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HomeMy WebLinkAboutRound_IV_Costworksheet 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. Baseline assumption is that there is a geothermal resource at Mt Spurr capable of supporting 50-100MW of net average baseload power at 100% resource availability. 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] Not applicable for a Railbelt project ii. Electricity [kWh] Not applicable for a Railbelt project iii. Propane [gal or MMBtu] Not applicable for a Railbelt project iv. Coal [tons or MMBtu] Not applicable for a Railbelt project v. Wood [cords, green tons, dry tons] Not applicable for a Railbelt project 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 vi. Other Not applicable for a Railbelt project 3. Proposed System Design Capacity and Fuel Usage (Include any projections for continued use of non-renewable fuels) a) Proposed renewable capacity (Wind, Hydro, Biomass, other) [kW or MMBtu/hr] We currently estimate the geothermal plant to be built at Mt Spurr to have the net capacity of 50-100 MW b) Proposed annual electricity or heat production (fill in as applicable) i. Electricity [kWh] 416,100,000 kWh – 832,200,000 kWh @ 95% availability ii. Heat [MMBtu] Not Applicable c) Proposed annual fuel usage (fill in as applicable) i. Propane [gal or MMBtu] Not Applicable ii. Coal [tons or MMBtu] Not Applicable iii. Wood [cords, green tons, dry tons] Not Applicable iv. Other Not Applicable. The geothermal plant will consume none 4. Project Cost a) Total capital cost of new system Early estimations indicate $5,000-$6,000 / kW b) Development cost Early estimations indicate $500-$600 / kW out of (a) until resource is confirmed and construction plus well-field development can begin c) Annual O&M cost of new system Early estimations indicate $0.03 – $0.05 / kWh d) Annual fuel cost There is no fuel cost once a facility is up and running 5. Project Benefits (calculated for a 50 MW net scenario displacing natural gas. See detailed assumptions and calculations below) a) Amount of fuel displaced for i. Electricity 2,925,183 MBtu of natural gas per year (1) ii. Heat Not applicable iii. Transportation Not applicable b) Current price of displaced fuel From $22.1m in 2016 to $41m in 2041 (2) c) Other economic benefits CCGT plant O&M estimated at $4.1m / year (3) d) Alaska public benefits Carbon credit estimated at $13.7m / year (4) 6. Power Purchase/Sales Price a) Price for power purchase/sale Early estimations indicate $120-$130/ MWh, for a 25 year PPA starting 2016, in 2010 currency 7. Project Analysis Renewable Energy Fund Round 4 Project Cost/Benefit Worksheet RFA AEA11-005 Application Cost Worksheet Page 3 7-21-10 a) Basic Economic Analysis Project benefit/cost ratio 1.59 (5) Payback (years) 17 years (5) Notes and assumptions: (1) Assuming 8,000 Btu/kWh for a combined cycle natural gas plant (CPUC GHG modeling for CCGT, http://www.ethree.com/GHG/21%20Gas%20CCGT%20Assumptions%20v4.doc) (2) Projection for Btu of natural gas taken from DOE Report #: DOE/EIA-0383(2009) assuming Henry Hub prices (http://www.eia.doe.gov/oiaf/aeo/gas.html) (3) Assuming O&M of a CCGT plant at $10/MWh (company reference based multiple industry sources) (4) Assuming 1.372 lb of CO2/kWh is emitted from a natural gas plant (K. Kit Bloomfield (INEEL), Joseph N. Moore (EGI), and Robert M. Neilson, Jr. (INEEL), GRC Bulletin Mar/Apr 2003 – attached), which equals 0.599 ton CO2/kWh, and assuming price of one ton of CO2 will cost 38.4 EUR or $55 in 2020 (average of estimates by various industry analysts: UBS, Deutsche Bank, Barcap, Daiwa, Societe Generale) which ultimately translates to $33/MWh. Assuming yearly generation at 416,100,000 kWh (50 MW net at 95% availability) yields total carbon credit of $13.7 million (5) Assuming a simplified zero inflation model as follows: a. Fuel cost taken from references (1) and (2) b. O&M costs for a natural gas CCGT taken from reference (3) c. Cost of CO2 taken from reference (4) d. Cost of project taken from preliminary company model assuming total CAPEX of $5,500/kW and O&M (fixed + variable) of $0.05/kWh Renewable Energy Fund Round 4 Project Cost/Benefit Worksheet RFA AEA11-005 Application Cost Worksheet Page 4 7-21-10 Renewable Energy Fund Round 4 Project Cost/Benefit Worksheet RFA AEA11-005 Application Cost Worksheet Page 5 7-21-10 Preliminary conclusions: Although this is a greatly simplified model, both on the cost side as well as on the benefit side, it shows that a geothermal plant at Mt. Spurr can complete effectively with a fossil fuel plant, especially when taking the cost of carbon into consideration. Furthermore, results would have been even more favorable if additional factors were taken into consideration, e.g.:  Since this is a long-term project, the CAPEX of the CCGT plant should also be added to the benefit.  A premium should be added to the benefit to reflect the predictability of the geothermal cost, which translated to a known price of power for the lifetime of the project, while any assumption on the fuel cost is sensitive to its volatile pricing.  Another premium should be added to reflect the benefit from offsetting carbon emission, since this is also a major unknown, especially when evaluating a long term project like the subject of this work.