HomeMy WebLinkAboutGrantApplication7 REV - Adak WindRenewable Energy Fund Round VII
Grant Application - Standard Form
AEA 2014-006 Application Page 1 of 22 7/2/2013
SECTION 1 – APPLICANT INFORMATION
Name (Name of utility, IPP, or government entity submitting proposal)
City of Adak, Alaska
Type of Entity: Local Government Fiscal Year End: June 30, 2013
Tax ID # 920175821 Tax Status: For-profit Non-profit X Government ( check one)
Date of last financial statement audit: Council Certified Financials FY 12
Mailing Address
PO Box 2011
Adak, AK 99546-2011
Physical Address
100 Mechanics Way
Adak, AK 99546
Telephone
907-592-4500
Fax
(907) 592-4262
Email
llockett@adak-ak.gov
1.1 APPLICANT POINT OF CONTACT / GRANTS MANAGER
Name
Mr. Layton J. Lockett
Title
City Manager
Mailing Address
PO Box 2011
Adak, AK 99546-2011
Telephone
(907) 592-4500
Fax
(907) 592-4262
Email
llockett@adak-ak.gov
1.2 APPLICANT MINIMUM REQUIREMENTS
Please check as appropriate. If you do not to meet the minimum applicant requirements, your
application will be rejected.
1.2.1 As an Applicant, we are: (put an X in the appropriate box)
An electric utility holding a certificate of public convenience and necessity under AS
42.05, or
An independent power producer in accordance with 3 AAC 107.695 (a) (1), or
X A local government, or
A governmental entity (which includes tribal councils and housing authorities);
Yes
1.2.2 Attached to this application is formal approval and endorsement for the project by
the applicant’s board of directors, executive management, or other governing
authority. If the applicant is a collaborative grouping, a formal approval from each
participant’s governing authority is necessary. (Indicate Yes or No in the box )
Yes
1.2.3 As an applicant, we have administrative and financial management systems and
follow procurement standards that comply with the standards set forth in the grant
agreement (Section 3 of the RFA).
Yes
1.2.4 If awarded the grant, we can comply with all terms and conditions of the award as
identified in the Standard Grant Agreement template at
http://www.akenergyauthority.org/veep/Grant-Template.pdf. (Any exceptions
should be clearly noted and submitted with the application.)
Yes
1.2.5 We intend to own and operate any project that may be constructed with grant
funds for the benefit of the general public. If no please describe the nature of the
project and who will be the primary beneficiaries.
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Grant Application - Standard Form
AEA 2014-006 Grant Application Page 2 of 22 7/1/2013
SECTION 2 – PROJECT SUMMARY
This section is intended to be no more than a 2-3 page overview of your project.
2.1 Project Title – (Provide a 4 to 7 word title for your project). Type in space below.
Adak Wind Data Collection, Analysis, and Preliminary Design
2.2 Project Location –
Include the physical location of your project and name(s) of the community or communities that will
benefit from your project in the subsections below.
Adak Island, City of Adak, Alaska
2.2.1 Location of Project – Latitude and longitude, street address, or community name.
Latitude and longitude coordinates may be obtained from Google Maps by finding you project’s location on the map
and then right clicking with the mouse and selecting “What is here? The coordinates will be displayed in the Google
search window above the map in a format as follows: 61.195676.-149.898663. If you would like assistance obtaining
this information please contact AEA at 907-771-3031.
Project wind field study location coordinates 51.843900 degrees and latitude 176.677548 longitude.
2.2.2 Community benefiting – Name(s) of the community or communities that will be the
beneficiaries of the project.
City of Adak
2.3 PROJECT TYPE
Put X in boxes as appropriate
2.3.1 Renewable Resource Type
X Wind Biomass or Biofuels (excluding heat-only)
Hydro, Including Run of River Hydrokinetic
Geothermal, Excluding Heat Pumps Transmission of Renewable Energy
Solar Photovoltaic Storage of Renewable
Other (Describe) Small Natural Gas
2.3.2 Proposed Grant Funded Phase(s) for this Request (Check all that apply)
Pre-Construction Construction
Reconnaissance Final Design and Permitting
X Feasibility and Conceptual Design Construction and Commissioning
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2.4 PROJECT DESCRIPTION
Provide a brief one paragraph description of the proposed project.
The proposed project is for wind field data collection, analysis and preliminary engineering design. Wind
field data collection will require a one year collection period as recommended by AEA for location of
wind generators. The wind data will be analyzed and used for the design of the wind generators and
related facilities. The City of Adak has completed a hydroelectric power feasibility analysis and
preliminary engineering prepared by McMillen LLC. The report recommends hydro – wind generation
with pump storage development project that includes hydroelectric power generation, raising the Lake
Bonnie Rose and Lake DeMarie dams, construction of the penstock, powerhouse (2 MW hydro),
transmission lines, wind generation (4.5 MW), wind pump from L. DeMarie to L. Bonnie Rose storage,
and associated facilities. Both lakes are in the same watershed. The hydro - wind generation with pump
storage project will supply hydro and wind generated power to the community as well as pump water to
the higher elevation Lake Bonnie Rose to store potential energy for conversion into hydropower
generation to the community to meet demand (a buffering effect). The next step in the development
process is wind field data collection and analysis to design the wind generation system. The hydropower
feasibility component and preliminary engineering design is complete in the McMillen report.
2.5 PROJECT BENEFIT
Briefly discuss the financial and public benefits that will result from this project, (such as reduced fuel
costs, lower energy costs, local jobs created, etc.)
The existing residential and commercial cost of electric power averages $1.24 / kWh. The existing diesel
generating equipment is not properly sized for base loads, inefficient with high operating cost, and near
the end of its useful life. The total existing generation capacity is less than 800 kWh and unable to meet
existing residential and commercial demand. The Icicle Seafood plant recently closed due to the cost of
power and lack of capacity to meet plant demand. The implementation of the hydro / wind pump storage
project will reduce the cost of electric power to the $0.17 to $0.21 range at 2MW power utilization.
Under the existing system, the cost of power will greatly diminish the economic ability of the community
to survive. Low cost power in combination with the major infrastructure assets (over $4.5 billion in past
federal investments) of Adak offers major economic development opportunities for Adak to become a
major economic growth center for the region and the State. The Aleut Corporation and the City have
recently completed negotiations with a major seafood processing firm (Adak Cod Cooperative) to operate
the existing seafood plant. The prospect of low cost power is a major factor in the seafood firm’s interest
in operating a plant at Adak. The development of the proposed project will eliminate the power cost
equalization payments by the State resulting in annual savings of $290,795 (PCE FY12) to the State or a
future value of $7,059,000 (8% compounded monthly for 40 years). Without implementation of the
proposed project, the annual PCE costs will continue to escalate as diesel fuel costs increase and as the
existing generator continues to fail.
Using FY 2012 AEA data of 2,682,173 kWh sold at the average rate of $1.24 per kWh equals $3,325,895
in total power cost to the community. Many of the industrial and commercial power users self-generated
and that energy is not included in the FY 2012 data. Furthermore with rates at and above $1.24/kWh,
residents are highly considering and planning for self-generation. With implementation of the proposed
project using the FY 2012 kWh power sold data and the projected rate of $0.21 per kWh, the annual
power cost to the community is estimated at $563,256. The annual total power cost savings to the
community with the hydro wind pump storage project is estimated at $2,762,638 based on FY 2012 data.
The estimated future value of the cost savings over the 40 year expected life of the project is estimated at
over $67.0 million. This estimate is conservative because at lower cost per kWh, residents will use
considerably more power and switch from self-generation to the community grid, and major commercial
users such as the seafood plant will switch from self-generation to the grid. Further, value added seafood
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Grant Application - Standard Form
AEA 2014-006 Grant Application Page 4 of 22 7/1/2013
processing under the current cost per kWh is not economically feasible. With lower cost power,
expansion of the seafood processing industry is economically viable. The future value of cost savings by
replacing the current power system with the proposed project is approximately 2 to 3 times greater than
the above conservatively estimated future value of savings. With low cost energy, other potentially
industries identified in the federally funded Adak Economic Adjustment Strategy can be attracted to
Adak. Seafood processing expansion and other potential industries will create new jobs and income in
the region and the State.
2.6 PROJECT BUDGET OVERVIEW
Briefly discuss the amount of funds needed, the anticipated sources of funds, and the nature and source
of other contributions to the project.
The cost of the proposed project, wind field data collection, analysis, and preliminary engineering design,
is estimated at $160,000. The City has not established a capital project budget for the FY 2015 (award
date) and is unable to provide matching funds at this time. Prior to the August 1, 2014 AEA award date,
the City will provide a cash match as well as in-kind services including grant administration and
equipment for the installation of the wind data collection. Implementation of the total hydro wind pump
storage project is estimated at $72.4 million including replacement of the diesel generators (backup to
hydro / wind generation), update of the community grid, and the hydro / wind generation / pump storage
system. The total development project will be financed by federal grants and loans, potential state
investment, city bonds, etc. The hydropower feasibility study with preliminary engineering design was
financed in part by a federal grant with City cash match funds.
