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HomeMy WebLinkAboutAPT Alaska Biomass AEA Application Renewable Energy Fund Round 3 Grant Application 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. AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 2 SECTION 1 – APPLICANT INFORMATION Name : Alaska Power Company (a subsidiary of Alaska Power & Telephone Company) Type of Entity: Utility Mailing Address: P.O. Box 3222 Port Townsend, WA 98368 Physical Address 193 Otto Street Port Townsend, WA 98368 Telephone 360-385-1733 Fax 360-385-5175 Email bob.g@aptalaska.com 1.1 APPLICANT POINT OF CONTACT Name Robert S. Grimm Title CEO Mailing Address Alaska Power & Telephone Company P.O. Box 3222 Port Townsend, WA 98368 Telephone 360-385-1733 X120 Fax 360-385-7538 Email bob.g@aptalaska.com 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) x 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 A local government, or A governmental entity (which includes tribal councils and housing authorities); Yes 1.2.2. Attached to this application is formal approval and endorsement for its project by its board of directors, executive management, or other governing authority. If the applicant is a collaborative grouping, a formal approval from each participant’s governing authority is necessary. (Indicate Yes or No in the box ) Yes 1.2.3. As an applicant, we have administrative and financial management systems and follow procurement standards that comply with the standards set forth in the grant agreement. Yes 1.2.4. If awarded the grant, we can comply with all terms and conditions of the attached grant form. (Any exceptions should be clearly noted and submitted with the application.) Yes 1.2.5 We intend to own and operate any project that may be constructed with grant funds for the benefit of the general public. AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 3 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) Alaska Biomass Combined Heat & Power Demonstration Project 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 CHP Project will involve the construction and commissioning of a 2MWe biomass gasification CHP (combined heat and power) System to supply the local (isolated) power grid of the Upper Tanana, including the Communities of Tok, Tanacross, Tetlin and Dot Lake. The 1,800 residents of the Upper Tanana will directly benefit from this project through lower cost power, . If replicated, this project has the potential to benefit the 24 communities throughout Alaska that AP&T serves, representing 13,000 energy consumers. It has the potential to be the model for small-scale renewable energy systems for rural and urban communities throughout the state of Alaska. 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 The following proposal contains proprietary information that Alaska Power and Telephone Company requests not be released to persons outside the Alaska Energy Authority, except for purposes of review and evaluation. Alaska Power & Telephone (AP&T), in partnership with Nexterra Systems, and with support from GE Energy, the Upper Tanana communities of Tok, Tetlin, Dot Lake and Tanacross, and the State of Alaska Department of Natural Resources (DNR), propose a Phase IV Construction project with grant support from the Alaska Energy Authority (AEA). This collaborative project will demonstrate the AEA’s commitment to community-scale renewable energy systems for rural Alaskans through the deployment of a 2MWe CHP (combined heat and power) system utilizing locally sourced woody biomass as fuel. The system combines Nexterra’s proprietary gasification technology and syngas conditioning systems with GE Energy’s high-efficiency internal combustion engines. The system is an Internal Combustion (IC) engine powered by conditioned syngas produced from the gasification of locally sourced woody biomass, with excess heat being made available for district heating. The system will serve the rural Alaskans on the local (isolated) power grid of Tok, Tetlin, Dot Lake and Tanacross, now fueled by diesel generators. AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 4 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 system sets a new standard for renewable small-scale (2-10MWe) heat and power generation for rural communities, and industrial and institutional facilities, while supporting sustainable forest practices that focus on utilizing small volumes of local woody biomass. The System will result in the following benefits for Alaskans: • Energy produced by the System will displace about 12,800 MWh of diesel-generated electricity per year, resulting in energy cost savings, and cost stability • The system will create a valuable use for biomass from wildfire risk-reduction projects • The System will generate meaningful reductions in GHGs with each MWh offsetting approximately 1,300 tons of GHG gases annually. • The System features very low emissions with expected particulate of less than 5mg/SCM • The System will also include heat recovery equipment to demonstrate global system efficiency and which will be made available for integration into a district energy system, further offsetting fossil fuel usage for heating buildings. When all external and environmental costs of the existing fossil fuel-reliant energy system upon which Alaskans rely are considered, it is apparent that the proposed renewable energy system will lead to long-term cost savings for the energy consumer, adding to the growing suite of sustainable alternatives to conventional energy systems. AP&T strongly believes that the objectives of this project are essential to the development and replication of renewable community-scale CHP generation in rural and urban communities as well as the establishment of Alaskan leadership in adopting and replicating renewable energy technology. 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 estimated cost of the Alaska Biomass Combined Heat & Power Project is $20MM. However, this Phase IV Construction funding request from AEA is for $4.5MM. This Project represents a unique and broad based collaboration between a Utility (AP&T); Industry (Nexterra and GE Energy) ; Communities (Tok, Tetlin, Tanacross & Dot Lake); Forest Industry (Supplier of biomass); State Government (Department of Natural Resources and Alaska State Energy Authority); Federal Government (DOE NETL & NREL) Of the $20MM overall Project cost, the summary contributions by the applicant and each contributing entity are as follows: Contributor Private / Industry State Federal Total AP&T $4,867,395 $4,867,395 Tok Community Umbrella Corp $607,000 $607,000 AEA Request $4,525,605 $4,525,605 DOE $10,000,000 $10,000,000 Total Funding $5,474,395 $4,525,605 $10,000,000 $20,000,000 % contribution 27% 23% 50% 100% AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 5 2.4 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. $ 4,525,605 2.7.2 Other Funds to be provided (Project match) $ 15,474,395 2.7.3 Total Grant Costs (sum of 2.7.1 and 2.7.2) $ 20,000,000 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) $20,000,000 2.7.5 Estimated Direct Financial Benefit (Savings) $3,964,450 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.) $ 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. Mr. Larry D. Coupe will be the Project Manager for the Alaska Biomass Combined Heat & Power Project. He holds a Masters degree in Civil Engineering and has been the lead civil engineer for numerous planning studies and design work over the past 30 years. AP&T’s budgets include several 50% grant funded projects for installation of transmission lines on Prince of Wales Island, and three RUS (Rural Utilities Service) 100% grants for the installation of transmission lines to Tetlin, Lutak, and communities along the Haines Highway. The company’s Interior Regional Manager for AP&T Operations, Mr. Eric K. Hannon, will be the senior manager of the project. He will personally supervise the construction crews. He is located in Tok, and is an electrical engineer with extensive experience in project management and electrical generation, transmission and distribution. AP&T’s engineering staff has been involved in the design, construction and operation of hydroelectric projects since the 1980’s. AP&T currently maintains over 250 miles of transmission line and has seasoned staff to maintain diesel generators and hydro power plants. AP&T has administrators responsible for multi-million dollar budgets, including the management of 60+ employees, equipment, and all generation and distribution resources. AP&T’s CEO has had a 37 year career with the company where he has been responsible for management, supervision, operating functions and financial performance. His breadth of experience within the company encompasses general management, accounting, purchasing and billing, regulatory affairs, and tariff conformance and development. Please refer to the attached resumes for a thorough review of the Project Managers’ credentials. AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 6 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.) This request will direct funds for completion of a Phase IV AEA project, Construction, Commissioning, Operation, and Reporting. A funding request has been submitted to the Department of Energy (DOE) for preparation activities which will position AP&T to continue into the requested Phase IV AEA project. The prior DOE request included site selection, confirmation of key project personnel, resource assessment, public consultation, engineering, design, and permitting. AP&T will be responsible for the completion of these phases through the DOE grant, except for the detailed equipment design, which will be the responsibility of Nexterra. In addition, Nexterra will complete the preliminary equipment design in consultation with AP&T and with technical assistance from GE Energy. AP&T will complete all activities in close cooperation with the State of Alaska. The DOE funded portion of the project is expected to begin January, 1, 2010 and continue for 24 months. The proposed Phase IV AEA project overlaps the term of the DOE Project funding. The proposed AEA project is expected to begin July 1, 2010 and be completed by December 30, 2011. This portion of the project includes all activities related to the construction, installation and