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HomeMy WebLinkAboutCraig Biomass Grant Application (907) 826-3275 ● Fax (907)826-3278 ● www.craigak.com ● PO Box 725, Craig, Alaska 99921 November 6, 2009 Alaska Energy Authority AEA-10-015-RE Fund Grant Application Round 3 813 West Northern Lights Blvd. Anchorage, AK 99503 Dear Alaska Energy Authority Staff: Attached you will find the City of Craig’s application for funding from the Renewable Energy Grant Fund. The city proposes to acquire equipment that will dry sawmill wood waste and chips to a moisture content that makes the fuel ideal for combustion in commercial wood boilers. The project supports the City of Craig’s wood boiler facility because it would eliminate the single greatest operational difficulty we have with the wood boiler—managing fuel that is too wet to properly burn in the boiler. The project would be scaled to produce combustible wood fuel for other public applications in Alaska, increasing renewable energy opportunities for other Alaska communities. Drying wood waste to a condition that makes it ideally suited for large-scale combustion is a natural extension of the Craig wood boiler project. Doing so improves efficiency of our local wood boiler and assists Craig in increasing the number of facilities that can benefit from the low cost, abundant, and renewable wood fuel resource we have in Southeast Alaska. Thank you for considering our application. Sincerely, Jon Bolling City Administrator Renewable Energy Fund Round 3 Grant Application AEA 10-015 Application Page 1 of 24 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 demonstrate that the preceding phases are satisfied and funding for an advanced phase is warranted. • If you have additional information or reports you would like the Authority to consider in reviewing your application, either provide an electronic version of the document with your submission or reference a web link where it can be downloaded or reviewed. REMINDER: • Alaska Energy Authority is subject to the Public Records Act AS 40.25, and materials submitted to the Authority may be subject to disclosure requirements under the act if no statutory exemptions apply. • All applications received will be posted on the Authority web site after final recommendations are made to the legislature. • In accordance with 3 AAC 107.630 (b) Applicants may request trade secrets or proprietary company data be kept confidential subject to review and approval by the Authority. If you want information is to be kept confidential the applicant must: o Request the information be kept confidential. o Clearly identify the information that is the trade secret or proprietary in their application. o Receive concurrence from the Authority that the information will be kept confidential. If the Authority determines it is not confidential it will be treated as a public record in accordance with AS 40.25 or returned to the applicant upon request. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 2 of 24 10/7/2009 SECTION 1 – APPLICANT INFORMATION Name (Name of utility, IPP, or government entity submitting proposal) City of Craig, Alaska Type of Entity: Municipality Mailing Address PO Box 725 Craig, AK 99921 Physical Address 500 Third Street Craig, AK 99921 Telephone 826-3275 Fax 826-3278 Email jbolling@aptalaska.net 1.1 APPLICANT POINT OF CONTACT Name Jon Bolling Title City Administrator Mailing Address PO Box 725 Craig, AK 99921 Telephone 826-3275 Fax 826-3278 Email jbolling@aptalaska.net 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 An independent power producer in accordance with 3 AAC 107.695 (a) (1), or X 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 3 of 24 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) Biomass Fuel Dryer Project 2.2 Project Location – Include the physical location of your project and name(s) of the community or communities that will benefit from your project. The physical location of the project is the Craig Wood Fired Boiler Facility at 1300 Water Tower Road; and Viking Lumber Co. Sawmill at Mile 7, Craig-Klawock Highway. The communities that will benefit from the project are the City of Craig, and other communities where energy facilities will burn waste wood dried by the project. 2.3 PROJECT TYPE Put X in boxes as appropriate 2.3.1 Renewable Resource Type Wind X Biomass or Biofuels Hydro, including run of river Transmission of Renewable Energy Geothermal, including Heat Pumps Small Natural Gas Heat Recovery from existing sources Hydrokinetic Solar Storage of Renewable Other (Describe) 2.3.2 Proposed Grant Funded Phase(s) for this Request (Check all that apply) Reconnaissance Design and Permitting Feasibility X Construction and Commissioning Conceptual Design 2.4 PROJECT DESCRIPTION Provide a brief one paragraph description of your proposed project. The project consists of acquiring and installing equipment that will dry approximately 13,000 tons of wood waste per year produced as a byproduct of the sawmilling process. The dried wood would then be burned in publicly owned facilities to provide reduced-cost, district-style heat for these facilities at reduced cost to the public entities that operate these facilities. The project enables recipient facilities to burn renewable fuels to provide heat at lower costs over time than the cost to burn fossil fuels to produce heat. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 4 of 24 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.)  There are three public benefits from the project. First, the City of Craig will receive a better quality of wood fuel—i.e. dried to an ideal moisture content for combustion in wood boilers—for its wood boiler, at a below market price. The better wood fuel will reduce the city’s costs to operate its wood boiler facility and also reduce the cost to heat the three buildings served by the wood boiler. Second, public facilities in other Alaska communities will also benefit by burning the same fuel, reducing heating costs and relying more on renewable, local fuel sources. Third, the project improves the value of wood logged and milled from the Tongass National Forest, increasing the benefit to the public from publicly owned stands of timber. 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. Expected project costs total approximately $600,000. The proposed sources of funds are 1. US Department of Agriculture (applicant is Viking Lumber Co.)…….$200,000 2. AEA Renewable Energy Fund……………………………………..….$350,000 3. Viking Lumber (in kind—installation of equipment)………………....$ 50,000 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. $ 350,000 2.7.2 Other Funds to be provided (Project match) $ 250,000 2.7.3 Total Grant Costs (sum of 2.7.1 and 2.7.2) $ 600,000 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) $ 600,000 2.7.5 Estimated Direct Financial Benefit (Savings) $ 168,855 to $2,000,000 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.) $ Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 5 of 24 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. Craig City Administrator Jon Bolling will oversee the project. The city will hire a qualified inspector to oversee installation of the wood drying equipment. 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.) January 4, 2010: Meet with Viking Lumber to negotiate lease for wood drying equipment. January 21: Present proposed final lease terms to the Craig city council. July 2: Solicit proposal(s) for project inspector. July 2-July 15: Finalize design and specification details for acquisition of drying equipment. July 2: Begin site work improvements for placement of wood drying equipment. July 15- August 15: Solicit bids for acquisition of drying equipment. July 31: Sign agreement with project inspection firm. August 19: Award bid to successful bidder. November 20: Receive equipment on site. December 1: Begin erection of drying equipment. February 28, 2011: Complete installation and begin testing. March 1: Certify equipment as operational March 5: First load of dried wood fuel delivered to Craig wood boiler project. 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.) 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. Personnel: City personnel used to accomplish the project include the following persons. 1. Jon Bolling, City Administrator. Mr. Bolling will oversee all components of the project. He will execute all official documents relevant to the project. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 6 of 24 10/7/2009 2. Joyce Mason, City Treasurer. Ms. Mason will complete required grant reports, oversee issuance of purchase orders, be responsible for grant accounting, will assist with the procurement processes, and be the point of contact between AEA auditors and the City of Craig. 3. Brian Templin, City Planner. Mr. Templin will assist with permitting and environmental documentation needed by the project. Partners: Project partners will include the following. 1. Viking Lumber Company. Viking Lumber Company will partner with the City of Craig on this project. The company will apply to lease the wood drying equipment from the City of Craig. If approved, the lease agreement will have Viking Lumber Co. operate and maintain the equipment for the benefit of the public at the City of Craig, other public- sector recipients of dried wood fuel, and for third party recipients. Consistent with the requirements of Section 16.02.030 of the Craig Municipal Code, the drying equipment shall be leased at a market rate of not less than eight percent per year of the equipment’s fair market value. Viking Lumber Co. brings two important assets to the partnership. One, the company owns and manages the biomass resource necessary for the project. The resource is available in substantial, existing stockpiles, and from future milling operations. Nearly all of the logs at the mill originate on public national forest lands. Two, Viking Lumber Company personnel have the operational experience and ability to install and operate equipment needed to dry the biomass raw material to a condition that makes it ideal for combustion in wood-fired boilers. The company is in an excellent position to manage its wood waste stream to efficiently supply biomass to the drying equipment and subsequently store and deliver the dried product. Contractors: Contractors will include the following. 