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HomeMy WebLinkAboutBethel Wind Project App Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 1 of 16 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 16 9/3/2008 SECTION 1 – APPLICANT INFORMATION Name (Name of utility, IPP, or government entity submitting proposal) Village Wind Power LLC Type of Entity: Private Wind Energy Developer, eventually to be an Independent Power Producer Mailing Address 10600 Prospect Drive Anchorage, AK 99507-6494 Physical Address 10600 Prospect Drive Anchorage, AK 99507-6494 Telephone 907 248-7188 Fax 907 248-7278 Email lapres@gci.net 1.1 APPLICANT POINT OF CONTACT Name David W. Lappi Title Member Mailing Address 10600 Prospect Drive Anchorage, AK 99507-6494 Telephone 907 248-7188 Fax 907 248-7278 Email lapres@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 X An independent power producer, or A local government, or A governmental entity (which includes tribal councils and housing authorities); Yes 1.2.2. Attached to this application is formal approval and endorsement for its project by its board of directors, executive management, or other governing authority. If a collaborative grouping, a formal approval from each participant’s governing authority is necessary. (Indicate Yes or No in the box ) Yes 1.2.3. As an applicant, we have administrative and financial management systems and follow procurement standards that comply with the standards set forth in the grant agreement. Yes 1.2.4. If awarded the grant, we can comply with all terms and conditions of the attached grant form. (Any exceptions should be clearly noted and submitted with the application.) Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 3 of 16 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. We have proposed building a 2 MW wind power project in Bethel Alaska to substitute for some of the diesel being burned by the local utility, Bethel Utility Corporation (BUC). BUC is a regulated utility serving Bethel. BUC’s facility currently consists of six diesel generators of 2,220 kW each, two diesel storage tanks 20,000 gallons each, and 1 incinerator 64-lb/hr. Our project will construct a 2,500 foot long access road to turbine sites, two or three turbines for about 2 MW total capacity wind energy generation, system controls, and underground power lines to transfer that power to the local grid. 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 Bethel Wind Project is designed to contribute clean, renewable wind power to the Bethel energy grid. The project area is about 1.5 miles northwest of the Bethel Airport on hilltop land owned by Bethel Native Corporation. Our power will be sold wholesale to BUC for distribution to its customers as normal. The size of our project is dependent on our ability to sell power, not on the wind resource, but we expect that a two MW project will be viable. The communities served could include Napakiak and Bethel. The grant participants will be Village Wind Power LLC (a wholly-owned subsidiary of Alaska Wind Power LLC). Alaska Wind Power LLC is owned by Alaska Power & Telephone Company, a certificated Alaska public utility, and LAPP Resources, Inc., a private Alaskan natural resource developer. We have invited both Bethel Native Corporation (BNC), whose land we are proposing to use for the wind farm site, and BUC who will distribute the electricity, to join us in this project as partners. Nether has made a decision on this yet. BNC entered into an exclusive use agreement with us for our evaluation of their site several months ago. We recently supplied a draft land lease to them and are currently negotiating its terns. We expect that the land lease will be in place by the end of the year, and equipment orders can be placed for delivery and construction in 2009. 2.3 PROJECT BUDGET OVERVIEW Briefly discuss the amount of funds needed, the anticipated sources of funds, and the nature and source of other contributions to the project. Include a project cost summary that includes an estimated total cost through construction. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 4 of 16 9/3/2008 The following budget is proposed for the construction of the Bethel Wind Farm. The budget numbers reflect the cost of construction in this remote part of Alaska. In particular, non-standard foundations need to be designed to accommodate frozen silty sand (permafrost) that underlies the site, and the high cost of concrete in this location. Roads and pads will be insulated to further protect permafrost. Passive thermal piles may be used in addition, especially for turbine foundations. 