HomeMy WebLinkAboutCity of Bethel Wind Power App Pt. 1D%4 w gQ
�V_� � CITY OF BETHEL
C� P.O. Box 1388 Bethel, Alaska 99559 1388
907-543-2047
Fax # 543-4171
ti1QQ4aGW Website: www.cityofbethel.org
October 16, 2008
Butch White, Grant Manager
Alaska Energy Authority
813 West Northern Lights Blvd.
Anchorage, AK 99503
Dear Mr. White:
Thank you for the telephone call on Wednesday, October 15, 2008 informing me that Mr.
Haagensen made a decision to accept the City of Bethel's grant application in response to the
Renewable Energy Grant Fund Request for Applications. I am grateful that the City of Bethel's
application for Bethel Wind Power Project Times 4 will be considered in the first round in which
$100 million will be allocated.
Butch, please find enclosed an electronic version of the hard copy of the grant application that
you accepted from the City of Bethel. During our telephone conversation on Thursday, October
9, 2008, you told me that you would provide me and others, as needed, with notice to correct any
deficiencies in the electronic copy submitted with our hard copy application. You mentioned that
you were getting all different types of files on the disks received. There should be one complete
PDF electronic copy enclosed herein. I hope this meets your needs.
You may contact me if you have any questions regarding the grant or its contents. My telephone
number is 907-543-1386 and my email address is (jsar_ ent e,cityofbethel.net). You may contact
the Acting City Manager, Lee Foley, if you have any general City -related questions. Lee may be
reached at 907-543-1373 or (lfoley@cityofbethel.net).
Grant Development Manager
"Deep Sea and Transportation Center of the Kuskokwim"
Table of Contents
Renewable Energy Fund Grant Application
Bethel Wind Power Project Times 4
City of Bethel
Number of
Item Paqes
1. Grant Application Form 27
2. Application Cost Worksheet 4
3. Grant Budget Form 1
4. Grant Budget Form Instructions 4
5. Attachments
/01::) ALASKA Renewable Energy Fund
EDENERGY AUTHORITY Grant Application
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
GrantApp.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
Costworksheet.doc
Summary of Cost information that should be addressed
Worksheet
by applicants in preparing their application.
Grant Budget
GrantBudget.xls
A detailed grant budget that includes a breakdown of
Form
costs by task and a summary of funds available and
requested to complete the work for which funds are being
requested.
Grant Budget
GrantBudgetlnstr.pdf
Instructions for completing the above grant budget form.
Form Instructions
• 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.
• 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.
AEA 09-004 Grant Application Page 1 of 27 9/2/2008
ALASKA
ENERGY AUTHORITY
Renewable Energy Fund
Grant Application
SECTION 1 —APPLICANT INFORMATION
Name (Name of utility, IPP, or govemment entity submitting proposal)
City of Bethel
Type of Entity:
Local government (municipality)
Mailing Address
Physical Address
P.O. Box 1388
300 State Highway
Bethel, AK 99559
Bethel, AK 99559
Telephone
Fax
Email
907-543-2047
907-543-4171
lfoley@cityofbethel.net
1.1 APPLICANT POINT OF CONTACT
Name
Title
John Sargent
Grant Development Manager
Mailing Address
P.O. Box 1388
Bethel, AK 99559
Telephone
Fax
Email
907-543-1386
907-543-4171
jsargent@cityofbethel.net
1.2 APPLICANT MINIMUM REQUIREMENTS
Please check as appropriate. If you do not to meet the minimum applicant requirements, your
application will be rejected.
1.2.1 As an Applicant, we are: (put an X in the appropriate box)
An electric utility holding a certificate of public convenienceand necessity under AS
42.05, or
An independent power producer, 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
or
its board of directors, executive management, or other governing authority. If a
No
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
or
No
agreement.
Yes
1.2.4. If awarded the grant, we can comply ,with all terms and conditions of the attached
or
grant form. (Any exceptions should be clearly noted and submitted with the
No
application.)
AEA 09-004 Grant Application Page 2 of 27 9/3/2008
j A L A S K A Renewable Energy Fund
ENERGY AUTHORITY Grant Application
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.
Phase III: Final Design and Permitting
Phase IV: Construction
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.
Bethel Wind Power Project Time 4 calls for the purchase and installation of four 100 kW wind
turbines, tubular towers, foundations, and related appurtenances on land owned by the City of
Bethel. The City of Bethel will own, operate, and maintain all four wind turbines and act as an
independent power producer by selling 100% of the electricity generated to the privately owned
utility in Bethel. The regulated electric utility is Bethel Utilities Corporation.
The community of Bethel, with a population of 5,650, will be the community and boundary area
served. The City of Bethel, the City's volunteer Alternative Energy Committee, the City's Public
Works Committee, the City's Planning Commission, and Bethel Utilities Corporation will be
involved with the project.
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.
The City of Bethel is requesting $2,598,320 in Renewable Energy Grant funds to completely
fund Bethel Wind Power Project Times 4. As the attached Capital Cost Summary shows, the
City is willing and able to contribute $199,889 toward the project. The City was recently
awarded a grant from the Alaska Energy Authority and Denali Commission in the amount of
$399,777 to fund one 100 kW wind turbine. The wind turbine partially funded by the City's
previous grant application is being added to the Bethel Wind Power Project Times 4.
Thus, for a total project cost of $3,197,986, the City already has $599,666 awarded and
committed to put toward the project. The City is requesting the remaining $2,598,320 from the
Renewable Energy Grant Fund to completely fund the project.
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.
The Bethel Wind Power Project Times 4 requires the purchase, shipping, transportation to site,
installation, and commissioning of four 100 kW wind turbines with tubular towers. The project
also includes training of three or more City Property Maintenance workers to perform routine
AEA 09-004 Grant Application Page 3 of 27 9/3/2008
/445-7--ALASKA
ENERGY AUTHORITY
Renewable Energy Fund
Grant Application
mainentance.
Please�see the Capital Cost Summary and Project Annual Income and Expenses sheet attached
for a complete financial picture of the project. The total project cost of $3,197,986 has a payback
of 8.69 short years! The reason for this is the annual revenue ($532,688) over expenses
($164,719) provides a yearly profit of $367,969. The costs are conservative in nature and include
a 4% insurance premium ($127,919), maintenance expense ($26,800), and insurance deductible
($10,000).
The insurance deductible acts like a depreciation expense, allowing the City to save $25,000 over
the first ten-year period to cover the full deductible cost if the wind turbine needed to be
completely replaced. The Brown Agency handles the insurance for the City. Each installed wind
turbine will be considered similar to a City building, with a deductible of $25,000. See Brown
Agency letter attached.
The benefits/cost ratio of the annual project revenues over expenses equals 3.23
($532,688/$164,719). When the project revenues and expenses are considered over the 30-year
expected life of the project, the benefits/cost ratio goes up to 3.39 in Year 11 and continues to
Year 30. The reason for the rise is that from Year 11 to Year 30, the $10,000 insurance
deductible is subtracted from costs in Year 11 because the full $100,000 will have been collected
over the first ten years of the project and be sitting in an account earning interest.
Bethel Wind Power Project Times 4 is expected to displace 82,605 gallons of diesel fuel per
year. According to the attached tariff Sheet No. 30.5, filed July 8, 2008 by Bethel Utilities
Corporation, the estimated unit cost for one gallon of diesel fuel is $6.01. Multiplying this diesel
fuel cost by the number of gallons displaced yields an annual displacement value of $496,456.05.
This is significant considering that Bethel Utilities Corporation spent $12,613,915 on diesel fuel
purchases for the twelve-month period ending in July, 2008. Bethel Utilities Corporation has an
arrangement with Crowley Marine, Inc. to receive three to four deliveries of diesel fuel a day
because BUC only has two 20,000 gallon tanks.
