HomeMy WebLinkAboutGulkana Village GrantApplication5
Grant Application
Application
Attachment B Cost Worksheet
Attachment C Grant Budget Form
Attachment D Electronic version of the Proposal
Attachment E Authorized Signers Form
Attachment F Governing Body Resolution
Attachment G Certification
Gulkana Village Biomass Fuels Project
Renewable Energy Fund Round V
AEA Application for Design, Equipment &
Gulkana Village Council
8/25/2011
Installation Work
Contents:
Attachment A Business Plan
Attachment H Support L etter
Renewable Energy Fund Round 5
Grant Application
AEA 12-001 Application Page 1 of 21 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 21 7/1//2011
SECTION 1 – APPLICANT INFORMATION
Name (Name of utility, IPP, or government entity submitting proposal)
Gulkana Village Council
Type of Entity: Fiscal Year End
Federally-recognized Indian Tribe
Tax ID # 92-0037705 Tax Status: For-profit or X non-profit ( check one)
Mailing Address
P.O Box 254 Gokona, AK 99586
Physical Address
Mile 127 Richardson Highway
Telephone
907-822-3746
Fax
907-822-3976
Email
LClaw@GulkanaCouncil.org
1.1 APPLICANT POINT OF CONTACT / GRANTS MANAGER
Name
Mr. LaMonica Claw
Title
Tribal Administrator
Mailing Address
P.O. Box 254 Gokona, AK 99586
Telephone
907-822-3746
Fax
907-822-3976
Email
LClaw@GulkanaCouncil.org
1.2 APPLICANT MINIMUM REQUIREMENTS
Please check as appropriate. If you do not to meet the minimum applicant requirements, your
application will be rejected.
1.2.1 As an Applicant, we are: (put an X in the appropriate box)
An electric utility holding a certificate of public convenience and necessity under AS
42.05, or
An independent power producer in accordance with 3 AAC 107.695 (a) (1), or
A local government, or
X A governmental entity (which includes tribal councils and housing authorities);
Yes
1.2.2. Attached to this application is formal approval and endorsement for 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 21 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.
Gulkana Village Biomass Fuels 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.
Location – latitude and longitude or street address or community / communities served:
The Community of Gulkana, Alaska and surrounding rural homes and school
businesses will benefit from this project.
Gulkana, Alaska is located in the Copper River basin in the south-central interior of
Alaska -- on the east bank of the Gulkana ("Kulkana") River -- at its confluence
with the Copper River. The community lies at mile 127 of the Richardson Highway,
14 miles north of the regional hub community of Glennallen, Alaska at
approximately 62.271390 North Latitude and -145.382220 West Longitude. (Sec.
27, T006N, R001W, Copper River Meridian.)
The residents of the community of Gulkana and the residents of the surrounding
region will realize the economic and environmental benefits of lower "cordwood"
consumption and higher consumption of cleaner burning wood pellets for heat
production.
2.3 PROJECT TYPE
Put X in boxes as appropriate
2.3.1 Renewable Resource Type
Wind X Biomass or Biofuels
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 X Design and Permitting
Feasibility X Construction and Commissioning
Conceptual Design
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2.4 PROJECT DESCRIPTION
Provide a brief one paragraph description of your proposed project.
The project will be a small scale "Wood Products for Heat" (Biomass) operation with
a heavy emphasis on the development of a viable small scale wood pellet
production facility. The project will work to achieve the following three (3) strategic
objectives (SO):
1) SO1: Displace 100% of the very expensive fossil fuels used for heat
production in our community.
2) SO2: Manage our wood products for heat production operation to ensure
sustainability and,
3) SO3: Create local jobs in our rural community supported by our natural
resources.
Small scale pellet operations do not enjoy the "economies of scale" of their larger
cousins and experience higher production costs "per ton of pellets produced". This
fact makes it important to identify all the production costs and manage them
properly, to remain a self-supporting, on-going concern. Higher production costs in
rural Alaska are not a problem unless they exceed the sales income and result in
'Jobs' in rural Alaska".
This reality of the lack of "economies of scale", leads to the importance of SO2
"Sustainability": The sale of "wood products for heat", especially wood pellets must
return enough financial resources (sales) to maintain, over time, the production and
capital replacement costs of the operation. The operation must "Breakeven" to be
sustainable. A preliminary analysis determined, based on the current market, the
production costs must be at or below $120 per ton with attention to all the cost
factors to sustain an on-going pellet producing operation. This cost is not set and is
dependent on the level of actual sales. We currently have "unsolicited" orders for
60 tons of pellets per year for boilers being installed in the region. 60 tons won't
support the operation, however it is an indication wood pellets are in demand and
commodity in the region. Based on research there are 1099 housing units in the
area and 31% of these units utilize some type of wood products for heat. It is
expected as the global economy recovers and the cost of energy increases the use
of wood for heat will increase.
Renewable Energy Fund
Grant Application Round 5
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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.)
This project will install commercially available equipment to produce high heat,
clean burning wood pellets This is a small scale production facility, managed for
sustainability with a goal to significantly reduce the consumption of expensive
diesel fuels for heat generation. The goal of this project is to displace as much
fuel for heating as possible with the local biomass.
Environmental Benefit: The increasing financial cost of fossil fuels for heating
has lead to increases in the consumption of wood products for heat production in
the Copper River Valley. Much of the wood products consumed has been and will
be 'unprocessed cordwood"; trees cut into uniform lengths and used as firewood.
From an economic and environmental stand point this is a "draconian solution" --
similar to burning high sulfur "dirty coal" to solve our nation's dependence on
foreign oil. The use of unprocessed cordwood to mitigate the higher fuel costs
simply moves the economic problem of high energy cost from a "high financial cost"
to a "high environmental cost". In other words the Copper River Valley will trade
low fuel costs for: "high winter smog and lower air quality" caused by smoke and
the associated pollution from burning "cordwood".
A recognized solution to utilizing wood products is to first convert the wood fiber
into "wood pellets". Wood Pellets burn clean, have very lower emissions and the
current technology for stoves and boilers burning pellets exceed current EPA
standards for particulates.
Gulkana Village Council (GVC) has recognized this shift from "oil to wood fuel" for
heat generation and has been producing wood pellets to: mitigate the smoke and
lower air quality from the use of "cordwood" and meet the current local demand for
wood generated heat. By converting to wood pellets instead of burning cordwood
the region will realize the full economic benefits of using wood products for heat
and future energy production.
Financial Benefit: There are two significant financial benefits for this project: (1)
Lower fuel costs for the community and (2) Job creation exploiting the local
biomass for fuel.
Lower Fuel Costs: Fossil fuel costs a volatile and are expected to rise significantly
over the next several years as the global economy recover. Energy costs from
wood fuel is stable and only subjected to the cost of production. Although fuel and
energy costs are a component of the production of fuel, the cost fluctuations will be
relatively stable over time. Currently there is significant long-term financial benefit
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to utilizing wood pellets instead of fuel oil for heat generation. One ton of wood
pellets has the heating equivalent of 120 gallons of heating oil. To compare the
financial benefit:
One pound of wood pellets has a BTU content of 8400 and one gallon of #2 heating
fuel has 138,500 BTU. Cost per BTU produced is calculated as follows:
((Fuel Price per Unit/(Fuel Heat Content per Unit x Approx. Efficiency) x
1MBtu)
The current reported fuel price for the Copper Valley region is 3.57/gallon. At this
price, the fuel cost per million BTU for #2 heating with 80% efficiency is: $32.18
The current reported wood pellet price for the Copper Valley is: $300-310/ton. At
this price, the fuel cost per million BTU for wood pellets at 80% efficiency is 22.32.
"Cordwood", although not the primary product for this project will be part of our
product mix. The current reported prices for "cordwood" in the Copper Valley is
$200/cord. At this price, the fuel cost per Million BTU at 55% efficiency is $16.53.
Although this is the cheaper "Financial option" the "environmental costs" are high
from more smoke, particles and lowered air quality. GVC, will work to meet this
market demand as it builds up their pellet operation. It is expected 'Cordwood' will
continue to be in demand for a variety of reasons.
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.
BUDGET CATEGORY AMOUNT
One Year Operating $200,000
One Year - Feedstock 50,000
Total Operating: 250,000
Equipment 600,000
Design & Installation 175,000
Total Equipment: 775,000
Contingency 50,000
TOTAL Project: 1,075,000
GVC Contribution:
Building 100,000
Equipment 125,000
225,000
TOTAL AEA REQUEST: $850,000
Renewable Energy Fund
Grant Application Round 5
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2.7 COST AND BENEFIT SUMARY
Include a summary of grant request and your project’s total cos ts and benefits below.
Grant Costs
(Summary of funds requested)
2.7.1 Grant Funds Requested in this application. $850,000
2.7.2 Other Funds to be provided (Project match) $,000
2.7.3 Total Grant Costs (sum of 2.7.1 and 2.7.2) $850,000
Project Costs & Benefits
(Summary of total project costs including work to date and future cost estimates to get to a fully
operational project)
2.7.4 Total Project Cost (Summary from Cost Worksheet including
estimates through construction)
$ 1,075,000
2.7.5 Estimated Direct Financial Benefit (Savings) $771,000
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.)
$
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.
GVC will have oversight of this Project. There are qualified and interested design
engineering companies in Alaska who will be solicited to assist GVC with the
installation, and production process. GVC has a working relationship with CE2
engineers and has completed funding requests with the support of WHPacific. It is
expected one of these engineering companies will be selected to assist GVC with
the installation, design and process to ensure the operation meets requirements for
safety, production output and cost containment.
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.)
The Following schedule is based on a Spring 2012 AEA announcement:
Grant Award Announcement May 2012
Authorization to Proceed May 2012
Verify and Complete Site Control May 2012
Equipment and Production Design-Layout June 1-15, 2012
Equipment Purchases June 15, 2012
Investigate and Obtain Permits May-August 2012
Refine Production Run and Cost Analysis August 2012
Commence Pellet Production Sept - Dec 2012
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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.)
Obtain Site Control/Right of Entry/Installation Permits: GVC has site control
and right of entry. There may be a need for permitting through the State for a
variety of agencies. GVC will work closely with the engineering contractor to secure
and complete any necessary permitting.
Resolve Feedstock Supply issues: Sustainability of this operation is dependent
on controlling the production costs. The cost of feedstock is critical and has to be
controlled within a specified range to ensure an ongoing concern. GVC has access
to Ahtna Corporation lands and their support for this operation, so the "volume of
feedstock" isn't a problem. The critical factor is the quality of the feedstock. To
maintain the production of a quality product -- the feedstock into the process has to
be "clean, a certain size and within a specified cost range" Establishing this
feedstock supply into the production process will be a critical milestone. Feedstock
supply issues are expected to be resolved over time with a variety of solutions.
Complete Installation and Production Design: Installing new equipment
requires time to integrate and refine the production process. To keep this
installation cost down, an initial design of the equipment installation will be done.
The installation design report will be completed 30 days after notification to
proceed.
Equipment Purchases: GVC contracted engineers will order the necessary
equipment based on the finalized installation report.
Equipment Installations: Equipment will be installed and the production set up
will be done with any assistance from the vendors and with engineer oversight.
Any permits will be signed off and safety procedures completed. Any permitting
that is required will be addressed at this point.
Initial Production: Production costs are critical for this operation. This milestone
will refine the process, set the level of production and track production costs and
production output. The first run production is scheduled for August/Sept 2012.
Full Production: The level of output for this operation is limited to the capacity of
the equipment. This operation is designed to be a small scale pellet production
facility meeting the three strategic objectives. The level of production will be
refined to maximize the output at the lowest operation and maintenance costs.
This refining will take upwards of 6-8 months to achieve the best production output
at the lowest production cost.
Renewable Energy Fund
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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 resu mes and references
for known, key personnel, contractors, and suppliers as an attachment to your application.
GVC will hire an engineering contractor, (GVC has a working relationship with CE2)
to complete the project milestones. Grant reporting will rest with GVC
administrator Mr. LA Monica "Bry" Claw, with support for the reports to come from
the contract engineer. Grant management and reporting will be done through the
ANC accounting and bookkeeper. Responsibility for the implementation of this
project will rest with GVC.
3.5 Project Communications
Discuss how you plan to monitor the project and keep the Authority informed of the status.
Weekly and monthly project coordination meetings will be held during the design,
installation and initial produ ction runs to address issues as they arise. It is
important to resolve the Feedstock supply, production cost and throughput issues to
ensure the operation will sustain operations over time. The engineering contractor
will provide quarterly reports to ANC for finalization and submission to AEA.
3.6 Project Risk
Discuss potential problems and how you would address them.
Site control and any concerns of permitting from the State fire marshal or other
agencies with jurisdiction need to be addressed. Proper communications and any
issues with permits needed from federal agencies or site control will be addressed
immediately with the GVC council and federal agencies. Site control is not
expected to be an issue.
Feedstock supply over the duration of the production process must be ensured.
Forward planning and supply contracts with local vendors will be made and any
assistance they need to ensure the feedstock is adequate quality will be provided
by the contract engineer. Equipment selection will be driven by the quality of
feedstock available to produce commercial grade pellets. Volume of feedstock is
not in question--however the quality of the feedstock into the mill has to be within
a specific cost range.
Equipment acquisitions There is a small risk equipment will not be available.
Gulkana is on the road system and not subject to the "Barge Schedule" and it is
possible to adjust the installation schedule. Risk in this case is expected to be
small.
Renewable Energy Fund
Grant Application Round 5
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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
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.
Based on current fuel costs for heating oil in the Copper River Valley ($3.57/gallon)
and the cost per Million BTU of $32.18 the development of this project will displace
fuel oil with a biomass fuel with current reported wood pellet price for the Copper
Valley of: $300-310/ton and fuel costs per million BTU (for wood pellets) at 80%
efficiency at $22.32/MBTU. The Proposed energy resource is the local biomass.
This resource will displace a significant volume of diesel fuel in the community and
surrounding residential and commercial as well government owned buildings. Initial
annual fuel displacement estimates for a small scale sustainable pellet operation is:
216,000 gallons of fuel oil per year. at current prices: 3.57 x $216,000 =$771,120
of annual displacement. This represents $771,000 of new money into the local
economy.
The largest advantage to utilizing locally produced biomass is the creation of local
jobs. The production costs for this project will financial resources kept in the local
and regional economy.
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.
In the Gulkana Community there are 36 Housing units and 3 Public facilities. The
current configuration for these residents is fuel oil furnaces and wood stoves. Most
of these units were built or brought in during the 1990's. 100% of Gulkana will be
serviced by this project.
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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.
Gulkana residents and surrounding communities use a combination of heating oil
and wood products for heating. Heat generated by wood is done with a
combination of 'cordwood stoves, pellet stoves and pellet and cordwood fired
boilers. No survey information in the exact number of each type of stove or boiler
is being utilized has been done for the Copper Valley.
4.2.3 Existing Energy Market
Discuss existing energy use and its market. Discuss impacts your project may have on energy
customers.
The market is: residential, commercial and government facilities; consumers heating
their homes, businesses and government installation in the Copper River Valley.
There are 1099 occupied housing units and 336 major business facilities in the
region. 32% of the residential units have "Wood" as their primary or supplemental
heat source. The Copper River School District is making investments to convert a
large percentage of their heating load from fossil fuels to fuels from wood products.
There are a substantial number of for profit commercial operations that use wood
products as a fuel source for heat.
Virtually any building -home, business or government facility in the Copper River
Valley is our target market. NOTE: The strategic objectives are to displace fuel,
create local jobs and remain sustainable - Achieving these goals will determine the
output and size of the facility. There are no plans to "grow this operation" into a
"24/7 60,000 ton national producer of wood pellet"
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
BIOMASS: GVC based on the existing market for wood products, will complete the
installation of equipment to produce premium grade wood pellets and provide
seasoned cordwood to displace diesel fuel for heat generation. (Replace Diesel fuel in
the region for wood products fuel).
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Optimum installed capacity: The optimum output of wood products will be
determined by the market demand, currently there are 1099 residential homes in the
Copper Valley region with 32% utilizing some type of wood fuel for heat generation.
Assuming a 25% market share, GVC will configure their operation to provide
$600,000 of annual sales of wood products; cordwood and wood pellets for the first
year of operation. NOTE: The market will consist of direct sales, supply distribution
to local retailers and supply contract for wood pellets.
Anticipated Capacity: The production facility will be configured to produce 3 cords of
seasoned wood and 2 tons of pellets. These levels are attainable with the current
known feedstock and will provide for adequate return of the production costs. It is
anticipated the levels of production and sales will rise significantly (Production is
slated to begin September 2012) and the capacity and output refined to optimize
output within a specified range of production costs. (see attached financial analysis)
Anticipated annual generation: When the production is refined and pellet operation
matures the expected BTU production will displace 145-200,000 gallons of diesel
fuel. This represents 1,200 - 2000 tons of wood pellets. This anticipated annual
generation will take 36 -60 months to achieve. This is due to the installation of
pellet fired equipment in the region - both residential and commercial installations
(stoves and boilers installed by homes, business and government).
Anticipated barriers. There is a risk of not securing public support for this
project based on the "conventional wisdom" -- Pellet plants need to have
"economies of scale " to be successful. To be successful in a small scale
pellet operation - "sustainability " is the key factor and "Production Costs =
Jobs". It is important to highlight this fact at every opportunity. Proper
analysis of the variable and fixed costs and the market is essential to the
success of a small scale wood pellet operation.
