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Renewable Energy Fund Round 5
Project Cost/Benefit Worksheet
RFA AEA12-001 Application Cost Worksheet Page 1 7-1-11
Please note that some fields might not be applicable for all technologies or all project
phases. The level of information detail varies according to phase requirements.
1. Renewable Energy Source – Cook Inlet Transmission Line (CITL) in support of
Fire Island Wind Farm (FIWF)
The Applicant should demonstrate that the renewable energy resource is available on a
sustainable basis.
Annual average resource availability. The Cook Inlet Transmission Line (CITL) which is
the subject of this application will be constructed in
order to transmit power from renewable projects
located on Fire Island. Initially, the CITL will
transmit clean renewable power from the Fire
Island W ind project (FIW) to the consumers of
electricity in Alaska’s Railbelt. The annual
availability of the CITL is expected to be virtually
100% for this purpose. The annual availability of
FIW for generation of renewable power will be
warranted at 95% annually. The net capacity factor
of FIW is 32.8% on an annual basis1. The
expected annual production from the initial phase
of the FIWF is 51,000 Megawatt-hours (MWh),
which is enough energy to meet the annual
electricity needs of approximately 6,050 typical
Alaskan homes2. Once fully built out to its 52.8
MW capacity, the FIWF will be capable of
producing approximately 153,000 MWh; enough
electricity to meet the needs of over 18,200 typical
Alaskan homes. The production of electricity from
FIW depends only on the mechanical availability of
the wind generation, the transmission line and wind
speed.
Unit depends on project type (e.g. windspeed, hydropower output, biomasss fuel)
2. Existing Energy Generation and Usage – system will be part of Railbelt
a) Basic configuration (if system is part of the Railbelt3 grid, leave this section blank)
i. Number of generators/boilers/other
ii. Rated capacity of generators/boilers/other
iii. Generator/boilers/other type
iv. Age of generators/boilers/other
1 Based on Wind Resource and Energy Assessment Fire Island Wind Power Project, final report dated August 22,
2011 that considered over 5 years of meteorological data from the site.
2 Assumes average consumption of 0.7 MWh/month per residence.
3 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 5
Project Cost/Benefit Worksheet
RFA AEA12-001 Application Cost Worksheet Page 2 7-1-11
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 The system will be part of the Railbelt grid.
ii. Annual O&M cost for non-labor
c) Annual electricity production and fuel usage (fill in as applicable) (if system is part of the
Railbelt grid, leave this section blank)
i. Electricity [kWh] The system will be part of the Railbelt grid.
ii. Fuel usage
Diesel [gal] None
Other None. Wind is the fuel.
iii. Peak Load
iv. Average Load
v. Minimum Load
vi. Efficiency
vii. Future trends
d) Annual heating fuel usage (fill in as applicable)
i. Diesel [gal or MMBtu] n/a
ii. Electricity [kWh] n/a
iii. Propane [gal or MMBtu] n/a
iv. Coal [tons or MMBtu] n/a
v. Wood [cords, green tons, dry tons] n/a
vi. Other n/a
3. 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]
Wind production capacity from the initial phase = 17.6
MW. Once fully built out, wind production capacity =
52.8 MW. Additionally, Ocean Renewable Power
Company, LLC (Ocean Renewable) has proposed a
tidal project off the west coast of Fire Island at Race
Point. The proposed capacity of the tidal project is 2
MW by 2012 and 5 MW by 2013. The total possible
renewable generation capacity that will be facilitated
by the CITL is therefore 57.8 MW.
b) Proposed annual electricity or heat production (fill in as applicable)
i. Electricity [kWh] The expected annual production from the initial
phase of the FIWF is 51,000 Megawatt-hours (MWh),
which is enough energy to meet the annual electricity
needs of approximately 6,050 typical Alaskan
homes4. Once fully built out to its 52.8 MW capacity,
4 Based on Wind Resource and Energy Assessment Fire Island Wind Power Project, final report dated August 22,
2011 that considered over 5 years of meteorological data from the site.
Renewable Energy Fund Round 5
Project Cost/Benefit Worksheet
RFA AEA12-001 Application Cost Worksheet Page 3 7-1-11
the FIWF will be capable of producing approximately
153,000 MWh; enough electricity to meet the needs
of over 18,200 typical Alaskan homes.5 Additional
energy from the first phase of the tidal project would
increase energy production transmitted from Fire
Island by approximately 6,132 MW in 2012 and
15,330 by 2013.
ii. Heat [MMBtu] None
c) Proposed annual fuel usage (fill in as applicable)
i. Propane [gal or MMBtu] None
ii. Coal [tons or MMBtu] None
iii. Wood [cords, green tons, dry tons] None
iv. Other None
4. Project Cost
a) Total capital cost of new system
b) Development cost6
The CITL is estimated to cost $36.795 million. The
total cost cost of the new system is $105 million and
includes 1) the FIW project, 2) the CITL transmission
line, and 3) the costs incurred to remove obstructive
FAA facilities from the FIW site. These costs are
shared by both private and public funding. If this
application is funded as requested the cost
responsibility breaks down as follows: $57 million
private funding, $29 million State funding, and $19
million federal funding. Therefore, every $1 of State
funding will enable $2.6 of incremental private and
federal funding.
c) Annual O&M cost7 of new system Annual O&M cost for the CITL is anticipated to be
$1,800 per mile. The transmission line is
approximately 12.2 miles and therefore the resulting
annual O&M cost is approximately $22,000. The
O&M cost for the FIWF is included in the Power
Purchase Price outlined in section 6.a below.
d) Annual fuel cost Zero
5 Assumes average consumption of 0.7 MWh/month per residence.
6 For purposes of this application “Development Cost” is assumed to be the cost necessary to determine initial
project feasibility, capital cost and siting. For the FIWF and the CITL, development activities are already complete.