commissioning of a 2MWe System. The System will be supplied as a turnkey equipment package by Nexterra and will be designed to operate in semi-automatic mode with minimal supervision exceeding all local, state and federal emission requirements. The proposed AEA project will include testing, reporting and knowledge dissemination activity and involves optimization and performance testing of the energy System. Performance tests will be conducted on a range of operating variables including energy production, emissions monitoring, process performance, system controls, turndown and diesel displacement. Third party emissions tests will be conducted by a recognized analytical service company to measure VOC, PM, NOx, CO and other regulated emissions during the contractual performance test immediately prior to turning the system over to AP&T. During this period, AP&T, Nexterra and GE support staff will meet regularly and compile a formal Project operations report. Please refer to the following table for more detailed outcomes, outputs, and dates. AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 7 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.) Success criteria have been established for each decision point in the project and evaluation criteria have been established for proceeding from one phase to the next, using a detailed methodology for the overall project. The following table illustrates the established milestones for each project phase; Milestone or Task Anticipated Completion Date Department of Energy Project (PRIOR TO AEA GRANT): The following activities will be conducted prior to the beginning of the proposed AEA Phase IV Construction request; these milestones, which represent AEA’s Phases I-III have been requested in the Department of Energy Grant application and are scheduled to be completed before the start date of the AEA project: • Reconnaissance; Site selected, methodology determined and approved by project team; Confirmation of Project Manager • Feasibility Analysis, Resource Assessment, Conceptual Design: Public Consultation Plan completed; Review of applicable emissions permits, public consultation, regulatory, certification, code and standard requirements; Power Purchase Agreement obtained; Delivery of preliminary engineering package; Run engine at Nexterra's product development center • Final Design and permitting; All permits obtained; Completion of the detailed engineering design of the energy system 1/1/2010 through 6/30/2010 Phase IV: AEA REQUEST Construction, Commissioning, Operation & Reporting • Confirmation of completion of detailed engineering design of system 8/1/2010 • Preliminary General Arrangement Drawings 8/1/2010 • Preliminary Control Logic Diagram 8/1/2010 • Completion of Bid Documents; Purchase Orders and deposit issued for complete system and all components; fabrication of system components 8/1/2010 • Construction of CHP System and Wood Storage Buildings 11/30/2010 • Contractor/vendor selection: Mechanical & Electrical Contractor retained 1/30/2011 • Integration and testing; Cold test of control loops; completion of cold testing of all mechanical, electrical and control 6/15/2011 • Complete training sessions with AP&T staff 9/30/2011 • Select fuel vendor and complete analysis 7/15/2011 • First trial, 100 hours of run time 12/30/2011 • Final Acceptance, Commissioning and startup; Syngas meets engine specification; Control system optimization; Pass emission test and performance test. Operations reporting and publications. 12/30/2011 AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 8 Project tasks included in the phases that occur prior to the Phase IV Construction AEA request are as follows: Task 1.0 - Preliminary Project Design, Permitting and Consultation Subtask 1.1 – Project Management and Planning; project negotiation and updates Subtask 1.2 - Public consultations with stakeholders/community Subtask 1.3 - Emissions Permitting Subtask 1.4 - Grid connection agreement Subtask 1.5 - Preliminary equipment design – layout of equipment Subtask 1.6 - Preliminary building/site design – Site and required services layout Subtask 1.7 – Alpha testing of application Responsibilities: AP&T will be responsible for Phase 1 except for the detailed equipment design that will be the responsibility of Nexterra. AP&T will complete all activities in close cooperation with the Community of Tok. Nexterra will complete the preliminary equipment design in consultation with AP&T and with technical assistance from GE Energy. Task 2.0 – Engineering Design and Technical Integration The objective of this task is to complete the detailed engineering of the energy system. This will include certified general arrangement drawings, process engineering and system design. Subtask 2.1 – Process engineering of biomass energy system including wood fuel analysis, combustion analysis, mass and energy balances, process flow diagrams (PFD’s), control strategy and instrumentation diagrams. Subtask 2.2 – Equipment design including equipment layout and mechanical design, materials selection, equipment sizing and specifications, and general arrangement drawings Subtask 2.3 – Control system engineering including process description, refining control strategy, PLC programming and logic, specification of control devices and field instruments, completing detailed electrical engineering, wiring and control diagrams. Responsibilities: This task will be completed by Nexterra’s engineering team in close collaboration with AP&T project management and facilities staff. The Phase IV Construction AEA funding request includes the following key tasks: Task 3.0: Procurement and Fabrication This task will complete fabrication, assembly and construction of the energy system. This involves preparation of supplier specifications, RFQ bid documents, securing quotations and outsourcing to local suppliers to fabricate and deliver energy system components. System components will be manufactured and shipped to site for final assembly and construction. Wherever possible, equipment will be sourced/fabricated in Alaska. Included in procurement are the major technical innovation pieces of the project which are: > Syngas thermal cracking chamber > Syngas heat recovery system > Controls and instrumentation to be developed in accordance with gas safety regulations Subtask 3.1- Procurement of vendor designed major components, such as conveyors, fans, pumps, fuel screen and hydraulic system Subtask 3.2- Fabrication of Nexterra designed components such as fuel reclaim system, dryers, fuel silo, conveyors, metering bin, fuel in-feed conveyors, in-feed cone, gasifier, cracking chamber, oxidizer and interconnecting breaching Subtask 3.3- Fabrication of ash removal system AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 9 Subtask 3.4- Specification of refractory Subtask 3.5- Procurement of instrumentation and controls Subtask 3.6- Procurement of analytical and electrical equipment Subtask 3.7- Procurement of conveying ducts Subtask 3.8- Procurement of the IC Engine, Gas train, silencer, hoerbiger valves and ancillary engine equipment Responsibilities: This task will be completed by Nexterra’s engineering team in close collaboration with AP&T project management and facilities staff. Task 4: Installation and Commissioning The objective of this task is to install and commission the demonstration plant at the AP&T site. Subtask 4.1- Installation of Foundations Subtask 4.2- Completion of mechanical installation of fuel handling system, gasification system, heat recovery system, syngas conditioning equipment and power generation equipment Subtask 4.3- Construction of building to house gasification system Subtask 4.4- Complete electrical power and control wiring Subtask 4.5 - Program and test instrumentation and control systems Subtask 4.6- Commissioning the energy system. Commissioning will involve a controlled start- up operation at partial fuel capacity using wood fuels. This will be followed by a series of short trials to test system operation and ensure all process, mechanical and control systems are fully functional. During this period, AP&T plant operations staff will be trained to operate the system. Subtask 4.7-Training of staff to operate and maintain gasification system and power generation equipment Responsibilities: This task will be supervised by Nexterra’s Chief Engineer and the Vice President of Projects. Activities will be completed by Alaska-sourced installation contractors, Nexterra start-up technicians, and AP&T facilities personnel. Task 5: Energy System Optimization, Performance Testing, Analysis and Reporting This phase involves optimization and performance testing of the energy System. Performance tests will be conducted on a range of operating variables including energy production, emissions monitoring, process performance, and system control. Third party emissions tests will be conducted by a domestically-sourced recognized analytical service company to measure VOC, PM, NOx, CO and other regulated emissions during the contractual performance test immediately prior to turning the system over to AP&T. During this period, AP&T, Nexterra and GE support staff will meet regularly and compile a formal project operations report. The objective of Task 5 is to operate the energy system at full commercial design capacity and optimize the process and control system. System optimization and analysis tasks include the tasks outlined below. Subtask 5.1 - Fuel analysis Subtask 5.2 - Operational trials Subtask 5.3 - Optimization of syngas conditioning system Subtask 5.4 - Control system optimization Subtask 5.5 - Syngas analysis and characterization Subtask 5.6 - Monitoring of GE’s internal combustion engine while operating on syngas Subtask 5.7 - Third party monitoring and evaluation of performance test Responsibilities: These tasks will be completed by Alaska-sourced installation contractors, and AP&T facilities personnel, with support from Nexterra’s Chief Engineer and start-up technicians. AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 10 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. This Project represents a unique and broad based collaboration between Utility (AP&T); Industry (Nexterra and GE Energy) ; Community (Tok, Alaska); Forest Industry (Supplier of biomass); State Government – Department of Natural Resources; and Federal Government (Through DOE NETL) . If awarded, AP&T will be the sole recipient of the grant funding and will be responsible for overall management of the project, operating the energy system including fuel supply, consumables and qualified labor. Through a business agreement, the subcontractor (Nexterra) will provide equipment and technical and operational support to AP&T for the proposed system. AP&T facilities personnel will be responsible for operating the energy system including fuel supply, consumables and qualified manpower, while Nexterra and GE Energy will provide equipment, technical and operational support. The following is a summary description of each entity involved in the proposed project: AP & T AP&T has been generating electricity with hydroelectric and diesel power plants throughout Alaska since 1957. Now serving 24 communities, AP&T has personnel certified as electrical, civil, and mechanical engineers who maintain the facilities to the highest professional standards. AP&T has a consistent history of excellent performance in reliability, customer service, and a long-standing reputation for being a low cost provider of electric service. AP&T has a proven record of accomplishment as an electrical utility as well as a developer of hydroelectric and other renewable energy projects. AP&T currently operates five hydroelectric projects, with an additional project currently under construction. Since 2001, AP&T has installed over 75 miles of 34.5 kV transmission line on Prince of Wales Island, Alaska, all with in-house personnel. Many additional miles of transmission lines, substations, and transformers have been constructed since then. During 2005-2006, AP&T designed, engineered, permitted, and constructed the 2MWe run-of-river South Fork Hydroelectric Project. Several of these projects were funded by grants, demonstrating significant grant administration experience. AP&T has administered several multi-million dollar budgets, including the management of 60+ employees, equipment, and all generation and distribution resources. AP&T’s CEO has had a 37-year career with the company where he has been responsible for management, supervision, operating functions and financial performance of the company. His breadth of experience within the company encompasses general management, accounting, purchasing and billing, regulatory affairs, and tariff conformance and development. Nexterra Energy Corporation Nexterra Energy Corp. is a privately held, Vancouver-based energy technology company incorporated in 2003 in British Columbia. The company is majority owned and financed by Calgary-based ARC Financial. ARC is Canada’s largest financial management company focused on the energy sector with over $1.8 billion under management and investments in more than 100 energy firms. Nexterra is well capitalized with $20MM of invested equity. In addition to equity funding, Nexterra has also received over $10MM from Sustainable Development Canada, National AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 11 Research Council, NRCan and Ethanol BC to support R&D and early commercial technology applications. Nexterra has established strategic relationships with Johnson Controls, Honeywell, McKinstry, Andritz, GE Energy, and other American strategic partners. Nexterra has a demonstrated history of developing and commercializing biomass gasification technology. Nexterra operates an 8MMBtu/hr biomass system at its Product Development Center (“PDC”) in Kamloops, British Columbia for R&D and product development work. The PDC was commissioned in 2004 and is staffed by twelve product development engineers and operators for 24/7 operations. The PDC has been the principal site for the development of current and planned future gasification applications. A history of application development activity carried out at the PDC is provided below: o Indirect Fire (Development Status – Commercial) – Indirect-fired gasification system such as those located at the University of South Carolina, a Kamloops plywood mill, Dockside Green (Victoria, BC) and the DOE’s Oakridge National Labs (ORNL) fully combust syngas in a closely coupled oxidizer. The resulting, clean, high temperature flue gas is directed to heat recovery equipment for delivering heat to boilers, dryers and traditional thermal applications. o Direct-Fired (Development Status – Demonstration) – With a direct-fired syngas application, such as the New Westminster BC Kruger paper mill project, a gasifier similar to that used in indirect fire systems provides the basic gasification platform minus the closely coupled oxidizer which is not required. Rather than combusting the syngas in an oxidizer, the clean, low temperature syngas is conveyed via ducting, and then directly combusted in a dual fuel syngas/natural gas combustion nozzle into a power/steam boiler or a limekiln. o IC Engine – The basis for this Project, Nexterra’s IC engine program has successfully demonstrated Nexterra’s proprietary thermal cracking technology that produces “warranty grade” syngas for use in GE Jenbacher IC engines. Nexterra is currently conducting syngas slipstream testing and is pilot testing a 239kw pilot scale IC engine in support of the AP&T Project. Nexterra’s Vice President/Chief Engineer has over 17 years experience designing and implementing combustion systems and over 26 years engineering experience. Prior to joining Nexterra, he was Contract Department Manager at Wellons, Western Canada’s largest manufacturer of wood-fired energy systems, where he was responsible for design and project management of turnkey energy system projects for customers in the forest products industry. Nexterra’s Program Manager has over 20 years of multidisciplinary engineering experience with an extensive record of management of technology development from commercialization to implementation. Prior to joining Nexterra in 2003, he was a consultant in the technology sector, serving clients such as Ballard Power Systems, DynaPower Systems and BI PureWater. GE Energy GE Energy has products and services ranging from aircraft engines, power generation, water processing and security technology to medical imaging. GE serves customers in more than 100 countries and employs more than 300,000 people worldwide. GE Energy is one of the world's leading suppliers of power generation and energy delivery technologies, with a 2007 revenue of $22 billion. Based in Atlanta, Georgia, GE Energy works in all areas of the energy industry including coal, oil, natural gas and nuclear energy; renewable resources such as water, wind, solar and biogas; and other alternative fuels. Numerous GE Energy products are certified under ecomagination, GE's corporate-wide initiative to aggressively bring to market new technologies that will help customers meet pressing environmental challenges. AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 12 Ecomagination is GE’s commitment to help its customers and society solve its most pressing energy and environmental challenges. Under Ecomagination, GE has committed to: • Doubling its research investment in environmentally friendly technologies from $700 million to more than $1.5 billion over the next five years. • Introducing new products and services that offer significant and measurable environmental performance advantages to its customers. • Reducing its greenhouse gas emissions (GHG) and improve its energy efficiency. • Keeping the public informed. GE has pledged to publicly report its progress in meeting its goals. GE has been collaborating with Nexterra on the IC engine application since early 2007. AP&T and Nexterra are equipped with professional facilities and adequate equipment to accommodate the proposed Project. The System scope is designed to include the following components: • Gasification system including gasifier, fuel metering system, combustion air fans and ducts, syngas ducting c/w abort system and ash collection system • Syngas conveying system consisting of a refractory lined duct that leads to the syngas preheater, cracking chamber and heat recovery heat exchanger • Precoat filter system including media doping, removal, and Inert gas purging systems • Syngas water condenser • Primary air condensate water evaporator • Steam side syngas duct, oxidizer and 20,000 #/hr 100psi steam boiler • Syngas gas train including syngas heater, regulators, blocking valves and sensors • GE Jenbacher J620 engine • Exhaust silencer, hoerbiger valve, oxygen catalyst and exhaust heat recovery heat exchanger • Instrumentation and controls including all field instruments, monitoring equipment and PLC control system • System installation including mechanical, refractory, and electrical installation • Commissioning, start-up and operator training 3.5 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. During all phases of the project, AP&T will provide regular periodic reports to AEA regarding the status of the work. AP&T has provided similar reports to AEA and other grant funding agencies in the past on other projects, and has established the necessary procedures for producing the report expeditiously. Communications within the team will consist of: • Weekly reports by the Environmental Compliance Monitor • Bi-weekly conference calls among the Project Manager, Superintendent, and Engineers • Periodic site visits by the Project Manager and Engineers These internal discussions will form the basis of reports to AEA. The reports will show progress made on the various tasks/milestones, the work to be accomplished in the ensuing quarter, and potential problems and corrective actions to be considered or implemented. MSProject or similar software will be used to develop and maintain schedule and budget information. Updating of the management files will be on a monthly basis. AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 13 Additionally, the information gathered by this project will be disseminated as follows: • University of Alaska, Fairbanks – The University, through ACEP and the School of Natural Resources, will be asked to participate in evaluating the System and will assist in the dissemination of the results • GE Energy – It is expected that GE Energy and its Jenbacher subsidiary will publish the results of the Project throughout the GE community and various global biomass to energy conferences. • Nexterra – Nexterra is a member of the global biomass network and will present the results of the project to both domestic and international renewable energy audiences. • Alaska State Government – The State of Alaska will publish its findings about the project as an example of Alaska’s leadership in implementing a core competency in renewable energy. The State will highlight the project and its results through various presentation opportunities including presentations to the Western Climate Initiative, through the Department of Natural Resources, Forestry. 