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HomeMy WebLinkAboutNikiski Combined Cycle Conversion ProjectApplication IVAlaska Electric and Energy Cooperative, Inc. 3977 Lake Stre et • Homer , Alaska 99603 • (907) 235-8551 September 15 , 2010 Alaska Energy Authority AEA 11-005 Renewable Energy Grant Application 813 West Northern Lights Blvd Anchorage, AK 99503 Subject: Round IV Grant Application , Nikiski Combined Cycle Conversion Project Dear Alaska Energy Authority : Alaska Electric and Energy Cooperative, Inc. (AEEC) appreciates the opportunity to present the enclosed application for grant funding in response to AEA's Request for Grant Applications AEA 11-005 issued July 21,2010. This application is for the Nikiski Combined Cycle Conversion (NCCC) project which will recover waste heat from the existing Nikiski gas turbine and convert it to 18MW of capacity with no additional fuel required. The plant conversion will increase the base load plant efficiency by 45 % without increasing fuel consumption . AEEC is seeking grant funds for the construction phase of this waste heat recovery project. Thank you for this opportunity. Please feel free to contact me with questions. Sincerely , ~~ Bradley P . Janorschke General Manager Renewable Energy Fund Round IV Grant Application AEA 11-005 Application Page 1 of 18 7/21/2010 Application Forms and Instructions The following forms and instructions are provided to assist you in preparing your application for a Renewable Energy Fund Grant. An electronic version of the Request for Applications (RFA) and the forms are available online at: http://www.akenergyauthority.org/RE_Fund-IV.html Grant Application Form GrantApp4.doc Application form in MS Word that includes an outline of information required to submit a complete application. Applicants should use the form to assure all information is provided and attach additional information as required. Application Cost Worksheet Costworksheet4.doc Summary of Cost information that should be addressed by applicants in preparing their application. Grant Budget Form GrantBudget4.doc A detailed grant budget that includes a breakdown of costs by milestone and a summary of funds available and requested to complete the work for which funds are being requested. Grant Budget Form Instructions GrantBudgetInstructions4.pdf Instructions for completing the above grant budget form. • If you are applying for grants for more than one project, provide separate application forms for each project. • Multiple phases for the same project may be submitted as one application. • If you are applying for grant funding for more than one phase of a project, provide milestones and grant budget for completion of each phase. • If some work has already been completed on your project and you are requesting funding for an advanced phase, submit information sufficient to demonstrate that the preceding phases are satisfied and funding for an advanced phase is warranted. • If you have additional information or reports you would like the Authority to consider in reviewing your application, either provide an electronic version of the document with your submission or reference a web link where it can be downloaded or reviewed. REMINDER: • Alaska Energy Authority is subject to the Public Records Act AS 40.25, and materials submitted to the Authority may be subject to disclosure requirements under the act if no statutory exemptions apply. • All applications received will be posted on the Authority web site after final recommendations are made to the legislature. • In accordance with 3 AAC 107.630 (b) Applicants may request trade secrets or proprietary company data be kept confidential subject to review and approval by the Authority. If you want information is to be kept confidential the applicant must: o Request the information be kept confidential. o Clearly identify the information that is the trade secret or proprietary in their application. o Receive concurrence from the Authority that the information will be kept confidential. If the Authority determines it is not confidential it will be treated as a public record in accordance with AS 40.25 or returned to the applicant upon request. Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 2 of 18 7/21/2010 SECTION 1 – APPLICANT INFORMATION Name (Name of utility, IPP, or government entity submitting proposal) Alaska Electric & Energy Cooperative, Inc. Type of Entity: Electric Utility Mailing Address 3977 Lake St Homer , AK 99603 Physical Address SAME Telephone 907-335- 6210 Fax 907-335-6213 Email hambrose@homerelectric.com 1.1 APPLICANT POINT OF CONTACT / GRANTS MANAGER Name Harvey Ambrose Title Director of Power Production & Transmission Mailing Address AEEC 3977 Lake St Homer, AK 99603 Telephone 907-335- 6210 Fax 907-335-6213 Email hambrose@homerelectric.com 1.2 APPLICANT MINIMUM REQUIREMENTS Please check as appropriate. If you do not to meet the minimum applicant requirements, your application will be rejected. 1.2.1 As an Applicant, we are: (put an X in the appropriate box) X An electric utility holding a certificate of public convenience and necessity under AS 42.05, The AEEC is an electric utility that holds a Certificate of Public Convenience and Necessity (CPC&N). The Regulatory Commission of Alaska, RCA, approved the CPC&N on July 19, 2002. An independent power producer in accordance with 3 AAC 107.695 (a) (1), or A local government, or A governmental entity (which includes tribal councils and housing authorities); Yes 1.2.2. Attached to this application is formal approval and endorsement for its project by its board of directors, executive management, or other governing authority. If the applicant is a collaborative grouping, a formal approval from each participant’s governing authority is necessary. (Indicate Yes or No in the box ) Yes 1.2.3. As an applicant, we have administrative and financial management systems and follow procurement standards that comply with the standards set forth in the grant Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 3 of 18 7/21/2010 agreement. Yes 1.2.4. If awarded the grant, we can comply with all terms and conditions of the attached grant form. (Any exceptions should be clearly noted and submitted with the application.) Yes 1.2.5 We intend to own and operate any project that may be constructed with grant funds for the benefit of the general public. Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 4 of 18 7/21/2010 SECTION 2 – PROJECT SUMMARY This is intended to be no more than a 1-2 page overview of your project. 2.1 Project Title – (Provide a 4 to 5 word title for your project) Nikiski Combined Cycle Conversion (NCCC) 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 facility is located near Nikiski, Alaska. Members of the Homer Electric Association cooperative throughout the Kenai Peninsula will benefit from this project. 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 Hydrokinetic Solar Storage of Renewable X Other (Describe) A conversion of an existing gas turbine to a combined cycle operation. 2.3.2 Proposed Grant Funded Phase(s) for this Request (Check all that apply) Reconnaissance X Design and Permitting Feasibility X Construction and Commissioning Conceptual Design 2.4 PROJECT DESCRIPTION Provide a brief one paragraph description of your proposed project. The Nikiski Combined Cycle Conversion (NCCC) project will convert the existing simple cycle 42MW gas turbine into a highly efficient combined cycle plant by adding a Steam Turbine Generator (STG) and re-commissioning the existing Heat Recovery Steam Generator (HRSG). The STG will recover waste heat from the existing gas turbine and produce an additional 18MW of capacity with no additional fuel required. The plant conversion will increase the base load plant efficiency by 45% without increasing fuel consumption. AEEC is seeking grant funds for the construction phase of this waste heat recovery project. Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 5 of 18 7/21/2010 2.5 PROJECT BENEFIT Briefly discuss the financial and public benefits that will result from this project, (such as reduced fuel costs, lower energy costs, etc.) An increase of 45% in efficiency effectively lowers the cost of energy from this facility to its customers and reduces the emissions per kWh, thereby improving air quality. Converting the plant from simple cycle to combined cycle operation will add an additional ten (10-FTE) Full Time Equivalent permanent staff positions to the local economy. During construction, the local economy will benefit from construction employment as well as demand for project-related support services. 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. Approximately $85M will be required for the complete transformation of the Nikiski facility and this grant request is seeking $2.0M for a portion of the construction phase. AEEC estimates approximately $6,625,000 for engineering services the balance of the funds, or $78,375,000, for major equipment, construction and other services. If awarded, AEEC would utilize the grant funding and its propose match to pay for the STG electrical and mechanical construction and engineering oversight activities following receipt of the STG at the Nikiski project site in September 2011. The cost of these activities will be in excess of $2.5M and can be accounted for pursuant to the Grant RFA requirements. These activities would be complete at turnover of the STG to AEEC for Commissioning and Start-Up in the early fall of 2012 (i.e, Milestone #1). AEEC proposes to match the available $2.0M grant funds with a 20% cash match, or $500,000. AEEC is securing most of the project funding from commercial sources. 2.7 COST AND BENEFIT SUMMARY 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. $2,000,000 2.7.2 Other Funds to be provided (Project match) $500,000 2.7.3 Total Grant Costs (sum of 2.7.1 and 2.7.2) $2,500,000 Project Costs & Benefits (Summary of total project costs including work to date and future cost estimates to get to a fully operational project) 2.7.4 Total Project Cost (Summary from Cost Worksheet including estimates through construction) $85,000,000 2.7.5 Estimated Direct Financial Benefit (Savings) $398,000,000 2.7.6 Other Public Benefit (If you can calculate the benefit in terms of dollars please provide that number here and $ 1,000,000/year local economic stimulus for 10 Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 6 of 18 7/21/2010 explain how you calculated that number in your application (Section 5.) FT employees; Lower cost per kWh Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 7 of 18 7/21/2010 SECTION 3 – PROJECT MANAGEMENT PLAN Describe who will be responsible for managing the project and provide a plan for successfully completing the project within the scope, schedule and budget proposed in the application. 3.1 Project Manager Tell us who will be managing the project for the Grantee and include contact information, a resume and references for the manager(s). If the applicant does not have a project manager indicate how you intend to solicit project management support. If the applicant expects project management assistance from AEA or another government entity, state that in this section. The following is a list of HEA staff that are tasked with the development, oversight and management of the NCCC project: • Mr. Harvey Ambrose, Director of Power Production & Transmission • Mr. Charlie Flynt, Independent Light Program Manager • Mr. Bob Day, Power Production Manager • Mr. Brad Zubeck, NCCC Project Manager • Mr. Mike Salzetti, Generation Engineer • Mr. Bruce Linton, Environmental Compliance Officer Contact information for Mr. Ambrose and brief professional biographies for staff indicated above are in provided in the attachments (refer to “List of Attachments”) Mr. Ambrose has the guidance, support and staffing of his parent organization for managing this project from its current state through design, construction and operation. AEEC has also contracted with qualified consultants to conduct the engineering studies and detailed design. Refer to Section 3.4 for additional 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.) Project Schedule Task Start Finish Steam Turbine Order & Delivery 4/30/2010 9/29/2011 Develop Constr. RFP, Bid & Award 11/29/2010 2/17/2011 Construction: 2/14/2011 9/3/2012 Electrical 9/16/2011 8/15/2012 Mechanical 8/26/2011 8/3/2012 Milestone #1 8/15/2012 Commissioning & Startup 8/15/2012 11/5/2012 Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 8 of 18 7/21/2010 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.) Milestone #1 would occur at the completion of electrical and mechanical construction for the STG. These activities will be considered complete when the contractor turns the STG over to AEEC for Commissioning and Start-Up. This milestone is scheduled to take place by August 15, 2012. 