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HomeMy WebLinkAboutGrant Lake Round V Application PackageAlaska Energy Authority Renewable Energy Fund Round V Kenai Hydro LLC Grant Lake Hydroelectric Project Grant Application Renewable Energy Fund Round 5 Grant Application AEA 12-001 Application Page 1 of 18 7/1/2011 Application Forms and Instructions The following forms and instructions are provided to assist you in preparing your application for a Renewable Energy Fund Grant. An electronic version of the Request for Applications (RFA) and the forms are available online at: http://www.akenergyauthority.org Grant Application Form GrantApp5.doc Application form in MS Word that includes an outline of information required to submit a complete application. Applicants should use the form to assure all information is provided and attach additional information as required. Application Cost Worksheet Costworksheet 5.doc Summary of Cost information that should be addressed by applicants in preparing their application. Grant Budget Form GrantBudget5. doc A detailed grant budget that includes a breakdown of costs by milestone and a summary of funds available and requested to complete the work for which funds are being requested. Grant Budget Form Instructions GrantBudgetIn structions5.doc Instructions for completing the above grant budget form. Authorized Signers Form Authorized signers form5.doc Form indicating who is authorized to sign the grant, finance reports and progress reports and provides grantee information. • If you are applying for grants for more than one project, provide separate application forms for each project. • Multiple phases for the same project may be submitted as one application. • If you are applying for grant funding for more than one phase of a project, provide milestones and grant budget for completion of each phase. • 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. • If you have additional information or reports you would like the Authority to consider in reviewing your application, either provide an electronic version of the document with your submission or reference a web link where it can be downloaded or reviewed. REMINDER: • Alaska Energy Authority is subject to the Public Records Act AS 40.25, and materials submitted to the Authority may be subject to disclosure requirements under the act if no statutory exemptions apply. • All applications received will be posted on the Authority web site after final recommendations are made to the legislature. • In accordance with 3 AAC 107.630 (b) Applicants may request trade secrets or proprietary company data be kept confidential subject to review and approval by the Authority. If you want information is to be kept confidential the applicant must: o Request the information be kept confidential. o Clearly identify the information that is the trade secret or proprietary in their application. o Receive concurrence from the Authority that the information will be kept confidential. If the Authority determines it is not confidential it will be treated as a public record in accordance with AS 40.25 or returned to the applicant upon request. Renewable Energy Fund Grant Application Round 5 AEA12-001 Grant Application Page 2 of 18 7/1//2011 SECTION 1 – APPLICANT INFORMATION Name (Name of utility, IPP, or government entity submitting proposal) KENAI HYDRO LLC Type of Entity: Fiscal Year End DECEMBER 31 INDEPENDENT POWER PRODUCER Tax ID # 27-3158417 Tax Status: X For-profit or non-profit ( check one) Mailing Address 3977 LAKE STREET, HOMER, AK 99603 Physical Address SAME Telephone 907-283-2375 Fax 907-335-6213 Email msalzetti@homerelectric.com 1.1 APPLICANT POINT OF CONTACT / GRANTS MANAGER Name MIKE SALZETTI Title GENERATION ENGINEER Mailing Address HOMER ELECTRIC ASSOCIATION, INC., 3977 LAKE STREET, HOMER, AK 99603 Telephone 907-283-2375 Fax 907-335-6213 Email msalzetti@homerelectric.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. Renewable Energy Fund Grant Application Round 5 AEA12-001 Grant Application Page 3 of 18 7/1//2011 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) Type in your answer here and follow same format for rest of the application. Grant Lake Hydroelectric Facility 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. Location – latitude and longitude or street address or community / communities served: The project would be harnessing the hydro energy of the Grant Lake watershed located near Moose Pass, Alaska. Persons benefitted would be the utility customers in the Kenai Peninsula. 2.3 PROJECT TYPE Put X in boxes as appropriate 2.3.1 Renewable Resource Type Wind Biomass or Biofuels X Hydro, including run of river Transmission of Renewable Energy 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) Reconnaissance Design and Permitting Feasibility X Construction and Commissioning Conceptual Design 2.4 PROJECT DESCRIPTION Provide a brief one paragraph description of your proposed project. The Grant Lake Hydroelectric Facility would consist of 5 MW of installed capacity with an average annual output of 20,600 MWh of energy, installed on the Grant lake watershed near Moose Pass, Alaska. The proposed Project is comprised of a diversion dam at the outlet to Grant Lake (under consideration), an intake structure in Grant Lake, a tunnel, a surge tank, a penstock, a powerhouse, a tailrace detention pond, a switchyard with disconnect switch & step- up transformer, and an overhead or underground transmission line. The intake would be in Grant Lake near its outlet. Water would be conveyed from the intake through a 3200’ penstock to a powerhouse containing two Francis-type turbines. The powerhouse would be located near the bank of Grant Creek and would discharge through a second penstock into Grant Creek. A transmission line would connect the facility to the Railbelt grid near Moose Pass. Please see the attached Project Description that was filed with FERC on August 13th, 2010. Kenai Hydro LLC, whose sole member is the Homer Electric Association (HEA), was created in 2008 to evaluate and possibly develop this site as a low impact hydroelectric facility. Renewable Energy Fund Grant Application Round 5 AEA12-001 Grant Application Page 4 of 18 7/1//2011 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.) Energy from the project would reduce consumption of carbon-based energy sources, thereby helping to improve air quality in Kenai Peninsula Borough. This renewable energy would also stabilize the long term price of power to consumers, and it would be a significant step in diversifying HEA’s generation portfolio. It is estimated that nearly $239,579,000 can be saved in avoided fuel cost over a 50-year period. This represents a tremendous value to the rate payers of Alaska and a generation asset that would produce clean, renewable power for Alaskans throughout this century. 