2.7 COST AND BENEFIT SUMARY
Include a summary of grant request and your project’s total costs and benefits below.
Grant Costs
(Summary of funds requested)
2.7.1 Grant Funds Requested in this application $160,000.00
2.7.2 Cash match to be provided $0
2.7.3 In-kind match to be provided $
2.7.4 Other grant funds to be provided $
2.7.5 Other grant applications not yet approved $
2.7.6 Total Grant Costs (sum of 2.7.1 through 2.7.4) $160,000.00
Project Costs & Benefits
(Summary of total project costs including work to date and future cost estimates to get to a fully
operational project)
2.7.7 Total Project Cost Summary from Cost Worksheet, Section
4.4.4, including estimates through construction.
$72,400,000.00
2.7.8 Additional Performance Monitoring Equipment not covered
by the project but required for the Grant Only applicable to
construction phase projects.
$ NA
2.7.9 Estimated Direct Financial Benefit (Savings) $ $167.5 million (Future
Value)
2.7.10 Other Public Benefit If you can calculate the benefit in terms
of dollars please provide that number here and explain how you
calculated that number in Section 5 below.
$ See Section 5
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Grant Application - Standard Form
AEA 2014-006 Grant Application Page 5 of 22 7/1/2013
SECTION 3 – PROJECT MANAGEMENT PLAN
Describe who will be responsible for managing the project and provide a plan for successfully
completing the project within the scope, schedule and budget proposed in the application.
3.1 Project Manager
Tell us who will be managing the project for the Grantee and include contact information, a
resume and references for the manager(s). In the electronic submittal, please submit resumes as
separate PDFs if the applicant would like those excluded from the web posting of this application.
If the applicant does not have a project manager indicate how you intend to solicit project
management support. If the applicant expects project management assistance from AEA or
another government entity, state that in this section.
The Project Manager is Layton J. Lockett, Adak City Manager (PO Box 2011, Adak, AK 99546; 907-592-4500; and
llockett@adak-ak.gov). Mr. Lockett has Bachelor and Master Degrees in Business Management (University of
Alaska, Anchorage and LaSalle University, Philadelphia, Pennsylvania). He currently holds the positions
of: Adak City Manager since 2010; Vice-President & Board Member of the Adak Community
Development Corporation; Treasurer & Board Member of the Southwest Alaska Municipal Conference;
and Managing Member of the 100 Knot Stop, LLC (Adak, Alaska). In these positions, Mr. Lockett has
implemented a new Adak city accounting system, managed numerous federal, state, and local grants,
managed the municipal budget, resolved requirements outlined by the State of Alaska to ensure grant and
financial compliance, supervised 19 City employees, played a key role in retaining the closed seafood
plant’s equipment in the community, engaged on the negotiation team in attracting Adak Cod Cooperative
to operate the seafood plant, and engaged in numerous other municipal and economic development
activities on behalf of the City.
3.2 Project Schedule and Milestones
Please fill out the schedule below. Be sure to identify key tasks and decision points in in your
project along with estimated start and end dates for each of the milestones and tasks. Please
clearly identify the beginning and ending of all phases of your proposed project.
This project schedule is limited to the Wind Feasibility and Conceptual Design Component.
Please fill out form provided below. You may add additional rows as needed.
Milestones Tasks Start
Date End Date
Grant Award 08/14 08/14
Develop Engineering Services scope
& RFQ for proposed project
Prepare RFQ and advertise competitive
procurement 08/02/14 08/15/14
Award Engineering Services Contract
for the proposed project
Evaluation and selection of most qualified
engineering firm 09/10/14 09/15/14
Erect wind data collection equipment Contractor procures equipment, ships, and
installs equipment at wind field site 10/15/14 11/15/14
Progress reporting Monthly written and teleconference reports 09/15/14 02/29/16
Monitor wind data collection
Data collection, monitor equipment
performance, repairs as necessary, and initial
analyses
11/15/14 11/15/15
Data Analyses - Permitting and
environmental analysis
Wind data analyses including wind speeds,
operating duration, energy generation potential,
permitting & environmental issues, and other
design criteria to initiate preliminary
engineering
11/15/15 12/31/15
Preliminary engineering design- cost
estimates, regulatory issues &
Identify wind generators & capacity,
engineering placement, associated equipment, 01/01/16 02/15/16
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Grant Application - Standard Form
AEA 2014-006 Grant Application Page 6 of 22 7/1/2013
feasibility analysis access infrastructure, identify issues and
problems to be resolved, regulatory issues,
integration with hydropower component, and
capital and operating costs.
Final Report
Prepare draft final report for review,
incorporate comments, and prepare final
reports
02/16/16 02/29/16
3.3 Project Resources
Describe the personnel, contractors, accounting or bookkeeping personnel or firms, equipment,
and services you will use to accomplish the project. Include any partnerships or commitments
with other entities you have or anticipate will be needed to complete your project. Describe any
existing contracts and the selection process you may use for major equipment purchases or
contracts. Include brief resumes and references for known, key personnel, contractors, and
suppliers as an attachment to your application.
The City of Adak has implemented a modern financial accounting system that includes trained accounting
personnel, financial oversight, accounting software, and routine Council certified financial statements that
meet the requirements of the State of Alaska. The City Manager provides day to day oversight of the
system with internal controls. Competitive procurement of contract services must meet the requirements of
the City procurement policies and procedures (Chapter 4.05 Purchasing) which meet State and federal
regulations.
The Aleut Corporation is the land owner of the wind field study site. The corporation strongly endorses
this proposed project and agrees to provide the land for the wind field project facilities under a no cost lease
agreement. The resume of the City Manager is attached.
The City of Adak under a federal Economic Development Administration grant has completed a
hydropower feasibility study and preliminary engineering analysis. The wind field data collection
component was not a component of these analyses. The wind field data collection, analysis and wind
generation system preliminary engineering design is the critical next step required to proceed to total
project final design. The proposed project will bring the wind component to the pre-final design stage of
the hydroelectric component completed by McMillen LLC.
3.4 Project Communications
Discuss how you plan to monitor the project and keep the Authority informed of the status.
Please provide an alternative contact person and their contact information.
The City of Adak has established procedures for monitoring and project communication with the Authority.
These procedures includes detailed written monthly progress reports that include reporting on scope of
work task completion, problems encountered, interim findings and data results, and other pertinent
information. These reports are supplemented with teleconference calls with the selected engineering firm.
Personnel of the Authority will receive copies of the monthly reports as well as all required project
financial reports. Authority personnel will be invited to participate in the regular project teleconferences
and site visits. City internal project communication includes distributing and discussing project reports in
the weekly City department staff meetings and routine reporting to the City Council.
The City Manager will inform the public on the proposed project in regularly scheduled public meetings. In
addition, the project progress reports will be shared with the Adak Community Development Corporation
(ACDC). ACDC holds regularly scheduled public meetings that are generally attended by public and
private entities with interests at Adak Island.
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AEA 2014-006 Grant Application Page 7 of 22 7/1/2013
3.5 Project Risk
Discuss potential problems and how you would address them.
This is a feasibility and conceptual design project with low risks. Potential low risks include the
following:
The proposed wind field site is on a ridge at 600 feet above sea level. There is rock outcropping on the
site. The wind data collection equipment including the equipment towers will be secured with guy wires,
attached to the rock. We expect periods of extremely high winds at times at this location. These wind
conditions may damage anemometers, data loggers or other monitoring equipment. We propose to
minimize this risk by having a regular (weekly and after every storm event) protocol site visits by City
staff during the data collection period to insure the system is collecting data properly.
SECTION 4 – PROJECT DESCRIPTION AND TASKS
The level of information will vary according to phase(s) of the project you propose to
undertake with grant funds.
If some work has already been completed on your project and you are requesting funding for
an advanced phase, submit information sufficient to demonstrate that the preceding phases
are satisfied and funding for an advanced phase is warranted.
4.1 Proposed Energy Resource
Describe the potential extent/amount of the energy resource that is available.
Discuss the pros and cons of your proposed energy resource vs. other alternatives that may be
available for the market to be served by your project. For pre-construction applications, describe
the resource to the extent known. For design and permitting or construction projects, please
provide feasibility documents, design documents, and permitting documents (if applicable) as
attachments to this application.
The proposed renewable energy resources are the use of wind power coupled with hydropower
supplemented with wind energy pump storage to store energy (water) at the higher elevation L. Bonnie
Rose and using the stored water energy for use at times when the wind resource cannot be used. The
amount of wind energy that can be produced is large (4.5MW McMillen Report estimate). The site of the
wind field is the ridge just east of Lake DeMarie (about 1.0 miles Southwest of Adak). The McMillen
report estimates that three turbines located at the wind field site will produce 1.5 MW of power each. The
potential wind resources at the site according to the Renewable Energy Atlas of Alaska for Google Earth
generated via modeling is considered “outstanding” at the proposed site. The energy density according to
the same atlas is 600-800 W/m2. According to the McMillen hydropower feasibility report, the cost to
produce power using hydro / wind with a wind pump storage, diesel backup, and upgraded grid system is
$0.21 per kWh at a 2 MW demand (this includes principal and interest loan costs as well as O&M costs
including minor use of diesel as a backup source). The hydro component of the project has a generation
capacity of 2 MW. The average generating capacity of the total system is 2.5 MW and 8.5 MW peak
capacity (hydro, wind, & diesel).
