HomeMy WebLinkAboutMcGrath Harvest Application FinalMcGrath Wood Harvest Program
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 1 of 20 9/2/2008
Application Forms and Instructions
The following forms and instructions are provided for 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.html
The following application forms are required to be submitted for a grant recommendation:
Grant Application
Form
GrantApp.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
Costworksheet.doc Summary of Cost information that should be addressed
by applicants in preparing their application.
Grant Budget
Form
GrantBudget.xls A detailed grant budget that includes a breakdown of
costs by task and a summary of funds available and
requested to complete the work for which funds are being
requested.
Grant Budget
Form Instructions
GrantBudgetInstr.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 a plan
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.
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 2 of 20 9/3/2008
SECTION 1 – APPLICANT INFORMATION
Name (Name of utility, IPP, or government entity submitting proposal)
McGrath Power and Light
Type of Entity:
Utility
Mailing Address
McGrath Light & Power
P.O. Box 52
McGrath Alaska 99627
Physical Address
Telephone
907-524-3009
Fax
907-524-3062
Email
Ernie Baumgartner
<ernie@raventechservices.com>
1.1 APPLICANT POINT OF CONTACT
Name
William A. Wall, PhD
Title
Project Manager
Mailing Address
PO Box 988 Seeley Lake, MT 59868
Telephone
406-210-9984
Fax
Email
Williamwall11@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)
X An electric utility holding a certificate of public convenience and necessity under AS
42.05, or
X An independent power producer, or
A local government, or
A governmental entity (which includes tribal councils and housing authorities);
Yes
1.2.2. Attached to this application is formal approval and endorsement for its project by
its board of directors, executive management, or other governing authority. If 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.)
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Grant Application
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SECTION 2 – PROJECT SUMMARY
Provide a brief 1-2 page overview of your project.
2.1 PROJECT TYPE
Describe the type of project you are proposing, (Reconnaissance; Resource Assessment/
Feasibility Analysis/Conceptual Design; Final Design and Permitting; and/or Construction) as
well as the kind of renewable energy you intend to use. Refer to Section 1.5 of RFA.
Develop a Wood Harvest, conversion, storage and delivery system in support of a district
heating system:
Final Business Plan, Final Design, and Construction of Wood Harvest, Conversion and Delivery
System and wood yard.
2.2 PROJECT DESCRIPTION
Provide a one paragraph description of your project. At a minimum include the project location,
communities to be served, and who will be involved in the grant project.
This application specifically develops the capacity to harvest and deliver 2000+ tons of wood
annually to the Village of McGrath, Alaska and to process the wood into usable form and store
the wood for later use. The biomass project will link and integrate with the heat recovery project
in future iterations of design and cost analysis in order to capture the synergies from both to
create an optimum design. A side by side analysis of both chip boilers (Köb) and stick fired
boilers (Garn) with estimated cost analysis and net simple payback for individual buildings was
conducted in the feasibility assessment (calculations attached). This application supports a
district wood heating project already in development in a previous application. The funding will
be used to purchase harvest and processing equipment and develop a wood processing,
storage and delivery system and storage yard. Matching funding will be used for development
of a forest harvest plan, training and technical support. Since the harvest system must integrate
to the boiler system installed, final decision on specific harvest equipment and design of wood
yard will be determined in coordination with the development of the final design of the boiler
systems. An initial list of the harvest equipment, with costs, is attached with a diagnostic of
harvest and delivery costs.
Local partners include the School District, City of McGrath, Village Safe Water, MTNT
Corporation, and McGrath Power and Light (applicant). A wood energy supply analysis, and a
Level 2 Feasibility (in writing phase) and conceptual design analysis has been completed for a
district heating loop for downtown McGrath to include the School, Gym, AC Store, School
District Office, Captain Snow building, Water Plant, Post Office, New clinic (to be built). This
Level 2 study has not been coordinated with an analysis for a heat recovery project being
proposed by MP&L and AE&E. This project is planned to be conducted in concert with the
Village Safe Water project to replace the entire water main and sewage system in McGrath in
2009-2011. The integration of these two projects has the potential to produce significant cost
savings for installation of piping, the most expensive portion of the project. Both projects have
been developed through technical support from Alaska Village Initiatives, and McGrath Power
and Light and e-Four Engineering. Principle personnel to date include Bill Wall, PhD, Peter
Olsen, Ernie Baumgartner, and Greg Koontz, ME, George Wilson, ME of Village Safe Water.
Linkages are planned with Steven J. Stassel, P.E., and president AE&E.
2.3 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. Include a project cost summary that includes an estimated total cost
through construction.
This application requests $822,950 of state funds for a project totaling $1,590,092 of which
$492,142 is anticipated federal funding and $275,000 coming from local cash and in-kind match.
State funds will be used to purchase and deliver harvest equipment, project management, travel
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and administration costs. Local and Federal funding will support forest management planning,
technical support, training, business plan development, final system design, and wood yard and
storage construction. The business plan will be developed in a collaborative interactive process
with MTNT staff and Board as well as with MP&L staff and Board. Alaska Village Initiatives
expects to receive a DOE earmark in the amount of $492,000, which will be used to support this
project. These funds will be used for developing a forest harvest plan, training, support for a
forest technician, and a regional forest management seminar based in McGrath. Details will
be determined with the final harvest business plan and a final list of equipment to be purchased.
MTNT Limited, the local native corporation, will donate the land for the wood yard and MP&L will
construct the wood yard. Funds from the state will be used to purchase harvest and wood
conversion equipment for the harvest group as well as technical support and project
management.
Purchase of harvest equipment and development of the following key elements for management
of wood energy procurement will be developed under this project.
1. Create 5 year harvest and regeneration plan
2. Develop and install wood storage/wood yard in the village
3. Equipment storage
4. Training and technical support
a. Forest Technician training
b. Harvest training and technical support
c. Development of a harvest methods manual
d. 2 years of technical support to make sure chip harvest system is well established
and operating efficiently.
2.4 PROJECT BENEFIT
Briefly discuss the financial benefits that will result from this project, including an estimate of economic
benefits (such as reduced fuel costs) and a description of other benefits to the Alaskan public.
A wood energy project in McGrath will affect energy costs at two scales in the village. The first
are local households and the second, which is the key economic driver, are major commercial
buildings. A reliable source of firewood at a cost of approximately $250 per cord, split and
delivered to households, will help displace fuel oil in the village and reduce heating costs to
households. A full cord of seasoned spruce burned at 80% efficiency will displace
approximately 100 gallons of heating fuel at $7.00/gallon. This benefit is not reflected in the
savings and cost analysis of the project in section 2.5 as it would be only an approximation.
The key to this household benefit is that wood delivery is reliable and split ready for use. A
household that burns 500 gallons of fuel will spend $3500 on fuel. If that is displaced by 80%
with wood, then there is a savings of $2800 per household. Reliable sources of wood in
combination with house heating education (a planned village workshop) will encourage
investment in cleaner wood burning appliances, thus yielding an environmental benefit as well.
A feasibility and side by side comparison of chip fired boilers and stick fired boilers in progress
is supported by McGrath Power and Light (see attachment tables) Expected optimum initial
installation would be a district heating loop in downtown in conjunction with the replacement of
the water mains, and in conjunction with a waste heat project to capture the heat form the power
plant generators. The following are the potential savings:
Target Savings: displace 123,550 gallons with 2 boilers @ one plant @ $7.00/gallon =
$864,850 annual displacement of fuel oil importation.
Wood cost: 2000 tons @ $175/ ton @ 40% moisture = $350,000 for wood
Total net savings: $514,850 per year or $7,722,750 net savings over 15 year life of
project.
A wood energy program can also reduce wildfire risk through forest thinning, enhance wildlife
habitat and, most importantly, create local jobs and economy through import substitution.
Schools are one of the most expensive buildings to heat in the village and a client that will help
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with economies of scale for supporting development of a wood energy business model.
Reducing energy costs for schools and clinic reduces public support costs for education and
health care. Wood energy business fits with subsistence lifestyles and creates a greater level of
self sufficiency within the village. The process of developing and creating business,
management and planning capacity enhances opportunities for increasing long term
opportunities for youth to stay in the village with well paying resource based jobs. An integrated
wood energy system is one of the best energy and community economic develop projects
available to villages with good wood resources and high cost of heating fuels.
Equipment selection will be based on the types of lands and forest to be harvested, the
transportation system identified, and the type of boilers installed. A fully integrated process from
the forest to boiler operation is critical for efficiency and sustainable success of the installation.