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. Construction Funds Needed Land and Land Rights $ 236,598 Powerhouse Structure 1,668,000 Diversion & Spillway 599,500 Intake 1,218,750 Low Level Outlet 303,000 Water Conductors 10,901,652 Turbine & Generator 2,275,000 Substation Equipment 1,150,000 Misc Power Plant Equipment 325,000 Roads 3,310,000 Transmission 1,212,500 Detention Pond 500,000 Design Engineering 2,370,000 Construction Administration 2,370,000 Contingency 6,952,921 Total Construction Costs $35,392,921 Anticipated Funding Sources AEA Round V Grant $4,000,000 The balance will be funded by a combination of financing, Federal Grants, other State Grants and possible legislative appropriation. 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. $ 4,000,000 2.7.2 Other Funds to be provided (Project match) $ -0- 2.7.3 Total Grant Costs (sum of 2.7.1 and 2.7.2) $ 4,000,000 Project Costs & Benefits (Summary of total project costs including work to date and future cost estimates to get to a fully operational project) Renewable Energy Fund Grant Application Round 5 AEA12-001 Grant Application Page 5 of 18 7/1//2011 2.7.4 Total Project Cost (Summary from Cost Worksheet including estimates through construction) $ 35,392,921 2.7.5 Estimated Direct Financial Benefit (Savings) $ 239,579,000 over a 50 year project lifetime 2.7.6 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.) $ PROJECT COST SUMMARY The construction cost is estimated at $28,440,000 with a contingency fund of $6,952,921 for a total construction cost of $35,392,921. This does not include $3,480,000 in development and licensing cost or $105,000 in initial reconnaissance costs. Renewable Energy Fund Grant Application Round 5 AEA12-001 Grant Application Page 6 of 18 7/1//2011 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. Type in your answer here and follow same format for rest of the application. Mr. Mike Salzetti (HEA) will oversee the development of this project with the assistance of Mr. Brad Zubeck (HEA). Their brief professional biographies are attached in Section 7, Attachment A as requested. Mr. Salzetti has the guidance, support and staffing of his parent organization to manage this project from its current state through design, construction and operation. Kenai Hydro, LLC has also contracted with qualified consultants to conduct engineering studies and design. 3.2 Project Schedule Include a schedule for the proposed work that will be funded by this grant. (You may include a chart or table attachment with a summary of dates below.) A summary of the dates is provided below: Construction Schedule – Based on receiving final FERC License by 3-31-2014. Task Name Start Finish Road Construction 3-31-2014 10-31-2014 Detailed Facility Design 3-31-2014 3-31-2015 Power House Construction 5-1-2015 12-31-2015 Diversion & Spillway Construction 5-1-2015 10-31-2015 Intake Construction 9-1-2015 4-1-2016 Low Level Outlet 5-1-2015 10-31-2015 Water Conductor Construction 4-1-2015 4-1-2016 Turbine & Generator Installation 3-31-2014 12-31-2015 Substation Construction 5-1-2015 10-31-2015 Transmission 3-31-2014 10-31-2015 Detention Pond Construction 3-31-2014 10-31-2014 Commissioning & Startup 1-1-2016 5-1-2016 Commercial Operation 5-1-2016 Please see the attach M.S. Project Schedule for more detail. Renewable Energy Fund Grant Application Round 5 AEA12-001 Grant Application Page 7 of 18 7/1//2011 3.3 Project Milestones Define key tasks and decision points in your project and a schedule for achieving them. The Milestones must also be included on your budget worksheet to demonstrate how you propose to manage the project cash flow. (See Section 2 of the RFA or the Budget Form.) Each of the following milestones would have a 50% and 100% completion milestone based on the schedule shown in Section 3.2. Requested reimbursement would be based on a percentage of overall construction costs. Milestone #1: Land & Land Rights This milestone includes obtaining the land rights for the power plant, securing all special use permits and the associated surveying required for these tasks. Milestone #2: Power House Structure Construction This milestone includes the work required to construct the Power House. This work includes the excavation, the concrete, the metal building erection, building HVAC, plumbing and electrical, power house ground grid and any required fire protection equipment. Milestone #3: Impoundment and Waterway Construction This work includes the completion of the impoundment, spillway, intake, low level outlet and all water conductors. Milestone #4: Turbine & Generator This milestone includes the procurement, delivery and installation of the turbines and generators. Milestone #5: Access Road Construction This milestone includes the construction of the access road to the powerhouse and the road from the powerhouse to intake structure. Milestone #6: Transmission Construction This work includes the generator step-up transformer and breaker, the transmission line to the “Railbelt” grid and the associated apparatus required to connect to the “Railbelt” grid. Milestone #7: Detention Pond Construction The work includes the construction of the diversion pond to fully utilize the spin capacity of the project. All milestones will go through the traditional construction phases of design, bid, procurement, constructions, testing, commissioning and commercial operation. 3.4 Project Resources Describe the personnel, contractors, 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. Mr. Mike Salzetti will be responsible for management and direct oversight of the project development. He has the guidance, support and staffing of his parent organization for managing this project from its current state through construction and operation. Kenai Hydro LLC, whose sole member is the Homer Electric Association (HEA), was created to evaluate and develop the site as a low impact hydroelectric facility. Kenai Hydro, LLC has contracted well- qualified consultants to conduct the engineering, studies, permitting, process management and facilitation. Based on their recent FERC relicensing performance with the Cooper Lake hydro facility, Long Renewable Energy Fund Grant Application Round 5 AEA12-001 Grant Application Page 8 of 18 7/1//2011 View Associates (LVA) was hired to prepare FERC preliminary permit applications. The preliminary permit for this project was secured and issued by FERC October 7, 2008. LVA will be retained in various capacities as a license and permitting consultant. HDR Alaska, Inc.(HDR) has provided engineering and consulting services for the feasibility phase of this project, and provided their field services for the 2010 field study season. HDR is a nation-wide engineering firm with a full-service office in Anchorage. HDR Alaska, Inc. has a long history in this state and offers a full spectrum of engineering, planning, and environmental services. The final design and construction contract of the project facilities will be awarded on a competitive bid process. 3.5 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. The project manager will issue reports to AEA on a mutually agreeable schedule throughout the life of the grant. These reports can be customized to meet AEA needs. The expectation is that these reports could be a one page summary-type document submitted quarterly. The project would also expect to process requests for reimbursement on a monthly basis. 