HomeMy WebLinkAboutHomer Kachemak Bay Tidal Power Round III AEA grant app
Renewable Energy Fund Round 3
Grant Application
AEA 10-015 Application Page 1 of 28 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.
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SECTION 1 – APPLICANT INFORMATION
Name (Name of utility, IPP, or government entity submitting proposal)
City of Homer
Type of Entity:
Municipal government
Mailing Address
491 E. Pioneer Avenue
Homer, AK 99603
Physical Address
491 E. Pioneer Avenue
Homer, AK 99603
Telephone
907-235-8121
Fax
907-235-3148
Email
wwrede@ci.homer.ak.us
1.1 APPLICANT POINT OF CONTACT
Name
Carey Meyer
Title
Public Works Director, City of Homer
Mailing Address
3575 Heath Street Homer, AK 99603
Telephone
907-235-3170
Fax
907-235-3145
Email
cmeyer@ci.homer.ak.us
1.2 APPLICANT MINIMUM REQUIREMENTS
Please check as appropriate. If you do not to meet the minimum applicant requirements, your
application will be rejected.
1.2.1 As an Applicant, we are: (put an X in the appropriate box)
An electric utility holding a certificate of public convenience and necessity under AS
42.05, or
An independent power producer in accordance with 3 AAC 107.695 (a) (1), or
X A local government, or
A governmental entity (which includes tribal councils and housing authorities);
Yes
or
No
1.2.2. Attached to this application is formal approval and endorsement for its project by
its board of directors, executive management, or other governing authority. If the
applicant is a collaborative grouping, a formal approval from each participant’s
governing authority is necessary. (Indicate Yes or No in the box )
Yes
or
No
1.2.3. As an applicant, we have administrative and financial management systems and
follow procurement standards that comply with the standards set forth in the grant
agreement.
Yes
or
No
1.2.4. If awarded the grant, we can comply with all terms and conditions of the attached
grant form. (Any exceptions should be clearly noted and submitted with the
application.)
N/A 1.2.5 We intend to own and operate any project that may be constructed with grant
funds for the benefit of the general public.
We are seeking grant funds for feasibility/conceptual design (not for construction).
Application for construction funds will likely come from an IPP, assuming feasibility
work is accomplished first.
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SECTION 2 – PROJECT SUMMARY
This is intended to be no more than a 1-2 page overview of your project.
2.1 Project Title – (Provide a 4 to 5 word title for your project)
Type in your answer here and follow same format for rest of the application.
Kachemak Bay Tidal Power – Feasibility and Conceptual Design
2.2 Project Location –
Include the physical location of your project and name(s) of the community or communities that will
benefit from your project.
Answer here.
The proposed project will center on Kachemak Bay, part of lower Cook Inlet. Communities
that will benefit from the project are Homer, Seldovia, Port Graham, and Nanwalek, as well
as other Kenai Peninsula Borough residents in small communities around Kachemak Bay.
2.3 PROJECT TYPE
Put X in boxes as appropriate
2.3.1 Renewable Resource Type
Wind Biomass or Biofuels
Hydro, including run of river Transmission of Renewable Energy
Geothermal, including Heat Pumps Small Natural Gas
Heat Recovery from existing sources X Hydrokinetic
Solar Storage of Renewable
Other (Describe)
2.3.2 Proposed Grant Funded Phase(s) for this Request (Check all that apply)
X Reconnaissance Design and Permitting
X Feasibility Construction and Commissioning
X Conceptual Design
2.4 PROJECT DESCRIPTION
Provide a brief one paragraph description of your proposed project.
The proposed project will assess the tidal energy potential and development feasibility of
four sites within Kachemak Bay. With assistance from the National Oceanic and Atmos-
pheric Administration (NOAA), the project will utilize historical water level and current
data, recent sea floor mapping data, and new ocean current measurements to construct a
comprehensive ocean circulation model of the entire Kachemak Bay region. The model and
tidal current data analyses will provide detailed information on tidal energy potential
throughout Kachemak Bay. With this tidal power information, four sites will be selected
and power production costs, output, and availability, as well as potential environmental
issues, will be assessed to determine initial feasibility of tidal energy projects. For all
feasible sites, a conceptual design to optimize tidal energy production will be produced,
along with a construction cost estimate for that design.
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2.5 PROJECT BENEFIT
Briefly discuss the financial and public benefits that will result from this project, (such as reduced fuel
costs, lower energy costs, etc.)
According to estimates of future avoided cost of electricity, HEA will be paying at least
$.109 per kWh in 2012 (stated by Chugach Electric). For a 250 kW system in a current
peaking at 6 knots, this would lead to $71,613 in annual revenue less $5,748 in annual
parts and supplies. Over the 20 year lifetime of this project this will come to $1,317,300 in
net revenue. This is likely a very conservative estimate because if the tidal resource is
determined to be viable, then it is probable that systems and projects larger than 250 kW
would be installed. If this is the case, then the cost of this single feasibility study, which
could lead to multiple installations in Kachemak Bay, would be spread over more revenue
than what is generated by a single 250 kW installation and the project economics would be
much improved.
Additional public benefits will include $114,376 in contracts to Alaskan businesses in the
feasibility study. Through project construction an additional estimated $336,062 in
contracts to Alaskan businesses will be expected.
The operation and maintenance of the 250 kW turbine is expected to cost $22,995 annually
($0.035/kWh and 30% capacity factor for production). Of these operation and
maintenance costs, an estimated 25% will be for parts and supplies and the remaining 75%
will be in contractual costs to Alaskan marine service companies, amounting to $17,246
annually. Over the 20-year lifetime of the project this will total $344,925. It is assumed that
the parts and supply costs will not be spent in Alaska (and thus, are not included as public
benefits), but the contractual costs will go to an Alaskan company, and are considered
public benefits.
Additional public benefits associated with this project include ancillary uses of the tidal
circulation flow model developed by NOAA, which will cover all of Cook Inlet. Beyond the
tidal energy assessment, the model will support oyster mariculture, fisheries management,
oil spill response, local coastal planning, and coastal climate change research. Kachemak
Bay is world-renowned for its oysters. This mariculture industry is valued at approximately
$1 million annually and the bay also supports extensive recreational and subsistence clam
harvest. Water currents carry the plankton that provide food to oysters and clams, and a
better understanding of circulation will improve management of these species.
We estimate that improved management associated with this model will result in
increased value of $25,000 annually. Over a 20-year lifecycle of the installed project, this
would amount to $500,000. In terms of improved spill response, Kachemak Bay is
considered a port of refuge for damaged vessels in Cook Inlet. This was dramatically
demonstrated three years ago when an oil tanker docked in Nikiski suffered damage and
required towing to Homer. This situation did not result in any oil spilled but publicly
highlighted the need for improved spill response, including better understanding of the
tides and currents in Kachemak Bay. Given the increased interest in oil exploration in the
region, it is expected that an improved understanding of tides and currents in Kachemak
Bay could result in improved spill response and reduced harm to existing natural
resources. Assuming even one fairly large spill during the 20-year lifetime of the proposed
project, this can be reasonably estimated to provide $100,000 of additional public benefit.
Circulation information will support local planning, including the proposed Homer Harbor
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expansion and Seldovia fast ferry project. State, federal, and university researchers also
need Kachemak Bay water current information for scientific studies that seek to
improvement resource management and understanding of climate change impacts on
coastal environments. Many public resource management and science agencies, including
the Alaska Department of Fish & Game, Alaska Department of Natural Resources, and
NOAA, will benefit from the circulation model information, which individual agencies
would have been unlikely to develop on their own.