2.5 PROJECT COST AND BENEFIT SUMARY
Include a summary of your project’s total costs and benefits below.
2.5.1 Total Project Cost
(Including estimates through construction.)
$1,590,092
2.5.2 Grant Funds Requested in this application. $822,950
2.5.3 Other Funds to be provided (Project match) $767,142
2.5.4 Total Grant Costs (sum of 2.5.2 and 2.5.3) $1,590,092
2.5.5 Estimated Benefit (Savings) $864,850 gross savings
2.5.6 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.)
$12,972,750 15 year gross
saving
Target Savings: displace 123,550 gallons with 2 boilers @ one plant @ $7.00/gallon =
$864,850 annual displacement of fuel oil importation and $12,972,750 over life of project
Wood cost: 2000 tons @ $175/ ton @ 40% moisture = $350,000 for wood
Total net savings: $514,850 per year or $7,722,750 net savings over 15 year life of project
Community public benefit based on multiplier of new infusion of funds into the community is just
slightly over 1.0 in the potential creation of new jobs, primarily because of the many resources
which are imported into rural Alaskan Villages. A wood energy utility is a new sustainable
business that is created out of local resources and acts as an energy import substitution. The
largest leakage of funds out of the village is for energy costs paid to outside vendors. The
specific multiplier on creation of direct jobs has not been calculated. The wood energy utility will
create 4-6 1/2 jobs and one full time at a rate of $15-25 per hour.
Public benefit was noted in two ways. First direct fuel cost savings to public commercial
buildings such as the school and clinic over a 15 year life of the project based on current fuel
prices and a stable cost of wood. Second, these savings are paid locally as salaries and profit
to the local wood energy utility, which then pays dividends to local share holders.
The importance of a wood energy utility and the jobs that it creates is demonstrated by the
below quotes form a report on rural community economic benefit multipliers. In the case of
commercial or public buildings such as the school, money now being spent outside the
community for energy is being redirected into the community for wood energy and local jobs.
Report Quotes:
“A community can add new wage paying jobs in three ways:
· Goods or services produced locally, sold to non-residents, bring money into the community to
pay wages
· Money from outside the region can directly pay the wages of local jobs
· Money already in the region can be re-spent there, supporting local jobs”
“The economic multiplier in these small places has a value little more than 1.0. For a larger
market like Anchorage, the multiplier would be in the range from 1.3 to 1.6. An important
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consequence of a small multiplier is that the only way to create jobs in a small community is to
bring more money into the economy from outside the community. Almost none of the jobs in
areas with low multipliers result from re-circulation of purchasing power already within the
community.”
Quotes from an interim report produced by UAA at website:
http://www.iser.uaa.alaska.edu/publications/client/afnjobs/ecmu
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.
Ernie Baumgartner, ML&P General Manager, will be the Grant Manager. He will be the single
point of contact with AEA and will execute all grants, contractual and administrative
responsibilities. The project manager will be Bill Wall, PhD. Dr. Wall will work cooperatively
with Ernie Baumgartner, Donne Fleagle, CEO of MTNT, and Natalie Baumgartner, City
Manager as the primary local liaisons to manage the project.
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 Table of Milestones, Decisions and Activities is attached. The project will be initiated
immediately after notification of a positive response to this application. The intent is to complete
this project over a two year period (2009-2010) in concert with the installation of a new water
system. Harvest equipment will be ordered and delivered in 2009 if this project is funded in time
for this to occur. Wood yard construction will be initiated in summer of 2009.
3.3 Project Milestones
Define key tasks and decision points in your project and a schedule for achieving them.
A Table of Milestones, Decisions and Activities is attached.
Decisions to be made:
Initial analysis on harvest equipment has been made, a final list must be decided upon
based on boiler configuration and amount of material needed on annual basis. This will
be done in time for ordering equipment for delivery in summer of 2009.
General location for wood yard is known, but specific location and design are still
needed.
Tasks to be completed in Phase 3:
Finalize project implementation plan – Dynamic planning. As soon as grant is approved
a facilitated planning process will be initiated to help keep the project on track.
Complete design for wood yard. This will be done in conjunction with design of the
boiler system; it is anticipated that the wood yard will be associated with the boiler
location.
Complete design for harvest equipment integrated with boiler types. A final configuration
of harvest equipment will be developed prior to moving into wood yard construction in
phase IV and purchase of equipment
A final harvest Business Plan will be developed in phase 3
Land ownership agreements will be set. Completion may not be until Phase IV.
Environmental Analyses will be completed
Wood Purchase & Sales Agreement will be agreed to between MP&L and MTNT.
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Development of Forest Management and Harvest plan. This will be an ongoing process
throughout the entire project.
Tasks to be completed in Phase 4:
Permission to proceed to Construction will be sought by end of month four.
Decision –Purchase and delivery of equipment. This may be highly variable depending
on timing or permission to purchase and ability to get equipment to McGrath.
Implement Wood Energy Utility Business Structure. This business structure will be
determined in the business planning process and will be finalized in phase 4 by the end
of month 6.
Wood Yard construction and storage will be completed by the end of the project
depending on timing relative to summer construction season.
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.
Key personnel: (resumes attached)
Donne Fleagle –CEO of MTNT Corporation has significant business management experience
and has served on several non-profit boards. The business management capacity of MTNT is
high.
Ernie Baumgartner – Manager of McGrath Power and Light and Principle in Raven Tech
Services which operates eight power plants in the region. Ernie has experience in energy
related management and has long supported the development of alternative energy sources.
Bill Wall, PhD: Contractor and Project Manager coauthored the Forest Stewardship Plan for
MTNT and has worked to develop a sustainable wood energy model for interior villages. He
has coordinated a Rural Business Enterprise Grant to develop a business model and for a local
harvest company and transportation plan for delivery of wood into McGrath both summer and
winter. He has coordinated the development of a Level 2 feasibility study to determine optimum
boiler installation in Fort Yukon to maximize fuel oil displacement for heat.
Peter Olsen: Contractor and Forester coauthored the Forest Stewardship Plan for MTNT and
has developed a cost model for wood harvest. Peter will support the Forest Harvesting and
Management portion of the program.
Greg Koontz, ME: Engineer contractor conducting the feasibility analysis and side by side
comparison of stick and chip fired boilers. Has experience in biomass operations and energy
savings analysis. Greg will develop the optimal schematic design for the boiler installations.
Steven J. Stassel, P.E., AE&E president, engineer putting in heat recovery from power plant.
Coordination will occur between the engineers to optimize the system.
Doug Johnson: Professional Growth Systems will support the business develop, business
plan and board/employee training, dynamic planning process to increase business capacity for
MTNT and MPL boards and employees.
The McGrath City Council has passed a resolution in favor of the wood energy program and has
been kept up to date on progress of the program development. A city wide meeting was held at
the initiation of project development and was well received by the entire community. Meetings
with the tribe have met with strong support. Alaska Village Initiatives helped initiate the process
with funding to support the initial model. AVI expects a DOE earmark in 2009 which will be
used to support this project. Funding has come through AVI, State and Private Forestry and
Rural Development to support development of the project to date.
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3.5 Project Communications
Discuss how you plan to monitor the project and keep the Authority informed of the status.
Project communications will focus on three areas:
Support team and local implementation partners
McGrath Community
Funding Partners
A detailed implementation matrix of activities, responsibilities and due dates will be developed
using a dynamic planning process once full funding is secured. This will be developed as part
of a planned training and planning exercise with the MTNT and MP&L Boards. The planning
process will be integrated with the Village Safe Water schedule for replacing water mains in
Downtown. The matrix will be kept current by the project manager and shared monthly with key
members of the team. The City Council will be updated on a regular basis. Another community
meeting will be scheduled in Spring of 2009 at the prior to implementation to discuss any final
issues with the community. The schedule matrix will be used as the basis to for a quarterly
report to inform all granting agencies of implementation progress and any key issues. Thus
AEA will receive a quarterly report and informal discussions and calls to the AEA project
manager.
3.6 Project Risk
Discuss potential problems and how you would address them.
There are two key types of risks associated in creating a sustainable wood energy project in
rural Alaska: Technical and Management Capacity / Fuel supply. This project specifically
addresses the supply component of a wood energy program. Harvest equipment, wood
conversion equipment, storage and handling are critical to a successful program. Forest
Management and harvest planning for a commercial harvest operation of this scale is also very
important for long term sustainability.