3.6 Project Risk Discuss potential problems and how you would address them. 1. There are the risks associated with successfully obtaining a FERC license application. To address these risks for the purposes of a construction grant request, it is expected that the release of the grant monies associated with this grant application will be contingent upon successfully licensing this project. 2. There is the risk that the preliminary cost estimate does not accurately reflect the cost to construct the project. The preliminary cost estimate was prepared by HDR Alaska, a nationally recognized engineering and consulting company with Alaska experience. The preliminary cost estimate was further refined with a Tunnel Feasibility Study performed by Jacobs Associates and an HDR access road study. Lastly the project estimate includes an overall contingency of approximately 25% to account for unknowns, material escalation, and the current level of engineering design. SECTION 4 – PROJECT DESCRIPTION AND TASKS • Tell us what the project is and how you will meet the requirements outlined in Section 2 of the RFA. • The level of information will vary according to phase(s) of the project you propose to undertake with grant funds. • If you are applying for grant funding for more than one phase of a project provide a plan and grant budget form for completion of each phase. • 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 Renewable Energy Fund Grant Application Round 5 AEA12-001 Grant Application Page 9 of 18 7/1//2011 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. Precisely quantifying the available energy from Grant Lake will be amongst the work performed with this grant request. However, initial estimates derived from hydrology data recommend a 5 MW installed with a Capacity Factor of ~50% or 20.6 GWh annually. Energy Potential The historical record for energy potential was garnered from USGS stream gage 15256000 records, located on Grant Creek approximately 1/3 mile upstream from the mouth which has an 11-year period of record from 1947 to 1958. This stream gage has a drainage basin of 44.2 square miles and the average annual flow for the period of record was 193-cfs. Hydropower is renewable, long-lived, efficient, dispatchable and environmentally responsible Pros energy that emits no greenhouse gases, waste or air pollution. It uses readily available technologies, it is low maintenance, displaces consumption of fossil fuels, and it provides long- term price stability to energy consumers. This particular facility could greatly enhance HEA’s spinning reserve capacity which provides a significant fuel savings. Hydropower opportunities on the Kenai Peninsula are extremely limited; potential resources have been catalogued by the US Geological Survey – Water Resources of Alaska. Proximity to the Railbelt grid, low impact and available energy recommend a Grant Lake hydro facility to be atop the short list of viable Kenai Peninsula renewable resources. The most expedient solution to local energy needs is construction of natural gas-fired generation. These units are less expensive to procure and install, require a much shorter time to permit, and have a relatively small footprint compared to hydro power. However, gas-fired units are not sustainable, subject to market-driven fuel pricing and availability, shorter lived, cost more to operate and maintain, and emit greenhouse gases. Disadvantages of hydropower include high initial investment, relatively long time required to Cons permit/license, and potential impact on habitats and water quality. 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. HEA has a 42 MW gas turbine (eff. ~ 40%) at Nikiski that was built in 2001, and it has an 11% share of the Bradley Lake hydro energy. HEA is in the process of building a steam turbine facility at its Nikiski Plant to recover the waste heat from combustion turbine. The waste heat along with duct firing capabilities will add 20MW of capacity to the Nik iski facility. The Nikiski facility will be the base loaded plant following the expiration of HEA’s wholesale power purchase agreement with Chugach Electric in 2014. Additionally, HEA has purchased a 48MW aero- derivative gas turbine and has begun construction of a backup and peaking plant in Soldotna. Renewable Energy Fund Grant Application Round 5 AEA12-001 Grant Application Page 10 of 18 7/1//2011 Lastly, HEA is in negotiations with Chugach Electric to purchase the Bernice Lake Power Plant in Nikiski which would add an additional 67MW of backup and peaking power to HEA’s generation portfolio. The average HEA combined load is 62.4 MW (~546 GWh/yr), with winter peaks approaching 85 MW and summer lows occasionally less than 40 MW. 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. HEA’s wholesale contracts expire at the end of 2013 and its Board of Directors has approved a path for HEA to develop assets that will achieve complete self-reliance. This requires that HEA nearly double its current generation capacity. A hydro facility at Grant lake would contribute to attaining that goal. HEA is also seeking to diversify its generation portfolio and moderate its reliance on natural gas. Part of this diversification is to develop renewable generation. The proposed project would represent approximately 4 % of HEA’s future energy needs, and would be a significant step in adding renewable energy to its portfolio. Furthermore, the addition of hydroelectric facilities would facilitate development of other renewable resources such as wind or tidal. 4.2.3 Existing Energy Market Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. The primary market for this project’s energy is HEA consumers, and a secondary market is other Railbelt utilities. A potential market may soon exist for Renewable Energy Credits that can be sold to utilities or industries seeking a means to comply with various Renewable Energy Standards or Policies. This project will have the following positive impacts on the existing energy system and its customers: 1. Incrementally stabilize the long-term price of power. 2. Provide approximately 4 % of HEA’s immediate generation needs from clean, renewable hydropower. 3. Offset and reduce greenhouse gas emissions. 4. Provide stored, dispatchable energy and spinning reserve. Improve consumer confidence in its utility leadership and management. Renewable Energy Fund Grant Application Round 5 AEA12-001 Grant Application Page 11 of 18 7/1//2011 4.3 Proposed System Include information necessary to describe the system you are intending to develop and address potential system design, land ownership, permits, and environmental issues. 