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HomeMy WebLinkAboutDelta Junctioin Wood Pellet Boiler Biofuel Pilot Program AppState of Alaska, Department of Natural Resources Division of Forestry Delta Area Office Renewable Energy Fund Grant Application Wood Pellet Boiler Biofuel Pilot Project Submitted by: Al Edgren, Delta Area Forester Date: November 5, 2009 r r_1 of N DIDI Milk' �`►M Grant Application Form Grant Application Cost Worksheet Grant Budt=_et Form Grant Budaet Form Instructions Appendices Appendix A, Estimated Project Cost Summary Appendix B, Project Cost Detail Appendix C, Economic Spreadsheet Appendix D, Delta Area Forestry Heating Fuel Usage Appendix E-1, Main Office First Floor Appendix E-2, Warehouse Appendix, E-3, Main Office Basement Appendix, E-4, As -Built Survey Appendix Five Year Schedule of Timber Sales and Maps r, ALASKA Renewable Energy Fund Round 3 � ENERGY AUTHORITY Grant Application 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: htto://www.akenergyauthority.org/RE Fund-Ill.html Grant Application GrantApp3.doc Application form in MS Word that includes an outline of Form 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 Costworksheet3 Summary of Cost information that should be addressed by Worksheet doc applicants in preparing their application. Grant Budget GrantBudget3.d A detailed grant budget that includes a breakdown of costs by Form oc milestone and a summary of funds available and requested to complete the work for which funds are being requested. Grant Budget GrantBudgetlnst Instructions for completing the above grant budget form. Form Instructions ructions3. df • 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. AEA 10-015 Application Page 1 of 17 10/7/2009 /ORITY � ALAENERGYASaKA Renewable Energy Fund Grant Application Round 3 SECTION 1 — APPLICANT INFORMATION Name (Name of utility, IPP, or government entity submitting proposal) State of Alaska, Department of Natural Resources, Division of Forestry Type of Entity: Government Agency Mailing Address Physical Address PO Box 1149 MP 267.6 Richardson Hwy Delta Junction, AK 99737 Delta Junction, AK 99737 Telephone Fax Email 907-895-4225 907-895-2125 al.edgren@alaska.gov 1.1 APPLICANT POINT OF CONTACT Name Title Al Edgren Delta Area Forester Mailing Address PO Box 1149 PO Box Delta Junction, AK 99737 Telephone Fax Email 9o7-ass-4225 9o7-895-2125 al.edgren@alaska.gov 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 1.2.2. Attached to this application is formal approval and endorsement for its project by its board of directors, executive management, or other governing authority. If the applicant is a collaborative grouping, a formal approval from each participant's governing authority is necessary. (Indicate Yes or No in the box ) Yes 1.2.3. As an applicant, we have administrative and financial management systems and follow procurement standards that comply with the standards set forth in the grant agreement. Yes 1.2.4. If awarded the grant, we can comply with all terms and conditions of the attached grant form. (Any exceptions should be clearly noted and submitted with the application.) Yes 1.2.5 We intend to own and operate any project that may be constructed with grant funds for the benefit of the general public. AEA10-015 Grant Application Page 2 of 17 10/7/2009 /© ALASKA Renewable Energy Fund L ENERGY AUTHORITY Grant Application Round 3 SECTION 2 — PROJECT SUMMARY This is intended to be no more than a 1-2 page overview of your project. 2.1 Project Title —Delta Junction Wood Pellet Boiler: Biofuel Pilot Program The Division of Forestry is proposing a pilot project using wood pellets for heating two governmental buildings. The boiler system will combine two heating systems, a 3,840 square foot (sf.) main office building, proposed 3,000 sf. addition, and a 1,792 sf. warehouse. The boiler will be located in a separate building which will house a heating system and wood pellet storage. See Appendix E-1, E-2, E-3 and E-4 for Floor Plan. 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 Division of Forestry is located at Milepost 267.5 Richardson Highway, Delta Junction, Alaska, approximately 2.0 miles north of the center of town. 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 X 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 Division of Forestry at Milepost 267.5 Richardson Highway, Delta Junction is proposing a project using wood pellets for heating two governmental buildings. The boiler system will combine two heating systems, a 3,840 square foot (sf.) main office building, proposed 3,000 sf. addition, and a 1,792 sf, warehouse/shop/maintenance facility. The boiler will be located in a separate building which will house a heating system and pellet storage. The grant will involve local contractors for construction of the building and retrofit of the plumbing systems. A request for proposal (RFP) or a bid process will be used for all aspects of the project.. Maintenance of the boiler will be performed by local contractors. AEA10-015 Grant Application Page 3 of 17 10/7/2009 '41111D ALASKA Renewable Energy Fund E ENERGY AUTHORITY Grant Application Round 3 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.) The Division of Forestry will save an estimated $104,396 in the first ten years of operation as a direct result of reducing the reliance on diesel fuel. Over a 30 year span, the Division will save approximately $744,813 by converting to a biofuel. This pilot project will serve as a model for other government office sin the State. The community will have a place to observe first-hand the benefits of biofuels. We will be able to provide the public benefit of a bioenergy system through design and engineering, cost savings of biofuel, and system fuel through demonstration and tours of the heating system. 