HomeMy WebLinkAboutAngoon Commercial Tidal Submission from Blue Energy App
Renewable Energy Fund Round 3
Grant Application
AEA 10-015 Application Page 1 of 24 10/7/2009
SECTION 1 – APPLICANT INFORMATION
Name
Blue Energy Canada Inc.
Type of Entity:
Tidal Energy
Mailing Address
11300 No. 5 Road
Richmond, BC
V7A 5J7
Physical Address (same)
11300 No. 5 Road
Richmond, BC
V7A 5J7
Telephone
604-277-2583
Fax
604-277-2589
Email
dan@bluenergy.com
mjb@bluenergy.com
1.1 APPLICANT POINT OF CONTACT
Name
Dr. Dan Fraser
Martin Burger
Title
Chief Technical Officer/Technical Authority
CEO
Mailing Address
11300 No. 5 Road
Richmond, BC
V7A 5J7
Telephone
604-277-2583
Fax
604-277-2589
Email
dan@bluenergy.com
mjb@bluenergy.com
1.2 APPLICANT MINIMUM REQUIREMENTS
1.2.1 As an Applicant, we are: (put an X in the appropriate box)
An electric utility holding a certificate of public convenience and necessity under AS
42.05, or
X An independent power producer in accordance with 3 AAC 107.695 (a) (1), or
A local government, or
A governmental entity (which includes tribal councils and housing authorities);
Yes 1.2.2. Attached to this application is formal approval and endorsement for its project by
its board of directors, executive management, or other governing authority. If the
applicant is a collaborative grouping, a formal approval from each participant’s
governing authority is necessary. (Indicate Yes or No in the box )
Yes 1.2.3. As an applicant, we have administrative and financial management systems and
follow procurement standards that comply with the standards set forth in the grant
agreement.
Yes 1.2.4. If awarded the grant, we can comply with all terms and conditions of the attached
grant form. (Any exceptions should be clearly noted and submitted with the
application.)
Yes 1.2.5 We intend to own and operate any project that may be constructed with grant
funds for the benefit of the general public.
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SECTION 2 – PROJECT SUMMARY
The Blue Energy Mid-range 375 kW tidal power conversion device is made up of three twin 125
kW counter rotating cross flow vertical axis rotors mounted in a steel floatation hull frame with
flow shaped rotor cavities. The rotors are connected to an off the shelf variable speed large pole
diameter permanent magnet generator and utilizes power control systems already in use in the
wind sector. The lower rotor bearing is a lateral support sealed bearing and the top bearing is a
combination lateral and thrust supported bearing. The system includes a fail-safe disk braking
device to stop the drives within one revolution. All components are coated to protect against
rust and corrosion.
Computer optimized cross-flow design ensures that the rotation of the turbine is unidirectional
on both the ebb and the flow of the tide. This means electricity in tidal applications can be
generated for 16 to 21 hours per day, depending on location. Apart from the rotors all
mechanical and electrical equipment, including generators, are housed above the high water
line in an atmosphere controlled powerhouse, eliminating the costly and challenging
containment and operating and maintenance access difficulties of submerged systems. The
unit is designed to operate in tidal streams, ocean current and river channels of 12 – 18 meter
depths and will be secured with steel pilings.
The 375 kW mid-range system is designed to be interconnected to existing off grid diesel
installations. The tidal power converter will become the base power supply and the diesel plant
would become peak power and cover the slack periods when power is not available from the
unit. Tide slacks move over time and distance and with multiple installations it is possible to
have only one site in a slack period. The goal would be to completely off-load the diesel and
have them for emergency stand by.
Diesel power off grid prices range from 25 cents / kW hr to 80 cents / kW hr and we anticipate
tidal power to be fed into the local grid in the 14 to 18 cents / kW hr range.
Prior prototype trials, Computational Fluid Dynamic (CFD) numeric modeling (tow tank scale
model verified) is the basis for predicting 45% energy conversion efficiencies. The name plate
nominal capacity is 375 kW and the generator can run for 1.5 hours in spring tides at 425kW
without suffering over heat damage.
The floatation hull will house the generator, electrical controls and ancillary equipment in an
atmosphere controlled machinery room. The ancillary systems include navigation lights, warning
horn hatch covers ladders and bilge sump pumping. If shore proximity permits the power will be
transmitted by overhead cable to shore and if not by submarine cabling. The maintenance
procedure for the rotors will be to jack up the caisson at high - high tide period and dog lag into
the supporting pipe piles to permit removal of the underwater components for dry service.
2.1 Project Title
The Angoon Commercial Demonstration Tidal Power Project
2.2 Project Location
The commercial demonstration project will be located in Angoon Alaska, a small community on
Admiralty Island in the southeast region of the state. Two excellent physical locations have
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been identified based on their recorded tidal flow characteristics and bottom bathometry. Site
#1 is between the village and Turn Point to the NE, with coordinates Latitude 57 30.312N
Longitude 134 34.907 W. Site #2 is 1.48 nm to the SE in the Favorite Bay Narrows, with
coordinates Latitude 57 29.334N Longitude 134 32.687W. Both sites are within a mile of the
existing diesel power plant, minimizing the length of new power line that will need to be installed
to integrate the tidal power system into the existing mini-grid and utilize the existing power plant
as back up and auxiliary source.
A third potential site in the passage between Killisnoo Island and Admiralty Island merits further
investigation but we lack sufficient details of tidal flow data to place it on our list until on-site
investigation and verification has been conducted.
