HomeMy WebLinkAboutRenewable Energy Fund Round VI Grant Application FinalAlaska Energy Authority
Renewable Energy Fund
Round VI Grant ApplicaƟon
Mount Makushin Geothermal Project
SubmiƩed by: The Aleut CorporaƟon
September 24, 2012
Renewable Energy Fund Round 6
Grant Application
AEA13-006 Grant Application Page 2 of 23 7/3//2012
SECTION 1 – APPLICANT INFORMATION
Name (Name of utility, IPP, or government entity submitting proposal)
The Aleut Corporation
Type of Entity: Alaska Native Corporation Fiscal Year End: March 31
Tax ID # 92-0043224 Tax Status: X For-profit or non-profit ( check one)
Mailing Address
4000 Old Seward Highway, Suite 300
Anchorage, Alaska 99503
Physical Address
Same
Telephone
907-561-4300
Fax
907-563-4328
Email
jreiser@aleutcorp.com
1.1 APPLICANT POINT OF CONTACT / GRANTS MANAGER
Name
Janet Reiser
Title
Director of Business and Resource Development
Mailing Address
4000 Old Seward Highway, Suite 300, Anchorage, Alaska 99503
Telephone
907-273-3445
Fax
907-563-4328
Email
jreiser@aleutcorp.com
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
X An independent power producer in accordance with 3 AAC 107.695 (a) (1), or
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 its project by
its 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.
Yes
1.2.4 If awarded the grant, we can comply with all terms and conditions of the attached
grant form. (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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SECTION 2 – PROJECT SUMMARY
This is intended to be no more than a 1-2 page overview of your project.
2.1 Project Title – (Provide a 4 to 5 word title for your project)
Mount Makushin Geothermal Project
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.
Mount Makushin is an ice-covered stratovolcano located on Unalaska Island in the Aleutian
Islands approximately 800 miles southwest of Anchorage. With an elevation of (6,680 ft), its
summit is the highest point on the island (See Figure 1).
The City of Unalaska, which includes Dutch Harbor, is the main community on the Island. The
Port of Dutch Harbor is the only deep draft, ice-free port from Unimak Pass west to Adak and
north to the headwaters of the Bering Straits. Unalaska’s economy is based primarily on
commercial fishing, seafood processing, fleet services and marine transportation. Unalaska
relies on diesel fueled generators to supply most of its power.
The City of Unalaska and its customers will benefit most from this project. This project will play
a major role in providing clean, reliable, and affordable base-load renewable power.
The local community will also benefit from increased local hire and local services for the
development and eventually construction work contemplated in this project as well as on-going
maintenance and operations.
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.
53.907574,-166.930389 is the location of the Mount Makushin. In addition to a multi-well steam
field, we anticipate a steam pipeline to a processing facility and then a sub-marine transmission
cable to the electric utility – a distance of approximately 8 miles.
2.2.2 Community benefiting – Name(s) of the community or communities that will be the
beneficiaries of the project.
The city, residents and commercial enterprises of Unalaska Island will be the main beneficiaries
of this project.
2.3 PROJECT TYPE
Put X in boxes as appropriate
2.3.1 Renewable Resource Type
Wind Biomass or Biofuels
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Hydro, including run of river Transmission of Renewable Energy
X Geothermal, including Heat Pumps Small Natural Gas
Heat Recovery from existing sources Hydrokinetic
Solar Storage of Renewable
Other (Describe)
2.3.2 Proposed Grant Funded Phase(s) for this Request (Check all that apply)
Pre-Construction Construction
X Reconnaissance X Design and Permitting
X Feasibility X Construction and Commissioning
X Conceptual Design
2.4 PROJECT DESCRIPTION
Provide a brief one paragraph description of your proposed project.
Mount Makushin geothermal energy potential has been discussed and evaluated by the State of
Alaska and others for the last twenty or so years.
An exploratory drilling program, funded by the Department of Energy in the early 1980s made
the determination that the Makushin geothermal resource is the only proven high temperature
geothermal system in Alaska that could be used for power generation.
