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HomeMy WebLinkAboutHydroReconReport_PedroFINAL H YDROELECTRIC R ECONNAISSANCE S TUDY K NUTSON C REEK D RAINAGE, T OWN C REEK, AND D UMBBELL L AKE P EDRO B AY, ALASKA F INAL R EPORT OCTOBER 2009 Prepared For PEDRO BAY VILLAGE COUNCIL P.O. BOX 47020 PEDRO BAY, ALASKA 99647 By POLARCONSULT ALASKA, INC. 1503 WEST 33RD AVENUE, SUITE 310 ANCHORAGE, ALASKA 99503 Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT I EXECUTIVE SUMMARY In 2008, the Pedro Bay Village Council (PBVC) retained Polarconsult Alaska, Inc., (Polarconsult) to complete a reconnaissance study of hydropower resources for the village of Pedro Bay. Polarconsult evaluated six hydropower resources in the immediate vicinity of Pedro Bay. These resources are: Ø Knutson Creek Main Stem Ø Knutson Creek Tributary R1 (1st major tributary on right looking upstream) Ø Knutson Creek Tributary L1 (1st major tributary on left looking upstream) Ø Knutson Creek Tributary R2 (2nd major tributary on right looking upstream) Ø Cottonwood Creek Ø Dumbbell Lake / Russian Creek Of these resources, projects on the main stem of Knutson Creek or any of the first three major tributaries of Knutson Creek appear technically feasible. A project on the main stem of Knutson Creek looks most favorable, and could supply 100% of the community's existing electrical generation, displacing 21,400 gallons of diesel fuel annually. This project could also displace 24,400 gallons of fuel used for space and water heating purposes. Economic analysis of this project indicates a probable installed cost of $2.2 to 2.5 million for a 125 to 200 kW installation. The 125 and 200 kW projects have estimated benefit cost ratios (BCRs) of 1.3 and 1.7. These BCRs assume 90% of excess energy from the projects can be used by the community. Projects on any of the three Knutson Creek tributaries could meet most of the community's electrical demand, supplemented by diesel generation during winter months. A project on Cottonwood Creek is also technically feasible, however this resource is much smaller than the others and would only displace about 5,000 gallons of diesel fuel annually. A project is not recommended at Dumbbell Lake / Russian Creek due to the probable conflict with anadromous fish habitat and high cost of the project. A feasibility study of the resources in the Knutson Valley is recommended to determine which of the several promising hydropower resources in this area presents the best value for the community. Key issues the feasibility study would address include: Ø Hydrology (both for power generation and design flood), Ø Permitting issues, including the extent and significance of anadromous fish habitat in the main stem of Knutson Creek, Ø Topographic and geotechnical surveys, Ø Project sizing and integration with the community's energy infrastructure to utilize all of the available energy, Ø Project financing, and Ø Construction methods and costs. Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT II TABLE OF CONTENTS EXECUTIVE SUMMARY .........................................................................................................................................I TABLE OF CONTENTS ..........................................................................................................................................II ACRONYMS AND TERMINOLOGY ..................................................................................................................V 1.0 INTRODUCTION .......................................................................................................................................1 1.1 PROJECT AUTHORIZATION AND PURPOSE ................................................................................................1 1.2 COMMUNITY BACKGROUND......................................................................................................................1 1.3 PROPOSED ENERGY RESOURCES ................................................................................................................3 1.4 SUMMARY OF PREVIOUS STUDIES ..............................................................................................................3 2.0 EXISTING ENERGY SYSTEM .................................................................................................................4 2.1 COMMUNITY ENERGY PROFILE .................................................................................................................4 2.2 ELECTRIC UTILITY ORGANIZATION...........................................................................................................4 2.3 GENERATION SYSTEM ................................................................................................................................4 2.4 ELECTRICAL DISTRIBUTION SYSTEM ..........................................................................................................5 2.5 EXISTING AND PROJECTED FUTURE LOAD PROFILE ..................................................................................5 2.6 PLANNED UPGRADES.................................................................................................................................5 2.7 ENERGY MARKET .......................................................................................................................................5 3.0 PROPOSED ENERGY RESOURCES .......................................................................................................6 3.1 RESOURCE DESCRIPTIONS ..........................................................................................................................6 3.1.1 Knutson Creek – Main Stem .................................................................................................................6 3.1.2 Knutson Creek – Tributary R1 ..............................................................................................................8 3.1.3 Knutson Creek – Tributary L1 ..............................................................................................................8 3.1.4 Knutson Creek – Tributary R2 ..............................................................................................................9 3.1.5 Cottonwood Creek ..................................................................................................................................9 3.1.6 Dumbbell Lake / Russian Creek ...........................................................................................................10 3.2 HYDROLOGY ............................................................................................................................................10 3.3 GEOTECHNICAL / GEOMORPHOLOGICAL CONSIDERATIONS .................................................................14 3.4 PROJECT LANDS .......................................................................................................................................14 3.4.1 Knutson Valley Projects ......................................................................................................................14 3.4.2 Site Control Requirements...................................................................................................................15 4.0 PROPOSED PROJECT DESIGN ............................................................................................................16 4.1 ANALYSIS OF PROJECT ALTERNATIVES ...................................................................................................16 4.1.1 Hydropower Resources ........................................................................................................................16 4.1.2 Installed Capacity ................................................................................................................................17 4.2 RECOMMENDED PROJECT ........................................................................................................................18 4.3 ANNUAL ENERGY PRODUCTION .............................................................................................................18 4.4 CONCEPTUAL SYSTEM DESIGN ................................................................................................................19 4.4.1 Project Access ......................................................................................................................................19 4.4.2 Intake ...................................................................................................................................................19 4.4.3 Penstock ...............................................................................................................................................19 4.4.4 Powerhouse ..........................................................................................................................................20 4.4.5 Power Line ...........................................................................................................................................20 4.4.6 Controls ...............................................................................................................................................20 4.5 CONCEPTUAL INTEGRATION DESIGN......................................................................................................21 4.6 REMAINING TECHNICAL CONSIDERATIONS ...........................................................................................21 4.6.1 Hydrology ............................................................................................................................................21 Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT III 4.6.2 Installed Capacity ................................................................................................................................22 4.6.3 Existing Electric System Constraints..................................................................................................22 4.6.4 Financing .............................................................................................................................................22 4.6.5 Geotechnical / Topographic Considerations.........................................................................................23 4.6.6 Permits.................................................................................................................................................23 4.6.7 