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HomeMy WebLinkAboutSilver Lake Pre-Feasibility Study Copper Valley Electric Association Application Renewable Energy Fund Round 3 Grant Application AEA 10-015 Application Page 1 of 19 10/7/2009 Copper Valley Electric Association, Inc. SILVER LAKE PRE-FEASIBILITY Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 2 of 19 10/7/2009 Application Forms and Instructions The following forms and instructions are provided to assist you in preparing your application for a Renewable Energy Fund Grant. An electronic version of the Request for Applications (RFA) and the forms are available online at: http://www.akenergyauthority.org/RE_Fund-III.html Grant Application Form GrantApp3.doc Application form in MS Word that includes an outline of information required to submit a complete application. Applicants should use the form to assure all information is provided and attach additional information as required. Application Cost Worksheet Costworksheet3 .doc Summary of Cost information that should be addressed by applicants in preparing their application. Grant Budget Form GrantBudget3.d oc A detailed grant budget that includes a breakdown of costs by milestone and a summary of funds available and requested to complete the work for which funds are being requested. Grant Budget Form Instructions GrantBudgetInst ructions3.pdf Instructions for completing the above grant budget form. If you are applying for grants for more than one project, provide separate application forms for each project. Multiple phases for the same project may be submitted as one application. If you are applying for grant funding for more than one phase of a project, provide milestones and grant budget for completion of each phase. If some work has already been completed on your project and you are requesting funding for an advanced phase, submit information sufficient to demonstr ate that the preceding phases are satisfied and funding for an advanced phase is warranted. If you have additional information or reports you would like the Authority to consider in reviewing your application, either provide an electronic version of the document with your submission or reference a web link where it can be downloaded or reviewed. REMINDER: Alaska Energy Authority is subject to the Public Records Act AS 40.25, and materials submitted to the Authority may be subject to disclosure requirements under the act if no statutory exemptions apply. All applications received will be posted on the Authority web site after final recommendations are made to the legislature. In accordance with 3 AAC 107.630 (b) Applicants may request trade secrets or proprietary company data be kept confidential subject to review and approval by the Authority. If you want information is to be kept confidential the applicant must: o Request the information be kept confidential. o Clearly identify the information that is the trade secret or proprietary in their application. o Receive concurrence from the Authority that the information will be kept confidential. If the Authority determines it is not confidential it will be treated as a public record in accordance with AS 40.25 or returned to the applicant upon request. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 3 of 19 10/7/2009 SECTION 1 – APPLICANT INFORMATION Name (Name of utility, IPP, or government entity submitting proposal) Copper Valley Electric Association, Inc. (CVEA) Type of Entity: Electric Utility Mailing Address PO Box 45 Glennallen, AK 99588 Physical Address Mile 187 Glenn Highway Glennallen, AK 99588 Telephone 907-822-3211 Fax 907-822-5586 Email Matthews@cvea.org 1.1 APPLICANT POINT OF CONTACT Name Jaime L. Matthews Title Manager of Administration & Finance Mailing Address PO Box 45 Glennallen, AK 99588 Telephone 907-822-8311 Fax 907-822-5586 Email Matthews@cvea.org 1.2 APPLICANT MINIMUM REQUIREMENTS Please check as appropriate. If you do not to meet the minimum applicant requirements, your application will be rejected. 1.2.1 As an Applicant, we are: (put an X in the appropriate box) x An electric utility holding a certificate of public convenience and necessity under AS 42.05, or An independent power producer in accordance with 3 AAC 107.695 (a) (1), or A local government, or A governmental entity (which includes tribal councils and housing authorities); Yes or No 1.2.2. Attached to this application is formal approval and endorsement for its project by its board of directors, executive management, or other governing authority. If the applicant is a collaborative grouping, a formal approval from each participant’s governing authority is necessary. (Indicate Yes or No in the box ) Yes or No 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 or No 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 or No 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 4 of 19 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 – Silver Lake Pre-Feasibility Study Copper Valley Electric Association, Inc. (CVEA) Board of Directors has approved and funded two task orders to start reconnaissance level work to evaluate the Silver Lake hydroelectric