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 Division of Forestry is requesting $932,250 from the Alaska Energy Authority. We are requesting 100% of the funds needed for the project. In -kind services from the Division of Forestry will include project supervision, unskilled labor as needed, budget and technical support, and grant administration. See attached Project Cost Summary, Appendix A. 2.7 COST AND BENEFIT SUMARY Include a summary of grant request and your projects total costs and benefits below. Grant Costs (Summary of funds requested) 2.7.1 Grant Funds Requested in this application. $932,250 2.7.2 Other Funds to be provided (Project match) $0 2.7.3 Total Grant Costs (sum of 2.7.1 and 2.7.2) $932,250 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 $932,250 including estimates through construction) 2.7.6 Estimated Direct Financial Benefit (Savings) $551,442 2.7.6 Other Public Benefit (If you can calculate the benefit in $0 terms of dollars please provide that number here and explain how you calculated that number in your application AEA10-015 Grant Application Page 4 of 17 10/7/2009 ALASKA Renewable Energy Fund /4END ENERGY AUTHORITY Grant Application Round 3 SECTION 3 — PROJECT MANAGEMENT PLAN Describe who will be responsible for managing the project and provide a plan for successfully completing the project within the scope, schedule and budget proposed in the application. 3.1 Project Manager Tell us who will be managing the project for the Grantee and include a resume and references for the manager(s). If the applicant does not have a project manager indicate how you intend to solicit project management support. If the applicant expects project management assistance from AEA or another government entity, state that in this section. The Delta Area Forester in conjunction with the maintenance staff will act as Project Managers. We request Alaska Energy Authority to provide technical support and project oversight for biomass boiler recommendations and general construction oversight. 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.) Design and engineering completed by March 1, 2011. Bid Award May 1, 2011. Construction June 1, 2011. Operational December 1, 2011. 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.) Design and engineering: an RFP will be advertised by February 1, 2011. Bid package completed by March 15, 2011. Bid Award May 1, 2011. Construction June 1, 2011. Secure contract for wood pellets September 1, 2011. Test system operation October 1, 2011. Refine system design as needed November 1, 2011. System operational December 1, 2011 AEA10-015 Grant Application Page 5 of 17 10/7/2009 r ALENERGASKA Renewable Energy Fund Grant Application Round 3 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. Local vendors: metal fabricating businesses, Delta Concrete, Delta Building Supply, Interior Building Supplies, Airport Rental, Delta Industrial, Heritage Homes/construction, J & J Associates/construction, Morley Electric, Granite Mountain Alaska Lumber, Logging & Milling Associates, Big Delta Lumber. These businesses have all operated in the Delta Area for at least 30 years. Personnel Al F,dgren Steve Joslin Maintenance staff Daniel Newby Joanne Singer Forest Technicians Contractors Purchasing regulations will dictate this list of contractors Concrete — local Mechanical contractor - Electrical contractor - local Equipment companies - local General Labor - local Specialized firm for Wood Heat Engineers Project Manager — Division of Forestry Equipment Purchasing regulations will dictate these companies Government/Agencies UAF/Cold Climate Research Dept. of Environmental Conservation State Dept. of Public Safety/Fire Marshall Alaska Division of Forestry Services Vendor for Wood Pellet Delivery Technical Providers for Wood Pellet Heating System Local service providers will be utilized throughout the completion of this project. Bid Process/Selection Process We will follow the State of Alaska purchasing regulations. Resumes: Available upon request. AEA10-015 Grant Application Page 6 of 17 10/7/2009 ALASKA Renewable Energy Fund /400D ENERGY AUTHORITY Grant Application Round 3 3.5 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. The Project Manager will have daily contacts throughout the construction process. The Area Forester will be updated weekly. We will keep AEA informed as the project progresses through the grant requirements. Daily — Maintenance Personnel Weekly — Delta Area Forester (Al Edgren) Bi-monthly —Regional Staff Monthly — State Office Staff Quarterly — AEA (electronically or written report as the Grantor desires/requires) AEA — site visit 3 times during the life of the Project 3.6 Project Risk Discuss potential problems and how you would address them. 1)'I'iming of bids. Risk: Contractors are limited in the Interior. Solution: Go out to bid by Feb. 2011 2) Inflation Costs Risk: With current inflation, materials and shipping are rising exponentially in Alaska. Solution: Early engineering of the project will help to contain the cost of shipping and purchasing materials. Possible larger contingency costs with inflation figured in. 3) Logistics Risk: Missing the bidding season of contractors and materials. Solution: To bid pre - construction season. Will have a lot more to do with Grantor AEA; this depends on grant awarding process 4) Construction Lead Time —Specialty system with limited contractors, limited contractors to fill needs in Alaskan interior. Solution: To avoid missing the bidding season it is essential to receive this award in a timely manner. 5) Markets are dynamic and unstable — Ordering of materials or equipment (wood pellet boiler) needs as much lead time as possible. Solution: To avoid a long delay and cost overruns, a timely awarding of this grant will assist in controlling costs. 