HomeMy WebLinkAboutSlana Wind Farm State RE Fund Grant Application
Renewable Energy Fund Round 3
Grant Application
AEA 10-015 Application Page 1 of 21 10/7/2009
Renewable Energy Fund Grant Application
Third Round, November 10, 2009
Wind Energy Resource Assessment and Monitoring,
Final Design, Permitting, and Construction
PROJECT: Slana Wind Project
LOCATION: Grizzly Lake, Alaska
OWNER: Village Wind Power LLC, a wholly-owned
subsidiary of Alaska Wind Power LLC, a
company owned by Alaska Power & Telephone
Company and LAPP Resources, Inc.
Renewable Energy Fund
Grant Application Round 3
AEA10-015 Grant Application Page 2 of 21 10/7/2009
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-III.html
Grant Application
Form
GrantApp3.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
Costworksheet3
.doc
Summary of Cost information that should be addressed by
applicants in preparing their application.
Grant Budget
Form
GrantBudget3.d
oc
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
GrantBudgetInst
ructions3.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 3
AEA10-015 Grant Application Page 3 of 21 10/7/2009
SECTION 1 – APPLICANT INFORMATION
Name (Name of utility, IPP, or government entity submitting proposal)
Village Wind Power LLC
Type of Entity:
Private Wind Energy Developer, Independent Power Producer
Mailing Address
10600 Prospect Drive
Anchorage AK 99507
Physical Address
10600 Prospect Drive
Anchorage AK 99507
Telephone
907 248-7188
Fax
907 248-7278
Email
lapres@gci.net
1.1 APPLICANT POINT OF CONTACT
Name
David W. Lappi
Title
Member
Mailing Address
10600 Prospect Drive
Anchorage AK 99507
Telephone
907 248-7188
Fax
907 248-7278
Email
lapres@gci.net
1.2 APPLICANT MINIMUM REQUIREMENTS
Please check as appropriate. If you do not to meet the minimum applicant requirements, your
application will be rejected.
1.2.1 As an Applicant, we are: (put an X in the appropriate box)
An electric utility holding a certificate of public convenience and necessity under AS
42.05, or
X An independent power producer in accordance with 3 AAC 107.695 (a) (1), or
A local government, or
A governmental entity (which includes tribal councils and housing authorities);
Yes
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.
Renewable Energy Fund
Grant Application Round 3
AEA10-015 Grant Application Page 4 of 21 10/7/2009
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)
Slana Wind Farm Wind Energy Resource Assessment, Monitoring,
Final Design, Permitting, and Construction
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.
About halfway between Chistochena and Slana on the Tok Cutoff, about 1.5 miles north of the
highway, on a ridgetop at an elevation of about 4,400 feet.
2.3 PROJECT TYPE
Put X in boxes as appropriate
2.3.1 Renewable Resource Type
X 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
Other (Describe)
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
Provide a brief one paragraph description of your proposed project.
The Slana Wind Project is located approximately seven miles west of Slana and will contribute
up to one MW of clean, renewable wind power to the Alaska Power Company Slana distribution
system. Grant monies from this application will initially be used to help erect and monitor one
50-meter meteorological tower to confirm that favorable wind energy is available at the site to
justify commercial development. A favorable resource assessment will result in final design,
permitting and construction.
The communities served will include all communities within the Alaska Power Company (APC,
an Alaska Power & Telephone Company public utility subsidiary) service area including Slana
(2009 population 110), Chistochena (81) and when it is connected, Mentasta (126). The total
population of the served area will be 313.
The project will include construction of a 1.7 mile long transmission line across Ahtna
Renewable Energy Fund
Grant Application Round 3
AEA10-015 Grant Application Page 5 of 21 10/7/2009
Corporation and state-owned land from the Tok Cutoff to the proposed wind power generation
facility on the ridgetop. The power generation facility will include approximately one MW of
wind turbines, the size and type subject to final design. These turbines will be founded in
shallow bedrock prevalent on the ridge crest. Power collection cables and control wiring will
lead from each turbine to the transformer substation. Overhead transmission lines (distribution
voltage) from the transformer substation will extend 1.7 miles to the existing APC distribution
line on the Tok Cutoff.
