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HomeMy WebLinkAboutKenaiWinds Complete Round3 Application Kenai Winds LLC C/O Apex Wind Energy 20 Jon Barrett Rd. Suite 2 Patterson, NY 12563 845.228.3485 phone 845.878.2139 fax jberkow@apexwind.com November 10, 2009 Mr. Butch White Alaska Energy Authority 813 West Northern Lights Blvd Anchorage, AK 99503 Dear Mr. White: Please find enclosed the request for grant funding for the Kenai Winds Expansion Project under the AEA’s Renewable Energy Grant Recommendation Program Round III. The enclosed grant is for the construction and commissioning (Phase IV) of Alaska’s first commercial wind energy facility. The many public benefits of the Kenai Winds power facility are familiar to AEA as it has been previously been awarded grants under Rounds I and II of the Renewable Energy Grant Program. These funds have been used to develop a 10 MW facility. Homer Electric Association has recently requested that Kenai Winds expand to a 15 MW facility as part of their post-2014 strategic operating plan. The funds requested in this application will be used in the construction phase of the wind farm expansion. As illustrated in the application, the Kenai Winds project is enthusiastically supported by Kenai Peninsula residents. This ‘shovel-ready’ project is ideally situated to help them through a period of economic downturn that began with insufficient natural gas resources needed to support commercial industries. This project will increase the energy security of all South- Central Alaskan residents by displacing natural gas that would otherwise be used for power generation. Additionally the project will result in reduced greenhouse gas emissions as well as increased stability and reliability of the HEA power grid which will improve the operational safety of the Nikiski industrial corridor. The local highly skilled Alaskan workforce will transition from applying skills in traditional carbon-based industry applications to the expanding wind energy industry. The enclosed application also illustrates that this project is well defined and designed, well financed, expertly project managed, on track to be completed, and in the vernacular “has legs” and incentive to be operational in 2010. In summary, this grant will support a power generation project that will result in construction of a safe, reliable, and efficient Southcentral Alaska energy system that is sustainable and environmentally sound. Please do not hesitate to contact me at if you need any more information. Sincerely, Josh Berkow Project Manager Apex Wind Energy Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 1 10/7/2009 Kenai Winds Expansion Project Response to Request for Grant Applications AEA-09-004 Table of Contents Grant Application Section 1 – Applicant Information 2 Section 2 – Project Summary 3 Section 3 – Project Management Plan 7 Section 4 – Project Description and Tasks 11 Section 5 – Project Benefit 25 Section 6 - Sustainability 29 Section 7 – Readiness and Compliance with Other Grants 30 Section 8 – Local Support 30 Section 9 - Grant Budget 31 Kenai Winds Benefit Cost Worksheet Round 3 34 Kenai Winds Grant Budget Worksheet Round 3 36 Appendices – A Apex Wind Energy Resumes 37 B Project Schedule 55 C Potential EPC Contractor Statement of Qualifications 58 D Interconnection Requirements Study 76 E HEA PPA Letter of Support 101 F Meteorological Study 104 G Kenai Winds Project Layout 107 H Coastal Zone Mgmt Statement of Project Consistency 109 I Southfork LLC Petition for/Grant of Exclusion from AS 42. 114 J FAA Determination of No Hazard to Air Navigation 120 K Letter of Kenai Winds Project Support from KPB Mayor 123 L Letter of Kenai Winds Project Support from HEA General Manager 125 M Letter of Kenai Winds Project Support from Tesoro Senior Management 127 N KPB Assembly Resolution Concerning Climate Change 129 O KPB Assembly Resolution Concerning Greenhouse Gas Emission Reduction 132 P Letter of Kenai Winds Project Support from Co-Chair of AK House Finance Committee 135 Q Corporate Authorization Letter 137 R Electrical One-Line Diagram 139 Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 2 10/7/2009 SECTION 1 – APPLICANT INFORMATION Name (Name of utility, IPP, or government entity submitting proposal) Kenai Winds LLC Type of Entity: Delaware Limited Liability Company, Registered in Alaska as a Foreign Limited Liability Company Mailing Address C/O Apex Wind Energy/Axio Power 20 Jon Barrett Rd. Suite 2 Patterson, NY 12563 Physical Address C/O Apex Wind Energy/Axio Power 20 Jon Barrett Rd. Suite 2 Patterson, NY 12563 Telephone 845) 228-3485 Fax 845) 878-2139 Email jberkow@apexwind.com 1.1 APPLICANT POINT OF CONTACT Name Josh Berkow Title Project Manager Mailing Address Apex Wind Energy/Axio Power 20 Jon Barrett Rd. Suite 2 Patterson, NY 12563 Telephone 845) 228-3485 Fax 845) 878-2139 Email jberkow@apexwind.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) An electric utility holding a certificate of public convenience and necessity under AS 42.05, or X 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. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 3 10/7/2009 SECTION 2 – PROJECT SUMMARY This is intended to be no more than a 1-2 page overview of your project. 2.1 Project Title – (Provide a 4 to 5 word title for your project) . Kenai Winds Expansion 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 Kenai Winds power plant will be located in the Nikiski industrial area on the Kenai peninsula. Approximate physical location is in the vicinity of milepost 21-23 on the Kenai Spur Hwy. The stability of power supply will benefit the west side, mid-peninsula communities served by Homer Electric (Nikiski, North Kenai, Kenai, and Soldotna) and specifically, the industrial district of Nikiski, the hundreds of residents directly employed by said industry, and the thousands of jobs indirectly supported by that industry. 2.3 PROJECT TYPE Put X in boxes as appropriate 2.3.1 Renewable Resource Type X Wind Biomass or Biofuels Hydro, including run of river Transmission of Renewable Energy Geothermal, including Heat Pumps Small Natural Gas Heat Recovery from existing sources Hydrokinetic Solar Storage of Renewable Other (Describe) 2.3.2 Proposed Grant Funded Phase(s) for this Request (Check all that apply) Reconnaissance Design and Permitting Feasibility X Construction and Commissioning Conceptual Design 2.4 PROJECT DESCRIPTION Provide a brief one paragraph description of your proposed project. Kenai Winds LLC has received AEA support to develop and erect a 10 MW wind energy facility located in the Nikiski industrial area on the Kenai Peninsula. Homer Electric Association has requested that the capacity of the facility be expanded from 10 to 15 MW. This proposal is submitted to secure funding needed for the expansion. The facility will consist of 5 to 10 wind turbines disbursed throughout the site, electrically interconnected to HEA’s Nikiski substation. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 4 10/7/2009 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.)  Financial and public benefits that will result from the Kenai Winds Expansion include a) immediate improvement of the energy security of Southcentral Alaska, b) immediate albeit temporary construction employment in the hard-hit Nikiski industrial zone, c) long-term benefits of a more stable electrical grid which directly impacts consumer safety and preserves jobs, d) long-term benefits related to retraining a workforce with on the job experience in the expanding wind industry e) long-term benefits related to decreasing green house gas emissions. The expansion of the wind power plant from 10 to 15 MW will increase the magnitude of the benefits cited above. Expansion of the Kenai Winds facility will increase the energy security of Southcentral Alaska residents by conserving the equivalent natural gas requirement needed to produce 15 MW of electrical power precisely when the natural gas is needed most, during the harsh wintertime. The dwindling availability of natural gas supply in Southcentral Alaska is a matter of fact known to all Alaskans that has already negatively impacted the Kenai Peninsula economy. In 2007 Agrium USA started employee layoffs at its fertilizer plant in Nikiski due to unreliable natural gas supply and the resulting high prices for this plant feedstock. Agrium stopped production in 2008. On October 21, 2009, residents of the Matanuska Valley, Anchorage bowl, and Kenai Peninsula were asked by a consortium of natural gas producers, electrical utilities, and municipality leaders to voluntarily participate in a natural gas conservation exercise. The purpose of the exercise was to prepare for the advent of insufficient natural gas flowrates expected to occur during peak demand periods within the next few years. To reiterate, expansion of the Kenai Winds facility will conserve natural gas requirements to produce 15 MW of power during peak demand. A letter of support from the Kenai Peninsula Borough Mayor Dave Carey appears as Appendix K.The mayor enthusiastically endorses the Kenai Winds project as a significant step towards meeting the policy goals of energy security for the Kenai Peninsula Borough. Mayor Carey is expertly aware of the need to expand energy supply within the Kenai Peninsula having served on the board of HEA for 20 years, 7 as president. Please note that Mayor Carey also comments on the stabilizing effect the construction of the wind farm will provide the hard-hit Nikiski industrial zone. During the construction period, the project would create approximately 100 jobs. Although these are temporary positions, the actual jobs created in Full-Time-Equivalents would be approximately 50 jobs, with a total payroll approximating $3 MM. Additionally, the availability and use of local contract labor translates into a payroll that would remain in the Kenai area; the estimated indirect benefits would be approximately $2 MM. Post-construction, the Kenai Winds project would have four full-time local staff with a total yearly payroll of $450,000 (escalating with inflation at 3% per year). The estimated indirect benefits would be an additional $350,000. Over a 30-year project life, the jobs created by the installation of the Kenai Winds power plant would have an economic impact of $29 MM. Albeit difficult to quantify, one long-term benefit that would result from the Kenai Winds project would be the increased efficiency of the electric power grid in the industrial district of Nikiski. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 5 10/7/2009 Utility design engineers prefer to locate generation near large electrical load centers, a strategy that eliminates long power lines and expensive systems integration that would be required of a generator in a remote location. Installing the Kenai Winds facility within the industrial district of Nikiski will increase the efficiency and reliability of power distribution in that area. Homer Electric General Manager Brad Janorschke states the full support and cooperation of HEA with the Kenai Winds design strategy in Appendix L. The industrial district includes an LNG plant, a multiproduct pipeline, a refinery, and three waterborne docks. Stabilizing the electrical grid will reduce the occurrence of catastrophic events such as emergency shutdowns. Besides loss of production revenue for local industries during downtime for repairs, unplanned shutdowns in hydrocarbon processing facilities can cause rapid cooling of metal which results in flange leaks. Such situations endanger the lives of employees and first responders. Joe Monroe, Tesoro Alaska Company’s Senior Vice President of Corporate Development, states the refinery’s support of the project in Appendix M. Tesoro has offered to lease Kenai Winds land to erect some of the wind turbine structures to help achieve the outcome of a more stable industrial power grid. A long-term educational benefit would result from installing Kenai Winds power plant; however the amount cannot be exactly quantified. Sufficient core competencies exist within the local labor pool for construction and operations/maintenance of the facility. However, the application of these competencies and skills will transition from carbon-based energy supply strategies to wind power generation. Due to the explosive growth in the wind industry, experienced construction personnel are in high demand. Work on this project will dramatically increase the value of the construction personnel involved as well as provide Alaska with a local workforce trained for renewable energy projects. Once on line, the operations and maintenance personnel selected to work at the facility will also have expert experience in renewable energy projects this grant program supports. Kenai Winds is also committed to maximizing the educational benefits by providing tours and information to local schools and other interested educational groups. In addition to education and electric power efficiency, the Kenai Winds project will benefit Alaskans through the direct reduction of greenhouse gas emissions. The Kenai Peninsula Borough Assembly has passed resolutions concerned with the impact of climate change and increased greenhouse gas emissions observed on the Kenai Peninsula (see Appendices O and P). Pre-construction, the quantification of greenhouse gas reductions can only be estimated. After the Kenai Winds facility is operational, system conditions and dispatch levels can be monitored to determine exactly the quantity of greenhouse gas emissions avoided. A preliminary estimate may be made based on the current generation mix of Chugach Electric Association (the provider of HEA’s power). CEA’s primary resources are natural gas fired. Assuming all of the displaced electricity production is from natural gas, Kenai Winds would cause greenhouse gas emission reductions of the following quantities: Greenhouse Gas Emission Reductions CO2 53,153,185 lbs NOX 79,612 lbs SO2 4,683 lbs The dollar savings to Alaskans as a result of these reductions are not possible to estimate. Future carbon regulation is likely, though the form is not yet known. The effects of climate change are also currently unknown. However, the economic impact of avoiding greenhouse gas emissions is highly likely to be significant. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 6 10/7/2009 In summary, the benefits of expanding the Kenai Winds power facility include immediate benefits of increased energy stability and power distribution for HEA, short term economic benefits related to construction activity, long term benefits related to operation and maintenance payroll, long term benefits related to education and training of the Alaska work force in renewable fuels implementation, and reduced greenhouse gas emissions. The project and its expansion are supported by business, government, and the people of the Kenai Peninsula Borough through their elected representatives. 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 expansion of the Kenai Winds project from 10 MW to 15 MW requested by Homer Electric Association will increase capital requirements $10 MM, from $21 MM to $31 MM. For this expansion proposal Kenai Winds LLC is requesting $2.00 MM (the maximum this AEA RFP allows for a renewable fuel construction project that serves communities within the Railbelt that have installed hydro power). The balance of $8 MM equates to a strong 4:1 project matching position proposed by Kenai Winds LLC. The Alaska portion will be frozen at a fixed dollar amount so that any cost overruns shall be absorbed by Kenai Winds LLC. The matching portion from Kenai Winds will be in cash, not “in-kind” contributions. The significant funds required will be raised from debt and tax equity sources known to Apex Wind Energy/Axio Power. This investment by AEA directly aligns with its mission to assist in the development of safe, reliable, and efficient energy systems which are sustainable and environmentally sound. 2.7 COST AND BENEFIT SUMARY Include a summary of grant request and your project’s total costs and benefits below. Grant Costs (Summary of funds requested) 2.7.1 Grant Funds Requested in this application. $ 4,000,000 2.7.2 Other Funds to be provided (Project match) $ 6,000,000 2.7.3 Total Grant Costs (sum of 2.7.1 and 2.7.2) $10,000,000 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) $10,200,000 2.7.5 Estimated Direct Financial Benefit (Savings) $ 9,907,736 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.) $29,000,000 Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 7 10/7/2009 SECTION 3 – PROJECT MANAGEMENT PLAN Describe who will be responsible for managing the project and provide a plan for successfully completing the project within the scope, schedule and budget proposed in the application. 3.1 Project Manager Tell us who will be managing the project for the Grantee and include a resume and references for the manager(s). If the applicant does not have a project manager indicate how you intend to solicit project management support. If the applicant expects project management assistance from AEA or another government entity, state that in this section. The project manager for Kenai Winds is Josh Berkow of Apex Wind Energy, Inc. (the parent companies of Kenai Winds) located in Patterson, NY. Mr. Berkow’s resume is included in Appendix A. Holly Norwood represents Apex Wind Energy within Alaska and coordinates local project management needs. Holly has been a resident of the Kenai Peninsula since 1985, has twenty years of experience with process facility design and operations, capital project construction, operations analysis, and quality control. She was employed by Tesoro Alaska for 14 years, the last 8 in management and has experience in negotiating contracts with HEA. She has been instrumental in the development of UAA’s Process Technology A.A.S. degree and is a charter member of the Alaska Process Industry Careers Consortium (a process industry/academic alliance organized to identify education needs and train Alaska’s workforce just in time for industry needs). She has a passion training Alaskan’s for Alaska’s high paying industrial jobs. Please find Ms. Norwood’s resume in Appendix A. Other key Apex Wind Energy personnel involved with the Kenai Winds power plant facility include Paul Curran (Senior Executive VP), Tim Ryan (Senior Executive VP),Jim Trousdale (CFO), Eamon Perrel (Development Manager), and Mark Goodwin (COO). Their resumes are in Appendix A. 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 RFP is submitted for Phase IV, Construction, Commissioning, Operation, and Reporting of the Kenai Winds power facility expansion. A detailed project schedule is included in Appendix B and is summarized below. The end of Phase III per AEA’s definition blends into the beginning of Phase IV. The next Phase III major milestones include completion of the Interconnection Agreement and Power Purchase Agreement (PPA) negotiations with HEA and and finalizing financing. Phase IV begins with turbine selection and procurement, and selection of an Engineering-Procurement-Construction firm. Anticipating a normal 2010 winter breakup scenario, groundbreaking is planned for end of April and commercial operations will commence September 2010. 3.3 Project Milestones Define key tasks and decision points in your project and a schedule for achieving them. The Milestones must also be included on your budget worksheet to demonstrate how you propose to manage the project cash flow. (See Section 2 of the RFA or the Budget Form.) Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 8 10/7/2009 1. Interconnection Requirements Study (Phase 1) Completed – 4/2/2009 Homer Electric Association (HEA) contracted with EPS out of Anchorage to study the impact of the Kenai Winds project on the HEA and Railbelt grids. The study determined that up to 18 MW of wind energy could be reliably interconnected to HEA’s grid without adverse impacts on system stability. HEA, EPS, and Kenai Winds are currently working to define the exact requirements to interconnect the project to the grid. 2. Power Sales Term Sheets Executed – 7/24/2009 HEA and Kenai Winds have executed a term sheet regarding the sale of electric energy from the project to HEA. HEA will purchase the full output of the Kenai Winds project at market rates. The parties are currently negotiating the Power Purchase Agreement. 3. Financing Plan Secured – 11/27/2009 Kenai Winds is currently in negotiations with a number of parties on the financing of the project. A number of parties will be involved and bring investment in a number of forms including but not limited to: debt, equity, tax equity, power price hedges, vendor financing, loan guarantees, and non-traditional lenders. 4. Interconnection Agreement Executed – 12/31/2009 HEA and Kenai Winds are currently negotiating the terms of an Interconnection Agreement (IA) which will set the requirements for the project to reliably interconnect and deliver power to HEA’s gird. This process also includes input from EPS, the contractor the performed the Interconnection Requirements Study, and will result in a document that outlines the operational characteristics of the wind project. The completed integration studies are in Appendix D. 5. Turbine Selection Finalized – 1/8/2010 6. Kenai Winds is currently in discussions with a number of wind turbine vendors interested in supplying this project. As with previous grant applications, Kenai Winds is in discussion with both GE and Vestas which are leaders in the wind turbine market. Kenai Winds is also in discussions with several new market entrants that can supply more advanced technology with a more flexible time frame. Site Lease Executed – 1/11/2010 Kenai Winds currently has a Memorandum of Understanding in place with Tesoro and is in negotiations for a formal lease for land for the wind turbines. Kenai Winds has also begun discussions with neighboring landowners to lease land for this project. The entire project can be built on lands owned or controlled by Tesoro, though the optimal layout would use lands owned by its neighbors as well. 7. Power Purchase Agreement Executed – 2/16/2010 Kenai Winds is currently in negotiations with Homer Electric on a PPA for the energy from the project. Kenai Winds anticipates completing negotiations by the end of 2009. In early 2010, the document will be submitted to the Regulatory Commission of Alaska (RCA) for approval. Kenai Winds and HEA have already discussed the PPA with the RCA and anticipate a speedy approval of the document. As noted above, Kenai Winds will sell energy to HEA at a market rate. 8. Wind Turbine Downpayments – 3/8/2010 9. Start of Detailed Engineering – 3/29/2010 Kenai Winds will use a competitive process to bid the Engineering, Procurement, and Construction (EPC) of the project. The Statements of Qualifications for two potential bidders (Signal Wind Energy and STG Inc.) are included in Appendix C. Kenai Winds will use every effort to ensure that significant numbers of local construction personnel are employed, and a preference will be put on hiring Alaska-based subcontractors. As required by the grant, Kenai Winds will mandate that all contractors be qualified to work in Alaska. 10. Groundbreaking – 4/23/2010 11. Turbine Components at Site – 6/24/2010 Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 9 10/7/2009 There is an existing deepwater port and oil terminal at the site. A second port, used for servicing offshore oil and gas platforms is located a few miles to the north of the site. It is anticipated that the blades, towers, and turbines will arrive via one of these two ports. Logistics will be coordinated with the turbine supplier, which is typically in the scope of supply. 12. Civil Construction Complete – 7/7/2010 The civil infrastructure for this project will mainly include the turbine foundations. Since the project area has already been cleared and graded for industrial purposes, no road construction is anticipated. 13. Electrical Infrastructure Complete – 7/21/2010 Electrical infrastructure includes the pad-mounted transformers, underground collection system, overhead collection system, interconnection to the substation, installation of reactive compensation, and test of the entire system. This does not occur serially with the civil construction, but can be begun as soon as one turbine location is finished. 14. Turbine Erection Complete – 8/20/2010 Kenai Winds anticipates possibly hiring extra crane operators to erect turbines around the clock and making use of the extended daylight hours available during Alaska summers. This does not occur serially with the electrical construction, but can be begun as soon as one turbine location is finished. 