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HomeMy WebLinkAboutYakutat Wave Energy Conversion App November 10, 2008 Renewable Energy Grant Fund Alaska Energy Authority 813 West Northern Lights Blvd. Anchorage, AK 99503 Re: Yakutat Power – Renewable Energy Fund Grant Application – Letter of Commitment Application Review Committee: Yakutat Power is pleased to submit the attached application for a Renewable Energy Fund Grant for a Wave Energy Conversion (WEC) Project, an eligible renewable energy project as defined under HB 152. Yakutat Power is authorized by the Regulatory Commission of Alaska to provide power to the community of Yakutat under Certificate of Public Convenience and Necessity, CPC&N No. 53. The attached Application documents and describes the proposed WEC project. The total estimated cost of design, permitting, construction, and development and testing for the pilot plant is $6,944,000. The estimated fuel savings as a result of this project is 85,000-gallons starting in year 4. Yakutat Power commits to this project a cash Match of up to $44,000. Yakutat Power strives to keep electric costs as low a possible by maximizing operating efficiencies and reducing operating costs. This project will provide a significant improvement toward meeting this continued goal, and will greatly benefit the community of Yakutat. Yakutat Power welcomes and fully supports this opportunity to work with the Alaska Energy Authority to implement this innovative wave energy conversion project, and requests the Review Committee carefully review the merits of this application. We welcome your review and evaluation of our proposal, and look forward to working with you on this project. If you have any questions about this project, please feel free to contact me at (907) 784-3242 Sincerely, Scott Newlun General Manager Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 1 of 24 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 24 9/3/2008 SECTION 1 – APPLICANT INFORMATION Name (Name of utility, IPP, or government entity submitting proposal) Yakutat Power Type of Entity: Certificated Electric Utility Mailing Address Yakutat Power PO Box 129 Yakutat, AK 99689 Physical Address Yakutat Power #1 Forest Hwy. Yakutat, AK 99689 Telephone (907) 784-3242 Fax (907) 784-3922 Email yakpower@ptialaska.net 1.1 APPLICANT POINT OF CONTACT Name Scott Newlun Title General Manager Mailing Address Yakutat Power PO Box 129 Yakutat, AK 99689 Telephone (907) 784-3242 Fax (907) 784-3922 Email yakpower@ptialaska.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) X An electric utility holding a certificate of public convenience and necessity under AS 42.05, or 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.) Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 3 of 24 9/3/2008 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. Yakutat Power is pleased to propose a four-phase Wave Energy Conversion (WEC) pilot demonstration project to the Alaska Energy Authority (AEA) Renewable Energy fund (REF). Alaska has more than 50% of the wave energy resource (about 1,200 TWhr/year) of the entire United States of America off its shores (and that is excluding the Bering Seas to the north of the Aleutian Islands). Yakutat Power believes that wave energy will play an important role in meeting the energy needs of the State of Alaska, and this project proposes to be an early adopter and evaluator of this emerging technology. Wave Energy Conversion (WEC) describes the conversion of kinetic and potential energy in ocean waves to electricity. Wave energy occurs due to movement of water near the surface of the sea. Waves are formed by winds blowing over the water surface, which imparts kinetic energy relative to the speed and duration of the wind, distance of sea it blows over, water depth, sea bed conditions and interactions with the tides. The goal of this four-phase WEC Pilot Demonstration Project is to conduct in-water testing and evaluation of WEC technology that could be used in a future commercial-scale WEC power plant for the City of Yakutat or anywhere else along the coast of Alaska. This will enable Yakutat Power to make an informed evaluation if wave energy should be included in its energy portfolio. The specific objective of the Phase I Reconnaissance and Phase II Feasibility Analysis is to evaluate and assess in detail the technical, economic, financial, environmental and operational viability of a WEC project. This process will support the decision to proceed to the Phase III Final Design and Permitting. As an indication of our level of commitment to this technology, Yakutat Power has funded Phase I and II, which is currently in process and will be completed in early 2009. The specific objective of Phase III Final Design and Permitting is to conduct all work necessary to complete engineering design, conduct baseline environmental studies and submit all license applications required for a pilot wave energy demonstration plant offshore Yakutat. The specific objective of Phase IV is to implement the technology in the actual environment near Yakutat to obtain real operational experience, environmental, performance and other data gathering and evaluation/analysis. Results of this project could open up the possibility of more of wave energy conversion plants at many sites in Alaska. We expect that AEA’s involvement in funding and program oversight of this innovative wave energy feasibility study will afford multiple benefits to the state, including: • diversifying the energy supply portfolio with an indigenous, clean, renewable and sustainable electric generation technology • reducing dependence on dwindling fossil fuels • reducing greenhouse gas emissions and carbon footprint • creating jobs in Alaska and improving the State’s economy Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 4 of 24 9/3/2008 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. Yakutat Power is located in Yakutat, Alaska. The City and Borough of Yakutat has a population of 631, and is located at the mouth of Yakutat Bay along the Gulf of Alaska, 225 miles northwest of Juneau and 220 miles southeast of Cordova. Yakutat receives monthly barge service during the winter and more frequent service during summer. Yakutat is equipped with two jet-certified runways and receives jet service daily. The U.S. Forest Service and the National Park Service have offices in Yakutat. This project will investigate the conversion of readily available wave energy with the long term goal of integrating the resource into the Yakutat Power electric grid. Direct beneficiaries of this project include all Yakutat Power electric service customers. Yakutat Power will be the Grantee under the Renewable Energy Fund grant. Yakutat Power has teamed up with the engineering firm of Alaska Energy and Engineering, Inc. (AE&E) ) and Electric Power Research Institute (EPRI). AE&E also brings to the team the geotechnical firm of Duane Miller Associates, LLC. EPRI is a non-profit, public-benefit organization leading innovation in strategic areas of electricity technology through public-private partnerships. Over the past four and half years, EPRI has performed techno feasibility studies for offshore wave and tidal energy conversion; wave energy in 2004 and tidal in 2005 and early 2006. The wave energy work evaluated the application of linear attenuators and oscillating water columns to convert the potential and kinetic energy in ocean waves to electricity. The wave energy feasibility studies, for good sites, made a compelling case for investing in projects using this technology to diversify our energy supply portfolio. The case made was so compelling that within a year of the completion of the EPRI feasibility studies, approximately 10 applications for preliminary permits were filed by private investors to the FERC for wave power plants in Oregon and Northern California. AE&E is an Alaska-owned, Anchorage-based firm incorporated in 1993 specifically to provide design and project management services for rural energy projects. AE&E has built its reputation on the ability to provide practical design solutions and hands-on construction support to effectively meet the challenges of rural Alaska. We have fostered excellent working relationships with permitting and regulatory agencies, which ensures that our projects comply with current interpretation of state and federal regulations. The engineering staff of AE&E has extensive experience designing and constructing projects in remote sites throughout the state with particular emphasis in western Alaska. Our primary field of expertise is electric power generation and distribution, rural fuel storage and handling facilities, and energy systems integration. AE&E has a long history of successful energy-related projects throughout Alaska, and has worked with Yakutat Power on several energy-related projects dating back to 1991. 