. 33 Figure 20: Yukon River Region Hydroelectric Supply Curve……………………………………………………………… 35 Figure 21: Southwest Alaska Hydro Supply Curve…………………………………………………………………………… 35 Figure 22: Southeast Alaska Hydro Supply Curve…………………………………………………………………………….. 36 Figure 23: Southcentral Alaska Hydro Supply Curve………………………………………………………………………… 36 Figure 24: Alaska Biomass Supply Curve…………………………………………………………………………………………. 37 Figure 25: Supply Curve for Geothermal Energy in Alaska – Energy Costs including Connection to Local Alaska Markets………………………………………………………………………………………………………………………… 38 Figure 26: Alaska Hydropower Resources – Availability of Resource for Development…………………. 42 Figure 27: Probability of Development of Alaska Hydro Resources…………………………………………….. 43 Figure 28: EIA AEO 09: Sales of Unconventional Light-Duty Vehicles by Fuel Type, 2030…………. 45 1 1. Executive Summary − Opportunities for Renewable Energy Resources in Alaska Alaska’s abundant renewable energy (RE) resources can be leveraged into an export opportunity by building upon the foundation of experienced human institutions and vast natural resources, creating a unique opportunity for RE technology deployment and development and new enterprise creation. Alaska has a complex layer of human institutions, including indigenous cultures and tribal communities, non-profit non- governmental organizations, sophisticated regional native corporations, and other private sector enterprises operating within the context of local, regional, state, and federal government agencies. Not unlike much of the developing world, many of Alaska’s rural communities lack running water and sewer systems, and have only replaced kerosene lamps with electric lights made practical by diesel-fired generators over the last forty years. As a resource-rich state, Alaska continues to enjoy a vigorous democratic debate over the balance between pursuing development opportunities and protecting local cultures and unique environments. Alaska has been a leader in successfully balancing resource preservation and development, and preserving a portion of the state’s resource base while developing targeted high-yield opportunities. This approach has enabled the distribution of resource income to Alaska residents, while investing in future sustainability through pursuit of RE projects. Alaska’s resource wealth has also attracted a vibrant oil and gas industry; the resulting technology deployments are implemented locally and the resources exported throughout the world. Alaska’s RE resources exist in a complex natural and socio-economic environment. Alaska’s RE resources must be accessed within vast challenging environments with severe seasonal transportation obstacles associated with limited road access. Alaska has a long tradition of supporting its remote rural areas with lifeline support for essential services, including telecommunications, fuel, and electricity. Alaska is managing the transition toward reduced support as circumstances allow. Many of Alaska’s RE resources can be developed by the indigenous villages and communities to reduce their dependence on fossil fuels and fossil fuel subsidies, and help sustain Alaska Native communities. Alaska is uniquely endowed with a full range of RE opportunities, including extensive and diverse biomass; hydropower that ranges from run-of–river and low-impact high-head to traditional massive dams; wind energy that ranges from micro, wind-hybrid turbines in small So, we have a choice to make. We can remain one of the world’s leading importers of foreign oil, or we can make investments that would allow us to become the world’s leading exporter of renewable energy. We can let the jobs of tomorrow be created abroad, or we can create those jobs right here in America and lay the foundation for lasting prosperity. –President Obama, March 19, 2009 2 coastal villages to large wind farms; world class tides; and huge geothermal potential on the northern edge of the Pacific rim of fire. Finally, Alaska’s strategic location, well positioned between Europe, Asia and North America, has enabled the Anchorage airport to become the busiest airfreight hub in the United States, and provides RE and commodity export industries with a strategic advantage. For all of these reasons, Alaska presents a unique opportunity to develop practical, exportable RE solutions for a wide range of circumstances that have been tested by a challenging physical environment under a complex institutional backdrop. Alaska presents a unique, competitive advantage and opportunity to build and staff a RE development and commercialization cluster to support developing regions of the 21st century. 3 2. Introduction 2.1 Scope Under the leadership of Brian Hirsch with the Alaska office of the National Renewable Energy Laboratory, (NREL), WHPacific, and Mark Foster and Associates (MAFA) was retained to conduct an analysis of the potential for energy efficiency and renewable energy (EE/RE) development opportunities in Alaska. The information found herein is derived under sub-contract agreement #AEU-9-99278-01 from the Alliance for Sustainable Energy, LLC Management and Operations contractor for NREL. The team was lead by Brian Hirsch, PhD., Alaskan office of NREL. This report examines the opportunities, challenges, and costs associated with EE/RE implementation in Alaska and provides strategies that position Alaska’s accumulating knowledge in EE/RE development for export to the rapidly growing energy/electric markets of the developing world. Modeling estimates EE/RE opportunities across Alaska’s many regions including: the Railbelt (Fairbanks-MatSu-Anchorage-Kenai-Homer-Seward), Southeast, Southwest, Western, Northwest, North Slope, and the remote rural Interior. Increasing the market adoption of EE will require improved customer education, EE program promotion to improve EE technology diffusion, and changes in pricing policies so prices more closely reflect the full cost. Many fossil fuel energy sources remain significantly under-priced relative to their future cost, especially at peak. This “false security” pricing of energy presents particular concerns for natural gas supply in the Cook Inlet where peak winter demand has begun to challenge the local peak supply. Increasing the market adoption of RE will require: 1) expansion of the transmission infrastructure; 2) expansion of technical and market opportunities for converting remote stranded RE resources into fuels that can be used locally and exported to larger markets; and 3) clarification of schedule and scope to reduce the uncertainty associated with renewable resource permitting. This report presents the results of an analysis of three energy price scenarios to test the sensitivity of the market to both short term and long term trends in fossil fuel energy prices. The report is not intended to offer a risk adjusted forecast of future energy prices, but rather to provide an illustration of the economic attractiveness of EE/RE in relation to future energy price expectations. 2.2 Contributors Report contributors include: Mark A. Foster, Brian Yanity, Barry Holt, and Jay Hermanson. Brian Hirsch provided guidance and programmatic perspective on the scope of work. Key references include: EIA AEO 2009 and EIA AEO Technical Documentation, IEA World Energy Outlook 2008; EIA, EPA, and CRA estimates of future C02 emissions costs (May-August, 2009); AEA EE/RE reports and databases, UAA ISER Energy Reports, Energy Alaska by Neil Davis, ANGDA Natural Gas Development Reports, Lake and Peninsula Borough Energy Plan (2008). 4 2.3 Assumptions and Method To establish a technical and economic foundation for the report, Mark A. Foster and Associates (MAFA ) analyzed the economic potential for energy efficiency and RE opportunities across Alaska and developed cost supply curves for the energy efficiency and RE opportunities. Similar projections for conventional generation technologies were developed based on MAFA data and experience with fossil fuel energy sources and power plant design, construction, and operational performance. The boundaries between market adoption of energy efficiency, RE and fossil fuel energy sources were identified and analyzed in order to estimate the future market potential for energy efficiency and renewables. The data analysis and market model runs for this report were concluded in August 2009. The data and information in this report are based on publicly market reconnaissance data available through August 2009. The Energy Information Administration Annual Energy Outlook 2009, reference high and low and the International Energy Agency World Energy Outlook 2008 reference case were used as baselines for future energy prices. These baselines were then adjusted to take into account differences between national/international markets and Alaska markets consistent with the methodology that has been used by the Alaska Energy Authority.1 Carbon emissions cost projections from Charles River Associates, EPA and EIA analysis of HR 2454 were added to the fossil fuel cost estimates to establish a range of fossil fuel energy costs. At the time this report was written (August 2009), the Renewable Energy Fund projects were in their beginning stages and the AHFC weatherization/energy grants program was entering its second year with thousands of households poised to receive their first energy audit for baseline energy consumption. In addition, the AEA had initiated a study of natural gas supply issues, electrical generation and transmission system resource options for the Railbelt region. This study identified electrical generation scenarios designed to reach 50% renewable penetration by 2020 and natural gas supply options to meet a large assumed increase in gas market demand. 1 See for example, Colt, Crimp. Foster “Renewable Energy Opportunities in Alaska” (2008). 5 3. Alaska Energy Market Overview 3.1. The Alaska Market Overview Alaska sits at the apex of the Pacific Rim and remains actively involved in developing international trade opportunities. The International Airport in Anchorage has been the busiest airport in the United States by total landed weight for at least a decade. Alaskan foreign trade ranks 4th among states on a per capita basis. Alaska ranks 8th among states when measuring foreign exports as a percentage of gross state product.2 Alaska hosts a large number of private, and public-private partnerships, and public organizations dedicated to supporting international trade.3 Building upon these foundations, an effort to develop renewable technologies and implementation expertise in challenging developing world conditions presents a unique opportunity for those interested in promoting the development and export of clean technology expertise around the Pacific Rim. Because of the relatively small size of energy markets in Alaska, Alaskan enterprises have frequently developed energy technology in and for Alaska, and then exported the technology and business models to other markets. Examples include the development and export of 4-D seismic, directional drilling and long-reach heavy-capacity drilling rigs in the oil and gas sector, as well as Alaska Power Company’s exportation of its hydropower project development expertise to small-scale (<50 MW) high-head (>300 m) low-impact Clean Development Mechanism projects in Central America (Guatemala, El Salvador). In short, Alaskan enterprises, ranging from large multi-national oil and gas industries to locally grown power companies, have found Alaska to be an excellent proving ground for technology and project development teams, and have successfully exported their expertise. When considering Alaska’s EE and RE opportunities, is useful to note that the addressable market has proven to be international, not just domestic in scope. As a leading petroleum producing state, Alaska’s total energy use is dominated by oil and gas production and export related activities. This sector also presents a large EE opportunity with spillover effects down market in adjacent industrial and commercial sectors.4 Alaska’s wealth of renewable resources, including large undeveloped hydropower, biomass, geothermal, tidal, and wind opportunities presents development opportunities to serve export industries (oil and gas, mining, Internet Pacific network hub, fertilizer), local industrial, commercial, and residential markets. 2 It is important to note that the vast majority of Alaska’s crude oil is dedicated to domestic, not international markets, and domestic trade is not counted in the rankings cited. 3 Organizations supporting the development of international trade include World Trade Center Alaska, Alaska Industrial Development and Export Authority, and the Alaska Office of Economic Development. 4 A prominent example of the down-market spillover effect from the oil and gas industry in Alaska is the development of local Internet enterprises in the 1990s. A number of entrepreneurial efforts, originating with information and communications technology employees and subcontractors serving the oil and gas sector in Alaska, blossomed into successful enterprises, including Internet Alaska, a pioneering Internet access company that led efforts to deploy Internet services around the state. 