HomeMy WebLinkAboutPhotovoltaic Array Ambler AK App
Alaska Village Electric Cooperative
Application for Renewable Energy Fund Grant
Alaska Energy Authority
Ambler, Alaska
Photovoltaic Array
October 8, 2008
Table of Contents
Grant Application 1
Resumes 2
Cost Worksheet 3
Grant Budget Form 4
Delegation of
Authority 5
Supplemental
Materials 6
Tab 1
Grant Application
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 1 of 9 9/2/2008
SECTION 1 – APPLICANT INFORMATION
Name (Name of utility, IPP, or government entity submitting proposal)
Alaska Village Electric Cooperative (AVEC)
Type of Entity:
Utility
Mailing Address
4831 Eagle Street, Anchorage, AK 99503
Mailing Address
4831 Eagle Street, Anchorage, AK 99503
Telephone
907-565-
5358
Telephone
907-565-5358
Telephone
907-565-5358
1.1 APPLICANT POINT OF CONTACT
Name
Brent Petrie
Name
Brent Petrie
Mailing Address
4831 Eagle Street, Anchorage, AK 99503
Alaska Village
Electric
Cooperative
(AVEC)
Alaska Village Electric Cooperative
(AVEC)
Alaska Village Electric Cooperative (AVEC)
1.2 APPLICANT MINIMUM REQUIREMENTS
Please check as appropriate. If you do not to meet the minimum applicant requirements, your
application will be rejected.
1.2.1 As an Applicant, we are: (put an X in the appropriate box)
X An electric utility holding a certificate of public convenience and necessity under AS
42.05, or
An independent power producer, or
A local government, or
A governmental entity (which includes tribal councils and housing authorities);
Yes
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 2 of 9 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.
This project is for the design/ permitting and construction of a photovoltaic solar energy system.
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.
Ambler is a village that can benefit from solar energy. It is proposed that a grid tied, batteryless
50.4 kW photovoltaic system be installed on property adjacent to the AVEC power plant and
tank farm in Ambler . It consists of 225 ea 224-watt panels on adjustable 6300 ft2 racking
mounted directly on a Triodetic Multipoint foundation system. Each adjustable array utilizes one
7000 watt inverter providing 277 VAC power.
2.3 PROJECT BUDGET OVERVIEW
Briefly discuss the amount of funds needed, the anticipated sources of funds, and the nature and source
of other contributions to the project. Include a project cost summary that includes an estimated total cost
through construction.
The estimated cost through construction is $605,000.
2.4 PROJECT BENEFIT
Briefly discuss the financial benefits that will result from this project, including an estimate of economic
benefits(such as reduced fuel costs) and a description of other benefits to the Alaskan public.
Based on the current cost offuel per kWh in Ambler at $.5505/kWh, and an average annual
production of electricity of 49462 kWh, the first years value of avoided fuel cost would be
$27,229. Assuming an 8% increase in the cost of diesel fuel over the next30 years, the net
present value savings would be $1,152,923 .
In addition to the direct fuel reduction are the benefits of:
- reduced long-term dependence on outside sources of energy;
- reduced exposure to fuel price volatility;
- reduced air pollution resulting from reducing fossil fuel combustion;
- reduced possibility of spills from fuel transport & storage; and
- reduced overall carbon footprint and its contribution to climate change.
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.)
$605,000
2.5.2 Grant Funds Requested in this application. $550,000
2.5.3 Other Funds to be provided (Project match) $55,000
2.5.4 Total Grant Costs (sum of 2.5.2 and 2.5.3) $
2.5.5 Estimated Benefit (Savings) $
2.5.6 Public Benefit (If you can calculate the benefit in terms of $ 1,152,593 over 30 yrs
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 3 of 9 9/3/2008
dollars please provide that number here and explain how
you calculated that number in your application.)
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.
Alaska Village Electric Cooperative’s (AVEC) project management approach to this project, and
to its overall energy upgrade program, is to utilize a team approach consisting of AVEC staff,
external consultants and construction management contractors.
AVEC provides a project team from its operating staff. The President and CEO acts as Program
Executive and maintains ultimate authority programmatically and financially. The manager of
the community development group acts as program manager. The group provides internal focus
and coordination of special projects including project development, planning, construction
coordination, and reporting. Resources include a project coordinator, contracts clerk,
accountant, engineer, and community liaison. The vice president and manager of AVEC’s
engineering group provide technical input on generation and distribution issues to the team.
Additionally, the engineering group provides specifications, design and drawings for AVEC
construction of diesel power plants and distribution systems. The manager of operation and
construction provides construction management and commissioning input on behalf of new
construction performed by AVEC staff. The manager of administrative services provides support
in accounting, payables, financial reporting, and capitalization of assets in accordance with
RUS guidelines.
To support the AVEC team, design consultants and construction managers (CM) are selected.
Both disciplines are derived from a resource bank of professional firms with applicable histories
of performance in rural Alaska. The construction manager works concurrently with the design
consultant through design development to provide constructability insight and value engineering
to maximize the overall effectiveness of the final construction documents.
Concurrent with design development, material and equipment procurement packages are
formulated by the CM in collaboration with AVEC’s purchasing manager. Each package is
competitively procured or issued from cooperative materials. Purchase orders are formulated
with delivery dates consistent with dates required for barge or air transport consolidation.