The City of Bethel plans to provide a feasible direct benefit to the residents of Bethel by
applying a portion of the project revenue over expenses each year to the City's Water and Sewer
Enterprise Fund. The premise here is that nearly every resident who has an electric service
arrangement with Bethel Utilities Corporation also has a water/sewer service arrangement with
the City. The City operates the water utility and the sewer utility for Bethel residents. By
applying a portion of the project proceeds to the City's Water and Sewer Enterprise Fund, the
City is able to reduce the $500,000 to $700,000 deficit under which it operates each year. By
providing wind turbine proceeds to the fund, the City will be able to stave off a water and sewer
rate increase, keeping the costs lower longer. City Council Resolution #08-23 verifies the City's
intention to provide the public benefit in this way. See a copy of the resolution and the letter
from City Finance Director Laurie Walters for details on the City's intention.
The City chose to allocate a portion of the proceeds to the Water and Sewer Enterprise Fund
because it is more visible to the people than simply putting it in the City's general fund. And the
cost of issuing each electric consumer a check quarterly or yearly was determined to be
unreasonable, especially in light of the fact that the City would have to have the full cooperation
of the privately -held electric utility to get continual customer database updates.
AEA 09-004 Grant Application Page 4 of 27 9/3/2008
/441F ALASKA
ENERGY AUTHORITY
Renewable Energy Fund
Grant Application
The purchase and installation of four commercial wind turbines offers the following major
benefits to the City, community, and other entities considering similar projects: (1) the City will
have actual cost figures from the purchase, installation, operation, and maintenance of the
turbines for post -project evaluation and future project assessment, (2) results on wind
characteristics (intensity, duration, frequency, direction) for a location in city limits, north of
town, four miles away from the met tower data collection site, (3) the City and Alternative
Energy Committee will gain experience in the preparation and submission of wind energy grants;
(4) jobs for residents to transport, install, operate, and maintain the wind turbine(s); (5) increased
potential for Bethel to serve as a wind energy hub community, supplying parts, labor, technical
assistance, and training to surrounding villages; and (6) a true test in western Alaska of a
municipality working with a private utility so the municipality could own and operate wind
turbines connected to the utility grid.
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
$ 3,197,986
(including estimates through construction.
2.5.2
Grant Funds Requested in this application.
$ 2,598,320
2.5.3
Other Funds to be provided (Project match)
$ 599,666
(City cash + previous 2008 AEA/DC grant award
2.5.4
Total Grant Costs (sum of 2.5.2 and 2.53) `
$ 3,197,986
2.5.5
Estimated Benefit (Savings)
$ 496,456 in displaced fuel
per year ($6.01/gallon X
82,605 gallons).
2.5.6
Public Benefit (If you can calculate the benefit in terms of
$ 367,969 per year
dollars please provide that number here and explain how
Annual revenues
you calculated that number in your application.)
($532,688) minus annual
expenses $164,719 .
AEA 09-004 Grant Application Page 5 of 27 9/3/2008
. Renewable Energy Fund
ALASKA
ENERGY AUTHORITY Grant Application
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.
John Sargent, City Grant Development Manager, will be managing the project for the City of
Bethel. A resume, references, and list of work accomplishments during 2007 while Grant
Development Manager are attached.
Mr. Sargent is the first person to fill the Grant Development Manager position since the City
created the position four and half years ago. He works closely with his direct supervisor, the City
Manager. The City Manager reports to and takes direction from the seven -member City Council.
Mr. Sargent is currently administering 12 grant projects ranging from the purchase of equipment
to the purchase of vehicles to the purchase and installation of a 100 kW wind turbine. Mr.
Sargent successfully administered a $500,000 grant for Senior Center renovations in 2006 and
successfully closed the grant. He prepared bid documents, selected a contractor, and oversaw the
contractor's work.
Mr. Sargent will also serve as grant manager for the project and insure the City's compliance
with all Alaska Energy Authority grant requirements. He will be sure that the purchase process is
done according to State of Alaska rules and regulations and the Bethel Municipal Code, the
collection of City ordinances. He will complete the progress and financial reports and include
appropriate supporting documentation.
The City will seek a qualified construction project manager to oversee the construction of the
wind turbine foundation and assembly and erection of the tower and turbine when it goes out to
bid. A representative model project manager might be David Myers with STG. Mr. Myers has
managed the installation of at least ten NorthWind 100 wind turbines with tubular towers in
western Alaska.
Dave Myers was on -site two summers ago in Kasigluk when STG installed three Northwind 100
wind turbines with 50 meter tubular towers. Kasigluk has similar warm -permafrost soil
conditions to Bethel, making his experience there more valuable to the City.
Duane Miller and Associates will likely do the soils analysis and geotechnical analysis. Please
see the ten -page description of Duane Miller and Associates' history, philosophy, values, and
experience all over Alaska. They are the renowned experts in the geotechnical field.
BBFM Engineers, Inc. is an Alaskan engineering company that may bid on the City's project
with STG. A four -page document is attached that provides a company overview, project
experience, company resources that can be brought to bear on the City's project, and the resume
of Vice -President Troy Feller.
AEA 09-004 Grant Application Page 6 of 27 9/3/2008
/441EF-7R ALASKA Renewable Energy Fund
ENERGY AUTHORITY Grant Application
The City is in the process of hiring a new Public Works Director. The individual the City made
an offer to has a great deal of experience installing wind energy turbines. This quality made this
person stand out as someone who can immediately provide value to the City by assisting with the
Bethel Wind Power Project Times 4.
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.)
Bethel Wind Power Project Times 4 will be completely funded by December 2008, if this grant
request is approved. The grant agreement will be signed in January 2009. The City will go out to
bid in January -February 2009 for 30 days, evaluate proposals in five days, obtain approval from
the Alaska Energy Authority of the City's bidding process, sign a contract with the successful
proposer, and order the turbines/towers for delivery and installation in Bethel. The wind turbines
and tubular towers will be manufactured and likely delivered to Seattle in June 2009 for barge
shipment to Bethel by July -August 2009. The wind turbines will be installed in Bethel in August -
September 2009.
Phase III will be completed in its entirety prior to Phase IV. The Request for Proposals the City
will prepare will clearly specify that each of the Phase III items are completed to the satisfaction
of AEA and the City prior to authorizing the contractor/vendor to move to any part of Phase IV.
3.3 Project Milestones
Define key tasks and decision points in your project and a schedule for achieving them.
Tasks
Decision Points
Schedule
City sends project details to
Bethel Utilities Corporation
December 10, 2008 - City
Bethel Utilities Corporation
decides to accept or reject
sends project details to BUC.
(BUC) formally requesting
connection of 100 kW wind
connection of four 100 kW
energy generator to its grid
January 10, 2009 - BUC
wind turbines to BUC electric
and whether to pay the
notifies City of approval or
utility grid.
avoided fuel cost rate to the
rejection. If rejected, BUC
City or offer a reduced
must provide reasons for the
amount. See Bethel Utilities
rejection. The City would
Corporation — Tariff No. 1
then appeal to the Regulatory
document, which contains
Commission of Alaska
word-for-word sections of the
(RCA) for approval to
tariff that deal with an entity
connect. The appeal process
generating alternative energy
is explained in the tariff
and selling it to BUC.
between BUC and RCA.
Prepare Bethel City Council
Bethel City Council decides
January 13, 2009 at 6:30 pm
resolution to approve grant
to accept or reject AEA-09-
is the City Council meeting
agreement and have City
004 grant agreement by way
where they will consider the
Manager put it on City
of resolution. The City
resolution to approve the
Council meeting agenda.
unanimously passed
grant award.
Resolution #08-23 on
September 23, 2008,
supporting the preparation
AEA 09-004 Grant Application Page 7 of 27 9/3/2008
ALASKA
ENERGY AUTHORITY
Renewable Energy Fund
Grant Application
and submission of this grant
application to fund one or
more commercial wind
turbines. See resolution
attached.
City of Bethel signs two
None.
January 14, 2008.
copies of grant agreement
with Alaska Energy
Authority and retains one
original copy.
City issues the Request for
None.
January 14, 2009 — issue date.