An alternative generation system considered is replacement of the existing system by a new efficient diesel
based system. The estimated cost for a new diesel generation system to provide this level of power is
approximately $0.40 per kWh (2013) under the same cost assumptions. With a diesel system, costs will
continue to escalate as fuel prices increase.
The hydropower feasibility and preliminary design component of the proposed development is complete.
In order to complete the analysis of the proposed total system, the proposed project is required to collect
wind data, its analysis, and preliminary design of the wind generation component. With completion of the
proposed project, the total project will be able to go to final design and construction.
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4.2 Existing Energy System
4.2.1 Basic configuration of Existing Energy System
Briefly discuss the basic configuration of the existing energy system. Include information about
the number, size, age, efficiency, and type of generation.
A detailed description of the existing power generation system is provided in the McMillen hydropower
feasibility technical report and in an earlier feasibility analysis by TDX Power (2013). The McMillen
description includes line diagrams and a detailed description of key components of the system. The system
is now limited to a single 800 kW (output) diesel generator. A second 800 kW diesel generator has failed,
thereby limiting the total existing capacity to 800 kW. The remaining generator has been in service since
1982 and is near the end of its serviceable life. The power delivery system is old and is showing signs of
wear. There have been numerous outages. A reconnaissance evaluation conducted by an electrical
engineer for the McMillen feasibility study concluded that the system was near the end of its service life.
There are numerous examples of deferred maintenance of the generator and power delivery system.
4.2.2 Existing Energy Resources Used
Briefly discuss your understanding of the existing energy resources. Include a brief discussion of
any impact the project may have on existing energy infrastructure and resources.
According to AEA statistical compilations, a little over 3 million kWh’s were generated in fiscal year 2012.
The average load is 344 kWh. According to a TDX feasibility study, there are seasonal peak demands by
the fish processing plant of over one (1) MWh. Due to outages and insufficient existing generation
capacity, the fish processing plant load is being met offline.
This wind energy feasibility and preliminary engineering design project will have no impact on the existing
energy infrastructure but the overall project’s goals are to modernize the Adak energy infrastructure with
available renewable resources and to lower the cost of energy to all consumers.
4.2.3 Existing Energy Market
Discuss existing energy use and its market. Discuss impacts your project may have on energy
customers.
The existing market is residential, light commercial, industrial, and government use. The fish processing
plant that has in the past produced energy offline will become a major customer. . The City has
implemented energy austerity measures as energy prices increase. With lower cost energy, the fish
processing plant will be able to expand to value added processing. The City will also be able to reduce the
austerity measures, thereby ensuring public facilities are in better condition as well as enable readiness for
emergency response. Existing residential and commercial customers currently generate off line or
implement more extreme conservation methods, detrimental to some, due to the high energy costs. These
customers use oil for heat due to current high electric energy costs. A shift in use is expected as energy
costs decrease with implementation of the proposed total project.
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4.3 Proposed System
Include information necessary to describe the system you are intending to develop and address
potential system design, land ownership, permits, and environmental issues.
4.3.1 System Design
Provide the following information for the proposed renewable energy system:
A description of renewable energy technology specific to project location
Optimum installed capacity
Anticipated capacity factor
Anticipated annual generation
Anticipated barriers
Basic integration concept
Delivery methods
The total renewable energy system is a hydro / wind generation system with pump storage on a new
updated energy grid with new diesel generators as backup. The estimated cost for the entire project is 72.4
million dollars. The estimated base capacity is 2 MW with an average capacity of 2.5 MW based on the
pattern of hydro and wind generation and the pattern of demand. Peak capacity is estimated at 8.5 MW.
The anticipated average annual generation is 17,520,000 kWh. The McMillen technical report identifies
two additional future hydroelectric power development projects with approximately 1 MW of additional
capacity. A more detailed analysis of the recommended system and its capital and operating cost is
provided in the McMillen Technical Report. The McMillen report executive summary is attached.
4.3.2 Land Ownership
Identify potential land ownership issues, including whether site owners have agreed to the project
or how you intend to approach land ownership and access issues.
The wind field area is owned by The Aleut Corporation. The corporation will lease the land to the City at
no cost. No problems are anticipated. The land ownership of the other components of the total project is
the City.
4.3.3 Permits
Provide the following information as it may relate to permitting and how you intend to address
outstanding permit issues.
List of applicable permits
Anticipated permitting timeline
Identify and discussion of potential barriers
For the proposed wind study component, we will apply for a FAA permit and if required, we will engage in
a USF&WS Section 7 Consultation. There are numerous permits required for the total renewable energy
project that are described in detail in the McMillen Technical Report (executive summary attached).
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4.3.4 Environmental
Address whether the following environmental and land use issues apply, and if so how they will
be addressed:
Threatened or endangered species
Habitat issues
Wetlands and other protected areas
Archaeological and historical resources
Land development constraints
Telecommunications interference
Aviation considerations
Visual, aesthetics impacts
Identify and discuss other potential barriers
For the proposed AEA wind study project, there are no known threatened, endangered species, or species of
concern in the wind field area. Wetlands and other protected areas are not within the wind field location.
The University of Alaska Anchorage is conducting ongoing archaeological and historic resource field work
and investigations. No known archaeological or historic resource sites are within the wind field study area.
The proposed AEA wind field study area is in an undeveloped area with no development constraints. The
telecommunications firm at Adak strongly endorses the subject project (see attached letter). We intend to
secure a FAA permit for the proposed wind study project. Similarly and if required, a USF&WS Section 7
Consultation will be conducted prior to the start of the proposed AEA wind study project. No visual or
aesthetics impact is anticipated for the proposed AEA project.
The implementation of the total hydro / wind energy project will address numerous environmental issues
including fish habitat. The full sized wind turbines will need to address avian issues. Due to its location
away from the airport and the city, other interference issues are not expected or will be minor. The
McMillen Technical Report provides details on potential environmental issues and permitting. The cost of
permitting is included in the total capital development cost presented herein.
4.4 Proposed New System Costs and Projected Revenues
(Total Estimated Costs and Projected Revenues)
The level of cost information provided will vary according to the phase of funding requested and
any previous work the applicant may have done on the project. Applicants must reference the
source of their cost data. For example: Applicants records or analysis, industry standards,
consultant or manufacturer’s estimates.
4.4.1 Project Development Cost
Provide detailed project cost information based on your current knowledge and understanding of
the project. Cost information should include the following:
Total anticipated project cost, and cost for this phase
Requested grant funding
Applicant matching funds – loans, capital contributions, in-kind
Identification of other funding sources
Projected capital cost of proposed renewable energy system
Projected development cost of proposed renewable energy system
This grant application is for $160,000 for a wind data collection, analysis, and preliminary engineering
design under AEA category Feasibility and Conceptual Design (McMillen cost estimate). The project will
provide the wind generation engineering to compliment the hydroelectric engineering completed by
McMillen. The combined reports will allow the City to proceed with financing, final design, and
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construction. The McMillen report was funded in part by the Economic Development Administration and
the City.
The total new energy system capital cost is estimated at $72.4 million. It includes replacement of the
current energy grid along with new back up diesel generators, the raising of two dam (Lake Bonnie Rose
and Lake DeMarie), and the construction of a penstock, hydro turbines, wind turbines, and transmission
lines. The McMillen Technical Report provides detailed hydroelectric engineering information about the
recommended total energy development (executive summary is attached).
4.4.2 Project Operating and Maintenance Costs
Include anticipated O&M costs for new facilities constructed and how these would be funded by
the applicant.
(Note: Operational costs are not eligible for grant funds however grantees are required to meet
ongoing reporting requirements for the purpose of reporting impacts of projects on the
communities they serve.)
The operation and maintenance costs for the proposed wind study equipment are negligible and are
included in the grant application budget.
The O&M costs of the total energy development project are estimated at $568,000 (McMillen). The costs
will be covered by energy system revenues.
4.4.3 Power Purchase/Sale
The power purchase/sale information should include the following:
Identification of potential power buyer(s)/customer(s)
Potential power purchase/sales price - at a minimum indicate a price range
Proposed rate of return from grant-funded project
Under the proposed AEA project, there will be no purchase or sale of power (Feasibility and Conceptual
Design).
Upon implementation of the total renewable energy project, residential, commercial, industrial, and
government are the target customers with an average demand of 2 MW in the initial years of operation.
The fish processing plant (Adak Cod Cooperative) demand is estimated at 1 MW. Future demand will
increase as the fish processing plant expands operations and new economic development projects are
completed.
4.4.4 Project Cost Worksheet
Complete the cost worksheet form which provides summary information that will be considered in
evaluating the project.
