HomeMy WebLinkAboutNikolaevsk Wind Generation Project AppAlaska Energy Authority
AEA-09-004 –Renewable Energy Grant Application
813 West Northern Lights Boulevard
Anchorage, AK 99503
Phone: 907-771-3000
Nikolaevsk Wind Generation Project
Renewable Energy Fund
Nikolaevsk Wind Project
Grant Application
AEA 09-004 Grant Application Page 1 of 21 10/8/2008
Alaska Wind Energy, LLC
SECTION 1 –APPLICANT INFORMATION
Name (Name of utility, IPP, or government entity submitting proposal)
Alaska Wind Energy, LLC, dba Wind Energy Alaska
Type of Entity:Alaska limited liability company
50-50 owned subsidiary of the Cook Inlet Region Incorporated (CIRI) and enXco, Inc.
Mailing Address
2525 C Street, Suite 500
Anchorage, AK 99508
Physical Address
2525 C Street, Suite 500
Anchorage, AK 99508
Telephone
(907) 333-0810
Fax
(907) 333-0810
Email
steveg@enxco.com
1.1 APPLICANT POINT OF CONTACT
Name
Steve Gilbert
Title
Alaskan Projects Manager
Mailing Address
6921 Howard, Anchorage, AK 99504
Telephone
(907) 333-0810
Fax
(907) 333-0810
Email
steveg@enxco.com
1.2 APPLICANT MINIMUM REQUIREMENTS
Please check as appropriate. If you do not to meet the minimum applicant requirements,your
application will be rejected.
1.2.1 As an Applicant, we are:(put an X in the appropriate box)
An electric utility holding a certificate of public convenience and necessity under AS
42.05, or
X An independent power producer, or
A local government, or
A governmental entity (which includes tribal councils and housing authorities);
Yes 1.2.2.Attached to this application is formal approval and endorsement for its project by
its board of directors, executive management, or other governing authority. If a
collaborative grouping,a formal approval from each participant’s governing
authority is necessary. (Indicate Yes or No in the box )
Yes 1.2.3.As an applicant, we have administrative and financial management systems and
follow procurement standards that comply with the standards set forth in the grant
agreement.
Yes 1.2.4.If awarded the grant,we can comply with all terms and conditions of the attached
grant form. (Any exceptions should be clearly noted and submitted with the
application.)
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Alaska Wind Energy, LLC
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.
Final Design,and Permitting and Construction of a wind generation project.
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.
Wind Energy Alaska (WEA),plans to construct a 6 megawatt (MW)wind generation facility on
CIRI-owned land near the village of Nikolaevsk, located on the southern Kenai Peninsula
(Figure 1 of Section 7).The electricity generated by the project will be interconnected to the
Anchor Point Substation, which is owned and operated by the Homer Electric Association
(HEA).The project includes the construction of the wind generation plant,with four 1.5 MW GE
wind turbines, a new 1.9 mile access road, and a distribution line approximately 10 miles in
length from the plant to the Anchor Point Substation in Nikolaevsk.See Appendix J
photographs representative of the GE wind turbines and the distribution line proposed for the
project.HEA is one of the six prime electric cooperatives, or utilities, that serves the Alaska
Railbelt transmission grid.This grid includes Anchorage, Fairbanks, Matanuska–Susitna, and
the Kenai Peninsula and serves about 75 percent of Alaska’s population. This portion of the
population consumes more than 85 percent of the State’s electrical power.HEA is a member-
owned electric cooperative that serves most of Alaska’s Kenai Peninsula.HEA serves
approximately 20,153 members at 28,547 metered locations, 2,200 miles of energized line,
within a service area of 3,166 square miles.WEA, CIRI,and enXco are project proponents.
WEA is investigating other prospective wind sites on the Kenai Peninsula in the Caribou Hills
area.HEA and Chugach Electric Association, Inc. (Chugach)are potential power customers.
WEA has contracted URS/Tryck, Nyman and Hayes to provide design engineering, permitting,
and construction management of 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 project development cost for the Nikoleavsk Wind Project is anticipated to total $21.9
million. The total grant request is $4.33 million or approximately 20 percent of total project
development. The grant money will be used specifically to fund road construction and electrical
intertie equipment and construction. WEA intends to turn over ownership of the electrical
intertie to HEA.WEA will fund the remainder of the project development cost and has already
invested about $250,000 in the project.
The project development costs are summarized in the table below and the budget worksheet
attached (see Appendix B Cost Worksheet and Appendix C Grant Budget Form).
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Alaska Wind Energy, LLC
Project Development Cost Total Grant Request Funded by WEA
Total Anticipated Project Cost $21,923,000 $4,334,600 $17,588,400
Reconnaissance (complete)$150,000 $0 $150,000
Conceptual Design
(complete)
$100,000 $0 $100,000
Final Design and Permitting $903,000 $180,6000 $722,400
Construction and
Commissioning
$20,770,000 $4,154,000 $16,616,000
Source: Project cost estimated developed by URS for WEA.
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.
Power companies in Southcentral Alaska use natural gas to generate 90 percent of the electric
power. Eighty-five percent of the electricity for the entire state of Alaska is consumed by users
living along the Alaska Railbelt, which runs from Homer to Fairbanks.There was a time when
natural gas had a low-cost advantage; however,due to changes in the Cook Inlet natural gas
market,ratepayers are now vulnerable to gas shortages and price increases.The proposed
Nilolaevsk Wind Project will supplement Railbelt power resources with a renewable energy
source,as well as increase power stability by diversifying generation resources by fuel source
and geographic location.
Southcentral Alaska is experiencing deliverability challenges in its gas supply.Over the last five
years, natural gas prices have increased from about $1.56/MMBtu in 2000 to about
$4.80/MMBtu in 2006, which is almost a 200 percent increase. Additionally,Chugach’s existing
natural gas supply contracts end in the 2010-2011 timeframe. Although Chugach has provisions
for future gas supply in existing contracts, the future price of that natural gas is uncertain.
Another market change is the shift by HEA from a full requirements customer of Chugach to
purchasing power independently starting in 2014. In a June 11, 2008 HEA press release, HEA
presented a proposal to Golden Valley Electric Association (GVEA) to open discussions on
transferring contractual rights for the Healy Clean Coal Plant to the Fairbanks utility.In
November 2006, HEA signed a Project Development Agreement and a Power Sales Agreement
with the Alaska Industrial Development and Export Authority (AIDEA). Under the terms of the
agreements, Homer Electric plans to restart the Healy Clean Coal Plant and on January 1,
2014, begin purchasing power from the plant at the same time HEA’s wholesale power contract
with Chugach Electric expires.
The Nikoleavsk Wind Project would supply 6 MW of power, offsetting the demand equivalent for
natural gas-fired power needed for more than 1,600 homes.The economic benefit of utilizing
wind is that there is no cost for fuel;therefore, the project’s power is predictable over the life of
the project. The project is owned and operated by Alaskans.Renewable Alaska energy
resource investments would help diversify the state’s energy portfolio and minimize the
economic boom and bust cycles that have plagued Alaska’s oil-based economy.Additionally,
wind is a clean resource.
HEA’s membership has expressed to its Board of Directors a strong desire to diversify the
cooperative’s resource mix, specifically utilizing renewable energy resources. This message
has been repeated in forums in 2007 and 2008, where more than 100 people attended each
time,and approximately 20 people have addressed the HEA Board about their desire for
renewable energy resources.
Renewable Energy Fund
Nikolaevsk Wind Project Grant Application
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Alaska Wind Energy, LLC
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.)
$21,923,000
2.5.2 Grant Funds Requested in this application.$4,334,600
2.5.3 Other Funds to be provided (Project match)$ WEA will pay for the
remainder of the project.
