HomeMy WebLinkAboutFishhook Hydroelectric Project App
Prepared by:
FISHHOOK RENEWABLE ENERGY, LLC
1503 West 33rd Avenue, #310
Anchorage, Alaska 99503
Tel: (907) 258-2420
Fax: (907) 258-2419
FISHHOOK HYDROELECTRIC PROJECT
AEA-09-004 - RENEWABLE ENERGY GRANT APPLICATION
FY 2009
OCTOBER 8, 2008
FISHHOOK RENEWABLE ENERGY, LLC RENEWABLE ENERGY FUND GRANT APPLICATION
FISHHOOK CREEK HYDROELECTRIC PROJECT
OCTOBER 8, 2008 PAGE i
Table of Contents
SECTION 1. - APPLICANT INFORMATION............................................................................. 1
1.1. Applicant point of contact.................................................................................................... 1
1.2. Applicant minimum requirements ....................................................................................... 1
SECTION 2. - PROJECT SUMMARY.......................................................................................... 2
2.1. Project Type......................................................................................................................... 2
2.2. Project Description............................................................................................................... 2
2.3. Project Budget Overview..................................................................................................... 2
2.4. Project Benefit ..................................................................................................................... 2
2.5. Project Cost and Benefit Summary...................................................................................... 3
SECTION 3. - PROJECT MANAGEMENT PLAN...................................................................... 3
3.1. Project Manager................................................................................................................... 3
3.2. Project Schedule................................................................................................................... 4
3.3. Project Milestones................................................................................................................ 4
3.4. Project Resources................................................................................................................. 4
3.5. Project Communications...................................................................................................... 5
3.6. Project Risk.......................................................................................................................... 5
SECTION 4. - PROJECT DESCRIPTION AND TASKS............................................................. 5
4.1. Proposed Energy Resource..................................................................................................5
4.2. Existing Energy System....................................................................................................... 6
4.2.1. Basic Configuration of Existing Energy System.......................................................... 6
4.2.2. Existing Energy Resources Used.................................................................................. 6
4.2.3. Existing Energy Market................................................................................................ 6
4.3. Proposed System.................................................................................................................. 6
4.3.1. System Design .............................................................................................................. 6
4.3.2. Land Ownership............................................................................................................ 7
4.3.3. Permits.......................................................................................................................... 7
4.3.4. Environmental............................................................................................................... 8
4.4. Proposed New System Costs (Total Estimated Costs and proposed Revenues) ................. 9
4.4.1. Project Development Cost........................................................................................... 9
4.4.2. Project Operating and Maintenance Costs.................................................................... 9
4.4.3. Power Purchase/Sale.....................................................................................................9
4.4.4. Cost Worksheet............................................................................................................. 9
4.4.5. Business Plan................................................................................................................ 9
4.4.6. Analysis and Recommendations................................................................................. 11
SECTION 5. - PROJECT BENEFIT............................................................................................ 12
5.1. Estimated Fuel Displacement ............................................................................................ 12
5.2. Estimated Annual Revenue................................................................................................ 12
5.3. Other Annual Revenue Streams......................................................................................... 12
5.4. Project Benefit from Direct Cost Savings.......................................................................... 13
5.5. Indirect Project Benefits .................................................................................................... 15
SECTION 6. - GRANT BUDGET ............................................................................................... 16
SECTION 7. - ADDITIONAL DOCUMENTATION AND CERTIFICATION ........................ 17
FISHHOOK RENEWABLE ENERGY, LLC RENEWABLE ENERGY FUND GRANT APPLICATION
FISHHOOK CREEK HYDROELECTRIC PROJECT
OCTOBER 8, 2008 PAGE 1 OF 24
SECTION 1. - APPLICANT INFORMATION
Name Fishhook Renewable Energy, LLC
Type of Entity: Independent Power Producer 1
Mailing/Physical
Address
1503 West 33rd Avenue, Suite 310
Anchorage, AK 99503
Telephone 258-2420
Fax 258-2419
Email dan@polarconsult.net
1.1. Applicant point of contact
Name Daniel Hertrich, PE
Title: Project Manager
Mailing Address 1503 West 33rd Avenue, Suite 310
Anchorage, AK 99503
Telephone 258-2420
Fax 258-2419
Email dan@polarconsult.net
1.2. Applicant minimum requirements
As an Applicant, we are: (put an X in the appropriate box)
X1 An electric utility holding a certificate of public convenience and necessity under AS
42.05, or
X1 An independent power producer, or
A local government, or
A governmental entity (which includes tribal councils and housing authorities);
Endorsements
Yes 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 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 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.)
1 Under State Law (AS42.05.221), IPPs selling wholesale energy to a public utility are subject to RCA
jurisdiction. FRE is preparing an application to the Regulatory Commission of Alaska (RCA) for an
exemption from regulation as allowed in AS42.05.711. If an exemption is not granted, then FRE would need
to become a certificated utility, and is fit, willing, and able to do so. South Fork Hydro, LLC and Fishhook
Renewable Energy, LLC are currently pioneering this process for grid-tied IPPs on the railbelt, and their
efforts will provide some clarity on this process for future similar projects.
FISHHOOK RENEWABLE ENERGY, LLC RENEWABLE ENERGY FUND GRANT APPLICATION
FISHHOOK CREEK HYDROELECTRIC PROJECT
OCTOBER 8, 2008 PAGE 2 OF 24
SECTION 2. - PROJECT SUMMARY
2.1. Project Type
The proposed project is for design and construction of a run-of-river hydroelectric project
located on Fishhook Creek in Hatcher Pass, Alaska. Preconstruction activities including
reconnaissance, feasibility, permitting, and contract negotiations are either completed or in
progress. Fiscal year 2009 (FY09) grant funds are requested for design and construction.
2.2. Project Description
The Fishhook Creek hydroelectric project is a low-impact run-of-river project located in Hatcher
Pass, Alaska. The project will be located on a combination of mostly state land and some
borough land off Hatcher Pass Road. Energy from the project would be provided into the
Matanuska Electric Association (MEA) grid.
Fishhook Renewable Energy, LLC (FRE) is the project proponent, and would contribute
funding, own, and operate the project. FRE has already completed reconnaissance, feasibility,
and conceptual design efforts, and is currently in the permitting and contract negotiation
processes for the project. With timely completion of permitting, contract negotiations, and
financing, construction will occur in 2009. Final design would be completed by members of
FRE. Construction would be completed by qualified contractors and subcontractors selected
through a competitive bidding process.
2.3. Project Budget Overview
FRE has been developing this project since 2006. Earlier this year, AEA awarded FRE a
$100,000 grant for pre-construction activities.
FRE requests FY09 grant funds to contribute to the final design and construction phases of the
project. FRE will contribute both capital and in-kind services to the project. FRE proposes to
contribute 50% to the cost of the design and construction phases of the project, with 50% from
grant funds. Including the previous grant award, total requested AEA participation in this project
is 49% of the total estimated development cost. A project cost summary is provided below.
2.4. Project Benefit
The direct financial benefits from the proposed project are summarized below. Assumptions
used to estimate these benefits are discussed in Section 5 of this application.
1. The project will be eligible for Renewable Energy Credits (RECs), which will be
transferred to MEA as part of the public benefit from a grant.
2 This sum includes a $100,000 grant for pre-construction activities. These funds were awarded by AEA
under the December 6, 2007 Alaska Alternative Energy Projects RFP.
Project Phase Requested Grant
Funds
Local Match (Capital and
In-Kind) Total Funding
PRECONSTRUCTION $0 $270,000
2 $270,000
FINAL DESIGN (FY 09) $50,000 $50,000 $100,000
CONSTRUCTION (FY 09) $2,092,961 $2,092,961 $4,185,922
TOTAL CAPITAL COST $2,142,961 $2,412,961 $4,555,922
FISHHOOK RENEWABLE ENERGY, LLC RENEWABLE ENERGY FUND GRANT APPLICATION
FISHHOOK CREEK HYDROELECTRIC PROJECT
OCTOBER 8, 2008 PAGE 3 OF 24
2. The capacity of the project will be made available to the local utility at no cost. This is a
direct benefit to the owners of the local utility, which are the MEA ratepayers.
3. The project will decrease the amount of energy being transmitted from the CEA system to
the Fishhook area. This will reduce line losses over that transmission line, increasing
overall efficiency of both the MEA and CEA transmission and distribution systems.
4. The project will pay property taxes to the Matanuska–Susitna Borough, increasing the
local tax base.
The project is also expected to have the following indirect benefits to the public:
1. Increased reliability and stability of the local power grid. Also, increased diversity of
fuel sources for the railbelt grid.
2. Reduced demand for Cook Inlet natural gas. This project will offset natural-gas fired
power generation, reducing natural gas consumption and incrementally extending the life
of the existing Cook Inlet fields, to the benefit of the public that relies upon these fields
for electricity and space heating needs.
3. A significant portion of the project funding will go towards hiring local construction
firms to perform the work, thus boosting the local economy.
4. Local firms are performing the design and development. This benefits Alaska by
promoting local experience and can be used to develop additional future projects thus
providing even more economic development and jobs for Alaskans.
2.5. Project Cost and Benefit Summary
2.1 PROJECT COST AND BENEFIT SUMMARY
Include a summary of your project’s total costs and benefits below.
Total
2.5.1 Total Project Cost
(Including estimates through construction.) $4,555,922
2.5.2 Grant Funds Requested in this application. $2,142,961
2.5.3 Other Funds to be provided (Project match) $2,412,961
2.5.4 Total Grant Costs (sum of 2.5.2 and 2.5.3) $4,555,922
2.5.5 Estimated Benefit (Savings) $0
2.5.6 Public Benefit
(See section 5 for discussion) $6,837,061
SECTION 3. - PROJECT MANAGEMENT PLAN
3.1. Project Manager
The Project Manager is Daniel J. Hertrich, PE. Mr. Hertrich is a member of FRE, and has
considerable experience evaluating, designing, permitting, and operating hydroelectric projects
similar to the proposed project throughout Alaska. Resumes and references for Mr. Hertrich and
other FRE members are attached to this proposal.
FISHHOOK RENEWABLE ENERGY, LLC RENEWABLE ENERGY FUND GRANT APPLICATION
FISHHOOK CREEK HYDROELECTRIC PROJECT
OCTOBER 8, 2008 PAGE 4 OF 24
No project management assistance from AEA or other government entities is expected for this
project.
