HomeMy WebLinkAboutCostBenefitWorksheet/S�ALASKA Renewable Energy Fund Round 3
ENERGYAUTHORITY Project Cost/Benefit Worksheet
Please note that some fields might not be applicable for all technologies or all project
phases. The level of information detail varies according to phase requirements.
1. Renewable Energy Source
The Applicant should demonstrate that the renewable energy resource is available on a
sustainable basis.
Annual average resource availability. Baseline assumption is that there is a geothermal
resource at Mt Spurr capable of supporting 50-100MW
of net average baseload power at 100% resource
availability. However this assumption is yet to be
confirmed, which is the purpose of this grant application
Unit depends on project type (e.g. windspeed, hydropower output, biomasss fuel)
2. Existing Energy Generation and Usage
a) Basic configuration (if system is part of the Railbelt' grid, leave this section blank)
i. Number of generators/boilers/other
ii. Rated capacity of generators/boilers/other
iii. Generator/boilers/other type
iv. Age of generators/boilers/other
v. Efficiency of generators/boilers/other
b) Annual O&M cost (if system is part of the Railbelt grid, leave this section blank)
i. Annual O&M cost for labor
ii. Annual O&M cost for non -labor
c) Annual electricity production and fuel usage (fill in as applicable) (if system is part of the
Railbelt grid, leave this section blank)
i. Electricity [kWh]
ii. Fuel usage
Diesel [gal]
Other
iii. Peak Load
iv. Average Load
v. Minimum Load
vi. Efficiency
vii. Future trends
d) Annual heating fuel usage (fill in as applicable)
i. Diesel [gal or MMBtu]
ii. Electricity [kWh]
iii. Propane [gal or MMBtu]
Not applicable for a Railbelt project
Not applicable for a Railbelt project
Not applicable for a Railbelt project
1 The Railbelt grid connects all customers of Chugach Electric Association, Homer Electric Association, Golden Valley Electric
Association, the City of Seward Electric Department, Matanuska Electric Association and Anchorage Municipal Light and Power.
RFA AEA10-015 Application Cost Worksheet Page 1 10-7-09
B�ALASM
Renewable Energy Fund Round 3
ENERGYAUTHORITY Project Cost/Benefit Worksheet
iv. Coal [tons or MMBtu] Not applicable for a Railbelt project
v. Wood [cords, green tons, dry tons] Not applicable for a Railbelt project
vi. Other Not applicable for a Railbelt project
a) Proposed renewable capacity
We currently estimate the geothermal plant to be built at
(Wind, Hydro, Biomass, other)
Mt Spurr to have the average capacity of 50-100 MW, net
[kWh or MMBtu/hr]
to the grid
b) Proposed Annual electricity or heat production (fill in as applicable)
i. Electricity [kWh]
416,100,000 kWh — 832,200,000 kWh @ 95% availability
ii. Heat [MMBtu]
Not Applicable
c) Proposed Annual fuel Usage (fill in as
applicable)
i. Propane [gal or MMBtu]
Not Applicable
ii. Coal [tons or MMBtu]
Not Applicable
iii. Wood [cords, green tons, dry tons]
Not Applicable
iv. Other
Not Applicable. The geothermal plant will consume none
a)
Total capital cost of new system
Early estimations indicate $5,000-$6,000 / kW
b)
Development cost
Early estimations indicate $500-$600 / kW out of (a) until
resource is confirmed and construction plus well -field
development (additional well drilling, piping) can begin
c)
Annual O&M cost of new system
Early estimations indicate $0.03 — $0.06 / kWh
d)
Annual fuel cost
There is no fuel cost once a facility is up and running
5. Project Benefits (calculated for a 50 MIN net scenario displacing natural gas.
See detailed assumptions and calculations below)
a) Amount of fuel displaced for
i. Electricity 2,925,183 MBtu of natural gas per year (1)
ii. Heat
iii. Transportation
Not applicable
Not applicable
b) Price of displaced fuel From $22.1 m in 2016 to $41 m in 2041 (2)
c) Other economic benefits CCGT plant O&M estimated at $4.1 m / year (3)
d) Amount of Alaska public benefits Carbon credit estimated at $13.7m / year (4)
a) Price for power purchase/sale Early estimations indicate $120-$160/ MWh, for a 25 year
PPA starting 2016, in 2016 $ value
RFA AEA10-015 Application Cost Worksheet Page 2 10-7-09
�6411EID) ALASKA Renewable Energy Fund Round 3
® ENERGY AUTHORITY Project Cost/Benefit Worksheet
7. Project Analysis
a) Basic Economic Analysis
Project benefit/cost ratio 1.59(5)
Payback 17 years (5)
Notes and assumptions:
(1) Assuming 8,000 Btu/kWh for a combined cycle natural gas plant (CPUC GHG modeling
for CCGT,
http://www.ethree.com/GHG/21%2OGas%20CCGT%2OAssumptions%2Ov4.doc)