Please fill out the form provided below.
Renewable Energy Source
The Applicant should demonstrate that the renewable energy resource is available on a
sustainable basis.
Annual average resource availability. Estimated 4.5 MW (wind) Estimated 3 MW+ (hydro)
Unit depends on project type (e.g. windspeed, hydropower output, biomasss fuel)
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Existing Energy Generation and Usage
a) Basic configuration (if system is part of the Railbelt1 grid, leave this section blank)
i. Number of generators/boilers/other 1
ii. Rated capacity of generators/boilers/other 800 kWh
iii. Generator/boilers/other type Diesel
iv. Age of generators/boilers/other 31 plus years
v. Efficiency of generators/boilers/other 10.8 kWh per gallon of diesel (AEA FY12)
b) Annual O&M cost (if system is part of the Railbelt grid, leave this section blank)
i. Annual O&M cost for labor $2.5 million total (AEA FY12)
ii. Annual O&M cost for non-labor
c) Annual electricity production and fuel usage (fill in as applicable) (if system is part of the
Railbelt grid, leave this section blank)
i. Electricity [kWh] 3,012,311 (generated) 2,682,173 (sold) (AEA FY12)
ii. Fuel usage
Diesel [gal] 278,867 (AEA FY12)
Other
iii. Peak Load 700 kW (McMillen)
iv. Average Load 344 kW (AEA)
v. Minimum Load Estimated 150 kW (McMillen)
vi. Efficiency 10.8 kWh per gallon (AEA FY12)
vii. Future trends Less efficiency, increased outages, & higher cost
d) Annual heating fuel usage (fill in as applicable)
i. Diesel [gal or MMBtu] Not Available
ii. Electricity [kWh] Not Available
iii. Propane [gal or MMBtu] Not Available
iv. Coal [tons or MMBtu] none
v. Wood [cords, green tons, dry tons] none
vi. Other none
Proposed System Design Capacity and Fuel Usage
(Include any projections for continued use of non-renewable fuels)
a) Proposed renewable capacity
(Wind, Hydro, Biomass, other)
[kW or MMBtu/hr]
2 MW base (Wind/Hydro pump-storage) with a 2.5 MW
average depending on demand patterns and wind
patterns. Maximum capacity 8.5 MW with wind, hydro, and
backup diesel in full operation.
1 The Railbelt grid connects all customers of Chugach Electric Association, Homer Electric Association, Golden Valley Electric
Association, the City of Seward Electric Department, Matanuska Electric Association and Anchorage Municipal Light and Power.
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b) Proposed annual electricity or heat production (fill in as applicable)
i. Electricity [kWh] 17,520,000 kWh (McMillen)
ii. Heat [MMBtu] Not Available
c) Proposed annual fuel usage (fill in as applicable)
i. Propane [gal or MMBtu] 0
ii. Coal [tons or MMBtu] 0
iii. Wood or pellets [cords, green tons,
dry tons]
0
iv. Other 0
Project Cost
a) Total capital cost of new system $72.4 million (final design and construction)
[McMillen]
b) Development cost
c) Annual O&M cost of new system $568,000 (McMillen)
d) Annual fuel cost
Project Benefits
a) Amount of fuel displaced for
i. Electricity 1,358,139 FY12 (AEA FY12)
ii. Heat Not Available
iii. Transportation Not Available
b) Current price of displaced fuel $4.42 (AEA FY12)
c) Other economic benefits $2,762,638 (annual savings FY12 data), $67.0 million
(future value based on FY12), & $167.5 million (projected
future value)
d) Alaska public benefits $290,795 (PCE FY 12) & $7.1 million (future value based
on FY12 data)
Power Purchase/Sales Price
a) Price for power purchase/sale Power Purchase - Not Applicable (Adak renewable
energy) Adak local power sale $0.21 per kWh
Project Analysis
a) Basic Economic Analysis
Project benefit/cost ratio 2.35 to 1
Payback (years) 40
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4.4.5 Impact on Rates
Briefly explain what if any effect your project will have on electrical rates in the proposed benefit
area. If the is for a PCE eligible utility please discus what the expected impact would be for both
pre and post PCE.
The estimated direct benefit is the reduction of electric rates for all consumers with the new renewable
energy system plus the economic benefit of new jobs and income to Alaska residents.
The current energy rates average $1.24 per kWh. The current system does not have the generation
capacity to meet total residential, commercial, government, and industrial demand. Many residents,
commercial firms, and the seafood processing plant use standalone diesel to generate power to meet their
need because of the lack of capacity of the utility or because of the high cost of utility supplied power.
With implementation of the hydro / wind with pump storage renewable power project, the cost of power is
estimated at $0.21 per kWh.
The Adak utility is PCE eligible. The FY 2012 AEA PCE reports an annual disbursement of $290,795 or
a future value of $7,059,000 (average 8% compounded monthly for 40 years).
Using FY 2012 AEA data of annual kWh sold of 2,682,173 kWh at the average rate per KWh of $1.24
equals $3,325,895 in total power cost to the community on the grid. Many of the residential, industrial,
and commercial power users self-generated. With implementation of the proposed project using the FY
2012 kWh power sold data and the projected rate of $0.21 per kWh, the annual power cost to the
community is estimated at $563,256. The annual FY 2012 total power cost savings to the community with
the proposed hydro wind pump storage system is estimated at $2,762,638. The estimated future value of
the cost savings over the 40 year estimated life of the project is estimated at over $67.0 million. A more
realistic estimated future value of these cost savings is $167.5 million when self-generation, energy
demand, and other factors are taken into consideration. This estimate is more realistic because at a lower
cost per kWh, all consumers will use considerably more power and switch from self-generation to the
community grid, and major industrial users such as the seafood plant will switch from self-generation to
the grid.
SECTION 5– PROJECT BENEFIT
Explain the economic and public benefits of your project. Include direct cost savings,
and how the people of Alaska will benefit from the project.
The benefits information should include the following:
Potential annual fuel displacement (gallons and dollars) over the lifetime of the evaluated
renewable energy project
Anticipated annual revenue (based on i.e. a Proposed Power Purchase Agreement price,
RCA tariff, or cost based rate)
Potential additional annual incentives (i.e. tax credits)
Potential additional annual revenue streams (i.e. green tag sales or other renewable
energy subsidies or programs that might be available)
Discuss the non-economic public benefits to Alaskans over the lifetime of the project
Based on the AEA FY12 report, the annual fuel displacement is 278,867 gallons of fuel at $4.42 per
gallon or $1,232,600 in FY12. Under the existing generation system, the annual fuel displacement is
estimated at over 1.6 million gallons annually assuming 2 MW of usage. With implementation of the total
renewable energy project, the annual fuel displacement is estimated at over 1.3 million gallons annually
assuming 2 MW of usage over a conventional diesel system. The net savings in costs include buyback
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costs as well as all O&M costs including diesel backup are $3,333,000 per year over a conventional diesel
system. These figures are based on cost assumptions generated by the McMillen Hydroelectric
Feasibility Study Technical Report (Executive Summary is attached).
Because this energy is developed on and for Adak Island there is no proposed power purchase
agreements. Other additional incentives and revenues are unknown at this time.
Non-economic public benefits include the quality of living in which there is a reliable power system with
redundancy in generation sources. There is a savings of over $5.7 million in fossil fuels based on 1.3
million gallons per year with a conventional diesel system.
5.1.1 Public Benefit for Projects with Private Sector Sales
Projects that include sales of power to private sector businesses (sawmills, cruise ships, mines,
etc.), please provide a brief description of the direct and indirect public benefits derived from the
project as well as the private sector benefits and complete the table below. See section 1.6 in
the Request for Applications for more information.
Renewable energy resource availability (kWh per month) 1,460,000
Estimated sales (kWh) $17,520,000 (annual)
Revenue for displacing diesel generation for use at privet
sector businesses ($)
$1,839,600 / year (assuming fish
processing plant and other offline
users use 1 MW average)
Estimated sales (kWh) 8,760 kWh
Revenue for displacing diesel generation for use by the
Alaskan public ($)
$1,839,600 / year (assuming
public/residential use 1 MW
average)
SECTION 6– SUSTAINABILITY
Discuss your plan for operating the completed project so that it will be sustainable.
Include at a minimum:
Proposed business structure(s) and concepts that may be considered.
How you propose to finance the maintenance and operations for the life of the project
Identification of operational issues that could arise.
A description of operational costs including on-going support for any back-up or existing
systems that may be require to continue operation
Commitment to reporting the savings and benefits
The proposed business structure is a local utility. M&O will be financed out of cash flow from utility
revenues. The McMillen report does not identify any unusual operational issues of a hydro wind renewable
energy system. The system will employ proven technology. The existing diesel generation system will be
replaced. The new 2MW diesel system is solely design as a backup system. In a remote area such as
Adak, a backup system is required for community safety. The Adak utility will follow normal AEA
reporting.
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SECTION 7 – READINESS & COMPLIANCE WITH OTHER GRANTS
Discuss what you have done to prepare for this award and how quickly you intend to proceed
with work once your grant is approved.