6 Figure 1: Alaska’s Energy Future: Incremental Efficiency and Renewable Energy 3.2. Findings – Energy Efficiency and RE Opportunities in Alaska Figure 1 represents the estimated incremental contribution of end-use efficiency and RE development associated with investment by public and private enterprises beyond historic market adoption trends. Contributions have been relatively modest, with the notable exception of the reconfiguration of the Trans-Alaska Pipeline System (TAPS) to more efficiently accommodate lower throughput. Industrial export sectors in Alaska (including oil and gas and mining) have an estimated 40,000 billion Btu of additional potential efficiency gains through 2030, or roughly a 10% energy efficiency gain over the next 20 years. These gains are anticipated based on a renewed emphasis on addressing aging infrastructure systems, as well as capacity reconfigurations and expansions associated with new developments. The sheer size of the industrial export sector is illustrated by noting that a 10% efficiency improvement in this sector amounts to roughly half of the incremental total energy efficiency/RE opportunity in Alaska (see Figure 1 above). End-use efficiency improvements in building heat and electrical use include the recently expanded Alaska Housing Finance Corporation (AHFC) weatherization and energy grant programs, along with emerging electric sector initiatives (e.g., Alaska Energy Authority/AEO, Golden Valley Electric, Chugach Electric, and Anchorage Municipal Light & Power). Benefits start to accrue in 2010, with a 20% efficiency improvement anticipated over the next 20 years. Combined heat and power (CHP) and distributed generation (DG) include utility gas-fired cogeneration in commercial/institutional sectors (e.g., University of Alaska Anchorage/Providence Hospital district in Anchorage, large office buildings and schools across the state). With rising fossil fuel prices (including natural gas and diesel), CHP/DG opportunities appear increasingly competitive over the next ten years. In the event of the development of Alaska North Slope natural gas, this gas appears likely to displace coal-fired electricity in the Interior (Aurora, UAF, Ft. Wainwright, Eielson AFB). 7 Run-of-river, low impact, and lake-tap hydropower and wind power are expected to continue to grow throughout the state; as diesel and natural gas energy prices increase, carbon emissions costs become internalized, and environmental permitting processes for renewables become more streamlined. Geothermal energy from Mt. Spurr and along the Aleutians could provide a competitive energy alternative as fossil fuel prices increase, assuming that it can be found in and around existing demand centers. This energy source is expected to make a noticeable contribution by 2020. Biomass appears to be a competitive heating option in locations with a sustainable fuel supply. Biomass for CHP appears competitive in communities that currently rely on diesel fuel. Tidal energy resources remain an intriguing possibility given Alaska’s world-class tides. Our analysis assumed the development of small-scale demonstration projects showing the technology development and export potential. The analysis does not include any longer term potential market opportunities associated with developing Alaska’s large renewable resources for export markets (e.g., large hydropower for energy intensive export industries, or for the development of “stranded” renewables like wind and geothermal along the Aleutians that could be used to produce renewable fuels such as hydrogen or ammonia for export).5 5 An overview of those opportunities is presented in Section 6 of this report. 8 3.3. EE/RE Opportunities in Alaska – Regional Overview Within Alaska, there are several distinct regions where energy challenges reflect the underlying geography, climate, geotechnical, transportation and logistical characteristics of each area. The following map attempts to capture the regional diversity of RE projects. The map reflects the estimated cost of energy from a panel of RE projects, including wind, hydro, geothermal, and biomass; projects are scaled by size and color coded by the relative cost of energy. Figure 2: Economics of RE Projects in Alaska (MAFA Analysis, 2009) 3.3.1. North Slope Alaska’s North Slope faces severe arctic climate conditions and remote logistical challenges. The area includes major oil and gas industrial development complexes at Prudhoe Bay, Kuparak, and out into the National Petroleum Reserve in the West. Barrow, the area’s regional hub, sits on top of a very slowly declining natural gas field which some speculate may reflect the presence of methane hydrates. The most prominent renewable opportunity in this area appears to be wind energy; this resource could be used to supplement local diesel and gas fired electrical generation, while providing high-value heat using dump- load energy. 3.3.2. Northwest Facing extreme climate conditions and remote logistical challenges, Alaska’s Northwestern Region, anchored by Nome and Kotzebue, currently relies heavily on diesel fuel oil imported by ocean barge. The coastal and upland communities near hills have started to develop wind resources. Additional 9 wind development would likely reduce local dependence on increasingly expensive fossil fuels. A few hydropower opportunities have been identified that would easily surpass local needs; however, local support of these opportunities remains questionable due to the risk of disturbing rivers that provide vital fish and game habitat to support local subsistence needs. Hydropower opportunities face the additional challenge of highly seasonal hydrology.6 3.3.3. Western Western Alaska’s climate and remote logistics are slightly less challenging than those of the Arctic/Northwest. The region’s historic abundance of fish and game has contributed to a high number of small indigenous villages on the coast and along the rivers with a regional hub in Bethel on the Kuskokwim River. The coastal winds and upland hills provide significant opportunities for wind to supplement local diesel generation and to provide high-value dump-load energy. As in the Northwest, a few hydropower opportunities have been identified that would easily surpass local needs; however, local support of these opportunities remains questionable due to the risk of disturbing rivers that provide vital fish and game habitat to support local subsistence needs. Hydropower opportunities face the additional challenge of highly seasonal hydrology.7 3.3.4. Southwest Southwestern Alaska’s remote logistics and climate are slightly less challenging than those of Western Alaska. Again, wind development to supplement local diesel generation presents a number of opportunities along the coast and out along the Aleutian chain. While the cost of wind development in many remote rural coastal communities may appear high in absolute terms, exceeding 40c/kWh, the wind energy is frequently less expensive than the diesel it displaces, which may approach 80c/kWh. A few hydropower opportunities have been identified that would surpass local needs. These opportunities would face scale considerations and challenges associated with local support due to potential disruption of rivers that provide vital fish and game habitat that support local subsistence needs. Additionally, hydropower opportunities face the challenge of seasonal hydrology.8 With slightly less challenging seasonal hydrology, a few small hydropower resources have been developed in Southwest Alaska to meet local needs and supplement the summer fishing export industry. The Southwest region potentially includes considerable geothermal resources, suggested by the presence of locally active volcanoes and confirmed in part by temperature logs from oil and gas exploration drilling. A production-capable drill rig has been mobilized in the region to explore and develop geothermal resources. 3.3.5. Kodiak Kodiak Electric Association (KEA) installed three 1.5-MW GE SLE wind turbines in August 2009 for roughly $3000/kW at its Pillar Mountain site.9 The new wind power complements the nearby 22.5- 6 Just as many developing countries face high seasonal rain, the rivers in the Northwest have highly seasonal stream flow associated with the rain and freeze/thaw cycles. 7 Ibid. 8 Ibid. 9 For the Pillar Mountain Wind Project (3X1.5-MW), KEA was the recipient of a $1 million grant from the State of Alaska and was also successful in receiving a second Clean Renewable Energy Bond (CREB) loan for $5 million from the IRS. The CREB funds give KEA a near zero interest loan for the project. A total of $12 million in CREB funds are allocated for this project. While the cost of wind development in many remote rural coastal communities may appear high in absolute terms, exceeding 40c/kWh, the wind energy is frequently less expensive than the diesel it displaces, which may approach 80c/kWh. 10 MW Terror Lake Hydroelectric Project. KEA’s recently acquired ownership of Terror Lake for $1700/kW from the Four Dam Pool Joint Action Agency.10 3.3.6. Yukon River into the Interior Dozens of remote rural villages reside along the Yukon River, a 2,300 mile river with a drainage area 25% larger than the state of Texas. Approximately one-third of the Yukon’s drainage area falls within Canada and two-thirds falls within Alaska. Far upriver in Canada, the Whitehorse Rapids Hydropower facility is the only permanent hydroelectric dam on the Yukon with a capacity of 40 MW summer/25 MW winter. Downstream along the Alaska portion of the Yukon and its tributaries, renewable opportunities include: 1) local biomass, predominantly located on South facing slopes; 2) upland wind; and 3) in-stream hydro. While many of the renewable sites on the recon map are costly, these sites appear to offer RE that is less expensive than imported diesel fuel oil. 3.3.7. Railbelt Roughly 500,000 people reside among the Railbelt region, which includes Fairbanks, Mat-Su, Anchorage, and the Kenai Peninsula. Many Railbelt communities utilize locally distributed generation resources that are linked by government-subsidized electric transmission facilities, providing shared access to a wide variety of electric generation resources, including naphtha, heavy atmospheric gas oil (HAGO), and coal-fired generation around Fairbanks in the North to hydropower and natural gas generation around Anchorage down to the Bradley Lake hydropower project (126 MW) across from Homer. The region also includes four (4) military bases, mining, refineries, and other oil and gas related industrial developments. Current prospects for RE include: 1) wind resources, most notably in the mountain-funnel geographic area around the Cook Inlet and in the Alaska Range; 2) local biomass for heat; 3) Mt. Spurr geothermal; and 4) tidal, and run of river, lake tap and various hydropower dam projects ranging from high head/small footprint in the mountains to large downstream dam sites. 3.3.8. Interior Roads Several communities adjacent to the Railbelt rely primarily on imported diesel fuel as their primary energy source. These communities are connected by roads (improving logistical access), but not interconnected by electrical transmission facilities. Rising diesel fuel costs have caused a shift toward biomass for heating. Biomass for CHP systems appears competitive along with small hydropower. 3.3.9. Southeast The early gold rush of 1898 was followed by larger gold mining operations after the turn of the 19th century. These ventures were eventually supplied with power by hydroelectric facilities that took advantage of local high-head hydropower with natural seasonal storage features. Many fishing and timber communities expanded during the decades of low-cost diesel fuel oil. As diesel fuel oil prices spiked over the past 30 years, both the State of Alaska and private sector interests have re-invested in hydropower ranging in size from 500 kW up to 20 MW. Investigations continue into the possibility of exporting SE hydropower via to-be-constructed transmission facilities into British Columbia.11 Local biomass and upland wind resources appear as competitive renewable opportunities in areas that are 10 Terror Lake was originally constructed by the State of Alaska for over $230 million in 1985, or $20,895 per kW (2009$). 11 For an excellent discussion of the SE Hydroelectric export opportunity, see Brian Yanity, “Transmitting Development Strategies”, International Water Power and Dam Construction, August 2009. Available at www.waterpowermagazine.com. 11 beyond the reach of affordable transmission facilities, tying local demand centers to regional hydropower developments. 3.4. EE/RE Opportunities in Alaska – The Challenges of “Stranded Resources” In addition to numerous undeveloped RE resource opportunities that are adjacent to existing communities, Alaska may have large RE resources that, by virtue of not being adjacent to a large rich market opportunity or appearing to be unproven or expensive relative to fossil fuel alternatives, are not on the high profile list of commercial development opportunities of the renewable industry in the near term. Nonetheless, these RE resources hold significant promise for future energy developments to serve growing local markets along with local development of export industries. These large, currently “stranded” renewable resources present significant opportunity: The next five years − As local innovations and learning-by-doing reduce costs and increase the competitive frontier of renewables; As roads and electrical transmission facilities are extended into areas with RE resources. The next 15 years, as local research and commercial development continues to push the cost/performance frontier for renewables and renewable electricity/storage and renewable fuel technologies. Technologies to help develop Alaska’s vast stranded renewables potential include wind, tidal, geothermal and hydropower combined with renewable fuels production, switching from fossil fuel to electric transportation systems supported by renewables, and energy storage systems that enable higher utilization rates of renewable resources. Alaska is well positioned to develop applied research in support of pushing the commercial frontiers to enable development of stranded renewables based on key research collaborations between National Energy Labs and State of Alaska and University of Alaska institutions. Two prominent collaborations include: Alaska Center for Energy and Power/Sandia National Laboratories/National Renewable Energy Laboratory; Alaska Energy Authority/National Renewable Energy Laboratory. 