*** See images of location in attachment and hard copy submission. ***
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2.3 PROJECT TYPE
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) Free Stream Tidal Power Converter
2.3.2 Proposed Grant Funded Phase(s) for this Request (Check all that apply)
X Reconnaissance X Design and Permitting
X Feasibility X Construction and Commissioning
X Conceptual Design
2.4 PROJECT DESCRIPTION
The Angoon Commercial Demonstration Tidal Power Project will install a Midrange 375 kW
nominal nameplate capacity free stream tidal power converter made up of triple counter rotating
units of 125kW each. The neutrally buoyant steel hulled unit will be anchored in position with
pilings at one of two sites identified within intertie distances from the existing diesel power
house. The tidal power diesel intertie will form an integrated mini grid where the diesel will
provide peaking, emergency, tide slack coverage and the predictable tidal power component will
become the new base power supply. Part of the study will determine a phase two installation
where the distance between the two installations provides offsetting slacks and then the existing
diesel can be designated emergency power only.
2.5 PROJECT BENEFIT
The existing power cost of the diesel supplied electricity in Angoon Alaska is $0.55 kW hr and
with a successful installation of Blue Energy’s midrange 375 kW unit could see a drop in fuel
costs of approximately 80%. The community of Angoon currently pays $0.26 per kWh for fuel
costs for a total annual dollar amount of $510,000. This would represent approximately
$400,000 in savings. Deployment of Blue Energy turbines in subsequent village power in
coastal communities using tidal power would see a price point of $0.15 to $0.20 kW hr and go
even lower in time. Off-loading existing diesel power with tidal power supply will mean less fuel
spill risk, less emissions with less fuel consumption and less noise pollution as the diesel’s will
run fewer hours per day.
The cost of diesel fuel has increased over 500% in the past decade. The most reasonable
assumption is that costs will continue to escalate during the 30-50 year service life of the tidal
project. Any cost/benefit comparison based upon present costs is by definition invalid. If
present costs only are used as a basis for comparison the benefits of any project with low and
predictable long-term fuel costs will be grossly understated and generating plants using liquid
fuels will continue to be preferred in the short run.
The Pacific Rim markets are anxiously awaiting Blue Energy’s Mid-range 375 kW unit and
Alaska’s proximity to this massive market makes it a potential manufacturing technology seat for
supplying the units to coastal areas of BC Alaska and the Pacific Rim. 150 direct jobs go into
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the factory to manufacture and assemble the components with a multiplier of 2 to 3 for each
direct job created. State commitments to tidal power adoption would be necessary to see this
downstream economic development benefit accrue to Alaska.
2.6 PROJECT BUDGET OVERVIEW
Reconnaissance $ 231,840
Feasibility Assessment $ 352,800
Permitting & Design $ 539,280
Off-Site Construction $3,899,826
On-Site Construction $ 825,600
TOTAL $ 5,849,346
(See attached budget work sheets for further details)
2.7 COST AND BENEFIT SUMARY
Grant Costs
2.7.1 Grant Funds Requested in this application. $ 4.0 MM
2.7.2 Other Funds to be provided (Project match) $ 2.0 MM
2.7.3 Total Grant Costs (sum of 2.7.1 and 2.7.2) $ 6.0 MM
Project Costs & Benefits
2.7.4 Total Project Cost (Summary from Cost Worksheet
including estimates through construction)
$ 6,000,000
2.7.5 Estimated Direct Financial Benefit (Savings) $971,510 x 30 =
$29,145,300 @ $10 per
gallon average fuel cost
$1,943,020x30 =
$58,290,600 @ $20 per
gallon average fuel cost
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.)
$695,400.00
Renewable energy credits
tradable on the world
market. (Market not yet
firmed up)
The Angoon Alaska Blue Energy 375kW Tidal Power Commercial Demonstration Project will
move the technology from the development stage to commercialization. The manufacture and
sale of the 250-500kW units as a diesel intertie solution will permit communities to start
offloading their diesel costs and eventually with multiple tidal power installations reduce the
diesel component of the integrated micro grid to that of stand by and emergency role.
Within five years of the Angoon Blue Energy Project production costs of the Midrange unit
should drop below $0.10 kW h significantly reducing the high power costs for outlying coastal
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communities. A follow on opportunity as an early adopter of the technology is to construct a
manufacturing facility in Alaska to service the Alaska, BC, Washington and Pacific Rim Markets
estimated to be worth $1.5 to $2.0 billion over the next ten years.
Alaska has a rich maritime labor resource with a compatible skill set base to export the
accompanying service jobs to propagate the technology to the Pacific Rim. The 375kW unit is
also a significant milestone in Blue Energy’s scale up program to the larger ocean class system
of which Alaska has a significant interest as the largest tidal power stake holder in North
America having 150,000 + MW of developable tidal reserves. The proposed Turnagain Arm
Tidal Power Project will significantly lower the Railbelt consumer power price from an average of
$0.13-$0.30 to $0.06-0.08. Anticipated advances in marine cabling capacities and costs would
permit the completion of the proposed panhandle intertie and eventually pave the way to
exporting large sales of tidal power to Canada and the West Coast of continental USA.
SECTION 3 – PROJECT MANAGEMENT PLAN
3.1 Project Manager
Project Manager: Richard Elder brings a wealth of practical knowledge in project management,
organization, and manufacturing with special area of expertise in the use of composite materials
in marine applications to the Blue Energy team. He has founded corporate organizations,
served as CEO, raised venture capital, coordinated engineering, & design teams, and directed
successful international sales programs.