15. Commercial Operations – 9/7/2010 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. Kenai Winds has four main project participants in addition to the various outside contractors hired to perform specific services. These are Apex Wind Energy, the EPC contractor (to be announced), Tesoro Alaska Company, and Homer Electric Association. Apex Wind Energy. The resumes of Project Manager Josh Berkow, Representative and on-site project manager Holly Norwood, and managing director Paul Curran can be found in Appendix A. Apex Wind Energy will competitively bid the engineering, procurement, and construction (EPC) of the project. The EPC contractor for the project has not yet been selected although site visits have been completed by several companies. The statements of qualifications from Signal Wind Energy and STG, Inc. can be found in Appendix C and are included here as examples only. During Phase III, the EPC contractor will identify via a competitive bidding process subcontractors qualified to work in Alaska. To the maximum extent possible, the EPC contractor shall utilize the abundant local labor available and experienced working within the Nikiski industrial corridor. Subcontractors will be needed for civil construction infrastructure, electrical infrastructure and construction, and setting of turbines. Civil construction tasks include turbine foundation excavation, sub grade preparation, cage construction and concrete work, trenching, cabling, backfilling for underground collection system, pole construction, cabling for overhead construction system, and installation of pad mounted transformers and switchgear. Electrical infrastructure and construction tasks include the pad mounted transformers, underground and Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 10 10/7/2009 overhead collection systems, interconnection to the substation(s), installation of reactive compensation, and testing of the entire system. The possible list of subcontractors is too great to list here. For the sake of example, possible electrical contractors could be Udelhoven, Dowland- Bach, or Big G Electric. For the sake of example, the labor pool may be supplied by CH2MHill, Peak, Udelhoven, or ASRC. Cement may be supplied by Davis Block, transportation services may be supplied by Lyndon Transport or Carlile, and crane service may be supplied by Anchorage crane. Actual construction will signal the beginning of Phase IV. Tesoro Alaska and Tesoro Corporation. Construction project management at the Tesoro refinery in Nikiski will be coordinated by Refinery Project Manager Joe Gabriel and Maintenance Supervisor Kevin Dix. Operational support at the refinery will be provided by Refinery Manager Steve Hanson and Superintendent of Operations Rolf Manzek. Project coordination at Tesoro San Antonio headquarters is handled by Leo Giron and Iype Chacko. Kip Knudson provides local public relations and legislative support. A letter of support from Tesoro for the Kenai Winds power facility is attached as Appendix M. Homer Electric Association. Project management from HEA is provided by Rick Eckert (Manager of Business Development and Regulatory Affairs).Rick handles business issues related to the power production agreement. Harvey Ambrose (Director of Power Production and Transmission) manages and directs the operation and maintenance interface support needed to incorporate Kenai Winds power facility into the grid. Mike Tracey (Power Production engineer) handles technical aspects of the power production and interconnection agreements between HEA and Kenai Winds. HEA has selected EPS out of Anchorage to perform the Interconnection Requirements Study for this project. An interconnection feasibility study has already been completed that shows the HEA grid can accommodate the additional generation. This report and a scope for the further interconnection study are included in Appendix D. A letter of support from HEA General Manager Brad Janorschke regarding power sales agreement between Kenai Winds and HEA appears as Appendix E. 3.5 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. The Alaska Energy Authority becomes a key stakeholder in the Kenai Winds LLC project once a financial agreement is in place. Project Manager Josh Berkow will provide monthly status reports by email (or other method allowed by AEA if email is not available) to AEA’s project manager once detailed engineering has commenced and construction mobilization is underway. The report will update AEA on the progress of the project, regulatory and compliance issues, possible delays, and grant expenditures during the period that the report covers. These monthly reports will concisely summarize the progress made on grant tasks during the month and will identify any difficulties in completing the tasks meeting goals or deadlines. Kenai Winds LLC will include the report copies of any work products due to AEA during the reporting period. Documentation and record keeping by Kenai Winds LLC will include a) the grant application, b) the grant agreement and any amendments, c) all written correspondence or copies of emails relating to the grant, d) reports as described above, including any consultant work products, e) a separate accounting of grant income and expenditures, f) supporting documentation for the expenditures charged to the grant (including supporting documentation for all required Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 11 10/7/2009 matching contributions). 3.6 Project Risk Discuss potential problems and how you would address them. The primary risk for the AEA regarding the Kenai Winds Expansion will be that the project fails to reach full operation and give Alaska a return of the public benefit expected. In all projects that risk of failure is greatest in the early stages of development. That is the reason that Apex Wind Energy uses a Phased Gate development system very similar in nature to Project Phase descriptions used by AEA in this RFP. This proposal is for construction funding for the project; Kenai Winds power facility will reach full operation. This project is in a mode of executing project aspects that have been well defined. This project has the full support of the community it will serve. For the Kenai Winds power facility, the Phase 3 risks are identified as follows: 1) Cost of delivered turbines exceeds the budget. 2) Unavailability of wind turbine vendors for the Alaska market. 3) A change in Alaska law requiring additional permits 4) Inability to finance the rest of the project. 5) An inability to execute key contracts consistent with the terms of completed MOUs. 6) Possible requirement to obtain a Certificate of Public Convenience and Necessity Kenai Winds LLC believes it has successfully mitigated all the described risks to the extent possible during Phase II. The risks that may remain will require prudent risk management. Certainly, prior to signing a full turbine supply contract that will require several million dollars of down-payment money, the management of Kenai Winds LLC will conduct a thorough risk assessment of these and all other project aspects. 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. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 12 10/7/2009 The Kenai Winds Expansion will significantly increase the capacity of the Kenai Winds power plant from 10 to 15 MW. Dependent upon make and model of the turbine, the full facility will include 5-10 turbines disbursed throughout the industrial area of Nikiski on the Kenai Peninsula. The facility will be electrically interconnected to HEA’s Nikiski 1 substation which also services the HEA’s Nikiski generator. Electric energy will be delivered to HEA under conditions defined by a power purchase agreement (PPA) and an interconnection agreement (IA) between the two companies. A letter of support from HEA General Manager Brad Janorschke regarding power sales agreement between Kenai Winds and HEA appears as Appendix E. Kenai Winds LLC has invested in equipment to accurately assess the potential production of the project. Beginning in November 2007, Kenai Winds undertook a 1 year meteorological study to assess the wind resource in Nikiski. A meteorological tower was installed within the industrial corridor of Nikiski. A 6-month energy production estimate was commissioned based on the Vestas V90-1.8 MW turbine. A further study based on the complete data record was recently completed. This examined the output of 4 different turbines, and a detailed report was generated for one of these turbines. A redacted copy of that report, removing confidential information, is attached in Appendix F. Based on this report, the full 15 MW Kenai Winds project will generate 30,600 MWh per year. The Kenai Winds Expansion will generate 10,200 MWh per year. The proposed facility site has been determined to be ideal for wind energy production. The data indicate that the prevailing wind directions are the NNE and SSW. As such, a row of wind turbines following the coastline is an ideal layout. The layout shown in Appendix G describes such a layout, using lands owned by Tesoro and neighboring industrial companies. Existing power sources on the railbelt grid are carbon based turbine generation and hydroelectric. The main advantage of the Kenai Wind Expansion project is that it consumes no fuel. Since it consumes no fuel, it has no variable cost and generates no pollution. The cost of energy from this facility will be based entirely on the capital cost and fixed operating costs of the facility. As shown in Section 5 of the Cost Benefit Worksheet (filename KWCostworksheet3.doc). The cost of carbon-based energy production is expected to increase at a rate that rapidly outpaces the inflation-based cost increases of wind energy. Furthermore, wind energy is not impacted by uncertainties related to upcoming Federal greenhouse gas regulations as carbon based power production is. In summary, unlike fossil-fuel power generation, a wind energy facility offers stable, fixed-price energy as long as a long-term PPA is in place. Another benefit of the Kenai Winds power plant will be the reduction in greenhouse gases. The Kenai Winds facility has the potential to avoid the emission of 53 million lbs of CO2, 79,000 lbs of NOx, and 4700 lbs of SO2. Avoiding these emissions will provide benefit to HEA’s electricity customers, as the costs associated with those emissions would have been passed on to the consumer. Another advantage of the Kenai Winds facility over other wind energy project sites is the accessibility of the power plant. Indeed, windier locations are known to exist throughout Alaska. Yet unlike these locations, the Kenai Winds power facility will not require expensive transmission lines or, upgrades to infrastructure and power grid system because the facility will be located next to an existing, large industrial load. The industrial power grid in Nikiski is ready to accept wind energy, thus the integration costs of competing wind projects will be less. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 13 10/7/2009 An additional advantage of the location is the industrial nature of the site. The three primary environmental impacts of wind energy are birds, viewshed, and noise. Existing operations make viewshed and noise non-issues. Wind turbine noise at off-site locations will be less than 50 dB, which is much less than the traditional hydrocarbon-based power plants serving the grid. The support of the Kenai Peninsula Borough also indicates that view-shed is less of a concern in a district that is already designated to be industrial. The impact on birds at this location will be incremental at best, as the location is already non-ideal for nesting and migrating birds. Indeed, the impact from existing operations will greatly outweigh the impact from wind energy. The disadvantage of this resource is that it is intermittent. Energy is produced when the wind blows. Intermittent generation of this type requires a modern electric utility grid with the flexibility to accommodate intermittent generation, a workforce knowledgeable in understanding wind rate predictions, and, of course, excellent SCADA and human communications. HEA has demonstrated the willingness to learn the core competencies required to incorporate wind energy into the industrial power grid. As part of its operations, Kenai Winds will provide day-ahead and real-time energy production estimates to HEA to aid in dispatching other generation, which will mitigate this intermittency. This service is typically provided by a contractor such as AWS Truewind or Global Energy Concepts. A detailed scope of work has not been created for this service yet, but will be specified prior to operations. 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. Currently, HEA operates a two-voltage transmission system at 69 and 115 kV. Electric energy is supplied by the Bradley Lake hydroelectric plant (owned by AEA and operated and maintained by HEA), Nikiski 1 Cogen (previously known a Soldotna 1), and imported electricity from Chugach Electric. The Bernice Lake generating station is also on the HEA grid, yet it operates rarely and only during electrical emergencies. HEA’s current base load is 83 MW and increases to 106 MW during peak demand during harsh winter conditions. The HEA grid is currently tied to the rest of Railbelt Alaska via a single transmission line at the north end of the Kenai Peninsula. Electric reliability on the peninsula is currently an issue because an outage on that line can impact HEA’s grid stability for weeks at a time. Interconnection of the Kenai Winds project helps increase grid stability in times when HEA is isolated from the rest of the Railbelt. The Kenai Winds project will interconnect at HEA’s Nikiski substation. That substation is currently split to interconnect HEA’s Nikiski generator, and to supply local industrial loads. The Nikiski generator is connected to the 13 kV bus, and will not change as a result of this project. The industrial loads, currently connected to the 4.16 kV bus will be supplied by local distribution following the interconnection of Kenai Winds. Kenai Winds will interconnect at the 4.16 kV bus, and through two 115 kV transformers to the transmission system. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 14 10/7/2009 4.2.2 Existing Energy Resources Used Briefly discuss your understanding of the existing energy resources. Include a brief discussion of any impact the project may have on existing energy infrastructure and resources. The existing energy resources in the Kenai Peninsula are natural gas and hydroelectric. The Bradley Lake hydroelectric plant is owned by AEA and operated and maintained by HEA. Nikiski 1 Cogen (previously known a Soldotna 1) uses natural gas for generation and electricity is also imported from CEA. In 2014, HEA’s power purchase contracts with Chugach Electric and Bradley Lake expire. Strategic planning for the loss of CEA electric supply appears to be the driving force behind HEA’s request to increase the capacity of Kenai Winds power facility from 10 to 15 MW. HEA is considering modernizing its system by using the waste heat of Nikiski 1 Cogen to increase generation capacity and create the flexible generation system required to best integrate wind generation. One impact the Kenai Winds Expansion project will have is a decrease in the amount of natural gas required to maintain the electrical load serving the Nikiski industrial district. Over the life of the expansion project, the project will displace 7,847,672 MCF of natural gas. The NPV of this displaced natural gas over the life of project is estimated to be over $30 MM. Other impacts are increased reliability and stability of the HEA grid. Increased reliability of the HEA grid will result by connecting the wind power plant in parallel with the HEA electric grid. Some form of reactive power compensation is also anticipated to be required which will further improve the reliability of the HEA grid. There are three main reasons for installing reactive power compensation; all are related to voltage stability. First, the voltage of the HEA grid may not remain constant if the Nikiski 1 Cogen, a contributing generator, or the wind facility trips offline. If any of these scenarios occur, the voltage and frequency at the substation will drop below nominal while the transmission system catches up. This typically occurs on the time-scale of seconds, which is a long time for electrical equipment. Immediately after a trip, voltage oscillations occur with extreme dips and spikes. These typically occur on the order of milliseconds (16.66 ms/cycle), which is an extremely short time for electrical equipment. Reactive power compensation acts as a shock absorber for both of these phenomena, holding the voltage constant after a trip. Thus the spikes will be softened and voltage oscillations that damage electrical equipment will be diminished. Wind turbine generator models proposed for this project make use of induction generators and are designed to operate at a unity power factor (they neither make nor consume reactive power). These induction generators are dependent on the transmission system stability and cannot control the voltage at their connection to the grid. In order to maximize reliability for the HEA grid, the generator output voltage should remain constant during an incident. Reactive power compensation provides the control that makes this possible. The stability of the grid will be improved because locating the wind project near the load keeps the frequency of the entire grid stable in the event of failure with one of the other generators feeding the grid. 4.2.3 Existing Energy Market Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 15 10/7/2009 Throughout the Railbelt grid, there is no deregulated real time energy market as is common in the lower-48 states. Consumers (industrial, commercial, and residential) do not have retail choice for electricity. The utilities purchase electricity (or natural gas for generation) through long-term contracts. In HEA territory, electricity prices are based primarily on natural gas. Through a complicated contract formula, natural gas prices are based on the historical aggregate United States natural gas, fuel oil, and crude oil prices. These contracts expire in 2014. It is anticipated that future prices will be based more closely on current Henry Hub prices. Following completion of the Alaska Natural Gas Pipeline, and the proposed spur line to the Railbelt, it is anticipated that natural gas prices will be set at a higher market rate. 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 Kenai Winds Expansion project increases the facility from 10 to 15 MW which will require 5 to 10 turbines dependent upon make and model. Thirteen sites have been permitted in the Nikiski industrial zone, but not all of them will be required for the initial installation. Potential sites include land owned by Tesoro, land owned by the Kenai Peninsula Borough and under long term lease to Tesoro, brownfield land owned by Chevron, and land owned by Agrium USA which is no longer used for fertilizer production. All of the land owners are enthusiastic about the project and lease terms will be discussed once the optimal sites for installation are chosen. As part of its Phase 3 activities Kenai Winds will work with DNV Global Energy Concepts, AWS Truewind, or another qualified contractor to determine the optimal locations for the wind turbines within manufacturer specifications. Wind data will be provided to the contractors and the turbine vendor as part of the final turbine selection process. The data and layout will be analyzed for other potential conflicts prior signing turbine purchase agreements. All of the sites are easy to connect to Nikiski substations. Kenai Winds has had productive discussions with several turbine suppliers eager to participate in this project. All of the suppliers have proven and successful commercial history with the make and model of turbines under consideration. As was discussed in Section 4.1, Kenai Winds anticipates annual generation of 30,600 MWh for the full 15 MW project, with 10,200 MWh supplied by expansion. This represents a net capacity factor of 24.3%. The draft Kenai Winds project layout, shown in Appendix G, shows the approximate locations of the wind turbines and the electrical collection system for a 2.4 MW wind turbine with a 90m rotor The yellow dots in the diagram are scale representations of the rotor-swept area for a wind Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 16 10/7/2009 turbine with a 90m rotor. Turbine locations have been selected to meet the design criteria of most turbine vendors with minimum spacing of 6 rotor diameters between turbines and a setback of “1.5 times the rotor diameter plus the turbine height” from occupied structures and off-site locations. Turbine selection will occur in the early part of 2010 as per the schedule in Appendix B. The project will interconnect to Homer Electric’s Nikiski substation. The substation has 2 115/4.16 kV transformers that will be used to interconnect Kenai Winds to the grid. A third 115/13.2 kV transformer connects to a 13.2 kV bus which connects HEA’s Nikiski generator to the grid. The project will connect via 3 collection feeders to the 4.16 kV bus at the Nikiski substation. No major changes to the substation are contemplated as a result of this project. Metering will be added to the 115 kV side of the substation, new relays will be required on the 4.16 kV bus, and existing breakers may be upgraded. The physical design and layout of the substation will remain unchanged. Each wind turbine generates electricity at approximately 600 V. The turbine output is fed to a 4160/600 V pad-mounted transformer at the base of the turbine. These transformers are connected in parallel to the collection system which feeds into the substation. In the immediate area of the wind turbines, the collection system will be underground. Every effort will be made to have the collection system follow existing electrical, pipeline, and road right-of-ways. Where appropriate, the collection system will be above ground, to minimize costs. As part of its Phase 3 activities, Kenai Winds will contract out preliminary engineering of the facility. Engineering, Procurement, and Construction costs will be estimated for updating the project economics and securing long lead-time items. Preliminary engineering will also include geotechnical and wetlands surveys. An electrical one-line diagram of the entire facility is shown in Appendix R 4.3.2 Land Ownership Identify potential land ownership issues, including whether site owners have agreed to the project or how you intend to approach land ownership and access issues. The primary landowner is Tesoro and its subsidiary Kenai Pipeline Company. Tesoro is an enthusiastic supporter of the Kenai Winds facility (Tesoro letter of support is Appendix M). The daft project layout shown in Appendix G shows the locations of the wind turbines on Tesoro land, and also identifies the other area landowners. The layout is currently in draft form. At present, a commercially viable wind farm can be constructed using land leased from Tesoro, with only a few required easements for power line road crossings. While the installed capacity of the project will not increase, access to the other lands allows flexibility in the final siting determination. Kenai Winds would prefer to site the turbines to optimize power production. As shown on Appendix G, the other area landowners are Agrium, Conoco-Phillips, Chevron, ASRC, and the Kenai Peninsula Borough (KPB). The Agrium property is the site of its moth-balled fertilizer plant. The fertilizer plant does not occupy the entire plot. The empty land was slated for a coal gasification facility, now cancelled due to the plant closure. The Conoco-Phillips property hosts a liquefied natural gas terminal and it does not occupy the entire plot. The Chevron property is the site of a former oil refinery which has long since closed and been removed, leaving a large area of shovel-ready land. ASRC is an oil Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 17 10/7/2009 and gas services company and the land available is currently a parking lot, which may not be sufficient to host a wind turbine. The KPB land is cleared and shovel-ready and has a long term lease with Tesoro. This land was originally slated for another oil-and-gas industrial company, but has not been developed. Preliminary meetings introducing the wind power project and possibility of erecting turbines on the Agrium and Chevron brownfields were held September 2009. The proposals were enthusiastically received as there is no commercial use of these properties planned in the future. Follow up meetings with senior company representatives have been held. Kenai Winds is currently in the process of acquiring leases for this land. Regarding the KPB property under long term lease to Tesoro, KPB Land Management Officer Marcus Mueller has affirmed KPB’s support upon documented approval of Tesoro. Letters of support for Kenai Winds from the KPB Mayor and Tesoro can be found as Appendices L and N, respectively. 