HomeMy WebLinkAbout21-23 Renewable Energy Generation Projects - CEA-RFP
CHUGACH ELECTRIC ASSOCIATION, INC.
Request for Proposals
for the
Purchase of Renewable Energy Generation
RFP 21-23
September 30, 2021
Chugach Electric RFP for Renewable Energy Page 1 of 8
SECTION 1: INTRODUCTION
A. Purpose and Scope
In 2020, Chugach Electric Association, Inc. (Chugach) established a goal to add renewable energy
generation projects enough to produce 100,000 megawatt hours (MWh) per year of renewable
energy by March 31, 2025. That addition would be about a 20 percent increase to Chugach’s current
renewable energy generation.
Chugach is issuing this Request for Proposals (RFP) as an avenue to achieve its renewable energy
goal. The purpose of this process is to obtain competitive proposals from Independent Power
Producers (IPP) to identify renewable energy projects that can be built and integrated into the
electric system for a cost at or below Chugach’s avoided cost, net of interconnection and integration
costs. Projects that appear able to be built without increasing costs to Chugach members (Category
1 proposals) may be selected by Chugach to advance to the integration and interconnection study
phase.
Chugach is also requesting proposals from projects that are expected to exceed Chugach’s avoided
cost to gain a better understanding of what future projects may be possible and at what cost. Those
higher-cost projects may not immediately advance but may be considered later. These Category 2
projects may respond to this RFP with a less comprehensive application for the purposes of
informing Chugach of these higher-cost potential renewable energy projects.
Chugach is seeking proposals for projects that will be in commercial operation by March 31, 2025
but is also interested in project proposals that will take longer to develop.
Chugach’s primary intent is to identify and move forward with renewable projects that will not
increase electric rates to its members. The secondary intent is to identify projects that would
produce higher-than-avoided-cost energy to better understand the costs of increasing renewable
energy in the Chugach system. These projects may become economically viable in the future.
For comparison purposes, proposers must provide a per MWh purchase price for the life of the
project, assuming energy will be purchased through a Purchased Power Agreement (PPA).
Proposers may also include a PPA with utility option to purchase the project.
As a result of this RFP, Chugach may engage with many or none of the proposals at its sole
discretion.
SECTION 2: REQUEST DETAILS
A. RFP Schedule
• September 30, 2021 RFP issue date
• October 14, 2021 Pre-proposal videoconference (optional) 3:00 p.m. to 4:00 p.m. Alaska
Time. Link to join the meeting.
Chugach Electric RFP for Renewable Energy Page 2 of 8
• November 22, 2021 End of question period at 4:00 p.m. Alaska Standard Time
• December 3, 2021 Answers to questions provided by 4:00 p.m. Alaska Standard Time
• December 17, 2021 Proposals deadline at 4:00 p.m. Alaska Standard Time
• February 25, 2022 Chugach review proposals, select projects to study
B. Post-RFP Execution Schedule
• Q2 2022 to Q1 2025 Invited projects conduct studies, sign PPA, develop project
• March 31, 2025 Commercial operation deadline
C. Project Requirements and Information
All proposals must conform to the requirements and conditions detailed below. Proposals that do
not conform to one or more of the RFP requirements may be eliminated from consideration.
1) Energy Volume - The proposed renewable energy project will generate a minimum 1,000
MWh per year.
2) Operation Date - The renewable energy project shall be in commercial operation by March
31, 2025. Projects that take longer to develop are encouraged to apply to provide Chugach
additional information about future project options.
3) Eligible Technologies - Eligible generation technologies are those which generate renewable
electricity from hydroelectric, wind, solar, geothermal, hydrokinetic (river or ocean), tidal, or
biomass resources.
4) Energy Storage - Energy storage projects are not an eligible technology; however, energy
storage may be offered in conjunction with a renewable energy project to create a firm
generation source. Energy storage may be required to maintain grid stability and stiffness.
5) Firm or Non-firm – The generating source may be firm or non-firm renewable power.
However, non-firm sources may require energy storage to mitigate their impact on the grid
and to meet Railbelt interconnection and reliability standards.
6) Delivery Point – The proposed system will be connected to Chugach’s distribution,
subtransmission or transmission system; each of these has size and other limitations. Projects
connected to the distribution system must be directly interconnected to the Chugach
distribution system, not interconnected to an existing member’s electric service connection.