Basic integration concept: Building up a small scale pellet operation is a stand-alone
operation with no integration into an existing plant.
Delivery: Supply contracts will be delivered by truck or loaded directly at the plant
site in Gulkana.
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 land and site are owned by GVC and there are no anticipate issues.
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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
Permitting will be determine by the engineering contractor. The design and
installation of equipment report will provide application to any required permits.
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 production plant will be located on the outskirts of Gulkana. There will be
minimal excavation (if any) so no anticipated permits are required.
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
The total project cost is as follows:
BUDGET CATEGORY AMOUNT
One Year Operating $200,000
One Year - Feedstock 50,000
Total Operating: 250,000
Equipment 600,000
Design & Installation 175,000
Total Equipment: 775,000
Contingency 50,000
TOTAL Project: 1,075,000
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Contributions: GVC will contribute -- Building. The Building was erected in 2009.
GVC also will contribute purchased equipment valued at 100,000 Equipment 125,000
Proposed Production Facility:
Financial Projection Goals:
"Proving the Market and Creating a Budget" Is a small wood
products for heat operation in Interior Alaska sustainable?
31% of residents reported by the "Selected Housing Characteristics 2005-2009
Dataset: Copper River Census Subarea" are utilizing wood products for heat in the
Copper River Basin.
There are a substantial number of business and government facilities utilizing
or converting to wood products for fuel - an example is, a major user of fuel in
the area, Copper River School District, is converting Kenny Lake School to a
biomass boiler fueled with wood pellets.
The demand for heating fuel in the region is "inelastic" meaning as the price
of fuel rises the level (volume) of consumption will remain constant. In this
case alternative fuel with a lower and consistent cost will be selected for
consumption. In this case it would be "biomass".
The "Wood Products for Heat" market is projected to support a small
biomass operation and Gulkana Village Council is positioned to capture at
least 25% of the market by providing wood pellets and seasoned cordwood.
Based on the market, to sustain this operation, GVC will need to generate
annual sales of $320,000 to meet variable and fixed operating costs by
producing and selling: Three (3) cords of seasoned wood and two (2) tons of
pellets per day.
Sustainability: Breakeven level
Account:
Cordwood - Cord
Wood Pellets -
Tons
Annual - Breakeven Sales Revenue $161,478 $158,373
Annual - Breakeven Sales Units 807 528
Monthly production 67 44
Daily - (240 Workdays per year) 3 2
Renewable Energy Fund
Grant Application Round 5
AEA12-001 Grant Application Page 15 of 21 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.)
Major costs associated with wood products for fuel are:
(1) Feedstock and (2) production costs. Feed stock for this operation are logs
available for cutting and splitting and an adequate and viable supply of wood chips to
maintain a pellet operation.
There is plenty of feedstock and the cost of acquiring it is accounted for as a variable
cost. For these projections the following assumptions are being made:
Major Cost Drivers:
Variable Cost Drivers Cost
Feedstock - Wood Pellets $50/ton
Feedstock - Cordwood $30/cord
Fixed Cost Drivers Annual Cost
Wages & Salaries $138,998
Fixed Operating Costs $191,100
Projected Sales a: Annual
Product Volume Revenue
Wood Pellets 920 Tons $240,000
Cordwood 1,200 Cords $276,000
Production Crew:
Production Crew Cost
Foreman 48,000/Year
2 Full time Production Workers $16/Hour
1 Part-time Production Workers $16/Hour
Equipment Operator $18/Hour
a NOTE: The objective of this analysis is to show the market demand for "wood
products for fuel" is viable. The product mix in this case would highly variable.
Since the market for wood fuel is a combination of cordwood and wood pellets, both
of these products will be offered. The ratio of cordwood and pellet sales will be
determined by the market demand. It is the intent of GVC to market the pellet
operation and work to increase the demand for pellets.
Renewable Energy Fund
Grant Application Round 5
AEA12-001 Grant Application Page 16 of 21 7/1//2011
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
There are no power purchase agreements
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.
Business plan & Related Plan Research
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
Fuel Displacement: One ton of Wood Pellet will displace 120 gallons of diesel fuel.
This sustainable operation, when fully refined and when the production of pellets is
80% of the output will produce 1,800 tons of pellets and displace 200-225,000
gallons of diesel fuel.
Annual Revenue: The anticipated revenue from this operation will be $516-625,000
annually.
The Job Creation: Operation and Maintenance -- Total Salaries and Wages to the
local economy will begin at $140,000 annually and grow steadily at a 5% annually.
An annual payroll when the operation mature is expected to be near $200,000
annually. It is important to note this payroll represents money INTO the local
economy for a sustainable small scale wood pellet operation.
There are also a variety of tax credits and other incentives; green tag sales,
carbon offsets to add to the annual revenue stream this will be determined. As
the project progress into the design stage these figures and the benefit of the
installations will be more evident based research.
Renewable Energy Fund
Grant Application Round 5
AEA12-001 Grant Application Page 17 of 21 7/1//2011
SECTION 6– SUSTAINABILITY
Discuss your plan for operating the completed project so that it will be sustainable.
Include at a minimum:
Proposed business structure(s) and concepts that may be considered.
How you propose to finance the maintenance and operations for the life of the project
Identification of operational issues that could arise.
A description of operational costs including on-going support for any back-up or existing
systems that may be require to continue operation
Commitment to reporting the savings and benefits
Proposed business structure(s) and concepts that may be considered: GVC will keep
the wood products operation as a separate entity. This will allow for proper
accounting of the operation. Sustainability is an important objective. In this case
GVC will manage our production costs to meet the existing demand for our products
- both cordwood and pellets.
How you propose to finance the maintenance and operations for the life of the
project: An analysis was completed to determine the cost of production and a range
for the variable and fixed costs. Strict adherence to the cost production will be
closely managed to ensure the revenue stream will service future operation and
maintenance costs. (see business plan for further discussion).
Identification of operational issues that could arise: Managing variable and
production costs is important. If there are increases of feedstock costs over a
specified range then there will be a problem with sustainability.
A description of operational costs: Operation Costs are Variable, Salaries & Wages
and Fixed Costs (See Business Plan for a detailed budget) Following is an iteration of
proposal costs:
Account Year One Year Two Year Three
Revenue 516,000 561,000 623,400
Cost of Sales 72,800 78,400 85,460
Gross Margin 443,200 482,600 537,940
Salaries and Wages 138,998 143,168 147,463
Fixed Costs 191,100 200,655 170,557
Other Expenses 140,079 141,104 141,104
Net Income (26,977) (2,326) 78,817
Renewable Energy Fund
Grant Application Round 5
AEA12-001 Grant Application Page 18 of 21 7/1//2011
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.
"Experience" Producing wood pellets is a learning process. GVC has been
developing the process to convert the local biomass into wood pellets for several
years. Many of the issues hampering a wood pellet operation in rural Alaska have
been resolved or mitigated. This includes the composition of the feedstock, the
necessary processes to produce high BTU low emission pellet and the operation has
become well known in the region; unsolicited requests for wood pellets purchases
have been made to GVC.
To date GVC, without any advertising or marketing has standing orders for 50
tons/year. Although this amount is insignificant to maintain a production facility the
orders represent the level of market demand and shows the development of a
healthy wood pellet market in the Copper Valley.
A mockup operation with each process defined and developed was completed in
2008-9 and can be seen online at: http://www.youtube.com/watch?v=SDGWxh3S-
QY. This effort determined high quality pellets could be produced in the region. As
a practical matter the operation wasn't intended to meet demand, but to
demonstrate a process to successfully produce high heat, low emission wood pellets
from the local biomass.
To date GVC has erected a production building and purchased some pellet
production equipment - these purchases were made outside the design and
installation report to be done before equipment is purchased. The existing
equipment will be evaluated and either installed or sold.
"Operational Budget:"
The "Roadmap" to manage the operational expenses is important to ensure an on-
going concern. Following are the account groups and the limits for each account
category. This includes Salaries and Wages and the Fixed Costs. The attached
spreadsheet will show the monthly account limits. Following is the annual budget:
(next page).
Renewable Energy Fund
Grant Application Round 5
AEA12-001 Grant Application Page 19 of 21 7/1//2011
ANNUAL BUDGET:
Salaries and Wages
Year One Year Two Year Three
Plant Foreman
- - -
Salaries
48,000 49,440 50,923
Full-Time Employees
62,400 64,272 66,200
Part-Time Employees
18,720 19,282 19,860
Independent Contractors
- - -
Payroll Taxes and Benefits
9,878 10,174 10,479
Total Salary and Wages
138,998 143,168 147,463
Fixed Business Expenses
Advertising
21,600 22,680 19,278
Car and Truck Expenses
- - -
Commissions and Fees
- - -
Contract Labor- Acct/Payroll
22,200 23,310 19,814
Garbage Service
900 945 803
Customer Discounts and Refunds
- - -
Dues and Subscriptions
- - -
Vault Pumping-Sewage
- - -
Insurance & Bond (Liability and Property) 15,000 15,750 13,388
Internet
1,800 1,890 1,607
Legal and Professional Fees
- - -
Office Expenses
1,800 1,890 1,607
Postage and Delivery
3,600 3,780 3,213
Rent (on business property)
- - -
Rent of Vehicles and Equipment
9,600 10,080 8,568
Repairs and Maintenance
51,000 53,550 45,518
Fuel
30,000 31,500 26,775
Telephone and Communications
3,600 3,780 3,213
Travel
- - -
Utilities
30,000 31,500 26,775
Total Fixed Business Expenses
191,100 200,655 170,557
The level of maintenance is set at 10% of the equipment costs. The other major
categories: Overhead maintenance/accounting, fuel, electricity and advertising.
These are projected costs and will vary - They are set at the maximum levels and
will probably be less. An example is "Advertising" currently this is set as a
"percentage of Sales" and to date GVC is receiving inquiries into orders for wood
pellet. The probably is high for reduced advertising expenses.
NOTE: These expense budget categories were set at the maximum levels and there
is substantial opportunity to lower these categories as the operation is commenced.
Renewable Energy Fund
Grant Application Round 5
AEA12-001 Grant Application Page 20 of 21 7/1//2011
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.
At this stage of the project there is no reported opposition to the project.
The project is widely known throughout the local community and region.
AHTNA Corporation is offering a commitment to collaborate with this project
and they will be invaluable to establish a reliable source of feedstock as the
wood pellet operation matures (18 months)
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
BUDGET CATEGORY AMOUNT
One Year Operating $200,000
One Year - Feedstock 50,000
Total Operating: 250,000
Equipment 600,000
Design & Installation 175,000
Total Equipment: 775,000
Contingency 50,000
TOTAL Project: 1,075,000
GVC Contribution:
Building 100,000
Equipment 125,000
GVC Contributions 225,000
TOTAL AEA REQUEST: $850,000
We are requesting $850,000 to complete the design and installation of
equipment for our wood products for fuel production operation.
TASK Total
Obtain Site Control/Right of Entry/Installation Permits $10,000
Resolve Feedstock Supply issues 25,000
Complete Installation and Production Design 75,000
Equipment Purchases: 600,000
Equipment Installations 80,000
Initial Production: 30,000
Full Production: 30,000
TOTAL: $850,000
Grant Application
Gulkana Village Biomass Fuels Project
Renewable Energy Fund Round V
AEA Application for Design, Equipment &
Gulkana Village Council
8/25/2011
Installation Work
Contents: Attachment A Business Plan
Copper Valley Wood Products
BUSINESS PLAN
Producing high quality -- high heat -- low emission "premium grade" wood
pellets to meet the wood products market demand for heat and energy
production in the Copper River Valley.
Gulkana Village Council
P.O. Box 254
Gakona, Alaska 99586
Phone: 907-822-3746
Fax: 907-822-3976
Making the Case: The Economic Realities of a
Small Scale Wood Pellet Operation in Rural Alaska
Gulkana Village Council: Copper River Valley Wood Products - Business Plan
Contents
1.0 Executive Summary .............................................................................................. 2
Environmental Benefit ............................................................................................. 3
1.1 Products and Services ........................................................................................ 4
1.2 The Financing .................................................................................................... 4
1.3 Mission Statement ............................................................................................. 5
1.4 Key Management Team ...................................................................................... 5
1.5 Sales Forecasts ................................................................................................. 5
Estimated Sales and Market Share: ......................................................................... 5
1.6 Expansion Plan .................................................................................................. 6
2.0 Company and Financing Summary .......................................................................... 6
2.1 Owners ........................................................................................................... 6
2.2 Required Funds ................................................................................................. 6
2.3 Investor Equity .................................................................................................. 7
3.0 Products and Services ........................................................................................... 8
Wood Pellets ........................................................................................................ 8
Good Old Fashioned "Cordwood" ............................................................................. 9
Wood Pellet Fired Stoves ....................................................................................... 9
Electrical Generation ............................................................................................. 9
4.0 Strategic and Market Analysis .............................................................................. 10
4.1 Economic Outlook ............................................................................................ 10
One Small School ............................................................................................... 10
Stable Energy Demand ........................................................................................ 11
Growing Region for Wood Products ....................................................................... 11
4.2 Industry Analysis ............................................................................................. 12
A Typical Biomass Pelleting Operation ................................................................. 12
PELLET PRODUCTION COSTS .............................................................................. 13
Regional Analysis ................................................................................................ 16
Initial Capital Investments ................................................................................... 16
4.3 Customer Profile .............................................................................................. 16
4.4 Competitive Analysis ........................................................................................ 17
5.0 Marketing Plan ................................................................................................... 17
5.1 Marketing Objectives ........................................................................................ 17
5.2 Marketing Strategies ........................................................................................ 17
5.3 Pricing ............................................................................................................ 17
6.0 Organizational Plan and Personnel Summary .......................................................... 17
6.1 Organization Gulkana Village Council.................................................................. 17
Organizational Capacity- GVC ................................................................................. 19
Organizational Capacity- Wood Products .................................................................. 20
6.2 Organizational Budget ...................................................................................... 20
6.3 Management Biographies - ............................................................................... 22
7.0 Strengths, Weakness, Opportunities and Threats .................................................... 22
7.1 The Strengths - Why this Project is Viable.......................................................... 22
7.2 The Weaknesses - The Achilles Heels ................................................................ 23
7.3 The Opportunities - Jobs, Jobs, Jobs! ................................................................ 23
7.4 The Threats - The "Monkey Wrenches" .............................................................. 24
Summary ............................................................................................................. 24
Page 1
8.0 Financial Management Analysis ............................................................................. 25
Breakeven Analysis- Combined Product ...................................................................... 26
Financial Projection ................................................................................................. 30
9.0 References ......................................................................................................... 58
Gulkana Village Council: Copper River Valley Wood Products - Business Plan
1.0 Executive Summary
In the Cooper River Basin 31% of the residents and a substantial number of business and
government facilities utilize wood products to generate heat. (US Census). The majority of
this heat production is from "cordwood" and over time it is expected wood pellets will
replace cordwood as the primary fuel source. Cordwood production is a simple process of
harvesting and cutting wood to size. However wood pellet production becomes a challenge
when developing small scale operation.
The scale of wood pellet production ranges from large "24 hour 365 day" commercial
operations producing 100,000 tons per year to small proprietors p roducing enough pellets to
meet their needs on a farm.
The objectives of these two operations are clear. The large commercial production goals
are to realize the greatest "economies of scale", keeping the cost per ton to a minimum and
generating the greatest profit. In the small rural farm the objective is to service their needs
and generate savings by utilizing their crops residual biomass for bedding or heat.
This plan offers analysis and justification for Gulkana Village Council (GVC) to develop a
very small scale and sustainable wood products for fuel operation in the Copper River Valley
in Alaska. This operation includes the production of cordwood and a wood pellet operation
to meet the growing demand for wood pellets in our local community and surrounding area.
The Strategic Objectives (SO) of our small scale operation are:
1) SO1: Displace 100% of the very expensive fossil fuels used for heat production in
our community.
2) SO2: Manage our production operation to ensure sustainability and,
3) SO3: Create local jobs in our rural community supported by our natural resources.
Small scale pellet operations do not enjoy the "economies of scale" of their larger cousins
and experience higher production costs "per ton of pellets produced". This fact makes it
important to identify all the production costs and manage them properly, to remain a self-
supporting, on-going concern. Higher production costs in rural Alaska are not a problem
unless they exceed the sales income and result in 'Jobs' in rural Alaska".
This leads to the importance of SO2 "Sustainability": The sale of wood pellets must return
enough financial resources to maintain, over time, the production and capital replacement
costs of the operation. The operation must "Breakeven" to be sustai nable. A preliminary
analysis determined, based on the current market, the production costs must be at or below
$120 per ton with attention to all the cost factors to sustain an on-going pellet producing
operation. Following is a table of the cost driver associated with a typical pellet operation.