4.3.3 Permits Provide the following information as it may relate to permitting and how you intend to address outstanding permit issues. • List of applicable permits • Anticipated permitting timeline • Identify and discussion of potential barriers The list of applicable permits includes Coastal Zone Management approval, FAA approval, RCA approval for the Kenai Winds-HEA PPA, and ROW permitting by the Alaska Department of Transportation. No zoning variances, ordinances or building permits will be required. The Alaska Coastal Zone Management Program (CZMP) governs permitting in the planned Kenai Winds facility site. The CZMP will not require a consistency review of the Kenai Winds project nor will it require any permits. Kenai Winds filed a coastal zone questionnaire with the Alaska Department of Natural Resources. A response letter from the DNR and an interpretation from Ecology and Environment (an environmental contractor with Anchorage offices) are included in Appendix H, Coastal Zone Confirmation of Project Consistency. The letter states that the Kenai Winds project does not require a consistency review as it does not require any permits under the CZMP. As such the project is deemed consistent with the CZMP. The Power Production Agreement between Kenai Winds and HEA must be approved by the Regulatory Commission of Alaska (RCA). The PPA will be ready for RGA review in early 2010. The RCA meets monthly and it is anticipated the PPA will be approved by the execution deadline of February 2010. Certain provisions of Alaska statute AS 42.05 may be interpreted to apply that Kenai Winds requires a “Certificate of Public Convenience and Necessity” prior to operation. Kenai Winds is exploring the potential of a “public interest exemption” from all AS 42 regulations based upon precedent set by the exclusion granted to the Southfork Hydro LLC project. The Southfork LLC petition for and granted exemption from AS 42 compliance is in Appendix I. The arguments Southfork LLC makes are persuasive and directly applicable to the situation Kenai Winds LLC has encountered. By virtue of selling 100% of its power to MEA, Southfork is indirectly regulated by RCA. Likewise, Kenai Winds LLC will sell 100% of its power to HEA and thus be indirectly regulated by RCA. Kenai Winds has received a Determination of No Hazard from FAA for the 13 locations permitted under the CZMP (see Appendix J, FAA Determination of No Hazard to Air Navigation). A lighting Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 18 10/7/2009 plan was filed with the Obstruction Evaluation/Airport Airspace Analysis (OEAAA) group at the Federal Aviation Administration (FAA). All developers building structures taller than 200ft. are required to file a lighting plan for approval with the FAA. Since this project is not located within 2 miles of an FAA airport, the nature of the review was cursory. Preliminary meetings with the Alaska Department of Transportation have confirmed that construction ROW permits will be readily available after site selection and turbine delivery scheme have been developed. Kenai Winds power facility will be located in an unincorporated section of the Kenai Peninsula Borough. As such, no municipal approvals will be required in the form of zoning variances, ordinances, or building permits. This statement was confirmed by both Tesoro and the Kenai Peninsula Borough Mayor’s during the Fall of 2007. A letter of support from the Kenai Peninsula Borough Mayor’s office is included as Appendix K. 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 A number of environmental impacts are commonly associated with wind energy. These are: birds, noise, view-shed, aviation, construction, and property values. In all cases, except aviation, the impact from existing operations will far outweigh the impact a wind energy facility at the site. 1. Avian Impacts Birds are an important part of the beauty of the Cook Inlet and several studies have shown that a wide variety of species are present during various points of the year. It has been widely documented that birds coexist well with wind turbines throughout the world. However, as with all tall structures, highways, and industrial complexes, some impact may As part of its Phase 3 activities, Kenai Winds intends to analyze the potential avian impact through a method recommended by the New York State Department of Environmental Conservation. NEXRAD (Next-Generation Radar WSR-88D) weather radar stations can be used to assess exactly how many birds have flown at a given height at a specific location. NEXRAD stations log data for many years and it is possible to literally count the number of birds that would have been flying over a site at the height of wind turbines on each day for several years. Because NEXRAD systems also monitor weather data, the technique, produces a very clear picture of the potential impact of wind turbines. By correlating the weather data, the bird count (and flight height), and the local wind speed (from the long-term reference tower at Tesoro’s port), a quantitative estimate of avian impacts can be developed. The NEXRAD chart below (from Apex Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 19 10/7/2009 Wind Energy’s Steel Winds project) clearly shows the local weather patterns and airborne birds in the project area. At other coastal locations, this type of analysis has shown that birds tend to fly above the height of the turbines. The weather conditions that cause birds to fly lower are correlated with low wind speeds, or at times when the turbines are not operating. Kenai Winds expects similar results at this site. Typically, NEXRAD is not present at places in the US near a proposed wind energy site. It is present at Nikiski to serve the Anchorage airport which puts Kenai in a unique position to achieve a level of analysis with NEXRAD that is not available at most locations.. This fortuitous location should allow for an exceptional analysis. While NEXRAD analysis is not required for permitting or Coastal Zone Consistency review, Kenai Winds intends to conduct the study for a more accurate picture of local environmental impacts, and to further validate this as a methodology for other wind sites. Obviously, the fact that birds have flown near where a wind turbine will be built does not mean that they will fly there in the future when a turbine is actually built. Birds generally see wind turbines and avoid them which is indicated by a national average of 2 – 7 avian collisions per wind turbine per year. For the Kenai Winds project, this would mean a maximum of 70 avian fatalities per year. This is the same number of fatalities that could be expected from a mile of highway or seven cats. 2. Noise Wind turbines are generally not noisy and the sound profile is well documented for each manufacturer’s turbines. The noise map shown below was created for Apex Wind Energy’s Steel Winds project in Lackawanna NY. Noise sensors were placed at varying distances from the proposed wind turbine locations to measure ambient background noise. The expected noise output of the wind turbines is plotted on the map. At these locations, the background noise was greater than the noise of the turbines. Given the industrial nature of the Kenai Winds area and its inherent existing background noise, similar results are expected. In any case, a full noise report will be Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 20 10/7/2009 produced at part of the Phase III activities. 3. Visual Impact Wind turbines are tall and visible from a distance. Given the shoreline location, Kenai Winds will be visible from ships and planes travelling around the Cook Inlet. Due to the wooded nature of the surrounding areas, the wind turbines are not expected to be visible from residences. Whether the turbines are viewed as an eyesore or an icon is clearly “in the eye of the beholder” and is debated at many wind projects. Kenai Winds is in an area of Alaska that already hosts a refinery, chemical plant, an LNG terminal, and a gas-to-liquids facility. Apex Wind Energy is developing wind projects at a number of similar sites around the United States, and there is a general consensus among residents at other project sites that the visual impact of a wind project on the area is a great improvement. We will not opine on either view but will produce a series of photo montages as part of the Phase 3 activities. During its Phase 2 activities, Kenai Winds has produced the following two photo-montages. Wind turbines were inserted into existing photographs at approximately the scale they would appear to the human eye. Public reception to-date has been favorable. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 21 10/7/2009 4. Aviation Impact Wind turbines do not pose a threat to area aviation. Turbines are typically less than 450 feet to the top of rotation and planes fly far higher than that. However, the FAA has clear regulations as to notification that we will adhere to. All developers building structures in excess of 200 feet are required to notify the FAA. The turbines of the Kenai Wind project will appear on all aviation maps for the area. The FAA was notified of the meteorological tower erected on the site in 2007. FAA approved lighting will be installed on top of the turbines to advise pilots of their presence. 5. Construction Disruption Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 22 10/7/2009 During construction there will be several trucks delivering major turbine components to the Nikiski area. Such deliveries will obviously be for a short period of time, but we will work with the state police and Department of Transportation and Public Facilities to ensure that all required permits are obtained for wide loads and extended length road vehicles. In addition there will be a greater labor presence in the area during construction, which is, generally a good thing. We will coordinate with other industries in the area to avoid simultaneous peaks in labor demand as well as use of port facilities. 6. Local Property Values The impact of wind energy on property values is a poorly understood and poorly documented phenomenon. Several major studies have been conducted in the continental United States yielding results that are difficult to gauge and are often contradictory. These studies tend to focus solely on the impact of wind turbines without analyzing any other factors. The recent boom in wind energy development has coincided with both a bubble and a collapse in the US housing market. While equal numbers of studies show positive, negative, and no impact from wind turbines; the results of these studies are suspect due to the other factors affecting the housing market. The clearest action a developer can undertake in this respect is related to public perceptions of wind turbines. Negative attitudes toward wind energy may lower property values. These negative attitudes are often linked to a perceived lack of local control over a project, and a sense of being subjected to some form of injustice. Apex Wind Energy has consistently had good relations with local residents at all of its project sites. Good communication with residents and local stakeholders help inform everyone about the project and give a sense of local ownership. Once the site has been better defined, Kenai Winds will meet with local Chambers of Commerce and other stakeholders to answer questions and respond to concerns. Informal preliminary meetings with smaller groups of residents have been favorable. 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 Grant Budget Form (filename KWGrantBudget3.doc) states the following: Total Anticipated Project Cost: $10 million Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 23 10/7/2009 Total Phase IV Cost: $10 million Requested Phase IV Grant Funding: $4 million Total Requested Grant Funding: $4 million Applicant Matching Funds: $6 million Total Development Cost: $0.2 million ($200,000) Total Capital Cost: $10.2 million (includes construction, turbines and down payments, balance of plant, interest during construction) Kenai Winds, in requesting $4 million, is requesting a fixed amount. The requested amount remains fixed regardless of any changes in the project capital cost. If the project cost goes up or down, the requested grant amount remains the same. 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.) Kenai Winds is negotiating use of existing Tesoro facilities during construction. This strategy precludes the need for new office and storage facilities required by the construction phase of the project. Use of highly skilled local contractors who are familiar with working on Tesoro capital projects and knowledgeable of Tesoro’s safety policy and procedures will minimize surprises that could otherwise delay construction. Wind turbines are purchased under warranty. To insure warranty guarantees, an O&M contract may be made with the turbine vendor. Typically the O&M contract term is for the first 5 years, after which the vendor will continue to provide O&M support under a new contract. In some cases, a third party contractor provides the O&M. This is typically for older model turbines that have been in service for many years. As the turbines age and the domestic wind industry develops Kenai Winds will explore this option. An alternative option for O&M post commissioning would be a separate arrangement with HEA. In September 2009 HEA expressed interest in being considered for an O&M contract. HEA has operated and maintained the Bradley Lake facility for AEA for many years. Currently, Kenai Winds estimates the annual O&M costs to be $255,345, escalating with inflation at 3% per year. The estimate includes the warranty, O&M, on-site project manager, and insurance. This will be paid out of project revenues. 4.4.3 Power Purchase/Sale The power purchase/sale information should include the following: Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 24 10/7/2009 • 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 Kenai Winds has executed a Memorandum of Understanding with Homer Electric Association (HEA) regarding the sale of electric energy from the wind project. Under the current arrangement, Kenai Winds will interconnect to HEA’s Nikiski substation and sell energy to HEA at a market rate. For the near term, this will be based on HEA’s avoided cost. As HEA’s contracts for energy from Bradley Lake and Chugach Electric expire in 2014, HEA is currently planning its own generation portfolio to supply its load. In addition, most natural gas contracts are currently based on historical indices from the contiguous 48 states. These contracts also expire in 2014. In the event these changes to Alaskan energy markets significantly change the economics of an avoided cost contract, HEA and Kenai Winds will renegotiate a pricing structure so the project remains of maximum benefit to both parties. Kenai Winds expects to receive a 9% unleveraged internal rate of return from the project. 4.4.4 Project Cost Worksheet Complete the cost worksheet form which provides summary information that will be considered in evaluating the project. The explanation of assumptions/methodology used to generate the Project Cost Benefit Worksheet (filename KWCostworksheet3.doc) are as follows: Project output is estimated from an Energy Production Estimate provided by RAM Associates, a world-class expert in wind energy meteorology. Capital costs were developed from industry sources based on work for prior Apex Wind Energy projects and confidential discussions with several wind turbine vendors. Development costs were estimated from Apex Wind Energy’s internal data from prior projects, and actual costs incurred to date on Kenai Winds. O&M costs were developed from internal data, industry sources, and confidential discussions with wind turbine vendors. Fuel displacement was developed from Regulatory Commission of Alaska documents describing the heat rate of Railbelt power plants. Working backwards from the known heat rate and estimated generation from the Kenai Winds expansion, it was possible to estimate the fuel displacement. Alaska public benefits were developed from industry sources and a 2002 study on Agrium by the Juneau-based McDowell Group. A detailed discussion below illustrates how the $9.9 MM benefit to the public over the life of the project was determined. Payback was developed by summing the annual savings to HEA based on probable future gas prices outlined in Section 5 of the worksheet. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 25 10/7/2009 SECTION 5– PROJECT BENEFIT Explain the economic and public benefits of your project. Include direct cost savings, and how the people of Alaska will benefit from the project. The benefits information should include the following: • Potential annual fuel displacement (gal and $) over the lifetime of the evaluated renewable energy project • Anticipated annual revenue (based on i.e. a Proposed Power Purchase Agreement price, RCA tariff, or cost based rate) • Potential additional annual incentives (i.e. tax credits) • Potential additional annual revenue streams (i.e. green tag sales or other renewable energy subsidies or programs that might be available) • Discuss the non-economic public benefits to Alaskans over the lifetime of the project DETERMINATION OF ANNUAL FUEL DISPLACEMENT. The annual fuel displacement is shown in the Cost Benefit Worksheet for the project (filename KWCostworksheet3.doc). Project benefits are shown in Section 5 of the worksheet. This RFA is for the Kenai Winds Expansion which will generate 4.4 additional MW (10,200 MWh annually). Kenai Winds estimated the natural gas displacement using information on the heat rate and avoided cost of Railbelt power plants available from the Regulatory Commission of Alaska. Working backwards from the known heat rate and estimated generation from the Kenai Winds expansion, it is estimated the expansion project will displace 7,847,672 mcf of natural gas through the life of the project (June 2010 – Dec. 2039). DETERMINATION OF PROJECT LIFETIME PUBLIC BENEFIT. The public benefit that will be realized is determined by forecasting the price of natural gas and combining this estimate with the amount of natural gas displacement. The methodology is explained in detail below. The value of the natural gas displaced and thus the benefit to the public is over $9.9 MM over the life of the Kenai Winds Expansion. Determination of natural gas baseline price. Kenai Winds has performed a detailed analysis on historical Alaskan natural gas prices in order to determine a baseline price for natural gas going forward over the life of the Kenai Winds project. The gas supply contracts between Chugach and gas producers were used to determine prices because Homer Electric currently buys a large portion of its electricity and natural gas through contracts with Chugach Electric. These contracts are publicly available and very familiar to the Alaska Energy Authority; AEA has used the formulas to evaluate a previous grant application. For completeness, the contract formula and its application to derivation of public benefit is detailed below: Chugach purchases natural gas using the complex formula shown below. The formula is based on the historical costs of natural gas, fuel oil, and crude oil in the lower-48 states: Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 26 10/7/2009 B = price of natural gas per mcf Pb = base price of natural gas when the contracts were signed in the late 1980’s dG, dF, and dC = coefficients based on the increase in commodity prices since the late 1980’s The final price is updated quarterly. The coefficients are recalculated each time based on commodity prices for a period beginning 15 months prior to the fiscal quarter and ending 3 months prior to the fiscal quarter. Projection of natural gas prices based on probability scenarios. The Kenai Winds project is anticipated to be operational in 2010 and project life will be evaluated to 2039. The price of natural gas per MMBTU from 2005 through 2030 is has been estimated by Kenai Winds and is shown below. Alaska Natural Gas Prices 0 5 10 15 20 25 Apr-05 Dec-07 Sep-10 Jun-13 Mar-16 Dec-18 Sep-21 May-24 Feb-27 Nov-29Real $/MMBTU$200oil MMBTU Parity $200oil MMBTU Parity $200oil $12NG Prices Constant Prices Constant $100oil $7.55NG $100oil $12NG AEA Projection $100oil $7.55NG Chugach Projection Probable Market Based Probable Regulated Known Prices Projected Prices Several pricing scenarios are included in this chart. In all cases, prepared by Kenai Winds, fuel oil and crude oil have equivalent prices on a per MMBTU basis. 1. Oil reaches $200/bbl. Natural Gas reaches parity with oil a per MMBTU basis by Sept. 2009. Prices escalate at 3% per year (as per general inflation). 2. Oil reaches $200/bbl. Natural gas reaches $12/MMBTU by Aug. 2008. Prices escalate at 3% per year. 3. Starting from August 2008, prices escalate at 3% per year. 4. Oil reaches $100/bbl. Natural gas reaches $7.55/MMBTU in Oct. 2008. Prices escalate at 3% per year. 5. Oil reaches $100/bbl in Jan. 2009. Natural gas reaches $12/MMBTU in Aug. 2008. Prices escalate at 3% per year. 6. Projections based on the Energy Information Administration Annual Energy Outlook, as Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 27 10/7/2009 provided by the Alaska Energy Authority. 