3.4 Project Resources Describe the personnel, contractors, equipment, and services you will use to accomplish the project. Include any partnerships or commitments with other entities you have or anticipate will be needed to complete your project. Describe any existing contracts and the selection process you may use for major equipment purchases or contracts. Include brief resumes and references for known, key personnel, contractors, and suppliers as an attachment to your application. Mr. Harvey Ambrose is responsible for management and direct oversight of the project development. He has the guidance, support and staffing of his parent organization for managing this project from its current state through design, construction and operation. AEEC has retained Stanley Consultants for engineering and construction, and management services, please refer to the attached company description and resumes. An organizational chart is provided below representing the general tasks and planned assignments. Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 9 of 18 7/21/2010 3.5 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. The project manager will issue reports to AEA on a mutually agreeable schedule throughout the life of the grant. These reports can be customized to meet AEA needs. The project would also expect to process requests for reimbursement on a quarterly basis. Regular meetings and a budget review process is already in place. Project consultants will provide status reports, summaries and analyses on a pre-determined schedule. 3.6 Project Risk Discuss potential problems and how you would address them. AEEC Board of Directors AEEC Brad Janorschke General Manager AEEC Harvey Ambrose Director Power Production & Transmission AEEC Bob Day Power Production Manager HEA Mike Salzetti Generation Engineer AEEC Charlie Flynt Program Manager HEA Brad Zubeck Project Manager AEEC Accounting, Financial, Legal, Fuel Supply, Permitting Design Engineer Stanley Consultants Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 10 of 18 7/21/2010 As would be typical of any large construction project, delays might be encountered due to manufacturer failure to deliver equipment on time. 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. Energy Potential The steam turbine will capture and convert waste heat into 18MW of power that would otherwise be escaping unutilized in the exhaust, or approximately 154GWh per year. Pros • A substantial increase in power output and efficiency with no increase in fuel consumption nor emissions. • An increase in baseload generation. • An improvement in economic dispatch scenarios because the unit will be capable of a greater range of operations. • Spinning reserve will be significantly abetted by the larger capacity unit. • The steam turbine converts the unit to combined cycle, and therefore represents a very attractive and much more efficient alternative to otherwise simple cycle mode operation. Cons It’s difficult to envision any drawbacks associated with the augmented facility, but as with any large capital project debt will have to be incurred and financed. 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. The existing 42 MW gas turbine was built in 1985 at Soldotna, moved to Nikiski in 2000 and rebuilt in a cogeneration configuration to provide Agrium with process steam. Agrium’s decision to close their plant 2007 left the HRSG as a stranded asset. The other component of HEA’s existing energy portfolio is a 12% share of the Bradley Lake Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 11 of 18 7/21/2010 hydro energy. HEA’s average combined load is 62.4 MW (~546 GWh/yr), with winter peaks approaching 85MW and summer lows occasionally less than 40MW. Future system capacity may include one or more aero-derivative turbines at an AEEC-owned facility. 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. The existing facility at Nikiski consumes approximately 4.12 MMCF of natural gas annually. The addition of a Steam Turbine Generator will increase plant output by approximately 18MW with no additional fuel burn, thus maximizing the conservation of dwindling Cook Inlet gas reserves. HEA’s wholesale contracts expire at the end of 2013 and its Board of Directors has approved “Independent Light”, a path for HEA to develop assets that will achieve complete self-reliance. This requires that HEA nearly double its current generation capacity. A greatly enhanced capacity of the Nikiski unit will be a major step in that process. 4.2.3 Existing Energy Market Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. The primary market for this project’s energy is HEA consumers, and a secondary market is other Railbelt utilities. This project will have the following positive impacts on the existing energy system and its customers: 1. Increased output without increasing fuel consumption - Lower heat rate, hence lower cost of energy 2. Lower emissions per MWh. 3. Enhanced spinning reserve capacity improves economic dispatch scenarios. 4. Increased baseload capacity. 5. Increased unit capacity will displace less efficient generation 6. Enhanced spinning reserve capacity will promote the integration of non-dispatchable renewables, such as wind, into the system. 7. Improve conservation of dwindling Cook Inlet gas reserves. 8. Adds 10 full-time, long term positions to local payrolls. 9. Improve consumer confidence in its utility leadership and management. Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 12 of 18 7/21/2010 4.3 Proposed System Include information necessary to describe the system you are intending to develop and address potential system design, land ownership, permits, and environmental issues. 4.3.1 System Design Provide the following information for the proposed renewable energy system: • A description of renewable energy technology specific to project location • Optimum installed capacity • Anticipated capacity factor • Anticipated annual generation • Anticipated barriers • Basic integration concept • Delivery methods The basic principle of operation is to capture waste heat and reintroduce it to the system thereby creating an enhanced thermodynamic cycle from which to extract electrical energy. The nominal capacity of the combined cycle plant will be 82MW: 42MW will be supplied from the combustion turbine, 18MW will be supplied from the waste heat recovery, and 22MW will be available from existing duct-burners when required, principally for spinning reserve. An existing Heat Recovery Steam Generator, or HRSG, will supply the steam turbine. The steam turbine output will be connected to AEEC’s 115 kV transmission grid via the existing Nikiski substation. The Nikiski unit will provide 80% of HEA energy needs. Its expected availability is about 98%. 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 Nikiski plant site is under long-term lease to AEEC. Access and site improvements are part of the NCCC project. 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 following permits are being sought: 1. ADEC APDES, a water discharge permit. 2. A Section 10 Army Corps of Engineers (ACE) permit for the construction of the discharge pipe which will carry the effluent allowed by the APDES permit. Permit planned to be submitted to Corp 12/01/10; expect approval within 5/01/11 to 12/01/11. 3. Modification of our current Title V Air Permit to include an Owner Requested Limit (ORL) for the firewater pump and backup generator to be installed. ORL will be submitted by 12/31/10 with anticipation of getting the permit in 3-6 months. Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 13 of 18 7/21/2010 4. A Water Supply Permit from the Department of Natural Resources (DNR) because we are obtaining an alternate water source. With the Water Supply Permit we will also complete a Coastal Zone Questionnaire which will be submitted to DNR and the Kenai Peninsula Borough (KPB). 5. We are in the process of writing an Environmental Report (ER) to meet the requirements of both our short term and long term lenders, CFC and potentially RUS. The ER will be submitted to RUS December 2010 with turnaround by RUS expected in 6-12 months. 4.3.4 Environmental Address whether the following environmental and land use issues apply, and if so how they will be addressed: • Threatened or Endangered species • Habitat issues • Wetlands and other protected areas • Archaeological and historical resources • Land development constraints • Telecommunications interference • Aviation considerations • Visual, aesthetics impacts • Identify and discuss other potential barriers The water discharge permit will entail a determination of whether there are any issues with archaeological resources, otherwise all of the foregoing issues have been addressed since the steam turbine will be an addition to an existing industrial facility. 4.4 Proposed New System Costs and Projected Revenues (Total Estimated Costs and Projected Revenues) The level of cost information provided will vary according to the phase of funding requested and any previous work the applicant may have done on the project. Applicants must reference the source of their cost data. For example: Applicants Records or Analysis, Industry Standards, Consultant or Manufacturer’s estimates. 4.4.1 Project Development Cost Provide detailed project cost information based on your current knowledge and understanding of the project. Cost information should include the following: • Total anticipated project cost, and cost for this phase • Requested grant funding • Applicant matching funds – loans, capital contributions, in-kind • Identification of other funding sources • Projected capital cost of proposed renewable energy system • Projected development cost of proposed renewable energy system TOTAL PROJECT COST Approximately $85M will be required for the complete transformation of the Nikiski facility and this grant request is seeking $2.0M for the final construction phase. AEEC estimates approximately $6,625,000 for engineering services and $78,375,000, for major equipment, construction and other services. Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 14 of 18 7/21/2010 If awarded, AEEC would utilize the grant funding and its propose match to pay for the STG electrical and mechanical construction and engineering oversight activities following receipt of the STG at the Nikiski project site in September 2011. The cost of these activities will be in excess of $2.5M and can be accounted for pursuant to the Grant RFA requirements. These activities would be complete at turnover of the STG to AEEC for Commissioning and Start-Up in the early fall of 2012 (i.e, Milestone #1). AEEC requests $2,000,000 in grant funding for this waste heat recovery project. REQUESTED GRANT FUNDING AEEC proposes to match the available $2.0M grant funds with a 20% cash match, or $500,000. MATCHING FUNDS AEEC is securing project funding from commercial sources. AEEC will pursue alternate sources of funding, such as grants, as they become available. No specific alternate sources of funding outside of AEA’s solicitation have been identified. OTHER FUNDING SOURCES 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.) O&M is expected to be about $59,000 monthly, and will be budgeted from typical utility revenue streams. 