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Home My WebLink AboutJackRiverFeasStudyGrantApp_NoResumesNoRecon GRANT APPLICATION – FOR – JACK RIVER HYDROELECTRIC PROJECT FEASIBILITY STUDY SEPTEMBER 2013 – SUBMITTED TO – ALASKA ENERGY AUTHORITY RENEWABLE ENERGY GRANT PROGRAM – ROUND VII RFA #AEA-14-006 – SUBMITTED BY – NATIVE VILLAGE OF CANTWELL P.O. BOX 94 CANTWELL, AK 99729 Renewable Energy Fund Round VII Grant Application - Standard Form AEA 2014-006 Grant Application Page 2 of 21 7/1/2013 SECTION 1 – APPLICANT INFORMATION Name (Name of utility, IPP, or government entity submitting proposal) NATIVE VILLAGE OF CANTWELL (NVC) Type of Entity: LOCAL GOVERNMENT (TRIBAL GOVERNMENT) Fiscal Year End SEPTEMBER 30 Tax ID # 92-0046670 Tax Status: For-profit X Non-profit Government ( check one) Date of last financial statement audit: None. NVC is not required to undergo financial audits. Mailing Address P.O. BOX 94 CANTWELL, AK 99729 Physical Address MP 133.4 DENALI HWY CANTWELL, AK 99729 Telephone 907-768-2591 Fax 907-768-1111 Email HALLVC@MTAONLINE.NET 1.1 APPLICANT POINT OF CONTACT / GRANTS MANAGER Name ARNEL HERNANDEZ GORDON CARLSON Title VILLAGE ADMINISTRATOR HYDRO PROJECT MANAGER Mailing Address P.O. BOX 94 CANTWELL, AK 99729 Telephone 907-768-2591 Fax 907-768-1111 Email HALLVC@MTAONLINE.NET 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 A local government, or x 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. Renewable Energy Fund Round VII Grant Application - Standard Form AEA 2014-006 Grant Application Page 3 of 21 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. JACK RIVER HYDROELECTRIC PROJECT FEASIBILITY STUDY 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. 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. The project is located on Jack River approximately 3 miles southeast of Cantwell (approximately MP 209.5 Parks Hwy). This project is located at approximately 63d 21’N, 148d 49’ W. The project is located within T18S R6W (Fairbanks Meridian). The project area is shown on USGS quad map Healy B4. See project maps in the Reconnaissance Study included in Appendix F. 2.2.2 Community benefiting – Name(s) of the community or communities that will be the beneficiaries of the project. Communities that will benefit from this project include Cantwell, Carlo Creek, and McKinley Village. Also, communities on the railbelt energy grid will benefit from the project - primarily communities served by Golden Valley Electric Association (GVEA) from Cantwell north. 2.3 PROJECT TYPE Put X in boxes as appropriate 2.3.1 Renewable Resource Type Wind Biomass or Biofuels (excluding heat-only) X 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 Renewable Energy Fund Round VII Grant Application - Standard Form AEA 2014-006 Grant Application Page 4 of 21 7/1/2013 2.4 PROJECT DESCRIPTION Provide a brief one paragraph description of the proposed project. The proposed project is a feasibility study of a 3 MW storage hydroelectric project on Jack River near Cantwell. The hydro project’s output would be sold to the local electric utility, Golden Valley Electric Association, Inc. (GVEA) to reduce GVEA’s reliance on diesel and naptha for generation. Other project configurations with installed capacity ranging from 1.6 to 7.3 MW were identified in the 2013 Reconnaissance Study and may be considered in the feasibility study. 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.) This project is expected to lower GVEA’s fuel expense, providing a public benefit to GVEA ratepayers, increasing the fuel diversity and sustainability of the region’s energy supplies, and improving air quality in Fairbanks by reducing local power plant emissions. Cantwell, Carlo Creek, and McKinley Village are currently served by GVEA via the power transmission line between MEA and GVEA (Alaska Intertie System), and have no local backup generation. Outage frequency and duration is approximately 4 to 8 times higher in these communities than for GVEA members at large1. By providing a local source of electricity, the project will help to improve electric reliability in these communities during outages on the Intertie System. In the past, damage to the transmission line from an avalanche caused a two day outage in the dead of the winter; temperatures without wind chill can be –50 F in this area. High winds are constant in the Cantwell area so the wind chill is an important factor. These transmission failures can last for several days or weeks in the worst case, and pose a grave hazard to the local people and infrastructure. In previous years, Cantwell has also experienced outages due to lightening strikes. If lightening damages insulators or other infrastructure, these outages can last a day or more. Operating and maintaining this project will provide local employment. Also, the project trails can provide improved access to the Jack River valley, providing new hiking or hunting destinations that will help bolster the local tourism and hospitality industries. 