1 - Site Control / Land Lease $10,000.00 1 - Met, Enviro, Geotech, Design & Permits, $200,000.00 2 - Road Construction $500,000.00 3 - Control and Maintenance Bldg $500,000.00 4 - Foundations for Turbines $3,000,000.00 5 - Crane for Turbine Construction $600,000.00 6 - Turbines, Towers $3,000,000.00 7 - Transmission to local Grid $100,000.00 8 - Transformer Station & Control $300,000.00 9 - Underground Power Collection $300,000.00 10 - Electrical Hookup / Commissioning $200,000.00 $8,710,000.00 2.4 PROJECT BENEFIT Briefly discuss the financial benefits that will result from this project, including an estimate of economic benefits(such as reduced fuel costs) and a description of other benefits to the Alaskan public. The Bethel Wind Project is designed to contribute clean, renewable wind power to the Bethel electric grid. The project will displace expensive diesel fuel, resulting in cleaner air for the residents of Bethel, reduce the risk of fuel spills since less fuel will be needed, and provide a means to stabilize power prices in Bethel since our portion of the power will not fluctuate with the world price of oil. In the larger picture, this project will help reduce this nation’s dependence on imported oil, improve our national balance of payments, and reduce US greenhouse gas emissions. Bethel Native Corporation will benefit from land lease payments for the wind farm, as well as a production payment from the net proceeds of the project. We are discussing with local contractors in Bethel, their capabilities regarding construction and operation of this wind farm. We expect to have significant local hire on the project. This project has the potential to reduce electric rates in Bethel, to the extent that wind power can be integrated into the grid. The project will have no adverse effect on BUC, the local electric utility, since they do not make a profit on generation; they just pass on the cost of diesel fuel. They charge their cust omers for the actual cost of generation and distribution, and make a regulated return on their investment. 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.) $8.71 million 2.5.2 Grant Funds Requested in this application. $6.96 million 2.5.3 Other Funds to be provided (Project match) $1.75 million 2.5.4 Total Grant Costs (sum of 2.5.2 and 2.5.3) $8.71 million 2.5.5 Estimated Benefit (Savings) $? 2.5.6 Public Benefit (If you can calculate the benefit in terms of $5.26 million Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 5 of 16 9/3/2008 dollars please provide that number here and explain how you calculated that number in your application.) over 20 years (see below) Our power purchase agreement is not yet negotiated with BUC. If we save BUC and consumers just five cents per kWh over the price of generating electricity using liquid hydrocarbons: 2 MW Wind Farm X 30 percent Capacity Factor X 8,760 hours per year = about 5.3 million kW hours per year or about $ 263,000 per year in savings, or about $5.26 million over 20 years. 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. Village Wind Power LLC is the manager. It is managed by its members, Alaska Power & Telephone Company (AP&T), a certificated Alaska utility specializing in renewable energy (mainly hydropower), and LAPP Resources, Inc.(LRI), an Alaska-owned private resource development company. AP&T’s CEO is Mr. Bob Grimm and LRI’s CEO is Mr. David Lappi. Both have significant project management experience. AP&T’s web site (see http://www.aptalaska.com/index.php) describes the company as follows: Recognized as one of the most progressive utilities in Alaska, the keys to AP&T's continued success lay primarily in its willingness to promote and develop long-term reliable energy and communication solutions while capitalizing on the innovation and technical expertise of its skilled and dedicated employees. AP&T currently provides service to communities located above the Arctic Circle, deep in the Wrangell Mountains ,and throughout the islands of Southeast Alaska. We travel by boat, floatplane, snow machine, riverboat, helicopter, and all terrain vehicles. We maintain systems on windswept mountaintops and storm-battered islands. Our power and telecommunications lines cross rainforest, taiga, and tundra. We operate facilities in places that are among the wettest, driest, windiest, coldest, and most remote regions on earth. We live and work in Alaska. [The low temperature in Tok last winter was -72.5° F, and the lights stayed on.] Alaska Power & Telephone Company proudly marks 2007 as its 50th year of growth, innovation, and leadership in the utility industry. AP&T serves over 30 communities stretching from the Arctic Circle to the southernmost tip of Southeast Alaska. In five decades, AP&T moved from humble beginnings to take a leadership role in the development of renewable resource energy in Alaska. Through a combination of low impact hydro, wind, and experimental underwater river turbine projects, AP&T’s 134 employee-owners work to further minimize our environmental footprint while ensuring the availability of energy resources necessary for future years. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 6 of 16 9/3/2008 LAPP Resources, Inc. has been involved in the Alaska energy business since 1991. During the last 17 years, LRI has been instrumental in exploring new energy sources for both the rail belt and rural Alaska, from wind energy, to remote sensing for geothermal exploration on the Alaska Peninsula, to shallow gas and coalbed methane exploration in the Cook Inlet basin (see resume at: http://home.gci.net/~lapres/). 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.) 