Multiple materials and/or equipment are detailed for consolidated shipments to rural staging
points, where secondary transport to the village destination is provided. The CM tracks the
shipments and provides handling services to and around the destination project sites.
The CM is responsible for the construction activities for all project components of the facility
upgrade. Local labor forces are utilized to the maximum extent possible to construct the projects.
Local job training is provided as a concurrent operation under the management and direction of
the CM. All construction costs, direct and indirect are reimbursed on a cost only reimbursement
to the CM or paid directly by AVEC.
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 4 of 9 9/3/2008
For the facilities applied for in this application, AVEC is responsible for managing the
commissioning process in content with the CM, designers and vendors. That entails testing and
training of operational personnel, as well as providing for all contract closeout documents.
AVEC’s concern and objective is to have a managed project delivery approach from inception
through operation.
3.2 Project Schedule
Include a schedule for the proposed work that will be funded by this grant. (You may include a
chart or table attachment with a summary of dates below.)
Assuming this grant application is successful and funding is available in January 2009, the
design, procurement, transportation and field installation can be completed in June 2009. Tie in
to the grid and commissioning of the system is anticipated to be complete by August 2009.
3.3 Project Milestones
Define key tasks and decision points in your project and a schedule for achieving them.
• Select PV array shape, orientation, support and protection requirements.
• Design the photovoltaic system in consideration of the selected site and the solar
resource that is available
• Procure PV equipment and control systems to provide the system as designed.
• Transport the equipment and supplies to the village.
• Erect the Triodetic foundation, install PV array and install inverters.
• Intertie PV system to the power plant
• Commission system
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.
AVEC will ultimately be responsible for successful completion of the project, using companies
and personnel that have successfully installed similar systems in the recent past. Electrical
system engineering will be subcontracted, using current internal procurement practices and
selection of engineering service providers from prequalified organizations. Equipment will be
purchased through competitive solicitations from reputable suppliers. Installation will likely be
executed on a force account basis using a construction manager yet to be named from the ranks
of AVEC and/or the professional construction management firms that under contract to AVEC.
The installation of solar electric and Triodetic foundation systems are simple as they require
little if any site preparation and skill levels that are available in the village given appropriate
supervision.
3.5 Project Communications
Discuss how you plan to monitor the project and keep the Authority informed of the status.
AVEC is a well established electric utility that owns power plants and distribution systems in 53
Alaska villages. It has established management systems for monitoring all of the village systems
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Grant Application
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in terms of operations, maintenance, renovations and new construction. The utility is also
accustomed to reporting to fund grant agencies such as the Denali Commission, RUS and the
Alaska Energy Authority. This project will of course be monitored and the status will be reported
to the AEA in a manner that meets the requirements and desires of the Authority.
3.6 Project Risk
Discuss potential problems and how you would address them.
In general, logistics, construction activities and weather all contain significant risks. AVEC
routinely purchases Builder’s Risk insurance to mitigate its exposure to these risks.
Logistics is a routine issue in rural Alaska. AVEC and it’s construction management staff have
extensive experience with the logistical conditions found in this Alaskan village. Advance
planning and allowing time for contingencies is crucial to success in such environments.
Construction can be challenging in rural Alaska. AVEC routinely conducts construction
operations in villages much like this one.
Weather is another challenge when working in rural Alaska. AVEC has worked in this area for
years. As with logistics, allowing time for contingencies is important.
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.
Solar energy is available in Ambler in sufficient quantity to be economically feasible. The amount of
energy is limited only by the number of solar panels that can be installed given sufficient investment
capital and available un-shaded land.
Other alternatives have been considered for Ambler. The location does not have adequate wind to
be a candidate for wind power. It does appear to be a candidate for hydro-power in the near future.
Funds for studying the latter alternative are being sought under a separate AEA renewable energy
grant application.
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.
A 982-kW diesel power plant is the present producer of 277/480 VAC electric power. The plant has 314 (new 1986),
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 6 of 9 9/3/2008
271 (1999) and 397 (1993) kW generators. According to AVEC’s end-of-year 2007 generation statistics, the peak
demand recorded to date at the Ambler AVEC power plant is 319 kW, with an overall average plant load in 2007 of
150 kW.
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 community of Ambler uses diesel and heating oil as the primary energy resources. They also use wood heat to a
limited degree. Annual diesel fuel consumption for power generation for FY2007 [PCE report] was 100,053 gallons.
4.2.3 Existing Energy Market
Discuss existing energy use and its market. Discuss impacts your project may have on energy
customers.
Annual electricity consumption for FY2007 [PCE report] was 1,363,646 kWh
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 50,400 watt system would be comprised of a single array consisting of a total of 225
solar modules. The arrays would be mounted on a 6,300 ft2 Triodetic® Multipoint®
foundation, a system specifically designed for northern climates and sites that are
unsuitable for standard footings and foundations.
• The optimum installed capacity will be 50.4 kW.
• The capacity factor is 0.112
• The annual power production is estimated to be 49,462 kWh.
• We don’t anticipate any barriers to this project.
• The power generated from the solar electric system will feed into AVEC’s existing power
plant where the DC current is inverted to277 VAC power.
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 new installation will be located on vacant land within the AVEC power plant and tank area.
As such there is no requirement to secure permission for using other land in the community.
However, we are exploring other sites in the community where additional installations could be
made.