3.6 Project Risk Discuss potential problems and how you would address them. The following contains proprietary information that Alaska Power and Telephone Company requests not be released to persons outside the Alaska Energy Authority, except for purposes of review and evaluation. The primary intent of the demonstration project is to gasify woody biomass and provide a syngas suitable for operation in an internal combustion engine. The syngas produced by the Nexterra gasifier must prove to be of suitable heating value, composition, stability and combustion properties for the controlled and rapid combustion process within an IC engine cylinder. The syngas provided to the engine must have a limited organic and inorganic content to prevent engine and gas train fouling. The key to success (and the key risk) of this project is the effective removal/conversion of the tars to non-condensable gases and/or manageable constituents. The conditioned syngas needs to be effectively void of contaminants prior to use in an IC Engine. Although much forethought and planning has been put into project development, some technical risks are expected to be encountered. The risk mitigation plans are as follows: o Identified Risk: High operating temperatures pose a risk to process equipment such as heat exchangers and the cracking chamber and High operating temperatures of >2,000°F increase the possibility of ash slagging at typical ash melting points. Risk Mitigation: Potential reduction of demonstration/commercial scale process temperatures at the potential expense of efficiency. o Identified Risk: Incomplete destruction of tars by syngas cleaning/conditioning equipment. Risk Mitigation: If the target post-cracking tar content is not achieved within the parameters for IC engines then post-treatment regimes will be considered. These treatments may include: WESPs, partial OLGA, expanded pre-coat filter systems, etc. AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 14 o Identified Risk: Phenols, BTEX (Benzene, Toluene, Ethylbenzene and Xylenes) remaining in condensate water. Risk Mitigation: If additional reductions become necessary, then post treatment of these organics in the water phase via activated carbon or biological methods will be investigated and may require additional process equipment and capital/operating costs. For the demonstration plant, a regenerative thermal water purification system may reduce global efficiency. A non-regenerative purification system is included in the Demo system capital cost for a startup/flare oxidizer to continuously burn the contaminated water and recover most of the heat as recoverable thermal energy. Major business risks expected to be encountered and the risk mitigation plans are as follows: • Identified Risk: Ability to deliver constant stream of quality syngas Risk Mitigation: This is a differentiating factor between this and competitive systems, and the proprietary development to be demonstrated • Identified Risk: Ability to secure sufficient quality wood fuel Risk Mitigation: The Project has sourced a 25-year supply of fuel through an Alaska State DNR timber sale contract • Identified Risk: Ability to automate the System and eliminate any requirement for 24/7 certified steam engineers Risk Mitigation: The Alaska State Boiler Branch has confirmed that the System will not require 24/7 certified steam engineers • Identified Risk: Confirmation of all required funding Risk Mitigation: AP&T has significant private resources, and has confirmed that biomass CHP development is a priority for and will be supported by several project partners • Identified Risk: Proponent ability to deliver, commission and replicate Risk Mitigation: AP&T, GE and Nexterra are well financed, have demonstrated project management and commercialization skill sets and have access to demonstrated sales channels that will enable the timely replication of the technology. Other risks expected to be encountered and the risk mitigation plans are as follows: • Identified Risk: Public Support Risk Mitigation: The Project will initiate local public consultation sessions to be held at the beginning of the project. The intention of these sessions will be to present project information, hear all questions and concerns, and build public trust and support. • Identified Risk: Securing Building and Development Permits Risk Mitigation: A process is in place that has previously been successful in securing necessary permits and authorizations • Identified Risk: Securing and meeting Emissions permit Risk Mitigation: Nexterra has previously obtained third party emissions results on two of its existing similar systems, and particulate emissions were found to be in the range of 2-3mg/m3 compared to 4-6mg/m3 for natural gas AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 15 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 State of Alaska Department of Natural Resources (DNR) Tok Area Forestry is completing an agreement for a 25-year contract with AP&T for a timber sale encompassing approximately 27,000 acres of State forestland in the Upper Tanana. This is more than sufficient resources for required feedstock. The system will convert approximately 12,500 tons of woody biomass per year to heat and power. This will use approximately 300 acres per year (at 40 tons per acre), or a total of 6,000 acres over 20 years. This amounts to about 25% of the biomass available from the leased parcel of state forest land. DNR Forester, Jeffrey Herrmanns states that State forest lands near the project area could provide much more woody biomass on a sustainable basis. He also states that the wildfire risk is an ongoing danger to communities in the Upper Tanana, and that harvest for energy production could avoid some wildfire fighting costs, while providing compensation to the State for the removed biomass fuel. The following contains proprietary information that Alaska Power and Telephone Company requests not be released to persons outside the Alaska Energy Authority, except for purposes of review and evaluation. The Nexterra gasification technology, which is the core of the System, is a commercial fixed bed, updraft gasification process. Fuel, sized to 3-inch minus and with a Higher Heating Value (HHV) of 8,000-9,000 BTU/lb (DB), is bottom-fed into the center of a cone-shaped, refractory lined primary gasification chamber. Combustion air is introduced into the base of the fuel pile and partial oxidation occurs at 650 - 850°C where the fuel is converted into “syngas” and non- combustible ash. The ash migrates to the perimeter of the primary chamber and is removed mechanically by a rotating ash dropout system. Minimal fuel disturbance and low gas velocities in the gasifier promote low particulate entrainment and carry over. While operating on unprocessed bark fuel (hog fuel), Nexterra’s gasification system produces a low-btu combustible syngas with a HHV of 100 – 150 btu/ft3. The syngas exits the gasifier at a temperature of 400 – 900°F depending on the moisture content of the wood fuel. The syngas is composed primarily of CO, H2, CH4, N2, CO2 and H20. It contains very low levels of entrained particulate, which means that it meets most PM emissions regulations without requiring additional mechanical pollution control equipment such as multi-cones, bag-houses and/or electrostatic precipitators. AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 16 The GE Jenbacher IC engine being proposed for use in the System is a mature, commercial and commonly used method for generating power in small to medium scale applications with the advantage of high gross electrical efficiencies. Traditionally, IC engines have been run on fossil fuels (gasoline, diesel or natural gas) due to the lack of technology required to refine and produce tar-free syngas from biomass. Syngas derived from biomass contains non-condensable gases rich in heating value and which are generally well suited to IC engines. Gas compositions and heating value from the Nexterra gasifier are in an appropriate range to for use in an IC engine as validated by GE-Jenbacher. However, syngas produced from biomass typically contains condensable and non-condensable impurities, primarily in the form of condensable organic compounds (pyrolitic tars) as well as inorganic constituents (ash). These impurities can cause premature IC engine failures in the operation of IC engines, if not treated, as has been demonstrated with other approaches to this technology. AP&T has selected the Nexterra biomass CHP technology for its robust, elegantly simple gas cleaning process, which relies on high efficiency thermal cracking to overcome fouling issues, which have traditionally been the “Achilles Heel” of biomass power systems. This system utilizes a thermal cracking approach to convert tars to usable combustion gases. The following review outlines additional advantages of the proposed gasification technology over other options, starting with the gasifier, and then the engine genset: • Ultra Low PM Emissions – One of the most significant innovations of this system is the Nexterra gasifier that produces extremely low particulate emissions (typically <50 mg/m3 without air pollution control equipment or less than 3 mg/m3 with pollution control equipment) to exceed the most stringent air quality regulations. By comparison, the combustion of natural gas typically produces PM emissions in the 4-6 mg/m3 range, and diesel combustion emissions are higher yet. The system’s ultra-low third party verified emissions means the technology is well suited to both urban and rural applications. • Design Simplicity – the system gasifier technology is relatively simple in design with an emphasis