With additional arrangements, renewable projects proposed to be interconnected to other
locations on the Railbelt system and wheeled to Chugach may be considered. All
interconnection and wheeling costs will be factored into the purchased power price.
Chugach Electric RFP for Renewable Energy Page 3 of 8
7) Price of Energy – For energy generated, Chugach will pay up to its avoided cost adjusted for
integration costs resulting from the proposed project which are identified by project-specific
integration studies. The integration cost adjusts for project impacts to the electric system.
For example, if the addition of a renewable energy project causes the utility to increase its
spinning reserve requirement, which decreases the efficiency of the natural gas turbines, the
cost of the efficiency loss will be an integration adjustment to reflect the impact of the project
on the system. Expected curtailment will also be considered in the avoided cost calculation.
The avoided cost calculation may be calculated hourly. All interconnection costs to
physically connect the project to the grid, and any changes to the grid that are required to
interconnect the project safely and reliably are costs that will be paid by the proposer. The
final purchased power rate Chugach will pay for energy produced may be a negotiated price
based upon many factors and will require the approval of the Regulatory Commission of
Alaska (RCA) and possibly other third parties.
Chugach publishes its estimated future avoided cost rate biannually, and it is posted on the
RCA web site. The results of Chugach’s most recent avoided cost study is attached as
Appendix A. Chugach is currently conducting an avoided cost study through 2045. If
completed during this RFP process, the results will be distributed to registered proposers of
this RFP. These avoided cost projections are only estimates of Chugach’s avoided costs
under current and expected future conditions. The actual avoided cost rate paid will vary
depending upon many factors at the time of generation.1 Additionally, Chugach’s current
purchase price for generating projects under 200 kW, is posted on Tariff Sheet No. 97 for
Chugach’s South District and on Tariff Sheet 103 for Chugach’s North District. These tariffs
are published on the Chugach and RCA websites and are attached as Appendix B.
8) Price of Capacity – Proposed projects are not expected to allow Chugach to avoid long-run
capacity costs and likely will not be factored into the avoided cost payment structure.
9) Approval – Final agreements with projects selected through this process shall be subject to
and only become effective upon receipt of any regulatory and other third-party approvals
legally required in connection with such an agreement.
10) Required Studies –Proposals selected from this RFP process that are interested in advancing
will undergo at least two required studies, an integration study and an interconnection study,
paid by the proposer. More information about the project might be required for the
completion of either or both studies.
a) Integration Study – An integration study will be required to determine integration costs
associated with the proposed project. The integration study will be completed by
Chugach or its consultants and will be paid for by the proposer. Integration costs are
specific to each project and are subtracted from the avoided cost rate paid by Chugach.
1 Factors include which generating units are in use, the price of fuel used, the system load, the
ambient temperature, and many other conditions.
Chugach Electric RFP for Renewable Energy Page 4 of 8
b) Interconnection Study – Each project that moves forward in the evaluation process will
require an interconnection study. Interconnection studies will be completed by Chugach
or its consultants and will be paid for by the proposer. Projects may interconnect at
Chugach’s transmission, sub-transmission or distribution system. If arrangements can be
made with other Railbelt utilities or transmission providers, proposers can consider
interconnecting to other locations within the Railbelt.
11) Renewable Energy Certificates – Chugach will purchase the bundled renewable energy from
the project, including the Renewable Energy Certificates generated.
12) Preexisting Project Proposals – Renewable energy projects that are already engaged with
Chugach need not apply.
D. Other Considerations
1) Cost Competitiveness: Federal and state law requires Chugach to purchase non-utility power
from certain qualifying facilities under the Public Utilities Regulatory Policy Act (PURPA) at
Chugach’s avoided cost which is intended to prevent those resources from increasing the utility’s
cost of generation.
2) Size of the Chugach System: Chugach operates within a relatively small isolated Railbelt
electric system that may create operational challenges for large scale renewable energy projects.
Proposers should be familiar with the Chugach and the Railbelt system size and constraints.
Chugach’s winter peak is about 320 MW and summer minimum is about 170 MW.
3) Renewable Developer Interconnection Requirements: Chugach’s operating tariffs and RCA
regulations provide guidelines for the installation and parallel operation of non-utility generation
facilities with Chugach’s system.2
SECTION 3: APPLICATION CONTENT
A. Submittal Requirements
Proposals shall include the information outlined in this section and organized in the same manner in
either Word or PDF format. Proposals may include one or multiple projects, but each project must
be described in a separate and complete proposal.