The grant participant is Village Wind Power LLC who has three Alaska wind projects under
development (Tok, Slana, and Bethel). There will be a number of contractors involved in
completing the project. In addition to our own in-house efforts, other experienced contractors
will be chosen to carry out selected components of the project. These components may include:
State Land Use Permit for Wind Resource Assessment – already completed
State and Native Corp easement for the transmission line
State land lease acquisition for the wind farm site
Topographic mapping for the wind farm and transmission line
Wetlands mapping for the wind farm and transmission line
Archeological review for the wind farm and transmission line
Detailed design for the wind farm and transmission line
Power Purchase Agreement with APC
Transmission line construction
Wind farm construction
Electrical hookup
Commissioning and testing
2.5 PROJECT BENEFIT
Briefly discuss the financial and public benefits that will result from this project, (such as reduced fuel
costs, lower energy costs, etc.)
The Slana Wind Project Generally:
APC is currently producing all of their power for Slana from diesel fuel. They are considering
building a small run-of-the-river hydro plant that will serve their needs during most summer
months, but during the winter, their loads will require continued reliance on diesel fuel. The
Slana Wind Project will likely displace much of this winter diesel fuel use reducing power costs
in Slana, Chistochena, and, when connected, Mentasta.
We are contemplating using up to five 200 kW turbines to supply up to 1 MW of electricity. This
may allow some electrical capacity to be routed to space-heating applications, especially if
heating oil prices are high. Having multiple options for heating and electrical supply is highly
desireable. These turbines, on tilt-up towers, will allow us to construct this project using
helicopter transport, and avoid the need to build and maintain a formal roadway to the site.
Renewable Energy Fund
Grant Application Round 3
AEA10-015 Grant Application Page 6 of 21 10/7/2009
With dynamic VAR support associated with the wind farm, APC’s grid could be strengthened by
regulating and stabilizing voltage levels. Our generation will provide an additional source of
local power for consumers in Slana region.
All APC’s consumers could benefit from this project if oil prices rise, since our power price will
be largely fixed and not fluctuate with Alaska’s oil and gas prices. The project sponsors intend
to sell Slana renewable wind power to APC under a long-term contract, reducing their
consumers’ uncertainty as fossil fuel prices fluctuate.
Air quality in Slana and Mentasta will also improve as we will be displacing hydrocarbon
combustion with clean renewable energy when the ridgetop is windy. This will also reduce the
significant exposure APC’s customers have to carbon tax or CO2 cap and trade proposals likely
to be enacted in the near future. Some of the proposals Congress has considered recently could
add several cents per kWh to the price of fossil fueled electricity ($0.25 per gallon of diesel
burned. Wind-generated electricity could save consumers this money through long-term
electricity supply contracts.
Development of the wind resource will benefit not just Alaska, but the entire nation.
Hydrocarbons that Alaskans do not use can be exported to the Lower-48, reducing our reliance
on oil imported from countries in less secure parts of the world, and reducing the outflow of
wealth from our country.
Alaska’s consultants and contractors will benefit from wind farm construction activities, and the
ongoing operation of the wind farm will generate employment opportunities for local residents.
Wind farm tourism opportunities will also exist, and we expect the wind farm to attract visitors
who will still be able to use the land within the wind farm for other uses since the turbine
foundations will only occupy a small area.
Final Project Design
This grant will speed confirmation of the wind resource and the completion of final
environmental and design studies, land lease, and ROW acquisition. The State’s land lease
procedures put the project participants in the awkward position of spending significant funds on
many of these tasks before the State makes its final decision on a land lease for the project. We
intend to vigorously pursue the land lease and ROW acquisition with both the State and Ahtna
Corporation.
Transmission Line and Construction Access
This grant will fund the construction of a 1.7-mile–long transmission line from the Tok Cutoff
and Slana electric grid to the proposed ridgetop wind power generation facility.
Renewable Energy Fund
Grant Application Round 3
AEA10-015 Grant Application Page 7 of 21 10/7/2009
2.6 PROJECT BUDGET OVERVIEW
Briefly discuss the amount of funds needed, the anticipated sources of funds, and the nature and source
of other contributions to the project.
This Grant
This grant application is for $4.00 million which will fund the following items:
Wind Resource Assessment $0.10 million
Engineering Studies 0.04
Environmental Studies 0.03
Construction Permitting 0.06
Chopper for Tower/Turbine transport 0.30 (charter and mob/demob)
Foundations for Turbines 0.50 (5 x $100k each)
Turbines, Towers & Commissioning 2.00 (1MW at $2.0 mill/MW)
Transmission to Tok Cutoff 0.17 (1.7 miles X $100k per mile)
Transformer Station 0.30
Underground Power Collection 0.30
Hookup 0.20
Total $4.00 million
The above estimated total cost to develop and construct the 1 MW Slana Wind Project is $4.00
million (subject to final design). The project sponsors will directly finance any remaining funds
needed to cover any additional project cost. Applying public grant financing will allow the
project to proceed rapidly, to quickly benefit power consumers in the Slana, Chistochena, and
Mentasta region.