7. Projections from Chugach Electric based on a 2006 generation plan. 8. In 2016, current gas contracts expire, the natural gas pipeline to the lower-48 states is complete, and Alaska gas prices are de-regulated. The first 5 scenarios are each re- represented; assuming Alaska gas prices are equivalent to Henry Hub. 9. Probabilities were assigned to each of the preceding cases. Two further gas price scenarios were created based on the probability of each scenario. The first assumes gas prices are regulated and ignores the 2016 Henry Hub cases. The second assumes gas prices are de-regulated and includes all the cases. The probabilities assigned to each scenario are given in the table below. If the price of natural gas stays regulated post-2106, the pre-2016 probabilities apply. Gas Price Probabilities Scenario Pre-2016 Post-2016 $200oil, MMBTU Parity (market) 0.00% 2.00% $200oil, MMBTU Parity 5.00% 4.00% $100oil, $12NG (market) 0.00% 15.00% $200oil, $12NG 5.00% 0.00% Prices Constant (market) 0.00% 15.00% Prices Constant 16.25% 10.00% $100oil, $7.55NG (market) 0.00% 9.00% $100oil, $12NG 21.25% 10.00% AEA Projection 21.25% 15.00% $100oil, $7.55NG 21.25% 15.00% Chugach Projection 10.00% 5.00% Total Probability 100% 100% Using this probabilistic gas price model, Kenai Winds has estimated the avoided cost of electricity through 2030. Chugach is the primary provider of electricity to HEA, so the Chugach avoided cost was used as a starting point. Historical avoided costs, the heat rates of Chugach generating stations, and the actual avoided cost filings were used to validate the model for the present day cost of energy shown above. The annual impact of the Bradley Lake hydro project is also included. The estimated avoided cost of electricity for the Kenai Winds Expansion was determined to be $30,702,134 over the life of the project (NPV June 2010-Dec 2039). AEA’s method for determining benefits to the Alaska public is to take the difference of the NPV of displaced fuel and the NPV of O&M costs for the project. Thus $9,907,736 is the Alaska public benefits realized over the life of the project. This does not take into account the economic multiplier effects from employing workers during construction and operations on the Kenai Peninsula. PROJECT REVENUES. The anticipated annual revenue will be from proceeds of energy sales to HEA which will be based on HEA’s avoided cost of purchasing 4.4 MW of power over the life of the project (10,200 MWh annually) from carbon based alternatives. As HEA’s contracts for energy from Bradley Lake and Chugach Electric expire in 2014, HEA is currently planning its own generation portfolio to supply its load. In addition, most natural gas contracts are currently based on historical indices from the contiguous 48 states. These contracts also expire in 2014. In the event these changes to Alaskan energy markets significantly change the economics of an avoided cost contract, HEA and Kenai Winds will renegotiate a pricing structure so the project Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 28 10/7/2009 remains of maximum benefit to both parties. Kenai Winds expects to receive a 9% unleveraged internal rate of return from the project. As a renewable energy project, Kenai Winds can take advantage of a number of Federal incentives created by the American Reinvestment and Recovery Act (ARRA). The two primary incentives are bonus depreciation and Treasury Department cash grant. Specifically, ARRA allows projects achieving commercial operations in 2009 to depreciate up to 50% of the value of the project in the first year of operations. Due to the economic downturn, this was not fully utilized nationwide during 2009, and it is widely anticipated to be extended through 2010. OTHER POSSIBLE INCENTIVES AND REVENUES In addition, the American Recovery and Reinvestment Act of 2009 (ARRA) made changes to the tax incentives available to renewable energy projects. Traditionally, wind projects could make use of a Production Tax Credit (PTC) valued at 2¢/kWh. Given the economic downturn, it became difficult to monetize the PTC as potential investors could not rely on a forward stream of revenue required to use the tax credit. ARRA allows developers to claim a 30% investment tax credit (ITC) worth up to 30% of the capital cost of the project. ARRA further allows developers to claim the ITC as a cash grant from Treasury Department. This applies only to projects entering construction in 2010, so Kenai Winds is clearly eligible. Given the recent advances in wind technology, it is widely anticipated that the availability of the ITC will continue beyond 2010. Another potential revenue stream comes from the sale of Renewable Energy Credits (RECs). At present, Alaska does not have an in-state requirement for renewable energy. Kenai Winds is currently formalizing its business plan for selling RECs. Potential buyers are Alaska utilities, large industrial customers, and the United States Military (which does have a requirement to buy renewable energy). The United States Congress is currently discussing a national renewable energy requirement which would expand the market and demand for these credits and provide considerable flexibility in monetizing this resource. Another potential revenue incentive may materialize if some form of Alaska Senate Bill 31 Renewable Energy Production Tax Credit is passed and is found applicable to Kenai Winds. Current version of SB31 would limit the total PTC to 10% of capital investment, allow the energy producer to claim applicability of the tax credit for the first years of production, and allow the credit to be used to offset taxes and/or allow the sale,assignment,exchange, or conveyance of the tax credit. NON ECONOMIC PUBLIC BENEFITS A detailed discussion of public benefit of the Kenai Wind Expansion project can be found in section 2.5 of this RFA. The public benefits not yet listed in this section include a) immediate improvement of the energy security of Southcentral Alaska, b) immediate albeit temporary construction employment in the hard-hit Nikiski industrial zone and the economic multiplier effect related to it, c) long-term benefits of a more stable electrical grid which directly impacts consumer safety and preserves jobs, d) long-term benefits related to retraining a workforce with on the job experience in the expanding wind industry e) long-term benefits related to decreasing green house gas emissions.The expansion of the Kenai Winds power facility from 10 to 15 MW will increase the magnitude of the benefits cited above. The investment AEA would make in the Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 29 10/7/2009 Kenai Winds project expansion directly aligns with its mission to assist in the development of safe, reliable, and efficient energy systems which are sustainable and environmentally sound. 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 Currently, Kenai Winds estimates the annual O&M costs to be $255,345, escalating with inflation at 3% per year. The estimate includes the turbine warranty, O&M, on-site project manager, and insurance. This will be paid out of project revenues. Post commissioning, the operations and maintenance may be performed partially by the turbine vendor, partially by the existing skilled workforce, or perhaps under contract to the local power company, HEA. Regardless of the optimal O&M chosen, the location on the Kenai Peninsula gives Kenai Winds unrivaled access to a highly skilled workforce that can be rapidly retrained to service the equipment. The project is located on Kenai Spur Hwy in the middle of the Nikiski industrial district with an available workforce specially trained for rotating equipment, high voltage equipment, and modern safety procedures. Furthermore, UAA has recently announced plans to have the Alaska Vocational Technical Center (AvTec) develop the curriculum for an occupational certificate in renewable fuels, specifically targeting wind industry operations and maintenance. AvTec is located in Seward, Alaska on the Kenai Peninsula. Regarding financing, Kenai Winds is currently in negotiations with a number of interested parties on the financing of the project. A number of parties will be involved and bring investment in a number of forms including but not limited to: debt, equity, tax equity, power price hedges, vendor financing, loan guarantees, and non- traditional lenders. Note that Tim Ryan, a partner in Apex Wind Energy and Kenai Winds, arranged project financing for over 19.000 MW of power projects prior to his entering the wind energy industry. He arranged financing for the 135 MW Judith Gap wind project in 2005. In 2006, Apex Wind Energy arranged for construction and permanent financing of the 20 MW Steel Winds project. We have the experience and ability to finance the Kenai Winds project. The main operational challenge will be the intermittent nature of wind power generation. Energy is only produced when the wind blows. Intermittent generation of this type requires a modern electric utility grid with the flexibility to accommodate intermittent generation, a workforce knowledgeable in understanding wind rate predictions, and, of course, excellent SCADA and human communications. HEA has demonstrated the willingness to learn the core competencies required to incorporate wind energy into the industrial power grid. As part of its operations, Kenai Winds will provide day-ahead and real-time energy production estimates to HEA to aid in dispatching other generation, which will mitigate this intermittency. As with any industrial production facility, ongoing support of the Kenai Winds facility will be a primary concern to all stakeholders in the LLC. The advantage of a wind energy facility is its low cost to maintain. Once the targeted return on investment is achieved, the project continues to Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 30 10/7/2009 provide revenue as an operating asset. Since there is no fuel cost, this revenue is easily predictable and presents a significant value to the owner. With proper maintenance procedures the project life can be extended beyond 20 years and be a valuable asset for many years beyond that. 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. Kenai Winds LLC will complete Phase III- Final Design and Permitting of the Kenai Winds facility by January 2010 and will start Phase IV-Construction, Commissioning, Operation, and Reporting thereafter. A complete timeline of milestones is listed in Section 3.3 of this RFA and the Gantt chart time line can be found in Appendix B. This project is in a mode of executing project aspects that have been well defined. This project has the full support of the community it will serve. Kenai Winds has received $80,000 from the AEA’s first round of solicitations under this grant project and $2,000,000 from the second round. Kenai Winds is currently negotiating the terms of the grant agreements for the previous two solicitations. This RFP is for expanding the wind project from 10 to 15 MW per the request of HEA. SECTION 8– LOCAL SUPORT Discuss what local support or possible opposition there may be regarding your project. Include letters of support from the community that would benefit from this project. The merits of the Kenai Winds power facility are recognized and endorsed by the public of the Kenai Peninsula Borough through their representatives. The following statements of support can be found in the Appendices as noted: Letter of Support from Kenai Peninsula Borough Mayor is in Appendix K. Letter of Support from HEA General Manager is Appendix L. Letter of Support from Tesoro Alaska Company Senior Management is Appendix M. Kenai Peninsula Borough Resolution 2007-009 Concerning a Local Climate Change Implementation Plan is Appendix N. Kenai Peninsula Borough Resolution 2008-007 Concerning Reduction in Greenhouse Gas Emissions is Appendix O. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 31 10/7/2009 The merits of the Kenai Winds power facility are recognized and endorsed by state of Alaska representatives. Letter of Support from Alaska State House of Representatives Finance Committee Co-Chair Mike Chenault is Appendix P. Furthermore, the Alaska Energy Authority has recognized the merit of the Kenai Winds power facility by granting prior stages of the project $2.08 MM. The expansion of the Kenai Winds power facility from 10 to 15 MW will increase the magnitude of the Kenai Winds power facility. The investment AEA would make in the Kenai Winds project expansion directly aligns with its mission to assist in the development of safe, reliable, and efficient energy systems which are sustainable and environmentally sound. 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 The total budget through construction of the Kenai Winds project is $10 million. This grant application is for $4 million, leaving a funding requirement of $6 million. This will be provided by a combination of funds from Apex Wind Energy and project-specific financing. To date, Apex Wind has provided $165,000 in funding for Phases 1, 2, and 3 of the project. ARRA as discussed in Section 5 has caused many changes in the business structure of a commercial wind energy facility. A significant portion of the financing will be sourced from “tax equity” investors that can monetize the depreciation benefits of the project. In addition, 30% of the project cost will be provided by the Federal Government in the form of a cash grant in-lieu of Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 32 10/7/2009 tax credits. Apex Energy has experience in monetizing the tax benefits and has excellent relationships with such tax investors. These tax incentives typically allow Independent Power Producers (IPPs) to produce renewable energy at rates less than regulated electric utilities. Additional amounts of capital will be financed using the projected cash flow of the project. This may be in the form of debt and/or equity. Apex Wind has already entered into discussions with a number of potential investors including banks, equity funds, and native corporations. Finally, construction financing will be required, which usually takes the form of short-term loans. Again, Apex Wind Energy has excellent relationships with providers of these kinds of financing. Note that Tim Ryan, a partner in Apex Wind Energy, arranged project financing for over 19.000 MW of power projects prior to his entering the wind energy industry. He arranged financing for the 135 MW Judith Gap wind project in 2005. In 2006, Apex Wind Energy arranged for construction and permanent financing of the 20 MW Steel Winds project. We have the experience and ability to finance the Kenai Winds project. The Corporate Authorizations Letter required for the RFA is in Appendix Q. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 33 10/7/2009 SECTION 9 – ADDITIONAL DOCUMENTATION AND CERTIFICATION SUBMIT THE FOLLOWING DOCUMENTS WITH YOUR APPLICATION: A. Resumes of Applicant’s Project Manager, key staff, partners, consultants, and suppliers per application form Section 3.1 and 3.4. B. Cost Worksheet per application form Section 4.4.4. C. Grant Budget Form per application form Section 9. D. Letters demonstrating local support per application form Section 8. E. An electronic version of the entire application on CD per RFA Section 1.6. F. Governing Body Resolution or other formal action taken by the applicant’s governing body or management per RFA Section 1.4 that: - Commits the organization to provide the matching resources for project at the match amounts indicated in the application. - Authorizes the individual who signs the application has the authority to commit the organization to the obligations under the grant. - Provides as point of contact to represent the applicant for purposes of this application. - Certifies the applicant is in compliance with applicable federal, state, and local, laws including existing credit and federal tax obligations. F. CERTIFICATION The undersigned certifies that this application for a renewable energy grant is truthful and correct, and that the applicant is in compliance with, and will continue to comply with, all federal and state laws including existing credit and federal tax obligations. Print Name Paul F. Curran Signature Title Senior Executive VP Date 11/9/2009   Renewable Energy Fund Round 3 Project Cost/Benefit Worksheet   RFA AEA10-015 Application Cost Worksheet 10-7-09 Please note that some fields might not be applicable for all technologies or all project phases. The level of information detail varies according to phase requirements. 1. Renewable Energy Source The Applicant should demonstrate that the renewable energy resource is available on a sustainable basis. Annual average resource availability. 98% (24.3% capacity factor) 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 Railbelt1 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] iv. Coal [tons or MMBtu] v. Wood [cords, green tons, dry tons] vi. Other                                                              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.    Page 34   Renewable Energy Fund Round 3 Project Cost/Benefit Worksheet   RFA AEA10-015 Application Cost Worksheet 10-7-09 3. Proposed System Design Capacity and Fuel Usage (Include any projections for continued use of non-renewable fuels) a) Proposed renewable capacity (Wind, Hydro, Biomass, other) [kWh or MMBtu/hr] 4.4 MW (wind) b) Proposed Annual electricity or heat production (fill in as applicable) i. Electricity [kWh] 10,200 MWh ii. Heat [MMBtu] c) Proposed Annual fuel Usage (fill in as applicable) i. Propane [gal or MMBtu] ii. Coal [tons or MMBtu] iii. Wood [cords, green tons, dry tons] iv. Other 4. Project Cost a) Total capital cost of new system $10,000,000 b) Development cost $200,000 c) Annual O&M cost of new system $255,345 d) Annual fuel cost $0 5. Project Benefits a) Amount of fuel displaced for i. Electricity 7,847,672 mcf, natural gas (June 2010 – Dec. 2039) ii. Heat iii. Transportation b) Price of displaced fuel $30,702,134 (NPV of June 2010 – Dec. 2039) c) Other economic benefits d) Amount of Alaska public benefits $9,907,736 6. Power Purchase/Sales Price a) Price for power purchase/sale Avoided Cost 7. Project Analysis a) Basic Economic Analysis Project benefit/cost ratio 20 yr NPV basis : 1.52 Payback 6.18 years Page 35 Renewable Energy Fund Grant Round III Grant Budget Form 10-7-09 Milestone or Task Anticipated Completion Date RE- Fund Grant Funds Grantee Matching Funds Source of Matching Funds: Cash/In-kind/Federal Grants/Other State Grants/Other TOTALS (List milestones based on phase and type of project. See Attached Milestone list. ) $ $ $ Remaining Wind Turbine Payments $3,050,000 $4,150,970 Cash $7,200,970 Engineering $0 $46,697 Cash $45,697 Balance of Plant $500,000 $857,166 Cash $1,357,166 Construction $250,000 $523,839 Cash $442,255 Contractor Fees $200,000 $242,255 $442,255 Contingency $0 $180,073 $180,073 $ $ $ $ $ $ $ $ TOTALS $4,000,000 $6,000,000 $10,000,000 Budget Categories: Direct Labor & Benefits $ $ $ Travel & Per Diem $ $ $ Equipment $3,550,000 $5,008,136.11 $8,558,136 Materials & Supplies $ $45,697.15 $45,697 Contractual Services $450,000 $946,167 $1,396,167 Construction Services $ $ $ Other $ $ $ TOTALS $4,000,000 $6,000,000 $10,000,000 Applications should include a separate worksheet for each project phase (Reconnaissance, Feasibility, Design and Permitting, and Construction)- Add additional pages as needed Page 36 AEA 10-015 Application 10/7/2009 APPENDIX A: APEX WIND ENERGY RESUMES Page 37 • AEA10-015 Grant Application 10/7/2009 APPENDIX B: PROJECT SCHEDULE Page 55 IDTask NameDurationStartFinishPredecessors1Preliminary Feasibility Study97 daysThu 3/1/07Fri 7/13/072Preliminary Economic Model67 daysThu 4/12/07Fri 7/13/071FF3Preliminary Stakeholder Meetings80 daysSat 7/14/07Thu 11/1/0714Meteorological Study450 daysFri 11/2/07Thu 7/23/09356 Month Meteorological Assessment30 daysWed 4/2/08Tue 5/13/084SS+108 days6Update Economic Model5 daysWed 5/14/08Tue 5/20/0857Infrastructure Review4 daysWed 5/14/08Mon 5/19/086SS8Preliminary Environmental Review30 daysWed 5/14/08Tue 6/24/087SS9Preliminary Plant Layout30 daysWed 6/25/08Tue 8/5/08810Turbine Commitment239 daysMon 7/27/09Thu 6/24/1011Short List Turbine Suppliers45 daysMon 7/27/09Fri 9/25/099,4512Term Sheets Received45 daysMon 9/28/09Fri 11/27/091113Turbine Selection30 daysMon 11/30/09Fri 1/8/101214New Term Sheets40 daysMon 1/11/10Fri 3/5/101315First Downpayment7 daysMon 3/8/10Tue 3/16/1014,5816Negotiation of Turbine Contracts30 edaysTue 3/16/10Thu 4/15/101517Signature of Turbine Contracts5 daysFri 4/16/10Thu 4/22/101618Second Payment0 daysThu 4/22/10Thu 4/22/101719Towers at Site45 daysFri 4/23/10Thu 6/24/101820Turbines at Site45 daysFri 4/23/10Thu 6/24/1019SS21Blades at Site45 daysFri 4/23/10Thu 6/24/1019SS22Final Payment0 daysThu 6/24/10Thu 6/24/102023Interconnection Requirements Study285 daysFri 11/28/08Thu 12/31/0924Negotiate Study Scope14 edaysFri 11/28/08Fri 12/12/0825System Impact Study80 daysFri 12/12/08Thu 4/2/092426Extended System Study114 daysMon 7/27/09Thu 12/31/094527Negotiate Interconnection Agreement40 daysMon 10/19/09Fri 12/11/0926SS+3 mons28Sign Interconnection Agreement0 daysThu 12/31/09Thu 12/31/0927,2629Site Development Plan5 daysWed 8/6/08Tue 8/12/08930Media/Community Relations Plan5 daysWed 8/13/08Tue 8/19/082931Coastal Zone Management Review13 daysWed 1/21/09Fri 2/6/098,29,5532FAA Obstruction Evaluation14 daysMon 1/26/09Thu 2/12/0931SS+3 days33Community Stakeholders Meetings180 daysFri 2/13/09Thu 10/22/093234Negotiate Taxing Agreement180 edaysFri 2/13/09Wed 8/12/0933SS35Preliminary Engineering134 daysFri 7/24/09Thu 1/28/1036Final BOP Quotes30 daysFri 12/18/09Thu 1/28/1025,4937Identify Long Lead Items 10 daysFri 12/18/09Thu 12/31/0936SS38Surface and Geotechnical Survey64 daysMon 7/27/09Thu 10/22/094539Site Building Safety Review for Setbacks30 edaysFri 7/24/09Sun 8/23/094540Discussions with Neighbor Properties (Chevron, Agrium etc)60 daysMon 7/27/09Fri 10/16/094541Finalize Layout15 daysMon 10/19/09Fri 11/6/094042Tesoro and HEA Offtake Agreements460 daysWed 5/14/08Tue 2/16/10543Tesoro Term Sheets80 daysWed 5/14/08Tue 9/2/08544Updated JDA150 daysWed 9/3/08Tue 3/31/094345Homer Electric Term Sheets162 edaysThu 2/12/09Fri 7/24/093246Tesoro SWAP Term Sheet90 daysMon 7/27/09Fri 11/27/094547Tesoro Lease Option45 edaysFri 7/24/09Mon 9/7/094548Chugach Discussions60 daysMon 7/27/09Fri 10/16/094549HEA PPA Negotiation44 daysMon 10/19/09Thu 12/17/094850Regulatory Approval43 daysFri 12/18/09Tue 2/16/104951PPA Signed0 daysTue 2/16/10Tue 2/16/105052Site Lease90 daysTue 9/8/09Mon 1/11/1044,4753Financing524.5 daysWed 9/3/08Tue 9/7/1054Alaska Renewable Energy Fund Activities215 daysWed 9/3/08Tue 6/30/0955Round 1 Grant100 daysWed 9/3/08Tue 1/20/094356Round 2 Grant185 daysWed 10/15/08Tue 6/30/0955SS+30 days57Discussions with Local Financiers90 edaysFri 7/24/09Thu 10/22/094558Financing For Turbine Downpayments60 edaysThu 12/17/09Mon 2/15/104959Construction Financing30 daysTue 2/16/10Mon 3/29/1045,52,5860DOE Grant / ITC0 daysTue 9/7/10Tue 9/7/1011061Long Term Debt0 daysTue 9/7/10Tue 9/7/1011062Construction216.5 daysMon 11/9/09Tue 9/7/1063Negotiate Contract10 daysMon 11/9/09Fri 11/20/094164Full Notice to Proceed90 daysMon 11/23/09Fri 3/26/10634/226/2412/312/169/79/73/04/05/06/07/08/09/010/11/12/1/02/03/04/05/06/07/08/09/010/11/12/1/02/03/04/05/06/07/08/09/010/11/12/1/12/13/14/15/16/17/18/19/110/1TaskPhase 2 TaskPhase 3 TaskPhase 4 TaskSplitProgressMilestoneSummaryProject SummaryExternal TasksExternal MilestoneDeadlinePage 1Project: Kenai WindsDate: Thu 11/5/09Page 56 IDTask NameDurationStartFinishPredecessors65Detailed Engineering40 daysMon 3/29/10Fri 5/21/1066Electrical2 wksMon 3/29/10Fri 4/9/106467Foundation - Design2 wksMon 3/29/10Fri 4/9/106468Site Plan and Detail Drawings2 wksMon 4/12/10Fri 4/23/106769Construction Plan10 daysMon 4/26/10Fri 5/7/106870O&M Plan10 daysMon 5/10/10Fri 5/21/106971Owner Approval2 wksMon 4/12/10Fri 4/23/1066,6772Material & Equipment Procurement30 daysMon 4/12/10Fri 5/21/1073PMTs and Conductor4 wksMon 4/12/10Fri 5/7/1066SS+10 days74UG Material4 wksMon 4/26/10Fri 5/21/107175OH Material4 wksMon 4/26/10Fri 5/21/107176Metering & Relays2 wksMon 4/26/10Fri 5/7/107177Embeds & Bolts2 wksMon 4/26/10Fri 5/7/107178Start of Construction0 daysFri 4/23/10Fri 4/23/107179Site Grading & Roads1.5 wksMon 4/26/10Wed 5/5/107880WTG Foundations45 daysWed 5/5/10Wed 7/7/1081Excavation30 daysWed 5/5/10Wed 6/16/107982Additoinal Sub-Grad Prep & Mud Mats9 daysWed 5/19/10Tue 6/1/1081SS+10 days83Install Steel, Bolt Cage, & Conduits10 daysWed 5/26/10Wed 6/9/1082SS+5 days,7784Pour6 daysWed 6/9/10Thu 6/17/1083SS+10 days,7485Install Grounding5 daysThu 6/17/10Thu 6/24/1084SS+6 days86Backfill5 daysThu 6/24/10Thu 7/1/1085SS+5 days87PMT Pads & Conduit4 daysThu 7/1/10Wed 7/7/1086SS+5 days88Collection System53 daysWed 5/5/10Mon 7/19/1089Trench, Cable, & Backfill1.5 wksWed 5/5/10Fri 5/14/107990Overhead1.5 wksWed 5/5/10Fri 5/14/107991Set PMT's & Terminate MV6 daysWed 7/7/10Thu 7/15/108792Test2 daysThu 7/15/10Mon 7/19/1089,90,9193Substation55 daysWed 5/5/10Wed 7/21/1094Test Existing Equipment1.5 wksWed 5/5/10Fri 5/14/107995Install New Metering4 daysMon 5/17/10Thu 5/20/1076,9496Install New Relays1 wkMon 5/17/10Fri 5/21/1076,9497Connect to Collection System1 dayMon 7/19/10Tue 7/20/1092,9698Collection System Backfeed1 dayTue 7/20/10Wed 7/21/109799WTG Installation26 daysThu 7/15/10Fri 8/20/10100Set Converters, Bases, Lower Mids, & Grout4 daysThu 7/15/10Wed 7/21/1079,91,19101Set Upper Mids, Tops, & Nacelles4 daysWed 7/21/10Tue 7/27/10100,20102Set Gearbox Assemblies4 daysTue 7/27/10Mon 8/2/10101103Install Rotors4 daysMon 8/2/10Fri 8/6/10102,21104Install Wiring & Elevators8 daysFri 8/6/10Wed 8/18/10103105Final Walkdowns and Punchlists1 dayWed 8/18/10Thu 8/19/10104106Backfeed and Turnover to Commission1 dayThu 8/19/10Fri 8/20/10105,98107Guaranteed Infrastructure Completion0 daysFri 8/20/10Fri 8/20/10106108Commissioning12 daysFri 8/20/10Tue 9/7/10106109Roads Reshaped & Reclaimed1 wkFri 8/20/10Fri 8/27/10106110Commerical Operations0 daysTue 9/7/10Tue 9/7/101084/238/209/73/04/05/06/07/08/09/010/11/12/1/02/03/04/05/06/07/08/09/010/11/12/1/02/03/04/05/06/07/08/09/010/11/12/1/12/13/14/15/16/17/18/19/110/1TaskPhase 2 TaskPhase 3 TaskPhase 4 TaskSplitProgressMilestoneSummaryProject SummaryExternal TasksExternal MilestoneDeadlinePage 2Project: Kenai WindsDate: Thu 11/5/09Page 57 AEA10-015 Grant Application 10/7/2009 APPENDIX C: EPC STATEMENTS OF QUALIFICATIONS Page 58 September 12, 2008 Josh Berkow BQ Energy, LLC 20 Jon Barrett Road Patterson, NY 12563 Re: Signal Wind Energy: Statement of Qualifications Dear Josh: We are very interested in discussing ways that Signal Wind can assist you with your future Projects. Our Preconstruction Services division offers a variety of services to aid wind energy owners and developers in bringing their projects from the conceptual stage to construction. Currently, we are providing preconstruction assistance to a variety of developers and would be happy to discuss with you ways in which we can help you bring your projects to fruition. Our Projects division is currently constructing a 100MW project in Kansas for BP Alternative Energy, as well as over 200 MW in other areas of the United States for other owners, including Noble Environmental Power, an affiliate of JP Morgan. Signal Wind is one of the most experienced Balance of Plant general contractors in the United States. I am sending this letter to give you and your team more information about Signal Wind and its qualifications. Included in this letter is information about our parent company, our project history, our organizational structure, our Safety Program and our financial strength. A. Statement of Qualifications Signal Wind is a subsidiary of EMJ Corporation, one of the nation’s largest commercial general contractors. EMJ is consistently ranked