Technical: technical risks for a chip fired boiler installation are making sure that reliable chip
storage and feed systems are developed for the climatic conditions in rural Interior Alaska. This
is being developed with close attention in the design phase and will be designed for the worst
case scenario wet chips at -50F. The project will utilize European boiler manufacturers with
high quality and proven reliability. Systems will be designed so that oil fired systems serve as a
redundant back up.
Management Capacity: The most critical risk associated with installation of wood burning
appliances in rural Alaska is whether there is a sustainable and reliable supply of fuel being
delivered to the boiler. Simply stated, someone has to get the fuel to the village and into the
boiler. Chip fired systems create more complexity than stick fired boilers for harvest and
delivery of chips. Creating a system that displaces a significant amount of fuel also creates a
much greater need for harvest planning and actual harvesting in both summer and winter.
This key risk is the focus of this application - to set up a wood harvest and delivery company
owned by the MTNT Corporation for delivery of wood to MP&L. A team has been formed for
technical support and training. A harvest planning system will be created within the MTNT
Resource Department with additional training for current GIS capacity and a forestry technician
to layout harvest boundary areas. A five year harvest plan will be developed cooperatively to
develop local capacity. Employees will spend time outside of the village working on a
harvesting crew prior to full scale harvesting within the village. Board and business training will
be conducted for the MTNT and MP&L Boards and key employees. A final business plan will
be developed and used as a planning and training exercise as part of the implementation of the
harvest project as well as boiler operations. MP&L has experience in effectively and efficiently
operating the power plant as a utility which will have parallels in the operation of a wood energy
utility.
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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 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 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.
A forest stewardship plan is under development for MTNT Corporation, with expected completion
of fall 2008 by Peter Olsen and Bill Wall, PhD. An extensive forest resource review was
conducted. An average of 18 tons/acre of harvestable woody biomass is available on fully
stocked stands of mixed hardwoods and white spruce. It was determined that MTNT lands could
easily sustain a harvest of up to 15-20,000 tons of wood per year in chips and round fire wood.
This is 4-5 times the projected needs for the initial proposed project. A 5-year harvest plan will
be developed in association with this project. A recent fire left standing fire killed black spruce
on the road system just behind the town and will serve as an excellent starting point for
harvesting of dry chips. Moisture content of standing dead wood has been determined to be
15% in McGrath.
Wood is the only alternative source of energy readily available to displace fuel oil on a village
scale in McGrath. The positive attributes of a wood energy program are that the program is
both an alternative energy program and an economic development program. Harvest and
conversion of wood for energy is import substitution, and creates local jobs. The greatest local
economic benefit occurs when ownership and operations are kept local. A key limiting factor
which must be addressed with implementation is development of the local capacity business,
planning and forest management for harvesting operations and feeding boilers.
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.
Current forest harvest for wood is being done by local entrepreneurs with various types of
equipment. This project will create a commercial operation capable of supplying 2000-5000 tons
of wood annually in both round wood and chip form.
All commercial buildings in McGrath are heated with oil boilers at an efficiency of approximately
85%. Age varies significantly from new to about 15 years old. Each building has a dual
installation of Weil McClain or Burnham Boilers. Sizes by BTU/ hour output has been inventoried
and used for feasibility analysis. These are in the AEA sponsored reconnaissance study
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conducted by the Alaska Wood Energy Development Task Force as well as previous studies
conducted on coal and woody biomass. It is the intent of this project to continue to use the
current oil boilers as a back up system to wood boilers and as a turn down support if there is not
enough of a load for the chip boiler to operate. Large chip boilers turn down at a 3:1 ratio. The
feasibility study is exploring options of installing one large and one small boiler in the downtown
district heat system to displace a larger percentage of fuel oil during shoulder months.
4.2.2 Existing Energy Resources Used
Briefly discuss your understanding of the existing energy resources. Include a brief discussion of
any impact the project may have on existing energy infrastructure and resources.
The existing heat energy resources are locally harvested wood and fuel oil purchased at rack
prices for houses and bulk fuel for most of the major commercial buildings. At the household
level, a wood energy program as described in this project, will create a consistent supply of fire
wood for households and may positively affect the willingness of households to invest in efficient
and clean burning appliances. At the commercial scale, displacing approximately 150,000-
170,000 gallons of fuel will reduce, but not eliminate, the need for bulk deliveries of fuel into the
village. This reduction in the amount of fuel may increase the costs or at least reduce the
frequency of deliveries into the village. McGrath, last year, was not able to get a barge up river
due to low flows. Fuel prices skyrocketed when fuel had to be flown in. Prices went as high as
$9.00 per gallon. All current modeling is being done based on $7.00 per gallon.
4.2.3 Existing Energy Market
Discuss existing energy use and its market. Discuss impacts your project may have on energy
customers.
There are two levels of market for each village, households and commercial buildings. The
commercial buildings will drive the actual economies of scale for a feasible project to include a
harvesting group. Current prices are over $7.00 rack price. This project will reduce the cost of
heat and stabilize the continuous increases being experienced to date. This project is proposing
to create a consistent, inexpensive supply of fire wood for residences and to displace up to 90%
of the heating fuel used by 6-11 commercial buildings. In a typical year, at least 2 barges of fuel
are scheduled. However, last year no barges were able to access McGrath due to low water.
Based on recent trends, it is more difficult to count on barges annually.
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
• A description of renewable energy technology specific to project location
A Level 1 feasibility analysis has been conducted, but not available in report form as yet.
A tradeoff analysis between Garn 3200 boilers and various models of Köb chip fired
boilers has been conducted for individual buildings. A side by side analysis is attached.
The second analysis focuses on a District Heating system for Downtown. Paybacks are
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higher for the District heating system due to long piping runs. However, optimum
installation configuration is still being determined in the final boiler feasibility analysis. A
final schematic design with costs will be conducted prior to going to a full design for each
installation.
• Optimum installed capacity
Optimum capacity is based on two factors. Creating an economy of scale for profitable
sustainable wood harvest, which is approximately 2000-3000 tons or more annually; and
displacing a significant amount of fuel oil in commercial buildings. This will create an
economically viable program of harvest and sales of BTUs to buildings based on cost
savings for each building participating. Projected fuel to be displaced is up to
approximately 135,000 gallons using up to 2000-3000 tons of wood chips (actual amount
depends on moisture). Optimum installed capacity and configuration has yet to be
decided upon regarding the downtown district heat system. Initial conservative (meaning
high) costs estimates have been determined for each building for both a stand alone chip
system and stick boiler, as well as 6 scenarios for district system heating from 6-11
buildings. A final optimum design is yet to be decided upon. This proposal will address
the maximum District Heat system and two stand alone chip fired boilers one at the clinic
and one at the Voc Ed.
• Anticipated capacity factor
The anticipated capacity factor displacement of current fuel consumption for a centralized
plant ranges from 75% to 98% using a chip fired system. Final capacity will be
determined in final feasibility and decision processes in development of the final business
plan in conjunction with development of the water main replacement project.
• Anticipated annual generation
Total maximum annual generation is based on 210 days of heating and BTUs to displace
up to 135,000 gallons of heating fuel.
• Anticipated barriers
There are two key barriers:
o a reliable supply of good quality reasonable low moisture chips delivered to the
boiler installation;
o a reliable automated storage and feeding system to the boiler;
Both of these issues can be dealt with in the design. The first one, quality chips, is a design of
the harvest, delivery and wood yard storage of the chips. This is being dealt with in the wood
harvest system project. The second will be dealt with in the final boiler design process which will
include on site chip storage and delivery systems.
• Basic integration concept
Heat integration in each of the installations will be designed where the wood boiler is the
primary, and the existing oil boilers are back up. Project integration will occur with the
wasted heat recovery project.
• Delivery methods
Two methods of wood chipping will be employed. Chipping in the woods with delivery to
a storage facility in the village or chipping of round material brought into the village. A
front end loader will be used to scoop chips into a dump truck. The chips will then be
delivered to each of the boilers. Specifics of chip bin design are still in design phase.
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.
There are three issues regarding land ownership for the two concurrent projects:
biomass ownership;
wood yard;
Boiler installation sites.
Most important with this specific proposal are the biomass ownership and wood yard installation
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sites. MTNT Corporation owns the forest land base surrounding McGrath, where all of the
biomass will be harvested. As they will be a vertically integrated harvesting and wood energy
utility, they are in full support of the sustainable utilization of forest biomass from their lands.