Page 2
Gulkana Village Council: Copper River Valley Wood Products - Business Plan
Key cost objects to maintain "Sustainability": % of process per ton of production
Pellet Process Operations - Cost Objects Capital Cost
($/t)
Operating Cost
($/t) Total Cost ($/t) Percent Cost Distribution
Raw material[a] 0.34 19.39 19.73 39.02
Drying operation 2.46 7.84 10.30 20.37
Hammer mill 0.25 0.70 0.95 1.88
Pellet mill 1.43 1.88 3.31 6.55
Pellet cooler 0.13 0.21 0.34 0.67
Screening 0.11 0.05 0.16 0.32
Packing 0.56 1.37 1.93 3.82
Pellet Storage 0.07 0.01 0.08 0.16
Miscellaneous equipment 0.42 0.33 0.76 1.50
Personnel cost 0.00 12.74 12.74 25.19
Land use and building 0.21 0.05 0.26 0.51
Total cost 5.99 44.58 50.57 100
Source (ECONOMICS OF PRODUCING FUEL PELLETS FROM BIOMASS S. Mani, S. Sokhansanj, X. Bi, A. Turhollow)
Environmental Benefit
This project will provide a substantial environmental benefit. The increasing financial cost of
fossil fuels for heating has lead to increases in the consumption of wood products for heat
generation in the Copper River Valley. Much of the wood products consumed has been and,
unless another alternative is readily available, will continue to be 'unprocessed cordwood";
'cordwood' is simply trees cut into uniform lengths, dried and used as firewood. From an
economic stand point, since cordwood produces so much air quality issues, is a draconian
solution for lower energy costs -- similar to burning high sulfur dirty coal to solve our
nation's dependence on foreign oil.
The use of this unprocessed cordwood to mitigate the higher fuel costs simply moves the
economic problem of high energy cost from a "high financial cost" to a "high environmental
cost". In other words the Copper River Valley will trade low fuel costs for: "high winter
smog and lower air quality" caused by smoke and the associated pollution from burning
"cordwood".
A recognized solution to utilizing wood products is to first convert the wood fiber into "wood
pellets". Wood Pellets burn clean, have very lower emissions and the current technology for
stoves and boilers burning pellets exceed cur rent EPA standards for particulates. The
community of Gulkana Village Council (GVC) has recognized this shift from oil to wood and
has been producing wood pellets at small operation -- gaining the most of the surrounding
wood products. The purpose of this business plan is to raise funds to increase the capacity
of Gulkana Village Council's existing wood pellet production facility and offer high quality,
high heat wood pellets to local and regional consumers a s they convert to biomass as an
alternative to high cost fossil fuels for heat and electrical generation. By converting to wood
pellets instead of burning cordwood the region will realize the full economic benefits of
using wood products for heat and energy production.
Page 3
Gulkana Village Council: Copper River Valley Wood Products - Business Plan
1.1 Products and Services
Our products and services will be: (1) Production of "Premium Grade" wood pellets for
heating, (2) "Cordwood" to meet the existing market demand for wood fuel and (3)
position our production operation to address probable future wood pellet demand for the
generation of electricity in the Copper River Valley.
Our goal, over time is to expand and meet the local market for wood pellets. Pellets is the
best option for "wood for fuel" and following is the pellet equivalent for other fuels: (Source:
"Wood Pellets" Introduction to their Production and Use - David Jones Mississippi State University"
One ton of pellets is equal to:
120 gallons of heating oil
170 gallons of propane
16,000 ft3 of natural gas
4,775 kilowatt hours of electricity
Wood Pellets: for producing heat are all not all: "Created Equal". Some pellets produce
more heat than others, or result in more harmful emissions, contribute to more air pollution
and produce more soot and by-products than other pellets when they are burned. We are
fortunate to have vast tracts of "White Spruce", a soft conifer wood, well suited for wood
pellet production. In our area, these large tracts of "White Spruce" can be used to produce
some of the best graded wood pellets.
Electrical Generation: Our community's electrical service is provided by Copper River Electric
Association (CVEA) though a regional intertie. The sources of electricity are from a
combination of hydro-electric and diesel powered generators. With a recent increase in
load, CVEA now generates 50 percent of its annual electricity requirements from fossil fuel
and, as a consequence, the cost of power CVEA members pay on their electric bill remains
high. For this reason, CVEA is working toward its vision "to reduce or eliminate our
dependence on fossil fuel and stabilize the Cooperative’s cost of generation with regional,
sustainable resources". Biomass fuel may be an important contribution to the generation of
electricity in our area and we will remain interested in supporting biomass fuels for
electricity and as this opportunity develops take steps to meet the market demand for pellet
fueled generators to produce electricity.
1.2 The Financing
Gulkana Village Council is seeking to raise funds from a variety of public and when the
opportunity and financial position warrants, private sources. This business plan assumes
GVC will receive public funding support. The funding will be used for the following: Expand
our current "Wood products for fuel" operation with and emphasis on our pellet operation:
Installation of Pellet Mill equipment with enough capacity to meet the local pellet market to
completely displace fossil fuel for heat in our community.
Page 4
Gulkana Village Council: Copper River Valley Wood Products - Business Plan
1.3 Mission Statement
Our mission statement for this venture is: "Capture the greatest economic benefit by
exploiting the local biomass for energy and heat production."
Harvesting, processing and utilizing the local wood resource for heat not only displaces fuel,
but had a tremendous economic impact to the entire region; the money expended in the
region for heat -- remains in the region -- and the money is re-circulated in the area and
expended on other goods and services.
1.4 Key Management Team
Pellet Mill Manager Provide direct supervision for the Pellet Plant operating staff and will
be responsible for the safe operation of the plant.
Tribal Accountant/Admin
Assistant
Administrative support for the project, including oversight of
accounting/grant management and marketing.
Tribal Administrator Project oversight - provide administrative support; manage public
and private funds; grant compliance.
Production Workers Day to day operation of the wood pellet plant; experienced staff to
operate and maintain the pellet process.
1.5 Sales Forecasts
GVC expects the expansion of their wood pellet operation to be a welcome addition to the
region. It will produce premium grade wood fuel and GVC expects to capture at least 25%
of the "wood products for heat" market. This is based on the research of the residential
and commercial market utilizing wood products for heat. Although wood pellets are not
100% of the market we will be supplying "cordwood" as the market transitions into cleaner
burning pellets.
The following estimates are based on the "2005-2009 American Community Survey 5 Year
Estimates" and the reported active businesses in the Copper region reported in the Copper
Valley Development Association 2009 publication.
Estimated Sales and Market Share:
Type of Structure Annual
Heating Cost # of Units
% of
Units w/
Wood
Heat
Total $
expended for
Wood Heat
% of
Market
Share
Annual
Income
Residential * $ 3,500 1,099 30% $1,153,950 25% 288,488
Commercial $ 7,500 300 30% 675,000 25% 168,750
Large Commercial $ 35,000 36 20% 252,000 25% 63,000
$2,080,950
Projected Annual Sales: $ 520,238
* 2005-2009 American Community Survey 5 Year Estimates
Page 5
Gulkana Village Council: Copper River Valley Wood Products - Business Plan
1.6 Expansion Plan
There are no plans for expansion into the state-wide or national wood pellet market. The
intent of this project is to establish the GVC wood pellet operation in the local and regional
market to meet the three important objectives: (1) Displace expense fuel oil with clean
burning wood pellets, (2) establish a market to maintain and sustain our production
operation and (3) Create long-term renewable energy jobs for our community.
2.0 Company and Financing Summary
2.1 Owners
"Copper Valley Wood Products" will be owned by Gulkana Village Council (GVC). GVC is the
Federally recognized tribe representing the members in Gulkana. Gulkana Community is
located in the Copper River basin in south-central interior Alaska at mile 127 of the
Richardson Highway. The Copper River basin is a large interior drainage basin
approximately the size of the state of Ohio with approximately 3,000 residents in several
small settlements and communities scattered throughout the basin. A regional hub
community is located 12 miles south. The Community is connected by the Alaska highway
system to other communities on the road system and “urban” areas of Alaska. Our site is
situated approximately 200 road miles east of Anchorage on the Glenn Highway, and
approximately 250 road miles south of Fairbanks on the Richardson Highway.
2.2 Required Funds
GVC's existing small pellet production facility has generated orders from all over the Copper
River Valley Basin and towns and communities from Valdez to the extreme south to
Fairbanks at the north end of the Richardson Highway. This demand is due to the quality of
our pellets; high heat, with low emissions! To meet this demand and develop a sustainable
operation, GVC will request funds to acquire the following: Equipment and "Year One"
Production Costs:
Cost Object Amount
Capital Cost - Equipment: $ 282,000
Capital Costs - Installation: $ 140,000
Total Equipment: $ 422,000
One Year Feedstock @ $25/ton $ 40,000
One Year Operating: $ 198,000
Total Operating: $ 238,000
Contingency: $ 40,000
Total AEA Application Request: $ 700,000
Page 6
Gulkana Village Council: Copper River Valley Wood Products - Business Plan
Equipment Descriptions:
Equipment Description: Cost
3 Pellet Mill @ $52,000 $156,000
3 Hammer Mill @ $11,000 33,000
3 Air Filtration @ $10,000 30,000
3 Conveyors @ $1,000 3,000
3 Augers@ $2,500 7,500
2 Lift Elevators @ $6,000 12,000
2 Belt Dryers @ $20,000 40,000
Equipment Total 281,500
Installation @ 50% 140,750
Total Capital Cost $422,250
2.3 Investor Equity
GVC owns the land and building for the wood products
operation. The asset values are set at "cost", $115,000.
This valuation is for the purposes of making "In-Kind"
contributions and the market value hasn't been
established, however its assumed to be substantially
higher.
GVC will own the operation and keep the management
and accounting separate from their tribal operations.
There will be an initial contract relationship with GVC for
the accounting, bookkeeping and payroll functions and
some other management, consulting and advertising
support. As the operation grows these functions will
become independent functions.
Any partnerships, joint ventures or other business
combinations will be at the discretion of the tribal council.
None are planned.
The primary purpose of this project is to displace expensive fossil fuels with heat generated
from local biomass. There may be grant provisions to adhere to or consider if the operation
is expanded into a strictly commercial operation for profit or sold to an outside interest. It
is unknown, if any what grant criteria must be met to secure public funds to meet the
primary objective of "lower energy costs".
Wood Pellet Hammer Mill
Page 7
Gulkana Village Council: Copper River Valley Wood Products - Business Plan
3.0 Products and Services
Wood Pellets
Our primary product will be "Wood Pellets. During recent years, standards for the
characteristics of wood pellets have been and are being developed in an effort to
"standardize" the wood pellet fuel industry.
The product our company will produce; wood
pellets from "White Spruce" is recognized as
"Premium Grade" wood pellets. The premium
grade was documented during January and
February 2010 from testing at the Alaska Mill
Company in Delta Junction and the test results
were published in the July 2011 General
Technical Report PNW-GTR-845. The report
was titled: Production of Wood Pellets From
Alaska- Grown White Spruce and Hemlock. The
research was completed by: Allen M. Brackley
and Daniel J. Parrent. (Appendix A)
Our wood pellet product will be used as fuel for our local heating needs and this will move
our goal forward to eventually displace 100% of our heat and thermal loads produced from
fossil fuels -- diesel fuel, with inexpensive and renewable energy from our "Premium grade"
wood pellets.
GVC will actively engage in the production and distribution of wood pellets (by the ton),
which are produced from local wood resources. The Company will acquire inventories of
wood products from local and regional sources including: Regional land owners and forest
products companies engaged in the tree harvesting business from State of Alaska timber
sales. GVC has support from Athna Corporation, a large land owner in the area. Once
acquired, the GVC pellet mill will produce high grade wood pellets that are commonly used
in small free standing household furnaces and commercial boilers being installed in the
region.
Wood pellets are a near carbon neutral source of renewable bio fuel used for both heat and
power generation:
Home and commercial heating systems can be easily fit or retrofit with pellet burning
furnaces (small and medium scale use);
Existing diesel fired boilers can be replaced to utilize wood pellets with minimal capital
investment.
Wood pellets are readily transportable by sea, rail, and road. This leaves few markets, if
any, inaccessible.
Source: "Production of Wood Pellets From Alaska Grown White Spruce and Hemlock"
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Gulkana Village Council: Copper River Valley Wood Products - Business Plan
As a clean, renewable, high energy density, portable, and easy to use energy source,
wood pellet demand is expected to increase steadil y over the next decade.
Wood Pellets will eventually be utilized for electrical generation; current pellet powered
generators meet or exceed current EPA air quality standards and technology is expected
to keep pace with future EPA air quality standards.
A January 2008 Standard & Poor’s Industry Survey on the paper and forest products sector
noted opportunities in bio-fuels and scale production of biomass as “one of the more
promising opportunities for the forest products industry,” particularly given rising fossil fuel
prices and increasing environmental concerns.
When compared to all wood products utilized for heat and power, Wood Pellets appear to be
the best alternative. To meet this demand we are constructing a facility to manufacture
wood fuel pellets utilizing local wood and biomass that has no other commercial value and
would normally go to waste as feedstock. Our operation will involve harvesting, chipping,
and processing the material into wood fuel pellets for residential and commercial markets.
The first phase of the project is under construction. We are erecting a 30’ by 40’ metal
building for the pellet plant. The first pellet production line will be installed in the building.
We will shortly be accepting delivery of the equipment for this first line, which will produce
one ton of pellets per hour.
Good Old Fashioned "Cordwood"
The market for wood products in the region isn't 100% wood pellets. There are stoves and
boilers fueled by seasoned cordwood. The processing of cordwood is straight forward with
producing a variety of sizes and volumes. This is the low grade "option" for our products
and we'll be pushing the conversion of wood pellet stoves and pellet fired boilers to our
customers. However, it is a viable market and GVC will meet the demand for cordwood as it
works to develop and expands the pellet operation.
Wood Pellet Fired Stoves
The largest percentage of our customers will be residential users. We will also be looking
into retail opportunities for selling wood pellets stoves and pellet fired boilers or providing
information on the advantages of pellets over cordwood for fuel. This strategy will expand
demand for our wood pellets.
Electrical Generation
A potential renewable resource in the Copper Basin is biomass electrical generation. This
could be either through a cogeneration-type operation that utilizes waste heat from a wood
product manufacturing operation or by directly utilizing wood products in a generation plant.
CVEA has been contacted by a local native corporations with significant land and timber
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Gulkana Village Council: Copper River Valley Wood Products - Business Plan
resources that are interested in pursuing a relationship to study the economic case of a
wood fueled biomass plant.
There are significant challenges to address before wood products for electrica l generation
can be utilized. Emerging EPA regulations may require that BACT standards to be utilized in
all aspects of a generation plant. "BACT" Standards is the acronym for "Best Available
Control Technology" and is a pollution control standard mandated by the United States
Clean Air Act. The U.S. Environmental Protection Agency (EPA) determines what air
pollution control technology will be used to control a specific pollutant to a specified limit.
When a BACT is determined, factors such as energy consumption, total source emission,
regional environmental impact, and economi c costs are taken into account. It is the current
EPA standard for all polluting sources that fall under the New Source Review guidelines and
each operation is determined viable on a case-by-case basis.
EPA has the authority to require the BACT Standard to be adopted any organization with a
Title V Permit. CVEA has three Title V. Permits so EPA has authority over their emissions of
the Glennallen Diesel Plant, Valdez Diesel Plant and the Cogen Plant. Since technology
changes constantly through time, EPA can force CVEA to adopt the BACT standard as it
becomes available (even if we flawlessly meet all our Title V permit standards as written
today). Those standards would have significant impacts on the economic viability of a
biomass plant. Even without the emerging EPA regulations, there are significant air quality
issues that must be addressed when licensing a biomass plant. Technology advances have
accelerated and cleaner wood burning equipment will be developed as the cost of fossil fuel
continues to rise the eventual use of wood products for electrical generation will eventually
commence. We will plan our pellet operation to meet the increasing demand for wood
products and explore and cooperate with CVEA to explore options to displace fossil fuels
with wood product 1. Copper Valley Electric Association Strategic Issues Paper 2011
4.0 Strategic and Market Analysis
4.1 Economic Outlook
One Small School
Supplying one small school with wood pellets results in an increase of $300,000 in annual
economic activity for the region. The increase in economic activity was determined by an
analysis completed by the Cooper River School District. Every 165 tons of pellet production
contributes approximately $46,000 of new money into the economy2. It is important to
note the infusion of this $46K used to purchase local wood pellets, generates $150 to
$300,000 of new economic activity in the region. This project will displace fossil fuel use,
fuel purchases for fossil fuel is a complete money drain for the entire region -- since the fuel
is imported and the money left the region -- with locally produced wood pellets, the
production activity for pellet and their sales will attract new financial resources (money) into
the area. 2. Copper Valley School District: "Kenny Lake School - Fuel Oil v. Wood Pellets Analysis
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Gulkana Village Council: Copper River Valley Wood Products - Business Plan
Stable Energy Demand
Heating and electrical generation is considered relatively "inelastic" This means the demand
is remains unchanged regardless of the price. The level of consumption will stay about the
same from year to year regardl ess of the price of energy. In other words "People need heat
and lights". This inelastic demand is why higher energy prices are detrimental to the
economic, social and welfare of the consumers. As prices rise people will reduce buying
other items to maintain the same level of consumption of energy.
Although Gulkana is on the road system, the community is still relatively isolated and
subject to higher energy costs than other urban areas of the state. The US economy also
has a direct effect on the cost or energy in rural Alaska. During the recent recession energy
prices dropped and this price decrease was enjoyed as a respite from the record high prices
of 2008. As the recession ends and economic recovery accelerates the price of energy will
again go higher. As the economy recovers in the U.S -- the price of fuel oil will rise and the
consumption of wood products for energy and heat production becomes more economical.
The economic recovery and associated higher oil prices (energy) over the next decade will
result in higher use of wood products in the region for heat and electricity production.
