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HomeMy WebLinkAboutBHI Cook Inlet Tidal Grant Application4 Renewable Energy Fund Round IV Grant Application AEA 11-005 Application Page 1 of 18 7/21/2010 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/RE_Fund-IV.html Grant Application Form GrantApp4.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 Costworksheet4.doc Summary of Cost information that should be addressed by applicants in preparing their application. Grant Budget Form GrantBudget4.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 GrantBudgetInstructions4.pdf Instructions for completing the above grant budget form.  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 IV AEA11-005 Grant Application Page 2 of 18 7/21/2010 SECTION 1 – APPLICANT INFORMATION Name Baker Hughes Inc. Type of Entity: IPP Mailing Address 795 E. 94th Ave. Anchorage, AK 99515 Physical Address 795 E. 94th Ave. Anchorage, AK 99515 Telephone 907-267-3409 Fax 907-267-3401 Email 1.1 APPLICANT POINT OF CONTACT / GRANTS MANAGER Name Walter Dinkins Title Applications Engineer Mailing Address 795 E. 94th Ave. Anchorage, AK 99515 Telephone 907-267-3437 Fax 718-887-7435 Email Walter.dinkins@bakerhughes.com 1.2 APPLICANT MINIMUM REQUIREMENTS Please check as appropriate. If you do not to meet the minimum applicant requirements, your application will be rejected. 1.2.1 As an Applicant, we are: (put an X in the appropriate box) An electric utility holding a certificate of public convenience and necessity under AS 42.05, or X An independent power producer in accordance with 3 AAC 107.695 (a) (1), or A local government, or A governmental entity (which includes tribal councils and housing authorities); Yes or No 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 or No 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 or No 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 or No 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 IV AEA11-005 Grant Application Page 3 of 18 7/21/2010 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) Cook Inlet Tidal Hydrokinetic Power Generation 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. The portion of the project in which we are looking to partner with Chevron will be targeting the waters of Cook Inlet, with the direct benefit available to the communities surrounding the Inlet. However, through the development of our in-stream equipment we are expecting project locations to vary significantly across much of rural Alaska. Given the number of viable streams and rivers for hydrokinetic power generation, we are confident a rural energy authority will provide a pilot for full scale power production. 2.3 PROJECT TYPE Put X in boxes as appropriate 2.3.1 Renewable Resource Type Wind Biomass or Biofuels Hydro, including run of river Transmission of Renewable Energy Geothermal, including Heat Pumps Small Natural Gas Heat Recovery from existing sources X 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 Construction and Commissioning Conceptual Design 2.4 PROJECT DESCRIPTION Provide a brief one paragraph description of your proposed project. The waters of Cook Inlet offer a clean and renewable power source for the communities of South Central Alaska. Our project will utilize existing infrastructure, namely the King Salmon platform, and proven submersible technologies to capture the tidal energy of the Inlet. Baker Hughes Centrilift develops electrical submersible pumps (ESP) for the oil industry and given our product’s reliable history in very demanding oil well environments, their ESP system was chosen as the power generating unit. The smaller diameter of an ESP Generator allows for higher speed operation and lower impact to fish than propeller-based systems. The ESP Generator would consist of 1) aquatic life diverters to protect the environment and minimize the environmental Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 4 of 18 7/21/2010 impact of the system, 2) rotating multistage turbine anchored in water at optimum flow velocity depth, 3) submersible electric power cable would carry the energy to shore connecting to 4) local utility substation or transformer. Buoys would be placed strategically near the system to alert boat traffic. The existing platform would act as an anchoring structure and intermediate for power distribution. By partnering with UAF, we will utilize existing in-stream testing sites, thus allowing the deployment of prototypes aimed at providing power to rural communities. With that said, our project will also target rural communities situated on a viable year long hydro-resource. The system will be designed to produce adequate energy during low-flow conditions of the winter season. Our anchoring system will look to anchor the system throughout the year, yet enabling a break-away during significant ice/debris flow. Enabling retrieval of the system without significant damage to the internal components of our equipment, which will allow a quick turnaround once the obstruction has passed. Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 5 of 18 7/21/2010 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.) The platforms of the Inlet are nearing their useful end, as gas reserves become depleted and overall volumes decrease. Thus, the need to utilize this existing infrastructure will enable the project to reduce capital costs. Instead of building the infrastructure or engineering complex anchoring systems our design will utilize these platforms, reducing costs and extending their usable lives. These reduced costs and the use of proven technologies will bring the most value to the end user, and allow for a cleaner and renewable energy source. In terms of in-stream power generation our units offer a low profile in comparison to technologies currently being pursued, which work off turbine designs requiring large dynamic surface areas. Our design distributes the surface area axially along the length of the equipment with all moving parts enclosed, thus eliminating interaction with aquatic or marine life. Our system for in-stream applications will require low installation costs, coupled with our extended run life will provide cheap sustainable power throughout rural Alaska, all the while eliminating significant environmental impact. 