While the data has been encouraging there has not been a sustained effort to develop the
resource beyond its current status since 1995 when the design and permitting reports were
completed for a 12MW power plant for which the financing was approved by the Alaska State
legislature. This grant will help the Aleut Corporation re-characterize the Makushin resource
and develop the preliminary design of a production facility with the intention of building and
operating a geothermal plant on Unalaska for the benefit of the Island.
The cost elements in this grant are based on a 30MW plant – which we expect to be the
maximum size project (likely project size range 10-30 MW). During this phase we will evaluate
all options and determine the optimum size of the project as well as the optimal location of the
steam field and other facilities.
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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, etc.)
In a broad sense, the Makushin project can serve as a model and template for other viable
development projects for the Alaska Peninsula and Aleutian Island “stranded” geothermal
energy resources. Costs estimates and costs for Makushin civil, electrical, transmission and
power plant design can serve as a basis for evaluation of other geothermal projects throughout
the state.
Potential Public Benefits:
1. Reduced Fuel Costs
Most of the electricity used on Unalaska is generated using diesel engines. Assuming
$5/gal. and an efficiency of 14.5kWhr/gal., the annual fuel savings could be
approximately $3MM/MW of installed capacity. A 30 MW plant at full capacity would
therefore displace the energy equivalent of $90,000,000 for each year benefitting the
City of Unalaska and its residents.
2. No fuel cost risk
Power generated at Mount Makushin will not be subject to the price volatility normally
associated with oil or gas based fuels.
3. Reliability
Geothermal technology has improved significantly in the last decade or so. Many
technology providers are guaranteeing 95% reliability with actual performance as high as
99%.
4. Baseload
Geothermal power, unlike many renewable forms of power, offers baseload 24/7
generation with a capacity factor as high as 90%.
5. Clean Energy
Geothermal has close to zero emissions of greenhouse gases and criteria pollutants.
Cooling water is returned to the geothermal reservoir and the facilities have very low
visual impact and a small footprint.
6. Opportunities for local development
All phases of the Makushin geothermal project will provide opportunities for local hire
and local business development. The addition of more power generation capacity to
Unalaska will not only allow customers to use less diesel fuel to meet the current load
but to provide additional capacity to support development and growth.
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Grant Application
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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.
Our current total project estimate is $311MM. In this grant application we are asking for approx.
$32MM. The grant money will be used for reconnaissance, feasibility, design and permitting
and a small amount of construction work. The construction assistance asked for in this grant is
for drilling wells to help define and analyze the geothermic resource.
Assuming the resource and commercial evaluations are favorable we plan to fund a majority of
the construction work through debt and equity financing. If appropriate, we will also apply for
federal and/or state grants.
There has been a substantial amount of work done on evaluating the Makushin resource in the
past. This work has been funded by various agencies at various times over the last 25 or so
years. The reconnaissance part of this project includes reviewing that previous work and
verifying the information or filling in the gaps in information from that work. The rest of the
project proceeds in a traditional development mode with continuing evaluations and “off-ramps”
built in to insure an effective outcome.
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. $ 32,464,000
2.7.2 Cash match to be provided $ 85,000
2.7.3 In-kind match to be provided $ 455,000
2.7.4 Other grant applications not yet approved $
2.7.5 Total Grant Costs (sum of 2.7.1 through 2.7.3) $ 33,004,000
Project Costs & Benefits
(Summary of total project costs including work to date and future cost estimates to get to a fully
operational project)
2.7.6 Total Project Cost (Summary from Cost Worksheet
including estimates through construction)
$ 311,304,000
2.7.7 Estimated Direct Financial Benefit (Savings) $ 75,000,000 –
88,000,000/year (30 MW
basis)
2.7.8 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 your application
(Section 5.)
$ reduction in the
emission of CO2, NOX,
SO2 and other pollutants
Renewable Energy Fund Round 6
Grant Application
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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). 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 will be Janet Reiser, Director of Business and Resource Development for
The Aleut Corporation augmented by “owner’s engineering” staff. See Attachment A for Ms.
Reiser’s resume.
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.