Tell us what you may have already accomplished on the project to date and identify other grants
that may have been previously awarded for this project and the degree you have been able to
meet the requirements of previous grants.
The City of Adak has received financial assistance from the Economic Development Administration
(EDA) to conduct a hydroelectric feasibility analysis and preliminary engineering. These analyses have
been completed and the McMillen summary report is attached to this application. The scope of the
completed project included 1) site analyses; 2) geographical investigations; 3) geotechnical analyses; 4)
hydrologic analyses; 5) design criteria development and environmental considerations; 6) preliminary
engineering design of three (3) alternatives; 7) preliminary cost estimates; 8) technical report describing the
three alternatives and the recommended alternative for development; and 9) project coordination and meetings.
The above analyses were completed on September 18, 2013 at a cost of $139,446 by McMillen LLC, a
renewable energy engineering firm. A copy of the summary report by McMillen LLC is attached to this
application.
The EDA funded study originally focused on hydropower sources and integration with the City electrical and
water systems. Key findings from the Report (Executive Summary is attached) include the following:
1. There are two pure hydropower alternatives analyzed. Both hydropower alternatives are feasible from a
construction and integration standpoint. However, these alternatives are not large enough to generate
sufficient power to address the existing industrial demand and the City’s potential economic
development demand.
2. Before any future renewable energy implementation is undertaken, a necessary first step is to update
the existing electrical grid and replace the diesel power generation system.
3. Due to the limited running water supply in the watershed, ample storage at the two reservoirs in close
proximity, considerable vertical difference between reservoirs, ample wind resources nearby, and the
relatively low cost to create considerable usable storage in both reservoirs, a hydro / wind generation
system with pump storage alternative was analyzed and recommended as the best alternative.
Because this feasibility study was focused on hydropower at its inception, it has considerable detail on costs,
benefits and methods to achieve raising the dams, penstock, powerhouse, transmission, and other related tasks.
Use of wind power as a viable option was considered in the middle of the project. Sufficient wind data has not
been completed to sufficiently understand the wind resource and to develop a wind generation system
preliminary engineering design. Hence, the proposed AEA application is required to complete the total project
design.
The McMillen report recommends that a wind field data collection, analysis, and preliminary design project be
completed prior to the final design and construction of the total project.
The EDA grant is in final stages of the grant closeout process. The final technical report will be edited and
printed. The final financial reporting is the last step required to complete the EDA grant.
The City of Adak, upon Authority award of financial assistance for the proposed project, will immediately
initiate the competitive procurement of an engineering firm with the qualifications to provide the wind field
data collection services, analyses, and preliminary engineering design of the wind energy component of the
total project. The duration of the proposed project is eighteen months. The total duration of the proposed
project includes procurement, wind data collection, analyses, design, and final reporting is eighteen months.
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With completion of the proposed project and the work completed by McMillen LLC, the total project will
be ready for final design and construction.
SECTION 8 – LOCAL SUPPORT AND OPPOSITION
Discuss local support and opposition, known or anticipated, for the project. Include letters of
support or other documentation of local support from the community that would benefit from this
project. The Documentation of support must be dated within one year of the RFA date of July 2,
2013.
The proposed project is strongly supported by the residents, commercial firms, the Adak
Community Development Corporation (represents local business), the seafood processing plant
and The Aleut Corporation. There is no opposition to the project.
SECTION 9 – GRANT BUDGET
Tell us how much you are seeking in grant funds. Include any investments to date and funding
sources, how much is being requested in grant funds, and additional investments you will make
as an applicant.
Provide a narrative summary regarding funding source and your financial commitment to the
project
The proposed AEA project will be solely funded by a Round 7 AEA grant. The City has not
established a capital project budget for the FY 2015 (award date) and is unable to provide matching funds
at this time. Prior to the August 1, 2014 AEA award date, the City will provide a cash match as well as
in-kind services including grant administration and equipment for the installation of the wind data
collection.
The City was able to attract Adak Cod Cooperative to operate the former Icicle Seafood plant. To prevent
the bank sale of the equipment assets of Icicle Seafood, the City and the community development
corporation successfully purchased these assets at a cost of over $2.0 million. If the assets were sold to a
non-Adak entity, the sole major industrial plant was non-operable. The City of Adak is committed to
implementing the total renewable energy project to assure economic survival and to create an economic
growth center to the benefit of the region and the State.
The City commissioned the original hydroelectric feasibility study and is committed to moving this
project forward. The City has invested considerable time and expense as a match to the EDA grant. The
City will invest the time and expense to the AEA grant. Implementation of the total renewable energy
project will require a major investment of City resources.
Please provide a short narrative, and cost estimate, identifying the metering equipment, and its
related use to comply with the operations reporting requirement identified in Section 3.15 of the
Request for Applications.
The cost estimate is based on similar projects, the scope of the project, and adjusted to reflect costs related
to the Adak location.
The proposed project consists of a data collection phase, an analysis of the data, and preliminary
engineering design of the wind generation components including capital and operating cost estimates,
environmental issues, and permitting. The first step in the data collection phase is installation of the met
towers and anemometers as well as data loggers. The preferred wind field site is located on a ridge at
elevation 600 feet. A recommended configuration of the 30 meter tall tower includes anemometers
located at 10, 20, and 30 meters on the tower. Two additional 10 meter met towers with anemometers at
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the top will be erected. In addition to wind data, we will also measure pressure and temperature. The
data logger(s) will receive data from the 5 anemometers along with pressure and temperature
measurements taken at short intervals (on the order of every 5-10 minutes). Wind direction will be
measured as well as part of the anemometer measurement and it will be collected on a separate band of
the data logger. Based on comparative evaluation of similar projects, the cost for the three towers, 5
anemometers and pressure and temperature sensors along with a data logger(s) is approximately $65,000.
The cost of shipping and installation by a trained crew on a remote site (about ¼ mile and 200 feet above
a road) on a remote island is estimated at $15,000. City employees will check the system on a weekly
schedule and after storms to ensure all the equipment is working properly. A specific system is not priced
at this time because the City will issue a competitive procurement immediately following the grant award.
The competitive procurement will include equipment configuration specifications. The data from this
phase will be compiled and made available to AEA.
The data collected will to be checked and verified. Correlations and relationships between the different
sensors will be developed. Graphs and analysis of the wind directions and speeds will be determined.
The data will be analyzed in spreadsheets and specialized computer programs to determine the average
wind energy output for different turbine configurations in order to create preliminary design
recommendations. The pattern of wind energy availability will be determined to evaluate the integration
of a wind energy system with the hydropower configuration and the pump storage system. The estimated
cost is $80,000 for data analysis, preliminary engineering design of the wind generation components,
capital and operating cost estimates, environmental analyses, permitting, and other associated analyses.
The total estimated cost of the project is $160,000.
Applications MUST include a separate worksheet for each project phase that was identified in
section 2.3.2 of this application, (I. Reconnaissance, II. Feasibility and Conceptual Design, III.
Final Design and Permitting, and IV. Construction and Commissioning). Please use the tables
provided below to detail your proposed project’s budget. Be sure to use one table for each
phase of your project.
If you have any question regarding how to prepare these tables or if you need assistance preparing the
application please feel free to contact AEA at 907-771-3031 or by emailing the Grant Administrator,
Shawn Calfa, at scalfa@aidea.org.
Milestone or Task
Anticipated
Completion
Date
RE- Fund
Grant Funds
Grantee
Matching
Funds
Source of
Matching
Funds:
Cash/In-
kind/Federal
Grants/Other
State
Grants/Other
TOTALS
(List milestones based on
phase and type of project.
See Milestone list below. )
$ $ $
Feasibility & Preliminary
Design $ $ $
Grant Award 08/01/14 $0.00 $ $0.00
Develop Engineering Services
scope & RFQ for proposed
project
08/15/14 $0.00 $ in-kind $0.00
Award Engineering Services
Contract for the proposed
project
09/15/14 $0.00 $ in-kind $0.00
Erect wind data collection
equipment 11/15/14 $80,000 $ $80,000
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Progress reporting continuous $0.00 $ $
Monitor wind data collection 11/15/15 $2,000 $ $2,000
Data Analyses - Permitting
and environmental analysis 12/31/15 $35,000 $ $35,000
Preliminary engineering
design- cost estimates,
regulatory issues & feasibility
analysis
02/15/16 $43,000 $ $43,000
Final report &
recommendations 02/29/16 $0.00 $ $0.00
TOTALS $160,000 $ $160,000
Budget Categories:
Direct Labor & Benefits $ $ $
Travel & Per Diem $ $ $
Equipment $ $ $
Materials & Supplies $ $ $
Contractual Services $160,000 $ $160,000
Construction Services $ $ $
Other $ $ $
TOTALS $160,000 $ $160,000
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Project Milestones that should be addressed in Budget Proposal
Reconnaissance Feasibility Design and
Permitting Construction
1. Project scoping and
contractor solicitation.