.
Richard has an extensive background in managing marine construction projects in the Pacific
Northwest. He will coordinate the Blue Energy team’s engineering design efforts, optimize the
manufacturing sequence of the final design, and manage the construction process in the
shipyard or fabricator(s) who are the winning subcontractor bid choices.
*** See resume for Richard Elder in attachment and hard copy submission. ***
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3.2 Project Schedule
*** See project schedule in attachments and hard copy submission. ***
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3.3 Project Milestones
PROJECT MILESTONES COMPLETION
Reconnaissance:
Fish impact study July-October 2010
Community meetings July-September 2010
Preliminary cost analysis July 2010
Bathometric analysis August 2010
Power line site analysis August, 2010
Transformer site analysis August 2010
Bottom composition analysis September 2010
Tidal current analysis September 2010
Interim report October 2010
Feasibility Assessment:
Detailed resource analysis October 2010
Evaluate land use issues October 2010
Evaluate marine site issues November 2010
Update energy market analysis October 2010
Resolve any permitting & Environmental issuesovember 2010
Evaluate marine life study November 2010
Site specific preliminary design December 2010
Standard design construction drawings December 2010
Construction bid preparation December 2010
Solicit preliminary bids January 2011
Business & operations plan January 2011
Final Feasibility Report& recommendations January 2011
Design & Permitting:
Permit applications in place January 2011
Submit environmental mitigation plan if required February 2011
Final design sign-off January 2011
Subcontractor bid negotiation February 2011
Power purchase agreements signed April 2011
Updated budget review March 2011
Land right of way contracts signed March 2011
Final permit approvals April 2011
Business & operations plan April 2011
Final approval for construction May 2011
Off-site Construction:
Shroud & ducting fabrication August 2011
Fabricate flotation platform July 2011
Drive line fabrication July 2011
Turbine rotor & blades August 2011
Machinery room July 2011
Braking system August 2011
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Generator & reduction gear September 2011
Telemetry, sonar & wiring September 2011
Pre-assembly at factory September 2011
Barge loading & delivery October 2011
On-site Construction:
Piling & site anchors August 2011
Transformer site & interconnect August 2011
Underground power lines September 2011
Turbine component assembly October 2011
Launch & mooring November 2011
Back-up power system integration November 2011
Operational testing December 2011
Grid connection January 2012
Start of commercial operation January 2012
Project summary report January 2012
3.4 Project Resources
Martin Burger, Chief Executive Officer - Mr. Burger serves to lead the Blue Energy team to
commercialization by engaging in company finance and building the capacity of the team. Mr.
Burger collaborated with inventor Barry Davis in July of 1990 to develop and commercialize the
Davis Hydro Turbine.
Mavi Innovations – Voytek Klaptocz, Yasser Nabavi, Bill Rawlings - CFD & FEA design, tank
testing and flow analysis, construction drawings, construction management assistance.
Jon Ellison, Executive Vice President – Mr. Ellison served as general manager between 2004
and 2007 and serves the company as a point of operations.
Bernadette Wright, General Manager – Ms. Wright has diverse experience in many aspects of
the business world including tax, corporate and general law in paralegal and management
capacities.
Dr. Dan Fraser, PhD, PE., Chief Technical Officer - Dr. Fraser holds a doctorate degree in
mechanical engineering with an emphasis in fluid mechanics, CFD, convective heat and mass
transfer, material selection, thermodynamics, supercritical water processes, boundary layer
theory.
Richard Elder, Project Manager – Mr. Elder brings a wealth of practical knowledge in project
management, organization, and manufacturing with special area of expertise in the use of
composite materials in marine applications to the Blue Energy team.
Jack Wilson, General Manager, Construction & Fabrication - An award winning Mechanical
Engineer with an extensive professional background of both design & implementation in
virtually every field of engineering including telecommunications, forestry, mining, pipelines, ship
building, special purpose machinery, port handling facilities, sub-sea cabling systems and heavy
construction.
Craig Peterson, Engineer - Mr. Peterson is a registered Professional Mechanical Engineer
but with extensive electrical experience and specializes in motors, generators and transformers.
Joseph Sun – PhD – Lead CFD – An experienced mechanical engineer, Joseph specializes in
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Computational Fluid Dynamics (CFD).
Michaella Miller, Documentation administration and reporting – Mrs. Miller brings with her an
assorted array of experience in executing new projects and managing all the individual part of
those projects. Accounting, all aspects of human resources, business administration and
reporting.
Inside Passage Electric Cooperative is an electric utility providing electricity to the community of
Angoon. The cooperative operates, maintains, and sells electricity to 190 residential, 26 small
commercial, 4 large commercial and 7 community customers in Angoon. They also serve
another thousand customers in several other communities.
Triton Consultants is a firm specializing in hydrographic resource modeling. Triton has been an
active member of the Canadian Ocean Energy community for more than 15 years. Ocean
Energy projects have included modeling and analysis for the Canadian Ocean Energy Atlas
(2006) and British Columbia Hydro Tidal Resource analysis (2002) and tidal and wave modeling
support for more than ten ocean energy projects over the past five years.
Tartoosh Environmental is an environmental services consultancy that is headed up by Robert
Martin, former Ombudsman for the Environmental Protection Agency. Tartoosh is responsible
for the first marine energy permit with the Federal Energy Regulation Commission in North
America in Neah Bay, Washington.