Proposals for the purchase,
February 13, 2009 — due date.
shipping, transportation to
site, installation, and
commissioning of four 100
kW wind turbines. Request
goes out for 30 days, per
Bethel Municipal Code.
City evaluates proposals
City proposal review
February 18, 2009.
submitted; selects one.
committee scores proposals
and selects the qualified
proposal with the highest
score.
City confirins proposal terms
None.
February 20, 2009.
with selected
vendor/contractor, prepares
and signs contract for the
purchase and installation of
four 100 kW wind turbines,
towers. Contract to be
turnkey and include purchase,
shipping, transportation to
site, engineering design,
foundation construction,
tower/turbine assembly,
erection of tower,
commissioning, and training
of City maintenance
employees.
Four 100 kW wind turbines
None.
August 20, 2009.
and related apparatuses
assembly complete at factory.
Four 100 kW wind turbines,
None.
September 7, 2009
towers, and related
apparatuses loaded on barge
in Seattle destined for Bethel.
Barge lands in Bethel and
None.
October 1, 2009
wind turbines are off-loaded.
AEA 09-004 Grant Application Page 8 of 27 9/3/2008
/Z7`7��_)ALASKA Renewable Energy Fund
ENERGY AUTHORITY Grant Application
Four wind turbines/towers
None.
October 1, 2009 to
moved to site, fully installed
October 30, 2009
on site.
Wind turbine is
None.
November 2, 2009.
commissioned.
City of Bethel Property
None.
November 3, 2009.
Maintenance crew is trained
to perform routine
maintenance/monitoring of
wind turbines.
Wind turbines begin
None.
November 3, 2009.
operation.
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.
Once the grant is awarded and grant agreements are signed, the City of Bethel will follow the
purchasing procedures and policies as required in each grant agreement from the Alaska Energy
Authority. It will also follow the Bethel Municipal Code, the set of ordinances for the City of
Bethel. One major tenet of these policies is that the City will have to go out to bid in order to hire
a company to provide the four wind turbines, and related engineering and installation services or
make a strong case for a sole source purchase.
Mr. Sargent routinely seeks out information from all vendors and has also had conversations
with Charles Newcomb, Managing Director of Operations for Entegrity Wind Systems, Inc. and
Dennis Meiners with Alaska Powercorp. Each of these companies and others, including Lorax
Energy and Halus Systems, will be provided with an opportunity to bid on Bethel's project,
unless the City decides to pursue a sole source purchase.
In the interest of being prepared for the bidding process and in its effort to prepare this grant
application for funds, the City obtained a quotation from STG, Inc. in Anchorage for the sale and
installation of one and three NorthWind 100 wind turbines. STG provided the City a quote for
the sale and installation of one NorthWind 100 wind turbine for use in the RFP issued in
December 2007 in which AEA teamed up with Denali Commission to award funds. The
$799,554 price quotation included engineering work, construction of foundation, installation of
turbine and tower, NorthWind 100 wind turbine and accessories, commissioning, and training of
City personnel. See the one -page quote attached. The price page also appears as a Page 13 insert
to the full 61-page proposal given to the City.
The City also obtained from STG, Inc. a quotation for the purchase and installation of three
NorthWind 100 wind turbines. See the attached one -page Pricing and Payment Terms sheet that
shows that three turbines can be purchased and installed for $2,392,432 or $798,977 per turbine.
While the construction field is faced with escalating materials cost, there are construction
efficiencies possible when three turbines at once are being installed versus one at a time. The
City hopes to receive a bid lower than both of the quotations given when it goes out to bid
because the City will seek one price for all four turbines to be installed at the same time.
AEA 09-004 Grant Application Page 9 of 27 9/3/2008
AALASKA Renewable Energy Fund
ENERGY AUTHORITY Grant Application
During wind energy workshops in Bethel, the 2007 statewide rural energy conference, and
through emails and telephone calls, the City Grant Development Manager has communicated
with Dave Myers, Project Manager with STG, Inc. and Brent Pingree, Sales Manager for
Northern Power. Reports from customers of STG, Inc., Northern Power, HDL, Coffinan
Engineers, and others who have been part of a successful install of a NorthWind 100 wind
turbine have been extremely positive. Meehra Koeler, CEO of Alaska Village Electric
Cooperative and Brent Petrie, the operations manager, have personally expressed to Mr. Sargent
how satisfied they are with their purchases, installations, and operations of NorthWind 100 wind
turbines. Mr. Petrie expressed in an email that operating six NorthWind 100 wind turbines cost
his company only $20,000 in operations and maintenance expenses. His email is attached.
The City of Bethel appreciates the successful track record of a company like STG, Inc. and a
product like the NorthWind 100 wind turbine that has proven itself to be high functioning in
rural Alaska. The City Grant Development Manager was able to fly to Kasigluk in 2006 and
witness the nearly finished construction of the three NorthWind 100 wind turbine foundations
and the wind -diesel system being installed there. Mr. Sargent was impressed with the
professional "get -it -done" attitude of Dave Myers and how his crew and the crew from Northern
Power worked together to accomplish the same goal. Mr. Myers' experience, leadership ability,
and construction knowledge was evident that day.
Although a personal resume was requested, Mr. Myers chose instead to send the City of Bethel
profiles of two other companies that STG, Inc. is currently working with to install NorthWind
100 wind turbines: BBFM Engineers, Inc. and Duane Miller Associates, LLC. Please see the
two -page BBFM company profile attached and the resume of Troy Feller, BBFM's Principal -in -
Charge attached. See a ten -page company profile attached for Duane Miller Associates, LLC.
Company information about Northern Power, formerly Distributed Energy Systems, is contained
in the 61-page proposal describing the NorthWind 100 wind turbine. Company marketing
material is also attached, which describes in detail some of the unique features of the NorthWind
100 wind turbine and news about the company.
The newly hired City Planner is a man named Daniel Shea. He has ten years experience in the planning
field. He will assume the duties of his position on October 20, 2008. A copy of his resume is attached.
The Project Manager for Bethel Wind Power Project Time 4 will be John Sargent, Grant Development
Manager. He has been with the City in his position for four and half years. He has two formal business
degrees and experience with small crew projects. He successfully managed the City's Community
Development Block Grant in the amount of $500,000 to complete repairs to the Senior Center building.
He has written bid specifications, scoring matrices, contracts, and other documents related to
procurement. Mr. Sargent is currently managing the City's Multiuse Recreation Center construction
project. See his 2004 resume attached and a profile of his accomplishments in 2007 while working for the
City of Bethel in his capacity as Grant Development Manager.
AEA 09-004 Grant Application Page 10 of 27 9/3/2008
ALASKA
ENERGY AUTHORITY
Renewable Energy Fund
Grant Application
3.5 Project Communications
Discuss how you plan to monitor the project and keep the Authority informed of the status.
As project manager, John Sargent will monitor the project and keep the Alaska Energy Authority
informed of the status. Mr. Sargent will provide detailed quarterly progress and financial reports
to keep the Authority informed. He will also send emails and make telephone calls to the AEA to
ask questions, seek approval, and communicate important information.
3.6 Project Risk
Discuss potential problems and how you would address them.
The table below contains some potential problems and their solutions.
Problem I Solution
Bethel Utilities Corporation (BUC) rejects the
City's proposal to install one, two, three, or
four 100 kW wind turbines on City land. Per
the tariff that BUC has with the Regulatory
Commission of Alaska, BUC must respond to
the City within 30 days of its request to install
one or more specific types of turbines.
BUC President Edward Tilbury indicated in a
February 2008 letter to the City that BUC
would allow the City to connect its wind
energy generator as long as it did harm any of
BUC's existing equipment.
Bethel Utilities Corporation (BUC) declines
to purchase power produced by one or more
of the City's proposed wind turbines. The
City anticipates selling 100% of the electricity
generated to BUC at the avoided fuel cost rate
of $.5122/kWh.
The cost of the project ends up being higher
than expected and higher than the amount
budgeted.