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 estimated cost for the pilot project is $6,944,000. Of this amount, Yakutat Power has provided a project match for the EPRI Phase I & II Feasibility Study in the amount of $44,000. The balance requested for this project from the Renewable Energy Grant Fund is $6,900,000. There are a variety of sources of capital that may be available for this project, including Department of Agriculture, Rural Utilities Service grants and loans, Denali Commission funding, private financing and commercial loans. However, due to the infancy of this promising technology, Yakutat Power is requesting full funding from the Renewable Energy Fund grant program for this project. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 5 of 24 9/3/2008 Yakutat Power WEC Budget PHASE I & II. RECONNAISSANCE & FEASIBILITY STUDY EPRI Yakutat WEC Feasibility Study Report (est'd 4/09) $44,000 PHASE I & II TOTAL $44,000 PHASE III. FINAL DESIGN & PERMITTING Phase III Engineering, Permitting and Project Management $400,000 EPRI Phase III Consulting $150,000 Phase III Contingency @ 15% $82,500 PHASE III TOTAL $632,500 PHASE IV. CONSTRUCTION, COMMISSIONING, OPERATION & REPORTING Phase IV Engineering and Project Management $200,000 EPRI Phase IV Consulting & Long Term Monitoring $250,000 Installation of Pilot WEC Device (500kW @ $7000/kW) $3,500,000 Submarine Cable Installation (1-mile @ $1.5 million/mile) $1,500,000 Phase IV Contingency @ 15% $817,500 PHASE IV TOTAL $6,267,500 PROJECT TOTAL $6,944,000 Less Local Match Funds ($44,000) TOTAL GRANT REQUEST $6,900,000 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. Financial/economic benefits The EPRI feasibility study will evaluate the likely financial benefits that will accrue from this project in terms of simple payback period for the remote distribution grid application. This payback period is the period of time that the revenues from the WEC plant, at an avoided cost of diesel fuel (currently at 32 cents/kWh) will payback the initial capital and operation and maintenance cost of the plant. The economic benefit of an annual 85,000-gallon fuel reduction at today’s fuel price of $4.71/gallon equates to over $400,000/year in fuel savings Other benefits to Alaskan public … The most significant benefit to the Alaska public will be the testing and development of a viable electric energy technology, which may substantially reduce the cost of power in other remote coastal areas of Alaska. Additional benefits include the use of an emission-less renewable energy source and community economic development as the installation, operation and maintenance will create jobs 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.) $ 6,944,000 2.5.2 Grant Funds Requested in this application. $ 6,900,000 2.5.3 Other Funds to be provided (Project match) $ 44,000 2.5.4 Total Grant Costs (sum of 2.5.2 and 2.5.3) $ 6,944,000 2.5.5 Estimated Benefit (Savings) $ 400,350/year 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.) refer to above paragraph Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 6 of 24 9/3/2008 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. Scott Newlun, Yakutat General Manager, will be the Grant Manager. He will be the single point of contact with AEA and will execute all grant, contractual and administrative responsibilities. Mr. Newlun has 20 years of experience in the electric power generation field. He is skilled in tracking grants, communications, and in his ability to deal smoothly and professionally with executive officers, upper management, employees, vendors, and customers in day-to-day and occasionally adverse situations. Mr. Roger Bedard, EPRI will be the Project Manager. Mr. Bedard will have overall responsibility for the technical, schedule and financial success of the overall project. He will also be the primary point of contact for liaison with Yakutat Power Stakeholders. Mr. Bedard will also be responsible for assuring Yakutat Power’s satisfaction with the process and end product of the project. The techniques that Mr. Bedard will employ to keep the project on track are the classic project management actions of planning, assessing actual performance against planned performance and applying corrective action when necessary. The structured approach for defining, implementing and managing the project will use a work breakdown structure, resource requirements and responsibilities plan, written risk mitigation planning, and milestone/schedule/cost performance tracking. Lastly, as project manager, he is responsible for assuring that sufficient programmatic and technical project discussions take place in order that expectations are correctly communicated, issues are resolved and project team members are empowered. These discussions are conversations and meetings between project and technical management and others as necessary and take place in all elements of the project both formally and informally. 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.) The following Gantt chart schedule is for the pilot demonstration plant project TASK IV.2. REMOTE GRID OPERATIONS TASK IV.3. MAINTENANCE TASK IV.4. PERFORMANCE VERIFICATION MANEGEMENT AND REPORTING Milestones/ Deliverables Kickoff Meeting Annual Progress Report Mid Term Review Meeting Stage Gate #1 - Proceed to Phase IV Final Report Final Briefing CONTRACT START TASK IV.1. CONSTRUCTION Year 3Year 1 Year 2 Year 4PROJECT GANNT CHART TASK III.3. DETAILED DESIGN PHASE IV CONSTRUCT & OPERATION TASK III.4. FINAL DESIGN TASK III.3. ENV STUDIES & PERMITTING TASK III.2. SITE MEASUREMENTS PHASE III DESIGN AND PERMITTING TASK III.1. WEC PROVIDER SELECTION PHASE I and II - RECONNAISSANCE AND FEASIBILITY STUDY Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 7 of 24 9/3/2008 3.3 Project Milestones Define key tasks and decision points in your project and a schedule for achieving them. Key milestones are (see Gantt chart above for schedule) 1. Complete Phase I and II Reconnaissance and Feasibility Study. 2. Decision gate for proceeding from Phases I and II to Phase III Final Design and Permitting. 3. Kickoff Meeting for presenting a detailed Phase III project implementation plan and assuring mutual expectations among project participants. 4. Decision Gate for proceeding from Phase III Final Design and Permitting to Phase IV Construction and Operations. 5. Completion of construction and beginning of operations. 6. Completion of operations. 