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HomeMy WebLinkAboutRecovered Energy Generation Ormat Nevada App Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 1 of 20 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 20 9/3/2008 SECTION 1 – APPLICANT INFORMATION Name (Name of utility, IPP, or government entity submitting proposal) Type of Entity: Ormat Nevada Inc. Mailing Address 6225 Neil Road, Reno, Nevada 89511 Physical Address 6225 Neil Road, Reno, Nevada 89511 Telephone 775-356-9029 Fax 775-823-5401 Email cduncan@ormat.com 1.1 APPLICANT POINT OF CONTACT Name Colin Duncan Title Manager, Recovered Energy Mailing Address 6225 Neil Road, Reno, Nevada 89511 Telephone 775-336-0134 Fax 775-823-5401 Email Cduncan@ormat.com 1.2 APPLICANT MINIMUM REQUIREMENTS Please check as appropriate. If you do not to meet the minimum applicant requirements, your application will be rejected. 1.2.1 As an Applicant, we are: (put an X in the appropriate box) An electric utility holding a certificate of public convenience and necessity under AS 42.05, or X An independent power producer, or A local government, or A governmental entity (which includes tribal councils and housing authorities); Yes 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 20 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. Type in your answer here and follow same format for rest of the application. The project Ormat is proposing under this grant application is a recovered energy generation project which is in the reconnaissance, resource assessment, feasibility analysis and conceptual design stage of development. The project will utilize the direct use of waste heat recovery from the exhaust of gas turbine to generate electricity. Such project is defined as eligible under Section 1.5.2 of the RFA. 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 project will be located at a site yet to be determined within the Alaska state boundaries. Once the exact site location is determined, then an evaluation of the communities to be served can be provided. Also involved in this project will be contractors and subcontractors to be hired for various engineering, design, construction and supply aspects related to the project activities. Specifically, Ormat will be working with Precision Power LLC who will be the construction contractor for this project to perform the construction of the project on site. 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 funds needed to support the phases of the project described in Section 2.1 above are $495,000. Ormat anticipates participating in the next phase of the grant program to obtain grant funds for the follow-on stages of this project. The funds to support these phases of the project are expected to be provided by internal sources of funding within the Ormat group of companies. There is no expectation of other sources of funding for this project at the time of this application. Following is a summary of the estimated project costs for a recently completed project which would be similar in design to this project. Firm costs for this project cannot be provided herein until a final design package has been prepared. This will not be completed until the phases of the project under this grant request have been completed: -$495,000: site inspection and evaluation of local requirements / conceptual design development / preliminary engineering design -$12,105,000: final engineering / equipment supply and procurement / transportation to site / start-up costs / technical assistance on site -$15,400,000: site preparation / on-site construction / permits Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 4 of 20 9/3/2008 Estimated total project costs through construction based upon similar project assumptions: $28,000,000 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. The financial benefits that will result from this project include: - The reduction of fossil fuel consumption related to the generation of electricity from the proposed project. - The benefit provided to the electric transmission/distribution system which the project is directly connected to since it will provide both distributed generation benefits as well as reduce loading on the grid due to typical customer loading profiles. - Creation of additional jobs in the Alaskan local workforce for project construction and also long term plant operation and maintenance requirements. - Creation of carbon offset credits, emission allowance credits, and other attributes associated with the generation of energy from renewable energy resources. - Other societal and socioeconomic benefits that can be further described after the exact project site has been determined. 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.) $ 28,000,000 2.5.2 Grant Funds Requested in this application. $ 495,000 2.5.3 Other Funds to be provided (Project match) $ 0 2.5.4 Total Grant Costs (sum of 2.5.2 and 2.5.3) $ 495,000 2.5.5 Estimated Benefit (Savings) $ 7,500,000 annually 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.) $ tbd Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 5 of 20 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. Type in your answer here and follow same format for rest of the application. The following individuals, possibly including others, will be responsible for managing various stages and components of the project development, engineering, design, manufacturing, construction, and testing of the project. Nadav Amir - Executive Vice President of Engineering Erez Klein – Manager of Product Engineering Department Shimon Hatzir – Senior Vice President of Electrical and Conceptual Design Shlomi Argas – Recovered Energy Generation – Department Manager Zvi Rosenne – Project Manager Colin Duncan – Manager, Recovered Energy David Strickland – Vice President of Precision Power LLC Resumes for each individual listed above are attached to this application. 