HomeMy WebLinkAboutHomer Kachemak Bay Round IV Grant App
Renewable Energy Fund Round IV
Grant Application
AEA 11-005 Application Page 1 of 24 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 24 7/21/2010
SECTION 1 – APPLICANT INFORMATION
Name (Name of utility, IPP, or government entity submitting proposal)
City of Homer
Type of Entity:
Municipal government
Mailing Address
491 E. Pioneer Avenue Homer, AK 99603
Physical Address
491 E. Pioneer Avenue Homer, AK 99603
Telephone
907-235-8121
Fax
907-235-3148
Email
wwrede@ci.homer.ak.us
1.1 APPLICANT POINT OF CONTACT / GRANTS MANAGER
Name
Carey Meyer
Title
Public Works Director, City of Homer
Mailing Address
3575 Heath Street Homer, AK 99603
Telephone
907-235-3170
Fax
907-235-3145
Email
cmeyer@ci.homer.ak.us
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
X 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.)
N/A 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.
We are seeking grant funds for feasibility/conceptual design (not for construction).
Application for construction funds will likely come from an IPP, assuming feasibility work is
accomplished first.
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SECTION 2 – PROJECT SUMMARY
This is intended to be no more than a 1-2 page overview of your project.
2.1 Project Title – (Provide a 4 to 5 word title for your project)
Type in your answer here and follow same format for rest of the application.
Kachemak Bay Tidal Power – Feasibility and Conceptual Design
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 proposed project will center on Kachemak Bay, part of lower Cook Inlet. Communities that will
benefit from the project are Homer, Seldovia, Port Graham, and Nanwalek, as well as other Kenai
Peninsula Borough residents in small communities around Kachemak Bay.
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)
X Reconnaissance Design and Permitting
X Feasibility Construction and Commissioning
X Conceptual Design
2.4 PROJECT DESCRIPTION
Provide a brief one paragraph description of your proposed project.
The proposed project will assess the tidal energy potential and development feasibility of four sites
within Kachemak Bay. With assistance from the National Oceanic and Atmospheric Administration
(NOAA), the project will utilize historical water level and current data, recent sea floor mapping
data, and new ocean current measurements to construct a comprehensive ocean circulation model
of the entire Kachemak Bay region. The model and tidal current data analyses will provide detailed
information on tidal energy potential throughout Kachemak Bay. With this tidal power information
and consideration of effective tie-in to the electric grid, four sites will be selected and power
production costs, output, and availability, as well as potential environmental issues, will be
assessed to determine initial feasibility of tidal energy projects. For all feasible sites, a conceptual
design to optimize tidal energy production will be produced, along with a construction cost
estimate for that design.
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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.)
According to estimates of future avoided cost of electricity, HEA will be paying at least $.109 per
kWh in 2012 (stated by Chugach Electric). For a 1.2 MW system in a current peaking at 6 knots, this
would lead to $333,430 in annual revenue less $107,064 in annual parts and supplies. Over the 20
year lifetime of this project this will come to $4,572,320 in net revenue. This is likely a very
conservative estimate because if the tidal resource is determined to be viable, then it is probable
that systems and projects larger than 1.2 MW would be installed. If this is the case, then this feasi-
bility study, which could lead to multiple installations in Kachemak Bay/Cook Inlet, would have
even more benefit than the preliminary analysis suggests.
It is widely recognized that Alaska has some of the best potential for generating tidal energy of
anywhere in the world. This proposed Kachemak Bay project, in combination with other nearby
initiatives such as those in upper Cook Inlet, could help to establish an Alaska-based industry and
global leadership in tidal power. In addition to the tidal energy potential offered by Kachemak Bay’s
large tides, the feasibility of this project is enhanced by having a location near population centers
and the electrical grid. Access to the road system will also help reduce early development costs.
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.
The total project budget proposed here for the reconnaissance and feasibility stages is $1,327,235.
This total includes $620,811 requested from AEA and confirmed $706,424 in cost-share contri-
buted by NOAA, HEA, and the City of Homer. These contributions amount to a total project match of
53%. Total Phase 1 (Milestone 1) requested funds are $166,071 and matching funds are $44,620.
Total Phase 2 (Milestones 2A and 2B) requested funds are $454,740 and matching funds are
$661,804.
The total project cost through construction of a hypothetical 1.2 MW tidal turbine is based on
assumptions of future installed cost per kW from published industry data, namely a year 2008 1.2
MW project in the United Kingdom by Marine Current Turbines, which stated a $5,377/kW
installed figure. This leads to a total project cost of $6,452,000, which includes the proposed budget
for the feasibility phase of $1,327,235, and a design and construction budget of $5,124,765. It
should be noted that this 1.2 MW project is of based upon a proven design which has been in
productive operation for over two years. Given the early development stage of ocean turbine
technology, we are conservatively basing costs on a project of proven size rather than speculating
on technology that does not exist. At the same time, we are optimistic that technological advances
may reduce future construction costs on a per kilowatt bases. The feasibility study proposed here
would have application for all sizes of projects as well, and thus would be even more cost effective
in leveraging these funds for additional renewable energy development as more than one project
may be found to be feasible when the survey is complete. Based on the assumed 1.2 MW turbine, it
is estimated that the $5,124,765 project completion costs would be split into roughly $725,000 for
final design, $2,300,000 for acquisition/fabrication and $2,100,000 for installation and on-shore
facilities.
Renewable Energy Fund
Grant Application Round IV
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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. $ 620,811
2.7.2 Other Funds to be provided (Project match) $ 706,424
2.7.3 Total Grant Costs (sum of 2.7.1 and 2.7.2) $1,327,235
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)
$6,452,000
2.7.5 Estimated Direct Financial Benefit (Savings) $4,527,320 (20 Yrs)
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.)
$4,968,796 (20 Yrs)
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Grant Application Round IV
AEA11-005 Grant Application Page 6 of 24 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.
The project manager for the Kachemak Bay tidal power feasibility project will be Carey Meyer.
Mr. Meyer, a professional engineer, has been the Public Works Director for the City of Homer since
1999. His resume and references are attached. We have established a team of City and Tribal staff,
contracted technical experts, and government agency personnel who will all contribute to the
project. This team is described in more detail under Project Resources.
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 schedule below corresponds to project milestones and tasks.
1. Site reconnaissance (Phase 1) - Begin 7/11; Complete 9/11
a. Project partner kick-off meeting; coordinate data needs and establish data transition
plans – 7/11
b. Identify all existing relevant data such as bathymetry, ownership maps, biological data,
possible electrical grid interconnection points and other existing infrastructure,
navigational information, current flows, traditional knowledge, etc. – 8/11
c. Develop an initial NOAA (CSDL) Cook Inlet model to incorporate historical current and
water level information and new Kachemak Bay bathymetry –9/11
d. Determine what data is necessary but does not yet exist, such as water currents, land
ownership, etc. – 9/11
e. Conduct field sampling reconnaissance and establish detailed monitoring plan to collect
additional data to determine current speeds, power density, biological and navigational
impacts – 9/11
2. Feasibility Study (Phase 2) – Begin 9/11; Complete 1/13
a. Deploy current meters (acoustic Doppler current profilers—ADCPs) for at least 35 days
to determine the tidal current signal at up to five sites – 5-7/12
b. Synthesize Kachemak Bay biological information to identify potential environmental
issues for tidal energy projects – 2/12
c. Develop final Cook Inlet/Kachemak Bay circulation model with current meter and other
data. Process data to determine power densities over time and space; generate report,
model, and graphical overlays – 10/12
d. Based on 2.c above, select optimal site(s); conduct technical and economic analysis
under various assumptions to determine power production costs, output, and
availability – 1/13
e. Identify necessary permits – 1/13
f. Determine feasibility of overall project. If “not feasible,” terminate the project. If
“feasible,” continue with conceptual design – 1/13
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3. Conceptual Design (Phase 2) – Begin 1/13; Complete 6/13
a. Select an optimal design and system to harness tidal energy – 2/13
b. Develop a more precise construction budget – 4/13
c. Examine and select preferred institutional configuration(s) – 5/13
d. Draft and distribute final report – 6/13
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.)