2008 2009 Project Schedule: Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep 1 - Site Control / Land Lease 2 -, Design & Permits 3 - Road Construction 4 - Control and Maintenance Bldg 5 - Foundations for Turbines 6 - Crane for Turbine Construction 7 - Turbines, Towers 8 - Transmission to local Grid 9 - Transformer Station & Control 10 – U/G Power Collection 11 - Hookup / Commissioning 3.3 Project Milestones Define key tasks and decision points in your project and a schedule for achieving them. Phase 1 and II - Wind Resource Assessment has been completed by AEA’s met tower erected several years ago. Conceptual Design has been accomplished by VWP over the last six months. Using our design, the wind resource data, suitable land availability, and electrical and economic data, we have shown that wind power will be economic at this location. Phase III – Final Design and Permitting: Task Time Period Site Control Fall 08 Turbine Selection Fall 08 Turbine Order Fall 08 Contractor Selection Fall 08 Foundation Design Jan/Feb 09 Phase IV – Construction, Commissioning, Operation, and Reporting: Construct Access Road Mar-May 09 Construct Foundations Jun/Jul 09 Crane /Turbine Setup Jun/Aug 09 Transmission/Transformers Aug/Sept 09 U/G Power/Controls Aug/Sept 09 Hookup/Commission Aug/Sept 09 Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 7 of 16 9/3/2008 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 res umes and references for known, key personnel, contractors, and suppliers as an attachment to your application. This project will be managed by Mr. David W. Lappi for Village Wind Power LLC, along with personnel from Alaska Power & Telephone Company as needed. Contractors for this project have not yet been selected. I have had discussions with BNC regarding using their construction subsidiaries (see BNC’s web site at: http://www.bncak.com/). Turbine suppliers have been reviewed with respect to delivery dates and the suitability of their turbines for this specific site. We have hired a wind energy consultant, Alternate Energy Solutions, Inc., to assist in this project (see http://www.aesmichigan.com/). We anticipate that both BNC and BUC will be an integral part of our wind farm, and look forward to working with them in a manner suitable to all the parties. A major resource for the project is the availability of suitable land (the highest spot in town, and close to transmission/distribution infrastructure), and a landowner who is willing to commit them for wind farm use. 3.5 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. Village Wind Power will work closely with the selected contractors and keep the AEA informed of progress by regular e-mail updates as components of the project are completed. Further details are likely to be specified in the final Grant Agreement with AEA. 3.6 Project Risk Discuss potential problems and how you would address them. Project risks include unexpected foundation design issues and difficulties with integration of the wind power into the BUC grid. We believe that foundations can be designed that ensure the integrity of permafrost, and the challenge will be to design a cost-effective system for this remote location. We are evaluating the use of heat loads or other point loads (e.g., ice plants?) to take power from the wind farm during times of high wind penetration. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 8 of 16 9/3/2008 SECTION 4 – PROJECT DESCRIPTION AND TASKS  Tell us what the project is and how you will meet the requirements outlined in Section 2 of the RFA. The level of information will vary according to phase of the project you propose to undertake with grant funds.  If you are applying for grant funding for more than one phase of a project provide a plan and grant budget for completion of each phase.  If some work has already been completed on your project and you are requesting funding for an advanced phase, submit information sufficient to demonstrate that the preceding phases are satisfied and funding for an advanced phase is warranted. 4.1 Proposed Energy Resource Describe the potential extent/amount of the energy resource that is available. Discuss the pros and cons of your proposed energy resource vs. other alternatives that may be available for the market to be served by your project. The wind energy resource of the Bethel Wind Project has been evaluated with an AEA met tower, and the data are posted on their web site. This monitoring has demonstrated the economic viability of wind energy at the site. The limiting factor for wind energy capture in this region is the amount of wind power that can be integrated into the BUC grid, not the wind resource. Pros: Our project will allow more of our fossil fuels to be displaced to regions where wind generation is not an option, and improve our air quality in the Bethel region. Our wind resource is a known resource that can be developed using thoroughly tested and proven wind turbine technology within the short term to help meet the energy needs of a growing region of the State. All fossil fuel sources of electricity could be subject to future “cap and trade” or “carbon tax” regimes designed to reduce CO2 emissions growth or output. The makeup of our future Congress and Presidential administration may make these measures quite likely to pass. Wind power will not be subject to these added costs. Other renewable sources include solar and in-stream hydro (Kuskokwim River), both of which are not available during high-demand winter months. Neither option is likely to be economic within the near future. Geothermal energy could be available in the region, but new and expensive exploration to identify the potential sources would be needed. Non- renewable natural gas may also be present in the region, but again, expensive exploration would be needed to identify the sources. Cons: Arguments against building our proposed project include the largely unfounded perception that wind farms “kill too many birds”, and fears that visual resources of the area will be altered. This energy source is only available part of the time, and at other times, diesels will be run. 