3.2 Project Schedule Include a schedule for the proposed work that will be funded by this grant. (You may include a chart or table attachment with a summary of dates below.) The schedule for the work (from the point that work begins) that will be funded by the grant will be: - Identify site/ perform site visits and existing equipment inspections: Month 1 - Evaluate local site requirements: Month 1 - Obtain site engineering data and any existing operational information: Month 1 - Perform conceptual design: Month 2 - Complete technical and economic feasibility assessment: Month 3 - Perform preliminary engineering design: Month 4 The performance of site inspections will be dependent upon the time of year in which work is initially commissioned. It would be anticipated that site inspections and evaluation of local site requirements will be made outside of winter months. 3.3 Project Milestones Define key tasks and decision points in your project and a schedule for achieving them. The key tasks and decision points for the work that will be funded by the grant are described in the answer to Section 3.2 above. 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 Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 6 of 20 9/3/2008 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. Ormat will be coordinating all aspects of the project development and construction as noted below. Ormat will be utilizing its internal abilities to manufacture various components of the project at its factory. This will include the project management capabilities of the individuals listed in Section 3.1 above. Additionally, Ormat will be contracting for the services or various equipment suppliers and vendors for certain equipment and services during the construction of this project. The selection of these suppliers and vendors is typical with any project developed by Ormat, whereby Ormat solicits bids from various approved vendors and suppliers and chooses the bid which best suits the requirements of Ormat for the specific project. The list of specific approved vendors and suppliers is confidential but can be supplied upon the execution of a confidentiality agreement between Ormat and the AEA. Specifically, Ormat will be working with Precision Power LLC who will be the construction contractor for this project to perform the construction of the project on site. A special arrangement shall be put together between Ormat and Precision Power LLC for this purpose once the project development proceeds. 3.5 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. Ormat typically prepares periodic written status reports of project status and activities during the project development, construction, testing and commercial operation. This type of report, one provided verbally, and another in writing, would be provided to AEA during the phase of the project for which grant funding has been requested. The frequency for these reports can be discussed and agreed with between Ormat and AEA prior to start of project activities. 3.6 Project Risk Discuss potential problems and how you would address them. The technology and applications employed by Ormat for this project are already proven. ORMAT is a fully integrated energy company and a world leader in recovered heat technology. Ormat designs, builds and manufactures Recovered Energy Generation Systems (REGS) and manages green-energy and geothermal power plants based on our ORMAT® Energy Converter (OEC). Ormat has constructed more than 900 MW of geothermal which have offset an estimated fourteen million tons of CO2 in the past decade. Dedicated to our vision, we pursue opportunities to achieve higher energy efficiency and to allow our communities to enjoy a healthier environment and inexpensive and steady electricity prices. Ormat has over 30 years of experience in Alaska in installing and operating simple cycle power plants and has proven reliability at these plants. The OEC is a field-proven, pre-packaged power unit using a power conversion process based on the organic Rankine cycle (ORC) technology. Its main parts consist mainly of a Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 7 of 20 9/3/2008 vaporizer/preheater, turbine-generator set, air-cooled condenser and feed pump. The OEC utilizes heat sources at relatively low temperatures. Specifically, the OEC is functional in 200ºF for fluid, 400ºF for gas, and 180ºF for condensable vapor at a low pressure. Ormat does not anticipate problems in the development and construction of this project, but in such event, would handle resolution utilizing its project management team just as with any other project we have constructed to overcome such difficulties in order to develop a successful commercial project. Determination of site conditions and engineering will be utilized to resolve any adverse conditions experienced in the first phase of activities in this project. 