See attached budget worksheet for more information on expected cash flow.
Milestone 1: Site reconnaissance – Begin 7/11; Complete 9/11
1. Project partner kick-off meeting. Complete data needs and transition plan –7/11
2. Complete synthesis of all existing relevant data such as bathymetry, ownership maps,
biological data, possible electrical grid interconnection points and other existing
infrastructure, navigational information, current flows, traditional knowledge, etc. – 8/11
3. Complete initial NOAA Cook Inlet model that incorporates historical current and water level
information and new Kachemak Bay bathymetry – 9/11
4. Complete identification of data gaps, such as additional bathymetric maps, current flows,
land ownership, etc. – 9/11
5. Conduct field survey reconnaissance and complete detailed monitoring plan for additional
data collection to determine current speeds, power density, biological and navigational
impacts – 9/11
Milestone 2A: Feasibility Study – Begin 9/11; Complete 1/13
1. Complete field survey of tidal flows and current speeds with Acoustic Doppler Current
Profiling (ADCP) devices (stationary and mobile) – 7/12
2. Complete biological assessment to determine potential conflicts and preliminary impacts to
biota from tidal energy development – 2/12
3. Complete final NOAA ocean circulation model, report on power densities, and graphical
overlays – 10/12
4. Finalize selection of optimal site(s). Complete technical and economic analyses to determine
power production costs, output, and variability – 1/13
5. Complete summary of necessary permits – 1/13
6. Determine feasibility of overall project. If “not feasible,” terminate the project. If “feasible,”
continue with conceptual design – 1/13
Milestone 2B: Conceptual Design – Begin 1/13; Complete 6/13
1. Select an optimal design and system to harness tidal energy – 2/13
2. Complete a more precise construction budget – 4/13
3. Finalize selection of preferred institutional configuration(s) – 5/13
4. Complete final report – 6/13
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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 resume s and references
for known, key personnel, contractors, and suppliers as an attachment to your application.
The City of Homer will provide overall project management. To ensure that the project proceeds as
smoothly as possible, the City will contract out project coordination activities. In its management
role, the City will be working closely with representatives from other government agencies (e.g.,
Alaska Department of Fish and Game and the National Oceanic and Atmospheric Administration),
along with leaders from other Kachemak Bay communities (City of Seldovia, Seldovia Village Tribe
and Port Graham Village Council), and with private contractors. This project team will combine
high-level national expertise and tremendous local knowledge in this collaborative effort.
While Homer is the largest community on Kachemak Bay and connected by the main road system,
both Seldovia and Port Graham on the south shore of the Bay are not connected by road, but are
connected by power lines. Both of these smaller, more remote communities are participating in this
project and will provide local personnel, traditional knowledge for siting and potential impacts, and
local support for data collection. Based on a preliminary assessment of tidal flows in the region, it is
also expected that these locations may have some of the strongest currents, and thus, best
opportunities for tidal power generation.
The NOAA National Ocean Service (NOS) Center for Operational Oceanographic Products and
Services (CO-OPS) will be the technical lead on producing the tidal energy information for this
project. CO-OPS produces tide and current tables for the nation and is the leading authority in the
country on tides and tidal currents. CO-OPS and its predecessors have been providing tidal
predictions to promote safe and efficient navigation since 1807. The CO-OPS National Current
Observation Program (NCOP) meets the nation's needs for current observations, tidal current
predictions, and other tidal current products. The products from this program primarily support
safe, efficient, and environmentally sound marine commerce, hazardous material response,
research, and recreational users. NCOP has recently completed a survey of tidal currents and
calculated updated predictions for inclusion in the US Tidal Current Tables at over 30 locations in
Cook Inlet including the entrance to Kachemak Bay.
The NOS Coast Survey Development Laboratory (CSDL) will work with CO-OPS and serve as the
lead to develop and implement the Cook Inlet/Kachemak Bay circulation modeling efforts of this
project. The proposed tidal project will leverage existing CSDL efforts to develop an operational
Cook Inlet circulation model. (Those efforts are not included as in-kind for this project.) The project
funds will allow the model to be specifically adapted to tidal energy applications. To provide
information for model development and validation, CO-OPS will synthesize and analyze historical
water level and current data for the region and make additional tidal current measurements with
acoustic Doppler current profilers (ADCPs). This project will also benefit from new, high-resolution
sea floor depth data recently collected by NOAA ships in Kachemak Bay under the “Hydropalooza”
mapping project (www.hydropalooza.noaa.gov). This survey provides the detailed bathymetry
needed to develop an accurate ocean circulation model for the complex Kachemak Bay sea floor.
CSDL has done preliminary work on a Cook Inlet circulation model that includes Kachemak Bay.
This model will be further developed into an initial project model with historical water level and
current data, and then run to determine what additional current measurements will be needed to
produce the comprehensive, high-resolution model for the tidal energy assessment. The final
project model will provide the information needed to determine site specific tidal power densities
for all of Kachemak Bay. The model results will guide site selection for further feasibility analyses.
Since the NOAA model covers all of Cook Inlet, model development funded by this project will also
benefit future tidal energy projects throughout the Inlet. As a substantial additional project benefit,
Renewable Energy Fund
Grant Application Round IV
AEA11-005 Grant Application Page 9 of 24 7/21/2010
the new circulation model will also be useful for other purposes, including spill response,
mariculture operations, fisheries management, local coastal planning, and coastal ocean research.
NOAA/CO-OPS will be providing $680,000 of in-kind contribution to this effort and have stated a
strong interest in expanding their contribution to this type of work throughout Alaska and
nationally, with Kachemak Bay serving as a pilot project.
The NOAA Kasitsna Bay Laboratory, located near Seldovia, will be contributing staff time, expertise
in physical oceanography, data collection equipment, and facility support to assist with NOAA field
work and modeling efforts for this project. Laboratory staff will provide local coordination with
NOAA offices outside of Alaska nad assist in the incorporation of data from the Hydropalooza
mapping project.
The Kachemak Bay Research Reserve, a state/federal partnership between NOAA and the Alaska
Department of Fish & Game–Sport Fish Division, will synthesize current data available in Kachemak
Bay and identify biological issues relevant to the project. KBRR staff will be contributing vast
expertise, credibility, and previous site-specific data collection and processing from other projects,
such as the proposed expansion of the Homer Harbor, that will inform the technical reviews.
Engineering consultants will join the project under contract with the City of Homer. Professional
services will include involvement in the feasibility analysis based on the data output model
generated by NOAA, permitting analysis, and assistance in evaluating hydrokinetic energy design
options. Two firms, Ocean Renewable Power Company and Re Vision Consulting, have provided
assistance in the development of this proposal, as has TerraSond, a company with expertise in
seafloor mapping. It should be noted, however, that no contracts have been offered or will be
offered other than in accordance with City of Homer procurement policies. The City’s procurement
policies will also be followed in purchasing major equipment. Key procurement policy provisions
are included in this application as an attachment.