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. Yakutat Power has teamed with the engineering firm of Alaska Energy and Engineering, Inc. for system integration, design, permitting, and construction management of the project, and has assembled a highly qualified, experienced, and multidisciplinary team of personnel to implement this proposed project. The team has the breadth and depth of both technical and managerial skills and experience and are uniquely qualified to successfully carry out this project. Locally available labor and contractors will be used to the extent practicable. All major purchases and construction contracts will be in accordance with Yakutat Power procurement policies. In addition to the Grant Manager and Project Manager annotated in Section 3.1, our team includes the following personnel, contractors, equipment and services. Yakutat Power will be the single point of contact and will execute all grant, contractual, and administrative responsibilities. EPRI will serve as Project Manager and WEC technical consultants. AE&E will provide all design, permitting, system integration, and construction management. Electric Power Research Institute Roger Bedard, M.E., EPRI, will serve provide WEC Technical Consulting. He has more than 40 years of engineering R&D experience, focused recently on emerging energy systems. He will work with the Project Manager to bring his and EPRI’s expertise in renewable energy, wave and in-stream river and tidal power, to the team. He has been the EPRI Ocean Energy leader since 2004 and managed the 2005- 2006 U.S. Wave Energy Feasibility Study as well as the ongoing WEC study in Yakutat. His EPRI Ocean Energy Program has accelerated the deployment and commercial development of in-stream and WEC renewable resource technologies. He and its engineers together have published more than 18 public reports on various aspects of tidal energy conversion, including resource assessments, conceptual design studies, environmental effects, cost and economics. Mirko Previsic, P.E., EPRI/re-vision LLC, will provide WEC Technical Consulting from his 10 years of experience with the design, evaluation and optimization of renewable power generation systems, theoretical modeling, resource assessments, feasibility studies, and environmental impact studies with an emphasis on wave and tidal power conversion. He has had primary technical responsibility in many high- profile studies of wave, tidal and river-in-stream power conversion for various state and federal government agencies, research institutes, technology development companies and utilities. He is the Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 8 of 24 9/3/2008 Technology Lead in WEC projects for EPRI Ocean Energy programs and is instrumental in the baseline WEC study at Yakutat. Alaska Energy & Engineering, Inc. Steven J. Stassel, P.E., AE&E president, will serve as the Lead Engineer/Environmental Permitting. He will work with the Project Manager to commit essential engineering disciplines to ensure a successful project. Mr. Stassel will oversee all technical work and coordinate the efforts of our team to ensure the efficient and cost effective production of project designs. He has more than 21 years of engineering experience, including rural Alaska energy projects in more than 125 communities. He has been responsible for permitting and fulfilling all regulatory and environmental compliance requirements (Wetlands, Flood Mitigation, Coastal Zone, NEPA Environmental review) and state and federal agency coordination. He has successfully permitted more than 40 energy-related projects in rural Alaska. John Dickerson, EIT, AE&E, will be the lead Designer/Construction Manager. He has more than 25 years of Alaska construction, engineering, project management, and business management experience. For the past nine years, he has served as project engineer for the design and construction of over $25 million worth of rural power system and fuel storage projects in Alaska communities. Responsibilities have included site investigations, design, drafting, cost estimation, procurement, logistics, and construction management. As a design engineer, Mr. Dickerson has prepared construction documents for heating, ventilation, plumbing, refrigeration, fuel storage and ASME B31.3 process piping systems for a range of commercial and industrial facilities. Duane Miller Associates, LLC Duane L. Miller, P.E., DMA, will provide Geotechnical Services as a subconsultant to AE&E. He has more than 36 years of experience as a geotechnical engineer on a variety of projects onshore and offshore in Alaska, California, and Guam. He has special training and experience in arctic engineering, engineering geology, and coastal and earthquake engineering. Mr. Miller has provided geotechnical engineering services on architectural, civil, mining, petroleum, and military projects across Alaska since 1973 and has worked extensively with the Authority and AE&E. WEC technology provider – will be selected using a competitive RFP process based on site specific data for Yakutat. Our proposed organization chart (below) for this project introduces and identifies key members of our team and shows the lines of authority. Each engineering discipline is led by a professional engineer registered in the State of Alaska. All engineering documents will be stamped by Alaska registered engineers. Refer to Appendix A for resumes of key personnel. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 9 of 24 9/3/2008 3.5 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. Alaska Energy and Engineering is in communication with AEA staff on almost a daily basis on a variety of active projects. The Authority Project Manager will be kept up to date on the WEC pilot project status by periodic email and/or verbal status reports, in addition to written quarterly reports that will be submitted by the Yakutat Power Grant Manager. Periodic reports will provide general information regarding project status and any unforeseen circumstances that need to be resolved. The quarterly reports from the Grant Manager will include specific information on project completion status vs. project schedule; project labor reports – including hours, rates and costs; and current project expenditures relative to budgeted project costs. In addition to regular email updates and quarterly reports, we also propose to conduct a minimum of four briefings: • an initial kickoff briefing of the detail project implementation plan, • a mid term review at the completion of the Phase II Pilot Project, • a review at completion of final design and permitting, • and a final briefing of all project results. AE&E has provided design and construction support services on over 80 energy infrastructure-related projects throughout Alaska over the past 15-years. Our long-term working relationship with the Authority assures well-tested monitoring methods and seamless channels of communication. 3.6 Project Risk Discuss potential problems and how you would address them. The risk associated with this project to develop emerging WEC technology will be mitigated by implementing a risk identification and mitigation program for the duration of the project. At this proposal stage, the primary risks and our proposed mitigation plan is as follows: 1. Risk of increased project cost – the cost estimate to construct and operate the commercial plant is currently at the preliminary design stage of development. There is a risk that the cost estimate will increase during the final design and permitting stage of development. This risk will be mitigated by the development and testing performed during the Pilot Project phase, by deferring selection of a WEC technology provider until the final Phase IV, and by developing a concise and specific RFP solicitation for selecting the final technology provider. 