on fewer moving parts compared to conventional combustion systems or other gasification processes. For example, Nexterra gasifiers use fixed, convection cooled grates, while others use moving, water-cooled grates that are higher cost and maintenance. A high level of ash is maintained in the gasifier with a very low volume of ash being discharged in the flue gas thereby reducing the requirement for excessively sized electrostatic precipitators or other cleanup equipment. The requirement for less equipment means lower capital, less power consumption, ease of operation and lower maintenance cost. • Low Refractory Maintenance Cost – Lower gas velocities and lower temperatures inside the gasifier means minimal wear and tear on refractory. Reduced particulate scouring means increased refractory life in the gasifier. • Better Operational Control – the system gasifier has excellent process control capabilities in terms of turndown (4:1), rapid shut down and start-up from idle mode, control over flue gas temperature and the ability to tune ash bed temperatures to eliminate ash melting and clinker formation. • Fuel Flexibility – The system’s gasification technology has been proven on bark and whitewood fuels between 15 – 55% moisture at a particle size of 3” minus. AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 17 • Application Flexibility – Ultra low emission flue gas provides opportunities to use the system gasifier for a variety of current and future applications • IC Engine – GE Jenbacher CHP systems economically utilize the waste heat incurred during engine operation to generate overall plant efficiencies of up to 90%. This efficient form of energy conversion achieves primary energy savings of roughly 40% by using a IC engine cogeneration system instead of separate power and heat generation equipment. Transportation and distribution losses are also reduced by the proximity to feedstock and end-users of community-scale decentralized energy generation. • The manufacturer of the IC engine/genset used in this system is GE Energy, one of the world's leading suppliers of power generation and energy delivery technologies, with 2007 revenue of $22 billion. Based in Atlanta, Georgia, GE Energy works in all areas of the energy industry including conventional and renewable energy. Despite the multitude of advantages to the chosen technology, some potential technology difficulties have been identified. Strategies have been developed to minimize impacts from the following issues: • Scale Limitations – Updraft gasification has several unique advantages but is also constrained in terms of scale-up potential. The size of the fuel bed is limited to the extent that air can readily penetrate the fuel pile to ensure even and rapid gasification. Typically, this constraint limits updraft gasification applications to total system sizing of under 15MWe before the number of gasifiers required exceeds practical operating and physical layout limitations. • Equipment Limitations – Nexterra’s core gasification technology is proven but the tar cracking system is new and not commercially proven. The technical challenges and risks of utilize equipment such as high temperature heat exchangers with syngas has yet to be validated. Nexterra has committed a signification amount of engineering to proper equipment and vendor selection to minimize the risks. • Syngas quality – Fundamentally, downdraft gasifiers produce a syngas stream lower in tars than updraft or fluidized bed gasifiers. Although Nexterra’s tar cracking technology produces syngas with less tar than raw tar from downdraft gasifiers, the conversion efficiency of downdraft systems is slightly higher. Scaleabily of downdraft gasifiers is a significant barrier due to the very large number of gasifiers required to produce power in the MW range. The Nexterra solution trades off the addition of a cracking system over a large number of gasifier necessary for a downdraft solution. • Water Waste Streams – All biomass to power via IC Engine solutions produce a stream of waste, most commonly contaminated water from the biomass, which is not processed in the engines. This water stream is a technical barrier in terms of life cycle cost to remediate the water. Nexterra’s solution will also produce a waste stream of water but the contaminant levels are expected to be low enough to remediate with modest technical solutions. North America and especially Alaska have a relatively abundant and sustainable woody biomass resource with a nominal value per GJ when compared to fossil fuels. This “spread” as represented by the excess of fossil fuel costs over wood fuel costs provides the economic returns required for the capital deployment necessary to deploy biomass power generation. The current consensus utility purchase price for marginal renewable power production takes into account a higher value for wood ($30+/bdt) that will help ensure the long term supply of locally harvested biomass from public lands. AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 18 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 electrical energy market in the Upper Tanana area consists of a local isolated power grid serving the communities of Tok, Northway, Tetlin and Tanacross, as well as the other rural residents of the area. All four communities are on the same local grid and are therefore supplied by the existing diesel power plant. Peak demand is about 1,800 kW, in both winter and summer. Production by the diesel power plant has averaged about 12,000 MWh/yr for the last ten years, with minor fluctuations corresponding to diesel price fluctuations. The project is expected to stabilize electric rates for AP&T’s customers by offsetting diesel. Rates may be reduced as system feedstock costs stabilize and are projected to be as much as 20% lower than current prices. Since diesel costs are expected to remain volatile, this is a major improvement in energy cost predictability for AP&T’s customers. The addition of other renewable energy sources could result in further rate reductions, but until diesel generation can be eliminated, electric rates will continue to have fluctuations. Many customers supplement their electrical use with kerosene, oil and gas for generators, as well as for heating. Several customers also use propane for cooking, clothes dryers, hot water heaters, etc. When electric rates stabilize, these other non-renewable fuel sources usage may decline, which would help clean the air and reduce toxic spills, as well as help localize the economy of the region. Energy demand is expected to grow for this area. Stable power costs are attractive to manufacturers and businesses looking to locate in this area. Healthy local economies, based on local natural and human resources can become more self-sustaining. There are 6 gensets in the Tok diesel power plant that supply electricity to all four communities, as follows: Unit #3 = CAT Model D3516, 1320 kW, Purchased / Installed 1999 Unit #4 = CAT/KATO Model 3516, 1135 kW, Purchased / Installed 1989 Unit #5 = CAT/KATO Model 3516, 1135 kW, Purchased / Installed 1995 Unit #7 = CAT Model C175-16, 1800 kW, Installed 2007 (is on loan from CAT as a test unit) Unit #8 = CAT/KATO Model D3508, 440 kW, Purchased / Installed 1985 Unit #9 = CAT/KATO Model 3512C, 1050 kW, Purchased / Installation in progress 2008 The project will reduce the cost of generation by AP&T, and the savings would be passed on to AP&T’s customers in Tetlin, Tok, Tanacross and Dot Lake who presently pay $0.47 per kWh (excluding PCE). The cost savings to customers is estimated to be roughly 20%, when current diesel costs, projected biomass costs and other factors are taken into consideration. AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 19 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 much of the power and heat generated in Alaska is from fossil fuel, including coal, diesel, natural gas or nuclear fuels. The need to move away from fossil fuel energy is painfully apparent in Alaska with high and escalating costs exacerbated by transportation challenges in rural communities that are not accessible by road. Diesel deliveries by river barge or airplane are not only expensive, but potential environmental disasters. It is anticipated that the current momentum in regulatory direction toward establishing arbitrary values in carbon markets will continue. As the carbon cycle benefits of renewable energy are inherently superior to fossil fuel energy, accounting of cost/benefit ratios for renewables will become more accurate as carbon values are quantified. Biomass is a readily accessible local fuel source that is grossly underutilized for lack of adequate and proper technology. The proposed Project will use this renewable and clean fuel source, thus minimizing dependence on fossil fuels and demonstrating community-energy sustainability and independence. Recent trends in biomass power production are focusing on smaller (<20MWe), distributed power generation facilities due to the increasing biomass transportation costs and logistical difficulties involved in securing large quantities of biomass feedstock on a long-term price-certain basis; the new System is ideally suited to addressing this demand for smaller scale power. 