4.4.3 Power Purchase/Sale The power purchase/sale information should include the following: • Identification of potential power buyer(s)/customer(s) • Potential power purchase/sales price - at a minimum indicate a price range • Proposed rate of return from grant-funded project Energy from the project will be sold to Homer Electric Association (HEA) for the use of its members. The resulting lower heat rate (reduced cost per kWh) will be levied against the capital cost and O&M cost to yield the net electric energy rate benefit. Rate of Return For the purpose of this application, a simplified approach will be employed looking at the return on an annual basis using 2010 dollars. The annual capital cost of $85M at 6.2%APR for a 30- year term is $6,307,882; add to this the estimated annual O&M cost of $708,000 for a total of $7,015,882. The annual revenue for only the 18MW from the waste heat recovery component of the project is $13,134,744 (18.0MW x 8,760-hr/yr x 98% Availability x $0.085/kWh wholesale cost of power). These figures yield an estimated annual rate of return of 97%. 4.4.4 Project Cost Worksheet Complete the cost worksheet form which provides summary information that will be considered in evaluating the project. Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 15 of 18 7/21/2010 The Project Cost Worksheet is contained in the attachments. 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 Potential Fuel Displacement Net annual fuel savings will be approximately 1.85 MMCF for an estimated project life of twenty years. A current gas price of $8/MCF yields an annual savings of $14.8 M, or $398 M over the projects anticipated lifetime when adjusted for 3% annual inflation. Anticipated Annual Revenue The annual revenue for only the 18MW from the waste heat recovery component of the project is $13,134,744 (18.0MW x 8,760-hr/yr x 98% Availability x $0.085/kWh wholesale cost of power). Potential Additional Revenue Streams Since Alaska lacks a RPS, the market for potential “green tags” is currently nonexistent. However, an increased spinning reserve capacity will promote the addition of other renewable that can provide long term price stability. Other Economic Public Benefits The creation of 10 FTE positions at $100,000 each will be a great boon for local payrolls. These positions would bring $1,000,000/year into the local economy. Non-Economic Public Benefit The emissions per MWh will be substantially lower. The increased spinning reserve capacity will promote the integration of non-dispatchable renewables, such as wind into the system. 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 Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 16 of 18 7/21/2010 The Nikiski plant has been operated and maintained since 2001 and all the necessary management, financial and other supporting functions are in place. HEA will continue to be the sole member and the primary purchaser of wholesale power from AEEC. Operations and maintenance will be financed through typical utility accounting procedures using revenue generated by the facility and other utility cash flows. The facility will require 10 additional full-time employees, routine maintenance and inspection, an annual inspection that entails a weeklong shutdown, and a two week major overhaul every 5 years. Annual O &M costs are anticipated to be about $59,000 per month, or $708,000/year for waste heat recovery component of the plant. 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 AEEC Board of Directors has given their approval, the administrative structure has been established for project development, long term financial and economic forecasts have been completed, a considerable amount of feasibility investigation has been conducted, RFP’s have been let, some engineering services have been retained and preliminary engineering has commenced, procurement of some items has been initiated. 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. Please find the following attachments in support of the Nikiski Combined Cycle Conversion project appended to this application: • Letter of Support from Representative Paul Seaton • Letter of Support from Representative Mike Chenault • Letter of Support from Senator Gary Stevens • Attachments “Homer News 1-27-2010” and “Peninsula Clarion 4-18-2010” that are recent editorials from local newspapers supportive of the Nikiski CCC project. To date, AEEC is unaware of any negative comments on the project. 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 AEEC requests $2,000,000 in grant funding for this waste heat recovery project. REQUESTED GRANT FUNDING Renewable Energy Fund Grant Application Round IV AEA11-005 Grant Application Page 17 of 18 7/21/2010 AEEC proposes to match the available $2.0M grant funds with a 20% cash match, or $500,000. MATCHING FUNDS AEEC is securing project funding from commercial sources. AEEC will pursue alternate sources of funding, such as grants, as they become available. No specific alternate sources of funding outside of AEA’s solicitation have been identified. OTHER FUNDING SOURCES NATURE & SOURCE OF FUNDS Funds will be secured from commercial lenders. Support for this was demonstrated by the AEEC Board of Directors Resolution 10-21, refer to attachment “10-21AEEC BOD Approval”. AEEC has secured construction financing. AEEC contracted with Stanley Consultants, Inc. for design engineering services. At the time of this application the design is approximate 50% complete and final design is expected by December 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 I ALASKA ) ENERGY AUTHORITY Renewable En ergy Fund Grant Application Round IV 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 Bradley P. Janorschke Signature ~ Z Title General Manager Date September 15 . 