1. Jack River Hydroelectric Reconnaissance Study, Polarconsult Alaska, Inc., March 2013, Page 6. 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 proposed cost of the feasibility study is $225,000. The NVC requests $213,750 in grant funds and is providing $11,250 in match from its own resources for the study. The NVC will provide in-kind labor and equipment support for the project. We have done this on the recently completed Jack River Reconnaissance Study by helping out with the stream gauge and field work where appropriate. Renewable Energy Fund Round VII Grant Application - Standard Form AEA 2014-006 Grant Application Page 5 of 21 7/1/2013 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 $213,750 2.7.2 Cash match to be provided $ 0 2.7.3 In-kind match to be provided $ 11,250 2.7.4 Other grant funds to be provided $ 0 2.7.5 Other grant applications not yet approved $ 0 2.7.6 Total Grant Costs (sum of 2.7.1 through 2.7.4) $225,000 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. $31.5 million 2.7.8 Additional Performance Monitoring Equipment not covered by the project but required for the Grant Only applicable to construction phase projects. Not applicable (feasibility stage) 2.7.9 Estimated Direct Financial Benefit (Savings) $3.21 million annually (cost of displaced fuel) 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. No quantifiable financial benefits, see narrative. The reconnaissance study completed in 2013 evaluated several different project configurations with a wide range of costs and project benefits. More study is necessary to determine which configuration is best and the specific costs and benefits of the selected development configuration. 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. Mr. Gordon Carlson of Cantwell will be the project manager for the reconnaissance study. He successfully managed the reconnaissance study completed earlier this year at Jack River. The Native Village of Cantwell has been working with Polarconsult Alaska, Inc. for several years on the study of Jack River. If funding is secured to do a feasibility study for the Jack River Hydro project, the village intends to hire Polarconsult Alaska, Inc. to perform this study. Qualifications of Polarconsult personnel to be assigned to this project are attached to this proposal. Renewable Energy Fund Round VII Grant Application - Standard Form AEA 2014-006 Grant Application Page 6 of 21 7/1/2013 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. Schedule for Feasibility Study Milestones Tasks Start Date End Date Grant Agreement with AEA Sign Grant Agreement July 2014 -- 1. Project Management, Scoping and Contractor Solicitation Sign Contract Aug. 2014 -- 2. Detailed Energy Resource Analysis Hydrology Study Sept. 2014 Sept. 2015 Geotechnical Studies Sept. 2014 Sept. 2015 3. Identify land and Regulatory Issues Land / Fish / Wildlife Study June 2015 Oct. 2015 4. Permitting and Environmental Analysis Jan. 2015 July 2015 5. Market Analysis Jan. 2015 July 2015 6. Assessment of Alternatives Sept. 2015 Dec. 2015 7. Conceptual Design Analysis and Cost Estimate Nov. 2015 Feb. 2016 8. Detailed Economic and Financial Analysis Nov. 2015 Feb. 2016 9. Business and Operations Plans Oct. 2015 Jan. 2016 10. Draft Final Report Jan. 2016 Mar. 2016 11. Final Report Address comments Mar. 2016 May 2016 Schedule is based on timely signing of grant agreement. Tasks are based on months from grant agreement signing. An estimated overall project development schedule is provided below. Reconnaissance Study: Completed March 2013 Feasibility Study: 2014 to 2016 Design and Permitting: 2017 to 2019 Construction: 2020 to 2021 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 NVC will make all of its resources available to successfully complete this project. Arnel Hernandez, the village administrator, has already spent many years to secure funding for the Jack River Reconnaissance Study, completed earlier this year. The village has also used and will continue to use its office, computer, telephone, fax and other office equipment until this project is accomplished. Village members will volunteer their time and experience (experience as an electrician, construction company owner, etc...) until this project is completed. The NVC has worked successfully with Polarconsult Alaska, Inc. for several years in efforts to study Jack River’s hydropower potential, including hiring Polarconsult to perform the Renewable Energy Fund Round VII Grant Application - Standard Form AEA 2014-006 Grant Application Page 7 of 21 7/1/2013 reconnaissance study completed earlier this year. The NVC intends to hire Polarconsult to perform this feasibility study. 