2. Risk of measurable environmental affects – As WEC technology is emerging; there is currently uncertainty about interactions between the WEC equipment and the environment in which they are generating electricity. The primary purpose of a pilot plant is to gain technical, environmental, and commercial confidence in a technology. There are additional elements of risk that arise in any rural Alaska construction project; however, the risk associated with this project is well managed. A highly competent team of professionals has been assembled with the skills and motivation necessary to see this project through to successful completion. The project has been devised to proceed in distinct phases, with carefully planned go/no go decision intervals. In the event that the pilot project is deemed unsuccessful, or Yakutat Power changes its direction or power production needs, the latter phases of the project may be postponed or cancelled with little additional risk. Yakutat Power understands the potential risks from this project, but seeks to be an early adopter of WEC technology to realize the benefit of reduced diesel fuel consumption by utilizing a readily available renewable resource. Demonstration of increased cost certainty and minimal environmental effects of this technology at Yakutat will benefit many remote coastal villages in the state of Alaska. Yakutat is willing to accept these risks. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 10 of 24 9/3/2008 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. Yakutat is located along the rugged Alaskan Gulf Coast between Sitka and Cordova. Bounded by the Gulf of Alaska on the South, nearly impenetrable mountains to the North, and coastal glaciers to the East and West, Yakutat is remote. There are no roads leading into or out of Yakutat. All commerce and access must occur via air or sea. Wave Energy Yakutat has an excellent wave energy climate. Archival measurements are available from a number of NDBC and other wave measurement buoys. Preliminary analysis based on NDBC data from a prior assessment indicates the average annual wave power density is about 34kW/m near Yakutat. The wave power densities are higher in the winter than in the summer, due to seasonal storms, indicating a good match between higher winter electric loads and WEC device power output. The EPRI Reconnaissance and Feasibility study will further investigate and quantify available wave energy data to be used for siting the pilot project. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 11 of 24 9/3/2008 4.2 Existing Energy System 4.2.1 Basic configuration of Existing Energy System Briefly discuss the basic configuration of the existing energy system. Include information about the number, size, age, efficiency, and type of generation. The Yakutat Power plant generation equipment consists of four diesel generator sets (gensets) with a total generation capacity of 4,000 kW. The generation system is a 4160-volt wye three-phase system. All generators operate at 1200 RPM. • Genset #1 a new CAT 3516B rated at 1322 kW • Genset #2 is a CAT 3512B rated at 880 kW. • Genset #3 is a CAT 3508B rated at 600 kW. • Genset #4 is a CAT 3516 rated at 1200 kW. The new 3516B is the primary genset. The 3512B and 3508B gensets operate on an as needed when the electric load exceeds the 3516B capacity, and when the 3516B is down for maintenance. The 3516 is nearing the end of its useful life and is used sparingly. The power plant has two separate cooling systems both with heat recovery capability. The 3516B and 3512B are on one common cooling loop, and the 3508B and the 3516 are on a separate cooling loop. Both cooling loops are 5-inch diameter welded steel piping with flanged butterfly valves, an AMONT valve, plate heat exchanger and a single radiator. 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 resource is diesel fuel. Fuel is delivered to Yakutat via barge year round and stored in bulk at the Delta Western tank farm. Fuel is delivered by truck to Yakutat Power, local businesses, and residents. Yakutat Power made a major investment in 2007 to replace an antiquated CAT 3412 with the new 3516B, to increase the plants rated kW capacity. A heat recovery system was installed in the early 1990s and provides heat to the Yakutat school complex nearby. Virtually all heating of the school complex is provided by the Yakutat power plant heat recovery system. The displacement of diesel fuel with wave energy will reduce the total fuel throughput of the Delta Western fuel terminal. It is not anticipated that the reduction in Yakutat Power’s diesel fuel use will have an appreciable impact on the Delta Western facility. The proposed WEC project will displace diesel fuel but will not replace the diesel generation capacity. The WEC system will be sized to provide sufficient energy for a base load of the community and diesel generation will be used for load following and to meet peak loads. 4.2.3 Existing Energy Market Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. Yakutat Power uses approximately 400,000 gallons/year of diesel fuel to provide 6,600,000 kWh of electricity annually to customers in the city and borough of Yakutat. The pilot project will be sized at 500 kW and is expected to have a 30% capacity factor, resulting in an annual electric production of about 1,182,600 kWh/year – based on 90% availability. This electric production will reduce diesel fuel consumption by approximately 85,000 gallons/year. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 12 of 24 9/3/2008 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 This proposed project encompasses the following four (4) phase program as formulated by the Alaska Renewable Energy Fund (REF) Grant Application Phase 1 - Reconnaissance A preliminary feasibility study that will ascertain whether a feasibility study is warranted. Phase II – Feasibility Analysis, Resource Assessment, Conceptual Design Detailed evaluation intended to assess technical, economic, financial and operational viability and to narrow focus of final design and construction. Phase III – Final Design and Permitting Project configuration and specifications that guide construction. Land use and resource permits and leases required for construction. Phase IV – Construction, Commissioning, Operation and Reporting Completion of project construction and beginning of operations. It also includes follow-up O&M reporting requirements. The Electric Power Research Institute (EPRI) reconnaissance and feasibility study phases will be completed by spring 2009. In summary, this renewable energy project includes the following categories of activities: 1. Reconnaissance and feasibility studies. 2. Detailed site studies to support pilot plant design and permitting (high resolution bathymetry, $geotechnical studies, cable route evaluation, localized wave height and velocity measurements, etc.). 3. Competitive selection of WEC technology and vendor. 4. Plant design and construction planning to include: ƒ Number/size/location/layout of device(s) ƒ Adaptation of technology to site conditions ƒ Plant engineering design ƒ Grid interconnection plans ƒ Construction management and team organization ƒ Construction drawings and bills of materials ƒ Construction budget and timeline development 5. Environmental baseline study plan development and execution, performance/environmental monitoring plan development, consultation/outreach, and completion of all federal/state/local permitting and Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 13 of 24 9/3/2008 construction license applications. 6. Construction and commissioning. 7. Operation and maintenance. 