The City plans to use its energy consultants,
Electric Power Systems (EPS), to help it
prepare the initial application to BUC to
connect its four wind turbines to the grid.
This effort will reduce the chance of the
problem occurring. If BUC rejects the City's
application to connect its wind energy, the
City will enlist the help of its consultants,
Electric Power Systems, and appeal the
decision by BUC to the RCA.
The City has the option to appeal BUC's
decision to the Regulatory Commission of
Alaska. The City intends to minimize this
problem from occurring by using its
consultants ahead of time in the preparation
and submission of the initial application. The
City will also use its consultants for the
appeal, if necessary.
The City Manager, Grant Development
Manager, and City's Alternative Energy
Committee appeal to Bethel City Council for
additional funds to complete the project. All
seven City Council members are strongly in
favor of the City developing a wind energy
project in Bethel. The City could also apply
for another grant, if the opportunity presents
itself (e.g., Tribal energy grant through the
Tribe or High Energy Cost Grant).
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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.
The Wind Resource Assessment for Bethel, Alaska, compiled and written by the Alaska Energy Authority,
states that Bethel has a Class 4 wind regime and is economically viable. "Areas of Class 4 and higher are
considered suitable for utility -scale wind power development," (Page 5). The study is the result of an
analysis of wind data collected from December 2004 through January 2006 in Bethel. See study attached.
The study indicates that a 16.3 m.p.h. annual average wind speed can be expected at a 50-meter height
(164 ft.) and a 15 m.p.h. annual average wind speed can be expected at 30 meters high (98.42 ft.). The
average wind power density at 50 meters is 440 W/m2 and at 30 meters it is 345 W/mz. The prevailing
wind direction is Northeast.
Not only is the wind resource available in Bethel every month, year-round, but there is land available on
the north/northeast of the buildings in town that could be used for wind energy development sites. Most of
the land surrounding Bethel is owned by private native Alaska allottees. In most cases, the Bureau of
Indian Affairs must be informed by application if one or more pieces of property are being considered for
development. When Bethel begins growing in population again, there will be more pressure to locate wind
turbines farther away from town where people are less annoyed by the noise they put off and their giant
size.
Pros and Cons of Wind Energy Development vs. Other Alternatives
The City of Bethel formed an Alternative Energy Committee in October 2005. The Committee is
composed of volunteers from the community, City employees, and City Council members. The Committee
has met consistently every month since,its inception and has made numerous recommendations to the City
Manager and City Council. The Committee has explored a variety of energy -producing alternatives over
the last three years and wind is the energy source that appears to be the most readily available, the easiest
to understand, and the easiest to develop.
The Committee considered geothermal energy as it reviewed a video describing the Chena Hot Springs
Resort project. The group found out that Amoco paid to have a 14,000 foot hole drilled in or around Bethel
and that there were no significant findings of mineral resources or water warm enough to justify
geothermal development.
Richard Seifert with the Alaska Building Science Network and Cooperative Extension Service at the
University of Alaska Fairbanks, came to Bethel three years ago to teach a three-day course on solar power.
Approximately fifteen people attended the course. After the course concluded, one person who attended
the course was dismayed. He said, "After coming out here and giving us this course, he tells us that we
don't have the right conditions for solar power development." There is one individual in Bethel who lives
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off the energy grid and has two solar panels working to produce electricity. While initial reports are mixed,
there needs to be a formal study to verify whether solar energy development would be worthwhile in
Bethel. The Bethel Tribe, Orutsararmiut Native Council, recently decided to seek funding from the
Renewable Energy Fund in the second funding cycle to pursue a solar power feasibility study for three of
its buildings.
Bethel's biomass options are limited. Alders and willows are two types of trees that seem to be the most
plentiful and grow the fastest in Bethel. The problem with burning them is the low BTUs they provide
relative to other wood types. Burning willow or alders logs in a fire pit will leave little recognizable ash
and it would be a fast burn.
The Alternative Energy Committee held a teleconference with one man who said his company invented a
chemical reformer that could produce hydrogen from solid municipal waste and raw sewage. Committee
members asked him many questions and ultimately recommended that he present to City Council. It was
during his City Council presentation that it was revealed that his company did not have any such unit in
operation anywhere in the country, as he claimed, and therefore there was no way to prove that any of his
claims were true. The chemical reformer was supposed to convert solid municipal waste and raw sewage
into hydrogen and then hydrogen into diesel fuel.
The City is interested in the results of a hydrokinetic study proposed to the Federal Energy Regulatory
Commission by a company called Hydrogreen Energy, LLC. The City and Alternative Energy Committee
members know very little about the company or the project, except that were made aware of its potential.
The wind blows in Bethel nearly every day. The Alaska Village Electric Cooperative purchased and
installed six NorthWind 100 wind turbines in the nearby villages of Kasigluk and Toksook Bay. Although
one turbine in Toksook Bay threw a blade when it was first installed, Northern Power, provided fast repair
service and made all the necessary repairs in short order. AVEC's success with wind turbines in Yukon-
Kuskokwim Delta villages proves that wind in this area is a resource worthy of developing.
4.2 Existing Energy System
4.2.1 Basic configuration of Existing Energy System
Briefly discuss the basic configuration of the existing energy system. Includeinformation about
the number, size, age, efficiency, and type of generation.
Bethel Utilities Corporation owns and operates the Bethel Power Plant. The plant uses six 2,500 kW EMD
16-cylinder turbo diesel generators to produce electricity for households in Bethel, Oscarville, and
Napakiak. Typically, two to three generators will be running at any time to handle the load. Three
generators are there as backup generators.
The Power Plant has manual switch gear and gauges that help local operators determine how to operate the
diesel generators efficiently. Several plant operators have ten or more years experience at the facility. Plant
Manager Lenny Welch has 25 years in with the company. Mr. Welch said that he was there when
automatic switch gear was installed at the plant and relied on only to have it fail and he and his human
element was required to save the day and restore power. This and other experiences in rural Alaska where
experts to repair sophisticated equipment and electronics are not available have convinced the Plant
Manager that his current system is very reliable, easy to repair, and simple to understand.
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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.
A few natural resources in Bethel are plentiful: sand, silt, permafrost, alders, willows, water, wind, and
extreme cold temperatures. Most of these cannot serve as energy resources. Wind is the one energy
resource in Bethel available year-round, has been proven to be economically viable in neighboring
villages, and has been recommended to the City by the Alaska Energy Authority, Electric Power Systems,
National Renewable Energy Laboratories, and private developers.
The Kuskokwim River is the second largest river in Alaska. It flows 400 miles from its source to the
Bering Sea. It flows right by the community of Bethel. The river is a vast, untapped potential energy
source. A hydrokinetic system or other river energy generating technology should be investigated.
Bethel Utilities Corporation uses diesel fuel to power its generators to make electricity. Most of the homes
in Bethel use Toyo stoves or boilers that consume heating oil. Many people are installing wood burning
stoves in their homes as a backup source of heat or as a cheaper supplement to heating oil.
Bethel Wind Power Project Times 4 will require Bethel Utilities Corporation to purchase and burn 82,605
less gallons of diesel fuel a year. This means that BUC will purchase less diesel from Crowley Marine,
Inc., owner of the tank farm in Bethel. Crowley will experience $496,456 less in its sale of diesel each
year ($6.01/gal. X 82,605). The City will not collect its 6% sales tax on the sale ($29,787).
4.2.3 Existing Energy Market
Discuss existing energy use and its market., Discuss impacts your project may have on energy
customers'.
Bethel is the largest western hub community in Alaska. With a population of 5,650, according to the
Alaska Department of Labor and Workforce Development, the residents require 42,000,000 kWh or so a
year. The long, dark winter months (late October to March) create a larger demand on the Bethel Power
Plant to produce electricity for Bethel consumers. Most homes and apartments in Bethel that have toyo
stoves or boilers that burn diesel fuel (heating oil) need electricity to operate.