project. The Silver Lake project has been evaluated on more than one prior occasion. CVEA plans to build upon available literature and to complete a pre-feasibility study by Spring 2011. The Silver Lake project would create an opportunity to serve new markets and new customers. New markets include extending service to the Native Village of Tatitlek on Prince William Sound and extensions to Chistochina and Chitina villages in the Copper River Basin. Potential new customers include service to the Alyeska Valdez Marine Terminal to replace steam turbines which were installed at the time the VMT was constructed. In addition, if a transmission connection could be economically justified the Cordova Electric Cooperative could purchase power from the Silver Lake project. The benefits of this project are further enumerated in Section 2.5. CVEA anticipates filing an Application for Preliminary Permit with the Federal Energy Regulatory Commission (FERC) by March 2010. Project phases include the following: - Phase I – Pre-feasibility and Application for Preliminary Permit - Phase II – Application for License and FERC Licensing Proceeding - Phase III – Final Design and Permitting - Phase IV – Construction and Project Start Up Phase I is estimated at $250,000, CVEA is applying for 50% funding of Phase I. 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. Silver Lake is approximately 15 miles southwest of Valdez and flows into the Duck River which flows into Galena Bay on Prince William Sound. CVEA is a member-owned electric cooperative providing central station electric service to a relatively large geographic area of Eastern Interior and Gulf Coast Alaska. CVEA is a stand- alone (not interconnected to another power system) electric utility. The service territory is divided into two districts, the Valdez District and the Copper River Basin District. The Valdez District is comprised of the organized area of the city of Valdez. The Copper River Basin District incorporates many outstretched communities including: Glennallen, Gakona, Gulkana, Tazlina, Copper Center, Kluti-Kaah, Copperville, Kenny Lake, Tolsona, Mendeltna, Nelchina, Eureka, and Sheep Mountain. In addition to CVEA’s service territory, the Silver Lake project has the potential to serve the communities of Cordova and Tatitlek on Prince William Sound. Please see the map of the project location on the following page: Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 5 of 19 10/7/2009 2.3 PROJECT TYPE Put X in boxes as appropriate 2.3.1 Renewable Resource Type Wind Biomass or Biofuels X Hydro, including run of river X Transmission of Renewable Energy Geothermal, including Heat Pumps Small Natural Gas Heat Recovery from existing sources Hydrokinetic Solar Storage of Renewable Other (Describe) 2.3.2 Proposed Grant Funded Phase(s) for this Request (Check all that apply) X Reconnaissance/Pre-feasibility Design and Permitting Feasibility Construction and Commissioning Conceptual Design Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 6 of 19 10/7/2009 2.4 PROJECT DESCRIPTION Provide a brief one paragraph description of your proposed project. A preliminary visit to the site in July 2009 was made by Hatch Acres, CVEA’s consultant for Allison Lake and a draft of the project layout was presented below. In fall 2009 CVEA installed two stream gages, one located on the Duck River and one near the outlet of Silver Lake. In the spring of 2010 water quality data will be collected and further evaluated. 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.) CVEA’s primary source of power is from the Solomon Gulch Hydroelectric Project, a 12-megawatt hydroelectric facility. Due to the seasonal pattern of the power production from this resource, CVEA must rely on other resources during the winter months. In an average year Solomon Gulch typically provides 60% of CVEA’s generation, the remaining 40% is generated with fossil fuel. CVEA is also pursuing the Allison Lake project which is estimated to provide approximately 30% of CVEA’s generation needs, final feasibility on that project will be determined in late Spring 2010. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 7 of 19 10/7/2009 The Silver Lake project would displace the remaining 10% of fossil fuel generation on CVEA’s system and in addition, would provide clean renewable energy to serve additional loads in the region. The project would eliminate the negative impacts associated with fluctuating oil prices by replacing oil fired generation with hydro power. Potential loads to be served by this project include replacing older generation at the Alyeska Valdez Marine Terminal, serving Petro Star’s Clean Fuel Project plant upgrade, serving the Native Village of Tatitlek and serving various villages in the Copper River Basin currently generating with diesel fuel. Other benefits include local jobs during construction and for project operations including land and resource development opportunities for regional and local native organizations. CVEA acknowledges and agrees that the Silver Lake project shall be constructed, owned, and operated for the benefit of the general public and will not deny any person the benefit of project facilities. Other benefits include reduction of greenhouse gases, improved air quality, and the public relations benefit of responsible development of an environmentally friendly energy project which displaces fossil fuel generation. 