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HomeMy WebLinkAboutMcGrath Light & Power for a Heat Recovery System Project AppALASKA Renewable Energy Fund ENERGY AUTHORITY Grant Application Application Forms and Instructions The following forms and instructions are provided for preparing your application for a Renewable Energy Fund Grant. An electronic version of the Request for Applications (RFA) and the forms are available online at http://www.akenergyauthority.org/RE Fund.html The following application forms are required to be submitted for a grant recommendation: Grant Application GrantApp.doc Application form in MS Word that includes an outline of Form information required to submit a complete application. Applicants should use the form to assure all information is provided and attach additional information as required. Application Cost Costworksheet.doc Summary of Cost information that should be addressed Worksheet in preparing their application. Grant Budget GrantBudget.xls _bK_applicants A detailed grant budget that includes a breakdown of Form costs by task and a summary of funds available and requested to complete the work for which funds are being requested. Grant Budget GrantBudgetlnstr.pdf Instructions for completing the above grant budget form. Form Instructions • If you are applying for grants for more than one project, provide separate application forms for each project. • Multiple phases for the same project may be submitted as one application. • If you are applying for grant funding for more than one phase of a project, provide a plan and grant budget for completion of each phase. • If some work has already been completed on your project and you are requesting funding for an advanced phase, submit information sufficient to demonstrate that the preceding phases are satisfied and funding for an advanced phase is warranted. • If you have additional information or reports you would like the Authority to consider in reviewing your application, either provide an electronic version of the document with your submission or reference a web link where it can be downloaded or reviewed. REMINDER: • Alaska Energy Authority is subject to the Public Records Act, AS 40.25 and materials submitted to the Authority may be subject to disclosure requirements under the act if no statutory exemptions apply. All applications received will be posted on the Authority web site after final recommendations are made to the legislature. AEA 09-004 Grant Application Page 1 of 15 9/2/2008 ENERGY AUTHORITY Renewable Energy Fund Grant Application SECTION 1 — APPLICANT INFORMATION Name (Name of utility, IPP, or government entity submitting proposal) McGrath Light & Power, Co. Type of Entity: Certificated Electric utility Mailing Address Physical Address McGrath Light & Power, Co. Same PO Box 52 McGrath, Alaska 99627 Telephone Fax Email 1.1 APPLICANT POINT OF CONTACT Name Title Ernie Baumgartner General Manager Mailing Address McGrath Light & Power, Co. PO Box 52 McGrath, Alaska 99627 Telephone Fax Email 1.2 APPLICANT MINIMUM REQUIREMENTS Please check as appropriate. ff 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 authohties); Fe--sl 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 or No collaborative grouping, a formal approval from each participant's governing authority is necessary. (indicate Yes or No in the box ) 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 or No -Eg- agreement. 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 or No application.) I AEA OS-O04Grant Application Page 2of15 0/3/2008 I ALASKA Renewable Energy Fund ENERGY AUTHORITY Grant Application ........._ 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 Designand Permitting; andlor Construction) as well as the kind of renewable energy you intendi to use. Refer to Section >'1.5 of;RFA. We are proposing for Final Design and Permitting (Phase III) and Construction (Phase IV) of a heat recovery system to provide available heat from the existing ML&P Power Plant to the Iditarod Area School District and three adjacent commercial buildings. This project will use available jacket water and exhaust heat (wasteheat recovery) that is currently being rejected to the atmosphere via radiators. The ML&P power plant is an existing facility in operation prior to August 20, 2008. The proposed heat recovery project is a new project that was not in operation prior to August 20, 2008 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. McGrath Light and Power is located in McGrath, Alaska. McGrath has a population of 315, and is located 221 miles northwest of Anchorage and 269 miles southwest of Fairbanks in Interior Alaska. It borders the Kuskokwim River directly south of its confluence with the Takotna River. The remote location of McGrath and frequently difficult river conditions lead to some of the highest barge -delivered fuel costs in the state. Direct beneficiaries of this project include the Iditarod Area School District (IASD) McGrath complex, and three commercial facilities adjacent to the ML&P power plant. Indirect beneficiaries include all ML&P electric customers, as the project will provide increased revenues from the sale of recovered heat, as well as improved electric generating efficiency and reduced operations and maintenance costs. ML&P will be the Grantee under the Renewable Energy Fund. ML&P has teamed up with the engineering firm of Alaska Energy and Engineering, Inc. (AE&E). AE&E has a long history of successful energy related projects throughout Alaska, and has worked with both ML&P and IASD on numerous projects dating back to 1995. 