1. Project Inspector. The project inspector will review contractor submittals for compliance with requirements listed in the bidding documents. The inspector will also make regular, on-site visits to ensure proper installation of the drying equipment, and assist with project start up and completion of punch-list items. 3.5 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. As it has done with past successful projects, regular (weekly or semi-weekly) progress meetings will occur between city staff, Viking Lumber Company representatives, and project contractors. The meetings will detail recent accomplishments, anticipated goals for the coming one to two week period, review the project budget, address unanticipated problems, and attend to other project needs. AEA staff would hold a standing invitation to join in the meetings either in person or via teleconference. 3.6 Project Risk Discuss potential problems and how you would address them. Virtually all capital projects include some degree of risk of potential problems. Many of these can be prevented with proper planning. However even the best planned projects encounter unanticipated problems. When such problems occur it is incumbent upon the project staff to Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 7 of 24 10/7/2009 consider all options for alleviating them. The regular progress meetings proposed in Section 3.5 of this application are effective in building good relationships between the project parties, relationships that allow problems to be addressed cooperatively when they do appear. One potential problem is that given the likely award date of grants from this third round of funding, and the long lead time between the time the dryer is ordered and the time it arrives on Prince of Wales Island, erection of the drying equipment will take place during the winter months. The inclement weather conditions and lack of daylight will limit productivity of workers charged with installing the equipment. Some work items will no doubt have to be postponed for weather conditions favorable to outside work. However, winter weather on POW typically allows for periodic times of production between inclement weather events, so some installation can occur between December and February. SECTION 4 – PROJECT DESCRIPTION AND TASKS • Tell us what the project is and how you will meet the requirements outlined in Section 2 of the RFA. • The level of information will vary according to phase(s) of the project you propose to undertake with grant funds. • If you are applying for grant funding for more than one phase of a project provide a plan and grant budget form for completion of each phase. • If some work has already been completed on your project and you are requesting funding for an advanced phase, submit information sufficient to demonstrate that the preceding phases are satisfied and funding for an advanced phase is warranted. 4.1 Proposed Energy Resource Describe the potential extent/amount of the energy resource that is available. Discuss the pros and cons of your proposed energy resource vs. other alternatives that may be available for the market to be served by your project. The potential amount of available biomass energy available through this project is significant. The Viking Lumber Mill typically produces more than 13,000 tons of biomass fuel each year. At 35 percent moisture content, local biomass fuel contains about 11.25 million Btu per ton. Therefore one ton of dried fuel can supply the full heating demand of an 11 million Btu system for one hour. For perspective, the City of Craig’s wood boiler system, rated at 4 million Btu per hour, is designed to supply the energy needs of 62,000 square feet of floor space and 113,000 gallons of heated pool water. There are many well-known benefits of using wood heat in both domestic and public/commercial applications. These include keeping in local communities the dollars spent on heating fuel; creation of wood fuel supply jobs in local economies; elimination of sulfur range emissions from combustion of wood fuels versus fossil fuels; elimination of a net increase in greenhouse gas emissions from combustion of wood fuels versus fossil fuels; and use of renewable, locally produced fuels. In the case of Southeast Alaska, one potential drawback to using biomass is the uncertainty surrounding the timber program on the Tongass National Forest. There are groups that actively oppose and litigate any timber sales from public land, and others that oppose many of the sales offered by the US Forest Service. The appeals and litigation that result from this opposition increase the uncertainty of the volume of timber available from the national forest for milling operations. Because the biomass resource is frequently directly correlated to the volume of Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 8 of 24 10/7/2009 production from sawmills that mill national forest wood, the availability of biomass byproduct can vary substantially from year to year. 4.2 Existing Energy System 4.2.1 Basic configuration of Existing Energy System Briefly discuss the basic configuration of the existing energy system. Include information about the number, size, age, efficiency, and type of generation. The project proposed here would install new equipment that would dry biomass fuel produced as a byproduct of the local milling process. There is no equipment in place locally today that can dry biomass fuel. 