2.5.4 Total Grant Costs (sum of 2.5.2 and 2.5.3)$4,334,600
2.5.5 Estimated Benefit (Savings)$Value of road construction
and interie
$4,334,600 to be turned
over to public entities.
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.)
$ Explained in application
Increased Railbelt system
reliability and reduced
energy costs.
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Alaska Wind Energy, LLC
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.
Steve Gilbert,enXco’s Alaskan Projects Manager, will be the project manager for the
Nikolaevsk W ind Project.enXco will manage operations and maintenance of the project after
the plant enters commercial operation.
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 project schedule is included as Appendix G.
3.3 Project Milestones
Define key tasks and decision points in your project and a schedule for achieving them.
Preliminary Engineering and Permitting
AEA Grant Award, December 2008
Preliminary Engineering –December 1, 2008 (45 days)
Initiate Permitting –December 22, 2008 (30 days)
Conduct Field Studies –April 15, 2009 (30 days)
Receive Permits and Preliminary Authorizations, June 17, 2009
Design Build Package
Prepare Design Build Project Package –January 12, 2009 (30 days)
Prepare Contractor Proposal –February 13, 2009 (30 days)
Review Proposals –March 16, 2009 (30 days)
Award Design Build Contract –April 13, 2009
Final Design and Construction
Final Design and Specifications –April 14, 2009 (30 days)
WEA Review –April 15, 2009 (21 days)
AEA Review –June 8, 2009 (14 days)
Revise Final Design –June 22, 2009 (14 days)
Construction –July 23, 2009 (128 days)
Substantial Completion –December 16, 2009
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Alaska Wind Energy, LLC
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.
WEA will provide overall project management of the Nikolaevsk Wind Project. Mr. Steve
Gilbert, Alaskan Projects Manager will oversee day-to-day management of the design,
construction, operations, and maintenance of the facility. enXco Services, a partner company
with WEA, will provide operations and maintenance of the wind generation facility. Mr. Gilbert
will be the liaison between the AEA, enXco Services, and the project developers CIRI and
enXco, project engineering design and permitting contractor URS, and the construction
contractor. Mr. Pat Weaver is the Construction Manager for WEA. Summary resumes are
included in Section 7 Appendix A. Below is an organization chart for the project.
3.5 Project Communications
Discuss how you plan to monitor the project and keep the Authority informed of the status.
WEA partners, CIRI and enXco, have substantial experience with management of multi-million
dollar projects.WEA will make project status and achievement of milestones a regular part of
the project’s communications protocol. At the commencement of the project grant award,WEA
will confer with Alaska Energy Authority on project status reporting requirements and methods
and frequency desired for delivery of the reports.WEA’s project manager can offer periodic
written status reports to Alaska Energy Authority’s project point of contact on a monthly basis;
however, should any issues arise that may require more frequent tracking, we will make
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Alaska Wind Energy, LLC
adjustments as needed. We envision providing status briefs to Alaska Energy Authority via
electronic mail. Should issues arise,WEA’s project manager may notify Alaska Energy
Authority via telephone and follow up with written notification for the project record.
3.6 Project Risk
Discuss potential problems and how you would address them.
As part of the overall project execution plan,WEA will include contingency planning for critical
milestones throughout the design and construction phases of the project. At this time, we do
not foresee problems or risks that would cause project delays, other than unpredictable delays
in delivery of equipment required for the construction of the wind project. Project partner, enXco
has a proven track record of developing and operating wind projects utilizing similar turbines
and infrastructure.
At this time,we do not anticipate opposition to the project, considering public advocacy in favor
of renewable resources voiced at several HEA Board meetings and during public forums.
However,WEA will prepare a public information plan that will include methods of
communicating and informing the public of the project. The project proponents will provide the
public with opportunities to voice their concerns and comments throughout the planning and
design phase of the project.
The current project cost estimate has an uncertainty of +/-20 percent that adds a risk of cost
over-runs that will not be covered by grant money. To mitigate this risk WEA is committed to
covering costs above those estimated in this proposal.
The risks associated negotiations include the inability to successfully negotiate a land use
agreement or power sales agreement. To mitigate these risks,WEA will not apply any grant
funds to project costs until these agreements are signed.The wind site is on private land.
Permitting the wind project is not likely a hurdle.
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 site has a class IV wind resource;in conjunction with sufficient area to install four 1.5-MW
turbines could generate approximately 14,717 MWh per year, enough to meet the annual electric
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needs of more than 1,600 homes.This assessment of the project’s potential is based on data
collected at the site,using 60 meter meteorological towers and combined with sophisticated
computer modeling. The project will be designed to maximize the energy extraction at the site.
The proposed project is expected to generate the most power during the winter months. While
the average annual capacity factor is estimated to be 28 percent, the average capacity factor
during the winter months (December, January,and February) is 50 percent. In addition, the
estimated average capacity factor for November is 48 percent and March is 46 percent.
This project will contribute to the diversification of Alaska’s energy supply. Declining natural gas
production in Cook Inlet and large variation in the fuel supply market makes Alaska susceptible
to potentially skyrocketing energy costs. The development of this project will both diversify the
state’s energy portfolio, and create an energy source that is not subject to variable fuel costs.
The energy produced will increase the State’s supply of clean, renewable energy resources.
The project’s electricity will be generated emission-free, without the use of fossil fuel.Because
the project’s output has no fuel costs, it will directly displace natural gas,and the cost of power to
consumers will get less expensive over time.
Finally, the project is located close to load centers on the Kenai Peninsula, where the electricity
is needed.
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 proposed project will sell power into the Railbelt grid. Some of the most relevant resources
for Chugach and HEA that comprise the existing energy system are included in the table below:
Summary of the installed capacity for Chugach (CEA) and HEA from REGA Report (Sept 2008)
Chugach Thermal Units from REGA Report (Sept 2008)
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HEA owns the natural gas Nikiski combustion turbine that can produce a maximum of 35 MW in
the summer months and 39 MW during the winter
Summary of Hydroelectric Generation for Chugach (CEA) and HEA from REGA Report.
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 Nikoleavsk Wind Project will have a positive impact on the existing energy infrastructure by
diversifying the generation resource mix and by relieving capacity constraints in the southern
part of the Railbelt system. As shown in the tables above,the generation resources for Chugach
are dominated by natural gas fuel and many are scheduled for retirement by 2014. The proposed
project will begin to replace these existing natural gas resources with clean wind powered
energy. Furthermore, HEA plans to terminate its existing agreement with Chugach as a full
requirements customer starting in 2014 and will need to meet its 80 MW demand from other
resources. Currently HEA has access to about 50 MW of generation with Nikiski’s combustion
turbine and its share of Bradley Lake hydro plant. HEA is currently studying several generation
options including restarting Healy Clean Coal project and adding heat recovery to Nikiski.HEA
is also studying small, low impact hydropower in the Moose Pass area.The Nikoleavsk Wind
Project would be a renewable generation resource option for HEA and would help HEA meet
customer demand for green power resources.
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Alaska Wind Energy, LLC
In addition to the need for new generation resources, the proposed project would also help to
alleviate transmission system capacity constraints in the southern part of the Railbelt system.
The proposed wind project located in the southern part of the Railbelt system on the Kenai
Peninsula could serve electric load without adding to the congestion in the southern intertie.
Furthermore, with the greatest power production from the project during winter months when
electric demand is usually the highest, the project will help make the grid on the Kenai Peninsula
more robust.