2.3 PROJECT BUDGET OVERVIEW Briefly discuss the amount of funds needed, the anticipated sources of funds, and the nature and source of other contributions to the project, Include a project cost summary that includes an estimated` total cost through construction. The estimated cost of construction is $991,815. Of this amount, ML&P is able to provide matching funds as a contribution in aid of construction in the amount of $167,000. The balance requested for this project from the Renewable Energy Grant Fund is $824,815 Due to dire need to improve operating efficiency and help reduce the impact of escalating fuel costs on the cost of electricity, ML&P is immediately proceeding with Phase III of the project, and proceeding with providing recovered jacketwater heat to three nearby facilities. AEA 09-004 Grant Application Page 3 of 15 9/3/2008 j ALASKA ENERGY AUTHORITY Renewable Energy Fund Grant Application SITE WORK / ARCTIC PIPING $330,325 POWER PLANT UPGRADES / EXHAUST HEAT BOILER $277,100 END -USER BUILDING UPGRADES $58,900 OVERHEAD $25,217 FREIGHT $54,970 CONSTRUCTION SUB -TOTAL $746,512 DESIGN AND CONSTRUCTION ADMIN. $40,000 CONSTRUCTION MANAGEMENT $40,000 PROJECT SUB -TOTAL $826,512 CONTINGENCY @ 20% $165,302 TOTAL PROJECT COST $991,815 MATCH ($167.0001 GRANT REQUEST 1 $824,8151 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. Financial/economic benefits The heat recovery project, in conjunction with the installation of a high efficiency electronically controlled genset, will result in a reduction in diesel fuel consumption for both space heating and power generation of up to 60,000 gallons of diesel fuel annually. The economic benefit of this fuel reduction is in excess of $250,000 per year, at a delivered fuel cost of $4.25/gallon. This renewable energy project will also decrease capital costs for IASD to upgrade its aging, non -code compliant fuel system because reliable heat recovery will reduce the need for on -site fuel storage capacity. Other benefits to Alaskan public ... The Alaska public further benefits from the reduction in carbon footprint, NOx, and Particulate Matter emissions from eliminating the equivalent of 60,000 gallons of diesel exhaust pollutants. 2.5 PROJECT COST AND BENEFIT SUMARY Include a summary of your project's total costs and benefits below. 2.5.1 Total Project Cast $ 991,815 (including estimates through construction, 2.5.2 Grant Funds Requested in this application'. $ 824,815 2.6.3 Other Funds to be provided (Project match) $ 167,000 2.5.4 Total Grant Costs (sum of 2.5.2 and 2.5.3) $ 991,815 2.5.5 Estimated Benefit (Savings) $ 294,000 2.5.6 Public Benefit (if you can calculate the benefit in terms of The project will reduce dollars please provide that number here and explain how diesel emissions by up to you calculated that number in your application.); 60,000 gallons of diesel annual) SECTION 3 - PROJECTMANAGEMENT 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. AEA 09-004 Grant Application Page 4 of 15 9/3/2008 %A L A S K A Renewable Energy Fund :a ) ENERGY AUTHORITY Grant 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). [[AS ATTACHMENTS]] 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. ML&P will be the single point of contact and will execute all grant, contractual and administrative responsibilities. AE&E will provide all design, permitting, and technical functions. Ernie Baumgartner, ML&P General Manager, will be the Grant Manager. He will be the single point of contact with AEA and will execute all grant, contractual and administrative responsibilities. Mr. Baumgartner has forty years of experience in the telecommunication and electric power generation field, including waste heat recovery projects. He is the owner of Raven Technology Service in McGrath and thus provides a highly knowledgeable on -site presence. He is skilled in tracking grants, communications, and in his ability to deal smoothly and professionally with executive officers, upper management, employees, vendors, and customers in day-to-day and occasionally adverse situations. Steven J. Stassel, P.E., AE&E president, will serve as the Project Manager. He will work with the Grant Manager to commit essential engineering disciplines to ensure a successful project. He will establish specific man hour and reimbursable budgets, and schedule the necessary technical staff. He will track specific contractual deliverables against the schedule to ensure adequate resources are available to meet critical milestones. He will analyze all relevant issues such as available shipping options, permitting and site control issues, and procurement requirements. Drawing on the expertise of our team, he will assign specific project tasks to responsible team members. Mr. Stassel will oversee all technical work and coordinate the efforts of our team to ensure the efficient and cost effective production of project designs. He will develop a realistic project schedule to address critical issues in proper sequence to minimize cost and maximize construction resources. Mr. Stassel will be directly responsible for the quality of all work produced by our team. He will oversee and review all critical tasks and provide input and support on all significant design issues. He will ensure that design review comments from the Authority and ML&P are adequately addressed and incorporated into final design documents, and he will manage the logistics of construction support. His working relationship with Authority staff and ML&P dates to the early 1990s. As president ofAE&E, Mr. Stassel has the authority to assign the technical personnel and resources necessary to successfully complete this project. 