3.5. Alaska Energy Historic Backdrop It is not unusual for the unit cost of developed energy resources in Alaska to be on the order of two to ten times the cost of similar resources in the Continental U.S. The relatively high cost of energy resource development in Alaska has led to a variety of local and regional adaptations of fossil fuels and renewables, depending upon local resources and the extent to which the market demand being addressed is local or export. There is a long history of hydroelectric development in Southeast Alaska - from the small projects that supported gold mining in Juneau and Skagway shortly after the turn of the century, continuing up to the present day completion of the 12 Kasidaya hydroelectric project outside Skagway to support local tourism. In addition to wood and coal burning for general space heating, biomass in the form of wood boilers for heating and electricity was used in the early mining developments in Fairbanks and in McCarthy/Kennicott12. Natural gas was used for heating and electricity in South-central Alaska after the discovery of oil and gas in the Cook Inlet in the 1950s that led to a refinery and LNG export facility. Coal and oil became prominent in the Interior after World War II to meet the needs of the Department of Defense, the university, local markets, and export opportunities. Where local hydropower and biomass were not readily available and natural gas was not adjacent to the local market, liquid fossil fuels (gasoline, diesel, AV gas, jet fuel) were commonly used in large resource development projects during and following World War II. These resources became more locally affordable after the development of relatively small-scale local refineries – the Nikiski refinery, which followed Cook Inlet oil discoveries in the 1950s, and the North Pole and Valdez refineries associated with the TAPS in 1977. During the early 1980s, the State of Alaska’s oil revenue surplus enabled a rapid expansion of state funded energy programs including the Alaska Housing Finance Corporation’s energy efficiency/weatherization programs, the Four Dam Pool, Railbelt electric transmission interties, Bradley Lake Hydroelectric Project and the Power Cost Equalization (PCE) program for rural, predominately diesel-fired electrical generation. Even with the PCE subsidy program, which is primarily designed as a lifeline program, the average residential customer in rural Alaska only uses around 400 kWh/month – reflecting the confluence of low incomes and high energy prices resulting in a high “natural rate” of energy conservation. Most recently, during the fossil fuel energy-price spike in the summer of 2008, the State of Alaska Administration and Legislature moved quickly to address high energy prices and the desire to accelerate the transition toward clean RE with: Approximately $750 million “resource rebate” to residents in the form of a supplement to the Permanent Fund Dividend in the fall of 2008, $360 million to residential weatherization and energy efficiency programs, $100 million for the RE grant fund (+another $25 million in 2009)13, $60 million in supplemental loan support for fuel purchases, and $1.8 million in supplemental payments to the PCE endowment and program. As fossil fuel energy prices and capital construction costs have moderated into 2009, many Alaskans have been asking, what is the future potential for EE/RE to help avoid fossil fuel price shocks and higher prices? How can we advance EE/RE opportunities in Alaska? Where should we focus our attention to help develop EE/RE opportunities? How should we monitor and evaluate EE/RE programs in Alaska in order to package local adaptation expertise for export to the developing word? 12 See Neil Davis, Energy Alaska (1984) 13 Please note that Alaska’s Renewable Energy Fund is the largest state-funded renewable energy effort in the United States, $125 million in two years, which, on a per capita basis, is equivalent to a $55 billion Renewable Energy Stimulus Fund in the United States Even in these challenging economic times, the State of Alaska continues to be supportive of additional spending on critical transmission infrastructure and smart grid demonstration projects to reduce the barriers for renewable energy development. The State of Alaska recently appropriated $25 million for transmission infrastructure for wind power development and is reviewing how to leverage another $49 million in energy fund grants in the upcoming legislative session. If the State follows through and invests $49 million in smart grid and efficient electrical transmission infrastructure, it would be the equivalent to a $21.7 billion investment in the United States on a per capita basis. 13 3 Fortunately, not unlike Norway, Alaska is blessed with abundant resources and has saved a significant portion of its fossil fuel-generated wealth in the form of financial reserves, and appears poised to continue to use its financial reserves to invest in the next generation of clean energy opportunities. A number of energy related bills have been introduced in the Alaska Legislature to support further investment in energy efficiency and renewable energy. 3.6. Alaska Historic Energy Consumption Over the past 50 years, the total energy consumption in Alaska has grown by a factor of 15 with two dominant expansions: 1) the development of oil resources on Alaska’s North Slope; and 2) the sales of jet fuel associated with the development of the Anchorage Airport as the leading international cargo hub in the United States. Prior to the development of the oil and gas industry, export industries and the federal government were the primary developers of renewables, including biomass and hydropower for mining, and federal hydropower projects. During the 1980s, the state invested surplus revenue from oil and gas resources in a number of hydropower projects. In the 2004-2007 period, as fossil fuel prices rose around the world, a portion of those increases were felt in Alaska. Figure 3: Alaska Total Energy Consumption by Source. A prominent industrial use of natural gas, the Agrium Nikiski fertilizer plant, phased down and eventually shut down in 2007. The phase down of the Agrium fertilizer plant, with a natural gas demand of approximately 40-50 billion cubic feet (Bcf)/year (40,000 to 50,000 billion Btu per year), or roughly 15% of the total consumption of natural gas across Alaska, including field operations, is a prominent contributor to the decline in natural gas and total energy consumption in the historic record. Figure __: Alaska Total Energy Consumption by Source Source: EIA Historic Energy Consumption, Alaska, Table 7 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 196019621964196619681970197219741976197819801982198419861988199019921994199619982000200220042006Billion BTUs per yearBiomass Hydro Other Petro Resid Motor Gasoline Lubricants LPG Kerosene Jet Fuel DFO Av Gas Asphalt Road Oil Natural Gas Coal 14 Figure 4 Subsequent events which have also contributed to a reduction in total energy use include: • The Phillips LNG export facility has been reducing exports to allow limited Cook Inlet supply of gas to be diverted to gas for local heating and electrical generation; • Flint Hills refinery periodically shuts down one out of three process trains over the past 12 months; • BP has announced the closure of its Gas-to-Liquids industrial facility on the Kenai Peninsula, reducing natural gas and electrical demand on the Kenai Peninsula. On the RE front, the Alaska Energy Authority, Alaska Village Electrical Cooperative, TDX, and AP&T, among others, have been developing wind and hydropower opportunities. AP&T completed Kasidaya hydroelectric project (approx. 3 MW near Skagway) in late fall of 2008. 3.7. Alaska Energy Consumption by Market Segment 3.7.1 Residential Diesel fuel oil remains a significant source of heating fuel for Alaska. The discovery of natural gas in the Cook Inlet allowed Anchorage and surrounding communities to convert to gas-fired generation as the transmission and distribution system expanded to meet the growing demand. As households increased in number and size, electric consumption has increased, magnifying energy losses associated with electrical generation. Most electricity is generated from an energy conversion Alaska Residential Energy Consumption by Source 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 196019621964196619681970197219741976197819801982198419861988199019921994199619982000200220042006Billion BTUsElectric System Losses Retail Electricity Wood LPG Kerosene DFO Natural Gas Coal 15 process that converts roughly a third of the primary energy to electricity − the remaining two-thirds is “wasted” as heat. Combined heat and power plants may capture another 20%+ of the heat to offset heating requirements. Modern fossil fueled turbines in combined cycle may increase system efficiencies to the high 50% - low 60% range. After that, the local power plant typically uses a few percent for “station use.” An additional 8-10% of the energy is lost in the transmission and distribution lines due to inefficient transfer of electrons. Over the past 20 years, residential energy consumption on an MMBtu per square foot basis has declined.14 Alaska’s residential heating and transportation fuel consumption is relatively high due to the state’s long and extreme winters, dispersed populations, and remote distances. In addition, the high energy costs and relatively low income of rural areas results in lower end-use energy consumption per household than in urban Alaska. See Figure 5 below. 14 MAFA Presentation to the Railbelt Integrated Resource Plan Technical Conference, July 2009. Figure xx: Median Household End-Use Energy Consumption Source: MAFA Analysis 2009 0 50 100 150 200 250 300 350 Rural AK Urban AKMMBtu/yearTransport Electric Heat Figure 5: 16 The electrical use per capita in rural Alaska is under 2000 kWh/year, placing it closer to the profile of a recently developing country. As a result of its relatively new exposure to electricity and its remote rural character, rural Alaska is well positioned to share lessons learned with other developing regions that appear poised to climb the development ladder through rapid expansion of electrical energy, especially with the rapid diffusion of information and communications technology (see Figure 6). Figure 1: Residential Electric Consumptions per capita, by region Source: EIA IEO 2009, MAFA 2009 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Canada United States Australia/New Zealand Japan OECD Europe Russia South Korea Rural Alaska Middle East Other Euro/Eurasia Mexico Brazil China Other Central andSouth America Other Non-OECD Asia India AfricaEIA IEO RegionkWh/year per capita (2030 Projection)Rural Alaska is well situated to act as a bridge between the developed and developing world on the transition to renewables - based on its strategic location on the energy development ladder and accumulated experience building bridges among indigineous populations and complext institutions under challenging circumstances Figure 6: 17 3.7.2 Commercial Aggregate commercial energy use tends to follow economic growth. Economic growth has been predominantly driven by oil and gas development and held aloft by federal government spending across the 1990s when oil prices were relatively low. Again, as the commercial sector grew, electrical use increased along with the associated energy loses from electrical generation. Over the past 20 years, commercial energy consumption on an MMBtu- per-square-foot basis has increased, driven in part by the proliferation of computer and associated telecommunications technology.15 Electric system losses, as noted earlier in the residential market overview, reflect the total energy efficiency of historic electric energy production, where roughly one-third of the fossil fuel energy is converted to electricity and roughly two-thirds is converted to heat (much of which is not recoverable). 15 MAFA Analysis of Railbelt End-Use Energy Consumption, prepared for Railbelt Integrated Resource Plan Technical Conference, July 2009. Figure 7 Alaska Commercial Energy Consumption by Source 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 Billion BTUs Electricity System Losses Retail Electricity Sales Geothermal Resid Motor Gasoline LPG DFO Natural Gas Coal 18 3.7.3 Industrial Industrial energy consumption is primarily driven by gas reinjection to support enhanced oil recovery and, up until 2007, the Unocal/Agrium Nikiski fertilizer plant, discussed previously. All things being equal, with the closure of the Unocal/Agrium Nikiski fertilizer plant, natural gas used for fertilizer production is expected to decrease on the order of 50,000 billion Btu per year. Depending upon how quickly the use of natural gas is converted from use to enhance oil recovery to commercial export opportunities, either as a heating fuel, fuel for electrical generation, or as liquefied natural gas feedstock, its use seems likely to continue whether in domestic or export markets. The big opportunity in the industrial sector, including both oil and gas and mining, is the replacement of aging energy infrastructure with efficient modern equipment as old fields are reworked and new throughput capacity is developed to meet new market opportunities (e.g., transportation of natural gas to non-local markets). Figure 8 Alaska Industrial Energy Consumption by Source 0 50,000 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000 Billion Btus Electricity System Loses Retail Electricity Sales Biomass Hydro Other Resid Motor Gasoline Lubricants LPG Kerosene DFO Asphalt Road Oil Natural Gas Coal 19 3.7.4 Transportation Historically, transportation fuel consumption is dominated by jet fuel to serve two U.S. Air Force bases and the expansion of the Anchorage International Airport into the busiest cargo airport in the United States. With the recent national and international economic downturn, jet fuel consumption has declined. Going forward, the transportation sectors in Alaska are likely candidates for increased efficiency, as transportation equipment (e.g., trains, planes, boats, automobiles, and off-road recreational vehicles) continues to evolve. Due to its relative distance from markets, goods and services in Alaska tend to have a higher proportion of their cost associated with transportation. As energy costs escalate, the relative burden of transportation requires efficiency adjustments to stay competitive. Given the relative magnitude of the fishing industry in Alaska, the conversion of the existing fleet of boats and ships to more efficient designs will likely be necessary for the industry to stay competitive in larger domestic and international markets. Finally, despite some concerns