4.3.1 System Design Provide the following information for the proposed renewable energy system: • A description of renewable energy technology specific to project location • Optimum installed capacity • Anticipated capacity factor • Anticipated annual generation • Anticipated barriers • Basic integration concept • Delivery methods The hydro project would be comprised of up to a 2’ impoundment dam at the outlet of Grant Lake, a 3200 foot 10’ diameter feed penstock, a surge tank, two Francis-type turbines with a combined 5 MW gross capacity power house, and a 200 foot discharge penstock. The dam (under consideration) would control outflow from the lake, creating or maintaining storage capacity. The intake tap, an above and below-grade penstock, would be in Grant Lake near its outlet. Water would be conveyed from the intake through the inlet feed penstock to a powerhouse located near the bank of Grant Creek, and would ultimately discharge through a second penstock into Grant Creek. A 7.5 MVA transformer would be used to convert the 13.8 kV generator voltage to 24.9 kV transmission voltage, and a 4100’ radial circuit would connect the facility to the Railbelt grid near Moose Pass. Historic Grant Creek flows recommend an optimal turbine of 5 MW and suggest a Capacity Factor of about 50%; this would yield an average annual energy output of ~21.4 GWh. Renewable Energy Fund Grant Application Round 5 AEA12-001 Grant Application Page 12 of 18 7/1//2011 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 legal description and ownership of lands (ADNR 2006) within the proposed project boundary are provided in the table below. All land is referenced to the Seward Meridian. Un-shaded rows pertain to the Grant Lake outlet and Grant Creek. Shaded rows include Grant Lake in its entirety and potential transmission areas. Township Range Section Ownership 5N 1W 36 Private 5N 1E 27 USDA Forest Service 5N 1E 28 USDA Forest Service 5N 1E 29 USDA Forest Service 5N 1E 30 State patented land 5N 1E 31 State patented land 5N 1E 32 State patented land 5N 1E 33 USDA Forest Service 5N 1E 34 USDA Forest Service 5N 1E 35 USDA Forest Service 5N 1E 36 USDA Forest Service 4N 1E 1 USDA Forest Service 4N 1E 2 USDA Forest Service 4N 1E 3 USDA Forest Service 4N 1E 5 USDA Forest Service 4N 1E 6 State patented land 4N 1E 7 State patented land 4N 1W 1 Private 4N 1W 12 Private 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 A comprehensive listing of permits was developed. Currently efforts are under way to obtain the requisite permits in support of a FERC license application. A list of permits is provided below: o USDA Forest Service, Special Use Application (SUA) o Alaska Railroad Corp., Access Road & Transmission Line ROW Crossing of Tracks o Transmission Line Right-of-Way, lease or purchase agreements o AKDNR, Water Rights A permit to invoke the Traditional License Program was granted by FERC on Sept 15th, 2009. Kenai Hydro, LLC filed a preliminary permit application with FERC on April 28, 2008 and was issued a permit on October 7, 2008 (attachment FERC 10-7-08). The purpose of the preliminary permit term is to determine the feasibility of a proposed project on Grant Lake and Creek in the Kenai Peninsula Borough, Alaska, and would occupy federal lands managed by the Chugach Renewable Energy Fund Grant Application Round 5 AEA12-001 Grant Application Page 13 of 18 7/1//2011 National Forest. A Pre-Application Document (PAD) was filed with FERC on August 6, 2009. FERC approved the Traditional License Program (TLP) as the appropriate course with which to proceed and secure a FERC license (attachment FERCTLP 9-15-09). 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 FERC license process addresses environmental and land issues. It is expected that the release of grant monies associated with this grant application will be contingent upon successfully licensing this project. 4.4 Proposed New System Costs and Projected Revenues (Total Estimated Costs and Projected Revenues) The level of cost information provided will vary according to the phase of funding requested and any previous work the applicant may have done on the project. Applicants must reference the source of their cost data. For example: Applicants Records or Analysis, Industry Standards, Consultant or Manufacturer’s estimates. 4.4.1 Project Development Cost Provide detailed project cost information based on your current knowledge and understanding of the project. Cost information should include the following: • Total anticipated project cost, and cost for this phase • Requested grant funding • Applicant matching funds – loans, capital contributions, in-kind • Identification of other funding sources • Projected capital cost of proposed renewable energy system • Projected development cost of proposed renewable energy system Total anticipated cost: $38,977,000 Construction cost: $35,392,921 with a ~25% contingency Requested grant funding: $4,000,000 Applicant matching funds: None at this time Identification of other funding sources: This is the first construction grant for which Kenai Hydro has applied. It is anticipated that the balance of construction funds will come from a combination of financing, Federal grants, State grants, private grants and possible Legislative appropriation. Projected capital cost: $35,392,921 Projected development costs: $3,585,000 Renewable Energy Fund Grant Application Round 5 AEA12-001 Grant Application Page 14 of 18 7/1//2011 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.) Operations and maintenance will be financed through typical utility accounting procedures using revenue generated by the hydro facility and other utility cash flows. The facility would be essentially unmanned requiring only periodic inspection and routine maintenance. Annual O &M costs are anticipated to be about $103,000 (in 2011 dollar) escalating at 3% per year which is easily supported by the project’s expected annual 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 Energy from the project will be sold to Homer Electric Association (HEA) for the benefit of its customers at prevailing rates. It should be noted that the project would incrementally stabilize long term electricity rates. It is likely that the acceptable rate-of-return will be kept to single-digit margins. 4.4.4 Project Cost Worksheet Complete the cost worksheet form which provides summary information that will be considered in evaluating the project. Download the form, complete it, and submit it as an attachment. Document any conditions or sources your numbers are based on here. See the attached Cost Worksheet completed for the proposed Grant Lake project and the attached spreadsheet Grant Lake Hydro Benefit-Cost 08-25-11 for the bases and conditions associated with the date in the cost worksheet. Renewable Energy Fund Grant Application Round 5 AEA12-001 Grant Application Page 15 of 18 7/1//2011 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 (gal and $) 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 It is estimated that $239,579,000 can be saved in avoided fuel cost over a 50-year period (using a 2010 dollars metric). This represents a tremendous value to the rate payers of Alaska and a generation asset that will produce clean, renewable power for Alaskans throughout this century. Potential Fuel Displacement Annual revenue minus the fuel savings cost accounted for above is estimated at approximately $7/MWh in 2010 dollars escalated at a 5% power price escalation factor. This equates to a revenue stream of $35,502,179 over a 50-year period. Anticipated Annual Revenue The potential tax credits are purely speculative, and will depend on the form of the business entity that carries the project into licensing, construction and operation Potential Additional Annual Incentives It may be possible to sell Renewable Energy Credits engendered by this project, but lack of an existing market renders a forecast purely speculative. Potential Additional Annual Revenue Streams The renewable energy will incrementally stabilize the long term price of power providing an attractive incentive to potential local businesses. It may also be possible to sell spinning reserve capacity from this asset when HEA is not utilizing the spin from this facility. The energy from the project would reduce consumption of carbon-based energy sources, and help to improve air quality in Kenai Peninsula Borough. The project would also be an important step in diversifying HEA’s future generation portfolio. Non-Economic Public Benefit A requisite public access road to the dam would substantially enhance recreational opportunities at Grant Lake. 