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HomeMy WebLinkAboutNome Koint Utility System Renewable Energy Fund Wind Project AppNOME JOINT UTILITY SYSTEM a component unit of P.O.Box 70 •Nome,Alaska 99762 •(907)443-NJUS •Fax (907)443-6336 October 7,2008 Dear Review Committee, It is with a deep sense of immediacy that this application is submitted on behalf of City of Nome/Nome Joint Utility System (NJUS)as a request for funding through the Alaska Energy Authority’s Renewable Energy Grant Program. As you are very much aware,the energy crisis facing rural Alaska has reached unsustainable levels that threaten the health,security and abilities for residents to maintain the basic necessities of life in a cost effective manner.The community of Nome is no exception to this challenge which can be largely attributed to the escalation of our primary energy source,diesel fuel.Since 2003,the price of diesel delivered to NJUS has increased by more than 250%.As a utility committed to providing reliable and affordable electricity,we have developed a very strong and personal understanding of how these rising costs impact our community.We,like so many other utilities across Alaska,search on a daily basis for ways to reduce these costs that must be passed on to our consumers in order to maintain our system and the reliable delivery of our services. The enclosed application documents a proposed system design that will dramatically reduce the amount of diesel being consumed by our utility through utilization of a strong,documented wind resource.In working towards this goal,we have created a partnership consisting of the state’s most experienced engineers,contractors and consultants to complete the wind energy project that is documented on the following pages of this application.We aim to create what will be the largest wind-diesel system operating in the state of Alaska through collaboration between our City of Nome utility,our designated project manager,project partners and the regional organizations who have pledged their support of this initiative. We are prepared to begin the final permitting,development and construction phases for this 3MW project immediately and request the financial support of the Alaska Energy Authority in helping us to implement the project.We also believe we have presented a conservative estimate regarding the expected total benefits of the project,$56 million in diesel savings alone over its operational life, which could be dramatically increased if current fuel price trends continue to follow annual projections. Residents in the Nome area are also essentially hit with a double punch as we are forced to pass on our costs to not just individuals,but also to our numerous commercial customers.As costs increase for this market segment,retailers and service providers must also pass along the additional overhead to residents.This,in turn,contributes to the unhealthy and unsustainable economic conditions currently experienced in Nome and so many other rural communities.Moreover,and as a hub for Western Alaska,it is imperative that Nome’s economy remains strong in order to support the villages found throughout our region.In this regard,both stable and affordable energy prices become a necessity to support existing populations and infrastructure found throughout the Bering Strait Region. Providing reliable utility services to system rate payers efficiently and economically by prudently operating and maintaining system assets in a fiscally responsible manner AEA Review Committee October 7,2008 Page 2. These points are well understood by many of the regional organizations that have either offered documented support of this application,raised concern about energy costs and seeking methods to reduce them,are implementing or have implemented alternative technology on their own,or are involved in ongoing community discussions.These grounds include Norton Sound Economic Development Corporation,Norton Sound Health Corporation,Kawerak,Inc.,Sitnasuak Native Corporation and the Bering Straits Native Corporation among others.All of these parties believe the survival of our community has been placed in jeopardy through energy inflation and our dependence on electricity created through diesel generation.We are in desperate need of more affordable and renewable energy supplies in order to support the continued existence of rural communities in our state.If we are to be successful in maintaining a basic quality of life for bush residents,the immediate implementation of renewable technologies that are proven,scalable and regional in focus will be needed.We believe we have proposed a project that meets these requirements. In addition to Nome,our development team has also committed to each other to develop projects utilizing the same turbine model and similar system design in the community of Unalakleet.Through this approach,NJUS along with Unalakleet Valley Electric Cooperative will be able to realize cost reduction synergies,facilitate knowledge transfer regarding the utilization of wind power technology on a regional basis and develop a higher level of understanding regarding the effective implementation of wind power.We understand Kotzebue is also developing a similar project.We remain open to working with them to further capitalize on any and all economies of scale that can be realized through a partnership approach.We have worked with several regional utilities through a fuel purchasing partnership with much success,Unalakleet and Kotzebue included;we believe we can build on this relationship to continue to address other facets of energy cost reductions throughout the region. Additionally,we have received support from the Alaska’s Department of Labor indicating that financial support for regional training will also be made available to ensure the projects that have been proposed for Nome and Unalakleet will be sustainable if developed.In this regard,we believe the enclosed application represents one of the greatest opportunities to reduce the cost of energy for rural Alaska,and also one that can be utilized for future regional efforts across the state. On behalf of the City of Nome/NJUS and the partners who have committed themselves to this project,we respectfully submit this request for funding.Thank you for your review and please do not hesitate to contact me should there be a need for further information regarding our application. Sincerely, K.Handelarid ,eneral Manager/Chief Operating Officer NOME JOINT UTILITY SYSTEM NJUS Renewable Energy Fund Wind Project Grant Application NJUS Renewable Energy Fund Grant Application Page 1 of 51 10/8/2008 SECTION 1 – APPLICANT INFORMATION Name (Name of utility, IPP, or government entity submitting proposal) City of Nome d/b/a Nome Joint Utility System (NJUS) Type of Entity: Electric Utility Mailing Address P.O. Box 70, Nome, Alaska, 99762 Physical Address 1226 Port Road, Nome, Alaska, 99762 Telephone 907-443-6587 Fax 907-443-6336 Email johnh@njus.org 1.1 APPLICANT POINT OF CONTACT Name John Handeland Title General Manager/Chief Operating Officer Mailing Address P.O. Box 70, Nome, Alaska, 99762 Telephone 907-443-6587 Fax 907-443-6336 Email johnh@njus.org 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  1.2.2. Attached to this application is formal approval and endorsement for its project by its board of directors, executive management, or other governing authority. If a collaborative grouping, a formal approval from each participant’s governing authority is necessary. (Indicate Yes or No in the box ) YES 1.2.3. As an applicant, we have administrative and financial management systems and follow procurement standards that comply with the standards set forth in the grant agreement. YES 1.2.4. If awarded the grant, we can comply with all terms and conditions of the attached grant form. (Any exceptions should be clearly noted and submitted with the application.) Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 2 of 51 10/8/2008 Direct Labor and Benefits $             21,200  Travel, Meals, or Per Diem $                      ‐    Equipment $       9,020,700  Supplies $                      ‐    Contractual  Services $       1,737,881  Construction Services $       3,922,528  Other Direct Costs $           832,000  TOTAL DIRECT CHARGES $     15,534,309  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. The NJUS Renewable Energy Fund Wind Project is a Final Design/Permitting and Construction project for a wind energy installation in Nome, Alaska. Over the years, extensive documentation and analysis have been conducted in the Nome region to evaluate the potential of utilizing wind energy. These studies, including the Department of Energy’s Nome Region Energy Assessment (published in March 2008) and various Alaska Energy Authority reports, document strong wind resources across the Nome area including the project installation site. Moreover, these studies, combined with conceptual designs, illustrate that reconnaissance (Phase I) and detailed project feasibility studies (Phase II) as described in this Request for Grant Applications (RFA# AEA-09- 004) have been substantially completed. 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 NJUS Renewable Energy Fund Wind Project involves the installation of five 600 kW wind turbines on Newton Peak located approximately one mile north of Nome. The completed project, with a total size of three MW, will be owned and operated by NJUS. The wind turbines will be connected into NJUS’s electrical distribution system through a constructed transmission line. The project will offer benefits to the community of Nome and its electric customers through a system-wide reduction and stabilization of energy prices. NJUS has assembled a project team, headed by STG Incorporated, that is prepared to immediately begin work on an accelerated schedule. The project team includes members from Intelligent Energy Systems LLC, DNV Global Energy Concepts Inc, Electrical Power Systems, Duane Miller Associates LLC, Hattenburg Dilley & Linnell LLC, BBFM Engineers and Aurora Consulting. All aspects of the Final Design/Permitting and Construction project, detailed in the following pages of this application, can be completed by fall 2010. 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. Project production and cost estimates, generated from independent analysis and contractor estimates, are summarized below: Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 3 of 51 10/8/2008 The total project costs of the NJUS Renewable Energy Fund Wind Project is estimated to be $15,534,309, inclusive of Phases I to IV. This project has advanced through Phases I and II and is ready for Phases III and IV activities. Much of the cost of Phase I and II were borne by third- party researchers, however, project team members have contributed $29,552 in project conceptual design and initial feasibility study. The total grant request for the NJUS Renewable Energy Fund Wind Project is $13,951,326 based upon the following: Total Project Costs $15,534,309 Less: Phase I and II Contributed Costs ($ 29,552) Total Phase III and IV Costs $15,504,757 Less: Additional Investments ($ 1,553,431) Total Grant Request $13,951,326 The additional investment of $1,553,431 is inclusive of $830,000 of land contributed by the City of Nome, $128,200 in labor and equipment contributed by NJUS for line transmission construction, and $595,231 in cash contributed by NJUS/City of Nome. 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. Total net energy production estimates NJUS Renewable Energy Fund Wind Project are 8,963,000 kWh annually with an estimated net displacement of 430,195 gallons of diesel per year. At a year-one cost of $3.72 per gallon, the project is estimated to reduce fuel costs for NJUS by $1,600,325 annually and reduce diesel-fuel storage costs by $154,913 annually. Other benefits of the NJUS Renewable Energy Fund Wind Project include the reduction of atmospheric pollution, tourism development within the Nome region (estimated value $5,200 annually) and a contribution towards decreased reliance on imported fossil fuels (national security). The projected benefit/cost ratio for this project is 3.14, payback is estimated to be 10.85 years and the internal rate of return is estimated to be 8.72%. An explanation of our calculations and financial assumptions is included in section 4.4.6. 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.) $ 15,534,309 2.5.2 Grant Funds Requested in this application. $ 13,952,326 2.5.3 Other Funds to be provided (Project match) $ 1,582,983 2.5.4 Total Grant Costs (sum of 2.5.2 and 2.5.3) $ 15,534,309 2.5.5 Estimated Benefit (Savings) $1,755,238 – Annual $59,846,943 – Cumulative 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.) $94,830 Annual REC/Tourism Revenue $2,370,750 Cumulative REC/Tourism Revenue Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 4 of 51 10/8/2008 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. NJUS will utilize James St. George, President of STG Incorporated (STG), as the project manager for the NJUS Renewable Energy Fund Wind Project. STG is one of Alaska’s premier construction services and management companies and has past direct experience with NJUS. Dealing mainly in rural Alaska, the company has played a major role in high profile projects such as wind energy installations, communication tower installation and community bulk fuel and diesel generation upgrades. STG specializes in remote project logistics, pile foundation installations, tower erections and construction management. STG has managed and constructed many of the Alaska Energy Authority’s and the Alaska Village Electric Cooperative’s bulk fuel facility and rural power system upgrade projects. STG’s core competencies include bulk fuel systems, power plant construction, wind farms and pile foundations. Additionally, STG has expanded to become United Utilities’ preferred contractor for its “Delta Net Project”, which involves the installation of communication towers and related equipment throughout the Yukon Kuskokwim Delta. STG has achieved this preferred status by demonstrating competitive rates and the ability to perform in remote locations with extreme logistical challenges. As project manager, James St. George and STG will be responsible to NJUS for direct project oversight and coordination, assure project schedules, provide recommendations for NJUS approval, have direct project oversight in accordance with NJUS policies and procedures on labor and contractor management, equipment procurement and mobilization, review of plans and specifications, on-site inspections, review and approval of work and other project management duties assigned by NJUS. References for James St. George and STG include: Krag Johnsen, Chief Operating Officer, Denali Commission 510 L Street, Suite 410, Anchorage, AK 99501 Phone (907) 271-1413, Fax (907) 271-1415 kjohnsen@denali.gov Meera Kohler, President/CEO, Alaska Village Electric Cooperative 4831 Eagle Street, Anchorage, AK 99503 Phone (907) 565-5531, Fax (907) 562-4086 mkohler@avec.org Jim Lyons, Operations Manager, TDX Corporation 4300 B Street, Suite 402, Anchorage, AK 99503 Phone (907) 762-8450, Fax (907) 562-0387 JLyons@tdxpower.com Resumes for STG are included in Section 7: Additional Documentation and Certification. Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 5 of 51 10/8/2008 PROPOSED ENERGY RESOURCE ANALYSIS Generic Survey of Wind Energy Potential Selection of Potential Sites Site Specific Wind Assessment Computation of Potential/Probable Output EXISTING ENERGY SYSTEM ANALYSIS Survey Transmission Access/Existing Infrastructure Transmission Lines and System Layout and Capacity Switchgears and Existing Power Plant Equipment Generation Demands Load Information Peak Loads and Projections Wind Energy Contributions to Power Supply Determine Sizing Requirements Annual O&M and R&R Costs Annual Fuel Consumption and Fuel Price Prepare Initial Economic Analysis Average Cost of Installed Equipment Avoided Cost of Energy Service Rates Production Estimates Plans for System Upgrades PROPOSED SYSTEM DESIGN Collect Localized Wind Measurements Annual Survey (Min) Conduct Technology Review Analysis of System Alternatives Identify Technical Barriers & Issues Conduct Layout and Design Review Begin Site Specific Design Review with Engineering Firm Conduct Site Assessment Conceptual layout Conduct Public Review Develop Basic Integration Concept Conceptual Integration Deisgn PROPOSED SYSTEM COSTS Identify Total Project Costs Projected capital, O&M, and Fuel Costs PROPOSED BENEFITS Annual Fuel Displacement & Costs Analysis Annual Review Estimates Identify Non Monetary Benefits ENERGY SALE Identification of Market Sale Rates BEGIN PERMITTING PROCESS Identify List of Permits Required Develop Permit Timeline Identify Potential Regulatory Barriers ENVIRONMENTAL ISSUES Initial Environmental Screening Identify Potential Impacts Identify Potential Regulatory Barriers LAND OWNERSHIP Sign Site Agreements ANALYSIS AND RECOMMENDATIONS Basic Economic Analysis of Alternatives Recommendations of Additional Project Work AEA / GEC OCTOBER 8THSTG DMA STG / NJUS Partners STG NJUS AURORA CONSULTING /  STG IES/STG NJUS STG HDL AURORA CONSULTING /  STG NJUS RENEWABLE ENERGY FUND WIND PROJECT SCHEDULE STG NJUS NJUS AURORA CONSULTING /  STG NJUS PROJECT TIMELINE Responsibility NJUS STG / LEGAL HDL/STG NJUS NJUS AURORA CONSULTING /  STG NJUS STG NJUS/AURORA  CONSULTING  NJUS CITY IES/EPS STG / NJUS Phase I ‐ Reconnaissance & Phase II ‐ Feasability Analysis, Conceptual Design 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.) Below is a project schedule for the NJUS Renewable Energy Fund Wind Project. Note that Phase 1 & 2 tasks are anticipated to be completed prior to receipt of grant funding. The Grant-funded portion of the project will begin with Phase III and continue through Phase IV. Thus, work will begin with grant funding in early 2009 and continue through delivery and erection of wind turbines in Summer 2010. Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 6 of 51 10/8/2008 FINALIZE ENGINEERING DESIGNS Foundation Designs Interconnection Diagrams Preliminary Site Layout BID KEY EQUIPTMENT Turbine Procurement Tower Procurement Switchgear Procurement Other Procurement BEGIN FINANCING DEVELOPMENT Define Contract Terms Sign Final Construction Agreement Access Necessary Capital Place Equipment Orders Tax Planning for Private Entities PROJECT COST Final Project Costing PERMITS & ENVIRONMENTAL Necessary Permits Obtained Environmental Issues Resolved ANALYSIS AND RECOMMENDATIONS Finalize Draft Busiiness Plan Periodic Reporting as Required by Grant RENEWABLE ENERGY RESOURCE Monitor to Update Resource PROPOSED SYSTEM DESIGN Formal Survey Work ‐‐ Final Site Design Take Off  And Mobilization Finalize Supply Delivery Schedules Finalize Heavy Equipment Delivery Schedules Organize Project Freight / Logistical Requirements Barge Deliveries Crew Housing Team Development Excavators, Operators, Electricians, Laborers Site Access Development Road Construction Road Repair Foundation Excavation Foundation Installation Pile Driving Concrete Pours & Backfill System Integration Connection to Transmission Lines Connection to Sub-Stations Connection to Metering Systems Connection to Power Distribution System Infrastructure Connection to Powerhouse Transmission Line Installation SCADA Installation System Calibration Tower Erection Tower Installation Nacelle Placement Blade Placement PROJECT COST Monitor to Update Resource PERMITTING & ENVIRONMENTAL Finalize Regulatory Requirements Finalize Permitting Reports ANALYSIS AND RECOMMENDATIONS Develop Safety And Maintenance Schedule As Built Diagrams Relevant to Construction Changes Relevant to Electrical/Distribution Changes Business Plans Update Business Plans Periodic Reporting as Required by Grant NJUS STG SUBS HDL/STG STG STG IES STG NJUS / LEGAL NJUS/   SUPPLIER EPS/IES HDL STG / NJUS STG DMA STG BBFM/DMA STG NJUS AURORA CONSULTING SPRING 2009 STG/   SUPPLIER(S)NJUS STG STG DUANE MILLER / BBFM /  NJUS STG BARGE TRANSPORTATION NJUS STG STG NJUS/STG/     EPS   EPS FALL 2010 NJUS/GEC NJUS AURORA CONSULTING STG EPS IES/SUPPLIER SPRING 2010 STG Phase IV ‐ Construction, Commissioning, Operation, and Reporting Phase III ‐ Final Design & Permitting NJUS Renewable Energy Fund Wind Project Grant Application NJUS Renewable Energy Fund Grant Application Page 7 of 51 10/8/2008 3.3 Project Milestones Define key tasks and decision points in your project and a schedule for achieving them. Following are the key project milestones, by project phase, and anticipated completion date: Phase I and II Tasks (Reconnaissance , Analysis & Design) 1. Initial Renewable Resource Review Completed 2. Existing Energy System Analysis Completed 3. Proposed System Design Completed 4. Proposed System Costs Estimations Completed 5. Proposed Benefits Completed 6. Energy Market/Sales Analysis Completed 7. Permitting Review Completed 8. Analysis of Potential Environmental Issues Completed 9. Land Ownership Preparations Completed 10. Legal Consultations Completed 11. Preliminary Analysis and Recommendations Completed Phase III Tasks (Final Design and Permitting) 12. Project Management Winter/Spring 2009 12. Perform Geotechnical Analysis Winter/Spring 2009 13. Finalize Energy Production Analysis Winter/Spring 2009 14. Finalize Foundation Designs Winter/Spring 2009 15. Finalize System Integration Designs Winter/Spring 2009 16.1 Finalize Land Agreements Winter/Spring 2009 16.2 Purchase Land Winter/Spring 2009 17. Turbine Procurement Winter/Spring 2009 18. Begin Financing Development Winter/Spring 2009 19. Apply for/Obtain Permits Winter/Spring 2009 20. Draft Final Operational Business Plan Winter/Spring 2009 Phase IV Tasks (Construction, Commissioning, Operation and Reporting) 22. Project Management Fall 2010 21.1 Foundation Material Procurement Spring 2010 21.2 Mobilization and Demobilization Costs Spring 2010 21.3 Site Access and Foundation Development Spring 2010 21.4 Foundation Installation Spring 2010 21.5 Tower/Turbine Erection Fall 2010 21.6 Transmission/Distribution Lines Fall 2010 21.7 Power Storage Foundation Pad Fall 2010 21.8 Construction Survey/As-Built Diagrams Fall 2010 21.9 Job Site Clean Up Fall 2010 22. System Integration Fall 2010 23. SCADA Installation Fall 2010 24. System Calibration Fall 2010 25. Final Business Plan Development Fall 2010 Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 8 of 51 10/8/2008 Chris Schimschat Sandy St. George VP, Field Operations Accounting Dave Myers Project Manager Brennan Walsh Project Engineer Mia Devine Dennis Meiners Dan Rogers, P.E. Richard Mitchells, P.E. Scott Hattenburg, P.E. Troy Feller, P.E. Ann Campbell, MBA Engineer Principal Principal Project Engineer Principal Principal Principal Resource Wind/Integration Electrical Integration Geotechnical Project Permitting Analysis Consultant Services Engineering Sub-Contractors DNV Global Energy Concepts (GEC) INTELLIGENT ENERGY SYSTEMS (IES) ELECTRICAL POWER SYSTEMS (EPS) CITY OF NOME NOME JOINT UTILITY SERVICE STG INCORPORATED DUANE MILLER ASSOCIATES (DMA) HATTENBURG DILLEY & LINNELL (HDL) Aurora Consulting James St. George, President Project Manager, General Contractor Denise Michaels, Mayor John Handeland, General Manager Land Owner Project Owner Business Plannin Structural Engineering BBFM ENGINEERS (BBFM) g 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. The NJUS Renewable Energy Fund Wind Project will be under the overall direction of John Handeland, general manager of NJUS; while the project manager will be James St. George, president of STG Incorporated. Personnel: The NJUS general manager, John Handeland, will have ultimate responsibility and authority over project decisions and will ensure that all grant requirements are fulfilled. Mr. Handeland will be assisted by NJUS chief financial officer, Michael Cusack CPA, who will oversee all grant accounting functions; the NJUS superintendent of field operations, Toby Schield, will coordinate on-going field operations with the project manager, STG, and oversee NJUS staff working on transmission construction; the NJUS power plant foreman, Doug Johnson, will coordinate power house operations with the project manager, STG, and assist with integration of the wind resource to the existing power generation system; and, the NJUS line foreman, John Gould, will coordinate new line extensions with the project manager, STG. (See Section 4.4.5 Business Plan for a more detailed discussion of NJUS – its business structure, management, operations, etc.) Contractors: James St. George (STG) will be the project manager of the NJUS Renewable Energy Fund Wind Project and under NJUS management oversight will manage project labor, consultants, procurement, construction contractors; review plans and specifications and project work; conduct on-site inspections; and, other management functions assigned by NJUS to ensure that the project objectives are attained. NJUS and STG have established contractual relationships with a strong team of subcontractors to assist with this project including Intelligent Energy Systems LLC, DNV Global Energy Concepts Inc., Electrical Power Systems, Duane Miller Associates LLC, Hattenburg Dilley & Linnell, BBFM Engineers and Aurora Consulting. The organizational chart below shows the key project partners and project roles: Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 9 of 51 10/8/2008 DNV Global Energy Concepts will provide validation and analysis of wind resources. GEC is a multi-discipline engineering and technology consulting firm providing services to clients involved in the energy industry. Recognized as leaders in the wind energy industry, the firm specializes in the analysis, design, testing and management of wind energy systems and projects. GEC supported the Kotzebue Electric Association with wind resource assessment and power performance testing tasks; is siting met towers at several locations in southeast Alaska, worked with AEA on power performance testing at Toksook Bay and performed site assessments at U.S. Air Force Long Range Radar Stations along Alaska’s west coast. Intelligent Energy Systems (Principal: Dennis Meiners) will provide wind project development and coordination services. IES provides energy project development, management and coordination services to communities in rural Alaska with high energy costs. IES services include: feasibility, financing, regulatory compliance, project planning, and implementation evaluation and support/maintenance programs. Recent projects include the Puvurnaq Power Company Model High Penetration Wind Diesel Project and three high penetration wind diesel systems, with smart grids, for the Chaninik Wind Group. Electrical Power Systems (Principal: Dan Rogers, P.E.) will provide electrical integration services. EPS has historically focused on providing substation, generation, control, protection, system planning and analysis and distribution engineering for utility, industrial and governmental clients. The majority of EPS’ clients are based in Alaska and the firm has extensive experience working within rural communities including the development of a wind/diesel SCADA system for Kotzebue Electric to control the city’s six diesel generators and its wind farm. Duane Miller Associates, LLC (Principal: Duane Miller, P.E.) will provide geotechnical engineering services. DMA engineers are peer reviewed and recognized experts in cold regions geotechnical engineering as well as unfrozen ground geotechnical engineering. DMA geotechnical engineering project experience ranges from small rural projects to large industrial and defense projects. Hattenburg, Dilley & Linnell (Principal: Scott Hattenburg, P.E.) will provide project permitting and environmental services. HDL specializes in civil, geotechnical and transportation engineering as well as providing permitting and environmental services. HDL has extensive experience with rural energy projects and working with rural communities including the recent completion of permitting and environmental review for the Hooper Bay and Chevak wind projects. BBFM Engineers (Principal: Troy Fellers, P.E.) will provide structural engineering services. BBFM has provided structural engineering design services to military and civilian clients throughout Alaska. BBFM has particular expertise in rural Alaska; completing more than 80 building and tower projects in western Alaska. Additionally, BBFM has designed tower foundations in 12 different villages in soil conditions ranging from marginal permafrost in deep silty soils to mountain-top bedrock. Aurora Consulting (Principal: Ann Campbell, M.B.A.) will provide project planning and business planning services. Aurora Consulting has over 30 years of experience providing business and management consulting services throughout Alaska to a wide variety of governmental and private entities. Additionally, Aurora Consulting has assisted with the Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 10 of 51 10/8/2008 development of business operating plans for over 75 rural utility projects, including water/sewer projects, bulk fuel projects, electric utilities, hydro-electric projects and wind generation projects. Suppliers: The NJUS Renewable Energy Fund Wind Project will follow competitive purchasing procedures that meet the standards defined in the sample AEA Grant Agreement. Through the conceptual design planning efforts completed during Phase I and II of this project, it has been determined that the two most critical equipment suppliers for the NJUS Renewable Energy Fund Wind Project will be the entities supplying wind turbines and energy storage equipment components. Independent wind resource analysis and production estimates generated by GEC indicates that two currently available turbines, the Fuhrländer 600 FL (600 kW) and Vestas PS-RRB (600 kW), would provide similar benefits and could be installed as proposed in this application. Conceptual planning along with the solicitation of bids from both turbine suppliers and independent energy production estimates also indicates that the delivery of a turn-key wind energy system, utilizing either model, would produce both comparable costs and benefits. Detailed evaluation of both models in regards to estimated installed cost, delivery schedules, available cold weather packages and expected performance has been performed. Other less tangible evaluation criteria including each supplier’s ability to provide parts for anticipated repairs over the life of the project, their ability to support local training efforts regarding the wind turbines themselves and the documented performance of previously installed units were also considered. Through the conceptual planning process, we have also determined that numerous supply options exist regarding available energy storage components. Our conceptual planning and design work to date has incorporated the anticipated utilization of the Vestas turbines to complete the project. Nonetheless, and due to both strong demand for this technology in the global marketplace, along with our inability to secure a fixed delivery schedule and fixed price of this key equipment without a secured down payment, it is possible that the costs and delivery schedules of these turbines may become less attractive by the time grant funds would be released to fund the proposed project (quotes remain valid for only a 30 day period). While we believe that we could obtain comparable delivery schedules and costs similar to those quoted, we believe that these purchasing decisions should be revisited once awards for this grant are announced. Equipment: All of the major construction equipment required for the NJUS Renewable Energy Fund Wind Project will be made available by NJUS, from the local community and/or STG. NJUS will contribute the use of equipment for project support and the construction of transmission lines, to include: Backhoes Marooka (small tracked dump) 6 wheeled ATV hauler Bucket trucks Pickups Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 11 of 51 10/8/2008 Kobelco CK 1600, series 2, with luffing boom, 160 ton hydraulic craw Tadando 28 ton rough terrain crane Caterpillar D9T, bulldozer w/ ripper Caterpillar D6R, bulldozer w/ ripper Caterpillar 980G loader, bucket forks Caterpillar 980G loader with masted fork lift Caterpillar 345B excavator Caterpillar 680E compactor Caterpillar 287B tracked loader 3 each, Terex Series 7, 30 ton articulated dump trucks Advanced mixer truck 12 yard Quick way batch plant Ingersoll -Rand ECM 370 drill Chevy 1-1/2 ton 4x4, mechanic truck 4 pickup trucks 4x4, crew cabs ler crane Other major construction equipment required can be obtained in the local community or be provided by STG from their fleet which includes: Resumes and general information for key personnel, contractors and suppliers is included in Section 7: Additional Documentation and Certification. 3.5 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. As the grantee, NJUS general manager, John Handeland, will be the point of contact between NJUS and the Alaska Energy Authority. As such, Mr. Handeland will be responsible for submitting AEA monthly and quarterly progress and financial reports, which will summarize the progress made during the reporting period and identify any difficulties in completing tasks or meeting goals or deadlines as well as financial reports. NJUS will utilize the AEA format for these reports. In addition, the project manager, James St. George (STG), will be responsible to monitor the project activities and to coordinate with NJUS. STG will coordinate daily team meetings to outline daily objectives and issues and, weekly, will communicate with NJUS’s general manager to identify any outstanding issues and suggested resolutions. Additionally, STG will provide the NJUS general manager information for the AEA required monthly and quarterly reporting. STG will focus on variance analysis, comparing actual project results to planned or expected results; a summary of tasks completed during the reporting period; a summary of tasks scheduled for completion in the next reporting period; and, identification of project challenges and problems. STG will provide the information to the NJUS in the approved AEA format for these reports. Change Process: The information contained within the project plan will likely change as the project progresses. While change is both certain and required, it is important to note that any changes to the project plan will impact at least one of three key success factors: available Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 12 of 51 10/8/2008 time, available resources or project quality. The decision by which to make modifications to the project plan will be coordinated using the following process: Step 1: As soon as a change that impacts project scope, schedule, staffing or spending is identified, the project manager will document the issue. Step 2: The project manager will review the change and determine the associated impact to the project and will forward the issue, along with a recommendation, to NJUS and/or AEA for review and decision. Step 3: Upon receipt, the NJUS general manager, project manager and/or AEA should reach a consensus opinion on whether to approve, reject or modify the project plan based upon the project manager’s recommendation and their own judgment. Step 4: Following an approval or denial, the project manager will modify the project plan and notify all the affected project partners. 3.6 Project Risk Discuss potential problems and how you would address them. If constructed, The NJUS Renewable Energy Fund Wind Project would become the largest wind-diesel system operating in the state of Alaska. As such, the project planning must incorporate an ongoing analysis of potential problems and strategies to address them. Outlined below are the key issues the project is anticipated to encounter: Issue #1: Quantifying wind and ice loads for the structure at the 1,000 +/- foot elevation to derive reliable foundation loading conditions. Structures at this elevation will have significantly different ice and wind loading - unreliable tower loading conditions may lead to over-designed or under-designed foundation systems. Strategy to address: We will rely upon historic data from Anvil Mountain and the Nome met station data to estimate icing and wind design considerations. The design team will incorporate meteorological assessment conducted by trained climatologists, specific to the Nome area. Ice and wind measurements at Anvil Mountain will be conducted routinely over the winter/spring 2008/2009 to establish baseline design data. Issue #2: Powerline access routing and design. Overhead powerlines will need reliable wind and ice loading states for their design life in order to design adequate powerline structures. Permafrost and seasonal frost forces as well as groundwater will impact both the route alignment and powerline performance. If icy soils are encountered along the alignment, thaw strains can be expected. Trench backfill may increase trench drainage with potential piping of fill along the powerline. Strategy to address: Powerline routing will be conducted concurrent with site road access. Icing data will be used to determine the conversion point from lower elevation overhead to higher elevation underground systems. Frost considerations along the alignment will be investigated as part of the tower geotechnical design. Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 13 of 51 10/8/2008 Issue #3: Constructing a cost-effective tower foundation. Strategy to address: Foundation design will be developed with both the contractor and engineer, working together as a team, to determine appropriate materials and systems for the site. STG and BBFM have successfully worked together on many other communication tower and wind tower foundation designs in remote Alaskan locations. Getting contractors input up front at the concept stage of design will allow for an appropriate foundation system to be developed. Issue #4: Developing a tower foundation design that can be adapted for unforeseen field and geotechnical conditions. Strategy to address: Design and selection of foundation systems that can be modified in the field will allow us to overcome unforeseen conditions. This also applies to the quantity of foundation materials that will be transported to the site. Issue #5: Cold weather operations/Turbine icing.  Extremely low temperatures may cause materials to become brittle and less ductile, and lubricants to become less viscous, which could result in damage to parts. Such temperatures may also cause electronic and hydraulic systems to cease working. Strategy to address: It is anticipated that the turbines will experience icing conditions which will result in the loss of potential energy production. While these losses have been included in the production estimates, and anticipated in the system design, reducing these losses represents a significant opportunity to improve project economics. And several approaches to increasing production have been proposed; including blade coating, careful selection of materials and the addition of special heaters and sensors. Issue #6: Coordinated integration; matching wind to the community. Strategy to address: The value of a variable wind resource is maximized through the integrated operation of both generation equipment and loads. This is accomplished with automated control systems and ability to rapidly visualize, diagnose and make adjustments. This is enabled by remote monitoring and diagnostics. Data, information and observations obtained from operational monitoring are necessary to ensure on-going performance and reliability. Each major system component will be monitored and its performance recorded and reported automatically. This information will be readily available and from the internet. This information will allow the system to be continuously recommissioned, insuring confirmation or proper operation of all controls, communications and system components. . Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 14 of 51 10/8/2008 SECTION 4 – PROJECT DESCRIPTION AND TASKS • Tell us what the project is and how you will meet the requirements outlined in Section 2 of the RFA. The level of information will vary according to phase of the project you propose to undertake with grant funds. • If you are applying for grant funding for more than one phase of a project provide a plan and grant budget for completion of each phase. • If some work has already been completed on your project and you are requesting funding for an advanced phase, submit information sufficient to demonstrate that the preceding phases are satisfied and funding for an advanced phase is warranted. 4.1 Proposed Energy Resource Describe the potential extent/amount of the energy resource that is available. Discuss the pros and cons of your proposed energy resource vs. other alternatives that may be available for the market to be served by your project. In March 2008, the Department of Energy released a final draft report that evaluates the energy resources and energy needs of the Nome region. This report contains extensive analysis that documents the options currently available for the Nome area to reduce energy costs through the implementation of non-diesel electricity generation technologies. Excerpts from this report, which determined that “the most likely prospect of immediate savings gain is the installation of wind turbines to offset diesel generation for the electric utility”, are contained in the appendix of this application. The authors’ summary of the energy resources evaluated for the Nome area along with their conclusions are copied below: “The energy technologies analyzed for Nome fall into two categories, (a) technologies that rely upon known energy resources—diesel, wind and coal; and (b) technologies that would rely upon hypothetical (or untested) resources—geothermal and natural gas. Geothermal and natural gas resources are known to exist based on limited evaluation, but will require expensive exploration to prove the resources exist in sufficient quantity and deliverability to meet the requirements. The exploration and development costs for geothermal and natural gas are not well established and will require additional analysis to confirm the estimates. The natural gas options assumed that a drill ship would be available at day rates only and that the costs to obtain and move a ship to and from Norton Sound would not have to be borne by the project. The present value comparisons indicate that for the assumptions incorporated in the analysis regarding each of the alternatives, the wind/diesel, geothermal plant, barge-mounted coal plant using high Btu coal and natural gas exploration and development are all economically equal or better than continued reliance on diesel for both mid-range and high-range diesel price escalation. The lower Btu coal option is slightly better in the instance of a high-range diesel price escalation. The development of a natural gas resource, in addition to showing a strong potential for savings in the operation of the electric utility, would provide an economical option by providing natural gas for water and space heating throughout the community. Of the alternatives investigated, the most likely prospect of immediate savings gain is the installation of wind turbines to offset diesel generation for the electric utility. Wind units are commercially available, and the Nome utility system has already anticipated the advent of wind by including integration capability in the construction of the new power house. Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 15 of 51 10/8/2008 The geothermal and natural gas prospects both indicate potential savings greater than the wind resource, but will require additional investment in exploration and development to verify the resource potential. Nevertheless, the potential gain from each is significant, with the natural gas prospect in particular providing the additional benefit of displacing fuel oil for space and water heating. The coal plant prospect with high-Btu coal provides savings to the electric system, but to a lesser extent than the other alternatives. With low-Btu coal, savings would only be available under a high rate of diesel price escalation and under conditions of coal prices remaining constant in real terms. In either case, the savings associated with the prospect of a coal power plant are based on an engineering estimate of costs to construct an initial unit. Economies of scale from construction of multiple units of a similar design could reduce the capital cost of the system and improve the economics of a coal- based alternative.” See Section 7: Additional Documentation and Certification for detailed studies on the Nome wind resource, including studies by the U.S. Department of Energy, the Alaska Energy Authority and DNV Global Energy Concepts Inc. 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. In 2007, NJUS put on-line a new $35 million state-of-the-art power generation plant that replaced the antiquated plant, which served the community for the previous 50 years. Currently, the NJUS electrical power generation system consists of diesel powered generators, as outlined below: Brand/Model Size (kW) Age Avg. Efficiency (kWh/Gal. Diesel) EMD #20-645F4B 2,865 23 13.08 EMD #12-645E4 1,500 19 12.84 Caterpillar #3516 3,660 17 16.39 Caterpillar #3516B-LS 1,875 9 14.35 Wärtsilä #12V32B 5,211 3 16.32 Wärtsilä #12V32B 5,211 3 16.32 Caterpillar #3456B 430 3 Black start – not yet used Boiler 1.5M BTU 3 Emergency only – not yet used Boiler 1.5M BTU 3 Emergency only – not yet used Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 16 of 51 10/8/2008 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. Currently, NJUS utilizes diesel to generate its electricity. During the past 12 months, NJUS consumed 2.3 million gallons of diesel for power generation purposes; at a cost of $5.5 million. As with other rural Alaska locations, the price of diesel fuel is rising exponentially - since 2003, the price of diesel delivered to NJUS has increased by more than 250%. According to project planning estimates, NJUS should achieve net generation of approximately 6,812 MWh utilizing the new wind turbines. Based upon a reported average diesel-generator efficiency of 15.83 kWh/Gal, NJUS would realize an annual savings of 430,195 gallons of diesel fuel per year. At an average price of $3.72 per gallon, NJUS would recognize an annual fuel savings of $1,600,325. 4.2.3 Existing Energy Market Discuss existing energy use and its market. Discuss impacts your project may have on energy customers. Currently, the majority (80%) of NJUS customers are residential (single phase) customers, with commercial customers constituting the second largest (13%) number of customers. Number of Customers ‐ Twelve Months Beginning September 1, 2007  Nome is a hub community for western Alaska and has a large population for one of the state’s rural communities – the 2007 State of Alaska certified population for Nome was 3,497. According to the 2000 U.S. Census data, Nome averages 2.90 persons per household. The vast majority of Nome’s population is on the power-grid and is experiencing economic pressure from the rapidly rising energy costs. Additionally, as the regional hub, much of the Bering Straits region economy is focused on commerce and industry based in or near the City of Nome. Residents in the Nome area are negatively impacted as NJUS passes on rising fuel costs to its commercial customers. Currently, while constituting only 16% of customers, the commercial and governmental customers (non-PCE customers) purchase 77.3% of the kWh produced. kWh Sold ‐ Twelve Months Beginning September 1, 2007  Average % Single  Phase 1,642 80.18% Commercial 273 13.33% Comm  Fac 82 4.00% Govt 51 2.49% Total 2,048 100.00% Total % Residential 5,485,167 22.65% Comm Fac 2,010,273 Total PCE 7,495,440 Non PCE 25,602,975 77.35% Total 33,098,415 100.00% Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 17 of 51 10/8/2008 As costs increase for this market segment, retailers and service providers must also pass along the additional overhead to individual residents. This, in turn, contributes to the unhealthy and unsustainable economic conditions currently experienced in Nome and, so many, other rural communities. Moreover, and as a hub for Western Alaska, it is imperative that Nome’s economy remains strong in order to support the villages within the region. Both stable and affordable energy prices become a necessity to support existing populations and infrastructure throughout the Bering Strait Region. These points are well understood by many of the regional organizations that have offered documented support of this application including Norton Sound Economic Development Corporation, Norton Sound Health Corporation and the City of Nome. All of these parties believe that Nome’s economy is in jeopardy due to energy inflation and the region’s dependence on diesel-generated electricity. 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 System Overview Wind-diesel power systems are categorized based on their penetration levels and categorized as low penetration, medium penetration, high penetration and high penetration diesel off configurations. As the level of penetration increases, the average proportion of wind-generated energy to the total amount of energy supplied to the system, the degree of communication between existing power generation facilities and the installed wind energy systems increases in complexity. It has been demonstrated that low penetration systems, ones in which the proportion of wind-generated energy to total generated energy rarely does not exceed 30%, require few modifications to the existing diesel systems, but are generally less economical due to limited fuel savings, in comparison to total installation costs. This is especially true for systems designed for rural Alaskan communities because of the fixed installation costs - primarily the cost of transporting the heavy construction equipment and foundation materials needed to complete village power systems. And, these costs are incurred regardless of the total size of the project. In efforts to construct a system that considers the realities of these cost issues, this application documents a medium penetration system design that aims to maximize the absorption of available wind energy, while keeping power quality high and reducing diesel generation costs as much as possible. Furthermore, and as a result of the estimated penetration levels of the proposed system, specific equipment and operating changes will be needed to integrate the proposed wind farm into NJUS’s existing infrastructure. Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 18 of 51 10/8/2008 The Wind-diesel system proposed in this application is based on the following objectives: • Maximize fuel savings through the implementation of a system design that will deliver the highest cost to benefit ratio possible • Maintain high power quality and system stability • Utilize standardized, proven and scalable commercial components that will provide opportunities to utilize additional renewable energy supplies in the future The system architecture proposed in this application consists of four primary elements: • Five 600 kW Vestas PS-RRB wind turbines • A kinetic (flywheel) energy storage system • A distributed integrated control system • A heat recovery boiler to capture any excess wind energy While the design proposed in this application would make the completed project the largest wind turbine installation in Alaska once constructed, it consists of proven technology that will be completed and supported through contracted services with a team of Alaska’s most experienced wind energy professionals. Similar wind-diesel systems, to the one proposed in this application, have been deployed successfully in markets across the world. Moreover, it is believed that the implementation of this proposed wind installation will provide significant opportunities to further develop Alaska’s knowledge base regarding wind energy systems. Project Location Various installation locations for the project were considered based on the review of documented wind resource data, land availability and existing electrical distribution infrastructure. Project team members have concluded that the most suitable location for the wind farm would be on Newton Peak, a documented class 6 wind site, which is property owned by the City of Nome. The City of Nome has issued a resolution stating that land would be made available to NJUS to develop a project at this location, which is approximately 1 mile north of Nome. This resolution is included in Section 7 – Additional Documentation and Certification. Moreover, and through consultation with an appraiser hired by the City of Nome, the land’s value has also been determined and allocated as a certified project match. A letter from the City of Nome is included in Section 7: Additional Documentation and Certification attesting to the land value. Below is a site diagram of the proposed wind farm: Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 19 of 51 10/8/2008 System Architecture Wind Turbines During the conceptual design phases of this project, two 600 kW turbines were evaluated based on a variety of criteria. These considerations included estimated delivered price of all wind turbine components (generator, blades, tower, controls, etc.), estimated delivery schedule, expected performance and total potential savings. Our analysis has produced estimates which indicate that both turbines would produce similar cost benefit ratios if selected as the primary component of the proposed system in this application. Nonetheless, due to the high demand of wind turbines in the global market, along with the limited supply of turbines of this particular size, we believe that it is possible that we will no longer have access to either of the turbines that have been evaluated at the prices that have been quoted to us or within the delivery times that have been promised by the time grant funds are allocated. We believe that the final decision as to what turbine will be utilized will need to be made at the time when funds are made available. Of the two turbines that have been considered, the Fuhrländer 600 FL (600 kW) and the Vestas PS-RRB (600 kW), we have based our conceptual planning on the installation of the Vestas model. Should it become more attractive for NJUS to consider the Fuhrländer unit at the time of an award, we believe that only minor modifications of previously completed conceptual designs and cost estimates would be necessary. Our project team is prepared to move forward on an accelerated construction schedule utilizing either model should an award be granted. This application proposes that five 600 kW Vestas PS-RRB wind turbines be installed on top of Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 20 of 51 10/8/2008 Newton Peak on 50 meter tubular towers. Summary specifications of the PS-RRB turbine are included below: The Vestas PS-RRB is a three-bladed, horizontal axis wind turbine based on the Vestas V-47 design. The PS-RRB model is currently being manufactured new by RRB Energy in India through the oversight of Vestas corporate, the world’s leading wind turbine manufacturer. Approximately 3,000 of the previously discontinued V-47 turbines have been installed in the U.S. market and over 600 of the RRB design are currently in operation. With the exception of the Siemens generator that is included in the RRB model, all parts are interchangeable with standardized V-47 components. Due to the familiarity of the V-47 design to the majority of wind industry technicians and the ability to obtain replacement parts, it is believed that the RRB turbines could be readily serviced and the further utilization of Vestas turbines would support the number of Vestas machines already in service across rural Alaska. To further evaluate the attractiveness of utilizing the wind resource at the proposed installation site, in general, and to compare the two particular turbine models under consideration specifically, DNV Global Energy Concepts was commissioned to perform a wind energy production analysis. The study was completed through the use of computer modeling software supported by documented wind resource data supplied by the Alaska Energy Authority and historical production information supplied by NJUS. The complete study is contained in Section 7: Additional Documentation and Certification and a summary of their conclusions are noted below: Energy System Modeling Results (Total project production based on 8 m/s wind speed) Description VESTAS FUHRLÄNDER Gross wind energy production (MWh/yr) 8,963 9,989 Gross wind turbine capacity factor (%) 34.10% 38.00% Fuel consumption of diesel-only system (gal/yr) 2,103,000 2,103,000 Fuel consumption of wind-diesel system (gal/yr) 1,539,000 1,527,000 Gross diesel fuel savings (gal/yr) 563,000 562,000 Energy loss correction factor 0.76 0.76 Net diesel fuel savings (gal/yr) 428,000 427,000 Net diesel fuel savings (%) 20% 20% Source: DVN Global Energy Concepts Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 21 of 51 10/8/2008 In addition to cost and production considerations, the Vestas PS-RRB turbine was selected for its relationship with an industry standard and proven design, access to a service and support network, an estimated nine month delivery time, and the willingness of the manufacturer to support and customize these turbines for extended cold weather operation. Project partners have also engaged Alaska’s Department of Labor in discussions regarding the creation of a training program that would provide local residents with the skills necessary to perform routine maintenance and repairs on the installed turbines. Similar programs have already been developed through partnership between the Department of Labor, Alaska Village Electric Cooperative, STG and Northern Power Systems that have successfully trained individuals to perform these services within their communities. Initial discussions about the creation of similar programs designed around the specifications of the Vestas machines have been positive and further collaboration between all involved parties is expected to materialize into the development of a new training program, should grant funds be awarded to implement this proposed project. Flywheel Energy Storage System The NJUS diesel generator sets have capacities of 5200 kW, 3800 kW and 1875 kW respectively. The existing plant control system senses the demand, at any given point in time, and automatically dispatches the most efficient generator set, or combination of sets, to meet that load. As a result of the intermittent supplies of energy that will be fed into NJUS’s distribution system through the completion of this proposed project, some modifications of the existing NJUS infrastructure will be necessary. Moreover, and due also to the energy demands placed on NJUS through mining operations at Rock Creek, we believe that the installation of a flywheel at the NJUS plant would both add stability to the overall system and provide opportunities to more efficiently balance the intermittent energy supplies delivered from the installed wind turbines. Our proposed system design involves the installation of a flywheel that is electrically coupled to the existing power system. The flywheel and power electronics interface combination, by itself, is capable of basic stabilization of both the voltage and frequency of the power system without any additional information from external sources. Inherently, flywheels are able to achieve this stabilization through frequency and voltage sensing of the grid along with the stepless absorption and exportation of real power for frequency variation and reactive power for voltage support. The energy stored in the flywheel reduces cyclic loading and smoothes out power fluctuations as the electric load and wind turbine outputs change. This level of stabilization also allows for greater diesel cost savings due to lower diesel set points on the generators, reduced spinning reserve on the flywheel itself and reduced maintenance costs with diesel generator sets. The fast acting flywheel energy storage system will also provide system stability on a sub-cycle basis. The sub-second response of flywheel systems is supplemented by the multi-second response of the diesel generators. This capability decreases the contribution of the diesel generators while riding through fluctuations of the wind. Finally, additional system stabilization is achieved by controlling the pitch and power set points of wind turbines themselves. We believe that there are numerous suppliers of flywheel technology that could provide NJUS with necessary integration components once exact system specifications have been established. As indicated in the guidelines relayed in the sample grant agreement for this RFA, NJUS intends to follow a competitive bid process to secure this equipment when conceptual integration designs become finalized. Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 22 of 51 10/8/2008 Distributed Integrated Control Network To maximize the diesel savings generated through the installed wind energy system while maintaining system stability, all components must operate in a coordinated manner across the grid. This will be achieved through the installation of a network of distributed integrated controllers. These controllers, but more specifically the larger network, are designed to interface with existing power station controls. Controllers are typically mounted into existing control cabinets. Each device is driven by advanced software applications that allow each component within the system to recognize and coordinate its activities with the other units supplying or regulating energy flows on the system. The Distributed Integrated Control Network (DICN) also expands the capabilities of the existing plant supervisory control and data acquisitions system (SCADA) through the network of standard, commercially available component controllers, which run sophisticated software to integrate increasing levels of wind energy. In the wind-diesel configuration that has been proposed in this application, the power plant SCADA would trigger the various diesel generators to start and stop; while also issuing power set-points for each component in the power plant. The DICN would incorporate the setting and commands of the SCADA and configure the other components of the system, based on the load and available wind energy. In addition to the installed wind turbines and existing generator sets, a DICN controller would also be embedded in the flywheel module. Thus, the modular distributed control system controller could also be used as a complete, or supplementary, SCADA system, if called for during the development of finalized integration plans. Software will need to be either developed by partners or sourced by suppliers for this level of functionality - functionality designed to issue start, stop, step point commands and drive user interfaces, while providing opportunities for remote diagnosis. These features will be an essential component of the completed project that ultimately will be monitored by NJUS and electrical integration partners. Other components of the control network include: • Diesel Generator Monitors: Small DIN-rail monitoring modules will be added to the existing generator controllers. These modules communicate information between the generator sets and installed flywheel about the current state of the generator (running, stopped, on-line or off- line) as well as how much power the generator is delivering at any given point in time. • Wind Turbine Interface: The wind turbines are provided with a customer interface to the wind turbine controller (WTC) and monitoring modules will be added in order to communicate with the wind turbines. These modules send and receive data, such as the state of the machine (running, stopped, on-line and off-line, power generated, alarms, nacelle position, etc.), current energy production, system performance and system monitoring. Commands can be initiated from the wind turbine controller itself or from a centralized control station and typically include options that will allow system operators to start/stop turbines, control power outputs of the turbines through pitch regulation or power set point control and adjust other blade components. The WTC would communicate with NJUS via fiber optic cable that will be run from the installation site into the existing distribution system adjacent to Nome’s high school and will be provided by the turbine supplier. Heat Recovery System There will be times when the output of the wind farm proposed in this application could exceed the Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 23 of 51 10/8/2008 electric requirements of the community. Under these conditions, two options are available to maintain system stability: 1. wind turbine output can be curtailed or 2. loads can be managed to capture or control this excess energy. In efforts to capture all energy supplied from the installed wind turbines, our system design includes the installation of an electric boiler grid interface to be installed at the Nome High School swimming pool complex. This boiler grid interface would be utilized primarily as a system dump load designed to capture excess wind energy. Through communication with other system components and system wide energy monitoring, the dump load interface can be used to efficiently manage power supplies while making maximum use of the wind energy generation. During times of increasing wind power generation, the dump load system funnels excess energy (energy that at any given point in time exceeds current system wide electricity demand) into a thermal heating unit. Thus, excess energy supplies are managed by increasing the total system load. During times of collapsing wind power generation, the dump load interface follows the total system load closely and reacts by decreasing its load. Thus, the dump load interface is able to lower the total power demand on the entire system. The installation of the dump load interface is also expected to improve the grid quality by providing reactive power and voltage level stabilization. The electric heat recovery boiler would be plumbed into the existing heating system located at the community pool. Excess wind energy, when available, would be captured in this boiler and the heat used to offset fuel costs of running the high school and swimming pool. The heat recovery load at the high school would also require a separate metering and service panel, including cables and breakers. The system would also be designed to utilize the existing temperature controls and act as demand managed devices controlled through the master control overlay. The method of communication proposed is Ethernet. Major community buildings with large heating requirements, such as the school, city offices, the Nome hospital, city shop, and water and sewer treatment facilities also have been considered as other potential installation sites for dump load components if the proposed wind farm is expanded at a later date and it is deemed necessary to install additional system dump loads. Energy Delivery and Integration Design Installed wind turbines will be placed approximately 900 feet apart on top of Newton Peak as described earlier in this section. Conceptual project designs also indicate that approximately two miles of new transmission lines will be needed to connect the installed turbines to existing 12.47 kV transmission lines on the Kougarok Road, west of the installation site. Power lines connecting the turbines and substations to existing electrical distribution lines will be buried in order to achieve cost savings and reduce the potential of icing complications. Once connected to the existing system, energy supplies and system performance will be monitored as indicated earlier in this application. A one-line diagram of the proposed system is below: Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 24 of 51 10/8/2008 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 City of Nome owns the land at Newton Peak where the proposed wind farm will be located. As the owner of the NJUS, the City of Nome definitely has a vested interest in the proposed NJUS Renewable Energy Fund Wind Project and is committed to providing the land resources needed for the project. The City of Nome will contribute, as match, the required land. There are no known, or unresolved, land issues at this time. See Section 7: Additional Documentation and Certification for a letter of commitment from the City of Nome and certification of land valuation. Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 25 of 51 10/8/2008 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 Based upon consultation with Hattenburg Dilley & Linnell LLC and information supplied in the “Nome Region Energy Assessment, DOE/NETL 2007/1284”, the following chart has been prepared to indicate applicable Federal and State permitting activities and their relevance to project components: Permit/Activity Applicability EPA National Pollutant Discharge Elimination System Applicable (if stormwater from construction disturbance) National Marine Fisheries Service Endangered Species Act Consultation Applicable F&W Coordination Act Consultation, Marine Mammal Act Applicable U.S. Fish & Wildlife ESA Consultant Applicable F&W Coordination Act Consultation Migratory Bird Protection Act Consultation Applicable Federal Aviation Administration Tower/lighting permit Applicable Alaska Department of Natural Resources Alaska Coastal Management Program (ACMP) Consistency Review Applicable (within coastal zone) Coastal Plan Questionnaire Applicable (within coastal zone) Cultural Resource Protection Applicable Alaska Department of Environmental Conservation Section 401 Certification Applicable HDL will lead project permitting efforts and anticipates that the permitting process will be completed within 120 days of the start of the project. This is based upon similar project experience and the following: • A field archaeological survey will not be needed for SHPO concurrence • There is no reason to assume there will be any significant environmental impacts • A Phase I Environmental Site Assessment should not be needed • Field delineation of wetlands should not be needed While there is not reason to believe that the project will encounter any insurmountable barriers, there are two potential challenges that could arise: 1. The U.S. Fish & Wildlife Service may express concern regarding transmission lines and their Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 26 of 51 10/8/2008 potential impact on migratory birds or the eiders, an endangered species found in the area surrounding Nome. Strategy to Address: Coordination will begin early in the project. At times mitigation can involve slight relocations to avoid potential concerns and this will be done early in Phase III. Underground transmission lines will be used to avoid these concerns. 2. Coordination with the FAA to determine air hazards will be critical. Strategy to Address: Coordination will begin as soon as the project begins in order to incorporate FAA considerations into final designs. 4.3.4 Environmental Address whether the following environmental and land use issues apply, and if so how they will be addressed: • Threatened or Endangered species • Habitat issues • Wetlands and other protected areas • Archaeological and historical resources • Land development constraints • Telecommunications interference • Aviation considerations • Visual, aesthetics impacts • Identify and discuss other potential barriers Environmental analyses will be conducted to evaluate the potential effects of the proposed project. This analysis will not involve field work at this level outside of the site visit. Anticipated environmental issues to be addressed include: • Historical and Cultural Impacts. A search of the Alaska Historical Resource Survey will be conducted. After consulting with the native tribes and corporations, we will seek a State Historical Preservation Office (SHPO) concurrence of “No Historic Properties Affected.” • Wetlands. A review of the U.S. Fish & Wildlife Service’s National Wetlands Inventory will be conducted to identify wetlands in the project area. Where wetlands are encountered, a delineation report will be submitted to the U.S. Army Corps of Engineers for a jurisdictional determination. Wetlands impacts will be minimized to the greatest extent feasible. • Threatened & Endangered Species. An informal U.S. Fish & Wildlife Service (USF&W) Section 7 Consultation is anticipated due to the concern generated from wind towers and transmission lines with regards to migratory birds. • FAA Determination of No Hazard. HDL will apply for a determination from the FAA that the wind towers will not be a hazard to air traffic in the area due to its proximity to the airport. Issues that are not anticipated to be of major concern, but will be addressed, include land development constraints, telecommunications interference and visual impacts. Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 27 of 51 10/8/2008 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 project cost of the NJUS Renewable Energy Fund Wind Project is estimated to be $15,534,309, inclusive of Phases I to IV. As discussed previously, this project has advanced through Phases I and II and is ready for Phases III and IV activities. Much of the cost of Phase I and II were borne by third-party researchers, however, project team members have contributed $29,552 in project conceptual design and initial feasibility study. The total grant request for the NJUS Renewable Energy Fund Wind Project is $13,951,326 based upon the following: Total Project Costs $15,534,309 Less: Phase I and II Contributed Costs ($ 29,552) Total Phase III and IV Costs $15,504,757 Less: Additional Investments ($ 1,553,431) Total Grant Request $13,951,326 The additional investment of $1,553,431 is inclusive of $830,000 of land contributed by the City of Nome, $128,200 in labor and equipment contributed by the NJUS for line transmission construction, and $595,231 in cash contributed by the NJUS. As indicated in the following budget summary, project costs have been developed utilizing contractor and vendor bids and cost quotes. The professional, contractual and construction cost estimates are expected to remain valid until the end of 2008; however, the turbine cost estimates are only valid for 30 days. As discussed earlier, this is not anticipated to create insurmountable project delay or overruns. Additionally, the budget summary below indicates that approximately 10% of the total project cost will be contributed by the NJUS and the City of Nome - $595,231 in cash and $958,200 in in-kind contributions. The capital costs for this project are estimated to be $15,102,757 and development costs are estimated to be $431,552. Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 28 of 51 10/8/2008 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 The anticipated fixed operating and maintenance (O&M) costs for the NJUS Renewable Energy Fund Wind Project are 3% of the project costs annually and variable O&M costs are $.00975 per kWh. (Based upon industry standards presented in the U.S. Department of Energy report, “The Nome Region Energy Assessment, DOE/NETL 2—7-1284”) Therefore, based upon total project costs of $15, 534,309, the annual fixed O&M would be $436,397. And, based upon expected annual gross energy generation of 8,963 MWh, variable O&M costs would be $87,389. The total estimated annual O&M costs would be $523,786. While it is expected that NJUS would potentially add one new staff member to manage the new wind farm, the annual estimated expenses would vary and are not anticipated to reach this total amount each year. The anticipation of performing certain major repairs on the wind farm during certain periods of its operational life (gear box replacement, blade repair, etc.) has been factored into this estimated annual average O&M expense. On-going O&M costs of the constructed wind project would be funded by energy sales by NJUS. BUDGET INFORMATION BUDGET SUMMARY:NJUS Renewable Energy Fund Wind Project Milestone Federal Funds State Funds Local Match  Funds (Cash) Local Match Funds  (In‐Kind) Other Funds TOTALS Phase I and II Tasks (Reconnaissance, Feasibility and Conceptual Design) 1. Initial Renewable Resource Review (DOE Report)$0 $0 2. Existing Energy System Analysis (DOE Report ‐ Partners)$4,302 $4,302 3. Proposed System Design (All Project Partners)$8,004 $8,004 4. Proposed System Costs Estimations (All Project Partners)$3,336 $3,336 5. Proposed Benefits (GEC ‐ STG)$3,804 $3,804 6. Energy Market/Sales Analysis (NJUS)$1,998 $1,998 7. Permitting Review (HDL)$230 $230 8. Analysis of Potential Environmental Issues (HDL)$230 $230 9. Land Ownership Preparations (NJUS)$1,998 $1,998 10.  Legal  Consultations $400 $400 11.  Preliminary Analysis and Recommendations (Aurora Consulting)$5,250 $5,250 $29,552 Phase III Tasks (Final Design and Permitting) 12. Project Management (STG Estimate)$125,000 $125,000 13. Perform Geotechnical Analysis (DMA Estimate)$44,000 $44,000 14. Finalize Energy Production Analysis (GEC Estimate)$10,000 $10,000 15. Finalize Foundation Designs (BBFM Estimate)$19,000 $19,000 16. Finalize System Integration Designs (IES/EPS Estimate)$222,346 $222,346 17.1 Finalize Land Agreements (Legal Estimate  ‐ NJUS)$2,000 $2,000 17.2 Purchase Land (NJUS)$830,000 $830,000 18. Turbine Procurement (Turbine Estimate ‐ IES/STG)$6,713,700 $6,713,700 19. Begin Financing Development (Legal Estimate ‐ NJUS)$2,000 $2,000 20. Apply for/Obtain Permits (HDL Estimate)$20,000 $20,000 21. Draft Final Operational Business Plan (Aurora Consulting Estimate)$15,000 $15,000 $8,003,046 Phase IV Tasks (Construction, Commissioning, Operation and Reporting) 22. Project Management  (STG Estimate)$125,000 $125,000 23.1 Foundation Material  Procurement (STG Estimate)$1,259,478 $1,259,478 23.2 Mobilization and Demobilization Costs (STG Estimate)$1,028,075 $1,028,075 23.3 Site Access and Foundation Development (STG Estimate)$285,580 $285,580 23.4 Foundation Installation (STG Estimate)$823,544 $823,544 23.5 Tower/Turbine  Erection (STG Estimate)$396,639 $396,639 23.6 Transmission/Distribution Lines (NJUS/STG/EPS Estimates)$434,400 $128,200 $562,600 23.7 Power Storage Foundation Pad (STG Estimate)$45,330 $45,330 23.8 Construction Survey/As‐Built Diagrams (STG Estimate)$26,220 $26,220 23.9 Job Site Clean Up (STG Estimate)$15,866 $15,866 24. System Integration (EPS Estimate)$1,608,769 $591,231 $2,200,000 25. SCADA Installation (IES Estimate)$503,380 $503,380 26. System Calibration (IES/EPS Estimate)$220,000 $220,000 27. Final Business Plan Development (Aurora Consulting Estimate)$10,000 $10,000 $    7,501,710.63  Total  Project Costs (Phase I, II, III and IV)$       13,951,326 $            595,231 $                    958,200  $              29,552 $        15,534,309  Total Phase I and Phase II Costs Total Phase III Costs Total Phase IV Costs Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 29 of 51 10/8/2008 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 NJUS generates electricity for sale to the community of Nome. Currently, NJUS sells electricity for an average price of $.31 per kWh and upon completion of the wind project anticipates an average price of $.285 per kWh. Based upon estimated project cashflows, as discussed throughout this proposal, the proposed rate of return from the grant-funded project is 8.78%. A detailed summary of cash flow assumptions and rate of return calculations is presented in Section 4.4.6 4.4.4 Cost Worksheet Complete the cost worksheet form which provides summary information that will be considered in evaluating the project. A completed Cost Worksheet is included in Section 7: Additional Documentation and Certification. Information included on the worksheet was derived from existing system data and the proposed project design information as well as from the “NJUS Renewable Energy Fund Wind Project Supporting Documents” also included in Section 7: Additional Documentation and Certification. 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 NJUS Renewable Energy Fund Wind Project will be owned and operated by NJUS, upon completion of the project, which is a sustainable, well-managed, city-owned utility. As such, it is anticipated that the on-going operations and maintenance – both short and long term – will be incorporated into the existing NJUS utility operations and management plans. Below are highlights of the NJUS management plan: History and Business Structure The City of Nome (“City” or “Nome”) is an Alaska municipal corporation, incorporated April 9, 1901. The City of Nome operates under the provisions of Alaska Statutes, Title 29 (“AS 29”), and the Nome Code of Ordinances (“NCO”) as enacted and amended from time to time by the Nome Common Council (“Council”). Nome has elected to utilize the Council-Manager form of government, whereby a city manager is appointed to administer the operations of the city. A mayor is also elected and performs the responsibilities outlined in AS 29, the NCO, and as directed or delegated by the Council. The Nome Joint Utility System (“NJUS” or “Utility”) is a component unit of the City created by NCO Chapter 15. The elected five-member Utility Board (“Board”) is charged with operation and management of all utilities owned by the City and hiring a utility manager. Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 30 of 51 10/8/2008 Organizational Chart Management Team The general manager is the chief operating and administrative officer whose areas of responsibility include: manage and operate all public utilities; enforce the ordinances and regulations pertaining to the policies and practices of the utility; manage public utility employees, prepare and administer annual operating and capital improvement program budgets; prepare and submit reports on finances and administrative activities; strategic planning; grant writing and administration; operational reporting to elected Board and Council; assume such other authority and perform such other duties as may be lawfully prescribed by the Board. Additionally, as outlined above, the general manager will be assisted by the chief financial officer, superintendent of field operations, power plant foreman and line foreman. Utility Accounting NJUS is operated from accounting funds separate from the general fund of the City of Nome. Separate books, records and accounts are maintained to reflect the financial condition of the utilities, their income and expenses and the status of their bond redemption funds. None of the income, money or property of the Utility is placed in the general fund of the City or is used for the benefit of anything other than NJUS, unless NJUS is compensated or due value is received in return. The NJUS Board provides for an annual independent audit of the accounts and financial transactions of the Utility, performed by an independent certified public accountant. For the past 20+ years, the NJUS’ independent auditors have issued “unqualified” (clean) opinions on the Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 31 of 51 10/8/2008 utility’s financial records. Copies of the audit are available upon request. Accounting functions of the Utility are performed under the direction of a chief financial officer, appointed by the general manager, and a support staff of accounting technicians. The Utility is a government enterprise fund. The Utility maintains separate accounts for electrical production and distribution, water and sewer operations and construction projects, which are funded by general fund appropriations, grant assistance from state and federal agencies and other contributors. The Utility utilizes an integrated accounting software suite “Insight” for general accounting and “Connect” for consumer accounting/billing, developed by Professional Computer Systems (PCS), Denison, IA, and an automated electric meter reading program, referred to as “the Turtle system”, developed by Hunt Technologies, Pequot Lakes, MN. The Utility currently uses the following “Insight” accounting modules: General Ledger, Payroll, Accounts Payable, Fixed Assets, Cash Management and Project Costing. “Connect” software drives customer management and Accounts Receivable, and interfaces directly with “Insight”. As noted previously, the Utility maintains separate cost centers within its accounting records for: Power Generation, Power Distribution, Water & Sewer (with further segregation to water distribution and wastewater collection), Consumer Accounting and General & Administrative expenses and construction activities segregated by project. Within the Project Costing module, costs are segregated by components such as labor, materials and supplies, services, equipment rental, engineering, inspection, travel, etc., and allow for summary or detailed transaction listing, as may be required for internal or external (grant) reporting. Staffing Requirements It is anticipated that NJUS will require an additional power operator upon completion of the wind farm, which has been included in the anticipated cost information provided above. Staff Training The State of Alaska, Division of Labor and Workforce Development has expressed interest in working with NJUS/STG, on the NJUS Renewable Energy Fund Wind Project, to fund OJT-type training for the NJUS operators on the wind turbines, system controls and other project components. Currently, project members plan to bring representatives of the chosen turbine supplier to Nome to provide O&M training for the Nome Joint Utility System and UVEC operators. Training plans will be finalized closer to the startup of the project. 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 part of the Phase I and II activities of this project, an initial economic analysis and feasibility was conducted for the proposed project. Based upon this analysis, the project Benefit/Cost ratio is estimated to be 3.14 and the Project Payback is expected to be 10.85 years. Based on a discount rate of 4%, which corresponds to the effective interest rate for borrowing by municipal electric systems such as NJUS, the project has a NPV of $7,994,612. A detailed model of project cash flows can be provided upon request and a summary of this analysis is included below: Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 32 of 51 10/8/2008 Project Returns NPV Cumulative   Benefit  (w/ O&M)Total Project Costs Discount Rate 3% $10,576,905 48,849,138$     15,534,309$     4% $7,994,612 5% $5,790,391 Benefit/Cost  Ratio Total Grant  Request 6% $3,902,946 3.14 13,951,326$     7% $2,281,834 8% $885,408 Payback (Years)Total Cash Match 10.85 595,231$           Project IRR 8.72% Cost/Installed KW 4,849$              Phase I & II Contributions 29,552$             The next step for the project is to proceed with Phase III activities upon receipt of grant funding, followed quickly by Phase IV activities. No additional development recommendations have been formulated at this time – additional recommendations will be formulated upon conclusion of Phase III and IV activities. The major economic assumptions utilized in our economic forecasting are included on the following page. Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 33 of 51 10/8/2008 Assumptions Turbine Cost V 6,713,700$         Permitting  Costs ($)20,000$               Geotechnical Engineering Costs ($)74,000$               Structural Engineering Costs ($)19,000$               System Integration  Costs ($)3,044,172$         Construction Costs ($)4,190,707$         Professional Services/Project Management/Other ($)484,978$                Total  Contractual Costs 14,546,557$       In ‐Kind (non‐cash) Contributions Conceptual Design Contributions (Phase  I & II  Costs)29,552$               Land Contribution (Certified Value)830,000$             Labor/Equipment Contributions 128,200$                 Total In‐Kind Contributions 987,752$            Include In‐Kind Contributions in  Cash Flows Y Total Project Match Contribution (% of Total Project Costs)10% Project Match Contribution (In‐Kind Labor/Equipment ‐Line Work)128,200$             Include Project Match Labor in Cash Flows Y Include Estimated Energy Sales in Cash Flows N Estimates Sale Price of Wind Energy ($/kWh)0.285$                 Estimated Project Life  (Years ‐ Based on DOE/Industry Data)25 Installed Turbines 5                           Fixed Annual Project O/M Costs (DOE/Industry ‐ % of Total  Project  Cost)3.00% Variable Annual Project  O/M Costs (DOE/Industry ‐ $/Generated kWh)0.00975$             Estimated Diesel Cost for  Year 1 ‐ (NJUS Data ‐ $/gal)3.72$                   Estimated Annual Diesel Cost Inflation (DOE %)2.12% Estimated Value of Green Tag Sales ($/kWh ‐ Based on AK sales data)0.01$                   Additional Annual  "Ecotourists" (people)4 Average Value of Tourist (State of Alaska ‐ $)1,300$                 Estimated Annual Value  of Health Benefits ($)‐$                        Generated  through reduced diesel usage Estimated Annual Value  of Reduced Diesel Handling ($)154,913$                NJUS  currently leases  additional per  gallon diesel storage space @:0.36$                   Expected Annual Gross Energy Generation (GEC  Est. ‐ Project ‐ MWH)8,963                   Estimated Wind Project Loss Factor (GEC Estimate  ‐ %)24% Estimated Annual Net  Generation (GEC Estimate ‐ Total Project ‐ MWH)6,812                   Estimated Efficiency of Existing Diesel Gen‐Sets (NJUS Data ‐ kWh/Gal)15.83 Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 34 of 51 10/8/2008 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 Based upon assumptions presented throughout this proposal, the potential annual displacement of diesel fuel is expected to 430,195 gallons per year over the lifetime of the project. At an assumed starting fuel price of $3.72 per gallon without considering expected annual energy inflation, the annual dollar savings is estimated to be $1,600,325. Based upon the anticipated Regulatory Commission of Alaska tariff of $.285 per kWh, it is anticipated that NJUS will generate $1,941,385 from wind generated electricity annually. Green tag sales also are assumed to be project revenue streams. Based upon recent Alaskan green tag sales involving Nome projects, our economic analysis assumes that we would also be able to negotiate a similar purchase price with the wind project proposed in this application. We have estimated that NJUS would be able to sell green tags generated through the project at $.01 per kWh. Based on the project’s expected production, annual green tag sales have been estimated at $89,630. Two additional project benefits include potential community-wide tourism revenue and reduced diesel-fuel storage costs for NJUS. The project economic analysis assumes that four individuals will be motivated, at least partially, to travel to Nome to learn more about the wind project and to visit the wind farm each year. Based upon economic research by the State of Alaska, Department of Commerce, Community and Economic Development (AVSP 2006), the average visitor to the Nome area provides an economic benefit of $1,300 to the visited community; therefore, additional community benefits would be $5,200 per year. Currently, NJUS leases bulk fuel storage space for $.36 per gallon of fuel. Therefore, based upon reduced diesel fuel consumption, NJUS should save an average of $154,913 per year. The utilization of wind power technologies in Nome is also expected to provide benefits that are less quantifiable or non-financial in nature. Through the implementation of this project and the resulting volume of displaced fuel, NJUS will significantly reduce the amount of greenhouse gasses emitted through the use of diesel electricity generation. While this environmental benefit can be quantified through emissions calculations and valued through the expected sale of green tags, the project’s complete contribution towards global climate change mitigation efforts is difficult to precisely determine. The completed project is also expected to reduce volatility in electric rates across the community of Nome and provide more stabilized prices for those who purchase energy from NJUS. Additionally, it is also possible that Nome could experience an increase in local employment due Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 35 of 51 10/8/2008 to a decrease in the amount of funds that previously have been leaving the community to cover rapidly increasing fuel prices expenditures. Finally, as a result of this decrease in fuel purchases, the State of Alaska’s PCE program will also be able to free up funds to spend elsewhere in the state due to the reduced need of PCE support of the Nome community. 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 total project costs of the NJUS Renewable Energy Fund Wind Project is estimated to be $15,534,309, inclusive of Phases I to IV. As discussed previously, this project has advanced through Phases I and II and is ready for Phases III and IV activities. Much of the cost of Phase I and II were borne by third-party researchers, however, project team members have contributed $29,552 in project conceptual design and initial feasibility study. The total grant request for the NJUS Renewable Energy Fund Wind Project is $13,951,326 based upon the following: Total Project Costs $15,534,309 Less: Phase I and II Contributed Costs ($ 29,552) Total Phase III and IV Costs $15,504,757 Less: Additional Investments ($ 1,553,431) Total Grant Request $13,951,326 The additional investment of $1,553,431 is inclusive of $830,000 of land contributed by the City of Nome, $128,200 in labor and equipment contributed by the NJUS for line transmission construction, and $595,231 in cash contributed by the NJUS. A completed Grant Budget is attached in included in Section 7: Additional Documentation and Certification. Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 36 of 51 10/8/2008 SECTION 7 – ADDITIONAL DOCUMENTATION AND CERTIFICATION SUBMIT THE FOLLOWING DOCUMENTS WITH YOUR APPLICATION: A. Resumes of Applicant’s Project Manager, key staff, partners, consultants, and suppliers per application form Section 3.1 and 3.4 B. Cost Worksheet per application form Section 4.4.4 C. Grant Budget Form per application form Section 6. D. An electronic version of the entire application per RFA Section 1.6 E. Governing Body Resolution per RFA Section 1.4 Enclose a copy of the resolution or other formal action taken by the applicant’s governing body or management that: - authorizes this application for project funding at the match amounts indicated in the application - authorizes the individual named as point of contact to represent the applicant for purposes of this application - states the applicant is in compliance with all federal state, and local, laws including existing credit and federal tax obligations. F. CERTIFICATION Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 37 of 51 10/8/2008 LIST OF ADDITIONAL DOCUMENTATION AND CERTIFICATION: A. Resumes of Applicant’s Project Manager, key staff, partners, consultants and suppliers 1. NJUS Management Team Resumes 2. Project Manager – STG Inc. – Resumes 3. Contractor/Consultant Resumes i. Intelligent Energy Systems LLC ii. DNV Global Energy Concepts Inc. iii. Electrical Power Systems iv. Duane Miller Associates LLC v. Hattenburg, Dilley & Linnell LLC vi. BBFM Engineers vii. Aurora Consulting B. Cost Worksheet C. Grant Budget Form D. Electric Version of Application (Attached on CD Rom) E. Governing Body Resolution 1. NJUS Resolution 2. City of Nome Resolution 3. Match Documentation (NJUS/City of Nome) 4. Partners’ Match Documentation F. “NJUS Renewable Energy Fund Wind Project Supporting Documents” 1. GEC Report: “Preliminary Assessment for Nome Wind Energy Project” 2. “The Nome Region Energy Assessment, DOE/NETL 2—7-1284” G. Project Correspondence & Letters of Support 1. Documentation of Land Value 2. Norton Sound Health Corporation Board Resolution 3. Norton Sound Economic Development Corporation Correspondence 4. Letter of Support from Adjacent Land Owner Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 38 of 51 10/8/2008 Resumes of Applicant’s Project Manager, Key Staff, Partners, Consultants and Suppliers Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 39 of 51 10/8/2008 NJUS Management Team Resumes 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 40 of 51 10/8/2008 Project Manager Resumes STATEMENT OF QUALIFICATIONS                 11820 S. Gambell Street • Anchorage, Alaska 99515 • Phone: (907) 644‐4664 • Fax: (907) 644‐4666  info.stginc@gci.net • www.stginc.cc  Over the past fifteen years, STG, In remier construction services and management company. Dealing mainly in rural Alaska, the company has played a major role in high profile projects such as wind energy installations, communication tower installations, and community bulk fuel and diesel generation upgrades, to name a few. STG specializes in remote project logistics, pile foundation installations, tower erections, and construction management. STG takes pride in its wealth of experience, gained from years of work throughout “bush” Alaska, and through its ability to deal with the diverse and challenging logistics and conditions which it encounters on nearly every project it undertakes in remote locations.  Company Overview In 1996, St. George Construction was incorporated as STG, Inc. Since incorporation, STG has become the preferred construction management company for both the Alaska Energy Authority (AEA) and the Alaska Village Electric Cooperative (AVEC). Many of the projects executed by these two entities are managed and constructed by STG. STG’s core competencies include bulk fuel systems, power plant construction (both modular and steel-framed), wind farms, and pile foundations (driven piles, post tension rock anchors, helical anchor systems, freeze back, and active refrigerated piles). STG is the prevalent pile foundation contractor for Interior and Western Alaska. Additionally, STG has expanded to become United Utilities’ preferred contractor for its “Delta Net Project”, which involves the installation of communication towers and related equipment throughout the Yukon Kuskokwim Delta. STG has achieved this preferred status by demonstrating competitive rates and the ability to perform in remote locations with extreme logistical challenges. Qualifications The STG team has developed and maintained the capacity to manage projects through a set of key deliverables to ensure appropriate management of jobs across the complete project cycle including: • Provision of a quality project at a fair and reasonable price • Timely delivery within budget • Safe and professional performance on all work • Positive relationships with clients to ensure that project deliverables are met • New modern equipment that results in high productivity • State of Alaska Professional Land Surveyor (Reg. 10192) on staff with modern Topcon GPS Control through Detailed Project Planning STG focuses pre-construction efforts on planning and preparation. A project team is identified which includes management, administrative, and field supervision personnel. The team establishes budgets, c. has grown and developed into a p production targets, a master construction schedule, and detailed work plan for each project. The planning process involves key supervisory personnel as all aspects of the project are analyzed with particular attention to logistics, labor and equipment resource needs, along with specific material requirements. This results in a clear understanding of the goals of the client, the ontractual requirements, scope of work, and entification of potential obstacles that may impact ion of the job. ough to the administrative level , accurate documentation and reporting, and on to the field level where clear goals of roduction and quality are reinforced through the superintendent’s and foremen’s daily huddles and ost Containment anagement decisions. The project manager and field ork together through this reporting y potential problems and direct resources rform “crisis management” while providing clients with TG employees ’s civic responsibility to local c id the successful complet The project-planning phase also establishes key systems which help assure quality throughout the project. This begins at the management level with a commitment to providing a quality project to the client and carries thr with timely p schedule reviews. C STG maintains budgets for all labor, material, and equipment for each project allowing managers to effectively manage project costs. Expense categories are tracked and updated weekly by the project managers and this information is then communicated to the field pervision level for use in making timely, proactive su m superintendent w system to identif as required to address issues before they impact the work. This proactive approach prevents STG from having to pe on-budget, on-time, turnkey deliveries of completed projects built to engineered specifications. STG maintains a philosophy to deliver the highest level of quality within the industry. S also realize the company’s commitment to its clients along with STG communities. The work that STG performs is a reflection of this commitment. Construction Management and Project Supervision Experience STG has built a reputation of professionalism an products within a set schedule and defined budget. construction services and management contracts wit • Alaska Village Electric Cooperative (A • Alaska Energy Authority (AEA) • United Utilities Inc. (Recently acquire STG has built a wealth of knowledge d thoroughness by delivering the highest quality As a result, STG has been awarded and maintains h the following clients: VEC) d by GCI, Inc.) and experience for lanning, execution, and completion of projects across ral Alaska. Over the years, STG has also enjoyed the ay of he company prides itself in its ability to professionally eal with all the different entities that are related to a roject. In this regard, STG maintains a close working relationship with AVEC’s engineering presentatives, a so id relationship with the AVEC management staff, along with strong connections to rs and vendors across the state of Alaska. e-of-the-art dump trucks, loaders, excavators, pile ural construction projects. During the efficiently supported logistically from two cation shop located in Anchorage, AK and its ons, company construction crews are fully needs that may arise during the course of the p ru opportunity to successfully implement a large arr projects specifically for AVEC including bulk fuel upgrades, diesel power, wind generation, and energy distribution systems. STG can also coordinate all project logistics from procurement, to transportation, to the final project demobilization. T d p re l various sub-contracto STG operates a modern fleet of fourteen cranes, stat drivers, and other equipment needed to support full scale r construction phase of STG projects, remote field crews are STG offices: the company’s headquarters and fabri staging yard located in Bethel, AK. From these locati supported in the field for parts, groceries, and any other project. STG Projects Selawik Power Plant, Tank Farm, and Wind Turbine Installation Client: AVEC Year Completed: 2004 The Selawik Bulk Fuel Upgrade Project exemplifies STG’s diverse capabilities. STG was highly he tank farm and power plant. The company executed the pile site, erected four 65kW wind turbines, of pipelines. n Kasigluk, STG once again demonstrated its abilities to execute omplex, multi-faceted projects. This project entailed transferring primary power generation from Nunapitchuk to Akula Heights while maintaining power generation to these two villages and also m intaining power to Old Kasigluk. As part of this project, STG constructed a new bulk fuel retail facility for the communities of Akula Heights and Old Kasigluk along with a new bulk fuel storage facility, totaling over 600,000 gallons of storage capacity in all. This project also included the construction of a power distribution system to the three aforem villages, the installation of a new diesel generation plant, the erection of three 100 kW wind turbines, the installation of a heat recovery system, upgrades to the school districts bulk fuel facilities, and the installation of a standby generator in Nunapitchuk. involved with the planning and design of t foundation work, fabricated ten 50,000 gallon storage tanks on- and tied the completed system together with a complex network Nunapitchuk-Kasigluk Bulk Fuel Upgrade, Power Plant, and Wind Turbine Installation Client: AVEC Year Completed: 2006 I c a entioned Toksook Bay Power Plant, Wind Generation, and Interties and Nightmute are located in Western Alaska on Nelson Island, an ideal installation of 23 miles of ower lines. STG orchestrated schedules, equipment, materials, field work and logistics to successfully bring this project to completion. Due to the impassible summer tundra conditions, all the intertie work took place in the winter season during sub-zero temperatures. many different levels of scope. iversity in rural construction and e Alaska Energy Authority the set-up, installation, and ties along the middle g the winter Client: AVEC d: 2008 Year Complete oksook Bay, Tununak,T location for wind generation. STG helped deliver a wind/diesel integrated power project for these communities. With three Northwind 100kW wind turbines and a new power plant complete with switch gear and heat recovery module in Toksook Bay, power can now be produced from either diesel fuel, or the natural powers of the wind. In order to capture the greatest value for all island residents, an intertie etwork was established, which connected the three communities through the n p Additional STG Projects STG has completed numerous projects for AVEC throughout the state on The company would also like to highlight a few other examples of its d management for other clients. STG has managed and constructed over a dozen bulk fuel upgrades for th across the western half of Alaska. The most notable of these projects was commissioning of eight modular power plants in eight unique communi Kuskokwim River. The units were built and prepared in STG’s Anchorage yard durin months, then delivered and installed on each site during the short summer season. The company has also gained valuable experience dealing with tower erection and foundation design. ontract with UUI, STG has built foundations for, and has erected, over thirty hroughout western Alaska. This project, known as the Delta-Net Project, has nked dozens of communities for tele-medicine and broadband communication. Two of the most hich unity of St. Paul. Under its term c communication towers t li notable towers are the 305-foot tower in Eek, and the 60-foot tower on top of Marshall Mountain w also required construction of a five-mile access road from the village of Marshall. STG has grown into one of the most experienced integrators of alternative energy systems within the state of Alaska. In addition to the previously referenced projects, this experience is documented through STG’s work to erect and install two Vestas 225 kW wind turbines for TDX Power on the remote Bering Sea island comm Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 41 of 51 10/8/2008 Contractor/Consultant Resumes Company Overview Global Energy Concepts, LLC (GEC) is a multi-discipline engineering and technology consulting firm providing services to clients involved in the energy industry. Recognized as leaders in the wind energy industry, the firm specializes in the analysis, design, testing, and management of wind energy systems and projects. Our experience includes both utility- scale and small-scale applications of wind energy technologies. GEC combines technical expertise, managerial capabilities, and common- sense financial and business knowledge to provide comprehensive consulting services to assist our clients in meeting their objectives. The services offered by GEC encompass a wide range of assignments including independent engineer and due diligence services; project feasibility and economic assessments; wind resource monitoring; power curve, noise, power quality, and loads measurement and documentation; wind flow and wake modeling; energy projections, site optimization, and visualization; component and turbine specification, design, analysis, test and certification; education and outreach materials; international training and development support; litigation support and dispute resolution; project performance evaluation and reporting; and database management and data analysis software. Projects are managed by experienced personnel who ensure all work products are of Page 1 of 3GEC - Company Overview 9/30/2008http://www.globalenergyconcepts.com/overview.htm the highest quality and are produced on time and within budget. CLIENTS GEC provides consulting services to a broad spectrum of clients including all sectors of the domestic and international energy industry. Our clients include electric utilities, investors, banks, wind turbine owners, insurance companies, equipment manufacturers, developers, law firms, the U.S. Department of Energy, the World Bank, the Electric Power Research Institute, the National Renewable Energy Laboratory, the U.S. Agency for International Development, and other public institutions both in the United States and abroad. STAFF AND COMPANY RESOURCES GEC personnel have been providing services to the wind industry for over 20 years. Staff members are internationally recognized for their work, are on industry advisory committees, have written numerous reports and papers, and frequently testify and lecture before industry audiences. The staff is supported by extensive library and computer facilities including current software and specialized wind energy analysis tools. We maintain extensive files on equipment suppliers, specifications, and turbine performance. Our inventory of test equipment, which includes data loggers, sensors, and towers, is available for lease to our clients. We also maintain affiliations with technical, regulatory, economic, and environmental experts from leading industry and academic positions. The frequent use of this expertise to support project implementation and enhance staff qualifications provides for additional flexibility Page 2 of 3GEC - Company Overview 9/30/2008http://www.globalenergyconcepts.com/overview.htm Electric Power Systems, Inc. Statement of Qualifications for Engineering, Design, Testing, Maintenance & Construction Statement of Qualifications Electric Power Systems, Inc. (EPS) was incorporated in 1996 and was founded by David Burlingame and Daniel Rogers. Their prior experience included working as engineers and managers for a variety of utility and manufacturing interests focusing on power transmission, distribution, generation, and control. EPS has historically focused on providing substation, generation, controls, protection, system planning and analysis and distribution engineering for utility, industrial, and governmental clients. EPS holds a number of long term and alliance type contracts and relationships. Most of EPS’ clients are based in Alaska, and are long-term, mature clients, which require little or no proposal effort to obtain work. For the past five years, EPS has been successfully expanding into the Pacific Northwest and South Pacific markets. KEY PERSONNEL The following are brief overviews of ESG’s key personnel’s qualifications and experience: DAVID BURLINGAME, PE, PRINCIPAL David Burlingame has over 25 years of experience in power system operation, engineering and administration. His experience includes a full range of services, from planning studies, design, construction, and start-up/commissioning to periodic testing and maintenance. His specific experience includes the following: ƒ Bradley Lake Governor Project for Homer Electric Association, Homer, Alaska ƒ Tyee Lake Governor Project, Four Dam Power Pool, Anchorage, Alaska ƒ Unalaska Power Plant, City of Unalaska, Unalaska, Alaska ƒ System Reliability Review, Guam Power Authority, Agana, Guam ƒ System Stability and Reliability Studies, Kauai Island Utility Cooperative, Lihue, Hawaii ƒ Marathon Substation Final Design, Startup and Commissioning, Homer Electric Association, Inc., Kenai, Alaska ƒ Seldovia and Port Graham Generation Plants, Homer Electric Association, Homer, Alaska ƒ Nikiski Co-Gen Corrective Action, Alaska Electric Generation and Transmission Cooperative, Homer, Alaska ƒ RW Retherford Substation, Chugach Electric Association, Inc., Anchorage, Alaska ƒ Postmark Substation, Chugach Electric Association, Anchorage, Alaska ƒ Diamond Ridge Substation, Homer Electric Association, Homer, Alaska ƒ Heidenview Station Design, Copper Valley Electric Association, Inc., Valdez, Alaska ƒ Kukuulia Substation Design, Kauai Island Utility Cooperative, Kauai, Hawaii ƒ ITSS switchgear design, Chugach Electric Association, Anchorage, Alaska ƒ Heidenview Substation Design, Copper Valley Electric Association, Valdez, Alaska ƒ BP Substation Design, Homer Electric Association, Kenai, Alaska DANIEL C. ROGERS, JR., PE, PRINCIPAL Daniel Rogers has over 20 years of experience in electrical power system engineering. He holds a Masters and Bachelors degree in Electrical Engineering and a Bachelors degree in Physics. His experience includes electrical design, project management and