4.2.3 Existing Energy Market Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. The existing energy market is the Upper Tanana region, including the communities of Dot Lake, Tetlin, Tanacross, Tok and surrounding areas. The communities are on a local grid and are supplied by the Tok diesel power plant. Peak demand is about 1,800 kW. The project does not intend to eliminate the existing diesel generating capacity, but to put it in reserve as backup, rather than primary status. The direct impact on energy customers will be negligible in practical terms, and beneficial in economic and cultural terms. The same reliable electricity grid with a cleaner air shed, more stable energy costs, more local economic stimulation, and lower wildfire risk. The project will utilize local biomass woodchips to fuel the system. Biomass fuel is not only a readily accessible local fuel source that creates local jobs to harvest and process; it is also a resource that is a wildfire risk unless managed. Alaska’s seventy-year average annual loss to wildfire is approximately 1,000,000 acres burned annually. The cost of fighting wildfires is from $500 to $1500 per acre. The environmental cost of a million acres of wildfires per year is virtually incalculable. The System will create direct local employment through the harvest, transportation and processing of the woody biomass required for the System and in operating/maintaining the equipment. On replication, the System has the capacity to result in the construction of multiple Systems throughout the Alaska and North America, generating up to 130MWe of renewable energy that can create up to $500MM in direct American economic activity and offset over 170,000 tons of GHG emissions annually. Furthermore; each individual System will create up to 35 FTE (full time employee) positions (engineering, fabrication and mechanical/electrical installation) in addition to approximately 2-3 full time System Operator positions and other indirect jobs related to biomass harvesting and System maintenance. AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 20 Long-term fossil fuel prices are widely expected to rise, even in conditions of low base commodity prices that are elevated through transportation, carbon tax and carbon credit purchase requirements. The increase in overall costs of delivered fossil fuels will result in escalating conventional power production costs, and this enhances the urgency of the search for stable cost alternatives. Energy from woody biomass fuel is an ideal stable cost alternative, and has the additional benefit of being “demand power,” available as needed, as opposed to solar and wind power. Currently, the cost per GJ of thermal energy derived from fossil fuels is higher (by approximately $4/GJ and rising) than woody biomass-derived heat. A principle reason that the technology used in this Project has developed to its current state is the amount of Interest in this method. The “Market Pull” comes from the following principal sources: • Communities – urban waste and energy security issues have prompted communities to seek out technologies such as this Project to enable smarter thinking about waste, biomass resources and energy. As evidence of this, the Tok Area DNR Forester is an enthusiastic advocate of the Project and is supporting it. • Universities – Universities are perhaps the largest initial market for the sale of renewable energy systems due to the large carbon footprint that typically exist on campus. Universities are eager to reduce their carbon footprint though technologies such as is represented by the Project. The School of Natural Resources at University of Alaska Fairbanks (UAF) is also supporting this project (see reference letter). • Industry – Many industrial processes require thermal energy and or large amounts of electrical energy. The Project has the potential to supply industry with both enabling industries to substantially reduce their carbon footprint and lower cost of production through lower cost biomass energy production. • Utilities – Many utilities face the prospect of addressing State Renewable Portfolio Standards whereby a stated percentage of energy production must come from renewable sources by a certain point in time. In addition, the cost of remote community and industry power servicing are simply not economic for new businesses. • Energy Service Companies – Nexterra, a packager of the technology, currently has strategic alliances to market commercial product offerings throughout North America with Johnson Controls Inc and Honeywell Inc. • Nexterra Systems Corp. – As indicated above, Nexterra is a developer of the gasification and gas cleanup technology that will form the basis for energy production in this Project.. • GE Energy – As a participant in the Project, GE Energy with over $17b in annual renewable energy revenues views this Project as an Ecomagination Breakthrough within the GE world, acknowledging that the Project is a priority for GE and that the outcome could have a material effect on GE’s renewable energy portfolio. • Forest Industry – The forest industry views the emergence of distributed renewable power production as essential to the evolution of its industry, independent of mill closures, the cyclical building industry and the economy as a whole. • IPP’s – Independent Power Producers are eager for the development of biomass based renewable power production. Stand-alone financing for these projects must be predicated by demonstrations to the satisfaction of rating engineering firms. AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 21 4.3 Proposed System Include information necessary to describe the system you are intending to develop and address potential system design, land ownership, permits, and environmental issues. 4.3.1 System Design Provide the following information for the proposed renewable energy system: • A description of renewable energy technology specific to project location • Optimum installed capacity • Anticipated capacity factor • Anticipated annual generation • Anticipated barriers • Basic integration concept • Delivery methods The System has been designed around the attributes that will enable economic and sustainable community-scale power production in both urban and rural communities, institutions and industrial facilities. These include a small footprint (2-10MWe size) scalable in 2MW increments, GHG reduction of approximately 1,300 tons/year per MW, and localized biomass resource requirement (12,500 BDT/yr (bone dry tons per year) for 2MWe. This is equivalent to 300 acres/year at 40 tons/acre (Tok Area forest volume –estimated by DNR). This volume allows a 90-year rotation on the contracted Alaska State land base available for this project of 27,000 acres. Additional information regarding the proposed System includes: • The proposed 2MW system matches the existing load with a small reserve. The technology includes a turndown ratio that allows load matching. Biomass CHP is demand-power, available as needed, as opposed to wind or solar power that must include battery storage to be available as needed. • The proposed system is scalable in 2MW increments. An increase of generating capacity to meet additional load could be easily accomplished to allow for growth by additional business, industrial or community power needs. The system as designed is scalable from 2MW to 10MW. • Anticipated capacity factor of 100% of historical load, with the existing diesel generators available if needed for peak loads beyond 2MW. • Anticipated annual generation of 12,000 kWh, matching historical power demand. • Anticipated barriers include the previously mentioned Scale Limitations, Equipment Limitations, Syngas quality, and Water Waste Streams. • Basic integration concept is as a separate and integrated primary generating system, tied into the existing grid, in parallel to the diesel generators that will assume secondary status. • System will deliver power to the electrical grid in the same manner as the existing system. The primary difference will be the source of fuel for the generators will be local and renewable, rather than non-renewable non-local fossil fuels. AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 22 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. There are no potential land ownership issues, as AP&T owns the land upon which the project will be located. This land has been used for industrial purposes for several years and is being provided to the project as part of the matching contributions. The size of the land that will be utilized is approximately 3.3 acres, or 160,000 square feet. The new construction portion of the project will consist of one 17,600 SF metal building that will house the Biomass CHP system and a second, 30,000 SF shed to serve as a woodchip storage building. 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 AP&T will be responsible for obtaining all permits and required inspections throughout the life of the project. These include a development permit, emissions permit, and building permit. It is expected that all of these permits will be obtained by June 30, 2010. There are no anticipated barriers to obtaining the required permits to conduct this project. A process is in place that has previously been successful in securing necessary permits and authorizations that AP&T will follow. In addition, Nexterra has previously obtained third party emissions results on two of its existing similar systems, and particulate emissions were found to be in the range of 2-3mg/m3 compared to 4-6mg/m3 for natural gas. 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 The proposed Alaska Biomass CHP Demonstration Project will take place in the Upper Tanana region, adjacent to the existing power plant on Discovery Lane at Borealis Avenue in Tok. This land has been used for industrial purposes for several years. AP&T will adequate address any potential environmental and/or land use issues that may arise from the project, as follows: T&E Species: There are no threatened or endangered species that would be affected by the proposed project. AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 23 Habitat Issues: There are no threatened or endangered species habitat that would be affected by the proposed project. As the site location is currently used for industrial purposes, there would be no wildlife habitat impacts at all for the proposed project, nor would the proposed project impact migratory animal corridors of any kind. Wetlands: The proposed project would not affect any existing body of water, floodplain or wetland. Additionally, the project would not cause runoff, sedimentation or erosion. The closest body of water is the Tanana River, which is over 10 miles away from the project site. Archaeological Issues: The proposed project would not disturb any historical, archeological or cultural sites of any kind. There are no archeological sites in the vicinity of the proposed project. Telecommunications Interference: There are no telecommunications interference issues expected with the proposed project. Aviation Considerations: This project is not near an airport nor typical flight pattern, nor will the infrastructure be more than 45 feet above ground, well below safe flying elevation. Visual & Aesthetic Impacts: The proposed project would not interfere with any visual resources or alter the landscape in any major way. Please refer to the attached Environmental Questionnaire that was submitted to the U.S. Department of Energy as part of a grant application. The questionnaire will provide more details regarding potential environmental impacts of the proposed project. 