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. Following is a description of the Ormat Energy Converter (OEC) power block that will be constructed for this project. Ormat will use its management team and rely on it experience and expertise in developing these types of recovered energy generation projects in order to meet the requirements outlined in Section 2 of the RFA and to accomplish the tasks outlines as Phases 1 and 2 under Sections 2.2 through 2.4 of the RFA. The OEC is a pre-engineered, pre-packaged and fully automatic power unit. The OEC operation is based on the Organic Rankine Cycle (ORC) to generate power from geothermal fluid or waste heat sources. The OEC is designed for outdoor installation (no buildings required) and remotely controlled unattended operation. The installation will extract the exhaust heat from a General Electric LM2500 gas turbine already in operation at the project site and convert this heat into electrical energy as described below. The owner of the LM2500 unit will assign the rights of the waste heat supply solely to Ormat for its use in the development and operation of this REG Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 8 of 20 9/3/2008 project. The OEC process Inside the OEC the thermal oil is pumped through two heat exchangers first into the motive fluid vaporizer, and then into the preheater, where the motive fluid is preheated prior to being vaporized. The vaporized motive fluid drives a turbine which is directly connected to a conventional alternating current generator. At the turbine exhaust the vapor is cooled in a recuperator and further condensed back to liquid in a condenser. Then the motive fluid is pumped back into the preheater. The water cooling system is designed in such a way that in case of an emergency stop of the turbine, all the heat absorbed in the heat source can be entirely dissipated by bypassing the turbine directly to the condenser. The OEC Components The OEC incorporates both a mechanical and an electrical subsystem:  Mechanical Subsystem The mechanical subsystem consists of the thermal-mechanical energy transfer equipment and includes a vaporizer / preheater, recuperator, water cooled condenser, turbine, lubrication system and feed pump as well as motive fluid piping, automatic control and safety relief valves, level, pressure and temperature controls and pneumatic piping as described below.  Electrical Subsystem The electrical subsystem consists of the mechanical-electrical energy transfer equipment and includes a generator, control cabinet and power cabinet.  List of Major OEC Components o Turbine with auxiliaries o Vaporizer / Preheater o Recuperator o Air -cooled condenser o Motive fluid feed pump and auxiliaries o Valves, control and relief valves o Instrumentation o Organic motive fluid piping system o Working fluids Vaporizer The vaporizer is a horizontal shell and tube heat exchanger, manufactured of carbon steel. Thermal oil flows through the tubes against the motive fluid flowing in the shell, Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 9 of 20 9/3/2008 resulting in complete motive fluid vaporization. Preheater and Recuperator The preheater is a horizontal shell and tube heat exchanger manufactured from carbon steel. The recuperator is a shell and tube heat exchanger, manufactured of carbon steel. Hot motive fluid vapor, exiting from the turbine, is used to heat cold motive fluid liquid on its way from the cycle pump to the preheater. The tubes have external flow fins to enhance the heat transfer at the vapor side. Generator The generator is a three phase, brushless, weather protected machine, and built to IEC specifications. The generator has flange-mounted slide journal bearings, which are oil lubricated. The bearings are protected against the ingress of any dust or moisture. A suitable connection box (separate from the main terminal box) is furnished for all thermistors, temperature detectors and space heater leads. The generator has its protection elements wired to the connection box. Turbine The turbine is a single casing, multi-stage axial unit, with impulse-design blading. The turbine is directly coupled to the generator shaft by means of a gear coupling. The turbine is specifically designed to operate with the organic vapors and its flow path is optimized for the design conditions. No speed-reducing gearbox is required because the properties of the organic fluids produce favorable aerodynamic conditions at 1500 or 1800 rpm. A double, mechanical shaft seal is used to seal the working fluid against leakage. Oil is used as the buffer fluid in a cartridge type, seal carrier. Turbine and Generator Oil System The oil system has two functions:  To supply oil to the turbine bearings and seal for lubrication, sealing and cooling.  To supply oil to the generator bearings for lubrication. The system is equipped with an oil pump as well as oil filter, oil cooler (forced air-cooled type), solenoid operated control valves, relief valve and level switch. The lubrication system is designed to supply the lube oil in the event of an electrical power failure which prevents the operation of the main oil pump. Organic Motive Fluid Piping System The organic motive fluid piping system consists of the following components: Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 10 of 20 9/3/2008  Feed pump The feed pump is a motor-driven, multi-stage centrifugal pump, which pressurizes and transfers the condensed motive fluid from the condenser to the recuperator and preheater. The pump is equipped with a mechanical seal.  