Growing Region for Wood Products
Residential Market: The latest survey
indicates there are 1099 Occupied Housing
units in the region 3. Of these a full 339 or
30.6% utilize wood products for heat. 62.7%
use fossil fuels and the remaining housing
units use some type of natural gas/propane or
electric heat.
Commercial Market: There are 360
commercial and government facilities listed on
the Copper River Development Associations
internet site 4. Each of these sites are larger
facilities and represent a good market for selling our wood products for heating. Providing
wood pellets to this market will have a substantial and positive economic impact for the
region. As the cost of fuel increases -- users of fossil fuel will migrate to wood products as a
cheaper fuel alternative. The best option for this conversion is to premium grade wood
pellets.
3. 2005-2009 American Community Survey 5 Year Estimates 4. Copper Valley Development Association Inc.
http://www.coppervalley.org/business
Wood Pellet Mill
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Gulkana Village Council: Copper River Valley Wood Products - Business Plan
Pellet Production Building
4.2 Industry Analysis
Within the United States, there are more than 3,800 companies that specialize in the
production of wood products. Approximately 10% of these companies have production
capabilities to produce wood pellets. Aggregately, these businesses generate more than $25
billion of revenue per year while providing jobs to more than 110,000 people. Aggregate
payrolls in each of the last five years have exceeded $3.5 billion. This is a mature industry,
and the excepted future growth rate is expected to mirror that of the general population and
economic growth. Being a mature industry offers advantages for GVC to: easily buy and sell
commercially produced equipment for the pellet operation. In the event the operation
experiences costs over and above a sustainable operation GVC can quickly exit the
operation with little or no loss for equipment purchases.
A Typical Biomass Pelleting Operation
Figure 1 shows the unit operations and the flow of biomass in a typical biomass
pellet production operation that consists of three major unit operations:
(1) drying, (2) size reduction (grinding), and (3) densification (pellet). The
biomass is dried in the rotary drum dryer. After drying, a hammer mill equipped
with a screen size of 3.2 to 6.4 mm reduces the dried biomass to a particle size
suitable for pellet production.
The ground biomass is compacted in the press mill to form pellets. The individual
pellet density ranges from 1000 to 1200 kg/m3.
The bulk density of pellets ranges from 550 to 700 kg/m3 depending on size of
pellets. Pellet density and durability are influenced by physical and chemical
properties of the feedstock, temperature and applied pressures.
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Gulkana Village Council: Copper River Valley Wood Products - Business Plan
Figure 1: Schematic of Typical Wood Pellet Production Operation
PELLET PRODUCTION COSTS
The cost of pellet production includes fixed (capital) and operating costs. All capital cost
components follow the economy of scale, i.e. expansion of the unit size with respect to its
characteristics dimensions will reduce the capital cost, non-proportional to the actual size of
expansion; in layman's terms -- the cost per ton of production goes down as the
number of tons is produced.
This project will demonstrate the feasibility of producing wood pellets with a scaled
production facility. While high volume production facilities produce pellets at far less cost
per ton, the small remote market in Interior Alaska where there is an abundance of
available feedstock deserves serious considerations. The objective of a large commercial
wood pellet operation is to maximize profit, the objective of this project is to: (1) create
jobs in rural Alaska by (2) utilizing the biomass to (3) reduce the cost of producing heat.
Production costs in a large commercial operation are looked as an expense to produce
profits, the production costs in this case translate to badly needed jobs where jobs are
scarce! As mentioned before the objective is to develop a sustainable and on-going
concern. It makes no sense to make an investment with no plan for the operation to
sustain the operations over the long-term.
The volume of sales and production cost must meet a certain thresholds to "Breakeven",
and the production costs must be within a specified range to make this operation viable.
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Gulkana Village Council: Copper River Valley Wood Products - Business Plan
To be a viable ongoing concern the maximum production costs cannot exceed $117/ton to
meet a projected market demand of 1,678 tons. This assumes a market price of $300/ton.
The per ton price is critical to be competitive with "Just shipping in Pellets". The imported
pellet price is $6-$8 per 40 pound bag or $350 - 400/ton.
Based on the breakeven analysis, supported by verifiable research on the number of
housing and commercial operations utilizing wood products in the Copper Valley region for
the generation of heat and the quoted current market price of wood pellets, this production
facility should have no problems remaining an "On-Going concern and meeting the 3
strategic objectives of (1) displacing fuel, (2) remaining an on-going operation and (3)
creating badly needed jobs in a rural Alaska community.
GVC made an initial application to the Alaska Energy Authority and an analysis of the
production costs were done. The original AEA proposal created jobs, met the market
demand for wood pellets, but due to high production costs was unsustainable over time.
The result of this analysis resulted in configuring the operation to meet the three strategic
objectives for jobs, meeting current and growing pellet demand and sustainability.
Costs. The Challenge for GVC is to control the "Cost of Production"
The capital costs of the plant depend on the type of material used. Material with moisture content
of greater than 12% will need drying. A dryer can cost up to 40% of the entire capital costs.
In addition capital will be required to overcome the time it takes to achieve profitability. Many
pellet plants take 6 to 18 months to refine the process before becoming profitable.
This report compares the costs of various sizes of plant.
1.5 ton per hour - $ 145,000.00 USD
4.5 ton per hour - $ 275,000.00 USD
20 ton per hour - $ 20 million USD
Capital costs of a three and ten ton/hour pellet plant. $CDN
Dryer: 700,000.00 - 3,550,000.00
Hammer Mill: 120,000.00 - 530,000.00
Pellet Machine: 280,000.00 - 890,000.00
Cooler: 19,000.00 - 360,000.00
Storage Conveyors, Separators: 430,000.00 - 1,290,000.00
Peripheral Equipment: 740,000.00 - 640,000.00
Buildings: 810,000.00 - 1,520,000.00
Total: $ 3,100,000.00 - 8,780,000.00
SOURCE: (WOOD PELLET PRODUCTION PROCESS ANALYSE Costs The capital costs of)
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Gulkana Village Council: Copper River Valley Wood Products - Business Plan
Gulkana Village Council: Wood Pellet Production Costs
Description Rate Hours
Round IV
Production Cost
Round
V Rate
Round
V
Hours
Round V
Production Costs
Operating Expense: Personnel
Project Manager 23.48 2080 $ 48,838 $ 22.00 2080 $ 45,760
Project Assistant 16.90 2080 $ 35,152
$ -
Project Foreman 20.16 2080 $ 41,933
$ -
Pellet Plant Worker 16.00 2080 $ 33,280 $ 16.00 2080 $ 33,280
Pellet Plant Worker 16.00 2080 $ 33,280 $ 16.00 2080 $ 33,280
Pellet Plant Worker 16.00 2080 $ 33,280 $ 16.00 1040 $ 16,640
Pellet Plant Worker 16.00 2080 $ 33,280
$ -
Pellet Plant Worker 16.00 2080 $ 33,280
$ -
Pellet Plant Worker 16.00 2080 $ 33,280
$ -
Heavy Equipment Operator 18.00 500 $ 9,000 $ 18.00 500 $ 9,000
Total Personnel: $ 334,603
$ 137,960
Tribal Administrator 28.15 624 $ 17,566 $ 28.15 52 $ 1,464
Accountant 22.89 416 $ 9,522 $ 22.89 104 $ 2,381
Administrative /Marketing (Rd.V) 15.13 208 $ 3,147 $ 16.00 200 $ 3,200
Total Indirect: $ 30,235
$ 7,044
Total Direct & Indirect: $ 364,838
$ 145,004
Fringe Benefit:
SSN/Medicare/401K 0.2 $ 80,264
$ 31,901
Operating Expense: Supplies
Equipment Fuel - 2,000 gallon @ 3.75/gal $ 16,294
$ 7,500
Utilities $ 50,160
$ 12,000
$ 66,454
$ 19,500
Total Operating Costs: $ 511,556
$ 196,405
Expected Market Demand $ 1,678
$ 1,678
Operating Cost per Ton $ 305 $ 117
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Gulkana Village Council: Copper River Valley Wood Products - Business Plan
Regional Analysis
Alaskan rural communities of the State are facing difficult social, economic and
environmental choices caused by rising energy costs and these high costs of energy are
leading to new opportunities to exploit and develop local renewable energy resource
previously not economically feasible. In some area the renewable resource is wind, in
other areas, solar and in yet other areas of the State, geo-thermal opportunities are being
developed. In interior Alaska, scaled forest products industries and markets to mitigate
these high energy costs and provide positive economic development and sustainability for
our regions communities are being developed.
As this new forest development takes shape, partnerships and mutual effort to meet
differing goals are highlighted as an advantage for a variety of user groups and managers;
collaborative efforts seeking opportunities to support and utilize wood energy while
responding to "forest management" needs related to: thinning, insect outbreaks, and
community wildfire protection are logical. Improvements to the economic well -being of
communities and the region will certainly be realized, however the vastness and large
expanse of the Interior forest will result in marginal benefit in regards to "forest
management"
Initial Capital Investments
Developing the local and regional biomass for energy and heat production will save
communities money, create local economic opportunities, and address associated issues
like wildfire management, insect mitigation and thinning to create areas of healthier forest
land. A major issue is the initial fiscal investment required to successfully and
economically develop the forest; fiscal resources required for the initial investment to
transition from fossil fuels to wood/wood-chip/wood-pellet burning infrastructure can be
substantial and coordination of public and private investment will be necessary to realize
the full potential of the biomass resource. 5
5 US Forest Service, Western Forestry Leadership Coalition
4.3 Customer Profile
Our customers are residential, commercial and government facilities; consumers heating
their homes, businesses and government installation in the Copper River Valley. There are
1099 occupied housing units and 336 major business facilities in the region. 30% of the
residential units have "Wood" as their primary heat source. The Copper River School
District is making investments to convert a large percentage of their heating load from fossil
fuels to fuels from wood products. There are a substantial number of for profit commercial
operations that use wood products as a fuel source for heat.
Virtually any building -home, business or government facility in the Copper River Valley is
our target market.
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Gulkana Village Council: Copper River Valley Wood Products - Business Plan
4.4 Competitive Analysis
5.0 Marketing Plan
There are several retail outlets in the regional hub Glennallen and in nearby Valdez where
agreements for pellet distribution can be made. Some stores are in the process of
importing pellets from Oregon. The pricing of the GVC wood pellets are competi tive at $5-
$7 for a 40 pound bag. We will make the case for selling locally produced pellets; more
local jobs mean more local spending at any of the local retail outlet stores.
5.1 Marketing Objectives
Currently we are "turning customers away". There are standing orders for pellets: 44 tons
and 15 tons from only two users in the Copper Valley. It is anticipated the market demand
will far surpass the capacity of our operation. The current level of advertising is set at
$21,600 for print, radio and targeted television advertising to introduce our products to the
Copper Valley market. This level of advertising is expected to drop immediately after
demand meets or exceeds our production capacity.
5.2 Marketing Strategies
There are 2 markets we will approach, the consumer and the distributors. Brochures and
other sales literature will be produced to showcase the facility, the pricing, and the
operations of the pellet plant when seeking to develop new ongoi ng retail opportunities for
our products. Print advertising and direct mails may be done to consumers in strategic
areas to inform consumers of the locally produced pellets.
5.3 Pricing
The market price for imported wood pellets is currently $6-8 per 40 pounds or $350-400 per
ton. The commercial market for bulk is $310/ton based on prices to the local school boiler.
Wood Pellets, although graded as "premium grade" are a commodity. The lower the price
the more sales. Price is everything in the energy market. The lower priced product will be
bought. We will set prices to match or beat the competitors, especially product imported
from out of the State.
6.0 Organizational Plan and Personnel Summary
6.1 Organization Gulkana Village Council
Gulkana Village Council (GVC) is the federally-recognized tribe for Gulkana, Alaska. GVC is
listed as a federally recognized tribe in the March 22, 2007, Federal Register (Volume 72,
Number 55) Notice titled “Indian Entities Recognized and Eligible to Receive Services from
the United States Bureau of Indian Affairs”. The tribe qualifies for federal services and
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Gulkana Village Council: Copper River Valley Wood Products - Business Plan
benefits under the BIA, the Federal Highway Administration, the Environmental Protection
Agency, and other federal agencies.
The wood products business will have an independent business identity and may be formed
and incorporated under the State of Alaska. The business will rely on the existing
accounting and bookkeeping of the traditional council and there wil l be a contract
relationship with the council to provide the overhead function until business activity prompts
a business formation.
Gulkana Village Council Organization Chart
The GVC is the governing body of the tribe, duly elected by tribal members and is
authorized and directed by the tribal members to exercise the tribe’s inherent right to self -
determination. In this capacity, the GVC has ultimate authority for governance of the tribe
and to execute legal agreements on behalf of the tribe. The GVC has delegated authority to
the Tribal Administrator to conduct the day-to-day business of the tribe, including executing
legal agreements excepting only those that require tribal ordinances, resolutions, or similar
GVC action to implement.
The goal of the GVC is to become self-sufficient by utilizing the talents and capabilities
within the tribe. The Council works aggressively to achieve this goal.
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Gulkana Village Council: Copper River Valley Wood Products - Business Plan
The GVC has successfully negotiated and administers a P.L. 93-638 self-determination
contract with the Bureau of Indian Affairs, which now totals $571,461. The GVC administers
several other programs, including the EPA IGAP grant ($110,000 for the cur rent year), a
wildfire fuels reduction project ($155,000), a dump assessment project ($70,000), and a
Native American Lands Environmental Mitigation Program ($80,000) funded by the
Department of Defense that is oriented toward assessment and clean up as ma y be
necessary of old military sites.
The GVC has in the recent past administered and completed the requirements of a $322,000
P.L. 93-638 contract for the design and engineering phase of a project to upgrade and pave
Village roads, and install street lighting. Consequent to the successful completion of this
contract, the Village has been awarded $2.9M for the construction phase of the project. The
GVC is currently acquiring rights-of-way, completing required preliminary work or projects
that will impact the road paving project (i.e. upgrade of existing sewer system), and
negotiating terms of necessary contracts to complete the project.
Other major projects that GVC has secured are:
A $1.0M renovation of the Village water storage tank, with a new water sou rce and
treatment plant. This project is on tap to be completed within the next year.
A $1.2M renovation and upgrade of the Village sewer system. This project included
replacement of damaged or failed sections of sewer mains, extension of other sewer mai ns
to provide sewer service to residents that previously did not have it, and installation of a
new, large capacity septic system and leach field. This project was completed just this
month (July 2007), however, work to tie the new system in with the old revealed the old
system had deteriorated to the point of imminent failure and needs to be completely
replaced.
In addition, the GVC in the recent past has completed a BIA Water Resources grant
($40,000), and implemented an ongoing ICWA program ($38,000 per year). And, as has
been discussed previously, the tribe recently completed a project to assess the viability and
status of the tribe’s native language (an $80,000 project, $61,000 provided by an ANA
grant).
Organizational Capacity- GVC
The management systems and accounting practices employed by the GVC are subject to
evaluation by an independent auditor through the annual single agency audit report that is
required by current statute and OMB Circular A-128, and as stated in CFR 25 §900.40 (b).
Just this past year, the tribe reached the $500,000 federal funding expenditure level that
requires an audit. Consequently, the tribe is currently undergoing its first ever single
agency audit. Results from this audit will not be available until about the end of April.
However, the GVC ICWA program has been audited in the recent past with no substantial
findings, and in 2006, the tribe was audited by the IRS with no findings.
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Gulkana Village Council: Copper River Valley Wood Products - Business Plan
Organizational Capacity- Wood Products
The wood products business will be a separate enti ty with GVC council oversight through the
Tribal Administrator. The production side of the business will be managed by the plant
supervisor, who will have the day to day responsibility for the operation. GVC has
relationships with engineers who will assi st in the development, installation and
commissioning of the plant and equipment. The engineer will also have recommendations
for the hiring of a Plant Supervisor. There will be 2 full time and 1 part time production
worker(s) and an Equipment Operator available as needed.
The Accounting will be done as either a new company class or have their own separate
accounting books depending on the scale of the operation. A larger scale operation where
demand is recognized to be growing and production needing to ramp up will create more
operating costs. In this event a new legal entity may need to be formed with its own
bookkeeping function to provide payroll, accounting and management reports.
Pellet Operation- Organization Chart
6.2 Organizational Budget
The production costs for the first year is set at the production rate to meet the expected
first year sales. The following is the process we determined the operational budget:
1. Determined the market for wood utilized for heat it the Copper Valley region.
2. Calculated the expected sales for the region based on the market demand.
3. Determined the total production costs to maintain a sustainable operation.
Plant
Supervisor
Production
Worker
GVC
Council
Production
Worker
Part Time
Equipment
Operator
Part-Time
Production Worker
Accountin
g
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Gulkana Village Council: Copper River Valley Wood Products - Business Plan
The total production costs to maintain sustainability is the total available for the first year of
operations. The per ton cost should be maintained at or below $117/ton to match the
expected revenue. Production costs are the major cost for the operation. Feedstock costs
are assumed to be capped at $25/ton. (See discussion on Feedstock).
Within a quarter the operation should be able to determine how the success or failure of the
operation. Based on the order to our facility the pellet operation should be very successful
and it's anticipated the number of employees will be increased to meet the higher deman d
for pellets. The Organizational Budget is show on the "Production Budget - Year One" Table:
Production Budget Estimate - Year One Production Costs at: $117/ton.