2. Resource
identification and
analysis
3. Land use, permitting,
and environmental
analysis
4. Preliminary design
analysis and cost
5. Cost of energy and
market analysis
6. Simple economic
analysis
7. Final report and
recommendations
1. Project scoping
and contractor
solicitation.
2. Detailed energy
resource analysis
3. Identification of
land and regulatory
issues,
4. Permitting and
environmental
analysis
5. Detailed analysis
of existing and
future energy costs
and markets
6. Assessment of
alternatives
7. Conceptual design
analysis and cost
estimate
8. Detailed economic
and financial
analysis
9, Conceptual
business and
operations plans
10. Final report and
recommendations
1. Project scoping
and contractor
solicitation for
planning and
design
2. Permit
applications (as
needed)
3. Final
environmental
assessment and
mitigation plans
(as needed)
4. Resolution of
land use, right of
way issues
5. Permit approvals
6. Final system
design
7. Engineers cost
estimate
8. Updated
economic and
financial analysis
9. Negotiated
power sales
agreements with
approved rates
10. Final business
and operational
plan
1. Confirmation that all
design and feasibility
requirements are
complete.
2. Completion of bid
documents
3. Contractor/vendor
selection and award
4. Construction Phases
–
Each project will have
unique construction
phases, limitations,
and schedule
constraints which
should be identified
by the grantee
5. Integration and
testing
6. Decommissioning
old systems
7. Final Acceptance,
Commissioning and
Start-up
8. Operations
Reporting
ATTACHMENTS
City of Adak
1. City of Adak – Authorizing Resolution
2. Executive Summary of Adak Hydroelectric Feasibility and Preliminary
Engineering – McMillen LLC
3. Resume of the Adak City Manager – Layton J. Lockett
4. The Aleut Corporation Letter of Support
5. Adak Cod Cooperative Letter of Support
6. Adak Community Development Corporation Letter of Support
7. Adak Eagle Enterprises LLC
CITY OF ADAK
Hydroelectric Feasibility Study
Technical Report
Prepared For: City of Adak
Prepared By: McMillen, LLC
Funded in part by the Economic Development
Administration Grant#: EDA 07-79-06843
September 18, 2013
City of Adak Hydroelectric Feasibility Study
McMillen, LLC Page 2 Draft Technical Report
September 18, 2013
Executive Summary
The purpose of this report is to evaluate alternatives, prepare a preliminary engineering analysis, and
examine the feasibility of producing hydroelectric power from streams and reservoirs near Adak, Alaska
for the City of Adak. Special emphasis is given to projects that y involve Lake Bonnie Rose or Lake De
Marie because of their close proximity to and integration with other city interests. The Project includes
alternatives development as well as site analyses, geographical investigations, geotechnical analyses,
hydrologic analyses, and design criteria development. As part of design criteria development, integration
with the city's water supply and electrical grid as well as construction feasibility, and environmental and
permitting issues are given strong consideration. This report and its appendices include preliminary
engineering design for three alternatives, including preliminary cost estimates and the recommended
alternative for development.
Adak Island was originally developed by the U.S. Navy during World War II. In order to provide the base
and its personnel with power, a sizeable diesel generation system and electric distribution network was
developed on the island. The Navy continued operations on the island until 1997, when the base was closed
and the land and associated infrastructure were turned over to the Aleut Corporation and the City of Adak.
This changed the electrical demand from a military base with some 6,000 or more personnel to a small
Alaskan city of approximately 300-400 residents.
Electrical costs on the island are high due to the oversized generation system and a complete reliance on
diesel fuel which has been increasing in cost in recent years. In addition, much of the work on the electrical
grid dates back to the Cold War and World War II with components that are, in many cases, decades old,
inefficient, and nearing the end of their useful life.
Due to the high electrical costs and unreliability of the system, the Aleut Corporation, the City of Adak,
and Adak Community Development Corporation are not able to pursue the strategies outlined in the
Economic Adjustment Reuse Plan. The City’s over-riding need for this Project is to examine hydroelectric
development from Lake Bonnie Rose and Lake De Marie, as well as surrounding areas to evaluate whether
the associated cost savings provide a feasible project. From the feasible alternatives, a preliminary design
for three preferred alternatives are developed that can readily be integrated into design-build activities.
One of the most important considerations is how each alternative integrates with the City’s existing
electrical system. A field reconnaissance of the electrical system was conducted in April 2013 with results
discussed in this report and in Appendix D. The key finding is that the system is at or near the end of its
useful design life. There are numerous examples of switching stations and transformers showing signs of
wear with indications that they are about to fail. One transformer provides the sole route for power from
the generators to the electrical grid. Failure of this transformer will render the city without power until a
replacement transformer can be installed or standby generators will need to be used. Because of the
remoteness of the island, this may result in days or weeks without power. Based on recent communication
with the City, the power system recently has been exhibiting serious issues that confirm the April findings.
In a recent discussion with a City official, 30 outages have occurred in the first half of the month of
September (2013). The last remaining generator is not sized properly for a city of the size of Adak and is
inefficient, especially during low load periods. The combination of the above issues makes energy costs
higher than most surrounding cities and villages. Given Adak’s strong economic development potential
with excellent port and infrastructure, lower cost energy will create an economic growth center with major
benefits to the region and the State.
Because of the poor condition of the existing generators and electrical grid system, a reconnaissance level
cost estimate to replace the electrical grid and generators was completed and is presented in the report. The
City of Adak Hydroelectric Feasibility Study
McMillen, LLC Page 3 Draft Technical Report
September 18, 2013
cost for full replacement is estimated at just under 17.5 million dollars. This includes replacement of the
diesel generating system as well as all main feeder power lines, switches and transformers. Even without
hydropower installed, the replacement of this system saves at least 20% in diesel generating costs due to
greater efficiencies as a result of properly sizing the generating system and less line losses in the distribution
system. Having the electrical grid and generators replaced would also allow for maximum benefit from the
hydroelectric and wind power resources. The current diesel system consisting of one generator and largely
manual controls would make fully utilizing variable hydro inputs and working with partial demand loads
difficult and inefficient.
After field reconnaissance and geological and hydrological evaluation, three alternatives have been selected
as possible power generating systems for the city. Detail on how these three alternatives were selected is
given in Appendix D. The three alternatives are summarized briefly in the Table below:
Alternative/ Issue Alt. 1
Wind- Pump Storage
Alt. 2
Lake Bonnie Rose Dam to
PRV1
Alt. 3
Moffett Creek
Potential Powerhouse
Size
2 MW (Hydro)*
4.5 MW (Wind) 246 kW 513 kW
Potential Total Project
Cost $54.9 Mil $21.3 Mil $18.5 Mil
Basic Description
Installation of wind
turbines near Lake
DeMarie.
Raise/fix Lake
DeMarie and Lake
Bonnie Rose Dams to
provide 2,000 acre-
feet of useable storage
for each dam.
Install 2 Francis
turbines to pump water
to upper reservoir
during windy periods
to buffer system and
generate power when
wind is down.
Raise/fix Bonnie Rose
Dam to create 2,000
acre-feet of useable
storage.
Replace city water
main from Dam to
Pressure Reducing
Valve house one
(PRV-1) and use
turbine to convert
excess pressure to
electrical power.
Use excess water to
create more power at
2nd turbine near Mitt
Lake.
Build two
diversion dams on
the North and
South Forks of
Moffett Creek.
Combine water on
North Fork and
deliver down
penstock to
powerhouse at
head of valley.
Generate power
with new Turbine.
Requires 5 miles of
transmission line.
* This is the capacity of water turbines. Wind turbines will have a capacity of 4.5 MW and the average capacity of
this system depending on wind patterns will be close to 2.5 MW.
Alternative 1: Wind- Pump Storage
Alternative 1 takes advantage of two natural features that are available in the mountains southwest of Adak.
First, there are ridgelines with strong, reliable winds passing through the area. Second, there are two lakes,
Lake Bonnie Rose and Lake De Marie, in close proximity to one another with an elevation difference
between the lakes of approximately 500 feet. In order to utilize wind as an energy source, a buffer is
required in order to provide consistent power during low wind periods and utilize the excess energy
generated during peak wind periods. To provide this buffer, a pump storage system will be installed under
this alternative between Lake Bonnie Rose and Lake De Marie.
Each dam will be raised so that each reservoir will have a useable storage up to 2,000 acre-feet. Bonnie
Rose needs to be raised 6 feet at the spillway while the De Marie dam requires a 14.1 foot raise in height.
Both dam raises are designed to encapsulate the existing dams and needed repairs to both dams will occur
as part of the Dam raise. The design includes a new 42-inch diameter steel penstock that will be located
City of Adak Hydroelectric Feasibility Study
McMillen, LLC Page 4 Draft Technical Report
September 18, 2013
from the Lake Bonnie Rose dam and extend approximately 4,860 feet down the valley to the upstream end
of Lake De Marie and the new powerhouse. The 42-inch penstock will accommodate up to 60 cubic feet
per second (“cfs”) of water. Under normal operating conditions, the system flow is designed to be between
20 cfs and 60 cfs. Depending on configuration, power output from the turbines is estimated to be up to 2
megawatts (“MW”). Power output from the three wind turbines installed as part of this alternative can be
up to 4.5 MW. If all power sources are cumulated (i.e. the new diesel generators, the wind and the water
turbines when the reservoir is full) there is a potential peak power output of 8.5 MW but this generation
output can only be sustained for short time periods.