Similarly, the project could help alleviate capacity constraints on the natural gas transmission
system, by reducing the need to transport natural gas to the south, for existing or proposed
natural gas power generation. The portion of natural gas transmission system on the Kenai
Peninsula can be especially constrained during high demand periods when gas is being moved
from gas fields near Homer as well as from Swanson River gas storage facility. As with
electricity, the higher power production during the winter season will disproportionately benefit
the gas transmission system by measurably reducing the gas that must be moved from the
southern part of the gas transmission to electric power resources needed to serve Homer or
other parts of the Railbelt.
4.2.3 Existing Energy Market
Discuss existing energy use and its market.Discuss impacts your project may have on energy
customers.
The impacts of the proposed project on energy markets will be more significant than the 14.7
million kWh of generation,because the bulk of the power from this project will be generated
during the winter months when electricity and natural gas demand are the highest.
The price that electric utilities are paying for natural gas to fuel 90 percent of the power plants in
the Railbelt is likely to increase dramatically. The existing gas supply contracts for CEA expire
after 2010 and CEA must negotiate new supply. See figure 13 below from the REGA study. The
most recent supply contract for natural gas from Cook Inlet was negotiated between Marathon,
ConocoPhillips and Enstar in 2007. While the specific terms and price for the contract are not
publicly available, it is clear from RCA hearings in August 2008 that future pricing for natural gas
from Cook Inlet will be based on “tiered” system depending on total natural gas demand. The
highest priced natural gas will be for supply used to meet “needle peak” or the periods with
highest total demand. This is likely to occur on the coldest winter days when demand is highest
for both electricity and natural gas.
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The proposed project is expected to generate the most power during the winter months. While
the average annual capacity factor is estimated to be 28 percent, the average capacity factor
during the winter months (December, January,and February) is 50 percent. In addition, the
estimated average capacity factor for November is 48 percent and March is 46 percent.
Therefore, the proposed project could have a proportionally greater impact on electricity and
natural gas prices because of its non-gas electricity production during the periods of highest
demand for Cook Inlet gas.The project could reduce overall electricity and natural gas prices in
the Railbelt system by reducing demand for natural gas during the months of highest demand
and when gas will have the highest tier prices.
Renewable Energy Fund
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Alaska Wind Energy, LLC
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
The technology to be used is the modern wind energy turbine, a proven, emission-free
technology for generating electricity. Specifically,WEA has selected the 1.5 MW sle wind
turbine manufactured by GE Energy, a world leader in the industry. The 1.5 MW turbine is one
of the most widely used wind turbine in the United States and is part of a fleet of more than 3,300
MW of installed capacity. The turbines will be installed with an 80-meter hub height and blades
that provide a 77-meter rotor diameter. This rotor diameter is optimal for use with in a Class IV
wind resource, such as exists on the project site. The turbine will be equipped with an extreme
cold-weather package to provide reliable operation at temperatures as low as -30°C, and in
survival mode (without operation) at temperatures as low as -40°C. These design parameters
ensure reliable operation in the conditions expected in Alaska, and at this specific project site.
Given the existing wind regime, the regional electric demand, and interconnection capacity, the
optimum installed capacity of the project is 6 MW. Based on the meteorological data collected
on site to date, and the very high reliability of the turbines selected, it is anticipated that the
project will produce an average annual output of 14,717 MWh.
There are few anticipated barriers to project development. Three potential barriers may be
presented for this project. First, because the market for wind turbines is relatively tight, turbine
availability is a potential obstacle. To overcome this problem,WEA partner enXco, has placed
advanced orders with GE for wind turbines to ensure availability of the necessary equipment.
Second, the project is located 22 driving miles from the Homer Airport and 218 miles from the
Ted Stevens International Airport in Anchorage. This is believed to be a sufficient distance such
that there will be no conflict with navigation, and close coordination, and permitting by the
Federal Aviation Administration (FAA) will be necessary. It is expected that the FAA will impose
lighting requirements and other measures to ensure navigational safety.
The October 3, 2008 extension of the production tax credit (PTC) to December 31, 2009 further
helps to lower the cost of energy from this project.
The project will be integrated to the regional electric grid through the existing Anchor Point
Substation, owned by HEA via a medium-voltage (24.9 kilovolts [kv]). This will permit delivery of
electricity to the bulk power system.
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The Nikolaevsk Ridge site is located ten miles from the Sterling Highway at the end of a gravel
oil field development road. Only 1.9 miles of new access road is required to the proposed site.
Upgrades to existing road should be minimal and the surrounding terrain is fairly flat. Three
existing bridges will require shoring prior to transporting the heavy wind turbine pieces. A few
horizontal and vertical curves will require flattening or straightening to accommodate the longer
loads.
The proposed new access road is located on a gently sloping shoulder of Nikolaevsk Ridge.
Placing the road on the shoulder of the ridge will minimize any cross drainage or culverts. The
typical design includes a 16-foot wide roadbed with a maximum of 10 percent of slope and
maximum 135 foot turn radius to accommodate the long loads. The higher areas near the ridge
top appear to be dominated by tall grass and alder shrub thickets.
A 24.9 kv power line is expected to be constructed between the Nikolaevsk Wind Generation
facility and the existing Anchor Point Substation located approximately 10 miles to the
southwest. The line will follow the short piece of new road and existing road infrastructure.
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.
WEA partner, CIRI, is an Alaska Native corporation based in Anchorage. CIRI owns the land on
which the wind generation facility will be located.This area is a mosaic of State and Native
owned lands (Kenai Area Plan 2001).
The distribution line is expected to be collocated with the existing road system mostly on CIRI
and Native Village of Ninilchik land. However, the distribution line may also traverse KPB and
State land.
4.3.3 Permits
Provide the following information is it may relate to permitting and how you intend to address
outstanding permit issues.
List of applicable permits
Anticipated permitting timeline
Identify and discussion of potential barriers
WEA has already initiated contact with many of the major permitting agencies during earlier
feasibility studies for this project. We anticipate that our robust field studies and incorporation of
best management practices into the project design will lead to an efficient permitting process.
Potential barriers to the permitting process exist where understaffing at the agency level may
delay the receipt of final permits. In such cases we anticipate that preliminary authorizat ions will
be authorized for construction.
WEA has identified applicable permits. Consultation with the federal, state, and local authorities
will be conducted to ensure an efficient and expedient permitting approval process. The United
States Fish and Wildlife Service (USFWS), the Alaska Department of Fish and Game (ADF&G),
the Alaska Department of Environmental Conservation, Alaska Department of Natural Resources
(DNR), Mining Land and Water, Division of Ocean and Coastal Management, and the Federal
Aviation Administration (FAA)will be consulted at the early stages of the project development.
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Any State of Alaska DNR applications will be filed first, once preliminary engineering has been
completed, to begin this authorization process. We anticipate that final design of the facilities will
occur in May of 2009. Corps of Engineers (COE) Section 404 applications will be submitted
once wetland field studies and a Preliminary Jurisdictional Determination have been completed
in the spring of 2009. A coastal consistency determination will be filed concurrent with the COE
application. Any required ADF&G and local development permit applications will be submitted at
this time as well. The State Historic Preservation Office (SHPO) will be consulted regarding the
potential for encountering any historic properties or artifacts during development. Any required
surveys or field studies required by SHPO or any other agency will be conducted in the spring of
2009. The USFWS will be contacted early, in accordance with the Migratory Bird Treaty Act, to
ensure that all best management practices are built into the final design of the project. With this
phased permitting strategy,we anticipate having all permits and/ or preliminary decisions issued
by June of 2009 to begin construction. All final permits and authorizations will be in hand by
December of 2009.
Table 1 (located within Section 7) contains a list of permits and anticipated process review
schedule required for this project. A permitting timeline is presented as part of the project
schedule in Appendix G.