construction management of electrical system projects throughout Alaska. His specific experience includes the following: ƒ Snake River Power Plant, Nome Joint Utilities, Nome, Alaska ƒ SCADA System, City of Soldotna, Soldotna, Alaska ƒ Kodiak Power Plant Generator Replacement, Kodiak Electric Association, Kodiak, Alaska Statement of Qualifications ƒ Facilities relocation in support of Water/Wastewater Upgrades, Nome Joint Utility Systems, Nome Alaska ƒ Power Creek Hydro Plant Design, Startup, and Commissioning, Cordova Electric Cooperative, Cordova, Alaska ƒ Pump Installation – Nome storage tank, Nome Joint Utility System, Nome, Alaska ƒ PRV Design, Various Contractors/Developers for AWWU, Anchorage, Alaska ƒ Orca Diesel Plant SCADA/Controls Upgrades, Cordova Electric Cooperative, Cordova, Alaska ƒ Elfin Cove Diesel Plant Control Systems Upgrade, Elfin Cove, Elfin Cove, Alaska ƒ Humpback Creek Hydro Plant Design, Startup, and Commissioning, Cordova Electric Cooperative, Cordova, Alaska DR. JAMES W. COTE, P.E. PRINCIPAL Dr. Cote has been involved in the planning and studies of electric power systems for over 25 years. His special area of expertise is analyzing the performance and planning requirements of islanded power systems. In addition to studies involving the electrical grid of the continental US, Dr. Cote has participated in the analysis, review and planning of islanded power systems from 5 MW up to the 1000 MW. This experience allows Dr. Cote to foresee many problems in isolted power systems that are not prevalent in larger networks. His specific experience includes the following: ƒ Railbelt Operating Studies – Alaska Intertie Operating Committee ƒ Wind Turbine Impact Study - Hawaiian Electric Light Company ƒ Aero-derivative turbine modeling – Kauai Island Utility Cooperative ƒ Bradley Lake Transient Stability Investigation – Chugach Electric Association ƒ Reliability Assessment – Guam Power Authority ƒ Static Var Compensation Study – Alaska Intertie Operating Committee ƒ Loadshedding Study – Homer Electric Association ƒ Bradley Governor Design & Operating Studies – Homer Electric Association ƒ LM-2500 Impact Studies – Kauai Island Utility Cooperative ƒ Transmission Long Range Plan – Chugach Electric Association PROJECT EXPERIENCE The following is an overview of EPS’s recent project experience: PROTECTIVE RELAYING AND AUTOMATION UPGRADES, CHUGACH ELECTRIC ASSOCIATION, INC., ANCHORAGE, ALASKA The Chugach Electric Association’s protective relaying and automation upgrades consisted of both the design and the subsequent project construction located at Chugach’s Beluga and Douglas Substations. The projects included the design and installation of protective relaying and automation on Chugach’s critical generation station and transmission system. All projects were completed in energized facilities without an outage. The projects included relaying upgrades on two 28 MW gas-fired turbines and station relaying on a 415 MW generation plant. The design was performed by Electric Power Systems (EPS) and the installation was performed by Electric Power Constructors (EPC). Statement of Qualifications WOODINVILLE SUBSTATION, BP OLYMPIC PIPELINE, WOODINVILLE, WASHINGTON EPS completed the design and construction inspection for the new Portage Substation along the Turnagain Arm south of Anchorage. The substation consisted of four 4.16 kV feeders in metal-clad switchgear. EPS was responsible for the design of the substation civil work, bus layout, grounding and lighting. EPS was responsible for the switchgear design and specifications, station layout and protective relaying settings, and implementation. EPS completed the quality control inspection, testing and commission for the substation construction. Project cost: $0.500 million. KUKUULIA SUBSTATION, KAUAI ISLAND UTILITY COOPERATIVE, KAUAI, HAWAII EPS completed the civil, structural and electrical design for the 69 kV/ 12.47 kV Kukuuulia Substation. Project included four 69 kV breakers, two 20 MVA transformers and provisions for twelve 12.47 kV feeder breakers, control building, communication and relaying control panels. EPS provided the structure design, electrical service, grounding, protective relaying and controls design. Project cost: $2.500 million. AIRAI SUBSTATION, PALAU PUBLIC UTILITIES CORPORATION, KOROR, PALAU EPS completed the civil, structural and electrical design for the 34.5 kV / 12.47 kV Airai Substation. Project included concrete block control building, relaying and control panels, four 12.47 kV breakers, installation of controls and modifications for one 34.5 kV breaker and three 34.5 kV motor-operated switches and SCADA control and monitoring for the station. EPS provided the structure design, electrical service, grounding, protective relaying and controls design. EPS completed the installation and commissioning. Project cost: $1.200 million. HEIDENVIEW STATION DESIGN, COPPER VALLEY ELECTRIC ASSOCIATION, INC., VALDEZ, AK This project consisted of the complete design of a new 138/24.9 kV station, including one line development, DC system design, controls and protection specification, equipment specification, bid evaluation and award, commissioning and startup assistance. In addition, EPS constructed the installed the controls into the station control house at our Anchorage facility, and shipped the completed control structure to Valdez for installation on the pad. INTERNATIONAL 35 KV METALCLAD SWITCHGEAR DESIGN, CHUGACH ELECTRIC ASSOCIATION, INC., ANCHORAGE, AK The project included development of design criteria, one lines, three lines, DC schematics and physical drawings for a common aisle 35 kV metalclad switchgear for Chugach’s main bulk substation. Implicit in the design of the switchgear was the limited space at the existing facility, and the need to minimize outage times during constru ction. The design included SEL-351, 287, 311C and 321 relays. The design included an evaluation of alternatives and recommendations for service and replacement of the existing station. HUMPBACK CREEK POWER PLANT FIRE REBUILD, CORDOVA ELECTRIC COOPERATIVE, CORDOVA, ALASKA Humpback Creek is a remote plant connected electrically to the Cordova Electric Cooperative system. The plant has over 100’ of head, and three units, with a plant capacity of over 1 MW. The plant had a fire in late 2005, with significant damage resulting from the heat, flames, and smoke. Engineered Solutions Group, Inc. (ESG) was hired by the owner to design, procure, and reconstruct the plant. The project scope included electrical design and construction, Statement of Qualifications general building construction, hydraulic system design and construction, and control/communications design and construction. ESG personnel performed all of the work on the project. The design was completed and a conformed set of drawings provided to the owner. The construction was bid and performed under a separate construction contract based on the conformed set of drawings. The project will be completed on time and on budget. The owner is pleased with the work, and ESG is in negotiations for additional work at the forebay with the owner following the completion of the power plant rebuild. Project cost: $1.5 million. MAIN GENERATOR RELAY UPGRADES, ALYESKA PIPELINE SERVICE COMPANY, VALDEZ, ALASKA In order to more reliably operate the power production facility at the Valdez Marine Facility, Alyeska Pipeline Service Company (APSC) decided to upgrade and install new microprocessor- based protective relays in the three main turbine generators at the Valdez Marine Terminal power plant. Electric Power Systems (EPS) acted as the design resource and Electric Power Constructors (EPC) as the contractor to perform the installation. EPS performed the overall project and construction management, as well as all of the electrical design. EPC personnel performed the installation tasks working with Alyeska personnel. The relays have been in operation since 2003 without any outages associated with the installation. The work was completed on time and on budget. Project cost: $120,000. NIKISKI POWER PLANT, ALASKA ELECTRIC GENERATION AND TRANSMISSION COOPERATIVE, NIKISKI, ALASKA The Nikiski Power Plant project consisted of feasibility studies, conceptual design, final design, construction and testing services and final acceptance testing associated with a 48 MW gas-turbine facility located on Alaska’s Kenai Peninsula. The project included the design and installation of protective relaying and SCADA systems, the design and installation of auxiliary power systems and the design and installation of low and medium voltage power systems. Electric Power Systems (EPS) designed and installed medium voltage switchgear in the project substation, designed and installed substation transformer electrical and fire protection systems. EPS was responsible for final commissioning tests and procedures on the SCADA, protection and station control systems and the protection improvements on six 3.5 MW gas-fired turbines and substations within the Agrium Nitrogen facility. LIFELINE SWITCHGEAR RELAY/CT UPGRADES, ALYESKA PIPELINE SERVICE COMPANY, VALDEZ, ALASKA In order to more reliably operate the power distribution facility at the Valdez Marine Facility, Alyeska Pipeline Service Company (APSC) decided to upgrade and install new microprocessor- based protective relays in the lifeline generator switchgear at the Valdez Marine Terminal. In addition, CT’s were installed to replace outdated linear couplers on the switchgear. Electric Power Systems (EPS) acted as the design resource and Electric Power Constructors (EPC) performed the installation as the contractor. EPS performed the overall project management, as well as all of the electrical design. EPC personnel performed the installation tasks. Some coordination issues were addressed onsite by the crew and Alyeska personnel, allowing for flexible operation of the terminal and no change orders to the project. The relays have been in Statement of Qualifications operation since 2005 without any outages associated with the installation. The work was completed on time and on budget. Project cost: $100,000. SNAKE RIVER POWER PLANT, NOME JOINT UTILITY SYSTEM, NOME, ALASKA The Snake River Power Plant project consisted of feasibility studies, site selection, conceptual design, final design, construction, construction management and testing services and final acceptance testing for the 30 MW diesel power plant located in Nome, Alaska. The project consists of the design and installation of a 30 MW plant (12 MW installed) to serve the community of Nome, Alaska. The project includes site design, building design (25,000 sq. ft. facility), utility interconnections, SCADA/automation design, protective relaying design, switchgear design, construction and installation, coordination studies, fuel tank and fuel delivery systems design and installation and project commissioning and testing. The project is located at a remote site on the Seward Peninsula, in Nome Alaska. Nome has no road connection to the rest of Alaska, and is served only during the summer by barge. The plant, when commissioned, will serve as the primary power source for the communities, and the surrounding area. During the course of the project, where the Board did not receive bids that were responsive, either from a cost or capabilities perspective, they have turned to the ESG Companies to assist in the construction. Subcontract portions that have been preformed by ESG Companies, include the electrical rough in (subgrade conduit), medium voltage switchgear installation, power transformer installation, all medium voltage plant work (480V through 15kV class equipment), PLC control/ SCADA installation and electrical system startup and commissioning. Final startup will be completed in 2007. Project cost: $28 million. SCADA SYSTEM ENGINEERING, PROCUREMENT AND CONSTRUCTION, CITY OF SOLDOTNA, SOLDOTNA, ALASKA The City of Soldotna desired to upgrade their existing control system, which was limited due to age, technology employed, and the number of sites at which it was deployed. EPS teamed with the prime contractor AirTek of Soldotna to provide the City a new SCADA system. EPS performed all of the design engineering for the electrical installation and the UL 508A control panels. In addition, EPS provided the materials for the control system, including a Wonderware HMI (human-machine interface), four GE 90-30 PLC’s for the well sites and reservoir, and the 920 MHz radio system to allow the remote sites to communicate with the HMI at the treatment plant. EPS programmed the PLC’s and HMI, assisted AirTek with construction-related engineering, and provided final startup, commissioning, and training for the Owner. EPS staff worked with the electrical contractor as a subcontractor, while keeping the goals of the owner in mind. The project was completed on time and budget, with only minor changes required from the original design. EPS has maintained a working relationship with both the owner and the contractor in the ensuing years. In fact, EPS continues to work for the City upgrading and adding facilities to their SCADA system. Since the completion of this project, EPS has added Statement of Qualifications two additional wells and one reservoir, and has discussed the costs and requirements for adding the waster water facilities into the system. Project cost: $70,000. SELDOVIA AND PORT GRAHAM POWER PLANTS, HOMER ELECTRIC ASSOCIATION, ALASKA The Seldovia and Port Graham Power Plant project consisted of feasibility studies, conceptual design, final design, construction and testing services and final acceptance testing for two power plants located on Alaska’s Kenai Peninsula. The plants consisted of the design and installation of a 600 kW plant installed in an existing power plant in Port Graham and the removal of an existing plant and design and construction of a new 3,000 kW plant in the town of Port Graham. Both projects included system automation design and installation, SCADA design and installation, protective relaying design and installation, switchgear design, construction and installation, coordination studies, fuel tank and fuel delivery systems design and installation and project commissioning and testing. The projects were located in remote sites on the Kenai Peninsula and served as back-up and emergency power sources for the two communities. The EPS contract was $1,207,500. Electric Power Constructors performed the construction. UNALASKA POWER PLANT, CITY OF UN ALASKA, UNALASKA, ALASKA The Unlaska Power Plant project consisted of feasibility studies, site selection, conceptual design, final design, construction, construction management and testing services and final acceptance testing for the 22 MW diesel power plant located in Unalaska, Alaska. The project consists of the design and installation of a 22 MW plant to serve the city and processors located in Unalaska, Alaska. The project includes site design, building design, utility interconnections, SCADA/automation design, protective relaying design, switchgear design, coordination studies, fuel tank and fuel delivery systems design and project commissioning and testing. The project is located at a remote site on the Aleutian Islands, in Unalaska, Alaska. Final startup will be completed in 2009. Project cost: $28 million. HUMPBACK CREEK POWER PLANT FLOOD DAMAGE, CORDOVA ELECTRIC COOPERATIVE, CORDOVA, ALASKA Humpback Creek is a remote plant connected electrically to the Cordova Electric Cooperative system. The plant has over 100’ of head, and three units, with a plant capacity of over 1 MW. The plant and associated facilities had major flood damage in late 2006. Power Builders, Inc. (PBI) was hired by the owner to reconstruct the facilities damaged by the flood. The project scope included replacing damaged outside electrical equipment, the access bridge, gravel and fill material, replacement of stream bank riprap, and the replacement of the plants tailrace. ESG Statement of Qualifications personnel performed all of the work on the project. The work was predominantly replacement in kind, and funded largely with FEMA monies. Project cost: $800,000. KOTZEBUE SWITCHGEAR AND SCADA SYSTEM UPGRADES, KOTZEBUE ELECTRIC ASSOCIATION, KOTZEBUE, ALASKA Kotzebue is a remote hub-community that is electrically isolated from any other system. The community runs predominantly on diesel and windpower. The windpower installation consists of 14 turbines, located on the edge of town. The project consisted of completing a design for the switchgear, SCADA, and mechanical/electrical instrumentation systems. Following completion of the design and acceptance by the Owner, the construction phase of the project commenced, installing all of the switchgear and controls in a phased manner to allow continuing plant operation. EPS continues to work with the Owner to implement additional upgrades to the plant and wind system to further enhance operation. A performance bond was required for the project, due to funding agency rules. EPS met this requirement with a letter of credit. Project cost: $1.1 million. MEDIUM POWER TRANSFORMER MAINTENANCE/REPAIR, ALYESKA PIPELINE SERVICE COMPANY, VALDEZ, ALASKA To better assess the condition of medium power transformers at the Alyeska Valdez Marine Terminal, Alyeska requested Electric Power Constructors (EPC) personnel to assist in the testing, assessment, and repair of several medium power transformers on the terminal. EPC personnel work with and under the direction of Alyeska personnel providing assistance and technical expertise in assessing the condition of the VMT power transformers. EPC worked cooperatively with Alyeska personnel performing DGA, power factor, and other testing to assess the condition of the terminals medium power transformers. Some coordination issues were addressed onsite by the crew and Alyeska personnel, allowing for flexible operation of the terminal. The work was performed in 2005, with additional technical assistance on an as- needed basis. KODIAK GENERATOR REPLACEMENT, KODIAK ELECTRIC ASSOCIATION, KODIAK, ALASKA Kodiak is an island community that is electrically isolated from any other system. The community runs predominantly on diesel and hydropower. The diesel plant, which provides the majority of the peaking and emergency energy for the community, consists of four large diesel machines. During a four month period, two of the engines experienced catastrophic failure. The project consisted of completing a design for the selection and installation of two new units, including mechanical, electrical, and civil. Following completion of the design and acceptance by the Owner, the construction phase of the project commenced with Power Builders personnel Statement of Qualifications performing the civil/structural portions, the mechanical portions being contracted to CRL Services, and EPC doing the majority of the electrical installation, in conjunction with KEA personnel. Project cost: $850,000. SUBSTATION MAINTENANCE & TESTING, CHUGACH ELECTRIC ASSOCIATION, ANCHORAGE ALASKA EPC has completed substation testing and maintenance for Chugach for the past 5 years on a task order basis under our alliance contract. Testing and maintenance services have included 34.5 kV – 230 kV oil circuit breaker testing and maintenance, including bushing power factor, ductor, time travel, speed adjustments and other tests associated with maintenance activities. Power transformer testing and maintenance for transformers up to 80 MVA and 230 kV. LTC testing and maintenance and metal-clad breaker testing and maintenance. KING SALMON SWITCHGEAR UPGRADE, CHEVRON , COOK INLET, ALASKA EPC completed the design and rebuild of the existing main 600 V switchgear bus work for the King Salmon Platform. The work included upgrading the bus for increased short circuit capacity, installing bus bracing and fabrication of bus work. The project also included the installation of protective relays for the switchgear, protective relay settings, testing and commissioning. The project was completed in a scheduled shutdown of the platform on time and on budget. The platform’s shutdown was a critical component and needed to be completed in the time allowed to avoid well shutdowns on the platform. PHILLIPS BELUGA RIVER , CHEVRON , COOK INLET, ALASKA EPC completed the testing and maintenance of the facilities’ contactors, transformers, breakers, RTDs and protective relays for the Beluga River gas field. The work was completed during a scheduled shutdown of the facility and was completed on time and budget. Tacoma Power Lincoln Avenue Line Relocation, TACOMA POWER EPS is providing complete engineering services for the line relocations, including structure and foundation design, coordination with the road designers, line design, plans and specifications for material procurement and construction, and construction inspection. CLIENT REFERENCES MR. MIKE LEWIS Alyeska Pipeline Service Company (907) 834-7356 MR. ROD RHOADES Alyeska Pipeline Service Company (907) 834-7076 MR. BRAD REEVE Kotzebue Electric Association, Inc. (907) 442-4391 MR. DARRON SCOTT Kodiak Electric Association, Inc. (907) 486-7739 DMA Resume Page 1 of 4 Duane Miller Associates LLC (DMA) 5821 Arctic Boulevard, Suite A Anchorage, AK 99518-1654 (907) 644-3200 Duane Miller Associates LLC (DMA) was established as Duane Miller & Associates in 1982 to provide geotechnical engineering and consultation in the problems unique to Alaska. The firm has evolved to a consultancy of engineers and geologists, all of whom have many years of Alaskan experience. The two senior consultants, Principal Engineer Duane Miller, P.E., and Principal Geologist Walt Phillips, C.P.G., each have more than 30 years experience with Alaskan projects. With a total of 17 Alaskan geotechnical engineers, geologists, laboratory technicians and administrative/IT support staff, DMA can address any geotechnical issue throughout Alaska in a timely basis. Professional staff at DMA consists of four Alaska licensed geotechnical engineers and one Alaska licensed geologist. We have five geologists and four EIT-level engineers. We have a full time geotechnical laboratory manager and one lab technician. Administrative and IT personnel support the professional staff. We are located at 5821 Arctic Blvd. in Anchorage, Alaska with our laboratory facilities, including our walk-in testing freezer, in the same building. DMA project experience ranges from small rural projects to large industrial and defense projects. Experience with remote site work has led to the development of specialized exploration and sampling tools for permafrost investigations. Field work is most often preceded by collection of available data from previous projects and examination of existing aerial photographs. DMA maintains an extensive library of past geotechnical reports prepared by us and other geotechnical service providers. These reports include data from most of the communities in the state. Our laboratory is equipped to perform nearly every primary soil test along with secondary strength and consolidation tests for undisturbed or remolded soil. The laboratory has a walk-in freezer for the storage and testing of frozen soils. DMA’s client base primarily includes major oil companies and other consulting engineers. Typical rural projects include improvements to sanitation systems through contracts administered by Village Safe Water (VSW) and ANTHC, hospital projects through the Indian Health Service (IHS), improvements to bulk fuel, wind farm, and diesel power plant facilities through AVEC and ADC&RA Division of Energy, rural housing through regional and local housing authorities, rural airfields and roads through DOT&PF and BIA, and school projects through regional school districts. DMA Resume Page 2 of 4 We pride ourselves on bringing custom geologic and geotechnical engineering solutions to many of Alaska’s most demanding foundation engineering problems, particularly in arctic and subartic conditions, from remote village projects necessary to improve local well-being to major industrial oil and gas projects important to our nation’s energy and security needs. Every geotechnical project undertaken by DMA has a principal or senior staff geotechnical engineer AND geologist assigned to properly scope our customer’s needs and expectations. As an important first step, our senior staff works closely with each customer to properly balance Scope, Schedule, Quality and Cost prior to finalizing a Notice to Proceed for three key reasons. First, this dialog defines our field, laboratory, and engineering objectives for all parties. A clear and concise definition of a project’s objectives is fundamental to our management philosophy. Second, this dialog provides the basis for project management decision making as field findings and project needs evolve. Third, this dialog establishes our role in the project’s scheme in terms of Chain of Command, site safety, and compliance with environmental documentation/requirements. The planning effort does not stop at the completion of the field effort. Upon completion of each field phase, field logs, geotechnical samples, field notes, geotechnical instrumentation data (ground temperatures, CPT data, piezometer, etc), photographs and GPS/GIS data are summarized. Laboratory effort is prioritized and managed through our Laboratory Manager with weekly updates on laboratory status to the Project Team. This permits refinement on laboratory schedules and scheduling engineering team effort to coincide with laboratory effort. Geology and engineering efforts are developed in tandem at the project level. We strongly believe that our success is based on treating geology and engineering as equally important elements of a project deliverable. This is the key reason a senior or principal level geologist and engineer are assigned at the very earliest stages of a project scoping effort. DMA maintains an extensive in-house library of both DMA and third-party geotechnical studies from nearly every area of Alaska. In-house studies are DMA efforts that start with the initial work effort by Duane Miller when he started DMA. This system spans over 1,000 separate reports retrieved by Lat/Long, site, work type, region, permafrost conditions and other search terms. This in-house database permits immediate retrieval of boring log and laboratory data, Alaskan ground temperature data dating back to the late 1970s, and geologic interpretation and engineering recommendations. Our system provides a notification of proprietary data that cannot be used without the customer’s DMA Resume Page 3 of 4 authorization. This database was developed internally and is unique is its ability to capture and retrieve key project information as part of the scope refinement process. In additional to our internal database system, we maintain a hardcopy file of many obscure and hard to locate third-party geotechnical reports. These reports often provide site specific geotechnical and ground temperature data from the late 1960s through today. These data are very useful in establishing a site history as part of a new scoping process. We maintain these hard copy reports by village location or by North Slope oil and gas project area. We also maintain a large collection of US, Canadian, and Russia (Federation and Soviet era) geotechnical research papers, some the founding work efforts in permafrost engineering. While most recent permafrost research efforts are available digitally through the Internet, many of our internal research papers are not commercially digitized and are very valuable in constructing design analysis spreadsheets or understanding the technical basis – and limitations – developed as part of the original research. DMA has seven experienced engineers/geologists able to supervise large, complex geotechnical field investigation projects. Two, Duane Miller and Walt Phillips bring a combined 75+ years of Alaskan experience to schedule, budget and resource assignment to any geotechnical effort regardless of size, locations or logistical complexity. Duane and Walt have successfully conducted concurrent large, complex geotechnical investigations for major oil and gas projects on the North Slope where remote camps, fuel logistics and Rolligon/helicopter support elements were necessary in areas of extreme environmental sensitivity. In additional to Duane and Walt, four senior personnel at DMA: Richard Mitchells, Susan Wilson, Jeremiah Drage, and Daniel Willman bring strong field geotechnical supervision capabilities. All four have experience with helicopter sling drilling operations, coring projects, remote camp and Alaskan ‘Bush’ experience. DMA field geologists/engineers including Nathan Luzney, Jeff Kenzie and Heather Brooks each bring field experience managing day-to-day drilling operations and logistical support for field projects. DMA maintains a complete in-house field sampling program for nearly any geotechnical investigation need. Unique to cold regions field investigations, we have developed a continuous sampling system that eliminates the need for refrigerated coring. Of particular importance for arctic and subarctic geotechnical field efforts is the need to collect reliable ground temperatures. We have adopted digital temperature measurement systems to accurately capture ground temperature data. DMA Resume Page 4 of 4 DMA engineers are peer recognized experts in cold regions geotechnical engineering as well as unfrozen ground geotechnical engineering. We have four geotechnical engineers licensed in Alaska and one Alaska licensed geologist. In unfrozen soil conditions, we adhere to geotechnical engineering designs using NAVFAC DM-7 and USACE EM-1110-1 and EM-1001-2 series design manuals. In addition, we rely on computer aided engineering support for many projects using Apile, Lpile, GRL-WEAP, PYWall, Reame, and a variety of other limit equilibrium slope analysis software tools. Our engineering staff also has expertise in seismic analysis capabilities, augmented with ProShake and Newmark displacement analysis software analysis tools. We are able to conduct liquefaction analysis using methodologies developed by Youd, et. al. as part of the NCEER Workshop Evaluation on Liquefaction. Since virtually no commercial engineering design software has been developed for cold region foundation engineering, DMA has developed and maintains an in-house library for cold regions foundation design, ranging form codified US Air Force/Army TM 5-852-4 (Arctic and Subarctic Design Manual) to salinity based primary and secondary creep in ice poor and ice rich permafrost as developed by Nixon, Sego and Bigger, CRREL, and Sayles. We also use Temp/W for finite element thermal analyses on our cold regions projects. We maintain a comprehensive internal climate database using six key climate centers (Barrow, Bethel, Nome, Kotzebue, Fairbanks and Gulkana) of daily climatic and temperature records from at least 1940 through present. In addition, we maintain a comprehensive temperature database for Prudhoe Bay with daily temperatures from the mid 1960’s. These data are used to forecast warming trends for air temperature and freezing or thawing indices throughout arctic and subarctic Alaska. DMA conducts groundwater analysis as part of our routine geotechnical assessments for foundation design and embankment seepage analysis. We rely on specialized third-party providers for more detailed groundwater analysis, if necessary. 3333 Arctic Boulevard, Suite 100 Anchorage, Alaska 99503 Phone: (907) 564-2120 Fax: (907) 564-2122 Our Firm. Hattenburg Dilley & Linnell LLC (HDL), is an engineering firm specializing in “client-focused” planning, civil engineering, transportation engineering, project management, earth science, geotechnical services, construction administration, and material testing. Scott Hattenburg and Lorie Dilley started Hattenburg & Dilley in July 2000. Dennis Linnell joined the firm in March of 2002, creating HDL. Our principals are actively involved with projects and are hands-on managers. We have structured our firm to produce a quality-centered, client focused atmosphere to provide you with superior services. Our main office and U.S. Corps of Engineer and AASHTO certified soils laboratory is located in Anchorage and we maintain a branch office in Palmer. HDL maintains a seasoned full-time staff of thirty-six (36), including seven licensed professional engineers, one professional surveyor, two geologists, three construction inspectors, two roadway designers, five engineers-in-training, three civil designers, four engineering technicians, one environmental specialist, and four administrative support personnel. We use state-of-the-art, field-to-finish civil software and computer hardware. Our workstations are equipped with a variety of the latest software including AutoCAD Release 2008, Land Development Desktop and Civil Design Software, Rockware Rockworks and Logger, Microsoft Office, MS Project, Adobe Photoshop and Illustrator, geotechnical software, and Topo Maps 3D. Our computer design personnel are high production graphic oriented technicians experienced with generating presentation graphics, drawings, engineering plans, and 3-dimensional graphic products. COMPANY OVERVIEW 3 ; Site Development ; Water and Sewer System Design ; Community and Regional Planning ; Project Programming ; Airport Planning and Design ; Bulk Fuel, POL and Pipelines ; Geotechnical Engineering ; Geothermal Resources ; Wind Power ; Geochemistry ; Soil, Aggregate, Concrete Testing ; Construction Administration ; Environmental Services and Permitting ; Surveying ; Road and Transportation Engineering CIVIL ENGINEERING HDL provides civil engineering services to a wide variety of clients throughout Alaska. These projects include civil site design, grading plans, and designs for utility improvements. AIRPORT PLANNING, DESIGN HDL offers airport master planning services as well as design of taxiways, runways, access roads, and related facilities. We also have conducted wind studies using our instrumentation expertise. Scott Hattenburg, our principal airport engineer has completed over 35 airport-related projects and has a 16 year working history with the FAA. We specialize in rural and city-owned airports. ƒ City of Wasilla Airport Master Plan ƒ Palmer Southwest Utility Extension to the Matanuska Valley Medical Center ƒ Valley Pathway School Site Design ƒ Alaska Zoo Entrance Site Design ƒ Chugach Alaska Office Building Site Design ƒ City of Palmer Sherrod Building ƒ ACS Parking Lot Design ƒ Palmer Airport Forestry Parking Lot ƒ Southcentral Foundation Primary Care Facility, Iliamna ƒ Wasilla Sewer Master Plan ƒ City of Palmer Headworks Building ƒ Chugach Street Water Replacement ƒ Helen Drive Utility Improvements ƒ South Anchorage Substation ƒ Nome Power Plant ƒ Elmendorf Fuel CEU Maintenance Hangar OUR SERVICES 4 ƒ Red Dog Mine Airport Planning ƒ Kaktovik Airport Master Plan ƒ Seldovia Airport Master Plan ƒ Merrill Field Access Road Reconstruct ƒ City of Palmer Airport Improvements ƒ City of Wasilla Airport Apron Improvements ƒ Nondalton Wind Study ƒ Rural Airport Embankment Evaluation: Chevak, Chefornak, Tuntutuliak & Kipnuk RURAL ENERGY We manage all phases of rural energy projects from the concept phase through final completion of construction. We provide in-house civil, geotechnical, and environmental phase services for these projects. HDL currently has two term agreements for design of rural energy projects: one with Alaska Energy Authority and the other with Alaska Village Electric Cooperative. In addition to the rural energy projects we have two certified tank inspectors on staff and have produced a number of Spill Prevention Control and Countermeasure (SPCC) Plans for the State and private companies throughout Alaska. ƒ Middle Kuskokwim Regional Energy Project (Sleetmute, Stony River, Crooked Creek, Chuathbaluk, Red Devil, Aniak & Takotna) Concept Design, Design, and CA ƒ White Mountain Bulk Fuel CA ƒ Koyukuk Power Plant and Bulk Fuel Facility Design and CA ƒ Chevak Power Plant & Bulk Fuel Facility Concept Design ƒ Noatak Bulk Fuel Concept Design ƒ Hooper Bay Bulk Fuel Concept Design ƒ Mountain Village Bulk Fuel Concept Design ƒ Koyuk Bulk Fuel Facility Concept Design, Design and CA ƒ Nunapitchuk/Kasigluk Amalgamated Energy Concept Design and Design ƒ Golovin Bulk Fuel Facility Construction 5 GEOTECHNICAL ENGINEERING HDL’s geotechnical division provides foundation design recommendations for a wide variety of structures including power plants, transmission lines, bulk fuel facilities, substations, roads, bridges, and buildings. We have developed pile recommendations for warm permafrost, cold permafrost, and organic rich soils. We have specialties in thermal analysis, instrumentation, and geochemical assessments. Given the nature of soils in Alaska we offer creative solutions to the more common foundation problems. ƒ Nome Power Plant Foundation – Dynamic Compaction of Loose Soils ƒ Merrill Field Access Road – Dynamic Compaction of Landfill ƒ Unalaska Power Plant Foundation and Site Selection ƒ Chugach Electric Transmission Line for South Anchorage ƒ Nunapitchuk/Kasigluk Helical Pier Foundation for Wind Towers ƒ Helical Anchor Design for Multiple Subdivisions ƒ Thermal Analysis of Four Rural Airport Embankments ƒ Parks Highway Geotechnical Study MP 72-83 ƒ Foundation Design for F-22 Fuel Maintenance Hangar ƒ Quarry Source Assessment for Village of Elim GEOTHERMAL RESOURCES HDL’s geotechnical group has been actively involved in the development of geothermal resources. We offer a wide range of geological and geochemical services for the exploration and development of geothermal power in Alaska. We are developing a new method, Fluid Inclusion Stratigraphy (FIS), based on measuring the gas concentrations trapped within minerals for evaluating the hydrological regime in geothermal reservoirs. This low cost, rapid, logging method can be used as the well is being drilled to determine if hot reservoir fluids have been encountered and if permeable zones exist in the well. We are also working under a grant from the US Department of Energy on using this technique for determining fracture locations in Enhanced Geothermal Systems. We work closely in collaboration with the Department of Earth Sciences of New Mexico Tech and the Energy and Geoscience Institute at the University of Utah. ƒ Preliminary Feasibility Study – Pilgrim Hot Springs – Alaska Energy Authority ƒ Preliminary Geological Evaluation – Naknek Geothermal Sources ƒ Fluid Inclusion Stratigraphy – New Tool for Geothermal Reservoir Assessment: Coso Geothermal Field, California – California Energy Commission ƒ Identifying Fractures using FIS in Enhanced Geothermal Systems – Department of Energy ƒ 2D and 3D Fluid Model of Coso Geothermal Field, California – US Navy Geothermal Program Office 6 WIND POWER HDL provides civil engineering solutions for the development of wind power in Alaska. We have provided foundation design recommendations, permitting and civil engineering services. AVEC has been instrumental in developing wind power in rural Alaska and the firm has worked closely with AVEC on these technically challenging projects. We have teamed with an Alaskan construction company and a wind turbine manufacturer to create the Alaska Wind Resource Group (AWRG). ƒ Prototype Designs for the AOC Wind Turbine Foundations, Various Villages - AVEC ƒ Nunapitchuck/Kasigluk geotechnical and civil design for Northwood 100 turbines - AVEC ƒ Hooper Bay geotechnical and permitting for three Northwind 100 turbines - AVEC ƒ Chevak geotechnical, permitting and civil design for four Northwind 100 turbines - AVEC ƒ Nome/Bering Straits Native Corp wind turbines permitting for 18 Entegrity 60kW turbines CONSTRUCTION ADMINISTRATION AND MATERIAL TESTING Our construction quality control programs typically include our strong daily presence on the jobsite. Our field technicians maintain contact with project managers and the client representative through daily reports and weekly status reports. We are typically responsible for certifying compliance with shop drawings; measuring quantities of pay items; auditing survey data (line, grade, and quantities); computing quantities; monitoring yields and overseeing field adjustments; performing and managing materials inspection; inspecting workmanship; preparing directives, change orders, and supplemental agreements; preparing periodic/final payment estimates and reports; confirming materials/equipment tests; coordinating off-site inspection services by others; analyzing construction contractor claims if any, and maintaining photo record of construction. Our laboratory technicians provide testing in accordance with ASTM, AASHTO, ATM, and WQTEC testing standards for soil and concrete. Our laboratory is certified by US Army Corps of Engineers, AASHTO, and concrete to conduct a wide variety of soil, concrete, aggregate, and grout testing. We can provide both ACI certified concrete and NRC certified nuclear equipment field technicians. The laboratory maintains nuclear densometers, concrete field sampling equipment and laboratory concrete strength testing equipment. In addition, we maintain triaxial strength testing equipment, permeability testing equipment, and consolidation testing equipment for non-routine soil testing. 