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G LACIER F ORK H YDROELECTRIC P ROJECT
AEA-10-015 RENEWABLE E NERGY G RANT A PPLICATION
R OUND III – FY 2011
N OVEMBER 10, 2009
By
GLACIER FORK HYDROPOWER, LLC
1503 WEST 33RD AVENUE, SUITE 211A
ANCHORAGE, ALASKA 99503
Glacier Fork Hydropower, LLC Renewable Energy Fund Grant Application
Glacier Fork Hydroelectric Project
NOVMEBER 10, 2009 I
TABLE OF CONTENTS
1.0 SECTION 1: APPLICANT INFORMATION .......................................................................2
1.1 APPLICANT POINT OF CONTACT ...........................................................................................2
1.2 APPLICANT MINIMUM REQUIREMENTS .................................................................................2
2.0 SECTION 2: PROJECT SUMMARY ....................................................................................3
2.1 PROJECT TITLE .......................................................................................................................3
2.2 PROJECT LOCATION ...............................................................................................................3
2.3 PROJECT TYPE ........................................................................................................................3
2.4 PROJECT DESCRIPTION...........................................................................................................3
2.5 PROJECT BENEFIT ...................................................................................................................4
2.5.1 Direct Economic Benefits...................................................................................................4
2.5.2 Indirect Public Benefits .....................................................................................................4
2.6 PROJECT BUDGET OVERVIEW .................................................................................................4
2.7 COST AND BENEFIT SUMMARY ..............................................................................................4
3.0 SECTION 3: PROJECT MANAGEMENT PLA N ...............................................................5
3.1 PROJECT MANAGER ...............................................................................................................5
3.2 PROJECT SCHEDULE ...............................................................................................................5
3.3 PROJECT MILESTONES ............................................................................................................5
3.4 PROJECT RESOURCES .............................................................................................................6
3.5 PROJECT COMMUNICATIONS .................................................................................................6
3.6 PROJECT RISK ........................................................................................................................6
4.0 SECTION 4: PROJECT DESCRIPTION AND TASKS ......................................................7
4.1 PROPOSED ENERGY RESOURCE ..............................................................................................7
4.2 EXISTING ENERGY SYSTEM .....................................................................................................8
4.2.1 Basic Configuration of Existing Energy System .................................................................8
4.2.2 Existing Energy Resources Used .......................................................................................8
4.2.3 Existing Energy Market ....................................................................................................9
4.3 PROPOSED SYSTEM ................................................................................................................9
4.3.1 System Design ..................................................................................................................9
4.3.2 Land Ownership...............................................................................................................10
4.3.3 Permits ............................................................................................................................10
4.3.4 Environmental .................................................................................................................11
4.4 PROPOSED NEW SYSTEM COSTS (TOTAL ESTIMATED COSTS AND PROPOSED REVENUES)......12
4.4.1 Project Development Cost ................................................................................................12
4.4.2 Project Operating and Maintenance Costs ........................................................................13
4.4.3 Power Purchase/Sale ........................................................................................................13
4.4.4 Cost Worksheet.................................................................................................................13
5.0 SECTION 5: PROJECT BENEFIT........................................................................................15
5.1 ESTIMATED FUEL DISPLACEMENT .........................................................................................15
5.2 ESTIMATED ANNUAL REVENUE ............................................................................................15
5.3 OTHER ANNUAL REVENUE STREAMS ...................................................................................15
5.4 PROJECT BENEFIT FROM DIRECT COST SAVINGS ...................................................................15
6.0 SECTION 6: SUSTAINABILITY .........................................................................................16
7.0 SECTION 7: READINESS & COMPLIANCE WITH OTHER GRANTS .......................17
8.0 SECTION 8: LOCAL SUPPORT..........................................................................................17
9.0 SECTION 9: GRANT BUDGET ..........................................................................................18
10.0 SECTION 10: ADDITIONAL DOCUMENTATION AND CERTIFICATION..............19
Glacier Fork Hydropower, LLC Renewable Energy Fund Grant Application
Glacier Fork Hydroelectric Project
NOVMEBER 10, 2009 PAGE 2
1.0 SECTION 1: APPLICANT INFORMATION
Name Glacier Fork Hydro, LLC
Type of Entity: Utility 1
Mailing/Physical Address 1503 West 33rd Avenue, Suite 211A
Anchorage, AK 99503
Telephone 258-2420
Fax 258-2419
Email joel@polarconsult.net
1.1 APPLICANT POINT OF CONTACT
Name Joel Groves, PE
Title: Project Manager
Mailing Address 1503 West 33rd Avenue, Suite 211A
Anchorage, AK 99503
Telephone 258-2420
Fax 258-2419
Email joel@polarconsult.net
1.2 APPLICANT MINIMUM REQUIREMENTS
As an Applicant, we are: (put an X in the appropriate box)
X 1 An electric utility holding a certificate of public convenience and necessity under AS
42.05, or
X 1 An independent power producer in accordance with 3 AAC 107.695, or
A local government, or
A governmental entity (which includes tribal councils and housing authorities);
Endorsements
Yes Attached to this application is formal approval and endorsement for its project by its board of
directors, executive management, or other governing authority. If a collaborative grouping, a
formal approval from each participant’s governing authority is necessary.
Yes 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 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 We intend to own and operate any project that may be constructed with grant funds for the
benefit of the general public.
1 GFH anticipates that it will become a regulated utility if the project is completed. GFH does not plan
to file for utility status until the project is more advanced.
