Loading...
HomeMy WebLinkAboutWind Hydro Hybrid Intertie Feasibility Study for Chigniks App Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 1 of 14 9/2/2008 Application Forms and Instructions The following forms and instructions are provided for preparing your application for a Renewable Energy Fund Grant. An electronic version of the Request for Applications (RFA) and the forms are available online at http://www.akenergyauthority.org/RE_Fund.html The following application forms are required to be submitted for a grant recommendation: Grant Application Form GrantApp.doc Application form in MS Word that includes an outline of information required to submit a complete application. Applicants should use the form to assure all information is provided and attach additional information as required. Application Cost Worksheet Costworksheet.doc Summary of Cost information that should be addressed by applicants in preparing their application. Grant Budget Form GrantBudget.xls A detailed grant budget that includes a breakdown of costs by task and a summary of funds available and requested to complete the work for which funds are being requested. Grant Budget Form Instructions GrantBudgetInstr.pdf Instructions for completing the above grant budget form.  If you are applying for grants for more than one project, provide separate application forms for each project.  Multiple phases for the same project may be submitted as one application.  If you are applying for grant funding for more than one phase of a project, provide a plan and grant budget for completion of each phase.  If some work has already been completed on your project and you are requesting funding for an advanced phase, submit information sufficient to demonstrate that the preceding phases are satisfied and funding for an advanced phase is warranted.  If you have additional information or reports you would like the Authority to consider in reviewing your application, either provide an electronic version of the document with your submission or reference a web link where it can be downloaded or reviewed. REMINDER:  Alaska Energy Authority is subject to the Public Records Act, AS 40.25 and materials submitted to the Authority may be subject to disclosure requirements under the act if no statutory exemptions apply.  All applications received will be posted on the Authority web site after final recommendations are made to the legislature. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 2 of 14 9/3/2008 SECTION 1 – APPLICANT INFORMATION Name (Name of utility, IPP, or government entity submitting proposal) Lake and Peninsula Borough Type of Entity: Borough government Mailing Address PO Box 495, King Salmon, AK 99613 Physical Address Same Telephone 907.246.3421 Fax 907.246.6602 Email ljcotten@gci.net 1.1 APPLICANT POINT OF CONTACT Name Lamar Cotten Title Borough Manager Mailing Address PO Box 495, King Salmon, AK 99613 Telephone 907.301.8737 Fax 907.272.5076 Email ljcotten@gci.net 1.2 APPLICANT MINIMUM REQUIREMENTS Please check as appropriate. If you do not to meet the minimum applicant requirements, your application will be rejected. 1.2.1 As an Applicant, we are: (put an X in the appropriate box) An electric utility holding a certificate of public convenience and necessity under AS 42.05, or An independent power producer, or X A local government, or A governmental entity (which includes tribal councils and housing authorities); Yes or No 1.2.2. Attached to this application is formal approval and endorsement for its project by its board of directors, executive management, or other governing authority. If a collaborative grouping, a formal approval from each participant’s governing authority is necessary. (Indicate Yes or No in the box ) Yes or No 1.2.3. As an applicant, we have administrative and financial management systems and follow procurement standards that comply with the standards set forth in the grant agreement. Yes or No 1.2.4. If awarded the grant, we can comply with all terms and conditions of the attached grant form. (Any exceptions should be clearly noted and submitted with the application.) Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 3 of 14 9/3/2008 SECTION 2 – PROJECT SUMMARY Provide a brief 1-2 page overview of your project. 