Dr. Mohamed Gadala is a world leading expert on Finite Element Analysis (FEA) as it pertains
to static and dynamic stresses as well as thermal systems analysis. He is Professor and Patrick
Campbell Chair in Design at the University of British Columbia (UBC). His expertise will be
sought on the stress analysis of the turbine blades (foils), bearings and overall structure.
.
Raghavan Jayaraman - As director of one of the best Composite Materials and Structures lab
he will focus on the design of marine Fiber Reinforced Composites for the overall system
design. Such composites not only reduce weight they add strength and do not have corrosion
issues.
James Darcel, B.A., CFA - is an independent financial analyst with varied experience in both
micro and macro financial and investment analyses, together with personal entrepreneurial
experience from inception to international venture company.
Sound & Sea Technology (SST) - Established in March 1999 to meet the need for experienced,
senior-level expertise in ocean engineering for a broad range of undersea and coastal
protection projects. Since its inception, Sound and Sea has completed more than 80 successful
projects, including design and installation of both military and commercial undersea sensor,
range, cable and protection systems. SST provides a complete range of engineering and
installation services for undersea projects. Since 2002, SST has been awarded approximately
$40M of government contracts and subcontracts covering over 225 individual tasks. Some of
their partnering clients include NFESC, SPAWAR SCC, Northrop Grumman, Raytheon, Alaskan
Native Technologies and Navy Region Northwest.
Project Foreman - We will hire a project foreman to assist the Project Manager with oversight,
as well as local on-site personnel.
SUBCONTRACTORS:
Manufacturing & on-site subcontractors for the project have not been selected at this stage in
the project proposal. However, all of the manufacturing processes are well within the
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capabilities of many shipyards we have worked with in the past. We will select the final set of
contractors from the most qualified and cost effective bids from suppliers in Washington State
and/or Alaska.
We plan a parallel supply chain with different subcontractors providing components to the final
assembly. This allows manufacturing time frame to be compacted to the lead time for the most
complex element.
The on-site activities can proceed in parallel or in advance of the manufacturing process to
ensure minimal lag between delivery and operational readiness.
Selection Process:
Blue Energy Canada’s procurement process utilizes international harmonized/standardized
bidding documents acceptable to and conforming to the extent possible to standard
procurement documents for Prequalification, Goods, Civil Works (Large contracts), Civil Works
(Small Contracts) and Design-Build and Turnkey Contracts.
Prequalification
Standard Procurement Documentation for Prequalification of Bidders (SPQD) will be prepared
for both small and large civil works contracts, turnkey contracts, and contracts for the fabrication
of expensive and technically complex plant and equipment. We ensure that only firms with
appropriate experience, a proven track record, and necessary annual turnover, which are free of
any major pending litigation, will be invited to submit bids.
Goods
A Standard Bidding Document (SBD) for the procurements of goods is utilized for all bidding
procedures so that we may select one to best suit the nature of the particular procurement.
A Two-Stage bidding procedure may be adopted in larger and more complex contracts where
technically unequal proposals are likely to be encountered or where the Purchaser is aware of
its options in the market but, for a given set of performance requirements, there are two or more
equally acceptable technical solutions available to the Purchaser.
Civil Works (small & large contracts)
Standardized Procurement Documents will be used for the procurement of small works
contracts through international competitive bidding (ICB) or local competitive bidding (LCB),
including a model form of Conditions of Contract.
Design-Build and Turnkey Contracts
Standardized documents will be used for the procurement of large and/or complex Design-Build
and Turnkey projects. Turnkey contracts involve the contractor's single responsibility for design,
manufacture, delivery, installation, testing, commissioning, training, etc. It includes both Single-
Stages: One-Envelope and Two-Stage: Two-Envelope bidding procedures.
*** See resumes in attachments and hard copy submission. ***
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3.5 Project Communications
For our projects with longer construction time scales we will typically install on-site 24hr video
cameras available to all investors in the project. Since The Angoon Commercial Demonstration
Tidal Power Project will be largely constructed off-site, it will rely upon regular reporting backed
up with construction photos supplied by the construction foreman.
1) Monthly Milestone reports;
a) Provide percentage of completion estimates for items listed on the Schedule
b) Provide budget/expenditure reporting for work under way
2) Summary reports
a) At the completion of each Schedule section (i.e. Reconnaissance) a full report will be
submitted including conclusions, recommendations, and changes to budgets,
construction plan, and timelines.
3) Construction Reports
During the construction phase, milestone reports will be supplemented by video and/or
photo records of progress.
3.6 Project Risk
As a commercial demonstration project for a technology that has not achieved commonplace
status, the Blue Energy tidal system poses a different risk metric than a diesel generating
system. With diesel, the technology risk is miniscule, but the energy supply and pricing risk is
both unpredictable and potentially great enough to render the plant unusable in time of global
conflict or divergence between supply and global demand curves.
In developing our particular tidal design we have endeavored to minimize technical risk by
employing low tech construction methods and materials that can be fabricated by any number of
existing suppliers. Our turbine design has thousands of hours of developmental testing, using
state of the art computer modeling techniques from the aircraft industry and live flow tank
verification of the computer models. This contemporary design work builds upon the live testing
of units in the water carried out by Barry Davis under a series of National Research Council
grants in the early 1980’s.