It is widely recognized that Alaska has some of the best potential for generating tidal
energy of anywhere in the world. This proposed Kachemak Bay project, in combination
with other nearby initiatives such as those in upper Cook Inlet, could help to establish an
Alaska-based industry and global leadership in tidal power. In addition to the tidal energy
potential offered by Kachemak Bay’s large tides, the feasibility of this project is enhanced
by having a location near population centers and the electrical grid. Access to the road
system will also help reduce early development costs.
Finally, an initial investment of less than $550,000 by AEA in this project will allow a
leveraging an additional $711,324 through direct project cost-share. This is a substantial
public benefit that will be made possible with AEA’s support for this project.
2.6 PROJECT BUDGET OVERVIEW
Briefly discuss the amount of funds needed, the anticipated sources of funds, and the nature and source
of other contributions to the project.
The total project budget proposed here for the reconnaissance and feasibility stages is
$1,243,335. This total includes $576,711 requested from AEA and confirmed $712,524 in
cost-share contributed by NOAA, Re Vision consulting, Ocean Renewable Power Company–
Alaska (ORPC), and the City of Homer. These contributions amount to a 56% match. Total
Phase 1 (Milestone 1) requested funds are $161,071 and matching funds are $60,120. Total
Phase 2 (Milestones 2A and 2B) requested funds are $403,740 and matching funds are
$652,404.
The total project cost through construction of a hypothetical 250 kW tidal turbine is based
on assumptions of future installed cost per kW from published industry data, namely a
recent 1.2 MW project in the United Kingdom by Marine Current Turbines, which stated a
$5,377/kW installed figure. This leads to a total project cost of $2,617,585, which includes
the proposed budget through the feasibility phase of $1,258,935, and a design and
construction budget of $1,358,650. It should be noted that a 250 kW project is of relatively
small size, but given the early stage of development of the technology, we are assuming a
project of this size as a “proof of concept” that, if successful, would likely lead to more and
larger projects. The feasibility study proposed here would have application for other and
larger projects as well, and thus would be even more cost effective in leveraging these
funds for additional renewable energy development. Furthermore, this feasibility study
will be applied to four distinct sites, so a project at any one site would have a more
favorable cost benefit analysis if one were to look at the expenditures for this specific site.
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2.7 COST AND BENEFIT SUMARY
Include a summary of grant request and your project’s total costs and benefits below.
Grant Costs
(Summary of funds requested)
2.7.1 Grant Funds Requested in this application. $ 547,611
2.7.2 Other Funds to be provided (Project match) $ 711,324
2.7.3 Total Grant Costs (sum of 2.7.1 and 2.7.2) $ 1,258,935
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)
$ 2,617,585
2.7.5 Estimated Direct Financial Benefit (Savings) $ 1,317,300
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.)
$ 1,395,358
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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.
The project manager for the Kachemak Bay tidal power feasibility project will be Carey
Meyer. Mr. Meyer, a professional engineer, has been the Public Works Director for the City
of Homer since 1999. His resume and references are attached. We have established a team
of City and Tribal staff, contracted technical experts, and government agency personnel
who will all contribute to the project. This team is described in more detail below.
3.2 Project Schedule
Include a schedule for the proposed work that will be funded by this grant. (You may include a
chart or table attachment with a summary of dates below.)
The schedule below corresponds to project milestones and tasks.
1. Site reconnaissance (Phase 1) - Begin 7/10; Complete 9/10
a. Project partner kick-off meeting; coordinate data needs and establish data
transition plans – 7/10
b. Identify all existing relevant data such as bathymetry, ownership maps,
biological data, possible electrical grid interconnection points and other existing
infrastructure, navigational information, current flows, traditional knowledge,
etc. – 8/10
c. Develop the NOAA (CSDL) Cook Inlet model to incorporate historical current and
water level information and new Kachemak Bay bathymetry –9/10
d. Determine what data is necessary but does not yet exist, such as water currents,
land ownership, etc. – 9/10
e. Establish detailed monitoring plan to collect additional data to determine
current speeds, power density, biological and navigational impacts – 9/10
2. Feasibility Study (Phase 2) – Begin 8/10; Complete 5/11
a. Deploy current meters (acoustic Doppler current profilers—ADCPs) for at least
35 days to determine the tidal current signal at up to five sites – 12/10
b. Synthesize Kachemak Bay biological information to identify potential
environmental issues for tidal energy projects – 2/11
c. Update Cook Inlet/Kachemak Bay circulation model with current meter and
other data. Process data to determine power densities over time and space;
generate report, model, and graphical overlays – 3/11
d. Based on 2.d above, select optimal site(s); conduct technical and economic
analysis under various assumptions to determine power production costs,
output, and availability – 6/11
e. Identify necessary permits – 6/11
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f. Determine feasibility of overall project. If “not feasible,” terminate the project. If
“feasible,” continue with next step – 6/11
3. Conceptual Design (Phase 2) – Begin 6/11; Complete 11/11
a. Select an optimal design and system to harness tidal energy – 7/11
b. Develop a more precise construction budget – 9/11
c. Examine and select preferred institutional configuration(s) – 10/11
d. Draft and distribute final report – 11/11
3.3 Project Milestones
Define key tasks and decision points in your project and a schedule for achieving them. The
Milestones must also be included on your budget worksheet to demonstrate how you propose to
manage the project cash flow. (See Section 2 of the RFA or the Budget Form.)
See attached budget worksheet for more information on expected cash flow.
Milestone 1: Site reconnaissance – Begin 7/10; Complete 9/10
1. Project partner kick-off meeting; coordinate data needs and establish data
transition plans – 7/10
2. Collect all existing relevant data such as bathymetry, ownership maps, biological
data, possible electrical grid interconnection points and other existing
infrastructure, navigational information, current flows, traditional knowledge,
etc. – 8/10
3. Develop NOAA Cook Inlet model to incorporate historical current and water
level information and new Kachemak Bay bathymetry – 9/10
4. Determine what data is necessary but does not yet exist, such as additional
bathymetric maps, current flows, land ownership, etc. – 9/10
5. Establish detailed monitoring plan to collect additional data to determine
current speeds, power density, biological and navigational impacts – 9/10
Milestone 2A: Feasibility Study – Begin 8/10; Complete 5/11
1. Deploy Acoustic Doppler Current Profiling (ADCP) devices (stationary and
mobile) to determine tidal flows and current speeds over a range of time and
selected areas – 12/10
2. Conduct necessary biological studies to determine potential conflicts and
preliminary impacts to biota from tidal energy development – 2/11
3. Update circulation models. Process data to determine power densities over time
and space; generate report, model, and graphical overlays – 3/11
4. Based on 4. above, select optimal site(s); conduct technical and economic
analysis under various assumptions to determine power production costs,
output, and availability – 6/11
5. Identify necessary permits – 5/11
6. Determine feasibility of overall project. If “not feasible,” terminate the project. If
“feasible,” continue with next step – 6/11
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Milestone 2B: Conceptual Design – Begin 6/11; Complete 11/11
1. Select an optimal design and system to harness tidal energy – 7/11
2. Develop a more precise construction budget – 9/11
3. Examine and select preferred institutional configuration(s) – 10/11
4. Draft and distribute final report – 11/11
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.
The City of Homer will provide overall project management. To ensure that the project
proceeds as smoothly as possible, the City will contract out project coordination activities.