3.2. Project Schedule
FRE has been working on pre-construction activities for this project since 2006. To date, the
following activities have already been completed or are in advanced stages:
1) Reconnaissance Studies (completed)
2) Feasibility Studies (completed)
3) Development Plan (completed)
4) Permitting/Conceptual Plan Set (completed)
5) Site Surveying (in progress)
6) Project Permitting (in progress)
7) Project Design (final design in progress)
8) Power Sales Contract Negotiations with MEA (in progress, advanced stages)
9) RCA Utility Certification / Exemption from Regulation (in progress)
FRE is on schedule to complete pre-construction activities in time for construction in 2009.
This schedule is contingent upon timely completion of contract negotiations, RCA approvals,
issuance of remaining permits, and securing project financing. FRE needs to secure financing
and begin materials procurement in early 2009. Construction can then commence in May 2009,
with completion and project commissioning scheduled for fall 2009.
3.3. Project Milestones
Key project milestones are summarized in the table below.
Milestone Scheduled Completion
Receive RCA Exemption November 2008
Final Power Sales Contract (PSC) November 2008
Receive permits and final approvals January 2009
Final RCA/MEA Board Approval of PSC,
Execute Contract January 2009
Secure Construction Financing February 2009
Order Turbine Package February 2009
Begin Construction May 2009
Finish Construction September 2009
Commencement of Operations October 2009
3.4. Project Resources
FRE members are all registered civil engineers with expensive experience in designing and
constructing small hydroelectric projects.
As needed, FRE will contract with Polarconsult Alaska, Inc (PCA), for engineering support
services. Such services may include construction engineering, surveying, equipment rental, and
related activities.
FISHHOOK RENEWABLE ENERGY, LLC RENEWABLE ENERGY FUND GRANT APPLICATION
FISHHOOK CREEK HYDROELECTRIC PROJECT
OCTOBER 8, 2008 PAGE 5 OF 24
In the construction phase of the project, FRE will retain bids from multiple vendors/contractors
for construction and major equipment supply. FRE will select vendors/contractors based upon
the best interests of the project.
3.5. Project Communications
FRE will keep AEA apprised of project status by issuing monthly project status reports. The
reports will include a brief (1 page) report including a narrative of current project status,
activities in the current month, problems encountered, and anticipated activities in the following
month. The report will also include a budget status summary.
As warranted, FRE may also advise the AEA grant manager of upcoming events such as field
visits on an as-needed basis.
3.6. Project Risk
FRE's previous studies and analysis on this project have already mitigated major technical,
permitting, and other risk items for this project. The key remaining risk item is financial
viability. This will be mitigated by placing major construction and equipment items out to bid,
and validating the engineer's cost estimate prior to beginning construction. This will identify any
potential cost overruns before hand and allow FRE to reevaluate the project cost before
commencing construction.
SECTION 4. - PROJECT DESCRIPTION AND TASKS
4.1. Proposed Energy Resource
FRE has completed a hydrology study for Fishhook Creek quantifying the quantity and duration
of flows in Fishhook Creek. This study is based upon a USGS gauge on the Little Susitna River
a few miles below Fishhook Creek that provides over 50 years of hydrology data for the project
basin.
Based on this hydrology, the project would have an installed capacity of 2.0 MW, and an average
annual energy generation of 7,820 MWh.
Alternative energy resources available to this market include all alternatives available to the
railbelt energy grid, which principally include: natural gas, diesel/oil, coal, storage hydro, run-of-
river hydro, hydrokinetic, wind, geothermal, and tidal. These various alternatives are discussed
briefly below.
¾ Natural gas and diesel have high fuel costs, and some exposure to any future carbon taxes.
¾ Coal has a relatively high capital cost. The fuel is relatively inexpensive, however it has
significant exposure to any future carbon taxes. In some areas of the state, including the
Mat-Su Borough, coal has received signifncant opposition from the public.
¾ Storage hydro, wind, and geothermal have high capital costs.
¾ Wind has a low capacity factor (typically 25-35%, and varying from 0-100% output at any
time), and must be backed by firm stand-by generation.
¾ Tidal and hydrokinetic systems also have high capital costs, and many tidal / hydrokinetic
technologies are not yet mature.
FISHHOOK RENEWABLE ENERGY, LLC RENEWABLE ENERGY FUND GRANT APPLICATION
FISHHOOK CREEK HYDROELECTRIC PROJECT
OCTOBER 8, 2008 PAGE 6 OF 24
¾ Other run-of-river hydroelectric projects may be competitive with this project on a cost basis,
however this project has very favorable economics on a capital cost per installed kW or kWh
basis.
Overall, this project is competitive with other renewable and nonrenewable generation options
available to the railbelt.
4.2. Existing Energy System
4.2.1. Basic Configuration of Existing Energy System
The project would be connected to the MEA grid, which is interconnected with the railbelt
energy grid.
4.2.2. Existing Energy Resources Used
MEA purchases wholesale power from Chugach Electric Association (CEA), Alaska Energy
Authority (AEA, Bradley Lake Hydroelectric Plant), and Enerdyne (McRoberts Creek
Hydroelectric Plant). MEA also owns a share of Eklutna Hydroelectric Project.
The project would not significantly impact existing energy infrastructure. The project would
interconnect with the MEA grid at a point where that system is capable of receiving the full
project output. In fact, this project would improve voltage and frequency stability on the MEA
system.
Under normal operating conditions, this project would offset natural gas-fired generation in the
Cook Inlet basin. This would incrementally reduce the demand for Cook Inlet natural gas,
extending the life of the Cook Inlet gas fields. This would directly benefit the residents of the
railbelt, which rely on that gas supply for affordable electricity and space heating. The volume
of natural gas offset by this project is modest compared to overall consumption, but is a
significant benefit to the public.
4.2.3. Existing Energy Market
The existing energy market is the six railbelt utilities, Matanuska Electric Association (MEA),
Chugach Electric Association (CEA), Seward Electric System, Homer Electric Association,
Municipal Light & Power, and Golden Valley Electric Association. MEA is the logical market
for energy from this project, as the project is located within MEA service territory. Sales to
other utilities are possible, although the wheeling costs and complexity in negotiating wheeling
agreements could adversely affect the project’s economic feasibility.
FRE is in advanced contract negotiations for the sale of energy from the project to MEA.
4.3. Proposed System
4.3.1. System Design
The Fishhook Project will consist of the following major components:
¾ Intake structure. The intake structure will be located at the 2538-foot elevation on the
Fishhook Creek, located near the parking lot at mile 16.5 of Hatcher Pass Road. It will
divert water from the creek up to the design flow of 30 cfs, pass it through a settling
FISHHOOK RENEWABLE ENERGY, LLC RENEWABLE ENERGY FUND GRANT APPLICATION
FISHHOOK CREEK HYDROELECTRIC PROJECT
OCTOBER 8, 2008 PAGE 7 OF 24
basin, screens, and other apparatus to remove deleterious materials from the water and
discharge it to the penstock. Filtered materials would be returned to the creek below the
intake structure. Access to the intake will be via a trail built from mile 16.5 of Hatcher
Pass Road.
¾ Penstock. The penstock will be 24 inches in diameter, and will convey water from the
intake about 7,700 feet to the powerhouse. The penstock will be constructed of plastic
and steel. The penstock will be fully buried. Power and communications between the
intake and powerhouse will be co-located with the penstock.
¾ Powerhouse. The powerhouse will house the turbines, generators, switchgear, controls,
and associated equipment for the project. It will be located at an elevation of
approximately 1,490 feet on an old channel of Fishhook Creek, near mile 11.0 of
Hatcher Pass Road. The powerhouse will measure approximately 40 by 60 feet. The
powerhouse will be accessed via a short driveway from mile 11.0 Hatcher Pass Road.
¾ Generation equipment. The project will have two identical 1.0 MW two-jet Pelton
turbines driving synchronous generators. This configuration will allow the project to
maximize reliability and efficiency, minimize its parts inventory, simplify maintenance
requirements, and standardize control processes for the project.
¾ Tailrace. Water from the powerhouse will be discharged via a short tailrace into the old
channel of Fishhook Creek for about ¼ mile, and then it will discharge to the Little
Susitna River.
¾ Transmission Line. Power generated by the project will be transmitted via a new buried
power line approximately ½ mile to MEA’s existing distribution system.
The project will have an installed capacity of 2.0 MW. The project’s capacity factor will be
about 0.44. Additional information on the project design and description is provided as
Attachment F.
4.3.2. Land Ownership
The project is located on a combination of state and borough land. A portion of the penstock and
a portion of the power line are located on borough land, the remainder of the project is located on
state land. FRE has applied for land easements and leases for the project from the Department of
Natural Resources. The Mat-Su Borough has indicated that their easement process will follow
the state's process schedule and findings.
4.3.3. Permits
The following permits applications have been submitted for this project. Until the past month,
most aspects of the permitting process were on hold pending resolution of some ambiguities
between the Regulatory Commission of Alaska approval and DNR leasing processes. That issue
has been recently resolved, and permit approvals are now expected in the next few months.
Additional detail on current permit status is provided in Attachment F. All permits and
approvals required for the project are listed below.
¾ Water Use Permit / Water Rights (ADNR)
FISHHOOK RENEWABLE ENERGY, LLC RENEWABLE ENERGY FUND GRANT APPLICATION
FISHHOOK CREEK HYDROELECTRIC PROJECT
OCTOBER 8, 2008 PAGE 8 OF 24
¾ Land Lease/easement (ADNR)
¾ Fish Habitat Permit (ADFG)
¾ Nationwide Permit 17 for Hydropower Projects – for incidental wetlands fill and
similar matters (Army Corps of Engineers)
¾ Utility certification or exemption (RCA)
¾ Finding of non-jurisdiction (FERC)
¾ Archeological consultation (SHPO)
¾ Mat-Su Borough Building Permits
4.3.4. Environmental
Compatibility of the project with environmental considerations has been reviewed as part of the
permitting process. Key initial findings are summarized below, and discussed in greater detail in
Attachment F.
¾ Fish Habitat. ADFG has tentatively determined that the project as configured will
enhance fish habitat on Fishhook Creek.
¾ Threatened or Endangered Species. No critical habitat is designated in the project
area.
¾ Aesthetics. The project will have negligible if any adverse aesthetic impact. The
project’s most visible feature will probably be the access road to the intake. FRE
conducted extensive public outreach to the Mat-Su Borough and in particular to the
Fishhook community in 2007 to gain feedback on the project configuration. Based on
the comments received, FRE reconfigured the powerhouse location and penstock
route to minimize aesthetic impacts and technical concerns.
