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HomeMy WebLinkAboutGalena Renewable Energy Project App Renewable Energy Fund Round 3 Grant Application AEA 10-015 Application Page 1 of 20 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 20 10/7/2009 SECTION 1 – APPLICANT INFORMATION Name (Name of utility, IPP, or government entity submitting proposal) Louden Tribal Council Type of Entity: Tribal Government Mailing Address PO Box 244, Galena, Alaska 99741 Physical Address 100 Campion Road, Galena, Alaska 99741 Telephone 9076561711 Fax 9076561716 Email Phil.koontz@gmail.com 1.1 APPLICANT POINT OF CONTACT Name Phil Koontz Title Environmental Engineer Mailing Address PO Box 288 Galena, Alaska 99741 Telephone 907 656 2328 Fax 9076561716 Email Phil.koontz@gmail.com 1.2 APPLICANT MINIMUM REQUIREMENTS Please check as appropriate. If you do not to meet the minimum applicant requirements, your application will be rejected. 1.2.1 As an Applicant, we are: (put an X in the appropriate box) An electric utility holding a certificate of public convenience and necessity under AS 42.05, or An independent power producer in accordance with 3 AAC 107.695 (a) (1), or A local government, or XX A governmental entity (which includes tribal councils and housing authorities); Yes 1.2.2. Attached to this application is formal approval and endorsement for its project by its board of directors, executive management, or other governing authority. If the applicant is a collaborative grouping, a formal approval from each participant’s governing authority is necessary. (Indicate Yes or No in the box ) Yes 1.2.3. As an applicant, we have administrative and financial management systems and follow procurement standards that comply with the standards set forth in the grant agreement. Yes 1.2.4. If awarded the grant, we can comply with all terms and conditions of the attached grant form. (Any exceptions should be clearly noted and submitted with the application.) No* See note 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. * Louden Tribal Council will turn the completed project over to the City of Galena to own and operate for the public benefit. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 3 of 20 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) Type in your answer here and follow same format for rest of the application. Galena Renewable Energy 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. Answer here. Galena, Alaska and the former Galena Air Force Base. The wood chip storage, the boiler, and generator will be located close to the existing boiler plant at the former Air Base, and will be directly connected to the City electrical distribution system and the existing utilidor that serves the former Air Force buildings that are presently used by the Galena Interior Learning Academy boarding school. 2.3 PROJECT TYPE Put X in boxes as appropriate 2.3.1 Renewable Resource Type Wind XX 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 XX Construction and Commissioning Conceptual Design 2.4 PROJECT DESCRIPTION Provide a brief one paragraph description of your proposed project. Louden Tribal Council is taking the lead in this application to purchase, install, and commission a new steam powered Combined Heat and Power (CHP) facility that will eventually be owned and operated by the City of Galena as an Independent Power Producer. The new project will include assessment and management of the local biomass resources, formation of a partnership with the biomass owner (Gana-a’Yoo Native Regional Corporation), purchasing and installation of the harvesting equipment, boiler, steam powered generator, and heat recovery systems including Organic Rankine Cycle generators, and providing steam heat for the existing utilidor and buildings occupied by the Galena City School District. We hope and anticipate that the project will eventually be expanded to provide wood pellets for home heating fuel to villages in Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 4 of 20 10/7/2009 the local region, and to radically reduce the cost of electric power through interties to other villages. 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.) One of the principal benefits will be local employment for about 8 to 12 persons directly employed, and about 40 to 50 additional local jobs, mostly at the Galena Interior Learning Academy. Other benefits will include reduced electrical costs (roughly $0.30 per kWh instead of the present $0.56 per kWH) and radically reduced heating costs for the GILA school buildings. In addition, the reduction of diesel fuel use locally will reduce the net carbon footprint, greatly reduced shipping of fuel on the Yukon River, and improvement of the biomass resource through management of fire hazards, increased wildlife browse, and increased diversity. In addition to the economic enhancement of providing local jobs and reduced living costs, there will be a direct financial benefit to the shareholders of the Gana-a’Yoo Native Regional Corporation due to the annual royalties that are anticipated as part of a land use agreement. 2.6 PROJECT BUDGET OVERVIEW Briefly discuss the amount of funds needed, the anticipated sources of funds, and the nature and source of other contributions to the project. The entire project will cost about $11.2 million in new funding. The existing facilities that will be dedicated to the project by the City and the City School district including the power distribution system, the utilidor, and the real estate are valued at something over $30 million. We (e.g. Louden Tribal Council, the project manager, and the community partners) plan to obtain grant funding to pay for most or all of the new equipment, supplies, and operating costs, so we are hoping that the $4 million limit for this grant application can be matched with other funding, which we are actively seeking, although none of our various grant applications have been approved as yet. The fundamental economics of the project appear to be sound, and it turn out that loans or other investment funds can be developed, particularly if a significant part of the total cost can be funded by one or more grants. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 5 of 20 10/7/2009 2.7 COST AND BENEFIT SUMARY Include a summary of grant request and your project’s total costs and benefits below. Grant Costs (Summary of funds requested) 2.7.1 Grant Funds Requested in this application. $4,000,000 2.7.2 Other Funds to be provided (Project match) $7,187,738 2.7.3 Total Grant Costs (sum of 2.7.1 and 2.7.2) $11,187,738 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) $11,187,738 2.7.5 Estimated Direct Financial Benefit (Savings) $63,000,000* 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.) $ 186,000,000* *notes— 2.7.5 Estimated Direct Financial Benefit (Savings)— This figure is estimated based on elimination of about 700,000 gallons of fuel consumption per year for the combined existing heating system and electrical generation systems, with diesel fuel cost estimated at $3 per gallon for 30 years. Realistically, this is the avoided cost, which will be offset by the actual costs, which are roughly half of the total amount. 2.7.6 Other Public Benefit— Local jobs are the principal other public benefit. Approximately 12 new jobs are expected for the new renewable energy system, plus about 50 new jobs at the GILA boarding school as it doubles enrollment over the next few years. Jobs are estimated at $100,000 total economic benefit per job per year, and, again, the benefits are extended for 30 years. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 6 of 20 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. Type in your answer here and follow same format for rest of the application. Three people have taken the lead for this project. Lewis T (Tom) Johnson will be the project director. His resume summary is attached. He performed the equipment scoping, sizing, and selection, and worked up the projected costs to design, install, start up, and operate the proposed system. His background includes long familiarity with the local economy, the utility systems, and with steam power and business development. He has decades of experience with utility and business management and is deeply familiar with local issues. March Runner is the Louden Tribal Council Administrator and director of the Environmental Department. She has extensive experience with financial and grant management, and will perform those functions for the project. She recently managed funding for construction of the $5.6 million Yukon Koyukuk Assisted Living Center. Phil Koontz will assist both Ms. Runner and Mr. Johnson as a technical assistant. He has degrees in civil engineering, chemical engineering, and law, and is a Professional Engineer registered to practice in Alaska. All of these persons are essentially self selected representatives of the local community, and have agreed to pursue grant funding of the project for the general benefit of the community. Resumes are attached. 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.) A Work Breakdown Structure (WBS--Excel Spreadsheet) is attached. The first sheet shows the proposes schedule, which extends from today through closure of the grant project in December of 2012. The schedule obviously will slip to accommodate the grant approval schedule, but we hope to start bidding equipment and selecting an engineering firm almost immediately and to have the project running by the fall of 2011. The first year of operation is included in the schedule to accommodate the shakedown of the project and any delays that may be encountered. 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.) The attached WBS spreadsheet depicts the project progress as a Gantt chart of activities, and as quarterly accomplishments. The principal milestones are as follows— December, 2009 (approximately) Grant approval, begin bids for equipment and a design/construction engineering firm. An agreement with the biomass resource owner for Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 7 of 20 10/7/2009 harvesting tree chips should be in place by about the end of 2009. Spring, 2010, hire the engineering firm, order the tree harvesting equipment. Summer (barge season) 2010, delivery of the tree harvesting equipment, including a feller buncher, chipper, and forwarders. Fall and winter 2010-2011—initial tree chip harvest. Spring 2011—delivery of the heavy equipment for the boiler, generator, and buildings. Fall and winter, 2011 and 2012—construction and startup. December 2012—close out project, turn the finished, operating steam plant and generator facility over to the City of Galena. 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. Biomass resources agreement—A contract for use of the local biomass resources is essential to the project, and an agreement with the biomass resource owner is under discussion with the goal of having it in place before any significant grant funding is committed. Personnel—Local heavy equipment operators are readily available for the tree harvesting operations, which is planned to be seasonal during the early and late winter seasons. The boarding school presently employs about 50 persons for direct support of the school operations, including dorm and teaching staff, dining hall, maintenance, administration, and support. The school staff is expected to roughly double during the next few years, so the local employment should increase by 50 people at the school plus direct operation of the harvesting and boiler/generator operations. Many of the school staff will presumably be hired from outside Galena. Equipment—All of the proposed equipment is available within the time frames that are projected. Engineering—An Alaskan Engineering firm will be hired based on qualifications, prior experience, and financial responsibility determinations. The engineering firm will perform the design/build and construction management phases of the project. 