Feasibility Study ..................................................................................................................................23 5.0 ECONOMIC ANALYSIS .........................................................................................................................24 5.1 ANNUAL PROJECT COSTS ........................................................................................................................25 5.1.1 Operation and Maintenance ................................................................................................................25 5.1.2 Repair and Replacement ......................................................................................................................25 5.1.3 Property ...............................................................................................................................................26 5.1.4 Taxes ....................................................................................................................................................26 5.1.5 Insurance .............................................................................................................................................26 5.1.6 Financing .............................................................................................................................................26 5.2 PROJECT REVENUES AND SAVINGS..........................................................................................................26 5.2.1 Direct Fuel Displacement ....................................................................................................................26 5.2.2 Excess Energy ......................................................................................................................................26 5.2.3 Environmental Attributes ...................................................................................................................27 5.2.4 Indirect and Non-Monetary Benefits...................................................................................................27 6.0 PERMITS ....................................................................................................................................................29 6.1 FEDERAL PERMITS ....................................................................................................................................29 6.1.1 FERC ...................................................................................................................................................29 6.1.2 U.S. Army Corps of Engineers Permits ..............................................................................................29 6.1.3 U.S. Environmental Protection Agency ..............................................................................................29 6.1.4 Federal Aviation Administration ........................................................................................................29 6.2 STATE OF ALASKA PERMITS .....................................................................................................................29 6.2.1 Department of Natural Resources Permits..........................................................................................29 6.2.2 Department of Fish and Game Permits ...............................................................................................30 6.2.3 Department of Transportation Permits ...............................................................................................30 6.2.4 Department of Environmental Conservation Permits.........................................................................30 6.3 LOCAL PERMITS .......................................................................................................................................30 7.0 ENVIRONMENTAL CONSIDERATIONS ..........................................................................................31 7.1 THREATENED AND ENDANGERED SPECIES .............................................................................................31 7.2 FISHERIES AND WILDLIFE ........................................................................................................................31 7.3 WATER AND AIR QUALITY ......................................................................................................................31 7.4 WETLAND AND PROTECTED AREAS ........................................................................................................31 7.5 ARCHAEOLOGICAL AND HISTORICAL RESOURCES .................................................................................31 7.6 LAND DEVELOPMENT CONSIDERATIONS................................................................................................31 7.7 TELECOMMUNICATIONS AND AVIATION ................................................................................................32 7.8 VISUAL AND AESTHETICS RESOURCES ....................................................................................................32 7.9 MITIGATION MEASURES ..........................................................................................................................32 8.0 FINDINGS AND RECOMMENDATIONS .........................................................................................33 8.1 FINDINGS..................................................................................................................................................33 8.2 DEVELOPMENT PLAN & SCHEDULE ........................................................................................................33 Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT IV LIST OF FIGURES Figure 1-1: Project Overview and Location Map ..................................................................................2 Figure 3-1: Aerial View of Knutson Creek in Vicinity of Proposed Project Intake Site ..................6 Figure 3-2: Location of Hydropower Resources near Pedro Bay .......................................................7 Figure 3-3: Aerial View of Knutson Creek Tributary R1 in Vicinity of Proposed Project Intake Site ...............................................................................................................................8 Figure 3-4: View of Knutson Creek ........................................................................................................8 Figure 3-5: Cottonwood Creek in the vicinity of the intake site looking upstream........................9 Figure 3-5: Drainage Basins Near Pedro Bay with USGS Discharge Gauges .................................11 Figure 3-6: Normalized Discharge from USGS-Gauged Basins Near Pedro Bay ..........................12 Figure 8-1: Project Development Schedule ..........................................................................................34 LIST OF TABLES Table 1-1: Previously Identified Hydropower Resources Near Pedro Bay .......................................3 Table 2-2: Existing Utility Generation Equipment ...............................................................................5 Table 3-1: Summary of Hydropower Resources near Pedro Bay .......................................................6 Table 3-2: Hydrologic Information for Pedro Bay Hydropower Resources ...................................12 Table 3-3: Stream Discharge Data for Local Hydropower Resources .............................................13 Table 4-1: Technical Parameters of Potential Hydropower Developments near Pedro Bay .........................................................................................................................................16 Table 4-2: Comparison of 125 kW and 200 kW Developments at Knutson Creek.........................18 Table 5-1: Summary of Economic Data for Recommended Hydroelectric Projects ......................24 Table 5-2: Estimated Electric Rates with Hydro Projects ..................................................................25 Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT V ACRONYMS AND TERMINOLOGY ADCED Alaska Department of Community and Economic Development ADEC Alaska Department of Environmental Conservation ADFG Alaska Department of Fish and Game ADNR Alaska Department of Natural Resources AEA Alaska Energy Authority AEA / REG Alaska Energy Authority Rural Energy Group AEE Alaska Energy and Engineering, Inc. cfs cubic feet per second coanda effect The tendency of a fluid jet to stay attached to a smoothly convex solid obstruction. A common example is the way a stream of water, as from a faucet, will wrap around a cylindrical object held under the faucet (such as the barrel of a drinking glass). COE U.S. Army Corps of Engineers CPCN Certificate of Public Convenience and Necessity Environmental attributes The term environmental attributes is used by the green power industry to describe the desirable aspects of electricity that is generated by environmentally benign and/or renewable sources. Environmental attributes are tracked, marketed, bought and sold separately from the physical energy. Separating the environmental attributes enables customers on a given utility system to elect to buy sustainable or ‘green’ energy even if it is unavailable from their utility. ft foot, feet FY fiscal year HDPE high-density polyethylene in inch, inches kV kilovolt, or 1,000 volts Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT VI kVA kilovolt-amp kW kilowatt, or 1,000 watts. One kW is the power consumed by ten 100-watt incandescent light bulbs. kWh kilowatt-hour. The quantity of energy equal to one kilowatt (kW) expended for one hour. LIDAR Light Detection and Ranging LPSD Lake and Peninsula School District mi mile, miles MW megawatt, or 1,000 kilowatts NEC National Electric Code NESC National Electric Safety Code PBC Pedro Bay Corporation, Inc. PBEU Pedro Bay Electric Utility PBVC Pedro Bay Village Council PCA Polarconsult Alaska, Inc. PCE Power Cost Equalization Program Polarconsult Polarconsult Alaska, Inc. Plant capacity factor The plant capacity factor is the amount of energy a power plant is likely to produce in a year divided by the amount of energy the plant would produce if it operated at 100% capacity continuously. Capacity factor is expressed as a percentage, and is usually less than 100% for renewable energy because the resource (water, wind, sun, etc.) is not always available. PLC programmable logic controller RCA Regulatory Commission of Alaska SDR strength-dimension ratio. Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT VII USGS U.S. Geological Survey V volt Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 1 1.0 INTRODUCTION 1.1 PROJECT AUTHORIZATION AND PURPOSE In December 2008, the Pedro Bay Village Council (PBVC) retained Polarconsult Alaska, Inc. (PCA) to complete a reconnaissance study of hydropower resources that might provide economical electricity for Pedro Bay. The purpose of this reconnaissance study is to identify potential hydropower resources suitable for Pedro Bay and to conduct an initial review and analysis of these resources to determine if more detailed study is warranted. The principal objectives of the reconnaissance study are (1) an opinion of whether further study is warranted and (2) specific recommendations for further study. After completing review of existing materials and information pertinent to potential hydropower resources near Pedro Bay, Polarconsult engineer Joel D. Groves, P.E., visited Pedro Bay on July 20-24, 2009 to conduct reconnaissance-level field investigations of several local hydropower resources. Reconnaissance investigations in Pedro Bay included gathering information on the existing electrical system and load profile, visiting proposed hydro sites, measuring stream flows, and collecting basic topographic data. This information is presented in this report and is used to arrive at recommendations for further study. This report summarizes the findings of Polarconsult's reconnaissance investigations and Polarconsult’s recommendations for further project development. This report is the final deliverable for the Reconnaissance Study. 1.2 COMMUNITY BACKGROUND Pedro Bay, population 62, is an unincorporated community located at the east end of Iliamna Lake in southwest Alaska. It is located at 598 47.23' North, 1548 6.37' West, which is about 175 miles southwest of Anchorage, 165 miles west of Dillingham, and 90 miles east of Homer. Pedro Bay is located in a transitional climate zone characterized by both continental and maritime climates. Normal summer temperatures range from the lower 40s to lower 60s, normal winter temperatures range from around 6 to 308F. Average annual rainfall is 26 inches, average annual snowfall is 64 inches. The community is accessible by air via a state owned airstrip, and by water via Iliamna Lake. Barge service is available from Naknek via the Kvichak River and Iliamna Lake. Goods can also shipped to Iliamna Bay on lower Cook Inlet, and then portaged over the Pile Bay Road to Pile Bay on Lake Iliamna, where they are then barged to Pedro Bay. Figure 1-1 indicates Pedro Bay's location in Alaska and surroundings. 1 1 Compiled from ADCED Community Profile for Pedro Bay. Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 3 Pedro Bay is located in the Lake & Peninsula School District (LPSD), and the local school teaches 12 students in grades P through 12. The Village Council operates a Class III landfill, 29,500-gallon bulk fuel facility, and the local power plant and electric system. 1.3 PROPOSED ENERGY RESOURCES Six hydropower resources in the immediate vicinity of Pedro Bay warranted reconnaissance- level investigation for hydropower development. These resources are listed below, and discussed in detail in Section 3: Ø Knutson Creek Ø Knutson Creek Tributary R1 (first major tributary on right looking upstream) Ø Knutson Creek Tributary L1 (first major tributary on left looking upstream) Ø Knutson Creek Tributary R2 (second major tributary on right looking upstream) Ø Dumbbell Lake / Russian Creek Ø Cottonwood Creek 1.4 SUMMARY OF PREVIOUS STUDIES Hydropower resources in the vicinity of Pedro Bay were investigated as part of a regional reconnaissance study completed for the U.S. Army Corps of Engineers (COE) in April 1981. The COE considered 100-kW run -of-river hydroelectric projects on Knutson Creek and Canyon Creek. Technical aspects of these projects are summarized in Table 1-1. Table 1-1: Previously Identified Hydropower Resources Near Pedro Bay Attribute Canyon Creek Knutson Creek Basin Area 24.5 square miles 29.4 square miles Estimated Average Flow 98 cfs 117.6 cfs Plant Design Flow 30 cfs 30 cfs Gross Head 50 feet 50 feet Installed Capacity 100 kW 100 kW Dan Height 20 feet 20 feet Penstock Length 500 feet 700 feet Penstock Diameter 30 inches 32 inches Transmission Line Length 10 miles 3 miles Installed Cost (1980 dollars) $4,772,000 $4,517,000 Cost-Benefit Ratio 0.30 0.31 Table condensed from Tables V-15 through V-17, Small Scale Hydropower Reconnaissance Study Southwest Alaska, COE, 1981. The COE found both of these projects to be uneconomical. The COE’s use of relatively large dams for these micro-scale hydro developments likely contributed to this conclusion. In spite of the COE’s findings, there are promising hydropower resources in the vicinity of Pedro Bay. Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 4 2.0 EXISTING ENERGY SYSTEM 2.1 COMMUNITY ENERGY PROFILE Pedro Bay's energy infrastructure underwent a significant upgrade in about 2004. At this time, separate electrical generation and bulk fuel operations for the school and community were consolidated, enabling lower operating costs, higher generation efficiency, and better utilization of waste heat at the school. 2 Pedro Bay's peak annual combined gasoline and diesel usage was estimated in 2003 to be 64,500 gallons. This is the total fuel consumed by the community, and includes fuel for electrical generation, heating, and transportation. Of this, the diesel power plant uses about 21,000 gallons annually. 2 Waste heat from the power plant is used to heat the school. This has been estimated to save 11,000 gallons of heating fuel annually. 3 2.2 ELECTRIC UTILITY ORGANIZATION Electrical service in Pedro Bay is provided by the Pedro Bay Village Council (PBVC). The PBVC holds Certificate of Public Convenience and Necessity (CPCN) No. 662 authorizing it to operate a public utility providing electrical service in and around Pedro Bay. The CPCN was issued by the Regulatory Commission of Alaska (RCA) in 2002. The RCA has exempted PBVC from rate regulation on a public interest basis as allowed by AS 42.05.711(d). PBVC participates in the state of Alaska’s Power Cost Equalization (PCE) program, which subsidizes electricity rates for residential and community facilities served by eligible Alaska utilities. 2.3 GENERATION SYSTEM PBVC's power plant is located at the school. The plant has three generators controlled by four sections of switchgear. The switchgear is fully automatic with paralleling capability, and uses a PLC to match the generator(s) to system load. The plant generates at 480V single phase. The generation assets are generally in good condition - all major assets are less than ten years old. A fourth generator is located immediately adjacent to the PBVC gensets, and is dedicated to emergency power for the school. This generator feeds the school through a manual transfer switch, and is not configured to power the community. Installed generation equipment in Pedro Bay is listed in Table 2-2. 2 State of Alaska Power Cost Equalization Program Annual Report, Alaska Energy Authority, 2002 – 2008. 3 Concept Design Report and Construction Cost Estimate for Consolidation and Renovation of Fuel Storage and Electrical Generation Facilities in the Community of Pedro Bay, Report for AEA/REG, Prepared by Alaska Energy and Engineering, Inc. 2003. Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 5 Table 2-2: Existing Utility Generation Equipment No. Equipment Prime Power (kW) Commissioned Date Use 1 John Deere #6059TFG01 Engine w/ Newage Generator 125 kW 2000 Utility 2 John Deere #4045T150 w/ Magnaplus Generator 60 kW 2001 Utility 3 John Deere #4045T150 w/ Magnaplus Generator 60 kW 2001 Utility 4 John Deere #4045T150 60 kW 2001 School Backup 2.4 ELECTRICAL DISTRIBUTION SYSTEM The PBVC distribution system is a 7,200V single-phase buried cable system. 480 V at the power plant is stepped up to 7,200V with a 100 kVA transformer. 2.5 EXISTING AND PROJECTED FUTURE LOAD PROFILE Pedro Bay's population and economy have been relatively stable for many years. Future electric loads are expected to be relatively flat. If the hydroelectric plant significantly reduces electricity rates, the system load may increase as the community transitions from wood and fuel oil to electricity for space and water heating. 2.6 PLANNED UPGRADES The bulk fuel and electrical generation systems were recently upgraded. No upgrades to the electric utility system are planned. 2.7 ENERGY MARKET Energy from a local hydroelectric project would be fed into the Pedro Bay Electric Utility to offset or replace diesel power generation. If a hydroelectric project generates energy in excess of electrical demand, other energy utilization such as space heating or water heating to displace fuel oil and/or wood burning is possible. The current cost of electricity in Pedro Bay is $0.91 per kWh. It was raised from $0.60 per kWh in late 2008 to reflect increases in the price of fuel. PCE subsidies reduce the cost of electricity for residential accounts (up to 500 kWh monthly) to the range of $0.20 to 0.40 per kWh. The subsidized rate varies depending on how much money the State of Alaska appropriates for the PCE program. Fuel is delivered to Pedro Bay by plane and by barge. In recent years PBVC has relied increasingly on airborne fuel deliveries because the reliability and frequency of fuel barge service has decreased. Fuel costs have increased from an average of $2.17 per gallon in 2002 – 2004 to an average of $4.17 per gallon in 2006 – 2008. The cost of fuel averaged $5.72 per gallon in FY 2008. Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 6 3.0 PROPOSED ENERGY RESOURCES 3.1 RESOURCE DESCRIPTIONS There are six hydropower resources in the vicinity of Pedro Bay that were studied. Key attributes for the six resources are summarized in Table 3-1. The locations of these projects are indicated on Figure 3-2. Table 3-1: Summary of Hydropower Resources near Pedro Bay Parameter Knutson Creek Main Knutson R1 Knutson L1 Knutson R2 Cottonwood Creek Dumbbell Lake Intake Elevation (ft) 400 500 750 800 320 250 Gross Head (ft) 200 350 500 350 215 190 Penstock Length (ft) 4,700’ 3,400’ 4,800’ 3,500’ 2,200’ 8,100’ Transmission Length (mi) 1.6 1.2 1.8 3.9 0.2 0.6 Note: All values are approximate and intended only for reconnaissance-level resource screening. 