Homer Electric Association, the electric utility provider in the area, has expressed strong interest in
the proposed study and pledged in-kind support in the form of engineering services. HEA will be
sharing information on existing transmission infrastructure and will help identify optimal intertie
locations. HEA staff will attend scoping meetings and will play an important role in determining the
best organizational structure for bringing tidal power to end users.
See attached resumes and/or statements of work provided by known project partners and
consultants. All of these individuals have assisted in the preparation of this application.
3.5 Project Communications
Discuss how you plan to monitor the project and keep the Authority informed of the status.
The City of Homer will comply with all AEA reporting requirements should a grant be awarded.
This will include providing monthly and quarterly status reports by email to the AEA Project
Manager to update the Authority on the project’s progress, regulatory and compliance issues,
possible delays, and grant expenditures during the month; summarize the progress made on grant
tasks during the month; and identify any difficulties in completing tasks or meeting goals or
deadlines. We will include copies of any work products due to the Authority during the reporting
period.
Should questions, concerns, or issues arise during the implementation of the project that would
benefit from consultation with AEA, project staff will contact the AEA Project Manager by phone or
email. Site visits will be welcome. Because of the complex nature and diverse entities involved in
this project, we have explicitly identified a “project coordination” role that will involve both intra-
project communications among participants as well as external communications with AEA and
others such as Homer, Seldovia, and Port Graham residents and the general public.
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3.6 Project Risk
Discuss potential problems and how you would address them.
There are three types of potential problems that we have identified: technical, institutional, and
environmental.
Technical challenges will be handled successfully by utilizing the most experienced and informed
scientists and engineers in the field (a combination of government and private firms) conducting
the data collection effort. By conducting a data reconnaissance with multiple experts before a
complete collection plan is developed and implemented, we will provide checks and balances and
create a more robust data collection regimen that meets everyone’s needs, thus addressing the
technical challenges by anticipating and thinking them through before we are out in the field. As
well, collaboration with the tribal governments in Seldovia and Port Graham will provide local
knowledge and support for the data operations that should help minimize technical challenges
related to working in the more remote and energetically dynamic parts of the Bay. In the long run,
past the feasibility stage proposed here, the technical challenges are essentially beyond the scope of
the project. The tidal energy industry is progressing significantly, with full-scale projects now
producing electricity in other parts of the world, and our assumption is that if Kachemak Bay
current speeds are within the range of expectations, the technology will continue to improve and
we will be able to effectively and efficiently produce power. In fact, the construction cost estimates
used here are based on other projects that are expected to reduce their costs over time.
Institutional problems could emerge as a result of the diverse interests and entities involved in the
project. As stated above, we have tried to anticipate and address this challenge by explicitly
planning for a project coordination role, starting with a project kick-off meeting to bring all the
participants together and develop a broad implementation plan agreed to by all. We will explicitly
address institutional options for development of tidal power in the feasibility study to further
anticipate and address any challenges this project may confront.
Environmental problems, if any, are not anticipated to occur during the reconnaissance and
feasibility study proposed here. However, in order to identify potential issues as early as possible,
we are working with the Kachemak Bay National Estuarine Research Reserve. During the proposed
project period, this will include a synthesis of current biological data for the impact region and a
report that will identify potential biological issues in the footprint of the potential project areas
assessed for feasibility. Any project recommended for construction would require a full assessment
of impacts on fish, marine mammals, sea birds, and other biological resources during the final
design phase.
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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.
The tidal power potential of Kachemak Bay is a little understood or studied resource. To date there
has been one study of the tidal potential, but only in the area of the Seldovia harbor. This study was
limited to looking at the resource from the perspective of a potential tidal barrage or impoundment
style installation. The purpose of this proposed study is to examine the resource potential of tidal
currents adjacent to Kachemak Bay communities and then to analyze the technical and economic
feasibility of the development of a tidal project in these areas using modern hydrokinetic devices.
Cook Inlet has one of the highest tidal ranges in the world, with an extreme tidal range in Kachemak
Bay of up to 8.7 meters (28 feet). The high tides in the region generate exceptional currents both
within the bay and at the mouth of the bay near the villages of Port Graham and Nanwalek. The
extent, peak velocity, and average power densities of this area are not known, but it is likely that
there exist adequate currents for tidal power generation near the Homer Spit, Seldovia Bay, Port
Graham and Nanwalek, as well as in other locations in the bay. The point of this feasibility study is to
quantify that potential and determine if viable currents exist in areas that have the necessary
components for an economically viable tidal power installation.
The components needed to assess tidal power project feasibility include adequate tidal current
energy, construction issues (depth, substrate, etc.), lack of conflicts with other uses, reasonable
transmission distances to existing power infrastructure. The feasibility study will identify realistic
boundaries for the generation potential within the region and in specific sites. While this project will
focus on four specific sites, it should be noted that NOAA’s data collection and modeling effort will
cover all of Kachemak Bay and the model information could be applied in the future to assess tidal
energy at virtually any specific site within the Bay. The modeling effort will also extend beyond
Kachemak Bay to cover all of Cook Inlet. Therefore, this project will provide accurate information for
any future efforts to quantify the tidal power potential of additional sites throughout the region.
Currently natural gas (with some conventional hydropower) is the main fuel source for the genera-
tion of power purchased by Homer Electric Association and sold to its members. While natural gas
has offered a stable price in the past, the contract for natural gas that supplies HEA's electricity is set
to expire in 2010, at which point prices for this power will increase an unknown amount and other
alternatives will be needed. Natural gas fired power plants also emit CO2 which may make the
technology subject to future carbon taxes and thus higher prices.
Bradley Lake Hydro, situated just above Kachemak Bay, is the largest hydroelectric plant in Alaska.
This facility is run by HEA, which owns 12% of the power it produces. As a hydro plant, Bradley Lake
has the potential to be a “resource following” generation facility, ramping power up and down with
(precisely predicted) tidal resource availability, thus reserving the capacity of the reservoir over a
longer period of time and allowing wind and tidal projects to be efficiently absorbed and utilized by
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the local grid infrastructure.
Wind projects are also being studied on the lower Kenai Peninsula, including in the area near the tip
of the peninsula and the Gulf of Alaska near Nanwalek. Wind energy projects would provide a
resource that is clean like tidal power, but not as predictable. While wind power can be economical,
lack of predictable output minimizes its value in terms of energy capacity. Tidal power, due to its
predictable nature, can be used not only to offset energy use, but also to offset capacity for a given
utility and thus is potentially much more valuable as a resource than wind power. As the technology
commercializes, tidal power is likely to become price competitive with wind power as well.
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.
Railbelt Energy Project – N/A
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.
Currently the energy used in the Homer Electric Association service area is purchased by contract
from Chugach Electric. HEA is contractually obligated to purchase Chugach power until December
31, 2013. Chugach Electric's energy comes primarily from the Beluga natural gas plant and the gas
that supplies this plant comes by contract from Marathon Oil. The contract for this natural gas will
expire in 2010, at which time Chugach will be renegotiating its contracts to purchase gas and HEA’s
electricity purchase price will also be impacted. HEA has stated that this dynamic is among the
factors leading them to pursue additional resources for electricity generation. Both Chugach and
HEA also receive some power from the state-owned Bradley Lake hydro facility on the south side of
Kachemak Bay.