There are a few large commercial users of electricity: Alaska Commercial Company, Yukon-Kuskokwim
Health Corporation administration building, Yukon-Kuskokwim Health Corporation hospital, Lower
Kuskokwim School District, and the City of Bethel.
Bethel Utilities Corporation owns and operates six ED 645 diesel generators. The company runs 2-4 of the
generators at any one time, depending on demand, with the others serving as back-up generators. The
generators are over 30 years old, but in excellent condition. The company completely rebuilds one
generator every summer, in other words, each generator is rebuilt every six years. The company has no
plans of which the City is aware to upgrade its diesel generators or pursue renewable energy sources.
The City's project will have a positive impact on energy consumers. The first thing that will happen will
be an excitement about the City's wind energy development effort because a large number of people in
town are disenchanted, disappointed, and downright angry with Bethel Utilities Corporation. The City's
wind energy project will give the people hope that "something can be done," that the people are not
powerless against the regulated monopolistic giant.
Although the City's project or any wind energy project is unlikely to reduce the cost of electricity in
Bethel, it can reduce the need to raise rates. The City plans to establish an Energy Enterprise Fund in its
Caselle accounting system to track revenues and expenses for the project. An equal share or majority share
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of the proceeds, revenues over expenses, will be transferred from the Energy Enterprise Fund to the City's
Water and Sewer Fund. In this way, the City is providing a direct benefit to the public and can hopefully
delay another rate increase to support the cost of delivering its water and sewer services.
The installation of 100 kW commercial wind turbines in Bethel will stimulate other wind energy projects.
Non -for -profit entities, for -profit businesses, and homeowners will be considering projects ranging from 1
kW to 500 kW in size. The City will break ground for others who wish to produce and sell power to the
utility by formally requesting connection of its alternative energy generator, signing a power purchase
agreement, and receiving payments for kilowatt hours produced. Individuals will rush to evaluate the
benefits and costs associated with purchasing, operating, and maintaining 1 kW and 3 kW machines.
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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 technologyspecific to project location
• Optimum installed capacity
• Anticipated capacity factor
• Anticipated annual generation
• Anticipated barriers
• Basic integration concept
• Delivery methods
The attached Bethel City Shop Wind Energy Project: The Installation and Operation of a
NorthWind 100, a Feasibility Study, dated February 10, 2008 provides information relevant to
this section. Whereas the City Shop site was evaluated in the study, the flat land across the street
from the City Shop and a little farther to the north is the site location for Bethel Wind Power
Times 4. The City Shop yard does not afford much room for more than one or two turbines. The
tundra land adjacent to the road rises up out of a drainage area and is flat right next to the road
and flat to the northeast and east, offering plenty of suitable land for construcing wind turbine
foundations. See PowerPoint slide show attached that contains two photos of the proposed site.
The proposed site for the four wind turbines is ideal because it is owned by the City. It is flat with
no major development of significant size to the north, northeast, or north, except the Recycling
Center building. Flat land that plains away from the turbine area toward the source of the wind is
a key feature of the site. Aside from the Recycling Center, there is a small utility maintenance
shed near the landfill that should be far enough away so as not to cause distortion. See the map
attached that shows where the site for the four turbines are relative to the rest of the city
infrastructure.
The project calls for an installed capacity of 400 kilowatts in the form of four 100 kW wind
turbines. The four turbines will be placed relatively close to the powerlines that run along the
street from telephone pole to telephone pole. The exact siting for each turbine will be done by an
expert as part of the installation contract.
The anticipated gross capacity factor is 26% and the net capacity factor is 24% for the project.
This information can be found on Page 13 under the Northern Power column in the Wind
Resource Assessment for Bethel, Alaska attached.
Bethel Wind Power Project Times 4 plans to generate 1,040,000 kWh of power or 2.4% of the
total amount of power generated last year by Bethel Utilities Corporation (42,464,000). Each of
the four NorthWind 100 wind turbines with blade extenders is expected to generate 260,000 kWh
per year.
There are no barriers to this large scale construction project, but there are challenges. One
challenge is dealing successfully with Bethel Utilities Corporation to ascertain an interconnection
agreement and a power purchase agreement. BUC owner Ed Tilbury has given us every
indication that he is likely to approve the City's addition of four alternative energy generators to
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the BUC grid as long as the City can satisfy BUC that no harm will come to existing BUC
equipment.
Another challenge is making sure the City has a sufficient amount of funding to cover unexpected
costs associated with the project. The City hopes to benefit by the price decrease of the NW 100
turbine over the last three years, the decline in the price of commodities in the last two months,
and the economies of scale achieved by bidding the installation of four turbines at once. It is
hoped that these decreases counterbalance any increase in inflation for other goods and services.
The City of Bethel plans to situate the turbines on the flat parcel of land next to the dirt road
leading to the landfill. One hundred percent of the electricity generated will be sold to Bethel
Utilities Corporation. Whereas this stipulation was a requirement in AEA's previous RFP, it will
now be a project standard.
4.32 Land Ownership
Identify potential landownership issues, including whether site owners have agreed to the
project or how you intend to approach land ownership and access issues,
The City of Bethel owns a 320-acre section of land north of town called the Lagoon Parcel. A
photocopy of the plat and certificate of ownership verifying City ownership are attached.
The City's land abuts the Lower Kuskokwim School District (LKSD) property where the new
Kilbuck Elementary School is being constructed. Across the property line the City shares with
LKSD, is a large shop building, three elementary schools, the district administration building, and
the high school. While the boundary line abuts the school district property, the actual location for
the turbines is higher ground about a quarter mile farther north. Thus, there are no residents living
on the school property. The buildings are only occupied during the weekday by administrators,
staff, teachers, and students.
The Bethel Municipal Code requires any developer to solicity comments from any household
located within 600 feet of the proposed development. The City believes the turbines will be sited
more than 600 feet away from any households. There are no households on Ridgecrest Drive in
front of the wind turbine site for one-third mile in both directions.
The school building closest to the wind turbines will still be greater than 600 feet from the
proposed wind turbine sites. If a proposed development in Bethel is within six hundred feet of
neighbors, each of the households inside the 600 ft. radius, must be given notice and have a
chance to comment. is the distance the City of Bethel requires
The City hired a new Planner, who will be taking his office on October 20, 2008. The Planner has
a great deal of influence in how site plan applications and conditional use permit applications are
handled and presented to the Planning Commission for approval. His resume is included for
review.
The City expects no land issues or access issues associated with this project. The land for the
wind turbines is north of town, on the right hand side of the road, opposite the Public Works
Building (City Shop). There are no housing units nearby; certainly not within 600 ft. The City has
the flexibility to move the turbine install sites up the road, toward the Recycling Center, if it is
warranted.
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4.3.3 Permits
Provide the following information as i
The City of Bethel's Grant Development Manager was told by Rick Abboud, former City
Planner, that he should expect to complete a site plan permit application and a conditional use
permit application and have it approved by the Planning Office in the City. The $100 application
fee will be waived.
Once the City's new Planner, Daniel Shea, begins work on October 20, 2008, the applications
will be completed and submitted to his office. Final approval is expected prior to this grant
application being approved and awarded in December 2008. The City will have both permits in
hand by the time of the award announcement.
A Coastal Project Questionnaire (CPQ) will also be completed to see if there are any issues with
regulatory bodies or federal or state agencies. The CPQ is a quick tool to determine if more
formal permits are required.
4.
The City of Bethel will obtain all necessary permits through its own efforts and, if necessary by
requirement in its Request for Proposals. Being familiar with permitting in Bethel and permitting
as it relates to the wind energy development projects, the City does not expect obtaining permits
to be a problem or a barrier. Obtaining permits is part of Phase III and will be done prior to
beginning Phase IV.
The City believes that the project site is inside the Bethel General Permit area of Bethel and
therefore categorically excluded from the U.S. Army Corps of Engineers environmental review
requirements. The Corps is concerned about the deposit of fill in wetland areas. The City does not
anticipate depositing fill as part of this project.