8. Project management and reporting. Phase I Reconnaissance and Phase II Feasibility Study phases are nearly complete. (This effort has been funded by Yakutat Power and is currently underway. Estimated completion is Spring 2009) The objective of these phases is to perform a feasibility study of applying wave energy conversion (WEC) technology for generating electricity for the city of Yakutat, Alaska. The objective will be achieved through an approach that (1) selects a site location area at about 50-60 meter depth outside of the Yakutat consistent with laying a submerged cable into the City of Yakutat for interconnection to the local distribution grid, (2) characterizes and models an existing WEC device, (3) creates a conceptual WEC plant design, evaluates performance, cost and economics. Phase I and II will consist of the following five (5) tasks which are described in the following paragraphs: Task I.1. Site Survey and Selection Task I.2. Device Characterization and update of existing integrated device model Task II.1. Preliminary Design, Performance Estimate, Cost Estimate Task II.2. Economics Assessment Task II.3. Grid Integration Project Management and Reporting Task I.1. Site Selection EPRI shall evaluate the wave energy climate offshore Yakutat at a 50-60 meter depth. The site location for the feasibility study will be a tradeoff between distance from shore, distance to the electrical interconnection point, and distance from the port infrastructure. Shipping navigation lanes and other areas of conflicts of sea space will be avoided. The selection shall be jointly selected and agreed to by EPRI and Yakutat Power. The evaluation work shall include gathering existing data (no new measurements will be taken as part of this desk study) on the wave energy resource from NOAA data buoys and any other sources known to Yakutat Power, the shoreline grid electrical distribution infrastructure and the port infrastructure. Due to the high cost of submarine cabling, it has been assumed for this application that the pilot project location will be located no further than 1-one mile from the shore electrical interconnect. Site selection will carefully evaluate economic tradeoffs between reduced cable costs vs. increased wave power density and available capacity factor. Task I. 2. Device Characterization EPRI shall use its existing integrated model (a generic Pelamis wavepower conversion device), which was established in 2005 and update it with more recent cost and performance data, which has become available since then. The EPRI integrated modeling approach allows to scale emerging technologies to the target site and provide a solid understanding of the technical constraints, performance and cost of a plant installed at the site of interest. Because of the remote nature of the site, a specific focus will be given to operational considerations at the site. The following illustration shows an example of the elements of such an integrated model. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 14 of 24 9/3/2008 Task II.1. Preliminary Design, Performance and Cost Estimate EPRI shall perform a preliminary design, use the generic power curve for a linear attenuator WEC to determine annual electricity produced and perform an independent estimate of the performance of plant installed and operation and maintenance cost evaluation. EPRI will use the approach depicted in the following figure and the list of the following activities: • Analyze available hourly/daily/monthly/yearly wave power. • Analyze the efficiency of the wave energy conversion capture device as a function of wave significant height and energy period and determine hourly/daily/monthly/yearly captured power. • Analyze the efficiency of the conversion power chain and determine hourly/daily/monthly/yearly power output of the wave power device. • Estimate the availability of the system and the actual estimated hourly/daily/monthly/yearly power output. • Estimate the capital cost construction, equipment procurement, installation, check out (detailed design and permitting are excluded as we are unable to estimate these costs). • Estimate the annual operating and maintenance cost, with a unique focus on the operational considerations for such a remote site. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 15 of 24 9/3/2008 EPRI will size the wave pilot power plant for Yakutat to provide the greatest economic benefit, taking into account capital and construction costs. The performance of the plant in terms of annual electricity produced (AEP) will be calculated. The plant capital cost and the plant yearly operation and maintenance (O&M) cost will be estimated. Task II.2. Economic Assessment EPRI will calculate the simple payback period (SPP) for the wave power plant. The SPP is the number of months (or years) it takes before the accumulated value of the revenues from the sale of electricity equals the capital cost and the yearly operating and maintenance cost of the plant. The value of electricity revenues is the avoided cost. The avoided cost of electricity has been specified by Yakutat power as 35 cents/kWh in 2008 dollars. The O&M cost of a diesel genset is 2-5 cents/kwh, but we will conservatively assume initially that maintaining diesel genset spinning reserves will provide no O&M savings. The following assumptions about escalation of costs will be made: Escalation of O&M cost = 3% per year Escalation of Revenue Prices (i.e., the price of diesel fuel) = 8% per year The approach for determining the simple payback period given the parameters described above is Site Selection Available Wave Power Captured Wave Power Maximum Annual Output Actual Annual Output Payback Period El t i it Device Selection Wave Power Resource Capture Efficiency Power Chain Efficiency Availability O&M Costs Capital Costs Avoided Costs Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 16 of 24 9/3/2008 \ Task II.3. Storage and Grid Integration The storage/grid integration issue is that Yakutat has a baseload electricity demand of 500 kW base and a peak electricity demand of 1.4 MW. A renewable power plant, supplying electricity to the Yakutat grid will likely be very limited in capacity because the electrical load will always need to use all the electricity of the renewable power system, resulting in a low threshold of renewable penetration into the grid network. EPRI shall address this issue by evaluating the use of energy storage and electric resistance heat to increase the percentage of electricity that can be supplied by wave energy in this isolated electrical grid network. The approach will take detailed load data and evaluate how the electrical load of the community and the electrical generation from the wave power conversion plant can be integrated to allow for a substantial amount of electricity to be provided by wave energy. Different energy storage options will be evaluated for their applicability to this particular application and sized to match supply and demand. Project Management and Reporting EPRI reporting will consist of 1) monthly status and progress reports and 2) a final summary technical report that will summarize the site and device characterizations and the preliminary design, performance analysis, cost estimates and the economics assessments. The monthly progress reports will describe progress during that reporting period; difficulties encountered during the reporting period, plans for the next reporting period including plans to overcome any difficulties and will include a statement from the project manager setting forth the cost of the work during the reporting period. Monthly reports will be sent in an email format. The final report will include a description of all methods, analysis and results from the project. A draft final report shall be submitted for Yakutat Power’s review prior to publication of the final report on the EPRI public website (unless Yakutat desires to keep this report confidential to the company). Phase III – Final Design and Permitting Requirements Building on information gathered in Phase I and II, Yakutat Power shall establish the project configuration and specifications that will be used to guide construction, refine project cost estimates, finalize business plans, and obtain land use and resource authorizations required for construction. Work shall address the information and tasks below. Task III.1. Selection of WEC Technology Developer(s) Yakutat Power shall prepare a requirements specification and solicitation package for a WEC system (including Capital Cost O&M Cost Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 17 of 24 9/3/2008 the moorings and optional subsea cable and grid interconnection equipment). Yakutat Power will provide the bidders a choice of two interconnection options: 1) to a