2010 AEA 11 -005 Grant Application Page 18 of 18 7/21/2010 AEEC Nikiski Combined Cycle Conversion Project Grant Application for AEA Renewable Energy Fund Round IV Grant List of Attachments (Attachment: Document Name) AEEC Contact Information: “Contact for NCCCC” AEEC Personnel Resumes Harvey Ambrose Charlie Flynt Bob Day Brad Zubeck Mike Salzetti: “Mike Salzetti Resume” Stanley Consultants Resumes: “Stanley Consultants Team Resume” Stanley Consultants company information: “Stanley Consultants Co info” Cost worksheet: “Round_IV_Costworksheet” Grant Budget Form: “Grant Budget wrksht” Letters of Support: • Letter of Support from Representative Paul Seaton • Letter of Support from Representative Mike Chenault • Letter of Support from Senator Gary Stevens • “Homer News 1-27-2010” • “Peninsula Clarion 4-18-2010” Authorization of AEEC General Manager: “10-21 Gen Mgr Approval” Authorization of AEEC Board of Directors: “10-21-AEEC BOD Approval” Contact info for Nikiski Combined Cycle Conversion Project: Mr. Harvey Ambrose Director of Power Production & Transmission Alaska Electric and Energy Cooperative 3977 Lake St Homer, AK 99603 907-335-6210 hambrose@homerelectric.com CORPORATE BACKGROUND Established in 1913 Total Staff: 1,500 Member (employee)-owned corporation www.stanleyconsultants.com Major Fields of Specialization Stanley Consultants is a professional engineering firm with over 1,500 professionals. We are a diverse organization of technical specialists providing multidisciplinary services in the fields of engineering, design, architecture, planning and management. Stanley Consultants provides services in the following major fields of specialization: ƒ Electric power generation, transmission, and distribution ƒ Energy utilization ƒ Industrial development ƒ Natural resources management ƒ Transportation, planning and design ƒ Air, water and noise pollution ƒ Urban and regional planning and development ƒ Water supply and wastewater treatment The services we offer range from studies to comprehensive engineering, design and management on large and complex projects. They include: ƒ Feasibility/site studies and permitting support for contemplated projects ƒ Detailed engineering, design and preparation of plans and specifications ƒ Construction management and inspection services ƒ Owner’s engineer services Stanley Consultants traces its beginning to 1913, when Central States Engineering began its practice in Muscatine, Iowa. Since then, we have performed more than 21,000 separate and diverse engagements for thousands of clients and in 94 countries, and we have worked on every continent. Our clients have included local, state, federal and international agencies; developers; electric utilities; industry; and education, research and health care institutions. DOMESTIC LOCATIONS Austin TX; Denver CO; Salt Lake City UT; Phoenix AZ; Las Vegas NV; Chicago IL; Minneapolis MN; Des Moines IA; Boise ID; West Palm Beach FL; Naples FL; Iowa City IA; Baton Rouge LA CONTACT INFORMATION Denver, Colorado Office 800-878-6806 Power & Energy Business Unit Stanley Consultants’ Power & Energy Business Unit provides engineering, design and construction management services for power generation and delivery projects. Our clients include investment-owned utilities; electric cooperatives and public power entities. Since the 1930s, Stanley Consultants has provided engineering services on thousands of project throughout the United States and around the world. Projects include new power generation; services to operating plants; transmission and distribution facilities and switchyards/substations. View of cooling towers on Gilbert Unit 3 CFB Plant; East Kentucky Power Cooperative, Maysville, KY Construction inspection services provided during building of 345kV Grimes Substation; MidAmerican Energy;, Grimes, IA Power Generation Stanley Consultants has provided engineering and design for new power generation facilities, as well as support services for existing plants. Projects have included coal, gas and oil-fired generation, as well as hydroelectric generating facilities. We have served over 200 utilities with systems ranging in size from 2 MW to over 10,000 MW. We have provided engineering, design and construction management services for over 10,000 MW of power generating facilities. These power generation projects have ranged in size from 750 KW to 825 MW, have been designed around all types of technologies and configurations, and have been installed worldwide. Power Delivery Stanley Consultants has provided services on hundreds of substation projects throughout the United States. Substation types include open-air buswork and compact gas insulated substation designs in both urban and rural settings. Stations have ranged in size from 500 kVA through 800 MVA with source voltages of 2.4kV through 500 kV. Transmission projects have ranged in voltage from 34.5kV to 500 kV and include wood pole, steel, concrete and lattice designs. We have provided design, construction management, and inspection services for over 50,000 miles of overhead and underground transmission line. These projects have been built in all types of terrain and climates from the rain forests of West Africa to the permafrost regions of Alaska. 1207 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. 98% Unit depends on project type (e.g. windspeed, hydropower output, biomasss fuel) 2. Existing Energy Generation and Usage a) Basic configuration (if system is part of the Railbelt 1 i. Number of generators/boilers/other grid, leave this section blank) ii. Rated capacity of generators/boilers/other iii. Generator/boilers/other type iv. Age of generators/boilers/other v. Efficiency of generators/boilers/other b) Annual O&M cost (if system is part of the Railbelt grid, leave this section blank) i. Annual O&M cost for labor ii. Annual O&M cost for non-labor c) Annual electricity production and fuel usage (fill in as applicable) (if system is part of the Railbelt grid, leave this section blank) i. Electricity [kWh] ii. Fuel usage Diesel [gal] Other iii. Peak Load iv. Average Load v. Minimum Load vi. Efficiency vii. Future trends d) Annual heating fuel usage (fill in as applicable) i. Diesel [gal or MMBtu] ii. Electricity [kWh] iii. Propane [gal or MMBtu] iv. Coal [tons or MMBtu] 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 (Wind, Hydro, Biomass, other) [kW or MMBtu/hr] Waste Heat Recovery steam turbine for production of electricity b) Proposed annual electricity or heat production (fill in as applicable) i. Electricity [kWh] 18MW 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 $85,000,000 b) Development cost c) Annual O&M cost of new system $708,000 d) Annual fuel cost Yields a savings of $14.8 M per year from current fuel costs. 