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NOVMEBER 10, 2009 PAGE 3
2.0 SECTION 2: PROJECT SUMMARY
2.1 PROJECT TITLE
"GLACIER FORK HYDROELECTRIC PROJECT"
2.2 PROJECT LOCATION
The project is located on the Glacier Fork of the Knik River in southcentral Alaska about 20
miles east of the Eklutna Hydroelectric Powerhouse and 25 miles southeast of Palmer. It is
located within the Matanuska-Susitna Borough, with portions of the reservoir located within
the Municipality of Anchorage and within unorganized lands. The project is generally located
at latitude 618 26' north and longitude 1488 30' west. The project is located within sections 34,
35, 36 of township 16 north, range 5 east, Seward Meridian. The project reservoir would be
located in section 1 of township 15 north, range 5 east, and sections 5, 6, 7 and 8 of township 15
north, range 6 east.
2.3 PROJECT TYPE
PROJECT TYPE
Put X in boxes as appropriate
2.3.1 Renewable Resource Type
Wind Biomass or Biofuels
X Hydro, including run of river Transmission of Renewable Energy
Geothermal, including Heat Pumps Small Natural Gas
Heat Recovery from existing sources Hydrokinetic
Solar Storage of Renewable
Other (Describe)
2.3.2 Proposed Grant Funded Phase(s) for this Request (Check all that apply)
X Reconnaissance Design and Permitting
Feasibility Construction and Commissioning
Conceptual Design
2.4 PROJECT DESCRIPTION
The Glacier Fork Hydroelectric Project is an approximately 75 MW storage project proposed for
the Glacier Fork of the Knik River. Electricity from the project would be delivered into the
railbelt transmission grid via a new approximately 20-mile transmission line to existing
transmission infrastructure in the vicinity of the Old Glenn Highway bridge over the Knik
River. A map of the project is included at the end of the application in Attachment H.
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Glacier Fork Hydroelectric Project
NOVMEBER 10, 2009 PAGE 4
2.5 PROJECT BENEFIT
2.5.1 Direct Economic Benefits
1. Avoided Cost of Fuel - $6,640,000 annually.
2. Capacity - $7,460,000 annually.
3. Increased Grid Efficiency - $713,000 annually.
2.5.2 Indirect Public Benefits
1. Increased reliability and stability of the local power grid. Also, increased diversity of
fuel sources for the railbelt grid.
2. Reduced demand for Cook Inlet natural gas. This project will offset natural -gas fired
power generation, reducing natural gas consumption and incrementally extending the
life of the Cook Inlet gas fields, to the benefit of the public that relies upon these fields
for electricity and space heating needs.
3. The creation of local jobs and economic benefit. A significant portion of the project
funding will go to local firms and will create local jobs.
4. Promote economic and recreational development of southcentral Alaska. The project
would extend power and road access up the Knik River valley, enabling economic
development of this area. The project would also extend road access into new alpine
areas of the Chugach Mountains, introducing the possibility of new readily accessible
areas for recreational and tourism-related activities.
2.6 PROJECT BUDGET OVERVIEW
$420,000 is requested for a project reconnaissance study, with local matching funds of $80,000
for a total budget of $500,000.
2.7 COST AND BENEFIT SUMMARY
Grant Costs
(Summary of funds requested)
2.7.1 Grant Funds Requested in this application. $ 420,000
2.7.2 Other Funds to be provided (Project match) $ 80,000
2.7.3 Total Grant Costs (sum of 2.7.1 and 2.7.2) $ 500,000
Project benefits are summarized below.
2.7.4 Total Project Cost (Summary from Cost
Worksheet including estimates through
construction)
$330,000,000
2.7.5 Estimated Direct Financial Benefit (Savings) $378,600,000
2.7.6 Other Public Benefit See Narrative
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Glacier Fork Hydroelectric Project
NOVMEBER 10, 2009 PAGE 5
3.0 SECTION 3: PROJECT MANAGEMENT PLAN
3.1 PROJECT MANAGER
The Project Manager is Joel D. Groves, PE. Mr. Groves has considerable experience evaluating,
designing, permitting, and operating hydroelectric projects similar to the proposed project
throughout Alaska. Resumes and references for Mr. Groves and other GFH Members are
attached to this proposal.
GFH requests assistance from AEA in coordinating the organizational integration of the Glacier
Fork Project with the railbelt utilities and the proposed GRETC integration of the railbelt
generation and transmission functions.
3.2 PROJECT SCHEDULE
Primary efforts to date have focused on project reconnaissance, and formulating preliminary
opinions on the technical, regulatory, and economic viability of the project. GFH has secured a
FERC Preliminary Permit for the Glacier Fork project. Reconnaissance activities are required to
advance the project. The proposed project schedule follows.
Year Activity
Hydrology
Surveys
Public Process
Reconnaissance study
Feasibility study
FERC permitting and licensing
Resource studies
Design studies
Project design
2011, 2012, 2013
Obtain permits, land, easements, right of ways
2014, 2015 Project Construction
3.3 PROJECT MILESTONES
Key project milestones are summarized in the table below.
Milestone Scheduled Completion
Reconnaissance Study Report Fall 2011
Feasibility Study Report and Determination Spring 2012
Agency Approved Resource Study Plan Fall 2012
FERC License, Agency Permits Fall 2013
Construction Bid Process Winter 2013/2013
Project Commissioning Fall 2015
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NOVMEBER 10, 2009 PAGE 6
3.4 PROJECT RESOURCES
GFH members will provide the technical expertise, hydropower engineering knowledge, and
direct hydro project operational experience to perform all aspects of developing the Glacier
Fork project. As appropriate, GFH will retain subcontractors to execute specific tasks to
advance the project.
CEA’s resource commitment depends upon the business relationship to be developed with
GFH and the State’s approval of the requested grant funds in this application for project
development.