as one of the nation’s top general contractors in terms of annual revenue volume (59th in 2007, Engineering News Record Magazine; 59th in 2006, Building Design and Construction Magazine;), total square footage built (4th in 2005, Retail Operations and Construction Magazine) and shopping center square footage built (3rd in shell space and 3rd in interior space for 2005, Retail Traffic Magazine). EMJ has offices in Chattanooga, Dallas, Boston and Sacramento, and is licensed in 45 states. EMJ has an unlimited bonding capacity Signal Wind brings the professionalism and expertise of EMJ to the wind industry. Signal Wind is a design/build general contractor and provides Balance of Plant (BOP) services for wind energy projects located throughout the continent. Our BOP contracts normally include basic infrastructure such as foundation design and construction for each wind turbine, access road design and construction to simplify wind turbine transport to each foundation, installation of turbines and Page 59 towers, an electrical collection system to bring the power to one point, design and construction of the project substation(s) and the interconnection of the wind farm to the power grid. The highly qualified project management team we have assembled has an established record of excellence within the wind energy industry, satisfying the requirements of a wide range of clients. Signal Wind utilizes experienced wind project personnel along with proven general contractor and project management systems to complete projects on schedule and within budget. As a full EPC Balance of Plant contractor, Signal Wind is experienced and fully capable in all aspects of wind farm balance of plant construction, including the following: • Design and construction of civil infrastructure, including: roads, crane pads, operations and maintenance buildings and all related structures; • Design and construction of WTG foundations; • Design and construction of electrical collection systems; • Design and construction of substations and interconnection facilities; • Design and construction of transmission lines; and • Turbine erection. Signal Wind has been an innovator in considering and implementing design alternatives that save our clients money and time with no sacrifice of quality. Our philosophy is to work with our clients to design a project that is optimized in the areas of cost, construction time, quality and safety. Below is a partial list of Signal Wind projects: Location Project Information Panhandle, TX 76 GE 1.5MW turbines—114 MW Signal Wind’s scope of work includes the design and construction of all aspects of this project, which will ultimately be a total of 240 MW. Phase I consists of two (2) 34.5kV/115kV substations, 76 WTGs, all civil infrastructure, foundations, underground collection system, turbine erection and overhead transmission to a central 115kV switchyard. Phase II will begin in early 2009 and will consist of 84 GE 1.5 MW WTGs. Medicine Lodge, KS 40 Clipper C-96 turbines – 100MW Signal Wind’s scope of work includes the design and construction of all aspects of typical BOP construction including all civil infrastructure, WTG foundations, electrical collection system, O&M Building and turbine erection. Forest Creek, TX 54 Siemens 2.3 MW turbines—124MW Signal Wind’s scope of work included the design and construction of all aspects of typical BOP construction including all civil infrastructure, WTG foundations, electrical collection system, substation (for this project as well as an adjacent 100+ MW project) and 5+ miles of 138kV transmission line. Turbine erection was performed by the manufacturer. Panhandle, TX 38 Suzlon S88 2.1 MW turbines-80MW Page 60 Signal Wind’s scope of work included the design and construction of all aspects of typical BOP construction, including all civil infrastructure, WTG foundations, electrical collection system, substation and turbine erection. Texhoma, TX 16 Suzlon S88 2.1 MW turbines-34MW Signal Wind’s scope of work included the design and construction of all aspects of typical BOP construction, including all civil infrastructure, WTG foundations, electrical collection system and turbine erection. Snyder, TX 21 Vestas V90 3.0 MW turbines-63MW Signal Wind’s scope of work includes the design and construction of all aspects of typical BOP construction including all civil infrastructure, WTG foundations, electrical collection system and substation Turbine erection will be performed by the manufacturer. St. Leon, MB, Canada 63 Vestas V82 1.65 MW turbines-104MW Signal’s scope of work included the managing design and construction of all aspects of typical BOP construction, including all civil infrastructure, WTG foundations, electrical collection system, substation and turbine erection as well as turbine delivery. Gruver, TX 24 Suzlon S64 1.25 MW turbines-30MW Signal Wind’s scope of work included the design and construction of all aspects of typical BOP construction, including all civil infrastructure, WTG foundations, electrical collection system and turbine erection. Panhandle, TX 40 Suzlon S64 1.25 MW turbines—50MW Signal Wind’s scope of work includes the design and construction of all aspects of typical BOP construction, including all civil infrastructure, WTG foundations, electrical collection system and turbine erection. Multiple Projects, MN & IL Suzlon S88 2.1 MW turbines Signal Wind’s scope of work includes the design and construction of all aspects of typical BOP construction, including all civil infrastructure, WTG foundations, electrical collection system and turbine erection. Signal Wind has an impressive staff of experienced wind farm professionals. Below is a list of wind farm construction projects in which Signal Wind personnel have been involved: Project Description Buffalo Mountain, TN 15 Vestas 1.8 MW turbines 2004 Hyde Cty. Wind Park, SD 27 GE 1.5 MW turbines 2003 Carroll, IA 1 Vestas V80 1.8 MW turbine 2003 Bowling Green, OH 2 Vestas V80 1.8 MW turbines 2003 Rio Vista, CA 15 Vestas V47 turbines 2003 Ft. Sumner, NM 136 GE 1.5 MW turbines 2003 Indian Mesa I, II, TX 107 GE 1.5 MW turbines 2001 Monfort, WI 20 Enron 1.5 MW turbines 2001 Lake Benton, MO 257 Zond 750 kW turbines 2000 Page 61 Storm Lake, IA 259 Zond 750 kW turbines 1999 Evanston, WY 80 Vestas 1.8 MW turbines 2004 Fenner , NY 20 GE 1.5 MW turbines 2001 Sommerset, PA 6 GE 1.5 MW turbines 2002 Mill Run, PA 10 GE 1.5 MW turbines 2002 Mountaineer, W VA 44 NEG Micon 1.5 MW turbines 2003 Whitewater, CA 41 GE 1.5 MW turbines 2003 Sky River, CA 342 Vestas V27 turbines 2003 Oak Creek, CA 33 NEG Micon 48 turbines 1999 Delaware Mtn., TX 40 Enron 750 kW turbines 1999 Big Spring, TX 42 Vestas 660 kW turbines 2002 Sibley, IA 1 Vestas 660 kW turbine 2003 Sibley, IA 5 Gamesa 800 kW turbines 2003 Sibley, IA 10 Gamesa 950 kW turbines 2003 Kimball, NE 7 Neg Micon 1.5 MW turbines 2002 McCamey, TX 242 Vestas 670 kW turbines 2000-2006 McCamey, TX 214 1.3 MW Bonus turbines 2000-2006 Ainsworth, NE 36 NEG Micon V-82 1.65MW WTGs 2005 B. Pre-Construction Services Signal Wind emphasizes project efficiency and value engineering on all of its wind energy projects. As part of the services we offer to our clients, we can assist in the development and planning of your wind project in order to bring it to the point of constructability. Our Pre-Construction Services Department is available to help in the performance of a number of project tasks, including the following: • Assisting in the preparation of an outline project format, setting forth preliminary goals including the overall scope of work, design intent, preliminary budget, schedule, and assignment of project team responsibilities. • Preparing the preliminary master construction schedule. • Evaluating the existing site conditions and coordinating/procuring site investigations and studies. • Assisting in reviewing the requirements of governmental agencies having jurisdiction over the project, advising on the cost impact of these requirements and suggesting possible alternatives, if necessary. • Reviewing the project interconnection requirements and procuring engineering for interconnection with the utility, as well as coordinating meetings with the utility to verify design standards. • Monitoring the budget throughout the design development and working drawing preparation periods. Page 62 • Conducting a value engineering analysis including cost, construction feasibility, and schedule impact. Preparing cost estimates on alternate design considerations and making recommendations for a cost effective design to meet the project goals. • Conducting regular project team meetings. • Refining the project budget and schedule throughout the pre-construction phase based on preliminary findings. • Developing a procurement strategy for time critical engineering and suppliers with consideration for schedule and cost. • Reviewing plans and specifications while issuing invitations to bid. • Soliciting, receiving and analyzing engineering and supplier proposals. • Awarding engineering/supplier contracts to keep the project on schedule. • Awarding contracts for preliminary civil infrastructure design, preliminary foundation design, preliminary electrical collection system design and preliminary electrical substation design. Signal Wind is pleased to be able to offer these pre-construction services in an effort to help our clients bring their wind projects to fruition. Our intent in developing a relationship at the pre- construction phase is to be in a position to enter into a contract for the construction of the balance of plant for the wind project, assuming that we can meet the clients’ budget and scheduling requirements. C. Project Organizational Structure Signal Wind is committed to devoting to each of our projects a personnel structure that reflects our commitment to quality, safety and overall project success. Accordingly, we staff each of our wind projects with the following personnel: • Project Manager: Signal Wind Project Managers are responsible for overall project oversight. Each of our Project Managers are industry professionals, with all having extensive wind farm experience, engineering degrees and backgrounds, or both. • Site Managers: Signal Wind Site Managers are responsible for the day to day operation of the project. They are accountable to the Project Manager and are the primary contact for all subcontractors working on site. Our Site Managers have extensive experience in all aspects of wind farm construction. • Superintendents: Each Signal Wind project has a site Superintendent assigned to oversee the construction of specific areas of the wind farm construction: Mechanical, Electrical, and Civil. The Superintendents each have specific knowledge in their area of expertise and oversee this work to insure overall project success. Page 63 • Third Party Oversight: Signal Wind also employs third-party consultants to assist in the oversight of critical project construction items. On many projects, Signal Wind employs third party engineers to review the wind turbine foundation design engineering, typically in cases where the foundation design is unique or must withstand unusually challenging site conditions or loads. Signal Wind requires that the foundation design engineer observe the foundation installation to make sure that the construction is executed as designed. In addition, Signal Wind requires that the geotechnical engineer responsible for the geotechnical report for the project be present for the excavation to confirm that the soil conditions are the same as those contained in the geotechnical report. • Safety Manager: As explained more fully below, all Signal Wind projects have a Site Safety Manager that is in charge of implementing and enforcing our Safety Program. • Quality Manager: Each site has a Quality Manager that has the primary responsibility of overseeing the implementation of our site specific Quality Plan for the project. D. Safety Program and Record Signal Wind is committed to making safety an integral part of the wind farm construction process. Safety is our primary concern on each project. Our Safety Department, consisting of credentialed professionals, is intimately involved in the planning and execution of each project. They interface with clients and subcontractors to ensure a safe and productive work site. Staff Our Safety Department staff consists of a Corporate Safety Director, a Company Safety Director and Site Safety Managers. Each project is assigned an on-site Site Safety Manager. Project Safety Management 1. Safety Evaluation – Each bid proposal is evaluated by the Company Safety Director to determine specific project needs as well as client requirements. This process is intended to ensure adequate resources for the site management team. 2. Site Specific Safety Plan – The Company Safety Director, in conjunction with the Site Safety Manager, will prepare an initial site safety plan for each project. The plan will include, at a minimum, individual project safety responsibilities, site safety rules, job hazard assessments, special hazard considerations, emergency action plan, and any other items dictated by site conditions or client requirements. 3. Subcontractor Selection – Signal Wind selects qualified subcontractors to meet the specific needs of each project. In order to qualify, subcontractors are required to submit detailed safety documentation. Some of the Signal Wind subcontractor safety targets include: • EMR Rating Less than or equal to 1 • Recordable incidence rates at or below industry standards • Acceptable safety/environmental programs policies and procedures pertinent to their contracted scope of work Page 64 • In the event a subcontractor does not meet a specific requirement, Signal Wind will require a detailed explanation from the subcontractor and will make a hiring determination based on the information provided. If an exception is made, it is on a probationary basis and the subcontractor is scrutinized closely for safety performance. 4. Project Safety Administration – Each project is assigned a Site Safety Manager. This individual reports directly to the Company Safety Director and is responsible for the administration and enforcement of all safety programs, policies, and procedures pertaining to the project. He/she works closely with clients, subcontractors, and Signal Wind site personnel to ensure that safety is not compromised on any aspect of the project. 5. Safety Inspections/Audits – The identification and abatement of existing and predictable hazards in the workplace is paramount to injury prevention. Accordingly, Signal Wind imposes 5 levels of safety inspections/audits on each project. • Daily Inspections – The Site Safety Manager is required to perform daily visual inspections of all active construction areas. In addition to the Site Safety Manager, the Site Manager and Superintendents are also required to conduct these daily visual inspections in their respective areas of responsibility. Any deficiencies noted in these inspections, as well as assigned responsibilities and corrective actions, are logged and tracked on the Safety Audit Action Item Log. • Monthly Inspections – The Site Safety Manager is required to perform one documented Site Safety Audit each month. This audit includes a visual inspection for physical hazards, as well as a review of Signal Wind and subcontractor program documentation. Once complete, the audit is reviewed by the Site Manager, as well as the Project Manager, for any action required on their part. It is then submitted to the Company Safety Director for review and approval. • Quarterly Safety Inspections – The Company Safety Director will conduct a minimum of one safety inspection/audit per quarter for each Signal Wind project. This inspection is similar to the monthly inspection in that it includes both physical program inspections. The results of this audit are forwarded to the Vice President of Projects and the Corporate Safety Director for review. These audits are also tied to the Safety Bonus Program. • Corporate Safety Inspections – The Corporate Safety Director will conduct at least one safety inspection/audit per project. The basis of the inspection is similar to the quarterly inspection. The results of this audit are also sent to EMJ executive staff for review. This inspection is also tied to the Safety Bonus Program. • Third Party Inspections – Each Signal Wind project requires one safety inspection to be conducted by our current insurance carrier and one inspection through the OSHA Consultation Services. Both of these inspections are tied to the Safety Bonus Program 6. Subcontractor Safety Performance – In addition to following their own safety policies and procedures, subcontractors are required contractually to adhere to all Signal Wind and client safety policies, procedures, and processes. Compliance is monitored and enforced daily by our site management staff. In addition to compliance, subcontractors are also required to conduct daily safety meetings with their respective crews and attend at least one safety meeting per week, conducted by the Site Safety Manager. This meeting will consist of a weekly training topic, as well as discussion and resolution of any project open safety issues. All subcontractor personnel are Page 65 required to attend an initial site safety orientation, advising them of the programs, policies, and procedures associated with the project, as well as any special hazards. 7. Landowner Safety – It is understood that landowners may require access to the site. However, they will be informed of and held to the same safety standards as any other visitor. 8. Visitor Safety – Each visitor to the site will be required to attend a visitor’s safety orientation. This orientation will be conducted by the Site Safety Manager and will be appropriate to the scope of their visit. 9. Accident Investigation – Signal Wind believes firmly that all occupational injuries and illnesses are preventable. However, when they do occur, we are left only with the opportunity to learn from circumstances surrounding the event in order to prevent a re-occurrence. For this reason, each injury incident, property damage incident, environmental incident, and near miss is investigated by both Signal Wind and the employer involved in the incident. The impetus of this investigation is always to determine causal relationships and implement corrective actions. 10. Safety Statistics- As a subsidiary of EMJ, Signal Wind’s safety record is combined with that of EMJ for purposes of establishing a Workers Compensation Experience Modification Rating (EMR). The current combined Signal Wind/EMJ EMR is 0.62. Signal Wind’s consistent emphasis on safety is exemplified by this low rating, reserved only for the safest construction companies. E. Statement of Financial Strength In addition to being a leader in general contracting, EMJ Corporation has strong financial backing as evidenced in its unlimited bonding capacity. This gives Signal Wind the ability to bond any wind project. Signal Wind is capable of obtaining a performance and payment bond on any project of up to $100 million. If necessary, this amount can be increased for specific projects. We hope that this information will be helpful to you in assessing Signal Wind’s suitability for any projects you are considering. Please do not hesitate to contact us at any time if you would like to discuss Signal Wind, our availability to work on a project, or any other matter. We look forward to working with you. Sincerely, Jeffrey J. Krysiak Pre-Construction Manager cc: Julian Bell, Director of Pre-Construction Services Page 66 STATEMENT OF QUALIFICATIONS                 11820 S. Gambell Street • Anchorage, Alaska 99515 • Phone: (907) 644‐4664 • Fax: (907) 644‐4666  info.stginc@gci.net • www.stginc.cc  Page 67 Over the past fifteen years, STG, In remier construction services and management company. Dealing mainly in rural Alaska, the company has played a major role in high profile projects such as wind energy installations, communication tower installations, and community bulk fuel and diesel generation upgrades, to name a few. STG specializes in remote project logistics, pile foundation installations, tower erections, and construction management. STG takes pride in its wealth of experience, gained from years of work throughout “bush” Alaska, and through its ability to deal with the diverse and challenging logistics and conditions which it encounters on nearly every project it undertakes in remote locations.  Company Overview In 1996, St. George Construction was incorporated as STG, Inc. Since incorporation, STG has become the preferred construction management company for both the Alaska Energy Authority (AEA) and the Alaska Village Electric Cooperative (AVEC). Many of the projects executed by these two entities are managed and constructed by STG. STG’s core competencies include bulk fuel systems, power plant construction (both modular and steel-framed), wind farms, and pile foundations (driven piles, post tension rock anchors, helical anchor systems, freeze back, and active refrigerated piles). STG is the prevalent pile foundation contractor for Interior and Western Alaska. Additionally, STG has expanded to become United Utilities’ preferred contractor for its “Delta Net Project”, which involves the installation of communication towers and related equipment throughout the Yukon Kuskokwim Delta. STG has achieved this preferred status by demonstrating competitive rates and the ability to perform in remote locations with extreme logistical challenges. Qualifications The STG team has developed and maintained the capacity to manage projects through a set of key deliverables to ensure appropriate management of jobs across the complete project cycle including: • Provision of a quality project at a fair and reasonable price • Timely delivery within budget • Safe and professional performance on all work • Positive relationships with clients to ensure that project deliverables are met • New modern equipment that results in high productivity • State of Alaska Professional Land Surveyor (Reg. 10192) on staff with modern Topcon GPS Control through Detailed Project Planning STG focuses pre-construction efforts on planning and preparation. A project team is identified which includes management, administrative, and field supervision personnel. The team establishes budgets, c. has grown and developed into a p Page 68 production targets, a master construction schedule, and detailed work plan for each project. The planning process involves key supervisory personnel as all aspects of the project are analyzed with particular attention to logistics, labor and equipment resource needs, along with specific material requirements. This results in a clear understanding of the goals of the client, the ontractual requirements, scope of work, and entification of potential obstacles that may impact ion of the job. ough to the administrative level , accurate documentation and reporting, and on to the field level where clear goals of roduction and quality are reinforced through the superintendent’s and foremen’s daily huddles and ost Containment anagement decisions. The project manager and field ork together through this reporting y potential problems and direct resources rform “crisis management” while providing clients with TG employees ’s civic responsibility to local c id the successful complet The project-planning phase also establishes key systems which help assure quality throughout the project. This begins at the management level with a commitment to providing a quality project to the client and carries thr with timely p schedule reviews. C STG maintains budgets for all labor, material, and equipment for each project allowing managers to effectively manage project costs. Expense categories are tracked and updated weekly by the project managers and this information is then communicated to the field pervision level for use in making timely, proactive su m superintendent w system to identif as required to address issues before they impact the work. This proactive approach prevents STG from having to pe on-budget, on-time, turnkey deliveries of completed projects built to engineered specifications. STG maintains a philosophy to deliver the highest level of quality within the industry. S also realize the company’s commitment to its clients along with STG communities. The work that STG performs is a reflection of this commitment. Page 69 Construction Management and Project Supervision Experience STG has built a reputation of professionalism an products within a set schedule and defined budget. construction services and management contracts wit • Alaska Village Electric Cooperative (A • Alaska Energy Authority (AEA) • United Utilities Inc. (Recently acquire STG has