This development history combines with our conservative materials and mechanical design to
provide a system with lower technical risk than the other tidal energy devices being proposed.
All of them are nice engineering exercises, but Blue Energy’s is a simple and robust machine
that can provide long-term service and maintainability.
Blue Energy will obtain construction insurance and performance bonds as required by
AS36.25.010.
Operational risk – There will be operational risks related to large items such as floating debris in
the form of logs or boats that may damage the moorage or the turbine, or cause it to be shut
down, stopping power output. Acoustic sensors will be installed to “see” large objects and when
detected brake the rotor in order to protect the turbine. Trash rakes may also be installed to
prohibit any debris from entering the rotor bay. All of the generation and electrical equipment
will be housed above the waterline in climate controlled environment. This lowers the risk of a
leak or a seal failure taking the equipment offline and decreasing the risk of maintenance
complications in a marine environment. This equipment will have fire protection. Regular
maintenance will be scheduled for five working days to be scheduled throughout the year to
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clean the equipment and to observe that the equipment is performing optimally. Operational,
replacement and full construction insurance will be carried on the power project.
SECTION 4 – PROJECT DESCRIPTION AND TASKS
*** See Grant Budget forms in attachment and hard copy submission. ***
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4.1 Proposed Energy Resource
The Angoon area has extensive tidal resources far greater than the 375kW project proposal. We
have identified two sites located at Turn Point and the Favorite Bay narrows, each with ideal
bathometric topography and tidal flows in the 7 knot range. These sites alone could produce 15-20
MW of power. A grid intertie as envisioned in the Southeast Alaska Electrical Intertie System Plan
may at some future time enable this resource to be developed and fed into the Juneau power pool.
i) Blue Energy’s tidal energy technology has 5 key features that distinguish it from other tidal
energy designs:
Rugged, modular turbine design with long service life.
Generators and machinery housed in climate-controlled, above-water machinery rooms.
No vulnerable underwater electrical devices or underwater repairs.
Common industrial materials and manufacturing processes.
Generator design capitalizes on wind energy development knowledge base.
Scalable to the gigawatt size range.
Compared to wind energy:
Tidal is totally predictable decades in advance.
Energy density is 832 times greater than air.
Capacity utilization of equipment over twice as high—1 MW nameplate capacity produces
as much as a 2.2 MW wind generator with much greater regularity.
i)
Compared to diesel generators:
Zero fuel costs.
Silent Operations.
Greater independence and security of power supply.
High degree of predictability for future power costs.
Higher project cost for plant amortizes into the lowest long term cost for power.
4.2 Existing Energy System
4.2.1 Basic configuration of Existing Energy System
There are three diesel generators providing power to Angoon, and are configured as follows:
Generator Capacity Model Age Efficiency
1 475 CAT 3456 2007 14.25kWh/gallon
2 565 CAT 3508 1998 14.25kWh/gallon
3 565 CAT 3508 1989 14.25kWh/gallon
4.2.2 Existing Energy Resources Used
The existing energy resource utilization is monolithic, the only energy source being diesel fuel. This
system will remain in place as a back-up and cyclical firming accessory to the primary production
plant. It will typically run several times a day during slack water periods, but will account for 20% of
the annual power production rather than 100%, offsetting those slack periods.
If a pumped storage system were to be included at a future date, reliance on diesel could be reduced
to as low as 2% of the operating cycle.
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The inlet above Angoon is extensive enough to warrant exploration for a second site with an offsetting
tidal pattern. Where such patterns exist, the two tidal facilities can complement each other and
drastically reduce requirements for a back-up generator.
4.2.3 Existing Energy Market
Diesel is a petroleum product derived from crude oil. Its’ ultimate pricing is determined by
supply/demand factors on the world market that are completely out of the control of local communities
and government agencies.
It is strongly indicated that the world has reached the maximum production of liquid fossil fuels that it
will ever produce at about 87 billion barrels per day in 2009. The peak of new discoveries passed
some thirty years ago. Super-giant oil fields like Cantarell Mexico, which form the background of
North American supply, are declining at 10-12% per year. New discoveries are miniscule in
comparison, and have extremely high extraction costs. Abetted by speculation, prices are volatile in
the extreme, ranging from $35 to $150 per barrel in a single year, and trending toward several times
that in the next 30 years. If an isolated community with a wealth of energy resources like Angoon
wants to ensure its future energy supply it needs to look to its own backyard, rather than casting its lot
with an uncertain and unpredictable future.
4.3 Proposed System
4.3.1 System Design
TIDAL ENERGY BACKGROUND
The potential energy of a tidal race is immense--- 832 times the density of wind.
In the race to commercialize this resource many different devices have been proposed. Designs basically
fall into two categories—those that locate their machinery entirely underwater and the Blue Energy Tidal
Bridge with its’ machinery and equipment rooms above water level. Underwater devices most frequently ar e
adaptations of current wind turbine blade technology, with much shorter and stouter propellers. They require
expensive mounting systems fixed to the seabed for each unit, and must be decommissioned and raised to
the surface for servicing. Since their propellers are unidirectional, they must incorporate a pivoting
mechanism to accommodate reversal of tidal direction.
A second class of propeller devices uses a ducted fan design in which the perimeter of the duct contains an
array of permanent magnet units forming and integral generator. While elegant in concept, these designs
have their complex electrical circuitry located in a dispersed fashion around the unit, which magnifies the
problems inherent in waterproofing an underwater electrical device.