Over the last two years, the City Grant Development Manager called the U.S. Fish and Wildlife
Service and the Alaska Department of Fish and Game to see if there were any issues of concern
for either agency when it came to wind tower erection. The U.S. Fish and Wildlife Service said
that there are no endangered species in Bethel and that none routinely pass by Bethel. The City
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will request a signed letter from both agencies acknowledging that no issues exist before the
December grant announcement.
No archeological or historical resources are expected in the project area. The area is flat tundra.
There is no overt evidence that anyone ever lived there before or left any articles of archeological
significance. The City will obtain a letter from the State Historic Preservation Officer saying that
no issues are present.
There are no land development constraints. The City of Bethel has no zoning restrictions or
building codes that would preclude the construction of four wind turbine foundations.
The City is not aware of any telecommunication interference that might result from the
construction and operation of the four commercial wind turbines. Upon request, the City will
consult with United Utilities, GCI, or another telecommunications service provider to obtain a
letter indicating that the turbines will not interfere with their operations.
The City has contacted the Federal Aviation Administration (FAA) several times over the years in
preparation for the day when it would be developing a wind energy project. The FAA said the
towers cannot be within 200 ft. of the flight path to and from the airport runway. Bethel Wind
Power Project Times 4 will be constructed to the east of Ridgecrest Drive, north of the City Shop,
approximately five miles or more away from the airport.
The City does not expect anyone to complain about the turbines being a visual obstruction or
negatively impacting the area's aesthetic appeal. There are no housing units within 1,000 feet or
more of the proposed turbine site. The nearest buildings are owned by the City. They are
occupied by City employees during the week from 8 am to 5 pm: Recycling Center, Utility
Maintenance building, and Public Works building. The Lower Kuskokwim School District
buildings are occupied during the weekdays by district employees, students, and visitors. No
complaints are expected from school district personnel for several reasons: the buildings are
located far enough away so as not block building window views, the building occupants are there
for work or attendance purposes and do not live there, and the school district has expressed
interest in developing its own wind power project and would likely show strong support for the
City's project.
The wind turbines are not expected to interfere with snowmobile travel and each of the four will
not block any existing snowmobile trails. The nearest trail runs along Brown Slough to the east of
the turbine site and down the slope.
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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
Project development costs are shown on the table containing the Capital Cost Summary and Project
Annual Income and Expenses. Some of these figures also appear in the Grant Budget and Cost Worksheet.
Total anticipated project cost: $3,197,986.
Grant funding requested: $2,598,320.
Applicant matching funds: $599,666 ($199,889 City cash + $399,777 AEA & Denali Commission grant)
Other funding sources: none
Projected capital cost of proposed renewable energy system: $3,197,986
Projected development cost of proposed renewable energy system: $0
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
Annual operating and maintenance costs for new facilities: $164,719
These costs to be funded from the annual revenues generated from the project: $532,688
No grant funding requested for this phase.
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 rant -funded project
Potential buyer of power produced: Bethel Utilities Corporation
Potential power purchase price: $.5122
Proposed rate of return from grant -funded project: 555.82% (total profit over 30 years / total project cost)
($17,774,961 / $3,197,986)
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4.4.4 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.
Cost Worksheet completed. See attached.
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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.
The City intends to operate a sustainable project. The revenues generated from the sale of electricity
produced by the four commercial wind turbines will be used to pay the operating expenses. Revenue over
expenses equals $367,969 for an average year.
The City Property Maintenance Division will be trained on how to perform routine maintenance on the
four turbines. Paul Wold is the foreman, Claire Grifka and Adrian Wolard are maintenance workers. A
remote monitoring device will be placed in Paul Wold's office so that he will know about any problems in
advance. The City will keep a list of wind technicians current who are able to work on major repairs, if
and when needed. Northern Power issues a two-year warranty upon the sale of NorthWind 100s. As a
result, the City expects very few problems in the first two years. See letter attached from Paul Wold
agreeing to honor the City's commitment to maintain the wind turbines. City Resolution #08-23 attached,
passed on September 23, 2008, says, "the City promises to administer the grant properly, including the
purchase, installation, operation, and maintenance of each and every wind turbine purchased with some or
all of these grant funds."
The City Finance Department will create the Energy Enterprise Fund using its Caselle accounting
management software. All revenue and expense data for Bethel Wind Power Project Times 4 will be
recorded in this account. The Fund will record the insurance deductible amount each year ($10,000) in a
subaccount. This amount will be collected for ten years so that the City will have four deductible amounts
of $25,000 each in case it needs to replace one or more of the turbines. The $25,000 amount is the
insurance deductible for each turbine. See City interoffice memorandum from Finance Director Laurie
Walters describing the process further.
The City Finance Department will also make regular entries in its accounting software to have a portion of
the revenue from the Energy Enterprise Fund transferred to the Water and Sewer Enterprise Fund. In this
way, the City will provide a more direct benefit to the residents of Bethel. The Water and Sewer Enterprise
Fund is currently running at a deficit of $500,000 to $700,000 a year. The transfer of revenues to the
Water and Sewer Enterprise Fund will help cover the City's cost of providing hauled water and sewer
service and piped water and sewer service.
4.4.6 Analysis and Recommendations
Provide information about the economic analysis and the proposed project. Discuss your recommendation
for additional project development work.
The economic analysis to evaluate Bethel Wind Power Project Times 4 was based on the model developed
by Electric Power Systems and used in Bethel City Shop Wind Energy Project: The Installation and
Operation of a NorthWind 100, a Feasibility Study. The Study was submitted to the Alaska Energy
Authority and Denali Commission during the last grant cycle and is attached herein.
The analysis involved making formulas and adding data to two spreadsheets: (1) Capital Cost Summary
and Project Annual Income and Expenses, and (2) Benefits/Cost Ratio over 30-year Expected Life of
NorthWind 100 Wind Turbine. See both of these documents attached.
The project cost includes the turnkey price provided to the City by STG for the purchase and installation
of one NorthWind 100 wind turbine and the purchase and installation of three NorthWind 100 wind
turbines. The quote for one turbine was used by the City in the previous AEA/DC grant application period
and it was 50% funded as a result. The quote is used again here so that the City can request the unfunded
part of that one turbine ($201,388) and still maintain its match of $199,889. The City chose to include the
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paritially funded turbine as part of Bethel Wind Power Project Times 4 so that it could get one larger
project funded and installed at a less expensive rate per turbine than if each of the four were put in one -by -
one. The City wants to achieve the savings associated with purchasing and installing four turbines at once.
The "BUC charge for meter and connection to grid" as listed on the Capital Cost Summary came from
Lenny Welch, BUC Plant Manager in Bethel. Mr. Welch indicated to the City's Grant Development
Manager in conversations over the years that for any turbine the City installed, the City would have to pay
BUC $500 for a meter to measure the energy production from it. BUC also wants approximately $1,000 as
a service connection fee per turbine. These costs, although not large in size, were added to capital costs to
keep all of the project costs together.
Bethel Wind Power Project Times 4 is extremely lucrative on paper, providing a profit each year of
$367,969. This money will go into a new account at the City called the Energy Enterprise Fund, where it
will be tracked, managed, and expensed. A portion of the profit from the project will be transferred
periodically to the City's Water and Sewer Fund as a way to subsidize the high cost to deliver water and
sewer services.
Future Development Work
The community of Bethel has a long-term problem when it comes to purchasing and installing wind
turbines that sell power to BUC. The problem is that BUC is using manual switch gear and older,
mechanical technology that will only allow a small kW total of renewable energy generators to connect to
the grid. BUC Plant Manager Lenny Welch thinks that number might be around 400 kW. Dan Rogers with
Electric Power Systems thinks the number might be closer to 1,500 kW. While a study to determine the
kW amount that cold be added would be helpful, the larger, more penetrating question is how much will it
cost to upgrade BUC so that there is no limit to how much renewable energy can be added to the grid. The
City has offered its grant preparation services to BUC to help it fund such an upgrade.