Polarconsult and CEA anticipate that business relationships pertaining to development and
ownership of the project will depend on the outcome of the GRETC legislation pending in the
State Legislature, and the future management framework for generation and transmission
assets on the railbelt.
3.5 PROJECT COMMUNICATIONS
GFH will keep AEA informed of project status through the issuance of monthly or quarterly
project status reports as warranted. The reports will include a brief (1 page) report including a
narrative of current project status, activities in the current month, any problems encountered,
and the anticipated activities in following months. The report will also include a budget status
summary.
As warranted, GFH may also advise the AEA grant manager of upcoming events such as field
visits or other activities of specific interest on an as-needed basis.
3.6 PROJECT RISK
To date, study of the Glacier Fork resource has been limited to review of existing information.
Collection of field data is necessary to identify and evaluate project risks, and determine if
identified risks can be mitigated or may influence project viability. Generally, project risks
include:
Ø Hydrological risk. The available water in the Glacier Fork could be different than indicated
by existing hydrology data. This risk will be mitigated through the development and
completion of a comprehensive hydrology study that will determine the water availability
at this resource to a high level of confidence. The project size will be adjusted as required
in the feasibility phase to optimally utilize the available water.
Ø Geotechnical risk. Geotechnical conditions at the proposed dam site, tunnel alignment, or
at other locations on the project may present unanticipated engineering challenges. This is
primarily a cost/feasibility risk. Field work will identify those geotechnical conditions that
require special attention, and these will addressed during the design phase.
Ø Environmental risk. Existing information indicates that the Glacier Fork is not an
anadromous river, and that the upper Glacier Fork canyon and other areas that will be
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NOVMEBER 10, 2009 PAGE 7
inundated by the reservoir are not significant or important habitat for any listed species or
game in general. Field studies will be performed to confirm these initial findings.
Ø Permitting/Regulatory risk. The project is located within the Knik River Public Use Area.
The Alaska Department of Natural Resources (ADNR) published a management Plan for
this area earlier in 2008. This management plan has been reviewed, and the proposed
project is generally consistent with the plan.
Ø Glacial risk. The project's footprint is located adjacent to the Knik Glacier, and could be
affected by the glacier if the glacier were to advance into the project area. Such behavior is
not known to be in the historical record, but given the long design life of such a project,
appropriate field investigations will be undertaken to evaluate any risks the glacier may
pose to the project. These risks will be mitigated by proper location of the project features.
Ø Cost risk. Cost estimates and economics of the project will be considered at the
reconnaissance, feasibility, and design stages of the project to confirm that the project's
economics are favorable for the railbelt. By monitoring the projected costs in an orderly
manner as more information becomes available throughout the reconnaissance and
feasibility phases of the project, exposure to cost risk will be minimized.
4.0 SECTION 4: PROJECT DESCRIPTION AND TASKS
4.1 PROPOSED ENERGY RESOURCE
The proposed energy resource is the Glacier Fork of the Knik River. The Glacier Fork above the
proposed dam site drains 267 square miles of the Chugach Mountains northwest of Prince
William Sound, and is 23% by area of the total basin drained by the Knik River above the U.S.
Geological Survey (USGS) stream gage #15281000 located at the Old Glenn Highway bridge. As
the Glacier Fork approaches the Knik River, it passes through a canyon to the north of the Knik
Glacier, near Metal Creek. A dam would be built within this canyon, with a power tunnel /
penstock / tailrace diverting water west approximately 8,400 feet through a powerhouse and
discharging near the mouth of the Glacier Fork at the head of the Knik River flats. The project
would have a gross head of approximately 680 feet.
The Glacier Fork basin is the northerly and easterly portion of the Knik River basin. Based
upon the similar degree of glaciation in the Glacier Fork and Lake Fork basins of the Knik River,
the normalized runoff from each basin is believed to be similar. This assumption will be
validated by establishing a stream gauge and conducting a hydrology study for the Glacier
Fork.
USGS gauge #15281000 has a period of record from 1959 to current. Based upon this data and a
maximum design flow of 1,700 cubic feet per second (cfs), an average annual energy generation
of 330,000 MWh is estimated from the project.
Alternative energy resources available to this market include all alternatives available to the
railbelt energy grid, which principally include: natural gas, diesel/oil, coal, storage hydro, run-
of-river hydro, hydrokinetic/tidal, wind and geothermal.
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Glacier Fork Hydroelectric Project
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Overall, this project appears competitive with existing generation costs on the railbelt and has
the potential to lower railbelt energy costs. In the long term, this project offers the potential to
significantly lower energy costs for railbelt rate payers.
4.2 EXISTING ENERGY SYSTEM
4.2.1 Basic Configuration of Existing Energy System
The project would interconnect with the railbelt transmission grid in the vicinity of the 115 kV
transmission line at the Old Glenn Highway bridge over the Knik River. From there, power
would be directed either west to the Eklutna Powerhouse over this existing line, and then via a
double transmission circuit to Anchorage and beyond to the Kenai Peninsula; or north to serve
the loads in the Mat-Su valley and beyond to Fairbanks.
The energy and capacity offered by the Glacier Fork project would be managed in concert with
other existing and future generation resources on the railbelt.
4.2.2 Existing Energy Resources Used
The southern railbelt generally relies upon a combination of natural gas turbines and
hydroelectric power to generate electricity. Currently, natural gas combustion accounts for
approximately 85-90% of total energy projection, and the balance is from hydroelectric projects.