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 entire proposed Alaska Biomass Combined Heat & Power Demonstration Project will cost $20,000,000. Of that amount, $10,000,000 has been requested from the U.S. Department of Energy. This AEA Phase IV Construction funding request is for $4,525,605 and includes the construction of a building to house the CHP unit, the construction of a wood storage building and contractual costs for installation of the CHP system. The remaining match funds are as follows: • AP&T: $4,867,395 • Tok Umbrella Corporation-$607,000 AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 24 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.) O&M Costs estimated by Nexterra, based on several similar installations in US and Canada. Cost Assumption Annual Cost Labor – Operators $80,000 Gasification Maintenance $185,000 Engine Maintenance $0.011/kWe-hr $170,000 Consumables $0.010/kWe-hr $155,000 Total annual O&M incl labor $580,000 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 AP&T is developing this Project to supply power to its own isolated Upper Tanana grid. (No PPA is necessary). This power will be sold to AP&T’s customers in the Upper Tanana region, including the communities of Tok (population 1,400), Tetlin (population 136), Tanacross (population 189), and Dot Lake (population 66), as well as the rest of AP&T’s rural customers in the region. They are expected to pay a lower price for biomass-generated power than they currently pay for diesel-generated power. The current cost of power that these residents are paying is $.47/kWh. Once the proposed system is installed, the price is estimated to be reduced by as much as 20%. In addition to the customers already connected to the Upper Tanana power grid, there is a great potential for a larger market. This potentially includes universities, state and federal buildings, fish processing, forest products, and others. Another potential is to increase the size of the system, given the local availability of fuel feedstock, and connect it to the Golden Valley grid. • Growth of Distributed Generation – Advances in power generation technology, market deregulation, focus on green energy and the drive for energy self-sufficiency are creating demand for highly efficient, small-scale energy systems. • Climate Change and Environmental Awareness – Public and corporate environmental awareness combined with the government’s commitment to fighting climate change are resulting in new national policy and regulatory initiatives that are mandating reductions in greenhouse gas emissions from fossil fuels. The emergence of the Waxman Energy Bill, the establishment of the Western Economic Climate Initiative and the emergence of state Renewable Portfolio Standards are leading examples of a change in awareness that is creating forward momentum for distributed and renewable energy solutions. • Rising Fossil Fuel Energy Costs vs. Wood Waste Costs – Currently, Heat and Power production is derived mostly from coal, diesel, natural gas or nuclear power production. Long term fossil fuel prices are expected to continue to rise even in current environments that are seeing low base commodity prices that are then elevated through transportation, carbon tax and carbon credit purchase requirements. This gradual increase in the overall cost of delivered fossil fuels means that conventional power production is becoming AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 25 increasingly expensive and this is spurring a search for lower cost alternatives, such as biomass fuel which, as opposed to wind and solar can be dispatched 24/7. Currently, the difference in cost per GJ of thermal energy derived from fossil fuels versus biomass is significant and growing with a current variation of approximately $4/GJ. • Excess Wood Residue – As discussed, North America and especially Alaska have a relatively abundant and sustainable woody biomass resource with a nominal value per GJ when compared to fossil fuels. This “spread” as represented by the excess of fossil fuel costs over wood fuel costs provides the economic returns required for the capital deployment necessary to deploy biomass power generation. The current consensus utility purchase price for marginal renewable power production takes into account a higher value for wood ($30+/bdt) that will help ensure the long term supply of locally harvested biomass from public lands. 4.4.4 Project Cost Worksheet Complete the cost worksheet form which provides summary information that will be considered in evaluating the project. Please see the attached completed cost worksheet. 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 fossil fuel offset • Potential fuel cost savings • Potential additional annual incentives (i.e. tax credits) • Potential additional annual revenue streams (green tags, etc) • Discuss the non-economic public benefits to Alaskans over the lifetime of the project The potential benefits of the deployment of the first viable and replicable community-scale biomass CHP system in rural Alaska will be many and significant: • Potential offset of 95% of the 2008 consumption of 1,268,323 gallons of diesel fuel System designed to operate approximately 8,000 hrs/yr Potential diesel fuel offset of 1,141,490 gallons • Potential fuel cost savings of $3.9M/yr 12,000 BDT=24,000 Green Tons Biomass @ $47/T=$1.13M vs. 1,268,323 gals diesel @ $3.29/gal = $4.17M ($3.29 average 2008 cost diesel fuel at generator) • Potential fuel cost savings = $3+M/yr • Possible Carbon Credit, Green Tag and/or other renewable energy incentive income • System appears to qualify for biomass fuel feedstock cost subsidy of $45/BDT for 1st 2 years, from USDA Biomass Crop Assistance Program (BCAP, Fact sheet attached) • System will demonstrate Alaskan leadership in clean energy technology deployment AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 26 The System described in this proposal is the result of a two year research effort by Nexterra and General Electric (GE) to demonstrate renewable power production using Nexterra’s commercially proven gasification system and pre-commercial gas cleanup solution with GE’s commercially proven Jenbacher internal combustion systems. This project will demonstrate the gasification of woody biomass to produce a synthetic form of natural gas (syngas), the treatment of the syngas in Nexterra’s proprietary cleaning/conditioning system, and the combustion of the clean syngas in a high efficiency IC engine to generate power and heat. The System is expected to set a new standard for converting biomass to heat and power with system efficiencies of up to 75%. The System will generate meaningful reductions in GHGs of approximately 1,300 tons per MW annually, and very low particulate emissions targeted at less than 5mg/SCM. This System represents a step-change evolution in mid-scale biomass power and heat production enabling cost effective distributed cogeneration systems at the scale of a community or an individual industrial facility or public/private institution. The System to be operated by AP&T for the Upper Tanana power grid will have a significant net positive environmental impact and will be designed as a Biomass CHP showcase. The System is designed to operate at low PM emissions levels, with no discharges of wastewater or other pollutants. The System will result in truck traffic of two to three woodchip trucks/day (partially offsetting diesel fuel deliveries) and the building will feature acoustically silenced equipment operating at less than 50 decibels at 20 feet. The System will be designed to deliver peak energy production of 30 MMBTU/hr (32 GJ/hr) using locally sourced wood fuel delivered to the site. Energy produced by the System will displace about 12,800 MWh of electricity per year resulting in net energy savings of approximately $1.5M/yr and reduce GHG emissions from diesel combustion by more than 2,600 tons/yr of CO2e. The System will also include heat recovery equipment to demonstrate global system efficiency and which may be integrated into a district energy system. The System will be installed as a turnkey operation and will operate in semi-automatic mode with minimal supervision exceeding all local, state and federal emission requirements. AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 27 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 If awarded, AP&T will be the sole recipient of the grant funding and will be responsible for overall management of the project, operating the energy system including fuel supply, O&M, consumables and qualified labor. Through a business agreement, the subcontractors Nexterra and GE Energy will provide equipment, technical and operational support. Please refer to the attached Equipment Appendix which lists Nexterra’s scope of supply. Please note that this equipment list contains proprietary information. Attached letter from Nexterra estimates O&M costs. AP&T is committed to maintaining and operating the system once installed and commissioned. This will be paid for out of AP&T’s general operating budget. As previously mentioned, there are some minor operational issues that could arise. However, there are mitigation procedures and plans in place to address theses issues. To reiterate, those technical risks and mitigation plans are as follows: o Identified Risk: High operating temperatures pose a risk to process equipment such as heat exchangers and the cracking chamber and High operating temperatures of >2,000°F increase the possibility of ash slagging at typical ash melting points. Risk Mitigation: Potential reduction of demonstration/commercial scale process temperatures at the expense of efficiency. o Identified Risk: Incomplete destruction of tars by syngas cleaning/conditioning equipment. Risk Mitigation: If the target post-cracking tar content is not achieved within the parameters for IC engines then post-treatment regimes will be considered. These treatments may include: WESPs, partial OLGA, expanded pre-coat filter systems, etc. o Identified