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 Village Administrator, Mr. Arnel Hernandez, will be the liaison between the village, Polarconsult, and the Alaska Energy Authority for the duration of this project. The village will be submitting quarterly reports to the Alaska Energy Authority until this project is completed. Mr. Hernandez successfully served in this capacity for the Jack River Reconnaissance Study. 3.5 Project Risk Discuss potential problems and how you would address them. This project is still in the study phase and as such there is limited risk associated with the project at the current level of study. In the event the studies conclude the project is not feasible, the village will not pursue the project and there is no risk. Various problems may be encountered in the course of studies and field work for the project. Such problems will be addressed by hiring qualified and experienced individuals to perform these studies and work. Such individuals are capable of recognizing problems early on and properly handling them when they do occur. One potential problem is not getting funding from the State of Alaska to do a feasibility study for the Jack River Hydro project. If this should occur the village will continue to look for funding through the State and the Federal Government to do this study. Another potential problem that the village might encounter, after doing a feasibility study and it is determined the Jack River Hydro project is viable and cost effective, is lack of funding to start construction. This project will provide the Alaska Intertie System with many benefits, so the village is encouraged to continue looking for funding through the State and the Federal Government as needed to accomplish this project. 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. Jack River drains approximately 140 square miles of the Talkeetna Mountains south of Cantwell. There are at least three potential dam sites as the river emerges from the mountains approximately three miles southeast of Cantwell. A dam at any of these sites would provide for a significant amount of storage, likely meeting the current year-round local energy needs of Cantwell and surrounding areas (typically 4,000 to 5,000 MWh), as well as providing significant Renewable Energy Fund Round VII Grant Application - Standard Form AEA 2014-006 Grant Application Page 8 of 21 7/1/2013 additional energy that would be sent via the Alaska Intertie System to other railbelt communities. The various project development options considered in the reconnaissance study have projected energy generation potential of 7,100 to 37,300 MWh annually. This application is based on a 150-foot tall dam at dam site 1, with 3.0 MW of installed capacity and annual generating capacity of 12,800,000 kWh. Hydropower is a mature technology with numerous successful installations throughout Alaska. The design life of this project would be 50 years. 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. GVEA currently serves the village of Cantwell and the surrounding area (Carlo Creek and McKinley Village) via a three-phase overhead distribution system. Power is provided through a tap off the Alaska Intertie System. Cantwell and the surrounding area has no local electrical generation capability. When floods, lightening, wind, or avalanches cause an outage on the Intertie, Cantwell experiences an outage until the intertie is reenergized. Cantwell’s outage rate is 4 to 8 times higher than for GVEA at large. The combined load in Cantwell and surrounding areas is approximately 500 to 1,000 kW during the summer months and 250 to 600 kW in the winter months. 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. Cantwell and surrounding areas receive electricity from the Alaska Intertie System. This electricity is generated from several energy sources, including coal, naptha, fuel oil, natural gas, hydropower, and wind. This project will provide more renewable hydropower to the intertie system and the railbelt communities. Hydropower is more stably priced and less costly than many of the fossil-fuel derived energy sources currently used by GVEA. In particular, this project will help to reduce the amount of fuel oil and naptha burned by GVEA in Fairbanks and North Pole. The cost of these energy resources on the GVEA system has recently ranged from approximately 20 to 90 cents per kWh. 4.2.3 Existing Energy Market Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. Energy costs for the communities served by GVEA are high due to the high costs of fuel. Lower electric costs are expected to increase demand from existing customers, and will encourage new business opportunities in Cantwell and surrounding communities. 