2.7 COST AND BENEFIT SUMARY
Include a summary of grant request and your project’s total costs and benefits belo w.
Grant Costs
(Summary of funds requested)
2.7.1 Grant Funds Requested in this application. $ 4.00 million
2.7.2 Other Funds to be provided (Project match) $ as required to complete.
2.7.3 Total Grant Costs (sum of 2.7.1 and 2.7.2) at least $ 4.00 million
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)
$ 4.00 million
2.7.5 Estimated Direct Financial Benefit (Savings) $ 3.5 million (avoided loan
costs)
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.)
$ 1.752 million over 20
years (avoided tariff and
carbon costs)
Estimated Direct Financial Benefit (Savings): Avoided project cost of borrowing $4.00 million
over 20 years at 7% = $3.5 million in interest.
Renewable Energy Fund
Grant Application Round 3
AEA10-015 Grant Application Page 8 of 21 10/7/2009
Public Benefit No 1: Our power purchase agreement is not yet negotiated with APC, however entering
into a long-term contract to sell power at a fixed price will allow the utility to hedge their fuel price risk.
If we save consumers just one cent per kWh over the price of generating electricity using diesel:
1 MW Wind Farm X 25 percent Capacity Factor X 8,760 hours per year =
about 2.19 million kW hours per year, or more than
$21,900 per year in savings, or more than $438,000 over 20 years, plus:
Public Benefit No. 2: If carbon taxes or cap and trade schemes are implemented, this wind
farm will avoid payment of those costs for each kWh of wind energy generated. For this area,
those costs could be several cents per kWh. If we assume the carbon cost is 3 cents per kWh:
1 MW Wind Farm X 25 percent Capacity Factor X 8,760 hours per year =
about 2.19 million kW hours per year X 3 cents per kWh, or more than
$65.700 per year in savings, or more than $1,314,000 over 20 years
Public Benefit No 3: If the price of diesel increases significantly, local residents may find it cheaper to
heat with wind-generated electricity, rather than heating oil. Electric heaters are now available to store
heat for up to several days, to be used when the wind is not blowing. This savings could be large, if
heating oil costs rise and excess wind energy is available.
Public Benefit No 4: The State of Alaska will receive royalties on the wind generation at rates still to
be negotiated in the land lease.
Public Benefit No 5: Air quality in the region of APC’s current generation facilities (Slana) will
improve (including a reduction in winter ice fog) proportional to the amount of fossil fuel combustion that
we displace. The dollar value of reduced health care costs is hard to calculate, but it will be a real benefit.
Public Benefit No. 6: A portion of the money that formerly left the Slana area (and Alaska) each year
to buy diesel fuel will now circulate within the local community and Alaska generally, strengthening the
local economy. If we consider the “multiplier effect”, this benefit could be significant.
Public Benefit No. 7: Security of Supply. Another non-economic benefit is having distributed
sources of generation in diverse geographic areas. A generation or transmission disruption in
one area is less likely to cause a long-lasting outage if generation resources are separated on
different parts of the transmission system. This becomes much more important during this
region’s very cold winter weather.
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 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.
Village Wind Power LLC will be the lead manager of the project, assisted as needed by Alaska
Renewable Energy Fund
Grant Application Round 3
AEA10-015 Grant Application Page 9 of 21 10/7/2009
Wind Power LLC’s Alaska experience. The project team also includes the parent companies of
the project proponents above; Alaska Power & Telephone Company, and Lapp Resources, Inc.
Alaska Wind Power LLC is managed by its members, Alaska Power & Telephone Company
(AP&T), a certificated Alaska utility specializing in renewable energy (mainly hydropower), and
LAPP Resources, Inc. (LRI), an Alaska-owned private resource development company. Both
AP&T and LRI are employee-owned. AP&T’s CEO is Mr. Bob Grimm and LRI’s CEO is Mr.
David Lappi. Both have significant project management experience.
AP&T’s web site (see http://www.aptalaska.com/index.php) describes the company as follows:
Recognized as one of the most progressive utilities in Alaska, the keys to AP&T's
continued success lay primarily in its willingness to promote and develop long-term
reliable energy and communication solutions while capitalizing on the innovation and
technical expertise of its skilled and dedicated employees.
AP&T currently provides service to communities located above the Arctic Circle, deep in
the Wrangell Mountains, and throughout the islands of Southeast Alaska. We travel by
boat, floatplane, snow machine, riverboat, helicopter, and all terrain vehicles.