¾ The project is not expected to fill a significant area of wetlands. Any required
wetlands fill is expected to be permitted under a Corps of Engineers nationwide
permit.
¾ No archeological or cultural resources are known to be in the project vicinity. SHPO
will be consulted during the course of the project.
¾ The project is located within DNR's Hatcher Pass Management Plan (HPMP). Which
governs land use and development in the area. The project is consistent with the
HPMP's designated development and usage objectives.
¾ Telecommunications Interference. None.
¾ Aviation Considerations. None.
FISHHOOK RENEWABLE ENERGY, LLC RENEWABLE ENERGY FUND GRANT APPLICATION
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OCTOBER 8, 2008 PAGE 9 OF 24
4.4. Proposed New System Costs (Total Estimated Costs and proposed
Revenues)
4.4.1. Project Development Cost
FRE has completed an engineer's cost estimate for the project of $4,555,922. This includes all
development and construction costs required to complete the project through commencement of
operations.
4.4.2. Project Operating and Maintenance Costs
Project operation and maintenance costs are projected to be $117,000 annually. FRE would
establish an operating fund at project startup to fund annual O&M expenses. This fund would
likely be capitalized as part of FRE’s project financing and then replenished on a perpetual basis
from operating revenues. The fund would also cover seasonal cash flow fluctuations, such as
reduced power sales revenue during the winter months, when the flow in Fishhook Creek is
reduced. This fund would also be used to manage longer-term cash flow issues, such as
weathering drought years and some major maintenance / repair activities.
No grant funding is requested for operations and maintenance costs.
4.4.3. Power Purchase/Sale
The energy from the project would be sold to one of the six railbelt utilities. The most likely
purchaser would be the local utility, MEA, with which advanced contract negotiations are
currently underway. CEA has also expressed an interest in purchasing energy from the project.
Current negotiations are for a power purchase price at MEA's avoided cost of energy.
Current projections are for the avoided cost of energy to MEA to run in the range of 5 to 13
cents/kWh for the life of the contract.
Based upon existing estimates and available information, the estimated rate of return for the
project would be in the range of 2 to 15% annually.
4.4.4. Cost Worksheet
Assumptions used in completing the attached AEA cost worksheet are summarized below.
¾ 4. – Project Costs. This cost is the engineer's cost estimate for the project. Bids will be
obtained before construction begins.
¾ 5. – Project Benefits. Displaced fuel is based upon assumed reliance on natural gas and
an assumed heat rate for future gas-fired generation. See section 5 for more details on
these assumptions.
¾ 6. – Power Purchase Price. Based on contract negotiations, power purchase price will be
MEA's avoided cost of energy. This is assumed to be $0.05/kWh.
4.4.5. Business Plan
All of the Members of Fishhook Renewable Energy, LLC (FRE) are Alaskan licensed
Professional Engineers. Together, they have decades of experience in all aspects of hydropower
FISHHOOK RENEWABLE ENERGY, LLC RENEWABLE ENERGY FUND GRANT APPLICATION
FISHHOOK CREEK HYDROELECTRIC PROJECT
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projects in Alaska. The extensive work completed to date without outside financial assistance is
a testament to FRE's commitment and capability to successfully build and operate the Fishhook
Hydroelectric Project.
FRE members have direct experience in permitting, design, construction, and operation of
hydroelectric facilities. In addition to the numerous projects that the Members have worked on
as part of their regular course of business as engineering consultants for Polarconsult Alaska, the
Members also have experience owning, operating, and maintaining the McRoberts Creek
hydroelectric project.
All of FRE members are employees of Polarconsult Alaska, Inc. Attachment A includes a
Statement of Qualifications for Polarconsult that highlights FRE member capabilities.
FRE members have extensive experience managing a business and remaining financially secure.
Three of FRE members have jointly owned and operated a consulting engineering business since
1984. Additionally, management through FRE's Operating Agreement requires cash reserve and
efficient project operation. FRE has already proven their financial capability on this Project.
FRE has spent the equivalent of $260,000 in engineering man hours thus far for project
development and permitting.
As a for-profit entity, FRE has a significant interest in maintaining long term sustainability for
this project. All members will be investing a significant amount of personal resources and work
effort to get the project started. Such investment keeps members highly motivated to operate the
project as efficiently and reliably as possible to realize the highest possible return on the
investment. Additionally, FRE's members are building a track record for developing projects,
similar to the 18-year old McRobert's Creek Project. These projects include the Fishhook and
South Fork Hydroelectric Projects, both of which are now in the advanced development phase;
and the Fourth of July Creek Hydroelectric Project, which is just beginning the feasibility phase
of development.
The five Members of FRE have all successfully worked together for 14 years, since 1994. Mr.
Earle Ausman and Mr. Dahl have worked together managing an engineering company,
Polarconsult Alaska, Inc. since 1984. Mr. David Ausman joined Polarconsult in 1986 Mr.
Hertrich joined in 1993, and Mr. Groves joined in 1994. FRE members, as owners and
employees of Polarconsult, have clearly demonstrated a long standing and healthy business
history that will endure well into the future.
The project financials are tailored to ensure a low development risk coupled with long term
sustainability. This is achieved primarily through risk mitigation using conservative estimating,
revenue analysis, and extensive cash reserves. Such efforts equate to a high probability of profit
from year to year that insures financial fitness and capability. The economic model has the
following conservative assumptions:
• High contingency on a detailed cost estimate (20%).
• Low turbine efficiency estimate (95% of actual).
• Low water availability estimate (95% of actual).
• Low reliability estimate (90%).
• Low natural gas price with no growth (92% of actual).
FISHHOOK RENEWABLE ENERGY, LLC RENEWABLE ENERGY FUND GRANT APPLICATION
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• In addition to insurance a $100,000 cash reserve required until sufficient owner
equity is obtained.
In addition to past experience, the efforts put forth towards developing the Fishhook
Hydroelectric Project demonstrate FRE Member's commitment to this project. Such efforts
include:
• Attended numerous public meetings and discussion sessions to hear public comments
and involvement.
• Implemented design changes to satisfy public and agency comments.
• Performed extensive surveying, hydrological investigations, and preliminary soils
investigations.
• Developed preliminary design drawings for the Project.
• Developed comprehensive cost estimates, feasibility studies, and economic models
for the Project.
• Applied for permits.
• Retained legal council specifically for the Project.
Through this experience, FRE has the knowledge, institutional framework, and processes to
sustainably operate small hydroelectric projects such as the Fishhook project. These processes
include:
• Financial Management Team. FRE will contract with independent entities to perform
bookkeeping, accounting, and financial management functions, with the direct
oversight of FRE members. Our financial management team is familiar with the
unique financial aspects of small hydroelectric projects.
• Operations and Maintenance Team. FRE members will be directly responsible for
and involved in operations and maintenance of the hydroelectric project. The project
will employ a supervisory control and data acquisition (SCADA) system that will
enable unmanned operation of the plant. Operators will be able to monitor plant
operations and telemetry, and will be able to troubleshoot and modify plant settings
remotely via secure communications. FRE may contract with a qualified local
resident to be on call to respond to any alarm conditions at the power plant in a timely
manner. The project will have a rigorous preventative and scheduled maintenance
program to minimize unscheduled outages.
• Business Team. FRE members will develop and maintain a formal business plan,
that will address key business issues such as maintaining regulatory compliance,
capital replacement needs, etc.
4.4.6. Analysis and Recommendations
The Fishhook Project is nearly ready for construction. With timely completion of contract
negotiations, permitting, RCA approvals, and construction financing, construction of this
favorable project can proceed in 2009.
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SECTION 5. - PROJECT BENEFIT
5.1. Estimated Fuel Displacement
The project would primarily displace Cook Inlet natural gas burned by Chugach Electric for
power generation. Estimated fuel displacement and assumptions used to generate the estimates
are summarized below:
Fuel Type Natural Gas
Annual Displaced Energy 7,429,000 kWh
Displacement 100%
Efficiency of Displaced Generation (Heat Rate) 9,800 btu/kWh
Average Annual Displaced Fuel 72.8 MMCF
Displaced Fuel over 30 Years 2,184 MMCF
Average Market Value of Displaced Fuel $7.00/MCF
Annual Value of Displaced Fuel $509,629
Inflation Rate 2%
Discount Rate 5%
Present Value of Displaced Fuel over 30 years $9,988,961
5.2. Estimated Annual Revenue
Estimated annual revenue from power sales and assumptions used to generate the estimates are
summarized below:
Contract Item Proposed Terms
Contract price structure Avoided Cost
Average avoided cost over 30 years (Power Sales Rate) $0.05/kWh
Average Annual Energy Sales 7,429,000 kWh
Average Annual Gross Revenue From Power Sales $371,450
Average Annual Operating Expenses $240,994
Average Annual Net Revenue (before taxes, depreciation, etc.) $130,456
5.3. Other Annual Revenue Streams
FRE anticipates that the project would qualify for low-impact certification under the national
standards established by Green-e3, and likely other certification entities. This would make
energy from the project eligible for green tags/renewable energy certificates (RECs). RECs
currently market in Alaska for $0.02/kWh (Denali Green Tags).
In contract negotiations, MEA has indicated that they want to purchase all RECs associated with
the project at the avoided cost of energy. FRE proposes to transfer REC rights to MEA as a
public benefit of this project. No project revenue is assumed from RECs.
State or federal tax credits may be available to the project over its life. Currently available
federal tax credits for renewable energy have very limited eligibility criteria for hydroelectricity,
3 Green-e National Standard, version 1.5. www.green-e.org.
FISHHOOK RENEWABLE ENERGY, LLC RENEWABLE ENERGY FUND GRANT APPLICATION
FISHHOOK CREEK HYDROELECTRIC PROJECT
OCTOBER 8, 2008 PAGE 13 OF 24
and this project would likely not qualify. Generally, the volatility in tax credit rules and
eligibility precludes forecasting any benefit from them over the project’s life.
5.4. Project Benefit from Direct Cost Savings
FRE has identified the following direct cost savings resulting from this project.
¾ Green Tag / Renewable Energy Credits (RECs): FRE will transfer title and rights to all
RECs the project may qualify for to MEA. The project meets the certification criteria
established by Green-e for low-impact hydropower. RECs currently market in Alaska
for $0.02/kWh (Denali Green Tags).