Blue Energy’s smaller designs are mounted on a floating platform that is held in place by anchors or pilings.
They have the ease of service that comes from isolating their electrical components from the underwater
environment, with the added benefit that they can be delivered to remote sites in near deployable form,
minimizing the necessity of high cost on site construction.
Tidal dam systems that use conventional hydropower turbines have been successfully operated for
decades, but they have drastic environmental impacts upon the estuaries they blockade. The Blue Energy
Tidal Bridge unique solution allows for continuation of tidal exchange, navigation, and marine mammal
access while extracting massive amounts of energy from the resource and a much lighter environmental
footprint.
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THE ANGOON COMMERCIAL DEMONSTRATION TIDAL POWER PROJECT
The proposed renewable energy system will consist of three vertical axis Davis type turbines with
nameplate capacity of 125kW each. They will
be counter-rotating to cancel torque effects on
the mounting platform. The device itself will be
floating, moored to pilings or gravity anchors
and easily relocated. Generators and electrical
equipment are mounted in weather tight
machinery rooms located entirely above water
for easy service access. The turbines are
simple, mechanically robust devices with over
20 years of development history behind them.
Housings and flotation chambers are fabricated
from welded steel using common shipbuilding
techniques and practice. Actual construction
can take at any qualified shipyard in Alaska or
the Pacific Northwest with transportation to the
side by barge.
The system is modular, and can be expanded at 125kW increments to meet the requirement of individual
communities. As mentioned elsewhere, the potential installed capacity in the Angoon site is measured in
the tens of megawatts using our mini tidal bridge technology (see below). At this scale project costs per
kW will be substantially lower; however the proposed capacity is determined by the needs of the community
rather than resource potential. With the very active tidal characteristics of the site we anticipate capacity
factors approaching 60%, which
compares very favorably to the 20% of
a typical a typical wind site. The result
will be an annual production of
1,944,000kWh.
BARRIERS TO SUCCESS
There are two basic barriers to the successful completion of this project, both having to do with the
difference between renewable energy and liquid fuel as a source of electricity. Our project has high initial
cost compared to buying a diesel generator, but during its operating cycle it has zero fuel costs and only
ongoing maintenance costs. Once capital costs are amortized, cost of power production is extremely low.
By contrast, a diesel generator is relatively cheap to install and very expensive to supply with fuel. A
successful demonstration project at Angoon will pave the way to a lease back option for other communities
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where finance companies like GE would purchase the units and provide power on a kw hr power produced
basis alleviating the initial capital cost burden on the communities.
The second barrier comes from the reluctance of the industry to explore any technology that hasn’t already
been in use for 30 years. As a commercial demonstration project, the Angoon tidal turbine will be more
expensive to construct than future modular versions, and will include extensive data collection to document
its performance. When it is a proven success it will provide the model f or other such installations throughout
Alaska and many other places in the world where community scale power is needed.
4.3.2 Land Ownership
Unlike conventional hydro projects, issues of land ownership are not critical factors in project location. T he
power plant itself is subject to waterway use regulations, but is located on public waters. Land based
requirements are limited to a small site to house transformers, and this need not be immediately adjacent to
the power plant, thus allowing for considerable flexibility of choice. In the case of The Angoon Commercial
Demonstration Tidal Power Project the existing diesel power station should be sufficient to satisfy the land
requirements for our tidal energy facility.
4.3.3 Permits
Alaska Coastal Management Permit - This is a fifty day review and may be extended for up to thirty
more days. This will begin July 2010 so as to engage all of the state entities that Coastal Management
will engage in the review process, and should be complete by December 2010.
US Fish & Wildlife & Alaska Fish & Game marine study permit -
Army Corps of Engineers Permit # 17 – This is a nationwide permit, meaning that it is pre approved if
the requirements of the permit are met and does not require special recommendations in that it is under
5000kW . This relies on the US Fish and Game and FERC licensing.
FERC Preliminary Permit A permit maintains priority of application for a license at a site for up to three
years while the permit holder studies project feasibility and prepares an application for license. A
preliminary permit does not authorize project construction or operation, nor does it provide special
access to the site, but it does prevent another party from acquiring a license (or permit) for the same site
during the term of the permit.
FERC Hydrokinetic Pilot Project License – This will take between 120 and 180 days to complete.
FERC Standard Hydrokinetic License
Timelines
Permits:
Start Date Approval Date
FERC Permit Jul-2010 May-2011
Coastal Management
Questionnaire Jul-2010 May-2011
US Fish and Wildlife Jul-2010 May-2011
Alaska Fish and Game Jul-2010 May-2011
FERC Hydrokinetic Pilot License Jul-2010 May-2011
Army Corps of Engineers NW17 Jul-2010 May-2011
FERC Standard Hydrokinetic
License May-2011 Mar-2012
Barriers:
The company will initially file for a FERC permit in order to conduct project and permit feasibility studies.
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The company will then file for a pilot project license which authorizes construction, operation, and
maintenance of a hydropower project under the Commission’s jurisdiction. The FERC Pilot Project License
does not permit the sale of power, and enforces that feed in tariffs will be paid if grid connection is to be
undertaken. The Pilot Project License is limited to five years and must be decommissioned at this time
unless a Standard Hydrokinetic Permit is granted to the project. Standard Hydrokinetic Permits allow the
sale of power and are generally for terms of fifty years.