Motive fluid strainers  Valves: o Vaporizer liquid level control valve o Main valves o Turbine injection valves o Turbine bypass valve o Feed pump outlet check valve  Piping expansion joints Air-Cooled Condenser The condenser is an induced draft, air-cooled heat exchanger. The tubes are arranged in a one-pass configuration where motive fluid vapor is fed from the inlet box to the tubes. The motive fluid is cooled and condensed inside the tubes by air flowing outside of the finned tubes in a cross-flow pattern. The condensers fans are driven by electric motors through a speed reduction belt drive. The condensed motive fluid accumulates in the collector from where it flows to the motive fluid strainer and pump. The condenser tubes are made of carbon steel tubes with aluminum fins. OEC Power and Control System The OEC power and control cabinets include all required auxiliaries. OEC Power System The OEC power system contains the following items:  Generator breaker, PTs and CTs.  Protection relays to provide generator protection against under / over voltage, reverse power, over current, over speed, etc.  400/ 480 Volt auxiliaries supply board.  Batteries and chargers for 24 VDC control voltage supply. OEC Control System The control system is based on a PLC. The OEC is controlled by a programmable logic controller (PLC) and a protection relay unit. The PLC unit, with its accessories, is housed in a control board. The control system, when engaged, automatically accelerates the turbine to synchronous Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 11 of 20 9/3/2008 speed and then synchronizes the generator to the bus. After being linked with the bus, the control system monitors and controls the operation of the OEC module. In the event of a failure, the unit is disconnected from the bus and shut down in a pre - programmed sequence. After a failure condition is rectified, the generating unit can be automatically star ted after a manual reset signal. Electro-pneumatic Control System The electro-pneumatic control system operates the control valve actuators and provides air pressure to pneumatic components, either directly or through solenoid-operated valves installed on the pneumatic control panel. Human-Machine Interface (HMI) The system includes a personal computer with dedicated software to enable the operator to operate the power plant and monitor its functions. Instrumentation All parameters that are measured to insure proper control and operation of the OEC, such as pressure, temperature, voltage, current, flow rate, power, etc., are measured by the appropriate instruments. 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 following figures are based upon the energy resource from a typical LM2500 installation already in operation. Until specific details of the selected site are chosen and the work has been performed as described in the first three work items in Section 3.2, exact figures for the resource will not be available. Typical assumptions: - 150lb per second of gas turbine exhaust - 980 degrees F exhaust temperature - Energy production: 50,000MWh annually The benefits for using this technology are:  Simple system  Air-cooled  No water use, no water treatment  No blow down  No vacuum pumps or steam ejectors  Uses thermal oil as the system’s intermediate medium  Load fluctuation tolerance Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 12 of 20 9/3/2008  Rugged design  1800 RPM turbine, no reduction gear  Outdoor installation typical (even in severe climates)  Packaged modular system – fast on-site installation  4-6 month onsite construction (20 months from notice to proceed to Completion)  May use existing utility interconnection  Small installation footprint  Cost effective  Very low O&M requirements  No licensed steam technicians required  Operates in automatic/unmanned mode The technology benefits include:  Provides environmental preferred energy  Reliable operation  Stable output(firm energy/capacity)  Short lead time from notice to proceed until commercial operation  Ratepayer benefits for green power  Affordable / Competitive to other sources of power  Economic development in-state  No fuel consumption  Near zero emissions  NOx, SOx, CO2, GHG credits  No water consumption  Closed loop operation 4.2 Existing Energy System 4.2.1 Basic configuration of Existing Energy System Briefly discuss the basic configuration of the existing energy system. Include information about the number, size, age, efficiency, and type of generation. The specifics of the gas turbine to be used for the heat source for this project is still to be determined based upon the scope of work defined in Section 3.2 , Project Schedule, above. The energy system will be comprised of the components listed in Section 4 above. All these components will be constructed as new for this project. The overall efficiency of the project to be installed will be in the 20% range, depending on the characteristics and quality of the heat source. 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. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 13 of 20 9/3/2008 Until further work is performed pursuant to Section 3.2 above, the details of existing energy resources has not been determined. The impact this recovered energy generation project would have on the existing infrastructure would be to: - Reduce the dependence of fossil fuel consumption related to the generation of electricity from the proposed project. - Benefit the electric transmission/distribution system which the project is directly connected to since it will provide both distributed generation benefits as well as reduce loading on the grid due to typical customer loading profiles. - Reduce the need to import any fuel source for the production of this electricity - Provide a baseload generation source for servicing the electrical needs of customers. 4.2.3 Existing Energy Market Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. Please see the answers provided in Section 4.2.2 above. Customers would benefit by being provided with an energy source that would be significantly less expensive than diesel or gas fired generation options. Since the project would be considered baseload generation, it would provide a more reliable source for energy than others which are dependent on fuel deliveries and weather contingencies. This type of project improves the overall energy efficiency of the host facility resulting in a cost savings to consumers and also a cost benefit to the host, which is also any energy consumer. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 14 of 20 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. See the answers to this in Section 4 above. 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 See the answers to this in Section 4 above. The optimum installed capacity for this system will have to be determined after the completion of the work described in Section 3.2 above. In general, these are the typical parameters for a recovered energy generation project installed utilizing the exhaust gas stream from a GE LM2500 GT: - 6MW gross capacity - 50,000MWh average annual generation - 95% availability Integration factors are discussed in Section 4 above. The typical delivery method is shipment to the closest port that can handle deliveries of equipment sized for this project. Integration: The recovered energy generating facility will utilize the exhaust waste heat from the gas turbine at the host site. Ormat would pay a fee to the host for the exclusive use of this waste heat stream. This waste heat would then be used to heat a thermal oil utilizing a boiler and this thermal oil would be piped into the Ormat Energy Converter (OEC) power block. The hot oil will then be used to heat the pentane working fluid which is expanded through an Ormat constructed turbine in order to drive an electric generator to generate electricity. Ormat will integrate the ducting to access the waste heat stream of the host as the interface point for the heat stream. Another interface point is where the electric output of the generator is injected back into the main electric grid. Ormat also designs and integrates this part of the interface. 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. At a location where a host facility already exists and the heat stream is already available, it is typical for Ormat to obtain rights to lease the property owned by the host for the life of the recovered energy generation facility. This lease arrangement is generally a very simple and straight forward arrangement where Ormat typically pays a fee for rights to use the property along with the rights to the waste heat. This arrangement has been made with each host at all of Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 15 of 20 9/3/2008 our currently operating projects. The property owned by the host generally has ample room for a recovered energy generation facility to be located on the existing host-owned property with no additional land acquisition needed. For property which has not yet been developed, Ormat will work with the host to ensure that adequate land is purchased by the host in order to accommodate the recovered energy generation facility and again Ormat would pay a lease fee to use the property for the life of the recovered energy generation facility. Specific land requirements will be determined after reconnaissance at the site and review and existing land ownership and access. 4.3.3 Permits Provide the following informationas 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 At a location where a host facility already exists and permits have already been obtained by the host, it is typical for Ormat to apply, on behalf of the host, for a modification to the existing air quality permit. In all Ormat projects, this amendment has been obtained without any complications and this is not a critical path item in the project schedule. For property which has not yet been developed, Ormat will work with the host to ensure that the air quality permit application made by the host will accommodate the details of the recovered energy generation facility operation. In either case, the overall air emissions from the facility have not been increased or decreased. The basic difference is the air dispersion variation, which is evaluated in the application for the modified permit. The recovered energy generation facility does not have any emissions. For construction, the typical state and local construction permits will be obtained which also are not critical path items. Specific permit requirements will be determined after reconnaissance at the site and review and existing land ownership, permits and requirements. 