Milestones/Tasks
Start
Date
End
Date
Complete analysis of technical, commercial and legal information obtained to date. now 6/13
Non-drilling mapping of the field 6/13 12/13
Implement community communications program 3/13 1/18
Complete load forecast now 3/13
Determine preliminary reservoir capacity and sustainability 10/12 6/13
Develop logistics plan 11/13 4/14
Develop conceptual project design inc. auxiliary equipment and services 1/14 10/14
Final environmental and permitting plan 1/14 6/15
Determine commercial capacity and sustainability 1/13 1/14
Go / no go decision 1/14
Owner’s engineer selected 10/13 1/14
Drilling contractor selection and award 10/13 4/14
Well Flow test 6/14 9/14
Final reservoir and resource characterization 1/14 1/15
Go / no go decision to proceed to production 3/15
Project Financing 10/13 9/15
Site Control and Civil Work 4/15 9/15
Power Purchase Agreement negotiation 6/13 2/14
EPC contractor selection and contract award 10/14 3/15
Power plant preliminary design 3/15 9/15
Transmission design 3/15 9/15
Utility Interconnection design 9/15 1/16
Final Cost estimate 3/15 3/16
Final Project Design and Operational Plan 3/15 10/16
Construction 4/15 10/17
Commissioning 10/17 1/18
Operations and Maintenance 1/18 1/43
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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 Aleut Corporation (TAC) will provide Project Management and back office services for the
Makushin project. Our strategy is to solicit and engage known, world-class organizations and
individuals to provide technical, financial, legal, permitting and development expertise to the
TAC team. We intend to rely on local talent and service providers where appropriate and select
contractors on a competitive basis. We will also augment our in-house capabilities by engaging
an experienced Owner’s Engineer to help manage the project. While our final team has not yet
been selected we have had informal preliminary discussions with a wide variety of professionals
including experts in the geological sciences, drilling, engineering, permitting, construction,
finance and legal.
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.
We plan to use project management software with on-line and remote access capabilities as
well as task, information and time management tools. This will help us keep all team members
informed and directed. The Authority will have access to the executive level of the program. In
addition we plan to submit quarterly updates, or whatever frequency is preferred by AEA during
each phase of the project.
3.5 Project Risk
Discuss potential problems and how you would address them.
Safety Risks
A major challenge to the project is accessibility to the geothermal fields from the Makushin River
Valley. At this time the geothermal field may be accessed from Driftwood Bay. There is a gravel
road beginning at a series of steep, unmaintained switchbacks from the western head of
Makushin River Valley which could provide partial access to a potential geothermal field and
access to the airport and sea at Driftwood Bay. For part of the year the road is not normally
passable without special equipment.
Access, production, development and maintenance risks will be identified with mitigation and
emergency response plans put in place before any activity takes place. As part of this project,
we will evaluate alternatives to accessing the field. These will include alternate routes, tramway
transportation systems, and a narrow gage railroad system. Helicopter access will also be
evaluated.
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The Aleut Corporation will maintain a robust employee safety program at all phases and at all
times throughout the course of this project. Employees and contractors will be thoroughly
trained to maintain the highest safety standards.
Volcano Eruption
Makushin is one of the most active among the 40 volcanoes of Alaska. It has erupted at least
two dozen times over the past several thousand years, with the last eruption occurring in 1995.
The development and production areas will not be near the steam vent and not in the likely path
of any volcanic activity. We will further assess this risk and mitigation measures as part of this
project.
Resources Risk
Though initial studies show that Mt. Makushin has high geothermal potential we plan to design a
field exploration campaign to delineate the system as accurately as possible. We plan to use
reservoir modeling and other tools to analyze exploration and drilling data as we proceed further
and further into the project. While we expect the resource to be commercially viable we have
built several “off-ramps” into our project design should the resource prove to be commercially
unacceptable.
Technical Risks
It is important that the geothermal resource be thoroughly understood so that the appropriate
development technology can be selected and implemented for maximum benefit. There is some
risk that a less than complete understanding of the resource will lead to a sub-optimum project.
The project will likely require a sub-sea transmission cable. While there are many sub-sea
cables in place throughout the world, we need to be certain that we have adequately protected
the cable and have robust maintenance and repair plans in place.