Model contracts have been developed to support a legal basis for harvest. The second issue is
location of the wood yard for storage and conversion of biomass into usable forms. A primary
location has been identified on property owned by MTNT adjacent to the school and clinic. The
wood yard, wood storage and the primary district heating plant will be located there. MTNT has
agreed to donate the land to the project. The third ownership issue is the location of satellite
boilers if they should be installed. Although all potential commercial customers are interested in
participating, the initial feasibility study numbers have just been completed and discussions have
not occurred as yet. No significant issues are expected.
4.3.3 Permits
Provide the following information is 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
List of permits –
• Permits for wood boilers are not required by the State of Alaska for the expected boiler
size. However, once a final design and boiler size is determined, the state will be
consulted to determine what, if any, regulations apply. A clearance from the Alaska
State DEC Division of Air Quality will be sought as soon as a final design is developed
and prior to construction on boilers.
• Forest harvesting – The provisions of the Alaska State Forest Practices Act will be
incorporated into harvest and delivery of biomass plans. Development of stream
crossings, ice roads and summer and winter harvest operations may require special
permits. These permits are granted annually based on harvest and transportation plans.
The permitting request process will begin at least one month prior to seasonal operations
allowing for 30 days in which the plan can be adjusted based on State suggests.
• No major barriers are expected on permitting issues.
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
This section will address both the current application for boilers and the project for biomass
harvesting:
• Threatened and Endangered Species – no listed species in the project area
• Habitat issues – a Forest Stewardship Plan is in preparation for the MTNT ownership
and a five year forest management and harvest plan will be completed as part of the
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biomass harvesting project. Opportunities for enhancing moose habitat will be sought
and developed. No significant negative habitat impacts outside the natural range of
variation in this fire driven ecosystem are expected. Harvesting of over mature spruce
and hardwood stands are not expected to be a major portion of the target for biomass
production, but their use could have some small scale local impacts on Neotropical
migratory bird species. A major focus will be on use of recent fires and rehabilitation of
those fires into productive new stands for future biomass production.
• Wetlands and other protected areas – The Alaska State Forest Practices Act will be
followed in all harvest operations. Accessing or crossing wetlands will only be done
during winter when frozen. MTNT Limited Lands Department has an excellent GIS
system and has done mapping on key sensitive areas for each of the villages in MTNT
Limited region. These will be noted during forest harvest transportation planning.
Classified SPOT imagery is expected to be secured through DNR Forestry for use in
planning.
• Land Development Constraints – none are anticipated at this time.
• Telecommunications Interference – none are anticipated at this time.
• Aviation Considerations – none are anticipated at this time,
• Visual and aesthetic impacts – Harvesting of biomass can create unaesthetic impacts
on the forest. FPA required buffers keep harvesting from banks and visibility corridors.
Forest planning can deal effectively with these issues. The wood yard will be fenced and
located in the edge of the village with forested buffers retained around the yare. Wood
chip deliveries to sites such where noise maybe an issue will be scheduled such that
minimum impact will occur.
• Potential Project Barriers – The approach that the project developers have taken in the
development of the McGrath program to date is that this will be a model project of
converting a village to substantial wood use for heating. We have tried to anticipate
many of the barriers and provide ways to bridge these barriers. However, some
additional barriers will emerge as the project moves forward. Key barriers identified:
o Organization cooperation: developing cooperation among the various key
organizations that are now acting as partners was critical. The City Council has
hosted several meetings to discuss the project. An MOU among the Tribe, City,
MTNT Limited Corporation, the School District and other major organizations in
McGrath has been developed to support coordination of multiple projects. As a
final business plan is developed, even more specific roles will be spelled out and
agreed upon. This is an ongoing process with good cooperation thus far.
o For Profit Model Simultaneous Development of Supply and
Delivery/Demand Creating a local structure for a for-profit model for harvesting
and converting biomass and a wood energy utility was key to being confident that
both the biomass supply side and BTU demand side were installed in sync. Thus
we have 2 projects: biomass harvest – supply; and boiler installation and
operations – demand. Appropriate economic incentives are being put in the
correct places for economic sustainability. A final business plan will be developed
which constructs, within MTNT Limited Corporation, a vertically integrated
biomass harvest conversion and delivery and boiler Operations Company. This
model fits in McGrath and the same components must be developed in other
villages, but may not be vertically integrated. The more local ownership in the
overall process the more benefits accrue to the community.
o Business Management Capacity: MTNT Limited Corporation owns MP&L
which operates the electrical utility in McGrath. Operations of wood fired boilers
fits within their current management capacity of operating the power plant and
billing. New personnel will be hired and trained for boiler operations. However,
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development of a commercial level biomass harvest company is a new enterprise
which will require new expertise and management of a labor intensive and
planning intensive field operation. A 5 year forest harvest plan will be developed
with an annual implementation plan. Annual harvest plans will be managed
based on summer and winter operations and variation in annual weather patterns.
Operation timing will vary depending on ice thickness, temperature in winter and
dry ground patterns and river levels in summer. Management of transportation of
equipment and supplies back to the village are critical to final costs of the supply.
These capacities must be developed locally. Training is planned in business
management and structure, forest planning, and harvest management. McGrath
has a good pool of skilled machine operators.
4.4 Proposed New System Costs (Total Estimated Costs and proposed 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 Cost Phase III & IV: $1,590,092
Total grant funding requested: $822,950
Matching Funds: MTNT and ML&P is proposing a $275,000 cash and in-kind match.
Other funding Sources: Alaska Village Initiatives is anticipating a $492,000 earmark from DOE
in 2009. These funds will be used to support the project.
Capital Cost: $796,000
Development Costs: $794,888
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.
• Total anticipated project cost for this phase
• Requested grant funding
A table of wood harvest costs is attached. O&M is part of a wood harvest and delivery system.
These costs have been modeled and are built into the expected price of wood delivery costs at
$250/cord and $200/ton for chips.
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
It is expected that there will be a vertically integrated wood harvest, wood handling and delivery
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and a wood utility operating the boilers. Final decisions have not been made, but this is
expected to be a subsidiary of MP&L. The agreements which must be made are a harvest
agreement between MP&L and MTNT for harvest of wood from MTNT Limited lands, and
delivery costs agreement between the harvesting group and the boiler operator group of the
company. These are expected to be internal transfer costs. However, model agreements have
been developed in a previous project.
Wood delivered to the household in cord form is expected to be $250. Chips delivered to the
boiler are expected to be $200 per green ton. Harvest and delivery costs are expected to be
between $140-180 per ton including a 25% markup over base costs. Modeling has been done
conservatively, since there are no current harvest operations in the interior to use as examples.
Tracking actual harvest costs, conversion costs, and delivery costs will be imperative to learn
actual wood energy savings over fuel oil.
4.4.4 Cost Worksheet
Complete the cost worksheet form which provides summary information that will be considered
in evaluating the project.
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4.4.5 Business Plan
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.
Financial modeling to date includes an initial harvest cost analysis which includes cost of forest
harvesting equipment, labor, maintenance, insurance, and fuel costs. The models for wood
harvest and boiler performance are attached. A final business plan will be developed in
collaboration with the MP&L Board as a business training exercise with the following major
topics:
• Executive summary
• Community information
• Management infrastructure
• Financial data
• Key assumptions
• Capital replacement schedule
• Funding legal authority and issues
• Inter-agency and organization relationships.
4.4.6 Analysis and Recommendations
Provide information about the economic analysis and the proposed project. Discuss your
recommendation for additional project development work.
A tremendous amount of effort and learning has gone into the development of this project on the
part of the project developers and MTNT Corporation and MP&L. The purpose of the Wood
Energy Program in McGrath is not only to establish a local wood energy utility and
displace a significant amount of fuel oil, but to develop, demonstrate, and perfect by
doing an integrated sustainable approach to converting a village from primarily fuel oil for
heat to primarily wood. This project addresses the wood harvest, conversion, storage, and
delivery side of the program. The potential synergy with a water system replacement project
creates the opportunity to do a much larger district heating system than could be afforded
separately.
There are two primary economic models that have been developed: A wood harvest and delivery
model for chips and round wood and multiple boiler installation models including a side by side
comparison of chip versus stick fired boilers for individual buildings, and eight scenarios for a
district heating plant in downtown McGrath. These models were developed using very
conservative numbers such as 40% moisture for wood chips actual production goal is 15-30%,
$175-200/ton for a delivered chip cost actual production goal is $150. These models in
combination demonstrate that installations of boilers and development of an integrated wood
harvest company are absolutely economically feasible. Potential Net Simple Payback analysis
for both stick fired boilers, stand alone chip fired boilers and district heating range from as short
as 4.1 to 12 years with nothing over 12 years considered. Pricing for piping and installations has
been set very high. No consideration has been given to the integration of the water replacement
project and the pipe installation for boilers as yet. A final business plan developed in conjunction
with MTNT Limited and ML&P Corporation staff and board will finalize business structure and
economic projections. During the development of the business plan a decision on the specific
boiler installations will be made. An implementation tracking system will be devised to determine
actual costs versus projected to help streamline and improve the overall village based model for
future installations.