The feasibility phase of this project will preliminarily address potential interconnection issues to
integrate tidal power onto the Railbelt grid. Currently there is a 25KV transmission line that crosses
Kachemak Bay from the end of the Homer Spit to McKewan flats and on to Seldovia. Tying into this
transmission line would allow for energy on the scale of this project and perhaps larger to be trans-
mitted onto the local grids. From Seldovia to Port Graham and Nanwalek there is only a single-phase
transmission line. This line would need to be upgraded to a 3-phase line in order to accommodate
more significant power transmission. HEA is already looking into funding for such an upgrade to
allow for commercial interests that require 3-phase power. This transmission line would also be
essential for the transmission of power from a tidal installation in this area.
If a 3-phase transmission line is not constructed on the south side of Kachemak Bay, it may make
more sense for the communities to generate tidal power for local consumption to replace both
electricity and heating fuel that is currently “imported.” Heating fuel especially is quite expensive
because these communities are not on the road system, so the value of locally produced electricity
used for heat that replaced fuel oil and propane would be substantial. We have not explicitly
included this option in our economic analysis but if the tides prove feasible, this could improve the
project economics for both the smaller Kachemak Bay communities.
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4.2.3 Existing Energy Market
Discuss existing energy use and its market. Discuss impacts your project may have on energy
customers.
Homer, Seldovia, Port Graham, and Nanwalek all fall within the Homer Electric Association service
area. The majority of power sold here is purchased by HEA from Chugach Electric, whose current
natural gas contracts are set to expire in 2010. At that time both the price and availability of power
for HEA members will be less certain. While HEA is investigating small scale hydro power and wind
projects, there is a need for more project development to provide stable and economical electrical
service for HEA customers into the future. This tidal project could provide an economical, stable, and
flat priced alternative power source for this market.
Additionally, it is possible that tidal generation in the selected areas could be smaller scale for
primarily local use. Especially for the more remote communities on the south side of Kachemak Bay
(Seldovia, Port Graham, and Nanwalek), where the unit price of electricity is higher (per HEA tariff)
and diesel fuel is much more expensive because of no road access, it may be possible for tidal energy
to replace electricity and heat currently purchased by the communities. For example, transmission
constraints may make it difficult and too expensive for large scale tidal development in, say, Port
Graham, but perhaps the locally available resource could be developed to power and heat the entire
village, including the Tribal fish hatchery and other commercial applications. A village-scale (as
compared to utility-scale) hydrokinetic device and construction project may be the most appro-
priate in certain locations to minimize ecological impact and shorten the development timeline.
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
At this time there are several companies developing tidal hydrokinetic technologies for the tidal
energy market. These include axial flow turbines such as those under development by Verdant Power,
Lunar Energy, Open Hydro, Voith Hydro, and Marine Current Turbines (MCT), as well as cross flow
turbines being developed by Ocean Renewable Power Company and New Energy Corporation, among
others. New Energy Corporation currently has an in-stream hydrokinetic device installed on the
Yukon River in interior Alaska, while ORPC is developing two Alaska projects, one in Northern Cook
Inlet and one on the Tanana River at Nenana, both slated for installation in 2012. At this stage, this
proposed project is not committed to a particular technology but will study the development and com-
mercialization of these tidal technologies as part of the feasibility study. For purposes of economic
feasibility, we will select a particular technology and apply power curves and related information to
determine projected production costs. We will also consider site specific issues that may assist in
choosing a particular turbine and installation system at each of the four selected locations. For
example, different depths at selected locations may lead to different turbines and system designs, or
similarly, differential ease and cost of access to on-shore transmission lines may dictate turbine selec-
tion and system design. One of the ongoing questions along these lines is if Kachemak Bay—or specific
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locations within the Bay—are sufficiently ice-free to allow a floating pontoon structure, or if it will be
necessary to submerge the device. It is anticipated that by the time this project has moved into final
design phase, significant advances, modifications, and proving out of these various technologies will
have taken place, which will make for more prudent decisions in technology selection.
The optimum installed capacity of tidal systems will be determined in the feasibility phase based on
resource availability and the ability of the nearby power infrastructure to utilize or transmit the
energy. It is anticipated that individual units ranging in size from 250kW to 1.2MW will be feasible in
this area with possible build-outs to 5MW or more being conceivable. As these tidal systems increase
in size, this will significantly improve the project economics from the calculations here. For example,
MCT’s projected capital costs per kW installed are reduced by 50% when expanding from a 1.2 MW
project installed in 2007 and a 10 MW project currently under installation and slated for commission-
ing in 2010.
The anticipated capacity factor will depend on the final technology selection but capacity factors of
around 30% in a 6 knot current are typical of tidal technologies under development. It should be
noted that while a 30% capacity factor is similar to wind energy, tidal energy has the distinct advan-
tage of being predictable and thus, can serve as a component of baseload energy.
At this capacity factor a 1.2 MW turbine would produce 3,058 MWh per year. A 1MW turbine would
produce 2,628 MWh per year. For economic calculation purposes here, we have selected a proven
1.2 MW turbine, but it is expected that if this “proof of concept” project is successful, there would be
additional projects installed in Kachemak Bay over time.
The project team will anticipate and be prepared to deal with barriers such as the following: 1) Con-
firming adequate current velocities exist in the project areas. 2) Confirming that it is possible to econ-
omically develop the sites that have adequate currents. 3) Assuring that these tidal installations will
not interfere with current uses including subsistence and commercial fisheries and marine navigation.
4) Assessing the local environmental impact of potential tidal technologies in respect to their effects
on marine life including fish and marine mammals.
The basic integration concept could be described as follows: The power produced by this tidal project
would be integrated into the local grid via the 25 KV transmission line at the end of the Homer Spit or
in Seldovia. In Port Graham or Nanwalek integration of the power would currently be limited to single
phase transmission capacity. As mentioned earlier there is the potential for this service to be up-
graded to a 3-phase 25 KV transmission line in the near future that would allow additional power to
be fed north into the railbelt grid. The power would be integrated into the grid at a capacity that is
manageable and dispatchable in accordance with the interconnect study to be completed in this
feasibility study phase of the project.
If a 3-phase transmission line is not constructed to Port Graham and Nanwalek, it may make more
sense for the communities to generate tidal power for local consumption to replace both electricity
and heating fuel that is currently “imported.” Heating fuel especially is quite expensive because these
communities are not on the road system, so the value of locally produced electricity used for heat that
replaced fuel oil and propane would be substantial, and system integration costs would be much
reduced. This would also limit the amount of power generated but also reduce the cost. These trade-
offs will be examined in the feasibility study.
Delivery methods will take advantage of Homer’s geographic location. Being on the road system and
having a deep water port, Homer is capable of receiving system components via overland or marine
shipping. From there items can be either shipped or put on the regular Alaska Marine Highway ferry
service to Seldovia. Port Graham and Nanwalek would require utilizing local marine freight companies
to ship items from Homer. Local marine service companies would also be used for system deployment.
It is anticipated that the power itself would be delivered from the hydrokinetic marine installation—
either near surface or submerged—to shore via underwater cable. This is a well understood tech-
nology that is already deployed in the area with local expertise to support such installation.