In its management role, the City will be working closely with representatives from other
government agencies (e.g., Alaska Department of Fish and Game and the National Oceanic
and Atmospheric Administration), along with leaders from Kachemak Bay tribal organiza-
tions (Seldovia Village Tribe and Port Graham Village Council), and with private
contractors (Re Vision Consulting, Terrasond, and Ocean Renewable Power Company). This
project team combines high-level national expertise and tremendous local knowledge in
this collaborative effort, and demonstrates how renewable energy can bring together
diverse and unique interests.
While Homer is the largest community on Kachemak Bay and connected by the main road
system, both Seldovia and Port Graham on the south shore of the Bay are not connected by
road, but are connected by power lines. Both of these smaller, more remote communities
are participating in this project and will provide local personnel, traditional knowledge for
siting and potential impacts, and local support for data collection. Based on a cursory
assessment of tidal flows in the region, it is also expected that these locations may have
some of the strongest currents, and thus, best opportunities for tidal power generation.
The NOAA National Ocean Service (NOS) Center for Operational Oceanographic Products
and Services (CO-OPS) will be the technical lead on producing the tidal energy information
for this project. COO-OPS produces tide and current tables for the nation and is the leading
authority in the country on tides and tidal currents. CO-OPS and its predecessors have been
providing tidal predictions to promote safe and efficient navigation since 1807. The CO-OPS
National Current Observation Program (NCOP) meets the nation's needs for current
observations, tidal current predictions, and other tidal current products. The products from
this program primarily support safe, efficient and environmentally sound marine
commerce, hazardous material response, research, and recreational users. NCOP has
recently completed a survey of tidal currents and calculated updated predictions for
inclusion in the US Tidal Current Tables at over 30 locations in Cook Inlet including the
entrance to Kachemak Bay.
CO-OPS will work with the NOS Coast Survey Development Laboratory (CSDL) to develop
and implement the Cook Inlet/Kachemak Bay circulation modeling efforts of this project.
With local coordination from the NOAA Kasitsna Bay Laboratory, NOAA ships recently
completed a high-resolution sea-floor mapping survey for Kachemak Bay under the
“Hydropalooza” project (www.hydropalooza.noaa.gov). This survey provides the detailed
bathymetry needed to develop an accurate ocean circulation model for the complex
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Kachemak Bay sea floor. CO-OPS will synthesize and analyze historical water level and
current data for the region, as well as make additional tidal current measurements with
acoustic Doppler current profilers (ADCPs). CSDL has done preliminary work on a Cook
Inlet circulation model that includes Kachemak Bay. This model will be further developed
with historical water level and current data, and then run to determine the additional
current measurements needed to produce the comprehensive, high-resolution circulation
model for the tidal energy assessment. The new model will provide the information needed
to determine site specific tidal power densities for all of Kachemak Bay. The model results
will guide site selection for further feasibility analyses. As a substantial additional benefit of
this project, the new circulation model will also be useful for other purposes, including spill
response, mariculture, fisheries management, local coastal planning and coastal ocean
research. NOAA/CO-OPS will be providing $650,000 of in-kind contributions to this effort
and have stated a strong interest in expanding their contribution to this type of work
throughout Alaska and nationally, with Kachemak Bay serving as a pilot project.
The NOAA Kasitsna Bay Laboratory, located near Seldovia on Kachemak Bay, will be
contributing staff time and facility support to assist with local coordination of NOAA field
work and modeling efforts for this project. The KBL will provide staff expertise in physical
oceanography and coordination with NOAA offices outside of Alaska.
Terrasond, a private consulting firm who works closely with NOAA on similar projects in
other locations, will provide technical assistance on the tidal energy characterization, both
in data analysis and application of the new circulation model to tidal energy assessment.
Terrasond is the technical lead on a similar tidal characterizations in upper Cook Inlet.
Terrasond, a private consulting firm who works closely with NOAA on similar projects in
other locations, and is the technical lead on a similar tidal characterization effort in upper
Cook Inlet, will also provide technical assistance on this effort to ensure consistency and
smooth transition for feasibility analysis of the data and application of the new model.
The Kachemak Bay Research Reserve, a state/federal partnership between NOAA and the
Alaska Department of Fish & Game—Sport Fish Division, will synthesize current data
available in Kachemak Bay and identify biological issues relevant to the project. KBRR staff
will be contributing vast expertise, credibility, and previous site-specific data collection and
processing from other projects, such as the proposed expansion of the Homer Harbor, that
will inform the technical reviews.
Re Vision Consulting will be involved in the feasibility analysis based on the data output
and model generated by NOAA. Re Vision is a nationally recognized firm on ocean energy
issues, working with the Electric Power Research Institute and many utilities throughout
the US, and will be the technical lead on the feasibility component of the project. ORPC, a
company that has been working in the emerging field of hydrokinetic energy since 2004,
including a project in Cook Inlet, will provide valuable local knowledge and expertise in
permitting analysis and other issues.
Homer Electric Association, the electric utility provider in the area, has expressed strong
interest in the proposed study and support for this grant application. Based on the outcome
of the feasibility study, we expect to have more substantive discussions with HEA to
conduct a system integration study and determine how this power can best fit on their grid.
See attached resumes and/or statements of work provided by possible project partners
and consultants. All of these individuals have assisted in the preparation of this application.
It should be noted, however, that no contracts have been offered or will be offered other
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than in accordance with City of Homer procurement policies. The City’s procurement
policies will also be followed in purchasing major equipment. Key procurement policy
provisions are included in this application as an attachment.
3.5 Project Communications
Discuss how you plan to monitor the project and keep the Authority informed of the status.
The City of Homer will comply with all AEA reporting requirements should a grant be
awarded.
This will include providing monthly and quarterly status reports by email to the AEA
Project Manager to update the Authority on the project’s progress, regulatory and
compliance issues, possible delays, and grant expenditures during the month; summarize
the progress made on grant tasks during the month; and identify any difficulties in
completing tasks or meeting goals or deadlines. We will include copies of any work
products due to the Authority during the reporting period.
Should questions, concerns, or issues arise during the implementation of the project that
would benefit from consultation with AEA, project staff will contact the AEA Project
Manager by phone or email. Site visits will be welcome. Because of the complex nature and
diverse entities involved in this project, we have explicitly identified a “project coordina-
tion” role that will involve both intra-project communications among participants as well
as external communications with AEA and others such as Homer, Seldovia, and Port
Graham residents and the general public.
3.6 Project Risk
Discuss potential problems and how you would address them.
There are three types of potential problems that we have identified: 1) Technical,
2) Institutional, and 3) Environmental.
Regarding technical challenges, we will have the most experienced and informed group in
the industry conducting the data collection effort, and have built in redundancy with
Terrasond providing back-up to NOAA where necessary. Both Terrasond and NOAA have
experience in the region doing precisely this type of work, so we believe we have addressed
this challenge by working with the best people in the field. By conducting a data recon-
naissance with multiple experts before a complete collection plan is developed and
implemented, we will provide checks and balances and create a more robust data collection
regimen that meets everyone’s needs, thus addressing the technical challenges by antici-
pating and thinking them through before we are out in the field. As well, collaboration with
the tribal governments in Seldovia and Port Graham will provide local knowledge and
support for the data operations that should help minimize technical challenges related to
working in the more remote and energetically dynamic parts of the Bay. In the long run,
past the feasibility stage proposed here, the technical challenges are essentially beyond the
scope of the project. The tidal energy industry is progressing significantly, with full-scale
projects now producing electricity in other parts of the world, and our assumption is that if
Kachemak Bay current speeds are within the range of expectations, the technology will
continue to improve and we will be able to effectively and efficiently produce power. In
fact, the construction cost estimates used here are based on other projects that are
expected to reduce their costs over time.