Yakutat Power socket installed on the sea bed or 2) at the distribution substation. This specification and solicitation will be sent to all known WEC technology providers (e.g., Ocean Power Technology, Finavera, OceanLinx, Pelamis, etc). Proposals will be evaluated and a WEC technology develop partner(s) selected. Task III.2. Site Measurements The objective of this task is the successful completion of all site measurements required for developing the pilot plant detailed design and construction plan. This will include the following elements: ƒ Yakutat Power will work with the selected WEC technology developer(s) to develop the appropriate scope of work for site studies to support WEC plant and device foundation design and deployment methods. These studies may include detailed bathymetrical measurements, geotechnical measurements, acoustic Doppler current profiler (ADCP), cable routing and shoreline evaluation. ƒ Yakutat Power will prepare the necessary specifications and solicitations to select team members to conduct the work described above. ƒ Yakutat Power will evaluate proposals in response to solicitations and select those contractors best suited to support the project requirements. ƒ Selected contractors will conduct planned studies in accordance with developed specifications and scopes of work. Yakutat Power will work with the selected WEC technology provider to establish site measurement requirements. Yakutat Power will review all currently available marine geological and bathymetric survey data for the plant site and will develop a plan to collect additional necessary data. It is anticipated that measurement techniques will include the following: surface grab samples, multi-beam side scan sonar imaging, underwater photography, and ADCP and current modelling. Some core-sampling may be necessary as well as some sub- bottom profiling to identify and measure various sediment layers that exist below the sediment/water interface. The choice of geotechnical survey method depends largely on the foundation type for the device to be installed. Wherever possible, acoustic technology will be leveraged to reduce overall cost and map out a broad area. Some core-sampling may be necessary, however, to validate seabed composition data and to get detailed, site-specific properties before actual installation. Detailed wave measurements will be conducted in the final location(s) chosen for WEC deployment. These measurements will inform device and plant design/layout, and also be used to further refine the model already begun in Phase I and II. This model will be used to predict and evaluate the performance of WEC devices, as well as to inform the Task 3 environmental studies and permitting activities. The final product of this task is the completion of all necessary site measurements required for completing the pilot plant detailed design and construction planning. Task III.3. Environmental Studies and Permitting The objective of this task is to provide for all necessary environmental study plans and outreach/consultation to obtain required permits to support the pilot plant. This will include the following elements: ƒ Development of an appropriate baseline environmental study plan ƒ Regulatory agency and stakeholder outreach and consultation ƒ Development of the solicitation and specifications to bid execution of study plan elements ƒ Execution of all required baseline study plans ƒ Development of the plant operations environmental monitoring plan ƒ Preparation and submittal of all required permit applications As part of this project, Yakutat Power will collaborate closely with both the state and local marine working groups to develop an appropriate environmental baseline study plan which fully supports all permitting requirements. Yakutat Power will also prepare an appropriate environmental monitoring plan ready for Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 18 of 24 9/3/2008 implementation coincident with the beginning of site construction preparation in the next phase of the project. An environmental framework will be developed to define the information needed for a baseline assessment of conditions, as well as the requirements for an optimum long term monitoring program. Execution of the baseline environmental study plan elements will likely require multiple subcontractors with specialized marine biology and habitat expertise. Yakutat Power will work with the WEC technology developer and the marine engineer contractor to develop specifications and competitive RFPs to achieve the baseline study plan goals. Potential project impacts and associated studies are shown in the table below: Yakutat Power will also execute a comprehensive communications plan. This effort will reach out to a diverse array of stakeholders including the general public, Alaska Natives, environmental groups, recreationalists, state/federal/local agencies, and other key stakeholders. Yakutat Power shall conduct outreach workshops/ meetings to inform key stakeholders of wave energy conversion and feasibility studies being conducted, and to solicit the feedback and concerns of these stakeholders. Lastly, Yakutat Power will prepare and submit all necessary federal, state, and regional permit applications necessary for construction of the project. The final product of this task is the completion and execution of the environmental baseline study plan, development of the environmental monitoring study plan, and the preparation and submission of all necessary permit applications. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 19 of 24 9/3/2008 Task III.4. Detailed Design The objective of this task is to complete all engineering design work required to both build the pilot demonstration plant and to describe the system sufficiently to support all regulatory/permitting requirements. This will include the following elements: ƒ Yakutat Power will work with the selected WEC technology developer(s) to scope the size and scale of the plant given expected financial resources, project objectives, and stakeholder feedback. ƒ Yakutat Power and the WEC technology developer will work with the selected marine contractor to develop specific plans for: • Plant location and layout • Mounting options will be identified and evaluated • Grid interconnection plans • Construction management and team organization • Construction drawings and bills of materials • Construction budget and timeline development • Plant deployment Yakutat Power will subcontract to the WEC technology developer to perform device optimization design. Devices that are being considered for implementation will need to be optimized for the specific wave conditions at the site. The resulting data will then feed directly into subsequent design and permitting processes. This data can also be used in further technology evaluation programs and will provide critical data for decision-making tools. It will also facilitate the ongoing efforts to reduce manufacturing and operations costs. Yakutat Power will perform grid interconnection studies (i.e., from cable landing point to the substation) to identify the ideal overland cable route. In addition, distributed generation interconnection standards shall be reviewed for applicability. Yakutat Power will coordinate high-level generator interconnection and facilities studies to identify interconnection costs and schedules. The final product of this task is an engineering package of sufficient detail to enable construction of the WEC pilot plant including the bill of materials, fabrication drawings, equipment procurement specifications, assembly drawings, and deployment plan/schedule. Phase IV – Construction and Operations The purpose of the construction phase is to construct and commission the project, begin operations, and provide follow-up reports on operations and maintenance for a specific period of time to document the program’s impact on the community. Grantees are