3.1.1 Knutson Creek – Main Stem This project would be located on the main stem of Knutson Creek. The powerhouse would be located about one mile upstream from the end of the runway, and the intake would be located 9/10ths of a mile farther upstream. The project would develop about 200 feet of head, and would use about 14 cubic feet per second (cfs) of water for an installed capacity of about 125 kW, or 22 cfs for an installed capacity of 200 kW . Available hydrology data indicates that Knutson Creek may be able to provide the full design flow for a 125 kW project year- round. Development of this resource can meet 100% of the community’s existing electricity demand, and could also provide a significant amount of additional energy for space heating, water heating, and other productive uses. If the community can absorb more than 125 kW of output, a larger project at this location may be warranted. Project size is a key issue for the feasibility study. Figure 3-1: Aerial View of Knutson Creek in Vicinity of Proposed Project Intake Site Proposed Intake Site on Knutson Creek Direction of Flow To Pedro Bay Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 8 Proposed Intake Location Vicinity Location of 7/22/09 Stream Flow Measurement 3.1.2 Knutson Creek – Tributary R1 This project would be located on the first major tributary of Knutson Creek on the right side looking upstream. It would have a gross head of about 350 feet and design flow of 6.6 cfs for an output of 125 kW. Full output would be available for most of the summer months. Minimum output during the winter months and summer-time dry spells in an average year would be approximately 20 kW. During extreme dry spells, the project could be briefly shut down for lack of water. With this project, Pedro Bay could shut down its diesel generators much of the time, but they would need to be operated in parallel with the hydro for most of the winter and during dry periods of the summer. This resource has the shortest access and power line from Pedro Bay, resulting in lower capital costs than other options in the Knutson Creek valley. This project would generate less energy than other projects, so its potential value to the community is somewhat less than for other project options. Figure 3-3: Aerial View of Knutson Creek Tributary R1 in Vicinity of Proposed Project Intake Site 3.1.3 Knutson Creek – Tributary L1 This project would be located on the first major tributary of Knutson Creek on the left looking upstream. It would have a gross head of about 500 feet and a design flow of 4.7 cfs for an installed capacity of 125 kW. Minimum power generation during low flows is estimated to be about 10 kW. Figure 3-4: View of Knutson Creek Tributary L1 From Pedro Bay Airport Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 9 3.1.4 Knutson Creek – Tributary R2 This project would be very similar to development of Tributaries R1 or L1, only it is located farther away from Pedro Bay and in more rugged terrain. Accordingly, expected development costs for this project would be higher than for Tributary L1, and this project warrants consideration only in the event that development of other options are determined to not be feasible. 3.1.5 Cottonwood Creek This project would be located on Cottonwood Creek, just behind Pedro Bay. The intake would be located in a small canyon less than 1,000 feet from existing residential development in the Big Hill subdivision, and the powerhouse would be located adjacent to an existing road. The project would have gross head of about 215 feet and a design flow of about 3 cfs, for an output of up to about 30 kW. During the winter months, the project may be shut down for lack of water. This project would be a good energy supply for the community, however development of larger projects in the Knutson Valley appears favorable, and these projects would provide significantly more energy for the community. In the event that development of hydropower resources in the Knutson Valley are not feasible, development of Cottonwood Creek should be further investigated. Figure 3-5: Cottonwood Creek in the vicinity of the intake site looking upstream. Note exposed bedrock cliff at right. The creek is incised in a canyon 30 to 50 feet deep in this vicinity. Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 10 3.1.6 Dumbbell Lake / Russian Creek This project would be located at or near the outlet of Dumbbell Lake into Russian Creek. It would have a head of up to 190 feet and a flow of about 12 cfs for an installed capacity of 125 kW. Regulation of the lake could enable peak power generation at any time during the year. This resource is not considered further in this study for the following reasons: · The project would require a relatively long, large diameter penstock. This will make the project more expensive compared to other projects. · Russian Creek, Dumbbell Lake, and the lake’s feeder streams are designated by the Alaska Department of Fish and Game (ADFG) as anadromous habitat for sockeye salmon. 4 Reconciling the need to regulate the lake level for power generation with the need to maintain fish passage and fish habitat makes this project problematic. In the event that future study of more favorable hydropower resources identified in this study determines that they are not feasible, this resource may warrant reconsideration. 3.2 HYDROLOGY The hydrology of the identified hydropower resources needs to be measured or characterized in order to calculate how much energy the resources can provide. It is also necessary to properly design the hydroelectric development so it does not get damaged by floods. Also, hydrology information is necessary to assess the effect hydropower development may have on the natural environment. The USGS maintains stream gauging stations on several streams in the Iliamna Lake region that may have similar hydrology as the hydropower resources near Pedro Bay. Stream flow measurements have also been collected at Knutson Creek and Russian Creek as part of environmental studies conducted by Bristol Environmental Services (BES) for potential transportation corridors to the proposed Pebble Mine. Polarconsult also collected stream flow data during field reconnaissance in July 2009. This information can be used to develop initial estimates of hydrology for the identified hydropower resources. Existing hydrologic information is summarized in Table 3-2. The drainage basins associated with the gauge / intake site locations listed in Table 3-2 are indicated in Figure 3-5. Normalized discharge (cfs per square mile) for the four USGS-gauged basins are presented in Figure 3-6. 4 Atlas of Waters Important for the Spawning, Rearing or Migration of Anadromous Fishes, ADFG, 2009. Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 12 Table 3-2: Hydrologic Information for Pedro Bay Hydropower Resources Location USGS Gauge ID Basin Size (sq mi) Site Elevation (ft) Latitude (NAD27) Longitude (NAD 27) Begin Date End Date Number of Daily Records Bear Creek 15300100 2.6 250 59849'28" 154852'56" 7/23/05 9/1/09 1 1,501 Roadhouse Creek 15300200 20.8 62 59845'26" 154850'49" 5/1/05 9/1/09 1 1,584 Upper Talarik River 15300250 86.6 425 59847'12" 155815'11" 8/25/04 9/1/09 1 1,833 Iliamna River 15300300 128 80 59845'31" 153850'41" 5/24/96 9/1/09 1 4,848 Knutson Creek - 33.8 80 59848'15" 154808'26" 7/21/04 10/7/05 11 2 Knutson Creek Intake - 27.6 400 59849'42" 154806'21" - - - Knutson Creek R1 Intake - 2.7 400 59848'44" 154806'28" 7/21/09 - 1 3 Knutson Creek L1 Intake - 1.5 800 59849'45" 154807'35" - - - Knutson Creek R2 Intake - 3.7 1,000 59849'32" 154805'03" - - - Cottonwood Creek Intake - .065 400 59847'28" 154805'26" 7/20/09 7/22/09 2 3 Russian Creek / Dumbbell Lake - 2.2 200 59846'31" 154802'37" 7/21/04 4/3/05 6 2 1. Sites are currently equipped by USGS with real-time gauges. 2. Instantaneous discharge measurements reported by BES. Measurement locations are assumed. 3. Instantaneous discharge measurements by Polarconsult. Figure 3-6: Normalized Discharge from USGS-Gauged Basins Near Pedro Bay 0 1 2 3 4 5 6 7 8 9 10 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecNormalized Basin Discharge(cfs per square mile)Iliamna Bear Upper Talarik Roadhouse Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 13 The discharge measurements taken by BES at Knutson Creek are the best available discharge data for Knutson Creek and its tributaries. Of the four USGS gauges near Pedro Bay, the Iliamna River discharge dataset, which extends to the present day, is the best dataset to compare to Knutson Creek. The Iliamna River dataset can be scaled to estimate discharge in Knutson Creek and its tributaries. This allows prediction of the amount of power that can be generated from these resources. The 11 discharge measurements at Knutson Creek have a correlation coefficient of 0.877 with the corresponding daily discharge data for Iliamna River. This is a very good correlation, indicating that these two basins likely have very similar discharge patterns. This means that Knutson Creek discharge can probably be predicted with high confidence using Iliamna River data. Unfortunately, the confidence of these findings is limited because there are only 11 data points. More discharge data or more detailed statistical analysis of existing data is needed to increase the confidence in conclusions drawn from these data. Polarconsult measured discharge in Cottonwood Creek and Knutson tributary R1 in July 2009. These and other flow data are summarized in Table 3-3. Table 3-3: Stream Discharge Data for Local Hydropower Resources Resource Measurement Date/Time Measured Flow (cfs) Normalized Flow (cfs per square mile) Concurrent Iliamna River Normalized Flow (cfs per square mile) Knutson Creek 7/21/2004 128.6 4.5 7.8 Knutson Creek 8/18/2004 63.52 2.2 3.3 Knutson Creek 9/24/2004 69.67 2.4 3.0 Knutson Creek 10/16/2004 282.35 9.9 8.0 Knutson Creek 2/17/2005 27.34 1.0 1.3 Knutson Creek 4/3/2005 16.03 0.6 1.3 Knutson Creek 5/4/2005 247.67 8.7 8.6 Knutson Creek 6/14/2005 314.31 11.0 16.2 Knutson Creek 7/15/2005 167.31 5.9 9.1 Knutson Creek 8/9/2005 116.83 4.1 4.0 Knutson Creek 10/7/2005 167.53 5.9 4.1 Knutson Creek Tributary R1 7/22/09 1:50 PM 43.5 19.8 46.6 Cottonwood Creek 7/20/09 4:35 PM 3.08 47.4 13.1 Cottonwood Creek 7/20/09 4:50 PM 3.09 47.4 13.1 Cottonwood Creek 7/22/09 4:45 PM 5.68 87.4 46.6 Russian Creek 7/21/2004 4.19 1.9 7.8 Russian Creek 8/19/2004 2.24 1.0 3.1 Russian Creek 9/24/2004 2.32 1.1 3.0 Russian Creek 10/15/2004 6.21 