7 ƒ Glenn-Bragaw Interchange, DOT, Anchorage ƒ Taxiway Alpha Construction, Palmer ƒ Division of Forestry Fire Retardant Loading Facility, Palmer ƒ Highland Subdivision Road Reconstruction, Palmer ƒ Nome Power Plant Pad Construction, Nome ƒ Fuel Maintenance Hangar and Taxiway, Elmendorf AFB ƒ Eagle-Gulkana Street, Palmer ƒ Wasilla Airport Apron Construction, Wasilla ƒ Nome Power Plant Concrete Testing, Nome ƒ Wasilla Airport Apron Construction, Wasilla ENVIRONMENTAL AND PERMITTING Our environmental and permitting team provides all phases of environmental documents and permitting for a wide range of engineering projects. We are skilled in the NEPA process having completed many Environmental Reviews, Environmental Checklists, and Environmental Assessments. Our services include Phase 1’s; Wetland Delineation; Wetland Functional Assessment; Hydrology Assessments; Section 7 Consultation; and Government to Government Consultation. We have permitted airports, roads, bulk fuel facilities, power plants, water and sewer improvements, site layouts, and wind generators. ƒ Palmer Airport Apron Categorical Exclusion ƒ Barter Island Airport Phase I Environmental Site Assessment ƒ Palmer Airport Phase I Environmental Site Assessment ƒ Nunapitchuk/Kasigluk Amalgamated Energy Improvements ƒ Middle Kuskokwim Regional Energy Project ƒ Chugach Electric South Anchorage Substation Storm Water Pollution Prevention Plan ƒ Hatcher Pass Scenic Outlook Storm Water Pollution Prevention Plan ƒ Seldovia Airport Master Plan Permits ƒ Hooper Bay Wind Turbine Environmental Assessment ƒ Savoonga Wind Turbine FAA Permits ƒ Chevak Energy Upgrades Permitting ƒ Government to Government Consultation with Native Village of Kaktovik ƒ City of Palmer Water and Sewer Extension Permits ƒ Kipnuk New Airport Stream Gauging SURVEYING At HDL we understand that land surveying is often the starting point for the design of a project. As such, we realize how important precise, quality field data can be in starting your project in the right direction. Our field crews and office technicians are equipped with the latest survey equipment and software. We have recently acquired a new conventional and GPS survey equipment system that easily integrates traditional survey techniques with Static and Real-Time Kinematic GPS surveying. This new system utilizes GPS and Russian Glonass Satellites enabling us to gather data in areas previously unsuitable for GPS surveying. As part of this system we have developed an innovative data collection process which uses comprehensive field coding and data reduction software to quickly 8 transfer field data into final processed information ready for design. This new way of thinking towards surveying providing our clients with precise, quality controlled data for even the most aggressive schedules and budgets. Our experienced survey staff has provided survey services across Alaska for a variety of projects and clients. This experience along with HDL’s commitment to a client focused atmosphere provides our clients with the best possible survey and mapping products. ƒ ALTA/ACSM Land Title & Boundary Surveys ƒ Engineering Design Surveys ƒ Right of Way and Boundary Surveys ƒ Platting for Commercial and Residential Subdivisions ƒ Control for Photogrammetric and LIDAR Mapping ƒ Construction Surveying ROAD AND TRANSPORTATION ENGINEERING Our road and highway design team provides planning, preliminary and final engineering, and peer/quality control review for a wide range of road and highway projects. We manage the right-of-way acquisitions, traffic studies, public meetings and all aspects of providing a complete road design package. ƒ Palmer Dogwood Avenue Extension & Signalization ƒ Anchorage 3rd Avenue Rehabilitation ƒ Seldon Road—Matanuska-Susitna Borough ƒ Parks Highway MP 72-83 Rehabilitation ƒ Palmer Evergreen & Gulkana Street ƒ Wasilla Church Road Analysis ƒ Parks Highway MP 44-52.3 Upgrade ƒ Wasilla Crusey Street Improvements ƒ Wasilla Lucas Road Improvements ƒ Palmer Chugach Street ƒ Wasilla Transportation Plan Update BBFM Engineers, Inc. 510 L Street, Ste 200 Anchorage, AK 99501 Phone: 907-274-2236 Fax: 907-274-2520 Company Overview Alaska Business License 218579 MBE status – N/A BBFM Engineers Inc. is an Alaskan company specializing in structural engineering design. The principals of BBFM Engineers are: Dennis L. Berry PE, Forrest T. Braun PE, Troy J. Feller PE and Colin Maynard PE. All four principals were either raised or born in Alaska. The company was established in 1996; however, the principals have been working together for over 18 years (in fact, two have been working together for over 30 years). The ten structural engineers and four drafters make BBFM Engineers one of the larger structural engineering staffs in the state. BBFM Engineers has been fortunate to average over 150 projects per year, on a variety of different project types using several different delivery systems. Over 80% of our work comes from repeat clients. Over the years, BBFM Engineers has received numerous awards for a variety of facilities—for public and private clients. The engineers have worked with all of the various structural materials in designs for structures in over 150 different communities around the state: from Ketchikan to Shemya, from Kodiak to Barrow. BBFM Engineers prides itself on working within the constraints set by nature, and the owner, and finding a solution that is not only structurally sound, but also cost effective and, when exposed, aesthetically pleasing. BBFM Engineers has a proven record of successful work on small, large and medium projects. This experience has been gained over the last 11 years (up to 34 years for the principals) on projects all over Alaska for military and civilian clients. We are aware of the level of production effort and coordination that is necessary for the development of high quality construction documents. In addition, we understand the level of management required to ensure that a quality product is produced. Our firm has a depth and breadth of experience with Alaskan Arctic projects to its credit and we are skilled in providing cost-effective, creative design solutions to meet the needs of our clients. Our engineers are experienced team players who are flexible and responsive to client needs. Project Experience BBFM Engineers has completed more than 80 building and tower projects in the Yukon Kuskokwim Delta and Northwest Alaska. We have experience designing tower foundations in many of the different geotechnical conditions that exist throughout Northwest Alaska. We have designed tower foundations in 12 different villages in soil conditions ranging from marginal permafrost in deep silty soils, to mountain top bedrock. Page 2 of 4 Resources BBFM Engineers has a staff of ten structural engineers (nine licensed), four CAD drafters, an office manager and an administrative assistant. This makes us one of the largest structural engineering staffs in the state of Alaska and, as such, we have the ability to work on projects with aggressive schedules. The engineers work as a team to complete established work schedules and we are able to re-assign staff as needed to meet accelerated schedules. Our staff meets weekly to review the workload and upcoming deadlines. We are capable of adding new design projects soon and having them blend readily into our workload. BBFM Engineers is committed to providing timely services and meeting all project schedules; we know we can bring the Wind Turbine projects to a successful completion. Equipment: BBFM Engineers uses a variety of automated systems to produce quality designs and quality construction documents. For contract documents, the latest version of AutoCAD is used. For specifications, the staff has used a variety of programs including MasterSpec. The office has its own computer network for sharing of databases, communication programs, the Internet, direct modem connections and, of course, complete backup records. In addition, the staff at BBFM Engineers is proficient in the use of computers for structural analysis and design, and uses the following analysis software: • ETABS – Static and Dynamic wind and seismic lateral load analysis software for multi-story buildings • STAAD III – General 3D Finite Element Analysis for both large and small projects including vertical, and wind and seismic lateral loadings. • ENERCALC – Miscellaneous element design for individual beam column wall and footing design in concrete, masonry, steel, and wood and well as general seismic and wind design. • PCAMats – Concrete Mat Analysis Program used for the design of large mat foundations supporting multiple columns. • WoodWorks – A software package for the design of various wood components including plywood sheathed shear walls. • ADAPT – A post-tensioned concrete software package used to assist in the design of post-tensioned concrete slabs. • RAM Structural Systems – A computer program that analyzes and designs concrete and steel buildings, considering dead, live, snow, snow drift, wind, and seismic loads. RAM also converts the output into Autocad drawings, creates a list of all structural steel members in the building, and totals the structural steel weights. • SAFE – This program assists with the design of flat slabs, foundation mats, spread and combined footings based upon the finite element method and also includes 3D modeling. These programs allow us to work very efficiently and coordinate the design with the drafting effort. Page 4 of 4 AURORA CONSULTING PAGE 1 1999- 2007 Communities in Blue 1983 – 1999 Black Dots Denali Anchorage Glacier Bay Nikolski Nome Egegik Juneau Dillingham Saxman Chenega Bay Port Graham Nanwalek Bettles Togiak Quinhagak Chignik Kodiak Mat-Su Naknek Fairbanks Cordova Nenana Dutch Harbor/Unalaska Galena Aniak Venetie Arctic Village Eagle Mountain Village Circle St Mary’s Unalakleet IliamnaNewhalen Allakaket Huslia Kaltag Stevens Village Wales Perryville Scammon Bay Ahkiok Chalkyitsik Diomede Igiugig Kokhanok Nikolai Port Heiden Takotna Tuluksak Akutan Atka False Pass Ft Yukon Kalskag Nondalton Solomon Koyukuk Stony River Sleetmute White Mountain AkiachakAtmauthluk Beaver Buckland Chefornak Deering Golovin Kongiganak Kwigillingok Larsen BayManokotak Nelson Lagoon Newtok Hoonah Kenai King Salmon Barrow Pedro Bay 1999-2007 1983-1999 z z z zz z z z z z z z z z z z zz z z z z z zz z z z z zz zzWhittier zz z z z z z z zz zz zzz z z z z z z z z z zz Denali Anchorage Glacier Bay Nikolski Nome Egegik Juneau Dillingham Saxman Chenega Bay Port Graham Nanwalek Bettles Togiak Quinhagak Chignik Kodiak Mat-Su Naknek Fairbanks Cordova Nenana Dutch Harbor/Unalaska Galena Aniak Venetie Arctic Village Eagle Mountain Village Circle St Mary’s Unalakleet IliamnaNewhalen Allakaket Huslia Kaltag Stevens Village Wales Perryville Scammon Bay Ahkiok Chalkyitsik Diomede Igiugig Kokhanok Nikolai Port Heiden Takotna Tuluksak Akutan Atka False Pass Ft Yukon Kalskag Nondalton Solomon Koyukuk Stony River Sleetmute White Mountain AkiachakAtmauthluk Beaver Buckland Chefornak Deering Golovin Kongiganak Kwigillingok Larsen BayManokotak Nelson Lagoon Newtok Hoonah Kenai King Salmon Barrow Pedro Bay 1999-2007 1983-1999 z z z zz z z z z z z z z z z z zz z z z z z zz z z z z zz zzWhittier zz z z z z z z zz zz zzz z z z z z z z z z zz Aurora Consulting 880 H St, Ste 105 Anchorage, Alaska 99501 Phone: (907) 245-9245 Fax: (907) 245-9244 Email: us@auroraconsulting.org A. GENERAL OVERVIEW Aurora Consulting and its business consulting staff have many years of experience in developing economic development projects, preparing business feasibility studies and business plans, submitting funding proposals and implementing economic development projects throughout the state. Although our offices are located in Anchorage, the professional consulting staff of Aurora Consulting has many years of experience in providing business development and management consulting services throughout the state. We have provided both private entrepreneurs and communities throughout the state with feasibility studies, business planning, market research, market strategies, development plans and project implementation assistance essential to successful business growth. B. EXPERIENCE WORKING WITH RURAL ALASKA Aurora Consulting’s staff has over thirty years of experience working with rural Alaska communities and organizations. We have worked with literally hundreds of rural communities, as illustrated by the map below and have traveled frequently to communities in every region of the state. C. SAMPLE CLIENTS AURORA CONSULTING PAGE 2 1. Anchorage Water & Wastewater Utility - Transition & Implementation Planning Aurora Consulting provides business planning and management services to the Anchorage Water and Wastewater Utility (AWWU) in conjuction with its transition from a department of the Municipality of Anchorage to an Authority. Aurora Consulting has assisted with an analysis of MOA provided services; IGC methodologies, historical charges and budgets; preliminary identification of problems areas, potential areas for cost savings and other issues by functional work area. Aurora Consulting assisted the AWWU to develop “Transition Plan” documents and materials, including Phase I and Phase II Transition Plans. The level of assistance provided required excellent communication skills and a broad understanding, interpretation and application of the MOA Charter, Code, Policies and Procedures and MOA/AWWU IGC’s and budgets. Project Schedule: October, 2005 – Current Contact: Mark Premo, General Manager and/or Brett Jokela, Assistant General Manager Anchorage Water & Wastewater Utility 3300 Arctic Blvd Anchorage, AK 99503 (907) 564-2700 2. Alaska Energy Authority (AEA) – Energy Project Business Planning Services Aurora Consulting provides professional consulting services to the Alaska Energy Authority under a Term Services Contract to assist the Alaska Energy Authority with the development of a Denali Commission approved business operating plan template and associated documents for rural energy projects. Aurora Consulting assists the Rural Energy Group with preparing templates for business plans, operation and maintenance schedules, repair and replacement schedules, regulatory agency coordination and other business related tasks for both the Bulk Fuel Upgrade program and the Rural Power System Upgrade program. Additionally, Aurora Consulting provides follow-up monitoring and evaluation of completed rural energy projects, as well as on-going business training and development. Additionally, working with the Alaska Energy Authority’s design/engineering term contractors, Aurora Consulting has provided a variety of business planning services for rural bulk fuel and electric utility operations, including the development of business operating plans for over 60 communities including Akiachak, Akhiok, Akutan, Atka, Buckland, Chalkyitsik, Chefornak, Chenega Bay, Chuathbaluk, Crooked Creek, Deering, Diomede, Egegik, False Pass, Fort Yukon, Golovin, Hoonah, Iguigig, Kokhanok, Kongiganak, Koyukuk, Kwigillingok, Karluk, Larsen Bay, Manokotak, Nanwalek, Nikolai, Nelson Lagoon, Newhalen, Newtok, Nikolski, Pedro Bay, Pilot Point, Port Heiden, Stony River, Sleetmute,Takotna, Tuluksak, Unalakleet, Venetie, White Mountain, Whitestone and many others. Through the process of developing these services to the Alaska Energy Authority, Aurora Consulting has worked closely with the rural communities, the Alaska Energy Authority and its contractors and the Denali Commission; performed a variety of research and analysis tasks; conducted interviews of project participants and engineering firms; and, communicated findings back in well organized and understandable oral, written and electronic formats. The level of assistance provided requires excellent communication skills and a broad understanding, interpretation and application of the local, state and federal utility codes and regulations, operating policies and procedures and application and governance of these at the local level. AURORA CONSULTING PAGE 3 During the eight plus years that Aurora Consulting has worked with the Alaska Energy Authority, we have always completed projects on-budget and on-time and have experience no significant customer complaints. The work that we have done under this contract is relevant in many ways – we have developed business plan outlines and templates, have worked on multiple business plans simultaneously, have worked closely with project engineers on project scope and design/costing and other factors, have worked closely with rural communities and residents in the development of the plans, and, have been asked to provide our assessment of financial viability and other key strategic decisions. Key Individuals: Ann Campbell, Sandy Williams, Carolyn Bettes Project Dates: October 2001 – Present Project Managers: Chris Mello Alaska Energy Authority 813 West Northern Lights Blvd. Anchorage, AK 99503 (907) 771-3000 Additional references include: Steve Stassel, Alaska Energy & Engineering Inc 349-0100 Jeff Stanley, CRW Engineering Group, 562-3252 Wiley Wilheim, LCMF Inc., 273-1851 Project Budget: Over $750,000 3. Organizational Board of Director/Management Planning and Training – 2004 - 2008 Aurora Consulting principal, Ann Campbell, has facilitated numerous community/strategic planning sessions and provided a wide variety of business management and planning trainings and workshops for rural and statewide organizations. Ann Campbell provided over 35 trainings and workshops on “How to Read Financial Statements”, “How to Structure New Investments”, “How to Track Financial Indicators and Business Activities”, “How to Set Product Pricing”, “How to Manage Effectively”, “Marketing Planning”, “How to Plan for CEO Succession”, “Strategic Planning” and other general financial and business topics. Clients have included native village corporations (Becharof Corporation, Chenega Corporation, Kijik Corporation, Toghotthele Corporation), regional non-profits (Kawerak Corporation, SEARHC Foundation), CDQ organizations (Norton Sound Economic Development Corporation, Aleutian Pribilofs Island Community Development Association), and statewide organizations (Sea Otter Sea Lion Commission, AWRTA, University of Alaska, Anchorage). Key Individuals: Ann Campbell Project Dates: 1999-2008 Sample Project Managers: Hazel Nelson, CEO Becharof Corporation 1225 E International Airport Rd, Ste 135 Anchorage, Alaska 99581 (907) 561-4777 Fax: 561-4778 Email: becharof@gci.net AURORA CONSULTING PAGE 4 Sample Consulting Clients Client Project Ahtna Heritage Foundation Feasibility Study Alaska Aggregate Products Business Planning Alaska Energy Authority Community Infrastructure Business Planning Alaska Lodging Management Hotel Business Planning Alaska Native Heritage Center Market Demand/Financial Projections Alaska Native Tourism Council Strategic Marketing Alaska SeaLife Center Business Planning/Market Demand Aleutian Pribilof Islands Community Development Assoc Business Planning/Feasibility Study Anchorage Water & Wastewater Utility Management Planning Becharof Corporation Strategic Planning, Marketing Planning Bering Straits Native Corporation Business Acquisition/Financial Consulting Bermello, Ajamil & Partners (City & Borough of Juneau) Juneau Waterfront Master Planning BP Exploration Marketing Consulting Bradley Reid Communications Tourism Marketing Planning Cape Fox Corporation Tourism Marketing Assistance Central Council Tlingit & Haida Indian Tribes of Alaska Board Training, Project Development Chenega Corporation Feasibility Analysis Chenega Corporation Acquisition Analysis Chenega IRA Council Community Planning – CEDS; Market Feasibility Study Chogguing, Ltd Board Training/Strategic Planning CIRI Market Analysis CIRI Tourism Acquisition Analysis City of Akutan Community Planning City of Aleknagik Feasibility Study Circle Tribal Council Market Demand Analysis/Marketing Planning City of Bettles Destination Marketing Planning, Community Planning City of Shaktoolik Fish Processing Plant Feasibility Study City of Togiak Community Planning – CEDS City of Wrangell Marine Feasibility Study, Business Planning Dillingham Chamber of Commerce Destination Marketing Planning, Eagle Tribal Council Feasibility Analysis Eyak Corporation Strategic Planning Glacier Bay Tours & Cruises Marketing Analysis Goldbelt Business Acquisition, 8(a) Planning Hawaiian Vacations Market Demand Analysis/Strategic Planning Kake Tribal Council Fishing Lodge Business Plan Ketchikan Indian Corporation Marketing & Development The Kijik Corporation Strategic Planning Kodiak Tribal Council Business Planning Kuskokwim Corporation Business Planning/Feasibility Study Mat-Su Convention & Visitors Bureau Visitor Research & Analysis / Economic Impact Analysis McDowell Group Community Planning – Yakatat Naknek Native Village Council Fish Processing Plant Feasibility Study North Pacific Volcano Learning Center Business Plan/Economic Impact Analysis Northern Air Cargo Strategic Planning Norton Sound Economic Development Council Feasibility Analysis/Management Services Quvaq, Inc Management Planning, Business Planning State of Alaska, Village Safe Water Community Infrastructure Business Planning Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 42 of 51 10/8/2008 Cost Worksheet  Renewable Energy Fund   Application Cost Worksheet– NJUS Wind Project 1. Renewable Energy Source The Applicant should demonstrate that the renewable energy resource is available on a sustainable basis. Annual average resource availability. Average Windspeed = 8 m/s 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 7 generators, 2 boilers ii. Rated capacity of generators/boilers/other See below iii. Generator/boilers/other type See below iv. Age of generators/boilers/other See below v. Efficiency of generators/boilers/other 15.81 average   Brand/Model Size (kW) Age Avg. Efficiency (kWh/Gal. Diesel) EMD #20-645F4B 2,865 23 13.08 EMD #12-645E4 1,500 19 12.84 Caterpillar #3516 3,660 17 16.39 Caterpillar #3516B-LS 1,875 9 14.35 Wärtsilä #12V32B 5,211 3 16.32 Wärtsilä #12V32B 5,211 3 16.32 Caterpillar #3456B 430 3 Black start – not yet used Boiler 1.5M BTU 3 Emergency only – not yet used Boiler 1.5M BTU 3 Emergency only – not yet used   b) Annual O&M cost (if system is part of the Railbelt grid, leave this section blank) i. Annual O&M cost for labor $1,187,403 ii. Annual O&M cost for non-labor $6,958,135 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] 30,542,141 kWh ii. Fuel usage Diesel [gal] 1,932,287 gal. Other                                                              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   iii. Peak Load 5,080 MW/kWh iv. Average Load 4,030 MW/kWh v. Minimum Load 2,173 MW/kWh vi. Efficiency 15.81 kWh/gal. of diesel vii. Future trends d) Annual heating fuel usage (fill in as applicable) NA i. Diesel [gal or MMBtu] ii. Electricity [kWh] iii. Propane [gal or MMBtu] iv. Coal [tons or MMBtu] v. Wood [cords, green tons, dry tons] vi. Other   3. Proposed System Design a) Installed capacity 3 MW b) Annual renewable electricity generation i. Diesel [gal or MMBtu] ii. Electricity [kWh] 8,963 MWh/year 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 $ 15,102,757 b) Development cost $ 431,552 c) Annual O&M cost of new system $ 523,786 d) Annual fuel cost $ 0 5. Project Benefits a) Amount of fuel displaced for i. Electricity 430,195 gallons per year ii. Heat iii. Transportation b) Price of displaced fuel $3.72 per gallon x 430,195 gallons = $1,600,325/year RFA AEA 09-004 Application Cost Worksheet revised 9/26/08 Page 2  Renewable Energy Fund   RFA AEA 09-004 Application Cost Worksheet revised 9/26/08 Page 3 c) Other economic benefits $ 249,743/year d) Amount of Alaska public benefits $ 249,743/year 6. Power Purchase/Sales Price a) Price for power purchase/sale N/A – Estimated $.285/kWh average rate 7. Project Analysis a) Basic Economic Analysis Project benefit/cost ratio 3.14 Payback 10.85 years Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 43 of 51 10/8/2008 Grant Budget Form Alaska Energy Authority ‐ Renewable Energy FundBUDGET INFORMATIONBUDGET SUMMARY: NJUS Renewable Energy Fund Wind ProjectMilestone Federal Funds State FundsLocal Match Funds (Cash)Local Match Funds (In‐Kind)Other FundsTOTALSPhase I and II Tasks (Reconnaissance, Feasibility and Conceptual Design)1. Initial Renewable Resource Review (DOE Report)$0 $02. Existing Energy System Analysis (DOE Report ‐ Partners)$4,302 $4,3023. Proposed System Design (All Project Partners)$8,004 $8,0044. Proposed System Costs Estimations (All Project Partners)$3,336 $3,3365. Proposed Benefits (GEC ‐ STG)$3,804 $3,8046. Energy Market/Sales Analysis (NJUS)$1,998 $1,9987. Permitting Review (HDL)$230 $2308. Analysis of Potential Environmental Issues (HDL)$230 $2309. Land Ownership Preparations (NJUS)$1,998 $1,99810.  Legal Consultations$400 $40011.  Preliminary Analysis and Recommendations (Aurora Consulting)$5,250 $5,250$29,552Phase III Tasks (Final Design and Permitting)12. Project Management (STG Estimate) $125,000 $125,00013. Perform Geotechnical Analysis (DMA Estimate) $44,000 $44,00014. Finalize Energy Production Analysis (GEC Estimate) $10,000 $10,00015. Finalize Foundation Designs (BBFM Estimate) $19,000 $19,00016. Finalize System Integration Designs (IES/EPS Estimate) $222,346 $222,34617.1 Finalize Land Agreements (Legal Estimate ‐ NJUS) $2,000 $2,00017.2 Purchase Land (NJUS)$830,000 $830,00018. Turbine Procurement (Turbine Estimate ‐ IES/STG) $6,713,700 $6,713,70019. Begin Financing Development (Legal Estimate ‐ NJUS) $2,000 $2,00020. Apply for/Obtain Permits (HDL Estimate) $20,000 $20,00021. Draft Final Operational Business Plan (Aurora Consulting Estimate) $15,000 $15,000$8,003,046Phase IV Tasks (Construction, Commissioning, Operation and Reporting)22. Project Management (STG Estimate) $125,000 $125,00023.1 Foundation Material Procurement (STG Estimate) $1,259,478 $1,259,47823.2 Mobilization and Demobilization Costs (STG Estimate) $1,028,075 $1,028,07523.3 Site Access and Foundation Development (STG Estimate) $285,580 $285,58023.4 Foundation Installation (STG Estimate) $823,544 $823,54423.5 Tower/Turbine Erection (STG Estimate) $396,639 $396,63923.6 Transmission/Distribution Lines (NJUS/STG/EPS Estimates) $434,400 $128,200 $562,60023.7 Power Storage Foundation Pad (STG Estimate) $45,330 $45,33023.8 Construction Survey/As‐Built Diagrams (STG Estimate) $26,220 $26,22023.9 Job Site Clean Up (STG Estimate) $15,866 $15,86624. System Integration (EPS Estimate) $1,608,769 $591,231 $2,200,00025. SCADA Installation (IES Estimate) $503,380 $503,38026. System Calibration (IES/EPS Estimate) $220,000 $220,00027. Final Business Plan Development (Aurora Consulting Estimate) $10,000 $10,000$    7,501,710.63 Total Project Costs (Phase I, II, III and IV)$       13,951,326  $           595,231 $                  958,200 $             29,552 $       15,534,309 Total Phase I and Phase II CostsTotal Phase III CostsTotal Phase IV CostsRFA AEA09-004 Budget Form Alaska Energy Authority ‐ Renewable Energy FundMilestone # BUDGET CATEGORIES: 1 2 3 4 5 6Direct Labor and BenefitsTravel, Meals, or Per DiemEquipmentSuppliesContractual Services4,302$                8,004$               3,336$                      3,804$               1,998$                 Construction ServicesOther Direct CostsTOTAL DIRECT CHARGES$                     ‐   $                 4,302  $               8,004 $                       3,336 $               3,804 $                 1,998 789 10 1112Direct Labor and BenefitsTravel, Meals, or Per DiemEquipmentSuppliesContractual Services 230$                 230$                    1,998$               400$                          5,250$               125,000$            Construction ServicesOther Direct CostsTOTAL DIRECT CHARGES$                  230 $                    230  $               1,998 $                          400 $               5,250 $             125,000 13 14 15 16 17.1 17.2Direct Labor and BenefitsTravel, Meals, or Per DiemEquipmentSuppliesContractual Services 30,000$            10,000$              19,000$             222,346$                  2,000$               Construction Services 14,000$            Other Direct Costs830,000$            TOTAL DIRECT CHARGES$            44,000 $               10,000  $             19,000 $                  222,346 $               2,000 $             830,000 18 19 20 21 22 23.1Direct Labor and BenefitsTravel, Meals, or Per DiemEquipment 6,713,700$      SuppliesContractual Services2,000$                18,000$             15,000$                    125,000$           Construction Services1,259,478$         Other Direct Costs2,000$               TOTAL DIRECT CHARGES$       6,713,700 $                 2,000  $             20,000 $                     15,000 $           125,000 $          1,259,478 RFA AEA09-004 Budget Form Alaska Energy Authority ‐ Renewable Energy Fund23.2 23.3 23.4 23.5 23.6 23.7Direct Labor and Benefits21,200$             Travel, Meals, or Per DiemEquipment107,000$           SuppliesContractual Services 785,559$          30,000$             94,424$             Construction Services 242,516$          285,580$            793,544$           396,639$                  339,976$           45,330$               Other Direct CostsTOTAL DIRECT CHARGES$       1,028,075 $             285,580  $           823,544 $                  396,639 $           562,600 $               45,330 23.8 23.9 24 25 26 27Direct Labor and BenefitsTravel, Meals, or Per DiemEquipment2,200,000$       SuppliesContractual Services220,000$           10,000$               Construction Services 26,220$            15,866$              503,380$                  Other Direct CostsTOTAL DIRECT CHARGES$            26,220 $               15,866  $        2,200,000 $                  503,380 $           220,000 $               10,000 TOTALSDirect Labor and Benefits$            21,200 Travel, Meals, or Per Diem$                     ‐   Equipment$       9,020,700 Supplies$                     ‐   Contractual Services$       1,737,881 Construction Services$       3,922,528 Other Direct Costs$          832,000 TOTAL DIRECT CHARGES$     15,534,309 RFA AEA09-004 Budget Form Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 44 of 51 10/8/2008 Electronic Version of Application (See attached CD Rom) Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 45 of 51 10/8/2008 Governing Body Resolution Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 46 of 51 10/8/2008 NJUS Board Resolution NOME JOINT UTILITY SYSTEM NOME JOINT UTILITY BOARD RESOLUTION 08-18 A RESOLUTION AUTHORIZING AND SUPPORTING THE RENEWABLE ENERGY FUND GRANT APPLICATION TO THE ALASKA ENERGY AUTHORITY FOR WIND GENERATION IN NOME WHEREAS,the City of Nome through the Nome Joint Utility System owns and operates the electric utility for the community of Nome,Alaska;and, WHEREAS,the cost of diesel fuel in rural Alaska is extraordinarily expensive and Nome/NJUS has been pursuing alternatives to the use of diesel generation to provide electricity to the community which can reduce reliance on diesel fuel and the cost of electricity to residents and businesses of the community;and, WHEREAS,the Alaska State Legislature has established a Rural Energy Grant Fund and the Alaska Energy Authority is soliciting proposals for funding of renewable energy projects on behalf of the State of Alaska;and, WHEREAS,Nome/NJUS is desirous of substituting diesel-generated power with wind-generated power; NOW,THEREFORE BE IT RESOLVED,that the Nome Joint Utility Board authorizes management to submit the Nome Renewable Energy Fund Wind Project grant application to the Alaska Energy Authority;and, BE IT FURTHER RESOLVED,that NJUS authorizes submittal of the Nome Renewable Energy Fund Wind Project application at the match levels indicated in the application;and, BE IT FURTHER RESOLVED,that the Nome Joint Utility Board designates and authorizes the Utility Manager as Chief Operating Officer to be the point of contact to represent Nome for purposes of the application;and, BE IT FURTHER RESOLVED,that NJUS attests that it is in compliance with all federal,state,and local laws, including existing credit and federal tax obligations. SIGNED THIS 30th DAY OF SEPTEMBER,2008 AT NOME,ALASKA. Jim qst,Jr.,Chairmar\ NOMyJOINT UTILITY BbARD ATTEST: David Barron,Secretary NOME JOINT UTILITY BOARD Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 47 of 51 10/8/2008 City of Nome Resolution Presented by: Utility Manager Action Taken: Yes4,No’C’ Abstain -‘- CITY OF NOME,ALASKA RESOLUTION NO.R-08-09-03 A RESOLUTION AUTHORIZING AND SUPPORTING A RENEWABLE ENERGY FUND GRANT APPLICATION TO THE ALASKA ENERGY AUTHORITY FOR WIND GENERATION IN NOME WHEREAS,the City of Nome through the Nome Joint Utility System (NJUS)owns and operates the electric utility for the community of Nome,Alaska;and, WHEREAS,the cost of diesel fuel in rural Alaska is extraordinarily expensive and Nome/NJUS has been pursuing alternatives to the use of diesel generation to provide electricity to the community which can reduce reliance on diesel fuel and the cost of electricity to the residents and businesses of the community;and, WHEREAS,the Alaska State Legislature has established a Rural Energy Grant Fund and the Alaska Energy Authority is soliciting proposals for funding of renewable energy projects on behalf of the State of Alaska;and, WHEREAS,Nome/NJUS is desirous of substituting diesel-generated power with wind- generated power; NOW,THEREFORE BE IT RESOLVED,that the Nome Common Council authorizes the Nome Joint Utility System to submit the Nome Renewable Energy Fund Wind Project grant application to the Alaska Energy Authority;and, BE IT FURTHER RESOLVED,that the City authorizes submittal of the Nome Renewable Energy Fund Wind Project application at the match levels indicated in the application;and, BE IT FURTHER RESOLVED,that the City designates and authorizes the Utility Manager as Chief Operating Officer of Nome Joint Utility System to be the point of contact to represent Nome for purposes of the application;and, BE IT FURTHER RESOLVED,that Nome attests that it is in compliance with all federal,state, and local laws,including existing credit and federal tax obligations. APPROVED and SIGNED this 29 day of September,2008. ATTEST: RER Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 48 of 51 10/8/2008 Match Documentation – NJUS and City of Nome NOME JOINT UTILITY SYSTEM a component unit of P.O.Box 70 •Nome,Alaska 99762 •(907)443-NJUS •Fax (907)443-6336 STATE OF ALASKA RENEWABLE ENERGY FUND NOME WIND PROJECT GRANT APPLICATION MATCH CERTIFICATION This is to certify the City of Nome/Nome Joint Utility System will make the following match contributions should funds be awarded to support the wind energy project described in our grant application of $13,951,326 submitted under RFA #AEA-09-004. Should grant funds be awarded,the applicant will provide a match representing a local cash and in-kind investment of ten percent (10%)of the grant funds awarded.Based on the application amount,our match will be comprised of the following: Land identified for location of wind farm on Newton: 672 acres,more or less,based on a restricted appraisal, valulation date of October 1,2008 (exceeds)830,000 Management oversight and rental value of equipment provided in-kind to the project 128,200 Cash Match Commitment to Project 595,231 1.553,431 I further confirm I am specifically authorized by the Nome Joint Utility Board and the Nome Common Council to commit the items listed as grant match and to provide this certification. JoIn K.Handeland General Manager/Chief Operating Officer NOME JOINT UTILITY SYSTEM Dated:October 7,2008 Providing reliable utility services to system rate payers efficiently and economically by prudently operating and maintaining system assets in a fiscally responsible manner Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 49 of 51 10/8/2008 Partners’ Match Documentation October 4, 2008 To Whom It May Concern: As the Project Manger of the NJUS Renewable Energy Fund Wind Project, this letter is to serve as documentation of the contributions made by project partners during the conceptual design phases of this project. To date, the following firms have either offered their services as in-kind contributions or directly billed STG Incorporated for their time completing work regarding this wind energy installation: Firm Total Contribution STG Incorporated $9,215.00 Duane Miller Associates $825.00 BBFM Engineers $1,240.00 Electric Power Systems $2,168.00 Intelligent Energy Systems $2,500.00 HDL Engineers $460.00 Nome Joint Utility System $6,000.00 Legal Counsel $400.00 Aurora Consulting $5,250.00 DNV Global Energy Concepts $1,500.00 Total: $29,558.00 More detailed cost accounting for this work is available upon request. Signed, James St. George President, STG Incorporated 11820 S. Gambell Street • Anchorage, Alaska 99515 • Phone: (907) 644-4664 • Fax: (907) 644-4666 info.stginc@gci.net • www.stgincorporated.com Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 50 of 51 10/8/2008 NJUS Renewable Energy Fund Wind Project Supporting Documents DNV Global Energy Concepts Inc. 1809 7th Avenue, Suite 900 Seattle, Washington 98101 Phone: (206) 387-4200 Fax: (206) 387-4201 www.globalenergyconcepts.com www.dnv.com Preliminary Energy Assessment for Nome Wind Energy Project October 6, 2008 Prepared for: STG Inc 11820 South Gambell Street Anchorage, AK 99515 Preliminary Energy Assessment, Nome, Alaska EARP0046-A DNV Global Energy Concepts Inc. i October 6, 2008 Approvals October 6, 2008 Prepared by Mia Devine Date October 6, 2008 Reviewed by Kevin J. Smith Date Version Block Version Release Date Summary of Changes A October 6, 2008 Original Preliminary Energy Assessment, Nome, Alaska EARP0046-A DNV Global Energy Concepts Inc. ii October 6, 2008 Table of Contents BACKGROUND AND SITE DESCRIPTION........................................................................... 