2.1 PROJECT TYPE Describe the type of project you are proposing, (Reconnaissance; Resource Assessment/ Feasibility Analysis/Conceptual Design; Final Design and Permitting; and/or Construction) as well as the kind of renewable energy you intend to use. Refer to Section 1.5 of RFA. Chigniks Hydro/Wind Feasibility & EIS Update 2.2 PROJECT DESCRIPTION Provide a one paragraph description of your project. At a minimum include the project location, communities to be served, and who will be involved in the grant project. The proposed project is a wind/hydro hybrid intertie feasibility study for Chignik Bay, Chignik Lagoon and Chignik Lake (hereafter “Chigniks”.) The Chigniks have a combined population of 277 people - the largest community is Chignik Lake with 128 people. The cost of fuel to create electricity is becoming beyond reach in the area, the purpose of the proposed project is to provide affordable and stable-price energy to create sustainable communities. Wind: There is existing wind data confirming class 5 wind in the area, strong enough to be a good energy source. However, at the sites where data was collected the wind was “too turbulent” to be utilized for wind energy generation. Part of the feasibility study will involve determining the most advantageous site for wind turbines by collecting supplemental met data. Hydro: The Chignik Alaska Draft Small Hydropower Feasibility Report and EIS, by the Army Corps of Engineers, July 1984, evaluated hydro resources at Packers Creek, Mud Bay Lake and Indian Creek. The study found that Indian Creek had the best potential for economical development with a potential head of 409 ft and modest flows on the order of 22cfs. See Hydro Screening Attachment G for details The Lake and Peninsula Borough will provide management for the project, overseeing the work of HDR Alaska who will act as the owner representative in developing the feasibility study for a wind/hydro intertie project. 2.3 PROJECT BUDGET OVERVIEW Briefly discuss the amount of funds needed, the antici pated sources of funds, and the nature and source of other contributions to the project. Include a project cost summary that includes an estimated total cost through construction. Total cost for the work to be performed under this grant is estimated at $471,000. The Borough is requesting a grant of $375,000 from the AEA and will offer a match of $96,000 in cash and in- kind contributions. Estimated total cost through construction of the project is estimated to be $8,150,000 including development and construction. Annual operations and maintenance costs are estimated to be $100,000. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 4 of 14 9/3/2008 2.4 PROJECT BENEFIT Briefly discuss the financial benefits that will result from this project, including an estimate of economic benefits(such as reduced fuel costs) and a description of other benefits to the Alaskan public. The project benefits have an estimated net present of $11.4 million with a benefit/cost ration of 1.39 - making it an attractive prospect from an economic point of view. Annual avoided costs are estimated at just over $400,000 per year initially, increasing over time to just over $750,000 in 2027. Direct dollar savings will be modest for individual households in the Lake and Peninsula Borough because the project is in PCE communities. However, commercial facilities such as lodges and stores as well as local schools will benefit from lower priced sustainable energy – that could be as much as 50% less than existing diesel electricity. (Please see attached “Hydro Rate Impact)” Recent sharp increases in fuel prices have put significant strain on local small businesses and larger commercial vendors. These businesses are what drive the economy and thus sustain the communities in the area. Individual households will benefit from operating in an environment where business can thrive, creating economic opportunity for residents and revenue streams for local government. 2.5 PROJECT COST AND BENEFIT SUMARY Include a summary of your project’s total costs and benefits below. 2.5.1 Total Project Cost (Including estimates through construction.) $8,150,000 This includes development and construction of the project 2.5.2 Grant Funds Requested in this application. $375,000 2.5.3 Other Funds to be provided (Project match) $96,000 2.5.4 Total Grant Costs (sum of 2.5.2 and 2.5.3) $471,000 2.5.5 Estimated Benefit (Savings) $400,000 in avoided fuel cost in early years of operation moving up to just under $800,000 in avoided fuel cost in 2027 2.5.6 Public Benefit (If you can calculate the benefit in terms of dollars please provide that number here and explain how you calculated that number in your application.) $ 11,423,098 NPV of project benefits See Grant Budget Form - Attachment C and Cost Worksheet - Attachment B for details See Benefits Analysis in Attachment E See Rate Impacts Analysis in Attachment F Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 5 of 14 9/3/2008 SECTION 3 – PROJECT MANAGEMENT PLAN Describe who will be responsible for managing the project and provide a plan for successfully completing the project within the scope, schedule and budget proposed in the application. 