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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 City of Homer intends to utilize City property, utility easements, and rights-of-way whenever
possible for this project. The City of Homer does have title to submerged lands adjacent to the Homer
spit, which is a likely location for future development. If access is needed over private property, the
City intends to work with willing landowners to secure the proper easements. At this level of
feasibility study, there will not be much, if any, need to access private property. Similarly in the
communities of Seldovia and Port Graham, it is not expected that we will need any access to private
property. However, for placement of the stationary ADCP devices at the bottom of Kachemak Bay, we
will likely need land use permits from the state (discussed below). Land ownership or access issues
for any future project will be explicitly considered in site selection and more fully addressed in the
feasibility study. Site selection for full feasibility analysis will likely be constrained, in part, by access
to grid interconnection, which should minimize land ownership challenges. In general, because of the
nature of the project, it is not land use-intensive and we do not expect to have problems or issues with
this aspect.
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
The City of Homer has extensive experience permitting major public works projects, including those
involving submerged lands, such as the Homer deep water dock facility. If the proposed tidal power
project is determined to be feasible and the City pursues construction funding, we will undertake and
complete all required permitting, in accordance with the Alaska Coastal Zone Management Act.
For these reconnaissance and feasibility stages of the project, we anticipate needing to secure a land
use permit from Alaska Department of Natural Resources to access the ocean floor. We have contacts
with this agency and do not anticipate any problems securing this permit. The agency has previously
indicated support for this type of project.
An important part of the feasibility study will be to identify all necessary permits and the required
path, timeline, and expected costs for securing them. We have explicitly budgeted time and money in
the feasibility study to address these concerns. Primary among the permits we will need to acquire
will be the Federal Energy Regulatory Commission (FERC) preliminary permit. The outcome of the
feasibility study will provide the “go/no go” decision point for pursuing this permit, on which all else
will depend.
If a tidal energy project is determined feasible and worthy of pursuit, other permits we expect to need
include the following:
Fish collection permit – Alaska Department of Fish & Game (ADF&F)
Fish habitat permit – ADF&G
Title 10 permit – US Army Corps of Engineers
Coastal Zone Management: local support will facilitate permit issuance if required
Coast Guard notification: Will be necessary to address potential navigational issues and inform
waterway users of installation
An Alaska Department of Natural Resources water rights permit should not be necessary, as the
proposed project would be constructed in salt water rather than fresh water.
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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
Because of the expected location of a tidal energy device, i.e., under the water in Kachemak Bay,
minimal impact in regard to avian, telecommunications, archaeological, visual, and aesthetic issues
would be expected. It should be noted that the City of Homer has title to submerged lands near the
Homer Spit that may be good sites for tidal energy production, which will simplify some of these
potential land use issues. The primary concerns will likely be biological and habitat, as Kachemak Bay
is a State critical habitat area and a designated National Estuarine Research Reserve. The bay supports
significant marine, avian, and terrestrial wildlife species; therefore the proposed feasibility study will
consider the potential environmental issues of concern to those species. Below is a list of species of
importance in Kachemak Bay.
SPECIES AND STATUS OCCURANCE RANGE IN ALASKA
Endangered
Blue whale (Balaenoptera musculus) Rare Bering Sea, Gulf of Alaska, N. Pacific
Bowhead whale (Balaena mysticetus) Regular Chukchi Sea, Beaufort Sea
Cook Inlet beluga whale (Delphinapterus leucas) Regular Cook Inlet
Fin whale (Balaenoptera physalus) Regular
Chukchi Sea, Bering Sea, Gulf of Alaska, N.
Pacific
Humpback whale (Megaptera novaeangliae) Regular Bering Sea, Gulf of Alaska, N. Pacific
Leatherback sea turtle (Dermochelys coriacea) Rare Gulf of Alaska
North Pacific right whale (Eubalaena japonica) Rare Bering Sea, Gulf of Alaska, N. Pacific
Sei whale (Balaenoptera borealis) Rare Gulf of Alaska, N. Pacific
Short-tailed albatross (Phoebastria albatrus) Rare Bering Sea, Aleutian Islands, Gulf of Alaska
Sperm whale (Physeter macrocephalus) Regular Bering Sea, Gulf of Alaska, N. Pacific
Steller sea lion (Eumetopias jubatus) west of 144° Regular Bering Sea, N. Pacific
Threatened
Green sea turtle (Chelonia mydas) (incl. agassizi) Rare Gulf of Alaska
Loggerhead sea turtle (Caretta caretta) Rare Gulf of Alaska
Northern sea otter (Enhydra lutris kenyoni) Regular Aleutian Islands, Alaska Peninsula, Kodiak Island
Spectacled eider (Somateria fischeri) Rare Western and Northern Alaska (coastal)
Steller sea lion (Eumetopias jubatus) east of 144° Regular Bering Sea, Gulf of Alaska, N. Pacific
Steller's eider (Polysticta stelleri) Regular Southwestern, Western, and Northern Alaska
Candidate
Kittletz’s Murrelet (Brachyramphus brevirostris) Regular Southern, Northwestern Alaska (coastal)
It is expected that additional biological studies, evaluations, and reviews will be necessary before full
construction. Such activities will be clarified in the feasibility report, including identification of
permits that may be required for the identified design.
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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 anticipated cost of this project through construction of a 1.2 MW turbine is estimated to be
$6,452,000. The cost for the first two phases of the project proposed here (reconnaissance and
feasibility/conceptual design) is $1,327,235. The request for funding from AEA for this part of the
project comes to $620,811 Applicant matching funds amount to $706,424 in in-kind contributions
from NOAA, HEA and the City of Homer. Total anticipated costs through construction of a 1.2 MW
turbine are based on published capital and development costs of a 1.2 MW project brought on line in
2008 by Marine Current Turbines in the United Kingdom (http://www.all-energy.co.uk/UserFiles/
File/ 2007PeterFraenkel.pdf). Of the two phases proposed here, Phase 1 project costs are $166,071
(AEA requested) and $44,620 (matching) and Phase 2 project costs are $454,740 (AEA requested) and
$661,804 (matching).
If the resource assessment and feasibility study determine that there are viable tidal power projects in
Kachemak Bay, there are several options for future funding. These options will depend in large part on
who actually develops the projects, which could be the local utility (HEA), independent power produ-
cers, local governments, or a combination of the above. Certainly federal and state grants will be
investigated, but other possibilities include local bonds, local dedicated revenue generation, conven-
tional capital markets and/or venture capital. Federal production tax credits for renewable energy
projects currently in place, as well as expected future green energy incentives and/or carbon taxes for
fossil fuel generation, would also be incorporated into a funding package for project development and
improved economic returns.
The estimated capital cost of this project is based on actual installed costs of a tidal pilot project. These
costs apply to installations in the 1.2 MW range, and it is anticipated that newer efficiencies from a
proven design will offset inflation and overall costs will be driven down by the commercialization of
these technologies. Capital costs for a 1.2 MW system for this project are estimated to be approxi-
mately $4,400,000. This would make the balance of the project cost, including design, another
$5,125,000 with the overall project development cost, including the feasibility study, totaling
$6,452,000. With future and likely larger systems, it is expected that the development costs per unit of
energy would significantly decrease, both in absolute terms and in relation to per unit capital costs.
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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.)
While it is difficult to estimate O&M for the different technologies that will be considered for this
project, based on industry expectations a very conservative value would be $.035 per kWh produced
for this 1.2 MW turbine. This would likely include at least an annual inspection, servicing and
replacement of worn parts. For a 1.2 MW system with a 30% capacity factor, this would result in
$107,064 of annual O&M expenditures. It is reasonable to assume that as the size of the project and
amount of energy generated increased, the per unit O&M cost would decline as well. Such costs would
be incorporated into the power sales and system servicing agreements, which would vary depending
on the institutional and business structure that eventually emerges to develop these projects.