We maintain systems on windswept mountaintops and storm-battered islands. Our power
and telecommunications lines cross rainforest, taiga, and tundra. We operate facilities in
places that are among the wettest, driest, windiest, coldest, and most remote regions on
earth. We live and work in Alaska. [The low temperature in Slana last winter was -70° F,
and the lights stayed on.]
Alaska Power & Telephone Company proudly marks 2007 as its 50th year of growth,
innovation, and leadership in the utility industry. AP&T serves over 30 communities
stretching from the Arctic Circle to the southernmost tip of Southeast Alaska. In five
decades, AP&T moved from humble beginnings to take a leadership role in the
development of renewable resource energy in Alaska. Through a combination of low
impact hydro, wind, and experimental underwater river turbine projects, AP&T’s 134
employee-owners work to further minimize our environmental footprint while ensuring
the availability of energy resources necessary for future years.
LAPP Resources, Inc. has been involved in the Alaska energy business since 1991. During the
last 17 years, LRI has been instrumental in exploring new energy sources for both the rail belt
and rural Alaska, from wind energy, to remote sensing for geothermal exploration on the Alaska
Peninsula, to shallow gas and coalbed methane exploration in the Cook Inlet basin and Interior
(see http://home.gci.net/~lapres/index.html).
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.)
Our project schedule has been delayed somewhat by the Yukon River flooding and ice floe
damage at Eagle this spring. AP&T spent a significant portion of the summer re-building power
lines and re-connecting homes in the Eagle area. Our proposed wind assessment at Slana was
therefore delayed.
Renewable Energy Fund
Grant Application Round 3
AEA10-015 Grant Application Page 10 of 21 10/7/2009
The following project schedule is proposed:
Task Time Period
State LUP Application/Grant Jan-June 09 - Completed
Met Tower Construction/Monitoring June 10 – June 2011
Topographic mapping July 2010
Wetlands mapping July 2010
Archeological review July 2010
Avian Studies Complete June- Sept 2010
Detailed trans line design Sept-Oct 2010
Detailed wind farm design Sept-Oct 2010
Ahtna/State road & line easement Oct-Dec 2010
State land lease acquisition Oct-Dec 2010
Interconnection study Oct-Dec 2010
Power Agreement with utility Jan 2011
Trans Line Construction April - July 2011
3.3 Project Milestones
Define key tasks and decision points in your project and a schedule for achieving them.
Successful completion of final design and environmental studies is required prior to final
permitting – October 2010.
Transmission Line easement and Land Lease – Long-term access to the site is required –
December 2010.
Completion of Integration Study and Power Purchase Agreement – A stable long-term
contract for power sales is required for the project to proceed – January 2011.
Transmission line construction – April – July 2011.
Successful wind farm construction (June-Sept 2011), and commissioning is expected in
September 2011.
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.
Village Wind Power LLC will be the lead manager of the project, assisted as needed by Alaska
Wind Power LLC’s and its owner’s Alaska experience. Their experience is listed above under
3.1 Project Manager.
Contractors have not been selected to carry out any of the Project tasks, but the tasks will be
completed using optimal wind industry practices. The tasks may include:
Mapping contractors to complete topographic and wetlands mapping.
Engineering contractor to complete final road right-of-way alignment and design.
Contractors to construct the following:
access road and transmission line,
Renewable Energy Fund
Grant Application Round 3
AEA10-015 Grant Application Page 11 of 21 10/7/2009
intra wind farm roads
turbine foundations
turbines and towers assembled
transformer substation
power collection system
electrical hookup of all components
testing and commissioning
3.5 Project Communications
Discuss how you plan to monitor the project and keep the Authority informed of the status.
Village Alaska Wind Power LLC will work closely with the selected contractors and keep the
AEA informed of progress by regular e-mail updates as components of the project are
completed. The contractor’s Interim and Final reports will be submitted promptly when
completed. Further details may be specified in the final Grant Agreement. Close liaison will be
maintained with the contractors throughout the project. Issues to be tracked include scope
clarifications, progress relative to budget, schedule, data recovery, and health and safety.
3.6 Project Risk
Discuss potential problems and how you would address them.
The design and environmental studies have a low completion risk associated with them. The
studies could uncover a conflict between our wind farm proposal and some aspect of the public
or wildlife interest. In that case, modifications or various mitigation measures could be
evaluated, for instance turbine sites or proposed rights of way could be moved.
The surface access right-of-way alignment will be surveyed to avoid any wetlands in the project
area. The final road alignment will also be developed in consultation with the Department of
Natural Resources, Ahtna Corporation, elected officials and affected stakeholders, to avoid
public access use conflicts and maximize the public benefits that can be gained by access to state
and private land in the project area.