Another impetus for the study to determine the cost and nature of equipment necessary to upgrade BUC's
gear is that high cost of electricity in Bethel is motivating organizations to plan wind energy projects,
incorporate them into new building projects, and use undeveloped land for turbines. Bethel Native
Corporation (BNC) and Village Wind Power are working on a feasibility study to see if BNC land on the
west side of town is suitable to support up to 20 NorthWind 100 wind turbines. The Association of Village
Council Presidents — Regional Housing Authority is working with architects and engineers to incorporate
wind energy in the construction of its apartment complex. The Yukon-Kuskokwim Health Corporation is
considering putting wind turbines on contaminated land it controls north of BIA Road in Bethel. The
Orutsararmiut Native Corporation is interested in pursuing funding in AEA's second application period to
study the feasibility of applying solar power to three of its buildings in Bethel.
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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
The City anticipates displacing 82,605 gallons of diesel fuel per year with Bethel Wind Power Project
Times 4 or 20,651 gallons per turbine. This displacement figure is based on a BUC efficiency quotient of
12.59. The efficiency calculation is shown on the bottom of the Capital Cost Summary sheet. A BUC
projection of the amount of kilowatt hours it planned to produce for the three month period beginning July
1, 2008 (9,013,544) was divided by 715,535 gallons of diesel fuel it planned to consume to generate the
kilowatt hours in the same period.
The City plans to take full advantage of BUC's recent 52.62% increase in its avoided fuel cost rate from
$.3356/kWh in May 2008 to $.5122/kWh effective August 1, 2008. In the tariff BUC has with the
Regulatory Commission of Alaska (RCA), a rate sheet must be calculated each quarter that contains the
"Rate for Purchase of Non -Firm Power Trom Qualifying Facilities." This rate is the avoided fuel cost rate.
The City undertook a research project and downloaded five years worth of BUC's avoided fuel cost rate
sheets from the RCA website. The rates were entered on a spreadsheet and evaluated for trends. A clear
trend emerged. The rate has gone up markedly from $.1570/kWh effective August 1, 2003 to $.5122/kWh
effective August 1, 200—a 226% increase! The rate went up an average of 7.39% per quarter and an
average of 17.85% over the five-year period. These data point to the likelihood that the City's project is
sustainable based on an escalating cost of diesel fuel
There are other incentives and economic benefits for which the City needs to explore and determine a
value, including green tags, tax credits, and shared contributions/shared benefits with other organizations.
The City explored and evaluated the hard numbers, the benefits it could measure, anticipate with high
certainty, and feel comfortable in its simplicity, directness, and avoidance of more sophisticated financial
analysis tools, like Present Value, Future Value, and discount rate.
Bethel Wind Power Project Times 4 has the following benefits over project's 30-year life:
l . City able to break ground with BUC and establish Power purchase Agreement and Intertie
Agreement. These agreements will help set the stage for future City projects and be shared with
other organizations to assist in their wind power project development.
2. City able to move rapidly along the learning curve in the process of developing a wind power
project, including grant -writing for wind power development, purchasing of equipment, supplies,
and materials, and operating, maintaining, and cleaning the equipment.
3. Four wind turbines offer Yuut Elitnaurviat, "The People's Learning Center," a golden opportunity
to design a wind technician certificate course or adopt curriculum from another adult vocational
school. Executive Director Lamont Albertson has expressed interest in offering training for wind
technicans and Bethel is the perfect hub community to provide it service to nearby villages.
AEA 09-004 Grant Application Page 24 of 27 9/3/2008
4GUETJ ALASKA Renewable Energy Fund
ENERGYAUTHORITY Grant Application
4. Prove to the Bethel community, surrounding villages, outside wind experts, equipment/service
vendors, and private developers that wind power is a viable resource in Bethel worthy of
investment. This may draw private developers to consider investing in wind energy in this town.
5. The City will have the ability to share data, experience, and results of project with Bethel
residents, business owners, agencies, and interested parties as a way to foster the development of
wind power projects in Bethel and surrounding village communities.
6. By allocating a portion of project profit to the City's water and sewer fund, the City is able to
show the people of Bethel how it benefits them more directly than disappearing into the City's
general fund.
7. Purchasing and installing four commercial wind turbines equal to 400 kW of capacity gets the
community closer to discovering that unknown quantity of kW generators that can be connected to
the utility grid and sell power to BUC. It sets the stage for other organizations to carry the flag and
charge! As wonderful as a charge toward wind is in itself, a local charge toward freedom and
independence from price oppression is a greater calling.
8. The City will have the opportunity to evaluate the wind regime on the east side of town by
purchasing and installing anemometers at the time it installs the turbines. Developers can never
have enough wind data. It will only make the next project better.
9. Children in Kilbuck Elementary School, Mikeingut Elitnaurviat Elementary School, Ayaprun
Elementary School, and Bethel Regional High School, will be able to see the four turbines in the
distance from their school grounds. The children will be excited to learn about wind energy, take
field trips to the turbine site, and maybe adopt green values.
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.xis
Total project cost: $3,197,986. See Capital Cost Summary sheet attached.
Amount of renewable energy grant funds requested: $2,598.320
The City incurred $71,129.51 in its 60% wind energy feasibility study to learn as much as it has
over the last two years. The study was done by Electric Power Systems. The City stopped the
study at the 60% stage because of the lack of cooperation on the part of BUC and the resulting
limited value perceived if EPS were to make too many guesses in the study about what they
thought was "probably true," regarding the distribution map, etc.
The City has invested numerous hours in discussion with potential wind system vendors,
contractors, Alaska Energy Authority personnel, electric utility managers, consultants, and in
Alternative Energy Committee meetings discussing issues and making decisions. The Alternative
Energy Committee has met once monthly for three years with four of its original members. The
Committee made about twenty recommendations to the City Manager and played a large role in
decisions affecting the wind energy feasibility study.
The City will consider making additional investments surrounding this project, including
purchasing an anemometer, hiring consultants to site the turbines, and hiring consultants to help
the City prepare the request to Bethel Utilities Corporation for connection to the grid and
negotiating a power purchase agreement.
AEA 09-004 Grant Application Page 25 of 27 9/3/2008
A L A S K A
ENERGY AUTHORITY
Renewable Energy Fund
Grant Application
Budget costs are included in GrantBudget.xls, Capital Cost Summary, and Benefits/Cost Ratio
over 30-year Expected Life of Northwind 100 Wind Turbine.
AEA 09-004 Grant Application . Page 26 of 27 9/3/2008
Renewable Energy Fund
fidEFF-ALASKA
0[::�) ENERGY AUTHORITY Grant Application
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
Lee Foley
n �I-q C
Signature
r --
Title
Acting City Mana r
Date
October 6, 2008
rG 6 /08"
AEA 09-004 Grant Application Page 27 of 27 9/3/2008
/wE:) ALASKA ENERGY AUTHORITY Renewable EnergyFund
<u
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
The Applicant should demonstrate that the renewable energy resource is available on a
sustainable basis.
Annual average resource availability. The Wind Resource Assessment for Bethel, Alaska
conducted by the Alaska Energy Authority in 2006 used
one year of meteorological tower data and historical
wind data from the National Weather Service. The report
reveals that Bethel has Class 4 wind resource or a
"Good" rating according to study's author; 16.3 m.p.h.
average annual wind speed at 50 meter height; 15
m.p.h. average annual wind speed at 30 meters height;
440 W/m2 average wind power density at 50 meter
height; and 345 W/m2 average wind power density at 30
meters. See Wind Resource Assessment attached.
Unit depends on project type (e.g. windspeed, hydropower output, biomasss fuel)
2. Existing Energy Generation (Information for Bethel Utilities Corp.)
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
Six 2,500 kW EMD 645 diesel generators.
Unknown by City of Bethel.
EMD 645 16-cylinder turbo diesel generators
32 years old.
12.59 kWh/gal. estimated for three months
beginning July 2008.