3.5 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 8 of 20 10/7/2009 The attached Work Breakdown Summary lists decision points, reports, estimated expenditures and schedules. The financial manager (March Runner) will be in charge of reporting, financial management, and oversight, with the assistance of the project director and the technical assistant. 3.6 Project Risk Discuss potential problems and how you would address them. No significant risks are anticipated with the technical portions of the project. That is, the equipment, construction, and operating costs appear to be well known and not subject to serious upsets. Tree harvesting equipment, the chipper, the forwarders, material handling equipment, steam generation, and power and heat distribution are all well known technologies that are in daily use in the local area. The biomass resource availability is the principal risk, in that the project cannot proceed without a firm, long term, and economically viable agreement for use of the trees located on several thousand acres of nearby tribal lands. Management of the risk of obtaining the resource development agreement will be by a simple decision at the beginning of the project—if the resources are not available, the project cannot proceed. Responsible long term management of the resource will be a continuing task, but is not viewed as a major risk element. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 9 of 20 10/7/2009 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 proposed energy resource is the fast growing low value scrub trees that grow in the wetlands surrounding Galena. The extent of the resource is much larger than the projected use. Our early estimated indicate that approximately 400 acres per year (plus or minus 20 percent or so) will be required to produce all of the tree chips that are required. Over the 30 year projected economic life of the project, approximately 12,000 acres might be affected. Some or most of the harvested biomass will be re-established during that time, although the exact speed and extent of the regrowth has not been determined exactly. The tribal lands affected also support some larger trees, principally spruce and birch that occasionally grow to substantial sizes. Some of those more desirable trees will be harvested, but the preference in selecting harvest areas will be for fast growing smaller trees such as willows and their relatives. One example of a harvest plan that was presented at a recent meeting with the Gana-a-‘Yoo natural resource committee would be to harvest a portion of one 640 acre section each year, working gradually around Galena over a period of 30 years. That sort of harvesting would keep the hauling distance for the tree chips to a maximum of ten or fifteen miles during the life of the project, and would allow for a range of regrowth, open areas, and older trees within any particular region. Initially, the preferred harvest areas would be on the north side of the Yukon River, where building roads and timing of the harvest season would be easier, but eventually, the harvesting is expected to expand to the south side of the river, and a winter road across the Yukon will be required. 4.2 Existing Energy System 4.2.1 Basic configuration of Existing Energy System Briefly discuss the basic configuration of the existing energy system. Include information about the number, size, age, efficiency, and type of generation. The existing energy system consists of three parts— The Galena Electric Utility operates six diesel generators. The generators are rated for base loads of about 450 kW to 1050 kW each, and generally two of them are in operation at any given time. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 10 of 20 10/7/2009 When they Air Force base was in operation, they burned about a million gallons of diesel per year, and provided waste heat via a utilidor to the City complex of uptown Galena, which includes the City School, the Clinic (now operated by TCC), the City Hall, the water plant, and the City swimming pool and shower house. Since 2005, the Air Force has deactivated the base and the load has declined to the point that the power house uses about 700,000 gallons per year and the waste heat is not sufficient for the heating loads on the system. As a result, the City complex utilidor has become inadequate, so the city buildings need to operate boilers for heat during cold weather. The generators are a combination of old and new units, and their efficiency depends largely on how much waste heat they can provide to the uptown Galena utilidor complex. Their peak efficiency is estimated at perhaps 70% overall thermal efficiency, which declines to as low as 30 or 40% during the summer months. The Denali Commission funded one high efficiency 1050 kW diesel generator for the Galena Electric Utility in 2003. It is overdue for a major overhaul, and the other generators are all older and less efficient. One of the six generators is presently out of service due to a major breakdown. As a result of the decline in available heat from the power house, the City complex now represents a second heat load, with an annual fuel requirement of about 150,000 gallons. The GILA boarding school complex at the former Air Force base uses heat from a utilidor and boiler system that also supports the sewer and water plants. The heating and utilidor system uses about 300,000 gallons of diesel fuel per year during the 10 month heating season, and cannot be shut down without resulting in a destructive freeze up of the water and sewer systems. The three existing boilers that supply heat for the utilidor are estimated at about 80% overall efficiency, and have been in operation for about 30 years. 