We are requesting no O&M costs for this resource assessment and feasibility project.
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 potential buyers for the power purchased from this project include all of the Railbelt utilities. The
most likely, however, would be Homer Electric Association since the power would be tied into the HEA
service area. Current avoided cost rates for HEA are $0.04043 per kWh, though this is projected to
increase in direct proportion to Chugach Electric's avoided cost which is forecast to reach $0.109 per
kWh by 2012 when current contracts for natural gas purchase are no longer in place and both new
fuel and new generation hardware will be necessary. This would be the more likely time frame for
project implementation and the beginning of power sales to HEA.
As stated several times above, it is also possible—and this will be considered explicitly in the feasi-
bility study—that the more remote villages in Kachemak Bay may want to purchase the power for
local use, and not sell back to HEA. This will likely replace not just conventional electricity use but
heating fuel and eventually, if electric vehicles become more widespread, liquid transportation fuels as
well. In these communities, because they are not road-connected, liquid fuels require expensive
marine transport from Homer. If a relatively inexpensive energy source such as tidal power can be
harnessed, there will likely be strong interest in maximizing local use of this energy, especially as a
replacement for imported and expensive liquid fuels. Currently liquid fuels sell for over $5.50 per
gallon for gasoline and more for diesel.
Costs per kWh of power produced by tidal turbines are highly variable and in some cases theoretical
for the various technologies. Manufacturers predict eventual commercialization and economies of
scale from larger build-outs bringing power into the realm of $0.08 per kWh. On the scale and time-
frame of this project, which would likely be a smaller capacity installation due to existing energy
infrastructures, the cost of power produced would be targeted around $.09-$.12 per kWh assuming a
conservative 20 years of operation before major upgrades are needed. With any increase in projected
avoided cost and renewable tax credits or green power incentives this will lead to a profitable energy
source by the time of its installation in 2015 or soon thereafter. As well, once proven out, larger
projects following on the heels of a pilot project such as that described here would likely realize
increased efficiencies, improved economies of scale, and lower per unit production costs.
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4.4.4 Project Cost Worksheet
Complete the cost worksheet form which provides summary information that will be considered in
evaluating the project.
See attached cost worksheet.
Capital cost based on Marine Current Turbines published figures ($5,377/kW installed).
Annual O&M cost based on industry projections plus $0.01/kWh for conservative estimate (assumed
total of $0.035/kWh).
Fuel displacement estimated based on 30% capacity factor of 1.2 MW turbine (3,058,992 kWh
annually).
Price of displaced fuel based on Chugach Electric projection of $0.109/kWh avoided cost in 2012.
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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
The project proposed here is essentially a resource assessment and feasibility study of Kachemak
Bay’s tidal energy potential. The communities of Homer, Seldovia and Port Graham are collaborating
on this effort, along with project partners NOAA, ADF&G, and HEA. In-kind contributions to the
project total $706,424.
If the feasibility study determines positive project economics, we are proposing the construction of a
1.2 MW tidal turbine to demonstrate “proof of concept.” At 30% capacity factor with 6 knot peaking
tidal currents, this amounts to 3,058 MW of electricity generated annually. Chugach Electric has stated
their expected avoided cost in 2012, once current natural gas contracts run out, will be at least $0.109.
The expected cost of replacing aging capital may increase this figure, but for conservative estimation
of benefits, we have used this avoided cost value to calculate $333,430 in annual benefits derived from
power sales and fuel displacement. We have reduced this value by $107,064 annually because of the
assumed O&M component (.035 per kWh) required to maintain and purchase parts and supplies.
Assuming a 20-year lifetime of the project yields $4,527,320 in net revenue. If larger projects come
on-line over time, the net revenues will be significantly more.
Additional public benefits will include $127,516 in contracts to Alaskan businesses in the feasibility
study. Through project construction an additional estimated $2,100,000 in contracts to Alaskan
businesses will be expected. A portion of the revenue from a generation facility will be spent locally on
operation and maintenance. Over a 20 year period, this public benefit yields $2,141,280.
Further public benefits associated with this project include ancillary uses of the tidal circulation flow
model developed by NOAA, which will cover all of Cook Inlet. Beyond the tidal energy assessment, the
model will support oyster mariculture, fisheries management, oil spill response, local coastal planning,
and coastal climate change research. We estimate that improved management associated with this
model will result in increased value of $500,000 over a 20-year period for mariculture and $100,000
in benefits related to oil spill response.
It is widely recognized that Alaska has some of the best potential for generating tidal energy of
anywhere in the world. This proposed Kachemak Bay project, in combination with other nearby
initiatives such as those in upper Cook Inlet, could help to establish an Alaska-based industry and
global leadership in tidal power. In addition to the tidal energy potential offered by Kachemak Bay’s
large tides, the feasibility of this project is enhanced by having a location near population centers and
the electrical grid. Access to the road system will also help reduce early development costs.
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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. If the proposed economic and technical analyses indicate that
construction of tidal energy production devices merits further consideration, the feasibility study will
examine institutional and business structures that best take advantage of the resource development
opportunities. Possibilities include:
Collaboration with, or “hand-off” to Homer Electric Association;
Solicitation of independent power producers (IPP) and/or technology providers such as Ocean
Renewable Power Company (who is engaged in a similar project in upper Cook Inlet and could
perhaps generate synergies with this proposed effort);
Some combination of utility and IPP and local government;
Small-scale development, perhaps led by local government and/or other local entities,
designed to meet local needs, perhaps including liquid fuel substitution, and avoid
transmission upgrades.
An important component of the feasibility study will be to more thoroughly investigate and compare
these options. Because of the site specific nature of the resource and the unique infrastructure
characteristics and location of each community, it is possible that different locations may require
different institutional/business structures to best take advantage of the tidal development potential.
For example, it may be preferable to consider large scale tidal development near Homer to “feed” the
railbelt grid, while smaller scale projects that meet local needs may be preferable on the south side of
Kachemak Bay where transmission constraints currently exist and both electricity and liquid fuels are
incrementally more expensive.
Finally, as discussed above, if the resource and technology to harness the resource proves viable, it is
likely that larger systems than the 1.2 MW turbine proposed here will emerge. This will improve the
project economics, shorten the payback, increase competitiveness, and generally alter the dynamic
and status quo of power generation in the region. At a larger scale, and in combination with similar
projects in Cook Inlet, a tidal energy industry would develop and perhaps require different business
models.
Financing maintenance and operations. (Not applicable to this application)
Operational issues that could arise. (Not applicable to this application)
Operational costs/backup of existing systems. (Not applicable to this application)
Commitment to reporting the savings and benefits. (Not applicable to this application)
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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 City of Homer was pleased that our proposed Kachemak Bay tidal power feasibility project was
recommended for funding by the Alaska Energy Authority for FY 2009 and FY 2010. For FY 2010,
the Legislature appropriated sufficient funding but the Governor reduced the amount by half, elim-
inating any chance for a grant award. Nevertheless, we have remained hopeful that our project
ultimately would be funded. We have continued to discuss the project with potential partners
(particularly NOAA) and are ready to proceed quickly if this application is approved.
NOAA (CSDL) has started development of the Cook Inlet circulation model to support navigation
requirements and this will facilitate completion of the initial project model during the reconnais-
sance phase of this project. NOAA has also completed processing of recent Kachemak Bay sea floor
mapping data, so high-resolution bathymetry will be available for this project. Current meter field
survey plans for this project have been incorporated into the CO-OPS operational planning process.