Calculation: 9,013,544 kWh to be produced divided
by 715,534 gallons to be used.
Source: Bethel Utilities Corporation tariff, 68`h
Revised Sheet No. 30.5: Determination of Cost of
Power Adjustment. See copy attached.
b) Annual O&M cost (if system is part of the Railbelt grid, leave this section blank)
i. Annual O&M cost for labor BUC O&M costs for labor unknown by City of Bethel.
ii. Annual O&M cost for non -labor BUC O&M costs for non -labor unknown by City of Bethel.
c) Annual electricity production and fuel usage (fill in as applicable) (if system is part of the
Railbelt grid, leave this section blank)
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 AEA 09-004 Application Cost Worksheet revised 9126108 Page 1
/' ALASKA Renewable EnergyFund
Off—D ENERGY AUTHORITY
i. Electricity [kWh] 42,464,000 kWh generated from July 2007 to June 2008.
39,513,604 kWh sold from July 2007 to June 2008.
Source: BUC tariff and Tariff Advice Letter enclosure dated July 8, 2008. See
six -page letter and enclosures attached.
ii. Fuel usage
Diesel [gal] 3,073,580 gals. used July 2007 to June 2008.
Other
iii. Peak Load 5,350 kWh in Sep. 2008; 6,900 kWh in Jan. 2008.
iv. Average Load Unknown by City of Bethel. Information not known by Lenny Welch, BUC
Plant Manager during telephone call to him on October 6, 2008.
v. Minimum Load 3,100 kWh in Sep. 2008;
vi. Efficiency 12.59 kWh/gal. estimated for three months beginning July 2008.
Calculation: 9,013,544 kWh to be produced divided by 715,534 gallons to be
used.
Source: Bethel Utilities Corporation tariff, 68`h Revised Sheet No. 30.5:
Determination of Cost of Power Adjustment. See copy attached.
vii. Future trends No future diesel or renewable energy generator purchases planned by utility.
d) Annual heating fuel usage (fill in as applicable)
i. Diesel [gal or MMBtu] NA
ii. Electricity [kWh] NA
iii. Propane [gal or MMBtu] NA
iv. Coal [tons or MMBtu] NA
v. Wood [cords, green tons, dry tons] NA
vi. Other NA
a) Installed capacity 400 kW
b) Annual renewable electricity generation
i. Diesel [gal or MMBtu]
ii. Electricity [kWh] 1,040,000 kWh (4 turbines X 260,000 kWh/turbine)
iii. Propane [gal or MMBtu]
iv. Coal [tons or MMBtu]
v. Wood [cords, green tons, dry tons]
vi. Other
RFA AEA 09-004 Application Cost Worksheet revised 9126108 Page 2
/' ALASKA Renewable Energy Fund
4. Project Cost
a) Total capital cost of new system
b) Development cost
c) Annual O&M cost of new system
d) Annual fuel cost
5. Project Benefits
$3,197,986
Included in capital cost of new system above.
$164,719
$0
a) Amount of fuel displaced for
i. Electricity 82,60.5 gallons of diesel fuel displaced per year over 30 years.
ii. Heat
iii. Transportation
b) Price of displaced fuel $6.0102/gallon (Source #1)
Source #1: Bethel Utilities Corporation tariff, 68th Revised
Sheet No. 30.5: Determination of Cost of Power Adjustment.
See copy attached.
Source #2: Telephone call to Crowley Marine, Inc. in Bethel,
AK on October 6, 2008 revealed that BUC currently pays
$5.40/gal. + $.05/gal. delivery charge for DF #2 (diesel) as a
contract price. Price at the pump for all others is currently
$6.23/gal.
c) Other economic benefits` • Allows Bethel to serve as wind energy hub for
surrounding villages (storing turbine parts, sending
out service technicians, providing technical
assistance to developers, sets Bethel up as ideal
conference/workshop site).
• Opens the door for Yuut Elitnaurviat "The People's
Learning Center," an adult vocational center in
Bethel, to offer wind technician courses and
certificate programs. Yuut serves 18-25 year -olds
from Yukon-Kuskokwim region. Yuut has student
dorms.
• Allows local contractors to see how wind turbine
foundations are constructed, towers assembled, and
wind turbine installed, which may encourage them to
go into this line of business.
• Provides some money for local businesses that are
able to participate in wind turbine installation
contract work (e.g., pile driving company, welder).
• Gives Bethel valuable information on actual wind
energy production that will open the door to more
wind energy development opportunities, including
offsetting cost of power to operate new recreation
center to be built and offsetting cost of power for
RFA AEA 09-004 Application Cost Worksheet revised 9126108 Page 3
/ALASKA Renewable Ener Fund
F- ENERGY AUTHORITY g y
proposed wastewater treatment plant.
• Less wear and tear on diesel generators operated
by Bethel Utilities Corporation.
• Reduced need for Bethel Utilities Corporation to
purchase another diesel generator to handle
population increase in Bethel, Napakiak, and
Oscarville, the three communities to which BUC
provides power.
d) Amount of Alaska public benefits $864,442 per year
$367,969 (annual revenue — annual expenses) + $496,473
(displaced diesel fuel - $6.01/gal. X 82,605 gals.)
6. Power Purchase/Sales Price
a) Price for power purchase/sale $.5122/kWh
7. Project Analysis
a) Basic Economic Analysis
Project benefit/cost ratio
Payback
3.23 from Year 1 to Year 10; 3.39 from Year 11 to Year 30.
The Benefits/Cost Ratio goes up in Year 11 because the insurance
deductible amount will not be taken out as a cost and therefore is no
longer considered an expense. See Benefits/Cost Ratio Over 30-Year
Expected Life of NorthWind 100 Wind Turbine table on 11" by 17"
paper attached.
8.69 years total project costs / .54 years on City contribution.
RFA AEA 09-004 Application Cost Worksheet revised 9126108 Page 4
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List of Attachments to Grant Application
Bethel Wind Power Project Times 4
City of Bethel
Wind Resource Assessment for Bethel, Alaska
Bethel City Shop Wind Energy Project
The Installation and Operation of a NorthWind 100: A Feasibility Study
City of Bethel Land Ownership
• Plat of Lagoon Parcel and Certificate of Ownership
Maps
• Bethel in relation to Alaska
• Location of wind turbines in Bethel, Alaska
• Map of proposed site for four 100 kW wind turbines and towers
City of Bethel Commitment
• Resolution #08-23: A Resolution Supporting the Preparation and Submission
of a Grant Application to the Alaska Energy Authority for the Purchase and
Installation of One or More Commercial Wind Turbines
• Memorandum: Energy Enterprise Fund and Water & Sewer Utility Enterprise
Fund
• Letter from Paul Wold to Butch White
BUC Avoided fuel Cost Rate and BUC Tariff Information
• Rate of Purchase of Non -Firm Power From Qualifying Facilities
• Tariff Advice Letter No. 208-43, July 8, 2008
• Five-year History of Bethel Utilities Corporation's Changes in Rates for
Purchase of Non -Firm Power From Qualifying Facilities
• Bethel Utilities Corporation — Tariff No. 1
Project Cost Information
• NorthWind 100 Wind Turbine Proposal (2 pages)
• Table 5. Construct and Install 3 Wind Turbines
• Email from Brett Pingree, Wind Business Manager
• Letter from Brown Agency, October 3, 2008
• Email from Dave Myers, Project Manager, STG Inc.
• Email from AVEC's Brent Petrie Verifying Low Maintenance Cost of NW 100
• Email from David Myers, Project Manager with STG, Inc.
Project Economic Analysis
• Capital Cost Summary / Project Annual Income and Expenses
• Benefits/Cost Ratio Over 30-Year Expected Life of NorthWind 100 Wind
Turbine
• Resume of John Sargent
• Work Performance and Accomplishments for John Sargent
• References for John Sargent
• Resume of Daniel Shea, City Planner
• BBFM Company Overview
• Duane Miller Associates: Company Overview,