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Institutional problems could emerge as a result of the diverse interests and entities
involved in the project. As stated above, we have tried to anticipate and address this
challenge by explicitly planning for a project coordination role, starting with a project kick-
off meeting to bring all the participants together and develop a broad implementation plan
agreed to by all. We will continue to include Homer Electric in these discussions to keep
them informed of our progress and seek opportunities for collaboration. Finally, we will
explicitly address institutional options for development of tidal power in the feasibility
study to further anticipate and address any challenges this project may confront.
Environmental problems, if any, are not anticipated to occur during the reconnaissance and
feasibility study proposed here. However, in order to identify potential issues as early as
possible, we are working with the Kachemak Bay Research Reserve. During the proposed
project period, this will include a synthesis of current biological data for the impact region
and a report that will identify potential biological issues in the footprint of the potential
project areas assessed for feasibility. Any project recommended for construction would
require a full assessment of impacts on fish, marine mammals, sea birds, and other
biological resources during the final design phase.
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SECTION 4 – PROJECT DESCRIPTION AND TASKS
Tell us what the project is and how you will meet the requirements outlined in Section 2 of
the RFA.
The level of information will vary according to phase(s) of the project you propose to
undertake with grant funds.
If you are applying for grant funding for more than one phase of a project provide a
plan and grant budget form for completion of each phase.
If some work has already been completed on your project and you are requesting funding for
an advanced phase, submit information sufficient to demonstrate that the preceding phases
are satisfied and funding for an advanced phase is warranted.
4.1 Proposed Energy Resource
Describe the potential extent/amount of the energy resource that is available.
Discuss the pros and cons of your proposed energy resource vs. other alternatives that may be
available for the market to be served by your project.
The tidal power potential of Kachemak Bay is a little understood or studied resource. To
date there has been one study of the tidal potential, but only in the area of the Seldovia
harbor. This study was limited to looking at the resource from the perspective of a potential
tidal barrage or impoundment style installation. The purpose of this proposed study is to
examine the resource potential of tidal currents adjacent to Kachemak Bay communities
and then to analyze the technical and economic feasibility of the development of a tidal
project in these areas using modern hydrokinetic devices.
Cook Inlet has one of the highest tidal ranges in the world, with an extreme tidal range in
Kachemak Bay of up to 8.7 meters (28 feet). The high tides in the region generate
exceptional currents both within the bay and at the mouth of the bay near the villages of
Port Graham and Nanwalek. The extent, peak velocity, and average power densities of this
area are not known, but it is likely that there exist adequate currents for tidal power
generation near the Homer Spit, Seldovia Bay, Port Graham and Nanwalek, as well as in
other locations in the bay. The point of this feasibility study is to quantify that potential and
determine if viable currents exist in areas that have the necessary components for an
economically viable tidal power installation.
The components needed to assess tidal power project feasibility include adequate tidal
current energy, construction issues (depth, substrate, etc.), lack of conflicts with other uses,
and reasonable transmission distances to existing power infrastructure. The feasibility
study will identify realistic boundaries for the generation potential within the region and in
specific sites. While this project will focus on four specific sites, it should be noted that
NOAA’s data collection and modeling effort will cover all of Kachemak Bay and the model
information could be applied in the future to assess tidal energy at virtually any specific site
within the Bay. This will provide accurate information for any future efforts to quantify the
tidal power potential of additional sites in the region.
Currently natural gas (with some conventional hydropower) is the main fuel source for the
generation of power purchased by Homer Electric Association and sold to its members.
While natural gas has offered a stable price in the past, the contract for natural gas that
supplies HEA's electricity is set to expire in 2010, at which point prices for this power will
increase an unknown amount and other alternatives will be needed. Natural gas fired power
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plants also emit CO2 which may make the technology subject to future carbon taxes and
thus higher prices.
Bradley Lake Hydro, situated just above Kachemak Bay, is the largest hydroelectric plant in
Alaska. This facility is run by HEA, which owns 12% of the power it produces. As a hydro
plant, Bradley Lake has the potential to be a “resource following” generation facility,
ramping power up and down with (precisely predicted) tidal resource availability, thus
reserving the capacity of the reservoir over a longer period of time and allowing wind and
tidal projects to be efficiently absorbed and utilized by the local grid infrastructure.
Wind projects are also being studied on the lower Kenai Peninsula, including in the area
near the tip of the peninsula and the Gulf of Alaska near Nanwalek. Wind energy projects
would provide a resource that is clean like tidal power, but not as predictable. While wind
power can be economical, lack of predictable output minimizes its value in terms of energy
capacity. Tidal power, due to its predictable nature, can be used not only to offset energy
use, but also to offset capacity for a given utility and thus is potentially much more valuable
as a resource than wind power. As the technology commercializes, tidal power promises to
become price competitive with wind power as well.
4.2 Existing Energy System
4.2.1 Basic configuration of Existing Energy System
Briefly discuss the basic configuration of the existing energy system. Include information about
the number, size, age, efficiency, and type of generation.
Railbelt Energy Project – N/A
4.2.2 Existing Energy Resources Used
Briefly discuss your understanding of the existing energy resources. Include a brief discussion of
any impact the project may have on existing energy infrastructure and resources.
Currently the energy used in the Homer Electric Association service area is purchased by
contract from Chugach Electric. HEA is contractually obligated to purchase Chugach power
until December 31, 2013. Chugach Electric's energy comes primarily from the Beluga
natural gas plant and the gas that supplies this plant comes by contract from Marathon Oil.
The contract for this natural gas will expire in 2010, at which time Chugach will be
renegotiating its contracts to purchase gas and HEA’s electricity purchase price will also be
impacted. HEA has stated that this dynamic is among the factors leading them to pursue
additional resources for electricity generation. Both Chugach and HEA also receive some
power from the state-owned Bradley Lake hydro facility on the south side of Kachemak Bay.
The feasibility phase of this project will preliminarily address potential interconnection
issues to integrate tidal power onto the Railbelt grid. Currently there is a 25KV transmission
line that crosses Kachemak Bay from the end of the Homer Spit to McKewan flats and on to
Seldovia. Tying into this transmission line would allow for energy on the scale of this project
and perhaps larger to be transmitted onto the local grids. From Seldovia to Port Graham
and Nanwalek there is only a single-phase transmission line. This line would need to be
upgraded to a 3-hase line in order to accommodate more significant power transmission.
HEA is already looking into funding for such an upgrade to allow for commercial interests
that require three phase power. This transmission line would also be essential for the
transmission of power from a tidal installation in this area.
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As well, if a three-phase transmission line is not constructed on the south side of Kachemak
Bay, it may make more sense for the communities to generate tidal power for local
consumption to replace both electricity and heating fuel that is currently “imported.”
Heating fuel especially is quite expensive because these communities are not on the road
system, so the value of locally produced electricity used for heat that replaced fuel oil and
propane would be substantial. We have not explicitly included this option in our economic
analysis but if the tides prove feasible, this could improve the project economics for both
the smaller Kachemak Bay communities.
4.2.3 Existing Energy Market
Discuss existing energy use and its market. Discuss impacts your project may have on energy
customers.