6) Project Manager —We do not have the expertise in wood fired systems. Solution: The Project Manager/Maintenance Foreman will need to consult with biomass experts to resolve engineering issues. 7) Weather —The building season in Interior Alaska is unpredictable. Delays in construction could be two days or two months. Solution: Assure that construction contractor has successful experience building and completing projects in sub -zero temperatures. 8) Overruns — Solution: Build shell and work inside during winter months. Need experienced construction contractor who has success completing projects in sub -zero temperatures. 9) Fuel source —Two pellet facilities are projected to come online to meet the demand of this project. We will be purchasing through this grant a commercial grade pellet processor as a backup to supplement shortages in supply. Only one pellet facility is manufacturing pellets. The other facility retails pellets but is dependent on delivery from Prince George, British Columbia. NPI is constructing a pellet facility in Fairbanks. AEA10-015 Grant Application Page 7 of 17 10/7/2009 /GIDALASKA Renewable Energy Fund 4=D ENERGY AUTHORITY Grant Application Round 3 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 extentlamount 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. FOREST LAND BASE There are several forest land ownerships in the vicinity that could potentially be used to supply wood for the proposed wood boiler. The land base in the Delta Management Area is categorized by ownership as follows: Well 9 463,000 Tanana Valley State Forest Lands 1,237,000 Other Forested State Lands 948,000 Other Non -Forested State Lands 650,000 Military Lands 469,000 BLM Lands 230,000 Native Corporation Lands 130,000 All Private Lands (includes farms, residential lots, homesteads, native allotments, etc.) 4,127,000 TOTAL LAND BASE The biggest supplier of timber to the local area is the State's Forestry Office in Delta Junction. The State of Alaska, develops timber sales on state lands managed by the Delta Area Office providing wood for the local sawmills, export markets, firewood, houselogs, and private timber sales. The other land owners listed above have also made timber available. Private lands could be a significant supplier of wood energy for the Delta Forestry's hearing system 1 when land is cleared to develop homes, businesses and farms. Forests cleared for developments on private land has historically been windrowed and burned or hauled to an approved burning site. The close proximity of the private lands would seem to make it the most feasible energy source. The Division of Forestry's estimated energy need is 40 tons of wood pellets. This roughly equates to 2 -4 acres of low grade commercial quality forest. This is a very low quantity in comparison to the potential available. AEA10-015 Grant Application Page 8 of 17 10rr/2009 '� ALASKA Renewable Energy Fund 400D ENERGY AUTHORITY Grant Application Round 3 The State of Alaska's timber sale program and its estimated sustained yield harvest is summarized in the "Delta Area Forestry Five -Year Schedule of Timber Sales, Fiscal Years 2008 to 2012" (FYSTS). The report states, "the Delta Area can be expected to support a sustained yield of 4,873,600 cubic feet of white spruce and 5,412,700 cubic feet of hardwoods on roughly 5,092 acres per year". There has been an average harvest of 167 acres of commercial timber in the last 5 years from state lands in the Delta Area. There is an exceeding surplus of wood available to meet the energy needs of the public school even if the amount was tripled. SAWMILL RESIDUE There are presently three (3) small commercial sawmills operating in the Delta Area as a primary business. Logging and Milling Associates (LMA) is presently harvesting more timber annually than its competitors, Granite Mountain Alaska Lumber (GMAL), and Delta Lumber (DL). Sawmill residue may also be available from Fairbanks, Glenallen and Tok, but it was not considered for this report. Each of the local sawmills has logging and sawmill residue in the form of log tops, edgings, sawdust and planner shavings. This residue types can make high quality pellets. The total available amount of the residue is roughly estimated to be about 2,000 tons per year not including limbs. Approximately a third of this residue is sold as firewood. About 10% is being used in a boiler system at LMA. LMA is now using all of the sawmill residue to manufacture pellets. Logging residue is still available from the other two milling operations. The log tops and edgings comprise over 60% of the residue. Both of these could easily be made into chips but they would have bark on them. The best thing about this fuel source is its ability to be air dried before being chipped, improving its heating value. EXISTING AND FUTURE TIMBER SALES The timber sale logging contractors have been supplied with multiple timber sales that exceed near term requirements of the local sawmills. Additional timber sales are planned in the state's FYSTS. There is presently at least another 1,000 acres of timber sales in various stages of completion and review to be auctioned in the future. As long as the state continues to fund the timber staff there will be an ongoing supply to accommodate the potential market. (See attached FYSTS, Appendix F. 