¾ Capacity and Energy Rate Reduction: While the Fishhook project provides capacity to
the railbelt grid, to expedite contract negotiations, FRE has pursued a non-firm avoided
cost of energy price structure for this project. The lowest avoided cost of energy
available to MEA is likely to be at or equal to CEA's avoided cost for the foreseeable
future, and this is the avoided cost upon which a contract would likely be based. This
price structure offers the project's capacity as a direct benefit to MEA at no cost.
¾ Line Efficiency: The line losses from the Fishhook project to MEA are less than the line
losses from CEA generation to MEA. The project will increase the efficiency of the
MEA and CEA systems, reducing costs for both utilities.
¾ Annual Property Tax Revenue: The Mat-Su Borough will likely levy property taxes on
the project over the life of the project. These annual property tax payments will
contribute to the tax base and economic activity in the Borough.
¾ Permitting and Regulatory clarity: The Fishhook Project is the first privately-owned
grid-tied small renewable energy project built on the railbelt grid in 18 years, and would
be only the second such project built on the railbelt in decades. The first such
hydroelectric project, the 100-kW McRoberts Creek Project, is owned by a member of
FRE. Since deciding to develop the Fishhook Project in 2006, FRE has been forced to
expend significant private resources, both capital and labor, researching and defining the
processes by which such projects can be developed. Existing regulations in Alaska
generally have not considered IPPs, run-of-river hydro, or the business model
contemplated for the Fishhook Project. Some of the activities required have included:
• Explaining the IPP concept, FRE business model, and benefits of the projects to the
utilities. Direct conversations have focused on MEA and CEA, but other railbelt
utilities are now aware of the project and the concept. In September 2008, GVEA
issued a draft small power purchase standard contract that appears targeted towards
encouraging Fishhook-type projects on its system (September 2008, RCA TA189-
13).
• Similarly, FRE has worked extensively with both MEA and CEA to pioneer an
amendment to the all-requirements contract that governs power sales between MEA
and CEA through 2015 allowing MEA to directly purchase power from the Fishhook
project. Future viable projects in MEA service area can work with the utilities to
duplicate this amendment.
FISHHOOK RENEWABLE ENERGY, LLC RENEWABLE ENERGY FUND GRANT APPLICATION
FISHHOOK CREEK HYDROELECTRIC PROJECT
OCTOBER 8, 2008 PAGE 14 OF 24
• Defining the RCA process and means by which IPPs will be regulated by the RCA.
Under existing state law, any IPP that sells wholesale power to a public utility must
also be a public utility. This is a very high financial and regulatory burden to place
on a small IPP, and is not in the public interest, as this increases front-end costs and
uncertainties, discouraging potential developers. FRE (and the South Fork project)
are working with the RCA to gain project-specific exemptions from regulation.
These dockets will likely provide precedent for future similar IPPs in Alaska,
lowering the development costs and risks for those successor projects.
• Clarifying State Permitting Processes. FRE has had extensive discussions with state
permitting personnel describing the Fishhook project, what it is, and what it is not.
Through these discussions, state permitting personnel have gained greater insights
and understanding of run-of-river projects and their potential for very minimal
environmental and resource impacts.
• Public outreach and education. FRE has conducted an extensive public outreach
campaign as part of the Fishhook project. This campaign has been targeted to the
Mat-Su valley, but has also been covered by widely read media outlets, such as the
Anchorage Daily News. FRE has presented to and testified before the Mat-Su
Planning Commission on multiple occasions, as well as several meetings of the
Fishhook Community Council. These efforts have increased awareness and
understanding of run-of-river hydropower, both by the public and by public officials.
All of these efforts have largely been non-recurring efforts that are necessary only for the
first project. It is our expectation and hope that future viable renewable energy projects
can build upon our efforts, and avoid many of the development costs incurred by FRE.
FRE's efforts will lower the development costs and front-end risks of future IPP projects,
making more projects viable and developable. This will directly benefit the public by
encouraging development of more distributed generation and renewable energy projects.
These annual public benefits are summarized, and their present value is estimated in the
following table. Assumptions used to generate the estimates are also stated.
FISHHOOK RENEWABLE ENERGY, LLC RENEWABLE ENERGY FUND GRANT APPLICATION
FISHHOOK CREEK HYDROELECTRIC PROJECT
OCTOBER 8, 2008 PAGE 15 OF 24
DIRECT ECONOMIC BENEFITS FROM PROJECT
Green Tags / RECs
Average annual generation: 7,429,000 kWh (assumed)
Market Value: 0.02 $/kWh
Annual Value: $148,580
Term: 30 years
Inflation Rate: 2%
Discount Rate: 5%
Present Value: $2,912,234
Increased Available Capacity
Installed Fishhook capacity 2,000 kW
Capacity Factor 0.44
Capacity Value $153.24 $/kW CEA-MEA Contract
Annual value of capacity $134,851
Term: 30 years
Present Value: $2,643,143
Line Efficiency
Line losses from CEA G&T to MEA 2.809% (CEA Tariff)
Line losses on MEA System: 2.0% (assumed)
Line losses from Fishhook to load center: 1.0% (assumed)
Power throughput avoided by project: 7,429,000 kWh (assumed)
Avoided energy losses (CEA): 208,681 kWh
Avoided energy losses (MEA): 74,290 kWh
Nominal value of energy: 0.065 $/kWh (projected over life)
Average annual savings from reduced energy losses: $18,393
Term: 30 years
Present Value: $360,513
Property Tax Revenue to Mat-Su Borough
Estimated annual tax obligation: $36,794
Term: 30 years
Present Value: $721,171
Clarification of Permitting and Regulatory Processes for IPPs
Estimated FRE costs in non-recurring permitting and regulatory efforts
that are applicable to successor IPP and run-of-river projects $200,000
Present Value: $200,000
TOTAL DIRECT ECONOMIC BENEFITS FROM PROJECT $6,837,061
5.5. Indirect Project Benefits
FRE has identified several indirect public benefits that may result from the project. These are
summarized and briefly discussed below.
FISHHOOK RENEWABLE ENERGY, LLC RENEWABLE ENERGY FUND GRANT APPLICATION
FISHHOOK CREEK HYDROELECTRIC PROJECT
OCTOBER 8, 2008 PAGE 16 OF 24
1. The project will be connected to the railbelt electrical grid. This provides desirable
operational enhancements to this transmission and distribution system. There is an
increase in stability, reliability, and redundancy. These gains can only be obtained by
providing multiple, distributed generation sources which is generally not feasible with
typical large utility generation facilities. This new generation asset also improves the
diversity of fuel sources powering the grid through the addition of renewable energy.
2. This new generation asset will offset generation from existing natural gas-burning
facilities in Southcentral Alaska. This will reduce consumption of Cook Inlet basin
natural gas. Cook Inlet gas production from existing developed fields is declining, and
shortages are already occurring during periods of peak gas demand. By offsetting natural
gas demand for electricity generation, this project will be extending the useful life of the
Cook Inlet gas fields to the benefit of the public.
3. A significant portion of the project funding will go towards hiring local construction
firms to perform the work, thus providing local jobs and experience in building a
hydroelectric project. Current unemployment in the area is at 7.0% compared with a state
average of 6.0%4.
4. With the concurrence of DNR, the project penstock alignment will be available for non-
motorized recreational use. There are relatively few trails in Hatcher Pass, and this
additional trail will provide increased recreational opportunities in the east side of the
pass. Also, this trail may take some pressure off existing trails, decreasing wear and tear
on those trails.
5. A local firm is performing the design and development. This benefits Alaska by
promoting local experience and can be used to develop additional future projects thus
providing even more economic development and jobs for Alaskans.
SECTION 6. - GRANT BUDGET
The total estimated cost for project development through to commissioning is $4,555,922. FRE
has expended approximately $272,700 in capital and in-kind services on the Fishhook Project to
date, completing and advancing the activities listed in Section 3.2 of this application. Also, FRE
has been awarded a grant of $100,000 for pre-construction activities on the project. FRE
anticipates an additional expenditure of $2,353,504 in capital and in-kind services through the
end of project commissioning for final design, contract negotiations, completing the RCA
process, permitting, and construction.
4 August 2008, State of Alaska, Department of Labor and Workforce Development,
http://www.labor.state.ak.us/research/monthlyunemprate/sep08map.pdf
FISHHOOK RENEWABLE ENERGY, LLC RENEWABLE ENERGY FUND GRANT APPLICATION
FISHHOOK CREEK HYDROELECTRIC PROJECT
OCTOBER 8, 2008 PAGE 17 OF 24
FRE will contribute capital and in-kind services to the project from its private resources to finish
the pre-construction phases of the project. FRE's share of construction funds would be in the
form of loans, from commercial lenders and government lenders, such as AIDEA's Power
Project Fund.
FRE is requesting a grant totaling $2,142,961 for the construction phase of this project.
The grant budget is summarized on the attached Grant Budget Form.
SECTION 7. - ADDITIONAL DOCUMENTATION AND CERTIFICATION
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
F. Fishhook Design, Hydrology, and Permitting Information
G. 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 Daniel Hertrich, PE
Signature
Title Project Manager
Date October 8, 2008
FISHHOOK RENEWABLE ENERGY, LLC RENEWABLE ENERGY FUND GRANT APPLICATION
FISHHOOK CREEK HYDROELECTRIC PROJECT
OCTOBER 8, 2008
A. RESUMES OF APPLICANT’S PROJECT MANAGER, KEY STAFF,
PARTNERS, CONSULTANTS, AND SUPPLIERS PER
APPLICATION FORM SECTION 3.1 AND 3.4
FISHHOOK RENEWABLE ENERGY, LLC AEA-09-004 RENEWABLE ENERGY GRANT APPLICATION
OCTOBER 8, 2008 PAGE A-1
ATTACHMENT A: KEY MANAGEMENT AND STATEMENT OF QUALIFICATIONS
The names, titles, and responsibilities of all key management are listed below. Resumes are
provided on the following pages.
Key personnel Title and Responsibilities Page
Earle V. Ausman, P.E. General Manager, Member A-2
Daniel Hertrich, P.E. Alternate Project Manager, Member A-12
Joel D. Groves, P.E. Project Manager, Member A-16
Mike D. Dahl, P.E. Member A-20
David E. Ausman, P.E. Member A-22
Stan Hintze, P.E. Chief Electrical Engineer A-26
Also included is the Statement of Qualifications (SOQ) for Polarconsult Alaska, Inc.