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. CVEA’s Board of Directors has approved funding in the amount of $250,000 to proceed with a reconnaissance level study. CVEA has committed $78,500, as of October 31, 2009, into Phase I of the project. This grant request, along with the project match identified below, would complete Phase I. 2.7 COST AND BENEFIT SUMMARY 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. $125,000 2.7.2 Other Funds to be provided (Project match) $ 46,500 2.7.3 Total Grant Costs (sum of 2.7.1 and 2.7.2) $171,500 The project is further summarized as follows: Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 8 of 19 10/7/2009 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) $86,951,000 2.7.5 Estimated Direct Financial Benefit (Savings) $1,759,000/year (minimum) 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.) $ Unknown at this time As indicated from CVEA’s rates in section 4.2.1, the average residential cost has averaged 24.5¢ per kWh the past two years. The cost varies with the price of fossil fuel. Please see section 5 for additional benefits. 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. Please see Attachment A for all resumes. CVEA has contracted with Hatch Acres to manage the activities for the Silver Lake Pre-Feasibility Study. Richard Griffith is the lead consultant for Hatch Acres and has over 45 years of experience in the hydro industry. CVEA’s Chief Executive Officer (CEO) Robert A. Wilkinson has been in the utility industry for 23 years. Robert provides support to Hatch Acres and communicates results and decisions to CVEA’s Board of Directors. CVEA’s Manager of Administration & Finance is Jaime Matthews who has worked in the utility industry for 9 years. Jaime will be the grant manager for CVEA. CVEA’s Manager of Power Generation is Aaron Remer who will assist in managing this project. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 9 of 19 10/7/2009 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.) 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.) Below is a milestone for each quarter of Phase I as identified in the budget form. 3rd Quarter 2009 Project scoping and contractor solicitation, resource identification and analysis, secure land use permits, install stream gages. (DONE) 1st Quarter 2010 Preliminary permit application filed and ongoing stream gaging 2nd Quarter 2010 Ongoing stream gaging, literature review and environmental analysis 4th Quarter 2010 Preliminary design analysis, cost estimate and ongoing stream gaging 1st Quarter 2011 Cost of energy and market analysis 2nd Quarter 2011 Final report and recommendations 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. Hatch Acres is CVEA’s main contractor for this project. Richard Griffith is the lead consultant for Hatch Acres and brings over 45 years in the hydro industry. His resume is included in Attachment A. Hatch Acres will contract out the field work necessary to complete the field studies. At this stage of the project CVEA has not purchased any major equipment. 3.5 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. Monthly written and financial reports will be prepared to update the CVEA Board of Directors at monthly board meetings, which occur on the third Thursday of each month. CVEA will submit reports as required by AEA on progress-to-date, accomplished milestones, and any changes or updates to the scope of the project. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 10 of 19 10/7/2009 3.6 Project Risk Discuss potential problems and how you would address them. The remote location of the site limits project accessibility. CVEA anticipates accessing the site by helicopter or boat. CVEA will address the access issue in the pre-feasibility study. Land use and permitting are major issues for this project. Major land owners are Chugach Alaska Corporation and Tatitlek Village Corporation. CVEA has secured land use permits from Chugach Alaska Corporation and The Tatitlek Corporation for purposes of installing and maintaining stream gages and conducting water quality studies. CVEA recognizes that mutual cooperation with project stakeholders will be a key element in moving this project forward. If other issues arise the Project Manager will conduct a teleconference to communicate the issue. If the decision needs to be directed to the CVEA Board of Directors, CEO Wilkinson will coordinate that activity. 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. Various reports have identified options for developing hydropower at Silver Lake with annual energy potential ranging from 45 to 48 Gigawatt-hours. The purpose of this reconnaissance study is to review available information and to further assess the resource potential of the site. CVEA is currently evaluating Allison Lake hydropower potential. Final feasibility on Allison Lake will be determined in early Spring 2010. CVEA has approached the Silver Lake project comparing it to the Allison Lake resource. Below is a table of comparisons. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 11 of 19 10/7/2009 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. CVEA generates electrical power at its two diesel plants, one in Valdez and one in Glennallen, a Cogeneration project in Valdez, and a 13 megawatt hydro facility in Valdez. Power is transferred between the two districts on a 106-mile transmission line through Thompson Pass and the Chugach Mountains. The CVEA Cogeneration Plant is a state-of-the-art facility located at the Petro Star Valdez Refinery. It is a five-megawatt Solar turbine and heat recovery unit that utilizes "light straight run" as its fuel source and provides exhaust heat to the attached crude heater for Petro Star’s use in the refining process. The plant was completed in the spring of 2000 and is remotely controlled from the Solomon Gulch hydroelectric facility. Efficiency for this unit is 9.3 kWhs per gallon for production of electricity but the project sells heat at a combined efficiency of 75-80%. Annual O&M costs for 2009 are estimated to be $118,000 which does not include labor. The Glennallen Diesel Plant (GDP) is the oldest of CVEA’s three thermal plants. It has expanded over the years to meet the needs of our customers. The available generation capacity of the plant is 6.9 megawatts. The GDP houses a total of six diesel engines; three Fairbanks Morse 38D8 1/8 opposed piston units, two Enterprise DSR 46 units, and one Caterpillar 3516B unit. The three largest units are remotely controlled from the Solomon Gulch hydroelectric facility. CVEA is currently installing an EMD unit with a capacity of 2.8 megawatts, which will improve reliability in the Copper Basin. The current average efficiency is 14 kWhs per gallon. Once the new EMD unit is online, the average efficiency will increase to 15 kWhs per gallon. Annual O&M costs for 2009 are estimated to be $140,000 which does not include labor. The Valdez Diesel Plant (VDP) was constructed after the 1964 Good Friday Earthquake that caused the city of Valdez to relocate to its present location. The plant houses three Fairbanks Morse 38D8 1/8 opposed piston units, three Enterprise DSR 46 units, and a trailer-mounted Solar Centaur turbine unit. The available generation capacity of this plant is 8.15 megawatts. The three largest units are remotely controlled from the Solomon Gulch hydroelectric facility. The average efficiency is 13.7 kWhs per gallon. Annual O&M costs for 2009 are estimated to be Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 12 of 19 10/7/2009 $115,000 which does not include labor. Previously owned by the Four Dam Pool Power Agency (FDPPA) CVEA acquired ownership of the Solomon Gulch hydroelectric facility in February 2009. The 13-megawatt Solomon Gulch hydroelectric facility is located on Dayville Road in Valdez. Power is generated by two Fuji Francis water turbines. The facility began providing power to CVEA customers in 1982. CVEA operates its dispatch center from this facility. The plant is manned 24 hours a day, seven days a week. Plant operators are responsible for the operation of up to four generation plants at one time via remote control operations. From the hydro plant, operators can start and stop units in any or all of CVEA's three generation facilities: Glennallen diesel, Valdez diesel, or the cogeneration plant, as well as the hydro project. CVEA's service areas are tied together with a 106-mile, 138-kilovolt transmission line that is owned and operated by CVEA. The transmission line provides a link to all four generating plants. Power can flow from any of the generating facilities to end consumers. Historically, power flows from the Solomon Gulch hydro plant to the Copper River Basin District during the summer months. The transmission line traverses severe terrain between the two districts and parts of it, in the Thompson Pass area, are in potential avalanche danger. The transmission line was last damaged by an avalanche in 2006. CVEA’s Rates CVEA’s base rates have not changed since 1998. The Cost of Power Charge changes monthly based on actual fuel and the cost of hydro. This has caused the overall rate to vary based on our seasonal generation. Rates are lower in the summer while we are generating nearly 100% hydro and higher in the winter when we are generating with fuel. The graph below illustrates CVEA’s average revenue per kWh collected for 2007 and 2008. 4.2.2 Existing Energy Resources Used Briefly discuss your understanding of the existing energy resources. Include a brief discussion of any impact the project may have on existing energy infrastructure and resources. Currently CVEA generates approximately 40% of system energy requirements with fossil fuel. If final feasibility is determined in Spring 2010, the Allison Lake Project will reduce system fossil fuel generation from 40% to approximately 10%. The Silver Lake project would reduce CVEA’s fossil fuel consumption to zero, place diesel fired generation in standby and would provide for future growth and potential inter-connection to other loads and communities. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 13 of 19 10/7/2009 4.2.3 Existing Energy Market Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. This project would have a positive impact on CVEA’s members by eliminating fossil fuel generation and by lowering and stabilizing the cost of energy. The project would create an opportunity to serve new markets and new customers. New markets include extending service to the Native Village of Tatitlek on Prince William Sound and extensions to Chistochina and Chitina villages in the Copper River Basin. Potential new customers include service to the Alyeska Valdez Marine Terminal to replace steam turbines which were installed at the time the VMT was constructed. 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 This proposed project includes reconnaissance and pre-feasibility work to assess the potential economic benefits of developing hydropower at Silver Lake. Earlier studies identified two design options. One option included a 125 foot dam, 6,000 feet of 108-inch diameter penstock to a 15 MW powerhouse located at elevation 65 feet. Energy delivery to Solomon Gulch would be via a 22-mile overland transmission line. This option was expected to produce 45,000 megawatt-hours annually. A second option proposed a 110-foot high dam, 10,000 feet of 108-inch diameter penstock to a 14 MW powerhouse located at elevation 10 feet. Energy delivery to Solomon Gulch would be via a 2.2-mile transmission line to Galena Bay then via an 18-mile submarine cable to Valdez. This second option was expected to produce 48,000 megawatt-hours annually. Following a review of available literature CVEA has described the proposed project as set forth in Attachment B. 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 land surrounding Silver Lake is owned by Chugach Alaska Corporation. The land traversed by the Duck River and the location of the proposed powerhouse is owned by The Tatitlek Corporation. Preliminary meetings have been held with both entities and both entities have issued land use permits to conduct stream gaging and water quality studies, as seen in Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 14 of 19 10/7/2009 Attachment C. Both entities have expressed conceptual support for and interest in the project. It is understood that both the regional corporation and the affected village corporations are major stakeholders in the development of Silver Lake and will be key participants in successful development of the project. Other interested landowners include the US Forest Service (for transmission line sitting). 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 CVEA will apply for an Application for Preliminary Permit from the FERC by March 2010. The purpose of the preliminary permit is to secure and maintain priority to allow CVEA to study the power potential of Silver Lake and develop information necessary to support a license application. The term of the permit is three years. During this time, CVEA will study the potential regulatory and environmental considerations associated with developments of this type. CVEA has obtained authorizations from the landowners for purposes of installing and maintaining stream gaging and to conduct water quality studies. If the project proceeds past the pre-feasibility stage CVEA will apply for and secure all permits required by FERC, the landowners, state and federal law. 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 Pursuant to FERC regulations applicants for license are required to prepare study plans in consultation with resource agencies, tribes and other interested participants. Should the project extend beyond the pre-feasibility stage study, plans will be developed at a minimum to address the following areas: Geology and soils Water use and quality Aquatic resources-fisheries and habitat Terrestrial resources-Wildlife/habitat and Botanical Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 15 of 19 10/7/2009 Historic and archeological resources Recreational resources Visual and aesthetic resources Socioeconomic resources 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 In 1994 the total cost of this project was estimated to range from $54 to $61 million in 1993 dollars. $54,185,000 inflated at 3% per year equates to $86,951,018 in 2009 dollars which is the amount used in the cost worksheet. One of the primary tasks of the pre-feasibility study will be to determine an updated cost estimate for the project. The cost of this grant request and matching contributions is summarized in Section 2.7. CVEA has invested $78,500 to start the reconnaissance level studies. The scope of this work is split into two task orders. The first task order includes the following: - Preliminary permit application - Stream gaging plan - Study plan development The second task order includes the following: - Installation of stream gages - Initial water quality measurement - Literature review After the pre-feasibility is complete, if CVEA pursues the Silver Lake project, we will apply for all funding opportunities as they become available. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 16 of 19 10/7/2009 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.) Project O&M costs are unknown at this time. For purposes of the total cost, annual O&M is estimated at $10/MWh. CVEA is not pursuing grant funding for O&M as O&M costs would be funded through electric rates. 4.4.3 Power Purchase/Sale The power purchase/sale information should include the following: Identification of potential power buyer(s)/customer(s) Potential power purchase/sales price - at a minimum indicate a price range Proposed rate of return from grant-funded project The project would create an opportunity to serve new markets and new customers. New markets include extending service to the Native Village of Tatitlek on Prince William Sound and extensions to Chistochina and Chitina villages in the Copper River Basin. Potential new customers include service to the Alyeska Valdez Marine Terminal to replace steam turbines which were installed at the time the VMT was constructed. In addition, if a transmission connection could be economically justified the Cordova Electric Cooperative could purchase power from the Silver Lake project. A primary purpose of the pre-feasibility study is to develop the information to assess economic feasibility of 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 completed cost worksheet is attached. Assumptions used in this analysis are outlined in Attachment E. 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 Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 17 of 19 10/7/2009 This project allows CVEA to displace approximately 664,185 gallons of fuel per year. This equates to approximately $1,980,500 in fuel savings in year 1. The project has an economic life of 50 years. Please see Attachment E for details on project benefit/cost analysis. The Silver Lake project would displace the remaining 10% of fossil fuel generation on CVEA’s system and in addition, would provide clean renewable energy to serve additional loads in the region. The project would eliminate the negative impacts associated with fluctuating oil prices by replacing oil-fired generation with hydro power. Potential loads to be served by this project include replacing older generation at the Alyeska Valdez Marine Terminal, serving Petro Star’s Clean Fuel Project plant upgrade, serving the Native Village of Tatitlek and serving various villages in the Copper River Basin currently generating with diesel fuel. Other benefits include local jobs during construction and for project operations including land and resource development opportunities for regional and local native organizations. CVEA acknowledges and agrees that the Silver Lake Project shall be constructed, owned, and operated for the benefit of the general public and will not deny any person the benefit of project facilities. Other benefits include reduction of greenhouse gases, improved air quality, and the public relations benefit of responsible development of a environmentally friendly energy project which displaces fossil fuel generation. 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 CVEA is a locally regulated IRC 501 (c)(12) cooperative electric utility organized and doing business under AS 10.25 Alaska Electric and Telephone Cooperative Act. CVEA was incorporated in 1955 and has been doing business under Certificate of Public Convenience and Necessity No. 10 since 1959. CVEA proposes to own and operate the Silver Lake hydroelectric facility. CVEA demonstrates sustainability in its every day successful operation of the cooperative. The maintenance and operations would be funded through electric rates. CVEA owns redundant generation assets to adequately back up the Silver Lake project in the event the project cannot deliver energy to the CVEA system. CVEA has a commitment to report the savings and benefits of this project once known. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 18 of 19 10/7/2009 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. In July 2009 the CVEA Board of Directors and Hatch Acres flew over the site. CVEA began reconnaissance level work in Fall 2009. Stream gages were installed in 2009. CVEA has proceeded with task orders as identified in Section 4.4.1. CVEA has not applied for other grants on the Silver Lake project. SECTION 8– LOCAL SUPPORT 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. CVEA members support renewable energy development and, in particular, development that will relieve the burden on electric rates caused by high oil prices. In meetings with major land stakeholders both Chugach Alaska Corporation and Tatitlek Inc. expressed conceptual support for the development of Silver Lake. The Tatitlek Corporation has provided CVEA with a letter of support as seen in attachment D. 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 CVEA will have invested $78,500 in this project. CVEA is requesting $125,000 from this round of grant funds with CVEA matching $46,500. If the grant request is funded CVEA will have invested 50% into the Silver Lake pre-feasibility study and cost estimate.