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. Renewable Energy Fund Round VII Grant Application - Standard Form AEA 2014-006 Grant Application Page 9 of 21 7/1/2013 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 specific project design would depend on the preferred project configuration that would be determined by the proposed feasibility study. This application assumes development of the most favorable configuration identified in the reconnaissance study, a 3 MW storage facility constructed at the upper of the three dam sites. This configuration would feature the following major components: 1. A 150-foot tall gravity dam located at river mile 15.13. This dam could be rock fill, roller- compacted concrete, or of a different type. 2. A reservoir behind the dam providing 12,200 acre-feet of storage. This would be sufficient to provide for backup power to Cantwell and surrounding areas. 3. A 2,400 foot long penstock to increase the available project head. The penstock would likely be buried where possible. 4. A powerhouse fitted with 3.0 MW of either Kaplan or Francis turbines. 5. Synchronous generators to allow black-start capability to provide electricity for Cantwell and surrounding areas during intertie outages. These are also expected to be easier to integrate with the intertie and substation operations. 6. A power line extension to the existing three-phase overhead distribution system along the Denali Highway. 7. Access roads and trails as needed for project construction, operation, and maintenance. The project’s installed capacity is estimated at approximately 3 MW. The capacity factor is estimated to be 49%. Annual energy generation is estimated at 12,800 MWh annually. Observations prior to and during the reconnaissance study indicate that a hydroproject at Jack River is likely technically feasible. The most important remaining unknowns for the project pertain to project benefits and costs, and the project’s economic feasibility. Critical unknowns for this project are the hydrology, fish passage or mitigation requirements, and geotechnical conditions. Stream flow in 2012 (during the reconnaissance study hydrology campaign) was unusually high in spring and summer, likely stemming from the above average snows of the 2011-12 winter. More hydrology data is needed to better characterize Jack River and develop higher-confidence estimates of average hydrology and long-term energy generation potential. More and site specific geotechnical information is needed for the selected dam site to better refine estimated costs and preliminary design of a dam on Jack River. Analysis of bed load is appropriate to develop estimates of the useful life of a reservoir on Jack River. All of these factors will influence the project’s economic feasibility. Renewable Energy Fund Round VII Grant Application - Standard Form AEA 2014-006 Grant Application Page 10 of 21 7/1/2013 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. Land where the project would be located is owned by the federal government, but has been selected by Ahtna, Inc. or the State of Alaska. Most of the affected project lands have been interim conveyed (IC’d) to Ahtna or tentative approved (TA’d) to the State of Alaska, however sections 19 and 20 of T18S R6W (which include the dam site) have only been selected by Ahtna but not yet IC’d. Project configurations using dam site 1 and reservoir elevations above approximately 2,615 feet would extend the reservoir onto unselected federal land. Ahtna, Inc. is aware of this project, issued land use permits to support reconnaissance studies, and has provided a letter of support for the project (attached). 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 The project is expected to require the following major permits for construction. 1. The project would fall under FERC jurisdiction if (1) permitting commences before lands are conveyed out of federal ownership, (2) the reservoir exceeds approximately 2,615 foot elevation, in which case it will extend upstream onto unselected federal land, (3) a fishery or other economic resource exists that is significant to interstate commerce, or (4) Jack River is considered navigable. If none of these criteria apply, the project would be non-jurisdictional. 2. Land authorizations from Ahtna, Inc., the State of Alaska, and potentially private land owners in the project vicinity. 3. Fish Habitat Permit. Jack River is not anadromous fish habitat, but some resident fish species may be present. 4. U.S. Department of Army permits for work in waters of the U.S. including wetlands. 5. Alaska Department of Natural Resources Water Rights. 6. RCA authorization. A Utility Certificate from the Regulatory Commission of Alaska may be required depending on how the Native Village of Cantwell proceeds with the project. 7. Applicable development permit(s) from the Denali Borough. 