2.8 9.9 Russian Creek 2/16/2005 3.56 1.6 1.3 Russian Creek 4/3/2005 3.01 1.4 1.3 Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 14 3.3 GEOTECHNICAL / GEOMORPHOLOGICAL CONSIDERATIONS The project areas are characterized by very thin organic soils over a mantle of granular deposits of varying depths. Bedrock is exposed in the upper elevations and around most intake sites. Based upon field observations, excavations and benching is possible on most moderate side slopes using conventional methods. Blasting could be required in some areas if competent rock is encountered. More specific geotechnical investigations are necessary as part of the feasibility study for the project. Field observations along Knutson Creek indicate it is an active stream with high flood flows and high bed loads. Knutson Creek broke out of its current channel in the past decade or so, causing damage to the airport and temporarily discharging into the wetland area located between Pedro Bay and the airport. A dike was built to relocate the creek to its channel. Observation of the terrain upstream from this dike suggests that the creek could again breach its natural confines and head towards the airport in a future flood. Floods in this area could affect project access, power line, and the powerhouse. Upstream of this area, where the hydro project penstock and intake would be located, the creek is confined to its channel by topography and bedrock. The intake structure would still need to handle flood flows and debris. Field observations along Knutson tributary R1 indicate it is also an active stream with high flood flows and high bed loads. The creek is incised in a bedrock canyon up in the intake vicinity, but on the lower slopes it is confined to an incised valley with a broad floor. Within this valley, the creek appears to shift course about every decade, judging from the willow and alder growth observed in old creek beds. The creek bed in this area consists of stones and boulders from 6-inch to 3-foot in size and larger. Site topography allows the penstock to rapidly depart this valley, so only the intake and upper several hundred feet of penstock would need to consider flood and channel shifting hazards. The powerhouse site would need to consider flood hazards associated with Knutson Creek. Access to the Knutson Valley sites is good. There appears to be abundant granular materials for trail construction, and very little exposed bedrock in the lower Knutson Valley. Some bedrock will likely be encountered on the upper portion of penstock routes and at the intake sites for any of the Knutson Valley projects. 3.4 PROJECT LANDS 3.4.1 Knutson Valley Projects All three hydropower resources in the Knutson Valley are located on lands that have been interim-conveyed from the Bureau of Land Management (BLM) to Pedro Bay Corporation (PBC). The overland access and power transmission routes between Pedro Bay and these resources have also been interim-conveyed to PBC. If a separate beach landing and materials Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 15 haul route is desired from Knutson Bay directly up to these project locations, Access across USS 7333 or USS 4821 could be necessary. If the power line is extended from the airport sectionalizing cabinet, it would need to cross the airport property en route to any of the Knutson Valley power house sites. 3.4.2 Site Control Requirements A hydroelectric project will require clear title to the lands it occupies. This includes the intake/diversion structure footprint, penstock alignment, powerhouse and tailrace footprint, transmission line alignment, and access trails or roads. Title to these lands can take a variety of forms. Some typical methods are listed below: Ø Easements. Some or all of the project lands can be secured by easement. Public or private easements can be used in accordance with the preferences of the parties involved. Ø Leases. Some or all of the project lands can be secured by long-term leases. A lease term of 50 years or with favorable renewal provisions is recommended due to the long economic life of a hydroelectric development. Ø Land transfer or purchase. Title to different parts of the project may be secured by different means. One typical arrangement is to purchase or lease the intake and powerhouse footprints and to secure easements for penstock, access, and transmission corridors. Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 16 4.0 PROPOSED PROJECT DESIGN 4.1 ANALYSIS OF PROJECT ALTERNATIVES 4.1.1 Hydropower Resources Of the six hydropower resources identified in the vicinity of Pedro Bay, only the four resources located in the Knutson Valley are considered. Cottonwood creek appears to be a viable resource, but is very small – the Knutson Valley resources offer superior benefits to the village. The Dumbbell Lake project would be expensive due to its long penstock, and would also likely be difficult to permit due to the presence of salmon habitat in Russian Creek, Dumbbell Lake, and the lake’s tributary streams. Technical parameters for proposed 125 kW projects at the four Knutson Valley resources are summarized in Table 4-1. Table 4-1: Technical Parameters of Potential Hydropower Developments near Pedro Bay Parameter Knutson Creek Main Knutson R1 Knutson L1 Knutson R2 Intake Elevation (ft) 400 500 750 800 Gross Head (ft) 200 350 500 350 Net Head (ft) 169 330 443 403 Penstock Length (ft) and diameter (inches) 4,700’ of 20” pipe 3,400’ of 16” pipe 4,800’ of 14” pipe 3,500’ of 16” pipe Design Flow (cfs) 14 6.6 4.7 6.5 Installed Capacity (kW) 125 kW 125 kW 125 kW 125 kW Plant Capacity Factor 97.5% 72% 66% 79% Minimum Average Annual Output (kW) 100 kW 20 kW 10 kW 30 kW Diesel Load Displaced (kWh) Percent of Annual Diesel Load 278,000 100% 258,000 93% 245,000 88% 267,000 96% Annual Excess Energy (kWh) 762,000 510,000 466,000 563,000 Transmission Length (mi) 1.6 1.2 1.8 3.9 Estimated Installed Cost 1 $2,200,000 $2,000,000 $2,300,000 $2,500,000 Estimated BCR with no revenue from excess energy 1 0.9 0.9 0.8 0.8 Estimated BCR with revenue from 90% of excess energy 1 1.3 1.0 0.8 1.0 Note 1: BCR means benefit-cost ratio. See section 5 for cost and financial estimates. Knutson Creek has the best energy generation potential of these resources. This is because this is the largest creek of the four, and so it has the highest plant capacity factor of the four projects. Estimated installed costs and estimated benefit-cost ratios (BCRs) were calculated for the projects. Assumptions used to create these estimates are discussed in section 5.0. Given the Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 17 level of detail and limited information used to develop the cost estimates, the four projects have fairly similar BCRs. Knutson Creek has the highest BCR, and Knutson tributary R1 is second highest. Knutson tributaries L1 and R2 are lower, although closer review of these projects could produce a BCR greater than one. This findings are consistent with the following considerations: 1. Knutson Creek has the highest plant capacity factor. This means that all else held equal, the plant produces more energy for the village than the other options. 2. Knutson R1 is closest to Pedro Bay and has the shortest penstock. This reduces the costs of transmission lines and penstock for this project. 3. Knutson L1 and R2 are farthest from Pedro Bay. These projects incur higher costs for access trails and power line extensions. 4. Knutson R2 has the largest basin of the three tributary resources, and also has the highest plant capacity factor of the three. This helps to increases its BCR above that of L1, but does not overcome the additional costs of access and transmission to be more cost effective than R1. 4.1.2 Installed Capacity Section 4.1.1 considers 125 kW projects. Because many of the costs of small hydro projects are largely independent of their installed capacity, larger projects tend to be more cost effective if the utility can sell all of the extra energy. In Pedro Bay, it is likely that space and water heating applications, as well as a general increase in electricity usage, could absorb the extra energy from a larger hydroelectric plant if the energy was affordably priced. A 200 kW project was considered at Knutson Creek. The two different Knutson Creek projects are compared in Table 4-2. The estimated BCRs for both Knutson Creek projects assume that 316,000 kWh of excess energy from the hydro projects is directed to the school to replace waste heat from the diesel power plant at no cost to the school. 5 The agreement between the LPSD and PBVC regarding power plant waste heat should be reviewed to determine how the loss of waste heat from the power plant would be addressed. 5 316,000 kWh of energy is based on the cited savings of 11,000 gallons of avoided fuel achieved by the waste heat system. This is converted to kWh using an assumed fuel heat content of 140,000 btu/gallon, oil fired HVAC system efficiency of 70%, and electric HVAC system efficiency of 100%. Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 18 Table 4-2: Comparison of 125 kW and 200 kW Developments at Knutson Creek Parameter Knutson Creek Main 125 kW Knutson Creek Main 200 kW Intake Elevation (ft) 400 400 Gross Head (ft) 200 200 Net Head (ft) 169 171 Penstock Length (ft) and diameter (inches) 4,700’ of 20” pipe 4,700’ of 24” pipe Design Flow (cfs) 14 22 Installed Capacity (kW) 125 kW 200 kW Plant Capacity Factor 97.5% 94% Minimum Average Annual Output (kW) 100 kW 125 kW Diesel Load Displaced (kWh) Percent of annual Diesel Load 278,000 100% 278,000 100% Annual Excess Energy (kWh) 762,000 1,390,000 Transmission Length (mi) 1.6 1.6 Estimated Installed Cost $2,200,000 $2,500,000 Estimated Benefit-Cost Ratio Range 1 0.9 – 1.3 0.8 – 1.7 Note 1: Range of BCRs is with and without revenues from sale of excess hydro energy. 4.2 RECOMMENDED PROJECT A project on the main-stem of Knutson Creek is recommended. This project offers the most cost-effective energy for the community, and would enable the community to turn off its diesel generators for nearly all of the year. At 125 kW, the project offers a significant amount of excess electrical energy for the community, although about half of this excess energy would be needed to replace the diesel plant waste heat that is currently used to heat the school. A 200 kW project on Knutson Creek would still meet all of the community’s existing electrical needs, heat the school, and still provide a significant amount of excess energy for the village that could be used for space heating and other applications. A project on Knutson tributary R1 also has an estimated BCR greater than 1, and should be considered in the event that the Knutson Creek project is not feasible. Projects on tributaries L1 and R2 would only warrant further study if Knutson Creek and R1 are not feasible. 