4.3.4 Environmental
Address whether the following environmental and land use issues apply, and if so how they will
be addressed:
Threatened or Endangered species
Habitat issues
Wetlands and other protected areas
Archaeological and historical resources
Land development constraints
Telecommunications interference
Aviation considerations
Visual, aesthetics impacts
Identify and discuss other potential barriers
WEA wishes to construct a fully operational small-scale Wind Resource Area (WRA) at the
project site by the end of 2009. In order to facilitate this goal our team will begin the agency
consultation process as soon as possible.
Environmental specialists hired by WEA will conduct a habitat delineation and assessment
utilizing high-resolution aerial or satellite imagery and our knowledge of the site to delineate
boundaries of general vegetation types and habitats. Each community description will be
augmented to include an expanded description and list of dominant plant species.
The site will also be surveyed to delineate waters of the United States, including wetlands, in
accordance with the methodology presented in the US Army Corps of Engineers (USACE)
Wetlands Delineation Manual (USACE 1987 Manual; Environmental Laboratory, 1987) and the
Alaska Supplement (Interim Regional Supplement to the Corps of Engineers Wetlands
Delineation Manual: Alaska Region; US Army Corps of Engineers, 2006). A delineation report
will assist in the placement of project features and to develop stormwater management plans. A
wetlands map is provided as Figure 2 in Section 7 of this application. We do not anticipate that
the project will impact wetlands.
Renewable Energy Fund
Nikolaevsk Wind Project Grant Application
AEA 09-004 Grant Application Page 15 of 21 10/8/2008
Alaska Wind Energy, LLC
WEA will evaluate telecommunication and microwave path clearance for the proposed project.
Using GeoPlanner Licensed Microwave Search,any licensed microwave paths that intersect the
coordinate block of the proposed project will be identified and the worst case Fresnel Zone
(WCFZ) boundaries will be delineated. The WCFZ is a swath along the microwave path where
wind turbines could obstruct the path. This identification allows micrositing of individual wind
turbines to avoid any potential conflict. If deemed necessary, interference with government
systems, AM and FM stations and post-construction measurements and evaluation can be
conducted.
These comprehensive environmental studies are designed to identify and resolve potential
barriers to development of the project. We anticipate that features, such as wetlands and
sensitive habitats, can be avoided, minimized, or mitigated by appropriate placement of project
features. Any additional studies required by permitting agencies will be considered and
accomplished as needed.
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 Cost
The project development cost for Nikoleavsk Wind Project is anticipated to total $21.9 million.
This estimate has a uncertainty of +/-20 percent. The total grant request is $4.33 million,
approximately 20 percent of total project development. The grant money will be used to fund
road construction and electrical intertie equipment and construction.WEA intends to turn over
ownership of the roads to CIRI or KPB and the ownership of the electrical intertie to HEA.
WEA will fund the remainder of the project development cost and has already invested about
$250,000 in the project. The project development costs developed by URS for WEA are
summarized in the table below and in the budget worksheet attached.
Project Development Cost Total Grant Request Funded by WEA
Total Anticipated Project Cost $21,923,000 $4,334,600 $17,588,400
Reconnaissance (complete)$150,000 $0 $150,000
Conceptual Design
(complete)
$100,000 $0 $100,000
Final Design and Permitting $903,000 $180,6000 $722,400
Construction and
Commissioning
$20,770,000 $4,154,000 $16,616,000
Renewable Energy Fund
Nikolaevsk Wind Project Grant Application
AEA 09-004 Grant Application Page 16 of 21 10/8/2008
Alaska Wind Energy, LLC
Projected Capital Cost of the Proposed Renewable Energy System
Project Capital Cost Total Grant Request Funded by WEA
Road Construction $ 410,000 $ 410,000
Electrical Intertie to Anchor
Point Substation
$ 3,500,000 $3,500,000
Turbines ($2.2 million each)$ 8,800,000 $ 8,800,000
Turbine Delivery $ 1,980,000 $ 1,980,000
TOTAL $14,690,000 $3,910,000 $10,780,000
Source: Project cost estimated developed by URS for WEA.
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 anticipated operating and maintenance costs for the wind project including land lease
payments of about $5,000 per turbine per year are about $0.002 per kilowatt-hour (kWh). Total
annual costs for the project are estimated to be $0.10 per kWh which includes the annualized
payment for capital costs. There is no grant funding requested to cover operating or
maintenance costs. However, grant funding will reduce capital costs for the project and therefore
reduce total annual costs by about $0.008 per kWh.
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
The power purchase sales agreement will be the subject of negotiation.The potential buyers are
Chugach and HEA. Both entities are known to need new generation resources in the near ter m
because of plant retirements and HEA ending its full requirements contract with Chugach. Both
Chugach and HEA will be exposed to higher natural gas supply prices because Chugach’s gas
supply contracts end in 2010 and 2011.
The estimated minimum power sales price for the purposes of this grant application is $0.11 per
kWh.With the grant funding used to reduce capital costs for the project, this wind project will
have costs similar to projects in the Lower 48. The estimated rate of return from the grant-funded
project based on similar projects in the Lower 48 would be 7 to 9 percent.
4.4.4 Cost Worksheet
Complete the cost worksheet form which provides summary information that will be considered
in evaluating the project.
See Appendix B for the cost worksheet form for the Project.
Renewable Energy Fund
Nikolaevsk Wind Project Grant Application
AEA 09-004 Grant Application Page 17 of 21 10/8/2008
Alaska Wind Energy, LLC
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.
WEA proposes to operate this project to maximize availability of wind power and benefit to
Railbelt power consumers. The grant money will be used to reduce capital costs on aspects of
the project (roads and electric intertie) whose ownership will be transferred to local landowners
and HEA, as appropriate. The grant money will also serve to reduce the overall cost of power
from the project by reducing capital costs.
Business Plan Highlights:
Estimated annual power generation = 14,716,800 kWh
Estimated annual power sales (Estimated price $0.11/kWh) = $1,619,000
Estimated annual production tax credit of $0.019/kWh = $279,600.
Estimated annual operating costs ($0.002/kWh) = $29,400
Estimated annualized capital costs for grant funded project ($0.10/kWh)
Estimated annual net revenue = $400,000
Project lifetime = 25 years
Estimated ROI
4.4.6 Analysis and Recommendations
Provide information about the economic analysis and the proposed project. Discuss your
recommendation for additional project development work.
There is a demonstrated need for new non-gas-fueled power generation in the Railbelt to
support growing electric demand and the need to diversify and replace aging generation
resources. Some of the factors supporting the need for this project include:
1.Need to increase Railbelt electric generation capacity. The recent REGA study conducted by
AEA found that there will be a need for more than 300 MW of new electric generation
capacity by 2015. See Table 26 from the REGA report.
Source: Alaska Railbelt Electrical Grid Authority (REGA) Study Report. September 12, 2008.
In addition, HEA has notified CEA that it will not be a full-requirements customer starting in
January 2014 and will need to meet its demand (approximately 80 MW peak) with its own
Renewable Energy Fund
Nikolaevsk Wind Project Grant Application
AEA 09-004 Grant Application Page 18 of 21 10/8/2008
Alaska Wind Energy, LLC
resources or purchases after that date. This project will serve to meet the power demand in the
Railbelt and at HEA.