The pioneer road is being constructed across forest and alpine land underlain by generally well-
drained weathered bedrock soils, thought to be good construction materials for roads. The
turbines will be founded in shallow bedrock prevalent at the site. There is little risk of
unexpected or expensive construction conditions, so we believe the road construction has a low
completion risk.
The wind farm construction also carries a low completion risk since we will be using relatively
small wind turbines.
We believe that our power will prove attractive to APC and Slana area consumers, and they are
likely to be receptive to accepting our power at commercially-viable rates. This risk will be
mitigated by negotiating this agreement by January 2010.
Another low-risk possibility is long-term climate (wind) change. Studies have shown that over a
25 year period, the variability in wind is generally less than five percent. Our commercial
contracts will be priced and adjusted to account for this risk. This variability could also prove
positive for the project.
Renewable Energy Fund
Grant Application Round 3
AEA10-015 Grant Application Page 12 of 21 10/7/2009
SECTION 4 – PROJECT DESCRIPTION AND TASKS
Tell us what the project is and how you will meet the requirements outlined in Section 2 of
the RFA.
The level of information will vary according to phase(s) of the project you propose to
undertake with grant funds.
If you are applying for grant funding for more than one phase of a project provide a
plan and grant budget form for completion of each phase.
If some work has already been completed on your project and you are requesting funding for
an advanced phase, submit information sufficient to demonstrate that the preceding phases
are satisfied and funding for an advanced phase is warranted.
4.1 Proposed Energy Resource
Describe the potential extent/amount of the energy resource that is available.
Discuss the pros and cons of your proposed energy resource vs. other alternatives that may be
available for the market to be served by your project.
The wind energy resource of the Slana Wind Project will be evaluated with one 50 meter
meteorological tower for a minimum of 12 months. We believe this monitoring will document a
resource which would support an economically viable one MW wind farm considering the market
and alternatives to generate power using diesel fuel. Modeling by AWS Truewinds shows a good
wind resource on the ridgetop. A one MW wind farm at our location is expected to produce a
minimum of 2.19 million kWh of clean, renewable energy every year. If a viable resource is
proven by the wind assessment, new turbines can be added to the system if more power is needed
in the future. The site is not limited to one megawatt, but could easily accommodate tens of
megawatts on the same ridgetop.
Pros: The Slana Wind Project will allow more efficient use of fossil fuels where renewables are
less applicable, such as in transportation and/or to be exported to regions where wind generation
is not an option. The Slana Wind Project will improve air quality in the Slana/Mentsta region by
reducing fossil fuel use at the existing diesel power plants in this area.
Tare really no other good renewable energy options to replace wind energy for wintertime use in
the Slana area. Other renewable sources include solar and run-of-the river (Carlson Creek)
hydropower or in-stream hydro (Copper River), both of which are not available during high-
demand winter months. The in-stream hydro option is not likely to be economic within the near
future. Geothermal energy could be available in the region but no nearby sources are known at
present and new, expensive exploration of the potential sources would be needed.
In the intermediate future, a gas pipeline may be built from the North Slope to Fairbanks and
southeast through Tok to the Lower-48, but neither the schedule for construction and completion,
nor the price of natural gas from this source is currently known. The recent worldwide decline in
the price of natural gas, and new technologies allowing for more economical recovery of natural
gas from Lower-48 unconventional resources may delay a North Slope gas line to the Lower-48
for an undetermined period. New generation capacity in Tok and new transmission lines from
Tok would be required to get power to the Slana/Mentasta area.
All fossil fuel sources of electricity are likely to be governed by future “cap and trade” or “carbon
tax” regimes designed to reduce CO2 emissions growth or output. Wind power generation will
Renewable Energy Fund
Grant Application Round 3
AEA10-015 Grant Application Page 13 of 21 10/7/2009
not be subject to these added costs, and may in-fact benefit wind power consumers by helping to
limit rate increases. Environmental attributes or “carbon credits” created by renewable wind
power generation will be sold to help reduce electric rates.
Cons: Wind energy is not dispatchable, as it is an intermittent resource, however, numerous grid
studies have shown that a significant penetration of wind can occur without major system
upgrades or increases in spinning reserves. Also, improved wind forecasting has helped integrate
wind into the grid. Wind also has environmental impacts such as avian mortality. This will be
studied in more detail in 2010. The Slana school is currently using waste heat from the diesel
generators in Slana and this “free” heat source would be reduced when the wind farm is
generating electricity.
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.