INTRODUCTION
1
OOLLAARRCCOONNSSUULLTT AALLAASSKKAA,, IINNCC..,,
headquartered in Anchorage, Alaska,
has engineered Alaskan infrastructure
since 1979. Since this time the firm has
completed hundreds of diverse projects
throughout the State of Alaska.
Through our licensed professionals and
specialty consultants, Polarconsult provides
civil, electrical, surveying, environmental,
energy, and other diverse consulting
services.
“Our goal is to optimize our clients projects
through value-added engineering and a
commitment to a high level of service.”
Polarconsult provides important benefits
to our clients:
Ø Experience - A project team that has
direct experience with the climate,
logistics, economics, and community
resources that are essential for designing
and constructing successful projects in
rural and urban Alaska.
Ø Key Relationships - Individual team
members who have developed the positive
and cooperative relationships with the
community leaders, local governments,
regulators, and individuals necessary to
accomplish our clients’ goals.
Ø Management - Personnel who have direct
experience with estimating and cost-
effectively managing construction projects
in urban and remote sites.
Ø Reporting - A firm that can prepare high
quality documentation and budget
analyses necessary to present the facts
clearly to our clients.
Ø Responsiveness - A responsive firm that
has the flexibility to commit team
members on short notice and use
personnel that may already be in the
region working on other projects.
Ø Broad Skills - Field personnel with a
broad range of abilities to reduce the often
significant mobilization costs incurred as a
result of sending multiple, less capable
individuals to the site.
Ø Regulatory Knowledge - A design team
that understands the regulatory constraints
and design codes and has a long-term
professional relationship with the
agencies.
Other Considerations:
All of Polarconsult’s engineers are licensed
professionals in the State of Alaska.
Our project team has long-term experience
managing projects in this state. Most of our
staff are lifelong Alaskans or have lived and
worked in Alaska for decades.
Our principles build, own, and operate power
plants, buildings, and other facilities. As a
result, Polarconsult’s experience extends
beyond that of typical design professionals.
P
CAPABILITIES AND RESOURCES
3
PROJECT MANAGEMENT
Ø Construction Planning, Supervision,
Inspection, and Material Testing
Ø Global Information Systems (GIS) and
Data Management and Analysis
Ø Cost Estimating and Material Takeoffs
Ø Permitting and Regulatory Compliance
Ø Construction Contracts Preparation and
Bidding
HYDROELECTRIC
Ø Stream Gauging, Rainfall-Runoff
Modeling, Data Collection
Ø Feasibility Studies, Cost Estimation,
Economic Analysis
Ø Federal Energy Regulatory Commission
(FERC) and State Permitting
Ø Dam, Intake, Pipeline, Power Plant
Design and Inspection
Ø Construction, Management, Inspection
Ø Owner and Operator
CIVIL
Ø Surveying, Site Layout, Storm, Road,
and Grading Design
Ø Domestic Water Distribution, Storage,
Well, and Treatment Design
Ø Water Network Fire System Modeling,
Testing, and Design
Ø Sanitary Sewer Collection Systems
Evaluation and Design
Ø Hydraulic Modeling (Open Channel,
Closed System, Groundwater)
Ø Energy, Waste Heat Analysis and
Evaluation
Ø Landfill and Waste Management
Design and Permitting
Ø Harbor, Ocean, Outfall Engineering and
Design
CAPABILITIES AND RESOURCES
4
STRUCTURAL
Ø Structural Design of Concrete, Steel,
and Wood Structures
Ø Foundation, Retaining Wall,
Geotechnical Investigations and Design
Ø Structural Failure Analysis and Repair
Design
Ø Fire Damage Inspection and Repair
Design
Ø Finite Element Modeling and Analysis
ELECTRICAL
Ø Power Generation Design
Ø Utility Power Distribution
Ø Building Electrical Design
Ø Controls Design
ENVIRONMENTAL
Ø Environmental Risk Assessment,
Characterization, Monitoring, and
Remediation
Ø API 653 Inspections for Above Ground
Petroleum Storage Tanks.
Ø Spill Prevention, Containment, and
Contingency Plans (SPCC)
Ø Groundwater and Contaminant
Modeling and Transport Analysis
Ø Air Quality – Pollutant Transport
Modeling and Analysis, Permitting,
Compliance Monitoring
POLARCONSULT PROJECT SITES
Currently, Polarconsult employs or has
active consulting agreements with 10
licensed engineering professionals. Since
our formation, we have completed
approximately 700 projects.
The firm has provided these services for
clients along the rail belt and across the state
including Southeastern, Western, and
Interior Alaska.
REPRESENTATIVE PROJECTS
5
PPOOLLAARRCCOONNSSUULLTT has extensive project experience
in Alaska. That experience includes both large-
scale projects in developed areas and small
projects in extremely remote locations. This
experience provides an understanding of the
widely varying conditions that occur in our state,
the unique logistic requirements of working in
the Alaska bush, and the general approach of the
various regulatory agencies active in Alaska.
PPOOLLAARRCCOONNSSUULLTT provides services for a wide
variety of organizations and agencies in Alaska.
An abbreviated list of these organizations is
provided below, followed by a description of
representative projects:
Ø Alaska Energy Authority
Ø Alaska Housing Finance Corporation
(AHFC)
Ø Alaska Industrial Development and
Export Authority (AIDEA)
Ø Alaska Village Electric Cooperative
(AVEC)
Ø Aleutian Pribilof Islands Association
Ø APICDA Joint Ventures
Ø ARCO Alaska
Ø Arctic Slope Consulting
Ø Bethel Utility Commission
Ø Central Bering Sea Fisherman’s
Association
Ø Chitina Village Council
Ø City of Akutan
Ø City of Atka
Ø City of Chignik Lagoon
Ø City of St. George
Ø City of St. Paul
Ø City of Tenakee Springs
Ø City of Unalaska
Ø City of Wasilla
Ø Copper River Forest Products
Ø CRW Engineering Group
Ø Delta Western
Ø Federal Home Loan Mortgage
Corporation (FHLMC)
Ø Federal Deposit Insurance Corporation
(FDIC)
Ø MAPCO
Ø Nome Joint Utilities
Ø Norquest Seafoods, Inc.
Ø Pelican Seafoods
Ø Peratovich, Nottingham & Drage, Inc.
Ø RIM Architects
Ø Signature Flight Support
Ø St. George Tanaq Corporation
Ø St. George Traditional Council
Ø State of Alaska Department of Natural
Resources
Ø Trillium Corporation
REPRESENTATIVE PROJECTS – CIVIL
6
Pelican Seafoods Hydroelectric, 2006
Alaska Energy Authority
Inspection and design of retrofit for 600 kW
hydroelectric facility. Included design of new
dam intake, penstock and pipeline supports to
replace original wood stave pipeline and flume
constructed in the 1940’s.
St. Paul Fire Station, 2006
City of St. Paul
Design of new 5,800 sq ft fire station and crane
storage building for the community including
water, sewer and waste heat connections,
permitting and project management.
False Pass and Nelson Lagoon Plants, 2006
APICDA
Design of new outfall line and septic systems for
new fish processing plants in Nelson Lagoon
and False Pass. Completed current studies and
bathymetric surveys to analyze outfall product
discharge and flow modeling.
St. Paul Water Tank 'A' and ‘B’, 2004-05
City of St. Paul
Design of new 500,000 gallon and 850,000-
gallon water storage tanks to increase domestic
water storage to the community and water
supply to fish processors. Included demolition
of old 1950’s era concrete tanks to make room
for new water tank on existing site, retrofit of
supply and distrubution tank headers and
relocation of existing roads. Included site
topographic and control surveys, geotechnical
investigations, permitting and site assessments.
Ft. Richardson National Cemetery, 2005
Yellowknife Construction
Design-build project to expand 39-acre National
Cemetery. Included 4,237-feet of new
roadways, sidewalks, curb and gutter, 1,500 new
concrete crypts, 2,983-feet irrigation system
mains and watering points and new water well,
1,350-feet of electrical distribution and services,
and design new committal shelter.
St. George Aleutian Housing, 2005
Aleutian Housing Authority
Design/Build project for site drainage system for
8 homes and a 6-plex. Included footing drains,
curtain drains, drainage swales, and culvert
design, installation and permitting.
Old Harbor Hydroelectric Plant, 2004
City of Old Harbor
Design of new 500 kW hydroelectric power
plant with connection to community diesel
power plant to provide electric power to the
community. Included site topographic and
control surveys, environmental assessments and
economic analysis and permitting.
Larsen Bay Hydroelectric, 2004
Alaska Energy Authority
Site inspection and analysis of existing
hydroelectric power plant with
recommendations and draft designs for upgrades
to the existing intake and penstock, addition of
drainage diversion to increase water flow to the
plant for increased power production and
interconnection to community diesel power
plant.
St. Paul Landfill, 2003
City of St. Paul
Design of Permitted Class III Solid Waste
Landfill and Transfer Facility. Design of 10-
acre landfill and 5-acre transfer facility
including 2 buildings and both on-site and utility
main extensions for water, sewer and electricity,
and 4 miles of new and existing road upgrades
for site access. Included site topographic and
control surveys, geotechnical investigations,
permitting and environmental site assessments.
REPRESENTATIVE PROJECTS – CIVIL
7
Chignik Lagoon Hydroelectric, 2003
Norquest Seafoods
FERC relicensing for hydroelectric facility and
community water system. Prepared as-built
facility survey and topography, facility condition
analysis, and environmental assessment, stream
and water system gauging and recording, and
coordinated environmental surveys for 30-year
relicense of facility.
Atka Hydroelectric Plant, 2003
City of Atka
Design of new hydroelectric plant with
connection to community diesel power plant to
provide electric power to the community.
Included site topographic and control surveys,
environmental assessments and economic
analysis and permitting.
Carl Ivey Building, 2003
Arctic Structures
Architectural, Structural and Civil design of
4,500 sq ft commercial building and site
including utility water and sewer service
connections and permitting.
Cabin Creek Water Line, 2003
Peratovich, Nottingham & Drage, Inc.
Review and analysis of the Petersburg water
supply line due to performance related issues.
Prepared hydraulic calculations relating to intake
structures, friction loss, vacuum conditions,
analysis of operational problems, and
recommendations for repairs and future
operations.