2.Transmission System. As a non-gas power resource, the project could also alleviate capacity
constraints in the electric and natural gas transmission systems.This project could reduce
constraints in the southern part of the Railbelt transmission system (Quartz Creek
transmission line) by providing power to meet electricity demand in Homer. Furthermore, with
the greatest power production from the project during winter months when electric demand is
usually the highest, the project would reduce the amount of electricity that must be
transported south to Homer. Similarly, the project could alleviate capacity constraints on the
natural gas transmission system, by reducing the need to transport natural gas to the south,
for existing or proposed natural gas power generation. The portion of natural gas
transmission system on the Kenai Peninsula can be especially constrained during high
demand periods when gas is being moved from gas fields near Homer as well as from
Swanson River gas storage facility. As with electricity, the higher power production during
the winter season will disproportionately benefit the gas transmission system by measurably
reducing the gas that must be moved from the southern part of the gas transmission to
electric power resources needed to serve Homer or other parts of the Railbelt.
3.Carbon legislation compliance. There have been several recent proposals to regulate
emissions of greenhouse gases (including carbon dioxide, methane, nitrous oxide, and
fluorinated gas) in the 110th US Congress. It is probable that in the next 10 years, Alaskan
power producers will have to comply with some type of carbon emission constraint or tax.
The proposed wind project will be in compliance with proposed legislation and power
generated by this project will become more valuable as the price for fossil fueled generation
increases because of carbon constraints.
Based on these factors, it is recommended that a high priority for grant money be designated for
this project. Because the bulk of the power from this project will be generated during the season
with highest electricity and natural gas demand, this project will have a higher benefit than 14.7
million kWh.The project will serve to alleviate critical capacity constraints in the electric and gas
transmission systems during periods of highest monthly demand,as well as reduce overall
energy prices by displacing natural gas generation and reducing natural gas demand for the
highest priced “tier.”
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 economic benefits for the Nikoleavsk Wind Project include the following:
1.Potential annual fuel displacement of natural gas need to generate 14,716,800 kWh.
Renewable Energy Fund
Nikolaevsk Wind Project Grant Application
AEA 09-004 Grant Application Page 19 of 21 10/8/2008
Alaska Wind Energy, LLC
2.Estimated annual power sales (Estimated price $0.11/kwh) = $1,619,000.
3.Production Tax Credit of $1.9/kwh cents = $279,600. This tax credit will reduce the cost of
power and is included in the estimated cost of power at $0.10/kwh.
4.Transfer of ownership of grant funded capital resources (roads and electric intertie) to public
entities (KPB and HEA) for public benefit.
5.Reduced energy costs and increased reliability for Railbelt energy users.
The public benefits of this project are conservatively estimated to total $0.02/kWh generated.
This amounts to a Benefit Cost Ratio of 1.70 for the grant investment for the project using that
following assumptions:
Public benefit over 25 year lifetime = $0.02/kWh generated by Nikoleavsk Wind Project
Cost = Grant Request ($4.33 million)
The payback for the grant amount is 15 years.
The non-economic benefits from Nikoleavsk Wind Project include:
1.Lower air emissions from Railbelt power generation –The Nikoleavsk Wind Project will result
in lower air emissions from power generation by displacing natural gas generation in the
Railbelt. Reduced air emissions include nitrogen oxides and carbon monoxide.
2.Diversification of Railbelt power supply making electric delivery and transmission more cost -
effective over time. The Nikoleavsk Wind Project will diversify the electric generation mix for
the Railbelt by adding renewable generation to a generation mix dominated by natural gas
fuel. In addition, because the wind project will generate the bulk of its power during the
winter season when electric demand is the highest in the Railbelt and hydro generation is
not fully available. The project will help to increase system reliability by alleviating system
transmission constraints.
3.The project will provide employment in the KPB. The project will provide construction jobs
during project development and long term jobs for project operation and maintenance.
Currently the unemployment rate in KPB is 9.8 percent (KPB Quarterly Demographic
Statistics). This project will provide good construction and maintenance jobs in an area that
has experienced recent job loss due to closure of the Agrium fertilizer plant and reduced
operations at the Kenai LNG plant.
4.The grant money for the project will be used for infrastructure improvements including roads
and electric transmission system. Ownership of these roads will be transferred to KPB at the
end of project development. Ownership of the electric intertie will be transferred to HEA.
Therefore, the grant will fund infrastructure improvements that will directly benefit the local
communities.
5.The project will support KPB and other local government revenues through local project
purchases and taxes. Project workers will indirectly support the local economy through
purchases by workers and their families at local businesses and services.
6.The project will benefit CIRI members by adding value to CIRI land resources. The project
will generate land lease payment totaling about $20,000 per year as well as other
improvements to CIRI properties.
Renewable Energy Fund
Nikolaevsk Wind Project Grant Application
AEA 09-004 Grant Application Page 20 of 21 10/8/2008
Alaska Wind Energy, LLC
7.The project will help KPB meet renewable energy and climate change goals as defined in a
recent resolution supporting net metering (see resolution attached in Appendix I).
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
The major funding source for the Nikoleavsk Wind Project will be WEA a partnership
between enXco and CIRI. The grant funding of $4.3 million is being requested to cover
the capital costs of road improvement and electric intertie equipment whose ownership
will be transferred to local government and HEA, respectively.
The grant request is $4,334,600 for the following costs:
Road Construction $ 410,000
Electrical Intertie to Anchor
Point Substation
$ 3,500,000
Final Engineering and Design
for these project components.
$ 424,600
TOTAL GRANT REQUEST $ 4,334,600
See Appendix C for the GrantBudget.xls form.
The financial commitment to the project is documented in HEA’s letter of support for the
project is included in Appendix H.
Renewable Energy Fund
Nikolaevsk Wind Project Grant Application
AEA 09-004 Grant Application Page 21 of 21 10/8/2008
Alaska Wind Energy, LLC
SECTION 7 –ADDITIONAL DOCUMENTATION AND CERTIFICATION
Renewable Energy Fund
Nikolaevsk Wind Project Grant Application
Appendix A
Resumes
Renewable Energy Fund
Nikolaevsk Wind Project Grant Application
Steve Gilbert, Project Manager
Steve Gilbert is Manager of Alaskan Projects for Wind Energy Alaska. He came
to his current post after 17 years with Chugach Electric Association, where he
served as Manager, Energy Projects Development. During his years at Chugach
he managed three of Chugach’s four power plants, served as lead electrical
engineer for the 1 MW fuel cell and micro turbine projects and the investigation of
renewable energy for Chugach including Fire Island.
After completing training in electrical power engineering Steve started his career
in 1980 in start up of large coal and nuclear power plants. He provided consulting
and technical services to client companies across the U.S. Steve has managed
numerous multi-million dollar power projects. Steve was Alaska’s electrical
engineer of the year in 2000 and for the 12 western states in 2001.
Scott Nelson, Vice President of Development and Operations
Scott joined the enXco organization, partner organization for WEA,in 1992.He
brings 16 years of expertise in the renewable field.Scott has a Bachelor's
Degree in Accounting from Hawaii Pacific University and received his CMA
license in 1998.Scott has been a part of over 2,000 Maw's of Wind Projects built
to date.Scott's role in these projects include contract negotiations, project
budgeting, project management oversight and lead in contract closings. He
manages numerous day to day development activities and has a record of
successful project completions.
Ethan Schutt, Senior Vice President, Land and Legal Affairs
Ethan Schutt oversees CIRI's ANCSA land and natural resource development,
government contracting division and legal and regulatory affairs.CIRI is a
partner organization for WEA.Schutt began working for CIRI in 2005 as general
counsel. Before that, he was general counsel for Tanana Chiefs Conference.
Schutt was also an associate with Dorsey & Whitney LLP and a law clerk for the
Alaska Supreme Court.Schutt is Athabascan and a Doyon, Limited shareholder
from Tok, Alaska. Schutt received a Bachelor of Science degree in Mathematics
from Washington State University in 1995 and his Juris Doctorate from Stanford
University in 1999.Schutt served on the Board of Directors of Doyon, Limited
from 2003 to 2006, and as the Board's secretary from 2004 to 2006. Schutt is a
director of Covenant House Alaska in Anchorage.