Some of the permit risks present will be in converting the FERC Pilot Hydrokinetic License to a FERC
Standard Hydrokinetic License to enable the sale of electricity, enabling Blue Energy to attain IPP status.
Though information about the potential environmental effects of large-scale deployments of these devices is
limited, we believe there is sufficient information to analyze the resource effects of proposed demonstration
projects, which the Commission will do before issuing any license for a demonstration project. It is
anticipated that this transition will be handled as a relicensing of the pilot project and will entail a standard
licensing process including a National Environmental Policy Act review and full opportunity for participation
by all stakeholders. The company will to file a Notice of Intent (NOI) and pre-application document (PAD),
which will include a process plan and schedule for licensing the commercial build-out. By statute, when
relicensing a hydropower project, a NOI is required five years before the license expires. A licensee can
request a waiver of this requirement only if the proposed project is less than 1.5 MW.
4.3.4 Environmental
Every method we use to generate energy has an impact upon the natural environment, whether it be smoke
from a campfire, a giant coal plant, or jet fuel burning at 40,000’ in an airplane engine. Tidal energy is no
exception, but if properly planned it can be one of the lowest impact sources available. In part this is due to
the high energy density of water, some 823 times that of air. Instead of CO2 pouring into the atmosphere
from coal plants or diesel generators, large land areas covered by wind farms or solar panels, or forests
clear cut for biomass, tidal energy plants impact a very small area.
Within that small zone, Blue Energy’s design has features that minimize its environmental impact. Since the
rotors and housings densely fill their section of water, marine mammals that use echo-location for
navigation perceive them as solid barriers and avoid them. Fish sense the pressure bubble in front of the
rotors as an obstruction and tend to avoid it. Smaller fish can pass through unharmed. In order to protect
schooling fish during spawning runs, the entire system can be shut down within two revolutions, thus
rendering it harmless. Where this fail-safe device is indicated, it can be automated to provide a 24hr sonar
surveillance system.
4.4 Proposed New System Costs and Projected Revenues (Total Estimated Costs and Projected
Revenues)
4.4.1 Project Development Cost
The costing for the Angoon Alaska Blue Energy Tidal Power 375 kW Commercial Demonstration Project is
an extrapolation from a detailed 532 engineering task item commercialization scale up program from a
previously proposed 500 kW, $7.5 million commercial demonstration project that was neither funded nor
built. The detailed work plan was prepared by top aerospace engineering design consultants from Boeing
Seattle utilizing MS Project. A number of these critical engineering task items pertaining to computational
fluid dynamic modeling were carried out in the Blue Energy UBC contract research program where we
prepared numeric models of earlier test models and verified the CFD’s in some 1400 + tow tank
experiments. The proposed development costs at this point are $1.6 million and capital costs are $2.1
million.
We anticipate competitive bidding on the fabrication work as there is presently idle capacity and recognize
the remoteness of the site has inherent premiums associated with logistics, travel, lodging etc.
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4.4.2 Project Operating and Maintenance Costs
The operations and maintenance costs of the project will be $55,000 per year which will be paid for by
power sales revenues. This includes five scheduled days of maintenance that consists of cleaning the rotor
and ducting, regular generator maintenance, and general inspection of all systems and site equipment.
4.4.3 Power Purchase/Sale
The Inside Passage Electricity Cooperative (IPEC) will purchase power and distribute it to its existing
customer base. There are 572 residents in Angoon. Potential power purchase/sales price will range from
$0.25 - $0.9 on an output of 1,944,000 kW h per year.
The rate of return for the range of power prices will be as follows:
DEMONSTRATION PROJECT WITH GRANT FUNDING
Power
price/kWh
Annual
Revenue
Less O&M
$55k
Rate
Return
$6m
project
kWh/
annum
1944000 0.25 $486,000.00 $431,000.00 7.18%
1944000 0.3 $583,200.00 $528,200.00 8.80%
1944000 0.4 $777,600.00 $722,600.00 12.04%
1944000 0.5 $972,000.00 $917,000.00 15.28%
1944000 0.6 $1,166,400.00 $1,111,400.00 18.52%
1944000 0.7 $1,360,800.00 $1,305,800.00 21.76%
1944000 0.8 $1,555,200.00 $1,500,200.00 25.00%
1944000 0.9 $1,749,600.00 $1,694,600.00 28.24%
DEMONSTRATION PROJECT FUNDED IN COMMERCIAL CAPITAL
MARKETS
Power
price/kWh
Annual
Revenue
Less O&M
$55k
Less annual
interest cost
@ 6% =
$360,000.00
Less 30 year
straight line
depreciation
=
$200,000.00
Rate Return
$6m project
kWh/
annum
1944000 0.25 $486,000.00 $431,000.00 $71,000.00 -$129,000.00 -2.15%
1944000 0.3 $583,200.00 $528,200.00 $168,200.00 -$31,800.00 -0.53%
1944000 0.4 $777,600.00 $722,600.00 $362,600.00 $162,600.00 2.71%
1944000 0.5 $972,000.00 $917,000.00 $557,000.00 $357,000.00 5.95%
1944000 0.6 $1,166,400.00 $1,111,400.00 $751,400.00 $551,400.00 9.19%
1944000 0.7 $1,360,800.00 $1,305,800.00 $945,800.00 $745,800.00 12.43%
1944000 0.8 $1,555,200.00 $1,500,200.00 $1,140,200.00 $940,200.00 15.67%
1944000 0.9 $1,749,600.00 $1,694,600.00 $1,334,600.00 $1,134,600.00 18.91%
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As can be seen by comparison of the above charts, AEA grant funding is the key ingredient necessary to
jump start this new technology and supply low cost energy to the community of Angoon. Future similar
installations will have much lower capital costs as they benefit from the design work and production
engineering verified and demonstrated in this first unit, thus shifting the break-even point further down the
price point curve.