At Lake De Marie, a new powerhouse will be constructed to house the two Francis style turbine/pump units
as well as all of the necessary electrical and controls systems. The Francis style turbine generator units are
capable of being operated as a pump or turbine, allowing for the dual-use pump/storage as designed, without
the need for additional piping and equipment. This allows the units to pump water from Lake De Marie to
Lake Bonnie Rose when excess wind power is available and generate power by flowing water from Lake
Bonnie Rose to Lake De Marie when wind power is not adequate to meet the City’s electrical demands.
The ridge selected for the wind turbine farm is located east of Lake De Marie, directly north of Lake Bonnie
Rose. This ridge was selected due to its proximity to the proposed Lake De Marie powerhouse as well as
the generally exposed wind conditions. Three, 1.5 MW wind turbines were preliminarily selected for the
feasibility analysis of Alterative 1. This ensures that during optimal wind events, with turbines operating
at peak capacity, there is still power available for pumping flow from Lake De Marie to Lake Bonnie Rose
as well as meeting city power demands.
For wind turbine integration into the pump storage system, an approximately 0.35 mile long transmission
line will be required between the wind turbine farm and the Lake De Marie powerhouse. To transport the
power back to the city, a new transmission line will be required from the powerhouse to the south side of
town, adjacent to the small boat harbor. This transmission line is designed to be approximately 1.6 miles
long.
A preliminary analysis was performed in order to determine the approximate amount of power that may be
generated by Alternative 1 on an annual basis. Based on wind analysis summarized in report, there is a
strong likelihood that the wind turbines will operate over 85% of the time. During times when there is
adequate wind, a pump or pumps will buffer spikes in available wind energy and push water from Lake De
Marie to Lake Bonnie Rose. Wind power will provide power both for the pump(s) and to the power needs
of the city. During times of inadequate wind, water will flow from Lake Bonnie Rose to Lake De Marie
and the turbine units will provide electrical power in place of wind. Because the time period of adequate
wind is 85% of the time, the capacity of the pumping system may be smaller than the turbine system. The
exact configuration of turbine power vs. pump capacity is beyond the scope of the reconnaissance-level
evaluation. However, a well-configured combination of wind and water turbine power can be designed to
minimize the diesel fuel generation as a back-up to the system.
Based on the preliminary analysis and assumptions of the available wind for generation, it is estimated that
the system will be capable of generating a base rate of 2 MW of power. This will result in a potential annual
generation of approximately 17,500 mega-watt hour (MWh). Because wind is producing near peak capacity
for 40% of the time, the average output of this system is approximately 2.5 MW. However, in order to use
this level of power, there needs to be demand during times when the wind power is available. In order to
verify the wind resource available, a year-long, site-specific wind study will be required prior to final
design. The reason for a site-specific wind study is to understand the local turbulence and the predominant
direction of the wind in order to create the best wind turbine design.
City of Adak Hydroelectric Feasibility Study
McMillen, LLC Page 5 Draft Technical Report
September 18, 2013
Alternative 2: Bonnie Rose Dam to PRV-1 and Mitt Lake
Lake Bonnie Rose combines high elevation (738.6 feet) with storage and a watershed of nearly 2 square
miles to provide water to the reservoir and lake. This creates a high head water source to be used for
generating power. Alternative 2 utilizes this water source to develop powerhouses at PRV-1 and Mitt Lake.
Starting at Lake Bonnie Rose, a dam repair and raise will be completed to provide more reservoir storage.
The current dam has deficiencies in the main embankment as well as in spillway capacity. The raise of the
dam is similar to Alternative 1 except instead of a 42 inch penstock there will be a new 15-inch steel
penstock, approximately 7,600 feet long, that will be installed from Lake Bonnie Rose to the new
powerhouse located at the existing PRV-1 station. Currently, there is a steel pipeline that follows this exact
routing as the city’s water supply pipeline. This water supply pipeline is estimated to have been installed
during World War II, with minimal upgrades since, and is reaching the end of its useful life. One of the
key benefits of Alternative 2 is the replacement of this pipeline with a new, reliable penstock serving both
the city water supply and power production.
The new, larger penstock will allow the full flow of up to 6 cfs to be transported to the new powerhouse, at
the existing PRV-1 site, with minimal head loss. The new powerhouse will be located adjacent to the
existing PRV-1 station. The remainder of the flow not required by the City, approximately 5 cfs, will be
diverted into a new 15-inch steel penstock to convey the excess water from PRV-1 to the Mitt Lake
powerhouse. This exposed penstock will be approximately 2,200 feet long running alongside the existing
road. Both generators will be Pelton style with the one at PRV-1 producing 167 kW and the one at Mitt
Lake producing 79 kW. In order to integrate the two powerhouses and the City electrical network, a new
transmission line will need to be installed from the PRV-1 powerhouse, along the road, to the south side of
town near the small boat harbor. If it is assumed the powerhouses will have an operation time of 80%, the
system will be capable of generating approximately 1,725 MWh annually.
Alternative 3: Moffett Creek
Moffett Creek's watershed drains from a nearly 4,000-foot peak. This is the highest point on Adak Island
and nearly double the elevation of the mountains that drain to form Bonnie Rose or other creeks near Adak.
For this reason, Moffett Creek receives considerably more snow and stream flow peaks later in the summer
than the creeks supplying water to Bonnie Rose. Moffett Creek also has a greater unit discharge per basin
area than streams near Bonnie Rose. Because of the combination of high elevation and a good water supply,
Moffett Creek has potential for hydropower.
This alternative includes two diversion structures (small dams), a pipeline between diversions (15 inch;
1,050 feet long), and a penstock to a powerhouse located at the head of the valley. It also requires a
transmission line that is 4.1 miles long. The diversion structures will be small, approximately 10-15 feet
in height and 200-230 feet long. The diversions will be constructed with twin sheet pile walls with an
earthen fill between them. The intake portion of the diversion will be located at the approximate creek
bottom location and be controlled with a pair of slide gates. In high flow events, these gates will be capable
of allowing water to bypass the diversion structure and travel down the existing stream channel. The gate
arrangement will also allow the intake structure to function with the presence of surface ice as the intake
will draw off of the bottom of the water column instead of the surface.
The main, 28 inch, penstock delivering flow to the Moffett Creek powerhouse will extend from the main
division approximately 4,550 feet down the valley to the powerhouse. The Moffett Creek powerhouse will
be located just upstream of a natural stream gradient break point at an approximate elevation of 240 feet.
Because the stream upstream of the powerhouse consists of poor habitat that may not contain fish, the full
City of Adak Hydroelectric Feasibility Study
McMillen, LLC Page 6 Draft Technical Report
September 18, 2013
stream flow of the creek can probably be used for hydropower. Within the powerhouse, a Pelton style
turbine generator assembly will be located along with all the necessary electrical and controls equipment.
Based on the preliminary analysis of Alternative 3, it is estimated that the system can produce an average
of 300 kW. This estimate includes the variation in stream flows as well as down time for maintenance
related items. Maintenance related downtime is expected to be performed during low power demand
periods to minimize effects on generation. Based on these assumptions it is estimated that the Moffett
Creek powerhouse will generate approximately 2,628 MWh annually. However, since this configuration
is run of the river, considerable adjustments will be needed with this system as there is considerable stream
flow variability and very little storage.
Comparison of Alternatives
All three alternatives are feasible from a constructability standpoint. All three have key obstacle(s) that
need to be overcome before construction occurs. The major difference among the alternatives are each
systems overall capacity, pattern of power production, and cost both in terms of absolute cost and cost per
kilowatt hour. The table below summarizes some of these comparisons and contrasts.
Alternative/ Issue Alt. 1
Wind- Pump Storage
Alt. 2
Lake Bonnie Rose
Dam to PRV-1
Alt. 3
Moffett Creek
Potential Powerhouse
Size
2 MW (Hydro)
4.5 MW (Wind) 246 kW 513 kW
Potential Total Project
Construction Cost $54.9 Mil $21.3 Mil $18.5 Mil
Potential Annual O&M
Cost* $568,000 $1,863,940 $1,554,540
Cost per kilowatt hour
(expected use; 688
KW)**
$0.61 $0.72 $0.52
Cost per kilowatt hour
(base pump storage
capacity; 2 MW)**
$0.21 $0.48 $0.45
Biggest Obstacle(s)
In stream flow
reservation will need
to be adjusted.
Requires wind study.
High cost on absolute
basis
In stream flow
reservation will
need to be
adjusted.
High cost on kWh
basis
Land ownership has not
been determined.
Ordinance cleanup has
not been completed.
Stream flows extremely
variable making
generation to full
potential difficult.