with the performance of hybrid vehicles at low ambient temperatures, we expect efficient land transportation vehicles to become more prevalent in Alaska. High fossil fuel prices may lead to the exploration of new alternatives for fleet vehicles, including hybrids and other renewable fuels. Figure 9 Alaska Transportation Energy Consumption by Source 0 50,000 100,000 150,000 200,000 250,000 300,000 196019621964196619681970197219741976197819801982198419861988199019921994199619982000200220042006Billion BTUsFuel Ethanol Resid Motor Gasoline Lubricants LPG Jet Fuel DFO Av Gas Natural Gas Coal 20 3.7.5 Energy for Electrical Production Cook Inlet natural gas dominates the historic picture due to its proximity to the population centers in South- central Alaska and the associated military bases and industrial developments on the Kenai Peninsula, including the Tesoro refinery and Unocal/Agrium fertilizer plant. The construction of the Alaska Intertie connecting Anchorage and Fairbanks has allowed the export of Cook Inlet gas-fired electrical generation to Fairbanks. This exportation enabled additional growth in natural gas for electrical consumption as industrial mining loads expanded in Fairbanks, drawing upon the less costly gas-fired electricity. In addition, Fort Richardson converted from generating its own power to purchasing power from Municipal Light and Power in 2007, resulting in a jump in natural gas consumption for electrical production. The Bradley Lake Hydroelectric Project (126 MW) and Four Dam Pool Projects (Tyee Lake, Solomon Gulch, Swan Lake, Terror Lake, total of 74 MW) were commissioned in 1980s and 1990s, and are the major contributors to the growth in the dark blue top line. In addition, a number of smaller hydroelectric projects constructed in the 1980s and 1990s (including Black Bear, Goat Lake, Power Creek, and Tazimina for a total of 15.3 MW) have also contributed to the growth in hydroelectric output. The increase in hydroelectric production has reduced the need for natural gas and diesel fuel oil used in electric production. Alaska Electric Energy Consumption by Source 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 196019621964196619681970197219741976197819801982198419861988199019921994199619982000200220042006Billion BTUsImports Wind Solar PV Geothermal Biomass Hydro Naphtha DFO Resid Natural Gas Coal Figure 10 21 More recently, peak winter gas consumption in the Cook Inlet associated with heating and gas for electrical generation has exceeded available peak supplies; the LNG export facility has curtailed natural gas consumption in deference to the high-priority local heat and electric winter demand. Peak pricing of gas supply and associated efforts to make more efficient use of gas and electricity are under way in the winter of 2009. 3.8. Lessons Learned 3.8.1 Alaska is a Tough Incubator Alaska’s energy needs and resources are spread across a vast and diverse landscape with limited road access, severe seasonal transportation and logistical challenges, and a high cost to deploy imported energy solutions. Vigorous competition and cooperation between and among local, state, and federal government agencies, village, and regional native corporations and enterprises, non-profit and for-profit enterprises has produced a rich mix of practical skills on how to navigate complex institutional settings. In addition, the dramatic seasonality of the climate and of many resource development activities is matched by a highly migratory population with the attendant challenges of attracting and retaining a skilled workforce each season – not unlike the sharp seasonality associated with activities and logistics around the rainy season in developing countries in addition to the more obvious analogues with the extreme arctic/sub-arctic and mountainous regions of the world. The accumulation of practical experience in a frontier environment makes Alaska an ideal location to continue to develop new RE enterprises. 3.8.2 Alaska as Innovation Hub to Develop Renewable Export Opportunities 3.8.2.1 Alaska’s Challenges are Challenges of the Developing World Going forward, one of the biggest challenges facing the worldwide development of RE is how to effectively develop technologies that will work under the severe stress of the developing world. As many commentators have repeatedly noted, success in the developing world is not just a matter of dropping United States, European or Australian technology into a developing community. Locally appropriate adaptations and local institutional support are absolutely critical for success.16 While Alaska has its own litany of stories of ineffective adaptations, it also has a growing list of success stories of energy projects, institutions, and narrowly targeted subsidies that have transformed energy markets leading toward higher efficiency and higher penetration of renewables under rather challenging remote conditions. Alaska’s history and accumulated experience with EE and RE provide a rich foundation upon which to build practical, robust energy solutions for many emerging economies in the developing world. Alaskan enterprises have already begun to share their RE expertise around the world, including hydroelectric development in Central America and RE and information and telecommunications 16 See for example Building Institutions for Markets, World Development Report 2002, World Bank and Stephen A. Marglin, “Development as Poison: Rethinking the Western Model of Modernity”, Harvard International Review, Spring 2003. 22 technology integrations in India and Ghana.17 Technical, institutional, and economic knowledge in RE/EE present both import and export opportunities. In the summer of 2009, an Alaska electric utility owned and operated by a former Peace Corps volunteer imported slow-speed electric generators from China to integrate into an Alaska fish wheel system designed to provide supplemental summer/fall refrigeration for fish and game harvest seasons. If the fish wheel system integration is successful, it may be suitable for export to regions where subsistence activities are prevalent around rivers and streams. The integration of simple, robust, electrical production systems with on-going subsistence activities provide reliable electrical production to support valuable health interventions for remote rural communities, such as water, sanitation, and refrigeration of medical supplies. 3.8.2.2 Alaska has Broad Experience in Enterprise Development Alaska is a developing state with a high density of business development enterprises devoted to creating new business and export opportunities.18 Over the past 40 years, Alaska’s leading public/private partnership development bank, Alaska Industrial Development and Export Authority (AIDEA), has issued roughly $2 billion (>$2900/capita) in loans and conduit revenue bonds.19 In addition, AIDEA, in recognition of the strategic value of energy and industrial and export development, has been closely associated with AEA, a public/private partnership organization. 3.8.2.3 Alaska as International Transportation Hub Anchorage’s airport is the busiest airport in the United States as measured by freight tonnage. Anchorage presents a unique international hub opportunity for RE enterprises that are looking to build a bridge from North America across the Pacific Rim and over the pole to Europe. 3.8.3 Alaska as Showcase for the Transition from Fossil Fuels to Renewables 3.8.3.1 World Class Oil and Gas Development Alaska’s oil industry has a long track record of development that demonstrates sensitivity and respect for Native culture, tradition, and a subsistence lifestyle, along with local employment needs. Alaska hosts some of the leading oil and gas companies in the world, including Exxon, BP, Conoco-Phillips − these corporations have built considerable expertise in new technology development and project management in challenging frontier environments. These advances present opportunities for cross-fertilization with RE projects, especially as both fossil fuel and RE industries head offshore in search of new resources. 17 Alaska Power and Telephone’s subsidiary, Hydrowest International, continues to develop low impact hydroelectric projects in Central America. The ATandT Industrial Ecology foundation nominated Alaskan subject matter experts to serve on the United Nations Committee on Renewable Energy and Telecommunications Technology to help identify policies to enhance the deployment of both in developing countries. 18 Among others, Alaska InvestNET, Alaska Federation of Natives Alaska Marketplace, Anchorage Economic Development Council, TriBorough Commission, Alaska Department of Commerce, Alaska Department of Commerce and Economic Development, USDA, Rural Development), and the Alaska Small Business Development Center 19 See http://www.aidea.org/ 23 3.8.3.2 Saving and Reinvesting Fossil Fuel Wealth in Future Generations Alaska is a world leader in investing financial gains from fossil fuel resource development for future generations - the Alaska Permanent Fund, with a market capitalization of $30 billion ($43,700/per capita)20 in June 30, 2009, which is expected to pay a dividend to all Alaska residents on the order of $1305. From 1982 through 2009, the accumulated total per resident dividend will be over $30,000. 3.8.3.3. Building the Bridge to Clean Energy Alaska continues to lead the United States in state-level investments in energy efficiency and renewable energy, having recently invested a portion of its surplus from the recent oil price spike in 2008 as follows:21 $360 million for weatherization and residential building envelope improvements; $125 million for a RE project fund. Matching funding has been encumbered for projects that include wind power, geothermal, biomass, combined heat and power, and hydro. The total RE project value associated with the RE matching funds is estimated at $1.25 billion for an aggregate average project value to match ratio of 10:1. Committees of the Alaska Legislature are working on a state energy policy that emphasizes energy efficiency and RE along with an Emerging Energy Technology Grant Program. 3.8.3.4 Federal Agency Presence and Department of Defense The Denali Commission is releasing up to $4 million towards alternative and emerging RE technology and demonstration projects. The Emerging Energy Technology Grant (EETG) seeks to develop emerging alternative and RE technology that has the potential of widespread deployment in Alaska, and that has the potential to reduce energy costs for Alaskans. Alaska’s large federal agency presence enables the rapid development of several energy efficiency and renewable enterprises as federal agencies such as the Department of Defense mobilize efforts to reduce their greenhouse gas footprint as a result of high-level directives to lead by example. 20 The Alaska Permanent Fund is roughly half the size of Norway’s Sovereign-Wealth Fund on a per capita basis. 21 On a per capita basis, the total of $485 million is roughly five times as large as the total 2009 Recovery Act investments directed through the U.S. Department of Energy, and 12 times as large as the 2009 Recovery Act DOE EE/RE allocation. PAGE 24 4. Fossil Fuel Energy Price Projections 4.1. Introduction This section describes the basis of the future energy price projections used to illustrate the market potential of energy efficiency and RE in Alaska. 4.2. Fossil Fuels Price Projections 4.2.1 Natural Gas Price Projection – The natural gas price projections range from $8 per MMBtu (2009$, EIA Low) to $17 per MMBtu (2009$, IEA Reference) in 2030. 4.2.2 Crude Oil – The crude oil price projections range from $50 per barrel (EIA Low, 2009$) to $200 per barrel (EIA High, 2009$) in 2030. Figure __: Natural Gas Price Projection - CONUS (2009$ / mmbtu) Sources: EIA AEO 09 Reference, Low, High; IEA WEO 08 $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 20062008201020122014201620182020202220242026202820302032203420362038204020422044204620482050205220542056205820602009 $ / mmbtuBase High Low IEA Reference 11 25 4.2.3 Carbon dioxide emissions cost estimates range from $30 per carbon dioxide eq tonne (EPA, Waxman-Markey Reference Case, 2009$) to $65 per carbon dioxide eq tonne (EIA, Waxman-Markey Reference Case, 2009$) in 2030.22 22 The presentation of the EIA projection ends at 2030 in part as a reminder of the advice offered by the Congressional Research Service review of carbon dioxide emissions cost projections – anything projected out beyond the 20-year time horizon is so highly speculative that it may not be anything more than illustrative. Figure __: CONUS Crude Oil Import Price (2009$ / bbl) Sources: EIA AEO 09 Reference, Low, High; IEA WEO 08 $0.00 $50.00 $100.00 $150.00 $200.00 $250.00 $300.00 20062008201020122014201620182020202220242026202820302032203420362038204020422044204620482050205220542056205820602009$ / bblBase High Low IEA Reference Figure ___: US CO2 Emissions Cost Projections (2009 $ / tonne) Sources: EPA (July 2009), CRA (May 2009), EIA (August 2009) $0.00 $50.00 $100.00 $150.00 $200.00 $250.00 20122014201620182020202220242026202820302032203420362038204020422044204620482050205220542056205820602009$ / tonneEPA WM Est CRA WM Est EIA Basic 12 13 26 4.3 Fossil Fuel Price Projections In Alaska 4.3.1 Natural Gas Wellhead Historically, Alaska has been blessed with a low wellhead price for natural gas compared to other gas producing states. Going forward, the wellhead price for natural gas in Alaska will substantially depend upon the extent to which Alaska can export its large natural gas and additional resources. The successful development of natural gas exports on the order of 4 billion cubic feet (bcf)/day should enable Alaska’s wellhead price of natural gas to remain below most North American wellhead price ratios (in the Alaska to Colorado range of 0.7 to 0.9 of U.S. average – see figure above) which appear likely to be dominated by shale gas at the margin. For the purpose of this long-run analysis, we have assumed that Alaska is able to develop and export significant natural gas resources. To the extent that Alaska is unable to develop a large natural gas export opportunity, the wellhead price is likely to increase toward the marginal forward looking cost to develop gas for smaller scale markets. Under this scenario, it seems likely that the wellhead price will exceed the price ratios of other gas producing states due to small relative scale (upper blue arrow in the figure above). Please note that difference in the future gas market price projections by EIA and IEA, roughly $10/MMBtu and $17/MMBtu respectively in 2030, suggest considerable uncertainty over the future price of natural gas. This turn presents considerable uncertainty with respect to the Figure __: Natural Gas Wellhead Price => State:U.S. Ratios Source: EIA Natural Gas Wellhead Price Annual Data (2009) 0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 196719691971197319751977197919811983198519871989199119931995199719992001200320052007Alaska Colorado Texas Wyoming 5 per. Mov. Avg. (Alaska) 5 per. Mov. Avg. (Colorado) Alaska Colorado ? ? 