A further technical challenge will be integrating the energy produced by the geothermal wells
into the existing distribution system.
Business Risks
The Aleut Corporation is a financially stable and well-managed organization. While the Aleut
Corporation will not own 100% of the project, it will own the sub-surface and surface rights to
the land. TAC will be working hand in hand with the City of Unalaska and the Ounalashka
Corporation. The likely customer for power is the City of Unalaska for distribution to customers
on the island. Prior to proceeding with the construction of the project we plan to have executed
power purchase agreements with customers for the full output of the facility. This will
substantially minimize the business risks.
Renewable Energy Fund Round 6
Grant Application
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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.
As part of this project we will be evaluating the optimum location for the steam field. That
optimization will depend on many factors including the availability and sustainability of the
resource. At this time we expect the extent of the resource to be at least 30MW of base load
power. The amount of power developed will be influenced by the community needs and growth
plans. The initial plant will be designed with the ability to add additional capacity when needed.
Alternatives to this project for the market include primarily hydro, wind, tidal, imported LNG and
continued use of diesel fuel. The pros of geothermal as opposed to LNG impart include:
No fuel cost risk: Power generated at Mt. Makushin will not be subject to the volatility
that is typical for oil and gas based generation.
Low fuel availability risk: Geothermal is one of the most sustainable sources of energy.
Our generation system will re-inject close to 100% of the geothermal fluid back in to the
reservoir. We will not be dependent on the availability of diesel or LNG nor on timely
shipments of the products.
Reliability: Geothermal generation technology has successfully been in use for decades.
A key criterion for selection of production technology will be reliability. Many technologies
in operation offer reliabilities of 95% and above.
Clean: Geothermal systems have close to zero emissions and a low visual impact
Baseload: Unlike most forms of renewable energy, both LNG, diesel and geothermal offer
baseload systems.
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.
The existing energy system consists almost exclusively of diesel fired generation. The Unalaska
Electric Utility generators have an average efficiency of approximately 14.5kWh/gal. The city
utility services an average estimated community load of approximately 4,000kW with an
estimated peak load of about 9000kW. (Community Information Summary: Division of
Community and Regional Affairs). The diesel electricity generated annually is estimated to be 30
million kWh. Most of the large commercial users supply their own power with on-site diesel
generators. The self-generated load is estimated to average 22 MW.
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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.
Beyond fossil fuels which are shipped in, Unalaska has the potential opportunity to use wind and
hydro resources to generate power.
Geothermal power is considered base load power and as such could dramatically reduce the
need for diesel generation. Our project design will include the appropriate facilities to integrate
geothermal power into the existing electric utility system for distribution. We expect that the
Unalaska electric utility could potentially then serve commercial customers who now self-
generate. The city electric distribution system would likely have to be upgraded to accommodate
reliably the increased load.
4.2.3 Existing Energy Market
Discuss existing energy use and its market. Discuss impacts your project may have on energy
customers.
The current energy market in Unalaska is primarily retail customers and commercial customers
served by the city of Unalaska and seafood processors who self-generate. With the advent of a
10-30 MW geothermal generating facility, much of the base load of Unalaska could be served.
As a cleaner and less expensive alternative to diesel generation, diesel generators could be
taken off-line and held for stand-by or peaking power.
We expect the Mount Makushin Geothermal Project to impact energy customers positively with
lower energy costs and greater generating capacity to attract development.
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
Description of renewable energy technology specific to project location
The key to our system design is the location and capacity of our geothermal resource. In this
phase of the project we plan to survey and analyze a variety of locations to tap into the Mount
Makushin resource. Depending on the results of the resource analysis, we plan to build either a
“Flash Steam” generating system or a Binary Cycle generating system. If the water comes out of
the well as steam, we can use it directly. If the water is hot enough we can use a flash system
where the very hot water is depressurized or flashed into steam which can then be used directly
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to drive the turbine. Lower temperature water would require a binary cycle system where the hot
water is passed through a heat exchanger, where it heats a second liquid in a closed loop. The
secondary liquid boils at a lower temperature than water, so it is more easily converted into
steam to run the turbine.