The Glacier Fork project will provide local utilities considerably increased flexibility to more
efficiently operate their generation assets to meet system loads and spinning reserve
requirements. At up to a 75 MW installed capacity, the Glacier Fork Reservoir provides
sufficient water storage for approximately five to seven days of electrical generation at full
capacity. During the summer months, the Glacier Fork project is capable of continuous output
at its installed capacity and could be used for base load generation. During the winter months,
the Glacier Fork project could be used for one or more of the following functions:
Ø Providing base load at a much lower level (approximately 5 to 7 MW continuous
generation),
Ø Daily peak shaving at up to its rated capacity, reducing the need for utilities to use lower
efficiency 'peaking' natural gas turbines.
Ø Providing spinning reserve up to the rated capacity of the project, reducing the need for
utilities to burn natural gas to provide spinning reserve.
Ø Operation in a coordinated manner with other hydroelectric resources to more optimally
utilize water storage at the Eklutna Lake, Cooper Lake, and Bradley Lake Hydroelectric
Projects.
Ø Provide 20 to 30 MW of energy for an extended period of time, such as during a cold
snap. This would decrease natural gas demand during the cold snap, helping to
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Glacier Fork Hydroelectric Project
NOVMEBER 10, 2009 PAGE 9
alleviate the natural gas deliverability issues that will be increasingly problematic until a
long term gas supply solution is implemented for the region.
4.2.3 Existing Energy Market
The project's electricity would be most readily marketed to MEA, ML&P, and/or CEA, which all
own transmission capacity originating at the Eklutna Powerhouse. More generally, the existing
energy market includes the six railbelt utilities, Matanuska Electric Association (MEA),
Chugach Electric Association, Seward Electric System (SES), Homer Electric Association (HEA),
Municipal Light & Power (ML&P), and Golden Valley Electric Association (GVEA). Various
power sales contracts and transmission capacity bottlenecks limit the extent to which GFH
electricity could be freely marketed to some of these utilities.
4.3 PROPOSED SYSTEM
4.3.1 System Design
The Project will consist of a dam, intake structure, power tunnel or penstock, powerhouse,
transmission line, and associated facilities. Detailed descriptions of these components follow.
Ø The dam will be located in the upper Glacier Fork Canyon, and will be approximately 430
feet tall and is of undetermined construction at this time. The dam will have a spillway
elevation at approximately 980 feet. There will be an associated intake structure to collect
up to 1700 cfs of water from the reservoir.
Ø The dam will create a reservoir in the Glacier Fork Canyon and lower Grasshopper Valley.
The reservoir will extend approximately 5 miles up the Glacier Fork and have a maximum
surface area of 390 acres. The reservoir will have approximately 75,000 acre-feet of total
storage, with approximately 17,000 acre-feet for normal power generation operations.
Ø Water will be transported from the intake structure via a 12 to 15-foot diameter 8,400-foot
long combination power tunnel -penstock, with surge tanks and appurtenant facilities as
required to the powerhouse. Exact routing, lengths and configuration of the power tunnel
and penstock will be determined during the feasibility, field investigation, and design
phases of the project.
An alternate water conveyance configuration would have a shorter power tunnel to a
subterranean powerhouse near the dam and a tailrace tunnel to the Knik River flats. A
separate tunnel would be driven to the powerhouse for ventilation and access. This
configuration would improve the hydraulic responsiveness of the project, allowing the
project to provide spinning reserve with superior water efficiency. This configuration may
be preferable if the project is intended to provide spinning reserve to back up variable
renewable energy loads such as wind turbines.
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Ø The powerhouse will be located at approximately the 300 foot elevation near the mouth of
the Glacier Fork Canyon, where it emerges onto the Knik River flats. A tailrace will return
waters to the Glacier Fork approximately 7 river miles downstream from the dam site. The
size of the powerhouse and the type and number of turbine-generator sets to be installed
will be determined during the later phases of the project.
Ø Electricity generated by the project will be transmitted to southcentral markets via a new
approximately 20-mile long transmission line constructed for this project. The transmission
line will generally travel along the Knik River flats and connect to the existing 115-kV line
near the Old Gl enn Highway at the bridge over the Knik River. From there, existing
transmission lines will deliver project electricity to railbelt energy markets. The specific
alignment for this new transmission line has not yet been determined.
Ø The project will be accessed by a road to be constructed up to the project site from existing
roads in the area. The starting point and route of the access road have not been determined.
The road and transmission line are expected to follow the same alignment in order to
simplify property acquisition and maintenance of the transmission line.
Based on available information, the gross head of the project is approximately 680 feet, and the
design flow is 1700 cubic feet per second (cfs). The project is estimated to have an installed
capacity of 75 MW and an annual average energy generation of approximately 330,000 MWh.
This capacity and energy would give the project a capacity factor of 0.52. Hydrology and
feasibility studies will confirm the optimal installed capacity and annual energy generation.
4.3.2 Land Ownership
The project works and reservoir are located entirely on lands owned by the State of Alaska and
within the Matanuska-Susitna Borough. A small portion of the reservoir is located within the
Municipality of Anchorage. Three privately held parcels and two mining claims are located in
the lower Glacier Fork Canyon in the general vicinity of the powerhouse.
The transmission and access routes to the project have not been determined, but would likely
cross lands under federal, state or private ownership. A major landholder in the area is
Eklutna, Inc. the ANSCA village corporation for the village of Eklutna. The project is located
within the limits of the Knik River Public Use Area.
4.3.3 Permits
The project boundary does not include any lands designated or recommended for designation
as wilderness area or wilderness study area; or any waters included in, designated for study, or
designated for inclusion in the National Wild and Scenic Rivers System.
Major permits and approvals required for the project are listed below.