Slana and Mentasta currently gets all their power from reciprocating diesel fuel generation at
APC’s Slana and Mentasta power plants. Village Wind Power will undertake an interconnection
study with Alaska Power Company to identify the design, equipment, and operating procedures
required to ensure APC’s system stability when accepting power from the Slana Wind renewable
energy project. Since APC is a project participant through its parent Alaska Power & Telephone
Company, the study should be easily accomplished.
APC is contemplating building a run-of-river hydroelectric project on Carlson Creek near Slana
that will supply some of the electric requirement for Slana during the summer months, but its
water resource will not be available in sufficient quantities during the winter. Wind energy from
this proposed wind energy project will integrate well with the hydro project since our wind
resource peaks during the winter months.
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.
See 4.2.1 above. We will conduct an interconnection study through APC to identify necessary
measures to minimize the adverse impact of wind power integration on their grid stability. This
study will likely be completed by the end of 2010. Our project will benefit air quality in Slana,
since less fossil fuel will need to be burned in existing power plant to follow APC’s load.
4.2.3 Existing Energy Market
Discuss existing energy use and its market. Discuss impacts your project may have on energy
customers.
Slana/Chistochena/Mentasta area contains about 317 people in the central Alaska Range. This
area’s residents and businesses will consume the electricity generated by this project. Mentasta
will soon be connected by a small transmission line to Slana and this wind farm. We believe that
our project will help shelter utility customers from the effects of carbon taxes or emissions trading
schemes that we believe are about to be implemented. These new taxes could cost Slana area
consumers an additional $0.03 per kWh on their electrical bills. Power costs to rate payers would
Renewable Energy Fund
Grant Application Round 3
AEA10-015 Grant Application Page 14 of 21 10/7/2009
be no greater than other non-renewable new generation, which might be brought online in the
future. Indeed, our project has potential to reduce power costs to the rate payer, depending on
factors such as financing ultimately realized. Wind fuel is “free” and a long-term tariff would be
sought, so any potential rate increase(s) with time would be less likely than with fossil fuel
generation.
4.3 Proposed System
Include information necessary to describe the system you are intending to develop and address
potential system design, land ownership, permits, and environmental issues.
4.3.1 System Design
Provide the following information for the proposed renewable energy system:
A description of renewable energy technology specific to project location
Optimum installed capacity
Anticipated capacity factor
Anticipated annual generation
Anticipated barriers
Basic integration concept
Delivery methods
The Slana Wind Project will generate renewable electricity from wind resources in the
Grizzly Lake area near Slana.
The optimum installed capacity will be dependent on demand and our power purchase
contracts with the utility, and is not limited by the wind resource available.
We conservatively anticipate a minimum capacity factor of 25 percent.
The project will generate about 2.19 million kW hours per year from one MW of
nameplate installed capacity.
Barriers include upfront environmental, engineering, and permitting studies; i.e.,
information required to achieve project permit approval and State land lease. Other
barriers could include unanticipated wildlife or bird issues arising from our specific site.
Integration will be by step-up transformers and a 1.7 mile long distribution-voltage
transmission line built to get our power to the APC grid.
The power will be sold wholesale to APC and delivered to consumers by APC (their
existing utility) as it is now.
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 access route is across Ahtna Corporation and vacant State land and the site is vacant Sate
land. We have contacted Ahtna Corporation regarding our securing an easement and ROW for the
power line across their property. APC already has negotiated extensive easements for their
existing transmission lines through the area. We do not believe that this will prove a barrier to
development. Completion of our avian and design studies is required to proceed to a State land
lease for the wind farm site and rights of way for the transmission line.
4.3.3 Permits
Provide the following information as it may relate to permitting and how you intend to address
outstanding permit issues.
Renewable Energy Fund
Grant Application Round 3
AEA10-015 Grant Application Page 15 of 21 10/7/2009
List of applicable permits
Anticipated permitting timeline
Identify and discussion of potential barriers
State Land Use Permit for Resource Monitoring – June 10
Wetlands Permit (if applicable) – July 10
SHPO Review – July 10
Ahtna road and powerline easement – Oct-Dec 10
State land lease - Oct-Dec 10
Interconnection and Power Purchase Agreement – Jan 2011
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
For the wind farm proposal generally:
No threatened or endangered species are known in the local area. The avian studies that
are already planned are a key element of our environmental study.
The area is used by moose, caribou and predators. Few wind farms have been built in
caribou habitat. Discussions would be held with ADFG and USFWS on any needed
information to support permit decisions.
Wetlands may be mapped along the proposed road ROW. Corps of Engineers 404 b(1)
guidelines require developers to (1) avoid wetlands, (2) minimize impacts if unavoidable,
and (3) mitigate unavoidable impacts. The road will avoid wetlands negating the need for
404 permitting.