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. This proposal for Design and Permitting has UAF helping with modifications of existing product to adapt to this application. Grant cost requested is $400K for UAF laboratory and Tanana river trial of small 50 kW prototype. Total grant request is $400K. BHI and CVX contribution to project totals $1,960K. With a better understanding of project costs, a larger Construction and Commissioning phase can be executed with more efficiency. This latter phase would include a larger number of generators set on platform with grant applied for transmission line and subsea cable. 2.7 COST AND BENEFIT SUMARY Include a summary of grant request and your project’s total costs and benefits below. Grant Costs (Summary of funds requested) 2.7.1 Grant Funds Requested in this application. $ 400,000 2.7.2 Other Funds to be provided (Project match) $ 1,960,000 2.7.3 Total Grant Costs (sum of 2.7.1 and 2.7.2) $ 2,760,000 Project Costs & Benefits Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 6 of 18 7/21/2010 (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) $3,600,000 2.7.5 Estimated Direct Financial Benefit (Savings) $ 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.) $ Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 7 of 18 7/21/2010 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. Walter Dinkins 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.) See attached. 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.) The project timeline is setup to allow initial performance testing of the turbine to help determine the most efficient design. During this initial testing period we will also be investing in permitting as well as environmental studies, to expedite the in-river testing. Once component testing is complete and their function verified, the schedule calls for the complete prototype to be assembled and tested. The initial testing will be by towing the assembly behind a barge. Upon completion of this simulated test, our schedule calls for in-river testing in the Tanana River. After completion of testing the ESP Generator will be installed suspended from the King Salmon platform in the waters of Cook Inlet, where the final testing will occur. 3.4 Project Resources Describe the personnel, contractors, equipment, and services you will use to accomplish the project. Include any partnerships or commitments with other entities you have or anticipate will be needed to complete your project. Describe any existing contracts and the selection process you may use for major equipment purchases or contracts. Include brief resumes and references for known, key personnel, contractors, and suppliers as an attachment to your application. UAF's Alaska Center for Energy and Power (ACEP) will conduct (1) laboratory tests and benchmarking of individual ESP Generator components, and (2) prototype performance tests at the Tanana River test site. Laboratory testing and data analysis will be supervised by Dr. Rorik Peterson and conducted at UAF. BHI will supply ESP Generator components, and UAF will be supply testing facilities. ACEP's Hydrokinetic Energy Test Center will coordinate and oversee in-river performance assessment of the ESP Generator at the FERC-permitted Tanana river test site. Center director Dr. Jerome Johnson will supervise in-river prototype testing in conjunction with R. Peterson. BHI will provide the prototype 50-kW ESP Generator, and UAF will be responsible for design modifications, coordinating deployment, performance measurement, and Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 8 of 18 7/21/2010 data assessment. 3.5 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. Monthly status updates. 3.6 Project Risk Discuss potential problems and how you would address them. A risk associated with any electro-mechanical system is a failure resulting in complete shutdown. This particular system will be protected under warranty for the first year, which will mitigate the risk for the operator in that timeframe. As time progresses we will have to consider the type of failure and the appropriate method of reconciliation, which may include a reduced replacement unit. If fuel prices were to drop too low, the economics of the project may not be feasible; however the price of oil and gas has not dipped to an uneconomic level in the past five years. Also, the likely hood that the price of oil and gas would remain at stagnant numbers for the life of the project is highly unlikely given the current supply and demand. A major risk that all Alaskans share is the unpredictability of the weather and the unforeseen destruction of natural disasters. In the event that our system is damaged during a storm or significant weather event, all parties will need to come to a resolution on purchasing and replacing surface equipment at reasonable prices and in an accelerated timeframe. Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 9 of 18 7/21/2010 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. The nature of this system allows the user to determine the number of units needed to produce a certain amount of energy, with the largest constraint being the depth of free flowing tide. For this application the design calls for 500 kWh of power generation. Pros: Low Profile, Proven Technology, Versatile System (Array Configuration, Add/Decrease number of units based on energy needs), Working Relationship (BHI-UAF), Alaska Base (Invested Interest) Cons: No Technical Data, No Test Facilities 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. Chugach Electric and Anchorage Municipal Light and Power currently rely on multiple gas power plants as well as a select number of hydroelectric plants to power their service areas. Chugach Electric maintains 402 miles of transmission lines, 926 miles of overhead distribution lines, 719 miles of underground distribution cable, and 25 distribution substations. Anchorage Municipal Light and Power maintains 243 miles of underground cable, 136 miles of distribution lines, 24.8 miles of transmission lines, and 23 distribution substations. Anchorage Municipal Light and Power also, owns a 1/3 stake in the Beluga River Gas Field giving it a more secure supply of natural gas through 2016. The efficiency of a gas power plant with a heat recovery system can approach a thermal efficiency near 60%. 4.2.2 Existing Energy Resources Used Briefly discuss your understanding of the existing energy resources. Include a brief discussion of Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 10 of 18 7/21/2010 any impact the project may have on existing energy infrastructure and resources. The majority of the power supplied to the communities surrounding Cook Inlet utilizes local gas reserves. In fact, Matanuska Electric Association estimates that 58% of power generation statewide is gas, 9% petroleum, 10% coal, and 23% Hydro. However, the Alaska Energy Authority predicts that Alaska may have a shortfall of gas production near these main population areas in the next decade, thus the need for alternative energy development is essential to these households. MEA also predicts that by 2015 the railbelt will demand a total 898 MW of power compared to 770 MW in 2003. This increase in demand will put further pressure on utilities to find the resources to not only meet the current demand, but to exceed current capacity by nearly 17%. There is a large potential for tidal hydroelectric power and the ESP Generator to fill this need. 4.2.3 Existing Energy Market Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. Currently Chugach Electric Association and Anchorage Municipal Light and Power supply the majority of power to the Cook Inlet region. These utilities attribute approximately 90% of their power to natural gas power plants. This reliance leaves these companies vulnerable to supply and price variability in an ever changing energy market. Our project focuses on alleviating the market variability by focusing on sustainable energy production. As discussed above, ESP Generators will harness tidal energy with no environmental impact, providing the reliable energy communities demand. Although this project is focusing on demand in the Railbelt, the concept could be very successful for a rural in-river application. The load requirements in rural Alaska calls for a robust system similar to our current design and the low profile would make our system a natural fit for in-river power generation. 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 ESP Generator Components: Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 11 of 18 7/21/2010 Motor proposed would be an existing 800 HP motor which would provide 580 kW output. No change would be required for the motor/generator for this application. Driving the motor slightly above the nameplate RPM, (3500 RPM rated at 3700 RPM) would generate electric power at 60 Hz, the level needed to directly connect to a utility. Greater flexibility would be achieved by connecting the motor/generator to a variable speed controller. The controller would improve operation over a normal load, with an 80% power factor, and would convert power to 60 Hz given a variable speed input. This would accommodate environmental factors such as unusually high/low tides or heavy springtime runoff affecting water flow. Cable would be corrosion resistant for a minimum 5 year life, built as standard round armored barrier cable. The ESP cable would be integrated with an anchor system to minimize cyclic fatigue failure. Armor is necessary to protect against impact from boat anchors or large debris. The cable-shore connection would be buried in the river bed to connect to the VSC system. Variable speed controller (VSC) would sense the motor speed and adjust the rotor field speed to improve conversion efficiency. In tidal applications, the VSC would also allow a "soft start" at change of tide, reducing wear on the gearbox. Finally, the VSC design would provide low harmonic power output to the supply system. Gearbox gear ratio would be in the range of 25 - 30: 1 with rating of 630 HP at varying load and speeds. This would need to be designed as there is not a suitable gear box in Centrilift inventory at this time. Seal system would provide isolation from mineral oil-filled motor and the water environment through cyclic loads. This system is standard in a variety of existing Centrilift applications. Multistage Turbine would be standard H-series (or larger) pump. The design rate would be for 4 – 12 ft/sec flow rate but would still rotate down to 1.5 ft / sec for minimal in-river winter and transitional tidal flow velocities. Shroud assembly has built-in aquatic life diverters. In river applications, the assembly front end would be angled lower than rear to minimize damage from floating ice & debris. Gauge would be applied at the motor/generator base and communicate via the power cable to an instrument box at the VSC. A standard ESP gauge would be modified to measure flow stream velocity and generator rpm. 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. Small junction interface for tidal / in-stream power cables along coast / river with tie-in to nearby substation or transmission line. 