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 7 of 9 9/3/2008
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
We do not anticipate any requirements for permits for this project. The installation will be
within an existing AVEC property and the nature of a PV system supported on Triodetic
foundations is a very low impact addition. There is no excavation or disturbance of the
ground surface involved.
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
There are no environmental or land issues that will apply.
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 anticipated cost for this project is $605,000.
• The requested grant funding is $55,000
• Matching funds will be $55,000
• There are no other funding sources.
• The projected capital cost is $605,000.
• There are no development costs.
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 8 of 9 9/3/2008
4.4.2 Project Operating and Maintenance Costs
Include anticipated O&M costs for new facilities constructed and how these would be funded by
the applicant.
• Total anticipated project cost for this phase
• Requested grant funding
No grant funding is requested for O&M.
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
Not applicable
4.4.4 Cost Worksheet
Complete the cost worksheet form which provides summary information that will be considered
in evaluating the project.
Cost worksheet is attached
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.
The project will be incorporated into AVEC’s power plant operation. Local plant operators
provide daily servicing of the plants. AVEC technicians provide periodic preventative or
corrective maintenance and are supported by AVEC headquarters staff, purchasing and
warehousing.
4.4.6 Analysis and Recommendations
Provide information about the economic analysis and the proposed project. Discuss your
recommendation for additional project development work.
A feasibility study by Remote Power is attached and includes an economic analysis. We have no
plans for project development work as this is a mature commercial technology.
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 9 of 9 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
• We expect this PV installation to displace 105,600 gallons of fuel over a 30 year life. This
equates to $1,702,923 in present value savings and $1,152,923 in net present value.
Non-economic benefits to Alaskans include: In addition to the direct fuel reduction are the
benefits of:
• reduced air pollution resulting from reducing fossil fuel combustion;
• reduced possibility of spills from fuel transport & storage; and
• reduced overall carbon footprint and its contribution to climate change.
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 Grant Budget is attached.
Tab 2
Resumes
Tab 3
Cost Worksheet
Renewable Energy Fund
Application Cost Worksheet
Please note that some fields might not be applicable for all technologies or all project
phases. Level of information detail varies according to phase requirements.
1. Renewable Energy Source
The Applicant should demonstrate that the renewable energy resource is available on a
sustainable basis.
Annual average resource availability. 49,462 kWh
Unit depends on project type (e.g. windspeed, hydropower output, biomasss fuel)
2. Existing Energy Generation
a) Basic configuration (if system is part of the Railbelt 1 grid, leave this section blank)
i. Number of generators/boilers/other Three
ii. Rated capacity of generators/boilers/other 314 kW, 271 kW and 397 kW
iii. Generator/boilers/other type
iv. Age of generators/boilers/other 1998, 1993 and 1990 respectively
v. Efficiency of generators/boilers/other 14.05
b) Annual O&M cost (if system is part of the Railbelt grid, leave this section blank)
i. Annual O&M cost for labor O&M costs are not requested, existing costs are $146,480 per
year
ii. Annual O&M cost for non-labor O&M costs are not requested
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] 1,374,285 kWh
ii. Fuel usage
Diesel [gal] 97,830
Other
iii. Peak Load 296 kW
iv. Average Load 157 kW
v. Minimum Load
vi. Efficiency 14.05 kWh/gal
vii. Future trends
d) Annual heating fuel usage (fill in as applicable)
i. Diesel [gal or MMBtu]
1 The Railbelt grid connects all customers of Chugach Electric Association, Homer Electric Association, Golden
Valley Electric Association, the City of Seward Electric Department, Matanuska Electric Association and Anchorage
Municipal Light and Power.
RFA AEA 09-004 Application Cost Worksheet revised 9/26/08 Page 1
Renewable Energy Fund
ii. Electricity [kWh]
iii. Propane [gal or MMBtu]
iv. Coal [tons or MMBtu]
v. Wood [cords, green tons, dry tons]
vi. Other
3. Proposed System Design
a) Installed capacity 50.4 kW
b) Annual renewable electricity generation
i. Diesel [gal or MMBtu]
ii. Electricity [kWh] 49,462
iii. Propane [gal or MMBtu]
iv. Coal [tons or MMBtu]
v. Wood [cords, green tons, dry tons]
vi. Other
4. Project Cost
a) Total capital cost of new system $605,000
b) Development cost Nil
c) Annual O&M cost of new system
5. Project Benefits
a) Amount of fuel displaced for
i. Electricity 3520
ii. Heat
iii. Transportation
b) Price of displaced fuel 3520 gal @ $6.3199/gal $ 22,248
c) Other economic benefits
d) Amount of Alaska public benefits
RFA AEA 09-004 Application Cost Worksheet revised 9/26/08 Page 2
Renewable Energy Fund
6. Power Purchase/Sales Price
a) Price for power purchase/sale
7. Project Analysis
a) Basic Economic Analysis
Project benefit/cost ratio 1.9057
Payback Simple: 20.2 yrs LCCA: 14 years
RFA AEA 09-004 Application Cost Worksheet revised 9/26/08 Page 3
Tab 4
Grant Budget Form
Alaska Energy Authority ‐ Renewable Energy FundAMBLER PVBUDGET INFORMATIONBUDGET SUMMARY:Milestone or Task Federal Funds State FundsLocal Match Funds (Cash)Local Match Funds (In‐Kind)Other FundsTOTALS1 Design system $50,000.00 $5,000.00 $55,000.002 Procure equipment $400,000.00 $40,000.00 $440,000.003 Transport the equipment to site $25,000.00 $2,500.00 $27,500.004 Installation $55,000.00 $5,500.00 $60,500.005 Intertie PV array to plant $15,000.00 $1,500.00 $16,500.006 Commission systrem $5,000.00 $500.00 $5,500.00TOTALS $550,000.00 $55,000.00 $605,000.00BUDGET CATAGORIES:123456TOTALSDirect Labor and Benefits $10,000.00 $15,000.00 $4,000.00 $29,000.00Travel, Meals, or Per Diem $2,500.00 $5,000.00 $1,500.00 $2,000.00 $11,000.00Equipment $440,000.00 $440,000.00Supplies$0.00Contractual Services $55,000.00 $25,000.00 $45,000.00 $125,000.00Construction Services$0.00Other Direct Costs$0.00TOTAL DIRECT CHARGES $55,000.00 $440,000.00 $27,500.00 $60,000.00 $16,500.00 $6,000.00 $605,000.00Milestone # or Task #RFA AEA09-004 Budget Form
Tab 5
Delegation of Authority
Tab 6
Supplemental Materials
• Ambler Feasibility Study
Remote Power Inc.