Homer, Seldovia, Port Graham and Nanwalek all fall within the Homer Electric Association
service area. The majority of power sold here is purchased by HEA from Chugach Electric,
whose current natural gas contracts are set to expire in 2010. At that time both the price
and availability of power for HEA members will be less certain. While HEA is investigating
small scale hydro power and wind projects, there is a need for more project development to
provide stable and economical electrical service for HEA customers into the future. This
tidal project could provide an economical, stable, and flat priced alternative power source
for this market.
Additionally, it is possible that tidal generation in the selected areas could be smaller scale
for primarily local use. Especially for the more remote communities on the south side of
Kachemak Bay (Seldovia, Port Graham, and Nanwalek), where the unit price of electricity is
higher (per HEA tariff) and diesel fuel is much more expensive because of no road access, it
may be possible for tidal energy to replace electricity and heat currently purchased by the
communities. For example, transmission constraints may make it difficult and too
expensive for large scale tidal development in, say, Port Graham, but perhaps the locally
available resource could be developed to power and heat the entire village, including the
Tribal fish hatchery and other commercial applications. A village-scale (as compared to
utility-scale) hydrokinetic device and construction project may be the most appropriate in
certain locations to minimize ecological impact and shorten the development timeline.
4.3 Proposed System
Include information necessary to describe the system you are intending to develop and address
potential system design, land ownership, permits, and environmental issues.
4.3.1 System Design
Provide the following information for the proposed renewable energy system:
A description of renewable energy technology specific to project location
Optimum installed capacity
Anticipated capacity factor
Anticipated annual generation
Anticipated barriers
Basic integration concept
Delivery methods
At this time there are several companies developing tidal hydrokinetic technologies for the
tidal energy market. These include axial flow turbines such as those under development by
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Verdant Power, Lunar Energy, Open Hydro, Voith Hydro, and Marine Current Turbines (MCT),
as well as cross flow turbines being developed by Ocean Renewable Power Company and New
Energy Corporation, among others. New Energy Corporation currently has an in-stream
hydrokinetic device installed on the Yukon River in interior Alaska, while ORPC is developing
two Alaska projects, one in Northern Cook Inlet and one on the Tanana River at Nenana, both
slated for installation in 2011. At this stage, this proposed project is not committed to a
particular technology but will study the development and commercialization of these tidal
technologies as part of the feasibility study. For purposes of economic feasibility, we will
select a particular technology and apply power curves and related information to determine
projected production costs. We will also consider site specific issues that may assist in
choosing a particular turbine and installation system at each of the four selected locations.
For example, different depths at selected locations may lead to different turbines and system
designs, or similarly, differential ease and cost of access to on-shore transmission lines may
dictate turbine selection and system design. One of the ongoing questions along these lines is
if Kachemak Bay—or specific locations within the Bay—are sufficiently ice-free to consider a
floating pontoon structure, or if it will be necessary to submerge the device. It is anticipated
that by the time this project has moved into a Final Design phase in 2011–2012, significant
advances, modifications, and proving out of these various technologies will have taken place,
which will make for more prudent decisions in technology selection.
The optimum installed capacity of tidal systems will be determined in the feasibility phase
based on resource availability, and the ability of the nearby power infrastructure to utilize or
transmit the energy. It is anticipated that individual units ranging in size from 250kW to 1MW
will be feasible in this area with possible build-outs to 5MW or more being conceivable. As
these tidal systems increase in size, this will significantly improve the project economics from
the calculations here. For example, MCT’s projected capital costs per kW installed are
reduced by 50% when expanding from a 1.2 MW project installed in 2007 and a 10 MW
project currently under installation and slated for commissioning in 2009.
The anticipated capacity factor will depend on the final technology selection but capacity
factors of around 30% in a 6 knot current are typical of tidal technologies under development.
It should be noted that while 30% capacity factor is similar to wind energy, tidal energy has
the distinct advantage of being predictable and thus, can serve as a component of baseload
energy.
At this capacity factor a 250KW turbine would produce 657MWh per year. A 1MW turbine
would produce 2,628 MWh per year. For economic calculation purposes here, we have
selected a single 250 kW turbine for simplicity, but it is expected that if this “proof of concept”
project was successful, there would be additional projects installed in Kachemak Bay over
time.
Anticipated barriers:
Confirming adequate current velocities exist in the project areas.
Confirming that it is possible to economically develop the sites that have adequate
currents.
Assuring that these tidal installations will not interfere with current uses including
subsistence and commercial fisheries and marine navigation.
Assessing the local environmental impact of potential tidal technologies in respect to their
effects on marine life including fish and marine mammals.
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Basic Integration Concept:
The power produced by this tidal project would be integrated into the local grid via the 25KV
transmission line at the end of the Homer spit or in Seldovia. In Port Graham or Nanwalek
integration of the power would currently be limited to single phase transmission capacity. As
mentioned earlier there is the potential for this service to also be upgraded to a three phase
25KV transmission line in the near future that would allow additional power to be fed north
into the railbelt grid. The power would be integrated into the grid at a capacity that is
manageable and dispatchable in accordance with the interconnect study to be completed in
this feasibility study phase of the project.
If a three-phase transmission line is not constructed to Port Graham and Nanwalek, it may
make more sense for the communities to generate tidal power for local consumption to
replace both electricity and heating fuel that is currently “imported.” Heating fuel especially
is quite expensive because these communities are not on the road system, so the value of
locally produced electricity used for heat that replaced fuel oil and propane would be
substantial, and system integration costs would be much reduced. This would also limit the
amount of power generated but also reduce the cost. These trade-offs will be examined in the
feasibility study.
Delivery Methods:
Being on the road system and having a deep water port, Homer is capable of receiving system
components via overland or marine shipping. From there items can be either shipped or put
on the regular Alaska Marine Highway ferry service to Seldovia. Port Graham and Nanwalek
would require utilizing local marine freight companies to ship items from Homer. Local
marine service companies would also be used for system deployment.
It is anticipated that the power itself would be delivered from the hydrokinetic marine
installation—either near surface or submerged—to shore via underwater cable. This is a well
understood technology that is already deployed in the area with local expertise to support
such installation.
4.3.2 Land Ownership
Identify potential land ownership issues, including whether site owners have agreed to the project
or how you intend to approach land ownership and access issues.
The City of Homer intends to utilize City property, utility easements, and rights-of-way
whenever possible for this project. The City of Homer does have title to submerged lands
adjacent to the Homer spit, which is a likely location for future development. If access is
needed over private property, the City intends to work with willing landowners to secure the
proper easements. At this level of feasibility study, there will not be much, if any, need to
access private property. Similarly in the communities of Seldovia and Port Graham, it is not
expected that we will need any access to private property. However, for placement of the
stationary ADCP devices at the bottom of Kachemak Bay, we will likely need land use permits
from the state (discussed below). Land ownership or access issues for any future project will
be explicitly considered in site selection and more fully addressed in the feasibility study. Site
selection for full feasibility analysis will likely be constrained, in part, by access to grid
interconnection, which should minimize land ownership challenges. In general, because of the
nature of the project, it is not land use-intensive and we do not expect to have problems or
issues with this aspect.
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4.3.3 Permits
Provide the following information as it may relate to permitting and how you intend to address
outstanding permit issues.
List of applicable permits
Anticipated permitting timeline
Identify and discussion of potential barriers
The City of Homer has extensive experience permitting major public works projects, including
those involving submerged lands, such as the Homer deep water dock facility. If the proposed
tidal power project is determined to be feasible and the City pursues construction funding, we
will undertake and complete all required permitting, in accordance with the Alaska Coastal
Zone Management Act.