Ø Water Use Permit / Water Rights (ADNR)
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NOVMEBER 10, 2009 PAGE 11
Ø Land Lease/easement/purchase (BLM, ADNR, and/or private land owners)
Ø Fish Habitat Permit (ADFG)
Ø Army Corps of Engineers permits
Ø Utility certification (RCA)
Ø License for Major Hydropower Project (FERC)
Ø Archeological consultation (SHPO)
Ø Mat-Su Borough Building Permits
4.3.4 Environmental
Based upon review of available environmental data, there are no major environmental conflicts
identified for this project. Primary environmental considerations and assessments based upon
known information are listed below.
Ø Fish Habitat. The Atlas of Waters Important to the Spawning, Rearing, or Migration of
Anadromous Fishes, maintained by the Alaska Department of Fish and Game (ADFG),
identifies the Knik River below the project as anadromous fish habitat, but does not identify
any of the Glacier Fork as anadromous fish habitat. It is likely that there is a barrier to
anadromous fish in the lower canyon. The 2008 Knik River Public Use Area Management Plan
states that habitat for resident fish 'may occur' in the Glacier Fork.
Even if the reservoir, dam, and dewatered reach of the Glacier Fork is not fish habitat, the
project has the potential to affect fish habitat by altering the thermal regime of waters
downstream of the project. Adverse thermal affects can be avoided through proper design
of the intake structure. By enabling the project to selectively draw water from various
depths within the reservoir, the project can modulate the tailrace temperature to emulate or
enhance natural conditions. The Glacier Fork accounts for approximately 23% of the total
flow in the Knik River. Waters from the project will combine with the natural flows from
Metal Creek and the Lake Fork Knik River.
Ø Game Habitat. The most significant project component likely to affect game habitat is the
reservoir. Most of the area inundated by the reservoir is steep canyon walls below 1000 feet
elevation, which is not expected to be prime habitat for game. The upper part of the
reservoir will inundate the very lower portion of the Grasshopper Valley. The 2008 Knik
River Public Use Area Management Plan characterized the valley floor as 'sparsely vegetated',
and identifies it as habitat for moose, bear, and various small game.
Ø Threatened or Endangered Species. The U.S. Fish and Wildlife Guide indicates no
threatened or endangered species in the project vicinity.
Ø Aesthetics. Public use of the area where the project works would be located is primarily
recreation and hunting. According to the Knik River Public Use Area Management Plan, there
is limited commercial recreation currently using the project area. The dam and reservoir
would be the most significant aesthetic changes caused by the project. The reservoir would
present a new recreational opportunity, potentially offering similar aquatic recreational
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NOVMEBER 10, 2009 PAGE 12
opportunities as Eklutna Lake. The penstock and powerhouse would have comparatively
minor aesthetic affects, being visible from a variety of vantage points in the area.
The project's most significant aesthetic effect is expected to be the transmission lines
connecting the project to the existing transmission grid. These lines would generally follow
the Knik River from the project to the vicinity of the Old Glenn Highway bridge, either on
or near the river flats, or on the hillsides to the north or south of the flats. The lines would
generally be visible to the public in this area, and would generally be similar in appearance
and scale to existing transmission lines below the Old Glenn Highway Bridge.
Based on the scale of the project, some wetlands fill certain. The quantity of wetlands that will
be filled by the project will not be known until specific alignments and locations for the various
project features have been selected and inventoried for wetlands. Any required wetlands fill
would be completed under a permit from the Army Corps of Engineers.
No archeological or cultural resources are known to be in the project vicinity. SHPO will be
consulted during the course of the project.
The project is located within DNR's 2008 Knik River Public Use Area Management Plan. The
project is consistent with the Plan's designated management objectives for the area, which are:
Ø Manage for low levels of public use and enhanced recreational opportunities.
Ø Manage to provide the full spectrum of public uses, while mitigating impacts to habitats
for fish and wildlife.
Ø Develop a single multiple use trail into Grasshopper Valley. The project access road
may be suitable for use as this access trail.
Telecommunications Interference. None.
Aviation Considerations. None.
4.4 PROPOSED NEW SYSTEM COSTS (TOTAL ESTIMATED COSTS AND PROPOSED REVENUES)
4.4.1 Project Development Cost
Due to the magnitude of the project and the limited available technical data on the project site
and resource, a detailed cost estimate to develop the Glacier Fork project is premature. Based
on available data, a likely capital cost for the project works would be in the range of $260 to
$500 million. This grant application uses a total development cost of $330 million.
The budget for the reconnaissance phase of the project is $500,000, comprised of a $420,000
grant and $80,000 applicant match as in-kind services.
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4.4.2 Project Operating and Maintenance Costs
It is premature to provide detailed estimates for project operation and maintenance costs, but
such costs would likely be similar to the O&M costs for the nearby Eklutna Hydroelectric
Project. Adjusting Eklutna costs to the Glacier Fork project on an installed-capacity basis results
in an estimated O&M budget of approximately $5 million annually. This budget would include
routine O&M activities and also less frequent activities such as equipment overhauls.
No grant funding is requested for operations and maintenance costs.
4.4.3 Power Purchase/Sale
The energy and capacity from the project would be sold to railbelt utilities. Power sales
negotiations have not been initiated at this time. Generally, power sales could be structured on
an avoided-cost basis, fixed-price basis or on a variable cost-of-service basis. Other mechanisms
are also possible. More study of the project's integration with the utilities’ existing and future
operations would be necessary to determine the appropriate pricing structure for electricity
from this project.
Current projections are for the avoided cost of energy on the southern railbelt to run in the
range of 5 to 13 cents/kWh over the next 30 years.
4.4.4 Cost Worksheet
A preliminary economic feasibility analysis using an average annual energy production of
330,000 MWh, state grants for 50% of the $330 million total project cost, project financing at 5%
on a 30-year note, and a 10% profit margin indicates that the project could provide energy at a
break-even cost of approximately $0.055/kWh. This is competitive with the expected long term
cost of energy from natural gas-fired generation on the railbelt grid.