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 main office has a 23 year old Burnham boiler with a 144,000 btu output. The warehouse uses a forced air furnace with a 100,000 btu output. This furnace was installed under the original construction in 1961. Both systems are 70% efficient running on hearing fuel #1. An addition is planned for the main office in 2011. The heating demand of the additional 3000 sf. has not yet been determined. AEA10-015 Grant Application Page 9 of 17 10/7/2009 ALASKA Renewable Energy Fund ,4�) ENERGY AUTHORITY Grant Application Round 3 4.2.2 Existing Energy Resources Used Briefly discuss your understanding of the existing energy resources. Include a brief discussion of any impact the project may have on existing energy infrastructure and resources. The energy currently used by the Division of Forestry is 2500 gallons of heating fuel #1 annually. The fuel usage for the Delta Forestry complex will be reduced by converting to wood pellets. See Appendix D. The amount of fuel used to heat the Delta Office does not reflect the true heating demand. 2500 gallons is the current documented fuel demand. However, the square footage is about to double with the addition of a Parks facility and additional Forestry office space. The additional demand is estimated at 1500-2500 gallons. The warehouse shop has been kept at 40°F to minimize fuel usage. While a less expensive fuel option, the warehouse shop could be heated to a more comfortable level. It is anticipated that 2000 - 2500 gallons of fuel oil equivalent would be used to heat the facility. Current Fuel Use: 2500 gallons, Expected Fuel Use: 7000 gallons Wood pellets are available through two local suppliers. The demand for wood pellets will secure a market that is in its infancy as a result of several hundred pellet stoves being sold throughout the Delta/Fairbanks Area. As a result of the pilot program in Delta, the awareness of biofuels should provide an increased interest in bioenergy. The demand for wood pellets should provide increased opportunities for the industry. 4.2.3 Existing Energy Market Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. Two pellet facilities offer wood pellets in the Delta Area. End of the Alcan is in the final stages of completing a commercial pellet manufacturing facility. They currently offer pellets for retail sale. Logging and Milling Associates (LMA), also known as Dry Creek, constructed a pellet manufacturing facility. Bagged pellets are available from both facilities. Bulk delivery is not an option yet. The reduction in heating fuel will have no impact on the local fuel suppliers. We expect the market for wood pellets to increase. Market demand for wood pellets may offer additional jobs and opportunities for businesses in the community AEA10-015 Grant Application Page 10 of 17 10/7/2009 �� ALASRGY HKA Renewable Energy Fund Grant Application Round 3 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 A description of renewable energy technology specific to project location: Delta Forestry will use a biomass boiler to help heat the main office complex and the warehouse. Wood pellets will be made from timber harvesting in the region and burned in the boiler to heat water which will circulate through the main office and warehouse to provide heat. Optimum installed capacity: The optimum boiler size is approximately 70% of the connected load of the main office and warehouse. Typical load profiles for government buildings show that approximately 90% of the boiler run hours occur at 70% of the peak load or less. Sizing the boiler at this smaller size allows the boiler to operate in the medium and high fire range more often which optimized efficiency and reduces emissions. During the design process, a energy model of the facility will be developed to determine the final optimum boiler size. Anticipated capacity factor: The anticipated capacity factor is 0.25 to 0.30. Unlike a power plant with a consistent base load, a biomass boiler is used to heat a building, which has a variable load. The amount of heat generated is directly proportional to outside air temperature. This capacity factor is actually two to three times better than the existing connected heating equipment. • Anticipated annual generation: The biomass boiler is estimated to use approximately 656,000,000 Btu per year, which is approximately 40 tons of wood pellets. • Anticipated barriers: The distance of this site from the boiler system manufacturers. During construction, this creates a longer lead time for the boiler to be manufactured and shipped to Delta Junction. The construction schedule will be closely monitored to make sure this does not cause any project delays. Access to wood fuel in winter. This will be addressed further in design. The request for proposal process used to select a wood fuel vendor would also address this. • Basic integration concept: The biomass boiler building would be constructed between the main office and the warehouse. The biomass boiler would simply be one boiler serving two heating systems. A primary — secondary pumping system would be utilized to allow the biomass boiler to be the primary boiler and allow the fuel oil boilers to operate to AEA10-015 Grant Application Page 11 of 17 10/7/2009 Renewable Energy Fund Grant Application Round 3 supplement the biomass boiler in peak heating conditions and/or at other times biomass boiler is not functioning. Delivery methods: The biomass boiler building would be constructed similar to any capital project. The building and systems would be designed by licensed professionals who will generate construction documents to be bid out to contractors. The successful contractor would then mobilize and construct the building. 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 Division of Forestry is the sole owner of the complex. 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 None required. 