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 Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 12 of 18 7/21/2010  Identify and discussion of potential barriers Permitting will need to be in place for both the tidal and in-river applications. Discussion is under way with UAF and BHI as to the names and contacts for state and federal permitting bodies. The goal being to bring in a knowledgeable third party contractor to act as liaison between the permitting agencies and BHI. In terms of our design, we are planning on making the necessary modifications, to minimize the impact to people and the environment. Specifically, we are developing a screen, to protect marine life from the turbine intake. 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 Environmental impact data as well as flow data is needed once specific installation sites are identified. For the Alaska area, much of this can be gathered from the Alaska Energy Authority database of environmental impact studies in 10 tidal and river sites in Alaska (see reference below). The Federal Energy Regulatory Commission is the primary contact for regulatory requirements and has been amenable to trial studies that also cover environmental issues. Because an ESP Generator is relatively small diameter (~36 inches) with a minimal environmental impact “footprint,” FERC may look on it more favorably than other alternative energy sources currently being considered for Alaska. For comparison, a new 20GW nuclear or coal plant cost $2000/kW versus slightly less than that ($1800/kW) for proposed ESP generator system. Securing approval for large plants can be costly and take years to get in place. In contrast, the ESP Generator is relatively inexpensive, can be installed fairly quickly, allows incremental buildup of units as needed, is significantly quieter than propeller-systems or large generators and is largely hidden from view. The National Marine Fisheries Service (NMFS, under Department of Commerce, NOAA) will need to be involved in developing the aquatic life diverter to protect species at risk. Several tidal application proposals for Puget Sound, San Francisco Bay and Alaska were turned down recently by NMFS, ostensibly because NMFS had not been adequately involved. NMFS involvement in the development stages of this project would improve the likelihood of approval from NMFS, and would also address concerns that will be presented by various Native Corporations regarding impact on fishing areas. 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. Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 13 of 18 7/21/2010 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 ESP suggested for this proposal is Baker Hughes Centrilift’s H series equipment, due to its high reliability and large capacity. For example, the 800 HP, 725 motor would provide an in- stream 500 kW generator system at an estimated installed cost of $900K and a payback of 1.5 years at $0.15/kWh. Centrilift’s new 880 motor would lend itself well to this application because it would allow higher output power generation (likely 2MW) from a single source, therefore improving overall economics. ESP Generators have potential of 10/yr installations in Alaska over the next 5 years. Business and residential users currently pay between 9 – 32 cents/kWh, averaging 15 cents/kWh. Generally, areas with lower costs have existing hydroelectric dams. The State of Alaska’s power cost equalization program offsets increased fuel cost in remote villages. Unfortunately, that program is running out of funds due to much higher fuel costs and the economic recession in 2008. Rather than pay for offsetting fuel costs, remote villages need alternative methods of generating electricity. 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.) No maintenance possible with current design. Unit is replaced on failure. Average run life of system estimated at 5 year replacement cycle. 4.4.3 Power Purchase/Sale The power purchase/sale information should include the following:  Identification of potential power buyer(s)/customer(s)  Potential power purchase/sales price - at a minimum indicate a price range  Proposed rate of return from grant-funded project The ideal place for a tidal ESP Generator system in Alaska would be coastal areas with large population densities along Cook Inlet. Knik arm bridge studies within Cook Inlet have defined those tidal currents, providing data on velocity, depth, boat traffic and environmental factors usable for implementing an ESP Generator system there. Remote Alaska villages along rivers and the west coast would be the greatest beneficiaries of an ESP Generator system, once a pilot Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 14 of 18 7/21/2010 system has been tested. With the existing data and infrastructure for support, a pilot system could be developed and installed in Cook Inlet within 12-18 months. Potentially, a Beta test system could be installed in a more remote location within the following 12 months. The 500 kWh system listed above would be adequate for a village of 25-30 households (estimating 5kW per person/4-person household). As stated above, the current system would have a payback of 1.5 years at $.15/kWh. 4.4.4 Project Cost Worksheet Complete the cost worksheet form which provides summary information that will be considered in evaluating the project. See attached. 