built a wealth of knowledge d thoroughness by delivering the highest quality As a result, STG has been awarded and maintains h the following clients: VEC) d by GCI, Inc.) and experience for lanning, execution, and completion of projects across ral Alaska. Over the years, STG has also enjoyed the ay of he company prides itself in its ability to professionally eal with all the different entities that are related to a roject. In this regard, STG maintains a close working relationship with AVEC’s engineering presentatives, a so id relationship with the AVEC management staff, along with strong connections to rs and vendors across the state of Alaska. e-of-the-art dump trucks, loaders, excavators, pile ural construction projects. During the efficiently supported logistically from two cation shop located in Anchorage, AK and its ons, company construction crews are fully needs that may arise during the course of the p ru opportunity to successfully implement a large arr projects specifically for AVEC including bulk fuel upgrades, diesel power, wind generation, and energy distribution systems. STG can also coordinate all project logistics from procurement, to transportation, to the final project demobilization. T d p re l various sub-contracto STG operates a modern fleet of fourteen cranes, stat drivers, and other equipment needed to support full scale r construction phase of STG projects, remote field crews are STG offices: the company’s headquarters and fabri staging yard located in Bethel, AK. From these locati supported in the field for parts, groceries, and any other project. Page 70 STG Projects Selawik Power Plant, Tank Farm, and Wind Turbine Installation Client: AVEC Year Completed: 2004 The Selawik Bulk Fuel Upgrade Project exemplifies STG’s diverse capabilities. STG was highly he tank farm and power plant. The company executed the pile site, erected four 65kW wind turbines, of pipelines. n Kasigluk, STG once again demonstrated its abilities to execute omplex, multi-faceted projects. This project entailed transferring primary power generation from Nunapitchuk to Akula Heights while maintaining power generation to these two villages and also m intaining power to Old Kasigluk. As part of this project, STG constructed a new bulk fuel retail facility for the communities of Akula Heights and Old Kasigluk along with a new bulk fuel storage facility, totaling over 600,000 gallons of storage capacity in all. This project also included the construction of a power distribution system to the three aforem villages, the installation of a new diesel generation plant, the erection of three 100 kW wind turbines, the installation of a heat recovery system, upgrades to the school districts bulk fuel facilities, and the installation of a standby generator in Nunapitchuk. involved with the planning and design of t foundation work, fabricated ten 50,000 gallon storage tanks on- and tied the completed system together with a complex network Nunapitchuk-Kasigluk Bulk Fuel Upgrade, Power Plant, and Wind Turbine Installation Client: AVEC Year Completed: 2006 I c a entioned Page 71 Toksook Bay Power Plant, Wind Generation, and Interties and Nightmute are located in Western Alaska on Nelson Island, an ideal installation of 23 miles of ower lines. STG orchestrated schedules, equipment, materials, field work and logistics to successfully bring this project to completion. Due to the impassible summer tundra conditions, all the intertie work took place in the winter season during sub-zero temperatures. many different levels of scope. iversity in rural construction and e Alaska Energy Authority the set-up, installation, and ties along the middle g the winter Client: AVEC d: 2008 Year Complete oksook Bay, Tununak,T location for wind generation. STG helped deliver a wind/diesel integrated power project for these communities. With three Northwind 100kW wind turbines and a new power plant complete with switch gear and heat recovery module in Toksook Bay, power can now be produced from either diesel fuel, or the natural powers of the wind. In order to capture the greatest value for all island residents, an intertie etwork was established, which connected the three communities through the n p Additional STG Projects STG has completed numerous projects for AVEC throughout the state on The company would also like to highlight a few other examples of its d management for other clients. STG has managed and constructed over a dozen bulk fuel upgrades for th across the western half of Alaska. The most notable of these projects was commissioning of eight modular power plants in eight unique communi Kuskokwim River. The units were built and prepared in STG’s Anchorage yard durin months, then delivered and installed on each site during the short summer season. Page 72 The company has also gained valuable experience dealing with tower erection and foundation design. ontract with UUI, STG has built foundations for, and has erected, over thirty hroughout western Alaska. This project, known as the Delta-Net Project, has nked dozens of communities for tele-medicine and broadband communication. Two of the most hich unity of St. Paul. Under its term c communication towers t li notable towers are the 305-foot tower in Eek, and the 60-foot tower on top of Marshall Mountain w also required construction of a five-mile access road from the village of Marshall. STG has grown into one of the most experienced integrators of alternative energy systems within the state of Alaska. In addition to the previously referenced projects, this experience is documented through STG’s work to erect and install two Vestas 225 kW wind turbines for TDX Power on the remote Bering Sea island comm Page 73 Key STG Personnel STG’s organization consists of approximately 25 full-time employees with many more returning seasonal workers. STG’s staff consists of experienced and professional project managers, a registered land surveyor, a full-time expediting crew, accounting and administrative personnel, welders, carpenters, crane and heavy equipment operators, pipe fitters, plumbers, and electricians. STG personnel have the nowledge and skills necessary to provide construction management services and su ccessfully complete ns STG, Inc. while overseeing the performance of projects roughout the state of Alaska. With over 30 years of varied construction experience, he specializes in nt and his expertise ranges from phases of work, including planni ary Matthews – Project Manager r. Matthews has over 30 years of construction experience. His experience includes the total oordination of projects starting with bidding/estimating; negotiating; scheduling manpower, equipment nd materials in extremely remote locations; communication tower erection; and government ontracting. For the last year Mr. Matthews has successfully managed the construction of the UUI elta-Net tele-medicine and broadband communication towers throughout Western Alaska for STG. se visit our website at www.stginc.cc or contact us at the information below. k projects anywhere inside of the state of Alaska. James St. George - President Mr. St. George operates and co-ow th rural construction manageme rm construction and upgrades as well as renewa xperience in the field involves all echanical, electrical, piling installation, and tank c ew and more efficient means for accom be a great asset in the company’s co avid E. Myers – Project Manager r. Myers has over 15 years of comp emediation. His responsibilities hav pliance, logistics, cost estima nergy upgrades, civil and vertical batement, demolition, drum remova reas of expertise include: remo overnment contracting. For the la elivery of multiple energy upgr communication tower construction, to tank ble energy projects. Mr. St. George’s extensive ng, logistics, budgeting, dirt work, onstruction. He has been progressive in introducing t goals. Mr. St. George’s versatility has proven letion of projects across rural Alaska. tion and environmental nagement, quality control, safety, porting and client relations in the areas of rural aterials, confined space entry, asbestos inated water treatment and soil remediation. civil construction, environmental remediation, responsible for the successful fa e m n to plishing projec mp rehensive experience in construc e included project ma ting, fieldwork, re construction, hazardous m l, mining, contam te construction, heavy st four years Mr. Myers has been ade projects for STG. D M r com e a A g d G M c a c D For further inquiries, plea Page 74 STG, Inc. • 11820 S. Gambell Street • Anchorage, Alaska 99515 • Phone: (907) 644-4664 • Fax: (907) 644-4666 info.stginc@gci.net • www.stginc.cc Page 75 AEA10-015 Grant Application 10/7/2009 APPENDIX D: INTERCONNECTION REQUIREMENTS STUDY Page 76 WWW.EPSINC.COM PHONE (425) 883-2833  4020 148th AVE NE, SUITE C, REDMOND, WASHINGTON 98052  FAX (425) 883-0464 PHONE (907) 522-1953  3305 ARCTIC BLVD., SUITE 201, ANCHORAGE, ALASKA 99503  FAX (907) 522-1182 Alaskan Electric & Energy Cooperative Homer Wind Generation Study Phase 1A Report April 21st , 2009 David W. Burlingame, P.E. David A. Meyer The image cannot be displayed. Your computer may not have enough memory to open the image, or the image may have been corrupted. Restart your computer, and then open the file again. If the red x still appears, you may have to delete the image and then insert it again. Page 77 AEEC – HEA Generation Study – Phase 1A WWW.EPSINC.COM PHONE (425) 883-2833  4020 148th AVE. NE, SUITE C, REDMOND, WASHINGTON 98052  FAX (425) 883-0464 PHONE (907) 522-1953  3305 ARCTIC BLVD., SUITE 201, ANCHORAGE, ALASKA 99503  FAX (907) 522-1182 ii Summary of Changes Revision Revision Date Revision Description 0 April, 2009 Initial Release Page 78 AEEC – HEA Generation Study – Phase 1A WWW.EPSINC.COM PHONE (425) 883-2833  4020 148th AVE. NE, SUITE C, REDMOND, WASHINGTON 98052  FAX (425) 883-0464 PHONE (907) 522-1953  3305 ARCTIC BLVD., SUITE 201, ANCHORAGE, ALASKA 99503  FAX (907) 522-1182 iii Table of Contents SUMMARY OF CHANGES ............................................................................................. II  TABLE OF FIGURES .................................................................................................... IV  LIST OF TABLES .......................................................................................................... IV  EXECUTIVE SUMMARY ................................................................................................ 1  1 INTRODUCTION ...................................................................................................... 2  1.1 Base Cases ........................................................................................................................................................... 2  1.2 Transmission Data ............................................................................................................................................. 4  1.3 Analysis Methods ............................................................................................................................................... 4  2 WINTER PEAK CASE ............................................................................................. 5  2.1 Line Faults .......................................................................................................................................................... 5  2.2 Unit Trips ............................................................................................................................................................ 5  2.3 Conclusions ......................................................................................................................................................... 6  3 SUMMER PEAK CASE ........................................................................................... 9  3.1 Line Faults .......................................................................................................................................................... 9  3.2 Unit Trips ............................................................................................................................................................ 9  3.3 Conclusions ....................................................................................................................................................... 10  4 SUMMER VALLEY CASE ..................................................................................... 13  4.1 Line Faults ........................................................................................................................................................ 13  4.2 Unit Trips .......................................................................................................................................................... 13  4.3 Conclusions ....................................................................................................................................................... 14  5 RESULTS & CONCLUSIONS ............................................................................... 16  Page 79 AEEC – HEA Generation Study – Phase 1A WWW.EPSINC.COM PHONE (425) 883-2833  4020 148th AVE. NE, SUITE C, REDMOND, WASHINGTON 98052  FAX (425) 883-0464 PHONE (907) 522-1953  3305 ARCTIC BLVD., SUITE 201, ANCHORAGE, ALASKA 99503  FAX (907) 522-1182 iv Table of Figures Figure 2-1 Line Fault – Winter Peak – Tie Closed ......................................................................... 7  Figure 2-2 Beluga Unit 7 – Winter Peak – Tie Closed ................................................................... 8  Figure 3-1 Line Fault – Summer Peak, Tie Closed, No Import .................................................... 11  Figure 3-2 Line Fault – Summer Peak, Tie Closed, No Import .................................................... 12  Figure 4-1 Line Fault, Summer Valley, Tie Open ........................................................................ 15  List of Tables Table 1-1 Power Flow Case Summary ........................................................................................... 3  Table 1-2 Line Disturbances ........................................................................................................... 4  Table 1-3 Loss of Generation Disturbances .................................................................................... 4  Table 2-1 Line Faults Results Summary – Winter Peak ................................................................. 5  Table 3-1 Line Faults Results Summary – Summer Peak .............................................................. 9  Table 3-2 Unit Trip Results Summary – Summer Peak ................................................................. 9  Table 4-1 Line Faults Results Summary – Summer Valley ......................................................... 13  Table 4-2 Unit Trip Results Summary – Summer Valley ............................................................. 14  Page 80 AEEC – HEA Generation Study – Phase 1A 4/21/2009 1 of 20 Executive Summary The purpose of the study is to analyze the effects on system response due to the addition of a 9 MW wind farm to the Homer electric system. This study of the Railbelt system shows that there is very little difference in transient performance due to the addition of a 9 MW wind farm. During unit trip events and line fault scenarios, the difference in performance is negligible. Page 81 AEEC – HEA Generation Study – Phase 1A 4/21/2009 2 of 20 1 Introduction Homer Electric Association (HEA) contracted EPS to perform stability analysis on the Railbelt system to find the impact of a 9 MW wind farm located close to the Tesoro substation. The wind farm is to comprise of six 1.5 MW units. Power flow and dynamics data information was added to the existing Railbelt database case to determine possible differences in performance during disturbance events. The studies were run using three seasons, and multiple generation dispatch scenarios for each season. 1.1 Base Cases Power flow base cases were selected that represent the peak loading conditions for the winter season, the summer season, and minimum loading conditions in the summer season, for 2015. The system power totals are shown in Table 1-1, and the cases are described below. The name of the power flow season case used in the study is in parentheses. The generation scenario (described below) is then concatenated to the end of the power flow season.  Winter Peak 2015 (wp15) – This case represents the heavy winter load condition. The net generation for load is 104.3 MW. The topology of the case represents the current electrical system in its normal operating state, with expected 2015 upgrades.  Summer Peak 2015 (sp15) - This case represents the heavy summer load condition. The net generation for load is 90.4 MW. The topology of the case represents the current electrical system in its normal operating state, with expected 2015 upgrades.  Summer Valley 2015 (sv15) – This case represents the light summer load condition. The net generation for load is 63.6 MW. The topology of the case represents the current electrical system in its normal operating state, with expected 2015 upgrades. The base cases represent the expected case loading conditions for the Railbelt system for 2015. Operating experience has shown that the heavy winter loading and light summer condition cause the Railbelt system to operate closer to its stability limits. The expected 2015 upgrades include the following.  New Sterling 115 kV substation between Soldotna and Quartz Creek.  New Pioneer 115 kV substation between Kasilof and Anchor Point  Diamond Ridge transformer  New Tesoro 115 kV substation – with transmission lines to Soldotna and Bernice  New Bernice 115 kV substation – with transmission lines to Tesoro and Nikiski  Two new LM2500 (30 MW each) units at Soldotna For the three different seasons, multiple generation scenarios were also created. This was done to show the importance of operational changes for the HEA area, and its effect upon the results.  HEA zero import (closed_0) – Dave’s Creek – Hope tie is closed, and all HEA load is served by HEA owned generation units on the Kenai.  HEA zero import Bradley full (Bradley) – Dave’s Creek – Hope tie is closed. Bradley generation is on full output (90 MW total) and Dave’s Creek – Hope flow is at the Page 82 AEEC – HEA Generation Study – Phase 1A 4/21/2009 3 of 20 maximum transfer limit of 75 MW. All HEA load is served by HEA owned generation units on the Kenai.  HEA generation import (closed_import) – Dave’s Creek – Hope tie is closed. HEA imports generation from off of the Kenai to serve HEA load.  HEA islanded (open) – Dave’s Creek – Hope tie is opened. All HEA load is served by HEA owned generation units on the Kenai. Sewerd load is served by Cooper units.  HEA islanded, generation switch (opena) - Dave’s Creek – Hope tie is opened. Assumed generation exchange between HCCP and Bradley. The summer valley cases were also run with lighter than expected load. This was to determine the effects of load level on system performance. These cases were run only in the islanded configuration (open) for the summer valley season. They are differentiated by having (light) at the end of the case name. Table 1-1 Power Flow Case Summary 26.5 917.5 25.5 917.3 21 912 22 913 22 913.1 51 942 56 947 22 913 52 943 21 912 39 930 49.9 2 6 36 7 n/a n/a 36.2 927.2 37.4 929 47 938 33.3 924.3 33.3 27 951 7 58 26 58 58 7 12 8 11 0 n/a 36 5 90 4 36 90 11 11 28 58 5 5 Condense 58 90 13 36 0 10 3 0 7 13 11 10 10 36 sp15_closed_import sp15_open sp15_opena (Bradley at Full  Island Output ‐ 36 MW) 49.9 63.2‐38‐31 62.7 62.7 90.5 90.5 63.632.5 74.7 72.3 wp15_closed_0 wp15_bradley (Bradley at 90  MW output) wp15_closed_import wp15_open wp15_opena (Bradley at Full  Island Output ‐ 36 MW) 90.411.5 74.5 101 92.6‐67 sv15_open_light sv15_open_lighta  (Bradley at  Full Island Output ‐ 36 MW) 74.3 ‐38‐50 ‐55 sv15_closed_0 sv15_bradley (Bradley at 90 MW  output) sv15_closed_import sv15_open sv15_opena (Bradley at Full  Island Output ‐ 36 MW) sp15_closed_0 sp15_bradley (Bradley at 90 MW  output) 103.2 112 102 102 Tesoro  Generation  (MW) New  Generation  (MW) HEA Load  + Losses  (MW) Nikiski  (MW) n/a na/ n/a n/a 6 6 48 Power Flow  Case Name Daves Crk ‐  Hope Flow  (MW) HEA  Export  (MW) Cooper  Generation  (MW) Bradley  Generation  (MW) Wind  (MW) 39.9 104.3 58 6 6 6 6 6 6 6 6 6 6 6 6 6 6 Page 83 AEEC – HEA Generation Study – Phase 1A 4/21/2009 4 of 20 1.2 Transmission Data EPS used the most current Railbelt database for this study. The database includes both power flow and transient stability data for the Railbelt. 1.2.1 Power Flow Issues The MEA 115 kV loop through the valley was closed from Eklutna through to Teeland, to mitigate problems within MEA from impacting the MLP transmission planning results. Also a 60 MW power plant was added at the Palmer 115 kV substation, configured as a 50 MW combustion turbine (CT) with a 10 MW heat recovery steam generator (HRSG). Note that this study is designed to focus on transmission needs within the HEA system, not needs within the MEA system. The power flow data for the new generators was also added. Each generator configured on its own 12.47 kV bus with a step up transformer to the 138 kV bus. 1.2.2 Transient Stability Issues The transient stability database was reviewed in this study and in previous studies conducted by EPS. A Clipper 1.5 MW wind turbine model was used for the study. The 60 MW of new Palmer generation is modeled similarly to the North Pole units 3 and 4. 1.3 Analysis Methods To analyze the differences between the generator types and generator location, stability analysis was run using disturbances consisting of line faults and trips, and also loss of generation events. A list of disturbances is shown in Tables 1-2 and 1-3. Table 1-2 Line Disturbances Table 1-3 Loss of Generation Disturbances Near End Far End d1 Soldotna ‐ Tesoro 100 170 1 Soldotna 5 5 d2 Tesoro ‐ Soldotna 170 100 1 Tesoro 5 5 d3 Soldotna ‐Sterling 100 102 1 Soldotna 5 5 d4 Soldotna ‐ Beaver Tap 1904 1000 1 Beaver Tap 5 30 d7 Soldotna ‐ Bradley 100 110 1 Soldotna 5 5 d8 Bradley ‐ Soldotna 110 100 1 Bradley 5 5 d9 Tesoro ‐ Bernice 170 590 1 Tesoro 5 5 Name Line Fault  Location Clearing Time (Cycles)To From ID Name Generator g1 Bradley 1 g2 Nikiski g3 Soldotna LM2500 g4 Beluga Unit 7 Page 84 AEEC – HEA Generation Study – Phase 1A 4/21/2009 5 of 20 2 Winter Peak Case The 2015 winter peak case represents the future winter maximum condition. Line faults as well as loss of generation disturbances were run for the different generation dispatches, seasons, and new generation configurations. 2.1 Line Faults The cases were run using PSS/E software for transient analysis. Plots were created of the line fault scenarios for all cases. The amount of load shedding that occurred, due to both, islanding areas of the grid with no generation and due to system response, was calculated and tabulated into a spreadsheet for comparison purposes, shown in Table 2-1. Table 2-1 Line Faults Results Summary – Winter Peak 2.2 Unit Trips The cases were run using PSS/E software for transient analysis. Plots were created of the unit trip scenarios for all cases. The amount of load shedding that occurred, due to both, islanding areas of the grid with no generation and due to system response, was calculated and tabulated into a spreadsheet for comparison purposes, shown in Table 2-2. Table 2-2 Unit Trip Results Summary – Winter Peak result load  loss  (MW) result load  loss  (MW) result load  loss  (MW) result load loss  (MW)result load  loss  (MW) result load  loss  (MW) result load loss  (MW) 24 14 92414 85 14 98514 33 33 10 14 NW VC 10 933331014 NW LV 14 22 91422 stable stable stable 15 9NW VC NW VC NW LV wind farm is in island, voltage collapse wind farm is in island, sustained low voltage wp15_opena *  (Bradley at  Full Island Output ‐ 36 MW) wp15_open wp15_closed_import  wp15_bradley (Bradley at  90 MW output) wp15_closed_0 Case d2d1Wind  Amount  (MW) d7 d8d3d4 stable Soldotna Stability Results stable d9 stable stable stable stable Fault Disturbance stable stable stable stable stablestable stable stable stable stable NW VC NW VC stable stable stable stable stable stable stable stable stable stable stable stablestable result load loss  (MW)result load loss  (MW)result load  loss  (MW) result load loss  (MW) 70 970 70 959 70 970 50 18 92510 stable 25 9 925 wp15_opena *  (Bradley at Full  Island Output ‐ 36 MW) wp15_open wp15_closed_import  wp15_bradley (Bradley at 90  MW output) wp15_closed_0 Case Generation Disturbance g1 (Bradley) g2 (Nikiski) g3 (Soldotna 1)g4 (Beluga 7)Wind  Amount  (MW) n/a n/a n/a stable stable stable stable stable stable stable stable stable n/a stable stable stable stable stable stable stable Soldotna Stability Results Page 85 AEEC – HEA Generation Study – Phase 1A 4/21/2009 6 of 20 2.3 Conclusions The results of the study show the effect of adding 9 MW of wind on the system’s performance. The addition of the wind farm has the ability to reduce the generation on HEA’s units, thus forcing HEA to run with more spin on their system. This increase in spin is in part, the reason for the marginal impact of the additional wind on the system. An important consideration is that the 9 MW wind farm does not have the ability to displace thermal generation entirely. The fact that no thermal units are displaced minimizes the impact of the wind generation on system performance. Wind generation was used to offset energy from conventional generation units, with only one case allowing for any generation to be completely turned off. In all cases it was assumed that transfer tripping was in place to open Nikiski breaker NB-4 for faults which can island the wind farm without thermal generation. Page 86 AEEC – HEA Generation Study – Phase 1A 4/21/2009 7 of 20 Figure 2-1 Line Fault – Winter Peak – Tie Closed Page 87 AEEC – HEA Generation Study – Phase 1A 4/21/2009 8 of 20 Figure 2-2 Beluga Unit 7 – Winter Peak – Tie Closed Page 88 AEEC – HEA Generation Study – Phase 1A 4/21/2009 9 of 20 3 Summer Peak Case The 2015 summer peak case represents the future summer maximum condition. Line faults as well as loss of generation disturbances were run for the different generation dispatches, seasons, and new generation configurations. 