Optimum installed capacity
Optimum installed capacity will be developed through our design phase. At this time we expect
to install a 10-30 MW system.
Anticipated capacity factor
Our anticipated capacity factor is 90%. We have taken into consideration the additional time
needed to attend to unplanned outages due to weather and remote location in this number.
Anticipated annual generation
We expect our annual generation to be a minimum of 10MW of expandable power, and closer to
the 30MW basis we used in our cost projections. Load and market studies contemplated in this
phase will help us determine the initial annual generation design basis.
Anticipated barriers
An anticipated barrier is the integration into and possible need to upgrade the city’s current
distribution system. We have included money in our project cost estimate for this situation, but it
is not part of our current grant request. We also expect to install a sub-sea transmission cable
which will require significant engineering, environmental and permitting work. By addressing this
potential barrier up front we will be better prepared to successfully carry out the project.
Basic integration concept and Delivery Methods
The basic integration concept is to provide geothermal power via a transmission line and sub-
sea transmission line across Broad Bay to a point located near an existing power plant. The
exact location of entrance into the City of Unalaska’s grid will be determined during the study.
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 exact site of the steam field will be determined in this grant phase. Sites under
consideration are under the control of The Aleut Corporation. Plant sites and land based
transmission rights of way are owned primarily by The Aleut Corporation and/or The Ounalashka
Corporation. For a visual representation see Attachment B.
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
List of Expected Permits:
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TAC will obtain all necessary authorizations and permits from the appropriate permitting
authorities. As the project design and description are developed, we will identify and engage one
or more consultants to assist in the permit identification and implementation process, as well as
helping us identify potential issues. The list of expected permits, below, would be supplemented
as those consultants continue their work on the project.
State of Alaska: Alaska Pollutant Discharge Elimination System (APDES) Water
Discharge Permit if there is a point source discharge of water
State of Alaska: Stormwater Construction and Operation Permit and SPPP
US Army Corps of Engineers: Section 404 Permit for Discharge of Dredge or Fill
Materials into Waters of the U.S., including wetlands
US Army Corps of Engineers: Section 10 Permit for Construction of any Structure in or
Over any Navigable Water of the United States
State of Alaska: Certificate of Reasonable Assurance (Section 401) for Section 404
Permit
EPA: Hazardous Waste Generator (Resource Conservation and Recovery Act [RCRA])
Identification Number
Participation by National Marine Fisheries Service:
o Threatened and Endangered Species Act (ESA) Consultation (Section 7)
o Essential Fish Habitat
o Fish and Wildlife Coordination
o Bald Eagle Protection Act Clearance
o Migratory Bird Protection
Bureau of Alcohol, Tobacco and Firearms permits, if explosives are used
FCC if a radio license is needed
US DOT if hazardous materials are transported
State of Alaska Temporary Water Use Permit/Permit to Appropriate Water, if water is
used
State of Alaska (ADF&G) Fish Passage Permit, Fish Habitat Permit for stream crossings
or other use
State of Alaska Waste Disposal Permits
State of Alaska Air Quality Control Permit to Construct and to Operate development
equipment, if emissions exceed threshhold
State of Alaska permits for a man camp: Approval to Construct and Operate a Public
Water Supply System, Plan Review for Non-Domestic Wastewater Treatment System,
Non-Domestic Wastewater Disposal Permit, Plan Review and Construction Approval for
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Domestic Sewage System, Food Sanitation Permit
Possible permits for fuel storage: Spill Prevention, Control, and Countermeasure (SPCC)
Plan/Oil Discharge Prevention and Contingency Plan
Land access agreements/leases/rights of way through private, tribal or state owned
land/Alaska DOT Utility Permit on Right of Way
State of Alaska Tidelands Lease
Local government permits and authorizations
Permitting Timeline
We expect most permits to require about six months. If an individual Section 404 permit is
needed (to discharge into wetlands), we expect to add 18 months for a federal review under
the National Environmental Policy Act (assuming sufficient environmental baseline data
already exists). We intend to determine whether or not we need a NEPA review and permit
as one of our early activities.