Solar Energy Feasibility
Study
For the Alaska Village Electric Cooperative (AVEC),
Ambler, AK
Report Date: 06 October 2008
Prepared by Bruno C. Grunau, P.E
Revision B
981 Gold Mine Trail
Fairbanks, AK 99712
1
Solar Energy Feasibility Study
For the Alaska Village Electric Cooperative (AVEC),
Ambler, AK
Introduction:
Alaska Village Electric Cooperative (AVEC), has req uested a Solar Energy Feasibility Study
for their facility located in the village of Ambler , AK. The following report summarizes the
solar energy system estimated cost, anticipated ann ual solar power produced, anticipated
month-by-month power produced, simple payback calcu lations, and a Life Cycle Cost
Analysis (LCCA) for a solar energy system. This study is intended to evaluate the cost-
effectiveness of such a system in the intended loca tion.
References:
1. “PVWATTS v. 2: A Performance Calculator for Grid-Co nnected PV Systems,”
retrieved 03 October 2008, from the National Renewa ble Energy Laboratory.
Web Source: http://rredc.nrel.gov/solar/codes_algs/PVWATTS/vers ion2/
2. Department of Energy publication DOE/EIA-0384(2007),”Annual Energy Review
2007” published June 2008
Web Source: http://www.eia.doe.gov/overview_hd.html
3. Department of Energy publication NISTIR 85-3273-23, “Energy Price Indices and
Discount Factors for Life-Cycle Cost Analysis – Apr il 2008”, Rev. 5/08
Web Source: http://www1.eere.energy.gov/femp/pdfs/ashb08.pdf
Site Survey:
A site survey was conducted to determine the locations on the site property best suited for
solar photovoltaic (PV) arrays. The site survey, t ypically performed on-site, was conducted
by aid of photos and physical descriptions of each site from AVEC personnel. Optimal PV
array locations maximize the available solar energy and minimize solar obstructions to
reduce shading on the PV arrays. Solar insolation data was estimated for the site per
reference (1). This software incorporates 30-year historical weather data from the
National Renewable Energy Laboratory (NREL) for spe cific locations in North America as
well as NREL's Internet Map Server (IMS) at http://www.nrel.gov/gis and estimates the
amount of solar radiation received for a given site and the amount of energy produced for
a given system.
Data from the reports generated by reference (1) wa s used as a basis for estimating the
month-by-month solar power generated and the cost a nalyses described below.
Facility Overview:
The AVEC Ambler facility produces diesel-generated power at the current cost of
$0.5505/kWh. Not only are increasing fuel costs a primary concern, but also is the
increasing cost of transporting the fuel to remote villages such as Ambler. The use of a
photovoltaic system is being considered to suppleme nt power generated by AVEC in an
effort to reduce the overall cost of energy product ion.
2
Description of Solar Energy System:
The proposed PV system is a grid-tied, batteryless 50.4 kW system. In an effort to shut
down the diesel generators on a regular basis, batt ery storage may be considered and
integrated into the system at a future date. A sol ar energy system preliminary design has
been created based on the recommendations of Remote Power, Inc. and described as
follows:
The 50,400 watt system would be comprised of multip le arrays consisting of a total of 225
solar modules. The arrays would be mounted on a 6,300 ft 2 Triodetic® Multipoint®
foundation, a system specifically designed for nort hern climates and sites that are
unsuitable for standard footings and foundations. Note: The actual area of the foundation
is dependent upon the final site selection.
The arrays would be manually adjusted twice a year to maximize solar radiation
availability. The arrays would be tilted to approx imately 52 degrees from horizontal from
April through September to maximize the solar radia tion from the high summer sun path.
The array would be adjusted to 90 degrees from hori zontal from October through March to
minimize snow accumulation and to maximize solar ra diation from the low winter sun path.
The adjustable array utilizes eight 7,000 watt inve rters to provide 277 VAC power. The
array would be located on the property southwest of the AVEC power plant and fuel
storage facility (tank farm). Refer to Figure 1 fo r the proposed array location.