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 • Threatened or Endangered species — Does not apply • Habitat issues — Does not apply • Wetlands and other protected areas — Does not apply • Archaeological and historical resources — Does not apply • Land development constraints — Does not apply • Telecommunications interference — Does not apply • Aviation considerations — less emissions to affect the local aviation concerns • Visual, aesthetics impacts — Does not apply • Identify and discuss other potential barriers — None AEA10-015 Grant Application Page 12 of 17 10/7/2009 ,' ALASKA Renewable Energy Fund 4NED ENERGY AUTHORITY Grant Application Round 3 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 See Appendix B, Estimate of Probable Cost of Design and Construction. 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.) $1,000/annual operating and maintenance costs., $500/annual additional electrical cost. See Appendix C, Economic Spreadsheet 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 No Applicable. 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. See Attached Application Cost Worksheet. AEA10-015 Grant Application Page 13 of 17 10/7/2009 ALASKA Renewable Energy Fund /t ENEROYAUTHORITY Grant Application Round 3 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 The annual fuel displaced will be 6,300 gallons of heating fuel for a total saving of $8,300.00 per year. This project will save $551,442 over 30 years. This project will become a model for other Forestry offices. Biofuel provides an equivalent heat for 1/3 the price. Our dependence on fossil fuel is reduced which may have long tern benefits as the production on the North slope shrinks. Fluctuating oil prices has caused a near budgetary crisis with the cost increases of heating fuel with no budgetary supplement. Fuel cost increases have resulted in program reduction. Biof iel will fluctuate but not to the degree that fuel oil has in the last 2 years. The State of Alaska should be on the forefront of innovative technology. Biofuel and Forestry seem like a good match for a project that may change heating systems in the future. 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 Wood Pellets as a Fuel: The wood pellet industry is beginning to provide a consistent supply of pellets to the residential pellet stove owners. Commercial delivery has not been developed. This proposal will provide a pellet manufacturer a new market for bulk delivery. It will also ensure a guaranteed contract for pellet delivery. Additional capital investment may occur with the new market opportunity. Maintenance of the Pellet Boiler: There is limited expertise in the local area for maintenance of AEA10-015 Grant Application Page 14 of 17 10/7/2009 Renewable Energy Fund Grant Application Round 3 the pellet fired boiler. Our Forestry maintenance staff person will need to be trained on the operation and maintenance. Mechanical and electrical system issues can be serviced by local contractors or our maintenance staff. Operational Issues: Initially, the pellet feed system will need to operate with a hopper with bagged pellets being delivered on a pallet. As bulk delivery gets developed, the system should be retrofitted to a silo system. A 10-20 ton silo would minimize the need to deliver during extremely cold temperatures. Both systems could be funded under the grant proposal or funded through other State funds. Operational Cost: The operating cost will be higher initially because of the cost of running 2 systems and shut downs. As experience is gained in the operation the saving will begin to manifest. It is anticipated to cost an additional $2,000.00 for the first 2 years as the bugs get worked out. Reporting: Since this is a model project for other Forestry offices, tracking cost savings and issues will be important to determining the feasibility of other projects in the State. The facility will draw an interest level from other small commercial businesses looking for an alternative to fossil fuel. Telling the story with factual information will be important to the growth of the wood heating industry. 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. Accomplishment to Date: I have completed research on pellet heating system manufactures to determine if the industry makes a small commercial boiler. They do. I have consulted with wood energy experts on the heating load and how best to distribute the heat being produced. I have researched system failures and tried to solve the problem in the design. I have encouraged the forest products industry to diversify with wood chips and pellets as a means of utilizing wood waist and small logs. They have. The State purchasing regulations will determine the pace at which we will proceed. The Division of Forestry has been a strong supporter of biofuels projects. They will aid in making this project work! AEA10-015 Grant Application Page 15 of 17 10/7/2009 /� ENERGY RGV AWHORITY Renewable Energy Fund Grant Application Round 3 SECTION 8— LOCAL SUPORT Discuss what local support or possible opposition there may be regarding your project. Include letters of support from the community that would benefit from this project. The Division of Forestry is a strong supporter of biofuels projects. The Delta School project has taken a significant amount of time and energy to bring this project to the construction phase. The Tok School project has had a similar effort by the Division of Forestry. There is no opposition to this project. 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 — GrantBudgeMdoc Provide a narrative summary regarding funding sources and your financial commitment to the project. The Division of Forestry is requesting $932,250 from the Alaska Energy Authority. We are requesting 100% of the funds needed for this project. In -kind services from the Division of Forestry will include project supervision, unskilled labor as needed, budget and technical support, and grant administration. See attached Project Cost Summary, Appendix A. AEA10-015 Grant Application Page 16 of 17 10/7/2009 �� ALASM Renewable Energy Fund Grant Application Round 3 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 Al Edgren Signature Title Delta Area Forester Date 11/5/09 AEA10-015 Grant Application Page 17 of 17 10/7/2009 I�rALASKA Renewable Energy Fund Round 3 ENERGY AUTHORITY Project Cost/Benefit Worksheet Please note that some fields might not be applicable for all technologies or all project phases. The level of information detail varies according to phase requirements. 