1. Proposer
2 See Chugach’s North and South District tariffs for interconnection guidelines and all operating
tariffs: https://www.chugachelectric.com/about-us/regulatory-affairs
Chugach Electric RFP for Renewable Energy Page 5 of 8
a. Project name
b. Proposing company name
c. Contact person and title
d. Contact address
e. Contact email
f. Contact phone number (s)
g. Project partners: name any project partners and briefly describe their role.
h. Authorized signer with a statement recognizing that the signer possesses the authority
to sign and act on behalf of the proposing organization.
2. Project Description
a. Project description: Provide a project description including renewable energy type,
installed capacity (MW), availability and reliability factors, amount of energy (MWh)
to be delivered by month, expected changes of energy generated through project life,
project location, and interconnection location. Include equipment types, equipment
ratings, one-line drawings, control schemes and other related information that
technically describes the project. Describe the interconnection and what
interconnection equipment is included in the interconnection cost estimate. Proposers
may include maps, images, spec sheets, or other information that helps describe the
project.
b. Land availability and site control: Provide a brief summary of the project’s land
ownership, the proposer’s access to the land including lease term (if applicable), and
site control, including a certification that such a project is legally allowed on the land
and requires no re-zoning efforts, if available.
c. Prior work: Describe any prior work conducted on the project including but not
limited to the measurement of resource availability, permitting, geotechnical
assessment, land acquisition, and other work.
d. Permitting: Describe any permitting requirements and address whether permitting
presents a potential barrier, either from a timing perspective, potential public
opposition, or other barriers.
e. Construction risk: Describe risks associated with subsurface conditions, weather
considerations for building season, availability of labor, availability of materials and
any other construction risks.
Chugach Electric RFP for Renewable Energy Page 6 of 8
f. Environmental risk: Describe any environmental risks to the project, such as
threatened or endangered species, habitat issues, wetlands, archaeological resources,
aviation impacts, visual impacts, land development constraints, and other
environmental risks.
g. Technical risk: Describe project’s potential technical risks. This should include but
not be limited to integration issues, such as the intermittency of the resource,
expected power generation ramp rates, the possibility of the sudden loss of power
from the project, and anticipated down time for maintenance.
h. Project schedule: List or describe the anticipated project activities and timing through
commercial operation and state the anticipated full commercial operation date.
3. Energy Price: Provide the proposed price per MWh for each year over the project life. The
estimated interconnection cost is the cost of equipment from the high voltage side of the
project transformer to the grid connection, including any required grid protections, switches,
meters, communications, controls, and other changes needed on the grid to accept the project.
This cost will be solidified following the interconnection studies and will be a project cost
paid through the energy price.
a. Per MWh price for each year of the project.
b. The estimated up-front interconnection cost.
c. Optional: If proposing a PPA with option to purchase, describe the PPA pricing, the
purchase pricing, the purchase timing, and ownership terms and conditions.
4. Energy Generation
a. Delivery term, in years.
b. Annual MWh produced for each year of the term.
c. Modeled 8760 hourly generation output.
5. Funding sources
a. Provide a short description of funding sources expected for this project, including
grants, tax incentives or other financial assistance.
6. Project ownership
a. Describe whether the proposer would own the project for the project life, or if sale to
another entity or to Chugach is planned or will be pursued.
7. Experience and financial strength
Chugach Electric RFP for Renewable Energy Page 7 of 8
a. Describe the experience of the proposer and any partners in developing this type of
renewable energy project, including experience in Alaska. If Alaska experience is not
available, include experience in other subarctic climates. Include specific examples.
b. Describe the financial position of the proposing organization and any other key
partners. If selected to advance, audited financial statements or similar financial
information will be required.
8. Litigation
a. Indicate any past or pending litigation that could affect the proposal or the proposer’s
financial stability.
SECTION 4: EVALUATION PROCESS
A. Steps
The following steps will be undertaken to evaluate proposals.
1. Chugach will evaluate the completeness of proposals. Incomplete proposals may be
eliminated from evaluation.
2. Chugach will evaluate the technical strength and risk considerations of the applications and
may eliminate proposals that lack technical strength and clarity, or that present a high risk of
inability to enter commercial operation or other risks that would impact the project’s ability
to reliably and cost-effectively produce power.