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. Renewable Energy Fund Grant Application Round 5 AEA12-001 Grant Application Page 16 of 18 7/1//2011 • 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 Operations and maintenance will be financed through typical utility accounting procedures using revenue generated by the hydro facility and other utility cash flows. The facility would be essentially unmanned requiring only periodic inspection and routine maintenance. Annual O &M costs are anticipated to be about $100,000 (in 2010 dollar) escalating at 3% per year which is easily supported by the project’s expected annual revenue. 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 reconnaissance Phase 1 was completed in 2009, the results of which suggested pursuing feasibility work. To that end, Field Studies were initiated in 2009 and executed through July of 2010. An authorization to proceed to licensing using the Traditional License Program was granted by FERC on 9/15/2009 – refer to attachment “FERCTLP 9-15-2009” Numerous agency and interested shareholder forums have been held, and public comment processes have been undertaken. The FERC scoping process has been completed and FERC issued Scoping Document 2 for this project on 8/23/2010 – refer to attachment “KHL_FERC_Scoping2”. Kenai Hydro has also maintained a website, www.kenaihydro.com that contains project information. Phase 1 Reconnaissance studies, which were completed in January 2009, were partially funded by a $100,000 AEA grant. AEA also provided a $816,000 grant award to fund Phase 2 activities from 2009 through July 2010. Additionally, Kenai Hydro has recently signed a grant agreement with AEA for $1,184,400 to complete the field and engineering studies required to apply for a FERC license. 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. The project has encountered some not unexpected minor, local opposition, but initial reaction of this sort is common and misunderstanding tends to diminish as people become more knowledgeable with a project’s details and unsubstantiated rumors are dispelled. Among ongoing tasks are the receipt, cataloguing and redress of public comments. The HEA Board of Directors which represents 21,586 member - owners has shown consistent support for renewable energy projects. Attached you will find a letter of support for this project signed by Speaker of the Alaska State House, Representative Mike Chenault; Alaska State Representative Kurt Olson; and Alaska State Senator Tom Wagoner. Renewable Energy Fund Grant Application Round 5 AEA12-001 Grant Application Page 17 of 18 7/1//2011 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. Include an estimate of budget costs by milestones using the form – GrantBudget5.doc Provide a narrative summary regarding funding sources and your financial commitment to the project. Requested Grant Funds $4,000,000 Investments to Date AEA Reconnaissance Grant 105,000 AEA Round III Grant 816,000 Kenai Hydro/HEA Funds 791,778 Future Committed Funds AEA Round IV Grant 1,184,000 HEA Round IV Match 296,000 Additional Investments As stated previously, it is anticipated that the balance of construction funds will come from a combination of financing, Federal grants, State grants, private grants and possible Legislative appropriation. See attached GrandBudget5.doc HDR Alaska, Inc. Key Personnel Résumés   IDTask NameDurationStartFinish1Road Construction155 days?3/31/201410/31/20142Detailed Facility Design262 days?3/31/20143/31/20153Power House Construction176 days?5/1/201512/31/20154Diversion & Spillway Construction132 days?5/1/201510/31/20155Intake Construction155 days?9/1/20154/1/20166Low Level Outlet132 days?5/1/201510/31/20157Water Conductor Construction264 days?4/1/20154/1/20168Turbine & Generator Installation460 days?3/31/201412/31/20159Substation Construction132 days?5/1/201510/31/201510Transmission416 days?3/31/201410/31/201511Detention Pond416 days?3/31/201410/31/201512Commission and Start-up 87 days?1/1/20165/1/201613Commence Commercial Operation0 days5/1/20165/1/20165/1Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3201420152016TaskSplitProgressMilestoneSummaryProject SummaryExternal TasksExternal MilestoneDeadlineConstruction Schedule - based on receiving final FERC license by 3/31/2014Page 1Project: Grant Lake Project Works ConDate: 8/24/2011 Renewable Energy Fund Grant Round V Grant Budget Form 7-1-11 Milestone or Task Anticipated Completion Date RE- Fund Grant Funds Grantee Matching Funds Source of Matching Funds: Cash/In-kind/Federal Grants/Other State Grants/Other TOTALS (List milestones based on phase and type of project. See Attached Milestone list. ) $ $ $ Milestone #1: Land & Land Rights 3/31/2014 $40,000 $0 $40,000 Milestone #2: Power House Structure Construction 12/31/2015 $290,000 $0 $290,000 Milestone #3: Impoundment & Waterway Construction 4/1/2016 $2,200,000 $0 $2,200,000 Milestone #4: Turbine & Generator Installation 12/31/2015 $400,000 $0 $400,000 Milestone #5: Access Road Construction 10/31/2014 $560,000 $0 $560,000 Milestone #6: Transmission Construction 10/31/2015 $400,000 $0 $400,000 Milestone #7: Detention Pond Construction 10/31/2014 $90,000 $0 $$90,000 $ TOTALS $4,000,000 $4,000,000 Budget Categories: Direct Labor & Benefits $ $HEA Labor will not be paid from grant funds Labor $HEA Labor will not be paid from grant funds Travel & Per Diem $ $ $ Equipment $ $ $ Materials & Supplies $ $ $ Contractual Services $ $ $ Construction Services $ $ $ Other $ $ $ TOTALS $4,000,000 $ $4,000,000 Applications should include a separate worksheet for each project phase (Reconnaissance, Feasibility, Design and Permitting, and Construction)- Add additional pages as needed *RE – Fund Grant Funds value is calculated by taking ($4,000,000/$23,700,000)*Construction Cost of the Milestone. Renewable Energy Fund Grant Round V Grant Budget Form 7-1-11 Reconnaissance Project Milestones that should be addressed in Budget Proposal Feasibility Design and Permitting Construction 1. Project scoping and contractor solicitation. 2. Resource identification and analysis 3. Land use, permitting, and environmental analysis 4. Preliminary design analysis and cost 5. Cost of energy and market analysis 6. Simple economic analysis 7. Final report and recommendations 1. Project scoping and contractor solicitation. 