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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 avoided cost of ownership)
• 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
Project Benefit:
• Fuel Displacement: Annual fuel displacement is up to 135,539 gallons @ current price
of $7.00 per gallon is $948,773. At a project life of 15 years total maximum gallons
displaced are 2,033,085 with a total gross savings of $14,231,595.
• Anticipate Revenues: At a delivered wood fuel price of $200/ton for 30% moisture
wood chips and total demand of 2200 tons the wood harvest and delivery company will
derive an annuls gross income of $440,000 which is equal to $21.76 per million BTUs.
At $7.00 per gallon for fuel oil, a million BTUs of heat costs $50.54. The wood utility
operators of the boilers will develop a long term BTU agreement with the commercial
buildings to stabilize the heat equivalent price at a range of $4.00-$5.00 per gallon of fuel
or thus the commercial price of a million BTUs will be $28.88 - $36.10. An annual gross
savings of $509,773 will be divided by the Wood Energy Utility and major commercial
customers based on agreed upon rate and escalator. Final determination of how
displacement savings will be derived and dispersed as savings to customers will be
developed in the final business plan. The intent of the program is to be both an
economically viable wood utility and a service to the community.
• Annual Incentives: Tax credits or other annual incentives have not been explored as
yet.
• Green Credits: Until the scope of the project and the need for additional incentives has
been fully understood within the context of the partners, Green Credits have not been
explored as yet.
Non-economic benefits: These two projects, woody biomass harvest and boiler installations, in
combination, create the significant non-economic benefits. In multiple discussions and
presentations, community members have commented on how wood energy will create local jobs
that are consistent with their subsistence lifestyles. Community leaders have commented on
how utilizing local resources helps create a culture of sustainability and self sufficiency, and
reduce dependence on outside energy sources. A wood energy program can also reduce
wildfire risk through forest thinning, enhance wildlife habitat and, most importantly, create local
jobs and economy through import substitution. Schools are one of the most expensive buildings
to heat in the village and a client that will help with economies of scale for supporting
development of a wood energy business model. Reducing energy costs for schools and clinic
reduces public support costs for education and health care. Wood energy business fits with
subsistence lifestyles and creates a greater level of self sufficiency within the village. The
process of developing and creating business, management and planning capacity enhances
opportunities for increasing long term opportunities for youth to stay in the village with well
paying resource based jobs. An integrated wood energy system is one of the best energy and
community economic develop projects available to villages with a sustainable source of wood.
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SECTION 6 – GRANT BUDGET
Tell us how much your total project costs. Include any investments to date and funding sources,
how much is requested in grant funds, and additional investments you will make as an
applicant.
Include an estimate of budget costs by tasks using the form - GrantBudget.xls
Funding to date includes the following:
State and Private Forestry - $45,000. Development of a Forest Stewardship Plan for
MTNT Limited lands in progress;
Rural Business Enterprise Grant - $75,000. Support the development of a set of model
contract agreements, wood harvest transportation plan, and develop of an initial harvest
equipment list.
MP&L - $15,000. Development of a level one analysis for a district heating system to be
installed simultaneously with replacement of the village water system.
Phase III & IV: Project Development
Task One: Project Initiation, Dynamic Planning, and Final Business Plan – A facilitated planning
meeting will be held at the outset of the project to develop a specific dynamic planning outline
among all the major partners to coordinate work, responsibilities, and timing of activities. A
second meeting will be held to finalize the business plan with key staff.
• Total costs = $30,000
Requested Funds = $0
Federal Funds = $25,000
Cash Match = $
In-Kind = $10,000 MP&L
Task Two: Forest Management Plan Process – This is a major process to support the
establishment of a sustainable forest management and harvesting program. Developing a GIS
forest stand analysis which includes the cost of purchase and classification of 3 satellite imagery
scenes. A five year stand based harvest plan will be produced, forest fire rehab plan will be
developed and initiated, technical support for harvest operations as training, business
agreements will be finalized, a region forest management workshop will be conducted, support
for a forest technician will be provided, and technical support and local training will occur. Land
owner agreements will be finalized.
• Total Costs = $283,000
• Requested funds = $0
• Federal Funds = $253,000
• In-kind support = $30,000
Task Three: Wood Yard Design and Tech Support – Develop a wood yard flow pattern and final
design for storage of round wood and chips.
Total Cost = $20,000
Requested Funds = $0
Federal Funds = $20,000
In-kind = $ 0
Task Four: Purchase Harvest Equipment and delivery to community
Total Cost $646,000
Requested funds = $616,000
Federal funds =
Cash Match =
In-kind support = $30,000
Task Five: Harvest equipment and harvesting process training
Total costs = $20,000
Requested funds = $
Federal funds =
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AEA 09-004 Grant Application Page 19 of 20 9/3/2008
In-kind Match = $20,000
Task Six: Project Management, facilitation, communications, reporting, environmental analysis,
and permitting.
Total cost $160,000
Requested funds = $100,000
Federal Funds = $25,000
Cash = $25,000
In-kind = $10,000
Task seven: Project administration, insurance, accounting.
Total costs: $88,950
Requested funds: $88,950
Federal Funds:
SECTION 7 – 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 6.
D. An electronic version of the entire application per RFA Section 1.6
E. Governing Body Resolution per RFA Section 1.4
Enclose a copy of the resolution or other formal action taken by the applicant’s
governing body or management that:
- authorizes this application for project funding at the match amounts indicated in
the application
- authorizes the individual named as point of contact to represent the applicant for
purposes of this application
- states the applicant is in compliance with all 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 William A. Wall, PhD
Signature
Title Authorized Project Manager
Date 11/10/08
Renewable Energy Fund
RFA AEA 09-004 Application Cost Worksheet Page 1
Application Cost Worksheet
Please note that some fields might not be applicable for all technologies or all project
phases. Level of information detail varies according to phase requirements.
1. Renewable Energy Source – Wood for Heat
The Applicant should demonstrate that the renewable energy resource is available on a
sustainable basis.
Annual average resource availability. 15-20,000 tons Chips and cord wood annually is
sustainable 2500 tons is expected.