Renewable Energy Fund
Nikolaevsk Wind Project Grant Application
Pat Weaver, Manager of Construction
Pat Weaver is the Director of Project Construction for enXco. Pat has worked in
the wind industry for 22+ years managing delivery, erection, commissioning and
balance plant for wind power plants. Prior to joining the enXco team Pat worked
with GE as the Global Installation Manager , Enron Wind as the Installation
Manager and the Zond Wind Energy as the Equipment Manager.In
2007 he managed the installation of 495 MW of wind power generating facilities
across the U.S.Pat very experienced in all phases of the construction on
both large and small wind farms throughout the world.
A-2
Renewable Energy Fund
Nikolaevsk Wind Project Grant Application
Alaska
Norman K. Gutcher, PE,Director of Engineering Services
Norm Gutcher has more than 45 years of experience in management, design and
construction administration of civil engineering projects. His extensive experience
includes the successful completion of projects involving highway and railroad
route location studies, traffic and transportation system planning, rural and urban
highway design, site development planning and design, system inventories,
airport planning and design, and environmental impact studies projects. This
experience includes serving as project manager on the Fire Island wind study,
and on an analysis of potential wind energy sites in Alaska.
Brian F. Kovol, REM,Senior Project Biologist/Department Manager
Brian Kovol brings more than 18 years of environmental experience to this
project. He has extensive experience performing environmental assessments,
impact analyses, NEPA/CEQA reporting, wetlands delineation, permitting,
regulatory compliance, environmental construction management, and sampling
and analysis of environmental contaminants.
Allison R. Nicole,Environmental Specialist
Nicole Allison has 4 years of experience in environmental policy issues. Prior to
joining URS, she was the Project Review Coordinator and Natural Resource
Specialist III for the Alaska Coastal Management Program (ACMP). Her project
experience has involved the implementation of coordinated permitting reviews
between multiple agencies, assisting applicants with their permit applications,
facilitating the dissemination of project information, and mediating between
agencies and applicants during the coastal consistency review process.
Peter S. Crews, PE,Transportation Engineer
Peter Crews has 8 years design experience in civil and structural engineering
projects, and more than 10 years of construction surveying experience. He is
solution orientated and determined to find the optimum solution to difficult design
problems for clients. His transportation experience includes roadway design
through difficult terrain, and hands-on knowledge of the right-of-way acquisition
and utility processes. Peter effectively coordinates with right-of-way agents and
utility companies during the acquisition process.
A-3
Renewable Energy Fund
Nikolaevsk Wind Project Grant Application
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.28% Capacity Factor; 50% seasonal capacity
factor (November through March)
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 Railbelt1 grid, leave this section blank)
i.Number of generators/boilers/other Railbelt System
ii.Rated capacity of generators/boilers/other
iii.Generator/boilers/other type
iv.Age of generators/boilers/other
v.Efficiency of generators/boilers/other
b)Annual O&M cost (if system is part of the Railbelt grid, leave this section blank)
i.Annual O&M cost for labor
ii.Annual O&M cost for non-labor
c)Annual electricity production and fuel usage (fill in as applicable)(if system is part of the
Railbelt grid, leave this section blank)
i.Electricity [kWh]
ii.Fuel usage
Diesel [gal]
Other
iii.Peak Load
iv.Average Load
v.Minimum Load
vi.Efficiency
vii.Future trends
d)Annual heating fuel usage (fill in as applicable)
i.Diesel [gal or MMBtu]
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
ii.Electricity [kWh]
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 6,000 kW
b)Annual renewable electricity generation
i.Diesel [gal or MMBtu]
ii.Electricity [kWh]14,716,800 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 $21,374,546.67
b)Development cost $1,164,900.00
c)Annual O&M cost of new system $ 44,000 ($0.002/kWh)
d)Annual fuel cost Not applicable wind power
5.Project Benefits
a)Amount of fuel displaced for
i.Electricity 14,716,800 kWh
ii.Heat
iii.Transportation
b)Price of displaced fuel Estimated to $6.00 per mcf depending on the supply
contract prices negotiated by Chugach Electric. The
project will displace highest-tiered priced power, as
bulk of power will be generated during winter season
when demand for electricity and Cook Inlet natural gas
are highest and “tiered” prices are expected to be
highest. See application for explanation.
Renewable Energy Fund
RFA AEA 09-004 Application Cost Worksheet revised 9/26/08 Page 3
c)Other economic benefits The economic benefits for the Nikoleavsk Wind Project
include the following:
1)Potential annual fuel displacement of natural
gas need to generate 14,716,800 kWh.
2)Estimated annual power sales (Estimated price
$0.11/kwh) = $1,619,000
3)Production Tax Credit of $1.9/kwh cents =
$279,600.
4)Transfer of ownership of grant funded capital
resources (roads and electric intertie) to public
entities (KPB and HEA) for public benefit.
5)Land lease payments to CIRI of $20,000 per
year.
d)Amount of Alaska public benefits Total benefits are conservatively estimated to amount
to $0.02/kWh generated by the Nikoleavsk Wind
Project.
The public benefits of the project include:
1) Increased Railbelt system reliability by diversifying
generation resources.
2) Reduced energy costs throughout the Railblet
system because wind project will displace natural gas
generation during the highest price tiers of the new
natural gas supply contracts.
3)The grant money for the project will be used for
infrastructure improvements including roads and
electric transmission system
4)Lower air emissions from Railbelt power generation.
5)The project will provide employment in the Kenai
Peninsula Borough (KPB).
6)The project will support KPB and other local
government revenues through local project purchases
and taxes.
7)The project will benefit CIRI members by adding
value to CIRI land resources.
8)The project will helps KPB meet renewable energy
and climate change goals.
Renewable Energy Fund
RFA AEA 09-004 Application Cost Worksheet revised 9/26/08 Page 4
6.Power Purchase/Sales Price
a)Price for power purchase/sale Power purchase sales agreement will be the subject of
negotiations. For grant applications purposes, a sales
price of $0.11 per kWh was used
7.Project Analysis
a)Basic Economic Analysis
Project benefit/cost ratio Benefit Cost Ratio = 1.70
Assumptions:
Public benefit over 25 year lifetime = $0.02/kWh generated by
Nikoleavsk Wind Project = $7.4 million.
Cost = Grant Request ($4.33 million)
Payback 15 years for grant investment.