Few archaeological and historical resources are known in the area. A SHPO 106 review
would be undertaken.
The site is within one mile of the boundary of Wrangell-Saint Elias Nation Park and there
may be some resistance from the Federal government to a wind farm at the site. There are
no other known land development constraints, aside from winter winds that at times
exceed 100 mph, with drifting snow. Access is to our proposed site is via vacant public
land and vacant private land. No incompatible land use(s) affect wind farm development.
A cell repeater site is located on the ridge 2.7 miles to the east at VABM Cobb.
Telecommunication interference is unlikely. There are no businesses or residences within
four miles of the site. We are not within line-of-sight paths for microwave
communications or radars.
Aviation use of the nearby area is frequent, since it is near the Tok Cutoff that runs
through Mentasta Pass. Civilian airmen often fly along the Tok Cutoff. Notices to Airmen
Renewable Energy Fund
Grant Application Round 3
AEA10-015 Grant Application Page 16 of 21 10/7/2009
and obstruction lights on met towers and turbines will alert the aviation community of the
potential hazard.
Aesthetic and visual impacts will be reduced by locating the wind farm away from the
highway where the majority of travelers will not see it from close quarters. Some find
wind turbines graceful additions to the countryside, a reminder that we can live well while
reducing our use of fossil fuels. Most travelers will not see the wind farm, since it will be
some distance away from the highway.
4.4 Proposed New System Costs and Projected Revenues
(Total Estimated Costs and Projected Revenues)
The level of cost information provided will vary according to the phase of funding requested and
any previous work the applicant may have done on the project. Applicants must reference the
source of their cost data. For example: Applicants Records or Analysis, Industry Standards,
Consultant or Manufacturer’s estimates.
4.4.1 Project Development Cost
Provide detailed project cost information based on your current knowledge and understanding of
the project. Cost information should include the following:
Total anticipated project cost, and cost for this phase
Requested grant funding
Applicant matching funds – loans, capital contributions, in-kind
Identification of other funding sources
Projected capital cost of proposed renewable energy system
Projected development cost of proposed renewable energy system
The total project cost for the one MW Slana Wind Farm is $4.06 million.
The grant request for this wind farm is $4.00 million (permitting, final design,
transmission line, and wind farm construction).
Company capital contribution matching funds will be supplied as required to complete the
project.
Sufficient funds are required to complete project final design and permitting, and a
bankable feasibility study.
Construction financing could be sought from other funding sources including the Power
Project Fund, commercial loan funds and/or joint venture with others.
The total estimated project capital cost for a two MW project is $4.06 million.
The total estimated project pre-development costs (for studies, permitting, legal review,
and engineering) for the project are $140,000.
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.)
For the Slana Wind Project, direct O&M costs are estimated (based on industry
experience) at about two cents per kWh. More definitive numbers will be available as the
final design is settled.
Renewable Energy Fund
Grant Application Round 3
AEA10-015 Grant Application Page 17 of 21 10/7/2009
This grant application has requested $4.00 million on an $4.00 million project. If
additional monies are required to complete the project the participants will supply the
required capital.
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
No wholesale power purchase agreement has been negotiated at this time with the utility.
We expect that the sale of our power will be at rates less than APC’s actual avoided cost,
in recognition of the public funds used to construct the project.
We expect that the majority of the project will be funded using this grant. When
commissioned, our project will help Alaska meet its increasing energy requirement,
stabilize power costs, and avoid a portion of future taxes on carbon fuels, CO2 emissions,
or carbon sequestration requirements. We will be able to better calculate a rate of return
after the final design, permitting, and power sales agreement has been accomplished.
4.4.4 Project Cost Worksheet
Complete the cost worksheet form which provides summary information that will be considered
in evaluating the project.
Download the form, complete it, and submit it as an attachment. Document any conditions or
sources your numbers are based on here.
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
If the proposed Carlson Creek Hydo is built, the local generation system will be able to
run in a “diesels off” mode as long as water is available in the creek to stabilize the
intermittent wind power. In this case, if 25 % of the annual average power is supplied by
the wind (more during the winter months), then the annual diesel fuel displaced will be:
2.19 million kWh / 14 kWh/gallon diesel = 156,429 gallons diesel.
At an average price of $5.00 per gallon, the cost savings is $782,143 per year.
Renewable Energy Fund
Grant Application Round 3
AEA10-015 Grant Application Page 18 of 21 10/7/2009
Over the 20 year turbine life, cost savings are $15,643,000.
At the end of 20 years, it will be relatively simple to re-power with new turbines.