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. Existing fossil fuel energy resources on Prince of Wales Island include conventional diesel and gasoline bulk fuel storage, and bulk storage of propane. Existing vendors provide home delivery via commercial tanker vehicle. Electric energy resources for most of Prince of Wales Island is provided by an investor-owned utility from hydro generation. The project proposed here will not impact existing energy infrastructure and resources. 4.2.3 Existing Energy Market Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. The existing energy market for biomass fuels is just developing. The City of Craig’s wood boiler project is the first of potentially many more biomass heating applications in Southeast Alaska. As oil prices increase again ($77.62 per barrel for Alaska North Slope crude as of November 5, 2009—more than twice as high as the 2009 low of $31.99 on January 15) the market for alternative fuels, especially locally produced renewable fuels, will increase. 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 Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 9 of 24 10/7/2009 1. Specific description. The wood drying project proposed here would include placement of wood drying equipment in close proximity to stockpiles/generation point of wood waste. Green waste at an estimated 50 percent moisture content would be conveyed to a receiving point that is the first step in the drying process. Conveyor and then drying systems would subject the green wood to heated air within a rotary drum where between thirty to fifty percent of the moisture content would exhaust. The dried fuel mixture, ranging from 25-35 percent moisture content, would then convey to bulk storage and loading area for shipment to wood boilers. Please see the sample line drawing at Attachment E. 2. Optimum installed capacity. The optimum installed capacity of is approximately 15,000 tons per year. 3. Anticipated capacity factor. We understand the term capacity factor to mean the ratio of electrical energy produced in a given time period with the quantity of electricity produced had the unit of production operated at full capacity. In this case, we anticipate the wood drying unit to operate at a capacity factor of 85 percent. 4. Anticipated annual generation. Production of dried wood should equal a volume of 13,000 tons. 5. Anticipated barriers. From a technical standpoint, the function of the equipment intended for this project is simple—wet wood waste from the mill is dried to produce combustible fuel that is ideal for use in commercial-sized heating systems. Some of the dry wood fuel produced is used to fire the unit to dry additional wood fuel. Barriers include some uncertainty in the supply of timber from the Tongass National Forest. The timber program in the Tongass has been the subject of much attention for the past twenty years. Timber sales released by the US Forest Service are frequently appealed and litigated, making supplies of wood to mills unpredictable. With an interest among mills in retooling toward young growth trees, and the with older logging areas on the Tongass nearing a point where young growth could provide an ongoing volume of timber, industry watchers hope that the conflicts over national forest logging will diminish with the movement toward timber harvest of young growth areas versus and with less reliance on old growth. It should be noted that this transition is commonly believed to be still twenty years away. 6. Basic integration concept. The wood drying equipment will be sited to collect wood waste from the milling process via automated conveyor belts from the milling blades to a receiving area, where the green waste begins the drying process described in item 1 of this section. At the end of the drying line the product is stored in bulk under cover or loaded in shipping containers for transport to wood boiler customers, either in steel shipping containers or by open truck to more local markets, including the Craig wood boiler facility. The wood drying project better integrates wood from local forests by reducing an unmarketable byproduct from local mills and, much like dried lumber, adds value to the wood to satisfy a market demanding the dried product. In this way, the waste wood is integrated both into the milling process and into the existing and growing energy market. 7. Delivery methods. Delivery methods will be via common barge carrier and via existing highways to POW area customers. 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. Equipment and facilities will be owned by the City of Craig and leased to Viking Lumber for operation. The equipment site will be owned by Viking Lumber and will be leased to the City of Craig as a condition of the equipment lease to Viking Lumber. Access to the site and the equipment by the owner will be guaranteed in the lease agreement. The site owner has agreed to the project and is prepared to execute lease and access agreements as necessary. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 10 of 24 10/7/2009 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 1. Coastal Project Consistency Review – The only item on the Coastal Project Questionnaire that will need review is the DEC Air Quality section. That permit will be handled separately from the ACMP process. A full consistency review will require 50 days from final project design. 2. Given that this project will occur on land that is already developed and is unlikely to require a permit from the State of Alaska or federal government, it is unlikely that the project will face potential permitting barriers. 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 1. Threatened or Endangered Species. Project will take place on previously developed upland. There are no known threatened or endangered species within the project area. 2. Habitat Issues. Project will take place on previously developed upland. No habitat will be impacted by the project. 3. Wetlands and other Protected Areas. Project will take place on previously developed upland and will not require fill or disturbance of wetlands or protected areas. 4. Archaeological and Historical Resources. Although there are numerous historical and archeological sites within the region, the project will take place on previously developed upland. The project site is not a catalogued archeological or historical site. If archaeological or historical resources are discovered during the course of construction or equipment installation the project manager will immediately notify the State Historical Preservation Office. 5. Land Development Constraints. Project will take place on land owned by Viking Lumber, is sufficient for the project scope and will not impact other development in the area. 6. Telecommunications Interference. The project will not receive or transmit signals that will interfere with telecommunications. The project location is not adjacent to telecommunications facilities. 7. Aviation Considerations. The project is located near the local seaplane base, but is not within the flight approach for Klawock Harbor. The project is also located approximately 2.5 miles from the Klawock Airport, but is not located within published approaches to the airport. The height of completed project construction and equipment will be similar to surrounding buildings and will not pose any danger or impediment to aviation. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 11 of 24 10/7/2009 8. Visual, Aesthetics Impacts. The project will be located in an area that has been developed as a sawmill, chip storage area, log sort yard and other heavy industrial uses. The project is consistent with the surrounding uses and will not have a negative visual or aesthetic impact. 9. Other Potential Barriers. No other potential barriers have been identified. 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 total cost of this project, including procurement of the wood drying system, shipment of the system to Prince of Wales Island, installation of the drying equipment, and making the system operations is estimated at $600,000. The sources of revenue are estimated as follows. Procurement of wood drying system……………………$ 350,000 Freight…………………………………………………...$ 15,000 Site work………………………………………………...$ 15,000 Concrete foundation.…………………………………….$ 50,000 Erection of drying equipment…………………………...$ 110,000 Electrical connection…………………………………….$ 25,000 Contingency……………………………………………..$ 35,000 Total……………………………….……….$ 600,000 Requested fund from the Renewable Energy Fund: $350,000 Matching funds. Matching funds include two possible sources. Viking Lumber Company will apply to the US Department of Agriculture for partial project funding of $250,000 through the ______________________________ program. Should the company fail to qualify for grant funding through that program, Viking commits to providing match from another source, including its own in-kind match to assemble the drying equipment on site, under the supervision of the technician provided by the vendor of the wood drying equipment. Match from Viking Lumber Company…………………………..…..$ 250,000 Projected capital cost of proposed renewable energy system………..$ 350,000 Projected development cost of proposed renewable energy system…$ 250,000 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. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 12 of 24 10/7/2009 (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.) The anticipated O&M costs would be borne by the operator of the wood drying equipment, per the terms of a subsequent lease agreement between the operator and the City of Craig. The lease will contain penalties for failure by the operator to operate and maintain the equipment in good working order. The lease will provide for the operator to share operating data with the city, including records, receipts, logs, correspondence etc. of maintenance efforts. While the operator of the wood drying equipment shall be responsible for O&M costs, the City of Craig will be the responsible party to AEA to ensure compliance with the terms of any grant agreements, including provisions of the grant agreement pertaining to O&M requirements of the equipment. 