14 27 economic attractiveness of many EE and RE alternatives. At the lower price projection, several energy efficiency and renewable opportunities from the hydropower, wind, and geothermal sectors appear commercially viable. Additional energy EE/RE market penetration is highly dependent on learning curve improvements in the technology development and integration and the project team experience. Conversely, at the high price projection, a wide range of energy efficiency and RE projects are very competitive with fossil fuels; existing commercial technologies could be expected to displace fossil fuels with only modest reliance on experienced project teams. In short, high prices allow otherwise less competitive projects to attract capital and teams to build them. Please see the supply curves developed below for quantitative information on the long-run cost of renewables. 4.3.2 Natural Gas Residential Heating Historically, the residential price for natural gas in those areas adjacent to natural gas resources has tracked the wellhead price plus transmission, distribution, and taxes. Over the study horizon, we assumed that residential prices will continue to track the wellhead price and the overall average Alaska wellhead price will be set largely as a netback from large- scale export markets. This is expected to result in an a favorable residential gas price relative to other gas producing states whose future prices appear likely to be set by shale gas and LNG imports at the margin. Figure __: Natural Gas Residential Price = State:U.S. Ratio Source: EIA Natural Gas Price Residential Annual Data (2009) 0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 196719691971197319751977197919811983198519871989199119931995199719992001200320052007Alaska Colorado Texas Wyoming 15 28 4.3.3 Diesel Fuel Oil Historically, Alaska’s residential price for home heating oil (No. 2 distillate or an “arctic blend” of No. 1/No. 2 for arctic winter conditions) has tended to track the U.S. price since the opening of the refinery complex in North Pole, currently owned by Flint Hills. Assuming the successful development of Alaska North Slope natural gas resources, there will likely be additional adjacent development in oil exploration yielding additional oil for transport down the TAPS and feedstock for the in-state refineries. It is important to note that older small-scale in-state refineries may struggle to compete with imported diesel fuel, especially in light of the Waxman-Markey Climate Change legislation which appears to levy a high emissions cost on U.S. refineries, putting the in-state refinery at a competitive disadvantage relative to diesel imports from the Pacific Rim.23 Given the relatively small incremental diesel fuel supply requirements in Alaska compared to other markets on the Pacific Rim, this uncertainty may result in higher diesel fuel prices in the Alaska market compared to historic trends. If these risks materialize, energy efficiency and RE should experience additional growth. 23 See Oil and Gas Journal, “Study lists House clean air bill's possible refining impacts,” September 7, 2009. Figure __: Alaska to U.S. Price Ratios - No. 2 Distillate (a.k.a. diesel fuel oil) Source: EIA Annual No. 2 Distillate Fuel Oil Prices (2009) 0 0.5 1 1.5 2 1978198019821984198619881990199219941996199820002002200420062008Alaska:U.S. Price RatioRetail Sales Residential Price Commercial Price Industrial Price 5 per. Mov. Avg. (Residential Price) 5 per. Mov. Avg. (Industrial Price) 5 per. Mov. Avg. (Commercial Price) Recent Moving Average: Residential = 1.00 Industrial = 1.16 Commercial = 1.23 16 PAGE 29 5. Energy Efficiency Opportunities 5.1 Historic Trends In rural Alaska, high energy prices have created considerable incentive for energy efficiency and conservation in the heating and electrical demand for buildings, industrial processes, and transportation end-use markets. Nonetheless, due to limited technical and marketing expertise, substantial opportunities for energy efficiency remain.24 In urban Alaska, moderate energy prices have provided the backdrop for residential energy efficiency programs (e.g., Alaska Housing Finance Corporation), resulting in energy efficiency savings for new construction and a weatherization program for existing housing. The net effect has been an increase in residential heating efficiency over the past 25 years. Commercial markets, without financial, technical, and marketing support, may be lagging behind the United States in the development of energy service companies. Large institutions have recently begun to procure energy efficiency resources.25 5.2 Current Developments The Legislature appropriated a total of $360 million ($525/capita) for residential weatherization and energy grant programs in 2008, and the program is well underway, reporting on the order of $130 million plus in encumbered funds in September 2009.26 Nascent Railbelt electric utility end-use initiatives, led by Golden Valley Electric Association GVEA, have recently expanded. Chugach Electric and Anchorage Municipal Light and Power (ML&P) recently re-invigorated a lighting program and ML&P has designated $250,000 for end-use efficiency/conservation to match other funds in 2010.27 Railbelt electric utilities have begun to include smart meter demonstration projects in their capital improvement program.28 The Alaska Energy Authority’s rural village electric efficiency program expects to continue its school lighting and other upgrades as it works its way around over 200 rural communities.29 The Alaska Legislature has promoted efforts to capture Alaska’s share of energy efficiency related stimulus funds in the summer of 2009. 24 The weatherization, energy grant, and village efficiency programs continue to find large untapped potential. 25 State of Alaska Department of Transportation is contracting for energy efficiency services in its facilities. 26 Personal conversation with Scott Waterman, AHFC 27 This represents roughly $4.20 per capita in the ML&P service territory, which, when combined with existing end-use efficiency/conservation program expenditures, places it near the national average, roughly $5.40 per capita, reported in The State Energy Efficiency Scorecard for 2006, Eldridge, Prindle, York and Nadel, June 2007, Report No. E075, ACEEE, Figure A.1, p. 63. 28 Chugach and ML&P, 2010 Budgets. 29 See http://www.aidea.org/AEA/programsalternativeenduse.html for more detail. 30 5.3 Future Opportunities 5.3.1 Electric Peak Demand A recent analysis from the Federal Energy Regulatory Commission (FERC) suggests that Alaska could bend the curve of electrical peak demand if it fully participated in the opportunities presented with demand side and distributed resources which include improved peak pricing, interruptible rates, smart metering and associated enabling technology. Figure 17: Alaska System Peak Demand Forecasts by Scenario • Source: FERC National Demand Side/Distributed Resource Assessment, 2009 Given the heightened level of concern over the availability of adequate natural gas in the Cook Inlet at winter peak demand, efforts are underway to help manage winter peak demand, including improving peak pricing so that it more closely resembles the future cost to acquire peak resources, energy efficiency/conservation initiatives, and a public information campaign to encourage conservation at peak. 5.3.2 Electric Energy Similar to the demand reduction estimate in the FERC National Demand Side/Distributed Resource Assessment (2009), Alaska consultants have estimated that an invigorated pursuit of end-use efficiency and conservation efforts can bend the curve of electric energy demand in Alaska at a level comparable to the Electric Power Research Institute’s estimate of “realistic savings” of 22% by 2030 (EPRI, January 2009) if market structure, pricing, enabling technology, and subject matter experts are organized around demand side services. As illustrated in the figure below, an estimated 21% reduction in Railbelt region’s energy requirements through 2030 may result from an aggressive restructuring of the market to emphasize forward-looking peak pricing and technical support for initiatives to transform the market and increase the demand for energy efficiency. Alaska System Peak Demand Forecasts by Scenario 1,300 1,350 1,400 1,450 1,500 1,550 1,600 1,650 1,700 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019Peak Demand (MW)System Peak (without DR) BAU Expanded BAU Achievable Participation Full Participation 31 While Alaska does not have the summer peak shaving potential of continental U.S. air conditioning demand, the region does experience high winter peaks with coincident winter peaks associated with lighting and refrigeration inside well-heated buildings. A combination of more efficient lighting, refrigeration, and water heating (including fuel switching) presents a number of promising areas to reduce electrical demand both at peak and year round. Figure 18: Projected Railbelt Electrical Energy Requirements (GWh) Source: MAFA Analysis of Railbelt EE Opportunities (2009) Projected Railbelt Electrical Energy Requirements (GWh) 0 1000 2000 3000 4000 5000 6000 7000 8000 20072009201120132015201720192021202320252027202920312033203520372039GWh/yearBAU Conservation Achievable Potential PAGE 32 6. Renewable Energy Opportunities 6.1 Introduction As energy prices peaked in the summer of 2008, the Alaska State Legislature appropriated $100 million for Renewable Energy Projects in 2008 and another $25 million in 2009. As a result, project development work is underway on over $1.2 billion in RE projects across Alaska.30 Further commercial development of projects receiving funding under the Renewable Energy Fund and other renewable opportunities around the state will depend upon the ability of project developers to raise sufficient funds and organize project development teams to successfully execute the projects. RE resource supply curves were developed to estimate potential renewables, based on levelized cost estimates of electricity (LCOE) for various renewable technologies in different regions of the state. Wind, hydropower, biomass and geothermal supply curves illustrate the local Alaska potential for each basic technology, while highlighting the sensitivity of the supply curves to price. Many of the supply curves represent a few lower cost, easily exploited resources, followed by higher cost large-scale opportunities or smaller costly resources. Please note the basic shape of the supply curves resemble a supply curve developed recently for a hydropower evaluation study in British Columbia. 6.2 Future Opportunities 6.2.1 Wind – Rural In rural Alaska, diesel fuel based electrical generation ranges in price from $0.20/kWh on up toward $1.00/kWh in remote rural villages where fuel has to be flown in. As a result, the “cost umbrella” presented by diesel in rural Alaska creates opportunities for many small- scale renewable project deployments that might not be competitive in larger markets where the fossil fuel alternatives may appear to cluster down around $0.10 per kWh. In those communities where wind appears likely to yield a net economic benefit relative to diesel (benefit/cost >1.0), we’ve estimated the wind supply curve for rural Alaska (PCE communities) in Figure 19 below. 30 See http://www.aidea.org/AEA/RE_Fund.html for detail. 