Biggest selling point
Provides power for
both city and future
development.
Uses natural features
(wind and large lake
areas) to highest
advantage.)
Fixes Bonnie Rose
dam
Provides relatively
constant power to
grid which will
reduce generation
costs if tied into
system correctly.
Will improve city
water supply
reliability and fix
Bonnie Rose Dam.
Provides 1/2 MW of
Hydro power at
relatively low cost
City of Adak Hydroelectric Feasibility Study
McMillen, LLC Page 7 Draft Technical Report
September 18, 2013
*This potential O&M cost includes the estimated cost of diesel generation under each of the alternatives at the
expected use level (688 kW average use) which is double that of the current AEA estimate given (AEA, 2013a).
** The cost per (kilo-watt-hour (kWh) for expected (688 kW average use) and full use (2 MW average use) includes
cost for upgrading the electrical grid (~$17.5 million) and all financing charges assuming 3% interest and 40 year
buyback period along with estimated diesel costs and other operation and maintenance costs..
In order to better evaluate the alternatives, the alternatives need to be compared with leaving the system “as
is” versus replacing the power grid and generators as the first step towards hydropower. The Table below
starts with the existing system, adds replacement of the distribution grid diesel generation system and then
adds the incremental benefit, as well as costs, of adding each of the hydropower alternatives.
Description of Improvements Cost of Improvements
Total Cost per kWh including
construction and O&M Costs including
diesel generation costs
Existing System – No Action
No improvements $0
$1.24/kWh for Current Load (344 kW)**
$0.88/kWh for Expected Load (688 kW)**
NA* for Higher Loads ( 2, 2.5 MW)
New Diesel generation and power Grid (no hydro Alternatives
Replace existing generators with 3 new
Diesel generators. Replace electrical
grid with new wiring, switches,
transformers etc.
$17.5 million design and
construction cost
$0.66/kWh for Current Load (344 kW)
$0.50/kWh for Expected Load (688 kW)
$0.40/kwh for P/S Base Load (2 MW)
NA* for P/S Average Load (2.5 MW)
Alternative 1: Pump Storage between Bonnie Rose and DeMarie with Wind
Replace diesel generators and
distribution grid. Raise Dams, install
Penstock, water and wind turbines as
well as power house and lines.
$17.5 million for new power
grid and diesel generation
$54.9 million for Design and
Construction of Alternative
Total Cost: $72.4 million
$1.23/kWh for Current Load (344 kW)
$0.61/kWh for Expected Load (688 kW)
$0.21/kwh for P/S Base Load (2 MW)
$0.17/kwh for P/S Average Load (2.5 MW)
Alternative 2: Lake Bonnie Rose to PRV-1 to Mitt Lake
Replacement of electrical grid and
diesel generation system. Raise Bonnie
Rose Dam. Construct 2 penstocks, 2
power houses and transmission lines.
$17.5 million for new power
grid and diesel generation
$21.3 million for Design and
Construction of Alternative
Total Cost: $38.8 million
$0.83/kWh for Current Load (344 kW)
$0.72/kWh for Expected Load (688 kW)
$0.48/kwh for P/S Base Load (2 MW)
NA* for P/S Average Load (2.5 MW)
Alternative 3 : Moffett Creek
Replacement of electrical grid and
diesel generation system. Design and
construction of two diversion dams, a
diversion pipeline, penstock and
powerhouse, as well as transmission
line for Moffett Creek to main
distribution grid.
$17.5 million for new power
grid and diesel generation
$18.5 million for Design and
Construction of Alternative
Total Cost: $36.0 million
$0.70/kWh for Current Load (344 kW)
$0.52/kWh for Expected Load (688 kW)
$0.40/kwh for P/S Base Load (2 MW)
NA* for P/S Average Load (2.5 MW)
*NA – Not applicable because system cannot meet these load demands.
** The $1.24 per kWh is based on recent pricing from TDX for Adak. The $0.88/kWh is based on adding non fuel
costs to a $0.41/kWh fuel cost from AEA report and then adding a $0.11/kWh cost to reflect a recent cost increase.
City of Adak Hydroelectric Feasibility Study
McMillen, LLC Page 8 Draft Technical Report
September 18, 2013
Each of the actions has a cost for construction of the improvements as well as the total cost that factors in
Operation and Maintenance and the cost of providing diesel fuel. For comparison, according to AEA
statistics, the cost per kWh in 2012 was $1.13/kWh for residential users. Based on a recent personal
communication, this rate is to be raised to $1.24 per kWh. Also according to city sources, rates vary from
$1.09 per kWh to $1.78 per kWh based on type and amount of use. According to the AEA report, the fuel
related generation cost is $0.41 per kWh. Operation and maintenance and other non-fuel related costs for
the current usage of 344 kW are $2,170,496 based on data from the 2013 AEA report. This non-fuel cost
is used as a base figure for the expected load (688 kW) as well. When the grid and diesel generators are
replaced, the maintenance and operation costs, besides diesel costs, are reduced to 200,000 dollars due to
the fact that new equipment is installed that is properly sized to the system. This greatly reduces
maintenance costs.
In evaluating the costs per kWh, there is value to replacing the electrical grid and diesel generators no matter
what the expected load may be. Compared with no action, there are consistent savings at all loads. For
hydropower, the results show that Alternative 1 is a cost saving alternative if there are loads approaching 2
MW. Alternative 1 has a high fixed capital cost but its operating expenses are largely the same up to 2 MW
because power can be generated from wind or hydropower without using diesel. Even at the average load
of 2.5 MW, diesel will not need to be used because power will come from optimum use of wind and water
turbine power.
If Adak is expecting to attract economic growth, having the pump storage system (Alternative 1) will nearly
halve the cost to generate power on a per kWh basis as compared to a replaced diesel system. Beyond
potential new businesses, current base businesses such as the fish processing plant, which is currently
closed, are likely to come on line and use power under these costs. The fish processing plant in the past,
under a prior owner, used over a MW of power during peak periods seasonally but generated off line.
Both Alternative 2 and Alternative 3 show no cost savings as compared with just replacing the diesel
generator and grid alone, however it will move the City away from fossil fuels to more renewable sources.
Conclusions and Recommendations
Based on the cost estimates, full replacement of the diesel generation and electrical grid system is warranted.
Over a 40 year buy back period, the cost to generate per kWh is lower ($1.24 vs. $0.66 per kWh at the
estimated current load and $0.88 vs. $0.50 per kWh at the expected load. Furthermore, the current system
is limited to less than 800 kW generation capacity unless new generators and other electrical equipment are
added.
The current energy grid and generation system is outdated and there is considerable deferred maintenance.
Since the savings are immediate, as well as the advantages of having a more reliable power grid, this power
and generation system is recommended to be replaced as soon as possible. Even with loan payback, the
reduced costs in diesel generation and maintenance show a favorable economic gain over a 40 year payback
period.
After reviewing the cost per kWh for each alternative, only Alternative 1 (wind pump storage), is
recommended for lower energy costs that may lead to economic development potential. This alternative
gives low cost power especially at full 2 MW demand, allowing for economic growth and stability in power
costs. Even at expected load (688 kW) the cost of pump storage per kWh is comparable with grid and
diesel generator replacement only. As the electrical demand grows toward full capacity, the pump storage
becomes more economical.
City of Adak Hydroelectric Feasibility Study
McMillen, LLC Page 9 Draft Technical Report
September 18, 2013
With any major wind energy project, a site specific study is strongly recommended. The study normally
will collect at least one year of data (REAP, 2011). It is recommended that funds be acquired to start this
study as soon as possible. The study will determine which type of turbine system and configuration will
best capture wind energy and work under the unique wind conditions that will be found on the ridges near
Lake DeMarie.
Alternative 1 can be broken down into sub steps with some parts being completed while the wind study is
ongoing. The dam raises, penstock, and powerhouse installations will be designed and constructed
immediately with the wind turbines being constructed the following year.
The following plan of action is recommended:
Description of Action Cost Schedule (with assumed November 1st,
start date
Step 1: Replace Power Grid and Diesel Generators
Replace existing generators with 3 new
Diesel generators. Replace electrical
grid with new wiring, switches,
transformers etc.
$17.5 million design and
construction cost
Design: November 1, 2013 – April 31,
2014
Construction: June 1, 2014 – November
15, 2014
Step 2: Complete Alternative 1 – Wind / Pump Storage
2.a Wind Study $200,000 November 1, 2013 – December 15, 2014
2.b Raise Bonnie Rose Dam, DeMarie
Dam, build power house and Penstock
along with road building and trail
improvements.
$26.7 million design and
construction cost
Design/Permitting: November 1, 2013 –
April 31, 2014
Construction: May 15, 2014 – November
15, 2014
2.c Design/Install Wind Turbines $28.2 million design and
construction cost.
Design: December 15, 2014 – April 31,
2015
Construction: June 1, 2015 – November
15, 2015
Please note this is an aggressive schedule that assumes funds can be procured quickly. The schedule may
need to be adjusted based on funding sources’ timeframes or unforeseen permitting issues.