Description
Production Budget
-Year One
Operating Expense: Personnel Rate Hours
Project Manager 22.00 2,080 $ 45,760
Pellet Plant Worker 16.00 2,080 $ 33,280
Pellet Plant Worker 16.00 2,080 $ 33,280
Pellet Plant Worker 16.00 1,040 $ 16,640
Heavy Equipment Operator 18.00 500 $ 9,000
Total Personnel: $ 137,960
Tribal Administrator 28.15 52 $ 1,464
Accountant 22.89 104 $ 2,381
Administrative /Marketing (Rd.V) 16.00 200 $ 3,200
Total Indirect: $ 7,044
Total Direct & Indirect: $ 145,004
Fringe Benefit:
SSN/Medicare/401K $ 31,901
Operating Expense: Supplies
Equipment Fuel - 2,000 gallon @ 3.75/gal $ 7,500
Utilities $ 12,000
$ 19,500
Total Operating Costs: $ 196,405
Expected Market Demand $ 1,678
Operating Cost per Ton $ 117
6.3 Management Biographies -
(See attached resume file)
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Gulkana Village Council: Copper River Valley Wood Products - Business Plan
7.0 Strengths, Weakness, Opportunities and Threats
7.1 The Strengths - Why this Project is Viable
"Location, Location, Location" is the conventional wisdom for retail operations. In this case
for the "wood products for heat" business, having an operation located in the heart of
recognized biomass resource is a tremendous strength. GVC Operations are located in the
"Heart of the Biomass" -- On the Road system, surrounded by accessible trees suitable for
a "Wood for heat" operation.
Captive Local Market: It is expected the "entire town" of Gulkana will participate in this
project and when GVC begins production of a less expensive alternative fuel for the
generate heat, most of the community will configure their heating systems to utilize locally
produced wood products for heat.
"Experience" Producing wood pellets is a learning process. GVC has been developing the
process to convert the local biomass into wood pellets for several years. Many of the issues
hampering a wood pellet operation in rural Alaska have been resolved or mitigated. This
includes the composition of the feedstock, the necessary processes to produce high BTU low
emission pellet and the operation has become well known in the region; unsolicited requests
for wood pellets purchases have been made. To date GVC, without any advertising or
marketing has standing orders for 50 tons/year. Although this amount is insignificant to
maintain a production facility the orders represent the level of market demand and shows
the development of a healthy wood pellet market in the Copper Valley.
A mockup operation with each process defined and developed was completed in 2008-9 and
can be seen online at: http://www.youtube.com/watch?v=SDGWxh3S-QY. This effort
determined high quality pellets could be produced in the region. As a practical matter the
operation wasn't intended to meet demand, but to demonstrate a process to successfully
produce high heat, low emission wood pellets from the local biomass.
Regional Support: GVC has regional support from their Regional Alaska Native Claims
Settlement Act corporation: Ahtna Corporation. "Ahtna" has significant and accessible
biomass resources and has committed to work collaboratively to meet the primary strategic
objectives of displacing fossil fuels, sustainability and job creation. (See Support letter)
"Feedstock" Accessibility is not recognized as a problem for this operation. The challenge
for the cordwood operation is small, GVC would simply purchase round logs and process the
logs though a sizing, splitting and seasoning operation. For the wood pellet operation the
challenge will be to "cost effectively" process cordwood into proper sized chips with low
contaminates to produce high quality pellets. With GVC's experience this challenge can be
met and managed to ensure a sustainable small scale wood pellet operation.
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Gulkana Village Council: Copper River Valley Wood Products - Business Plan
7.2 The Weaknesses - The Achilles Heels
To be successful -- as many of the weaknesses to this project must be identified and
mitigated or resolved all together. There are two obvious weaknesses to this project: (1)
the lack of "economies of scale" and (2) managing the cost of the feedstock for the pellet
operation.
Production costs for the wood pellet operation are expected to be near $120/ton. In large
scale wood pellet operations, where profit is the primary driver, the per ton production costs
are kept as low as possible. In this small scale operation, production costs = local jobs, and
since the primary objective is to exploit the biomass to displace fossil fuels the operational
costs can be well over "Large Scale Operation". However, there is a limit to the cost of
production and managing these costs will be an important consideration. To mitigate this
weakness, proper budgeting and accounting should be maintained throughout the year to
monitor cost, sales and ensure sustainability over time. Although the market demand for
wood pellets is expected to grow the supply of pellets is not limited to local production and
GVC will be constrained by the c market price as well as volume demand for pellets.
"Feedstock" Costs Feed stock is a variable cost for production and while accessibility to local
feedstock is not an issues, converting the feedstock to usable chips for a pellet plant
operation is a significant weakness. Building up a production capacity may be limited if
quality chips cannot be produced within a specified "cost per ton". For the purposes of this
analysis the cost per ton was set at $40/ton. If this costs rises, then other production costs
must be adjusted to keep the total production costs within a range to ensure a sustainable
operation over time.
c NOTE: The scale of the operation will be determined by the product demand. The most favorable
scenario is: "... the market demand surpasses GVC's production capabilities." In this case, if
production capacity is below the market demand then, prices usually rise, however due to other
operations in the state and the price of 'imported pellets' (Oregon) stable over time the price s for
GVC's products are not expected rise due to limited production capacity - Like oil prices, the price for
wood pellets is established by 'foreign producers'.. in this case national producers.
7.3 The Opportunities - Jobs, Jobs, Jobs!
There are ample opportunities for the community to exploit the biomass for fuel. Since the
production cost will be managed to create local job while displacing expensive fossil fuels
and lowering energy costs in the region this aspect of the proposal should be forwarded at
every opportunity, especially when seeking public financial support.
This small scale operation, when operated at the lowest level to ensure "sustainability" will
produce 3 full-time permanent positions and 2-4 part-time opportunities. It is expected the
operation will grow sufficiently to create 4-6 permanent jobs and offer support for suppliers
of raw feedstock - wood cutters, small logging operations or provide a market for existing
and future companies interested in logging state land.
Page 23
Gulkana Village Council: Copper River Valley Wood Products - Business Plan
7.4 The Threats - The "Monkey Wrenches"
"The rumored 'All Alaska Gas line'" Someday, possibly in the next 50 to 100 years, there will
be a natural gas pipeline snaking its way through the region providing natural gas to every
community located on the road system. Although not a 'threat' to the overall economy of
the State, it is a threat to the immediate and near future plans of any organization or
business planning to invest capital to exploit the local biomass for heat and electrical
generation.
Political Considerations: There are privately funded operations being developed in the
Fairbanks area and developing a pellet operation in the heart of the Copper Valley may be
perceived by State agencies as: "Uneconomical under any circumstances" To secure public
support for this project a viable case has to be made in light of the State's desires to see
private business exploit the resources, rather than support a questionable operation in rural
Alaska. Every effort should be made to advance the opportunities for job creation for rural
communities interested in lowering their energy costs.
Summary
There are significant reasons to proceed with this project; lower fuel costs and job creation.
These aspects should be forwarded and highlighted for any funding requests. Particular
attentions will be necessary to control the cost of production and every advantage such as
accessibility and regional support advanced to make a case for public support.
Near Gulkana, Alaska on the Richardson Highway - "Look at all that accessible biomass"
Page 24
Copper Valley Wood Products
Producing high quality -- high heat -- low emission "premium grade" wood
pellets to meet the wood products market demand for heat and energy
production in the Copper River Valley.
Gulkana Village Council
P.O. Box 254
Gakona, Alaska 99586
Phone: 907-822-3746
Fax: 907-822-3976
MEETING MARKET DEMAND FOR WOOD
PELLETS IN THE COPPER RIVER VALLEY
8.0 Financial Management Analysis
Page 25
Gulkana Village Council
Financial Management Analysis
Breakeven Data
3 Augers@ $2,500
2 Lift Elevators @ $6,000
40,000.002 Belt Dryers @ $20,000
12,000.00
30,000.00
3,000.00
7,500.00
Feedstock
Production Costs
Costs required to produce the first unit of a product.Costs that vary directly with the production of one additional unit.
Cost
25.00
117.05
3 Pellet Mill @ $52,000
3 Hammer Mill @ $11,000
3 Air Filtration @ $10,000
3 Conveyors @ $1,000
156,000.00
33,000.00
BREAK-EVEN ANALYSIS
Break-Even Units:1,676
Number of units of the product projected to be sold over a specific period of time.
The amount of money charged to the customer for each unit of a product or service.
Fixed Costs Variable Unit Costs
Definition Definiton Cost
Unit Selling Price:310.00
Expected Unit Sales:1,678
Page 26
Gulkana Village Council
Financial Management Analysis
Breakeven Analysis
281,500.00
142.05
1,678
310.00
Revenue ProfitUnits
100.00
200.00
-264,704.73
-247,909.45
1,676.07
Fixed Cost Variable Cost Total Cost
1,200.00
1,300.00
1,400.00
1,500.00
400.00
500.00
600.00
700.00
800.00
900.00
170,456.72
184,661.45
198,866.18
213,070.91
295,704.73
309,909.45
324,114.18
338,318.91
352,523.64
281,500.00
281,500.00
281,500.00
281,500.00
281,500.00
281,500.00
1,600.00
1,678.19
1,000.00
1,100.00
300.00
281,500.00
281,500.00
281,500.00
281,500.00
281,500.00
281,500.00
281,500.00
281,500.00
281,500.00
281,500.00
281,500.00
14,204.73
28,409.45
42,614.18
56,818.91
71,023.64
85,228.36
99,433.09
113,637.82
127,842.54
366,728.36
227,275.63
238,381.67
142,047.27
156,252.00
466,161.45
480,366.18
494,570.91
508,775.63
519,881.67
380,933.09
395,137.82
409,342.54
423,547.27
437,752.00
451,956.72 372,000.00
403,000.00
434,000.00
465,000.00
355.83
-163,933.09
-147,137.82
-130,342.54
-113,547.27
-96,752.00
-79,956.72
31,000.00
62,000.00
93,000.00
124,000.00
155,000.00
186,000.00
217,000.00
248,000.00
279,000.00
BREAK-EVEN ANALYSIS - TONS
Break Even Units:
Price per Unit:
Expected Unit Sales:
Total Variable Unit Costs:
Total Fixed Costs:
You will be making profit after 1,676.07 units.
-63,161.45
-46,366.18
-29,570.91
496,000.00
520,237.50
310,000.00
341,000.00
-231,114.18
-214,318.91
-197,523.64
-180,728.36
-12,775.63
0
200000
400000
600000
800000
1000000
1200000
Fixed Cost
Variable Cost
Total Cost
Revenue
Page 27
Gulkana Village Council
Financial Management Analysis
Production Costs
Description Rate Hours
Round IV
Production Cost
Round V
Rate
Round V
Hours
Round V
Production Costs
Operating Expense: Personnel
Project Manager 23.48 2080 48,838$ 22.00$ 2080 45,760$
Project Assistant 16.90 2080 35,152$ -$
Project Foreman 20.16 2080 41,933$ -$
Pellet Plant Worker 16.00 2080 33,280$ 16.00$ 2080 33,280$
Pellet Plant Worker 16.00 2080 33,280$ 16.00$ 2080 33,280$
Pellet Plant Worker 16.00 2080 33,280$ 16.00$ 1040 16,640$
Pellet Plant Worker 16.00 2080 33,280$ -$
Pellet Plant Worker 16.00 2080 33,280$ -$
Pellet Plant Worker 16.00 2080 33,280$ -$
Heavy Equipment Operator 18.00 500 9,000$ 18.00$ 500 9,000$
Total Personnel:334,603$ 137,960$
Tribal Administrator 28.15 624 17,566$ 28.15$ 52 1,464$
Accountant 22.89 416 9,522$ 22.89$ 104 2,381$
Administrative /Marketing (Rd.V)15.13 208 3,147$ 16.00$ 200 3,200$
Total Indirect:30,235$ 7,044$
Total Direct & Indirect:364,838$ 145,004$
Fringe Benefit: SSN/Medicare/401K 0.22 80,264$ 31,901$
Operating Expense: Supplies
Equipment Fuel - 2,000 gallon @ 3.75/gal 16,294$ 7,500$
Utilities 50,160$ 12,000$
66,454$ 19,500$
Total Operating Costs:511,556$ 196,405$
Expected Market Demand 1,678$ 1,678$
Operating Cost per Ton 305$ 117$
Page 28
Gulkana Village Council
Financial Management Analysis
Market Projection
Type of Structure
Annual
Heating
Cost
# of
Units
% of
Units w/
Wood
Heat
Total $ expended for
Wood Heat % of Market Share
Annual Income
Residental *3,500$ 1,099 30%1,153,950$ 25%288,488
Commercial 7,500$ 300 30%675,000 25%168,750
Large Commercial 35,000$ 36 20%252,000 25%63,000
2,080,950$
520,238
* 2005-2009 American Community Survey 5 Year Estimates
1st Year Production @310/ton 1,678
Production Output:Month 140
Daily 7.0
Copper River Region - Wood Products Usage for Heat: Current Estimate
Projected Annual Sales:
Page 29
Copper Valley Wood Products
Producing high quality -- high heat -- low emission "premium grade" wood
pellets to meet the wood products market demand for heat and energy
production in the Copper River Valley.
Gulkana Village Council
P.O. Box 254
Gakona, Alaska 99586
Phone: 907-822-3746
Fax: 907-822-3976
MEETING MARKET DEMAND FOR WOOD
PELLETS IN THE COPPER RIVER VALLEY
Financial Proj ection
Page 30
Financial Analysis Narrative:
Making the Case: Small Scale Wood Products Operation
Cordwood and Wood Pellets
Financial Projection Goals:
"Proving the Market and Creating a Budget"
Is a small wood products for heat operation in Interior Alaska sustainable?
31% reported by the "Selected Housing Characteristics 2005-2009
Dataset: Copper River Census Subarea" are utilizing wood products
for heat in the Copper River Basin.
There are a substantial number of business and government
facilities utilizing or converting to wood products for fuel - an
example is, a major user of fuel in the area, Copper River School
District, is converting Kenny Lake School to a biomass boiler fueled
with wood pellets.
The demand for heating fuel in the region is "inelastic" meaning as
the price of fuel rises the level (volume) of consumption will remain
constant. In this case alternative fuel with a lower and consistent
cost will be selected for consumption. In this case it would be
"biomass".
The "Wood Products for Heat" market is projected to support a
small biomass operation and Gulkana Village Council is positioned
to capture at least 25% of the market by providing wood pellets
and seasoned cordwood.
Based on the market, to sustain this operation, GVC will need to generate
annual sales of $320,000 to cover their variable and fixed operating costs by
producing and selling: Three (3) cords of seasoned wood and two (2) tons
of pellets per day.
Sustainability: Breakeven level
Account: Cordwood - Cord Wood Pellets - Tons
Annual - Breakeven Sales Revenue $ 161,478
$ 158,373
Annual - Breakeven Sales Units 807
528
Monthly production 67
44
Daily - (240 Workdays per year) 3
2
Page 31
Financial Analysis Narrative:
Making the Case: Small Scale Wood Products Operation
Cordwood and Wood Pellets
Major costs associated with wood products for fuel are:
(1) Feedstock and (2) production costs. Feed stock for this operation are
logs available for cutting and splitting and an adequate and viable supply of
wood chips to maintain a pellet operation.
There is plenty of feedstock and the cost of acquiring it is accounted for as a
variable cost. For these projections the following assumptions are being
made:
Major Cost Drivers:
Variable Cost Drivers Cost
Feedstock - Wood Pellets $50/ton
Feedstock - Cordwood $30/cord
Fixed Cost Drivers Cost
Wages & Salaries $138,998
Fixed Operating Costs $15,925
Projected Sales a: Annual
Product Volume Revenue
Wood Pellets 920 Tons $240,000
Cordwood 1,200 Cords $276,000
Production Crew:
Production Crew Cost
Foreman 48,000/Year
2 Full time Production Workers $16/Hour
1 Part-time Production Workers $16/Hour
Equipment Operator $18/Hour
a NOTE: The objective of this analysis is to show the market demand for "wood products for
fuel" is viable. The product mix in this case would highly variable. Since the market for
wood fuel is a combination of cordwood and wood pellets, both of these products will be
offered. The ratio of cordwood and pellet sales will be determined by the market demand.
It is the intent of GVC to market the pellet operation and work to increase the demand for
pellets.
Page 32
Financial Analysis Narrative:
Making the Case: Small Scale Wood Products Operation
Cordwood and Wood Pellets
INCOME STATMENT ACCOUNT GROUP:
GVC will configure their operation and manage the cash flow for long
term sustainability and create jobs. The net income is projected with
the following major income statement accounts:
Account Year One Year Two Year Three
Revenue 516,000 561,000 623,400
Cost of Sales 72,800 78,400 85,460
Gross Margin 443,200 482,600 537,940
Salaries and Wages 138,998 143,168 147,463
Fixed Costs 191,100 200,655 170,557
Other Expenses 140,079 141,104 141,104
Net Income (26,977) (2,326) 78,817
b Revenue and Cost Assumptions:
The current market price for wood pellets in the region is $6-$8 for a 40
pound bag or $300- $400 for pellets imported from other areas of the
country --this is based on inquires to local distributors and a study of prices
to supply new pellet fired boilers in the region.
For Cordwood the price for cordwood in the Mat-Su Valley is $200.00/cord.
It is expected the price will be slightly higher in the Copper Valley.