33 19 19 6.2.2 Wind – Railbelt Within the Cook Inlet and Alaska Range, mountain funnels create high wind zones with Class 3 and above winds with capacity factors of 0.30 and above. The ports, rail, and road system that serve the Railbelt region enable total project cost on 24 to 50-MW scale wind projects to be estimated at around $3000 to 3400/kW (2009$), including an allowance for transmission and interconnection facilities to connect to the transmission grid. Preliminary wind integration studies have pointed toward the use of hydropower facilities as the most appropriate balancing resource for wind. Unfortunately, the largest modern hydropower facility with robust control is Bradley Lake, located at the southern end of the transmission system which may require additional balancing resources to make optimal use of the wind while maintaining robust voltage support across the network. Fire Island and Eva Creek wind projects are included on Figure 2, the Alaska map of competitive RE projects. In addition, renewable resource potential maps for the Railbelt region have identified a renewable cluster that includes wind on the west side of Cook Inlet, Mt. Spurr geothermal, and Chakachamna hydropower. High level analyses suggests this cluster may present a competitive package of renewables that takes advantage of the relatively close proximity of the cluster to the existing Beluga Power Plant, thereby reducing the total cost of transmission infrastructure required for any one project. In addition, the close proximity of the wind, hydropower, and geothermal resources to each other may reduce the total cost of integration of the intermittent wind resource into the grid. 6.2.3 Hydropower – Analysis of AEA Alaska Hydropower Project Database The Alaska Energy Authority hydroelectric reference database was combed to develop a list of roughly 1000 mutually exclusive projects where cost estimates or actual Figure __: Supply Curve for Rural Alaska Wind Energy - estimated bus-bar energy costs Source: MAFA Wind Model of PCE Communities, Updated to 2009 $0.000 $0.100 $0.200 $0.300 $0.400 $0.500 $0.600 $0.700 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 Cumulative Quantity Available for Local Use (kW)Levelized Cost of Electricity ($/kWh) 34 information was either in the database or readily available. The cost information was then adjusted to a common 2009 basis using U.S. Corps of Engineers cost escalation factors for hydroelectric projects. Using a small sample of roughly a dozen projects completed since 1980, estimated costs were compared to actual costs of completed projects (where available and discovered). The analysis revealed a systematic bias of underestimates on larger public projects and overestimates on smaller private projects. To avoid the apparent bias in the project cost estimates − many dating back to the 1970s and 1980s − the cost estimates were adjusted to reflect the historic pattern of underestimating large projects and over-estimating small projects.31 The results of the hydropower screening study are presented below by region. In communities where hydroelectric development appears within the range to yield a net benefit relative to fossil fuels within the 50-year study period, a hydropower supply curve is provided. Notably, the general pattern reveals a few very large hydropower projects with modest capital cost, measured on a $/kW basis, followed by a variety of medium to small projects with increasing capital cost typically associated with projects that are 1) farther away from demand centers which require additional transmission facilities to interconnect; and 2) farther “upstream” in both the river/hydrology sense and in logistical challenges to develop the project. It is also useful to note that there are a number of smaller projects, typically high head, low- impact sites of under 5 MW, that are relatively close to an existing substation (e.g., hydropower around Girdwood and in Southeast, whose unit costs are relatively modest compared to larger dam projects) that show up as low cost in the Southeast and South-central regional supply curve presentations. Few small projects with long-term levelized cost of electricity appear to be down around $30/MWh. We appreciate the skepticism expressed by a reviewer of the draft report about this low-cost hydropower. Verification revealed that estimates appear reasonable based on the particulars of the sites, which typically include previous civil engineering work from an earlier era to provide access to the site and enhance the storage volumes available, effectively reducing the overall need for civil engineering work and increasing annual flow volumes and capacity factors available on relatively high head projects. In short, there appear to be a few cost effective opportunities for redevelopment of previously developed sites across the Southern mountainous regions of the state typically associated with the mining and fishing industries from earlier in the 20th century. On the opposite end of the cost curve, the screened project list includes small projects that appear to be around $300-400/MWh. These projects are included in the presentation because many of the small remote projects are competitive with other basic local options − such as remote off-grid diesel-fired generation. 31 Analysis of hydropower cost estimates vs. actuals available upon request. 35 Figure 20: Yukon River Region Hydroelectric Supply Curve Figure 21: Southwest Alaska Hydropower Supply Curve Yukon River Region Hydro Supply Curve - $/MWh vs. Cumulative Capacity (MW) $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 0.0 1,000.0 2,000.0 3,000.0 4,000.0 5,000.0 6,000.0 7,000.0 8,000.0 Capacity (MW)Levelized Cost (2009$/MWh)Rampart ($55/MWh) Woodchopper ($125/MWh) Crooked Creek - Circle Hot Springs ($84/MWh) Gerstle - Tanana River ($257/MWh) Southwest Alaska Hydro Supply Curve - $/MWh vs. Cumulative Capacity (MW) $0.00 $200.00 $400.00 $600.00 $800.00 $1,000.00 $1,200.00 $1,400.00 $1,600.00 0.00 100.00 200.00 300.00 400.00 500.00 600.00 700.00 800.00 Cum. Capacity (MW)Levelized Cost $/MWh (2009$) 36 Figure 22: Southeast Alaska Hydropower Supply Curve Figure 23: South-central Alaska Hydropower Supply Curve SE Alaska Hydro Supply Curve - $/MWh vs. Cumulative Capacity (MW) $0.00 $100.00 $200.00 $300.00 $400.00 $500.00 $600.00 0.00 200.00 400.00 600.00 800.00 1000.00 1200.00 Cumulative Capacity$/MWh (2009$)Southcentral Hydro Supply Curve - $/MWh vs. Cumulative Capacity (MW) $0.00 $50.00 $100.00 $150.00 $200.00 $250.00 $300.00 $350.00 $400.00 $450.00 0.00 500.00 1000.00 1500.00 2000.00 2500.00 3000.00 3500.00 Cumulative Capacity (MW)Levelized $/MWh (2009$) 37 6.2.4 Biomass The cost/performance data in the Crimp Biomass database was updated and calibrated against steam engine 2009 vendor quotes. It was assumed that biomass electrical generation plants would be used in combined heat and power applications where, in aggregate, 50% of the “waste” heat would be used to offset fossil-fuel heating, typically diesel fuel oil. The analysis did not include an independent assessment of biomass gasification technology. Figure 24: Alaska Biomass Supply Curve *MAFA Cost/Performance Update of Crimp Biomass Database 38 6.2.5 Geothermal The cost/performance data outlined in the April 2009 HDL memo to David Lockard, AEA was updated, illustrating the cost of geothermal developments in Alaska and added current estimates for fixed and variable operations and maintenance (O&M) costs. Within this analysis, the Chena Hot Springs project was estimated at $200/MWh (2009$) – roughly at the inflection point in the supply curve. As with prior supply curves, a few high-cost projects are included; these projects appear competitive with the basic remote diesel-fired alternative due to their remote location. Figure 25: Supply Curve for Geothermal Energy in Alaska – Energy Costs including Connection to Local Alaska Markets Supply Curve for Geothermal Energy in Alaska - Energy Costs Including Connection to Local Alaska Markets $0.00 $100.00 $200.00 $300.00 $400.00 $500.00 $600.00 $700.00 0 50 100 150 200 250 Quantity Available, MWLevelized Cost of Electricity, $/MWh (2009$)Mt. Spurr Makushin Naknek PAGE 39 7. Stranded Renewable Energy Resource Opportunities 7.1 Introduction In addition to numerous undeveloped RE resource opportunities that are adjacent to existing communities, Alaska may have large RE resources that, by virtue of not being adjacent to a large, rich market opportunity or appearing to be unproven or expensive relative to fossil fuel alternatives, are not on the high profile list of commercial development opportunities of the renewable industry in the near term. Nonetheless, these renewable resources hold significant promise for future energy developments to serve growing local markets along with local development of export industries. These large, currently “stranded” renewable resources present significant opportunities: The next five years − o As local innovations and learning-by-doing reduce costs and increase the competitive frontier of renewables (e.g., wind-diesel-dump load integrations, wind-Railbelt grid integrations, geothermal exploration and development). o As roads and electrical transmission facilities are extended into areas with RE resources (e.g., wind-hydro-geothermal cluster around Mt. Spurr/Chakachamna). The next 15 years as local research and commercial development continues to push the cost/performance frontier for renewables and renewable electricity/storage and renewable fuel technologies. Alaska is well positioned to develop applied research in support of pushing the commercial frontiers to enable development of stranded renewables based on key research collaborations between national energy labs and State of Alaska and University of Alaska institutions. Two prominent collaborations include: Alaska Center for Energy and Power/Sandia National Laboratories/National Renewable Energy Laboratory Alaska Energy Authority/National Renewable Energy Laboratory 7.2 The Big Renewable Stranded Resources – Wind, Geothermal, Tidal, Hydro 7.2.1 Shoreline and Offshore Wind Not unlike the offshore wind potential of the continental U.S., Alaska has tremendous offshore wind potential.32In the short term, shoreline and near-shore winds present opportunities for 32 See for example NREL high resolutions wind maps of Alaska available at: http://www.akenergyauthority.org/programwindmap.html which indicate an abundance of class seven wind resources along the vast Alaska coastline. 40 wind power to displace expensive diesel fuel for commercial export (e.g., seafood) and local village power system. As innovation in diesel-wind-energy storage systems advances, additional wind power opportunities will become competitive. Some progress has been made on improving the cost/performance of energy storage systems. Additionally, wind-storage systems appear likely beneficiaries of research into batteries for electric cars.33 Potential wind resource opportunities may be unduly constrained by current practices which require individual project independent assessments of bird migration conflicts and local environmental and view-shed concerns. Systematic, regional bird migration and mitigation assessments may be a more efficient and effective way to help wind project development. 7.2.2 Geothermal Alaska sits on the top of the Pacific Ring of Fire where the North Pacific Plate runs under Alaska, resulting in an extraordinary geothermal resource potential along the South- central/South-western volcano range and down along the Aleutian Chain.34 Due to relatively small local markets, 95% of geothermal projects under public review in Alaska are under 30 MW in size, while 86% are 10 MW and smaller.35 A few larger projects have recently received private sector attention. Ormat paid the State of Alaska $3.5 million for a subsurface lease to develop geothermal resources around Mt. Spurr near Anchorage. Ormat has estimated the Mt. Spurr project size at 100 MWe.36 In the short term, the geothermal potential in Alaska appears constrained by a very small number of experienced geothermal developers, lack of a proven utility-scale development and associated support services, and a subsurface resource lease regime on State of Alaska land that includes a 10% State of Alaska royalty on gross revenues derived from the geothermal resources.37 The potential geothermal resource opportunity may also be constrained by local environmental concerns.38 7.2.3 Tidal Several of Alaska’s southern coastal regions (e.g., Cook Inlet, Southwest/Aleutians, and Southeast) contain world-scale tides with daily variation averaging 30 feet and approaching as much as 40 feet in the Cook Inlet. The estimated costs to develop these large tidal resources remain highly uncertain; projected costs range from a yet-to-be-constructed 1-MW pilot project estimate of $6346/kW (EPRI, 33 See for example WHP Report on Energy Storage [Brian Yanity to provide cite] 34 See for example, http://geotherm.inel.gov/maps/ak.pdf 35 See Dilley, HDL, Memo to Lockard, AEA, April 2009. The 100MW Mt. Spurr geothermal project sponsored by Ormat is the exception to the tendency for Alaska geothermal projects to be small scale, even when they are slated to serve a fish processing energy demand. 36 Ormat applied for, but did not receive, any funding from the State of Alaska Renewable Energy Fund, for assistance with geothermal exploration around Mt. Spurr. 37 See the summary of the results of the State of Alaska Mt. Spurr Geothermal Lease Sale, http://www.dog.dnr.state.ak.us/oil/products/publications/geothermal/spurr/sale_docs/final_SaleResultsSummary.pdf 38 We note the presence in the historic public record of concerns by local indigenous populations on the Hawaiian Islands over geothermal development. 41 2006), an estimated commercial 50 MW development of $2200/kW (EPRI, 2006), to $1136/kW (Petroleum News, Little Susitna Construction Company, Turnagain Arm Project, 2009). Ocean Renewable Power Co. has subsequently proposed installing a single tidal-power turbine-module pilot project in the Cook Inlet in 2010 to test the technology and commercial potential. The National Marine Fisheries Service (NMFS) sent a letter to the Federal Energy Regulatory Commission (FERC) questioning the adequacy of proposed environmental studies for the pilot project based on concerns with the Cook Inlet beluga whale, an endangered species, and salmon runs.39 Little Susitna Construction Company filed a preliminary permit application, dated July 28, 2009, with the FERC for the $2.5 billion Turnagain Arm Project – estimated at 2200 MW ($1136/kW) and a 54% capacity factor, which suggests a total cost on the order of $0.04/kWh.40 If these tidal power configurations achieve the commercial break-through purported in their preliminary permit applications with FERC and successfully navigate the permitting process, they may have the potential to be “game changing” renewable opportunities that substantially displace fossil fuels, position Alaska as a world leader in tidal power technology, provide extremely competitive electric rates for the northern Pacific Rim which could significantly enhance export industry opportunities, and encourage renewable market transformation in electrification of end-use energy demand and conversion from fossil fuel to renewable fuels for transportation. In the meantime, the development of these tidal projects appears to remain in the pre-commercial demonstration project phase. The local office of NREL has been approached to facilitate a discussion among federal permitting agencies to explore the potential for streamlining the permit process for tidal energy projects in the Cook Inlet. 7.2.4 Large Hydroelectric Resources 7.2.4.1 Overview At first blush, Alaska appears to have a tremendous amount of undeveloped hydroelectric potential. Some reports suggest Alaska may have as much as 45,000 MW of undeveloped hydropower potential.41 However, an analysis of the Idaho National Labs IHRED database (2003) suggests that a significant portion of the undeveloped hydroelectric potential is not likely to be accessible for a variety of reasons. See Figure 26. 