The specific assumptions used in completing the attached AEA cost worksheet are summarized
below.
Ø Sections 1 & 3. Resource availability, installed capacity, plant capacity factor, and annual
energy generation are based upon hydrology for the project estimated from the Knik
River USGS stream gage #15281000.
Ø Section 4. – Project capital, development, and O&M costs are opinions of probable cost
based upon available information and estimates. These values would be refined as part
of the feasibility study phase of project development.
Ø Section 5. – Project Benefits. The amount of fuel displaced is based upon the estimated
annual energy generation, and an estimated future net heat rate for the natural gas fired
generation the project would offset. Project benefits are also calculated at a
reconnaissance level. Benefits have been calculated assuming that capacity value will be
Glacier Fork Hydropower, LLC Renewable Energy Fund Grant Application
Glacier Fork Hydroelectric Project
NOVMEBER 10, 2009 PAGE 14
a direct public benefit, and revenue from energy sales will be used to pay the projects
debt service, O&M, and other costs. Depending on the eventual business structure,
project participants, and other factors, public benefit may be achieved by other means.
See section 5 for a more detailed explanation of these assumptions.
Ø Section 6. – Power Purchase Price. A long term energy purchase price of $0.055/kWh is
the preliminary estimate used for this project.
Glacier Fork Hydropower, LLC Renewable Energy Fund Grant Application
Glacier Fork Hydroelectric Project
NOVMEBER 10, 2009 PAGE 15
5.0 SECTION 5: PROJECT BENEFIT
5.1 ESTIMATED FUEL DISPLACEMENT
The project would primarily displace Cook Inlet natural gas burned for power generation.
Estimated fuel displacement and assumptions used to generate the estimates are summarized
below:
Fuel Type Natural Gas
Annual Displaced Energy 331,982 MWh
Displacement 100%
Efficiency of Displaced Generation (Heat Rate) 8,500 btu/kWh
Average Annual Displaced Fuel 2.8 BCF
Displaced Fuel over 50 Years 141 BCF
Average Market Value of Displaced Fuel $9.00/MCF
Annual Value of Displaced Fuel $25,400,000
Inflation Rate 2%
Discount Rate 5%
Present Value of Displaced Fuel over 50 years $653,500,000
5.2 ESTIMATED ANNUAL REVENUE
Estimated annual revenue from power sales and assumptions used to generate the estimates are
summarized below:
Contract Item Proposed Terms
Contract price structure Cost of Service
Average avoided cost over 50 years (Energy Rate) $71/MWh
Average Annual Energy Sales 331,982 MWh
Average Annual Gross Revenue From Power Sales $23,570,000
Average Annual Operating Expenses $21,000,000
Average Annual Net Revenue (before taxes, depreciation, etc.) $2,570,000
5.3 OTHER ANNUAL REVENUE STREAMS
State or federal tax credits may be available to the project over its life. Currently available
federal tax credits for renewable energy have very limited eligibility criteria for hydroelectricity,
and this project is not expected to qualify. Generally, the volatility in tax credit rules and
eligibility precludes forecasting any benefit from them over the project’s life. The project
ownership structure may also affect eligibility for tax credits.
5.4 PROJECT BENEFIT FROM DIRECT COST SAVINGS
The following direct cost savings would result from this project.
Glacier Fork Hydropower, LLC Renewable Energy Fund Grant Application
Glacier Fork Hydroelectric Project
NOVMEBER 10, 2009 PAGE 16
Ø Green Tag / Renewable Energy Credits (RECs): The project may qualify for RECs.
RECs currently market in Alaska for $0.02/kWh (Denali Green Tags). The federal or
state government may enact new laws such as carbon taxes or renewable portfolio
standards that local utilities could be required to comply with. The renewable energy
from this project would not have any carbon emissions, potentially enabling the
purchasing utility/utilities to reduce the quantity of RECs or other carbon trading
instruments they could be required to purchase under any new federal or state
programs. The value of these RECs is considered to be part of the public benefit from
the project.
Ø The project would provide significant capacity and energy value to the purchasing
utility or utilities. The requested grant funding level would enable GFH to pass on a
combined capacity/energy discount of approximately $0.02/kWh to the purchasing
utility, which would be a direct pass-through savings to the ratepayers and the public in
general.
Ø Line Efficiency: By positioning generation closer to existing demand centers, it is
expected that the project would generally increase the efficiency of the region’s
transmission system. Increased efficiency would likely be observed on the CEA, MEA,
and ML&P systems to varying degrees. This would reduce costs for all three local
utilities.
Ø Annual Property Tax Revenue: The Mat-Su Borough will likely levy property taxes on
the project over the life of the project, although the project’s tax status and tax rate
would depend upon the business structure and tax status of the project owners. Annual
property tax payments will contribute to the tax base and economic activity in the
Borough.
Ø A capital financing term of 50 years is assumed, but the project’s design life would be in
excess of 100 years. After 50 years, the public would enjoy considerable benefits from
the project beyond 50 years. An example of these benefits is the Eklutna Lake
Hydroelectric Project, which provides energy to CEA, MEA, and ML&P for under
$0.005 per kWh – compared to prevailing energy rates of $0.05 to 0.08 per kWh.
These annual public benefits are summarized, and their present value is estimated in the
following table. Assumptions used to generate the estimates are also stated.
6.0 SECTION 6: SUSTAINABILITY
Over 100 years of experience in Alaska have proven hydroelectric projects to be the most
sustainable power generation technology and investment available. No other generation
technology has come close to having the historical longevity and the future potential of
hydroelectric projects. Once the hurdle of the initial capital cost is overcome, the projects are
successfully maintained and renewed by all classes of communities in Alaska.