4.3 ANNUAL ENERGY PRODUCTION Pedro Bay’s annual electrical energy generation has varied from 203,000 to 293,000 kWh in recent years. Average annual generation from 2005 to 2008 was about 278,000 kWh. Detailed load data is not available, but review of daily plant logs indicate the annual system peak demand is likely in the range of 60 to 70 kW. Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 19 The utility uses an average of about 21,400 gallons of fuel annually for power generation. At the 2006 – 2008 average fuel cost of $4.20 per gallon, the utility's fuel expense is $88,800 annually. 4.4 CONCEPTUAL SYSTEM DESIGN The main stem Knutson Creek project would include the following elements: 4.4.1 Project Access An access trail would need to be built from the vicinity of the gravel pit and airport up Knutson Valley to the powerhouse site and continuing up to the intake site. Conditions for trail or road construction to the powerhouse site are favorable. Surficial soils are generally granular and can be shaped into a road or trail with modest effort. The terrain is not steep or rugged. The trail route may need to avoid some areas near Knutson Creek that are prone to flooding or washout. Conditions for construction of the trail from the powerhouse to the intake also appear favorable, although the trail may encounter some areas of shallow or exposed bedrock. The terrain in this area is also steeper and more rugged. Conventional construction methods using earth-moving equipment should be appropriate for trail construction. 4.4.2 Intake The intake structures needs to capture all of low flows (14 to 30 cfs), and still function reliably during the frequent periods of significantly higher flow (100s of cfs). It also needs to function and survive flood events when Knutson Creek is moving 1,000s of cfs, boulders, trees, and other debris. This intake structure may be a low weir or sill built across Knutson Creek. Exposed bedrock is present in the creek in the intake vicinity - construction would be simplified if a suitable area with exposed bedrock can be used. The intake structure would direct low flows through an intake grill where the water would be conveyed to a box on the edge of the creek where it would be processed to remove sand and organic material (leaves, twigs, etc) that could clog the turbine. This debris would be flushed back out to the creek. Design of this intake structure will need to combine reliable function and robust construction with affordability and constructability. Construction in the early spring may be necessary to take advantage of pre-breakup low flows. 4.4.3 Penstock The penstock is a large pipe that conveys clean water from the intake down to the powerhouse. The penstock would be about 4,700 feet long and 20 or more inches in diameter, depending on the installed project capacity. The pipe would likely be buried along the access trail between the powerhouse and intake. The pipe could be installed on-grade in areas with shallow Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 20 bedrock. Pipe material will depend on a number of factors, including geotechnical conditions, construction methods, and cost. Common pipe materials would include high-density polyethylene (HDPE), PVC, ductile iron, or steel. 4.4.4 Powerhouse The powerhouse is a small building that houses the water turbine, electrical generator, electrical switchgear, and control equipment. Other equipment for project maintenance can also be located at the powerhouse. The powerhouse for this project would likely be a wood or metal framed building. The size of the building would depend on the project capacity, but would be about 20 feet by 20 feet. The project would use a cross-flow turbine driving a 480V single phase synchronous generator via a belt-drive speed increaser. Cross-flow turbines generally have a fairly flat efficiency curve from 50 to 100% of rated output. Their efficiency drops steeply below 50%, and their minimum output is about 25% of rated output. At Knutson Creek, there is likely adequate water even during periods of low flow to keep a turbine running at around 50% of rated output. The synchronous generator would enable the hydro to run independently of the diesel power plant or in parallel with the diesel power plant. A transformer would be located at the power house to step up voltage from 480 V to 7200 V for transmission to Pedro Bay. 4.4.5 Power Line The power line would run from the hydro powerhouse back to the existing utility distribution system. The closest electrical cabinet is at the airport apron on the south side of the runway, about 8,400 feet from the powerhouse location. Because Pedro Bay’s electrical system is 7.2 kV single phase, a single cable with neutral conductor can be installed to the power house. This can be a single buried cable or two overhead wires on poles. Site conditions appear conducive to either construction method. Electricity would also be run from the powerhouse up to the intake site to power flush gates, sensors and other apparatus to keep the intake operating. This would likely be a single 480 volt circuit. 4.4.6 Controls A communications cable would be run from the powerhouse to the intake. This control cable is necessary to control the intake systems and also to control the hydro project in general. This cable could also be used for communications and security purposes. Another control cable would need to run between the hydro and diesel powerhouses to coordinate operations. This cable may be able to utilize existing communications in the town, Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 21 or a dedicated cable can be installed. If a dedicated cable is used, it would be approximately 16,000 feet long. A cable that patches into existing communications circuits would need to be about 8,400 feet long. 4.5 CONCEPTUAL INTEGRATION DESIGN The hydro project would be interconnected with the distribution system with a fused disconnect switch. This would provide protection between the systems, and a means of isolating the systems when necessary. The diesel power plant switchgear/controls would be upgraded to function with the hydro project. The controller would dispatch the hydro first, and then would automatically turn on diesel generators when the system load was within a certain threshold of the hydro’s available output. With the recommended hydro project and existing system demand, the diesel generators would run very infrequently – for a few days a year at most. Pedro Bay could use excess energy from the hydro either on dedicated discretionary circuits or for uncontrolled applications. Dedicated discretionary circuits would only allow energy usage when it was available – during periods of low flow, these circuits would be disabled to avoid having to turn on the diesel engines. These circuits would typically be for a few large loads, such as heating for the school and community building. Uncontrolled loads would come on at any time, and would tend to increase the system's peak demand. If the increased peak demand is large enough, the diesel plant would be run more often. The best approach for Pedro Bay is a matter of economics that would be addressed during the feasibility or design phase of the project. 4.6 REMAINING TECHNICAL CONSIDERATIONS 4.6.1 Hydrology Existing limited hydrology data indicates that the recommended hydro project(s) on Knutson Creek and Knutson tributary R1 are favorable. For Knutson Creek, more data or more extensive statistical analysis of existing data is needed to confirm these findings. For tributary R1, stream gauging data is necessary. If further analysis of existing data indicates that additional data is needed at Knutson Creek, installing stream gauges in Knutson Creek and Knutson tributary R1 is recommended. The critical season for gauging Knutson Creek is through the winter months to capture seasonal low flows. Low flows during the summer months are relatively less important because they are caused by dry spells, and tend to be of shorter duration. Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 22 Depending on available gauging sites, it may be appropriate to remove the Knutson Creek gauging hardware during the summer months to reduce the likelihood that the hardware is damaged or destroyed by high flows. Concurrent gauging of Knutson tributary R1 is recommended so that the development schedule for hydropower is not unduly delayed in the event that a project on Knutson Creek is not feasible. Because the design flow on R1 is a greater fraction of the average flow for this creek, year-round gauging is recommended. One of the first tasks in the feasibility phase of the project should be to evaluate existing data to determine if additional gauging is warranted at Knutson Creek. If so, gauges should be installed as soon as possible to start collecting hydrology data for these resources. 4.6.2 Installed Capacity This reconnaissance study considered 125 kW and 200 kW projects at Knutson Creek. Assuming that all of the excess energy is purchased and used by the community, the larger project has a higher benefit-cost ratio. The feasibility study needs to determine the optimum installed capacity for this resource and Pedro Bay. This decision will be influenced by: Ø Community demand. A larger hydro project is justified only if the community can pay for and use all or most of the energy the project produces. Ø Resource availability. Knutson Creek has plenty of water to operate larger projects. Ø Project cost. Many costs associated with a small hydro project are entirely or mostly independent of installed capacity. Project capacity can therefore be increased with a comparatively modest increase in construction or maintenance costs. 4.6.3 Existing Electric System Constraints The capacity of the existing electric system should be assessed to verify that it is adequate to receive all power from the hydroelectric project. This is more of an issue for larger projects. Some distribution system upgrades may be necessary depending on the size of the existing conductors and transformers in the existing system. 