Renewable Energy Fund
Nikolaevsk Wind Project Grant Application
Appendix C
Grant Budget Form
Alaska Energy Authority - Renewable Energy Fund
BUDGET INFORMATION
BUDGET SUMMARY:Wind Energy Alaska - Nikoleavsk Wind Project
Milestone or Task Federal Funds
Grant Request/
State Funds
Local Match
Funds (Cash)
Local Match
Funds (In-Kind)Other Funds TOTALS
Reconnaissance (complete)$150,000.00 $150,000.00
Conceptual Design (complete)$100,000.00 $100,000.00
Final Design and Permitting $180,600.00 $722,400.00 $903,000.00
Construction and Commissioning $4,154,000.00 $16,616,000.00 $20,770,000.00
Operation and Reporting $0.00
TOTAL $0.00 $4,334,600.00 $17,588,400.00 $0.00 $0.00 $21,923,000.00
Milestone # or Task #
BUDGET CATAGORIES:
Reconnaissance
(complete)
Conceptual
Design
(complete)
Final Design and
Permitting
Construction and
Commissioning
Operation and
Reporting TOTALS
Direct Labor and Benefits $250,000.00 $250,000.00
Travel, Meals, or Per Diem $0.00
Equipment $8,800,000.00 $8,800,000.00
Supplies $0.00
Contractual Services $456,000.00 $458,900.00 $1,980,000.00 $2,894,900.00
Construction Services $9,990,000.00 $9,990,000.00
Other Direct Costs $0.00
TOTAL DIRECT CHARGES $250,000.00 $456,000.00 $458,900.00 $20,770,000.00 $0.00 $0.00 $21,934,900.00
RFA AEA09-004 Budget Form
Renewable Energy Fund
Nikolaevsk Wind Project Grant Application
Appendix D
Grant Application (CD-ROM)
Renewable Energy Fund
Nikolaevsk Wind Project Grant Application
Appendix E
Governing Body Resolution
Renewable Energy Fund
Nikolaevsk Wind Project Grant Application
Appendix F
Certification
Renewable Energy Fund
Nikolaevsk Wind Project Grant Application
Appendix G
Project Schedule
Renewable Energy Fund
Nikolaevsk Wind Project Grant Application
Appendix H
HEA Letter of Support
Corporate Office Central Peninsula Service Center
3977 Lake Street 280 Airport Way
Homer, Alaska 99603-7680 Kenai, Alaska 99611-5280
Phone (907) 235-8551 Phone (907) 283-5831
FAX (907) 235-3313 FAX (907) 283-7122
October 3, 2008
Mr. Steve Gilbert, Manager of Alaskan Projects
Alaska Wind Energy, LLC
dba Wind Energy Alaska
2525 C Street, Suite 500
Anchorage, AK 99503
Dear Steve:
This letter is being written in support of the Wind Energy Alaska application to the Alaska
Energy Authority (AEA) for a grant associated with the evaluation and potential installation of a
wind energy facility.
The proposed wind farm would be sited in Homer Electric Association's (HEA's) service area
and would generally be located either near the town of Nikolaevsk or in the Caribou Hills locale.
HEA intends to support the performance of a feasibility study assessing whether or not these
projects can reliably be integrated into HEA’s system with justifiable economics and then,
assuming a positive result to those studies, working with all parties required to bring the project
on-line. HEA will need to coordinate with the other Railbelt utilities, including Chugach Electric
Association which is responsible for system dispatch through 2013.
HEA welcomes cost efficient clean power generation alternatives to its service territory and we
fully support the Wind Energy Alaska application to AEA.
Sincerely,
Bradley P. Janorschke
General Manager
Renewable Energy Fund
Nikolaevsk Wind Project Grant Application
Appendix I
Kenai Peninsula Borough Resolutions
Kenai Peninsula Borough, Alaska New Text Underlined; [DELETED TEXT BRACKETED]Resolution 2007-069
Page 1 of 2
Introduced by:Long, Gilman, M artin, Smith
Date:10/23/07
Action:Postponed Until 11/20/07
Action:Postponed Until 01/08/08
Action:Adopted as Amended
Vote:6 Yes, 3 No, 0 Absent
KENAI PENINSULA BOROUGH
RESOLUTION 2007-069
A RESOLUTION COMMITTING TO THE DEVELOPMENT OF A LOCAL CLIMATE
CHANGE IMPACT PLAN
WHEREAS,the Kenai Peninsula Borough Assembly has recognized the need to develop a
community understanding of the potential impacts, adaptation to, and opportunities
from climate change and learn what local actions could be taken and then consider
appropriate steps to address these issues; and
WHEREAS,numerous Alaskan commissions and panels charged with identifying Alaska’s
climate change indicators, have been considering the local impacts measured through
research and observations. These include the University of Alaska International
Polar Year Scenarios Network for Alaska Planning (SNAP) activities, Alaska Center
for Climate Assessment and Policy (ACCAP) research on public infrastructure
impact costs, the Denali Commission’s community surveys, Governor Palin’s Sub-
Cabinet Panel on Climate Change, the Alaska Army Corp of Engineers, and Homer’s
Global Warming Task Force; and
WHEREAS,numerous University of Alaska scientists have presented information developed from
their research that points to both short term and long term impacts to the natural
environment and surrounding communities, including increased risks of forest fire,
floods, and coastal erosion; and
WHEREAS,local actions to increase energy efficiency and alternative energy developments are
expected to reduce the high cost of energy needed to heat our homes and our
businesses and, when incorporated into a borough energy plan that would reduce the
use of fossil fuels, will be effective in adapting to climate impacts, producing
financial savings, strengthening our economy, improving air quality and lead to a
healthier, sustainable community;
NOW THEREFORE, BE IT RESOLVED BY THE ASSEMBLY OF THE KENAI
PENINSULA BOROUGH:
SECTION 1.That the Kenai Peninsula Borough commits to develop a Climate Change Impact
plan that will promote public awareness of the benefits of developing and
implementing a plan that improves our local economy, and that protects our
resources and borough residents.
Resolution 2007-069 New Text Underlined; [DELETED TEXT BRACKETED]Kenai Peninsula Borough, Alaska
Page 2 of 2
SECTION 2.That the Assembly requests the Mayor to specifically develop a Climate Change
Impact plan that includes:
1. Study and assess the Borough’s vulnerability
The Kenai Peninsula Borough shall work with local and agency experts to assess
vulnerabilities and opportunities associated with climate change.
2. Set goals and prioritize
Based on the assessment, the borough shall develop a prioritized list of goals and targets that
reduce climate change vulnerabilities and enhance opportunities, including goals based on
a borough energy plan that prioritizes cost savings and reduces emissions.
3. Develop the plan
Produce a concise plan that describes the action and policies for adapting to climate change
by reducing the negative impacts and taking advantage of opportunities. The plan will
include a description of timing, financial impact, responsible parties, and potential partners.
4. Implement the plan
The Borough administration will implement the plan provided that any parts of the plan
requiring appropriation will necessitate Assembly approval and/or notification.
5. Monitor efforts and reevaluate the plan
The responsible parties will document results and accomplishments towards the goals in the
plan and will periodically report those findings to the Mayor, Assembly and public in order
that they may determine if revision of the plan or if an alternative approach is necessary to
reach the goals set in the plan.
SECTION 3.That this resolution takes effect immediately upon its adoption.
ADOPTED BY THE ASSEMBLY OF THE KENAI PENINSULA BOROUGH THIS 8TH
DAY OF JANUARY, 2008.