3.1 Line Faults The cases were run using PSS/E software for transient analysis. Plots were created of the cases. The amount of load shedding that occurred, due to both islanding with no generation and due to system response, was calculated and tabulated into a spreadsheet for comparison purposes, shown in Table 3-1. Table 3-1 Line Faults Results Summary – Summer Peak 3.2 Unit Trips The cases were run using PSS/E software for transient analysis. Plots were created of the unit trip scenarios for all cases. The amount of load shedding that occurred, due to both, islanding areas of the grid with no generation and due to system response, was calculated and tabulated into a spreadsheet for comparison purposes, shown in Table 3-2. Table 3-2 Unit Trip Results Summary – Summer Peak result load  loss  (MW) result load  loss  (MW) result load  loss  (MW) result load loss  (MW)result load  loss  (MW) result load  loss  (MW) result load loss  (MW) 12 9 12 63 13 9 63 12 28 28 47 12 NW VC 9 928284712 NW LV 12 13.5 91213.5 12 9 12 wind farm is in island, voltage collapse wind farm is in island, sustained low voltage sp15_bradley (Bradley at 90  MW output) sp15_closed_0 sp15_opena   (Bradley at  Full Island Output ‐ 36 MW) sp15_open sp15_closed_import Case d2d1Wind  Amount  (MW) d7 d8 stable stable stablestable stable stable d3 d4 stable stable stable stable stable stable stable stable NW VC NW VC stable stable stable stable stable stable Soldotna Stability Results stable stable d9 stable stable stable stable stable stable stable Fault Disturbance stable stable stable result load loss  (MW)result load loss  (MW)result load  loss  (MW) result load loss  (MW) 9 54 9 44 9 23 9 9169 16 9 sp15_bradley (Bradley at 90  MW output) sp15_closed_0 sp15_opena   (Bradley at  Full Island Output ‐ 36 MW) sp15_open sp15_closed_import Case Generation Disturbance g1 (Bradley) g2 (Nikiski) g3 (Soldotna 1)g4 (Beluga 7)Wind  Amount  (MW) stable stable stable stable stable stable stable stable n/a stable stable stable stable stable stable n/a stable stable stable n/a Soldotna Stability Results Page 89 AEEC – HEA Generation Study – Phase 1A 4/21/2009 10 of 20 3.3 Conclusions The results of the study show the effect of added 9 MW of wind on the system performance. The addition of the wind farm has the ability to reduce the generation on HEA’s units, thus forcing HEA to run with more spin on their system. This is part of the cause of the increase in performance for the cases with wind. Wind generation was used to offset conventional generation units, with only one case allowing for generation to be completely turned off. There are several cases where the Northwest Kenai suffers a voltage collapse due to the area having only the wind farm as a source of generation. There are a couple of cases where the Northwest Kenai suffers from continuous low voltage. This result is questionable as the wind farm is in an islanded configuration without a synching source. Page 90 AEEC – HEA Generation Study – Phase 1A 4/21/2009 11 of 20 Figure 3-1 Line Fault – Summer Peak, Tie Closed, No Import Page 91 AEEC – HEA Generation Study – Phase 1A 4/21/2009 12 of 20 Figure 3-2 Line Fault – Summer Peak, Tie Closed, No Import Page 92 AEEC – HEA Generation Study – Phase 1A 4/21/2009 13 of 20 4 Summer Valley Case The 2015 summer valley case represents the future summer minimum condition. Line faults as well as loss of generation disturbances were run for the different generation dispatches, seasons, and new generation configurations. 4.1 Line Faults The cases were run using PSS/E software for transient analysis. Plots were created of the cases. The amount of load shedding that occurred, due to both islanding with no generation and due to system response, was calculated and tabulated into a spreadsheet for comparison purposes, shown in Table 4-1. Table 4-1 Line Faults Results Summary – Summer Valley 4.2 Unit Trips The cases were run using PSS/E software for transient analysis. Plots were created of the unit trip scenarios for all cases. The amount of load shedding that occurred, due to both, islanding areas of the grid with no generation and due to system response, was calculated and tabulated into a spreadsheet for comparison purposes, shown in Table 4-2. result load  loss  (MW) result load  loss  (MW) result load  loss  (MW) result load loss  (MW)result load  loss  (MW) result load  loss  (MW) result load loss  (MW) 24 24 8 NW VC 6 92424 8 NW LV 24 24 41 85 NW VC 6 92424418 NW LV 24 24 30 8 NW VC 6 92424168 NW LV 25 25 8 NW VC 6 92525 8 NW LV 24 24 8 NW VC 6 92424 8 NW LV NW VC 24 NW VC 24 8 NW VC 6 9NW LV 24 NW LV 24 8 NW LV NW VC 24 NW VC 24 stable stable stable stable stable 6 9 wind farm is in island, voltage collapse wind farm is in island, sustained low voltage sv15_closed_import sv15_bradley (Bradley at 90  MW output) sv15_closed_0 sv15_opena_light* (Bradley  at Full Island Output ‐ 36  sv15_open_light sv15_opena  (Bradley at Full  Island Output ‐ 36 MW) sv15_open Case d2d1Wind  Amount  (MW) stable d7 d8 stablestable stable stable d3 d4 stable stable stable stable stable stablestable stablestable stable stable stable stable Soldotna Stability Results stable stable n/a n/a n/a d9 stable n/a n/a n/a n/a NW VC NW VC stable stable Fault Disturbance NW VCNW VC NW VC stable NW VC NW VCNW VC NW VC NW VC Page 93 AEEC – HEA Generation Study – Phase 1A 4/21/2009 14 of 20 Table 4-2 Unit Trip Results Summary – Summer Valley 4.3 Conclusions The results of the study show the effect of added 9 MW of wind on the system performance. The addition of the wind farm has the ability to reduce the generation on HEA’s units, thus forcing HEA to run with more spin on their system. This is part of the cause of the increase in performance for the cases with wind. Wind generation was used to offset conventional generation units, with only one case allowing for generation to be completely turned off. There are several cases where the Northwest Kenai suffers a voltage collapse due to the area having only the wind farm as a source of generation. There are a couple of cases where the Northwest Kenai suffers from continuous low voltage. This result is questionable as the wind farm is in an islanded configuration without a synching source. result load loss  (MW)result load loss  (MW)result load  loss  (MW) result load loss  (MW) 27 9 33 923 9 30 9 16 66 9 6 10 98 stable 8 stable 9 sv15_closed_import sv15_bradley (Bradley at 90  MW output) sv15_closed_0 sv15_opena_light* (Bradley  at Full Island Output ‐ 36  sv15_open_light sv15_opena  (Bradley at Full  Island Output ‐ 36 MW) sv15_open Case Generation Disturbance g1 (Bradley) g2 (Nikiski) g3 (Soldotna 1)g4 (Beluga 7)Wind  Amount  (MW) stable stable stable stable n/a n/a n/a n/a n/a n/a n/a n/a n/an/a stable stable stable stable stable stable stable stable stable stable stable n/a Soldotna Stability Results n/a n/a Page 94 AEEC – HEA Generation Study – Phase 1A 4/21/2009 15 of 20 Figure 4-1 Line Fault, Summer Valley, Tie Open Page 95 AEEC – HEA Generation Study – Phase 1A 4/21/2009 16 of 20 5 Results & Conclusions The addition of 9 MW of wind has been shown to have negligible impact on the stability of the HEA system during contingency events. At the current load levels, the addition of the wind farm allows HEA to be able to effectively run with more spin without needing to change the generation dispatch (ie. turning units off), increasing system performance under certain conditions. Page 96 PHONE (907) 522-1953  3305 ARCTIC BLVD., SUITE 201, ANCHORAGE, AK 99503  FAX (907) 522-1182 PHONE (425) 883-2833  4020 148TH AVE. NE, REDMOND, WA 98052  FAX (425) 883-0464 PHONE (907) 789-2474  2213 JORDAN AVE, JUNEAU, AK 99803  FAX (907) 789-4939 WWW.EPSINC.COM 9 MW Wind Integration at Nikiski Interconnection and Protection Assessment Scope of Work and Cost Estimate October 14, 2009 The image cannot be displayed. Your computer may not have enough memory to open the image, or the image may have been corrupted. Restart your computer, and then open the file again. If the red x still appears, you may have to delete the image and then insert it again. Page 97 Homer Electric Association Nikiski Wind Interconnection and Protection Assessment September 16, 2009 Page 1 The image cannot be displayed. Your computer may not have enough memory to open the image, or the image may have been corrupted. Restart your computer, and then open the file again. If the red x still appears, you may have to delete the image and then insert it again. 1 Background Homer Electric Association (HEA) is requesting a scope of work and cost estimate from Electric Power Systems, Inc. (EPS) to evaluate the interconnection of a 9 MW wind farm at the Nikiski substation. 2 Scope of Work The Scope of Work for the study is defined in separate work sections below. 2.1 Nikiski Substation Equipment: EPS will review the proposed interconnection of the 9 MW of wind power at the Nikiski substation. The following items will be evaluated. A. EPS will recommend the use of one or two transformers. EPS will include an evaluation of the impact of transformer configuration on project operations, substation maintenance, and contingency analysis. B. EPS will evaluate any possible problematic interactions with transformer T3 and Nikiski Generator. 1. 2.3 Transmission and Substation Protection (deleted from Scope) A. EPS will evaluate and recommend protection schemes for two different scenarios based upon the timing of the project interconnection in relation to the Bernice Lake transmission upgrades: 1. Pre-Bernice transmission upgrades (existing system). 2. Post-Bernice transmission upgrades. EPS will make recommendations in accordance with typical HEA protection equipment and schemes (SEL421, SEL311C, POTTs, etc). EPS personnel will work closely with HEA personnel to ensure adequate HEA input. EPS will compare changes necessary in both scenarios against existing substation equipment. B. EPS will evaluate and recommend substation protective relaying, including bus differential, transformer differential, protective line relays and other relays required by the addition of the wind farm.. C. EPS will evaluate and recommend protection schemes and equipment to be used to ensure wind project interconnection point(s) will not adversely impact HEA substation Page 98 Homer Electric Association Nikiski Wind Interconnection and Protection Assessment September 16, 2009 Page 2 The image cannot be displayed. Your computer may not have enough memory to open the image, or the image may have been corrupted. Restart your computer, and then open the file again. If the red x still appears, you may have to delete the image and then insert it again. or system equipment. EPS will include any probable interconnections to the wind farm project needed for protection concerns. 2.4 SCADA and Communications (Deleted from Scope) A. EPS will evaluate the adequacy of the SCADA connections to CEA needed for dispatching. B. EPS will evaluate the adequacy of the SCADA connections to HEA needed for monitoring and controlling the substation. C. EPS will evaluate and recommend wind farm SCADA connections to both HEA and CEA needed for monitoring and controlling the wind farm. D. EPS will utilize to complete the communication path assessments and estimates. 3 Cost Estimate and Schedule Below is a schedule of the work to be completed. EPS will include weekly progress reports and weekly opportunities for detailed discussions with HEA. Table 1. Schedule Commence Work Immediately upon receipt of required data from HEA Interconnection Data Review 2 weeks after all requested data is delivered. Condition Assessment Removed from Scope Draft Final Report 6 weeks weeks after data review. Final Report 2 weeks after comments are received from HEA on the Draft report. Table 2 below shows the cost estimate to fully incorporate the wind farm into the PSSE Railbelt model. The personnel assignments, estimated man-hours, and estimated costs for each task follows: Table 2. Cost Estimate Page 99 Homer Electric Association Nikiski Wind Interconnection and Protection Assessment September 16, 2009 Page 3 The image cannot be displayed. Your computer may not have enough memory to open the image, or the image may have been corrupted. Restart your computer, and then open the file again. If the red x still appears, you may have to delete the image and then insert it again. Task Personnel Estimated Manhours Estimated Cost 1 Nikiski Substation Equipment Evaluation D. Burlingame 0 $ - Nikiski Substation Equipment Evaluation C. Muschany 0 $ - Nikiski Transformer T-2 Testing C Clayton 0 $ - Nikiski Transformer T-1 Testing C Clayton 0 $ - Nikiski Breaker NB-4,5,6, PT, CT Testing C Clayton 0 $ - 4 Protection Review D. Burlingame 0 $ - 4 Protection Review C. Muschany 0 $ - 4 5 kV Switchgear Review C. Muschany 0 $ - Modifying CEA SCADA Algorithm D. Burlingame 0 $ - Communications Analysis NHI 0 $ - 5 System Revisions and Additions D. Burlingame 60 5 Railbelt Modeling J Cote 120 5 Railbelt Simulations D. Meyer 120 7 Draft Report and Weekly Progress Reports D. Burlingame/J Cote 40 7 Draft Report and Weekly Progress Reports D Meyer 60 8 Final Report D. Burlingame 30 Totals 430 The EPS cost estimate is a Not-to-Exceed cost estimate. Staff Personnel are as listed in the cost table above. Depending on the timing of the project, certain staff level positions may be substituted with other personnel at the actual time of the work. Information Needs Additional data needs may arise as the evaluation is performed and EPS will provide HEA with an information request as soon as those needs are identified. If you have any questions, please feel free to give me a call at 907-646-5103. Sincerely, David W. Burlingame, P.E. Principal Engineer Page 100 AEA10-015 Grant Application 10/7/2009 APPENDIX E: HEA PPA LETTER OF SUPPORT Page 101 HOIIl.er Electric Association, Inc. Corporate Office 3977 Lake Street Homer9 Alaska 99603-7680 Phone (907) 235-855] FAX (907) 235-33] 3 Ccentral Peninsula, Service CeJnlt~r 280 Airport Way Kenai 9 ARaska 996]! -5280 Phone (907) 283~583] FAX (907) 283-7] 22 March 5, 2009 Mr. Paul F. Curran Kenai Winds LLC clo BQ Energy LLC 20 Jon Barrett Road Patterson, NY 12563 Dear Mr. Curran: I understand that in your recent meeting with the Alaska Energy Authority, you elected to prepare a Supplemental Filing for your Round 2 Application under the Renewable Energy Grant Program. This letter is being written in support of that supplemental filing with respect to power sales from the Kenai Winds facility to Homer Electric Association (HEA). HEA intends to negotiate with Kenai Winds in good faith with the intended outcome being the procurement of the power produced by the Kenai Winds project and its utilization as part of our overall supply progranl to meet our customer needs. Long-term energy pricing requires consideration of several factors and the location of generation is critical to a well planned system. The Kenai Winds project is located on the REA system in a place where it should allow for easier access to our existing transmission system. HEA supports the decision to split the project into two phases each of 9 MW. While further study work must be completed for the initial 9 MW, from an operational perspective the initial phase should be easier to integrate into the existing transmission system as compared to a larger project. In addition, the smaller initial capacity will allow HEA to learn the operating aspects of Wil1d energy and its impact on system stability. We look forward to working with you and other professional wind energy meteorological organizations such as A WS Truewind or Lawrence Livermore National Labs in developing operating protocols that will ensure continued safe and reliable power supply to our members. HEA is also interested in collaborating with Kenai Winds and other stakeholder groups with respect to marketing of Renewable Energy Credits (RECs). The sale of RECs has been limited in Alaska to date and REA will need to ensure that there is sufficient customer interest before nlaking commitments in that area. Obviously our power procurement from Kenai Winds will require approval by our Board as well as by the Regulatory Commission of Alaska and is subject to the negotiation and execution of a power purchase agreement acceptable to both parties. If REA is to acquire the power directly prior to December 31, 2013, HEA~s wholesale power purchase agreement with Chugach Electric Association will also need to be amended and approved by the RCA as well. A Touchstone Energl Cooperative ~"1'J1 Page 102 Mr. Paul Curran March 5, 2009 Page 2 HEA supports the grant application fully and views the Kenai Winds project as being among the most viable and attractive wind farm projects in Alaska. We look forward to your moving forward this year with this landmark renewable energy facility in our service territory. Sincerely, HOMER ELECTRIC ASSOCIATION, INC. ~~~ Bradley P. J anorschke, General Manager Page 103 AEA10-015 Grant Application 10/7/2009 APPENDIX F: METEOROLOGICAL STUDY Page 104 Energy Assessment for , Alaska Prepared for Josh Berkow Apex Wind Energy By Jack Kline RAM Associates October 19, 2009 Wind data has been measured at a 60 m meteorological tower located on the Kenai Peninsula, near Nikiski, Alaska. The period of data made available for analysis was from November 1, 2007 to April 13, 2009. Data from a long-term reference site located two km (1.2 miles) to the north-northwest on a pier at Nikiski for the period August 1996 through April 2009 has been provided. The mean wind speed (mean of monthly means) for the full reference period at Nikiski was 4.22 m/s. The observed mean wind speed (mean of monthly means) at the 58.5 m level of the Kenai site was 5.54 m/s over its period of observation. However, the mean wind speed at the Nikiski pier site during the concurrent period was 4.16 m/s, which is 1.4% below its long term average. A climatological adjustment to the 58.5 m level wind speed at the Kenai site was made and its long-term average wind speed is estimated to be 5.60 m/s. This represents a 1.1% increase from its observed mean wind speed. The observed vertical shear power law exponent, α, was measured to have a value of 0.21 at the Kenai met tower. Assuming that this shear remains constant up to the turbine hub height of 80 m, the long-term mean wind speed at that level is estimated to be 5.98 m/s. The project is designed to include 6 2.4 MW turbines with a 100 m rotor diameter and a hub height of 80 m. The siting of the six turbines was performed by Apex Wind Energy. The six sites are all located near the coast in an approximate north-northwest to south-southeast orientation. Two of the sites are in forested areas and one is near an industrial area, downwind of some of the associated structures. As such, these three turbines have surface roughness elements that will reduce their effective hub heights on the order of four to eight meters, thus reducing the mean wind speed at hub height marginally of those locations. 55 Cloverleaf Circle Ph. 925-240-7855 Brentwood, CA 94513 Fx. 925-240-7881 Page 105 Topographic variation of the wind speed was estimated based on the turbine sites’ elevations and local exposure. Topographic wind speed effects were applied to each turbine site and combined with the local shear effects to produce individual mean speed estimates. The combined mean hub height wind speed for the six turbines is 5.92 m/s. Local site air density at the 80 m level was calculated based on observed station pressure and temperature data from the Anchorage ASOS station. The pressure data was corrected to hub height using a hypsometric correction and the average air pressure was calculated to be 1.25 kg/m3. A power curve for the at that density was provided by . Gross energy was calculated for each turbine using hourly average wind speed data from the anemometer tower combined with scaling factors for each turbine site so that the mean speed for each towers’ calculation was equal to the projected long-term hub height wind speed. Array losses were calculated using an energy-conserving wake model developed by RAM Associates. The wind regime indicates that the majority of the energy will come from north- northeasterly wind directions. The design of the array is such that wake losses are calculated to be very small, at 0.66% annually, as there will be little wake interaction between the turbine sites, based on the wind rose and array design. Other losses were taken for availability (assumed to be 95%), electrical losses, blade soiling and icing, grid availability, power curve losses and turbulence losses and high speed stop/restart hysteresis. The gross energy was calculated to be 34.7 GWh/year (27.5% GCf) and after all losses were taken the net energy was calculated to be 30.6 GWh/year (24.3% NCf). 55 Cloverleaf Circle Ph. 925-240-7855 Brentwood, CA 94513 Fx. 925-240-7881 Page 106 AEA10-015 Grant Application 10/7/2009 APPENDIX G: PROJECT LAYOUT Page 107 È 6x 90m Rotor Turbines Rotor Diameter: 90m Setbacks: 243.75m Turbine Spacing: 540m Foundation Diameter: 18.3m Parcels: Other Owners OWNER AGRIUM US INC ASRC ENERGY SERVICES INC CHEVRON USA INC C/O CHEVRON CORP CONOCOPHILLIPS COMPANY KENAI PENINSULA BOROUGH KENAI PIPELINE CO TESORO ALASKA COMPANY 0 480 960240 Meters PRIVELEGED AND CONFIDENTIAL Turbines funded under AEA Round 3 Turbines funded under AEA Round 2 Page 108 AEA10-015 Grant Application 10/7/2009 APPENDIX H: COASTAL ZONE CONSISTENCY REVIEW Page 109 Kenai Winds, LLC c/o BQ Energy 20 Jon Barrett Rd., Suite 2 Patterson, NY 12563 Attn: Josh Berkow Re: ACMP Review and Permits for Kenai Winds Project I have received from you, and have reviewed your submittal to the Division of Coastal and Ocean Management (DCOM) of the State of Alaska DNR for determination of consistency with the Alaska Coastal Zone Management Program (ACMP). The response from the DCOM dated February 6, 2009 indicates that the project located near the Tesoro Kenai refinery does not require a State review for consistency with the ACMP because it does not require permits subject to the ACMP. I have reviewed your submittal and the response to determine if any other permits may be required for this project. In our discussions I am aware that, although not a permit, the project must comply with Federal Aviation Administration (FAA) requirements for adequate warning lights and that you will seek required authorization for power generation from State Agencies and/or the regulatory commission of Alaska. You will require a right of way to cross the State right of way with the buried power line and it will likely be prudent to contact the State Historic Preservation Office (SHPO) even though the submittal indicated that it is very unlikely that in the disturbed form industrial areas to be used by the project that there will be any issues. You have informed us that the Kenai Peninsula Borough or Nikiski does not have a building permit requirement for the area in question. Page 110 2 Overall; unless an issue is raised by one of the agencies copied by the DCOM, it would appear that, other than the issues raised in this letter, no other permits will be required for this project. Sincerely, ECOLOGY & ENVIRONMENT INC. James D. Gill P.E. Anchorage Manager Page 111 SARAH PALIN, GOVERNOR DEPARTMENT OF NATURAL RESOURCES DIVISION OF COASTAL AND OCEAN MANAGEMENT http://www.a/askacoast.state.ak.us o SOUTHCENTRAL REGIONAL OFFICE o CENTRAL OFFICE 550 W 7'h AVENUE SUITE 705 302 GOLD STREET, SUITE 202 ANCHORAGE, ALASKA 99501 P.O. Box 111030 PH: (907) 269-7470 FAX: (907) 269-3891 JUNEAU, ALASKA 99811-1030 PH: (907) 465-3562 FAX: (907) 465-3075 February 6, 2009 Kenai Winds, LLC Attn: Josh Berkow c/o BQ Energy 20 Jon Barrett Rd., Suite 2 Patterson, NY 12563 SUBJECT: ACMP REVIEW NOT REQUIRED AT THIS TIME Kenai Winds Project ID2009-0134AA Dear Mr. Berkow: The Division of Coastal & Ocean Management (DCOM) has reviewed the Coastal Project Questionnaire (CPQ) and other pertinent information regarding the above referenced project. Based upon the information you have supplied, your proposed project does not require a State review for consistency with the Alaska Coastal Management Program (ACMP), because it does not require permits subject to the ACMP. You are not relieved from obtaining required permits and approvals from state, federal or local agencies before you begin the proposed work. Nothing in this letter excuses you from compliance with other statutes, ordinances, or regulations that may affect any proposed work. This decision is ONLY for the proposed project as described. If there are any changes to the proposed project, including its intended use, prior to or during its siting, construction, or operation, contact this office immediately to determine if further review and approval of the revised project is necessary. Thank you for your cooperation with the ACMP. Sincerely, Peter Boyer Project Review Coordinator "Develop, Conserve, and Enhance Natural Resources for Present and Future Alaskans. " Page 112 end: CPQ, page 1&2 cc: Adele Lee, ACMP Liaison, DML W David Gann, DCOM Marla Carter, ADFG Ellen Simpson, ADFG Fran Mann, FWS Fran Roche, DEC -JNU Gary Williams, Coastal District Coordinator Ginny Litchfield, ADFG/Habitat Lee McKinley, ADFG/Habitat Linda Markham, ADOT&PF Lynnda Kahn, FWS Pamela Russell, Kenai River Center Sean Palmer, DEC -ANC SHPO, DNRlSHPO Susan Chihuly, ADFGIHabitat USACE Regulatory Branch, USACE Page 113 AEA10-015 Grant Application 10/7/2009 APPENDIX I: SOUTH FORK LLC PETITION TO THE RCA Page 114 1 2 3 4 5 6 7 I 9 10 11 12 13 14 15 l6 17 18 19 20 21 22 23 24 25 26 (E ^ Cr) -Y x cf)øx roñ., s<ÊsÉ ËdBt,^^tr .