39 See Petroleum News, 7 June 2009, http://www.petroleumnews.com/pnads/545706866.shtml 40 Assuming 20 years, 5% real discount rate on a reported capital cost of $2.5 billion, and all of estimated output is sold. Assume fixed O&M at $100/kW/yr. See http://www.petroleumnews.com/pnads/641916781.shtml for additional information. We note that Blue Energy Canada does not yet appear to have built a 1-MW pilot project to prove the concept at a moderate scale, let alone scale up to 2200 MW, so the cost/performance projections remain highly uncertain. 41 US DOE Wind and Hydropower U.S. Hydropower Potential Study (2003). 42 In short, the Idaho National Laboratory’s Alaska Hydropower Assessment suggests that roughly 1/8th of the hydropower resource identified in their assessment is available for development; the remaining 7/8ths of the hydropower resource raise concerns related to National Parks, Preserves, and Refuges, and fish which limit their development potential to less than a 90% probability of success. In light of the recent substantial interest in national and international renewable potential, the tremendous hydropower potential of Alaska may benefit from additional research work to delineate a “national renewable reserve” from the pool of technically available hydropower resources. Figure xx: Alaska Hydropower Resources - Availability of Resource for Development Source: IHRED - Alaska Hydro Resource Assessment (2003) 13% 62% 25% Available for Development Dev't Concerns - Nat'l Parks Dev't Concerns - Fish Figure 26 43 Figure 27: Probability of Development of Alaska Hydropower Resources 7.2.4.2 Potential Measures to Improve the Prospects for Hydropower Development Research into local fisheries, wildlife habitats, and local indigenous uses could help reduce the uncertainties associated with hydroelectric development by identifying low impact hydroelectric opportunities; this in turn could reduce development timelines and permit uncertainty.42 Research on effective techniques for engaging local indigenous populations and addressing local, regional, national, and international environmental and habitat concerns could be shared in international forum for renewable resource advocates. This would allow advocates to share “lessons learned” on working with local populations to solve the practical challenges associated with renewable development in developing countries. Prominent Alaskan examples of local engagement with indigenous populations in the development of RE include the Yukon River Inter-tribal Watershed Council (YRITWC) – the first ever U.S. application of hydrokinetic turbines in addition to installations of wind turbines, solar, and energy efficiency measures in Ruby, Alaska. 42 A similar effort is underway in wind. The Alaska Energy Authority and the U.S. Fish and Wildlife Service have been working to delineate those regions with minimal potential conflict between bird migration and wind turbines. Email with Martina Dabo, Alaska Energy Authority, Wind Program Director. Probability of Development of Alaska Hydro Resources Source: IHRED Alaska Hydro Resource Database (2003) 296 355 1,792 533 438 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 1MW 90% Dev't Probability 75% Dev't Probability 50% Dev't Probability 25% Dev't Probability 10% Dev't Probability 72% of MW = 50% or less probability of development 44 One way to distill practical learning in the Alaska renewables development arena is to provide experienced indigenous culture business-development resources for local entrepreneurs to compile lessons learned into practical models for export to developing countries. 7.2.5 Potential Break-Through Technologies to Unlock Alaska’s Vast Renewable Resources that Appear “Stranded” Today 7.2.5.1 Electric Vehicles 43 Hybrid electric vehicles (HEVs) combine the benefits of high fuel economy and low emissions with the power, range, and convenience of conventional diesel and gasoline fueling. HEV technologies also have potential to be combined with alternative fuels and fuel cells to provide additional benefits. Future offerings might also include plug-in hybrid electric vehicles (PHEVs). The EIA Annual Energy Outlook 2009 forecast includes: Concerns about oil supply, fuel prices, and emissions have driven the market penetration of unconventional vehicles (vehicles that can use alternative fuels, electric motors and advanced electricity storage, advanced engine controls, or other new technologies). Unconventional vehicle technologies are expected to play a greater role in meeting the new NHTSA CAFE standards for LDVs (light-duty vehicles). Unconventional vehicles account for 63 percent of total new LDV sales in 2030 in the AEO2009 reference case. Hybrid vehicles (including both standard hybrids and PHEVs) represent the largest share of the unconventional LDV market in 2030 (see figure below), at 63 percent of all new unconventional LDV sales and 40 percent of all new LDV sales. Micro hybrids, which allow the vehicle’s gasoline engine to turn off by switching to battery power when the vehicle is idling, have the second-largest share, at 25 percent of unconventional LDV sales. Turbo diesel direct-injection engines, which can improve fuel economy significantly, capture a 16-percent share of unconventional LDV sales. The availability of ultra-low-sulfur diesel and biodiesel fuels, along with advances in emission control technologies that reduce criteria pollutants, supports the increase in diesel LDV sales. Currently, manufacturers receive incentives for selling FFVs (flex-fuel vehicles) through fuel economy credits that count toward CAFE compliance. Although those credits are assumed to be phased out by 2020, FFVs make up 13 percent of all new LDV sales in 2030 in the reference case, in part because of the increased availability and lower cost of E85. 43 See for example, http://www.nrel.gov/vehiclesandfuels/hev/ and for the latest news, and also see electric vehicle world at http://www.evworld.com/index.cfm. 45 Alaska Hybrid and Electric Vehicle Challenges While the opportunity for hybrid and electric vehicles remains promising at the international and national level, the remote nature and extreme climate of Alaska may present some challenges for the development of cost effective hybrids. Battery performance typically degrades during cold weather and can effectively preclude reliable performance of conventional automobiles during the extreme winter conditions of the Interior and Northern regions where winter temperatures are frequently below –20°F and often reach –40°F. Additional applied research into battery technologies under the extreme climactic conditions of Alaska’s winters may enable broader deployment of hybrid and electric vehicles to regions with cold temperature extremes, including mountainous regions of the world, as well as the far North and far South. 7.2.5.2 Wind Hydrogen.44 The development of commercial technology that links renewable power (e.g., wind turbines) to electrolyzers would serve as a technical breakthrough that could expand the addressable market for renewable electricity. Hydrogen could then be stored for later use to generate electricity from an internal combustion engine or a fuel cell – a configuration that may be of particular interest to isolated off-grid systems like those in Alaska and the developing world. The goal of this technology would be to improve hydrogen production efficiency from renewable resources to compete with traditional energy sources such as coal, oil, and natural gas.45 In the future, as the price of fossil fuels rise and the price of hydrogen production from renewable power falls, there is a potential for wind-hydrogen to provide local hydrogen fuel that is competitive with gasoline and diesel used for transportation. 44 See a system study in Alaska, Colt and Gilbert, “Economic Analysis of an Integrated Wind-Hydrogen Energy System for a Small Alaska Community,” Final Technical Report, DOE, December 2008. 45 For more details, see the NREL Wind-Hydrogen Demonstration project at http://www.nrel.gov/hydrogen/proj_wind_hydrogen.html. Figure __: EIA AEO 09: Sales of Unconventional Light-Duty Vehicles by Fuel Type, 2030 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 Total Electric hybrid Micros Flex-fuel Diesel OtherThousand Vehicles Sold Per Year28 46 7.2.5.3 Ammonia Fuels.46 Another potential renewable fuel on the horizon is ammonia. The Iowa Energy Center in Iowa State University has been researching the viability of NH 3 as “the other hydrogenTM” in light of its potential benefits:47 Ammonia is widely produced and distributed today for fertilizer around the world; the technology and incremental cost of storage and delivery systems is modest. The cost of ammonia has been competitive with gasoline on a dollar-per-MMBtu basis for several years. While the price of ammonia peaked more sharply during the natural gas price run-in in the 2004-2008 period, the cost of NH 3 for fertilizer and NH 3 for fuel may both decrease if they are produced as a joint product because of improvements in capital infrastructure utilization. The incremental cost to convert diesel and spark-ignition engines to run on ammonia is purported to be modest. Direct ammonia fuel cells are under development at Natural Resources Canada and at Howard University. The Hydrogen Engine Center (HEC) and the NH 3 car have both produced spark ignition engines that have demonstrated the use of ammonia fuel for hundreds of hours. 46 See for example, http://www.ammoniafuelnetwork.org/projects.html and the associated research published by the Iowa State University, Iowa Energy Center. 47 See Olson and Holbrook, “NH3−The Other HydrogrenTM”, March 30, 2009, for a summary of key considerations. PAGE 47 8. Market Evolution and Transformation 8.1 Alaska Market Evolution Opportunity Alaska is in the process of investing $125 million in RE projects and $360 million in end-use efficiency/conservation programs, or roughly $524 per capita, from 2008/2009 legislative appropriations – placing it in the forefront of U.S. efforts to finance RE projects and help develop RE enterprises, including wind, geothermal, biomass, and hydropower. The Regulatory Commission of Alaska, the state utility regulator, is examining how to enhance energy efficiency, conservation, peak demand shaving, and RE opportunities. The Alaska Energy Authority (AEA) is developing an energy plan that features consideration of demand side and RE opportunities. The public and private sector and associated enterprises are working together across the state to increase the availability of reliable, cost-effective energy efficiency and renewable energy. If these collective efforts continue, a sharp focus on key market transformation issues may include: Pricing energy resources to reflect their full incremental cost, especially at peak; Development of subject matter expertise in management, marketing, technology and integration of energy efficiency/renewable energy, especially robust rural-scale wind, geothermal, biomass, and hydropower that can be exported; Wide dissemination of technical, managerial, and marketing lessons learned − o Alaska is well positioned to take a leadership role in the rapid development of EE/RE opportunities for developing markets around the world. 8.2 Package Alaska Market Transformation Expertise for Export As a leading trade state with significant public and private sector support for export enterprises, Alaska is well positioned to support national goals of developing a vigorous RE export industry. 8.3 Alaska/NREL International Developing Country Energy Ambassador Opportunities Forty years ago, most of rural Alaska was without reliable electricity, frequently relying on kerosene lamps or a few small household-scale gasoline generators that were used to generate light for a few hours a day. Watering points were still being installed and most villages used “honey buckets” for waste. Over the past forty years, rural Alaska has been in transition − 48 building schools and clinics, village-scale power plants, piped water and sewer systems, and modern mobile and Internet telecommunications systems. Much has been accomplished, yet much remains to be done. A tremendous number of rural development lessons have become part of the fabric of successful rural enterprises – including rural utilities and health care facilities. International development agencies have sought the expertise of Alaskan subject matter experts in rural development. As energy prices have risen dramatically over the past few years, the private sector, State of Alaska, and the federal government have increasingly invested in RE technology and enterprise development. As the State of Alaska’s RE fund is being leveraged to develop over $1 billion in new wind, biomass, geothermal, and hydropower resources, new innovative enterprises are working to address the needs of many remote rural communities attempting to move from fossil fuels toward a low carbon future. If the United States is to move forward on the promise of becoming “the world’s leading exporter of renewable energy” to the vast developing world that is poised for continued growth, it may find Alaska presents a unique investment opportunity. 8.4 Recommendations to Enable Further Development and Export of Alaska EE/RE Knowledge Market Transformation − Assist efforts to eliminate fossil fuel subsidies 48 and ensure that any remaining life-line subsidies for energy and electricity are “technology neutral” and apply to both energy efficiency and renewable technologies; Explore opportunities, e.g., build, own, transfer, build, own, operate, to leverage private- sector federal tax credits for RE into Alaska market dominated by municipal, cooperative, and village non-profit utilities; Facilitate exploration of combined heat and power opportunities by encouraging appropriate pricing of fossil fuels, especially at peak demand. Permit Streamlining − Facilitate state and federal agency exploration of ways to streamline the permitting of renewable energy resources. Monitoring and Evaluation − Develop program monitoring and evaluation capacity, especially with respect to the current slate of projects being funded by the State Renewable Energy Fund and federal stimulus funds, to identify most promising EE/RE technologies and business models for further development. 