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. Diesel. The City uses something over a million gallons per year of diesel fuel that is delivered by barge on the Yukon River. The proposed project will displace the existing diesel generator plant, which will be kept as a backup system. Some diesel fuel will be required for the tree harvesting, chipping, and hauling operations, but the estimated fuel consumption is much lower than at present, perhaps 200,000 gallons per year. The existing boiler plant at the former AFB will also be mothballed, for use in an emergency, but it will be easy to heat because it will be immediately adjacent to the new boiler generator plant. The school buildings and business plan would benefit immensely, and there is almost no drawback, unless the biomass harvesting itself should turn out to be a problem. We hope and assume that careful planning and responsible management will enable the tree harvesting portion of the project to benefit the forest and wildlife diversity and sustainability. The net results should be greatly reduced use and transport of diesel fuel, greatly improved local economics and employment, more responsible environmental resource management, and a reduced carbon footprint for the local area. In addition, we hope that the tree chips will provide a feedstock for a wood pellet mill, with an almost negligible increase in the harvesting requirements Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 11 of 20 10/7/2009 (300 tons per year is the estimated capacity of the pellet mill, compared with 17,000 tons per year for the entire project). Locally produced pellets would allow the local villages to begin to convert to pellet stoves, which are more efficient to operate and use wood fuel in a much more convenient form than typical home wood stoves. It’s hard to find a down side. A few jobs will be moved from the diesel generator plant and from the boiler plant to the steam fired system. Some barges won’t be required to haul fuel to Galena. On the other hand, the future of the boarding school would be much more secure, more jobs will be available there and elsewhere, and the cost of living should be significantly reduced. 4.2.3 Existing Energy Market Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. The main difference will be the substitution of local resources for imported fuel. The price of electricity is expected to be reduced from about $0.56/kWh to $0.30 or less, and the cost of heat for the GILA school buildings should be reduced proportionately. We hope that an intertie will eventually extend some of the electrical cost benefits to nearby villages (probably Ruby, Koyukuk, Nulato, and perhaps Kaltag), and that the pellet mill will permit people to use locally produced fuel for pellet stoves instead of oil fired heaters such as Monitors or Laser stoves. 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 technology specific to project location— Galena is located on the north bank of the Yukon River about 300 air miles west of Fairbanks. Like most of interior Alaska, some renewable energy technologies (e.g. wind energy and direct solar) are considered inadequate), and several non-renewable technologies including nuclear power, coal and coal gas have been considered and dismissed as unsuitable. The renewable technologies with the most promise appear to be in-stream hydro turbines in the Yukon River and biomass. Both are under consideration, although implementation of in-stream hydro technology appears to be several years away at best, and it cannot provide significant amounts of heat for buildings or for the utilidors. Biomass development in the form of harvesting trees is therefore the preferred technology for development. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 12 of 20 10/7/2009 Optimum installed capacity— The electric power generation capacity of the system was selected so that it can take over essentially all of the electric load from the existing diesel generator plant, which presently operates at or below one megawatt, roughly 1500 horsepower. The electrical load is expected to be generally around 800 kW, or 80% of the capacity of the proposed project, and to decline slightly as the local power customers improve the efficiency of their buildings and activities. If the electrical peak loads exceed the capacity of the new generator, the existing diesel power plant can provide for standby and peak loads. The other capacity issues (eg waste heat for building heating and utilidor maintenance in the winter) are adequately provided for with a one megawatt generator capacity. Waste heat in the summer will be recovered by the proposed ORC low temperature turbines and for use to maintain greenhouses. Harvesting and chipping capacity is expected to be adequate to provide the annual fuel supply during a harvest season of about 60 to 90 days, but the season can be adjusted if necessary to provide additional wood chips for a pellet mill, or for a boiler to heat the utilidor system in uptown Galena that serves the City complex, the clinic, and the water plant. The additional fuel required for these purposes is not a major contribution to the overall capacity of the system, and does not affect the sizing considerations for the equipment. As the power and heating systems mature in the future, the community expects and plans to increase our electrical and heating efficiency to more than offset the potential growth of the City and the school, and we hope to be able to provide relative cheap excess power to other local villages through electrical interties. Anticipated Capacity Factor— The electrical generator is expected to operate at approximately 80% of full load on an annual basis, although this design factor may be refined during the engineering design phase of the project. The harvesting and chipping capacity are based on seasonal use during early and late winter when ice roads can be used, but extreme cold weather will not cause undue stress on the equipment, and is estimated at about 60 to 90 days per year. The season can be adjusted to suit the operational needs of the project, and the two key pieces of harvest equipment, the feller buncher and the chipper are sized to allow some expansion of the harvesting capacity if necessary