2. Detailed energy resource analysis 3. Identification of land and regulatory issues, 4. Permitting and environmental analysis 5. Detailed analysis of existing and future energy costs and markets 6. Assessment of alternatives 7. Conceptual design analysis and cost estimate 8. Detailed economic and financial analysis 9, Conceptual business and operations plans 10. Final report and recommendations 1. Project scoping and contractor solicitation for planning and design 2. Permit applications (as needed) 3. Final environmental assessment and mitigation plans (as needed) 4. Resolution of land use, right of way issues 5. Permit approvals 6. Final system design 7. Engineers cost estimate 8. Updated economic and financial analysis 9. Negotiated power sales agreements with approved rates 10. Final business and operational plan 1. Confirmation that all design and feasibility requirements are complete. 2. Completion of bid documents 3. Contractor/vendor selection and award 4. Construction Phases – Each project will have unique construction phases, limitations, and schedule constraints which should be identified by the grantee 5. Integration and testing 6. Decommissioning old systems 7. Final Acceptance, Commissioning and Start-up 8. Operations Reporting UNITED STATES OF AMERICA 125 FERC ¶ 62,018 FEDERAL ENERGY REGULATORY COMMISSION Kenai Hydro, LLC Project No. 13212-000 ORDER ISSUING PRELIMINARY PERMIT (Issued October 07, 2008) On April 28, 2008, Kenai Hydro, LLC filed an application, pursuant to section 4(f) of the Federal Power Act (FPA), 1 to study the feasibility of the Grant Lake Project. The project would be located on Grant Lake and Creek in Kenai Peninsula Borough, Alaska, and would occupy federal lands managed by the Chugach National Forest. The proposed project would consist of: (1) an earth filled, concrete faced gravity dam 10 feet high and 200 feet wide; (2) a reservoir with an approximate surface elevation of 800 feet MSL, an approximate surface area of 1,888 acres, and a storage capacity of 37,760 acre feet; (3) a 5 foot diameter, 1 mile long penstock constructed of high density polyethylene or steel; (4) a powerhouse containing one turbine generator unit with a total installed capacity of about 5 MW; (5) a 1-2 mile long, 115 kV transmission line and; (6) appurtenant facilities. The annual production would be 17.5 GWh, which would be sold to a local utility. Background The Commission issued public notice of the application on July 21, 2008. The U. S. Department of the Interior and the U.S. Department of Agriculture (USDA) filed motions to intervene to be parties in the proceeding. 2 The USDA also filed comments. USDA commented on resource issues that need to be evaluated by the permittee during the course of the preliminary permit. These issues include fish and wildlife, recreation, and visual resources. The USDA also states the permittee will need to obtain a Special Use Authorization in order to perform work related to the permit on National Forest lands. Discussion 1 16 U.S.C. § 797(f) (2000). 2 Timely, unopposed motions to intervene are granted by operation of Rule 214 of the Commission’s Regulations.Id.§ 385.214(a)(3) (2008). 20081007-3019 FERC PDF (Unofficial) 10/07/2008 Project No. 13212-000 2 The purpose of a preliminary permit is to maintain priority of application for a license during the term of the permit while the permittee conducts investigations and secures data necessary, after consultation with the appropriate resource agencies, to determine the feasibility of the proposed project and prepares an acceptable development application. The permit confers no authority on the permittee to undertake construction of the proposed project or any part thereof, 3 or to occupy or use lands or other property of the United States or of any other entity or individual. If, during the course of the permittee’s investigation into the feasibility of the proposal, the permittee decides to prepare a development application, it must first prepare a Notice of Intent (NOI) and Pre-Application Document (PAD) pursuant to Sections 5.5 and 5.6 of the Commission’s Regulations. Pursuant to Part 5 of the Commission’s regulations, 18 C.F.R. Part 5, the permittee must use the Integrated Licensing Process unless the Commission grants a request to use an alternative process (Alternative or Traditional Licensing Process). Pursuant to Section 5.3, such a request must accompany the NOI and PAD and set forth specific information justifying the request. 4 Should the permittee file a development application, notice of the application will be published, and interested persons and agencies will have an opportunity to intervene and to present their views concerning the project and the effects of its construction and operation. A preliminary permit is not transferable. The named permittee is the only party entitled to the priority of application for license afforded by this preliminary permit. In order to invoke permit-based priority in any subsequent licensing competition, the named permittee must file an application for license as the sole applicant, thereby evidencing its intent to be the sole licensee and to hold all proprietary rights necessary to construct, operate, and maintain the proposed project. Should any other parties intend to hold during the term of any license issued any of these proprietary rights necessary for project purposes, they must be included as joint applicants in any application for license filed. In such an instance, where parties other than the permittee are added as joint applicants for license, the joint application will not be eligible for any permit-based priority. See City of Fayetteville,16 FERC 61,209 (1981). The Director orders: 3 Issuance of this preliminary permit is thus not a major federal action significantly affecting the quality of the human environment. 4See Commission Order 2002, issued July 23, 2003. 20081007-3019 FERC PDF (Unofficial) 10/07/2008 Project No. 13212-000 3 (A) A preliminary permit is issued for the this project to Kenai Hydro, LLC, for a period effective the first day of the month in which this permit is issued, and ending either 36 months from the effective date or on the date that a development application submitted by the permittee has been accepted for filing, whichever occurs first. (B) This preliminary permit is subject to the terms and conditions of Part I of the Federal Power Act and related regulations. The permit is also subject to Articles 1 through 4, set forth in the attached standard form P-1. (C) This order is issued under authority delegated to the Director and constitutes final agency action. Requests for rehearing by the Commission may be filed within 30 days from the date of issuance of this order, pursuant to 18 C.F.R. 385.713. William Guey-Lee Chief, Engineering and Jurisdiction Branch Division of Hydropower Administration and Compliance 20081007-3019 FERC PDF (Unofficial) 10/07/2008 Form P-1 (Revised February 2007) FEDERAL ENERGY REGULATORY COMMISSION TERMS AND CONDITIONS OF PRELIMINARY PERMIT Article 1. The purpose of the permit is to maintain priority of application