For these reconnaissance and feasibility stages of the project, we anticipate needing to secure
a land use permit from Alaska Department of Natural Resources to access the ocean floor. We
have contacts with this agency and do not anticipate any problems securing this permit. The
agency has previously indicated support for this type of project.
An important part of the feasibility study will be to identify all necessary permits and the
required path, timeline, and expected costs for securing them. We have explicitly budgeted
time and money in the feasibility study to address these concerns. Primary among the permits
we will need to acquire will be the Federal Energy Regulatory Commission (FERC)
preliminary permit. The outcome of the feasibility study will provide the “go/no go” decision
point for pursuing this permit, on which all else will depend.
If a tidal energy project is determined feasible and worthy of pursuit, other permits we expect
to need include the following:
Fish collection permit – Alaska Department of Fish & Game (ADF&F)
Fish habitat permit – ADF&G
Title 10 permit – US Army Corps of Engineers
Coastal Zone Management: local support will facilitate permit issuance if required
Coast Guard notification: Will be necessary to address potential navigational issues and
inform waterway users of installation
An Alaska DNR Water Rights permit should not be necessary, as the proposed project would
be constructed in salt water rather than fresh water.
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4.3.4 Environmental
Address whether the following environmental and land use issues apply, and if so how they will be
addressed:
Threatened or Endangered species
Habitat issues
Wetlands and other protected areas
Archaeological and historical resources
Land development constraints
Telecommunications interference
Aviation considerations
Visual, aesthetics impacts
Identify and discuss other potential barriers
Because of the expected location of a tidal energy device, i.e., under the water in Kachemak
Bay, minimal impact in regard to avian, telecommunications, archaeological, visual and
aesthetic issues would be expected. It should be noted that the City of Homer has title to
submerged lands near the Homer Spit that may be good sites for tidal energy production,
which will simplify some of these potential land use issues. The primary concerns will likely
be biological and habitat, as Kachemak Bay is a State critical habitat area and a designated
National Estuarine Research Reserve. The bay supports significant marine, avian, and
terrestrial wildlife species; therefore the proposed feasibility study will consider the potential
environmental issues of concern to those species. Below is a list of species of importance in
Kachemak Bay.
SPECIES AND STATUS OCCURANCE RANGE IN ALASKA
Endangered
Blue whale (Balaenoptera musculus) Rare Bering Sea, Gulf of Alaska, N. Pacific
Bowhead whale (Balaena mysticetus) Regular Chukchi Sea, Beaufort Sea
Cook Inlet beluga whale (Delphinapterus leucas) Regular Cook Inlet
Fin whale (Balaenoptera physalus) Regular
Chukchi Sea, Bering Sea, Gulf of Alaska, N.
Pacific
Humpback whale (Megaptera novaeangliae) Regular Bering Sea, Gulf of Alaska, N. Pacific
Leatherback sea turtle (Dermochelys coriacea) Rare Gulf of Alaska
North Pacific right whale (Eubalaena japonica) Rare Bering Sea, Gulf of Alaska, N. Pacific
Sei whale (Balaenoptera borealis) Rare Gulf of Alaska, N. Pacific
Short-tailed albatross (Phoebastria albatrus) Rare Bering Sea, Aleutian Islands, Gulf of Alaska
Sperm whale (Physeter macrocephalus) Regular Bering Sea, Gulf of Alaska, N. Pacific
Steller sea lion (Eumetopias jubatus) west of 144° Regular Bering Sea, N. Pacific
Threatened
Green sea turtle (Chelonia mydas) (incl. agassizi) Rare Gulf of Alaska
Loggerhead sea turtle (Caretta caretta) Rare Gulf of Alaska
Northern sea otter (Enhydra lutris kenyoni) Regular Aleutian Islands, Alaska Peninsula, Kodiak Island
Spectacled eider (Somateria fischeri) Rare Western and Northern Alaska (coastal)
Steller sea lion (Eumetopias jubatus) east of 144° Regular Bering Sea, Gulf of Alaska, N. Pacific
Steller's eider (Polysticta stelleri) Regular Southwestern, Western, and Northern Alaska
Candidate
Kittletz’s Murrelet (Brachyramphus brevirostris) Regular Southern, Northwestern Alaska (coastal)
It is expected that additional biological studies, evaluations, and reviews will be necessary
before full construction. Such activities will be clarified in the feasibility report, including
identification of permits that may be required for the identified design.
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4.4 Proposed New System Costs and Projected Revenues
(Total Estimated Costs and Projected Revenues)
The level of cost information provided will vary according to the phase of funding requested and
any previous work the applicant may have done on the project. Applicants must reference the
source of their cost data. For example: Applicants Records or Analysis, Industry Standards,
Consultant or Manufacturer’s estimates.
4.4.1 Project Development Cost
Provide detailed project cost information based on your current knowledge and understanding of
the project. Cost information should include the following:
Total anticipated project cost, and cost for this phase
Requested grant funding
Applicant matching funds – loans, capital contributions, in-kind
Identification of other funding sources
Projected capital cost of proposed renewable energy system
Projected development cost of proposed renewable energy system
The total anticipated cost of this project through construction of a hypothetical 250 kW
turbine is estimated to be $2,617,585. The cost for the first two phases of the project
proposed here (reconnaissance and feasibility/conceptual design) is $1,258,935. The request
for funding from AEA for this part of the project comes to $547,611. Applicant matching funds
amount to $711,324 in in-kind contributions from NOAA, Re Vision Consulting, ORPC, and the
City of Homer. Total anticipated costs through construction of a 250 kW turbine are based on
published capital and development costs of a 1 MW project completed in 2007 by Marine
Current Turbines in the United Kingdom (http://www.all-energy.co.uk/UserFiles/File/
2007PeterFraenkel.pdf). Of the two phases proposed here, Phase 1 project costs are $161,071
(AEA requested) and $60,120 (matching) and Phase 2 project costs are $386,540 (AEA
requested) and $651,204 (matching).
If the resource assessment and feasibility study determine that there are viable tidal power
projects in Kachemak Bay, there are several options for future funding. These options will
depend in large part on who actually develops the projects, which could be the local utility
(HEA), independent power producers, local governments, or a combination of the above.
Certainly federal and state grants will be investigated, but other possibilities include local
bonds, local dedicated revenue generation, conventional capital markets and/or venture
capital. Federal production tax credits for renewable energy projects currently in place, as
well as expected future green energy incentives and/or carbon taxes for fossil fuel generation,
would also be incorporated into a funding package for project development and improved
economic returns.
The estimated capital cost of this project is based on actual installed costs of tidal pilot
projects. These costs apply to installations in the 1MW range, but it is anticipated that
reduced efficiencies from diseconomies of scale for smaller 250kW systems will be offset by
overall costs being driven down by the commercialization of these technologies. Capital costs
for a 250 kW system for this project are estimated to be approximately $816,417. This would
make the balance of the project cost, including design, another $542,233 with the overall
project development cost, including the feasibility study, totaling $1,801,168. With future and
likely larger systems, it is expected that the development costs per unit energy would
significantly decrease, both in absolute terms and in relation to per unit capital costs.
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4.4.2 Project Operating and Maintenance Costs
Include anticipated O&M costs for new facilities constructed and how these would be funded by
the applicant.
(Note: Operational costs are not eligible for grant funds however grantees are required to meet
ongoing reporting requirements for the purpose of reporting impacts of projects on the
communities they serve.)