The above savings will be reduced by the extent that the diesels need to be run for system
stability during windy periods.
Anticipated annual revenue is still to be negotiated in a power purchase agreement.
Additional incentives are available from the Federal government in the form of a 30
percent construction reimbursement grant, or alternatively a production tax credit,
although we are unsure if these are applicable for projects financed by state grants.
The project will generate “green tags” or “carbon credits” for sale on the secondary
market, or for use internally to offset diesel used locally.
Other, non-economic benefits attributable to the project are discussed in Section 2.7.6
above.
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
Sustainability - We expect that the wind resource will continue to be available in the area
for the foreseeable future and at little to no change in cost. Minor variations in wind may
occur over the long term, and those can be anticipated in long-term pricing models for our
power sales agreements. Alaska Power & Telephone Company and APC have been very
aggressive in attempting to move the communities they serve off diesel fuel and onto
renewable energy resources to enable these communities to continue to grow instead of
being held hostage to the uncertainties of fossil fuel pricing.
Village Wind Power LLC and Alaska Wind Power LLC will operate this project as
independent power producers on the APC’s grid, selling wholesale power to APC for
distribution to their customers. There should be little change in the way customers receive
their power.
Our power purchase agreement will allow for adjustments to prices based on inflation and
other specific market conditions, allowing us to continue maintenance and operations for
the long term.
Operational issues could include excessive diesel costs required to stabilize the grid,
however we believe that these issues can be mitigated with operating procedures and
technology. If excessive turbine blade icing conditions exist at the site, heated blades may
be required – our wind resource assessment should give us some idea if this will be an
issue.
Renewable Energy Fund
Grant Application Round 3
AEA10-015 Grant Application Page 19 of 21 10/7/2009
Operational costs include periodic preventive maintenance, and specific maintenance items
that arise. A trained local person is needed to help address these issues as they arise. AP&T
and APC build and maintain the local power lines already, so the addition of 1.7 miles of
line should not be a major issue. If we use 200 kW turbines, there will be five at the wind
farm so operational issues affecting one or two are unlikely to prevent power generation
from the entire wind farm. We will find it useful to have some real-time wind prediction
capability, in order to anticipate fluctuations in power requirements from diesels or hydro.
AP&T and APC are committed to keeping their rate-payers informed on issues related to
the utility. They have been active in getting the communities they serve onto renewable
energy sources, mainly hydro-power in Southeast Alaska, and off diesel fuel. Their eastern
Alaska communities are somewhat challenged by sparse renewable energy resources,
however, small hydro projects combined with small wind farms may be sufficient to serve
the community’s needs. Cost savings and benefits are routinely reported in AP&T’s annual
reports. Further reports will likely be required by the terms of the grant agreement.
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.
We have scouted the area and selected the best site available, based on topography, land
ownership status, access to wind, and proximity to the road and transmission lines.
We have purchased a 50 meter meteorological tower, currently stored in Tok, and have it
ready to install on the site.
We have applied for and been granted a Land Use Permit for the tower by the State
Department of Natural Resources.
We have entered into negotiations for a Right of Way for the installation of the met tower
with Ahtna Corporation.
We have developed a conceptual design for the wind farm using helicopter-transported
turbines and towers, and using a tilt-up design, we have obviated the need to build a road to
the wind farm site, reducing the overall cost and complexity of the project. This includes a
reduction in the complexity of permitting.
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.
See Attached.
Renewable Energy Fund
Grant Application Round 3
AEA10-015 Grant Application Page 20 of 21 10/7/2009
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
Provide a narrative summary regarding funding sources and your financial commitment to the
project.
Village Wind Power LLC is a wholly owned subsidiary of Alaska Wind Power LLC, owned by
Alaska Power & Telephone Company and LAPP Resources, Inc. Funds required to complete this
project will be contributed from retained earnings from the member companies.
We are requesting $4 million in this grant application, to evaluate, design and build the Slana
Wind Farm to displace diesel fuel being used in the region for electricity and space heating.
See attached budget worksheet.
Renewable Energy Fund
Grant Application Round 3
AEA10-015 Grant Application Page 21 of 21 10/7/2009
SECTION 9 – ADDITIONAL DOCUMENTATION AND CERTIFICATION
SUBMIT THE FOLLOWING DOCUMENTS WITH YOUR APPLICATION:
A. 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. 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.
F. CERTIFICATION
The undersigned certifies that this application for a renewable energy grant is truthful and
correct, and that the applicant is in compliance with, and will continue to comply with, all federal
and state laws including existing credit and federal tax obligations.
Print
Name
David W. Lappi
Signature
Title Member
Date November 10, 2009