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HomeMy WebLinkAbout01 FINAL Kenny Lake GrantApplication Renewable Energy Fund Round 3 Grant Application AEA 10-015 Application Page 1 of 13 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 2 of 13 10/7/2009 SECTION 1 – APPLICANT INFORMATION Name (Name of utility, IPP, or government entity submitting proposal) Copper River School District Type of Entity: Public School Mailing Address PO Box 108 Glennallen, AK 99588 Mailing Address PO Box 108 Glennallen, AK 99588 Telephone 907-822-3234 Telephone 907-822-3234 Telephone 907-822-3234 1.1 APPLICANT POINT OF CONTACT Name Tim Hand Title Maintenance Mechanic II Mailing Address PO Box 108 Glennallen, AK 99588 Telephone 907-822-3234 Telephone 907-822-3234 Telephone 907-822-3234 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); 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 ) *Signed resolution to be provided after board meeting, no later than December 1, 2009. 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 3 of 13 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) Kenny Lake School Biomass-Fired Heating System 2.2 Project Location – Include the physical location of your project and name(s) of the community or communities that will benefit from your project. The Kenny Lake School is located at Mile 5 of the Edgerton Highway in Copper Center, Alaska, which is off the Richardson Highway between mileposts 101 and 105. Copper Center and the nearby community of Glennallen will benefit from this woody biomass renewable energy project. 2.3 PROJECT TYPE Put X in boxes as appropriate 2.3.1 Renewable Resource Type Wind X 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) Reconnaissance Design and Permitting Feasibility X Construction and Commissioning Conceptual Design 2.4 PROJECT DESCRIPTION Provide a brief one paragraph description of your proposed project. The Copper River School District (CRSD) plans to install a wood pellet-fired heating system at the Kenny Lake School. With this application, CRSD is requesting grant monies for Phase IV – Construction. This will include purchase of pellet-fired boiler, pellet storage bin, delivery system, and boiler building construction. Public bid solicitations will be advertised for purchase of the wood pellet boiler system and facility infrastructure construction. Local contractors will be targeted. 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 project benefits are multi-faceted. Economic benefits: • Save the CRSD money on heating costs by using wood pellets vs. fuel oil. Annual savings are estimated at $25,000 • Purchasing wood pellets from an Alaskan source will keep the money in Alaska • Use of wood pellets for heating will greatly insulate the CRSD from potentially devastating price fluctuations in the cost of fuel oil • The cost savings may also help protect the CRSD from teacher layoffs or workforce reductions due to spikes in the price of fuel oil. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 4 of 13 10/7/2009 Environmental & public benefits: • Woody biomass is a carbon neutral energy, which will help to reduce the CRSD carbon footprint from that of fuel oil • Woody biomass is also a low-sulfur material, so CRSD will reduce our sulfur oxide compound emissions • This pellet-fired boiler system will be a demonstration project that Alaskans and other rural Alaskan communities can emulate 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. Phase IV requires $648,284 in State funds for construction of the project. The Copper River School District previously contributed the land necessary for construction. 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. $ 648,284 2.7.2 Other Funds to be provided (Project match) $ 0 2.7.3 Total Grant Costs (sum of 2.7.1 and 2.7.2) $ 648,284 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) $ 807,972 See Engineer’s Estimate in Attachment G 2.7.5 Estimated Direct Financial Benefit (Savings) $1.70 million in 30 years, based upon $3.07/gallon fuel oil and $280/ton wood pellets at Kenny Lake. 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.) Money normally used to pay for fuel oil will go to Alaskan wood pellet suppliers. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 5 of 13 10/7/2009 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 CRSD will expect project management assistance from AEA. 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.) Kenny Lake School Preliminary Construction Schedule is provided in Attachment H. This schedule assumes a preliminary notice to proceed with procurement based on senate appropriation of funds on July 1, 2010. 3.3 Project Milestones Define key tasks and decision points in your project and a schedule for achieving them. The Milestones must also be included on your budget worksheet to demonstrate how you propose to manage the project cash flow. (See Section 2 of the RFA or the Budget Form.) The key tasks and decision points are presented in the Kenny Lake School Preliminary Construction Schedule in Attachment H. Key decision points for the construction phase include: Preliminary notice to proceed with procurement: July 1, 2010 Contractor selection Complete: August 24, 2010 Project kickoff meeting: September 13, 2010 Mechanical and Electrical work complete: December 3, 2010 Final Inspection: December 11, 2010 Project Closeout complete: January 24, 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. CRSD will use present design contractor CE2 Engineers Inc. (CE2) for final design and construction management (purchasing, logistics, site communications). In accordance with AEA procurement policies, mechanical and electrical contractors will be selected through an RFP process. 3.5 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. Design engineer and construction manager CE2 will keep AEA and CRSD informed of progress in monthly (or other approved time span) written reports in a format acceptable to AEA and CRSD. Reports will be emailed to involved parties. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 6 of 13 10/7/2009 3.6 Project Risk Discuss potential problems and how you would address them. The initial idea of using wood chips from the nearby Regal sawmill was rejected because the extensive chip handling equipment was too complicated and did not justify the expense for saving 18,000 gallons of oil. Since that time, the Dry Creek sawmill has a regular, high quality wood pellet operation going at about 16 tons per week (two 8-hr days of production per week). In addition, a wood pellet mill capable of 25,000 tons per year is nearing completion in Fairbanks. All equipment is in place, awaiting completion of a 2.5 megawatt electric power service. The main risk is for wood pellet production to have a major delay or production problem in Fairbanks. Fortunately, the heating plant at Kenny Lake will not need pellets until late October 2010 so there will be at least 11 months of time after pellet plant startup to have pellets. The Dry Creek pellet operation is capable of producing the necessary amount of pellets at approximately the same delivered price of $280 per ton. The biggest problem would be for both plants to be down and then delivery would be over $300 per ton from Outside sources in western Canada or the northwest US. Risk will be minimized by keeping an eye on production from the local pellet mills. Pellet quality is also a risk. A poor quality pellet can cause major problems in combustion equipment. The Dry Creek operation has an excellent track record, and there will be plenty of time for the new Fairbanks operation to work any kinks out of their process. Samples of product will be sent to a lab for analysis to minimize risk of bad pellets. Additionally, careful consideration and development of specifications through the procurement process will ensure receipt of quality materials. There is also a risk of problems with combustion equipment, but this can be minimized by careful selection of equipment with strong performance history in similar operational environments in the U.S. or Canada. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 7 of 13 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 energy resource for the biomass boiler will be wood pellets, produced in Alaska, either from Fairbanks or Dry Creek plants. It is anticipated that 132.09 tons of pellets (wet basis) will be used annually for the heating. There are three biomass alternatives for heating the Kenny Lake School: • Cordwood • Wood Chips from the nearby Regal sawmill • Pellets from Dry Creek (existing source) or Fairbanks (2010 source) pellet mills. CRSD’s previous AEA grant application assumed the use of wood chips. The cost was estimated at $1.2 million. This was found to not be economically justified for the relatively small amount of fuel displacement (18,000 gallons). There is not enough cordwood around Kenny Lake for the plant, so it would have to be trucked from Tok. Also, it was determined that labor for the stoking would have been more cost-intensive. In the time elapsed since the original application was made, wood pellets are starting to be produced in Alaska, so the wood pellet option is more viable. Previously, shipping costs put the distant suppliers up to $350 per ton delivered. The pellet plant at Dry Creek is producing 16 tons per week, and initial production for the Fairbanks plant will be 25,000 tons per year, both with pricing closer to $280 per ton delivered. 4.2 Existing Energy System 4.2.1 Basic configuration of Existing Energy System Briefly discuss the basic configuration of the existing energy system. Include information about the number, size, age, efficiency, and type of generation. The existing heating system for the Kenny Lake School consists of two each 2145 MBTU oil fired hot water boilers, using a total of 18,000 gallons per year. The boilers are about 4 years old, and are about 80% efficient. 4.2.2 Existing Energy Resources Used Briefly discuss your understanding of the existing energy resources. Include a brief discussion of any impact the project may have on existing energy infrastructure and resources. The school presently uses 18,000 gallons of fuel oil annually. When the wood pellet boiler is on line, only 1,800 gallons of fuel oil will be used. This will lower the amount of fuel that the CRSD will purchase from the local fuel supplier. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 8 of 13 10/7/2009 4.2.3 Existing Energy Market Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. Oil costs for other consumers should not rise, but if enough energy consumers lower their consumption, the price of fuel oil could rise. 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 Because of the need for a highly automated, reliable, and autonomous renewable energy heating system, it was decided that a wood pellet-fired boiler be used to provide 90% of the heat to the school. The pellet boiler would have overall efficiencies of 90%, with automated ash removal, fire tube air blowout to maintain efficiency and reliability, cyclone exhaust particulate removal, and automated auger feed from an outdoor 50-ton silo to hold the pellets. The CRSD would own a highway trailer that would be used to transport the pellets from the mill to the silo. An auger feed system would also be placed on site to transfer the pellets from the trailer to the silo. The silo would be capable of holding two full truckloads of pellets. It is anticipated that six 24 ton truckloads of pellets would be required per heating season. The CRSD would own the trailer, and would hire a trucking contractor to pick up the wood pellets at the plant in Fairbanks or Dry Creek. From the attached spreadsheet, the optimum capacity would be 1.5 million BTU/hour. The capacity factor would be 0.24 for the wood-pellet boiler. Anticipated annual heat generation would be 1.8 billion BTU for the wood pellet system. The proposed biomass heating would have no significant barriers anticipated, other than the possibility of a major supply problem with the pellets. The integration concept is fairly simple. The wood pellet boiler would operate like any boiler, with heat generated on demand. In this case it would be modulated from 340,000 BTU/hr to 1.5 million BTU/hour to maintain a constant heat at 180°F on the heated supply. Heating glycol would flow through 4-inch insulated buried pipes to the school boiler room, where they would be connected to a heat exchanger on the return side of the school oil-fired boilers. This would allow transfer of heat to the school, but would isolate the two heating systems for system survival and integrity. A circulating pump would circulate about 170 gpm through the system, varying the flow rate depending on heat load. The oil fired boilers would only come on line if the wood-pellet fired boiler could not keep up with demand or was out of service. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 9 of 13 10/7/2009 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. Please see site plan in conceptual drawing set presented in Attachment I. The heat building and pellet storage silo, as well as underground piping and electrical conduit, will be situated on land owned by CRSD and designated by them for use in support of this project. Access to the building and silo will be made through the existing gravel road that fuel trucks use to fill the school oil tanks. 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 only anticipated permit at this time will be the Approval to Construct by the Alaska State Fire Marshal. Air quality permits will not be required because the installation is relatively small. The only potential barrier would be a requirement that the boiler building have sprinklers. In that case, it could add $20,000 to $30,000 to the cost. This would be worked out at the early stage of design with the Fire Marshal. 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 • No threatened or endangered species use the land area anticipated for the project on the school property. Since this project is on the graded schoolyard, there are no habitat disturbance, archaeological, or historical resource issues. • The site contains no wetlands or other protected areas. • There are no land development constraints. • The proposed installation is not in the way of telecommunications antennas or cables. • The height of the installation will be less than 30-ft, so there are no nearby airports that the silo or exhaust stack will conflict with. • The silo and heat building will be in the rear area of the school, so it will not have a negative aesthetic impact to people parking and entering the school. • There are no other potential barriers anticipated for this project. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 10 of 13 10/7/2009 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 Project development costs were covered in Phase III Final Design activities, which were covered in the prior AEA grant application. 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.) Anticipated O&M costs are approximately $500 annually for materials. Labor costs are sunk, as they are part of the site maintenance person’s duties. An additional $1000 in annual O&M costs are included in the first two years to cover potential costs incurred during the break-in period. 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 Not applicable - no power will be sold on this project. 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. The completed cost worksheet form is provided in Attachment B. Comparisons for cost savings, payback, and cost/benefit ratio were made using the current fuel oil price of $3.07/gallon versus the 2008 fuel oil price of $4.50/gallon. These analyses are presented in Attachment J. This analysis was done to demonstrate the sensitivity of the cost/payback analysis based on large fluctuations in the petroleum market, such as those which occurred during the 2008/2009 period. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 11 of 13 10/7/2009 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 Annual fuel displacement is estimated at 16,200 gallons for a total of 486,000 gallons over the 30-year project life. $1.70 million in savings over 30 years based on a conservative 5% annual fuel oil price escalation, using the 2009 rate of $3.07/ gallon. Savings increase to $2.91 million over 30 years based on the 2008 rate of $4.50/gallon. See attached cost analysis spreadsheets, which compare savings at the widely varying 2008 and 2009 fuel prices. Non-economic benefits are the beneficial environmental effects associated with the use of carbon- neutral, low-sulfur biomass. 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 This system will be part of the normal operations and maintenance for the Kenny Lake School. Maintenance and operational costs will not exceed the already-budgeted amounts for the facility. Cost savings are estimated in the cost analysis spreadsheets provided in Attachment J. These figures are estimates only, and the actual savings will be tracked and reported to AEA. This data will be available to the general public to encourage the use of renewable energy sources. 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. A resource assessment was completed and the feasibility study is in the final stages at this time. With the advent of new local biomass sources, the direction of the proposed system has shifted Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 12 of 13 10/7/2009 from wood chips to wood pellets, which are much more viable economically. The capital costs of the mechanical components for using wood chips are significantly higher than a wood pellet system. The lower cost mechanical components for the wood pellet system may reduce the overall capital costs by over $400,000 (33%). Phase III – Final Design, is in progress under the existing AEA grant. Final design will be completed by March 31, 2010. 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 project has gone through the public discussion process and has been approved by the CRSD board of education. A copy of the CRSD resolution will be provided in Attachment F by December 1, 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. CRSD is requesting $648,284 in grant funds for Phase IV – Construction. The completed Grant Budget Form is provided in Attachment C.