For the purposes of this analysis the prices were set as follows: Wood
Pellets: $300/ton Cordwood: $200/cord
Cost of Sales
The feedstock acquisition costs are set at: $40/ton for wood pellet feedstock.
$30/cord (round un split logs)
b. NOTE: Feedstock Costs are initial variable costs and are determined by the local market.
These are estimates and other costs; salaries & wages and fixed operating costs, may be
adjusted to: determine the number of workers, adjust the fixed costs and to set the sales
prices to ensure sustainability.
Page 33
Financial Analysis Narrative:
Making the Case: Small Scale Wood Products Operation
Cordwood and Wood Pellets
Balance Sheet ACCOUNT GROUP:
Period Ending:
Base Period
Year One
Year Two
Year Three
Assets
Current Assets
Cash
-
178,228
309,408
520,824
Accounts Receivable
-
15,250
16,875
19,406
Inventory
41,250
41,250
41,250
41,250
Prepaid Expenses
170,000
113,333
56,667
0
Other Current
-
-
-
-
Total Current Assets
211,250
348,061
424,199
581,481
Fixed Assets
Real Estate
40,000
40,000
40,000
40,000
Buildings
75,000
75,000
75,000
75,000
Leasehold Improvements
-
-
-
-
Equipment
425,000
425,000
425,000
425,000
Furniture and Fixtures
35,000
35,000
35,000
35,000
Vehicles
35,000
35,000
35,000
35,000
Other Fixed Assets
-
-
-
-
Total Fixed Assets
610,000
610,000
610,000
610,000
-
-
-
-
Less: Accumulated Depreciation
-
78,464
156,929
235,393
-
-
-
-
Total Assets
821,250
879,597
877,270
956,087
-
-
-
-
Liabilities and Owner's Equity
-
-
-
-
Liabilities
-
-
-
-
Accounts Payable
-
-
-
-
Notes Payable
-
-
-
-
Mortgage Payable
-
-
-
-
Line of Credit Balance
-
85,324
85,324
85,324
Total Liabilities
-
85,324
85,324
85,324
-
-
-
-
Owner's Equity
-
-
-
-
Common Stock
821,250
821,250
821,250
821,250
Retained Earnings
-
(26,977)
(29,303)
49,514
Dividends Dispersed
-
-
-
-
Total Owner's Equity
821,250
794,273
791,947
870,764
-
-
-
-
Total Liabilities and Owner's Equity
821,250
879,597
877,270
956,087
Page 34
Financial Analysis Narrative:
Making the Case: Small Scale Wood Products Operation
Cordwood and Wood Pellets
The "Roadmap" to manage the operational expenses is important to ensure
an on-going concern. Following are the account groups and the limits for
each account category. This includes Salaries and Wages and the Fixed
Costs. The attached spreadsheet will show the monthly account limits.
Following is the annual budget:
ANNUAL BUDGET:
Salaries and Wages
Year One Year Two Year Three
Plant Foreman
- - -
Salaries
48,000 49,440 50,923
Full-Time Employees
62,400 64,272 66,200
Part-Time Employees
18,720 19,282 19,860
Independent Contractors
- - -
Payroll Taxes and Benefits
9,878 10,174 10,479
Total Salary and Wages
138,998 143,168 147,463
Fixed Business Expenses
Advertising
21,600 22,680 19,278
Car and Truck Expenses
- - -
Commissions and Fees
- - -
Contract Labor- Acct/Payroll
22,200 23,310 19,814
Garbage Service
900 945 803
Customer Discounts and Refunds
- - -
Dues and Subscriptions
- - -
Vault Pumping-Sewage
- - -
Insurance & Bond (Liability and Property) 15,000 15,750 13,388
Internet
1,800 1,890 1,607
Legal and Professional Fees
- - -
Office Expenses
1,800 1,890 1,607
Postage and Delivery
3,600 3,780 3,213
Rent (on business property)
- - -
Rent of Vehicles and Equipment
9,600 10,080 8,568
Repairs and Maintenance
51,000 53,550 45,518
Fuel
30,000 31,500 26,775
Telephone and Communications
3,600 3,780 3,213
Travel
- - -
Utilities
30,000 31,500 26,775
Total Fixed Business Expenses
191,100 200,655 170,557
The level of maintenance is set at 10% of the equipment costs. The other
major categories: Overhead maintenance/accounting, fuel, electricity and
advertising. These are projected costs and will vary - They are set at the
maximum levels and will probably be less. An example is "Advertising"
currently this is set as a "percentage of Sales" and to date GVC is receiving
inquiries into orders for wood pellet. The probably is high for reduced
advertising expenses.
Page 35
Financial Analysis Narrative:
Making the Case: Small Scale Wood Products Operation
Cordwood and Wood Pellets
Assumptions were based on preliminary market data from:
Selected Housing Characteristics 2005-2009 Dataset: Copper
River Census Subarea.
Copper Valley Business Association
Calls to current supplier of wood pellets in the region.
Internet research of Wood Pellet Industry Costs.
Analysis of the Economics of Wood Pellet plant.
The following spreadsheets accompany this narrative:
Required Start-up Funds
Salaries and Wages
Fixed Operating Expenses
Projected Sales - Cordwood
Projected Sales - Wood Pellets
Cash Receipts and Disbursements
3 Year Income Summary
3 Yr Summary Balance Sheet
o Y1 Income Statement (Year one Detail)
o Y1 Cash Flow Statement (Detail)
o Y1 Balance Sheet (Detail)
o Y2 Income Statement (Year one Detail)
o Y2 Cash Flow Statement (Detail)
o Y2 Balance Sheet (Detail)
o Y3 Income Statement (Year one Detail)
o Y3 Cash Flow Statement (Detail)
o Y3 Balance Sheet (Detail)
Breakeven Analysis
Financial Diagnostics
Financial Ratios
Production Requirement (Lowest levels of production to remain
solvent)
Page 36
Financial Statements-Projected
Required Start-Up Funds
8/19/2011
Copper Valley Wood Fuel a division of Gulkana Village Council
Required Start-Up Funds
Required Start-Up Funds Amount Totals Depreciation Notes
Fixed Assets
Real Estate 40,000$
Buildings 75,000 20.00 years
Equipment 425,000 7.00 years
Furniture and Fixtures 35,000 5.00 years
Vehicles 35,000 5.00 years
Other Fixed Assets 5.00 years
Total Fixed Assets 610,000
Operating Capital
Pre-Opening Salaries and Wages 150,000
Prepaid Insurance Premiums
Beginning Inventory 41,250
Legal and Accounting Fees
Rent Deposits 5,000
Utility Deposits 5,000
Supplies 5,000
Advertising and Promotions 5,000
Licenses
Other Initial Start-Up Costs
Working Capital (Cash On Hand)-
Total Operating Capital 211,250
Total Required Funds 821,250$
Sources of Funding Amount Totals Loan Rate Term in Months Monthly Payments
GVC Contribution 14.00%115,000
Alaska Energy Authority - Rd V Grant 86.00%706,250
Additional Loans or Debt
Commercial Loan 0.00%- 9.00%84.00 $0.00
Commercial Mortgage 0.00%- 9.00%240.00 $0.00
Total Sources of Funding 100.00%821,250$ $0.00
A line of credit is also required in the amount of -$
Page 37
Financial Statements-Projected
Salaries and Wages
8/19/2011
Copper Valley Wood Fuel a division of Gulkana Village Council
Salaries and Wages
Salaries and Related Expenses #AssumptionsWage Base Monthly Year One Year Two Year Three
Percent Change 3.00%3.00%
Salaries and Wages
Plant Foreman 1 -$ - - -
Salaries 42000 4,000 48,000 49,440 50,923
Wages
Full-Time Employees 2 5,200 62,400 64,272 66,200
Estimated Hours Per Week 40.00
Estimated Rate Per Hour 15.00$
Part-Time Employees 1 1,560 18,720 19,282 19,860
Estimated Hours Per Week 18.00
Estimated Rate Per Hour 20.00$
Independent Contractors - - - -
Total Salaries and Wages 42004 10,760 129,120 132,994 136,983
Payroll Taxes and Benefits
Social Security 6.20%667 8,005 8,246 8,493
Medicare 1.45%156 1,872 1,928 1,986
Federal Unemployment Tax (FUTA)0.80%- - - -
State Unemployment Tax (SUTA)2.70%- - - -
Employee Pension Programs 0.00%- - - -
Worker's Compensation 0.00%- - - -
Employee Health Insurance 0.00%- - - -
Other Employee Benefit Programs 0.00%- - - -
Total Payroll Taxes and Benefits 823 9,878 10,174 10,479
Total Salaries and Related Expenses 11,583 138,998 143,168 147,463
Page 38
Financial Statements-Projected
Fixed Operating Expenses
8/19/2011
Copper Valley Wood Fuel a division of Gulkana Village Council
Fixed Operating Expenses
Fixed Operating Expenses Monthly Year One Year Two Year Three
Percent Change 5.00%-15.00%
Expenses
Advertising 1,800$ 21,600 22,680 19,278
Car and Truck Expenses - - - -
Commissions and Fees - - - -
Contract Labor- Acct/Payroll 1,850 22,200 23,310 19,814
Garbage Service 75 900 945 803
Customer Discounts and Refunds - - - -
Dues and Subscriptions - - - -
Vault Pumping-Sewage - - - -
Insurance & Bond (Liability and Property)1,250 15,000 15,750 13,388
Internet 150 1,800 1,890 1,607
Legal and Professional Fees - - - -
Office Expenses 150 1,800 1,890 1,607
Postage and Delivery 300 3,600 3,780 3,213
Rent (on business property)- - - -
Rent of Vehicles and Equipment 800 9,600 10,080 8,568
Repairs and Maintenance 4,250 51,000 53,550 45,518
Fuel 2,500 30,000 31,500 26,775
Telephone and Communications 300 3,600 3,780 3,213
Travel - - - -
Utilities 2,500 30,000 31,500 26,775
Total Expenses 15,925 191,100 200,655 170,557
Other Expenses
Depreciation 6,539 78,464 78,464 78,464
Interest
Commercial Loan - - - -
Commercial Mortgage - - - -
Line of Credit 412 4,948 - -
Total Other Expenses 6,951 83,413 78,464 78,464
Total Fixed Operating Expenses 22,876 274,513 279,119 249,021
Page 39
Financial Statements-Projected
Projected Sales -Cordwood
8/19/2011
Copper Valley Wood Fuel a division of Gulkana Village Council
Projected Sales Forecast - Cordwood
Products and Services Assumptions %May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr Totals
Cordwood
Price Per Unit 200.00$ 100.00%
Variable Cost Per Unit 30.00$ 15.00%
Gross Margin Per Unit 170.00$ 85.00%
Projected Unit Sales
Seasonality Factor 0.00%0.00%0.00%10.42%10.42%8.33%12.50%14.58%16.67%12.50%8.33%6.25%100.00%
Year One - - 125 125 100 150 175 200 150 100 75 1,200
Year Two Growth -10.00%- - - 113 113 90 135 158 180 135 90 68 1,080
Year Three Growth -35.00%- - - 73 73 59 88 102 117 88 59 44 702
Fixed Expense Allocation 50.00%
Projected Revenue 240,000$
Variable Costs 36,000
Gross Margin 204,000
Fixed Expenses 137,256
Profit 66,744 27.81%
Breakeven Sales Revenue 161,478$
Breakeven Sales Units 807 Cordwood Sales to Breakeven
Page 40
Financial Statements-Projected
Projected Sales -Pellets
8/19/2011
Copper Valley Wood Fuel a division of Gulkana Village Council
Projected Sales Forecast - Wood Pellets
Products and Services Assumptions %May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr Totals
Pellets
Price Per Unit 300.00$ 100.00%
Variable Cost Per Unit 40.00$ 13.33%
Gross Margin Per Unit 260.00$ 86.67%
Projected Unit Sales
Seasonality Factor 0.00%0.00%0.00%9.24%9.24%10.87%13.59%13.59%16.30%10.87%8.15%8.15%100.00%
Year One 85 85 100 125 125 150 100 75 75 920
Year Two Growth 25.00%- - - 106 106 125 156 156 188 125 94 94 1,150
Year Three Growth 40.00%- - - 149 149 175 219 219 263 175 131 131 1,610
Fixed Expense Allocation 50.00%
Projected Revenue 276,000$
Variable Costs 36,800
Gross Margin 239,200
Fixed Expenses 137,256
Profit 101,944 36.94%
Breakeven Sales Revenue 158,373$
Breakeven Sales Units 528 Pellet Sales in tons to Breakeven
Page 41
Financial Statements-Projected
Cash Receipts-Disbursements
8/19/2011
Copper Valley Wood Fuel a division of Gulkana Village Council
Cash Receipts and Disbursements
Accounts Receivable Collections
Percent of Collections
0 to 30 days 65.00%
31 to 60 days 30.00%
More than 60 days 5.00%
Total Collections Percentage 100.00%
Accounts Payable Disbursements
Number of Days to Pay Suppliers
0 to 30 days 100.00%
31 to 60 days 0.00%
More than 60 days 0.00%
Total Disbursements Percentage 100.00%
Line of Credit Assumptions
Desired Minimum Cash Balance -$
Line of Credit Interest Rate 7.00%
Income Tax Assumptions
Effective Income Tax Rate 0.00%
Amortization of Start-Up Expenses
Amortization Period in Years 3.00
Page 42
Financial Statements-Projected
3 Year Income Summary
8/19/2011
Copper Valley Wood Fuel a division of Gulkana Village Council
Year End Summary
Year One %Year Two %Year Three %
Income
Cordwood 240,000 216,000 140,400
Pellets 276,000 345,000 483,000
- - -
Total Income 516,000 100.00%561,000 100.00%623,400 100.00%
Cost of Sales
Cordwood 36,000 32,400 21,060
Pellets 36,800 46,000 64,400
- - -
Total Cost of Sales 72,800 14.11%78,400 13.98%85,460 13.71%
Gross Margin 443,200 85.89%482,600 86.02%537,940 86.29%
Salaries and Wages
Plant Foreman - - -
Salaries 48,000 49,440 50,923
Full-Time Employees 62,400 64,272 66,200
Part-Time Employees 18,720 19,282 19,860
Independent Contractors - - -
Payroll Taxes and Benefits 9,878 10,174 10,479
Total Salary and Wages 138,998 26.94%143,168 25.52%147,463 23.65%
Fixed Business Expenses
Advertising 21,600 22,680 19,278
Car and Truck Expenses - - -
Commissions and Fees - - -
Contract Labor- Acct/Payroll 22,200 23,310 19,814
Garbage Service 900 945 803
Customer Discounts and Refunds - - -
Dues and Subscriptions - - -
Vault Pumping-Sewage - - -
Insurance & Bond (Liability and Property)15,000 15,750 13,388
Internet 1,800 1,890 1,607
Legal and Professional Fees - - -
Office Expenses 1,800 1,890 1,607
Postage and Delivery 3,600 3,780 3,213
Rent (on business property)- - -
Rent of Vehicles and Equipment 9,600 10,080 8,568
Repairs and Maintenance 51,000 53,550 45,518
Fuel 30,000 31,500 26,775
Telephone and Communications 3,600 3,780 3,213
Travel - - -
Utilities 30,000 31,500 26,775
Total Fixed Business Expenses 191,100 37.03%200,655 35.77%170,557 27.36%
Other Expenses
Amortized Start-up Expenses 56,667 56,667 56,667
Depreciation 78,464 78,464 78,464
Interest
Commercial Loan - - -
Commercial Mortgage - - -
Line of Credit 4,948 5,973 5,973
Taxes - - -
Total Other Expenses 140,079 27.15%141,104 25.15%141,104 22.63%
Net Income (26,977) -5.23%(2,326) -0.41%78,817 12.64%
Page 43
Financial Statements-Projected
3 Yr Summary Balance Sheet
8/19/2011
Copper Valley Wood Fuel a division of Gulkana Village Council
Balance Sheet - Year One
Period Ending:Base Period Year One Year Two Year Three
Assets
Current Assets
Cash - 178,228 309,408 520,824
Accounts Receivable - 15,250 16,875 19,406
Inventory 41,250 41,250 41,250 41,250
Prepaid Expenses 170,000 113,333 56,667 0
Other Current - - - -
Total Current Assets 211,250 348,061 424,199 581,481
Fixed Assets
Real Estate 40,000 40,000 40,000 40,000
Buildings 75,000 75,000 75,000 75,000
Leasehold Improvements - - - -
Equipment 425,000 425,000 425,000 425,000
Furniture and Fixtures 35,000 35,000 35,000 35,000
Vehicles 35,000 35,000 35,000 35,000
Other Fixed Assets - - - -
Total Fixed Assets 610,000 610,000 610,000 610,000
- - - -
Less: Accumulated Depreciation - 78,464 156,929 235,393
- - - -
Total Assets 821,250 879,597 877,270 956,087
- - - -
Liabilities and Owner's Equity - - - -
Liabilities - - - -
Accounts Payable - - - -
Notes Payable - - - -
Mortgage Payable - - - -
Line of Credit Balance - 85,324 85,324 85,324
Total Liabilities - 85,324 85,324 85,324
- - - -
Owner's Equity - - - -
Common Stock 821,250 821,250 821,250 821,250
Retained Earnings - (26,977) (29,303) 49,514
Dividends Dispersed - - - -
Total Owner's Equity 821,250 794,273 791,947 870,764
- - - -
Total Liabilities and Owner's Equity 821,250 879,597 877,270 956,087
Page 44
Financial Statements-Projected
Y1 Income Statement
8/19/2011
Copper Valley Wood Fuel a division of Gulkana Village Council