5. Project Benefits a) Amount of fuel displaced for i. Electricity 1.85 MMCF per year ii. Heat iii. Transportation b) Current price of displaced fuel $8/ MCF of natural gas c) Other economic benefits Creates 10 Full Time positions, and dozens of jobs during the construction phase of the project. d) Alaska public benefits Improved heat rate means lower cost per kWh,lower emissions per kWh, conserves dwindling Cook Inlet gas reserves 6. Power Purchase/Sales Price a) Price for power purchase/sale Current residential, commercial and industrial rates will apply. 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 4.7 Payback (years) 5-1/2 years Renewable Energy Fund Grant Round IV Grant Budget Form 7-21-10 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 $ $ $ $ $ $ Completion of STG Electrical & Mechanical Construction (Turnover to AEEC for Commissioning & Start-Up) 8/15/2012 $ 2,000,000 $ 500,000 Commercially financed $ 2,500,000 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ TOTALS $ 2,000,000 $ 500,000 $2,500,000 Budget Categories: Direct Labor & Benefits $ $ $ Travel & Per Diem $ $ $ Equipment $ $ $ Materials & Supplies $ $ $ Contractual Services $ $ Construction Services $2,000,000 $ 500,000 $2,500,000 Other $ $ $ TOTALS $ 2,000,000 $ 500,000 $ 2,500,000 Applications should include a separate worksheet for each project phase (Reconnaissance, Feasibility, Design and Permitting, and Construction)- Add additional pages as needed Renewable Energy Fund Grant Round IV Grant Budget Form 7-21-10 Project Milestones that should be addressed in Budget Proposal Reconnaissance Feasibility Design and Permitting Construction 1. Project scoping and contractor solicitation. 2. Resource identification and analysis 3. Land use, permitting, and environmental analysis 5. Preliminary design analysis and cost 4. Cost of energy and market analysis 5. Simple economic analysis 6. Final report and recommendations 1. Project scoping and contractor solicitation. 2. Detailed energy resource analysis 3. Identification of land and regulatory issues, 4. Permitting and environmental analysis 5. Detailed analysis of existing and future energy costs and markets 6. Assessment of alternatives 7. Conceptual design analysis and cost estimate 8. Detailed economic and financial analysis 9, Conceptual business and operations plans 10. Final report and recommendations 1. Project scoping and contractor solicitation for planning and design 2. Permit applications (as needed) 3. Final environmental assessment and mitigation plans (as needed) 4. Resolution of land use, right of way issues 5. Permit approvals 6. Final system design 7. Engineers cost estimate 8. Updated economic and financial analysis 9. Negotiated power sales agreements with approved rates 10. Final business and operational plan 1. Confirmation that all design and feasibility requirements are complete. 2. Completion of bid documents 3. Contractor/vendor selection and award 4. Construction Phases – Each project will have unique construction phases, limitations, and schedule constraints which should be identified by the grantee 5. Integration and testing 6. Decommissioning old systems 7. Final Acceptance, Commissioning and Start-up 8. Operations Reporting Alaska State Legislature State Capitol, Room 102 345 W. Sterling Highway Juneau, AK 99802 Suite 102B Phone: 465-2689 Homer, AK 99603 Fax: 465-3472 Phone: 235-2921 Toll Free (800) 665-2689 Fax: 235-4008 Representative_Paul_Seaton@legis.state.ak.us REPRESENTATIVE Paul Seaton District 35 September 14, 2010 To whom it may concern: The provision of clean, affordable, renewable energy for Alaska in the 21st century is foremost among the many challenges confronting our state. Homer Electric Association’s (HEA) Nikiski Combined Cycle Conversion (NCCC) project would be a significant step in achieving this objective. The NCCC project will capture the waste heat from an existing gas turbine and convert it to 18 MW of clean energy. Since fuel consumption would be unchanged, this represents a tremendous increase in efficiency, hence a lower cost per kilowatt hour for Peninsula residents. Not only would the NCCC provide a reliable, efficient source of energy, but it will also add 10 full time jobs to a local economy that has lately been suffering from an eroding industrial base. The enhanced flexibility in systems operation afforded by this project will also facilitate the development of other non-dispatchable renewables, such as wind. Clean, affordable energy and jobs for Alaskans: that’s an energy solution we can all agree upon. I endorse and applaud Homer Electric Association’s efforts to make this project a reality. Sincerely, Representative Paul Seaton ALASKA STATE LEGISLATURE SESSION ADDRESS INTERIM ADDRESSES: Alaska State Capitol 112 Mill Bay Road 345 W. Sterling Hwy.#102 Juneau, AK 99801-1182 Kodiak, AK 99615 Homer, AK 99603 (907) 465-4925 (907) 486-4925 (907) 235-0690 Fax (907) 465-3517 Fax (907) 486-5264 Fax (907) 235-4008 Senator Gary Stevens Senate President September 14, 2010 To whom it may concern: The provision of clean, affordable, renewable energy for Alaska in the 21st century is foremost among the many challenges confronting our state. Homer Electric Association’s (HEA) Nikiski Combined Cycle Conversion (NCCC) project would be a significant step in achieving this objective. The NCCC project will capture the waste heat from an existing gas turbine and convert it to 18 MW of clean energy. Since fuel consumption would be unchanged, this represents a tremendous increase in efficiency, hence a lower cost per kilowatt hour for Peninsula residents. Not only would the NCCC provide a reliable, efficient source of energy, but it will also add 10 full time jobs to a local economy that has lately been suffering from an eroding industrial base. The enhanced flexibility in systems operation afforded by this project will also facilitate the development of other non-dispatchable renewables, such as wind. Clean, affordable energy and jobs for Alaskans: that’s an energy solution we can all agree upon. I endorse and applaud Homer Electric Association’s efforts to make this project a reality. Sincerely, Senator Gary Stevens Senate President • Home • Alaska Arts • Business • Letters • Lifestyles • Local Stories • Opinion • Schools • Sports • Advertisers • Anchor Point • Calendar • Churches • Classifieds • Cooking • Dining • Gardening • History • Online Guide • Real Estate • Seawatch • Spotted® • Tour Guide • Writers Contest • Announcements • Births • Cops & Courts • Obituaries • Weddings • Archives • Contact us • Place Ad • Subscribe Homer Alaska - Oped - Story last updated at 9:01 PM on Wednesday, January 27, 2010 HEA takes realistic, approach to future Homer Electric Association has announced plans it has in the works to produce power for its members when its contract with Chugach Electric runs out at the end of 2013. The local cooperative utility is looking to the future and requesting proposals for implementation well ahead of the deadline, rather than waiting for other utilities or the state to take the lead. As envisioned, HEA would have new assets on line sometime in 2012 — plenty of time to make sure the Kenai Peninsula's energy needs will be filled in the very near future. The utility's plan is both forward thinking and highly feasible. This is not a pie in the sky solution, but a realistic, well thought out plan. The best part? It would use infrastructure HEA already has in place. Dubbed Independent Light, HEA's proposal is two-fold. First, a steam turbine would be added to the natural gas-fired facility in Nikiski, which currently produces 40 megawatts. That unit produced steam used by Agrium to make fertilizer products. With the Agrium plant shut down, HEA can harness steam power to generate 18 megawatts more electricity — without using any additional natural gas. What's more, all the necessary permits already are in place, because there would be no increase in emissions. The second part of the proposal involves installation of a pair of natural gas-fired turbines at the Soldotna substation. That facility housed such a turbine until 2000, when it was moved to the Nikiski plant. So, HEA has all the necessary infrastructure in place. The building has been well- maintained; all HEA will need to do is roll in the turbines. HEA also is exploring renewable energy such as wind, small-scale hydro, solar and tidal power. By going independent, HEA can add new renewable energy projects as they prove feasible. Natural gas also has a smaller carbon footprint than coal. It's good that HEA remains open to renewable energy and has chosen a cleaner fuel. There's one "renewable" energy source already available — conservation. By exploiting waste steam, HEA makes better use of its existing turbine. New natural gas turbines also will be more efficient. HEA members can do their own part through conservation. Every megawatt saved is one less that has to be produced — and paid for. Ideas include installing energy-efficient light bulbs, turning down the thermostat and turning off lights when not needed. Implementing Independent Light will involve the investment of capital by HEA. But the move gives HEA —and by extension, its members — much greater control over its energy production capabilities. Along with investment in infrastructure comes the creation of 20 new jobs to run and maintain the units — funds that would have gone to Chugach to pay for services on equipment in which HEA has no ownership interest. Providing energy on the Kenai Peninsula is no easy task. HEA has put in the work to ensure the lights stay on into 2014 and for years to come in a way that reaps the maximum benefit for the Kenai Peninsula. TELLER Juneau Whether you're at the beginning of your career... Homer Medical Clinic is looking for a Medical Assistant for ... Bookkeeper Needed (AP/AR) at small Homer business. Must be ... ELECTRICIAN/OPERATOR Petersburg, AK The City of Petersburg, ... ELECTRICIAN/OPERATOR Petersburg, AK The City of Petersburg, ... Page 1 of 2Homer, Alaska - Oped - HEA takes realistic, approach to future 01/27/10 1/28/2010http://www.homernews.com/stories/012710/oped_4_009.shtml E-mail this Story to a friend Send a message to the editor Have our Headlines sent to you Contact our web master Copyright Privacy info Page 2 of 2Homer, Alaska - Oped - HEA takes realistic, approach to future 01/27/10 1/28/2010http://www.homernews.com/stories/012710/oped_4_009.shtml Oped Share | Home > Oped > Independent Light keeps on moving Sunday, April 18, 2010 Story last updated at 4/18/2010 - 12:16 pm Independent Light keeps on moving Peninsula Clarion A small item inside Thursday's paper deserves a little more mention. On Tuesday Homer Electric Association said it is moving forward on converting the existing Nikiski Generation Plant into a combined cycle unit that will use steam to generate electricity. We've written about and commented positively on HEA's Independent Light project before. It's purpose is to use the current gas-fired generation plant that had been used by the Agrium plant to produce electricity of our own. Currently HEA purchases most of its power under an existing contract with Anchorage-based Chugach Electric Association that expires at the end of 2013. HEA's plan to provide power from its own generation assets on the Peninsula starting in January 2014. Tuesday's action means the project continues on target so far. We continue to like this idea a lot. It means independence for HEA rate payers. And it's a creative re-purposing of an existing asset -- always an economical idea. Let's keep moving ahead. CLICK HERE TO VIEW COMMENTS ON THIS ARTICLE ARTICLE LINKS: Printer Friendly Version | Email This Article HAVE ANY QUESTIONS OR CONCERNS? CONTACT US Powered by Local.com Add your business, free! Kenai Attorneys Kenai Auto Dealers Kenai Dentists Kenai Doctors Kenai Fishing Kenai Hair Salons Kenai Hotels Kenai Real Estate Kenai Recreation Kenai Restaurants Featured More... Soldotna Searches All contents ©Copyright 2009 Peninsula Clarion, Morris DigitalWorks & Morris Communications Corporation Contact Us | About Us | About Our Ads |Privacy Policy | Advertising Information | Local Business Listings Page 1 of 1Independent Light keeps on moving | Peninsula Clarion 4/19/2010http://www.peninsulaclarion.com/stories/041810/ope_611630224.shtml