for a license during the term of the permit while the permittee conducts investigations and secures data necessary to determine the feasibility of the proposed project and, if said project is found to be feasible, prepares an acceptable application for license. In the course of whatever field studies the permittee undertakes, the permittee shall at all time exercise appropriate measures to prevent irreparable damage to the environment of the proposed project. All test sites shall be restored as closely as possible to their original condition and to the satisfaction of the Commission's authorized representative or, where federal lands are affected, to the satisfaction of the agency administering such lands. Article 2. The permit is not transferable and may, after notice and opportunity for hearing, be canceled by order of the Commission upon failure of the permittee to prosecute diligently the activities for which a permit is issued, or for any other good cause shown. Article 3. The priority granted under the permit shall be lost if the permit is canceled pursuant to Article 2 of this permit, or if the permittee fails, on or before the expiration date of the permit, to file with the Commission an application for license for the proposed project in conformity with the Commission's rules and regulations then in effect. Article 4. At the close of each six-month period from the effective date of this permit, the permittee shall file four copies of a progress report with the Secretary, Federal Energy Regulatory Commission, 888 First Street, N.E., Washington, D.C. 20426; and shall serve a copy on the interveners in this proceeding. The report shall describe, for that report period, the nature and timing of what the permittee has done under the pre-filing requirements of 18 CFR §§ 4.38 and 5 and other applicable regulations; and, where studies require access to and use of land not owned by the permittee, the status of the permittee's efforts to obtain permission therefor. 20081007-3019 FERC PDF (Unofficial) 10/07/2008 FEDERAL ENERGY REGULATORY COMMISSION WASHINGTON,D.C.20426 September 15,2009 OFFICE OF ENERGY PROJECTS Project No.13212-001 and 13211-001 –Alaska Grant Lake/Falls Creek Hydroelectric Project Kenai Hydro,L.L.C. Steve Gilbert,Manager Kenai Hydro,L.L.C. 6921 Howard Avenue Anchorage,AK 99504 Reference:Authorization to Use the Traditional Licensing Process Dear Mr.Gilbert: In a letter filed August 6,2009,you requested to use the Traditional Licensing Process (TLP)in preparing a license application for the proposed 4.5-megawatt Grant Lake/Falls Creek Hydroelectric Project,which would be located on Grant Lake,Grant Creek and Falls Creek on the Kenai Peninsula,near the community of Moose Pass, Alaska.On August 6,2009,you filed a notice of intent and pre-application document (PAD)for the proposed project. On August 7,2009,you filed documentation that you published notice of your request to use the TLP in editions of the Anchorage Daily News,Peninsula Clarion and Homer Tribune.Your notice contained the information required in 18 C.F.R.§5.3(d)(2) of the Commission’s regulations,including a statement requesting that comments on the request to use the TLP be filed with the Commission within 30 days of the date of the notice,which was by September 5,2009. The U.S.Forest Service (Forest Service)and Alaska Department of Fish and Game (Alaska DFG)filed comments September 4 and 8,2009,respectfully,supporting the use of the TLP,with the request that scoping be held early in the licensing process to advance timely study development and provide time for analysis of results.The Kenaitze Indian Tribe,filed comments September 4,2009,expressing no opposition to the use of the TLP. 20090915-3018 FERC PDF (Unofficial) 09/15/2009 P-13212-001 and P-13211-001 2 Comments from Michael Coone y and the Sierra Club Alaska Chapter,filed September 8,and 10,2009,respectfully,expressed concerns with the use of the TLP, particularly that the process does not afford adequate public involvement in which to voice environmental concerns.The Sierra Club also expressed concerns that the Integrated License Process (ILP),the Commission’s default license process,would need to be modified through lengthened timeframes,to ensure adequate study development and deployment. Also,comments from the Alaska Center for the Environment,filed September 8, 2009,while not advocating one process over the other,do express the different advantages of the ILP and TLP,noting that early scoping is one benefit of the ILP. Holding scoping early in the licensing process,as suggested by the Forest Service and the Alaska DFG,would provide early identification of issues by all interested parties, which would help to foster the development of any needed studies.Kenai Hydro,L.L.C., in a comment filed September 10,2009,expressed support of the TLP with early scoping and requested agencies and interested parties to consider this as an option when filing their comments.Early scoping also addresses some of the concerns of the Sierra Club Alaska Chapter and the Alaska Center for the Environment.In consideration of the above,I am granting your request to use the TLP with early scoping. If you have an y questions,please contact Joseph Adamson at (202)502-8085 or via email at joseph.adamson@ferc.gov. Sincerely, Ann F.Miles,Director Division of Hydropower Licensing cc:Mailing List Public Files Brad Zubeck,Project Engineer Kenai Hydro,L.L.C. 280 Airport Way Kenai,AK 99611 20090915-3018 FERC PDF (Unofficial) 09/15/2009 Document Content(s) P-13212-001Letter.DOC.................................................1-2 20090915-3018 FERC PDF (Unofficial) 09/15/2009 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 The Applicant should demonstrate that the renewable energy resource is available on a sustainable basis. Annual average resource availability. The water resource is well documented in the form of USGS stream gauging data available on Grant Creek, as well as in the referenced 1984 Ebasco study. Unit depends on project type (e.g. windspeed, hydropower output, biomasss fuel) 2. Existing Energy Generation and Usage a) Basic configuration (if system is part of the Railbelt 1 i. Number of generators/boilers/other grid, leave this section blank) ii. Rated capacity of generators/boilers/other iii. Generator/boilers/other type iv. Age of generators/boilers/other 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 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] ii. Fuel usage Diesel [gal] Other 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] 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. Renewable Energy Fund Round 5 Project Cost/Benefit Worksheet RFA AEA12-001 Application Cost Worksheet Page 2 7-1-11 v. Wood [cords, green tons, dry tons] vi. Other 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] HYDRO b) Proposed annual electricity or heat production (fill in as applicable) i. Electricity [kWh] 5 MW NOMINAL 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 4. Project Cost a) Total capital cost of new system $ b) Development cost 35,392,921 $ c) Annual O&M cost of new system 3,480,000 ~$100,000 d) Annual fuel cost $ 0 