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Chignik Bay • Chignik Lagoon• Chignik Lake• Egegik • Igiugig• Iliamna • Ivanof Bay• Kokhanok• Levelock • Newhalen •
Nondalton• Pedro Bay• Perryville• Pilot Point• Pope Vannoy• Port Alsworth• Port Heiden• Ugashik
Lake and Peninsula Borough
P.O. Box 495
King Salmon, Alaska 99613
Telephone: (907) 246-3421
Fax: (907) 246-6602
September 22, 2014
Dear Sir or Madame:
The cost of providing heat in the Lake and Peninsula Borough communities is a major
contributor to the high cost of living in these communities. The goal of this grant application is to
offset the heating fuel costs in three Borough communities by installing highly efficient wood
boilers.
The Borough is taking a systems approach to this project. The approach ensures that the project
is appropriate, economically beneficial, and will be maintained in the long-run to continue the
benefits of the project for many years.
The total project cost to construct wood boilers in the four villages is $309,450. The borough is
contributing 20% of the cost. Therefore, this grant is requesting $247,560.
The Systems Approach to the Wood Boiler Project
Step 1. A Borough-wide Energy Plan. In 2008, The Borough contracted with Mark Foster and
Information Insights to review the energy situation in Lake and Peninsula Borough villages and
recommend strategies to decrease energy costs in an economically efficient manner. The study,
completed in October 2008, recommended a number of strategies including electric generation,
wind projects, transportation improvements, energy conservation, and wood projects.
Specifically with respect to wood projects, the study concluded that in seven communities there
is potential to use wood resources to decrease the high cost of heating fuel.
Step 2. Detailed Feasibility Analysis for Each Potential Project. The next step in the system is
to contract to develop detailed feasibility and design information for the strategies recommended
by the energy plan. The first best step is to develop the required information to determine
whether projects are feasible. For example, for wind projects, the first step is usually a wind-
resource assessment. In other cases where the support information is already available, it is
possible to complete the more detailed feasibility information necessary for a design/build RFP.
With respect to the wood boiler project, the Alaska Energy Authority, Renewable Energy Fund,
provided a grant to the Borough to determine the feasibility of wood boilers to decrease heating
costs, and to prepare analysis and design information for which to write an RFP to install such
boilers. Through a competitive RFP, the Borough selected RBA Engineers, Inc to perform the
study.
RBA Engineers analyzed situations for seven villages in the region (and included a number of
alternatives for each village). RBA determined that the simple payback (price divided by
Chignik Bay • Chignik Lagoon• Chignik Lake• Egegik • Igiugig• Iliamna • Ivanof Bay• Kokhanok• Levelock • Newhalen
• Nondalton• Pedro Bay• Perryville• Pilot Point• Pope Vannoy• Port Alsworth• Port Heiden• Ugashik
savings/year) varied by alternative from 5 to 19 years, depending on the village and alternative.
The up-front construction to install a wood boiler system ranged from $90,000 to $980,000 per
site, depending on the village and alternative. A copy of the final report is an Appendix to this
grant.
In 2011, the Borough managed another AEA Renewable Energy Fund grant to install a wood
boiler on a community facility in Kokhanok. In addition, the Borough installed a smaller wood
boiler in a community facility in Igiugig. Both projects were completed on-time and are still
operating successfully today.
Based on community interest and economic feasibility, the Borough has selected three villages in
this grant application to implement wood boiler systems: Port Alsworth, Nondalton, and Pedro
Bay. In each of these communities, the Borough has commitments from organizations with
expertise and history of successful maintenance of facilities to ensure that the wood boiler is
used and maintained in the long run. The Borough also has support of land-owners who will
provide a supply of long-term wood to the project.
Step 3. The Subject of This Grant: Construction RFP to Construct the Project. After a project
is proved economically and technically feasible, the next step is to build it. In building a
project, the Borough’s approach is to implement the following principals:
• Add technical expertise to help the Borough to evaluate proposed designs, and inspect
construction. A wood boiler project is quite simple. However, it is still useful to contract
with technical experts familiar with wood boilers will help evaluate the RFPs to ensure
that the wood boiler designs are practical, appropriate, will meet EPA air emission
standards, etc. For that reason, the Borough is including $15,000 to contract with an
expert to sit in on the RFP evaluation and to inspect the finished projects to ensure that
construction is code-compliant.
• Construction RFP. The Borough then issues a construction RFP to solicit bidders. A
competitive RFP also allows bidders to innovate to some extent. For example, the RBA’s
feasibility analysis selected particular boiler, the E-classic 2400, to evaluate wood boiler
feasibility. RBA’s report proves that a project is feasible, but the RFP expects to use a
new boiler – the Garn Jr. to decrease cost, and increase efficiency (such as how
frequently the boiler needs to be stoked), etc. In addition to encouraging competition on
cost, making a construction RFP also simplifies the project and decreases opportunity
cost overruns.
The funding requested to complete the construction in the three villages is $309,450 as
outlined in the table below:
Village
Wood
Boiler
Project
Cost
Payback
(Yrs)
Port
Alsworth
Improvement
Center
&
Firehall
$98,150
12.4
Nondalton
City
Hall
&
Fire
Truck
Garage
$98,150
2.4
Pedro
Bay
Smokehouse
Bay
Annex
$98,150
20.9
Total:
$
294,450
Chignik Bay • Chignik Lagoon• Chignik Lake• Egegik • Igiugig• Iliamna • Ivanof Bay• Kokhanok• Levelock • Newhalen
• Nondalton• Pedro Bay• Perryville• Pilot Point• Pope Vannoy• Port Alsworth• Port Heiden• Ugashik
• Inspection. Once the project is constructed the technical expert outlined in the first step
(to evaluate RFPs) will inspect the sites to ensure construction is as designed and is code-
compliant. The $15,000 cost outlined in the first step includes these inspections.
Step 4. Post-Project Use and Maintenance. Many bush projects fail because the villages fail to
adequately use or maintain the project. The villages for the wood boiler project were selected
based on economic feasibility, availability of wood, and community interest. In each case, a
village organization with a history of follow-through and reliability has agreed to maintain and
use the project. In each case, the owner of land that will be the long-term source of wood
supports the project. A letter of support from the wood-owners has been included with the grant.
There is no grant cost for this step in the project.
Project Budget
The project budget is below:
Technical Expertise: $15,000
Project Construction:
Port Alsworth: $98,150
Nondalton: $98,150
Pedro Bay $98,150
Total Project Cost: $309,450
Borough Contribution @ 20% of total: $61,890
Grant Request: $247,560
Project Benefits
The three Lake and Peninsula communities will realize $53,642.81 in annual fuel displacement,
which is equivalent to 9,104 gallons of oil. Over the lifetime of the project, this will achieve
displacing 182,080 gallons of oil. This is an average of 11.9 years investment payback for the
overall project. Local jobs will also be generated to provide wood to the boilers.
The grant forms are attached. If you have questions or need further information, please contact
me. Thank you for your consideration.
Sincerely,
Nathan Hill
Nathan Hill
Borough Manager
Chignik Bay • Chignik Lagoon• Chignik Lake• Egegik • Igiugig• Iliamna • Ivanof Bay• Kokhanok• Levelock • Newhalen
• Nondalton• Pedro Bay• Perryville• Pilot Point• Pope Vannoy• Port Alsworth• Port Heiden• Ugashik