3.1 Project Manager Tell us who will be managing the project for the Grantee and include a resume and references for the manager(s). If the applicant does not have a project manager indicate how you intend to solicit project management Support. If the applicant expects project management assistance from AEA or another government entity, state that in this section. Lamar Cotten, Borough Manager, will manage the project, working in close coordination with Bob Loeffler, Borough Energy Planner. The team will oversee the work of HDR Alaska, a power and engineering consulting firm that will act as the owner representative for the project. Lamar and Bob have combined decades of experience successfully planning and managing projects in rural Alaska. See resumes and statement of qualification in attachment A The Lake and Peninsula Borough will provide administrative an on-the-ground support offer up the time and expense of their staff to completing energy projects. The Borough has five full time employee positions and three contract employees. The Borough finance department successfully oversees an annual multi-million dollar operating and capital budget. The borough has issued a number of multi-million dollar GO bonds over the last 15 years. All bonds have been paid in a timely fashion. There are a series of internal controls and procurement standards for purchasing good and acquiring services. 3.2 Project Schedule Include a schedule for the proposed work that will be funded by this grant. (You may include a chart or table attachment with a summary of dates below.) See Project Schedule attachment D 3.3 Project Milestones Define key tasks and decision points in your project and a schedule for achieving them. Project milestones are: 1. Acquisition of supplemental data 2. System integration analysis 3. Transmission study 4. Permitting and environmental analysis 5. Estimate of final costs for project construction Work performed under this grant application is expected to be completed in calendar year 2009, see project schedule in attachment D for details. 3.4 Project Resources Describe the personnel, contractors, equipment, and services you will use to accomplish the project. Include any partnerships or commitments with other entities you have or anticipate will be needed to complete your project. Describe any existing contracts and the selection process you may use for major equipment purchases or contracts. Include brief resumes and references for known, key personnel, contractors, and suppliers as an attachment to your application. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 6 of 14 9/3/2008 Energy plan: The Borough has a current contract with Mark Foster and Associates, MAFA, and Information Insights to develop a regional energy plan. The work produced under this contract represents a significant in-kind contribution to future energy projects in the area. The team has provided the Borough with a screening study for various energy solutions for the region, taking into consideration project economics, systems improvements, potential sub-regional synergies and local capacity. Borough staff: The Borough has five full time staff people and three contract staff, all will be available to assist with project development as needed. Key personnel include Lamar Cotten, Borough Manager, and Bob Loeffler, Energy Planner (resumes attached). HDR Alaska will act at the owner representative for the project. See Statement of Qualifications in attachment D In addition the Borough can offer: 1. Village offices and computers use 2. Village vehicle access 3. Borough office use 3.5 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. The Borough Manager will manage communication on the project, including benchmark memos to updates to the Authority. Any consultants or vendors brought into the project will provide the Borough Manager with weekly updates via email. 3.6 Project Risk Discuss potential problems and how you would address them. Many of the potential risks generally associated with Hydro projects are minimized in the proposed project through existing study and data collection. Hydro risks:  Schedule risk is mitigated in this project compared to others through the existing feasibility and draft EIS  Capital risk is mitigated by starting with a well known hydro site with known hydrology that will be updated as part of this study The Borough will gather additional met data on wind, update the hydro EIS and spend ample time and resources on analysis of integration in order to optimize the size of each resource (wind/hydro/diesel backup). This process will create a balanced energy portfolio and a system that will offer the lowest cost reliable energy available in the area. SECTION 4 – PROJECT DESCRIPTION AND TASKS  Tell us what the project is and how you will meet the requirements outlined in Section 2 of the RFA. The level of information will vary according to phase of the project you propose to Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 7 of 14 9/3/2008 undertake with grant funds.  If you are applying for grant funding for more than one phase of a project provide a plan and grant budget for completion of each phase.  If some work has already been completed on your project and you are requesting funding for an advanced phase, submit information sufficient to demonstrate that the preceding phases are satisfied and funding for an advanced phase is warranted. 