1 WIND RESOURCE MEASUREMENTS................................................................................... 2 Wind Rose............................................................................................................................... 2 Air Density.............................................................................................................................. 3 Wind Speeds at the Project Site.............................................................................................. 3 ENERGY ANALYSIS.................................................................................................................. 6 Wind Turbine Power Curves and Gross Energy Production.................................................. 6 Energy Losses......................................................................................................................... 7 Electric Load........................................................................................................................... 9 Diesel Generators and Controls............................................................................................ 10 Balance of System Equipment.............................................................................................. 10 Energy System Modeling Results......................................................................................... 11 Preliminary Energy Assessment, Nome, Alaska EARP0046-A DNV Global Energy Concepts Inc. iii October 6, 2008 List of Figures Figure 1. Proposed Wind Project Site, Nome................................................................................. 1 Figure 2. Wind Rose at Anvil Mountain, Nome (September 15, 2005, to July 8, 2007) ............... 3 Figure 3. Estimated Monthly Diurnal Wind Speeds at Newton Peak............................................. 5 Figure 4. Estimated Year 2015 Electric Load Requirements in Nome......................................... 10 Figure 5. Estimated Hourly Electric Load and Wind Energy Production .................................... 12 List of Tables Table 1. Monthly Average Wind Speeds (m/s) .............................................................................. 5 Table 2. Turbine Power Curves and Gross Energy, 1.26 kg/m3 Air Density................................. 6 Table 3. Estimated System Energy Losses..................................................................................... 7 Table 4. Estimated Year 2015 Power Generation Requirements in Nome..................................... 9 Table 5. Specifications for Diesel Generators in Nome ............................................................... 10 Table 6. Energy System Modeling Results, Five Fuhrländer FL600 Wind Turbines .................. 13 Table 7. Energy System Modeling Results, Five Vestas RRB PS600 Wind Turbines ................ 13 Preliminary Energy Assessment, Nome, Alaska EARP0046-A DNV Global Energy Concepts Inc. 1 October 6, 2008 Background and Site Description DNV Global Energy Concepts Inc. (DNV-GEC) has been retained by STG Inc to evaluate the wind resource in Nome, Alaska, and complete a preliminary estimate of the potential energy production and diesel fuel displacement of a proposed wind power project in the community. This report describes the methodology and assumptions used in the analysis. This report is not intended as a detailed technical or economic feasibility study of the proposed wind power system. DNV-GEC has not completed a site visit of the proposed project area. STG intends to install five 600 kW wind turbines on Newton Peak, located about 7 km northeast of the town of Nome. The hybrid wind-diesel power plant is intended to be a medium- penetration system, with wind energy providing up to 30% of the village load on average. The location of the proposed project site on Newton Peak and the turbine layout provided by STG is shown in Figure 1. Also shown are the locations of wind monitoring stations discussed in this report. Figure 1. Proposed Wind Project Site, Nome Preliminary Energy Assessment, Nome, Alaska EARP0046-A DNV Global Energy Concepts Inc. 2 October 6, 2008 Wind Resource Measurements Data are available from a 30-m meteorological (met) tower, located along the Snake River valley in Nome at an elevation of 18 m. Wind speed and direction measurements were recorded at heights of 19.5 m and 29 m above ground level. Standard, uncalibrated NRG#40 anemometers and NRG #200P wind vanes were used at the site. Data were recorded as 10-minute averages from November 9, 2005, to May 8, 2008. A second wind monitoring station is located on Anvil Mountain, at an elevation of 305 m. Standard, uncalibrated NRG#40 anemometers and NRG #200P wind vanes were mounted on a 12-m tall telephone pole and data were recorded as 10-minute averages from September 15, 2005, to July 8, 2007. DNV-GEC compiled, validated, and incorporated data from both met towers into the analysis. DNV-GEC followed a standard validation process to identify and remove erroneous data (e.g., due to icing). Invalid wind data were removed from the data set and a secondary anemometer was used to fill the gaps when available. Both sites experienced a significant amount of data loss due to icing as well as data that is missing for unknown reasons. The average data recovery rates were 75% at Anvil Mountain and 81% at Snake River. The Windographer software program was used to fill all gaps in the data set by making use of the statistical properties of the measured data surrounding the gap. Wind Rose A wind rose depicts the frequency and energy content of wind by direction and influences the layout of a wind farm with multiple wind turbines. As shown in Figure 2, the prevailing wind direction on top of Anvil Mountain is from the northeast, with secondary wind directions from the northwest and south. The wind rose from the Snake River met tower site and the airport weather station in Nome also indicate frequent winds from the northeast, as well as secondary winds from the southwest and north. The turbine layout developed by STG is oriented to capture the prevailing northeast winds. Preliminary Energy Assessment, Nome, Alaska EARP0046-A DNV Global Energy Concepts Inc. 3 October 6, 2008 0 2 4 6 8 10 12 14 0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160170 180 190200 210 220 230 240 250 260 270 280 290 300 310 320 330 340 350 % of Energy % of Time Figure 2. Wind Rose at Anvil Mountain, Nome (September 15, 2005, to July 8, 2007) Air Density The density of the air affects power production from a wind turbine, with denser air leading to greater power production potential. The density of air depends on the air temperature and the elevation of the site. An annual average air density value of 1.26 kg/m3 was calculated for Newton Peak based on the long-term average air temperature of -5.5°C measured at the Nome airport weather station and an elevation of 350 m (site elevation of 300 m plus hub-height elevation of 50 m). The wind turbine power curves are adjusted to the site air density. Wind Speeds at the Project Site DNV-GEC investigated the availability of long-term reference meteorological data to adjust the measured met tower wind speeds to represent long-term conditions. The Automated Surface Observation Station (ASOS) at Nome was identified as the only valid source of long-term data in close proximity to the met tower sites; however the correlation between the met towers and ASOS site is poor, with an R-squared value of 0.46 based on a comparison of monthly average wind speeds. Adjustments to the met tower data based on this reference station are not likely to reduce uncertainty in long-term wind resource estimates; therefore, long-term adjustments were not made to the measured data. The multi-year record at the met tower sites helps to reduce uncertainty in lieu of a long-term reference station. The proposed wind project site is on a hill approximately 3 km east of Anvil Mountain and 8 km southeast of the Snake River measurement site. The wind resource is highly variable from one Preliminary Energy Assessment, Nome, Alaska EARP0046-A DNV Global Energy Concepts Inc. 4 October 6, 2008 location to the next, particularly in complex terrain such as the hills and valleys around Nome. Therefore, DNV-GEC made adjustments to the measured wind resource to account for variations of wind flow over the terrain between the met tower sites and the proposed project site on Newton Peak. The primary tool used to extrapolate from one site to the next is the High Resolution Wind Map of Alaska produced by AWS Truewind, which presents expected annual average wind speeds at heights of 30 m and 50 m above ground level. The measured met tower data at both Snake River and Anvil Mountain were compared to predictions from the wind map. At the Snake River site, the expected annual average wind speed based on the 30-m wind map is 5.1 to 5.8 m/s at a height of 30 m above ground level. The actual 30-month weighted average wind speed measured at the site is 5.4 m/s at a 30-m height, which is in the middle of the expected range. Based on the standard wind shear value of 0.14 used in the wind map classification system, the Anvil Mountain site is expected to experience an annual average wind speed of 6.5 to 7.2 m/s at a 12-m height above ground level. The actual 22-month weighted average wind speed measured at Anvil Mountain is 6.1 m/s at a 12-m height, which is 6% below the range predicted by the wind map. A possible explanation for a lower than expected wind resource on Anvil Mountain is the significant amount of data loss experienced due to ice during the windy winter months at this site. However, without a valid long-term reference station, the magnitude of the possible under-estimation cannot be quantified with available data. Since the terrain at the proposed project site on Newton Peak appears similar to the terrain at Anvil Mountain based on our desk-level map analysis, DNV-GEC has assumed that Newton Peak will experience the same relationship between estimated and actual wind speeds as at the Anvil Mountain site. According to the 50-m wind speed map (see Figure 1), the annual average wind speed at the proposed turbine locations is expected to range from 8.0 to 8.8 m/s at a height of 50 m. Based on the magnitude of over-estimation at the Anvil Mountain site, the actual range of wind speeds estimated at Newton Peak is 7.5 to 8.5 m/s. In order to create an hourly data set for use in energy calculations, a year of hourly data measured at Anvil Mountain was scaled to the expected annual average wind speeds at Newton Peak. Due to the similar topography between the sites, DNV-GEC expects the diurnal and seasonal wind patterns between the sites to be similar. Although the wind map suggests that one of the turbine locations may be located in a higher wind speed class than the other turbines, to be conservative, DNV-GEC assumed all turbine locations would be exposed to the same wind resource when calculating gross energy production. Table 1 and Figure 3 summarize the measured and the calculated monthly average wind speeds for Nome. Preliminary Energy Assessment, Nome, Alaska EARP0046-A DNV Global Energy Concepts Inc. 5 October 6, 2008 Table 1. Monthly Average Wind Speeds (m/s) Month Snake River, Measured (29 m) Anvil Mountain, Measured (12 m) Newton Peak Wind Project Site, Long-Term Estimate (50 m) January 5.9 4.2 8.6 – 10.1 February 6.9 7.2 8.8 – 10.4 March 5.4 5.3 6.8 – 8.0 April 5.5 5.1 5.9 – 6.9 May 3.8 4.4 4.3 – 5.1 June 3.9 4.8 5.7 – 6.6 July 3.7 4.7 6.7 – 7.9 August 4.1 4.5 5.6 – 6.5 September 5.6 6.4 8.2 – 9.6 October 5.6 8.0 11.6 – 13.6 November 6.3 8.9 10.1 – 11.9 December 6.2 6.7 7.7 – 9.0 Annual Average 5.5 6.0 7.5 – 8.8 Note: The annual average wind speed at Snake River is based on 30 months of data and the annual average wind speed at Anvil Mountain is based on 22 months of data. Figure 3. Estimated Monthly Diurnal Wind Speeds at Newton Peak Preliminary Energy Assessment, Nome, Alaska EARP0046-A DNV Global Energy Concepts Inc. 6 October 6, 2008 Energy Analysis DNV-GEC used the software program HOMER, developed by the National Renewable Energy Laboratory, to estimate energy production (www.nrel.gov/homer). The HOMER modeling software compares the hourly output of the wind turbines with the hourly electric load of the community and dispatches the appropriate diesel generator to make up any difference in power needs. The operating reserve, minimum loading of the diesel engines, and the diesel-fuel efficiency curves are also taken into consideration to calculate the fuel consumption of the system. Inputs into the model include the local wind resource, the wind turbine power curve, the community’s hourly electric load, and diesel generator fuel curves. Assumptions used for each of these inputs and results of the analysis are described below. Wind Turbine Power Curves and Gross Energy Production STG is considering either the Fuhrländer FL600 or the Vestas RRB PS600 wind turbine for the project site. The suitability and long-term reliability of either turbine model for operation in cold climates has not been specifically evaluated by DNV-GEC for this preliminary assessment. The energy analysis was completed for both turbine models. The manufacturer-provided power curves were adjusted to the site air density of 1.26 kg/m3 and are shown in Table 2. The turbine power curves are used to calculate energy production for each hourly average wind speed value. The hourly energy production is summed over a year to estimate gross annual energy production for each wind turbine. Table 2. Turbine Power Curves and Gross Energy, 1.26 kg/m3 Air Density Wind Speed (m/s) Fuhrländer Power (kW) Vestas RRB Power (kW) 0 0 0 1 0 0 2 0 0 3 6 0 4 28 22 5 63 44 6 120 84 7 196 147 8 298 224 9 421 311 10 527 408 11 595 479 12 611 536 13 615 566 14 615 584 15 615 597 16 615 600 17 615 602 18 615 600 19 615 600 Preliminary Energy Assessment, Nome, Alaska EARP0046-A DNV Global Energy Concepts Inc. 7 October 6, 2008 Wind Speed (m/s) Fuhrländer Power (kW) Vestas RRB Power (kW) 20 615 600 21 0 600 22 0 600 23 0 600 24 0 600 25 0 600 Annual Average Wind Speed, 50 m Height 8.0 m/s 8.0 m/s Gross Energy Production per Turbine 1,997 MWh/yr 1,792 MWh/yr Gross Capacity Factor 38.0% 34.1% Energy Losses The gross annual energy represents the energy delivered at the base of the wind turbine towers under ideal conditions. Net energy production takes into account typical losses and represents the energy delivered to the grid interconnection point for a typical (average) year. Exact losses can vary significantly from project to project and are strongly influenced by factors such as equipment reliability, owner/operator’s approach to maintenance and repairs, turbine and subcomponent supplier responsiveness, and site conditions. DNV-GEC evaluated each potential area of energy loss in the Nome wind power system and estimated a correction factor to be applied to the projected diesel-fuel savings calculated by the HOMER model, which otherwise assumes 100% turbine availability and zero system losses. Aggregate energy losses are estimated to be 24% for the site, as listed in Table 3. Estimated values are long-term averages over an expected 20-year project life. Year to year losses, particularly availability, can fluctuate significantly. Table 3. Estimated System Energy Losses Description Losses (% of Energy) Correction Factor Availability 11% 0.89 Electrical 2% 0.98 Turbine Performance 2% 0.98 Environmental 7% 0.93 Wake Effects 3% 0.97 Curtailment 1% 0.99 Total 24% 0.76 Turbine availability is the primary cause of energy losses for the wind system. Availability is the percent of time during the year that the wind turbines are online and available to produce power. Factors affecting turbine availability include downtime due to routine maintenance, faults, minor or major component failures, and balance-of-plant downtime (substation transformer failures, electrical collection system or communication system problems, or transmission outages). While a “typical” year may have relatively limited downtime associated with component failures, the Preliminary Energy Assessment, Nome, Alaska EARP0046-A DNV Global Energy Concepts Inc. 8 October 6, 2008 infrequent events of long duration can result in significant lost energy. As the equipment ages, failure of minor components with design lives less than 20 years is expected to increase; however, the increasing failure rate may be offset somewhat by increased efficiency as experience is gained in replacing these components. DNV-GEC estimated a long-term turbine availability of 89% which corresponds to an average of 960 turbine-hours per year of project downtime due to planned or unplanned maintenance. This estimate is based on the assumption that the wind power system will have remote monitoring capability that would allow both the turbine supplier and the power system operator to monitor production, troubleshoot faults and take corrective action on some tasks without sending a technician to the site. It is also assumed that technicians experienced with electrical and mechanical systems employed by the power system operator would be capable of completing routine maintenance and minor component repairs with some basic training from the turbine manufacturers. Electrical losses represent the difference between energy measured at each wind turbine and the point of revenue metering, including transformers, collection wiring, conversion to and from energy storage devices, and parasitic consumption within the power plant. DNV-GEC estimates electrical losses to be 2%. Turbine performance losses include a variety of issues related to the normal control of the wind turbine that prevent performance in accordance with the reference power curve. These issues include high-wind hysteresis (production lost during the time it takes to recover from automatic high-wind shutdowns), low-wind hysteresis (startup and cut-in), off-yaw operations, and turbulence. DNV-GEC estimates turbine performance losses to be 2%. Environmental losses include weather-related shutdowns to avoid hail, lightning, or other storm damage, reduced site access due to inclement weather conditions, and shut downs due to ambient temperatures outside the turbine’s operating range. Also included in this category is blade soiling and degradation, which occurs with the accumulation of dirt, insects, or ice, impacts the aerodynamics of the blades, thus lowering production. The cold weather specifications of the Fuhrländer and Vestas RRB were not available for this analysis; however, wind turbines are typically designed to operate in temperatures as low as -20°C without special modifications. Based on the temperature data measured at the Snake River met tower, temperatures drop below -20°C during approximately 600 hours per year. Some of these hours are likely to coincide with periods of energy loss due to icing and reduced access to the site during poor weather. DNV- GEC estimates an average 7% energy loss per year due to environmental-related issues. Wake effects refer to lost energy production caused by turbines located downwind of other turbines. The wind turbine layout in Nome is based on a primary wind direction of northeast; however, the wind rose shows that power-producing winds also come from the southwest and north. During those times, some of the wind turbines will be located downwind, or in the wake, of other turbines, leading to energy losses for those wind turbines. Based on the current turbine layout with a single row of turbines and turbine-to-turbine spacing of 5.5 rotor diameters, DNV- GEC estimates a 3% energy loss due to wake losses; however, a complete wake loss simulation has not been completed. Preliminary Energy Assessment, Nome, Alaska EARP0046-A DNV Global Energy Concepts Inc. 9 October 6, 2008 Curtailment includes commanded shutdowns related to wind sector management, losses due to the power purchaser electing to not take power generated by the facility, and altered operations to reduce noise, shadow flicker impacts, or for bird or bat mitigation. Curtailment of the proposed wind facility is expected to be minimal; DNV-GEC estimates 1% energy loss to account for occasional curtailment when wind power generation exceeds the community demand. Since each loss category is independent of the other categories, total losses are calculated by multiplying each system loss correction factor to result in a total correction factor of 0.76. HOMER does not incorporate the above-discussed energy losses into the power system model. Therefore, the loss correction factor is applied to the gross fuel savings results from HOMER. Wind-generated electricity not immediately used by the community may be diverted into an electric dump load and used for space heat. Since this electricity is not sold at retail electric rates, it is considered an energy loss from the power plant operator’s point of view. This electrical energy loss is included in the HOMER model and is therefore not repeated in the energy loss categories above. Electric Load According to the Nome Region Energy Assessment report prepared by the Department of Energy’s National Energy Technology Laboratory in 2007, the annual electric generation requirements in Nome in the year 2015 are expected to be 31,200 MWh, and daily loads are expected to range from 2.7 MW to 4.3 MW seasonally. Based on the monthly and diurnal load profiles presented in the report, DNV-GEC synthesized a year of hourly electric load data as summarized in Table 4 and Figure 4. Table 4. Estimated Year 2015 Power Generation Requirements in Nome Month Average Load (MW) Gross Energy Production (MWh) Jan 4.1 3050 Feb 4.0 2654 Mar 3.9 2902 Apr 3.6 2592 May 3.3 2455 Jun 2.9 2088 Jul 2.9 2158 Aug 3.1 2306 Sep 3.3 2376 Oct 3.6 2641 Nov 4.0 2844 Dec 4.1 3013 Total 3.6 31,080 Preliminary Energy Assessment, Nome, Alaska EARP0046-A DNV Global Energy Concepts Inc. 10 October 6, 2008 Figure 4. Estimated Year 2015 Electric Load Requirements in Nome Diesel Generators and Controls The sizes of the diesel generators at the Nome power plant are summarized in Table 5. DNV- GEC estimated fuel efficiency data based on available specifications from similar sized diesel gensets. In the HOMER model it is assumed that the minimum load to be placed on these diesels is 30% of rated power. Table 5. Specifications for Diesel Generators in Nome Estimated Fuel Efficiency Data Make Rating Minimum Load 100% Load 30% Load Wartsila 1875 kW 562 kW 41% 34% Wartsila 3660 kW 1098 kW 41% 34% Wartsila 5200 kW 1560 kW 41% 34% Balance of System Equipment Balance of system equipment could include electric dump loads, energy storage systems, flywheels, or other equipment necessary to ensure high quality and reliable power. The evaluation and specification of various balance of system equipment is beyond the scope of this analysis. For the purpose of estimating diesel fuel displacement, DNV-GEC assumes that adequate balance of system equipment and/or control systems are in place to absorb and/or curtail any excess wind generated electricity that is not instantaneously consumed by the community. Preliminary Energy Assessment, Nome, Alaska EARP0046-A DNV Global Energy Concepts Inc. 11 October 6, 2008 Typically, energy storage systems only prove economically beneficial in high-penetration systems where the diesel generators can be shut down when the wind turbines supply more power than is needed by the load. During lulls in wind power generation, the energy storage device supplies any needed power. If the lulls are prolonged and the storage becomes discharged, a diesel generator is started and takes over supplying the load. The primary energy storage devices commercially available include flywheels, ultra-capacitors, and batteries. This equipment can be coupled with a low-load diesel to extend fuel savings. Since the proposed number of wind turbines in Nome would result in a medium-penetration wind-diesel system, DNV-GEC assumes that the proposed wind-diesel system will not include an energy storage device. The wind turbines will rarely generate more electricity than can be instantaneously consumed by the community. Without an energy storage device, at least one diesel generator will remain in operation at all times to cover fluctuations between the wind generated electricity and the electric load. In HOMER, the dispatch of diesel generators is modeled by setting the spinning reserve value to 50% of the wind turbine output and 10% of the electric load. In other words, at any given time the appropriately-sized diesel generator will be selected that is capable of covering a sudden decrease in wind power output of up to 50% and a simultaneous increase in electric demand of up to 10%. The benefit of the wind power system will be to reduce the electric demand on the diesel power plant and allow for the operation of a smaller diesel generator with a lower fuel consumption rate than would be used in a diesel-only system. Energy System Modeling Results The HOMER modeling software compares the hourly output of the wind turbines with the hourly electric load of the community and dispatches the appropriate diesel generator to make up any difference in power needs. Figure 5 illustrates the daily energy production from the wind power system consisting of five 600 kW Fuhrländer turbines compared to the electric load of the community, assuming an average hub-height wind speed of 8.0 m/s. The difference between the electric load and the wind power output is supplied by the diesel generators. Preliminary Energy Assessment, Nome, Alaska EARP0046-A DNV Global Energy Concepts Inc. 12 October 6, 2008 Figure 5. Estimated Hourly Electric Load and Wind Energy Production System energy production and fuel savings are summarized in Table 6 and Table 7 for the range of expected wind speeds at the site. The gross wind energy output is the amount of electricity available to meet the community demand prior to energy losses. The turbine capacity factor is calculated by dividing the gross energy output by the maximum possible energy production throughout the year. The gross diesel-fuel savings of the wind-diesel system represents the results of the HOMER modeling. The correction factor for energy losses described previously was applied to the gross diesel-fuel savings to arrive at the net fuel savings listed. Estimated fuel consumption of the diesel-only system is provided for comparison. Some excess electricity is generated by the wind-diesel system since the diesel generators are not allowed to shut off and must maintain a minimum load. In northern climates, it is common to install an electric boiler consisting of fast-acting electric resistive heaters to absorb excess wind electricity. The heat generated by the excess wind electricity can be incorporated into the diesel generator heat recovery loop or supplement the heat system of the school, community buildings, or water treatment plant. Modeling of the thermal energy and sizing of the dump load is beyond the scope of this report; however, the amount of excess electricity generated by the proposed wind power system is presented. Preliminary Energy Assessment, Nome, Alaska EARP0046-A DNV Global Energy Concepts Inc. 13 October 6, 2008 Table 6. Energy System Modeling Results, Five Fuhrländer FL600 Wind Turbines Hub-Height Wind Speed (m/s) Description 7.5 8.0 8.5 Gross wind energy production (MWh/yr) 9,363 9,989 10,555 Gross wind turbine capacity factor (%) 35.6% 38.0% 40.2% Excess electricity generated (MWh/yr) 600 700 800 Fuel consumption of diesel-only system (gal/yr) 2,103,000 2,103,000 2,103,000 Fuel consumption of wind-diesel system (gal/yr) 1,560,000 1,527,000 1,499,000 Gross diesel fuel savings (gal/yr) 543,000 562,000 590,000 Energy loss correction factor 0.76 0.76 0.76 Net diesel fuel savings (gal/yr) 413,000 427,000 448,000 Net diesel fuel savings (%) 20% 20% 21% Note: The results represent DNV-GEC’s current best estimate of the range of P50 values (the average expected value, or the value below which 50% of the outcomes are expected to be found). Table 7. Energy System Modeling Results, Five Vestas RRB PS600 Wind Turbines Hub Height Wind Speed (m/s) Description 7.5 8.0 8.5 Gross wind energy production (MWh/yr) 8,335 8,963 9,603 Gross wind turbine capacity factor (%) 31.7% 34.1% 36.5% Excess electricity generated (MWh/yr) 600 700 800 Fuel consumption of diesel-only system (gal/yr) 2,103,000 2,103,000 2,103,000 Fuel consumption of wind-diesel system (gal/yr) 1,609,000 1,539,000 1,574,000 Gross diesel fuel savings (gal/yr) 493,000 563,000 528,000 Energy loss correction factor 0.76 0.76 0.76 Net diesel fuel savings (gal/yr) 375,000 428,000 401,000 Net diesel fuel savings (%) 18% 20% 19% Note: The results represent DNV-GEC’s current best estimate of the range of P50 values (the average expected value, or the value below which 50% of the outcomes are expected to be found). It is expected that the wind power system will reduce diesel fuel consumption in Nome by 18% to 21%, or an average of 375,000 to 450,000 gallons per year. Nome Region Energy Assessment DOE/NETL-2007/1284 Final Draft Report March 2008 FINAL DRAFT iii Nome Region Energy Assessment DOE/NETL-2007/1284 Final Draft Report March 2008 NETL Contact: Brent Sheets Manager Arctic Energy Office Prepared by: Charles P. Thomas–Research & Development Solutions, LLC(RDS)/SAIC Lawrence Van Bibber–RDS/SAIC Kevin Bloomfield–RDS/SAIC Tom Lovas–Energy & Resource Economics Mike Nagy–ENTRIX Jeanette Brena–ENTRIX Harvey Goldstein–WorleyParsons Dave Hoecke–ENERCON Peter Crimp–Alaska Energy Authority (AEA) David Lockard–AEA Martina Dabo–AEA National Energy Technology Laboratory www.netl.doe.gov FINAL DRAFT v NOME REGION ENERGY ASSESSMENT EXECUTIVE SUMMARY The purpose of this assessment is to present an analysis of technologies available to the City of Nome for electric power production. Nome is a city of 3,500 people located on the Bering Sea coast of the Seward Peninsula 539 air miles northwest of Anchorage, 102 miles south of the Arctic Circle and 161 miles east of the Russian coast. Typical of most of Alaska’s rural communities, Nome is totally dependent upon diesel generators for electricity. The current load range for the city is 1.8 MWe to 5.2 MWe (yearly average of 3.35 MWe). All power is supplied by diesel generation. Diesel fuel is also required by the residents for residential and commercial space and water heating. The addition of industrial activity, the Rock Creek Mine, increased the load by about 9 MWe for an average load of 12.35 MWe. The mine, which began initial operations in late 2007, is estimated to be in operation for 7 to10 years. Recovered heat is currently used for heating the plant site and the potable water system for the City. The diesel generators require 1.8 to 2.0 million gallons of fuel each year. The consumer power rate has held steady in Nome since 2001. It ranges from $0.165 to 0.185/kWh depending upon usage. However, the fuel surcharge has risen to $0.075/kWh in 2006, making the current effective rate from $0.24 to 0.26/kWh. The continuing increase in diesel fuel costs has caused the City to look at alternative power sources to offset the total reliance on diesel. Scope and Approach Alternatives to the city’s dependence on diesel generators analyzed in this assessment are: • A barge-mounted coal-fired power plant using coal from: (1) the Usibelli mine near Healy, AK and transported by rail to Seward, AK and then by barge to Nome; or (2) British Columbia coal transported by barge to Nome. • Wind power with the wind turbines located on Anvil Mountain approximately 1 mile north of Nome. • Geothermal power plant at Pilgrim Hot Springs located 60 miles north of Nome with a power transmission network to Nome. • Natural gas from the Norton Sound delivered to Nome from a sub-sea development with a pipeline to shore and conversion of one of the new diesel engines to burn natural gas. Tidal/wave energy, hydroelectric dams, and coalbed natural gas were also considered, but these options did not appear viable and were not included in the final analysis. Tidal/wave energy technology is less mature than the other technologies considered and its applicability at Nome could not be assessed under current budget restrictions. The hydroelectric power option was not considered feasible and was not analyzed. Coalbed natural gas is not expected to be present in the vicinity of Nome and was not evaluated beyond some initial inquiries. Coal resources are known to exist on the Seward Peninsula, specifically at Chicago Creek on the north side of the Seward Peninsula and other coal resources are known to exist on the Seward Peninsula and in the Northwest. However, none of the Northwest Alaska resources are being actively mined and would require significant capital investment to start operations. This start-up cost would not be justified to supply coal for a small power plant. Hence, the coal plant design and economics contained within this report are based on coal available from within Alaska and from British Columbia. FINAL DRAFT vi Infrastructure requirements, environmental regulations and the status of technology development for the coal plant, wind, geothermal, and natural gas options were assessed and compared with the existing diesel generation system on an equivalent economic basis. Economic Results The economic analysis model calculates the total cost of providing electric power to the Nome Joint Utility electrical distribution system (the “busbar cost”). Total cost is the cost of all capital and operating costs, including distribution and administrative costs, and the cost of providing heat energy on a Btu basis to residential and commercial residents. The analysis runs for thirty years, from 2015 to 2044. All existing electrical and thermal loads currently served by the system are treated as firm; that is, fully and continuously supplied throughout the period. A reasonable expectation of electrical load growth over the 30-year period is included to account for increases in population and economic activity of the city. For each alternative case, the model estimates the electrical load requirement for each day of the year and computes how much energy is supplied by the primary generation source (e.g., diesel, coal, wind/diesel, geothermal, or natural gas). It also estimates how much must be delivered from diesel units as a backup resource. The model calculates the net present value of all annual costs, including current system fixed costs and the carrying cost of investments in new resources, to