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. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 9 of 16 9/3/2008 Liquid Hydrocarbon Generation: The BUC generation plant burns diesel fuel imported from the Lower-48 by ocean-going barge during the ice-free months. The plant consists of six reciprocating diesel engine-generators of 2,220 kW each. Village Wind Power will soon undertake an interconnection study. This study should be complete by the end of the year and will identify the design, equipment, and operating procedures required to ensure BUC’s system stability when accepting power from our wind farm. 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. See above. We will conduct an interconnection study to identify necessary measures to minimize the impact of wind power integration on their grid. This study will likely be competed by the end of 2008. There will be no change in the existing energy infrastructure, except a new source of power will exist on the system, diversifying the energy sources. Our project will benefit air quality in Bethel, since less fuel will need to be burned there to follow BUC’s load. 4.2.3 Existing Energy Market Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. Bethel is a city of about 6,000 people in Southwest Alaska. This city and one outlying connected community (Napakiak) will consume the electricity generated by this project. We believe that our project will help shelter BUC’s customers from the effects of carbon taxes or emissions trading schemes that we believe are about to be implemented. BUC’s customers are now about 100% exposed to the brunt of those taxes since 100% of their generation is coming from diesel fuel. 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 Bethel Wind Project will generate renewable electricity from wind resources in the region.  The optimum installed capacity will be dependent on our power purchase contract with BUC, the local utility, and is not limited by the wind resource available. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 10 of 16 9/3/2008  We anticipate a minimum capacity factor of 30 percent.  The project will generate about 5.3 million kW hours per year from two MW of nameplate installed capacity, more capacity will be installed over time if power sales agreements allow and it is technically feasible.  Barriers include an adequate power purchase agreement with the utility being negotiated, or unanticipated permafrost issues arising from our specific site.  Step-up transformers and a 0.5 mile long distribution line will be built to get our power to the BUC grid. An integration study will soon identify grid integration issues.  The power will be sold wholesale to BUC and delivered to consumers by BUC as it is now. 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 proposed wind farm site is owned by Bethel Native Corporation and we have had an agreement with them for our access and study of that site. We are now negotiating a long-term land lease agreement for the wind farm at that site. The site is 1.5 miles northwest of the city Airport and is accessible on maintained roads. We expect a land lease to be executed by November this year. 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 On private land, permitting requirements are minimal, however the following aspects are likely to be reviewed or required.  Wetlands Permit (if applicable) - Fall and Winter 2008  SHPO Review - Fall and Winter 2008  BUC Interconnection and Power Purchase Agreement – Winter 08/09  ADF&G habitat permit - Fall 2008  Various State and local construction permits – Spring 2009. 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 For our wind farm proposal: Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 11 of 16 9/3/2008  No threatened or endangered species are known in the local area. A regional review of avian information will be conducted to further identify risks to birds.  The area is close to the town of Bethel, so large animals are not likely to be frequent visitors. Except for 2,500 feet access road and two to three small turbine pads, no disturbance of the natural land surface is contemplated.  A small wetlands exist near a pond and along a creek along the proposed road ROW. The road will avoid wetlands.  Few archaeological and historical resources are known in the area and will be reviewed.  There are no known land development constraints.  Telecommunication interference is unlikely, as long as our turbines are not within microwave paths being used for village-to-village line-of-sight telecommunications.  Aviation use of the area is frequent, since it is near the airport. We have consulted with the FAA and there is no undue height restriction on towers in this location. Notices to Airmen and obstruction lights on met towers and turbines will alert the aviation community of the potential hazard.  Aesthetic and visual impacts will be reduced by locating the wind farm away from the city where the majority of residents will not see it from close quarters. Some find wind turbines graceful additions to the countryside, a reminder that we can live well while reducing our use of fossil fuels. We contemplate that our power will be delivered to the grid by underground cable, eliminating transmission line construction.  