8. Dam Safety permit from the Alaska Department of Natural Resources (if the project falls under FERC jurisdiction, then this permit is not required). Once a decision to develop the project is made (at the conclusion of the Feasibility Study), permits are estimated to take 1.5 to 3 years to obtain. This estimate will be refined once the project resource issues, configuration and land status is refined. The longer timeframe would correlate with more challenging resource issues or FERC jurisdiction for the project due to the increased level of study required. No permitting barriers are known at this time. Renewable Energy Fund Round VII Grant Application - Standard Form AEA 2014-006 Grant Application Page 11 of 21 7/1/2013 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 The following assessment is based on currently available information. Threatened or endangered species: None known. Habitat issues: Reservoirs would flood approximately 330 acres of mixed upland / wetland habitat. Fisheries Issues: The project is upstream of anadromous fish habitat. Resident fish are likely present in the project reach. The project would need to provide for fish passage around the dam or provide mitigation acceptable to ADFG. Fisheries surveys would be needed during the feasibility phase of study to determine the presence, extent, and relative abundance of resident fish. Wetlands and other protected areas: All project configurations would fill some wetlands (dam footprint, access roads, etc.) and flood other wetlands (reservoir, tailrace, etc.) Archeological resources: None known. Land development constraints: None known. Telecommunications Interference: None known. Aviation considerations: None known. Visual, aesthetics impacts: Some dam configurations may be briefly visible to alert travelers from portions of the Denali or Parks highways. Most visual or aesthetic impacts are limited to vantage points from the air, remote terrain around Cantwell, or the immediate vicinity of the project. Other potential barriers: the Jack River valley receives some modest recreational use that could be affected depending on the selected project configuration. Improved access to the area would likely open up comparable access to comparable areas at least partially mitigating these concerns. 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 Renewable Energy Fund Round VII Grant Application - Standard Form AEA 2014-006 Grant Application Page 12 of 21 7/1/2013  Projected capital cost of proposed renewable energy system  Projected development cost of proposed renewable energy system Estimated Total Project Cost The estimated total installed cost of the project is $31.5 million. Total preconstruction cost is estimated at $2.3 million. Cost information is from the 2013 Reconnaissance Study for this site and configuration. Cost for this Phase, Requested Grant Funding, and Matching Funds The cost of the feasibility study is $225,000. The NVC requests $213,750 in grant funds and is providing $11,250 in match for the study. The NVC will provide in-kind labor and equipment support for the project. We did this for the recently completed reconnaissance study at Jack River with project administration and assisting with the stream gauge and field work where appropriate. Funding Sources and Financing Plan Should the project be viable, NVC expects to apply for future grants to complete pre-development activities (feasibility study, design, and permitting). Construction costs would be funded through a combination of grants and/or private-sector finance such as loans or bonding. Construction finance would depend on the project economics, business model adopted for the project, and related factors that are not known at this time due to the preliminary status of this project. 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 project concept is not sufficiently developed at this point in time to provide detailed O&M cost estimates. No factors are currently known that would result in abnormally high or low O&M costs compared to typical costs for small to medium-sized storage hydroelectric projects in Alaska. 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 Sale of power from a Jack River project could take a number of forms. This application assumes a power sales contract with GVEA for the project’s full output with a sale price equal to GVEA’s system average avoided cost of energy plus a capacity value. The avoided cost rate varies quarterly from approximately $0.10 to 0.12 per kWh. 