ï"'f- .o 5 oR I qã; E<<l-tr-c -sã\.-O-c x.N 3'? Ë'ilıı5co = o FF*Ë=<alþr f-OO OÉr'- g STATE OF ALASKA THE REGULATORY COMMISSION OF ALASKA Before Commissioners: In the Matter of the Petition Filed by Southfork Hydro LLC for an Exemption from Regulation under AS 42.05.711(d) u-08-1 02(2) - (021 0e | 200e) Page 1 of 5 Robert M. Pickett, Chairman Kate Giard Mark K. Johnson Anthony A. Price Janis W. Wilson u-08-102 ORDER NO. 2 BY THE COMMISSION: Summary We grant the petition of Southfork Hydro LLC (Southfork) for exemption from regulation. We close this docket. Backqround Southfork filed a petition for an exemption from the requirements of AS 42.05, in accordance with AS 42.05.711(ü.1 Matanuska Electric Association, Inc. (MEA)filed a response to the Petition.2 'Letter from P. Janke, filed August 20, 2008 (Petition). zPetition for Waiver Pursuanf fo AS 42.05.711(d), filed August 29, 2008 (MEA Response), as corrected by Errata to MEA's Response to Petition for Waiver Pursuant fo AS 42.05.711(d), filed September 2,2008. Page 115 1 2 3 4 5 6 7 I 9 10 11 12 '13 14 15 16 17 l8 19 20 21 22 23 24 25 26 (ú^ CÐix c)Øx ro(E., \r ".9=óÈıHÑc "io C .p 5 oR ü qÈt E<<l-tr-c -sñ\.^o -c åo.r(J .9) ı'N >ur b tòııtó EË:¡lþr F-¿R A Discussion Southfork is single-project company that is developing a small run-of-the- river hydroelectric generation facility within MEA's service territory that is planned to produce less than 5 gigawatt-hours of electricity per year for sale to MEA.3 Once in operation, Southfork will likely come within the statutory definition of a "public utility" that is subject to regulation by us.a The Petition requests that we exempt Southfork from regulation under AS 42.05.711(d): The commission may exempt a utility, a class of utilities, or a utility service from all or a portion of this chapter if the commission finds that the exemption is in the public interest. The Petition asserts that for a small renewable energy producer Southfork, regulation is very costly and onerous because its support organizations 'Petition at 1, MEA Response at 1. oAS ¿2.05.990(4) provides in part: "public utility" or "utility" includes every corporation whether public, cooperative, or othen¡uise, company, individual, or association of individuals, their lessees, trustees, or receivers appointed by a court, that owns, operates, manages, or controls any plant, pipeline, or system for (A) furnishing, by generation, transmission, or distribution, electrical services to the public for consumption. AS 42.05.990(3) provides in part: "public" or "general public" means (B) one or more customers that purchase electrical service for use within an area that is certificated to and presently or formerly served by an electric utility if the total annual compensation that the electrical utility receives for sales of electricity exceeds $50,000; and (C) a utility purchasing the product or service or paying for the transmission of electric energy, natural or manufactured gas, or petroleum products that are re-sold to a person or group included in (A) or (B) of this paragraph or that are used to produce the service or commodity sold to the public by the utility. u-08- 1 02(2) - (02t 0e | 200e) Page 2of 5 like are Page 116 1 2 3 4 5 6 7 I I 10 1',1 12 13 14 15 l6 G^ CÐ 17 ix cr)gı S 18ã-9=óÈ;5ñ 1eÃ^c .i'' f-O X ^O 8 qÈ3 20 EÉ1i 21 O-c ånl3'fl3il 22 €EFÉ 23Ë=<1Ps524EF- I 25 26 comprised of only a few non-specialist people not proficient with regulation, and that over-regulation will chill the development of renewable energy. Southfork also states that it will be indirectly regulated because MEA will need to obtain our approval of its purchase contract with Southfork.5 MEA states that it will be the sole purchaser of the output of the Southfork facility, and because of its location the project will only affect consumers on the MEA distribution system.6 MEA agrees that its agreement to purchase the Southfork output will be subject to our approval under AS 42.05.361(a), so granting the requested exemption will not result in any increased risks to consumers.t The MEA Response expresses concern that our administrative burden would increase if we went through the process of issuing certificates of public convenience and necessity to Southfork and other small distributed generation prolects in the MEA service area, resulting in higher regulatory cost charges to MEA.8 MEA is also concerned that the distributed generation projects could have overlapping service territories that would likely cause confusion to consumers and require additional proceedings before us to resolve.e MEA expresses concern that the Southfork project and other similar projects may not be economical with the added burden of regulation, and therefore regulation would tend to discourage these projects.lo MEA supports the Petition and also urges us to consider adopting rules that would exempt small generators from regulation.ll sPetition at 1. 6MEA Response at 1. 'td. aT 2. Btd. etd. atg. to rd. tt rd. u-08- 1 02(2) - (02t }st 200e) Page 3 of 5 Page 117 1 2 3 4 5 6 7 I I 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 G^ Cr) -Y x Cf) .n Á r.o fE., S<€;pbı3ñ E "ì"'N.9 5 oR ü qÈ; E<<l-tr -c -r- O -c X'ol(J o) X'N ;'¡ Ëùıı5óË o FF.-È=<1þ)r f-OO OEf-- g We find that it is in the public interest at this time to exempt Southfork from regulation. Southfork's sole customer, MEA, is a sophisticated regulated electric utility, and MEA supports granting the exemption. The purchase and sale agreement between Southfork and MEA is subject to our approval underAS 42.05.361(a) even if we grant the exemption to Southfork. So long as Southfork operates only one small distributed generation project, it will remain a relatively small company for which the expense of regulatory compliance would be relatively large. Exemption from regulation in appropriate circumstances may encourage small distributed renewable generation projects. Finally, if a change circumstances occurs that warrants or requires that we regulate Southfork, we have the authority to revoke this exemption. For these reasons we grant Southfork's request for exemption from regulation under AS 42.05. Final Order This order constitutes the final decision in this proceeding. This decision may be appealed within thirty days of the date of this order in accordance with AS 22.10.020(d) and the Alaska Rules of Court, Rule of Appellate Procedure (Ak. R. App. P.) 602(a)(2). ln addition to the appellate rights afforded by AS 22.10.020(d), a party may file a petition for reconsideration as permitted by 3 AAC 48.105. lf such a petition is filed, the time period for filing an appeal is then calculated under Ak. R. App. P. 602(a)(2). Docket Closure With the above determinations, no substantive or procedural matters remain in this proceeding, and there are no allocable costs under AS 42.05.651 and 3 AAC 48.157. Accordingly, we close this docket. u-08-1 02(2) - (02t 0e | 200s) Page 4of 5 Page 118 12 13 14 15 16 Ga cÐ 17 jx cÐ -EY ç 18 sËÞFıØäíN r9 C aiv'l-o x ^o'ı çi9 20 .9 y Ë>E:18 21 O -c X,crt 3,flË$ 22 .?EFÉ 23ÈÈ<a8s524EÈ.- 9 25 26 ORDER THE COMMISSION FURTHER ORDERS: 1. The request for exemption from regulation filed August 17, Southfork Hydro LLC is granted. 2. Docket U-08-102 is closed. DATED AND EFFECTIVE at Anchorage, Alaska, this 9th day of February,200g. BY DIRECTION OF THE COMMISSION (Commissioners Kate Giard and Anthony A. price, not participating.) u-08- 1 02(2) - (02t 0e t 200e) Page 5 of 5 2009, by Page 119 AEA10-015 Grant Application 10/7/2009 APPENDIX J: FAA DETERMINATION OF NO HAZARD Page 120 Federal Aviation Administration Air Traffic Airspace Branch, ASW-520 2601 Meacham Blvd. Fort Worth, TX 76137-0520 Aeronautical Study No. 2009-WTW-847-OE Page 1 of 2 Issued Date: 02/18/2009 Josh Berkow BQ - Kenai 20 Jon Barrett Rd. Suite 2 Patterson, NY 12563 ** DETERMINATION OF NO HAZARD TO AIR NAVIGATION ** The Federal Aviation Administration has conducted an aeronautical study under the provisions of 49 U.S.C., Section 44718 and if applicable Title 14 of the Code of Federal Regulations, part 77, concerning: Structure: Wind Turbine KT-1 Location: Kenai, AK Latitude: 60-39-59.57N NAD 83 Longitude: 151-22-33.64W Heights:459 feet above ground level (AGL) 609 feet above mean sea level (AMSL) This aeronautical study revealed that the structure does not exceed obstruction standards and would not be a hazard to air navigation provided the following condition(s), if any, is(are) met: As a condition to this Determination, the structure is marked and/or lighted in accordance with FAA Advisory circular 70/7460-1 K Change 2, Obstruction Marking and Lighting, white paint/synchronized red lights - Chapters 4,12&13(Turbines). It is required that FAA Form 7460-2, Notice of Actual Construction or Alteration, be completed and returned to this office any time the project is abandoned or: _____ At least 10 days prior to start of construction (7460-2, Part I) __X__ Within 5 days after the construction reaches its greatest height (7460-2, Part II) This determination expires on 02/18/2011 unless: (a) extended, revised or terminated by the issuing office. (b) the construction is subject to the licensing authority of the Federal Communications Commission (FCC) and an application for a construction permit has been filed, as required by the FCC, within 6 months of the date of this determination. In such case, the determination expires on the date prescribed by the FCC for completion of construction, or the date the FCC denies the application. NOTE: REQUEST FOR EXTENSION OF THE EFFECTIVE PERIOD OF THIS DETERMINATION MUST BE POSTMARKED OR DELIVERED TO THIS OFFICE AT LEAST 15 DAYS PRIOR TO THE EXPIRATION DATE. Page 121 Page 2 of 2 Additional wind turbines or met towers proposed in the future may cause a cumulative effect on the national airspace system. This determination is based, in part, on the foregoing description which includes specific coordinates and heights . Any changes in coordinates will void this determination. Any future construction or alteration requires separate notice to the FAA. This determination does include temporary construction equipment such as cranes, derricks, etc., which may be used during actual construction of the structure. However, this equipment shall not exceed the overall heights as indicated above. Equipment which has a height greater than the studied structure requires separate notice to the FAA. This determination concerns the effect of this structure on the safe and efficient use of navigable airspace by aircraft and does not relieve the sponsor of compliance responsibilities relating to any law, ordinance, or regulation of any Federal, State, or local government body. If we can be of further assistance, please contact our office at (770) 909-4401. On any future correspondence concerning this matter, please refer to Aeronautical Study Number 2009-WTW-847-OE. Signature Control No: 616247-108311804 ( DNE -WT ) Earl Newalu Specialist Page 122 AEA10-015 Grant Application 10/7/2009 APPENDIX K: LETTER OF SUPPORT FROM KPB MAYOR Page 123 Page 124 AEA10-015 Grant Application 10/7/2009 APPENDIX L: LETTER OF SUPPORT FROM HEA Page 125 Page 126 AEA10-015 Grant Application 10/7/2009 APPENDIX M: LETTER OF SUPPORT FROM TESORO Page 127 AEA10-015 Grant Application 10/7/2009 APPENDIX N: KPB ASSEMBLY RESOLUTION ON CLIMATE CHANGE Page 129 Kenai Peninsula Borough, Alaska New Text Underlined; [DELETED TEXT BRACKETED]Resolution 2007-069 Page 1 of 2 Introduced by:Long, Gilman, Martin, Smith Date:10/23/07 Action:Postponed Until 11/20/07 Action:Postponed Until 01/08/08 Action:Adopted as Amended Vote:6 Yes, 3 No, 0 Absent KENAI PENINSULA BOROUGH RESOLUTION 2007-069 A RESOLUTION COMMITTING TO THE DEVELOPMENT OF A LOCAL CLIMATE CHANGE IMPACT PLAN WHEREAS,the Kenai Peninsula Borough Assembly has recognized the need to develop a community understanding of the potential impacts, adaptation to, and opportunities from climate change and learn what local actions could be taken and then consider appropriate steps to address these issues; and WHEREAS,numerous Alaskan commissions and panels charged with identifying Alaska’s climate change indicators, have been considering the local impacts measured through research and observations. These include the University of Alaska International Polar Year Scenarios Network for Alaska Planning (SNAP) activities, Alaska Center for Climate Assessment and Policy (ACCAP) research on public infrastructure impact costs, the Denali Commission’s community surveys, Governor Palin’s Sub- Cabinet Panel on Climate Change, the Alaska Army Corp of Engineers, and Homer’s Global Warming Task Force; and WHEREAS,numerous University of Alaska scientists have presented information developed from their research that points to both short term and long term impacts to the natural environment and surrounding communities, including increased risks of forest fire, floods, and coastal erosion; and WHEREAS,local actions to increase energy efficiency and alternative energy developments are expected to reduce the high cost of energy needed to heat our homes and our businesses and, when incorporated into a borough energy plan that would reduce the use of fossil fuels, will be effective in adapting to climate impacts, producing financial savings, strengthening our economy, improving air quality and lead to a healthier, sustainable community; NOW THEREFORE, BE IT RESOLVED BY THE ASSEMBLY OF THE KENAI PENINSULA BOROUGH: SECTION 1.That the Kenai Peninsula Borough commits to develop a Climate Change Impact plan that will promote public awareness of the benefits of developing and implementing a plan that improves our local economy, and that protects our resources and borough residents. Page 130 Resolution 2007-069 New Text Underlined; [DELETED TEXT BRACKETED] Kenai Peninsula Borough, Alaska Page 2 of 2 SECTION 2.That the Assembly requests the Mayor to specifically develop a Climate Change Impact plan that includes: 1. Study and assess the Borough’s vulnerability The Kenai Peninsula Borough shall work with local and agency experts to assess vulnerabilities and opportunities associated with climate change. 2. Set goals and prioritize Based on the assessment, the borough shall develop a prioritized list of goals and targets that reduce climate change vulnerabilities and enhance opportunities, including goals based on a borough energy plan that prioritizes cost savings and reduces emissions. 3. Develop the plan Produce a concise plan that describes the action and policies for adapting to climate change by reducing the negative impacts and taking advantage of opportunities. The plan will include a description of timing, financial impact, responsible parties, and potential partners. 4. Implement the plan The Borough administration will implement the plan provided that any parts of the plan requiring appropriation will necessitate Assembly approval and/or notification. 5. Monitor efforts and reevaluate the plan The responsible parties will document results and accomplishments towards the goals in the plan and will periodically report those findings to the Mayor, Assembly and public in order that they may determine if revision of the plan or if an alternative approach is necessary to reach the goals set in the plan. SECTION 3.That this resolution takes effect immediately upon its adoption. ADOPTED BY THE ASSEMBLY OF THE KENAI PENINSULA BOROUGH THIS 8TH DAY OF JANUARY, 2008. Grace Merkes, Assembly President ATTEST: Sherry Biggs, Borough Clerk Yes:Gilman, Knopp, Long, Martin, Smith, Sprague No:Fischer, Superman, Merkes Absent:None Page 131 AEA10-015 Grant Application 10/7/2009 APPENDIX O: KPB ASSEMBLY RESOLUTION ON GREENHOUSE GASES Page 132 Kenai Peninsula Borough, Alaska New Text Underlined; [DELETED TEXT BRACKETED]Resolution 2008-007 Page 1 of 2 Introduced by:Smith Date:01/22/08 Action:Adopted Vote:9 Yes, 0 No, 0 Absent KENAI PENINSULA BOROUGH RESOLUTION 2008-007 A RESOLUTION COMMITTING TO REDUCING ENERGY CONSUMPTION AND GREENHOUSE GAS EMISSIONS BY PARTICIPATING IN THE ENERGY STAR SEVEN STEP CHALLENGE PROGRAM WHEREAS,the cost to the taxpayers of the Kenai Peninsula Borough for purchased energy has risen to unprecedented levels, both in total dollars and as a percentage of budget; and WHEREAS,the Kenai Peninsula Borough Assembly has recognized the need to develop a plan to understand and control the rising costs of energy for heating, lighting and powering Borough activities. At a minimum, this includes all energy consuming activities within Borough buildings and schools, transportation and maintenance use, solid waste operations, plus operational and management practices; and WHEREAS,numerous University of Alaska scientists have presented information developed from their research which indicate that high levels of green house gases have led to both short term and long term impacts to the natural environment and surrounding communities; including weather anomalies, increased risk of forest fire, floods and coastal erosion; and WHEREAS,actions which reduce energy consumption also reduce greenhouse gas emissions; and WHEREAS,numerous municipalities and businesses throughout Alaska and the United States have realized dramatic savings by developing and implementing an Energy Action Plan based on proven methodology; and WHEREAS,nationwide experience indicates that the most benefit is derived when some staff is dedicated to an energy management program in order to set goals, track progress and promote energy management; and WHEREAS,Borough actions to increase energy efficiency and utilize alternative energy developments are expected to reduce the amount of energy used by Borough activities and would reduce the use of fossil fuels, produce financial savings, strengthen our economy, reduce dependence on foreign oil, improve air quality and lead to a healthier, sustainable community; Page 133 Resolution 2008-007 New Text Underlined; [DELETED TEXT BRACKETED] Kenai Peninsula Borough, Alaska Page 2 of 2 NOW THEREFORE, BE IT RESOLVED BY THE ASSEMBLY OF THE KENAI PENINSULA BOROUGH: SECTION 1.That in order to increase energy efficiency and conserve tax dollars, the Kenai Peninsula Borough Assembly commits to develop an Energy Efficiency Action Plan using the Energy Star Challenge seven step program created by the U.S. Departments of Energy and Environmental Protection. SECTION 2.That the Assembly requests the Mayor to develop and coordinate, for all borough operations, an Energy Efficiency Action Plan following Energy Star guidelines and present that plan for Assembly approval. SECTION 3.That this resolution takes effect immediately upon its adoption. ADOPTED BY THE ASSEMBLY OF THE KENAI PENINSULA BOROUGH THIS 22ND DAY OF JANUARY, 2008. Grace Merkes, Assembly President ATTEST: Sherry Biggs, Borough Clerk Yes:Fischer, Gilman, Knopp, Long, Martin, Smith, Sprague, Superman, Merkes No:None Absent:None Page 134 AEA10-015 Grant Application 10/7/2009 APPENDIX P: LETTER OF SUPPORT FROM AK HOUSE FINANCE COMMITTEE CO-CHAIR Page 135 Page 136 AEA10-015 Grant Application 10/7/2009 APPENDIX Q: CORPORATE AUTHORIZATION LETTER     Page 137 APEX WIND ENERGY 20 JON BARRETT ROAD SUITE 2 PATTERSON, NY 12540 PHONE: (845) 228 3477 pcurran@apexwind.com www.apexwind.com PAUL F CURRAN Senior Executive Vice President Alaska Energy Authority November 6, 2009 813 West Northern Lights Blvd Anchorage, AK 99503 Attn: Mr Butch White RE: AEA-09-004- Renewable Energy Grant Application Dear Mr White, Apex Wind wholeheartedly endorses the application of Kenai Winds LLC to the Alaska Energy Authority for financial support under RFP AEA-09-004. Apex Wind LLC is currently the sole member of Kenai Winds and we will continue to do all in our powers to ensure that this important project is built and operated in a fashion that will make the people of Nikiski and the entire State of Alaska proud. Apex Wind is a member-managed Delaware limited liability company. As such we do not have a formal Board of Directors as described in your RFP. However, I am authorized by the members of Apex Wind to state that Apex Wind is committed to complete the development of the Kenai Winds facility in accordance with the business plan described in this submittal. Although not as large as some wind farms, we think that the location and setting make the Nikiski site ideal for a wind farm development. We are very much looking forward to finalizing development and construction of this important project. The role of Apex Wind in this venture will continue to be diverse. We are the project manager. In the world of energy development, that means we are responsible for all aspects of the project. Although we do not have the in-house expertise on all aspects of any project, it is our responsibility to ensure that we find and deploy such expertise for any project need of Kenai Winds. This expertise can come from industry experts such as federal tax experts, or financing organizations. The expertise and resources can also come from our fellow stakeholders at Tesoro and Homer Electric who have great knowledge of the local area and community as well as tremendous awareness of the Alaska energy outlook. Apex Wind will bring these capabilities together to the advantage of Kenai Winds LLC to ensure its success. Financing of the venture is a key Phase 3 activity and we remain confident of the success in that area as evidenced by our matching aspect of this bid which will exceed 50% We look forward to working with the Alaska Energy Authority on this key project. Page 138 AEA10-015 Grant Application 10/7/2009 APPENDIX R: ELECTRICAL ONE-LINE DIAGRAM Page 139 115 kVTO BERNICE LAKE & SOLDOTNA STATIONS2000 AOCBN B7NIKISKI 138.0 MVA0.85 PF13.8 kV3PH, 60 CYC1500 AZ = 7.1%115 kV / 13.2 kV21/33/45 MVANIKISKI T3Z = 7.1%115 kV / 13.2 kV21/33/45 MVANIKZ = 7.1%115 kV / 13.2 kV21/33/45 MVANIK2000 AOCBN B72000 AOCBN B72000 AOCBN B42000 AACBN12000 AOCBN B72000 AVCBN B112000 AVCBN B82.4 MWWind Turbine Generator12.4 MWWind Turbine Generator22.4 MWWind Turbine Generator32.4 MWWind Turbine Generator42.4 MWWind Turbine Generator5Z = 5%4.16 kV - 600 V2.5 MVA2.4 MWWind Turbine Generator6Z = 4.5%13.8 kV - 480 V500 kVAStation Servicejberkow@axiopower.comKENAI WINDS 14.4 MW WIND ENERGY PROJECT115 kV & 4.16 kV ONE LINE DIAGRAMPROPOSED MODIFICATIONS TO NIKISKI SUBSTATIONLOCATIONDATEREVNIKISKI, AK11 / 06 / 20090SCALE1:1SHEET1OF120 JON BARRETT RD.SUITE 2PATTERSON ,NY 12563USA115 kV SWITCHYARDKENAI WINDS 5MW EXPANSIONPage 140