Projected Income Statement - Year One
May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr Totals
Income
Cordwood - - - 25,000 25,000 20,000 30,000 35,000 40,000 30,000 20,000 15,000 240,000
Pellets - - - 25,500 25,500 30,000 37,500 37,500 45,000 30,000 22,500 22,500 276,000
-
Total Income - - - 50,500 50,500 50,000 67,500 72,500 85,000 60,000 42,500 37,500 516,000
Cost of Sales
Cordwood - - - 3,750 3,750 3,000 4,500 5,250 6,000 4,500 3,000 2,250 36,000
Pellets - - - 3,400 3,400 4,000 5,000 5,000 6,000 4,000 3,000 3,000 36,800
-
Total Cost of Sales - - - 7,150 7,150 7,000 9,500 10,250 12,000 8,500 6,000 5,250 72,800
Gross Margin - - - 43,350 43,350 43,000 58,000 62,250 73,000 51,500 36,500 32,250 443,200
Salaries and Wages
Plant Foreman - - - - - - - - - - - - -
Salaries 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 4,000 48,000
Full-Time Employees 5,200 5,200 5,200 5,200 5,200 5,200 5,200 5,200 5,200 5,200 5,200 5,200 62,400
Part-Time Employees 1,560 1,560 1,560 1,560 1,560 1,560 1,560 1,560 1,560 1,560 1,560 1,560 18,720
Independent Contractors - - - - - - - - - - - - -
Payroll Taxes and Benefits 823 823 823 823 823 823 823 823 823 823 823 823 9,878
Total Salary and Wages 11,583 11,583 11,583 11,583 11,583 11,583 11,583 11,583 11,583 11,583 11,583 11,583 138,998
Fixed Business Expenses
Advertising 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 1,800 21,600
Car and Truck Expenses - - - - - - - - - - - - -
Commissions and Fees - - - - - - - - - - - - -
Contract Labor- Acct/Payroll 1,850 1,850 1,850 1,850 1,850 1,850 1,850 1,850 1,850 1,850 1,850 1,850 22,200
Garbage Service 75 75 75 75 75 75 75 75 75 75 75 75 900
Customer Discounts and Refunds - - - - - - - - - - - - -
Dues and Subscriptions - - - - - - - - - - - - -
Vault Pumping-Sewage - - - - - - - - - - - - -
Insurance & Bond (Liability and Property)1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 1,250 15,000
Internet 150 150 150 150 150 150 150 150 150 150 150 150 1,800
Legal and Professional Fees - - - - - - - - - - - - -
Office Expenses 150 150 150 150 150 150 150 150 150 150 150 150 1,800
Postage and Delivery 300 300 300 300 300 300 300 300 300 300 300 300 3,600
Rent (on business property)- - - - - - - - - - - - -
Rent of Vehicles and Equipment 800 800 800 800 800 800 800 800 800 800 800 800 9,600
Repairs and Maintenance 4,250 4,250 4,250 4,250 4,250 4,250 4,250 4,250 4,250 4,250 4,250 4,250 51,000
Fuel 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 30,000
Telephone and Communications 300 300 300 300 300 300 300 300 300 300 300 300 3,600
Travel - - - - - - - - - - - - -
Utilities 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 30,000
Total Fixed Business Expenses 15,925 15,925 15,925 15,925 15,925 15,925 15,925 15,925 15,925 15,925 15,925 15,925 191,100
Other Expenses
Amortized Start-up Expenses 4,722 4,722 4,722 4,722 4,722 4,722 4,722 4,722 4,722 4,722 4,722 4,722 56,667
Depreciation 6,539 6,539 6,539 6,539 6,539 6,539 6,539 6,539 6,539 6,539 6,539 6,539 78,464
Interest
Commercial Loan - - - - - - - - - - - - -
Commercial Mortgage - - - - - - - - - - - - -
Line of Credit - 160 322 484 498 498 498 498 498 498 498 498 4,948
Taxes - - - - - - - - - - - - -
Total Other Expenses 11,261 11,421 11,583 11,745 11,759 11,759 11,759 11,759 11,759 11,759 11,759 11,759 140,079
Net Income (38,769) (38,930) (39,091) 4,097 4,083 3,733 18,733 22,983 33,733 12,233 (2,767) (7,017) (26,977)
Page 45
Financial Statements-Projected
Y1 Cash Flow Statement
8/19/2011
Copper Valley Wood Fuel a division of Gulkana Village Council
Projected Cash Flow Statement - Year One
May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr Totals
Beginning Cash Balance - - - - - 12,819 27,988 51,882 83,502 123,871 155,490 171,359
Cash Inflows
Income from Sales - - - 32,825 32,825 32,500 43,875 47,125 55,250 39,000 27,625 24,375 335,400
Accounts Receivable - - - - 15,150 17,675 17,525 22,750 25,125 29,125 22,250 15,750 165,350
Total Cash Inflows - - - 32,825 47,975 50,175 61,400 69,875 80,375 68,125 49,875 40,125 500,750
Cash Outflows
Investing Activities
New Capital Purchases - - - - - - - - - - - - -
Inventory Purchases - - - - - - - - - - - - -
Cost of Sales - - - 7,150 7,150 7,000 9,500 10,250 12,000 8,500 6,000 5,250 72,800
Operating Activities
Salaries and Wages 11,583 11,583 11,583 11,583 11,583 11,583 11,583 11,583 11,583 11,583 11,583 11,583 138,998
Fixed Business Expenses 15,925 15,925 15,925 15,925 15,925 15,925 15,925 15,925 15,925 15,925 15,925 15,925 191,100
Taxes - - - - - - - - - - - - -
Financing Activities -
Loan Payments - - - - - - - - - - - - -
Line of Credit Interest - 160 322 484 498 498 498 498 498 498 498 498 4,948
Line of Credit Repayments - - - - - - - - - - - - -
Dividends Paid - - - - - - - - - - - - -
Total Cash Outflows 27,508 27,669 27,830 35,142 35,156 35,006 37,506 38,256 40,006 36,506 34,006 33,256 407,846
Cash Flow (27,508) (27,669) (27,830) (2,317) 12,819 15,169 23,894 31,619 40,369 31,619 15,869 6,869 92,904
Operating Cash Balance (27,508) (27,669) (27,830) (2,317) 12,819 27,988 51,882 83,502 123,871 155,490 171,359 178,228
Line of Credit Drawdowns 27,508 27,669 27,830 2,317 - - - - - - - - 85,324
Ending Cash Balance - - - - 12,819 27,988 51,882 83,502 123,871 155,490 171,359 178,228
Line of Credit Balance 27,508 55,177 83,007 85,324 85,324 85,324 85,324 85,324 85,324 85,324 85,324 85,324
Page 46
Financial Statements-Projected
Y1 Balance Sheet
8/19/2011
Copper Valley Wood Fuel a division of Gulkana Village Council
Balance Sheet - Year One
Base Period End of Year One
Assets
Current Assets
Cash - 178,228
Accounts Receivable - 15,250
Inventory 41,250 41,250
Prepaid Expenses 170,000 113,333
Other Current - -
Total Current Assets 211,250 348,061
Fixed Assets
Real Estate 40,000 40,000
Buildings 75,000 75,000
Leasehold Improvements - -
Equipment 425,000 425,000
Furniture and Fixtures 35,000 35,000
Vehicles 35,000 35,000
Other Fixed Assets - -
Total Fixed Assets 610,000 610,000
Less: Accumulated Depreciation - 78,464
Total Assets 821,250 879,597
Liabilities and Owner's Equity
Liabilities
Accounts Payable - -
Notes Payable - -
Mortgage Payable - -
Line of Credit Balance - 85,324
Total Liabilities - 85,324
Owner's Equity
Common Stock 821,250 821,250
Retained Earnings - (26,977)
Dividends Dispersed - -
Total Owner's Equity 821,250 794,273
Total Liabilities and Owner's Equity 821,250 879,597
Page 47
Financial Statements-Projected
Y2 Income Statement
8/19/2011
Copper Valley Wood Fuel a division of Gulkana Village Council
Projected Income Statement - Year Two
May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr Totals
Income
Cordwood - - - 22,500 22,500 18,000 27,000 31,500 36,000 27,000 18,000 13,500 216,000
Pellets - - - 31,875 31,875 37,500 46,875 46,875 56,250 37,500 28,125 28,125 345,000
-
Total Income - - - 54,375 54,375 55,500 73,875 78,375 92,250 64,500 46,125 41,625 561,000
Cost of Sales
Cordwood - - - 3,375 3,375 2,700 4,050 4,725 5,400 4,050 2,700 2,025 32,400
Pellets - - - 4,250 4,250 5,000 6,250 6,250 7,500 5,000 3,750 3,750 46,000
-
Total Cost of Sales - - - 7,625 7,625 7,700 10,300 10,975 12,900 9,050 6,450 5,775 78,400
Gross Margin - - - 46,750 46,750 47,800 63,575 67,400 79,350 55,450 39,675 35,850 482,600
Salaries and Wages
Plant Foreman - - - - - - - - - - - - -
Salaries 4,120 4,120 4,120 4,120 4,120 4,120 4,120 4,120 4,120 4,120 4,120 4,120 49,440
Full-Time Employees 5,356 5,356 5,356 5,356 5,356 5,356 5,356 5,356 5,356 5,356 5,356 5,356 64,272
Part-Time Employees 1,607 1,607 1,607 1,607 1,607 1,607 1,607 1,607 1,607 1,607 1,607 1,607 19,282
Independent Contractors - - - - - - - - - - - - -
Payroll Taxes and Benefits 848 848 848 848 848 848 848 848 848 848 848 848 10,174
Total Salary and Wages 11,931 11,931 11,931 11,931 11,931 11,931 11,931 11,931 11,931 11,931 11,931 11,931 143,168
Fixed Business Expenses
Advertising 1,890 1,890 1,890 1,890 1,890 1,890 1,890 1,890 1,890 1,890 1,890 1,890 22,680
Car and Truck Expenses - - - - - - - - - - - - -
Commissions and Fees - - - - - - - - - - - - -
Contract Labor- Acct/Payroll 1,943 1,943 1,943 1,943 1,943 1,943 1,943 1,943 1,943 1,943 1,943 1,943 23,310
Garbage Service 79 79 79 79 79 79 79 79 79 79 79 79 945
Customer Discounts and Refunds - - - - - - - - - - - - -
Dues and Subscriptions - - - - - - - - - - - - -
Vault Pumping-Sewage - - - - - - - - - - - - -
Insurance & Bond (Liability and Property)1,313 1,313 1,313 1,313 1,313 1,313 1,313 1,313 1,313 1,313 1,313 1,313 15,750
Internet 158 158 158 158 158 158 158 158 158 158 158 158 1,890
Legal and Professional Fees - - - - - - - - - - - - -
Office Expenses 158 158 158 158 158 158 158 158 158 158 158 158 1,890
Postage and Delivery 315 315 315 315 315 315 315 315 315 315 315 315 3,780
Rent (on business property)- - - - - - - - - - - - -
Rent of Vehicles and Equipment 840 840 840 840 840 840 840 840 840 840 840 840 10,080
Repairs and Maintenance 4,463 4,463 4,463 4,463 4,463 4,463 4,463 4,463 4,463 4,463 4,463 4,463 53,550
Fuel 2,625 2,625 2,625 2,625 2,625 2,625 2,625 2,625 2,625 2,625 2,625 2,625 31,500
Telephone and Communications 315 315 315 315 315 315 315 315 315 315 315 315 3,780
Travel - - - - - - - - - - - - -
Utilities 2,625 2,625 2,625 2,625 2,625 2,625 2,625 2,625 2,625 2,625 2,625 2,625 31,500
Total Fixed Business Expenses 16,721 16,721 16,721 16,721 16,721 16,721 16,721 16,721 16,721 16,721 16,721 16,721 200,655
Other Expenses
Amortized Start-up Expenses 4,722 4,722 4,722 4,722 4,722 4,722 4,722 4,722 4,722 4,722 4,722 4,722 56,667
Depreciation 6,539 6,539 6,539 6,539 6,539 6,539 6,539 6,539 6,539 6,539 6,539 6,539 78,464
Interest
Commercial Loan - - - - - - - - - - - - -
Commercial Mortgage - - - - - - - - - - - - -
Line of Credit 498 498 498 498 498 498 498 498 498 498 498 498 5,973
Taxes - - - - - - - - - - - - -
Total Other Expenses 11,759 11,759 11,759 11,759 11,759 11,759 11,759 11,759 11,759 11,759 11,759 11,759 141,104
Net Income (40,411) (40,411) (40,411) 6,339 6,339 7,389 23,164 26,989 38,939 15,039 (736) (4,561) (2,326)
Page 48
Financial Statements-Projected
Y2 Cash Flow Statement
8/19/2011
Copper Valley Wood Fuel a division of Gulkana Village Council
Projected Cash Flow Statement - Year Two
May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr Totals
Beginning Cash Balance 178,228 162,453 135,179 106,029 104,598 119,480 137,737 165,675 201,431 246,550 281,870 300,214
Cash Inflows
Income from Sales - - - 35,344 35,344 36,075 48,019 50,944 59,963 41,925 29,981 27,056 364,650
Accounts Receivable 13,375 1,875 - - 16,313 19,031 19,369 24,938 27,206 31,594 23,963 17,063 194,725
Total Cash Inflows 13,375 1,875 - 35,344 51,656 55,106 67,388 75,881 87,169 73,519 53,944 44,119 559,375
Cash Outflows
Investing Activities
New Capital Purchases - - - - - - - - - - - - -
Inventory Purchases - - - - - - - - - - - - -
Cost of Sales - - - 7,625 7,625 7,700 10,300 10,975 12,900 9,050 6,450 5,775 78,400
Operating Activities
Salaries and Wages 11,931 11,931 11,931 11,931 11,931 11,931 11,931 11,931 11,931 11,931 11,931 11,931 143,168
Fixed Business Expenses 16,721 16,721 16,721 16,721 16,721 16,721 16,721 16,721 16,721 16,721 16,721 16,721 200,655
Taxes - - - - - - - - - - - - -
Financing Activities -
Loan Payments - - - - - - - - - - - - -
Line of Credit Interest 498 498 498 498 498 498 498 498 498 498 498 498 5,973
Line of Credit Repayments - - - - - - - - - - - - -
Dividends Paid - - - - - - - - - - - - -
Total Cash Outflows 29,150 29,150 29,150 36,775 36,775 36,850 39,450 40,125 42,050 38,200 35,600 34,925 428,195
Cash Flow (15,775) (27,275) (29,150) (1,431) 14,882 18,257 27,938 35,757 45,119 35,319 18,344 9,194 131,180
Operating Cash Balance 162,453 135,179 106,029 104,598 119,480 137,737 165,675 201,431 246,550 281,870 300,214 309,408
Line of Credit Drawdowns - - - - - - - - - - - - -
Ending Cash Balance 162,453 135,179 106,029 104,598 119,480 137,737 165,675 201,431 246,550 281,870 300,214 309,408
Line of Credit Balance 85,324 85,324 85,324 85,324 85,324 85,324 85,324 85,324 85,324 85,324 85,324 85,324
Page 49
Financial Statements-Projected
Y2 Balance Sheet Year
8/19/2011
Copper Valley Wood Fuel a division of Gulkana Village Council
Balance Sheet - Year Two
End of Year One End of Year Two
Assets
Current Assets
Cash 178,228 309,408
Accounts Receivable 15,250 16,875
Inventory 41,250 41,250
Prepaid Expenses 113,333 56,667
Other Current - -
Total Current Assets 348,061 424,199
Fixed Assets
Real Estate 40,000 40,000
Buildings 75,000 75,000
Leasehold Improvements - -
Equipment 425,000 425,000
Furniture and Fixtures 35,000 35,000
Vehicles 35,000 35,000
Other Fixed Assets - -
Total Fixed Assets 610,000 610,000
Less: Accumulated Depreciation 78,464 156,929
Total Assets 879,597 877,270
Liabilities and Owner's Equity
Liabilities
Accounts Payable - -
Notes Payable - -
Mortgage Payable - -
Line of Credit Balance 85,324 85,324
Total Liabilities 85,324 85,324
Owner's Equity
Common Stock 821,250 821,250
Retained Earnings (26,977) (29,303)
Dividends Dispersed - -
Total Owner's Equity 794,273 791,947
Total Liabilities and Owner's Equity 879,597 877,270
Page 50
Financial Statements-Projected
Y3 Income Statement
8/19/2011
Copper Valley Wood Fuel a division of Gulkana Village Council
Projected Income Statement - Year Three
May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr Totals
Income
Cordwood - - - 14,625 14,625 11,700 17,550 20,475 23,400 17,550 11,700 8,775 140,400
Pellets - - - 44,625 44,625 52,500 65,625 65,625 78,750 52,500 39,375 39,375 483,000
-
Total Income - - - 59,250 59,250 64,200 83,175 86,100 #####70,050 51,075 48,150 623,400
Cost of Sales
Cordwood - - - 2,194 2,194 1,755 2,633 3,071 3,510 2,633 1,755 1,316 21,060
Pellets - - - 5,950 5,950 7,000 8,750 8,750 10,500 7,000 5,250 5,250 64,400
-
Total Cost of Sales - - - 8,144 8,144 8,755 11,383 11,821 14,010 9,633 7,005 6,566 85,460
Gross Margin - - - 51,106 51,106 55,445 71,793 74,279 88,140 60,418 44,070 41,584 537,940
Total Salary and Wages 12,289 12,289 12,289 12,289 12,289 12,289 12,289 12,289 12,289 12,289 12,289 12,289 147,463
Fixed Business Expenses
Advertising 1,607 1,607 1,607 1,607 1,607 1,607 1,607 1,607 1,607 1,607 1,607 1,607 19,278
Car and Truck Expenses - - - - - - - - - - - - -
Commissions and Fees - - - - - - - - - - - - -
Contract Labor- Acct/Payroll 1,651 1,651 1,651 1,651 1,651 1,651 1,651 1,651 1,651 1,651 1,651 1,651 19,814
Garbage Service 67 67 67 67 67 67 67 67 67 67 67 67 803
Customer Discounts and Refunds - - - - - - - - - - - - -
Dues and Subscriptions - - - - - - - - - - - - -
Vault Pumping-Sewage - - - - - - - - - - - - -
Insurance & Bond (Liability and Property)1,116 1,116 1,116 1,116 1,116 1,116 1,116 1,116 1,116 1,116 1,116 1,116 13,388
Internet 134 134 134 134 134 134 134 134 134 134 134 134 1,607