Assuming a grant award is announced before the end of June, we would hold the first meeting of
partners in July 2011 to begin the site reconnaissance phase of the project. The feasibility study
phase would begin in September 2011, beginning with collection of data from Acoustic Doppler
Current Profiling devices. NOAA will take the lead in the data collection effort and has expressed
strong commitment to do so.
SECTION 8– LOCAL SUPORT
Discuss what local support or possible opposition there may be regarding your project. Include
letters of support from the community that would benefit from this project.
The proposed Kachemak Bay tidal power feasibility project has been the subject of discussion in
Homer and other Kachemak Bay communities for more than two years, since the City of Homer
began work on our first AEA application in fall 2008. During this time, we have received substantial
expressions of support from diverse local stakeholders and have not heard any opposition
expressed. While there are concerns about possible impacts on fish and other marine life from
underwater turbines, this project will not be constructing turbines but will help to evaluate the risks
involved. Clearly this information (feasibility study) will be of value in determining whether to
proceed with a construction project.
In general there is strong support in the Homer community for research and development in the
realm of renewable energy. Evidence of this was seen in the high level of public involvement and
testimony supporting adoption of the City of Homer Climate Action Plan in 2007 and in the recent
approval of a wind energy ordinance (the first such local ordinance in Alaska) by the Homer City
Council.
Letters of support from project partners, including the communities of Seldovia and Port Graham,
are attached.
Renewable Energy Fund
Grant Application Round IV
AEA11-005 Grant Application Page 23 of 24 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
See attached grant budget form.
This proposal requests $166,071 for Phase 1/Milestone 1 and $454,740 in Phase 2/Milestones 2A
and 2B, for a total of $620,811 from AEA. All project partners combined will be contributing
$44,620 in Phase 1 and $661,804 in Phase 2, for a total of $706,424 of cost-share. This amounts to a
total project cost of $1,327,235.
Within Phase 1, requested funds include $22,875 for travel, meals, and per diem. This will be used
to bring all project partners together for a project kick-off meeting in Homer, and for ongoing costs
for the NOAA researchers who will remain in the area for data reconnaissance and background
research.
Phase 1 requested funds for direct labor include $16,980 for City of Homer personnel involved in
project management and financial reporting.
The remainder of the AEA requested funds for Phase 1 are for contractual expenses for NOAA’s
information technology support ($75,000); HEA (5,000); Engineering Consultants solicited via RFP
($10,704); Seldovia, SVT, and Port Graham personnel ($3,000 total); KBRR ($12,312); An addi-
tional $12,900 is allocated to the City of Homer to hire a project coordinator on a contract basis.
Cost-share contributions in Phase 1 include $32,000 of donated labor from NOAA personnel, $2,500
from HEA, and $10,120 in donated labor from the City of Homer.
Within Phase 2, AEA requested funds include $80,000 in travel, meals, and per diem for NOAA
researchers to conduct 35 days of field work in Kachemak Bay; $75.000 for NOAA vessel support
for field work and for NOAA IT support in data analysis; $140,912 in contractual for engineering
services; $10,800 for engineering support services from HEA, $9,000 in contractual for Seldovia,
SVT, and Port Graham personnel; $19,152 in contractual to KBRR; $42,900 is allocated to the City
of Homer for a project coordinator (contract). The budget also includes $2,096 for materials and
supplies and $20,480 for City of Homer personnel involved in project management and reporting.
Cost-share contributions in phase 2 include $323,000 in equipment (ADCP devices) from NOAA;
$200,000 to install and use the ADCP devices from NOAA; $325,000 in labor from NOAA personnel
who will be collecting and processing the tidal data; and $13,804 of labor from the City of Homer
for project management.
Additional cost-share contributions are anticipated; however, the City of Homer procurement
policy requires open bidding for vendors and specific project partners cannot be guaranteed at this
time.
Renewable Energy Fund
Grant Application Round IV
AEA11-005 Grant Application Page 24 of 24 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 Walt Wrede
Signature
Title City Manager
Date
Renewable Energy Fund Round 4
Project Cost/Benefit Worksheet
RFA AEA11-005 Application Cost Worksheet Page 1 7-21-10
Please note that some fields might not be applicable for all technologies or all project
phases. The level of information detail varies according to phase requirements.
1. Renewable Energy Source
The Applicant should demonstrate that the renewable energy resource is available on a
sustainable basis.
Annual average resource availability. 100%
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]
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 4
Project Cost/Benefit Worksheet
RFA AEA11-005 Application Cost Worksheet Page 2 7-21-10
3. Proposed System Design Capacity and Fuel Usage
(Include any projections for continued use of non-renewable fuels)
a) Proposed renewable capacity
[kW or MMBtu/hr]
1.2 MW Ocean/Tidal Marine Turbine
b) Proposed annual electricity or heat production (fill in as applicable)
i. Electricity [kWh] 3,058,800 kWh
ii. Heat [MMBtu]
c) Proposed annual fuel usage (fill in as applicable)
i. Propane [gal or MMBtu]
ii. Coal [tons or MMBtu]
iii. Wood [cords, green tons, dry tons]
iv. Other
4. Project Cost
a) Total capital cost of new system:
Projected
$4,400,000 Capital + $725,000 Engineering =
5,125,000 Total Cost
b) Development cost $1,327,235 (This Phase)
c) Annual O&M cost of new system $107,064
d) Annual fuel cost 0
5. Project Benefits
a) Amount of fuel displaced for
i. Electricity 3,058,800 kW h Annually. 61,176,000 kWh in 20 Years
ii. Heat
iii. Transportation
b) Current price of displaced fuel $333,409 – Annually. $4,527,320 Net 20 Years
c) Other economic benefits $600,000 in 20 Yr, Mariculture + Spill Response
d) Alaska public benefits $4,368,796 20 Yr, Construction plus Contracting
6. Power Purchase/Sales Price
a) Price for power purchase/sale $333,409 Gross Annual, $4,527,320 – Net 20 Years
7. Project Analysis
a) Basic Economic Analysis
Project benefit/cost ratio $9,426,116 Total Net Benefit / $6,452,235 Cost = 1.47 Ratio
Payback (years) 28.51 Years
CITY OF HOMER GRANT APPLICATION
Renewable Energy Fund Grant Round IV Grant Budget Form 7/21/2010
Summary Budget All Phases
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
RECONNAISSANCE $166,071 $44,620 $210,691
FEASIBILITY $413,620 $656,044 $1,069,664
CONCEPTUAL DESIGN $41,120 $5,760 $46,880
CONSTRUCTION $0 $0 $0
$0
$0
$0
$0
$0
$0
$0
Milestone Totals $620,811 $706,424 $1,327,235
Budget Categories:
Direct Labor & Benefits $37,460 $381,624 $419,084
Travel & Per Diem $102,875 $0 $102,875
Equipment $5,700 $323,000 $328,700
Materials & Supplies $2,096 $0 $2,096
Contractual Services $472,680 $0 $472,680
Construction Services $0 $0 $0
Other $0 $1,800 $1,800
Budget Category Totals $620,811 $706,424 $1,327,235
This Application includes a separate worksheet for each project phase (Reconnaissance, Feasibility, Design and Permitting, and Construction)
¹
0 105Miles
Kache mak Bay
Cook Inlet
Legend
Homer Tidelands
City Limits
Homer
Seldovia
Port GrahamEnglish Bay
Kachemak Bay
City of Homer Procurement Policy (Summary of key provisions) Contracts and Purchases
Homer City Code (Section 3.16.010) authorizes the City Manager or his designee to carry out a contract for purchase or issue purchase authorizations for all supplies, materials, equipment and services for the offices, departments and agencies of the City as well as contract for the construction, repair or improvements of City facilities.