1. Renewable Energy Source The Applicant should demonstrate that the renewable energy resource is available on a sustainable basis. Annual average resource availability. 5,000 acres of commercial forest land Unit depends on project type (e.g. windspeed, hydropower output, biomasss fuel) 2. Existing Energy Generation and Usage a) Basic configuration (if system is part of the Railbelt' grid, leave this section blank) i. Number of generators/boilers/other ii. Rated capacity of generators/boilers/other iii. Generator/boilers/other type iv. Age of generators/boilers/other v. Efficiency of generators/boilers/other b) Annual O&M cost (if system is part of the Railbelt grid, leave this section blank) i. Annual O&M cost for labor ii. Annual O&M cost for non -labor c) Annual electricity production and fuel usage (fill in as applicable) (if system is part of the Railbelt grid, leave this section blank) i. Electricity [kWh] ii. Fuel usage Diesel [gal] Other iii. Peak Load iv. Average Load v. Minimum Load vi. Efficiency vii. Future trends d) Annual heating fuel usage (fill in as applicable) i. Diesel [gal or MMBtu] Currently 2500 gallons anticipated 7,000 gallons ii. Electricity [kWh] 30,000 kWh — Main Office, 14,400 kWh Warehouse iii. Propane [gal or MMBtu] iv. Coal [tons or MMBtu] v. Wood [cords, green tons, dry tons] vi. Other 1 The Railbelt grid connects all customers of Chugach Electric Association, Homer Electric Association, Golden Valley Electric Association, the City of Seward Electric Department, Matanuska Electric Association and Anchorage Municipal light and Power. RFA AEA10-015 Application Cost Worksheet Page 1 10-7-09 I` ALASKA Renewable Energy Fund Round 3 i; ENERGY AUTHORITY Project Cost/Benefit Worksheet 3. Proposed System Design Capacity and Fuel Usage (Include any projections for continued use of non-renewable fuels) a) Proposed renewable capacity ??????? (Wind, Hydro, Biomass, other) [kWh or MMBtu/hr] b) Proposed Annual electricity or heat production (fill in as applicable) i. Electricity [kWh] ii. Heat [MMBtu] c) Proposed Annual fuel Usage (fill in as applicable) I. Propane [gal or MMBtu] ii. Coal [tons or MMBtu] iii. Wood [cords, green tons, dry tons] iv. Other a) Total capital cost of new system $932,250.00 b) Development cost c) Annual O&M cost of new system $1,000 d) Annual fuel cost $1,050 5. Project Benefits a) Amount of fuel displaced for i. Electricity None ii. Heat 6,800 gallons (See Appendix F, Heating Fuel Usage) iii. Transportation none b) Price of displaced fuel c) Other economic benefits d) Amount of Alaska public benefits 6. Power Purchase/Sales Price $3.00/gal - Demonstration project for community $551,442 over 30 years a) Price for power purchase/sale N/A 7. Project Analysis a) Basic Economic Analysis Project benefit/cost ratio Huge Payback Close RFA AEA10-015 Application Cost Worksheet Page 2 10-7-09 ) \ \ k ) [co LO \ M } N \ N \ \ \ \ \ \ \ _ _ _ _ _ _ !d&$A Jf ; )f _ _ to _ _ I _ _ _ _ _ 2 LL # 4 (,1 \ \ \ \ \ \ \ \ \ \ _ _ _ _ to _ . JE k $ 2 {a o ( ) « } / e c a = a Co) / {) § ) [ ) ` \ / § ) { \ 2 {/) co & D0 ) ; 7 E \ ) - E ) ALL ® CO I - ;\ E k, _ A §. ^ - § 7 \� ® ( ] I £ - a ® B: � \ g ) E 7 ( ) , , , , , _ 2 / ) \ ) \ \ / & § co 3 ƒ rn 0 0 u w C N C C C U j O � O t � N d E m 3 m E p v o(Ewc �-p C_d D m 0)Co O -Ow O cc wN co ao ) ma) o o crn nc sE �i o ai c Ofcy� y ° N C 'O O C j a C fNn O' O N O E m E a) t0 c o u a E cncpi U) g U w a m N a �' o m E E Q E m 00 h— 0)o E co U m `a) U U CL m U W 0 m y it � ca � U)i LL U O C-i c+i v ui cm n co `o o m Y _ C a3 C 0 O O C a) 'w al6 O a cn ca N U C cOI 'c N 'a aa) O- O o E CD `° a) g aa)i a aai c N w aa) E Mn a`) ca d m m E c p (a is a n o N ns a) > c 0 3 N c Y a) o o E 0 o a) n r m (0 U C O. N C C a) O_ N N N m U C C coO N > E N O N N L U a) 'w c ca c aa) (D N as 3 N Y > aa)i a) a) E a O O a) O •d .O N N N C (n N c0 N C C1 d� N `p) C m a N "O d o LL. (a d 3 a LL W 0tr— Z m LL n (V (M d' l0 CO f-� W m L O N U �)cca c N CN _0 > >, U =3 C(D U T aNO cn CC N U U aca N a) c O fa mNC T N O) la E cm N N N N M 3m C O>. E CN -Fo R O C O N a3 c m c N U c O" -C "O y U 0 N Z 0) a) N N 7 m N ca Co C O C LL .N-U co V O C N "O ..0. .N. U) O. N O- O N E aoi Z. m E >. w Y U U m e coi m E N 0) a7 C C C U d m o m a m O m E Q U ca c U o LL N M (O (O r 00 0) y c p 'N a)N n) c ca T -le O a) N c E m ca C ca _c m c E -p + as C � l0 a3 w ca O) m U C E ca � �E 0 cC 6O a) O N:O n C a) p "O a) U pU a C 0.0 d @ 7 'fn 7 C O p y a) N E a)p >, _p 2 E o >, a E G' o c N m c> m a cn a) E c 0 a0 �m a`m Um in LL2 c\i ri ui v c(i co ALASKA ENERGY AUTHORITY �� Renewable Energy Fund Round 3 f Grant Budget Instructions NOTICE TO GRANTEES Reimbursement to a Grantee under this program is on a cost reimbursable basis. In accordance with the terms of the grant a Grantee is required to submit certified requests for reimbursements that document commitments and expenditures and demonstrate meeting milestones identified in the grant. A proposed reimbursement schedule tied to completion of milestones must be identified in the applicant's proposal. The Alaska Energy Authority ("AEA" or "Authority") will not approve a reimbursement schedule that does not reflect costs or commitments tied to the accomplishment of milestones identified in the grant. The final reimbursement schedule is subject to negotiation and will be incorporated into the grant agreement. The Authority may authorize a percentage of grant funds, up to 20% depending on the type of grant, as an advance reimbursement at the start up of the grant. The Authority may also withhold up to 20% of the total grant subject to completion of the project and submission of final reports and other documentation that may be required by the grant. A Grantee is required to account for and document all expenditures of grant and matching funds including documentation of expenditures on any advanced reimbursement. All requests for reimbursement are subject to audit by the Authority. The Grantee is also required to comply with 2.AAC.45.010, the State Single Audit regulations. 