by adding additional transportation capacity in the form of forwarders. Three forwarders are proposed. Anticipated Annual Generation— At the projected 800 kW average load, the annual electrical generation would be approximately 7 million kWh per year. Steam for the utilidor is estimated at approximately the equivalent of 300,000 gallons of fuel oil per year or 30,000 Mbtu per year. Anticipated Barriers— The principal issue to be overcome is to reach an agreement for use of the biomass resource, which is regarded as a decision point rather than a barrier. Scheduling for the project was originally to begin this fall, and is likely to slip at least one year, depending on availability of funds, which in turn will affect the delivery and construction plans. Basic Integration Concept— The new electrical power and steam generation facilities can be connected directly to existing utilities, and the proposed location for the boiler/generator plant is close and convenient for the connections. The real estate that will be used for the new facility and for chip storage and handling already belongs to the City of Galena, which has agreed to dedicate their resources to the project. Taking a wider view, the regional land use has historically been compatible with wilderness ecology—that is, the Native Regional Corporation has allowed the use of their land for subsistence harvesting of furs, hunting and fishing, and for casual harvesting of firewood and sawlogs. Prior to transfer of the property to Gana-a’Yoo, some of the property was logged for Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 13 of 20 10/7/2009 lumber and for fuel for the gold rush era steam boats, so much of the land on the north shore of the Yukon is second growth timber. Increasing the harvesting of biomass enough to account for the demands of this project will require some adjustment in the local land management philosophy, but it should not compete strongly with the existing uses, and there will be some offsetting benefits including improved public access to the land, improved fire control, and possibly increased biological diversity. Regarding other villages in the region, the principal effects should be economic shifts, including some change in the local job market which may cause people to move to Galena from the other villages, and some additional income and reduced costs for living in the local area. Delivery methods— Electrical power and steam heat deliveries will not be changed by this proposed project. Eventually, electrical interties with local villages and some local commerce in wood pellets for home heating may result in improved local commerce. Barge traffic may be reduced slightly on the Yukon due to the reduced local demand for diesel fuel, but the fuel deliveries are typically accomplished by about 3 to 6 barge deliveries per year, so the change will not be very substantial in terms of river traffic. 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 property that will be used for the fixed assets associated with the project is already owned by the City, and the City Council has indicated that it will dedicate whatever resources are required for installation of the proposed facilities. Gana-a’Yoo Native Regional Corporation has been approached for an agreement on the use of the biomass resource, which should be resolved in the next few months. 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 Permitting issues for a small facility like this are routine and will be turned over to a qualified engineering firm. They are expected to include air and particulate emissions, use of property adjacent to a state owned airport, land use issues associated with the known contamination of ground water during the Air Force occupation of the property, and operation of a public electric utility (Independent Power Producer). The timeline for permitting should be easily accommodated during the projected three year duration of the project. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 14 of 20 10/7/2009 4.3.4 Environmental Address whether the following environmental and land use issues apply, and if so how they will be addressed:  Threatened or Endangered species  Habitat issues  Wetlands and other protected areas  Archaeological and historical resources  Land development constraints  Telecommunications interference  Aviation considerations  Visual, aesthetics impacts  Identify and discuss other potential barriers The net effect of the project on the environment is expected to be very positive in terms of reduced use of fossil fuels, diesel and petroleum emissions, fuel transport on the river, and carbon dioxide generation. Many of these specific issues, particularly threatened or endangered species, habitat issues, wetlands and other protected areas, and archaeological and historical resources will need detailed examination during the engineering phase of the project. Land development constraints, telecommunications interference, and aviation considerations do not appear to be significant issues, but will be addressed if needed. Visual and aesthetics impacts should be minor because the property affected is relatively remote, and will be mitigated as far as possible by responsible management of the harvesting plan. No other 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 Total anticipated project cost, and cost for this phase— The total cost is $11,187,738. Cost for this phase is the same. Follow-on projects are anticipated but no grant applications are planned at this time. Requested grant funding— Grant funding under this application is for $4 million, the limit of the grant offering. Applicant matching funds— The remainder of the project cost beyond the $4 million grant request is $7,187,738. No source has been identified to date, but some or all of that total may be matching funds, depending on the source. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 15 of 20 10/7/2009 Projected capital cost of proposed renewable energy system— The budget includes $2,543,682 for operation of the project during the first year. The remainder of the project cost, totaling $8,644,056 represents the capital cost, which includes legal, and engineering costs that are considered essential to the project construction and implementation. Projected development cost of proposed renewable energy system— The operating expenses for the first year in the amount of $2,543,682 are necessary for the system to begin operation, because the fuel harvesting is performed annually. 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.) Capital Cost (annualized depreciation) $ 864,000.00 Biomass Fuel cost $ 780,628.00 O & M $ 899,040.00 Annual operating cost $ 2,543,682.00 Projected user charges Electrical sales: hourly average load 800kw x 24hr/day x 30days x .30cents/kw = $ 172,800.00 monthly Steam sales: 2,500Mbtu / month x $20/ Mbtu = $50,000.00 monthly Total revenue stream = $222,800.00 monthly or $2,673,600 per year. 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 Customers—assume no change from the present day power consumption of approximately 800 kW, combined public, private and business use. Approximate power sale price--$0.20 to $0.30/kWH. The lower end of the range assumes that no cost recovery is required for the cost of the project. At the higher range, the project could be funded by loans or private ownership. Proposed rate of return from grant funded project—at the higher rate of power charges (e.g. $0.30/kWH, the return on investment is estimated at 9.5%. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 16 of 20 10/7/2009 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. Attached 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 Annual fuel displacement— Approximately 1,000,000 gallons of imported diesel fuel would be replaced by renewable energy, which would be harvested be consuming only about 46,000 gallons of diesel per year. The estimated fuel displacement in dollars is $3,000,000 per year for fuel presently, estimating the cost of delivered fuel at $3 during the life of the project, compared with— $ 780,628.00 annual cost of renewable fuel, including salaries, fuel and maintenance costs for the harvesting equipment. Anticipated annual revenue would be selected to balance the costs on an annual basis. The estimate for revenues including electrical power charges and steam heat sales is $2,673,600 per year. No tax credits have been identified. Potential additional annual revenue streams include— Wood chip pellet sales to provide feed stock for a wood pellet mill. Electrical sales to other villages via interties. Greenhouse operations. Sales of sawlogs, firewood, or other timber that is too big or otherwise unsuitable for chipping. Non-economic benefits— Reduced particulate emission, sulfur oxides, and other air quality issues associated with diesel fuel, Improved access to local wilderness areas, reduced wildfire hazards, and improved wildlife Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 17 of 20 10/7/2009 habitat. Increased economic stability and improved job outlook for the region. 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 Proposed business structure— Although Louden Tribal Council has the lead in developing this grant application, the City of Galena will be the intended owner and operator of the utility, and will operate the project as it does now. The boarding school and other tenants of the buildings at the former Air Force base will pay for heat that is delivered via the utilidor at a rate that reimburses the reasonable operating costs, and electrical power rates will be adjusted to a similar standard. Financing maintenance and operations, operational issues, and costs, and maintenance of the existing generators and boiler plant will be the task of the City of Galena, which presently operates those utilities and systems. Reporting of grant elements will be the task of the Louden Tribal Council, and will be managed by the Tribal Administrator. 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. The Work Breakdown Structure that is attached as an Excel spreadsheet has a proposed schedule that began this fall with a projected grant approval and continues through completion in December 2012. That schedule and some of the funding assumptions will need to be revised to reflect reality, but it shows the general plan with decision points, critical time lines (eg barge delivery seasons), and dates that can be shifted if necessary. Other grant applications are in process, but no other funding source has been identified to date, although Louden Tribal Council has been selected for a formula based Energy Efficiency Community Development Block Grant from the Department of Energy in the amount of $49,300, and has elected to direct the grant proceeds toward furthering this project, particularly in terms of developing accurate and defensible land management plans for harvesting the biomass resource. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 18 of 20 10/7/2009 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. Local support is very high, and both the City of Galena and Louden Tribal Council have excellent records of following through on grant projects. Letters of support are attached from Tom Corrigan, the City Manager for Galena, and from Jim Smith, the Superintendant of the Galena City School District. 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. Louden Tribal Council is still seeking funding for this project, and if this grant application is approved, approximately $7.2 million in matching funds will be required to complete the implementation. We have not yet identified the source of the additional funds, but will continue to pursue them. GrantBudget3.doc is attached. Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 19 of 20 10/7/2009 Renewable Energy Fund Grant Application Round 3 AEA10-015 Grant Application Page 20 of 20 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 Signature Title Date