The system components would include:
a) (Qty 225) 224-watt panels on adjustable racking mou nted directly to a Triodetic®
Multipoint® ground foundation system with PV combin er boxes, DC disconnects,
and fuses/circuit breakers;
b) wiring and necessary conduit from the arrays to the facility where the electrical
interconnection is located (refer to Figure 1); Note: Cost of wiring and conduit will
vary greatly, depending upon final proximity of the array to the facility where the
interconnection is located.
c) one AC circuit breaker enclosure, one DC circuit breaker enclosure, several AC and
DC circuit breakers and disconnects, eight 7,000 wa tt grid-tied inverters, and
standard electrical system conduit components (elbo ws, junction boxes, etc) in the
mechanical room.
The estimated installed cost for this system is $60 5,000, based on $12.0/W.
3 Figure 1. Overhead Photo of AVEC Facility in Ambler, AK Showing Proposed Approximate Solar Array Location (Photo obtained from maps.google.com.) AVEC Facility N Ambler, AK Solar Array Site
4 Anticipated Solar Energy Produced: The anticipated solar energy produced by the proposed system was calculated using reference (1) and is summarized in Table 1. The reported results are based upon the 30-year historical weather data from NREL for the site location, the amount of shading due to solar obstructions, and estimated system efficiency losses. Note: As a physical site survey was not conducted, the data presented is considered to be an estimate. The annual AC power generated will be reduced by shading/solar obstructions on the array. Per reference (1), the monthly and yearly energy production estimates are modeled using the intended PV system parameters described above and weather data that are typical or representative of long-term averages. Because weather patterns vary from year-to-year, the output values are better indicators of long-term performance than performance for a particular month or year. PV performance is largely proportional to the amount of solar radiation received, which may vary from the long-term average by ± 30% for monthly values and ± 10% for yearly values. For these variations and the uncertainties associated with the weather data and the model used to model the PV performance, future months and years may be encountered where the actual PV performance is less than or greater than the values shown in the table. The variations may be as much as 40% for individual months and up to 20% for individual years. Compared to long-term performance over many years, the values in the table are accurate to within 10% to 12%. Table 1. Anticipated Solar Energy Produced Notes: (1) Shaded areas in table indicate that the array is to be positioned 90 degrees from horizontal during the indicated months. As evident from Table 1, the array is to be positioned 90 degrees from horizontal during the winter snow months. The array is to be adjustable, however a fixed-position array may be considered: A fixed-position array in the 52 degree (from horizontal) position would yield approximately 36,300 kWh (27% loss), assuming that snow on the array would cause shading, thus preventing any significant power output during the snow months. A fixed position array in the 90 degree (from horizontal) position would yield approximately 40,000 kWh (19% loss). System SizeDescription Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov DecAnnual AC Power Generated50.4 kW 225 Panels mounted on foundation 507 2,403 5,723 7,394 6,996 6,619 6,392 5,022 3,921 2,988 1,497 0 49,462 kWhMonthly AC Power Generated (kWh)
5
Projected Energy Cost Savings:
The current power generation cost for the AVEC Ambl er facility is $0.5505/kWh and
is anticipated to increase annually a minimum rate of 8%.
Reference (2) was used as a basis for an estimation of the anticipated annual
energy rate. Since rural Alaskan villages are depe ndent upon diesel-powered
generators, the prices of electricity in these vill ages are largely dependent upon
fuel prices. Table 5.22 of this document lists the refiner sales prices (excluding
taxes) for selected petroleum products from 1991 through 2007. Due to the
extremely cold temperatures in these villages, the use of Arctic #1 diesel fuel
and/or kerosene-type jet fuel is required for use i n the generators. The nominal
prices for jet fuel excerpted from this table are s ummarized in Table 2 below. (The
historical prices of Arctic #1 diesel fuel are not available in reference (2), therefore
only the prices of jet fuel are listed.)
The nominal price is the price paid for a product o r service at the time of the
transaction. Nominal prices are those that have no t been adjusted to remove the
effect of changes in the purchasing power of the do llar; they reflect buying power
in the year in which the transaction occurred.
Table 2. National Average of Refiner Sales Price for Kerosen e-Type Jet Fuel (1991-2007)
Figure 2 plots the national average of refiner sale s price for kerosene-type jet fuel
from 1991 through 2007. A trendline was created to describe the rate of the
overall annual energy cost increase for the given t ime period. From this trendline,
however, a national annual price increase of approx imately 8% is evident from
1991 until 2007. Since AVEC’s energy costs are cur rently dependent upon these
fuel prices, an annual energy cost increase of 8% w as used for this cost analysis.
Table 3 provides the projected energy costs (fuel-a djusted energy rate) based on
the 8% annual energy rate increase.