Potential Barriers
A potential barrier to our permitting plan is land access rights. At this time the land required
for this project will ultimately belong to The Aleut Corporation, the Ounalashka Corporation
and/or the City of Unalaska. Preliminary discussion with land holders indicates that we will
be able to receive accommodation for our project. This will be confirmed in the
reconnaissance phase of the project.
If an individual Section 404 permit is needed (to discharge into wetlands), the review of
potential environmental impacts requires environmental baseline studies and public review.
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
As the project is developed TAC will solicit advice from experts that will help us plan for and
implement the environmental permitting process and address potential issues that may arise. In
all cases we will seek outside expertise.
Threatened or Endangered species
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TAC does not expect to encounter or impact any ESA-listed species during the feasibility and
pre-construction phases of this project.
Habitat issues
Habitat issues may arise in the context of stream crossings or as a NEPA requirement.
Wetlands and other protected areas
Rights to discharge fill to wetlands would be granted by US Army Corps of Engineers, in the context of a
Section 404 permit. Rights to access special habitat areas would be granted by the State of Alaska.
Archaeological and historical resources
An archaeological and historical resources review is required by the State of Alaska and will be
undertaken using qualified consultants.
Land development constraints
At this time we are confident that we will successfully negotiate all land access
agreements/leases/rights of way with land owners. We may need an Alaska DOT Utility Permit
on Right of Way that we will apply for as required.
Telecommunications interference
We do not see an issue with telecommunications interference at this time. We may need
however, a license to operate radio and will obtain one if required.
Aviation considerations
We are not expecting any issues with aviation considerations.
Visual, aesthetics impacts
We do not expect an aesthetics impact with this project. A review could be triggered under NEPA
if a Section 404 wetlands permit or other federal authorization is needed.
Identify and discuss other potential barriers
Although we do not expect opposition from local people or groups, any opposition to the project
could delay the issuance of necessary permits and other authorizations.
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:
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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
Total anticipated project cost, and cost for this phase
The total anticipated project cost, based on a 30MW project: $311 MM
The cost for this phase: $33,004,000
Requested Grant Funding: $32,004,000
Applicant Matching funds (in-kind and cash): $540,000
Capital cost of proposed renewable energy system (const. and drilling costs): $ 295 MM
Projected development cost of proposed renewable energy system: $16 MM
Information for these estimated costs were obtained through a variety of sources. Primary
sources for geology, legal, permitting, environmental analysis, and financial analyses are from
known consultants in the field. Engineering cost estimates are based on internal experience and
industry standards. Sources for specific costs are available upon request.
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.)
We expect O& M costs of approximately $ 8MM/yr. These costs will be paid from the power
sales revenue.
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
The Makushin Geothermal Project intends to operate as an independent power producer and
sell the electrical output of our plant to one or more customers in Unalaska. We will work with
the City of Unalaska and other groups of potential customers to get Power Purchase
Agreements into place before proceeding to construct the project generation facilities.
We plan to sell the power produced by this project for significantly less than the cost of diesel
generated power and less than the current cost of purchased diesel fuel. According to the
Community Information Summary, the fuel cost for diesel powered generation is $0.35/kWh (at
$5/gal) and the total diesel cost of energy is $0.43/kWh. The cost of electricity to a residence is
$0.52/kWh. The targeted cost of power from this project will be about $0.25/kWh.