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 Fund Round VII Grant Application - Standard Form AEA 2014-006 Grant Application Page 13 of 21 7/1/2013 Renewable Energy Source Jack River Hydroelectric Project The Applicant should demonstrate that the renewable energy resource is available on a sustainable basis. Annual average resource availability. Estimated capacity factor of 0.49 (49%) Unit depends on project type (e.g. windspeed, hydropower output, biomasss fuel) 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 Railbelt ii. Rated capacity of generators/boilers/other Railbelt iii. Generator/boilers/other type Railbelt iv. Age of generators/boilers/other Railbelt v. Efficiency of generators/boilers/other Railbelt b) Annual O&M cost (if system is part of the Railbelt grid, leave this section blank) i. Annual O&M cost for labor Railbelt ii. Annual O&M cost for non-labor Railbelt 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] Railbelt ii. Fuel usage Diesel [gal] Railbelt Other Railbelt iii. Peak Load Railbelt iv. Average Load Railbelt v. Minimum Load Railbelt vi. Efficiency Railbelt vii. Future trends Railbelt d) Annual heating fuel usage (fill in as applicable) i. Diesel [gal or MMBtu] -- ii. Electricity [kWh] -- iii. Propane [gal or MMBtu] -- iv. Coal [tons or MMBtu] -- v. Wood [cords, green tons, dry tons] -- vi. Other -- 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. Renewable Energy Fund Round VII Grant Application - Standard Form AEA 2014-006 Grant Application Page 14 of 21 7/1/2013 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] 3,000 kW b) Proposed annual electricity or heat production (fill in as applicable) i. Electricity [kWh] Approximately 12,800,000 kWh annually ii. Heat [MMBtu] -- c) Proposed annual fuel usage (fill in as applicable) i. Propane [gal or MMBtu] -- ii. Coal [tons or MMBtu] -- iii. Wood or pellets [cords, green tons, dry tons] -- iv. Other ~985,000 gallons of fuel oil or equivalents annually. (Assumes GVEA displaces fuel oil for 100% of hydro project output at generation efficiency of 13 kWh/gallon) Project Cost a) Total capital cost of new system $31.5 million b) Development cost $2.3 million c) Annual O&M cost of new system $150,000 d) Annual fuel cost $0 Project Benefits a) Amount of fuel displaced for i. Electricity ~49,250,000 gallons of fuel oil and equivalents (over 50 year life) ii. Heat -- iii. Transportation -- b) Current price of displaced fuel $3.26 per gallon (ISER 2013) c) Other economic benefits -- d) Alaska public benefits $3.21 million annually in avoided fuel cost. (ISER 2013) Power Purchase/Sales Price a) Price for power purchase/sale $0.121 per kWh (2013 AEA/ISER Price Model + $0.015/kWh for capacity value) Renewable Energy Fund Round VII Grant Application - Standard Form AEA 2014-006 Grant Application Page 15 of 21 7/1/2013 Project Analysis a) Basic Economic Analysis Project benefit/cost ratio $30.35 million / 26.47 million = 1.15 (ISER 2013 Model with capacity value) Payback (years) $31.5 million / $3.88 million = simple payback 8.1 years. 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. This project would reduce electric rates for the entire GVEA service area, which includes over 100,000 people consuming approximately 300,000,000 kWh annually. This project would annually displace approximately 12,800,000 kWh of the most costly energy now generated by GVEA (fueled with naptha/diesel). Under prevailing policies and considering capacity value, energy from this project would cost GVEA approximately $0.121 per kWh (GVEA’s system average avoided cost plus $0.015/kWh for capacity), and would displace energy costing GVEA approximately $0.20 per kWh (GVEA’s incremental avoided cost). Thus, the project would save GVEA approximately $1,011,000 annually (12,800,000 kWh x ($0.20/kWh - $0.121/kWh)). Divided over GVEA’s total sales, the savings from this single relatively small project would benefit a population of over 100,000 with a rate reduction of approximately $0.0034 per kWh. 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 The estimated annual fuel displacement by the project would be approximately 985,000 gallons of fuel oil or equivalents (naptha) burned by GVEA. This is based on 12,800,000 kWh of hydro generation and a fuel efficiency of 13 kWh per gallon at GVEA. At an assumed fuel cost of $3.26 per gallon, this is valued at $3.21 million annually. A wholesale power purchase contract with GVEA would likely be at their system average avoided cost plus capacity (or firm energy), which is assumed at $0.015/kWh. Energy has an assumed value of $0.104 per kWh (based on the 2013 AEA/ISER price model for the northern railbelt) for a total of $0.121 per kWh. Estimated annual project revenue with these assumptions is $1,548,800. Renewable Energy Fund Round VII Grant Application - Standard Form AEA 2014-006 Grant Application Page 16 of 21 7/1/2013 Several entities have expressed an interest in purchasing the clean energy from hydro projects in the region. This is most easily achieved through the sale of ‘Green Tags’ or selling the environmental attributes of the project separately from the physical electricity. Green Tags on the voluntary market have stabilized at a price of approximately $0.001 per kWh, which would result in incremental revenue of $12,800 per year assuming that all Green Tags from the project were sold. All cities connected