Year
Nominal Price per Gallon, Excluding
Taxes
1991 $0.65
1992 $0.61
1993 $0.58
1994 $0.53
1995 $0.54
1996 $0.65
1997 $0.61
1998 $0.45
1999 $0.54
2000 $0.90
2001 $0.78
2002 $0.72
2003 $0.87
2004 $1.21
2005 $1.74
2006 $2.00
2007 $2.17
6
Figure 2. National Average of All Sellers Sales Price for No. 2 Diesel Fuel (1994-2007)
with Trendline
Table 3. Tabulated Projected Energy Cost Savings (8% annual rate increase)
Year
Avoided
Cost
($/kWh)
Year
Avoided
Cost
($/kWh)
Year 1 2008 $0.55 Year 16 2023 $1.75
Year 2 2009 $0.59 Year 17 2024 $1.89
Year 3 2010 $0.64 Year 18 2025 $2.04
Year 4 2011 $0.69 Year 19 2026 $2.20
Year 5 2012 $0.75 Year 20 2027 $2.38
Year 6 2013 $0.81 Year 21 2028 $2.57
Year 7 2014 $0.87 Year 22 2029 $2.77
Year 8 2015 $0.94 Year 23 2030 $2.99
Year 9 2016 $1.02 Year 24 2031 $3.23
Year 10 2017 $1.10 Year 25 2032 $3.49
Year 11 2018 $1.19 Year 26 2033 $3.77
Year 12 2019 $1.28 Year 27 2034 $4.07
Year 13 2020 $1.39 Year 28 2035 $4.40
Year 14 2021 $1.50 Year 29 2036 $4.75
Year 15 2022
$1.62 Year 30 2037
$5.13
National Average Sellers Sales Prices for Jet Fuel
(Nominal Price per Gallon, excluding taxes)
y = 9E-69e0.0783x
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
YearPrice ($)
7 Simple Payback and Life Cycle Cost Analyses: Reference (3) was used as a reference for the LCCA. An excerpt from page 1 of the document reads: “This report provides tables of present-value factors for use in the life-cycle cost analysis of capital investment projects for federal facilities. It also provides energy price indices based on Department of Energy (DOE) forecasts from 2008 to 2038. The factors and indices presented in this report are useful for determining the present value of future project-related costs, especially those related to operational energy costs. Discount factors included in this report are based on two different federal sources: (1) the DOE discount rate for projects related to energy conservation, renewable energy resources, and water conservation; and (2) Office of Management and Budget (OMB) discount rates from Circular A-94 for use with most other capital investment projects in federal facilities. The DOE discount and inflation rates for 2008 are as follows: Real rate (excluding general price inflation): 3.0 % Nominal rate (including general price inflation): 4.9 % Implied long-term average rate of inflation: 1.8 %” Using the cited excerpt from page 1 of the referenced document as a basis for calculation, a discount rate of 3% was applied and the cost analyses were performed. The simple payback periods calculated are based solely on the estimated project cost and the cost savings during the first year. The LCCA payback periods, however, are calculated by taking into consideration the increasing cost of energy. The savings-to-investment ratio, net present value, internal rate of return, and adjusted rate of return were calculated for the proposed project. Table 4 summarizes the simple payback and LCCA for the proposed system and given payback period. A summary of the cost analysis for each period of study is included as Appendix A. Table 4. Cost Analysis Summary Payback PeriodEstimated Project CostAnnual kWh Projected SavingsDiscount RatePresent Value SavingsAnnual Cost Savings(1)Simple Payback Period(2)LCCA Payback PeriodSavings-to-Investment Ratio (SIR)(3)Net Present Value (NPV)(4)Internal Rate of Return (IRR)(5)Adjusted Internal Rate of Return (AIRR)(6)10 Years$326,541 $27,229 22.2 years N/A 0.54($278,459)-7% -3%20 Years$853,705 $27,229 22.2 years 14 years 1.41 $248,705 6% 5%30 Years$1,702,923 $27,229 22.2 years 14 years 2.81 $1,097,923 10% 7%Notes: 1. The annual cost savings is based on first-year cost factor of $0.5505/kWh times the annual savings of 49462 kWh.2. Simple Payback Period = Estimated Project Cost ÷ Annual Cost Savings3. SIR = Present Value Savings ÷ Estimated Project Cost4. NPV = Present Value Savings - Estimated Project Cost5. The IRR is the annualized effective compounded return rate which can be earned on the invested capital, i.e., the yield on the investment.6. AIRR = {[1+Discount Rate]*[(SIR)^(1/Life) ]}- 1. AIRR assumes interim proceeds can be invested at the discount rate.$605,000 49,462 kWh 3.0%
Appendix A
Simple Payback and Life Cycle Cost
Analysis Worksheets
A-1
LIFE CYCLE COST ANALYSIS ENERGY CONSERVATION PROJECT
Location:Energy Conservation Measures (ECM):ECM Cost:$ 605,000 Annual cost savings:$ 27,229
(electricity) in U.S. Dollars
Based on cost factor of $0.5505/KHW.