determine the total system life-cycle cost of power to the utility. The present values for each energy option are shown in Table 1. Table 1. Present Value of Busbar Electricity, $Millions Present Value of Busbar Electricity, $Millions Scenario Diesel Cost Escalation Diesel System Wind & Diesel Geothermal Coal @ $63/ton Coal @ $78/ton Natural Gas Mid 116 111 90 134 117 107 High 140 128 92 137 120 107 Present Value Savings Residential/Commercial Heat, $ Millions Mid 5 High 13 The model also computes the approximate average electric rate necessary to cover each year’s annual cost of providing electrical service, which includes estimated distribution and administration costs, based on recent financial statistics. The savings to residential and commercial consumers from an alternative source of heating fuel is estimated on a per Btu basis for the natural gas option. The average electricity rates for each energy option are shown in Table 2. FINAL DRAFT vii Table 2. Average Electric Rates and Space Heating Rates Year 2015 2020 2025 2030 2035 2044 Avg. 2015 to 2044 Diesel System $/kWh Mid-range diesel escalation 0.30 0.31 0.31 0.31 0.31 0.32 0.31 High-range diesel escalation 0.30 0.32 0.34 0.36 0.38 0.43 0.36 Coal Scenarios Coal $63/ton, Mid-Range Diesel 0.35 0.34 0.33 0.32 0.32 0.31 0.33 Coal $63/ton, High-Range Diesel 0.35 0.34 0.33 0.32 0.32 0.33 0.33 Coal $78/ton, Mid-Range Diesel 0.32 0.31 0.30 0.29 0.29 0.28 0.30 Coal $78/ton, High-Range Diesel 0.32 0.31 0.30 0.29 0.29 0.30 0.30 Wind/Diesel Mid-Range Diesel escalation 0.30 0.30 0.30 0.30 0.30 0.30 0.30 High-Range Diesel escalation 0.30 0.31 0.32 0.33 0.35 0.39 0.34 Geothermal Mid-Range Diesel escalation 0.29 0.28 0.26 0.25 0.24 0.24 0.26 High-Range Diesel escalation 0.29 0.28 0.27 0.26 0.25 0.25 0.26 Natural Gas Mid-Range Diesel Escalation 0.32 0.31 0.29 0.28 0.27 0.27 0.29 High-Range Diesel Escalation 0.32 0.31 0.29 0.28 0.27 0.28 0.29 Natural Gas Water and Space Heating—Relative Costs ($/MMBtu) Mid-Range Diesel Escalation 24 24 25 26 26 27 25 High-Range Diesel Escalation 24 26 28 31 33 39 31 Natural Gas 25 24 23 22 21 19 22 All costs are expressed in real dollars that have purchasing power at a constant reference point, in this case 2007. Diesel fuel cost increases in real terms (i.e., price increases over and above general inflation rates) are the same in all scenarios. For the purposes of estimating future costs of diesel fuel, the Alaska Energy Authority (AEA) prepares projections of delivered fuel prices for a number of locations in Alaska, including the city of Nome. These projections are used for analysis of a variety of energy issues throughout the state, including evaluation of wind-diesel hybrid systems and other alternative generation options. For consistency with statewide energy planning, the diesel fuel rate of change over time (other than general inflation) for the city of Nome was drawn from the Alaska Energy Authority estimates and applied to the price of diesel delivered to Nome in 2007. FINAL DRAFT viii • Diesel Fuel Initial Price: $2.54/gal • Diesel Fuel Escalation (real) ƒ Mid-Range case 0.58%/yr ƒ High-Range case 2.12%/yr These diesel fuel escalation rates result in estimates of diesel costs of $3.00/gal by 2044 for the mid-range case, and to as much as $4.67/gal in the high-range case. A low-range case, which assumes an average decline in diesel prices of over 1%/yr over the AEA analysis period, was not examined for the purposes of this screening analysis. The net present values are derived with a real discount rate of 4%, corresponding to the effective interest rate for borrowing by municipal electric systems such as Nome. For each case, the life-cycle cost of providing electricity is the discounted present value of all annual costs for the 30-year period of analysis. In the natural gas case, where natural gas is made available for utility requirements, a net present value is estimated for the electric utility that compares directly with other electric production options, and a separate estimate is provided for the savings from the availability of natural gas for space and water heating, Diesel System The generating efficiency of the two new units recently installed by the Nome Joint Utility System will average 16 kWh/gallon of diesel fuel, an efficiency that is expected to remain unchanged year-to-year, so diesel consumption will vary directly with changes in electric load requirements. For the Nome system in 2006, with fuel costs at an average of $1.99/gallon, diesel fuel constituted 50% of the average cost of electricity in Nome. The cost of fuel used for generation reached $2.54/gallon (Nov. 2007), significantly increasing the share of electricity costs attributable to generation. The fixed costs of the generation facilities are “sunk costs” that will not be diminished by the addition of alternative generation facilities. Those fixed costs, along with administrative expenses are assumed not to vary with load changes and are held at a constant level throughout the analysis. Distribution system costs, however, will likely vary as system loads increase, due to the need to add and maintain new services. Distribution system costs are estimated on a per kWh basis. The total cost of distribution system ownership, operation and maintenance will increase as the distribution load increases. The results of the economic analysis for the operation between 2015 and 2044 of the diesel generation system installed at Nome indicate system operating costs of between $116 million in present value under the expectations of a mid-range diesel fuel cost escalation to $140 million present value under conditions of a high-range escalation of diesel fuel costs. The results indicate that the existing diesel system is fully available to meet energy requirements for the electric system at a stable cost, net of fuel cost increases. The greatest risk to the system is the potential variability in the cost of diesel delivered to Nome, or the additional or extended load requirements associated with local mining activities. Wind-Diesel System As part of this analysis, the Alaska Energy Authority (AEA) performed an analysis of the availability of wind energy to supplement the existing diesel generation. .A wind generation system of 3 MW, consisting of two 1.5 MW units installed on Anvil Mountain near Nome appeared to provide annual electric energy at a cost slightly less than the current cost of diesel generation. The wind source, however, is intermittent and provides energy as a function of wind FINAL DRAFT ix velocity rather than electricity requirements, and cannot be relied upon for energy at any particular point in time. Integrating wind units with diesel generation systems requires specialized control systems that respond to the variation in wind energy production and electric load requirements to ensure that maximum efficiency is made of the combination of wind and diesel units. The wind turbine installation is expected to provide about 8,988 MWh/year or about 30% of the initial year load of the Nome electric system. For the purposes of the economic analysis, it was assumed that the energy provided by the wind turbines will be contributed throughout the year, displacing that amount of diesel generation each and every year of the analysis period. Nome’s new power plant controls were designed to integrate alternative and intermittent sources so no additional costs for integration hardware and software are expected to be required for the two wind turbines of 1.5 MW each. Adding wind turbine capacity adds cost to the system. Thus, the installed cost of $4,000/kW is recovered in electric rates over the analysis period, as well as the expected fixed operating costs of 3% of the installed costs and variable operating costs of slightly less than 1 cent/kWh. Initially, the installation of new wind turbines is expected to require 1 additional staff member to adequately maintain the wind system. The installation of two 1.5 MW wind turbines near Nome, producing at a 34% capacity factor that offset diesel generation, results in system operating costs for the 30-year period of $111 million in present value under conditions of a mid-range escalation in diesel fuel costs. In the case of high-range escalation in diesel fuel costs, the total present value would increase to $128 million. In both cases, the total cost of providing electricity under these assumptions is several million dollars less than the cost of continuing to operate the system with only diesel generation. If green tag sales are available and successful at the time of installation and throughout the life of the wind system approximately $4.7 million in credits may contribute to a further reduction in the cost of electricity to the residents With proper siting and mitigation measures, most impacts from wind energy development would be negligible. Obtaining required permits in accordance with federal and state regulations is anticipated to be routine. Geothermal System A geothermal installation located at Pilgrim Hot Springs, approximately 60 miles north of Nome, was evaluated as an option with the potential to displace a very large portion of the diesel generation in the initial years of operation. The analysis, described in Section 6, suggests the possibility of a 5 MWe geothermal installation providing about 41,600 MWh/yr, 33% more than required in 2015. The generating capability of the geothermal facility is just slightly less than the 41,633 MWh/year expected to be required in 2044. If successfully developed, the geothermal facility can provide nearly all of the electric load requirements, and with the load shape of the electric system, maintenance activities can be scheduled during low load periods without significantly impacting system operating costs. The existing diesel system will be available for backup service in the event of unscheduled outages or transmission failures. Further, the existing diesels will be available to meet short-term and intermittent peaking requirements (although a diesel generating unit may be selected to operate during high load periods for reliability, but not necessarily economic, purposes). The installed cost of the geothermal system, including all exploratory activities, construction costs and the transmission system to interconnect with Nome, is assumed to be $12,800/kW for a system with a lifetime of at least 30 years. A geothermal installation, while generally robust, will require specialized staff to operate and maintain the installation, increasing personnel costs, FINAL DRAFT x particularly in the initial years of operation (and perhaps toward the later years), while the increase in miles of transmission lines may increase line worker requirements. For the screening analysis, two additional staff members are estimated to be required over the analysis period, but it may be possible that generation facility staff currently operating the diesel system could be redeployed. The diesel system must be maintained for backup (or high load reliability service), and some personnel will remain assigned to the power house. The geothermal operating costs would consist primarily of manpower and supplies. Very little is currently known about the cost of operating and maintaining a geothermal facility of that magnitude in the Nome region, but information from other geothermal investigations suggests that annual supplies, such as chemicals, lube oil, etc. will amount to about 1.5% of the installed cost of the facility. That cost is considered a fixed annual cost recovered in power rates in similar fashion to the acquisition cost. The displacement of the diesel generation with a geothermal power source eliminates, for the most part, the availability of water-jacket heating for the Nome city water supply. Consequently, in the early years of the geothermal scenario, the city water heat is assumed to be supplied by the direct-fired boilers. In later years, as more supplemental diesel generation will be required, the diesel engines will contribute to the city water heating load. Installation of a geothermal power generation facility at Pilgrim Hot Springs would significantly reduce the cost of electricity for the Nome Joint Utility System. The cost for 30 years of energy supply to Nome would drop to $90 million in present value with a mid-range diesel fuel cost escalation and to $92 million for the high-range diesel cost escalation. Generation costs increase in the latter years as a result of the increasing component of diesel generation as loads increase, and the contribution of geothermal energy declines as a proportion of generation. The low cost associated with the geothermal option must be weighed against the risk that the geothermal resource will not prove to be adequate to support the generation capability of scenario described. The lack of a steam phase in binary geothermal power systems prevents the airborne release of CO2 and other gases, which remain in solution and are reinjected back into the reservoir to help sustain resources. The permitting process should only involve standard permits related to land use. Coal Plant A conceptual design was completed for a barge-mounted coal plant that would provide 4.655 MW of coal-fired electrical power to the city upon installation in 2015. A barge-mounted coal plant has the advantage that it could be constructed in an existing ship yard in the Lower 48, tested, and then towed to Nome reducing on-site construction time and costs. In addition to the coal plant capability, the design of barge mounted system includes a 1 MW diesel generation unit for startup power and auxiliary loads in order to accomplish a self-contained system. For the purposes of the Nome system evaluation with the addition of a barge-mounted coal plant, the diesel unit will provide only a backup power source for black-start conditions or other system emergencies and not be routinely operated or included in the net capability. Other than the estimated capital cost ($14,100/kWe based on the 4.655 MWe output only), the most significant cost element for the evaluation of a coal plant in Nome is the fuel cost. The fuel cost of the coal system is a function of the delivered cost and quality (i.e., heat content) of the coal and the efficiency of the coal boilers. The coal units were designed to accommodate a variety of coal, but with emphasis on the character of the coal available within Alaska. The Usibelli coal source in central Alaska provides an available source of coal at a somewhat lower cost than coal obtained elsewhere, but it has a heat, or energy, content lower than some other FINAL DRAFT xi coals. Coal obtained in British Columbia that is readily transportable to Nome will have a higher cost and heat content than the coal currently available in Alaska. Usibelli coal is estimated to cost $63/ton delivered to Nome, whereas British Columbia coal is estimated to cost $78/ton. Considering the Btu content of the coal, the British Columbia coal will provide for the needs of the plant at $2.82/MMBtu. Usibelli coal on an equivalent basis will cost about $4.06/MMBtu. Coal unit net efficiency (electric output/coal input) is a function of a variety of factors, most notably the size of the units relative to the auxiliary loads. The operation of boiler feed water pumps, fans and other ancillary equipment will have a significant impact on the net efficiency in converting the energy of coal into electric power. The barge-mounted coal system designed for the Nome installation has a net efficiency of 16%, which is relatively low compared to larger coal-fired power plants in operation or planned for construction. Regardless of the source of coal, the delivered cost is estimated to remain constant in real terms, including transportation. Coal price projections available for review have indicated a trend of stable prices for both the commodity and transportation for the foreseeable future as a result of supply and demand characteristics worldwide. Consequently, no real increase is expected above general inflation for coal delivered to Nome. The barge-mounted coal fired generation alternative introduces a cost of production that will vary dramatically as a function of the assumptions regarding the coal fuel purchased and delivered to the Nome location. Assuming Usibelli coal at $63/ton delivered, the cost of operating the system for 30 years will be $134 million in present value under conditions of mid- range diesel fuel escalation. With the same coal fuel, but a presumed high-range escalation of diesel costs, the present value cost of operating the system rises to $137 million. If British Columbia coal at $78/ton is assumed to be used to fuel the coal generation facility the present value for the midrange case will be about $117 million and high-range case will be about $120 million. The displacement of the diesel generation with a coal plant eliminates, for the most part, the availability of diesel unit water-jacket heating for the Nome city water supply. The coal plant, however, would be capable of providing a source of heat to replace that provided by the diesel units if a steam or hot water interconnection is constructed between the coal plant and the existing power house. In the absence of an interconnection, the city water heating requirement would need to be supplied by the direct-fired boilers. In later years as more supplemental diesel generation is required, the diesel engines could contribute to the water heating load. The diesel fuel required by the direct-fired boilers to provide the heat required for the city water system is estimated to cost $6 million in present value for the mid-range escalation case and $7 million for the high-range case. A steam line that could be installed and operated at a lower cost over the 30-year period for installation and ownership would provide additional benefits to the coal scenario. A withdrawal of steam from the coal plant at the rate required would, however, introduce a loss of about 2% of the coal plant’s electric capability and result in more supplemental diesel generation. As long as the project can avoid triggering Hazardous Air Pollutants (HAP) major status (10 tons per year (tpy) of a single HAP or 25 tpy of multiple HAPs), then the permitting process and applicable limits associated with operation of a coal-fired boiler would be relatively straightforward with no red flags. In this instance, the boiler would not be subject to the boiler maximum achievable control technology (MACT) because it was not HAP major, and it would not be subject to the Clean Air Mercury Rules since it would be rated at only 4.655 MWe. Because coal will be stockpiled from one delivery per year, the Alaska Department of Environmental Conservation will most likely require reasonable precautions to prevent FINAL DRAFT xii emissions of particulate matter (e.g., fugitive dust). Coal slag and fly ash from the boiler and elemental sulfur could be disposed of at an approved landfill or monofill. Mercury content of slag and fly ash could become a regulatory issue for reuse or disposal in the future. Permitting as described in Section 7 will be required for siting, water use, etc. but is expected to be straight forward. Natural Gas An entirely new fuel source for Nome is potentially possible from a Norton Sound natural gas drilling and production investment, described in Section 6. Successful exploration and development of a Norton Sound resource would provide for both the electric energy needs and the space and water heating requirements of the community. The economic analysis of the natural gas scenario requires consideration of the investment costs of the natural gas system, both to deliver fuel to the utility, and to the commercial and residential business sectors. In addition to the investment in the system of production and delivery, costs will be incurred to convert generation units to operate on natural gas, as will space and water heating equipment. The assessment includes an evaluation of the shared costs of the investment in the off-shore production facilities and pipeline costs for delivery to the city gate. Of the total investment of $62.7 million overall required to provide the fuel supply, $56.2 million will be committed to the installation of the production and primary delivery systems. Annual fixed costs estimated at $4 million/year associated with the operation of the system and variable operating costs will add significantly to the costs, such that initial-year total costs of the production and primary transmission of gas are estimated at $7.3 million. These costs are assumed to be shared between the electric utility and the gas distribution system customers on the basis of the relative shares of natural gas volumes consumed for each purpose. A distribution system to provide access to gas, along with the conversion of heating equipment from fuel oil to natural gas, is estimated to cost about $4.2 million and require about 1.0% of that amount in annual variable operating costs for maintenance and repairs. All of the annual costs of the distribution system are assumed to be paid by the users of the commercial and residential service. For the electric utility to operate on natural gas, it is assumed that one of the newest installed units will be changed out for a unit that will operate on natural gas. Each of the two recently installed diesel units will provide 5.2 MW of electrical energy, individually meeting nearly all of the energy requirements of Nome. For the purposes of screening, the analysis assumes that all of the annual electrical energy is provided from natural gas, while some diesel fuel will undoubtedly continue to be required for emergency purposes and during short periods of natural gas unit outages. An investment in a second unit to operate on natural gas would add a modest cost to the analysis, or about $2 million. A $2 million investment represents about 787,000 gallons of diesel fuel, enough to produce over 400,000 kWh of electricity each year, providing for several outage days a year during low load periods. If the natural gas system proves feasible, the change out of an additional unit may be appropriate, since other units will remain in place to operate on diesel fuel for emergency purposes. A significant economic factor associated with the investment in a natural gas system is that the sole cost of the natural gas for the utility and other users will be embodied in the capital and operating costs of the production and delivery systems. There are no taxes or commodity costs assumed for the volumes of gas delivered by the system by which to compare directly with the cost of diesel fuel that is sold on a gallon-by-gallon basis. Consequently, unlike the electric FINAL DRAFT xiii utility for which average power costs may be compared, the economic evaluation of the space and heating requirement is a comparison of the relative cost of thermal energy on a Btu basis. The installation of a natural gas system allows the displacement of nearly all diesel fuel used by the Nome electric utility system. The present value of system operating costs includes full recovery of all investment costs necessary to both obtain and deliver natural gas. For the electric system, the present value of the busbar cost of electricity using natural gas fuel is estimated at between $107 million. This is about $10 million less than operating the diesel system at mid-range fuel escalation, and about $33 million less under a high-range escalation assumption. Different assumptions of diesel cost escalation for the system operating on natural gas has very little effect on the economics, because so little diesel generation is likely to occur until late in the analysis period. (Only emergency and maintenance requirements will be met with diesel.) Thus, electric rates between the mid-range and high-range cases will be nearly identical until the last few years. The permitting process and applicable limits of a gas-fired engine or turbine would be relatively straightforward with no red flags. However, caution should be used when selecting a turbine to ensure compliance with the federal limit. Natural Gas Space Heating The installation of a natural gas system for Nome would provide a source of fuel as an alternative to diesel fuel for the provision of commercial and residential space and water heating. The economic evaluation of the impact of the installation of the gas system indicates a present value savings for the thermal requirements for space and water heating, in the instance of a mid-range fuel price escalation, of about $5 million. Under a high-range cost escalation, the economic benefit to the community will reach slightly more than $13 million. The impact on heating consumers is described in terms of the cost per Btu for energy providing space and water heat and is shown in Table 2. Conclusions The energy technologies analyzed for Nome fall into two categories, (a) technologies that rely upon known energy resources—diesel, wind, and coal; and (b) technologies that would rely upon hypothetical (or untested) resources—geothermal and natural gas. Geothermal and natural gas resources are known to exist based on limited evaluation, but will require expensive exploration to prove the resources exist in sufficient quantity and deliverability to meet the requirements. The exploration and development costs for geothermal and natural gas are not well established and will require additional analysis to confirm the estimates. The natural gas options assumed that a drill ship would be available at day rates only and that the costs to obtain and move a ship to and from Norton Sound would not have to be borne by the project. The present value comparisons indicate that for the assumptions incorporated in the analysis regarding each of the alternatives, the wind/diesel, geothermal plant, barge-mounted coal plant using high BTU coal, and natural gas exploration and development are all economically equal or better than continued reliance on diesel for both mid-range and high-range diesel price escalation. The lower Btu coal option is slightly better in the instance of a high-range diesel price escalation. The development of a natural gas resource, in addition to showing a strong potential for savings in the operation of the electric utility, would provide an economical option by providing natural gas for water and space heating throughout the community. Of the alternatives investigated, the most likely prospect of immediate savings gain is the installation of wind turbines to offset diesel generation for the electric utility. Wind units are FINAL DRAFT xiv commercially available, and the Nome utility system has already anticipated the advent of wind by including integration capability in the construction of the new power house. The geothermal and natural gas prospects both indicate potential savings greater than the wind resource, but will require additional investment in exploration and development to verify the resource potential. Nevertheless, the potential gain from each is significant, with the natural gas prospect in particular providing the additional benefit of displacing fuel oil for space and water heating. The coal plant prospect with high-Btu coal provides savings to the electric system, but to a lesser extent than the other alternatives. With low-Btu coal, savings would only be available under a high rate of diesel price escalation, and under conditions of coal prices remaining constant in real terms. In either case, the savings associated with the prospect of a coal power plant are based on an engineering estimate of costs to construct an initial unit. Economies of scale from construction of multiple units of a similar design could reduce the capital cost of the system and improve the economics of a coal-based alternative. FINAL DRAFT 5-1 5 WIND RESOURCES 5.1 INTRODUCTION Excellent wind resources are known to exist very near Nome at Anvil Mountain and the potential for offsetting a major portion of the diesel fuel used for power generation in a cost effective manner by developing this resource is described in this section. 5.2 ELECTRICAL LOAD PROFILE The electric load profile was generated by importing hourly load data provided by the Nome Energy Assessment Group into the economic optimization software HOMER, developed by the National Renewable Energy Laboratory.1 A graphic overview of year 2007 is show in Figure 5.1. Figure 5.1. Hourly load profile for year 2007 1 https://analysis.nrel.gov/homer/includes/downloads/HOMERBrochure_English.pdf FINAL DRAFT 5-2 The monthly scaled averages for 2007 are shown in Figure 5.2. Figure 5.2. Nome scaled averages for year 2007 A scaled daily profile for year 2007 is shown in Figure 5.3. Figure 5.3. Nome scaled daily load data for year 2007 FINAL DRAFT 5-3 5.3 WIND RESOURCE In September 2005, wind monitoring equipment was installed in Nome on Anvil Mountain. The purpose of this monitoring effort is to evaluate the feasibility of utilizing utility-scale wind energy in the community (Dolchok 2006). The site is described in Figure 5.4. Figure 5.4. Nome Anvil Mountain Site summary. A one-year synthesized wind-data set was developed by filling the data gaps due to icing by using probability methods that calculate the most likely scenario for this time period. The site has the following beneficial factors: ƒ The potential wind site is in slightly mountainous terrain, which enhances terrain induced wind acceleration from certain wind directions. ƒ Existing roads and transmission lines are in the proximity of the site. ƒ No living quarters or other housing within a safe ice-throw distance (≥250m) (Bossani and Morgan 1996). ƒ Visible intrusion is assumed to be minimal from main developments. Viewshed analysis has to be performed to confirm. FINAL DRAFT 5-4 A topographic map indicating the Met-tower location is shown in Figure 5.5. Figure 5.5. Nome–Met Tower location, Anvil Mountain FINAL DRAFT 5-5 A map that combines high-resolution wind modeling results with topographic information is shown in Figure 5.6. The red marks indicate potential turbine locations. Figure 5.6. Nome—High Resolution wind map, Anvil Mountain FINAL DRAFT 5-6 Color coding for the high resolution wind map is shown in Figure 5.7 Figure 5.7. High Resolution wind map color coding Wind Speed 70m Wind Class 1 - Poor ( < 5.8 m/s) Wind Class 2 - Marginal ( 5.8 - 6.7 m/s) Wind Class 3 - Fair ( 6.7 - 7.4 m/s) Wind Class 4 - Good ( 7.4 - 7.9 m/s) Wind Class 5 - Excellent ( 7.9 - 8.5 m/s) Wind Class 6 - Outstanding ( 8.5 - 9.2 m/s) Wind Class 7 - Superb ( >9.2 m/s) The collected data were evaluated with the Windographer software.2 An unfiltered wind probability profile is shown in Figure 5.8. Icing events appear as calm periods. Figure 5.8. Nome Anvil Mountain wind probability profile. 2 Mistaya Engineering Inc. http://www.mistaya.ca/products/windographer.htm FINAL DRAFT 5-7 A wind frequency rose is shown in Figure 5.9. Figure 5.9. Nome Anvil Mountain wind frequency rose. FINAL DRAFT 5-8 During the monitoring period, time periods with severe icing occurred. The collected data showed time gaps with no events recorded, attributable to ice coated sensors. In Figure 5.10 the ice built-up on the Met-Tower is shown. Figure 5.10. Nome Anvil Mountain, Met-Tower after icing event. In order to obtain a more complete picture of the wind resource, it is recommended that a 60 to 80 meter ice-rated Met-tower be installed to measure wind speed at the hub height of large size wind turbines. The data collection period is recommended to be at least twelve continuous months. The current data collection at 30 meters will most likely not satisfy the needs for an industry standard wind feasibility study for large size wind turbine development. FINAL DRAFT 5-9 5.4 WIND MODELING 5.4.1 GENERAL INFORMATION The wind modeling was performed using a Clean Energy Project Analysis Software from RetScreen 3 and provided data which was then used to develop the comparative economics described in Section 8. For the purpose of this screening report, no optimization between different wind-diesel system designs was performed due to different integration design possibilities such as available equipment and its costs, controls, switchgear, and interconnection. A detailed engineering study is necessary to evaluate the feasibility, costs, and performance of an integrated wind-diesel system. This is outside the scope of this study. For maximum utilization of investment only the high penetration scenario is described. This increases the complexity and integration cost compared to a medium or low penetration system. However, it is assumed that the increased wind absorption rate and resulting diesel fuel savings will justify the higher cost for integration. The cost estimation for the different integration controls (low, medium, high penetration) are outside the scope of this study. For preparation of a final design study the different scenarios should be taken into consideration and a cost comparison should be made. 5.4.2 WIND RESOURCE An annual average wind speed of 6.0 m/s at 10 meter (class 5) was used to conservatively compensate for uncertainty in the high-resolution wind map and the monitoring data gaps. The wind speed distribution is calculated as the Weibull probability density function. A wind shear component of 0.16 was estimated to take moderate rough terrain features like hills or cliffs into account. The model calculated the average wind speed at hub height to be 8 m/s with a wind density of 580 W/m2. 5.4.3 ATMOSPHERIC CONDITIONS The standard atmosphere of 101.3 kPA was used for modeling, although local average pressure data are likely to be more favorable for wind density. The annual average temperature of 27.1°F or -3°C was used. 4 5.4.4 SYSTEM CHARACTERISTICS Several models runs were performed by AEA. The recommended wind generation system was a 3 MW central-grid system using two 1.5 MW or similar-sized turbines. A project life of 20 years for the wind turbines was used. The model calculates the wind plant capacity factor (%), which represents the ratio of the average power produced by the plant over a year to its rated power capacity. It is calculated as the ratio of the renewable energy delivered over the wind plant capacity multiplied by the total hours in a year. The wind plant capacity factor will typically range from 20 to 40%. The lower end of the range is representative of older technologies installed in average wind regimes while the higher end of the range represents the latest wind turbines installed in good wind regimes. A wind farm capacity of 34% is used in the economic assessment. 3 http://www.retscreen.net/ang/d_o_view.php 4 http://climate.gi.alaska.edu/climate/Temperature/mean_season.html FINAL DRAFT 5-10 5.4.4.1 WIND TURBINES The power curve for the wind turbine was modeled after the specifications of the GE 1.5se turbine with a hub height of 65 meters, a swept area of 3,904 m2, and a rotor diameter of 70 meters. The electricity output is 1,500 kW at a rated wind speed of 13 m/s. The cut-in wind speed for this model is set at 4m/s and the cut-out wind speed is 25 m/s. The rotor speed is 12 to 22.2 rpm. 5.4.4.2 TURBINE LOSS FACTORS Following turbine loss factors were taken into account: ƒ Array losses: 5% ƒ Icing losses: 10% ƒ Other downtime losses: 5% ƒ Miscellaneous losses: 10% ƒ Total Losses: 30% ƒ The current industry estimate for turbine loss factor is in the range of 15 to 33%. 5.4.5 COST DATA The turbine costs are estimated to be $4000/kW installed. A recent study undertaken by the Berkeley National Laboratory (Harper et al. 2007) states the installed cost for utility scale, grid connected wind turbines in the U.S. market (lower 48) are $1,725 to $1,829 per installed kW. The higher installed cost used in this evaluation is warranted due to Alaska’s high transportation and construction cost according to wind developers in Alaska, and verified by AEA experience with past wind projects. This assumption results in an initial capital cost for the 3 MW system of $12 million. The amount of displaced diesel was calculated by dividing the 8,992,503 kWh/year produced by the wind generators by the diesel system efficiency number of 16 kWh/gal. This results in displacement of 562,031gal/year. The cost for operation and maintenance is a combination of fixed and variable cost. The fixed cost used is 3% of installed cost and the variable cost is 0.975¢/kWh per year. These annual costs are applied throughout the estimated project life of the wind turbines and include repair and replacement costs. The variable cost was determined by applying a 5% annual increase of 1996 industry data of 0.65¢/kWh.5 Planners consider adding variable cost to take wear and tear that increases with project life into account. The resulting annual operation and maintenance cost is $447,677. A price for environmental attributes, renewable energy credits or green tags, may be available. The price for the green tag calculation is $0.03/kWh for 20 years. This price is based on price information from Bonneville Environmental Foundation’s Denali Green Tag Program. 6 The actual price depends on project parameters and can be negotiated in individual contracts. The typical range is between $0.03 to $0.05/kWh. 5 http://www.awea.org/faq/cost.html 6 www.greentagsusa.org/greentags/denali.cfm. FINAL DRAFT 5-11 5.4.6 TIME FRAME ƒ Met-data collection: at least one year from starting point. ƒ Site development: 1.5 years from starting point. ƒ Turbine Selection/Procurement: 2 years from starting point. ƒ Construction: 6 to 12 months from point app. 1.8 years after starting point ƒ Final commissioning: 2 to 6 months after construction start. ƒ Full commercial operation: App. 1 year after final commissioning. 5.4.7 GREENHOUSE GAS ANALYSIS Green House Gas (GHG) emissions were calculated based on 100% energy mix of diesel #2 generation using the following default values: ƒ CO2 74.1kg/GJ; ƒ CH4 0.0020 kg/GJ; ƒ NO2 0.0020 kg/GJ; ƒ Fuel conversion efficiency 30% ƒ To obtain a more accurate emission analysis, actual energy mix data have to be applied. 