to the railbelt grid would benefit from this project. This project would increase the amount of renewable energy available to the railbelt, decreasing dependence on fossil fuels, which in the case of natural gas in Cook Inlet is a diminishing resource and in the case of fuel oils in Fairbanks is very costly. Coal is inexpensive and stably-priced, however the potential for future carbon taxes would increase the cost of electricity from coal. This project would also provide the following non-economic benefits: 1. If supported by the land owners and local public, the access road to the dam could be used for non-motorized public access into the Jack River valley for hiking, hunting, or other recreational pursuits. This would enhance the local tourist industry by providing another local destination for tourists. 2. The project would employ a local operator who would be responsible for routine oversight of the project (being on-call for project emergencies, performing routine maintenance, etc.). The project would also generate part-time local jobs for less frequent maintenance activities such as trail repair and equipment maintenance. 3. The project would provide useful information for other hydroelectric projects in the state regarding seasonal or year-round operation of run-of-river hydroelectric projects in cold climates. Specific information would include operation of intakes, penstock icing, and techniques to minimize O&M requirements for winter operation. 4. The project would help to improve the reliability of the electric grid for Cantwell and surrounding communities by creating a local generation source that can help keep the lights on when the Alaska Intertie System is out of service. The project would be able to provide backup power to the local area year-round. 5. The project would decrease power plant emissions in Fairbanks and surrounding areas, helping to improve air quality in this region. 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. Not Applicable. The project’s full output is assumed to be sold to GVEA. Renewable energy resource availability (kWh per month) NA Estimated sales (kWh) NA Revenue for displacing diesel generation for use at private sector businesses ($) NA Estimated sales (kWh) NA Revenue for displacing diesel generation for use by the Alaskan public ($) NA Renewable Energy Fund Round VII Grant Application - Standard Form AEA 2014-006 Grant Application Page 17 of 21 7/1/2013 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 Selection of business structures is premature given the preliminary state of investigations at Jack River. While the NVC has not begun to evaluate business options, some potential business structures could include: 1. Become an IPP and obtain QF status, exemption, or utility certification from the RCA 2. Joint venture with GVEA 3. Form a new electric utility and assume responsibility for providing electric service in Cantwell and the surrounding area. Economic evaluations used in this application assume an IPP business model with power sales at GVEA’s system average avoided cost plus a capacity value. Evaluations indicate this provides sufficient revenue for the project and provides a substantial public benefit by lowering GVEA costs. O&M costs for the project would be funded by revenues from sale of electricity. The market value of the electricity easily exceeds likely O&M costs. No unusual operational issues are known at this time. Operational costs would include periodic scheduled overhauls of the turbines, generators, and ancillary equipment, reservoir and intake maintenance (trash rack clearing, etc), and related hydro project operations. The Alaska Intertie System would provide backup for the hydro and also would provide a market for hydro generation in excess of local needs. The NVC commits to reporting the savings and benefits associated with the Jack River hydroelectric project. 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. If this study is funded, the NVC will be ready to start the study in July or August 2014 so time- critical activities such as stream gauging can be initiated before the onset of winter. The NVC has an existing relationship with Polarconsult Alaska, Inc. and will coordinate with Polarconsult to Renewable Energy Fund Round VII Grant Application - Standard Form AEA 2014-006 Grant Application Page 18 of 21 7/1/2013 ensure timely completion of these seasonally sensitive activities. The NVC successfully managed and completed the Jack River Reconnaissance Study in 2013 under a Round 4 Renewable Energy Fund Program Grant. That study included expedited mobilization of a drill rig to Cantwell to install a stream gauging station before freeze up in November 2011, shortly after the Grant Agreement was signed in October 2011. That grant was successfully closed out in the 2nd quarter of 2013. 