Other wind farm proposals could potentially compete for market share with our proposed wind farm. A suitable power purchase agreement with BUC is a key element of our project. Further studies could uncover unknown permafrost, animal or bird issues that could impact our project. 4.4 Proposed New System Costs (Total Estimated Costs and proposed Revenues) The level of cost information provided will vary according to the phase of funding requested and any previous work the applicant may have done on the project. Applicants must reference the source of their cost data. For example: Applicants Records or Analysis, Industry Standards, Consultant or Manufacturer’s estimates. 4.4.1 Project Development Cost Provide detailed project cost information based on your current knowledge and understanding of the project. Cost information should include the following:  Total anticipated project cost, and cost for this phase  Requested grant funding  Applicant matching funds – loans, capital contributions, in-kind  Identification of other funding sources  Projected capital cost of proposed renewable energy system  Projected development cost of proposed renewable energy system  The total estimated project cost for a 2 MW project is $8.71 million.  The project has requested grant funding for 80%, that is, $6.96 million.  Company capital contribution matching funds and labor, $1.75 million.  Other funding sources could include project loan funds and/or joint venture with others.  The Denali Commission granted $100,000 “pre-construction funds” to this project earlier this year. Those funds are not yet available but se expect them soon.  The total estimated project capital cost for a 2 MW project is $8.7 million.  The total estimated project development cost (for studies) for the project is $100,000. 4.4.2 Project Operating and Maintenance Costs Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 12 of 16 9/3/2008 Include anticipated O&M costs for new facilities constructed and how these would be funded by the applicant.  Total anticipated project cost for this phase  Requested grant funding  O&M costs for the wind farm will be funded from operating revenues from the sale of electricity to BUC.  For the Bethel Wind Project, direct O&M costs are estimated at about three cents per kWh. More definitive numbers will be available as the final design is settled.  This grant application has requested $6.96 million for a wind farm worth $8.71 million. 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  No wholesale power purchase agreement has been negotiated at this time with BUC.  We expect that the sale of our power will be at rates close to BUC’s actual avoided cost.  We expect that the majority of our project will be funded using project grants which will allow us to charge lower rate s for electricity while remaining economically viable. . When commissioned, our project will help BUC meet its increasing energy requirements, stabilize its power costs, and avoid a portion of future taxes on carbon fuels or CO2 emissions. 4.4.4 Cost Worksheet Complete the cost worksheet form which provides summary information that will be considered in evaluating the project. Download the form, complete it, and submit it as an attachment. Document any conditions or sources your numbers are based on here. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 13 of 16 9/3/2008 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. We expect that the wind resource will continue to be available in the area for the foreseeable future. Village Wind Power LLC will operate this project as an independent power producer on the BUC system, selling wholesale power to BUC for distribution to its customers. Our power purchase agreement will allow for adjustments to prices based on inflation and other market conditions, allowing us to continue operations for the long term. We plan to have most of the business of operating the wind farm carried out within the city of Bethel. 4.4.6 Analysis and Recommendations Provide information about the economic analysis and the proposed project. Discuss your recommendation for additional project development work. We have visited wind energy sites and visited with wind energy companies in many areas of the USA. In some of those areas, operating conditions are nearly as difficult as the Bethel area. Wind energy companies, with rare exceptions, are able to make sustainable operations in areas with much lower power costs than Bethel. Our review of AEA’s wind resource studies and our economic analyses indicate that the Bethel region has a viable wind energy resource that can be harnessed and sold on a sustainable basis for local consumption. Further project development work includes refining turbine locations based on the wind resource, geotechnical, avian, and wildlife studies, and completing the grid integration and interconnection studies. A key development effort will be the negotiation of the Power Purchase Agreement with BUC in a form that allows for long-term project operation. We believe that the project is ready to move rapidly into the construction phase and will prove an asset to the community of Bethel. We believe by setting an aggressive schedule, the project can be commissioned by fall of 2009. A key lead-time component is the order and delivery of towers and turbines, and that task is best started this year, in 2008, in order for the wind farm construction to proceed in 2009. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 14 of 16 9/3/2008 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 annual fuel displacement is about 400,000 gallons ($2 million at $5.00 per gallon), based on likely efficiencies of BUC’s generation facility. If we save the consumer just five cents on the cost of power produced from liquid fuels, we will save BUC customers about $263,000 per year, or about $5.26 million over the 20 year life of the wind turbines (they would be replaced by newer more efficient models at that time).  Our power purchase agreement will specify the price for our power so we can’t tell what the annual revenue is at this time, but it will be sufficient to operate the wind farm over the long term, or we will not build it. We are a Qualifying Facility as defined by the Federal Energy Regulatory Commission, and thus are able to sell our power to BUC at their RCA published avoided cost, less the cost of wind integration.  Federal Tax Credits for wind include the two cent per kWh Production Tax Credit (PTC) that was recently renewed by Congress for a further year. Our project will proceed even if this tax credit fails to be extended next year, although it helps the project economics to have it.  Renewable attributes for our project will be sold, hopefully to the highest and best bidder, to further assist with project economics.  Non-economic public benefits: We believe the Bethel Wind Project will be an asset to the community of Bethel and the region generally, and we expect that visitors, locals, and school children will want to tour the wind farm and understand its operation Another public benefit are the jobs created by the construction and operation of the wind farm. This stable, long-term project will create local employment for a few people and many temporary jobs during the construction phase. This employment will be good for the town. The Bethel Wind Project will displace about 400,000 gallons of hydrocarbons per year that are currently being burned in combustion engines to generate power. This will allow the liquids to be displaced to the Lower-48 to reduce their need to import oil from foreign countries in distant, unstable parts of the world. Some would say that this is a step toward environmental, social, and economic justice. We think that American energy self-sufficiency is a worthy goal, and the Bethel Wind Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 15 of 16 9/3/2008 Project is another step toward attainment of that goal. SECTION 6 – GRANT BUDGET Tell us how much your total project costs. Include any investments to date and funding sources, how much is requested in grant funds, and additional investments you will make as an applicant. Include an estimate of budget costs by tasks using the form - GrantBudget.xls The Bethel Wind Project will consist of a two MW wind farm. The project budget is $8.71 million, comprising $8.7 million for capital construction, and $100,000 for development studies and permitting. We have pursued this project for nearly a year using our own funds and labor. We have completed preliminary design of the new proposed access road, and have a turbine layout plan in place. Earlier this year on February 12 we applied for and were granted an Denali Commission grant for $100,000 in “pre-construction funding”, but the grant agreement is not in place and those funds are not yet available. We will work with AEA to decide which portions of the project to apply those funds to. This application applies for $6.96 million for construction funds to build the Bethel Wind Project. We will supply the extra matching $1.75 million in matching funds from our company funds. We expect the State Renewable Energy Fund grant monies will allow projects to proceed in the short term, for the benefit of local communities where smaller-scale projects in rural areas may otherwise find it difficult to get financing. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 16 of 16 9/3/2008 SECTION 7 – ADDITIONAL DOCUMENTATION AND CERTIFICATION SUBMIT THE FOLLOWING DOCUMENTS WITH YOUR APPLICATION: A. Resumes of Applicant’s Project Manager, key staff, partners, consultants, and suppliers per application form Section 3.1 and 3.4 B. Cost Worksheet per application form Section 4.4.4 C. Grant Budget Form per application form Section 6. D. An electronic version of the entire application per RFA Section 1.6 E. Governing Body Resolution per RFA Section 1.4 Enclose a copy of the resolution or other formal action taken by the applicant’s governing body or management that: - authorizes this application for project funding at the match amounts indicated in the application - authorizes the individual named as point of contact to represent the applicant for purposes of this application - states the applicant is in compliance with all federal state, and local, laws including existing credit and federal tax obligations. F. CERTIFICATION The undersigned certifies that this application for a renewable energy grant is truthful and correct, and that the applicant is in compliance with, and will continue to comply with, all federal and state laws including existing credit and federal tax obligations. Print Name David W. Lappi Signature Title Member Date October 8, 2008