3. Remaining proposed projects will be grouped into two categories:
a. Category 1: Projects that appear able to produce energy at a rate that would not
increase rates that Chugach members pay. These projects will be evaluated on the
project’s price, technical detail, risks, level of development, financial resources,
strength of the team (experience, financial strength, and litigation status), how the
proposed project fits with other proposed or potential projects, the size of the project,
the type of renewable energy, availability and reliability factors, the project schedule,
and other factors.
b. Category 2: Projects that will or are likely to produce energy at a rate that would
increase rates that Chugach members pay.
B. Selection
Chugach, at its sole discretion, may engage with all or none of the proposed projects to advance the
projects, with the intent to engage with the strongest project(s) that, in combination with other
Chugach Electric RFP for Renewable Energy Page 8 of 8
potential renewable energy development initiatives, will meet or move toward Chugach’s renewable
energy goal. Chugach will make this determination in its sole discretion.
Proposals selected to advance will be invited to negotiate with Chugach to develop the project or an
adaptation of the project that meets both party’s approval. Advancing proposers will apply for
interconnection with Chugach and will be invited to conduct interconnection and integration studies,
as needed, at the proposer’s expense with deposit collected in advance. Chugach reserves the right
at any time to discontinue negotiations. In these cases, the proposer shall remain responsible for all
costs incurred until that date, including but not limited to all engineering, planning, permitting,
management and study costs.
A non-disclosure agreement will be signed prior to entering the study phase. Third party approvals
of selected projects may be required.
Chugach reserves the right to submit follow up questions to any one or more of the proposers.
Prompt responses to these questions will be required to maintain a responsive proposal.
Chugach Electric Association, Inc.
5601 Electron Drive, P.O. Box 196300, Anchorage, Alaska 99519-6300 • (907) 563-7494 Fax (907) 562-0027 • (800) 478-7494
www.chugachelectric.com • info@chugachelectric.com
March 31, 2020 ELECTRONICALLY FILED WITH RCA
Regulatory Commission of Alaska
701 W. 8th Avenue, Suite 300
Anchorage, AK 99501
Subject: Compliance with 3 AAC 50.790(e); Avoided Cost Biennial Information Report
Commissioners:
Chugach Electric Association, Inc. (Chugach) hereby submits updated information regarding
avoided energy costs, planned generation retirements and estimated capacity additions in
compliance with 3 AAC 50.790(e)(1) - (3) of the Alaska Administrative Code.
The information submitted herein does not constitute a rate or an offer to purchase electric power
at any particular rate. Purchase power rates specific to a particular qualifying facility requires
detailed information about the qualifying facility from which power will be purchased. The
methodology and calculations used in developing avoided costs for the purchase of firm power
reflect a production costing model that represents the hourly dispatch of power on Chugach’s
system. The avoided energy costs identified in this report, and as shown in the tables below,
assume regional power pooling. Chugach has its standard offer tariff for purchases from third-
party generators that have a nameplate capacity of 200 kW or less. The rate included in the
standard offer tariff is updated on a quarterly basis.
Estimated Avoided Energy Costs: 3 AAC 50.790(e)(1)
Chugach’s estimated avoided energy costs for calendar-year 2020 through 2025 are summarized
in Tables 1 through 3 below in blocks of 10 percent of Chugach’s system peak demand,
including variations in daily, seasonal and off-peak periods by year. The avoided variable costs
for energy include the fuel and variable O&M expense.
The avoided energy costs do not include integration costs which are determined on a project-
specific basis. Integration costs can vary for many reasons including, but not limited to, the type
of power supply provided by a non-utility generator (firm, non-firm, or variable) and the current
generation resource portfolio of the utility, such as availability of battery technologies. For these
reasons, integration costs are considered on a project-specific basis in light of the factual
circumstances as they exist at the time a project-specific request is received by Chugach.