While it is difficult to estimate O&M for the different technologies that will be considered for
this project, based on industry expectations a very conservative value would be $.035 per
kWh produced for small-scale projects such as a 250 kW turbine. This would likely include at
least an annual inspection, servicing and replacement of worn parts. For a 250 kW system
with a 30% capacity factor, this would result in $22,995 of annual O&M expenditures. It is
reasonable to assume that as the size of the project and amount of energy generated
increased, the per unit O&M cost would decline as well. Such costs would be incorporated into
the power sales and system servicing agreements, which would vary depending on the
institutional and business structure that eventually emerges to develop these projects.
We are requesting no O&M costs for this resource assessment and feasibility project.
4.4.3 Power Purchase/Sale
The power purchase/sale information should include the following:
Identification of potential power buyer(s)/customer(s)
Potential power purchase/sales price - at a minimum indicate a price range
Proposed rate of return from grant-funded project
The potential buyers for the power purchased from this project include all of the Railbelt
utilities. The most likely, however, would be Homer Electric Association since the power
would be tied into the HEA service area. Current avoided cost rates for HEA are $0.04043 per
kWh, though this is projected to increase in direct proportion to Chugach Electric's avoided
cost which is forecast to reach $0.109 per kWh by 2012 when current contracts for natural
gas purchase are no longer in place and both new fuel and new generation hardware will be
necessary. This would be the more likely time frame for project implementation and the
beginning of power sales to HEA.
As stated several times above, it is also possible—and this will be considered explicitly in the
feasibility study—that the more remote villages in Kachemak Bay may want to purchase the
power for local use, and not sell back to HEA. This will likely replace not just conventional
electricity use but heating fuel and eventually, if electric vehicles become more widespread,
liquid transportation fuels as well. In these communities, because they are not road-
connected, liquid fuels require expensive marine transport from Homer. If a relatively
inexpensive energy source such as tidal power can be harnessed, there will likely be strong
interest in maximizing local use of this energy, especially as a replacement for imported and
expensive liquid fuels. Currently liquid fuels sell for over $5.50 per gallon for gasoline and
more for diesel.
Costs per kWh of power produced by tidal turbines are highly variable and in some cases
theoretical for the various technologies. Manufacturers predict eventual commercialization
and economies of scale from larger build outs bringing power into the realm of $0.08 per
kWh. On the scale and timeframe of this project, which would likely be a smaller capacity
installation due to existing energy infrastructures, the cost of power produced would be
targeted around $.11-$.15 per kWh assuming a conservative 20 years of operation before
major upgrades are needed. With any increase in projected avoided cost and renewable tax
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credits or green power incentives this will lead to a profitable energy source by the time of its
installation in 2012 or soon thereafter. As well, once proven out, larger projects following on
the heels of a pilot project such as that described here would likely realize increased
efficiencies, improved economies of scale, and lower per unit production costs.
4.4.4 Project Cost Worksheet
Complete the cost worksheet form which provides summary information that will be considered in
evaluating the project.
See attached cost worksheet.
Capital cost based on Marine Current Turbines published figures ($5,377/kW installed).
Annual O&M cost based on industry projections plus $0.01/kWh for conservative estimate of
smaller system (assumed total of $0.035/kWh).
Fuel displacement estimated based on 30% capacity factor of 250 kW turbine (657,000 kWh
annually).
Price of displaced fuel based on Chugach Electric projection of $0.109/kWh avoided cost in
2012.
Alaska public benefits include value of Kachemak Bay tidal circulation flow model to oyster
mariculture, fisheries management, oil spill response, local planning and coastal science;
along with O&M service contracts to Alaska marine energy firms and the portion of the
reconnaissance and feasibility study funds that will be awarded to Alaska firms.
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SECTION 5– PROJECT BENEFIT
Explain the economic and public benefits of your project. Include direct cost savings, and
how the people of Alaska will benefit from the project.
The benefits information should include the following:
Potential annual fuel displacement (gal and $) over the lifetime of the evaluated renewable
energy project
Anticipated annual revenue (based on i.e. a Proposed Power Purchase Agreement price,
RCA tariff, or cost based rate)
Potential additional annual incentives (i.e. tax credits)
Potential additional annual revenue streams (i.e. green tag sales or other renewable
energy subsidies or programs that might be available)
Discuss the non-economic public benefits to Alaskans over the lifetime of the project
The project proposed here is essentially a resource assessment and feasibility study of
Kachemak Bay’s tidal energy potential. The communities of Homer, Seldovia and Port Graham
are collaborating on this effort, along with project partners NOAA, ADF&G, Terrasond, Re
Vision Consulting, and ORPC. In-kind contributions to the project total $711,324.
If the feasibility study determines positive project economics, we are proposing the
construction of a 250 kW tidal turbine to demonstrate “proof of concept.” At 30% capacity
factor with 6 knot peaking tidal currents, this amounts to 657 MW of electricity generated
annually. Chugach Electric has stated their expected avoided cost in 2012, once current
natural gas contracts run out, will be at least $0.109. The expected cost of replacing aging
capital may increase this figure, but for conservative estimation of benefits, we have used this
avoided cost value to calculate $71,613 in annual benefits derived from power sales and fuel
displacement. We have reduced this value by $5,748 annually because of the assumed O&M
component (25% of total) required to purchase parts and supplies. Assuming a 20-year
lifetime of the project yields $1,317,300 in net revenue. If larger projects come on-line over
time, the net revenues will be significantly more.
Additional public benefits will include $114,376 in contracts to Alaskan businesses in the
feasibility study. Through project construction an additional estimated $336,062 in contracts
to Alaskan businesses will be expected.
The operation and maintenance of the 250 kW turbine is expected to cost $22,995 annually
($0.035/kWh and 30% capacity factor for production). Of these operation and maintenance
costs, an estimated 25% will be for parts and supplies and the remaining 75% of this will be
in contractual costs to Alaskan marine service companies amounting to $17,246 annually.
Over the 20 year lifetime of the project this will total $344,920. It is assumed that the parts
and supply costs will not be spent in Alaska (and thus, are not included as public benefits), but
the contractual costs will go to an Alaska company, and are considered public benefits.
Additional public benefits associated with this project include ancillary uses of the tidal
circulation flow model developed by NOAA, which will cover all of Cook Inlet. Beyond the
tidal energy assessment, the model will support oyster mariculture, fisheries management, oil
spill response, local coastal planning, and coastal climate change research. Kachemak Bay is
world renowned for its oysters. This mariculture industry is valued at approximately
$1 million annually and the Bay also supports extensive recreational and subsistence clam
harvest. We estimate that improved management associated with this model will result in
increased value of $25,000 annually. Over a 20-year lifecycle of the installed project, this
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would amount to $500,000. In terms of improved spill response, Kachemak Bay is considered
a port of refuge for damaged vessels in Cook Inlet. This was dramatically demonstrated three
years ago when an oil tanker docked in Nikiski suffered damage and required towing to
Homer. This situation did not result in any oil spilled, but publicly highlighted the need for
improved spill response, including better understanding of the tides and currents in
Kachemak Bay. Given the increased interest in oil exploration in the region, it is expected that
an improved understanding of tides and currents in Kachemak Bay could result in improved
spill response and reduced harm to existing natural resources. Assuming even one fairly large
spill during the 20 year lifetime of the proposed project, this can be reasonably estimated to
provide $100,000 of additional public benefit. Circulation information will also support local
planning and scientific studies in the region to improve resource management.