Glacier Fork Hydropower, LLC Renewable Energy Fund Grant Application
Glacier Fork Hydroelectric Project
NOVMEBER 10, 2009 PAGE 17
The utility industry in Southcentral Alaska has continuously operated hydroelectric projects
since the old Eklutna project was built in the 1930s. The utilities have the experience, capability,
and resources to operate Glacier Fork in perpetuity.
Additionally, GFH members have operated the railbelt's fourth grid tied hydro – the 100-kW
McRobert's Creek Hydro – for nearly 20 years.
Annual O,M,R & R costs for the project will be funded by project revenues. In the design phase,
a financial management plan will be developed to project long term cash flow requirements for
project operations. This plan may include the following elements:
Ø An operating fund to pay for routine operating, maintenance, repair and replacement
costs on a sustainable basis from annual project revenues. The operating fund may be
designed to provide adequate cash reserves for annual cash flow fluctuations and also
for low water years and other causes of revenue volatility.
Ø Dedicated sinking fund(s) for certain large infrequent expenses, such as turbine
overhauls.
Ø Contingency funds, lines of credit, and/or insurance policies to cover expenses from
infrequent events, such as floods or natural disasters.
GFH commits to reporting savings and benefits from the project for the project's economic life,
or shorter period as desired by the Alaska Energy Authority and its successor agencies.
7.0 SECTION 7: READINESS & COMPLIANCE WITH OTHER GRANTS
GFH has already demonstrated its commitment to this project by completing the initial
investigations necessary to create the estimates provided in this proposal. Our on-going efforts
working with CEA and AEA's consultants on the Railbelt Integrated Resource Plan (R -IRP) to
help determine the value and utility of this project to the railbelt's long term generation needs
also demonstrate our commitment to this project.
GFH is ready to advance the Glacier Fork project when the region's stakeholders are ready to
commit to studying it. Progress on the project is on hold pending completion of the on-going R -
IRP and GRETC efforts, which will provide definition to the need, value, and market for
electricity from Glacier Fork.
No other grants have been awarded for this project.
8.0 SECTION 8: LOCAL SUPPORT
As with any project of this scale, some people and organizations will support it, and others will
oppose it. Specific opposition to the project is unknown at this time.
Glacier Fork Hydropower, LLC Renewable Energy Fund Grant Application
Glacier Fork Hydroelectric Project
NOVMEBER 10, 2009 PAGE 18
GFH is already working with CEA on this project. GFH intends to engage other southcentral
utilities to determine their level of support for the project. GFH expects that project support
will depend on the outcome of the R-IRP and GRETC processes that will be resolved in the
coming months.
9.0 SECTION 9: GRANT BUDGET
GFH is requesting $420,000 in grant funds, with $80,000 in matching funds, for a total budget of
$500,000.
The Grant Budget Form is included in Attachment C.
Glacier Fork Hydropower, LLC Renewable Energy Fund Grant Application
Glacier Fork Hydroelectric Project
NOVMEBER 10, 2009 PAGE 1
A. RESUMES OF APPLICANT’S PROJECT MANAGER, KEY
STAFF, PARTNERS, CONSULTANTS, AND SUPPLIERS PER
APPLICATION FORM SECTION 3.1 AND 3.4
Glacier Fork Hydropower, LLC Renewable Energy Fund Grant Application
Glacier Fork Hydroelectric Project
NOVMEBER 10, 2009 PAGE 2
B. COST WORKSHEET PER APPLICATION FORM SECTION
4.4.4
Renewable Energy Fund
Round 3
Project Cost/Benefit
Worksheet
RFA AEA10-015 Application Cost Worksheet Page 1 10-7-09
Please note that some fields might not be applicable for all technologies or
all project phases. The level of information detail varies according to phase
requirements.
1. Renewable Energy Source: Glacier Fork Hydroelectric Project
The Applicant should demonstrate that the renewable energy resource is available on a
sustainable basis.
Estimated annual average resource
availability.
330,000 MWh/year for average water year
Unit depends on project type (e.g. windspeed, hydropower output, biomass fuel)
2. Existing Energy Generation and Usage
a) Basic configuration (if system is part of the Railbelt1 grid, leave this section blank)
i. Number of generators/boilers/other N/A – on railbelt
ii. Rated capacity of
generators/boilers/other
N/A – on railbelt
iii. Generator/boilers/other type N/A – on railbelt
iv. Age of generators/boilers/other N/A – on railbelt
v. Efficiency of generators/boilers/other N/A – on railbelt
b) Annual O&M cost (if system is part of the Railbelt grid, leave this section blank)
i. Annual O&M cost for labor N/A – on railbelt
ii. Annual O&M cost for non-
labor
N/A – on railbelt
c) Annual electricity production and fuel usage (fill in as applicable) (if system is part
of the Railbelt grid, leave this section blank)
i. Electricity [kWh] N/A – on railbelt
ii. Fuel usage
Diesel
[gal]
N/A – on railbelt
NG/Hydro Other N/A – on railbelt
1 The Railbelt grid connects all customers of Chugach Electric Association, Homer Electric Association, Golden Valley Electric
Association, the City of Seward Electric Department, Matanuska Electric Association and Anchorage Municipal Light and Power.