4.4.4 Project Cost Worksheet
*** See Project Cost Worksheet in attachment and hard copy submission. ***
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SECTION 5– PROJECT BENEFIT
*** See Section 5 details in attachment and hard copy submission. ***
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SECTION 6– SUSTAINABILITY
Blue Energy will investigate the possibility of a joint venture agreement with the Inside Passage Electricity
Cooperative during the feasibility phase of the project. The agreement will enable IPEC to purchase a
percentage of the project and operate some of the regular maintenance for the turbine and transmission
system. The operations and maintenance costs will be paid for out of the revenues generated by the
project. Operational issues that can arise are typically a condition of the marine environment on the
equipment. That is why it is critical to the design of the turbine that the generating and electrical equipment
is kept in a climate controlled machinery enclosure. Debris in the waterway in the form of a log or an
unmanned or out of control vessel could take the turbine offline, though this is unlikely. The bearings are
designed to have an operational lifespan of ten years. Operational costs will include 5 days of scheduled
maintenance to clean the turbine of any bio fouling that may reduce turbine performance as well as regular
generator maintenance. The savings and benefits of the project will be reported by IPEC as a partner in the
project.
SECTION 7 – READINESS & COMPLIANCE WITH OTHER GRANTS
Blue Energy Canada is an investor funded privately held corporation, based in Vancouver Canada, with
preliminary project funding to build a large scale tidal energy plant in northern Scotland. We will be forming
a US subsidiary corporation to pursue the Angoon project as well as a larger tidal bridge opportunity in the
Anchorage area. At this time we have applied for no other grant funding to support these projects,
concentrating instead upon developing investor relationships and private capital resources through our
strategic alliance with World Energy Research and other corporate activities.
Our technology has been tested and verified with 5 versions of in-the-water device, including two grid-
connected trials, and has been refined by extensive computer modeling and tow tank testing. We are ready
to demonstrate this technology at full commercial scale.
We have assembled a management and engineering team that forms the foundation for growth to meet the
scale of opportunity our designs present. That team is ready to move immediately upon awarding of the
grant to perform resource assessment, reconnaissance and feasibility to prepare the groundwork for
decision making, and proceed with construction of the project within the timelines proposed in the
accompanying Schedule.
During the feasibility phase of the project, the company will investigate a United States Department of
Energy Hydrokinetic grant.
SECTION 8– LOCAL SUPORT
Blue Energy contacted state Senator Albert Kookesh of Angoon to inquire about the feasibility of a tidal
energy project in Angoon, Alaska. His recommendation was to contact Jodi Mitchell of the Inside Passage
Electric Cooperative which supplies the electricity to Angoon, and that if she was supportive of the project,
he would get the mayor of Angoon to write a letter of support. We have attached a letter of support from
Jodi Mitchell of IPEC and await a letter from Senator Kookesh, though Jodi Mitchell has contacted him as
notification of her support. The IPEC is owned by its members who are the residents of Angoon, so lower
fuel costs are highly supported and favorable for this project.
*** See Letter of Support in attachment and hard copy submission. ***
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SECTION 9 – GRANT BUDGET
The Angoon Commercial Demonstration Tidal Power Project will cost $6,000,000 dollars in 5 phases
over 18 months. Blue Energy Canada Inc. has passed a Director’s Resolution committing the
company to $2 million in match funding required for the Angoon Alaska Commercial Demonstration
Project. Having submitted the AEA renewable energy $4.0 million funding request we will now
proceed to explore the eligible state and federal matching stackable grant funds. Blue Energy
Canada Inc. is also in the process of preparing an Offering Memorandum which will permit the
company to raise $3.0 million dollars in working capital over the next 6 months.
The company has recently entered into a JV Project Finance Agreement with World Energy Research
LLC to fund a 1 MW $30 million dollar technology scale up project, a 10 MW $100M Commercial
Demonstration Project in Scotland to take advantage of the Renewable Obligation Certificates
(R.O.C.s) incentives offered in the UK. http://www.reuters.com/article/pressRelease/idUS24341+04-
Jul-2009+PRN20090704. After the 10 MW project is complete the JV plans a 200 MW Tidal Power
Bridge Project in the Pantanal Firth estimated to cost $450 million.
The principle of World Energy Research, Mr. Chad Willis, http://worldenergyresearch.com/Index.aspx
is formerly from Alaska and has a keen personal interest in the project. Mr. Willis has offered to
provide back-up Bank References or letter of credit if needed to support this project.
The company’s first objective in this project is to successfully commercially demonstrate the midrange
tidal power technology and thusly open up a significant market in coastal communities and the Pacific
Rim. IPEC has expressed interest in plant ownership and from our perspective if we could recover
our out of pocket cash in the project that will be more than sufficient as well as utilize the project as a
training facility for future Blue Energy Tidal Turbine projects.
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SECTION 9 – ADDITIONAL DOCUMENTATION AND CERTIFICATION
*** See signed Certification sheet in attachment and hard copy submission. ***
*** See signed Resolution of the Directors in attachment and hard copy submission. ***