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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. 93%
Unit depends on project type (e.g. windspeed, hydropower output, biomasss fuel)
Existing Energy Generation and Usage – Unalaska Utility Only
a) Basic configuration (if system is part of the Railbelt1 grid, leave this section blank)
i. Number of generators/boilers/other
ii. Rated capacity of generators/boilers/other 8000kW
iii. Generator/boilers/other type Diesel generators
iv. Age of generators/boilers/other Various ages
v. Efficiency of generators/boilers/other
b) Annual O&M cost (if system is part of the Railbelt grid, leave this section blank)
i. Annual O&M cost for labor unknown
ii. Annual O&M cost for non-labor unknown
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] 35,353,537 kWh
ii. Fuel usage
Diesel [gal] 2,434,061 gal
Other
iii. Peak Load 8,517 kW
iv. Average Load 3,833 kW
v. Minimum Load
vi. Efficiency 14.5kW/gal
vii. Future trends growth
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]
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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v. Wood [cords, green tons, dry tons]
vi. Other
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]
30 MW
b) Proposed annual electricity or heat production (fill in as applicable)
i. Electricity [kWh] 30,000 kWh
ii. Heat [MMBtu]
c) Proposed annual fuel usage (fill in as applicable)
i. Propane [gal or MMBtu]
ii. Coal [tons or MMBtu]
iii. Wood [cords, green tons, dry tons]
iv. Other
Project Cost
a) Total capital cost of new system Estimated: $295MM
b) Development cost Estimated: $ 16MM
c) Annual O&M cost of new system Estimated: $ 8MM
d) Annual fuel cost 0
Project Benefits
a) Amount of fuel displaced for
i. Electricity 2,345,781 (electric utility only)
ii. Heat
iii. Transportation
b) Current price of displaced fuel Assume $5/gal =$11,729,000
c) Other economic benefits Independent customers @22MW/yr: $66MM/year
d) Alaska public benefits Lower PCE payments and lower household
expenditure for electricity. Capacity for economic
growth.
Power Purchase/Sales Price
a) Price for power purchase/sale TBD – expected to be $.25/kWh
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Project Analysis
a) Basic Economic Analysis
Project benefit/cost ratio TBD
Payback (years) TBD, approximately 10 years
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
Potential annual fuel displacement (gallons and dollars):
Using a project life of 25 years the potential annual fuel displacement is 15 million gals and
$75MM (at current prices).
Anticipated annual revenue:
$51MM (at $.25/kwh)
Potential additional annual incentives (tax credits etc.)
To Be Determined, could be substantial.
Potential additional annual revenue streams
To Be Determined, could be substantial.
Non-economic public benefits to Alaskans
Reducing pollutant and green-house gas emissions from fossil fuel based systems,
thereby improving public health and reducing the contribution to climate change.
Providing multiple short term and long term opportunities for local hire and services –
both during construction and during the operating phase of the plant.
Opportunities for growth and diversification of industry.
SECTION 6– SUSTAINABILITY
Discuss your plan for operating the completed project so that it will be sustainable.
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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 Aleut Corporation’s (TAC) participation and management of this project is crucial to the
project’s success. TAC considers this project not only beneficial to the people of Unalaska but to
all TAC shareholders throughout the region. This project will be managed like a typical
Independent Power Producer, supplying power to users through power purchase agreements. If
there is interest in the future, other business structures (such as an electric cooperative) may be
considered.
The O&M for the project will be financed from revenue. We plan to use experienced power
generation builders and operators for our projects. This project will be challenging from an
operational point of view primarily due the remoteness and harshness of the environment.
Experience in the technology and operation of plants around the world that work in a similar
environment will be critical in our selection of our project team. We are also very sensitive to
cultural, environmental and safety issues and will only select consultants and vendors who share
our sensitivities and concerns.
We do not intend to supply any back-up generation systems. We will coordinate maintenance
and other planned outages with our customers.
We see Makushin as a potential model for other geothermal projects in the region and in the
state. We will be happy to not only supply operational information to the Authority but also
savings and benefit information on a regular basis.
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 Aleut Corporation has done several things to prepare for this grant including: conducting
negotiations to purchase any land, not already owned, that may be required to accomplish this
project; hiring an experienced project manager with a strong background in energy project
development; and focusing board attention on the project. We have refreshed our internal pro
forma with up to date information and have made preliminary inquiries to technical specialists
and possible vendors. We are ready to proceed immediately upon award of the grant.
We have not been awarded any other grants associated with this project.
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SECTION 8– LOCAL SUPORT
Discuss what local support or possible opposition there may be regarding your project. Include
letters of support from the community that would benefit from this project.
We are currently in discussion with the City of Unalaska and the Ounalashka Corporation
regarding this project.
SECTION 9 – GRANT BUDGET
Tell us how much you want 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.
Please see Attachment C (1-4).
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