Chugach Electric RFP for Renewable Energy Appendix A Page1
Commissioners March 31, 2020
Compliance 3 AAC 50.790(e) Page 2 of 3
Table 1: Avoided Energy Cost Winter Peak of 215 MW:
November – February
(Computed on Percent Reduction from Winter Peak)
Avoided Cost (cents per kWh)
Year 0% 10% 20% 30% 40% 50%
2020 6.3 6.1 6.0 6.1 6.0 5.2
2021 6.6 6.0 5.5 5.9 5.6 5.3
2022 6.3 6.1 5.5 5.8 5.5 5.3
2023 7.3 6.1 5.7 5.9 5.6 5.4
2024 6.5 6.2 5.6 5.8 5.6 5.4
2025 6.6 6.1 5.6 5.7 5.6 5.4
Table 2: Avoided Energy Cost Shoulder Peak of 183 MW:
March – May; September – October
(Computed on Percent Reduction from Shoulder Peak)
Avoided Cost (cents per kWh)
Year 0% 10% 20% 30% 40% 50%
2020 6.4 6.0 5.7 6.0 5.8 5.4
2021 5.9 5.5 5.9 5.7 5.7 5.6
2022 5.8 5.6 6.0 5.9 5.6 5.6
2023 5.5 5.4 5.9 5.9 5.6 5.7
2024 5.2 5.7 5.7 6.0 5.7 5.8
2025 6.0 5.8 5.6 5.9 5.6 5.6
Table 3: Avoided Energy Cost Summer Peak of 146 MW:
June – August
(Computed on Percent Reduction from Summer Peak)
Avoided Cost (cents per kWh)
Year 0% 10% 20% 30% 40% 50%
2020 6.7 6.2 6.1 6.0 5.1 *
2021 6.6 6.3 5.8 5.6 5.3 *
2022 6.8 6.3 6.1 5.7 5.4 *
2023 6.9 6.4 6.1 5.8 5.4 *
2024 7.0 6.3 6.2 6.0 5.5 *
2025 7.1 6.3 6.2 6.0 5.5 *
* In practice, based on historical load profiles assumed in Chugach’s modeling, there is no point in time at which
the load forecast is as low as 50 percent of summer peak. Rather, it is consistently more than 50 percent of
summer peak.
The avoided energy costs were derived on the basis of production cost modeling assuming a
three-utility pool.1 The avoided costs are averages of the hourly results of the model for
Chugach loads either at or within a small band around the loads referenced in each table.
1 Chugach, Municipal Light & Power and Matanuska Electric Association, Inc.
Chugach Electric RFP for Renewable Energy Appendix A Page2
Commissioners March 31, 2020
Compliance 3 AAC 50.790(e) Page 3 of 3
The production cost model reflects real-world dispatch constraints, leading to occasional
increases in avoided costs. In Table 1, for example, avoided energy costs at 0 percent reduction
of peak load in the winter period are $0.063, $0.073 and $0.065 per kWh for years 2022, 2023,
and 2024, respectively. Several factors influence Chugach’s avoided costs to be at a higher level
than $0.073 or at a lower level of $0.063 at the winter peak load. Variations in avoided cost
levels reflect different units operating on the margin at different times. Any of the more
expensive units could reasonably establish Chugach’s avoided energy costs during winter peak
periods. Additionally, it is noted that the production cost model optimizes hydro dispatch and,
for this reason, it is possible to have similar and sometimes higher costs in the summer versus
winter periods, or in the summer versus shoulder periods, even with the lower loads in the
summer (Tables 1 and 3 above show examples of this). The specifics of hydro dispatch, its
tendency to shave the peak, and other operational conditions impact the results.
Planned Capacity Additions and Retirements: 3 AAC 50.790(e)(2)
Chugach does not have plans to add generation capacity or physically retire any generation units
in the next 10 years. Chugach is evaluating the potential addition of a utility scale battery in
support of system operations and reliability. The battery energy storage system study and
planning efforts are expected to be completed in 2021.
Estimated Capacity Costs: 3 AAC 50.790(e)(3)
As indicated above, Chugach does not expect to add generation capacity in the next 10 years.
Chugach is considering purchasing a utility-scale energy storage system; this potential purchase
is preliminary and the project is being studied. The cost of the battery will be determined, in
part, by battery type (chemistry), size and location.
Sincerely,
CHUGACH ELECTRIC ASSOCIATION, INC.
Arthur W. Miller
Executive Vice President, Regulatory and External Affairs
P.O. Box 196300
Anchorage, Alaska 99519-6300
Telephone: 907-762-4758
Facsimile: 907-762-4514
arthur_miller@chugachelectric.com
cc: John Foutz, City of Seward (electronically)
Chugach Electric RFP for Renewable Energy Appendix A Page3
Chugach Electric RFP for Renewable Energy Appendix B Page1
Chugach Electric RFP for Renewable Energy Appendix B Page2