St. Paul Aquifer Study, 2003
City of Saint Paul
Conducted a hydrological study of the City of
Saint Paul’s sole source water supply aquifer to
improve understanding and management of the
water supply and recommendations for future
domestic water wells. Included review of
existing hydrological, geological, and
operational data, develop a groundwater model
in MODFLOW-2000, install groundwater level
data loggers in the vicinity of the city wellfield,
and develop a database to aid in record keeping
and reporting activities. Study
recommendations included changes to specific
well pump sizes and duty cycles; development
of aquifer protection ordinance; and
recommendations for location of future wells.
NAPA Auto Parts, 2003
Calls Repairs, Inc.
Design of site access, parking, grading, building
foundation, electrical and mechanical systems
and water and sewer utility service connections
for a new 5,000 sq ft auto parts store in Eagle
River.
Tudor Square Drainage, 2002
Jack White Company
Design of new storm drainage system and new
site grading and asphalt paving to retrofit
existing 35,000 sq ft Mall parking lot.
Byers Lake Campground, 2002
Tamsher Construction
Design build water system and RV dump station
for seasonal use campground and office for
Department of Natural Resources at the Byers
Lake Campground Site.
St. Paul Harbor Water Upgrade, 2002
City of St. Paul
Design and project management for installation
of new 12-inch water main to provide loop feed
to commercial fish processors for increased flow
and reliability. Coordinated construction with
contaminated site cleanup operation by NOAA
in the immediate area of the new line.
REPRESENTATIVE HYDROELECTRIC PROJECTS
polarconsult alaska, inc.
OOLLAARRCCOONNSSUULLTT AALLAASSKKAA,, IINNCC.., has extensive experience designing, permitting, constructing and
operating hydroelectric plants in Alaska. Our design professionals have been involved in hydro
in Alaska since 1966, and collectively have over 90 years of experience in the field.
SSEELLEECCTTEEDD HHYYDDRROO PPRROOJJEECCTTSS BBYY PPOOLLAARRCCOONNSSUULLTT
P
Project Design
Capacity
Type of
Project Location Services Rendered
Allison Lake 4,950 kW Storage Valdez, AK Design, FERC Permitting, Owner.
Mc Roberts
Creek 100 kW Run of River Palmer, AK Design, Permitting, Construction,
Operation, Owner.
Indian Creek 60 kW Storage Chignik, AK Permitting, FERC Relicense.
Larsen Bay 475 kW Run of River Larsen Bay, AK Design, Permitting.
Old Harbor 500 kW Run of River Old Harbor, AK Design, State and FERC Permitting.
O’Brien
Creek 400 kW Run of River Chitna, AK Feasibility Study, Preliminary Design.
Lace River 4,950 kW Storage North of
Juneau, AK Preliminary Design, FERC Permitting.
Chuniisax
Creek 280 kW Run of River Atka, AK Feasibility Study, Preliminary Design,
Permitting.
Angoon 600 kW Storage Angoon, AK Feasibility Study, Preliminary Design.
Indian River 125 kW Run of River Tenakee Springs,
AK Feasibility Study, Preliminary Design.
IINNDDIIAANN CCRREEEEKK HHYYDDRROO FFEERRCC LLIICCEENNSSIINNGG
PPOOLLAARRCCOONNSSUULLTT managed the FERC licensing process for
the owner of Indian Creek Hydro, a 60-kW installation
located in Chignik, Alaska. The multi-year FERC
licensing process required significant effort and
coordination relating to the development of the
Environmental Assessment. Key activities included:
Ø NEPA scoping meetings,
Ø Stream gauging and fish surveys,
Ø Geomorphological surveys of Indian Creek, and
Ø Preparation of License Application and EA.
Through innovative techniques and efficient use of the applicant prepared EA process, Polarconsult was able
to minimize licensing costs and reduce the time to complete the licensing process by over fifty percent.
REPRESENTATIVE HYDROELECTRIC PROJECTS
MMccRROOBBEERRTTSS CCRREEEEKK HHYYDDRROO
PPOOLLAARRCCOONNSSUULLTT principals designed, built, own
and operate the McRoberts Creek Hydro, located
near Palmer, Alaska. The 100-kW run-of-river
project delivers power to the Matanuska Electric
Association grid.
The McRoberts Project is an excellent example
of renewable energy systems benefiting Alaskan
communities. The project has improved
recreational access to the Matanuska Peak area,
operates in harmony with the environment, and
provides renewable energy to local homes and
businesses.
OO’’BBRRIIEENN CCRREEEEKK HHYYDDRROO
PPOOLLAARRCCOONNSSUULLTT completed a conceptual design for
the Alaska Energy Authority to evaluate a run-of-
river hydroplant on O’Brien Creek to serve the
community of Chitina, Alaska on the Copper River.
Key activities included:
Ø Paper study to define project parameters,
Ø Handling and analysis of large LIDAR data set
to finalize a conceptual design,
Ø Field reconnaissance to evaluate intake
locations and penstock corridors, and
Ø Preliminary project cost estimate.
CCHHUUNNIIIISSAAXX CCRREEEEKK HHYYDDRROO
PPOOLLAARRCCOONNSSUULLTT designed and permitted a 280-kW run-of -river
hydro plant to offset costly diesel-electric power for the village of
Atka in the Aleutian Islands. Key project features include:
Ø A small concrete dam,
Ø 1,000-foot HDPE penstock, and
Ø francis turbine.
The project, to be completed in 2006, is expected to significantly
reduce power rates in the village.
polarconsult alaska, inc.
energy systems – environmental services – engineering design
1503 West 33rd Avenue, Suite 310 tel: 907.258.2420
Anchorage, Alaska 99503 fax: 907.258.2419
Internet Website: http://www.polarconsult.net
FISHHOOK RENEWABLE ENERGY, LLC RENEWABLE ENERGY FUND GRANT APPLICATION
FISHHOOK CREEK HYDROELECTRIC PROJECT
OCTOBER 8, 2008
B. COST WORKSHEET PER APPLICATION FORM SECTION 4.4.4
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 – Fishhook Creek Hydroelectric project
The Applicant should demonstrate that the renewable energy resource is available on a
sustainable basis.
Annual average resource availability. Plant capacity factor is 44%
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 N/A
ii. Rated capacity of generators/boilers/other N/A
iii. Generator/boilers/other type N/A
iv. Age of generators/boilers/other N/A
v. Efficiency of generators/boilers/other N/A
b) Annual O&M cost (if system is part of the Railbelt grid, leave this section blank)
i. Annual O&M cost for labor N/A
ii. Annual O&M cost for non-labor N/A
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] N/A
ii. Fuel usage
Diesel [gal] N/A
Other N/A
iii. Peak Load N/A
iv. Average Load N/A
v. Minimum Load N/A
vi. Efficiency N/A
vii. Future trends N/A
d) Annual heating fuel usage (fill in as applicable)
i. Diesel [gal or MMBtu] N/A
ii. Electricity [kWh] N/A
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] N/A
iv. Coal [tons or MMBtu] N/A
v. Wood [cords, green tons, dry tons] N/A
vi. Other N/A
3. Proposed System Design
a) Installed capacity 2,000 kW
b) Annual renewable electricity generation
i. Diesel [gal or MMBtu] -
ii. Electricity [kWh] -
iii. Propane [gal or MMBtu] -
iv. Coal [tons or MMBtu] -
v. Wood [cords, green tons, dry tons] -
vi. Other (hydroelectric) 7,820,000 kWh
4. Project Cost
a) Total capital cost of new system $4,555,922
b) Development cost $370,000
c) Annual O&M cost of new system $117,000
d) Annual fuel cost $0
5. Project Benefits
a) Amount of fuel displaced annually for
i. Electricity 72.8 MMCF of Cook Inlet Basin natural gas.
ii. Heat N/A
iii. Transportation N/A
b) Price of displaced fuel $509,629
c) Other economic benefits CEA and MEA system efficiency, increased capacity,
Green Tags transferred to MEA for public benefit.
d) Amount of Alaska public benefits $6,837,061
6. Power Purchase/Sales Price
a) Price for power purchase/sale $0.05/kWh (MEA's avoided cost of energy)
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 $6,837,061 / $2,242,961 = 3.05
Payback 30 years
FISHHOOK RENEWABLE ENERGY, LLC RENEWABLE ENERGY FUND GRANT APPLICATION
FISHHOOK CREEK HYDROELECTRIC PROJECT
OCTOBER 8, 2008
C. GRANT BUDGET FORM PER APPLICATION FORM SECTION 6.
Alaska Energy Authority - Renewable Energy FundAEA GRANT BUDGET FORM - ATTACHMENT CPROJECT: FISHHOOK CREEK RUN-OF-RIVER HYDROELECTRIC PROJECTLOCATION: HATCHER PASS, ALASKAPROPONENT: FISHHOOK RENEWABLE ENERGY, LLCBUDGET SUMMARY:Milestone or Task Federal FundsState FundsLocal Match Funds (Cash)Local Match Funds (In-Kind)Other FundsTOTALS1 Preconstruction Activities $27,000 $143,000 $100,000.00 $270,0002 Design $50,000 $5,000 $45,000 $100,000FY 09 Totals $50,000 $32,000 $188,000 $100,000 $370,0003 Construction Engineering & Commissioning $67,793 $67,793 $0 $135,5864 Construction $2,025,168 $2,025,168 $0 $4,050,336FY 10 Totals $2,092,961 $2,092,961 $0 $4,185,922Project Totals $2,142,961 $2,124,961 $188,000 $100,000 $4,555,922BUDGET CATAGORIES:Milestone # or Task #1234TOTALSDirect Labor and Benefits $229,500 $97,500 $101,689 $0 $428,689Travel, Meals, or Per Diem $6,750 $0 $6,779 $202,517 $216,046Equipment $6,750 $0 $3,390 $1,215,101 $1,225,240Supplies $6,750 $2,500 $3,390 $202,517 $215,156Contractual Services $0 $0 $20,338 $607,550 $627,888Construction Services $0 $0 $0 $1,822,651 $1,822,651Other Direct Costs $0 $0 $0 $0 $0TOTAL DIRECT CHARGES $249,750 $100,000 $135,586 $4,050,336 $4,535,672RFA AEA09-004 Budget Form
FISHHOOK RENEWABLE ENERGY, LLC RENEWABLE ENERGY FUND GRANT APPLICATION
FISHHOOK CREEK HYDROELECTRIC PROJECT
OCTOBER 8, 2008
D. AN ELECTRONIC VERSION OF THE ENTIRE APPLICATION PER
RFA SECTION 1.6
FISHHOOK RENEWABLE ENERGY, LLC RENEWABLE ENERGY FUND GRANT APPLICATION
FISHHOOK CREEK HYDROELECTRIC PROJECT
OCTOBER 8, 2008
E. GOVERNING BODY RESOLUTION PER RFA SECTION 1.4
1503 West 33rd Avenue, Anchorage, Alaska 99503
Phone: (907) 258-2420 Fax: (907) 258-2419
Fishhook Renewable Energy, LLC
ATTACHMENT F
FISHHOOK HYDROELECTRIC PROJECT FEASIBILITY STUDY
Primary factors affecting the technical and financial viability are as follows:
· Permitting - obtaining the legal authority and public acceptance to
construct the project.