4.6.4 Financing PBVC needs to consider how it would pay for a hydro project. The basic financing options are grant financing, capital financing, debt financing, or a combination of these. Ø There are a variety of federal and state grant programs that could provide complete or partial funding for project construction. Grants generally will only pay for pre- construction and construction expenses – they generally do not pay for post- construction operating costs. Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 23 Ø Capital financing would be possible if PBVC has the funds necessary to build the project out-of-pocket. If PBVC did have construction funds, it would likely require a return on its investment, which would affect the revenue structure and electric rates for the utility. Ø Debt financing could be achieved through either private sector or public sector financing. The project's capital cost is small for private bonding, although there are some entities that handle micro bonds of this size. There are state or federal financing programs such as the state's Power Project Fund that could be used for project financing. Some of these programs offer below-market interest rates to help support the project. There are also a variety of government loan guarantee programs that can help reduce the interest rates for private-sector financing. 4.6.5 Geotechnical / Topographic Considerations A topographic and geotechnical site survey is necessary to determine the hydraulic head on the resource, specific intake location, penstock alignment, powerhouse site, and access route. Topographic or geotechnical conditions at these sites may call for different design approaches than outlined in this reconnaissance study. 4.6.6 Permits ADFG should be consulted about the project to determine what will be required to obtain a fish habitat permit for the project. ADFG’s permitting requirements may affect project feasibility. There may be other unknown permitting issues, such as the presence of significant archeological resources in the project footprint, that would affect project feasibility. Resource agencies should be consulted in an effort to identify any such issues. 4.6.7 Feasibility Study Once the additional data described above is collected, a more detailed study of project feasibility is necessary. The feasibility study would focus on technical and economic issues to confirm the project is feasible. Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 24 5.0 ECONOMIC ANALYSIS Table 5-1 summarizes economic data for the recommended hydro projects. More detailed data and explanation is presented in the following sections. Table 5-1: Summary of Economic Data for Recommended Hydroelectric Projects Item Knutson Creek (200 kW) Knutson Creek (125 kW) Tributary R1 (125 kW) Pre-Construction Activities (Feasibility, Design, Permitting) $195,000 $195,000 $195,000 Direct Construction Cost $1,630,000 $1,450,000 $1,300,000 Project Administration / Management $68,000 $68,000 $64,000 Construction Engineering / Inspections / Commissioning $68,000 $68,000 $64,000 Contingency $474,000 $362,000 $325,000 Financing $65,000 $57,000 $52,000 Project Installed Cost $2,500,000 $2,200,000 $2,000,000 Annual O, M, R & R Costs / Savings (50 years) $17,000 $17,000 $15,700 Annual Debt Service (30 years) $127,700 $109,800 $101,200 Salvage Value (at 50 years) $0 $0 $0 Present Value of Project Costs $2,940,000 $2,590,000 $2,388,000 Displaced Power Plant Energy (kWh / year) 278,000 278,000 258,500 Displaced Power Plant Fuel (gallons / year) 21,400 21,400 19,900 Annual Value of Displaced Fuel ($ / year) $89,800 $89,800 $83,500 Present Value of Project Benefits (50 years) $2,310,000 $2,310,000 $2,149,000 Benefit Cost Ratio (no excess energy benefit) 0.8 0.9 0.9 Gross Excess Hydro Energy (kWh / year) 1,310,000 762,000 488,000 Net Metered Excess Hydro Energy (kWh / yr) 1 701,400 276,000 85,400 Displaced Heating Fuel (gallons / year) 2 24,400 9,600 3,000 Annual Value of Displaced Heating Fuel ($ / yr) $102,600 $40,400 $12,500 Present Value of Project Benefits (50 years) $4,950,000 $3,349,000 $2,470,000 Benefit Cost Ratio (with excess energy benefit) 1.7 1.3 1.0 Note 1: The analysis assumes 90% of excess energy generation is dispatched to community loads. Of this, 13.7% is consumed by distribution system losses (based on past system performance from PCE reports). Of the remaining excess energy, up to 315,000 kWh is subtracted for unbilled energy used by the school to replace waste heat energy. Note 2: The analysis assumes that heating oil displaced by hydro excess energy was consumed with a community –wide average efficiency of 70%. Table 5-2 presents estimated electricity rates for 100% debt-financed and 100% grant-financed projects. Figures in Table 5-2 have not been adjusted to reflect PCE-subsidized electric rates. Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 25 Table 5-2: Estimated Electric Rates with Hydro Projects Item Knutson Creek (200 kW) Knutson Creek (125 kW) Tributary R1 (125 kW) Estimated Electric Rate 100% Debt Financed Hydro 1 $0.40 to $0.46 per kWh $0.50 to $0.79 per kWh $0.63 to $0.77 per kWh Estimated Electric Rate 100% Grant Financed Hydro 1 $0.27 to $0.29 per kWh $0.28 to $0.32 per kWh $0.30 to $0.32 per kWh Note 1: Range of rates is with and without revenues from sale of excess hydro energy. 5.1 ANNUAL PROJECT COSTS 5.1.1 Operation and Maintenance Total non-fuel O&M costs for PBEU have averaged about $42,000 annually over the past several years.6 This annual expense includes activities such as meter reading, customer service, managing customer accounts, etc. These costs will not change if the means of energy generation changes from diesel to hydroelectric or a combination. This annual expense also includes the costs of lube oils, filters, and other consumables for the diesel generators, maintenance labor, and similar costs that are directly tied to the running time of the diesel engines. Nearly all of these costs will be avoided with any of the recommended hydroelectric projects. Because the diesels would effectively become a back up power supply, they would be run much less often with the hydroelectric project in service. They would therefore use fewer consumables and would require less frequent overhauls. These values are assumed to be worth 15% of total annual non-fuel expenses, or $6,300 annually. The hydroelectric project will have operation and maintenance costs. Based on experience with similar projects, annual O&M costs are estimated to be $11,000 annually. This includes additional labor costs for monitoring and maintaining the hydro as well as direct expenses for parts and consumables. 5.1.2 Repair and Replacement Most of the hydroelectric project systems and components have a very long useful life. The intake, penstock, powerhouse, switchgear, turbine/generator, and power line all have useful lives of at least 30 years. Some portions of the project will require periodic repair or replacement. Some minor components, such as the hydraulic pumps, control sensors, and similar devices, are assumed to have a useful life of five years. The water turbine would need 6 State of Alaska Power Cost Equalization Program Annual Report, Alaska Energy Authority, 2002 – 2008. Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 26 an overhaul at about 15 to 25 years. The average annual expense for repair and replacement is estimated at $7,800. 5.1.3 Property The recommended hydroelectric project is located on village corporation land. The cost of access to this property will depend on the agreement that is reached between PBEU and PBC. For reconnaissance level financial analysis, the property cost is assumed to be $4,500 annually. 5.1.4 Taxes No tax liability is considered. 5.1.5 Insurance It is assumed that the PBEU’s existing insurance policies would be adequate for the hydroelectric project. No annual cost is allocated for insurance. 5.1.6 Financing The costs of financing will depend on the type of financing used for the project. Financing options vary from government grants or loans to commercial financing options such as bonding. Commercial finance for the project is assumed to consist of a 30-year bond at a nominal interest rate of 6%. Adjusted for inflation (assumed at 3% average over 30 years), this is a real interest rate of approximately 3%. In addition, the cost of preparing and issuing the bond adds about 3% to the cost of the project (for items such as application fees, loan guarantee fees, origination fees, etc). 5.2 PROJECT REVENUES AND SAVINGS 5.2.1 Direct Fuel Displacement The hydro project will displace all or nearly all of the fuel currently consumed by the diesel power plant. Fuel savings are based on the diesel plant’s existing generation efficiency of 13.0 kWh per gallon, and 2006 – 2008 average fuel price of $4.20 per gallon. 5.2.2 Excess Energy In addition to the diesel electric generation that the hydro displaces, it also generates a significant amount of excess energy that is available to the community. For economic analysis purposes, 10% of this gross excess energy is assumed to be consumed by the hydro load governor system, and 90% is assumed to be made available to system loads such as space Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 27 heating and water heating uses. Of this 90%, 13.7% is assumed to be consumed by losses on PBEU’s distribution system (based on existing system efficiency). The balance (77.7% of gross excess energy generation) can be metered to PBEU’s accounts. All of this excess energy is assumed to be directed to space and water heating applications, displacing heating oil that is consumed with an average efficiency of 70%. Because the school currently receives waste heat from the power plant, worth 11,000 gallons of heating oil annually, an equivalent amount of excess hydro energy, 315,800 kWh, is allocated to the school at no cost in all economic analyses. 7 How the school’s energy needs are met and the impact that has on the hydro’s revenues will depend on the contractual relationship between PBEU and LPSD. 5.2.3 Environmental Attributes As a small, low-impact, run-of-river hydroelectric project, this hydro project would have the ability to market its environmental attributes nation-wide. The market for environmental attributes is still developing, and as a result is subject to considerable uncertainty. There is federal and state legislation pending that could influence this market, transforming it from the existing patchwork of state compliance markets and national and regional voluntary markets into a more uniform and regulated national market. A reasonable range for the value of the environmental attributes from this project is $0.005 to 0.020 per kWh on the voluntary market. Pedro Bay has the potential to market its unique Alaska setting to command a premium for its environmental attributes. For the economic analysis, no revenue from sale of environmental attributes is assumed. 