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 Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 16 of 20 9/3/2008  Visual, aesthetics impacts  Identify and discuss other potential barriers All of the items listed above shall be addressed based upon the specific circumstances of the host site after reconnaissance has been performed and the site specific requirements have been determined. Ormat has a staff which is trained to handle environmental and permitting issues on a site specific basis. Ormat also contracts out for services for environmental assessments and site work, including permitting. Telecommunication interference is evaluated by Ormat’s engineering team. Aviation considerations have not been an issue for recovered energy generation facilities due to the limited height of the installation. Visual and aesthetic impacts are also addressed and handled on a site by site basis. Design, paint, and visual requirements at the host site are incorporated into the final design of the project. Due to the small footprint and limited height of the recovered energy generation facility, satisfying these requirements at prior installations has not been a concern for Ormat. 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. The costs provided below have been prepared from Ormat’s records for costing of projects it has built both for itself and third parties. 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  Total anticipated project cost, and cost for this phase Estimated total project cost: $28,000,000 Estimated cost for this phase: $750,000  Requested grant funding:$495,000  Applicant matching funds – loans, capital contributions, in-kind: $255,000  Identification of other funding sources: all funding is intended to be from internal sources  Projected capital cost of proposed renewable energy system: $27,250,000  Projected development cost of proposed renewable energy system: $750,000 As noted in Section 2.3 of this application, these costs are based upon estimates from recently completed projects which would be similar in design to this project. Firm costs for this project cannot be provided herein until a final design package has been prepared. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 17 of 20 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 There are no costs for operation and maintenance anticipated for this phase of the project. No grant funding has been requested for operation and maintenance for this phase of the project. 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 Potential power buyers/customers and the location and details of the transmission grid shall be addressed based upon the specific circumstances of the host site and its proximity to customers and the transmission grid after reconnaissance has been performed and the site specifics have been determined. The price range anticipated for industrial consumer energy prices for energy purchased from grid supplied power would be in the $90 to $120 per MWH price range for energy only plus costs for demand, customer service charges and ancillary services. Based upon this, the price range anticipated for power sales for energy produced from the recovered energy generation facility sold into the electric grid would be $120 to $180 per MWh. The intended rate of return from the project will be totally dependent upon the power sales price negotiated for this project. The portion of grant funds sought under this grant application will not significantly impact the ROR for this project. However, the grant funds will allow Ormat to continue to pursue the preliminary assessment of the project and continue to allow Ormat to pursue an economically successful recovered energy generation project. 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. Document attached hereto. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 18 of 20 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. Ormat employs an operating division located within North America that handles operations and maintenance of existing operating recovered energy generating facilities in the United States which are owned by Ormat. Ormat maintains an operating program for its own facilities that intends to minimize unit downtime with the goal of maximizing revenues while also reducing operation and maintenance costs. Our operations group is continuing to hire additional qualified employees to expand our O&M capabilities in the waste heat recovery area. This same philosophy is employed with our geothermal power plants in the US and throughout the world. Ormat has significant experience and expertise in operating and maintaining its own equipment, since it has constructed over 900MW of geothermal power plants. Ormat has built 12 waste-heat recovery projects in North America with a combined total of 64 MW of capacity which are currently in operation. These projects involve gas pipeline compressors and industrial applications. There are currently six waste heat recovery projects currently under construction by Ormat in the US. Ormat currently owns four waste heat recovery projects in the US and has another 5 under construction that it will also own that will all be completed within early 2010. Ormat’s operations division is expanding to handle this additional capacity and will continue to do so for any new projects constructed for which Ormat will provide O&M services. 