ECM Life:10 years Saved as:Armory Analysis.XLS Savings to Investment Ratio, SIR:0.54
Annual KWH Savings:49,462 KWH KWH Rate:$0.55 /KWH (PV Savings/PV Investment)
Energy Escalation Rate:8% / year (Initial Rate)Simple Pay Back Period
Recurring Maint. Cost:$400 first year Yr 1 $ Svgs:$27,229 605000 =22.22 Years
Discount Rate:3%Maint. Escalation Rate:2% / year 27229
Year Year Year Year Year Year Year Year Year Year Year
0 1 2 3 4 5 6 7 8 9 10
ECM cost ($605,000)
Projected KWH Rate:$0.55 $0.59 $0.64 $0.69 $0.75 $0.81 $0.87 $0.94 $1.02 $1.10
(see tab entitled "Projected AK Payments")
Energy Cost Savings:$27,229 $29,407 $31,760 $34,300 $37,045 $40,008 $43,209 $46,665 $50,399 $54,431
Less O & M Costs:($400)($408)($416)($424)($432)($441)($450)($459)($468)($477)
Misc. Benefits/Costs:
Net Cash Flow:($605,000)$26,829 $28,999 $31,344 $33,876 $36,613 $39,567 $42,759 $46,206 $49,931 $53,954
Cum.Cash Flow:($605,000)($578,171)($549,172)($517,828)($483,952)($447,339)($407,772)($365,013)($318,807)($268,876)($214,922)
Year Year Year Year Year Year Year Year Year Year
11 12 13 14 15 16 17 18 19 20
Projected KWH Rate:$1.19 $1.28 $1.39 $1.50 $1.62 $1.75 $1.89 $2.04 $2.20 $2.38
(see tab entitled "Projected AK Payments")
Energy Cost Savings:$0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Less O & M Costs:$0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Misc. Benefits/Costs:
Net Cash Flow:$0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Cum.Cash Flow:($214,922)($214,922)($214,922)($214,922)($214,922)($214,922)($214,922)($214,922)($214,922)($214,922)
Year Year Year Year Year Year Year Year Year Year
21 22 23 24 25 26 27 28 29 30
Projected KWH Rate:$2.57 $2.77 $2.99 $3.23 $3.49 $3.77 $4.07 $4.40 $4.75 $5.13
(see tab entitled "Projected AK Payments")
Energy Cost Savings:$0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Less O & M Costs:$0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Misc. Benefits/Costs:
Net Cash Flow:$0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Cum.Cash Flow:($214,922)($214,922)($214,922)($214,922)($214,922)($214,922)($214,922)($214,922)($214,922)($214,922)
Discount Rate:3%
Present Value Savings:$326,541
Net Present Value (NPV):($278,459)
Internal Rate of Return (IRR):-7.00%
IRR assumes interim proceeds can be invested at the IRR rate.
Adjusted Internal Rate of Return (AIRR):-3.00%-3%
where AIRR = {[1+Discount Rate]*[(SIR)^(1/Life) ]}- 1
AIRR assumes interim proceeds can be invested at the discount rate.
AVEC Facility, Ambler, AK 50,400 Watt System, consisting of an adjustable 225 -panel array mounted on a Triodetic
foundation on the property adjacent to the AVEC southwest property line. The array utilizes
eight 7000 watt inverters to provide 277 VAC power
Solar Energy System Evaluation for the AVEC Ambler, AK Facility
2
LIFE CYCLE COST ANALYSIS ENERGY CONSERVATION PROJECT
Location:Energy Conservation Measures (ECM):ECM Cost:$ 605,000 Annual cost savings:$ 27,229
(electricity) in U.S. Dollars
Based on cost factor of $0.5505/KHW.
ECM Life:20 years Saved as:Armory Analysis.XLS Savings to Investment Ratio, SIR:1.41
Annual KWH Savings:49,462 KWH KWH Rate:$0.55 /KWH (PV Savings/PV Investment)
Energy Escalation Rate:8% / year (Initial Rate)Simple Pay Back Period
Recurring Maint. Cost:$400 first year Yr 1 $ Svgs:$27,229 605000 =22.22 Years
Discount Rate:3%Maint. Escalation Rate:2% / year 27229
Year Year Year Year Year Year Year Year Year Year Year
0 1 2 3 4 5 6 7 8 9 10
ECM cost ($605,000)
Projected KWH Rate:$0.55 $0.59 $0.64 $0.69 $0.75 $0.81 $0.87 $0.94 $1.02 $1.10
(see tab entitled "Projected AK Payments")
Energy Cost Savings:$27,229 $29,407 $31,760 $34,300 $37,045 $40,008 $43,209 $46,665 $50,399 $54,431
Less O & M Costs:($400)($408)($416)($424)($432)($441)($450)($459)($468)($477)
Misc. Benefits/Costs:
Net Cash Flow:($605,000)$26,829 $28,999 $31,344 $33,876 $36,613 $39,567 $42,759 $46,206 $49,931 $53,954
Cum.Cash Flow:($605,000)($578,171)($549,172)($517,828)($483,952)($447,339)($407,772)($365,013)($318,807)($268,876)($214,922)
Year Year Year Year Year Year Year Year Year Year
11 12 13 14 15 16 17 18 19 20
Projected KWH Rate:$1.19 $1.28 $1.39 $1.50 $1.62 $1.75 $1.89 $2.04 $2.20 $2.38
(see tab entitled "Projected AK Payments")
Energy Cost Savings:$58,785 $63,488 $68,567 $74,052 $79,976 $86,374 $93,284 $100,747 $108,807 $117,511
Less O & M Costs:($487)($497)($507)($517)($527)($538)($549)($560)($571)($582)
Misc. Benefits/Costs:
Net Cash Flow:$58,298 $62,991 $68,060 $73,535 $79,449 $85,836 $92,735 $100,187 $108,236 $116,929
Cum.Cash Flow:($156,624)($93,633)($25,573)$47,962 $127,411 $213,247 $305,982 $406,169 $514,405 $631,334
Year Year Year Year Year Year Year Year Year Year
21 22 23 24 25 26 27 28 29 30
Projected KWH Rate:$2.57 $2.77 $2.99 $3.23 $3.49 $3.77 $4.07 $4.40 $4.75 $5.13
(see tab entitled "Projected AK Payments")
Energy Cost Savings:$0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Less O & M Costs:$0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Misc. Benefits/Costs:
Net Cash Flow:$0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Cum.Cash Flow:$631,334 $631,334 $631,334 $631,334 $631,334 $631,334 $631,334 $631,334 $631,334 $631,334
Discount Rate:3%
Present Value Savings:$853,705
Net Present Value (NPV):$248,705
Internal Rate of Return (IRR):6.00%
IRR assumes interim proceeds can be invested at the IRR rate.