Risk: Phenols, BTEX (Benzene, Toluene, Ethylbenzene and Xylenes) remaining in condensate water. Risk Mitigation: If additional reductions become necessary, then post treatment of these organics in the water phase via activated carbon or biological methods will be investigated and may require additional process equipment and capital/operating costs. For the demonstration plant, a regenerative thermal water purification system may reduce global efficiency. A non-regenerative purification system is included in the Demo system capital cost for a startup/flare oxidizer to continuously burn the contaminated water and recover most of the heat as recoverable thermal energy. Since this is a demonstration project, tracking and reporting the savings and benefits that the system generates will be necessary. AP&T is fully committed to recording this information and has made a preliminary agreement with UAF to evaluate the system, document results and participate in evaluating the System, and disseminate the results. It is expected that GE Energy and its Jenbacher subsidiary will publish the results of the Project throughout the GE community and various global biomass to energy conferences. In addition, Nexterra will present the results of the project to both domestic and international renewable energy audiences. AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 28 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. Some of the work necessary to ensuring the success of the Alaska Biomass Combined Heat & Power Project has already been conducted. The U.S. Department of Energy grant that was submitted in August, 2009 will precede this award, and once the AEA grant is awarded, if the project is selected, the Project will already be well underway. As this is a complex and large- scale project with multiple partners and entities involved, many steps will have already been taken to move the project forward. These steps and actions include: • Six months of strategic planning meetings to develop a project management plan, commercialization plan and other vital planning actions • Research on the viability of renewable community-scale biomass combined heat & power in rural communities, specifically in the unique environment that is Alaska • Established strategic partnerships with a variety of entities, including state, federal, and private entities that all have resources that are needed for the project • Submission of a $10,000,000 funding request to the U.S. Department of Energy which has successfully passed the first administrative review and is now undergoing technical review. AP&T has a proven track record as an electrical utility as well as a developer of hydroelectric and other renewable energy projects. AP&T currently operates five hydroelectric projects, two storage and three run-of-river, with the Kasidaya Creek Hydro Project under construction. Since 2001 AP&T has installed over 75 miles of 34.5 kV transmission line on Prince of Wales Island, Alaska, all with in-house personnel. Many more miles of transmission lines, substations and transformers have been constructed since then. During 2005-2006, AP&T also designed, engineered, permitted, and constructed the 2MWe run-of-river South Fork Hydroelectric Project. Several of the projects were funded by grants, demonstrating significant grant administration experience. AP&T is familiar with and has successfully obtained AEA funding in the past, and has regularly met funding requirements and reports. 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. Please see attached letters of support. No opposition has been identified, and the plan is to reach out to any potentially concerned citizens or groups to invite them to the public meetings and listen to their concerns. We believe that the demonstrable facts about this project will answer most concerns. We also feel that in many cases, genuine acknowledgment of all concerns and points of view can often ameliorate potential opposition. AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 29 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 Grant request is $4,505,605. The following is the project budget narrative. Please see the attached grant budget form for a detailed breakdown of funds requested from AEA for this Phase IV Construction project, milestones that are linked with each budget category, and all matching funds that will be contributed to the overall project cost. Budget Narrative A. – B. Personnel : Alaska Power and Telephone (AP&T) has allocated labor costs for eight (8) key staff members who will spend time on the project and one (1) secretarial staff; these individuals are currently employed with AP&T. Costs for staff have been proposed for the DOE Grant, and not for this AEA request. Fringe Benefits: For fringe benefits, AP&T employs a direct labor allocation where the relationship of all budgeted employee benefits to budgeted labor expense is estimated at 50% and applied to direct labor charged. The expenses included in the allocation are: Payroll taxes, Health Insurance premiums, Employee Stock Ownership Plan contributions, workmen’s compensation, state unemployment insurance, vacation, sick pay, and holiday pay. The percentage applied during the year to direct labor cost is 50%. That total fringe allocation amount is then “trued-up” at year end to the actual fringe expense incurred and appropriate adjustment is made. The true-up adjustment generally is in the few percentage points range. Year One: $432,802.50 Year Two: $432,802.50 Total AEA Share for Personnel and Fringe Benefits: $0 Total Match Share, (DOE Grant): $865,605 C. Equipment: Heavy equipment will be needed for handling large logs and will be purchased by AP&T as match; One (1) Hitachi Log Loader, $250,000 and one (1) Cat 966 Loader with fork and bucket, $300,000. A RotoChopper for chipping the logs will be provided by Tok Umbrella Corporation as match for project use; the value of the match for the use of the machine is $257,000. Letters of commitment are included with this proposal. Total AEA Share for Equipment: $0 Total Matching Share: $807,000 D. Travel: Domestic travel costs are allocated for the PI and key staff for travel to Nexterra’s offices for training and on site demonstrations/tours of the proposed system. In addition, travel is expected for key staff to attend conferences and planning meetings during each year of the project. AP&T will provide all travel expenses as match to the project. Due to the rural Alaskan location of the Project site, travel costs can be high; the closest commercial airport is 200 miles from Tok. Year 1 Travel $25,000 Year 2 Travel $18,000 Total AEA Share for Travel: $0 Total Matching Share: $43,000 E. Participant / Trainee Costs None requested. AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 30 F. Other Direct Costs Materials and Supplies: None Requested Publication Costs: Costs for industry journal publications on the project will be funded by the DOE Grant for four (4) professional reports in Year 2 only: $4,000 Consultant Services are allocated for coordination and management of the project activities, reports, and for monitoring the implementation schedule. $100,000 each year. AP&T will pay for 50% of these costs as match to the project, and the other 50% will be provided through the DOE Grant. ADP/Computer Services are anticipated for data management and reporting are estimated at $14,395 for the project, provided by AP&T as in-kind match to the project. Sub awards/Contractual Costs will be allocated for a contract with Nexterra Systems, Corp for the purchase and installation of the proposed CHP system. Total contract cost for the 2-Year Project is $15,300,000. The submitted DOE Grant will provide $8,030,395; AP&T will apply for additional loans and grants to provide an additional $4,000,000 in cash and in- kind services for the system installation and demonstration; this request to AEA will provide the balance of the system costs of $3,269,605. Year 1: $8,800,000 Year 2: $6,500,000 Two (2) buildings will be needed for the project; this request to AEA will provide $1,256,000 for engineering services, labor, materials and construction, and the DOE Grant will provide remaining funds for materials for the buildings, ($1,000,000) which are: Total cost for the Year 1 construction is estimated as follows: • CHP System Building, 17,600 sqf x $60 sqf Total Cost to Build: $1,056,000 • Wood Storage Shed, 30,000 sqf x $40 sqf Total Cost to Build: $1,200,000 Land will be needed for the demonstration site, and AP&T will provide the land as match to the project. Total value of the land is $160,000, allocated in Year 1. Woody biomass will be needed for the demonstration of the system, and 1000 tons of harvested decked wood will be provided as match by the Tok Community Umbrella Corporation. Total value, including cost of harvesting and delivery is $175,000 per year for each year of the project. Total AEA Share for Other: $4,525,605 Total Match Share: $13,778,790 G. Direct Costs AEA Request: $4,505,605 Match: $15,494,395 H. Indirect Costs None Requested I. Total Direct and Indirect Costs AEA Request: $4,505,605 Match: $15,494,395 AP&T – Alaska Biomass Combined Heat and Power Demonstration Project AEA 10-015 Alaska Energy Authority, Renewable Energy Fund Round 3 Grant Application 31 Cost Sharing The total cost share contribution for the 2-Year Project is $15,494,395. Three companies/agencies are providing cost share amounts to this project: 1. Alaska Power and Telephone Company (applicant) will provide $4,887,395 cash and in-kind match for equipment and materials, labor and construction costs for the new buildings, consultant costs, computer and data management costs, travel expenses, installation costs, and land for the proposed CHP demonstration project. 2. Tok Community Umbrella Corporation (TCUC) has committed an in-kind contribution of $607,000. This includes costs for use of the RotoChopper and harvested decked wood that is already in place. Once chipped it will be stored in the Wood Storage shed . 3. U.S. Department of Energy (Federal) - Note: DOE funds have been requested and are pending review and award. The request was submitted in August 2009 and is expected to be awarded in December 2009 for a project start date of January, 2010. Amount of request: $10,000,000.