Renewable Energy Fund
Round 3
Project Cost/Benefit
Worksheet
RFA AEA10-015 Application Cost Worksheet Page 2 10-7-09
iii. Peak Load N/A – on railbelt
iv. Average Load N/A – on railbelt
v. Minimum Load N/A – on railbelt
vi. Efficiency N/A – on railbelt
vii. Future trends N/A – on railbelt
d) Annual heating fuel usage (fill in as applicable)
i. Diesel [gal or MMBtu] N/A – on railbelt
ii. Electricity [kWh] N/A – on railbelt
iii. Propane [gal or MMBtu] N/A – on railbelt
iv. Coal [tons or MMBtu] N/A – on railbelt
v. Wood [cords, green tons, dry
tons]
N/A – on railbelt
vi. Other N/A – on railbelt
3. Proposed System Design Capacity and Fuel Usage
(Include any projections for continued use of non-renewable fuels)
a) Proposed renewable capacity
(Wind, Hydro, Biomass, other)
[kWh or MMBtu/hr]
75 MW of installed capacity
est. 330,000,000 kWh of ann. energy (average water
year)
52% est. capacity factor
b) Proposed Annual electricity or heat production (fill in as applicable)
i. Electricity [kWh] 330,000,000 kWh/year
ii. Heat [MMBtu] -
c) Proposed Annual fuel Usage (fill in as applicable)
i. Propane [gal or MMBtu] N/A
ii. Coal [tons or MMBtu] N/A
iii. Wood [cords, green tons, dry
tons]
N/A
iv. Other N/A
4. Project Cost
a) Total capital cost of new system $260 – 400 million (400 million used)
Renewable Energy Fund
Round 3
Project Cost/Benefit
Worksheet
RFA AEA10-015 Application Cost Worksheet Page 3 10-7-09
b) Development cost $ 5 million
c) Annual O&M cost of new system $ 5 million
d) Annual fuel cost Zero
5. Project Benefits
a) Amount of fuel displaced for
i. Electricity 2.8 BCF of Natural Gas per year
ii. Heat N/A
iii. Transportation N/A
b) Price of displaced fuel $25,400,000 per year (at $9.00 per MCF)
c) Other economic benefits $ 14,800,000 per year
d) Amount of Alaska public
benefits
$0 in quantifiable economic terms
6. Power Purchase/Sales Price
a) Price for power purchase/sale $0.081/kWh
7. Project Analysis
a) Basic Economic Analysis
Project benefit/cost ratio 1,032,000,000 / 400,000,000 = 2.58
Payback 400,000,000 / 40,200,000 = 10.0 years
Glacier Fork Hydropower, LLC Renewable Energy Fund Grant Application
Glacier Fork Hydroelectric Project
NOVMEBER 10, 2009 PAGE 3
C. GRANT BUDGET FORM PER APPLICATION FORM
SECTION 9.
Renewable Energy Fund Grant Round IIIGrant Budget FormGlacier Fork Hydroelectric Project10-7-09RE- Fund Grantee MatchingSource of Matching Funds: Grant Funds FundsCash/In-kind/Federal Grants/Other State Grants/Other1. Subcontractor Solicitations (1)Aug-10$0 $0 N/A $02. Reconnaissance Study ActivitiesyygyStudy)Jul-11$110,040 $20,960 Cash / In-Kind Services $131,000 2.2 Land Use, Permitting, and Environmental AnalysisJun-11$43,680 $8,320 Cash / In-Kind Services $52,000 2.3 Preliminary Design Analysis and CostJun-11$38,640 $7,360 Cash / In-Kind Services $46,000 2.4 Analysis of Energy Cost / MarketsJun-11$22,680 $4,320 Cash / In-Kind Services $27,0003. Manage FERC Preliminary Permit Jun-11$35,280 $6,720 Cash / In-Kind Services $42,0004. Meetings with public and project stakeholdersJun-11$71,400 $13,600 Cash / In-Kind Services $85,0005. Work with project stakeholders to define business plan optionsJun-11$71,400 $13,600 Cash / In-Kind Services $85,0006. Final Report and RecommendationsJul-11$26,880 $5,120 Cash / In-Kind Services $32,000TOTALS$420,000 $80,000 $500,000Direct Labor & Benefits$306,600 $58,400 In-Kind Services $365,000Travel & Per Diem$10,080 $1,920 Cash / In-Kind Services $12,000Equipment$15,960 $3,040 Cash / In-Kind Services $19,000Materials & Supplies$36,120 $6,880 Cash / In-Kind Services $43,000Contractual Services$0 $0 Cash $0Construction Services$0 $0 - $0Other$51,240 $9,760 Cash $61,000 TOTALS$420,000 $80,000 $500,000Budget Categories:Milestone or TaskAnticipated Completion DateTOTALSApplications should include a separate worksheet for each project phase (reconnaissance, feasibility, design permitting, and construction)Add additional pages as needed.
Glacier Fork Hydropower, LLC Renewable Energy Fund Grant Application
Glacier Fork Hydroelectric Project
NOVMEBER 10, 2009 PAGE 4
D. LETTERS DEMONSTRATING LOCAL SUPPORT PER
APPLICATION FORM SECTION 8
SEE APPLICATION NARRATIVE, SECTION 8.
Glacier Fork Hydropower, LLC Renewable Energy Fund Grant Application
Glacier Fork Hydroelectric Project
NOVMEBER 10, 2009 PAGE 5
E. AN ELECTRONIC VERSION OF THE ENTIRE
APPLICATION ON CD PER RFA SECTION 1.6
Glacier Fork Hydropower, LLC Renewable Energy Fund Grant Application
Glacier Fork Hydroelectric Project
NOVMEBER 10, 2009 PAGE 6
F. GOVERNING BODY RESOLUTION PER RFA SECTION 1.4
Glacier Fork Hydropower, LLC Renewable Energy Fund Grant Application
Glacier Fork Hydroelectric Project
NOVMEBER 10, 2009 PAGE 7
H. PROJECT MAPS
THIS
PROJECT
STATE INDEX MAP
LOCATION MAP
LOCATION MAP
PROJECT
SITE