7 O&M cost includes payments to 3rd parties for service, and O&M of the FIWF wind turbines. The cost of O&M
annually for the CITL is essentially zero.
Renewable Energy Fund Round 5
Project Cost/Benefit Worksheet
RFA AEA12-001 Application Cost Worksheet Page 4 7-1-11
5. Project Benefits
a) Amount of fuel displaced for
i. Electricity Phase I of FIW will displace between 300,000 and 350,000 MMBtu/year of
natural gas which would otherwise be used for generation fuel.
Fully built out at 52.8 MW, FIW will displace between 900,000 and 1,000,000
MMBtu/year of natural gas which would otherwise be used for generation fuel.
Additionally, if Ocean Renewable’s tidal project reaches 5 MW by 2013, the
annual fuel savings from renewable projects located on Fire Island could be as
much as 1,100,000 MMBtu.
ii. Heat N/A
iii. Transportation Natural gas which is not used for generation fuel will not need to be transported
from the point of production to the generation facility. Therefore, costs related
to the transportation of natural gas will also be avoided.
b) Current price of displaced fuel The average annual price forecast for natural gas fuel
that CEA used in its analysis of the FIWF is included in
Tariff Advice Letter 335-8.. Average price of avoided
natural gas ranges from approximately $7.75/MMBtu
initially to over $17.00/MMBtu by the end of the 25 year
term of the power purchase agreement between FIWF
and CEA.
Relating to the 17.6 MW phase I of the FIWF, the
average annual cost savings in natural gas fuel that
CEA used in its analysis of the FIWF is included in TA
Letter 335-8. The NPV of fuel savings relating to the
FIWF is $60.6 million. When fully built out to its 52.8
MW capacity, this value of fuel saved would be triple
that shown for the Phase I FIWF analysis.
c) Other economic benefits CEA’s Tariff Advice Letter 335-8 estimates the value of
reduced carbon emissions and Renwable Energy
Certificates (REC’s) related to the avoidance of natural
gas fuel consumption, which relates to the CITL and
the FIWF. Relating to the 17.6 MW phase I of the
FIWF, the average annual value of carbon emission
reductions CEA used in its analysis of the FIWF is
included in Tariff Advice Letter 335-8 at Table 7.0 and
in Appendix G. The NPV of REC’s and carbon
emissions is greater than $8.8 million. When fully built
out to its 52.8 MW capacity, this value of carbon
emission reductions and REC’s would be triple that
shown for the Phase I FIWF analysis.
d) Alaska public benefits The FIWF and the CITL begin the process of
diversifying the Railbelt generation portfolio away from
natural gas fuel, and thereby helps reduce risk
associated with the future availability of natural gas as
well as fuel cost risk to Railbelt consumers. The FIWF
and the CITL also begin moving the State of Alaska
toward its legislatively mandated renewable energy
goal of achieving 50% renewable power by 2025. The
project will be constructed at a time when
Renewable Energy Fund Round 5
Project Cost/Benefit Worksheet
RFA AEA12-001 Application Cost Worksheet Page 5 7-1-11
unemployment levels are at historical highs. The
project is expected to generate more than 105
construction jobs, twenty professional jobs
(engineering, PM, permitting, etc.) and four to five long-
term, high-wage permanent positions. Additionally,
development of Fire Island will expand Chugach’s
service territory to include the island and bring the
Municipality of Anchorage new tax revenue to help
fund schools and general city administration. The
project is extremely well supported by the public, as is
evidenced by the more than 100 letters of support
which were filed with the RCA in June and July 2011.
Those letters are attached as Appendix 7 to this
application.
6. Power Purchase/Sales Price
a) Price for power purchase/sale The power from the project is priced at a f lat rate
without escalation for the entire 25 year term beginning
in January 2013. The price is $107.85/MWh less
$10.85/MWh paid to CEA by Fire Island Wind for
integration, which results in a net cost of $97.85/MWh.
The net cost of $97.85/MWh includes all O&M
necessary for FIW.
7. Project Analysis
a) Basic Economic Analysis
Project benefit/cost ratio Chugach estimates the NPV of benefits associated with the FIW
Phase I and the CITL are $80.2 million and the NPV of costs
associated with the Phase I of FIW and CITL are $77.2 million.
When fully built out to its 52.8 MW capacity, the relative benefit
will be at least triple what is shown in the CEA Tariff Advice
Letter. It is likely that future costs of renewable projects located
on Fire Island will not be linear compared to costs of Phase I
since the entire cost CITL is included in Phase I of FIW and
those CITL costs would not be present in future expansions.
Payback (years)