1. Budget Form Information concerning the proposed grant budget needs to be provided on the Grant Budget Form. The Grantee must tie their budget request to the proposed milestones they propose in their application. Examples of milestones for each project phase are included with the budget form and in Section 2 of the RFA. For the purposes of determining potential cash -flow and a reimbursement schedule Grantees should use the form to identify the proposed date that the milestone would be met, the anticipated amount of grant funds to be expended to meet that milestone, and the amount and type of matching resources they intend to apply to that milestone. The bottom part of the form includes the allowable Budget Categories and is intended to be a summary of types of cost for each phase of the grant. 2. Allowable Costs Allowable costs for a grant include all reasonable and ordinary costs for direct labor and benefits, travel, equipment, supplies, contractual services, construction services, and other direct costs identified that are necessary for and incurred as a direct result of the project. RFA AEA10-015 Grant Budget Instructions Page 1 of 5 10-7-09 AS ALASKA Grant Budget Instructions Renewable Energy Fund Round 3 A cost is reasonable and ordinary if, in its nature or amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the costs. Allowable costs under this grant include all reasonable and ordinary costs for direct labor & benefits, travel, equipment, supplies, contractual services, construction services, and other direct costs identified and approved in the Project budget that are necessary for and incurred as a direct result of the Project and are consistent with the requirements of the grant agreement. A cost is reasonable and ordinary if, in its nature and amount, it does not exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the costs. Allowable costs are only those costs that are directly related to activities authorized by the Grant Agreement and necessary for the Project. The categories of costs and additional limits or restrictions are listed below: a. Direct Labor & Benefits Include salaries, wages, and employee benefits of the Grantee's employees for that portion of those costs attributable to the time actually devoted by each employee to, and necessary for the Project. Direct labor costs do not include bonuses, stock options, other payments above base compensation and employee benefits, severance payments or other termination allowances paid to the Grantee's employees. b. Travel, Meals, or Per Diem Include reasonable travel expenses necessary for the Project. These include necessary transportation and meal expenses or per diem of Grantee employees for which expenses the employees are reimbursed under the Grantee's standard written operating practice for travel and per diem or the current State of Alaska Administrative Manual for employee travel. c. Equipment Include costs of acquiring, transporting, leasing, installing, operating, and maintaining equipment necessary for the Project, including sales and use taxes. Equipment owned by the Grantee is to be charged to the project at the monthly rates contained in the Data Quest Blue Book. The rates for equipment owned by the Grantee for less than a month's duration are to be computed on an hourly charge determined by dividing the monthly rate by 176. Equipment rented by the Grantee can be charged to the grant at actual invoiced charge rates, subject to a maximum amount equal to the hourly rates contained in the Data Quest Blue Book. The Authority's Project Manager must approve all equipment charge rates to be used by the Grantee. The Data Quest Blue Book is available to the AEA Project Managers and grantees may contact them for current allowable rates. Subject to prior approval of the Authority's Project Manager, costs or expenses necessary to repair or replace equipment damage or losses incurred in performance of work under the grant may be allowed. However, damage or losses that result from the Grantee's RFA AEA10-015 Grant Budget Instructions Page 2 of 5 10-7-09 r ALASKA Grant Budget Instructions Renewable Energy Fund Round 3 employees, officer's, or contractor's gross negligence, willful misconduct, or criminal conduct will not be allowed. d. Materials and Supplies Include costs of material, office expenses, communications, computers, and supplies purchased or leased by the Grantee necessary for the Project. e. Contractual services Include the Grantee's cost of contract services necessary for the Project. Services may include costs of contract feasibility studies, project management services, engineering and design, environmental studies, field studies, and surveys for the project as well as costs incurred to comply with ecological, environmental, and health and safety laws. f. Construction Services For construction projects this includes the Grantee's cost for construction contracts, labor, equipment, materials, insurance, bonding, and transportation necessary for the Project. Work performed by the Grantee's employees during construction may be budgeted under direct labor and benefits. Contracted project management or engineering may be budgeted under contractual services and major equipment purchases made by the Grantee may be budgeted under equipment. g. Other Direct Costs In addition to the above the following expenses necessary for the Project may be allowed. • Net insurance premiums paid for insurance required for the grant Project; • Costs of permits and licenses for the grant Project; • Non -litigation legal costs for the Project directly relating to the activities; in this paragraph, "non -litigation legal costs" includes expenses for the Grantee's legal staff and outside legal counsel performing non -litigation legal services; • Office lease/rental payments; • Other direct costs for the Project directly relating to the activities and identified in the grant documents; and/or • Land or other real property or reasonable and ordinary costs related to interests in land including easements, right-of-ways, or other defined interests. 