4.4.6 Analysis and Recommendations Provide information about the economic analysis and the proposed project. Discuss your recommendation for additional project development work. As noted in Section 2.3, Project Budget Overview, the funds requested in this phase of the grant program will be used to develop the project to the next stage of the program which would be the final design, permitting and construction phase. Upon the completion of the reconnaissance work and development of a final design, an economic analysis cannot be provided. Ormat’s recommendation for additional project development work is that if it is found that there is an economically and technically viable project upon completion of the work in this phase of funding of the project, then Ormat will proceed to the next level of project development along with appropriate requests for funding. In regard to the potential for additional development work and economic benefits, Ormat and Precision Power LLC have identified at least 38 different waste heat source opportunities in the southeast areas of Alaska around Fairbanks and Anchorage where waste heat recovery could be a viable alternative for generating additional energy. Dependent upon the successful deployment of this first pilot project described herein, there is the opportunity for numerous additional projects which could be developed by Ormat under a similar structure. This could reap a significant economic benefit to Alaska if economically viable renewable energy projects could continue to be constructed in Alaska stimulated from the initial funding request in this application. The technology and the host sites already exist for this type of venture. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 19 of 20 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. Part of the calculation of the economic and public benefit would be dependent upon the offset that is being made by the recovered energy generation facility. In the event it is offsetting electric grid power, then the calculation would be based upon the fuel type of the generation which is offset by the purchasing utility. In the event it would be offsetting the installation of a diesel fired generator to provide electricity, then the offset cost would be tied to diesel oil costs. The figures and benefit calculation requested below cannot be provided until the reconnaissance work is completed on the project and an evaluation of the electric grid and electricity prices has been evaluated. 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 power sales price cannot be provided until the reconnaissance work is completed on the project and an evaluation of the electric grid and electricity prices has been evaluated. However, making general assumptions of a potential power sales pricing of $.15/kWh, this project could be expected to produce annual revenues of $7,500,000, excluding costs for host fees and other royalties, lease and permit fees, etc. Assuming an offset of diesel oil consumption at $.2/kWh, the offset savings for the energy would be $2,500,000 annually. Annual fuel displacement: based upon an estimated annual energy production of 50,000MWh, the amount of annual fuel savings would be equivalent to 500,000MMBTU. The amount of CO2 emissions saved is estimated at 50,000 tons annually. There will also be significant amounts of SO2 and NOx emission reductions due to the energy offset by the project. Ormat is not assuming any additional incentives or revenue streams for this project at this stage of development. The non-economic public benefits to Alaskans would include: - Using this generation to reduce its dependence on importation of fossil fuels or other resources which can harm the environment and emit pollutants into the air when burned. - Increasing its indigenous resource capabilities. As discussed in Section 4.6.6, there is also the opportunity for future projects in Alaska based upon the same structure proposed herein. Additional waste heat recovery renewable generating projects constructed in Alaska will continue to expand both the economic and societal benefits derived from these projects and the energy produced from them. Renewable Energy Fund Grant Application AEA 09-004 Grant Application Page 20 of 20 9/3/2008 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 Provide a narrative summary regarding funding sources and your financial commitment to the project. No investment has been made to date on the development of this project. Ormat does not have any plans at this time to seek funding sources other than the Alaska Energy Authority. As the applicant and owner of the project, Ormat will be making all the investments to progress and develop this project. The grant budget form has only been filled in for this initial phase of the project. Until the reconnaissance is complete and a final design has been prepared, detailed costs for this project will not yet be developed. Under the Grant Budget Instructions, there are areas for costs and expenditures that can as of yet not be determined, as so therefore have not yet been included in the budget information summary.