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. Attached to this application are letters of support from GVEA, Ahtna, Inc., the Denali Borough, and Denali National Park and Preserve, and Usibelli Coal Mine, Inc. The NVC is not aware of any opposition to this 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 Native Village of Cantwell is requesting a grant in the amount of $213,750 for a feasibility study of the Jack River Hydro Project. Village members will donate their time and experience to this project until this project is complete. 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. NVC expects that the control and monitoring equipment installed for the project will be capable of providing the necessary data to fulfill AEA’s annual reporting requirements. NVC estimates that the annual cost of complying with AEA’s reporting requirement will be approximately $1,000 for the labor required to compile and reduce data and operating information and prepare the annual report. Over ten years, the total cost is estimated at $10,000. 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. Renewable Energy Fund Round VII Grant Application - Standard Form AEA 2014-006 Grant Application Page 19 of 21 7/1/2013 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 Grant Agreement with AEA Notice to Proceed = 0 months 1. Project Management, Scoping and Contractor Solicitation End of 2nd month $0 $11,250 Native Village of Cantwell $11,250 2. Detailed Energy Resource Analysis Hydrology Study End of 12th month $35,000 $0 $35,000 Geotechnical Studies End of 12th month $60,000 $0 $60,000 3. Identify land and Regulatory Issues Land / Fish / Wildlife Study End of 13th month $20,000 $0 $20,000 4. Permitting and Environmental Analysis End of 10th month $10,000 $0 $10,000 5. Market Analysis End of 10th month $5,000 $0 $5,000 6. Assessment of Alternatives End of 13th month $4,750 $0 $4,750 7. Conceptual Design Analysis and Cost Estimate End of 16th month $30,000 $0 $30,000 8. Detailed Economic and Financial Analysis End of 16th month $17,000 $0 $17,000 9. Business and Operations Plans End of 16th month $7,000 $0 $7,000 10. Draft Final Report End of 18th month $20,000 $0 $20,000 11. Final Report End of 20th month $5,000 $0 $5,000 TOTALS $213,750 $11,250 $225,000 Budget Categories: Direct Labor & Benefits $0 $6,500 Native Village of Cantwell $6,500 Travel & Per Diem $0 $2,500 Native Village of Cantwell $2,500 Equipment $0 $750 Native Village of Cantwell $750 Materials & Supplies $0 $1,500 Native Village of Cantwell $1,500 Contractual Services $213,750 $0 $225,000 Construction Services $0 $0 $ Other $0 $0 $ TOTALS $213,750 $11,250 $225,000 ATTACHMENT A PROJECT TEAM CONTACT INFORMATION AND QUALIFICATIONS ATTACHMENT B LETTERS OF SUPPORT September 23rd, 2013 Mr. Arnel Hernandez, Administrator Native Village of Cantwell PO Box 94 Cantwell, AK 99729 Re: Jack River Hydro Project Dear Mr. Hernandez, This letter is written in support of the efforts by the Native Village of Cantwell to perform a feasibility study for the Jack River Hydro Project. The reconnaissance study completed earlier this year identified several possible hydro project configurations ranging in capacity from 1.6 to 7.3 MW. The feasibility study would collect additional field data (fisheries, hydrology, geotechnical, etc.) needed to identified the best project configuration and feasibility. The Jack River Hydro Project (Project) appears to make good sense from several perspectives. The mega hydro projects currently receiving most of the attention have technical and environmental hurdles to overcome and, if feasible, will take a decade or more to permit and build. From my knowledge of the area, Jack River appears to be a site that is technically feasible and environmentally attractive for a small hydro facility. The Project should be able to be brought on line in a relatively short time frame. Usibelli Coal Mine, Inc. is involved in looking at renewable energy resources in the Healy area and supports the concept of small distributed renewable generation. I believe there are many similar sites throughout Alaska that could provide good low head power production, with little environmental risk and relatively low cost. Although each unit may be small, they can be built in reasonable cost increments and add up to a significant addition in generating capacity. Good luck in your development of the Project. It will be good for Cantwell, the Denali Borough and the Railbelt and hopefully can lead the way to many future projects of a similar nature in the Railbelt and throughout Alaska. Sincerely, Robert Brown V.P. Business Development Cc: Joel D. Groves ATTACHMENT C (NOT A HEAT APPLICATION – NOT APPLICABLE) ATTACHMENT D GOVERNING BODY RESOLUTION ATTACHMENT E ELECTRONIC VERSION OF APPLICATION ATTACHMENT F ADDITIONAL PROJECT INFORMATION March 2013 Jack River Reconnaissance Study