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 Inherently, hydroelectric power provides a cleaner and more sustainable form of energy than conventional energy resources. The state of Alaska is estimated to contain 1/3 of the United States total potential hydropower. Our systems taps into this vast resource, reducing rural Alaska’s dependence on hydrocarbons. This system will also provide a solution that offers no emissions, no visible obstructions, and no noise pollution. In years where fuel prices rise above affordable levels, this solution will reduce fuel subsidies allowing the communities to function on their own without the need for outside aid. The economic benefits of a hydroelectric project vary due to initial investment costs and the price of alternative sources of energy. As the past year has shown, the price of oil and gas can be highly variable resulting in fluctuating balance sheets. However, this project utilizes a technology with minimal to no maintenance costs, thus the price of electricity can be set at a fixed yearly payback to offset initial investments. This eliminates market variability and economic uncertainty, with the intent being to provide electricity at or below fair market value. SECTION 6– SUSTAINABILITY Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 15 of 18 7/21/2010 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 The ESP Generator is designed to be a one time install, lasting the life of the device, reducing the need for annual maintenance costs. When small changes to the surface equipment are needed the operating company will be responsible for the costs associated with repair, although this should be a rare occurrence. The intent of this project will be to provide a solution to an array of Alaskan communities in need of reliable and secure energy sources. To that end, we are committed to collecting and analyzing all data pertaining to the operation of the ESP Generator. This information will be needed to calculate and provide to potential users, the savings and benefits of the unit for both tidal and in- river applications. Baker Hughes has extensive experience operating these units in oil well applications, thus will provide oversight on any operational issues that arise to prevent complete failure of a unit. SECTION 7 – READINESS & COMPLIANCE WITH OTHER GRANTS Discuss what you have done to prepare for this award and how quickly you intend to proceed with work once your grant is approved. Tell us what you may have already accomplished on the project to date and identify other grants that may have been previously awarded for this project and the degree you have been able to meet the requirements of previous grants. The project timeline calls for permitting to begin at the start of Q2 of 2011, which will require a concerted effort from the date of approval to the onset of permitting in order to be successful during this crucial process. The structure of the project timeline has been designed to move quickly through initial permitting allowing testing to be conducted in an adequate timeframe to Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 16 of 18 7/21/2010 ensure project success by spring/summer of 2012. BHI and UAF have worked directly or indirectly with AEA on many occasions although no formal grants have been awarded for this project to date. 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. Baker Hughes’s Alaska Team has a strong network of contacts to make this project successful. The company has a positive history with Alaska Energy Authority (AEA), in particular Dan Young’s recent work on geothermal potentials with David Lockard, AEA Project Lead. The Alaska Team has good working relationships with NANA and ASRC, two Native owned corporations that would undoubtedly be involved with remote project installations. Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 17 of 18 7/21/2010 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 – GrantBudget3.doc The Grant Budget has been designed to facilitate a successful deployment in the waters of Cook Inlet, however the investments being made by BHI are not unique to this project. The ultimate goal is to develop an ESP Generator that will be successful in an array of applications, specifically in-river deployment. Our alignment with UAF, centers on finding the best solution to solving the energy needs to the communities of Alaska. Utilizing the technical resources and lab facilities at UAF, we can understand the environmental constraints, and work to providing a design suited to providing the most power in varying conditions. UAF has provided BHI with a Scope of Work and thus the funding requested in this grant has been established by these guidelines. Also, in order to fully test the ESP Generator, permits and environmental studies must be performed at the Tanana River test site, thus a portion of this investment has been included as well. Overall, the funding requested by BHI will enable us to integrate our proven submersible technology, with the technical expertise of UAF to provide a solution to the energy needs of rural Alaska. Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 18 of 18 7/21/2010 SECTION 9 – ADDITIONAL DOCUMENTATION AND CERTIFICATION SUBMIT THE FOLLOWING DOCUMENTS WITH YOUR APPLICATION: A. Contact information, resumes of Applicant’s Project Manager, key staff, partners, consultants, and suppliers per application form Section 3.1 and 3.4. B. Cost Worksheet per application form Section 4.4.4. C. Grant Budget Form per application form Section 9. D. Letters demonstrating local support per application form Section 8. E. An electronic version of the entire application on CD per RFA Section 1.6. F. Authorized Signers Form. G. Governing Body Resolution or other formal action taken by the applicant’s governing body or management per RFA Section 1.4 that: - Commits the organization to provide the matching resources for project at the match amounts indicated in the application. - Authorizes the individual who signs the application has the authority to commit the organization to the obligations under the grant. - Provides as point of contact to represent the applicant for purposes of this application. - Certifies the applicant is in compliance with applicable federal, state, and local, laws including existing credit and federal tax obligations. H. CERTIFICATION The undersigned certifies that this application for a renewable energy grant is truthful and correct, and that the applicant is in compliance with, and will continue to comply with, all federal and state laws including existing credit and federal tax obligations. Print Name Signature Title Date