Unit depends on project type (e.g. windspeed, hydropower output, biomasss fuel)
2. Existing Energy Generation
a) Basic configuration (if system is part of the railbelt grid, leave this section blank)
i. Number of generators/boilers/other 2 boilers per building x up to 16 = 32 boilers
ii. Rated capacity of generators/boilers/other Range from 135KBTU/hr – 805KBTU/hr
iii. Generator/boilers/other type Oil fired
iv. Age of generators/boilers/other 1 year to 15 years
v. Efficiency of generators/boilers/other Oil boilers range between 80-85%
b) Annual O&M cost
i. Annual O&M cost for labor 16 different ownerships of boilers – not known
ii. Annual O&M cost for non-labor 16 different ownerships of boilers – not known
c) Annual electricity production and fuel usage (fill in as applicable)
i. Electricity [kWh] $.55/kwh commercial
ii. Fuel usage (if system is part of the Railbelt grid, leave this section blank
Diesel [gal] 212,000 gallons for power plant
Other
iii. Peak Load 500 Kwh
iv. Average Load 305 Kwh
v. Minimum Load 225 Kwh
vi. Efficiency 32%
vii. Future trends Electrical use has gone down in recent years
d) Annual heating fuel usage (fill in as applicable)
i. Diesel [gal or MMBtu] 125,000 gal. targeted for displacement at commercial
ii. Electricity [kWh]
iii. Propane [gal or MMBtu]
iv. Coal [tons or MMBtu]
v. Wood [cords, green tons, dry tons] current usage not known local use for firewood only
vi. Other
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RFA AEA 09-004 Application Cost Worksheet Page 2
3. Proposed System Design
a) Installed capacity Displace 125,000 gallons of fuel oil with district heat
b) Annual renewable electricity generation
i. Diesel [gal or MMBtu]
ii. Electricity [kWh]
iii. Propane [gal or MMBtu]
iv. Coal [tons or MMBtu]
v. Wood [cords, green tons, dry tons] 2500 tons @ 40% moisture projected for displacement
of oil
vi. Other
4. Project Cost
a) Total capital cost of new system $796,000
b) Development cost $794,888
c) Annual O&M cost of new system $50,000
d) Annual fuel cost $20,000 = diesel fuel to run harvest machinery
5. Project Benefits
a) Amount of fuel displaced for
i. Electricity
ii. Heat 125,000 gallons
iii. Transportation
b) Price of displaced fuel $875,500 @ $7.00/gallon annually
c) Other economic benefits Local employment, import substitution
d) Amount of Alaska public benefits Reduce costs of heating school, district office, clinic
6. Power Purchase/Sales Price
a) Price for power purchase/sale Sell heat BTUs @ between $28.88 – $36.10/MMBTUs
Sell chips @ $175-$200/green ton & $250/cord split
7. Project Analysis
Renewable Energy Fund
RFA AEA 09-004 Application Cost Worksheet Page 3
a) Basic Economic Analysis
Project benefit/cost ratio 2:1 over 15 year project life
Payback 4.5 years
Alaska Energy Authority ‐ Renewable Energy FundBUDGET INFORMATION ‐ Anticipated AVI DOE Earmark ‐ McGrath Forest Management, Wood Harvest Project BUDGET SUMMARY:Project Initiation Jan 1,2009 ‐ End Sept 30, 2010TaskAnticipated DOE Federal Funds ‐ AVIState FundingLocal Match Funds (Cash)MP&L & MTNT Local Match Funds (In‐TOTALSProject Dynamic Planning & Business Plan $25,000 $10,000 $35,000Forest Management Planning and Tech sup$253,000 $30,000 $283,000Wood Yard Design & Tech Support $20,000 $20,000Wood Yard Installation $50,000 $100,000 $150,000Travel support $25,000 $18,000 $43,000Purchase Harvest Equipment & Delivery $616,000 $30,000 $646,000Training on Harvest Equipment $20,000 $20,000Project Management & Program Fascilitatio$25,000 $100,000 $25,000 $10,000 $160,000Administration and other direct costs $88,950 $88,950Total Direct $348,000 $822,950 $105,000 $170,000 $1,445,950Indirect AVI $144,142 $144,142Total $492,142 $822,950 $105,000 $170,000 $1,590,092Milestone # or Task #BUDGET CATAGORIES:5 6 7 8 9 10 11 12 13 TOTALSDirect Labor and Benefits $10,000 $30,000 $10,000 $50,000Travel, Meals, or Per Diem $6,000 $10,000 $2,000 $5,000 $6,000 $14,000 $43,000Equipment$630,000 $630,000Supplies $30,000$30,000Contractual Services $25,000 $218,000 $20,000 $16,000 $125,000 $404,000Construction Services$0Other Direct Costs $10,000$30,000$150,000$20,000$88,950$298,950TOTAL DIRECT CHARGES $51,000 $318,000 $22,000 $150,000 $0 $651,000 $26,000 $149,000 $88,950 $1,455,950RFA AEA09-004 Budget Form
McGrath Wood Harvest Program Milestone & Activity Table MILESTONES, DESCISIONS & ACTIVITIES WHO* START Month END Month EXPECTED OUTCOMES 1st Quarter (January – March 2009 ) Phase III Complete contract with AEA & MPL Finalize project implementation plan – Dynamic planning Complete Design for wood yard Complete design for harvest equipment integrated with boiler types Final Business Plan Land ownership agreements Environmental Analyses Wood Purchase & Sales Agreement Development of Forest Management and Harvest plan Quarterly report due WW, EB, MP&L WW, MP&L, GK, DJ WW, MP&L, PO, WW, PO, GK WW,PO, MP&L WW, MP&L, PO WW, MPL WW, MPL WW, MP&L, PO WW, MP&L, 1 1 1 1 1 1 1 1 1 1 1 3 3 4 3 4 5 12 3 Initialize work on Alternative Energy Grant Establish work completion timelines and responsibilities Schematic Design delivered to MP&L Coordinate with boiler design process Facilitated collaborative development of final business plan All necessary land agreements are made with cooperators All necessary applications made for permits as required Finalize agreements needed to start wood harvest On going for entire project GIS based Quarterly Report due to AEA 2nd Quarter (April – June 2009) Phase IV Permission to proceed to Construction Decision –Purchase and delivery of equipment Implement Wood Energy Utility Business Structure Quarterly report due WW, MP&L, AEA WW, MP&L, PO WW, MP&L, DJ WW, MP&L, 4 4 4 4 9 6 6 Provide enough info to AEA to move to construction phase Initiate Purchase process for equipment delivery Legal Development for wood energy utility Write report 3rd Quarter (July- September 2009) Phase IV Wood Yard construction initiated Harvest Equipment Training Quarterly report due WW, MP&L, PO WW,PO,MP&L 7 7 9 9 9 Construction of wood yard Harvest process developed Quarterly Report due to AEA 4th Quarter (October – December 2009) Phase IV Track Project Costs Environmental Monitoring Permitting Final Annual Report WW, MP&L WW, MP&L WW,MP&L WW,MP&L 1 1 1 12 12 12 12 12 Actively track project costs and report any issues quarterly Monitor and report as needed Monitor and report as needed Final report 5th-8th Quarters (January-December 2010) Phase IV
* WW William Wall – Project manager PO Peter Olsen – Forester GK Greg Koontz – Engineer MPL McGrath Power and Light EB Ernie Baumgartner Cont. Contractor – to be selected – Final Design Engineer and Construction Supervisor DJ Doug Johnson – Training and facilitation – Professional Growth Systems
McGrath Biomass Harvest Economics
The following spreadsheet Table 2 is a model based on production estimates using the
above equipment configuration. It is believed to be a reasonable estimate but it must be
recognized that it is untested. The yellow cells represent data input assumptions, and the
blue cells represent the resultant calculations of high interest. Maintenance and
Operation costs are listed and built into the production model.
For demonstration purposes, an assumed volume of 2,000 tons of seasoned wood is to be
produced annually for firewood and stick or chip boilers. This would take approximately
89 fully productive working days. Additional labor will be required to move equipment
from one community to another, as well as transportation expenses if done by barge. A
local contractor with a river freight boat will be use to move equipment and wood chips
during summer. The boat will handle a load of 20,000 pounds in it current configuration
and has been in business for three years.
Theoretically, the entire annual production could be done within 120 days (4 months) at
this production level. Under these and the other set of assumptions displayed in the
spreadsheet, approximately 2,000 tons or 1,657 cords of Spruce is produced. When
burned in wood boilers with an equal efficiency as the heating oil boilers, approximately
$500,000 of diesel at $3.50 per gallon can be displaced with a total savings of $244, 370.
These numbers are based on a calculated delivered wood cost of $155 per cord that has
been marked up 25% above actual production costs. The model displays production cost
estimates and includes an annual capital equipment cost of $132,000.
Table 2. Calculated Harvest Costs and Revenue Data in Tons and Cords
Wood Yard
The implementation project addresses the development of a wood yard in the village.
The wood yard will have a heated shop for maintenance of equipment, a wood storage
area, an equipment storage area, an automated firewood processor, and perhaps a small
sawmill for producing house logs and dimension lumber. A chipper for chip production
will be used in the wood yard. There are two potential sites located for the wood yard
and marked on the map (Figure 4)
Fire wood production in the village is currently by various individuals with a “village
cord” selling for approximately $150. This of course is far less than an actual cord. By
adding another $25-50 per cord for processing firewood could be sold for $200-250 per
full cord.
Economies of Scale
Generally speaking, the more volume that is produced using the same equipment, the less
expensive the wood per unit is to produce. See Figures 1 and 2 below. The inflection
point for reasonably priced wood produced with an automated system is around 2000
tons per year. Expected annual wood utilization for firewood and boilers at all major
buildings will be approximately 15-1800 cords or 1815-2178 tons per year.
Figures 1 and 2. Economies of scale for chips and cord wood production.
Annual Chip Production Effect on Cost $715.29 $392.79 $285.29 $231.54 $199.29 $177.79 $162.43 $150.91 $141.95 $134.79 $128.92 $124.04 $-
$100.00
$200.00
$300.00
$400.00
$500.00
$600.00
$700.00
$800.00
250 500 750 1000 1250 1500 1750 2000 2250 2500 2750 3000
Tons Produced Annually@23 Tons Daily Production
Cost/ton
Annual Cordwood Production Effect on Cost $863 $474 $344 $279 $241 $215 $196 $182 $171 $163 $150 $156 $-
$100.00
$200.00
$300.00
$400.00
$500.00
$600.00
$700.00
$800.00
$900.00
$1,000.00
250 500 750 1000 1250 1500 1750 2000 2250 2500 2750 3000
Tons Produced Annually @ 23 Tons Daily Production
Cost Per Cord
Species mix will shift with the need to produce large quantities of chips from Spruce to
various deciduous species. A 20-25 year willow rotation is quite possible for chips
producing approximately 15 tons per acre See page 40 in McGrath FS Plan. Willow
harvest and other deciduous species such as cotton wood, and aspen have the potential to
reduce the overall harvest of spruce.