Adjusted Internal Rate of Return (AIRR):5.00%5%
where AIRR = {[1+Discount Rate]*[(SIR)^(1/Life) ]}- 1
AIRR assumes interim proceeds can be invested at the discount rate.
AVEC Facility, Ambler, AK 50,400 Watt System, consisting of an adjustable 225 -panel array mounted on a Triodetic
foundation on the property adjacent to the AVEC southwest property line. The array utilizes
eight 7000 watt inverters to provide 277 VAC power
Solar Energy System Evaluation for the AVEC Ambler, AK Facility
3
LIFE CYCLE COST ANALYSIS ENERGY CONSERVATION PROJECT
Location:Energy Conservation Measures (ECM):ECM Cost:$ 605,000 Annual cost savings:$ 27,229
(electricity) in U.S. Dollars
Based on cost factor of $0.5505/KHW.
ECM Life:30 years Saved as:Armory Analysis.XLS Savings to Investment Ratio, SIR:2.81
Annual KWH Savings:49,462 KWH KWH Rate:$0.55 /KWH (PV Savings/PV Investment)
Energy Escalation Rate:8% / year (Initial Rate)Simple Pay Back Period
Recurring Maint. Cost:$400 first year Yr 1 $ Svgs:$27,229 605000 =22.22 Years
Discount Rate:3%Maint. Escalation Rate:2% / year 27229
Year Year Year Year Year Year Year Year Year Year Year
0 1 2 3 4 5 6 7 8 9 10
ECM cost ($605,000)
Projected KWH Rate:$0.55 $0.59 $0.64 $0.69 $0.75 $0.81 $0.87 $0.94 $1.02 $1.10
(see tab entitled "Projected AK Payments")
Energy Cost Savings:$27,229 $29,407 $31,760 $34,300 $37,045 $40,008 $43,209 $46,665 $50,399 $54,431
Less O & M Costs:($400)($408)($416)($424)($432)($441)($450)($459)($468)($477)
Misc. Benefits/Costs:
Net Cash Flow:($605,000)$26,829 $28,999 $31,344 $33,876 $36,613 $39,567 $42,759 $46,206 $49,931 $53,954
Cum.Cash Flow:($605,000)($578,171)($549,172)($517,828)($483,952)($447,339)($407,772)($365,013)($318,807)($268,876)($214,922)
Year Year Year Year Year Year Year Year Year Year
11 12 13 14 15 16 17 18 19 20
Projected KWH Rate:$1.19 $1.28 $1.39 $1.50 $1.62 $1.75 $1.89 $2.04 $2.20 $2.38
(see tab entitled "Projected AK Payments")
Energy Cost Savings:$58,785 $63,488 $68,567 $74,052 $79,976 $86,374 $93,284 $100,747 $108,807 $117,511
Less O & M Costs:($487)($497)($507)($517)($527)($538)($549)($560)($571)($582)
Misc. Benefits/Costs:
Net Cash Flow:$58,298 $62,991 $68,060 $73,535 $79,449 $85,836 $92,735 $100,187 $108,236 $116,929
Cum.Cash Flow:($156,624)($93,633)($25,573)$47,962 $127,411 $213,247 $305,982 $406,169 $514,405 $631,334
Year Year Year Year Year Year Year Year Year Year
21 22 23 24 25 26 27 28 29 30
Projected KWH Rate:$2.57 $2.77 $2.99 $3.23 $3.49 $3.77 $4.07 $4.40 $4.75 $5.13
(see tab entitled "Projected AK Payments")
Energy Cost Savings:$126,912 $137,065 $148,031 $159,873 $172,663 $186,476 $201,394 $217,506 $234,906 $253,699
Less O & M Costs:($594)($606)($618)($630)($643)($656)($669)($682)($696)($710)
Misc. Benefits/Costs:
Net Cash Flow:$126,318 $136,459 $147,413 $159,243 $172,020 $185,820 $200,725 $216,824 $234,210 $252,989
Cum.Cash Flow:$757,652 $894,111 $1,041,524 $1,200,767 $1,372,787 $1,558,607 $1,759,332 $1,976,156 $2,210,366 $2,463,355
Discount Rate:3%
Present Value Savings:$1,702,923
Net Present Value (NPV):$1,097,923
Internal Rate of Return (IRR):10.00%
IRR assumes interim proceeds can be invested at the IRR rate.
Adjusted Internal Rate of Return (AIRR):7.00%7%
where AIRR = {[1+Discount Rate]*[(SIR)^(1/Life) ]}- 1
AIRR assumes interim proceeds can be invested at the discount rate.
AVEC Facility, Ambler, AK 50,400 Watt System, consisting of an adjustable 225 -panel array mounted on a Triodetic
foundation on the property adjacent to the AVEC southwest property line. The array utilizes
eight 7000 watt inverters to provide 277 VAC power
Solar Energy System Evaluation for the AVEC Ambler, AK Facility