(2) Projection for Btu of natural gas taken from DOE Report #:DOE/EIA-0383(2009)m
assuming Henry Hub prices (http://www.eia.doe.gov/oiaf/aeo/gas.htm1)
(3) Assuming O&M of a CCGT plant at $10/MWh (company reference based multiple industry
sources)
(4) Assuming 1.372 lbOf CO2/kWh is emitted from a natural gas plant (K. Kit Bloomfield
(INEEL), Joseph N. Moore (EGI), and Robert M. Neilson, Jr. (INEEL), GRC Bulletin
Mar/Apr 2003 — attached), which equals 0.599 ton CO2/kWh , and assuming price of one
ton of CO2 will cost 38.4 EUR or $55 in 2020 (average of estimates by various industry
analysts: UBS, Deutsche Bank, Barcap, Daiwa, Societe Generale) which ultimately
translates to $33/MWh. Assuming yearly generation at 416,100,000 kWh (50 MW net at
95% availability) yields total carbon credit of $13.7 million
(5) Assuming a simplified zero inflation model as follows:
a. Fuel cost taken from references (1) and (2)
b. O&M costs for a natural gas CCGT taken from reference (3)
c. Cost of CO2 taken from reference (4)
d. Cost of project taken from preliminary company model assuming total CAPEX of
$5,500/kW and O&M (fixed + variable) of $0.05/kWh
Year
Fuel cost
CO2 Costs @
$33/MWh
CCGT O&M
Costs at
$10/MWh
Total
benefit
Cost
2010
$22,169,808
$13,731,300
$4,161,000
$0
$1,000,000
2011
$22,036,656
$13,731,300
$4,161,000
$0
$4,000,000
2012
$22,469,400
$13,731,300
$4,161,000
$0
$9,000,000
2013
$22,502,688
$13,731,300
$4,161,000
$0
$10,000,000
2014
$22,702,416
$13,731,300
$4,161,000
$0
$50,000,000
2015
$22,968,720
$13,731,300
$4,161,000
$0
$126,000,000
2016
$23,368,176
$13,731,300
$4,161,000
$41,260,476
$75,000,000
2017
$23,900,784
$13,731,300
$4,161,000
$41,793,084
$20,805,000
2018
$24,566,544
$13,731,300
$4,161,000
$42,458,844
$20,805,000
2019
$25,165,728
$13,731,300
$4,161,000
$43,058,028
$20,805,000
2020
$24,732,984
$13,731,300
$4,161,000
$42,625,284
$20,805,000
2021
$24,033,936
$13,731,300
$4,161,000
$41,926,236
$20,805,000
2022
$24,266,952
$13,731,300
$4,161,000
$42,159,252
$20,805,000
2023
$24,633,120
$13,731,300
$4,161,000
$42,525,420
$20,805,000
2024
$25,864,776
$13,731,300
$4,161,000
$43,757,076
$20,805,000
2025
$26,896,704
$13,731,300
$4,161,000
$44,789,004
$20,805,000
2026
$27,895,344
$13,731,300
$4,161,000
$45,787,644
$20,805,000
RFA AEA10-015 Application Cost Worksheet Page 3 10-7-09
/G=IEED)ALASKA Renewable Energy Fund Round 3
GEEDENERGY AUTHORITY project Cost/Benefit Worksheet
2027
$28,860,696
$13,731,300
$4,161,000
$46,752,996
$20,805,000
2028
$29,692,896
$13,731,300
$4,161,000
$47,585,196
$20,805,000
2029
$30,258,792
$13,731,300
$4,161,000
$48,151,092
$20,805,000
2030
$30,791,400
$13,731,300
$4,161,000
$48,683,700
$20,805,000
2031
$32,099,143
$13,731,300
$4,161,000
$49,991,443
$20,805,000
2032
$32,985,238
$13,731,300
$4,161,000
$50,877,538
$20,805,000
2033
$33,871,333
$13,731,300
$4,161,000
$51,763,633
$20,805,000
2034
$34,757,427
$13,731,300
$4,161,000
$52,649,727
$20,805,000
2035
$35,643,522
$13,731,300
$4,161,000
$53,535,822
$20,805,000
2036
$36,529,617
$13,731,300
$4,161,000
$54,421,917
$20,805,000
2037
$37,415,712
$13,731,300
$4,161,000
$55,308,012
$20,805,000
2038
$38,301,807
$13,731,300
$4,161,000
$56,194,107
$20,805,000
2039
$39,187,902
$13,731,300
$4,161,000
$57,080,202
$20,805,000
2040
$40,073,997
$13,731,300
$4,161,000
$57,966,297
$20,805,000
2041
$40,960,091
$13,731,300
$4,161,000
1 $58,852,391
$20,805,000
Total cost Total benefit
$795,125,000 $1,261,954,421
Benefit/Cost
ratio: 1.59
Payback: 17 years
Preliminary conclusions:
Although this is a greatly simplified model, both on the cost side as well as on the benefit side, it
shows that a geothermal plant at Mt. Spurr can complete effectively with a fossil fuel
plant, especially when taking the cost of carbon into consideration.
Furthermore, results would have been even more favorable if additional factors were taken into
consideration, e.g.:
• Since this is a long-term project, the CAPEX of the CCGT plant should also be added to
the benefit
• A premium should be added to the benefit to reflect the predictability of the geothermal
cost, which translated to a known price of power for the lifetime of the project, while any
assumption on the fuel cost is sensitive to it's volatile pricing.
• Another premium should be added to reflect the benefit from offsetting carbon emission,
since this is also a major unknown, especially when evaluating a long term project like
the subject of this work.
RFA AEA10-015 Application Cost Worksheet Page 4 10-7-09