Grace Merkes, Assembly President
ATTEST:
Sherry Biggs, Borough Clerk
Yes:Gilman, Knopp, Long, M artin, Smith, Sprague
No:Fischer, Superman, Merkes
Absent:None
Kenai Peninsula Borough, Alaska New Text Underlined; [DELETED TEXT BRACKETED]Resolution 2008-007
Page 1 of 2
Introduced by:Smith
Date:01/22/08
Action:Adopted
Vote:9 Yes, 0 No, 0 Absent
KENAI PENINSULA BOROUGH
RESOLUTION 2008-007
A RESOLUTION COMMITTING TO REDUCING ENERGY CONSUMPTION AND
GREENHOUSE GAS EMISSIONS BY PARTICIPATING IN THE ENERGY STAR
SEVEN STEP CHALLENGE PROGRAM
WHEREAS,the cost to the taxpayers of the Kenai Peninsula Borough for purchased energy has
risen to unprecedented levels, both in total dollars and as a percentage of budget; and
WHEREAS,the Kenai Peninsula Borough Assembly has recognized the need to develop a plan
to understand and control the rising costs of energy for heating, lighting and
powering Borough activities. At a minimum, this includes all energy consuming
activities within Borough buildings and schools, transportation and maintenance use,
solid waste operations, plus operational and management practices; and
WHEREAS,numerous University of Alaska scientists have presented information developed from
their research which indicate that high levels of green house gases have led to both
short term and long term impacts to the natural environment and surrounding
communities; including weather anomalies, increased risk of forest fire, floods and
coastal erosion; and
WHEREAS,actions which reduce energy consumption also reduce greenhouse gas emissions; and
WHEREAS,numerous municipalities and businesses throughout Alaska and the United States
have realized dramatic savings by developing and implementing an Energy Action
Plan based on proven methodology; and
WHEREAS,nationwide experience indicates that the most benefit is derived when some staff is
dedicated to an energy management program in order to set goals, track progress and
promote energy management; and
WHEREAS,Borough actions to increase energy efficiency and utilize alternative energy
developments are expected to reduce the amount of energy used by Borough
activities and would reduce the use of fossil fuels, produce financial savings,
strengthen our economy, reduce dependence on foreign oil, improve air quality and
lead to a healthier, sustainable community;
Resolution 2008-007 New Text Underlined; [DELETED TEXT BRACKETED]Kenai Peninsula Borough, Alaska
Page 2 of 2
NOW THEREFORE, BE IT RESOLVED BY THE ASSEMBLY OF THE KENAI
PENINSULA BOROUGH:
SECTION 1.That in order to increase energy efficiency and conserve tax dollars, the Kenai
Peninsula Borough Assembly commits to develop an Energy Efficiency Action Plan
using the Energy Star Challenge seven step program created by the U.S. Departments
of Energy and Environmental Protection.
SECTION 2.That the Assembly requests the Mayor to develop and coordinate, for all borough
operations, an Energy Efficiency Action Plan following Energy Star guidelines and
present that plan for Assembly approval.
SECTION 3.That this resolution takes effect immediately upon its adoption.
ADOPTED BY THE ASSEMBLY OF THE KENAI PENINSULA BOROUGH THIS 22ND
DAY OF JANUARY, 2008.
Grace Merkes, Assembly President
ATTEST:
Sherry Biggs, Borough Clerk
Yes:Fischer, Gilman, Knopp, Long, M artin, Smith, Sprague, Superman, Merkes
No:None
Absent:None
Renewable Energy Fund
Nikolaevsk Wind Project Grant Application
Appendix J
Photographs
1 - GE Wind Turbines proposed for Nikolaevsk Wind Project
2 - Distribution line representative of 25-kV line from Project
site to Anchor Point Substation
Renewable Energy Fund
Nikolaevsk Wind Project Grant Application
Table 1
List of Authorizations/Permits
Table 1 –Permits/Authorizations List
Anticipated Permits/Authorizations Potential Proposed Action Requiring
Authorization Process for Review
ADNR-MLW
Temporary Water Use Permit
Making cement, dust control, for large amount of
water usage lasting less than 5 years.
Simple permit application. 15 day agency
notice. Generally 30 days total for review.
Material Sale and Reclamation Plan (Title
38)
Gravel Extraction on State land. Possible option
for cement and construction needs. Required for
mineral rights owned by the State.
Application must include detailed information
regarding the location and quantity of
materials intended to be extracted. 30 day
public comment period. Generally 90 days
for total review.
Easements: Public Access & Utility
Associated electrical tie-ins can be authorized by
Utility easements. If a permanent road is to be
constructed, and Access easement would need to
be obtained.
Easement-Application must included
detailed information regarding the location
and length of desired easement. Separate
permit applications for each easement.
Public notice issued. Total timeline for
issuance is variable depending on scope of
project and agency backlog. A preliminary
decision can be issued within 90 days of
submittal. Finalized in 1-2 years from date of
submittal.
ADNR-OHMP
Title 41-Fish Habitat Permit
Placement of cable on streambed or the
installation of culverts within a catalogued
anadramous stream or resident fish stream.
Simple permit application. Review period
variable. Generally issued within 30 days.
ADNR-OPMP
Alaska Coastal Management Program
(ACMP) Consistency Review
Required for development that is located within the
Coastal Zone, or that has the potential to affect
coastal uses or resources. We do not believe that
a review under the ACMP will be required for this
project.
Complex permit application; requires
evaluation of State and local Coastal district
policies. Requires a 15 day/ 30 day public
comment period depending on the types of
authorizations required for the project. Total
review time varies from 45-60 days.
U.S. Army Corps of Engineers (USACE)
Nationwide Permit 12 (Utility Line
Activities)
Placement of cable in “waters of the united states,”
and construction of roads for utility servicing
purposes when disturbance of “waters” is less than
½ acre. Construction of access roads associated
with utility line activities when disturbance is less
than 1/3 acre.
Simple permit application. Preparation time
variable. Requires a 15 day public comment
period. Permit issuance within 30 days.
Table 1 –Permits/Authorizations List
Section 404/ 401 permit (CWA)
Placement of fill in “waters of the united states” for
activities such as road construction in jurisdictional
wetlands (disturbance of greater than ½ acre),
construction in navigable waters.
Permit application is fairly detailed. Must
include a detailed project description. May
require a wetland determination or further
assessment. Required 30 day public
comment period with potential for public
hearings. Variable total time frame; permit
issuance usually within 120 days.
Federal Aviation Administration
Form 7460-1
If the towers will be taller than 200 ft, or within 3.75
miles of a commercial runway, form 7460-1 must
be filled out and sent to the FAA for approval.
Simple. Requires the submission of a form
to the FAA, compliance with obstruction
marking.
Environmental Protection Agency (EPA)
NPDES Construction General Permit
and SWPPP
This permit must be obtained for stormwater
discharges associated with construction activities
greater than 1 acre.
Requires the submission of an application
packet that includes the development of a
Storm Water Pollution Prevention Plan
(SWPPP).
Office of History and Archaeology
(SHPO)
Section 106 Consultation (NHPA)
SHPO will need to be consulted in accordance
with Section 106 of the National Historic
Preservation Act.
Involvement time variable, depending on site.
SHPO will need to be notified and consulted
regarding development activities that may
disturb historical or cultural resources or
involve ground disturbing activities in areas
that have a high potential for the presence of
archaeological resources.
Federal Regulations and Consultations
U.S Fish and Wildlife Service
Consultation (MBTA and BGEPA)
Consultation will be needed to establish BMPs that
will ensure good faith compliance.
US Fish and Wildlife Service will need to be
consulted throughout the entire planning and
engineering process to avoid prosecution,
should the operation of the wind turbines
lead to avian mortality.
National Environmental Policy Act
(NEPA)
Compliance with NEPA will be required, should
this project receive federal funding or
authorizations.
Should a federal action be required, the
NEPA process would need to be initiated.
This timeline and process for development of
this project would likely require several
studies and an Environmental Assessment.
Renewable Energy Fund
Nikolaevsk Wind Project Grant Application
Figures
1 - Nikolaevsk Wind Project Facility
2 - Nikolaevsk Wind Project Vicinity Map
!.!.!.!.North Fork RoadS te rlin g H w yLSH 561CottonfieldStariski CreekChakok RiverNorth Fork RiverN orth Fork RiverAnchor RiverTwitter CreekB ridge C reekSouth Beaver Cree k
Anchor RiverBeaver CreekAnchor RiverBeaver CreekMcN e il C re e k
North Fork RdEast End RdHomerKachemakAnchor PointNikolaevsk0 1 20.5Miles³!(WIND RESOURCE AREACOOK INLETKACHEMAK BAY10/7/08Nikolaevsk Ridge_Windpower.pdfBRKNIKOLAEVSK VICINITY MAPWIND GENERATION FACILITYDATE:DRAWN BY:FILE NAME:CIRI