Figure 3. Break Even Analysis for Cord Wood Production.
Total Cost/Revenue Breakeven Analysis $239,957 $256,784 $273,611 $290,438 $307,265 $324,092 $340,919 $357,746 $391,401 $408,228 $425,055 $41,425
$82,850
$124,275
$165,700
$207,125
$248,550
$289,975
$331,400
$372,825
$414,250
$455,675
$497,100 $374,574 $-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
207 414 621 829 1036 1243 1450 1657 1864 2071 2278 2486Annual Cordwood ProductionTotal DollarsTotal Production Costs
Revenue At $200/Cord
Break even analysis Figure 3 above, also demonstrates that with the proposed harvest
equipment configuration, 2000 tons need to be sold annually at a price of $200 per ton.
There are two scenarios which make this level of production feasible. The first is to
move the harvest equipment to additional villages in the region as they convert to more
wood usage and the second which is the intent of this program is to build a biomass
diesel hybrid power plant. Displacing 50-70,000 gallons of fuel oil for heat in wood
boilers is a mid size economy of scale and could be achieved with some smaller
equipment and less capital costs but production is slower and operations costs remain
very similar. However, displacing an additional 200,000 gallons of diesel in a power
plant with a vertically integrated business model is the end target of this project.
McGRATH, ALASKA
Level 2 Study, Biomass Heat
B x B Summary
C:\Documents and Settings\Bill Wall VWCS\My Documents\Alaska Documents\Funding\Alaska Energy Authority Grant Applications\McGrath MTNT Contract\application\McGrath_Calcs_3
Summary McGrath
>These buildings were looked at individually, and, the case of the IASD Bldgs, as a mini-plant. In each
case, a stick-fired option and a chip-fired option was studied. In general, the chip-fired options require a large building (or
DH plant) to have enough economy of scale to be cost effective.
>See the TAB "McG Inputs" for base assumptions for the model, including the cost of oil and wood chips.
>Estimated project costs include construction, as well as design, construction admin, commissioning, and contingency (soft.
costs). Only the major line items are shown here.
>Only the No. and Size of Boiler should be changed on this sheet -to change other parameters, go to McG Inputs TAB.
Summary of Results School IASD Off School + Off MTNT Off Cap'n Snow Water Treat
Stick-fired Performnace
baseline oil consumption :31,947 7,987 39,934 13,069 16,467 11,617
proposed biomass, cords/yr :290 72 355 121 149 109
fraction of oil displaced :1.000 1.000 1.000 1.000 1.000 1.000
Garn model :WHS 3,200 WHS 3,200 WHS 3,200 WHS 3,200 WHS 3,200 WHS 3,200
No. of boilers :414222
Maximum wood loads per day req. :3.2 3.2 4.0 2.6 3.3 2.3
Stick-fired Cost and savings :
boilers, shipped and installed :$536,441 $134,110 $536,441 $268,221 $268,221 $268,221
Slab/Building for Boilers :$30,000 $15,000 $30,000 $20,000 $20,000 $20,000
direct buried piping :$32,800 $32,800 $131,200 $32,800 $32,800 $32,800
interconnection :$35,000 $35,000 $70,000 $35,000 $35,000 $35,000
other :$25,000 $25,000 $35,000 $25,000 $25,000 $25,000
subtotal :$659,241 $241,910 $802,641 $381,021 $381,021 $381,021
soft costs :$258,752 $94,950 $315,037 $149,551 $149,551 $149,551
total :$917,993 $336,860 $1,117,678 $530,571 $530,571 $530,571
baseline oil cost :$239,606 $59,901 $299,507 $98,020 $123,506 $87,129
final oil cost :
cord wood cost :$72,390 $18,097 $88,806 $30,225 $37,210 $27,240
total savings :$167,216 $41,804 $210,701 $67,795 $86,296 $59,889
Chip-fired Performnace :
baseline oil consumption :31,947 7,987 39,934 13,069 16,467 11,617
proposed biomass, tons/yr :351 76 428 137 186 131
fraction of oil displaced :0.743 0.643 0.725 0.712 0.763 0.763
Kob model :Pyrot 300 Pyrot 100 Pyrot 400 Pyrot 100 Pyrot 150 Pyrot 100
No. of boilers :111111
Chip-fired Cost and savings :
boilers, shipped and installed :$259,347 $202,537 $285,120 $202,537 $216,184 $202,537
Slab/Building for Boilers :$5,000 $5,000 $5,000 $5,000 $5,000 $5,000
direct buried piping :$32,800 $32,800 $131,200 $32,800 $32,800 $32,800
interconnection :$20,000 $20,000 $40,000 $20,000 $20,000 $20,000
other :$25,000 $25,000 $25,000 $25,000 $25,000 $25,000
subtotal :$342,147 $285,337 $486,320 $285,337 $298,984 $285,337
soft costs :$134,293 $111,995 $190,881 $111,995 $117,351 $111,995
total :$476,440 $397,332 $677,200 $397,332 $416,335 $397,332
baseline oil cost :$239,606 $59,901 $299,507 $98,020 $123,506 $87,129
final oil cost :$61,464 $21,384 $82,306 $28,252 $29,247 $20,678
chip cost :$61,410 $13,278 $74,874 $24,051 $32,493 $22,907
total savings :$116,732 $25,240 $142,327 $45,718 $61,765 $43,544
Net Simple Payback
stick-fired :5.5 yrs 8.1 yrs 5.3 yrs 7.8 yrs 6.1 yrs 8.9 yrs
chip-fired :4.1 yrs 15.7 yrs 4.8 yrs 8.7 yrs 6.7 yrs 9.1 yrs
efour, PLLC 1 of 2
McGRATH, ALASKA
Level 2 Study, Biomass Heat
B x B Summary
C:\Documents and Settings\Bill Wall VWCS\My Documents\Alaska Documents\Funding\Alaska Energy Authority Grant Applications\McGrath MTNT Contract\application\McGrath_Calcs_3
Summary (cont)McGrath
>These buildings were looked at individually, and, the case of the Cap'n Snow Bldgs, as a mini-plant. In each
case, a stick-fired option and a chip-fired option was studied. In general, the chip-fired options require a large building (or
DH plant) to have enough economy of scale to be cost effective. The Bldgs after Snow are the larger commerical bldgs
>See the TAB "McG Inputs" for base assumptions for the model, including the cost of oil and wood chips.
>Estimated project costs include construction, as well as design, construction admin, commissioning, and contingency (soft.
costs). Only the major line items are shown here.
>Only the No. and Size of Boiler should be changed on this sheet -to change other parameters, go to McG Inputs TAB.