Legal and Professional Fees - - - - - - - - - - - - -
Office Expenses 134 134 134 134 134 134 134 134 134 134 134 134 1,607
Postage and Delivery 268 268 268 268 268 268 268 268 268 268 268 268 3,213
Rent (on business property)- - - - - - - - - - - - -
Rent of Vehicles and Equipment 714 714 714 714 714 714 714 714 714 714 714 714 8,568
Repairs and Maintenance 3,793 3,793 3,793 3,793 3,793 3,793 3,793 3,793 3,793 3,793 3,793 3,793 45,518
Fuel 2,231 2,231 2,231 2,231 2,231 2,231 2,231 2,231 2,231 2,231 2,231 2,231 26,775
Telephone and Communications 268 268 268 268 268 268 268 268 268 268 268 268 3,213
Travel - - - - - - - - - - - - -
Utilities 2,231 2,231 2,231 2,231 2,231 2,231 2,231 2,231 2,231 2,231 2,231 2,231 26,775
Total Fixed Business Expenses 14,213 14,213 14,213 14,213 14,213 14,213 14,213 14,213 14,213 14,213 14,213 14,213 170,557
Total Other Expenses 11,759 11,759 11,759 11,759 11,759 11,759 11,759 11,759 11,759 11,759 11,759 11,759 141,104
Net Income (38,260) (38,260) (38,260) 12,846 12,846 17,185 33,532 36,018 49,880 22,157 5,810 3,323 78,817
Page 51
Financial Statements-Projected
Y3 Cash Flow Statement
8/19/2011
Copper Valley Wood Fuel a division of Gulkana Village Council
Projected Cash Flow Statement - Year Three
May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr Totals
Beginning Cash Balance 309,408 297,202 272,284 245,285 248,654 269,799 296,512 334,416 379,723 435,100 478,951 504,268
Cash Inflows
Income from Sales - - - 38,513 38,513 41,730 54,064 55,965 66,398 45,533 33,199 31,298 405,210
Accounts Receivable 14,794 2,081 - - 17,775 20,738 22,223 28,163 29,989 34,950 26,123 18,825 215,659
Total Cash Inflows 14,794 2,081 - 38,513 56,288 62,468 76,286 84,128 96,386 80,483 59,321 50,123 620,869
Cash Outflows
Investing Activities
New Capital Purchases - - - - - - - - - - - - -
Inventory Purchases - - - - - - - - - - - - -
Cost of Sales - - - 8,144 8,144 8,755 11,383 11,821 14,010 9,633 7,005 6,566 85,460
Operating Activities
Salaries and Wages 12,289 12,289 12,289 12,289 12,289 12,289 12,289 12,289 12,289 12,289 12,289 12,289 147,463
Fixed Business Expenses 14,213 14,213 14,213 14,213 14,213 14,213 14,213 14,213 14,213 14,213 14,213 14,213 170,557
Taxes - - - - - - - - - - - - -
Financing Activities -
Loan Payments - - - - - - - - - - - - -
Line of Credit Interest 498 498 498 498 498 498 498 498 498 498 498 498 5,973
Line of Credit Repayments - - - - - - - - - - - - -
Dividends Paid - - - - - - - - - - - - -
Total Cash Outflows 26,999 26,999 26,999 35,143 35,143 35,754 38,382 38,821 41,009 36,632 34,004 33,566 409,452
Cash Flow (12,206) (24,918) (26,999) 3,369 21,144 26,713 37,904 45,307 55,377 43,851 25,317 16,557 211,417
Operating Cash Balance 297,202 272,284 245,285 248,654 269,799 296,512 334,416 379,723 435,100 478,951 504,268 520,824
Line of Credit Drawdowns - - - - - - - - - - - - -
Ending Cash Balance 297,202 272,284 245,285 248,654 269,799 296,512 334,416 379,723 435,100 478,951 504,268 520,824
Line of Credit Balance 85,324 85,324 85,324 85,324 85,324 85,324 85,324 85,324 85,324 85,324 85,324 85,324
Page 52
Financial Statements-Projected
Y3 Balance Sheet Year
8/19/2011
Copper Valley Wood Fuel a division of Gulkana Village Council
Balance Sheet - Year Three
End of Year Two End of Year Three
Assets
Current Assets
Cash 309,408 520,824
Accounts Receivable 16,875 19,406
Inventory 41,250 41,250
Prepaid Expenses 56,667 0
Other Current - -
Total Current Assets 424,199 581,481
Fixed Assets
Real Estate 40,000 40,000
Buildings 75,000 75,000
Leasehold Improvements - -
Equipment 425,000 425,000
Furniture and Fixtures 35,000 35,000
Vehicles 35,000 35,000
Other Fixed Assets - -
Total Fixed Assets 610,000 610,000
Less: Accumulated Depreciation 156,929 235,393
Total Assets 877,270 956,087
Liabilities and Owner's Equity
Liabilities
Accounts Payable - -
Notes Payable - -
Mortgage Payable - -
Line of Credit Balance 85,324 85,324
Total Liabilities 85,324 85,324
Owner's Equity
Common Stock 821,250 821,250
Retained Earnings (29,303) 49,514
Dividends Dispersed - -
Total Owner's Equity 791,947 870,764
Total Liabilities and Owner's Equity 877,270 956,087
Page 53
Financial Statements-Projected
Breakeven Analysis
8/19/2011
Copper Valley Wood Fuel a division of Gulkana Village Council
Breakeven Analysis
Breakeven Analysis Dollars Percent
Annual Sales Revenue 516,000$ 100.00%
Cost of Sales 72,800 14.11%
Gross Margin 443,200 85.89%
Salaries and Wages 138,998
Fixed Operating Expenses 274,513
Total Fixed Business Expenses 413,510
Breakeven Sales Calculation 413,510
85.89%
Breakeven Sales in Dollars 481,433$
Page 54
Financial Statements-Projected
Financial Diagnostics
8/19/2011
Copper Valley Wood Fuel a division of Gulkana Village Council
Financial Diagnostics
This sheet performs a few tests on your numbers to see if they seem within certain reasonable ranges.
Remember, no computer can tell whether your projections are truly well-constructed, only a human can do that.
But these tests can at least look for values that are critically out of range.
Financial Diagnostics Value Findings
General Financing Assumptions
Owner's Cash Injection into the Business 14.00%Owner's injection might be too low in relation to the amount of money needed
Cash Request as percent of Total Required Funds 0.00%Cash request seems reasonable with respect to total request
Loan Assumptions
Commercial Loan Interest rate 9.00%Interest rate seems reasonable
Commercial Loan Term in Months 84 Loan term seems within range for this type of loan
Commercial Mortgage Interest rate 9.00%Interest rate seems reasonable
Commercial Mortgage Term in Months 240.00 Loan term seems within range for this type of loan
Loan Payments as a Percent of Projected Sales 0.00%Calculated loan payments as a percent of sales seem resonable
Income Statement
Gross Margin as a Percent of Sales 85.89%Gross margin percentage seems reasonable
Owner's Compensation Lower Limit Check -$ An owner's compensation amount has not been established
Owner's Compensation Upper Limit Check 0.00%Owner's compensation seems reasonable
Advertising Expense Levels as a Percent of Sales 4.19%Advertising as a percent of sales may be too low
Profitability Levels (26,977)$ The business is not showing a profit
Profitability as a Percent of Sales -5.23%The projection does not seem highly unreasonable
Cash Flow Statement
Desired Operating cash Flow Levels 85,324$ The financial projection does not provide the desired level of cash flow
Line of Credit Drawdowns 85,324$ The business will need at least this level of a line of credit
Accounts Receivable Ratio to Sales 2.96%Accounts receivable amount as a percent of sales seems reasonable
Balance Sheet
Does the Base Period Balance Sheet Balance?- The balance sheet does balance
Does the Final Balance Sheet Balance - The balance sheet does balance
Debt to Equity Ratio 10.74%The debt to equity ratio seems reasonable
Breakeven Analysis
Breakeven Levels 34,567$ The sales projection exceeds the projected break-even sales level
Page 55
Financial Statements-Projected
Financial Ratios
8/19/2011
Copper Valley Wood Fuel a division of Gulkana Village Council
Financial Ratios
Ratio Year One Year Two Year Three
Liquidity
Current Ratio 4.08 4.97 6.81
Quick Ratio 2.27 3.82 6.33
Safety
Debt to Equity Ratio 0.11 0.11 0.10
Debt to Coverage Ratio 0.60 0.89 1.84
Profitability
Sales Growth - 0.09 0.11
COGS to Sales 0.14 0.14 0.14
Gross Profit Margin 0.86 0.86 0.86
SG&A to Sales 0.64 0.61 0.51
Net Profit Margin (0.05) (0.00) 0.13
Return on Equity (0.03) (0.00) 0.09
Return on Assets (0.03) (0.00) 0.08
Owner's Compensation to Sales - - -
Efficiency
Days in Receivables 10.64 10.83 11.21
Accounts Receivable Turnover 33.84 33.24 32.12
Days in Inventory 203.98 189.41 173.77
Inventory Turnover 1.76 1.90 2.07
Sales to Total Assets 0.59 0.64 0.65
Page 56
Financial Statements-Projected
Production Requirements
8/19/2011
Account:Cordwood - Cord Wood Pellets - Tons
Breakeven Sales Revenue 161,478$ 158,373$
Breakeven Sales Units 807 528
Month (12 Months per Year)67 44
Daily - (240 Workdays per year)3 2
Daily Production levels -Sales to sustain the cordwood and wood pellet operation:
Cordwood: 3 Cords Wood Pellets: 2 Tons
Page 57
Gulkana Village Council: Copper River Valley Wood Products - Business Plan
Cited References
ECONOMICS OF PRODUCING FUEL PELLETS FROM BIOMASS S. Mani, S.
Sokhansanj, X. Bi, A. Turholl
Deloitte Wood Pellet Cost Study for the Forest of North Eastern Ontario
Copper Valley Electric Association - Strategic Issues Paper 2011
Bioenergy and Sustainable Forestry - Outlook for Alaska
Selected Housing Characteristics 2005-2009 Dataset: Copper River Census Subarea
Kenny Lake School: Fuel Oil vs. Pellet Analysis/Round IV AEA application
Page 58
9.0 References
Grant Application
Attachment B Cost Worksheet
Gulkana Village Biomass Fuels Project
Renewable Energy Fund Round V
AEA Application for Design, Equipment &
Gulkana Village Council
8/25/2011
Installation Work
Contents:
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 BIOMASS
The Applicant should demonstrate that the renewable energy resource is available on a
sustainable basis.
Annual average resource availability. 30,240,000,000 BTU
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 Railbelt1 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
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] 216,000/gal 29,808,000,000Mbtu
ii. Electricity [kWh]
iii. Propane [gal or MMBtu]
iv. Coal [tons or MMBtu]
v. Wood [cords, green tons, dry tons]
vi. Other
1 The Railbelt grid connects all customers of Chugach Electric Association, Homer Electric Association, Golden Valley Electric
Association, the City of Seward Electric Department, Matanuska Electric Association and Anchorage Municipal Light and Power.
Renewable Energy Fund Round 5
Project Cost/Benefit Worksheet
RFA AEA12-001 Application Cost Worksheet Page 2 7-1-11
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]
30,240,000,000 Btu
b) Proposed annual electricity or heat production (fill in as applicable)
i. Electricity [kWh]
ii. Heat [MMBtu] 30,240,000,000 Btu
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] 1800 ton Pellets
iv. Other
4. Project Cost
a) Total capital cost of new system 1,075,000
b) Development cost
c) Annual O&M cost of new system 50,000
d) Annual fuel cost 30,000
5. Project Benefits
a) Amount of fuel displaced for
i. Electricity
ii. Heat $771,000
iii. Transportation
b) Current price of displaced fuel 3.57
c) Other economic benefits
d) Alaska public benefits Air Quality
6. Power Purchase/Sales Price
a) Price for power purchase/sale
7. Project Analysis
a) Basic Economic Analysis
Project benefit/cost ratio .72
Payback (years) 5.0
Grant Application
Attachment C Grant Budget Form
Gulkana Village Biomass Fuels Project
Renewable Energy Fund Round V
AEA Application for Design, Equipment &
Gulkana Village Council
8/25/2011
Installation Work
Contents:
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. )
Site Control & Installation Permitting June 2012 $10,000 $10,000
Feedstock - Supply Channel/Vendor Contracts August 2012 $25,000 $25,000
Small Scale Installation & Production Design August 30, 2012 $75,000 $75,000
Equipment Acquisitions August 1, 2012 $475,000 $125,000 $600,000
Equipment Installations inc Building Prep August 30,2012 $80,000 $80,000
Initial Production Sept 30, 2012 $30,000 $30,000
Refine to Full Production Sept - Dec 2012 $30,000 $30,000
TOTALS $645,000 $205,000 $850,000
Budget Categories:
Direct Labor & Benefits $60,000 $60,000
Travel & Per Diem $0 $0
Equipment $475,000 $125,000 $600,000
Materials & Supplies $25,000 $25,000
Contractual Services $165,000 $165,000
Construction Services
Other
TOTALS $850,000
Applications should include a separate worksheet for each project phase (Reconnaissance, Feasibility, Design and Permitting, and Construction)-
Add additional pages as needed
Renewable Energy Fund Grant Round V Grant Budget Form 7-1-11
Project Milestones that should be addressed in Budget Proposal
Reconnaissance Feasibility Design and Permitting Construction
1. Project scoping and
contractor solicitation.
2. Resource identification and
analysis
3. Land use, permitting, and
environmental analysis
4. Preliminary design analysis
and cost
5. Cost of energy and market
analysis
6. Simple economic analysis
7. Final report and
recommendations
1. Project scoping and contractor
solicitation.
2. Detailed energy resource
analysis
3. Identification of land and
regulatory issues,
4. Permitting and environmental
analysis
5. Detailed analysis of existing
and future energy costs and
markets
6. Assessment of alternatives
7. Conceptual design analysis
and cost estimate
8. Detailed economic and
financial analysis
9, Conceptual business and
operations plans
10. Final report and
recommendations
1. Project scoping and contractor
solicitation for planning and
design
2. Permit applications (as
needed)
3. Final environmental
assessment and mitigation
plans (as needed)
4. Resolution of land use, right of
way issues
5. Permit approvals
6. Final system design
7. Engineers cost estimate
8. Updated economic and
financial analysis
9. Negotiated power sales
agreements with approved
rates
10. Final business and operational
plan
1. Confirmation that all design
and feasibility requirements
are complete.
2. Completion of bid documents
3. Contractor/vendor selection
and award
4. Construction Phases –
Each project will have unique
construction phases, limitations,
and schedule constraints which
should be identified by the
grantee
5. Integration and testing
6. Decommissioning old
systems
7. Final Acceptance,
Commissioning and Start-up
8. Operations Reporting
Grant Application
Attachment D Electronic version of the Proposal
Gulkana Village Biomass Fuels Project
Renewable Energy Fund Round V
AEA Application for Design, Equipment &
Gulkana Village Council
8/25/2011
Installation Work
Contents:
Grant Application
Attachment E Authorized Signers Form
Gulkana Village Biomass Fuels Project
Renewable Energy Fund Round V
AEA Application for Design, Equipment &
Gulkana Village Council
8/25/2011
Installation Work
Contents:
Grant Application
Attachment F Governing Body Resolution
Gulkana Village Biomass Fuels Project
Renewable Energy Fund Round V
AEA Application for Design, Equipment &
Gulkana Village Council
8/25/2011
Installation Work
Contents:
Grant Application
Attachment G Certification
Gulkana Village Biomass Fuels Project
Renewable Energy Fund Round V
AEA Application for Design, Equipment &
Gulkana Village Council
8/25/2011
Installation Work
Contents:
Grant Application
Gulkana Village Biomass Fuels Project
Renewable Energy Fund Round V
AEA Application for Design, Equipment &
Gulkana Village Council
8/25/2011
Installation Work
Contents: Attachment H - L etter of Support