expected to cover all costs of operations and maintenance in compliance with their operational and business plans developed in Phase III. The construction phase will address the information and tasks below. Task IV.1. Construction The objective of this task is to complete all construction work and successfully perform check-out testing to demonstrate that the plant is ready to be turned over to the operational personnel. The necessary work includes, but is not limited to, the following items: • Site preparation • Procurement of equipment (device, cables, grid interconnect equipment, etc) and materials (cement, reinforcement bars, etc) and shipment to the job site • Field construction and installation, startup and checkout • Construction management • Operation and evaluation implementation planning • Refine cost estimate for subsequent phases Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 20 of 24 9/3/2008 Task IV.2. Operations The objective of this task is to gain a minimum of 18 months of operational experience and evaluation results of the plant when connected to the Yakutat Power grid with a diesel providing load following. Operational experience will encompass determination of items such as kWh produced, capacity factor, reliability, maintainability and availability (RM&A and O&M costs. Evaluation results will include assessments of plant efficiency as a function of plant rating, turbine efficiency as a function of wave amplitude and frequency and O&M costs as a function of O&M processes. The electricity shall displace the use of diesel fuel. Operations also includes the environmental monitoring program that will be defined in collaboration with the regulatory agencies and the stakeholders in Phase III. Task IV.3. Maintenance The objective of this task is to perform preventive maintenance per the manufacturer instructions, and corrective maintenance as needed. Task IV.3. Independent Performance Verification The objective of this task is to perform a verification of the WEC system performance (instantaneous power, energy delivered, reliability, availability, etc). This task will be performed by an independent contractor. A test protocol and plan will be prepared specifying the measurement instruments required, the test plans, and the type of results to be gathered. Prior to testing, a test procedure will be developed. The independent contractor shall prepare a report of all findings 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. Due to the high cost of submarine cabling, we expect the feasibility study will result in a plant well within the 3 mile limit such that the sea bed belongs to the State of Alaska. Appropriate rights to the plant area will be secured from state and federal agencies prior to implementation of the pilot project. 4.3.3 Permits Provide the following information as it may relate to permitting and how you intend to address outstanding permit issues. • List of applicable permits • Anticipated permitting timeline • Identify and discussion of potential barriers If appropriate following the feasibility study, an application for a FERC hydrokinetic license will be filed by the City and Borough of Yakutat in order to hold first exclusive right to develop the resource throughout the Phase II and IV period. FERC has been notified of this possibility and in the meantime, has agreed to notify Yakutat Power if any other developer/investor applies for such a preliminary permit. Permits required to construct and operate the WEC plant will be obtained during the proposed Phase III of the project 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 Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 21 of 24 9/3/2008 • Telecommunications interference • Aviation considerations • Visual, aesthetics impacts • Identify and discuss other potential barriers Given proper care in siting, design, construction and operations, we believe that WEC power will have a minimal environmental impact and be one of the more benign ways to generate electricity. AE&E has provided NEPA project level environmental permitting on over 40 energy related projects throughout Alaska during the past 10 years. Our understanding of the NEPA process and potential environmental impacts of our projects allows us to mitigate possible negative affects early in the design stage. The environmental and sea bed issues will be addressed as part of the permitting process. 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 The cost information provided in this application is based on an assumed 500 kW WEC pilot project located within one mile of the shoreside electrical interconnect. This data will be updated in Spring 2009 when EPRI has completed the Phase I&II reconnaissance and feasibility study for Yakutat. Total anticipated project cost: $6,944,000 Design / Permitting / Project Management: $1,150,000 500 kW WEC (installed cost) $4,025,000 Submarine Cable (1-mile, maximum): $1,725,000 Requested grant funding: $6,900,000 Applicant matching funds – loans, capital contributions, in-kind: $ 44,000 Identification of other funding sources: Operating Budget Projected capital cost of renewable energy system: $6,944,000 Projected development cost of renewable energy system: to be determined 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 The O&M costs for a remote WEC project are as yet unknown because currently there are no commercial scale WEC projects in operation. The goal of this grant proposal is to implement the pilot project to ferret out real Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 22 of 24 9/3/2008 costs based on remote Alaska application. Although the specific costs associated with operating and maintaining a WEC plant are unknown, the AE&E team has continually demonstrated its ability to implement innovative technologies throughout rural Alaska that are highly cost effective and that result in low O&M costs. A significant component of the pilot project is to confirm that the benefits of this renewable resource are not discounted due to poor reliability and high operational costs. Real O&M costs obtained during the pilot project will be incorporated into the business plan at Phase III and will weigh heavily in the decision whether or not to expand the pilot project to full commercialization. Due to the high costs of R&D in rural Alaska, all activities related to it being a pilot plant including operation, testing, and evaluation will be funded through the Renewable Energy grant. 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 Yakutat Power is the electric utility and project operator; therefore, there will be no power purchase agreement. Due to the infancy of this technology and many unknowns yet to be determined during the pilot project, the cost of power from WEC technology is unknown. Yakutat is a remote isolated grid. Yakutat Power is both the electric utility and project operator; therefore, no power purchase agreement is required. The energy generated by the WEC pilot demonstration plant will displace diesel fuel. The cost savings to the citizens of Yakutat is the cost of the diesel fuel displaced less the ongoing operation and maintenance of the WEC plant. The bus bar cost for electricity from this project will be determined during the pilot project investigation and compared to the current diesel fuel bus bar cost of $.385/kWh. A simple payback period calculation will be made at the completion of Phase II Feasibility Study 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. The cost worksheet is submitted as Appendix B. 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. Yakutat Power will be owner of the WEC project. Yakutat Power is a sustainable electric utility that is certificated by the Regulatory Commission of Alaska. Yakutat Power will use its utility staff and assets to maintain, operate, and sustain the WEC project. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 23 of 24 9/3/2008 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 EPRI Phase I&II feasibility study will perform a simple payback period calculation for the pilot scale plant for the remote Yakutat grid scenario at a rated capacity of about 500 kW 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 Yakutat pilot project will advance the technical design, permitting, and environmental knowledge of WEC for use by other coastal Alaskan communities considering this form of renewable energy. The project will also boost the expertise of the industry and potentially reduce manufacturing and operations costs. Economic benefits The estimated annual fuel displacement from a 500kW pilot scale project is 85,000 gallons/year. This equates to approximately 1,700,000 gallons over a twenty-year anticipated useful life of the project. The anticipated cost savings to the electric utility based on reduced diesel fuel use is $8,007,000 over a 20- year period based on the current fuel cost of $4.71/gallon. Non-economic benefits There are no known tax credits or other subsidies for a project of this type. Non-economic benefits to Alaskans include the reduction in diesel exhaust emissions realized by using renewable wave energy, short term job creation during testing and construction, as well as improved long term viability of Yakutat Power. 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 Provide a narrative summary regarding funding sources and your financial commitment to the project. Total estimated project cost is $6,944,000. The grant request is for $6,900,000. Yakutat Power will provide a cash match in the amount of $44,000 for the EPRI Phase I&II Reconnaissance Level and Feasibility study. Refer to Grant Budget worksheet in Appendix C Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 24 of 24 9/3/2008 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 Scott Newlun Signature Title General Manager Date November 10, 2008 APPENDIX A PROJECT RESUMES APPENDIX B COST WORKSHEET  Renewable Energy Fund   RFA AEA 09-004 Application Cost Worksheet revised 9/26/08 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 The Applicant should demonstrate that the renewable energy resource is available on a sustainable basis. Annual average resource availability. 34 kW / meter +/- wave power density 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 4 Gensets ii. Rated capacity of generators/boilers/other 4000 kW iii. Generator/boilers/other type Diesel iv. Age of generators/boilers/other 1990’s to 2007 v. Efficiency of generators/boilers/other 14.6 kWh / Gallon b) Annual O&M cost i. Annual O&M cost for labor $655,148 ii. Annual O&M cost for non-labor $570,459 c) Annual electricity production and fuel usage (fill in as applicable) i. Electricity [kWh] 6,600,000 kWh ii. Fuel usage (if system is part of the Railbelt grid, leave this section blank Diesel [gal] 400,000 gallons Other - iii. Peak Load 1328 kW iv. Average Load 760 kW v. Minimum Load 550 kW +/- vi. Efficiency 14.6 kWh / Gallon vii. Future trends Up to 85,000 Gallons / Year Reduction in Diesel Fuel Use d) Annual heating fuel usage (fill in as applicable) i. Diesel [gal or MMBtu] - ii. Electricity [kWh] -   1 The Railbelt grid connects all customers of Chugach Electric Association, Homer Electric Association,  Golden Valley Electric Association, the City of Seward Electric Department, Matanuska Electric  Association and Anchorage Municipal Light and Power.  Renewable Energy Fund   RFA AEA 09-004 Application Cost Worksheet revised 9/26/08 Page 2   iii. Propane [gal or MMBtu] - iv. Coal [tons or MMBtu] - v. Wood [cords, green tons, dry tons] - vi. Other -   3. Proposed System Design a) Installed capacity 500 kW peak @ 30% capacity factor b) Annual renewable electricity generation i. Diesel [gal or MMBtu] - ii. Electricity [kWh] 1,182,600 kWh iii. Propane [gal or MMBtu] - iv. Coal [tons or MMBtu] - v. Wood [cords, green tons, dry tons] - vi. Other - 4. Project Cost a) Total capital cost of new system $6,994,000 b) Development cost To be determined c) Annual O&M cost of new system To be determined d) Annual fuel cost - 5. Project Benefits a) Amount of fuel displaced for i. Electricity 85,000 Gallons ii. Heat - iii. Transportation - b) Price of displaced fuel $4.71 / Gallon (Weighted Average) c) Other economic benefits - d) Amount of Alaska public benefits Test Bed Facility for Statewide Applicability 6. Power Purchase/Sales Price a) Price for power purchase/sale -  Renewable Energy Fund   RFA AEA 09-004 Application Cost Worksheet revised 9/26/08 Page 3 7. Project Analysis a) Basic Economic Analysis Project benefit/cost ratio To be determined Payback To be determined   APPENDIX C GRANT BUDGET Alaska Energy Authority ‐ Renewable Energy FundMilestone or Task Federal Funds State FundsLocal Match Funds (Cash)Local Match Funds (In‐Kind)Other FundsTOTALS1 ) Phase 1 ‐ 2 Reconnaissance & Feasibility Study$44,000 $44,0002) Phase 3 Final Design & Permitting $632,500 $632,5003) Phase 4 Construction, Commissioning, Operation & Reporting $6,267,500 $6,267,500$0 $6,900,000 $44,000 $0 $0 $6,944,000Milestone # or Task #BUDGET CATAGORIES:1 2 3 TOTALSDirect Labor and Benefits$0Travel, Meals, or Per Diem$0Equipment$0Supplies$0Contractual Services $44,000 $632,500 $517,500 $1,194,000Construction Services$5,750,000 $5,750,000Other Direct Costs$0TOTAL DIRECT CHARGES $44,000 $632,500 $6,267,500 $6,944,000RFA AEA09-004 Budget Form ALASKA ENERGY ENGINEERING YAKUTAT WEC COST ESTIMATE SUMMARY NOVEMBER 10 , 2008 PHASE I & II. RECONNAISSANCE & FEASIBILITY STUDY EPRI Yakutat WEC Feasibility Study Report (est'd 4/09) $44,000 PHASE I & II TOTAL $44,000 PHASE III. FINAL DESIGN & PERMITTING Phase III Engineering, Permitting and Project Management $400,000 EPRI Phase III Consulting $150,000 Phase III Contingency @ 15% $82,500 PHASE III TOTAL $632,500 Phase IV Engineering and Project Management $200,000 EPRI Phase IV Consulting & Long Term Monitoring $250,000 Installation of Pilot WEC Device (500kW @ $7000/kW) $3,500,000 Submarine Cable Installation (1-mile @ $1.5 million/mile) $1,500,000 Phase IV Contingency @ 15%$817,500 PHASE IV TOTAL $6,267,500 PROJECT TOTAL $6,944,000 Less Local Match Funds ($44,000) TOTAL GRANT REQUEST $6,900,000 PHASE IV. CONSTRUCTION, COMMISSIONING, OPERATION & REPORTING B-1 APPENDIX D ELECTRONIC COPY OF APPLICATION (REFER TO ENCLOSED DISC) APPENDIX E RESOLUTION & SUPPORTING LETTERS APPENDIX F TECHNICAL DATA EPRI PRELIMINARY ASSESSEMENTWave Data of NDBC Buoy near YakutatStation ID Station Name Longitude Latitude Water DepData YearsDirectionaAverage Power Density46083 Fairweather Gro 58.24N 137.99W 137m 2001-2006 No 34.5 kW/mJan 60.62 32.36 47.29Jan 46.75673Feb 35.43 79.22 66.16Feb 60.27Mar 34.03 56.40 32.00Mar 40.81Apr 25.77 29.98 29.77Apr 28.51May 13.99 11.99 19.76May 15.24Jun 9.07 9.09 8.01 10.24Jun 9.10Jul 8.41 7.66 5.90 7.05 7.21 8.30Jul 7.42Aug 12.14 13.06 12.98 6.13 10.56 11.47Aug 11.05Sep 32.05 16.62 23.42 25.03 27.71 23.53Sep 24.73Oct 49.37 38.23 39.33 27.49 50.71 37.85Oct 40.50Nov 53.32 60.63 45.46 68.70Nov 57.03Dec 73.84 50.70 97.35 68.22Dec 72.53Year Avg33.61Ann Avg 34.50High-Level Budgetary Numbers for Subsea Cable ($2007) … may need to be escalated to installation yearRated Capacity: 7.8MVAVoltage Level: 12kVOuter protection: double ArmorLength: 3000mDirectional Drilling for Cable Landing: YesSubsea Cable buried into soft sedimentsSubsea Cable Cost $972,000Directional Drilling $240,000 (Lower 48 cost estimate for 500m directional drilling with 200mm diameter steel conduit through clay… may be very different in AK)Subsea Junction box $200,000 (Budgetary estimate: assumes single wave power unit installed, no step up transformer of multiple unit splicing capabilities)Subsea Cable Installation $1,300,000 (assumes 3km trenched in soft sediments)Total Cost$2,712,000Device CostEPRI Study 2004: $7,000 / kW => Suggest to go for at least 1MW, because single unit size may be more then 500kW. => Budget estimate of $7M