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 According to Viking Lumber Company, potential customers of the wood drying equipment include the City of Craig, as a priority customer, U.S. Coast Guard Stations in Sitka, Ketchikan, and Juneau, Sealaska’s Juneau Headquarters, Sitka Airport, Mt. Edgecombe High School, Sitka SEARHC Hospital in Sitka U of A campus, Sitka, the Haines Borough, and the City of Juneau. Expected purchase price for dried wood fuel ranges between $150 and $200 per ton. Rate of return to the City of Craig for the project will be at least eight percent of the equipment’s fair market value, per section 16.02 of the Craig Municipal Code (to review the city’s lease rate, see www.craigak.com/cmc/CMC0507Title16.pdf) 4.4.4 Project Cost Worksheet Complete the cost worksheet form which provides summary information that will be considered in evaluating the project. Download the form, complete it, and submit it as an attachment. Document any conditions or sources your numbers are based on here. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 13 of 24 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 1. Lifetime potential annual fuel displacement. At a twenty year equipment life, assuming annual sales of 13,000 dry tons of biomass, the potential annual fossil fuel displacement is 850,000 gallons. At an average diesel cost of $2.50 per gallon, the average annual gross cost displacement is $2,125,000. 2. Anticipated annual revenue. Annual revenue is estimated at $1,950,000 (9,000 tons at $200/ton; 1,000 tons at $150/ton). 3. Potential additional annual incentives. The US Department of Agriculture offers the Collection, Harvest, Storage, and Transportation Matching Payment Program for users of biomass of the type proposed for production in this application. The program can, for up to two years, halve the cost of purchasing biomass. 4. Potential additional annual revenue streams. The wood drier is sized to provide public biomass benefit to other users (see, for example, the recent Juneau Empire article at http://juneauempire.com/stories/102809/loc_509936043.shtml; and Anchorage Daily News editorial at http://www.adn.com/opinion/view/story/997301.html --copies also attached). 5. Non Economic Benefits. Depending on how one chooses to measure non-economic benefits, the following could apply to this proposed project. A. Reduction in fossil fuel emissions. Wood used to displace fossil fuel combustion eliminates sulfur range emissions from combustion. Further, emissions from combustion of wood are considered green house gas neutral. B. Renewable fuel source. Wood is a renewable resource. National forests are managed on a sustainable basis, providing for a perpetual supply of wood fuel. C. Local control of commodity. The fact that the wood resource is locally/domestically controlled eliminates some of the variables that can interrupt fuel supply and cost, compared with internationally shipped fuels. D. Beneficial use of state lands on Prince of Wales Island. According to the Alaska Department of Natural Resources, the POW Island area includes approximately 32,400 acres of State of Alaska owned, general use designated lands from which commercial timber sales can occur. Wood not well suited for dimensional lumber or other milled uses can be put to productive use as a source of renewable heating fuel for Alaska residents. 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 Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 14 of 24 10/7/2009 • 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 1. Business structure. As noted above, the City of Craig proposes to acquire wood drying equipment and lease the equipment, at the market rate, to a sawmill that has an ongoing supply of wood waste that the mill can dry into a fuel intended for combustion in commercial-sized boilers. The lease would govern: A. Placement of equipment, including where the equipment would be installed, and include provisions for city and granting agency personnel to access and inspect the equipment; B. Oversight of the assembly of the wood drying equipment, and assurances that the equipment is installed in compliance with vendor specifications. C. Operation and maintenance of the wood drying equipment. The lessee would assume responsibility for property operation and maintenance of the drying equipment, and keeping the equipment in good working order. D. Public compensation for use of the equipment, at a market rate equal to at least eight percent of the equipment’s fair market value. E. Operational life of the equipment, and agreeing in the lease to the useful life of the drying equipment. F. Terms of the contribution of the lessee, including in-kind and other contributions to the acquisition, installation, operation, and maintenance of the equipment. 2. Financing of operation and maintenance. The City of Craig proposes that operation and maintenance of the equipment fall upon the lessee as a condition of leasing the equipment. 3. Other operational issues. The city intends to work closely with the operator of the equipment to jointly address any unexpected operational matters. As noted in Section 3.5, above, regular meetings between the city and the operator are needed to work on operational issues that occur during the course of construction and operation of the facility. 