5.2.4 Indirect and Non-Monetary Benefits The recommended hydroelectric project offers significant indirect and non-monetary benefits in addition to direct economic benefits. These other benefits include: Ø Reduced air pollution (NOx, SOx, particulates, and hydrocarbons) due to decreased operation of the diesel power plant Ø Reduced noise when the diesel plant is turned off. Ø Reduced risk of oil spills due to decreased throughput and handling of fuel. Ø More stable energy prices. With the hydro, PBEU’s electricity rates will be largely insulated from increasingly volatile world oil prices. Ø Secondary benefits arising from the availability of plentiful hydropower with a stable price. This will increase the affordability of living and doing business in Pedro Bay and 7 AEE estimated that the waste heat system would displace up to 11,000 gallons of heating oil annually. Pedro Bay Energy Upgrades Concept Design Report, AEE, 2003. Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 28 will increase the long-term viability of the community. Secondary benefits could include an increase in the population of school-age children, ensuring that school enrollment exceeds district and state thresholds for state funding year-to-year. Ø Economic multipliers due to the fact that a greater percentage of the utility's revenues will be retained in the local community for labor instead of paying external entities such as fuel suppliers. Ø Local training and experience with small hydroelectric projects. To the extent that locals choose to be involved in construction, maintenance, and operation of the hydro, they will learn a unique set of skills. These skills will become increasingly useful as Alaska continues to develop local hydropower resources. Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 29 6.0 PERMITS 6.1 FEDERAL PERMITS 6.1.1 FERC The Federal Energy Regulatory Commission has jurisdiction over hydropower projects that meet certain criteria. The recommended project does not meet any of these criteria, so FERC does not have jurisdiction. To formalize this finding, a Declaration of Intent would be filed with FERC. FERC will review the Declaration of Intent and solicit public comments, and then issue a ruling on the Declaration. It is probable that FERC would concur that the project is non- jurisdictional. 6.1.2 U.S. Army Corps of Engineers Permits The project intake and tailrace will be located within wetlands, therefore a wetlands permit from the COE will be required. Other project features may also be located in wetlands. The project is likely eligible for a Nationwide Permit #17 for small hydroelectric development. 6.1.3 U.S. Environmental Protection Agency A stormwater pollution prevention plan (SWPPP) will be required for the project. 6.1.4 Federal Aviation Administration The project is located within five miles of Pedro Bay’s airport, so consultation with FAA and/or the Alaska Department of Transportation is needed. The project will not have any features likely to present a hazard to aviation. 6.2 STATE OF ALASKA PERMITS 6.2.1 Department of Natural Resources Permits 6.2.1.1 Coastal Zone Consistency Review The recommended project is located within the Lake and Peninsula Borough Coastal Zone. The project will therefore have to be reviewed by ADNR’s Division of Coastal and Ocean Management for consistency with the area’s coastal management plan. 6.2.1.2 Land Authorizations The recommended project would not occupy state lands. Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 30 6.2.1.3 Tidelands Permits Not applicable. 6.2.1.4 Material Sale Agreement Not applicable. 6.2.1.5 Water Use Permit / Water Rights The project would need to obtain water rights from the ADNR. 6.2.2 Department of Fish and Game Permits 6.2.2.1 Fish Habitat Permit The project would need to obtain a fish habitat permit or a finding that a permit is not required from the ADFG. 6.2.3 Department of Transportation Permits Not applicable. 6.2.4 Department of Environmental Conservation Permits 6.2.4.1 DEC Wastewater or Potable Water Permits Not applicable. 6.2.4.2 Solid Waste Disposal Permit It may be desirable to dispose of bulky inert construction wastes from the project in an on-site monofill. This would require an ADEC monofill permit and approval of the land owner. 6.2.4.3 Air Quality Permit& Bulk Fuel Permit Not applicable. 6.3 LOCAL PERMITS The project is located within the Lake and Peninsula Borough, and will have to comply with the Borough’s permitting processes. Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 31 7.0 ENVIRONMENTAL CONSIDERATIONS 7.1 THREATENED AND ENDANGERED SPECIES The U.S. Fish and Wildlife Service’s on-line consultation guide indicates that there are no species listed as threatened or endangered within the vicinity of the project. 8 7.2 FISHERIES AND WILDLIFE Development of the recommended project has the potential to affect fisheries and wildlife resources. Significant effects to wildlife are considered very unlikely. The ADFG's Atlas of Waters Important for the Spawning, Rearing or Migration of Anadromous Fishes indicates that the lower reaches of Knutson Creek below the project are spawning habitat for sockeye salmon and also habitat for arctic char. These habitat areas extend upstream approximately to the proposed powerhouse location. Because the recommended project is a run-of-river system, it does not change the flow below the project. Because the project is located above fish habitat, it is considered unlikely to adversely affect fish habitat. It is recommended that ADFG be consulted regarding the project to determine what ADFG will require to issue a fish habitat permit for the project. 7.3 WATER AND AIR QUALITY The project would not significantly impact water or air quality. 7.4 WETLAND AND PROTECTED AREAS The project will require filling wetlands areas, such as for portions of the diversion structure located in the creek. Other wetlands areas may be affected by the project as well. 7.5 ARCHAEOLOGICAL AND HISTORICAL RESOURCES None known. The state historical preservation office should be consulted to see if any historical or cultural resources are present in the project area. 7.6 LAND DEVELOPMENT CONSIDERATIONS None. 8 http://alaska.fws.gov/fisheries/endangered/pdf/consultation_guide/70_consult_guide_map_11x17.pdf Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 32 7.7 TELECOMMUNICATIONS AND AVIATION The project will not affect telecommunications. The project will not affect aviation. 7.8 VISUAL AND AESTHETICS RESOURCES The project would primarily be visible from the air or alpine vantage points along Knutson Valley. The project would not be significantly visible from land or from Iliamna Lake. 7.9 MITIGATION MEASURES No impacts warranting mitigation are known at this time. Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 33 8.0 FINDINGS AND RECOMMENDATIONS 8.1 FINDINGS This reconnaissance study has identified hydropower resources on Knutson Creek and Knutson tributary R1 near Pedro Bay that appear feasible. Development of either resource would supply most of the village’s existing electrical demand and also provide significant additional energy. Other hydropower resources near Pedro Bay also have promise, but are considered inferior to projects on Knutson Creek and Knutson tributary R1, based on current information. In the event neither of these projects is feasible, the other projects should be investigated. Existing hydrology information should be analyzed to determine if additional hydrology data is needed. If additional data is needed, stream gauges should be installed in Knutson Creek and/or Knutson tributary R1 as soon as possible to begin collecting discharge data for these resources. Collecting data in both resources would allow PBVC to avoid delaying hydro development in the event that one of the resources is not feasible. Obtaining permits for the recommended projects should be relatively straightforward. ADFG should be consulted to discuss the salmon habitat in Knutson Creek and determine what information they will require to issue a fish habitat permit for the project(s). Additional field investigations are needed to review topography and geotechnical conditions along the project corridors. The intake sites and upper penstock routes are of particular importance. Once additional information is collected, a feasibility study should be completed to confirm the preliminary findings and recommendations made in this report. 8.2 DEVELOPMENT PLAN & SCHEDULE The major steps to advance the recommended hydro projects are: 1. Determine if additional stream gauging is necessary. 2. Conduct additional field investigations for both resources. 3. Consult with resource agencies on key permits required for the projects. 4. Complete a feasibility study of the projects – identify the preferred project. 5. Apply for permits required for the preferred project. 6. Complete engineering designs. 7. Secure construction funding. 8. Construction. Based on current information, either of the projects can be ready for construction in 2012. A project schedule is presented in Figure 8-1. Pedro Bay Village Council Hydroelectric Reconnaissance Study Polarconsult Alaska, Inc. OCTOBER 2009 – FINAL REPORT 34 Figure 8-1: Project Development Schedule 2009 2010 2011 2012 ACTIVITY Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Feasibility Study Activities Hydrology Add'l Field Investigations Agency Consultations Feasibility Study and Report Prepare and File Permit Applications FERC DOI COE Wetlands Permit ADNR Coastal Zone Consistency Review PBC Property Agreement ADNR Water Rights ADFG Fish Habitat Permit Process / Recieve Permit Authorizations FERC DOI COE Wetlands Permit ADNR Coastal Zone Consistency Review PBC Property Agreement ADNR Water Rights ADFG Fish Habitat Permit Project Design Conceptual Design 100% Design Construction Plan Arrange Financing Construction Post Construction Activities As-Built Survey Finalize Property Documents