5. Project Benefits a) Amount of fuel displaced for i. Electricity 197,626 MCF per year ii. Heat iii. Transportation b) Current price of displaced fuel $6.83/ MCF of natural gas (2010) c) Other economic benefits 19,585 MCF per year of spin savings & 44 fewer unit starts. d) Alaska public benefits Stabilize rates, lower emissions per kWh, conserve gas Renewable Energy Fund Round 5 Project Cost/Benefit Worksheet RFA AEA12-001 Application Cost Worksheet Page 3 7-1-11 6. Power Purchase/Sales Price a) Price for power purchase/sale 7. Project Analysis a) Basic Economic Analysis Project benefit/cost ratio 1.35 This ratio is sensitive to the price of natural gas, discount rates and the cost of capital. See attached Grant Lake Hydro Benefit – Cost 08-25-2011 spreadsheet Payback (years) for details. To be determined AEA Grant RFA, Round 1 Application, October 8, 2008 GRANT LAKE/CREEK HYDRO BENEFIT-COST ANALYSIS ASSUMPTIONS 5.0000 MW, Power Capacity 3%/Year, Discount Rate 9.6 Mcf per MWh for LM6000 Gas-fired Plant 47%CAPACITY FACTOR 3%/Year, Cost Escalation for O&M & Gas beyond 2033 197,626 Mcf, Gas Required for Equivalent Hydro Energy 2.4 aMW, Net Capacity 5%/Year, Power Price Escalation 8760 Hours Per Year 6%/Year, Cost of Capital 100%Availability Multiplier 5.00$ /MWh, Estimated O&M Cost 20586000 kWh, Estimated Annual Power Production 4,942.00$ /kW Estimated Construction Cost DATE YEAR # DESIGN & PERMITTING COST CONSTRUCTION COST Pay Period Cost of Capital (Interest on Loan)O&M COST Present Worth (PW) of Design & Permitting Costs PW of Construction Cost PW of Cost of Capital PW of O&M Cost PW of All Costs Projected Price of Gas ($/Mcf) Annual Avoided Fuel Cost Annual Spin Savings for 3MW Total Annual Savings Present Worth of Annual Avoided Cost Net Present Worth = PW Avoided Costs - PW All Costs Benefit:Cost Ratio PRESENT WORTH (2008) TOTALS ($3,256,465)($29,641,014)($25,886,639)($4,100,884)($62,885,002)$217,966,615 $21,613,319 $239,579,933 ($85,156,614)($22,271,612)1.35 2010 1 $1,500,000 $0 $0 ($1,456,311)6.83$ $133,765 2011 2 $100,000 $0 $0 ($94,260)6.77$ $132,727 2012 3 $1,500,000 $0 $0 ($1,372,712)7.16$ $140,260 2013 4 $375,000 $0 $0 ($333,183)7.68$ $150,473 2014 5 $0 $0 $0 $0 8.05$ $157,664 2015 6 $0 $35,392,921 1 $2,123,575 $0 ($29,641,014)($1,778,461)8.42$ $1,664,602 $165,060 $1,829,662 2016 7 $0 $0 2 $2,096,714 $102,930 ($1,704,821)($83,692)8.60$ $1,699,513 $168,522 $1,868,035 ($1,518,883) 2017 8 $0 $0 3 $2,068,242 $106,018 ($1,632,689)($83,692)8.73$ $1,725,128 $171,062 $1,896,190 ($1,496,870) 2018 9 $0 $0 4 $2,038,061 $109,198 ($1,562,004)($83,692)8.68$ $1,716,010 $170,158 $1,886,167 ($1,445,590) 2019 10 $0 $0 5 $2,006,069 $112,474 ($1,492,704)($83,692)8.94$ $1,767,043 $175,218 $1,942,261 ($1,445,224) 2020 11 $0 $0 6 $1,972,158 $115,849 ($1,424,729)($83,692)9.40$ $1,857,321 $184,170 $2,041,491 ($1,474,817) 2021 12 $0 $0 7 $1,936,212 $119,324 ($1,358,020)($83,692)9.94$ $1,965,023 $194,849 $2,159,873 ($1,514,891) 2022 13 $0 $0 8 $1,898,109 $122,904 ($1,292,520)($83,692)10.34$ $2,044,061 $202,687 $2,246,747 ($1,529,926) 2023 14 $0 $0 9 $1,857,720 $126,591 ($1,228,172)($83,692)10.79$ $2,131,547 $211,362 $2,342,909 ($1,548,939) 2024 15 $0 $0 10 $1,814,908 $130,389 ($1,164,920)($83,692)11.27$ $2,227,579 $220,884 $2,448,464 ($1,571,576) 2025 16 $0 $0 11 $1,769,527 $134,300 ($1,102,711)($83,692)11.52$ $2,276,074 $225,693 $2,501,767 ($1,559,018) 2026 17 $0 $0 12 $1,721,423 $138,329 ($1,041,489)($83,692)11.77$ $2,325,078 $230,552 $2,555,630 ($1,546,198) 2027 18 $0 $0 13 $1,670,433 $142,479 ($981,203)($83,692)12.24$ $2,419,778 $239,942 $2,659,721 ($1,562,306) 2028 19 $0 $0 14 $1,616,384 $146,754 ($921,801)($83,692)12.93$ $2,555,308 $253,381 $2,808,690 ($1,601,757) 2029 20 $0 $0 15 $1,559,091 $151,156 ($863,231)($83,692)13.56$ $2,679,154 $265,662 $2,944,816 ($1,630,473) 2030 21 $0 $0 16 $1,498,361 $155,691 ($805,443)($83,692)14.21$ $2,808,192 $278,457 $3,086,649 ($1,659,226) 2031 22 $0 $0 17 $1,433,988 $160,362 ($748,387)($83,692)14.97$ $2,957,665 $293,279 $3,250,943 ($1,696,643) 2032 23 $0 $0 18 $1,365,751 $165,172 ($692,015)($83,692)15.60$ $3,083,214 $305,728 $3,388,941 ($1,717,149) 2033 24 $0 $0 19 $1,293,421 $170,128 ($636,277)($83,692)16.36$ $3,233,149 $320,595 $3,553,745 ($1,748,207) 2034 25 $0 $0 20 $1,216,751 $175,231 ($581,127)($83,692)17.40$ $3,438,880 $340,995 $3,779,875 ($1,805,289) 2035 26 $0 $0 21 $1,135,481 $180,488 ($526,516)($83,692)18.23$ $3,602,539 $357,224 $3,959,763 ($1,836,121) 2036 27 $0 $0 22 $1,049,334 $185,903 ($472,399)($83,692)18.78$ $3,710,615 $367,940 $4,078,556 ($1,836,121) 2037 28 $0 $0 23 $958,019 $191,480 ($418,728)($83,692)19.34$ $3,821,934 $378,979 $4,200,912 ($1,836,121) 2038 29 $0 $0 24 $861,224 $197,225 ($365,457)($83,692)19.92$ $3,936,592 $390,348 $4,326,940 ($1,836,121) 2039 30 $0 $0 25 $758,622 $203,141 ($312,542)($83,692)20.52$ $4,054,689 $402,058 $4,456,748 ($1,836,121) 2040 31 $0 $0 26 $649,864 $209,235 ($259,937)($83,692)21.13$ $4,176,330 $414,120 $4,590,450 ($1,836,121) 2041 32 $0 $0 27 $534,581 $215,513 ($207,597)($83,692)21.77$ $4,301,620 $426,544 $4,728,164 ($1,836,121) 2042 33 $0 $0 28 $412,380 $221,978 ($155,478)($83,692)22.42$ $4,430,669 $439,340 $4,870,009 ($1,836,121) 2043 34 $0 $0 29 $282,847 $228,637 ($103,535)($83,692)23.09$ $4,563,589 $452,520 $5,016,109 ($1,836,121) 2044 35 $0 $0 30 $145,543 $235,496 ($51,724)($83,692)23.78$ $4,700,496 $466,096 $5,166,592 ($1,836,121) 2045 36 $0 $0 31 $242,561 ($83,692)24.50$ $4,841,511 $480,079 $5,321,590 ($1,836,121) 2046 37 $0 $0 32 $249,838 ($83,692)25.23$ $4,986,757 $494,481 $5,481,238 ($1,836,121) 2047 38 $0 $0 33 $257,333 ($83,692)25.99$ $5,136,359 $509,315 $5,645,675 ($1,836,121) 2048 39 $0 $0 34 $265,053 ($83,692)26.77$ $5,290,450 $524,595 $5,815,045 ($1,836,121) 2049 40 $0 $0 35 $273,005 ($83,692)27.57$ $5,449,164 $540,333 $5,989,496 ($1,836,121) 2050 41 $0 $0 36 $281,195 ($83,692)28.40$ $5,612,639 $556,543 $6,169,181 ($1,836,121) 2051 42 $0 $0 37 $289,631 ($83,692)29.25$ $5,781,018 $573,239 $6,354,257 ($1,836,121) 2052 43 $0 $0 38 $298,320 ($83,692)30.13$ $5,954,448 $590,436 $6,544,884 ($1,836,121) 2053 44 $0 $0 39 $307,269 ($83,692)31.03$ $6,133,082 $608,149 $6,741,231 ($1,836,121) 2054 45 $0 $0 40 $316,487 ($83,692)31.96$ $6,317,074 $626,394 $6,943,468 ($1,836,121) 2055 46 $0 $0 41 $325,982 ($83,692)32.92$ $6,506,586 $645,186 $7,151,772 ($1,836,121) 2056 47 $0 $0 42 $335,762 ($83,692)33.91$ $6,701,784 $664,541 $7,366,325 ($1,836,121) 2057 48 $0 $0 43 $345,834 ($83,692)34.93$ $6,902,837 $684,477 $7,587,315 ($1,836,121) 2058 49 $0 $0 44 $356,209 ($83,692)35.98$ $7,109,923 $705,012 $7,814,934 ($1,836,121) 2059 50 $0 $0 45 $366,896 ($83,692)37.06$ $7,323,220 $726,162 $8,049,382 ($1,836,121) 2060 51 $0 $0 46 $377,903 ($83,692)38.17$ $7,542,917 $747,947 $8,290,864 ($1,836,121) 2061 52 $0 $0 47 $389,240 ($83,692)39.31$ $7,769,204 $770,385 $8,539,590 ($1,836,121) 2062 53 $0 $0 48 $400,917 ($83,692)40.49$ $8,002,280 $793,497 $8,795,777 ($1,836,121) 2063 54 $0 $0 49 $412,944 ($83,692)41.71$ $8,242,349 $817,302 $9,059,651 ($1,836,121) 2064 55 $0 $0 50 $425,333 ($83,692)42.96$ $8,489,619 $841,821 $9,331,440 ($1,836,121) COSTS Power Production & Construction Financial Avoided Costs SAVINGS