4.1 Proposed Energy Resource Describe the potential extent/amount of the energy resource that is available. Discuss the pros and cons of your proposed energy resource vs. other alternatives that may be available for the market to be served by your project. The Indian Creek hydro resource is well known in the area and has been used over the years for micro- hydro projects (<10kW). The Army Corps of Engineers produced a draft feasibility study and EIS in July 1984 which identified the Indian Creek hydro resource as being able to support 1100kW of hydro capacity with an estimated annual production of 5 million kWhs based on an annual capacity factor of 0.5. For the initial screening study, we have downsized the scale of the Indian Creek project to 500kW to better match the existing and anticipated load growth profile, recognizing that the size and scale of the hydro- wind-diesel-intertie system is the subject of this study phase of the project. The wind resources around Chignik were recently assessed by IPPEC consulting in March 2006 and were found to be a class 6 wind resource. However the particular site exhibited turbulence that was outside of industry standards and the wind assessment team recommended additional reconnaissance in areas with less obstructed fetch lengths. This study will pursue the recommendations of that wind assessment and seek supplemental wind met data to identify and optimize the utilization of local wind in conjunction with local hydro resources. 4.2 Existing Energy System 4.2.1 Basic configuration of Existing Energy System Briefly discuss the basic configuration of the existing energy system. Include information about the number, size, age, efficiency, and type of generation. This study will examine each local central power station to ensure a reliable cost effective integration of hydro and wind resources with the use of existing diesel power plants as back-up and swing producers. The study will also examine the attractiveness of interconnecting the communities by intertie. Additional information about individual communities and their gen sets can be found in the Denali Commission diesel gen set condition inventory. 4.2.2 Existing Energy Resources Used Briefly discuss your understanding of the existing energy resources. Include a brief discussion of any impact the project may have on existing energy infrastructure and resources. The Chigniks are currently served by diesel fired electrical generators producing over 1 million kWhs a Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 8 of 14 9/3/2008 year at an efficiency of between 10-12 kWh/gallon or 0.10-0.0833 gallons per kWh. Thus they are using on the order of 110,000 gallons of year of diesel for electrical generation. Diesel fuel arrives by ocean barge and has been running between $4 and $5 per gallon in recent months. 4.2.3 Existing Energy Market Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. The primary beneficiaries of a more cost effective electric generation system will be local commercial and government enterprises who are not on PCE support, primarily fishing and tourism in the summer and the schools in the winter. If the project is funded by 80% grant funds, the rates for local customers could be roughly 50% less than current rates over much of the life of the project. And, once the loan for the remaining 20% of the capital project is paid off, the rates for local customers can be expected to approach 68% less than current rates. Please Hydro Rate Impact Attachment F Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 9 of 14 9/3/2008 4.3 Proposed System Include information necessary to describe the system you are intending to develop and address potential system design, land ownership, permits, and environmental issues. 4.3.1 System Design Provide the following information for the proposed renewable energy system:  A description of renewable energy technology specific to project location  Optimum installed capacity  Anticipated capacity factor  Anticipated annual generation  Anticipated barriers  Basic integration concept  Delivery methods The screening study assumes a scaled down 500kW hydro project at Indian Creek with the potential to adjust the characteristics of the hydro project to take advantage of local wind, diesel back-up and intertied resources. The purpose of this phase of the study is to optimize the system design in anticipation of preparing bid documents for an EPC Contract. 4.3.2 Land Ownership Identify potential land ownership issues, including whether site owners have agreed to the project or how you intend to approach land ownership and access issues. The Lake and Peninsula Borough will rely on the expert consultation of Bob Loeffler to address any land ownership issues that might arise. Initial reconnaissance indicates that that the proposed Hydro project is on ANCSA land and not in the nearby federal park. It will be necessary to obtain a lease from the Native corporation that owns the land. Specific site locations for wind turbines will be determined as part of the feasibility study. Land ownership does not appear to be a barrier in this project. 