3. Specific Expenditures not allowed Ineligible expenditures include costs for overhead, lobbying, entertainment , alcohol, litigation, payments for civil or criminal restitution, judgments, interest on judgments, penalties, fines, costs not necessary for and directly related to the grant Project, or any costs incurred before the beginning date of the grant as indicated on the signature page. RFA AEA10-015 Grant Budget Instructions Page 3 of 5 30-7-09 ALASKA Grant Budget Instructions E ENERGY AUTHORITY Renewable Energy Fund Round 3 Overhead costs described in this section include: • salaries, wages, applicable employee benefits, and business -related expenses of the Grantee's employees performing functions not directly related to the grant Project; • office and other expenses not directly related to the grant Project; and • costs and expenses of administration, accounting, human resources, training, property and income taxes, entertainment, self-insurance, and warehousing. 4. Match and Cost Sharing If the Applicant is providing a match, it is should be detailed either as a specific dollar amount or as a percentage of the total project budget. The type and amount of matching contributions should be discussed in the application under section two. Cost sharing or matching is that portion of the Project costs not borne by the Authority. The Authority will accept all contributions, including cash and in -kind, as part of the Applicants' cost sharing or matching when such contributions meet the following criteria: • Are provided for in the Project budget; • Are verifiable from the Applicant's records; • Third party costing sharing contributions are verifiable (with a letter of intent or similar document); • Are not included as contributions for another state or federally assisted project or program (i.e., the same funds cannot be counted as match for more than one program); • Are necessary and reasonable for proper and efficient accomplishment of the Project or program objectives; • Are allowable costs; • Are not paid by the State or federal government under another award, except for authorized by the State or federal statute to be used for cost sharing or matching; • Must be incurred within the grant eligible time period. Any match proposed with the application will be required in the Grant award and the Grantee will be required to document the use of the proposed matching funds or in -kind contributions with their request for reimbursement. 5. Valuing In -Kind Support as Match If the Applicant chooses to use in -kind support as some; or, its entire match, the values of those contributions will be reviewed by the Authority at the time the budget is approved. The values will be determined as follows: • The value of real property will be the current fair market value as determined by an independent third party or a valuation that is mutually agreed to by the Authority and the Applicant and approved in the grant budget. RFA AEA10-015 Grant Budget Instructions Page 4 of 5 10-7-09 Mw ALASKA Grant Budget Instructions t-ENERGY AUTHMTY Renewable Energy Fund Round 3 • The value assessed to Applicant equipment or supplies will not exceed the approved equipment rates or fair market value of the supplies at the time the grant is approved or amended. • Equipment usage will be valued based on approved usage rates that are determined in accordance with the item 'c.' above. Rates paid will not exceed the fair market value of the equipment if purchased. • Rates for donated personal services will be based on rates paid for similar work and skill level in the recipient's organization. If the required skills are not found in the recipient organization, rates will be based on rates paid for similar work in the labor market. Fringe benefits that are reasonable, allowable, and allocable may be included in the valuation. • Transportation and lodging provided by the Applicant for non -local labor will not exceed the commercial rates that may be available within the community or region. 6. Grant Disbursements Applicants are reminded that they must request disbursement of grant funds in the form and format required by the Authority with appropriate back-up documentation and certifications. This format will be provided by the Authority. The back-up documentation must demonstrate the total costs incurred are allowable, and reflect the amount being billed. Documentation must include: • A summary of direct labor costs supported by timesheets or other valid time record to document proof of payment. • Travel and per diem reimbursement documentation. • Contractor or vendor payment requests. • Invoices. Payment of grant funds will be subject to the Applicant complying with its matching contribution requirements of the proposed grant. Payment of grant funds will be made by AEA to the Grantee within 30 days of receipt of a properly completed, supported, and certified Reimbursement Request. RFA AEA10-015 Grant Budget Instructions Page 5 of 5 10-7-09