4. Operational costs and project support. Operational costs of the wood drying equipment include Labor $ 375,000 (five FTE at $75,000 year (wages and benefits)) Electricity $49,400 (300,000 KwH/year at $0.15/KwH; plus 12 percent fuel surcharge) Fuel $30,000 Parts & Maintenance $50,000 Loading equipment $100,000 ($100/hour at 1,000 hours) Freight $600,000 ($50/ton at 12,000 tons for common carrier or barge charter deliveries) Depreciation & Insurance $35,000 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. 1. Award preparation. Prior to making a decision on whether to apply for funding from the Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 15 of 24 10/7/2009 Renewable Energy Fund, the City of Craig and representatives from Viking Lumber Company discussed: the merits of acquiring the proposed equipment; how the equipment would operate; benefits to the City of Craig; the city’s leasing protocols and requirements. In addition, several city and Craig school district staff discussed the idea and the likelihood of the project aiding in the operation of the Craig wood boiler. The Craig city administrator also briefed the City of Craig Mayor on the project and took feedback. Assuming that applicants are made aware of their ranking after AEA reviews on December 22, 2009, and if this project is recommended for funding to the legislature, the city is prepared to implement the project based on the schedule found in Section 3.2. 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. Attached is a letter of support from the Craig City School District. Also attached is a resolution from the Craig city council authorizing the application. The City of Craig is not aware of possible opposition to the project. There is general public support of the wood boiler project, and the project proposed here supports the continued operation of the wood boiler. Indeed, having access to a drier wood fuel will assist the city in connecting the Craig Community Association (CCA—the federally-recognized Tribe in Craig) tribal hall to the wood boiler facility because the city will be able to produce a greater amount of heat energy for the same volume of wood burned. 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 Provide a narrative summary regarding funding sources and your financial commitment to the project. This application requests $350,000 in grant funding from the AEA Renewable Energy Fund. Proposed matching funds will come from one of two sources, either entirely from the USDA Forest Products Lab Hazardous Fuels grant program; from a combination of grant funds and Viking Lumber Company, or entirely from Viking Lumber Company. Should Viking Lumber Co. fail to receive USDA funding, the company shall provide all labor and materials to prepare the construction site and assemble the drying equipment, and the costs to test the equipment and put it into production. The City of Craig commits to completing the public notice process to put the equipment under lease, negotiating a market lease rate per the requirements of the Craig Municipal Code (and additional requirements included in any subsequent grant agreement with AEA), and purchasing dried biomass fuel. The city will also work to expand the reach of the Craig wood boiler to benefit other facilities in Craig. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 16 of 24 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 Jon Bolling Signature Title City Administrator Date November 6, 2009 Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 20 of 24 10/7/2009 ATTACHMENT B 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. 13,000 tons of sawmill wood waste. Unit depends on project type (e.g. windspeed, hydropower output, biomasss fuel) 2. Existing Energy Generation and Usage a) Basic configuration (if system is part of the Railbelt 1 grid, leave this section blank) i. Number of generators/boilers/other One (Craig wood boiler) ii. Rated capacity of generators/boilers/other 4 MMBtu iii. Generator/boilers/other type None iv. Age of generators/boilers/other 1.5 years v. Efficiency of generators/boilers/other 85 percent b) Annual O&M cost (if system is part of the Railbelt grid, leave this section blank) i. Annual O&M cost for labor $18,200 ii. Annual O&M cost for non-labor $40,000 c) Annual electricity production and fuel usage (fill in as applicable) (if system is part of the Railbelt grid, leave this section blank) i. Electricity [kWh] N/A 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] 785 green tons (at Craig boiler facility) 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.    Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 21 of 24 10/7/2009 3. Proposed System Design Capacity and Fuel Usage Please note: This page estimates cost/benefit for use by Craig wood boiler. a) Proposed renewable capacity (Wind, Hydro, Biomass, other) [kWh or MMBtu/hr] 785 tons dried wood fuel b) Proposed Annual electricity or heat production (fill in as applicable) i. Electricity [kWh] ii. Heat [MMBtu] 9,028 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] 785 dry tons (range 25-35 percent moisture content) iv. Other 4. Project Cost a) Total capital cost of new system $ 350,000 b) Development cost $ 250,000 c) Annual O&M cost of new system $1,239,400 d) Annual fuel cost $ 30,000 (diesel fuel for system start up) 5. Project Benefits a) Amount of fuel displaced for i. Electricity ii. Heat 67,208 gallons of propane; 21,280 gallons diesel. iii. Transportation b) Price of displaced fuel $2 per gallon propane; $ 2.50 per gallon diesel c) Other economic benefits Reduction of sulfur range omissions; carbon neutral. d) Amount of Alaska public benefits $120,975* (propane) + $47,880* (diesel) = $168,855 *Reduce propane and diesel benefit by 10% for incidental consumption each year. 6. Power Purchase/Sales Price a) Price for power purchase/sale $30 per dry ton (discounted per equip. lease)= $23,550 7. Project Analysis a) Basic Economic Analysis Project benefit/cost ratio $168,855/$53,550* = 3.15 (*cost = annual, straight-line depreciation of wood drier + $23,550; time value over 20 years not calculated.) Payback <one year. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 22 of 24 10/7/2009 3. Proposed System Design Capacity and Fuel Usage Please note: This page estimates cost/benefit for capacity of wood drying equipment. b) Proposed renewable capacity (Wind, Hydro, Biomass, other) [kWh or MMBtu/hr] 13,000 tons dried wood fuel b) Proposed Annual electricity or heat production (fill in as applicable) i. Electricity [kWh] ii. Heat [MMBtu] 145,600 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] 13,000 dry tons (range 25-35 percent moisture content) iv. Other 4. Project Cost a) Total capital cost of new system $ 350,000 b) Development cost $ 250,000 c) Annual O&M cost of new system $ 1,239,400 d) Annual fuel cost $ 30,000 (diesel fuel for system start up) 5. Project Benefits a) Amount of fuel displaced for i. Electricity ii. Heat 1,040,000 gallons of fuel oil. (Line 3.b.ii/145,000 Btu per gallon of diesel) iii. Transportation b) Price of displaced fuel Approx. $ 2.50 per gallon c) Other economic benefits Reduction of sulfur range omissions; carbon neutral. d) Amount of Alaska public benefits $2,600,000 6. Power Purchase/Sales Price a) Price for power purchase/sale $200 per dry ton = $2,000,000 7. Project Analysis a) Basic Economic Analysis Project benefit/cost ratio $2,600,000/$2,030,000* = 1.28 (*cost=annual, straight-line deprec. of wood drier + $2 million; time value over 20 years not calculated) Payback Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 23 of 24 10/7/2009 ATTACHMENT C 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. ) $ $ $ Completion of bid documents July 15, 2010 $ 5,000 $ $ 5,000 Vendor selection and award August 19, 2010 $ 330,000 $ $ 330,000 Begin site work July 2, 2010 $ $ 65,000 In-kind $ 65,000 Receive drying equipment Nov. 20, 2010 $ 15,000 $ $ 15,000 Begin assembly of drying equipment Dec. 1, 2010 $ $ 110,000 In-kind $ 110,000 Integration and testing of equipment Feb. 28, 2011 $ $ 25,000 In-kind $ 25,000 Final acceptance and start up March 1, 2011 $ $ 15,000 In-kind $ 15,000 Operations reporting Per grant $ $ $ Contingency $ 35,000 In-kind $ 35,000 $ TOTALS $ 350,000 $ 250,000 $ 600,000 Budget Categories: Direct Labor & Benefits $ $ 110,000 $ 110,000 Travel & Per Diem $ $ $ 0 Equipment $ 330,000 $ $ 330,000 Materials & Supplies $ $ 65,000 $ 65,000 Contractual Services $ $ $ Construction Services $ $ 50,000 $ 50,000 Other $ 20,000 $ 25,000 $ 45,000 TOTALS $ 350,000 $ 250,000 $ 600,000 Applications should include a separate worksheet for each project phase (Reconnaissance, Feasibility, Design and Permitting, and Construction)- Add additional pages as needed Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 24 of 24 10/7/2009 Project Milestones that should be addressed in Budget Proposal Reconnaissance Feasibility Design and Permitting Construction 1. Project scoping and contractor solicitation. 2. Resource identification and analysis 3. Land use, permitting, and environmental analysis 5. Preliminary design analysis and cost 4. Cost of energy and market analysis 5. Simple economic analysis 6. Final report and recommendations 1. Project scoping and contractor solicitation. 2. Detailed energy resource analysis 3. Identification of land and regulatory issues, 4. Permitting and environmental analysis 5. Detailed analysis of existing and future energy costs and markets 6. Assessment of alternatives 7. Conceptual design analysis and cost estimate 8. Detailed economic and financial analysis 9, Conceptual business and operations plans 10. Final report and recommendation s 1. Project scoping and contractor solicitation for planning and design 2. Permit applications (as needed) 3. Final environmental assessment and mitigation plans (as needed) 4. Resolution of land use, right of way issues 5. Permit approvals 6. Final system design 7. Engineers cost estimate 8. Updated economic and financial analysis 9. Negotiated power sales agreements with approved rates 10. Final business and operational plan 1. Confirmation that all design and feasibility requirements are complete. 2. Completion of bid documents 3. Contractor/vendor selection and award 4. Construction Phases – Each project will have unique construction phases, limitations, and schedule constraints which should be identified by the grantee 5. Integration and testing 6. Decommissioning old systems 7. Final Acceptance, Commissioning and Start-up 8. Operations Reporting ATTACHMENT G JUNEAU EMPIRE ARTICLE AND ANCHORAGE DAILY NEWS EDITORIAL