48 See for example, Financial Times, “An idea whose time has come” (24 Sept 09), “As addictions go, the world’s addiction to fossil fuels is a killer. President Obama has a big idea on how to help the world kick the habit: the elimination of fossil fuel subsidies globally.” 49 Marketing and Education − Support local technology collaborations, including EE/RE conferences; Support the development of national and international collaborations, especially among indigenous peoples. Technology Development and Deployment − Facilitate exploration of combined heat and power opportunities, e.g., wind-dump loads to heat bricks and other storage media; Facilitate exploration of new emerging renewable and enabling technologies (e.g., batteries, ammonia fuels, in extreme climatic conditions); Identify and support the most promising demonstration projects in emerging renewables, including tidal and hydrokinetic technologies. Workforce Development − Provide support for efforts to attract and retain local expertise in the development of RE and RE enterprises. PAGE 50 References Alaska Energy Authority Hydroelectric Project Study Database, 2007. Black and Veatch, Alaska Energy Authority Railbelt Integrated Resource Plan, Advisory Committee Presentation, 26 August, 2009. California Energy Commission, “Distributed Generation and Cogeneration Policy Roadmap for California”, March 2007. Charles River Associates, “Impact on the Economy of the American Clean Energy and Security Act of 2009 (HR 2454)”, May 2009. Colt, Gilbert, Economic Analysis of an Integrated Wind-Hydrogen Energy System for a Small Alaska Community, Final Technical Report, DOE, December 2008. Colt, Crimp, Foster, Renewable Report DOE, Wind Resource Potential, Continental U.S. (2008). DOE, Energy Efficiency and Renewable Energy, Hydropower: Setting a Course for Our Energy Future (2003). Devine, Mia, Analysis of Loads and Wind Energy Potential in Rural Alaska, Alaska Energy Authority, 2004. Dzioubinski and Chipman, Trends in Consumption and Production: Household Energy Consumption, United Nations Division for Sustainable Development, Department of Economic and Social Affairs, Discussion Paper No. 6, April 1999. Easterly, William, The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good (Penguin, 2006). EIA Annual Energy Outlook 2009, Low, Reference and High Energy Price Forecast EIA Annual Energy Outlook 2009, Assumptions EIA Annual Energy Outlook 2009, Appendix, IHRED Hydroelectric Resource database (2003), Alaska. EIA Electric Power Annual, 2007, Table A3: Carbon Dioxide Uncontrolled Emission Factors. EIA Historic Energy Consumption, Tables 7-12, Alaska, 1960-2006. EIA, Energy Market and Economic Impacts of HR 2454, the American Clean Energy and Security Act of 2009, SR/OIAF/2009-05, (August 2009). EIA Energy Price Data Series, Downloads from August 2009: Regular Gasoline, Distillate Fuel Oil, Natural Gas (wellhead, city gate, residential). 51 EPA, eGRID emissions database, Alaska, 2007. EPRI, Hydropower Life Extension Modernization Guide, 2001. EPRI, Environmental Assessment of Plug-In Hybrids, July 2007. EPRI, The Potential To Reduce CO2 Emissions by Expanding End-Use Applications of Electricity, March 2009. EPRI, Assessment of Achievable Potential from Energy Efficiency and Demand Response Programs in the U.S., January 2009. EPRI, System Level Design Performance Cost and Economic Assessment – Knik Arm Alaska Tidal In-Stream Power Plant, June 2006. FERC National DR Potential Assessment, Alaska, 2009. Heltbert, Household Fuel and Energy Use in Developing Countries – A Multi-country Study, Oil and Gas Policy Division, World Bank, May 2003. HDL, Memo from Ms. Dilley to Mr. Lockard, Alaska Energy Authority, Alaska Geothermal Cost Estimates, April 2009. HR 2454, “American Clean Energy and Security Act of 2009.” IEA World Energy Outlook 2008, Electrical Energy Information 2009. Idaho National Lab, http://hydropower.inel.gov/resourceassessment/index.shtml. Joint Drilling Survey 2007. MAFA, Alaska Household Carbon Calculator, 2007. McKinsey Quarterly, Enkvist, et al., “A Cost Curve for Greenhouse Gas Reduction”, pps. 35-45; 2007, Volume 1. NREL, Denholm and Short, “An Evaluation of Utility System Impacts and Benefits of Optimally Dispatched Plug-In Hybrid Vehicles,” October 2006. NREL, Short and Denholm, “A Preliminary Assessment of Plug-In Hybrid Electric Vehicles on Wind Energy Markets,” April 2006. Renewable Energy Alaska Project/Alaska Energy Authority, Renewable Energy Atlas Stern, Nicholas, The Global Deal: Climate Change and the Creation of a New Era of Progress and Prosperity (Public Affairs/Perseus Books Group, NY, 2009). Stiglitz, Joseph, Making Globalization Work (WW Norton, 2007). MATANUSKA ELECTRIC ASSOCIATION, INC. • P.O. Box 2929 • Palmer, Alaska 99645 • t 907.745.3231 • f 907.761.9368 • www.mea.coop December 5, 2022 Grants Coordinator Alaska Energy Authority 813 West Northern Lights Blvd. Anchorage, AK 99503 RE: Matanuska Electric Association’s REF Round 15 Grant Application Match Commitment To whom it may concern: Matanuska Electric Association’s (MEA’s) Board of Directors meets on December 12, 2022, to approve the 2023 calendar year budget. The cash intended for use as a match to MEA’s Round 15 REF application is included in the 2023 budget. Without a special meeting of the Board, funds would not be allocated until after the December 5 due date for the Round 15 REF application deadline. MEA sought guidance from Conner Erickson, Manager of Planning for Alaska Energy Authority (AEA), regarding this issue. Per an email dated November 28, 2022, to Josh Craft, Grid Modernization Manager for Matanuska Electric Association, which copied Karin St. Clair, Grants Coordinator for AEA, Mr. Erickson provided MEA permission to submit a Board Resolution committing matching funds as supplementary information to our application. MEA intends to submit the Board Resolution by close of business December 13, 2022, to the AEA Grants Coordinator as supplementary information to our REF application. MEA thanks AEA for their consideration on this subject. Sincerely, Anthony M. Izzo Chief Executive Officer Department of Commerce, Community, and Economic Development CO R P O R AT I O N S , B U S I N E S S & P R O F E S S I O N A L L I C E N S I N G Show Former State of Alaska / Commerce / Corporations, Business, and Professional Licensing / Search & Database Download / Corporations / Entity Details ENTITY DETAILS Name(s) Entity Type: COOP Electric and Telephone Entity #: 1348D Status: Good Standing AK Formed Date: 4/1/1941 Duration/Expiration: Perpetual Home State: ALASKA Next Biennial Report Due: Entity Mailing Address: P O BOX 2929, PALMER, AK 99645 Entity Physical Address: 163 E INDUSTRIAL WAY, PALMER, AK 99645 Registered Agent Agent Name: ANTHONY IZZO Registered Mailing Address: P O BOX 2929, PALMER, AK 99645 Registered Physical Address: 163 E INDUSTRIAL WAY, PALMER, AK 99645 Officials Type Name Legal Name MATANUSKA ELECTRIC ASSOCIATION, INC. AK Entity #Name Titles Owned Arthur Keyes Director DANIEL TUCKER Director, Secretary, Treasurer MARK HAMM Director Filed Documents COPYRIGHT © STATE OF ALASKA · DEPARTMENT OF COMMERCE, COMMUNITY, AND ECONOMIC DEVELOPMENT · AK Entity #Name Titles Owned MARK KELSEY Director MARK MASTELLER Director, Vice President PETER BURCHELL Director WILLIAM KENDIG Director, President Date Filed Type Filing Certificate 4/01/1941 Creation Filing Click to View 9/27/1956 Amendment Click to View 6/24/1957 Agent Change Click to View 2/24/1958 Entity Address Change Click to View 5/20/1960 Amendment Click to View 5/26/1971 Amendment Click to View 1/06/1975 Amendment Click to View 10/10/1981 Agent Change Click to View 6/05/1986 Agent Change Click to View 3/25/1988 Agent Change Click to View 3/27/1992 Agent Change Click to View 11/27/1992 Agent Change Click to View 5/10/2010 Agent Change Click to View 3/14/2012 Certificate of Compliance Click to View 6/07/2012 Certificate of Compliance Click to View 5/14/2013 Certificate of Compliance Click to View 9/08/2014 Certificate of Compliance Click to View 5/23/2016 Change of Officials Click to View 6/10/2016 Agent Change Click to View 10/17/2018 Entity Address Change Click to View 3/20/2019 Certificate of Compliance Click to View 5/22/2019 Certificate of Compliance Click to View 8/14/2020 Change of Officials Click to View 8/09/2021 Change of Officials Click to View 5/11/2022 Change of Officials Click to View 8/29/2022 Change of Officials Click to View Alaska Business License # 8677 Alaska Department of Commerce, Community, and Economic Development Division of Corporations, Business, and Professional Licensing PO Box 110806, Juneau, AK 99811-0806 This is to certify that MATANUSKA ELECTRIC ASSOCIATION, INC. PO BOX 2929, PALMER, AK 99645 owned by MATANUSKA ELECTRIC ASSOCIATION, INC. is licensed by the department to conduct business for the period October 14, 2022 to December 31, 2024 for the following line(s) of business: 22 - Utilities This license shall not be taken as permission to do business in the state without having complied with the other requirements of the laws of the State or of the United States. This license must be posted in a conspicuous place at the business location. It is not transferable or assignable. Julie Sande Commissioner Appendix A - Certificate No. 18 Revised December 14, 2011 Page 1 of 5 APPENDIX A Certificate of Public Convenience and Necessity No. 18 Granted to MATANUSKA ELECTRIC ASSOCIATION, INC. DESCRIPTION OF SERVICE AREA: Palmer Area T12N R2E Sections: 4, 5, 6, 8, 9, 10, 15, and 16 T13N R1E Sections: 3 through 6, 8, 9, 10, 14, 15, 16, 21 through 27, 35, and 36 T13N R2E Sections: 31 and 32 T13N R1W Sections: 1 through 4, 9, 10, and 15 T13N R4W Sections: 1 through 6, 9, 10, and 11 T14N R1E Sections: 19, 20, 21, and 28 through 33 T14N R2E Sections: 1, 12, and 13 T14N R3E Sections: 6, 7, 8, 17, 18, and 19 T14N R1W Sections: 1 through 29 and 32 through 36 T14N R2W Sections: 1 through 17, 22, 23, and 24 T14N R3W Sections: 1 and 12 T14N R4W Sections: All T14N R5W Sections: All T15N R1E Sections: 1 through 6 and 10 through 15 T15N R2E Sections: 4 through 11, 13 through 18, 22 through 26, 35, and 36 T15N R3E Sections: 30 and 31 T15N R4E Sections: 1, 2, 3, 10 through 15, 22 through 27, 34, 35, and 36 T15N R5E Sections: All T15N R6E Sections: All T15N R1W Sections: All T15N R2W Sections: All T15N R3W Sections: 1 through 19, 30, and 31 Appendix A - Certificate No. 18 Revised December 14, 2011 Page 2 of 5 T15N R4W Sections: All T15N R5W Sections: All T16N R1E Sections: All T16N R2E Sections: 1 through 21 T16N R3E Sections: 1 through 16, 22 through 27, 34, 35, and 36 T16N R4E Sections: All T16N R5E Sections: All T16N R6E Sections: All T16N R1W Sections: All T16N R2W Sections: All T16N R3W Sections: All T16N R4W Sections: All T16N R5W Sections: All T17N R1E Sections: All T17N R2E Sections: All T17N R3E Sections: 6, 7, 8, 16 through 22, and 25 through 36 T17N R1W Sections: All T17N R2W Sections: All T17N R3W Sections: All T17N R4W Sections: All T17N R5W Sections: All T18N R1E Sections: All T18N R2E Sections: All T18N R3E Sections: 1 through 24, 30, and 31 T18N R1W Sections: All T18N R2W Sections: All T18N R3W Sections: All T18N R4W Sections: All Appendix A - Certificate No. 18 Revised December 14, 2011 Page 3 of 5 T18N R5W Sections: All T18N R6W Sections: 1, 2, 11 through 15, 22 through 27, and 33 through 36 T19N R1E Sections: All T19N R2E Sections: All T19N R3E Sections: All T19N R4E Sections: 1 through 24 and 27 through 34 T19N R5E Sections: 1 through 20 T19N R6E Sections: 4, 5, and 6 T19N R1W Sections: All T19N R2W Sections: All T19N R3W Sections: All T19N R4W Sections: All T19N R5W Sections: All T19N R6W Sections: 25 and 36 T20N R1E Sections: 19 through 36 T20N R4E Sections: 36 T20N R5E Sections: All T20N R6E Sections: 19 through 36 T20N R7E Sections: 19 through 30 and 36 T20N R8E Sections: 19 through 36 T20N R9E Sections: 19 through 36 T20N R10E Sections: 19, 20, and 29 through 32 T20N R1W Sections: 19 through 36 T20N R2W Sections: 19 through 36 T20N R3W Sections: 19 through 36 T20N R4W Sections: All T20N R5W Sections: All T21N R4W Sections: All T21N R5W Sections: All Appendix A - Certificate No. 18 Revised December 14, 2011 Page 4 of 5 T22N R4W Sections: All T22N R5W Sections: All T23N R4W Sections: All T23N R5W Sections: All T24N R4W Sections: All T24N R5W Sections: All T25N R4W Sections: All T25N R5W Sections: All T25N R6W Sections: All T25N R7W Sections: 1 through 18 T26N R4W Sections: All T26N R5W Sections: All T26N R6W Sections: All T26N R7W Sections: All T26N R8W Sections: All T27N R4W Sections: All T27N R5W Sections: All T27N R6W Sections: All T27N R7W Sections: All T27N R8W Sections: All T27N R9W Sections: All T27N R10W Sections: All T28N R4W Sections: All T28N R5W Sections: All T28N R6W Sections: 1, 2, 3, 10 through 15, 22 through 27, 34, 35, and 36 T28N R7W Sections: 19, 20, 21, and 28 through 33 T28N R8W Sections: All T28N R9W Sections: All Appendix A - Certificate No. 18 Revised December 14, 2011 Page 5 of 5 T29N R4W Sections: All T29N R5W Sections: All T29N R8W Sections: 25 through 36 T29N R9W Sections: 25, 26, 35, and 36 T30N R2W Sections: All T30N R3W Sections: All T30N R4W Sections: All T30N R5W Sections: All T31N R2W Sections: All T31N R3W Sections: All T31N R4W Sections: All T31N R5W Sections: All T32N R2W Sections: All T32N R3W Sections: All T32N R4W Sections: 1, 2, 3, 10 through 15, 22 through 27, 34, 35, and 36 T33N R2W Sections: All T33N R3W Sections: All (All of the above with reference to the Seward Meridian) T22S R11W Sections: 19 through 36 (All of the above with reference to the Fairbanks Meridian) CHRONOLOGY: Certificate Granted: 01/01/64 Certificate Revision: 03/17/65 Service Area Description Correction: 11/28/73 Service Area Extension: 09/15/77 (U-77-045(1)) Service Area Description Correction: 02/15/78 (U-77-045(1E)) Service Area Extension: 12/30/81 (U-81-043(1)) Partial Service Area Deletion: 07/07/87 (U-86-105(1)) Service Area Extension: 04/28/88 (U-87-078(1)) Partial Service Area Deletion: 12/14/11 (U-11-059(3))