· Resource availability - the quantity of the water available and the ability to
divert the required quantity to the project.
· Soils - Unexpected or adverse soil conditions can significantly affect
viability primarily in the area of construction cost.
· Engineering - Any unusual technical or engineering challenges for
construction can affect viability.
· Construction - Project management, unexpected costs or delays during
construction, or unaccounted expenses can affect the viability.
· Operation - reliability and unexpected operating conditions can affect
project viability.
· Contracts and Energy Market - Contracts and energy price fluctuations
can significantly impact the financial feasibility and project viability.
Mitigating and/or limiting risk with all foreseeable and reasonable possibilities for the
above issues will maximize project viability.
Permitting
Risk to the lender is completely mitigated because FRE is not asking for any loan money
until the project is fully permitted and authorized to construct. FRE will only utilize
bo rrowed money for the actual construction phase of the Project.
As of this date all remaining permits should be relatively straightforward. The only
foreseeable exception at this stage is obtaining a conditional use permit from the
Matanuska-Susitna Borough. The following describes the permits needed for the Project
and their current status:
FERC exemption - Applied for this permit on February 23rd, 2007. The Project is not on
federal land, does not affect navigable waters, and does not affect interstate commerce.
An exemption was granted on April 30th, 2007.
RCA utility application - The Regulatory Commission of Alaska (RCA) requires FRE to
demonstrate a fitness, willingness, and ability to complete the Project and provide power
before issuing a certific ate. They have 2 weeks upon receipt of the application to rule on
its completeness and, if complete, 6 months thereafter to make a decision on the
application. FRE has drafted an application for a certificate. The principle outstanding
item needed before submitting the application to the RCA is a financial commitment for
the Project from a lending institution. This has been held up pending receipt of an offer
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Fishhook Renewable Energy, LLC
from a utility to purchase power that has just recently been received. Power purchase
contract details still need to be finalized.
Based upon recent reversal of DNR's position requiring a charitable land lease for the
project, FRE has elected to request an exemption from RCA regulation.
DNR easement/lease application - The Department of Natural Resources land lease
process is the primary state permitting process that will drive the review of the project
and solicit public comments. DNR recently notified FRE that it can use the competitive
lease process for this project, which is not dependent on utility certification. Based on
this new information, FRE has requested that DNR proceed with the leasing process for
this project. The public process (which takes 60 days) for the competitive lease will
commence later in 2008.
DNR water rights - FRE applied for water rights in April of 2006. Water rights will be
issued after DNR Habitat Division makes a determination on the Project and the land
leasing is initiated.
Habitat Permit - Discussions with State fish and game review staff has resulted in a
preliminary agreement regarding the Project. The tentative investigation by Habitat
revealed Dolly Varden habitat in the lower 200 yards of the current Fishhook Creek
mouth. The old channel, where the Project tailrace will discharge, is considered superior
habitat and capable of supporting salmon spawning if the culvert is adequate. During the
summer of 2007 FRE Members found juvenile salmon in the old channel reach (none
were found in the current mouth reach).
Habitat has tentatively stated that if the fo llowing conditions are met then a permit will be
issued:
· Move the powerhouse up 200 yards from the culvert, effectively creating 200
yards of new habitat to make up for the possible loss at the current mouth.
Current design drawings reflect this change.
· Upgrade the culvert to the standards necessary for passage of adult salmon. FRE
has agreed to this and included such costs in the cost estimate for the Project.
· Provide a bypass to allow for continuous flows to the tailrace during turbine
maintenance. FRE has agreed to this and included such costs in the cost estimate
for the Project.
Matanuska-Susitna Borough - An easement application has been submitted to the Mat-Su
Borough. Thus far, they have indicated that the easement will be granted after the DNR
approves the project.
The Mat-Su Borough has indefinitely suspended development and adoption of the
Hatcher Pass Special Use District regulations. Until these are reactivated, no further
permits are required.
Under the SPUD, the Mat-Su Borough would likely require a conditional use permit for
the project. As the name implies, such a permit is conditional and what conditions, if
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Fishhook Renewable Energy, LLC
any, may be imposed are not known. It is possible that conditions could be required that
could significantly impact the project feasibility.
Public Involvement - FRE has presented the Project to the Fishhook Community Council
and received numerous comments, most of which were incorporated into the Project
design. Overall, the comments tended towards a neutral stance. Similar reactions were
obtained from the few who commented on the Project when it was displayed at the 2007
MEA annual meeting. Finally, letters describing the Project have been distributed to all
Mat-Su area State Senators and Representatives and the Governor, no ne of whom have
responded with comments.
Resource availability
The amount of power produced each year is a direct function of the available water.
Accurately accounting for the quantity and fluctuations in the water supply (hydrology)
are crucial in determining the overall project economics. A secondary effort in hydrology
is to determine maximum flood levels which can impact the engineering of the Project.
The primary basis for determining Project hydrology is analyzing and comparing
measurements taken at the intake with the USGS flow measurements on the Little Susitna
River which encompasses the Fishhook Creek drainage basin.
The United States Geological Survey (USGS) has maintained a gauging station on the
Little Susitna River at the Wasilla -Fishhook Road bridge since July 1946 (USGS Gauge
#15290000). The historical record consists of daily average flow readings. These values
are used for statistically estimating year to year power production including the minimum
expected power output for any given year.
The USGS also publishes real-time data for the gauge which consists of provisional data
averaged every 15 minutes. The real time data is used to verify that instantaneous flow
measurements taken at the intake site match those at the USGS gauge site after scaling
for basin size. Any significant discrepancy would indicate that scaling by the basin size
is not appropriate. To account for seasonal variation numerous instantaneous flow
measurements at the intake were taken throughout the year and compared with the real
time data at the USGS gauge.
The USGS gauging station is located approximately 3 miles downstream from the mouth
of Fishhook Creek. The basin and gauging location is shown in Figure 1.
Daily flow data from USGS gauge #15290000 was scaled by relative basin size to
determine the expected flows for Fishhook Creek. Table 1 summarizes basin areas for
the USGS gauge and the Fishhook sub-basin (begins at Project intake).
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Table 1: Attributes of Gauging Station and Project Creeks
Little Susitna River USGS
Gauge #15290000 Proposed Fishhook Creek Intake
Location 618 42.6’ N
1498 13.8’ W
618 46.0’ N
1498 16.3’ W
Drainage Area
(sq. mi.) 61.90 6.66
Percentage of
Gauged Basin 100% 10.76%
Gauge/Intake
Elevation (feet) 916.6 2,550
Basin
Description
Mountainous alpine areas with
some alpine valley bottomlands.
Generally southerly facing.
Mountainous alpine areas with
negligible alpine valley
bottomlands. Generally easterly
facing.
To validate the expected stream flows based upon the USGS gauge on the Little Susitna
River, actual stream flow measurements were taken using a Swoffer Current Velocity
Meter. The following table summarizes these measurements where a corresponding real
time flow for the Little Susitna River was published.
Table 2 - Flow Measurements at Intake Compared with USGS
Measurements
Date
Fishhook
Intake Flow,
cfs
Little Susitna
Flow, cfs Ratio, %
3/24/2006 14:15 2.2 24 9.4%
7/7/2006 13:45 33.2 401 8.3%
7/8/2006 15:00 33.2 321 10.3%
10/20/2006 17:30 23.8 201 11.9%
4/9/2007 18:00 2.8 23 12.0%
5/12/2007 15:30 5.7 65 8.7%
Average 10.1%
As can be seen by the table, the average flow at the intake of the Fishhook Project is
slightly less than the expected 10.76% based on scaling the basin area. This could be due
to several factors:
· Inaccuracies in the method of the measurements at the Fishhook intake
using the Swoffer flow meter.
· Differences in soil type of the sub-basin on average compared to the full
basin.
· Differenc es in flow releases and timing due to elevation and/or
precipitation/runoff relationships.
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Most likely, the error is due to the flow meter and the associated difficulty in obtaining
accurate flow readings at low velocities and in rough stream beds. However, to remain
on the conservative side, the value of 10.1% of the USGS reported Little Susitna flow is
assumed for the statistical analysis to estimate yearly project economics.
The long term record of data on the Little Susitna is beneficial in that accurate estimates
of the yearly power of the proposed project can be derived. As detailed above, the flow
data will be scaled by a factor of 10.1%. Before doing so, a review of the data follows
along with the procedure to obtain an average year of power production used for the
economic analysis.
The following chart graphically depicts yearly summaries for the dataset. A somewhat
noticeable aspect of the Little Susitna record set is a trend towards decreased peak runoff
values and an increase in minimum runoff values. There is also an obvious upward trend
in median values.
Figure 1 - USGS Little Susitna Gaging Summary
This indicates that there is a trend towards higher low to moderate flows. These are the
flows that are most important to the Project. This is further evidenced by the following
graph depicting the average daily Project flows for the record set split into two time
periods using 1979 as dividing point. The average is calculated using maximum values
of 30 cfs since this is the maximum flow that can be utilized by the Project. This
USGS Little Susitna Gaging Summary
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
1949 1959 1969 1979 1989 1999
YearMedian & Min Flow, cfs1
10
100
1000
Max Flow, cfsMedian Flow
Min Flow
Max Flow
5 per. Mov. Avg. (Median Flow)
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streamflow trend is confirmed by USGS publications in 2005 (USGS Fact Sheets 2005-
3017 and 2005-3018).
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Figure 2 - Daily Average Project Flows
In order to remain slightly conservative, the entire record will be averaged on a daily
basis to estimate average yearly power production. Actual average yearly power
production, if the trend remains, should be approximately 5% higher. The following
table summarizes the statistical results of the hydrology analysis in terms of Project
power output (as opposed to stream flows).