Purchases or contracts valued under $25,000 may be made in the open market without publishing notice in a newspaper. If the value is between $10,000 and $25,000 there shall be at least three competitive written bids from three vendors with the contract awarded to the lowest responsive bidder. If the value is more than $25,000 contracts may be made only after a notice calling for bids is printed in a newspaper of general circulation within the City. Sealed proposals shall be received at the time and place designated in the request for proposals. Proposals shall be opened avoiding disclosure of their contents to competing proponents during the process of negotiation. Proposals and evaluations are open to public inspection only after the contract award. In determining the lowest responsive and responsible bidder, the City will consider the price, ability, capacity and skill of the bidder to perform the contract within time and price specified, the reputation and experience of the bidder, and bidder performance and payment under a previous contract.
Awards will be made to the proponent whose final proposal is determined to be most advantageous to the City.
The City of Homer may give preference to City of Homer residents, workers, businesses, contractors, producers and dealers when the contract does not exceed the lowest non-local bid by more than the following percentages:
• For contract/purchase up to $500,000 – 5% higher than non-local bid.
• For contract/purchase greater than $500,000 – 5% higher than non-local bid on first $500,000 and 2.5% higher than non-local bid on amount in excess of $500,000.
The City Council may approve the procurement of a supply, equipment, service or construction item without competitive bidding if it has been determined that there is only one available source or single provider. Based on the review and recommendation of the Director of Finance, the City Manager may approve this Sole Source exception to the procurement policy.
UNITED STATES DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric Administration
NATIONAL OCEAN SERVICE
Silver Spring, Maryland 20910
September 14,2010
Mr. Walt Wrede
City Manager, City of Homer
491 East Pioneer Avenue Homer, Alaska 99603
Dear Mr. Wrede:
This letter is to confirm the support of the National Oceanic and Atmospheric Administration (NOAA)
Center for Operational Oceanographic Products and Services (CO-OPS) for the City's proposed project to
the Alaska Energy Authority's (AEA) Renewable Energy Grant program to determine the tidal energy
potential in Kachemak Bay, Alaska.
CO-OPS will provide technical assistance, collect historical water current data, collect additional water
current information, utilize a hydrodynamic model and analyze the data for tidal energy in support of this
project. CO-OPS will work closely with the NOAA Office of Coast Survey (OCS) Coast Survey
Development Lab (CSDL) on the application of the modeling work. The primary deliverable that CO
OPS will provide will be a technical report, based on model and collected tidal data analysis, as to where
the energy potential exists in Kachemak Bay. As outlined in the proposal, CO-OPS will provide
approximately $650,000 of in-kind support for this proposal, which is a combination of data collection
equipment ($150,000), supplies ($150,000), and staff time ($350,000). CO-OPS and CSDL support is
contingent on additional funding of $300,000 as identified in the grant proposal.
CO-OPS is the leading U.S. authority on tides and tidal currents and has, with its predecessors, been
providing tidal predictions to promote safe and efficient navigation since 1807. The CO-OPS National
Current Observation Program (NCOP) meets the Nation's needs for current observations, tidal current
predictions, and other tidal current products. We are very interested in exploring new ways in which our
expertise in tidal information can facilitate development of tidally-based renewable energy projects.
Alaska provides one of the best sites in the Nation for such projects and, if funded, we anticipate that this
project with the City of Homer and other Kachemak Bay communities will be a model for our
participation in additional collaborations statewide.
We look forward to working with you on this exciting project.
Sincerely,
Richard Edwing, Director
Center for Operational Oceanographic
Products and Services
cc: CAPT John Lowell, Director
Office of Coast Survey
*Printed on Recycled Paper
Drawer L* Seldovia Alaska 99663 * (907) 234-7898
Fax: (907) 234-7865*E-mail: svt@svt.org Web: svt.org
Tradition Integrated with Technology
Seldovia Village Tribe
September 3, 2010
Walt Wrede
City Manager
City of Homer
491 East Pioneer Avenue
Homer, AK 99603
RE: SUPPORT FOR KACHEMAK BAY TIDAL ENERGY FEASIBILITY STUDY
GRANT APPLICATION
Dear Mr. Wrede,
This letter is to express the Seldovia Village Tribe's (SVT) support for the
Kachemak Bay Tidal Energy Feasibility Study grant application that is being
submitted to the Alaska Energy Authority.
We look forward to working with other communities around Kachemak Bay,
government agencies, and technical experts to assess the renewable energy
generation potential of the tidal currents in our area. Renewable energy based on
the Bay that we share is an issue that can bring our diverse communities
together. As well, the tidal circulation flow model that will be developed as a
result of this collaboration will improve resource management and decision
making for all of our mutual benefit.
SVT has Tribal Environmental staff that will participate in the data collection effort
around Seldovia. Other Tribal and community leaders will also be available to
address land ownership, existing infrastructure, historical and traditional
knowledge, and related issues. We understand that this project will produce a
feasibility study describing the tidal energy resource potential around Seldovia, a
conceptual design, development costs, possible challenges, and institutional
issues.
If you have any further questions, please feel free to contact me.
Sincerely,
Crystal Collier
President/CEO
420 L Street, Suite 305 Anchorage, AK 99501 Ph: 907.271.3633 www.nrel.gov
September 8, 2010
Walt Wrede, City Manager
City of Homer
491 East Pioneer Avenue
Homer, AK 99603
Dear Mr. Wrede:
This letter is to affirm NREL’s support of the City of Homer’s efforts to implement a tidal energy
feasibility study for Kachemak Bay and your Alaska Renewable Energy Fund grant application.
The National Renewable Energy Laboratory (NREL) is the nation’s primary laboratory focused
on energy efficiency and renewable energy. NREL is a government-owned-contractor-operated
facility managed and operated by Alliance for Sustainable Energy, LLC (“Alliance”)
under U.S. Department of Energy (DOE) Contract No. DE-AC36-08GO28308.
NREL is well aware of Alaska’s ocean energy potential, including over 90% of the entire nation’s
tidal energy. Recent commercial-scale projects in the Orkney Islands in the United Kingdom are
demonstrating the value and emerging reliability of tidal energy technology. Harnessing this
energy is both an exciting and important initiative that could catapult Alaska into the forefront of
clean energy production nationally and globally.
Combined with in-stream and other tidal hydrokinetic projects throughout Alaska, this proposed
feasibility study could contribute important information and help to develop a critical mass for the
tidal energy industry in the state. In particular, assessing the feasibility of Kachemak Bay for tidal
energy production is a necessary first step to determine if this long-held vision can become a
major contributor to Railbelt energy security. Your collaborative approach with other government
agencies, private industry, and communities is innovative and holds promise as a model for other
project development efforts.
NREL has recently expanded its internal capacity and expertise in ocean and in-stream
hydrokinetic energy and is currently working throughout the country, including in Alaska. We
believe our ongoing efforts will be quite complementary to this initiative and look forward to
assisting where possible. Please contact me if you have any questions or would like additional
information. Best of luck on your application.
Sincerely,
Brian Hirsch, Ph.D.
Senior Project Leader – Alaska
Brian.Hirsch@nrel.gov