It is widely recognized that Alaska has some of the best potential for generating tidal energy
of anywhere in the world. This proposed Kachemak Bay project, in combination with other
nearby initiatives such as those in upper Cook Inlet, could help to establish an Alaska-based
industry and global leadership in tidal power. In addition to the tidal energy potential offered
by Kachemak Bay’s large tides, the feasibility of this project is enhanced by having a location
near population centers and the electrical grid. Access to the road system will also help
reduce early development costs.
An initial investment of less than $550,000 by AEA in this project will allow a leveraging of an
additional $711,324 through direct project cost-share. This is a substantial public benefit that
will be made possible with AEA’s support for this project.
Renewable Energy Fund
Grant Application Round 3
AEA10-015 Grant Application Page 25 of 28 10/7/2009
SECTION 6– SUSTAINABILITY
Discuss your plan for operating the completed project so that it will be sustainable.
Include at a minimum:
Proposed business structure(s) and concepts that may be considered.
How you propose to finance the maintenance and operations for the life of the project
Identification of operational issues that could arise.
A description of operational costs including on-going support for any back-up or existing
systems that may be require to continue operation
Commitment to reporting the savings and benefits
Proposed business structure. If the proposed economic and technical analyses indicate that
construction of tidal energy production devices merits further consideration, the feasibility
study will examine institutional and business structures that best take advantage of the
resource development opportunities. Possibilities include:
Collaboration with, or “hand-off” to Homer Electric Association;
Solicitation of independent power producers (IPP) and/or technology providers
such as Ocean Renewable Power Company (who is engaged in a similar project in
upper Cook Inlet and could perhaps generate synergies with this proposed effort);
Some combination of utility and IPP and local government;
Small-scale development, perhaps led by local government and/or other local
entities, designed to meet local needs, perhaps including liquid fuel substitution, and
avoid transmission upgrades.
An important component of the feasibility study will be to more thoroughly investigate and
compare these options. Because of the site specific nature of the resource and the unique
infrastructure characteristics and location of each community, it is possible that different
locations may require different institutional/business structures to best take advantage of
the tidal development potential. For example, it may be preferable to consider large scale
tidal development near Homer to “feed” the railbelt grid, while smaller scale projects that
meet local needs may be preferable on the south side of Kachemak Bay where transmission
constraints currently exist and both electricity and liquid fuels are incrementally more
expensive.
Finally, as discussed above, if the resource and technology to harness the resource proves
viable, it is likely that much larger systems than the 250 kW turbine proposed here will
emerge. This will improve the project economics, shorten the payback, increase
competitiveness, and generally alter the dynamic and status quo of power generation in the
region. At a larger scale, and in combination with similar projects in Cook Inlet, a tidal
energy industry would develop and perhaps require different business models.
Financing maintenance and operations. (Not applicable to this application)
Operational issues that could arise. (Not applicable to this application)
Operational costs/backup of existing systems. (Not applicable to this application)
Commitment to reporting the savings and benefits. (Not applicable to this application)
Renewable Energy Fund
Grant Application Round 3
AEA10-015 Grant Application Page 26 of 28 10/7/2009
SECTION 7 – READINESS & COMPLIANCE WITH OTHER GRANTS
Discuss what you have done to prepare for this award and how quickly you intend to proceed
with work once your grant is approved.
Tell us what you may have already accomplished on the project to date and identify other grants
that may have been previously awarded for this project and the degree you have been able to
meet the requirements of previous grants.
The City of Homer was pleased that our proposed Kachemak Bay tidal power feasibility
project was recommended for funding by the Alaska Energy Authority for FY 2009. Despite
the fact that the Legislature did not appropriate sufficient funds to cover all the projects that
were approved, including this one, we have remained hopeful that our project ultimately
would be funded. We have continued to discuss the project with potential partners
(particularly NOAA) and are ready to proceed quickly if this application is approved.
Assuming a grant award is announced before the end of June, we would hold the first
meeting of partners in July 2010 to begin the site reconnaissance phase of the project. The
feasibility study phase would begin in August 2009, beginning with collection of data from
Acoustic Doppler Current Profiling devices. NOAA will take the lead in the data collection
effort and has expressed strong commitment to do so.
SECTION 8– LOCAL SUPORT
Discuss what local support or possible opposition there may be regarding your project. Include
letters of support from the community that would benefit from this project.
The proposed Kachemak Bay tidal power feasibility project has been the subject of
discussion in Homer and other Kachemak Bay communities for more than a year, since the
City of Homer began work on our first AEA application in fall 2008. During this time, we
have not heard any opposition expressed. While there are concerns about possible impacts
on fish and other marine life from underwater turbines, this project will not be constructing
turbines but will help to evaluate the risks involved. Clearly this information (feasibility
study) will be of value in determining whether to proceed with a construction project.
In general there is strong support in the Homer community for research and development
in the realm of renewable energy. Evidence of this was seen in the high level of public
involvement and testimony supporting adoption of the City of Homer Climate Action Plan in
2007 and in the recent approval of a wind energy ordinance (the first such local ordinance
in Alaska) by the Homer City Council.
Letters of support from project partners, including the communities of Seldovia, Port
Graham, and Nanwalek, are attached.
Renewable Energy Fund
Grant Application Round 3
AEA10-015 Grant Application Page 27 of 28 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
See attached grant budget form.
This proposal requests $161,071 for Phase 1/Milestone 1 and $386,540 in Phase
2/Milestones 2A and 2B, for a total of $547,611 from AEA. All project partners combined
will be contributing $60,120 in Phase 1 and $651,204 in Phase 2, for a total of $711,324 of
cost-share. This amounts to a total project cost of $1,258,935.
Within Phase 1, requested funds include $22,875 for travel, meals, and per diem. This will
be used to bring all project partners together for a project kick-off meeting in Homer, and
for ongoing costs for the NOAA researchers who will remain in the area for data
reconnaissance and background research.
Phase 1 requested funds for direct labor include $16,980 for City of Homer personnel
involved in project management and financial reporting.
The remainder of the AEA requested funds for Phase 1 are for contractual expenses for
NOAA’s information technology support ($75,000); Re Vision Consulting ($6,440); Seldovia
and Port Graham personnel ($3,000 total); KBRR ($12,312); and Terrasond ($4,264). An
additional $14,500 is allocated to the City of Homer to hire a project coordinator on a
contract basis.
Cost-share contributions in phase 1 include $50,000 of donated labor from NOAA
personnel and $10,120 in donated labor from the City of Homer.
Within Phase 2, AEA requested funds include $80,000 in travel, meals, and per diem for
NOAA researchers to conduct 35 days of field work in Kachemak Bay; $75,000 for NOAA
vessel support for field work and for NOAA IT support in data analysis; $124,348 in
contractual for Re Vision Consulting; $9,000 in contractual for Seldovia and Port Graham
personnel; $19,152 in contractual to KBRR; $5,400 in contractual for ORPC; and $3,764 in
contractual for Terrasond. $47,300 is allocated to the City of Homer for a project
coordinator (contract). The budget also includes $2,096 for materials and supplies.
Cost-share contributions in phase 2 include $300,000 in equipment (ADCP devices) from
NOAA; $200,000 to install and use the ADCP devices from NOAA; $130,000 in labor from
NOAA personnel who will be collecting and processing the tidal data; $5,600 in donated
labor from Re Vision Consulting; $1,800 in labor from ORPC; and $13,804 of labor from the
City of Homer for project management.
Renewable Energy Fund
Grant Application Round 3
AEA10-015 Grant Application Page 28 of 28 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 Walt Wrede
Signature
Title City Manager, City of Homer
Date November 10, 2009