Summary of Results Snow + WT Clinic AC Store Hotel McG Restaurant FAA Bldg
Stick-fired Performnace
baseline oil consumption :28,085 19,909 8,434 7,476 9,776 17,252
proposed biomass, cords/yr :251 177 76 68 87 155
fraction of oil displaced :1.000 1.000 1.000 1.000 1.000 1.000
Garn model :WHS 3,200 WHS 3,200 WHS 3,200 WHS 3,200 WHS 3,200 WHS 3,200
No. of boilers :321112
Maximum wood loads per day req. :3.8 4.0 3.4 3.0 3.9 3.5
Stick-fired Cost and savings :
boilers, shipped and installed :$402,331 $268,221 $134,110 $134,110 $134,110 $268,221
Slab/Building for Boilers :$25,000 $20,000 $15,000 $15,000 $15,000 $20,000
direct buried piping :$98,400 $32,800 $32,800 $32,800 $32,800 $32,800
interconnection :$70,000 $35,000 $35,000 $35,000 $35,000 $35,000
other :$35,000 $25,000 $25,000 $25,000 $25,000 $25,000
subtotal :$630,731 $381,021 $241,910 $241,910 $241,910 $381,021
soft costs :$247,562 $149,551 $94,950 $94,950 $94,950 $149,551
total :$878,293 $530,571 $336,860 $336,860 $336,860 $530,571
baseline oil cost :$210,635 $149,318 $63,256 $56,068 $73,319 $129,387
final oil cost :
cord wood cost :$62,769 $44,284 $19,017 $17,047 $21,775 $38,821
total savings :$147,866 $105,034 $44,239 $39,021 $51,545 $90,566
Chip-fired Performnace :
baseline oil consumption :28,085 19,909 8,434 7,476 9,776 17,252
proposed biomass, tons/yr :312 209 84 68 105 196
fraction of oil displaced :0.751 0.712 0.675 0.612 0.726 0.770
Kob model :Pyrot 220 Pyrot 150 Pyrot 100 Pyrot 100 Pyrot 100 Pyrot 150
No. of boilers :111111
Chip-fired Cost and savings :
boilers, shipped and installed :$228,898 $216,184 $202,537 $202,537 $202,537 $216,184
Slab/Building for Boilers :$5,000 $5,000 $5,000 $5,000 $5,000 $5,000
direct buried piping :$98,400 $32,800 $32,800 $32,800 $32,800 $32,800
interconnection :$40,000 $20,000 $20,000 $20,000 $20,000 $20,000
other :$35,000 $25,000 $25,000 $25,000 $25,000 $25,000
subtotal :$407,298 $298,984 $285,337 $285,337 $285,337 $298,984
soft costs :$159,864 $117,351 $111,995 $111,995 $111,995 $117,351
total :$567,162 $416,335 $397,332 $397,332 $397,332 $416,335
baseline oil cost :$210,635 $149,318 $63,256 $56,068 $73,319 $129,387
final oil cost :$52,462 $43,037 $20,566 $21,765 $20,056 $29,703
chip cost :$54,526 $36,638 $14,716 $11,825 $18,361 $34,363
total savings :$103,647 $69,644 $27,974 $22,478 $34,902 $65,320
Net Simple Payback
stick-fired :5.9 yrs 5.1 yrs 7.6 yrs 8.6 yrs 6.5 yrs 5.9 yrs
chip-fired :5.5 yrs 6.0 yrs 14.2 yrs 17.7 yrs 11.4 yrs 6.4 yrs
efour, PLLC 2 of 2
McGRATH, ALASKA
Level 2 Study, Biomass Heat
McG Summary
C:\Documents and Settings\Bill Wall VWCS\My Documents\Alaska Documents\Funding\Alaska Energy Authority Grant Applications\McGrath MTNT Contract\application\McGrath_Calcs_3
Summary of results for full District Heating Plants for Downtown McGrath
>four different plants were modeled, and each plant had two configurations, for a total of eight options. In all cases,
the "B" option for a given plant size was the addition of a second (smaller) boiler to pick up the low summer loads,
and to add capacity at the top end. The primary boiler was chosen to displace as much oil as possible.
>See Page 2 for a description of each plant
>The piping mains are oversized to allow future connections to the Plant, perhaps on a commercial basis
>See the TAB "Inputs" for base assumptions for the model, including the cost of oil and wood chips.
>Estimated project costs include construction, as well as design, construction admin, commissioning, and contingency
Summary of Results DT P A DT P B DT/FAA P A DT/FAA P B DT/McG Dr P A DT/McG Dr P B
Boilers 68 (284) 57
B-1 :Pyrtec 720 Pyrtec 720 Pyrtec 1,250 Pyrtec 950 Pyrtec 950 Pyrtec 950
B-2 :Pyrot 220 Pyrot 400 Pyrot 300
Financial :
marginal cost add to DT P A :$1,136,903 $1,478,192 $593,059 $954,200
estimated project cost :$2,916,416 $3,235,156 $4,053,319 $4,394,608 $3,509,475 $3,870,616
estimated annual savings :$300,587 $390,604 $482,659 $604,003 $362,775 $447,598
net simple payback, yrs :9.70 8.28 8.40 7.28 9.67 8.65
:
Performance :
No. buildings connected :6 6 11 11 9 9
peak load heating, kBTU/h :3,175.3 3,175.3 4,938.2 4,938.2 3,713.5 3,713.5
peak losses to heating fuel, kBTU/h :40.0 40.0 40.0 40.0 40.0 40.0
peak piping losses, KBTU/h :51.6 51.6 86.5 86.5 84.0 84.0
total peak losses, kBTU/h :91.6 91.6 126.5 126.5 124.0 124.0
total losses, as a fraction of load, winter :0.029 0.029 0.026 0.026 0.033 0.033
total losses, as a fraction of load, summer :0.145 0.145 0.155 0.155 0.199 0.199
current oil consumption, gal/yr :88,823 88,823 138,597 138,597 103,391 103,391
proposed consumption, gal/yr :22,123 882 31,818 3,057 22,523 1,473
estimated savings, gal/yr :66,700 87,940 106,779 135,539 80,867 101,917
fraction of oil displaced :0.751 0.990 0.770 0.978 0.782 0.986
:
estimated wood chips, tons/yr :1,027.7 1,360.8 1,640 2,096 1,256 1,597
:
pumping energy, kWh/yr :36,033 56,009 56,627 83,147 43,390 67,841
electrical energy cost :$19,818 $30,805 $31,145 $45,731 $23,864 $37,312
:
Fuel Properties and Cost :
heat content of No. 1 oil :134,000 BTU/gal
cost of oil used in study :$7.50 per gal
:
moisture content of wood chips :40.0%
heat content of wet chips :4,252 BTU/lb
cost of chips used in study :$175.00 per geen ton
:
cost of electrical energy :$0.550 per kWh
efour, PLLC 1 of 2
McGRATH, ALASKA
Level 2 Study, Biomass Heat
McG Summary
C:\Documents and Settings\Bill Wall VWCS\My Documents\Alaska Documents\Funding\Alaska Energy Authority Grant Applications\McGrath MTNT Contract\application\McGrath_Calcs_3
Summary McGrath
The Base Plant (downtown, or DT) would be located near the school. The mains would run along the water piping
route from the school to Chinana Ave, then SE to the intersection of Chinana and the North-South water main that
runs directly to the AC store.
The DT / FAA plant adds an additional main that runs from the School/Chinana pipe intersection NW to the street in front
of the FAA Bldg, then due north to McGuire Drive.
The DT / McG Dr plant is also an adder to the DT plant - it does not include the FAA mains, but does include the DT mains.
In this Plant, the end of the DT main (at the AC Store) would be extended due west along the entire length of McGuire Drive
Finally, the DT / Captain Snow Plant is also an adder to the DT Plant. At the piping intersection where the DT main heads
due north, the main would be extended to the intersection with Takotna Ave, then along Takotna to the Cap'n Snow Center
Summary of Results DT/CS P A DT/CS P B Plant Buildings
Boilers 57 DT School
B-1 :Pyrtec 1,250 Pyrtec 950 Clinic (future)
B-2 :Pyrot 300 IASD Offices
Financial : MTNT Offices
marginal cost add to DT P A :$984,724 $1,290,125 AC Store
estimated project cost :$3,901,140 $4,206,541 Hotel McGrath
estimated annual savings :$435,948 $546,074
net simple payback, yrs :8.95 7.70 DT / FAA all in DT, plus
: Community Center
Performance : Library (also called University)
No. buildings connected :99 FAA Building
peak load heating, kBTU/h :4,481.2 4,481.2 FAA Shop
peak losses to heating fuel, kBTU/h :40.0 40.0 FAA Flight Service
peak piping losses, KBTU/h :96.6 96.6
total peak losses, kBTU/h :136.6 136.6 DT / McG Dr all in DT, plus
total losses, as a fraction of load, winter :0.030 0.030 McGuires Tavern
total losses, as a fraction of load, summer :0.192 0.192 Restaurant
FAA Flight Service
current oil consumption, gal/yr :125,141 125,141
proposed consumption, gal/yr :28,329 1,591 DT / CS all in DT, plus
estimated savings, gal/yr :96,812 123,550 Post Office
fraction of oil displaced :0.774 0.987 Captain Snow
: Water Treatment
estimated wood chips, tons/yr :1,497.7 1,930.5
:
pumping energy, kWh/yr :50,991 77,648
electrical energy cost :$28,045 $42,706
:
Fuel Properties and Cost :
heat content of No. 1 oil :134,000 BTU/gal
cost of oil used in study :$7.50 per gal
:
moisture content of wood chips :40.0%
heat content of wet chips :4,252 BTU/lb
cost of chips used in study :$175.00 per geen ton
:
cost of electrical energy :$0.550 per kWh
efour, PLLC 2 of 2
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