5.5 CONCLUSION AND RECOMMENDATION Current turbine development in the wind industry is targeted to multi-megawatt wind generators. For smaller applications the equipment choice is limited. Two emerging trends for the Alaska market are visible. One market sector supply caters towards used, refurbished wind turbines. These machines are decommissioned at existing wind projects (‘Lower 48’ or Europe) and are remanufactured, rebuilt, and often upgraded to meet modern standards. However, the lifetime of these re- manufactured turbines is uncertain, since not enough performance data have been collected to make a valid statement. The overall industry consensus is that the lifetime of a re-manufactured wind turbine is about 15 years. Another uncertainty is the spare part supply and service support. Vendors or re-manufactured turbines, in general, do not offer warranty contracts over one year and service, technical support, and maintenance contracts are unusual. However exceptions exist, warranty and service contracts are a negotiation point that should be considered when re-manufactured turbines are the project choice. The second market sector is the small to medium size wind turbine sector. Manufacturers offer new turbines with warranty contracts between 1 to 2 years, and extended warranty periods of 5 years are negotiable. The spare part supply is usually guaranteed by the manufacturer throughout the lifetime of the turbine, which ranges from 20 to 25 years. Service contracts and technical support are available. The capital costs for these turbines are generally higher. However, the levelized maintenance, replacement and repair costs are believed to be equal to or lower than those of the re-manufactured turbines. Due to limited data a firm statement in regard to the operation costs cannot be made. Operation and maintenance costs are in general an uncertainty, especially with the limited data for Alaska installations. Recently a commitment from a large turbine manufacturer was made to install 2 megawatt size turbines in Alaska, on Kodiak Island. It is uncertain if this presence will guarantee the deployment of additional large size turbines into the Alaska market and the necessary technical, FINAL DRAFT 5-12 spare part, and service support for further machines. The application for these machines in Alaska is limited due to electrical load demand requirements, construction equipment requirements, and maintenance requirements. However, the selected large size wind turbines for this screening report are believed to be an appropriate choice for Nome due to the relatively large current and projected load demand as well as the local skilled workforce, a well run and organized utility, and the ability to support large construction projects. However, special attention should be given to the fact that Nome’s met data collection showed moderate to severe icing conditions. This might limit the ability to obtain a large size wind turbine without modifying the manufacturer’s standard model. Usually the offered cold climate packages are not suited to withstand the climatic conditions of Nome. It will be dependent on the manufacturer’s willingness to modify the standard turbine model and the structural limitations thereof. The number of installed turbines per project in rural Alaska applications can differ due to a number of reasons. The intended installed capacity can usually be met with the choice of a number of smaller turbines or one or two larger turbines. The benefit of fewer turbines is the reduced cost of foundation, transmission line and construction time, to a limited extend. The disadvantage is the risk of losing a higher percentage of electricity output if a turbine fails or downtime occurs, than with a higher number of smaller turbines. The repair skill, spare part availability, remoteness of location, complexity of system (medium or high penetration system), and responsiveness of technical support are factors that have to be taken into consideration in the decision making process. A good general rule of thumb is that the less certain the above stated factors are, the recommendation is to install more, smaller turbines in order to avoid a large percentage reduction of production capability. Another important factor for wind-diesel installations in Alaska is the integration design and integration controls. Low, medium, and high penetration systems are currently installed in Alaska. Low penetration systems require only a minimum of control function on the diesel generation side, but displace only a minimal amount of diesel. Medium penetration designs require a more advanced level of integration and switchgear design and are capable of displacing up to ~25% of the annual diesel consumption. High penetration systems are highly complex designs that require experienced engineers and operators to develop a successful wind-diesel system. It also displaces the largest amount of diesel. High penetration wind-diesel systems are still in the pilot project phase and experience data for Alaska installations is minimal. When trying to determine the desired level of wind penetration in a specific village application one must balance the potentially greater diesel savings of higher penetration systems against the higher costs and risks associated with the greater complexity of the system. Local conditions such as availability of skilled technicians and remoteness of location should help to determine where along the risk/reward continuum a project should be selected. The owner and operator of the system as well as the utility have to be aware of the risk involved in installing a high penetration system in a remote location in Alaska and have to evaluate the benefits and disadvantages in terms of reliability and quality of energy supply, diesel savings, and environmental attributes. 5.5.1 FURTHER STUDY NEEDS If the comparison with other energy scenarios should be favorable for wind development in Nome, the following studies are suggested before a final decision is made for implementing the proposed wind generation system, or variations thereof: ƒ Met-data collection with 60 to 80 meter ice rated tower FINAL DRAFT 5-13 ƒ Detailed system integration design ƒ Turbine availability for Nome including O&M options ƒ Environmental assessment ƒ Potential funding sources and/or business structure ƒ Detailed economic and financial analysis 5.5.2 RECOMMENDATION Based on the modeling results the preferred wind generation system would be comprised of two 1.5 MW or similar sized turbines. We think that wind development could potentially be considered as a viable option for the citizens of Nome to displace a significant amount of diesel fuel and thus have the potential to reduce the price of energy as well as the dependency on diesel as a fuel source. FINAL DRAFT 8-1 8 ECONOMIC EVALUATON OF POWER GENERATING OPTONS Evaluating various energy alternatives involves technology, environmental factors and economics. Previous sections of this report addressed the status of the various technologies and the environment impacts of the alternatives. Central to the evaluation of competing technologies is the economic value of generating useful energy from the various resources available. The economic analysis presented here examines the economic value of the alternatives by comparing the impact on energy costs of the various power generating options identified for Nome. The comparison is made by estimating the cost of providing energy from the alternatives against the cost of using the existing generation, transmission and distribution system for serving electric loads and providing thermal energy over the period 2015 through 2044. 8.1 OVERVIEW OF METHODOLOGY The economic analysis model calculates the total cost of providing electric power to the Nome Joint Utility electrical distribution system (the “busbar cost”). Total cost is the cost of all capital and operating costs, including distribution and administrative costs, and the cost of providing heat energy on a Btu basis to residential and commercial residents. The analysis runs for thirty years, from 2015 to 2044. All existing electrical and thermal loads currently served by the system are treated as firm; that is, fully and continuously supplied throughout the period. A reasonable expectation of electrical load growth over the 30-year period is included to account for increases in population and economic activity of the city. For each alternative case, the model estimates the electrical load requirement for each day of the year and computes how much energy is supplied by the primary alternative generation source (diesel, coal, wind/diesel, geothermal, and natural gas). It also estimates how much must be delivered from diesel units as a backup resource. The model calculates the net present value of all annual costs, including current system fixed costs and the carrying cost of investments in new resources, to determine the total system life-cycle cost of power to the utility. The model also computes the approximate average electric rate necessary to cover each year’s annual cost of providing electrical service, which includes estimated distribution and administration costs, based on recent financial statistics. The savings to residential and commercial consumers from an alternative source of heating fuel is estimated on a per Btu basis. The uncertainty associated with different expectations of the changes in the cost of diesel fuel over time is treated by testing one or more expected annual increases in the price of diesel fuel delivered to Nome. Other variations in assumptions may be tested, as well, to derive the sensitivity of the results to changes in the fundamental variables. All costs are expressed in real dollars that have purchasing power at a constant reference point, in this case 2007. Diesel fuel cost increases in real terms—i.e., price increases over and above general inflation rates - are the same in all scenarios. The net present values are derived with a real discount rate of 4%, corresponding to the effective interest rate for borrowing by municipal electric systems such as Nome. For each case, the life-cycle cost of providing electricity is the discounted present value of all annual costs for the thirty year period of analysis. In the natural gas case, where natural gas is made available for utility requirements, a net present value is estimated for the electric utility that compares directly with other electric production options, and a separate estimate is provided for the savings from the availability of natural gas for space and water heating. FINAL DRAFT 8-2 8.1.1 EXAMPLES OF THE MODEL CALCULATIONS The economic model includes a number of basic steps. These steps are illustrated by the following example for estimating the cost of providing electric power. Assume the total firm load to be served on January 1, 2015, is four megawatts (4 MW) of electricity measured at the bus bar–the point of interconnection with the transmission and distribution system–and that the primary generation resource is diesel. • The busbar energy requirement for that day is: o 4 MW x 24 hours = 96 megawatt-hours (MWh), or 96,000 kilowatt-hours (kWh) • The amount of diesel required is: o 96,000 kWh / (16 kWh/gallon) = 6,000 gallons/day • The cost of the fuel is: o 6,000 gallons times $2.54/gallon = $15,240/day • Additional variable operating costs (such as lube oil and overhauls) are: o 96,000 kWh times $0.02 = $1,920/day • The total variable cost of generation for this one day is: o $15,240 + $1,920 = $17,160/day The total variable cost for other days differs because more or less electricity is produced. The model adds all of these daily variable costs together; the total variable cost for one year may then be on the order of $5.5 million. • The annual fixed generation cost is: o $1,200,000 (for labor) + $500,000 (for generation equipment) = $1,700,000. • Therefore, the total annual cost of generation for the year 2015 is $7.2 million. If the annual cost of ownership and operation of the distribution system is $0.8 million, and the annual cost of the administration of the system is $0.6 million, then the total cost of electric service for the year is approximately $8.6 million. • The total electric sales for the year are based on an annual energy load of 32,000 MWh: o 32,000 MWh x 0.9 = 28,800 MWh where the factor 0.9 accounts for the 10% losses between the point of generation and the customers’ meters. To cover the total cost of generation, the average electric rate for the system must be: • $8,600,000 / 28,800,000 kWh = $0.30/kWh Of this, $0.19/kWh is for the variable costs of generation (fuel, lube and overhaul) and the remaining $0.11/kWh covers the fixed ownership costs of the generation, transmission and distribution system, the distribution system operating costs, and all of the administrative expenses attributable to providing electric service. In subsequent years, as the load grows and costs increase, the electric rate may go up or down over time. In the instance of an alternative fuel source for generation that will displace the current primary use of diesel for electric generation, the model also considers the impact of sales of the fuel for FINAL DRAFT 8-3 other purposes. Another simple example illustrates the steps in the model to evaluate an impact of a natural gas alternative for generation that also may be used to displace diesel fuel for commercial and home heating applications. As before, a 4 MW load corresponds to 96,000 kWh of electricity to be generated daily. The amount of natural gas required to provide generation for the kWh load is: • 96,000 kWh x (7,653 Btu/kWh) (See Table 4.3) = 735 MMBtu per day. Over the course of a year, the electric system natural gas requirement may reach as much as 238 Billion Btu just to meet the electric load requirements. However, if the natural gas fuel is available, a portion of the gas may be available to displace the fuel oil normally used for space and water heating. The residential and commercial fuel oil used throughout the year must be estimated on an equivalent energy content basis. The amount of natural gas that is required annually to displace the fuel oil needed for residential and commercial space and water heating is: • (683,000 gal/yr) x (138,000 Btu/gal) = 94 Billion Btu/yr; Other potential heating loads may add a billion Btu or so a year, for a total natural gas energy requirement of about 333 Billion Btu. Delivery from a natural gas source to Nome, however, will require an investment in the infrastructure to extract the gas from underground sources and deliver the natural gas to the initial point of use. The annual carrying cost of the investment in the infrastructure, and the variable cost of operating the natural gas system could reach $7.3 million, shared on the basis of volume of gas required. The annual cost for the availability of a natural gas supply source by user would be: • Utility: $7.3 million x (238 B Btu / 333 B Btu) = $5.2 million, • Res/Comm: $7.3 million x (95 B Btu / 333 B Btu) = $2.1 million. In addition, the electric system would incur the capital cost of converting the generation equipment to operate on natural gas, adding about $116,000/year of amortization expenses to the cost of generating power. The variable generation cost for lube and overhaul of $0.7 million would remain as in the earlier example, as would the $1.7 million for labor and other fixed costs, for a total annual generation cost of $7.7 million. The electric distribution system costs and administrative costs would add an additional $1.4 million for a total system cost of $9.1 million. The average electric rate for the system to cover the total generation cost would be: • $9.1 million / 28,800,000 kWh = $0.32/kWh. For the commercial and residential natural gas users, the difference in cost between operating on diesel fuel and natural gas can be expressed as the difference in dollars per Btu of energy provided for space and water heating. Heating fuel must be distributed to the end user, however, resulting in a higher cost than diesel supplied in bulk to the utility. And, since a distribution system is required to deliver the natural gas to the end user, an investment in distribution pipe and meters, and the equipment to convert existing water and space heaters will result in an annual distribution system cost of about $285,000. The average annual cost per Btu for fuel oil for the commercial and residential users is: • (683,000 gal/yr) x ($2.50/gal + $0.75/gal) x 138,000 Btu/gal = $24/MMBtu. FINAL DRAFT 8-4 The average annual cost per Btu for natural gas for space and water heating would be: • $2.1 million + $0.3 million / 95 B Btu = $25/MMBtu The actual year-by-year costs will vary with the relative change in costs of operating the system, the growth in electric and natural gas requirements, and the expected increase in costs of fuels supplied to meet the electrical and thermal loads. 8.1.2 ECONOMIC MODEL LIMITATIONS The methodology of the economic analysis is a comparison of scenarios. The scenarios are structured to identify the costs of operating the electric utility system and meet the electric requirements of the Nome system over a period of time 30 years into the future. The annual production and operations costs of the system are estimated for each year to obtain the present value of the life-cycle costs for providing electricity and, in one case, fuel for commercial and residential space and water heating. The scenarios compare current system operations projected into the future with alternative generation or fuel opportunities. A benefit of scenario analysis using the economic model is that the assumptions are clearly defined and a clear comparison may be made of the benefits and costs between scenarios. However, there are limitations. Some of those limitations are: • The validity of each scenario depends on the validity of the assumptions. • No probabilities are assigned to the outcomes of the scenarios, nor are a range of probabilities provided for the assumptions (such as, for example, the success of a natural gas drilling program). • Feedback loops are not included, so there are no estimates of changes in electric or thermal load forecasts as a consequence of changes in the cost of electricity or the price of fuel for space and water heating. • Other impacts to Nome, such as higher costs for delivery of smaller volumes of fuel, and the resultant economic impact on users of diesel other than for electric power production, are not considered. • There is no explicit estimation of the risk associated with any of the scenarios, either financial or economic. The results obtained from the scenario analysis therefore provides an indication (“screening”) of the relative economic value of the generation alternatives and alternative fuel source for the Nome electric system and for space and water heating. The model is very effective as a system for developing a ranking of alternatives. The limitations of the methodology, however, suggest that further and more detailed investigation of any one scenario may be required prior to investing in the development of any particular alternative. 8.2 ECONOMIC INTEGRATION The basic assumptions for each of the energy options (diesel system, wind-diesel, geothermal, coal plant, and natural gas) are described in this section. 8.2.1 NOME DIESEL SYSTEM ASSUMPTIONS The electric generation system of Nome has recently been upgraded with two new generating units and improved interconnection and auxiliary systems. With the advent of the new generation facilities, the diesel-based system is expected to provide adequate capacity and FINAL DRAFT 8-5 energy for the foreseeable future. With appropriate routine maintenance and periodic overhauls, the existing units are likely to be available for operation throughout the entire period of the analysis. The generating efficiency of the new units will average 16 kWh/gallon of diesel fuel, an efficiency that is expected to remain unchanged year-to-year, so diesel consumption will vary directly with changes in electric load requirements. For the Nome system in 2006, with fuel costs at an average of $1.99/gallon, diesel fuel constituted 50% of the average cost of electricity in Nome. The cost of fuel used for generation reached $2.54/gallon (Nov. 2007), significantly increasing the share of electricity costs attributable to generation For the purposes of estimating future costs of diesel fuel, the Alaska Energy Authority (AEA) prepares projections of delivered fuel prices for a number of locations in Alaska, including the city of Nome. These projections are used for analysis of a variety of energy issues throughout the state, including evaluation of wind-diesel hybrid systems and other alternative generation options. For consistency with statewide energy planning, the diesel fuel rate of change over time (other than general inflation) for Nome was drawn from the Energy Authority estimates and applied to the price of diesel delivered to Nome in 2007. • Diesel Fuel Initial Price: $2.54/gal • Diesel Fuel Escalation (real) ƒ Mid-Range case 0.58%/yr ƒ High-Range case 2.12%/yr These diesel fuel escalation rates will result in estimates of diesel costs of $3.00/gal by 2044 for the mid-range case, and to as much as $4.67/gal in the high-range case. A low-range case, which assumes an average decline in diesel prices of over 1%/yr over the AEA analysis period, was not examined for the purposes of this screening analysis. Other assumptions regarding the current electric system costs include the estimates of the new unit maintenance on a “per/kWh” basis. The maintenance includes all routine lubrication and component replacements over a 20-year maintenance cycle recommended by the manufacturer. Effectively, the costs of operating the units in addition to fuel costs are recovered on the basis of the energy produced rather than availability. The fixed costs of the generation facilities are “sunk costs” that will not be diminished by the addition of alternative generation facilities. Those fixed costs, along with administrative expenses are assumed not to vary with load changes and are held at a constant level throughout the analysis. Distribution system costs, however, will likely vary as system loads increase, due to the need to add and maintain new services. Distribution system costs are estimated on a per kWh basis. The total cost of distribution system ownership, operation and maintenance will increase as the distribution load increases. 8.2.2 DIESEL SYSTEM ECONOMIC ANALYSIS RESULTS The results of the economic analysis for the operation between 2015 and 2044 of the diesel generation system indicate system operating costs of between $116 million in present value under the expectations of a mid-range diesel fuel cost escalation to $140 million present value under conditions of a high-range escalation of diesel fuel costs. The average electric rates (2007$) are shown in Figure 8.1. The rates reflect the expected increase in diesel prices. For the mid-range escalation of 0.58%, the increase in electric rates FINAL DRAFT 8-6 from 2015 to 2044 is small, from $0.30 to $0.32/kWh as compared to the increase to $0.43/kWh for the high-range escalation in diesel prices. The results indicate that the existing diesel system is fully available to meet energy requirements for the electric system at a stable cost, net of fuel cost increases. The greatest risk to the system is the potential variability in the cost of diesel delivered to Nome, or the additional or extended load requirements associated with local mining activities. Figure 8.1. Diesel System–Electric Rates. 8.2.3 WIND-DIESEL SYSTEM ASSUMPTIONS As a part of this study the AEA completed an initial screening analysis of the availability of wind energy to supplement the current generating sources of the Nome utility. The results of the screening analysis, described in Section 5, included an assessment of possible wind turbine configurations available for the wind energy regime of Anvil Mountain, located just north of Nome. The results indicate that a wind system of 3 MW, consisting of two 1.5 MW units, could provide electricity at a cost slightly less than the current cost of diesel based generation. The wind source, however, is intermittent and provides energy as a function of wind velocity rather than electricity requirements, and cannot be relied upon for energy at any particular point in time. Integrating wind units with diesel generation systems requires specialized control systems that respond to the variation in wind energy production and electric load requirements to ensure that maximum efficiency is made of the combination of wind and diesel units. The load requirements will have an effect on the operation and the choice of diesel units that may be dispatched to meet the load unmet by the wind generators. The wind turbine installation is expected to provide about 8,988 MWh/year or about 30% of the initial year load of the Nome electric system. For the purposes of the economic analysis, it was Diesel System: Average Electric Rates 0.20 0.25 0.30 0.35 0.40 0.45 201520172019202120232025202720292031203320352037203920412043real year 2007 $ per kWhDiesel $2.54, Mid-range escalation Diesel $2.54, High-range escalation FINAL DRAFT 8-7 assumed that the energy provided by the wind turbines will be contributed throughout the year, displacing that amount of diesel generation each and every year of the analysis period. Nome’s new power plant controls were designed to integrate alternative and intermittent sources so no additional costs for integration hardware and software are expected to be required for the two wind turbines of 1.5 MW each. However, adding wind turbine capacity adds cost to the system. Thus, the installed cost of $4,000/kW is recovered in electric rates over the analysis period, as well as the expected fixed operating costs of 3% of the installed costs and variable operating costs of slightly less than 1 cent/kWh. Initially, the installation of new wind turbines is expected to require 1 additional staff member to adequately maintain the wind system. A simplifying assumption is that the units installed in 2015 will operate over the analysis period with routine maintenance. The actual availability of the turbines suggested for installation, with a forecasted effective lifetime of 20 years, is not certain. It is also possible that more robust units with greater operating efficiency and longer lifetimes may become available over the analysis period as a result of the rapid advances that are being routinely achieved in wind turbine technology. Replacing units after 20 years with more efficient turbines would likely increase the economic benefits of a wind-diesel system, as would adding more turbine capacity over time as electric load requirements increase. (See Section 5 for more on this.) 8.2.4 WIND/DIESEL SYSTEM ECONOMIC ANALYSIS RESULTS The installation of two 1.5 MW wind turbines producing at a 34% capacity factor that offsets diesel generation results in system operating costs for the 30-year period of $111 million in present value under conditions of a mid-range escalation in diesel fuel costs. In the alternative case of high-range escalation in diesel fuel costs, the total present value would increase to $128 million. In both cases, the total cost of providing electricity under these assumptions is several million dollars less than the cost of continuing to generate electricity with only diesel generators. If green tag sales are available and successful at the time of installation of the wind system, approximately $4.7 million in credits may contribute to a further reduction in the cost of electricity (See Section 5.4.5). The rate of change of the average electric rates is shown in Figure 8.2. For this case, the rates remain almost constant for the mid-range escalation case and increase about 30% to $0.39/kWh for the high-range escalation. Figure 8.2. Wind/Diesel system: Average Electric Rates Wind/Diesel System: Average Electric Rates 0.20 0.25 0.30 0.35 0.40 0.45 201520172019202120232025202720292031203320352037203920412043real year 2007 $ per kWhMid-Range Diesel escalation High-Range Diesel escalation Renewable Energy Fund Grant Application NJUS Renewable Energy Fund Grant Application Page 50 of 51 10/8/2008 NJUS Renewable Energy Fund Wind Project Supporting Documents Appraisal Company of Alaska 3940 ARCTIC BOULEVARD, SUITE 103 ANCHORAGE, LASKA 99503 office@appraisalalaska.com Fax (907) 563-1368 Telephone (907) 562-2424 A October 1, 2008 John Handeland, Manager Nome Joint Utility P.O. Box 70 Nome, Alaska 99762 Re: Restricted Appraisal – 672 Acres More or Less Located in Sections 5 & 6, Township 11 South, Range 33 West, Kateel River Meridian – Nome, Alaska Dear Mr. Handeland: As requested, I have completed a restricted appraisal of the above referenced property which is described in the following report. The purpose of the appraisal is to estimate the market value of the fee simple estate of the subject land. As a result of the investigation and analysis, and subject to the assumptions and limiting conditions, it is my opinion the market value of the subject property, as of October 1, 2008 is: EIGHT HUNDRED FORTY THOUSAND DOLLARS ($840,000) The report is intended to meet the current Uniform Standards of Professional Appraisal Practice as formulated by the Appraisal Foundation, and conform to the Appraisal Standards for Federally Related Transactions adopted by the Office of the Comptroller of the Currency (OCC). I hope this limited appraisal proves relevant to your decisions regarding the property. If you have any questions, please contact me at this office. Sincerely, APPRAISAL COMPANY OF ALASKA Michael C. Renfro Partner 08-3189 NORTON SOUND HEALTH CORPORATION  BOARD OF DIRECTORS         As of 09/30/08    Name    Representing    Officer/Executive Committee  Emily Hughes  Region‐At‐Large    Chairperson  June Walunga  Native Village of Gambell  1st Vice Chair  Kathy Johnson  Native Village of Unalakleet  2nd Vice Chair  Berda Willson  Native Village of Council  Secretary  John Handeland  Nome Community‐At‐Large  Treasurer  Mary Knodel  City of Nome    Assistant Secretary/Treasurer  Alfred Sahlin  Nome Eskimo Community (President) Executive Committee #1  Virginia Washington Native Village of St. Michael  Executive Committee #2  Karlin Itchoak  Nome Eskimo Community  Executive Committee #3  Leonard Adams  Native Village of Brevig  Karen Kazingnuk Native Village of Diomede  Frederick Murray Native Village of Elim  Mary Lou Amaktoolik Chinik Eskimo Community (Golovin)  Robert Keith  Kawerak, Inc. (Chairman), Elim  Ruth Ojanen  King Island Community  Morris Nassuk  Native Village of Koyuk  Carol Ablowaluk Mary’s Igloo  Preston Rookok  Native Village of Savoonga  Simon Bekoalok Jr. Native Village of Shaktoolik  Karla Nayokpuk  Native Village of Shishmaref  Brian James  Village of Solomon  Becky Odinzoff  Stebbins Community Assoc.  Wesley Okbaok  Native Village of Teller  Joanne Keyes  Native Village of Wales  Lincoln M. Simon Sr. Native Village of White Mountain     RECEIVED C.NORTON SOUND AUG 8ECONOMIC 2008 DEVELOPMENT NJ U S CORPORATION _________________ Serving the fisheries of the Bering Strait Region Elim Gambell Golovin Koyuk Nome Saint Michael Savoonga Shaktoolik Stebbins Teller Unalakleet Wales White Mountain August 25,2008 Mr.John Handeland,Manager Nome Joint Utility Systems P.O.Box 70 Nome,Alaska 99762 Re:Renewable Energy Discussions Dear Mr.Handeland, The Norton Sound Economic Development Corporation (NSEDC)Board of Directors (Board)met for their 2008 2’quarter meeting from July 30-August 1.As with most businesses and households,the recent surge in energy costs has NSEDC examining options to decrease costs of our operations.At the meeting the Board directed NSEDC staff to pursue engaging Nome Joint Utility Systems (NJUS)in discussion regarding NSEDC objectives and the potential for cooperating with NJUS to achieve those objectives.In order to meet NSEDC’s goal of decreasing operational costs,the best solution,from both an energy output and installation standpoint,is to cooperate with the local utility. NSEDC is interested in NJUS’consideration of a net-billing program for commercial buildings in Nome. In the event NSEDC installs renewable energy resources,in addition or as an alternative to cooperating with NJUS,the success of a potential NSEDC wind turbine installation project depends upon NSEDC’s decision on net-billing.The predicament is that NSSP is using a vast majority of its energy during the four months that the wind blows the least.If NSSP is unable to gain credits during the winter months when the plants use much less power,but the wind is blowing much more,these wind systems may simply not be cost effective to install. NSEDC would like to meet with you to discuss the above stated issues.Please let me know your availability at your soonest convenience.I can be reached at (800)650-2248 orjanis@nsedc.com. Please do not hesitaLe to oiitact me and I look forward to hearing from you. Thank you, 14 Jas Ivanoff C6mmumty Benefits Director cc:Mr.Don Stiles,NSEDC Board Member Mr.Josh Osborne,Northern NSSP Manager Mr.Richard Ferry,Facilities Engineer Community Benefits Department File “NSEDC will pariicopae in and encouras the dean harvest ofa/I Bering Sea fisheries toprnnwte and provide econo,uic develop snerst throinh education,employment,training and financial assistance to member communities and Wistern Alaska,while protecting subsistence ,esourcss” Brevig Mission Diomede 420 L Street Suite 310 Anchorage,Alaska 99501 (907)274-2248 Fax:(907)274-2249 1 John K. Handeland From:Janis Ivanoff [JDIVANOFF@nsedc.com] Sent:Tuesday, October 07, 2008 3:45 PM To:John K. Handeland Subject:RE: [Junk released by User action] RE: Renewable Energy Discussions Good afternoon John,     We look forward to this discussion with NJUS on pursuing an opportunity for NSEDC to  cooperate and assist our member communities with energy solutions.  Please let us know when a  good time would be for a meeting.      Janis Ivanoff  Community Benefits Director    ________________________________    From: John K. Handeland [mailto:johnh@njus.org]  Sent: Tue 10/7/2008 3:29 PM  To: Janis Ivanoff  Subject: [Junk released by User action] RE: Renewable Energy Discussions                  From: John K. Handeland [mailto:johnh@njus.org]   Sent: Tuesday, October 07, 2008 12:06 PM  To: 'janis@nsedc.com'  Subject: Renewable Energy Discussions         Janis,         I have not forgotten about your August 25, 2008 letter, which we briefly discussed at the  Rural Energy Conference in Girdwood last month.  I believe there are some possibilities that  we can pursue that would benefit both NSEDC/NSSP and Nome/NJUS.         As I told you, we are seriously working to install alternative energy (wind) into our grid.   Bering Straits/Sitnasuak through Banner Wind LLC is in the process of installing about 1MW of  capacity to feed to us.  We are pursuing our own 3MW farm and are working cooperatively with  Unalakleet to develop similar equipment and operations, so we can share expertise, parts,  maintenance, etc.         I am aware that NSEDC is collaborating with UVEC on a project that would allow them to  install wind turbines with financial assistance from NSEDC in exchange for a negotiated long‐ 2 term power rate reduction for your facilities in that community.  This is a win‐win situation  for them; and I think a like situation in Nome also bears further discussion.         When it is convenient, I would welcome the opportunity you requested to meet with to discuss  how we can meet mutual objectives, which ultimately could lead to reductions in costs for not  just NSEDC, but for the community as a whole, and also perhaps strengthen your presence here  ‐ and provide additional opportunities for year‐round employment for the region.         Thanks,         John Handeland  Adem and Melissa Boeckmann P.O.Box 1007 Nome,AK 99762 Sunday,September 28,2008 John Handeland,Manager Nome Joint Utility P.O.Box 70 Nome,AK 99762 Dear John, Thank you for visiting with us to share the Utility’s plans for a wind generation site on city property adjoining ours.This is a very exciting development,and one which we fully support.The cost of energy is having a big impact on communities throughout the region and we applaud the efforts to bring some relief to Nome area residents. The extreme southwest border of city property is common a common property line with our property.We acquired the North Star Placer claim in 2002 and the adjoining No.6 &No.7 Above on Dry Creek Placer in 2006. This is to confirm that in 2006 we paid $2.000 per acre for No.6 &No.7 Above on Dry.The Anvil Bypass Road goes through this property but Alaska Gold required us to buy the entire claims, including the road section.Therefore,a portion of our property is encumbered,so if you remove the road area not useable by us,effectively the price paid was much more than $2,000 per acre for the remaining property. Please keep us informed as your plans develop.While your property is accessible from the state road now,as you refine plans for permanent access —we would be most willing to work with you. As we already have some existing roads established on our property,we are willing and open to working out an agreement that would allow the city access from our private road if this is something that would assist in developing the project.Our course,we would need to work out a few details to formalize.We would not want this access to become a public thoroughfare,so there would need to be a gate,liability protection for your use of our road,and an arrangement on maintenance and snow removal. This is so exciting!Thanks for keeping us in the loop.