4.3.3 Permits Provide the following information as it may relate to permitting and how you intend to address outstanding permit issues.  List of applicable permits  Anticipated permitting timeline  Identify and discussion of potential barriers Permits for the proposed projects will be sought concurrent with data collection efforts during calendar year 2009 and potentially include:  Updating the draft EIS for the Hydro project. Access to the existing draft EIS offers baseline data and expedites the process.  Fish Habitat Permit  Obtaining land lease(s) from Native Corporation  Core of Engineers permit Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 10 of 14 9/3/2008 There do not appear to be any DNR land issues that would require permitting For details see Project Schedule in attachment D 4.3.4 Environmental Address whether the following environmental and land use issues apply, and if so how they will be addressed:  Threatened or Endangered species  Habitat issues  Wetlands and other protected areas  Archaeological and historical resources  Land development constraints  Telecommunications interference  Aviation considerations  Visual, aesthetics impacts  Identify and discuss other potential barriers Environmental risks will be assessed as part of the EIS process necessary to move the project to completion. It is possible that any or none of the considerations listed above will present barriers but none have yet been identified. All environmental uses that do arise will be addressed through the EIS process. Land issues will be addressed by Borough contract staff Bob Loeffler. The hydro site does not appear to have any land issue barriers and specific site location for wind turbines will be identified as part of the feasibility study. 4.4 Proposed New System Costs (Total Estimated Costs and proposed Revenues) The level of cost information provided will vary according to the phase of funding requested and any previous work the applicant may have done on the project. Applicants must reference the source of their cost data. For example: Applicants Records or Analysis, Industry Standards, Consultant or Manufacturer’s estimates. 4.4.1 Project Development Cost Provide detailed project cost information based on your current knowledge and understanding of the project. Cost information should include the following:  Total anticipated project cost, and cost for this phase  Requested grant funding  Applicant matching funds – loans, capital contributions, in-kind  Identification of other funding sources  Projected capital cost of proposed renewable energy system  Projected development cost of proposed renewable energy system See Project Cost Worksheet in Attachment B 4.4.2 Project Operating and Maintenance Costs Include anticipated O&M costs for new facilities constructed and how these would be funded by the applicant.  Total anticipated project cost for this phase Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 11 of 14 9/3/2008  Requested grant funding Project operations and maintenance costs are estimated to be $250,000 per year. No grant funds are requested, operations and maintenance costs will be absorbed into the proposed cooperative utility operating costs. 4.4.3 Power Purchase/Sale The power purchase/sale information should include the following:  Identification of potential power buyer(s)/customer(s)  Potential power purchase/sales price - at a minimum indicate a price range  Proposed rate of return from grant-funded project The Borough is working with the local electric utilities that will own and operate the resource with support from the Borough. 4.4.4 Cost Worksheet Complete the cost worksheet form which provides summary information that will be considered in evaluating the project. Please see Project Cost Worksheet in Attachment B 4.4.5 Business Plan Discuss your plan for operating the completed project so that it will be sustainable. Include at a minimum proposed business structure(s) and concepts that may be considered. Upon project completion the local utilities will take control of managing the distribution of power in the area. The Chigniks currently have three separate utilities but with a new generation system and intertie will be well positioned to form an electric cooperative modeled after the Iliamna- Newhalen-Nondalton Electric Cooperative which currently manages the Tazimina River Hydroelectric project in the Borough. The cooperative model will offer administrative savings and an ability to develop more sophisticated staff capacity to maintain the system. The inputs to the system are renewable resources. See initial review of precipitation (hydro) and wind (wind) monthly correlation to energy use in attachment H. 4.4.6 Analysis and Recommendations Provide information about the economic analysis and the proposed project. Discuss your recommendation for additional project development work. The Screening Study of the Lake & Peninsula Borough Energy Plan identified the Indian Creek Hydro and Wind Resources around Chignik as very promising candidates to provide cost effective stable long term electrical generation resources for the area. In addition, it appears that the development of pioneer roads in the area may present a cost effective opportunity to extend interties between the communities to allow the region to share the benefits of hydro/wind with diesel backup. The screening study economic analysis suggests a benefit cost ratio for the project might be on the order of 1.39. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 12 of 14 9/3/2008 Please see Hydro BC Attachment E The screening study suggests that electric rates in the area may be reduced by 35%-50% in the intermediate term. Please see Hydro Rate Impact Attachment F SECTION 5– PROJECT BENEFIT Explain the economic and public benefits of your project. Include direct cost savings, and how the people of Alaska will benefit from the project. The benefits information should include the following:  Potential annual fuel displacement (gal and $) over the lifetime of the evaluated renewable energy project  Anticipated annual revenue (based on i.e. a Proposed Power Purchase Agreement price, RCA tariff, or avoided cost of ownership)  Potential additional annual incentives (i.e. tax credits)  Potential additional annual revenue streams (i.e. green tag sales or other renewable energy subsidies or programs that might be available)  Discuss the non-economic public benefits to Alaskans over the lifetime of the project The Screening Study of the Lake & Peninsula Borough Energy Plan identified the Indian Creek Hydro and Wind Resources around Chignik as very promising candidates to provide cost effective stable long term electrical generation resources for the area. In addition, it appears that the development of pioneer roads in the area may present a cost effective opportunity to extend interties between the communities to allow the region to share the benefits of hydro/wind with diesel backup. The screening study economic analysis suggests a benefit cost ratio for the project might be on the order of 1.39. Please see Hydro BC Attachment E The screening study suggests that electric rates in the area may be reduced by 35%-50% in the intermediate term. Please see Hydro Rate Impact Attachment F Please note that we have assumed local non-profit ownership so we have not included the upside potential associated with the capture of federal renewable tax credits. Also note that we have not included any upside potential revenue associated from green tag sales or a future carbon cap and trade program. SECTION 6 – GRANT BUDGET Tell us how much your total project costs. Include any investments to date and funding sources, how much is requested in grant funds, and additional investments you will make as an applicant. Include an estimate of budget costs by tasks using the form - GrantBudget.xls Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 13 of 14 9/3/2008 The budget for the feasibility of the project is outlined in the Budget Form. Investment to date includes in-kind contributions of Borough staff time and a $75,000 contract with consulting firms MAFA and Information Insights to develop a Borough Energy Plan. The consultants have performed a screening study of potential energy solutions in the Borough including both supply side and demand side solutions. SECTION 7 – ADDITIONAL DOCUMENTATION AND CERTIFICATION SUBMIT THE FOLLOWING DOCUMENTS WITH YOUR APPLICATION: A. Resumes of Applicant’s Project Manager, key staff, partners, consultants, and suppliers per application form Section 3.1 and 3.4 B. Cost Worksheet per application form Section 4.4.4 C. Grant Budget Form per application form Section 6. D. An electronic version of the entire application per RFA Section 1.6 E. Governing Body Resolution per RFA Section 1.4 Enclose a copy of the resolution or other formal action taken by the applicant’s governing body or management that: - authorizes this application for project funding at the match amounts indicated in the application - authorizes the individual named as point of contact to represent the applicant for purposes of this application - states the applicant is in compliance with all federal state, and local, laws including existing credit and federal tax obligations. F. CERTIFICATION The undersigned certifies that this application for a renewable energy grant is truthful and correct, and that the applicant is in compliance with, and will continue to comply with, all federal and state laws including existing credit and federal tax obligations. Print Name Lamar Cotten Signature Title Borough Manager Date October 8, 2008 Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 14 of 14 9/3/2008 List of Attachment A – Resumes and Statement of Qualifications B – Project Cost Worksheet C – Grant Budget Form D – Project Schedule E – Benefits Analysis F – Rate Impact Analysis G – Hydro Opportunity Recon and Screening H – Precipitation and Wind Analysis I - Borough Resolution J – Diesel Fuel Price Projections