In conclusion, the long period of record at the USGS gaging station provides a high
degree of confidence in seasonal and annual flow variations available to the project. The
streamflow analysis presented tends towards the conservative side and the expected
average power production should generally increase in the future based on current trends
although this is not included in the economic analysis.
Table 3 - Summary Statistics of Annual Power Output, kWh
Annual Power Output, kWh
Median 7,630,000
Average 7,440,000
Min 5,320,000
Max 9,300,000
Daily Average Project Flow
0.0
5.0
10.0
15.0
20.0
25.0
30.0
1/1 2/1 3/1 4/1 5/1 6/1 7/1 8/1 9/1 10/1 11/1 12/1
DateProject Flow, cfsPre 1979 Avg flow
Post 1979 Avg flow
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Soils
The soils around the Project are generally known to consist of gravelly and/or sandy silt
with cobbles and boulders strewn about. Preliminary investigations have confirmed this.
The exception to this is along the creek bank at the upper section of the Project which
appears to be almost entirely cobbles and boulders. Some hauled in backfill may be
required for this section of pipe. However, the pipe in this area consists of HDPE which
can accommodate local site conditions with its flexibility and rugged nature. Bedding
requirements for the HDPE are not as stringent as for steel pipe so this will also reduce
the select backfill required.
The final design phase of the Project, which is scheduled for the summer of 2008,
includes a full geotechnical investigation.
Engineering
No significant technical challenges are foreseen at this time in terms of engineering the
Project. Proper feasibility, however, requires careful attention to the amount power
produced. Small errors in miscalculations can have significant impacts. The following
illustrates the methods employed to arrive at the quantity of energy produced by the
Project.
The procedure used for the energy analysis was to numerically simulate operation of the
Fishhook project using actual historical daily flow values. This included accounting for
head loss in the pipeline as a function of flows and calculating the turbine output based
on the actual head, flow, and turbine operating efficiency at the given flow rate.
The calculation of the head loss in the pipeline is based on the explicit solution of the
Darcy-Weisbach equation presented by Streeter and Wylie 1. Roughness values for the
high density polyethylene (HDPE) pipe and for the steel pipe are 0.000005' and 0.00015'
respectively. Water kinematic viscosity has been interpolated at a temperature of 36
degrees F. For a total length of pipeline equal to 7,700’, the maximum head loss at the
design flow rate of 30 cfs is 62 feet. The static head for the project is 1,048'.
The total water-to-wire efficiency, which includes losses from the
generator and the transformer, is multiplied with the turbine
efficiency curve. Based on information provided by turbine
suppliers, the turbine and generator combined efficiency is
expected to be about 83%. An additional 2% is expected in the
transformer. Net system efficiency should be approximately
81%. As a conservative estimate, a net turbine efficiency of 77%
has been selected for calculating project output. The table to the
left shows the water-to-wire efficiency used for various
percentages of total project flow rate.
To obtain good efficiency at low flows, the Project design
includes a 1500 kW turbine and a smaller 400 kW turbine. This also provides some
power production when a turbine is offline for maintenance.
1 Fluid Mechanics, 8th Edition, Streeter and Wylie, 1985, McGraw-Hill Publishing Company
Flow % Efficiency
0% 0%
5% 0%
10% 46%
20% 65%
40% 73%
60% 77%
80% 77%
100% 77%
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With the flow data, the pipeline losses, the net water to wire efficiency, power from the
Project is calculated using the potential energy remaining. The calculation is basically a
units conversion having the following form: 11.3455*0.746*Flow*Head/100*Efficiency.
Construction
A detailed construction cost estimate was prepared in 2007. Generally, prices used were
based on small quantity estimates so some savings will occur for large material orders.
On the other hand, actual material prices will likely increase by the time FRE begins
ordering materials so a new estimate will be generated once permitting approval is
obtained and prior to accepting any loans. This will be part of the final design.
The cost estimate, while detailed, incorporates a 20% contingency factor. While the
construction of the Project is deemed to be relatively straightforward due to the mild
slopes, road access and proximity to urban centers, and the simple nature of the Project
(there are no unique challenges or aspects to this Project), a conservative approach is
required to mitigate risks on the part of FRE Members and its lenders.
Nearly all aspects of construction will be put out to bid to bonded contractors. Large
items such as purchase of the turbine and generator and possibly the pipe will be done
directly by FRE. Even so, the cost estimate includes a contractor profit of 10% on the
entire construction budget - another somewhat conservative approach.
The cost estimate also allows for a generous amount of labor. Total budgeted
construction man hours translate into a 5 man crew working 60 hours a week for 5.5
months.
The economic analysis contains a complete breakdown of the construction cost estimate.
FRE’s development plan. included at the end of this application, contains a more detailed
discussion on all aspects of the construction.
Operation
One of the most important aspects of a hydroelectric project is maintaining reliable
operation. Attention to detail and identifying potential problems and finding appropriate
solutions are critical. This is especially true in the first few years of operation.
Run-of-river projects are particularly prone to reliability problems due to the lack of a
large reservoir and the associated intake difficulties. FRE has paid particular attention to
this critical component of the Project.
Fortunately, the bed load and erosion potential at Fishhook Creek is significantly less
than many other creeks, including McRoberts Creek which has a very high bed load.
FRE Member 's experience with intake design and operation at the McRoberts Creek
hydro has aided substantially in developing effective systems to handle high bed loads
without project disruption. This technology will be applied to the Fishhook Creek as
well. The schemes employed at McRoberts Creek are also very effective at trapping and
flushing floating debris such as sticks and leaves. Such debris will likely be comparable
in quantity at Fishhook Creek.
Another potential problem at run of river intakes is the handling of flood flows. FRE
Members witnessed first hand the massive floods of August 2006 (designated 100-year
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floods by the USGS) in Hatcher Pass. Surprisingly, no erosion or bank jumping occurred
at the intake site. FRE expects no major problems after witnessing this event given that
this was nearly an all time record flood (the August 2006 flood was the second highest
flow recorded in the Little Susitna River). FRE will design the intake to easily pass the
record flood without any difficulty.
Contracts and Energy Market
Power sales contracts and the regional energy market will directly control project revenue
and thus project viability. FRE is in advanced contract negotiations with MEA for the
project, and expects a contract to be completed by November 2008.
Power Sales Contracts
FRE will sell the power to Matanuska Electric Association, Inc. (MEA). Until the end of
2014, MEA is an all-requirements customer of Chugach Electric Association, Inc. (CEA).
FRE, MEA, and CEA have verbally agreed to allow FRE to sell power to MEA at the
avoided energy cost that MEA pays CEA for power. This approach is revenue-neutral to
MEA and CEA, and thus protects their ratepayers from incurring stranded costs. MEA
and CEA are currently working to amend their contract to allow the Fishhook project,
and a contract amendment is expected by spring 2008. This contract amendment will be
approved by FRE, MEA, CEA and the RCA before FRE finalizes any loan obligations.
After 2014, FRE will continue to sell power to MEA. The pricing terms are still being
negotiated, but for project viability, continued sales on an avoided-cost basis is assumed.
Energy Market
To assess project viability in terms of contracts, CEA and MEA's avoided cost of energy
must be projected. For both utilities, the avoided cost of energy for the life of the Project
will be natural gas. MEA's generation plans have included use of coal, however this
would be for their base generation. Their peaking generation, which is what would be
offset by the Project, would be fired by natural gas.
Cook Inlet's natural gas market is currently in a state of flux, as proven reserves are
nearing depletion, and numerous gas contracts, including CEA's gas supply contracts,
will be expiring in the first five years of the Project. Historical and near-term projected
gas prices for CEA delivery under their existing contracts are presented in Figure 3.
CEA is currently negotiating new gas supply contracts for sales starting in approximately
2010. The terms of these contracts are unknown, but similar recent supply contracts (for
Enstar, Inc., the regional gas utility) have trended towards pricing based upon the Henry
Hub price for natural gas. In recent years, the Henry Hub price has generally been
bounded between $6 – 8 per MCF, excepting major supply disruptions, such as Hurricane
Katrina in 2005, which resulted in a temporary spike to around $14 per MCF. This will
result in a considerable increase in CEA's future natural gas costs. Any future MEA
natural gas contract s are expected to follow a similar price structure.
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Figure 3 – Historical and Projected Natural Gas Prices to CEA
Mitigating this projected increase in future gas costs will be the increased efficiency of
new generation units planned by both CEA and MEA. CEA's aggregate heat rate of their
current thermal generation is approximately 10,800 MCF/kWh. With their planned new
generation, CEA's aggregate heat rate is estimated to improve to as low as 8,000
MCF/kWh (if they cease providing energy to MEA and Homer Electric Association, Inc.
(HEA) after 2014). This increased efficiency would largely counter the expected
increase in natural gas costs, resulting in a future avoided energy cost similar to the
current energy cost.
A 'bullet line' has been proposed to deliver natural gas from Fairbanks to Anchorage.
This line would tap the proposed North Slope Gas line. Given that the Cook Inlet natural
gas market is already migrating towards a national pricing structure, the availability of
gas from the bullet line is not viewed as a significant downside risk, unless this gas or the
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pipeline is heavily subsidized by the State of Alaska. Also, it is considered unlikely that
this gas would be available to the Cook Inlet market until the twilight years of the
Project's financing, and thus will have minimal to no impact on project viability from a
revenue standpoint.
CEA and Municipal Light and Power (MLP) have proposed a merger. If these two
utilities completely merged, CEA could gain access to MLP's wholly-owned 1/3rd share
of the Beluga Gas Field. This gas is available to MLP (and presumably a successor
combined MLP-CEA) at cost, which is approximately $1 to 2 per MCF. If this gas were
made wholly available to a merged MLP-CEA, it would supply generation needs for
approximately 5 years. This is a worst case scenario, and is considered very unlikely, as
it would require nullification of several existing gas supply contracts and retention of the
all-requirements contract with MEA to impact FRE. In the event of this worst case
scenario, FRE would have to evaluate mitigating strategies such as refinancing the
project debt to remain solvent.
While there are many considerable unknowns that directly influence any forecast of the
avoided cost of energy over the life of the Project, FRE expects many of the most critical
unknowns to be resolved before project financing and construction commences. Best
available information regarding these unknowns at this time indicates that the project will
remain viable.
In consideration of these various factors in aggregate, FRE has assumed a power sales
rate of $0.05/kWh, over the life of the Project. Considering the totality of variables that
govern the future avoided cost of energy, FRE believes that this forecast is conservative.