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.) Due to the high retail cost of diesel heating fuel in McGrath (currently $7.50/gallon), and the close proximity of three commercial buildings to the ML&P power plant, Phase III of the heat recovery project is proceeding immediately. Arctic pipe is on order and is planned to be installed prior to freeze up. The end -user building heat recovery tie-in and heat exchanger installation will take place in November. This will provide immediate heating fuel savings of up to 4,000 gallons this winter. Phase IV of the project will commence upon award and execution of a Renewable Energy Fund grant, anticipated to occur late December 2008 or early January 2009. The timing of this grant will facilitate materials procurement this winter, with an estimated Phase IV construction start date of May 2009. Construction is estimated to take six -weeks, with start-up and testing scheduled for mid -summer. Below is a schedule depicting specific tasks and project milestones: AEA 09-004 Grant Application Page 5 of 15 9/3/2008 /44KFE ALASKA Renewable Energy Fund ENERGY AUTHORITY Grant Application PH. III TASKS 1!: 95% DESIGN i� AGREEMENT ■■■■■■■■■■ 3.3 Project Milestones Define key tasks and decision points in your project and a schedule for achieving them rroject milestones (see above table for details of components and dates) include: Final Design and NEPA Permitting o A concept design study (Phase II) was prepared in 2001 and updated in 2003, as part of ML&P's Rural Utilities Service (RUS) High Energy Cost Grant application. Final design and NEPA project level permitting (Phase III) is scheduled for completion by mid - December 2008. • Site Control & Heat Sales Agreements o Phase IV of the project will take place within the ML&P power plant and end -user facility property limits which streamlines the need for additional site control. Heat Sales agreements and utility permits for routing the arctic pipe between the power plant and the IASD complex are scheduled to be in place by the end of December 2008 ML&P is taking an aggressive approach to ensure that all design, permitting, site control and heat sales agreements are in place prior to the Rural Energy Fund grant award. • Grant Award — late December 20081 early January 2009. • Procurement and Mobilization — Materials will be procured and ready to mobilize to McGrath by the end of April 2009. • Phase IV Construction — Construction will start upon arrival of materials, and when the ground is sufficiently thawed to perform the arctic pipe trenching. Estimated start date is the first week of June 2009. 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. AEA 09-004 Grant Application Page 6 of 15 91312008 �AL.ASKA Renewable Energy Fund ENERGY AUTHORITY Grant Application ML&P has teamed with the engineering firm of Alaska Energy and Engineering, Inc. to design, permit, and provide construction management for the project. The project will be constructed using primarily local force account labor. An experienced welder / foreman will perform all welding and piping work, and will oversee local labor. Locally available contractors will be used for the earthwork for arctic piping installation. All major purchases and construction contracts will be in accordance with ML&P procurement policies. Our proposed organization chart (below) for this project introduces and identifies key members of our team and shows the lines of authority. Each engineering discipline is led by a professional engineer registered in the State of Alaska. All engineering documents will be stamped by Alaska registered engineers. Refer to Appendix A for resumes of key personnel. lriz Tft5i�1►� AEA PROGRAM MANAGER ERNIE BAUMGARTNER PROJECT MANAGER STEVE STASSEL, P.E.IAE&E ENGINEERING DESIGN AE&E AEA CONTRACTS MANAGER ENVIRONMENTAL PERMITTING AE&E 3.5 Project Communications Discuss how you plan to monitor the project and keep the Authority informed of the status. Alaska Energy and Engineering is in communication with AEA staff on almost a daily basis. The Authority Project Manager will be kept up to date of the heat recovery project status by periodic email and/or verbal status reports, in addition to written quarterly reports that will be submitted by the ML&P Grant Manager. Periodic reports will provide general information regarding project status and any unforeseen circumstances that need to be resolved. The quarterly Grant Manager reports will include specific information on project completion status vs. project schedule; project labor reports — including hours, rates and costs; and current project expenditures relative to budgeted project costs. AE&E has provided design and construction support services on over 80 energy infrastructure -related projects throughout Alaska over the past I5 years. Our long-term working relationship with the Authority assures well -tested monitoring methods and seamless channels of communication. AEA 09-004 Grant Application Page 7 of 15 9/3/2008 1 ALASKA c WIF:` ENERGY AUTHORITY Renewable Energy Fund Grant Application � s 6 $ • • • i i f • • iaddress them. There is always an element of risk in any rural Alaska construction project; however, the risk associated with this project is minimal. Heat recovery is a mature and reliable form of energy conservation. AE&E has designed and successfully implemented heat recovery projects in over 30 rural Alaska communities. The depth and breadth of AE&Es experience assures that this project will be brought to a successful completion. SECTION d ,- • Tell us what the RFA. Tt undertake w • if you are ap grant budget • if some worA an advancee are satisfied' 4.1 Proposed E Describe the poi Discuss the pros )TION AND TASKS w you will meet the requirements outlined in Section 2 of will ;'vary according to phase of the project you propose to g for more than one phase of a project provide a plan and h phase. ending for an advanced phase is 'warranted. iy ;Resource extent/amount of the energy resource that is available. cons of your proposed energy resource vs. other alternatives that may be et to be served by your project. Because the heat provided from a heat recovery system is derived from diesel fuel that has already been purchased and consumed to generate electricity, it makes sense to first maximize use of recovered heat prior to looking to other sources of heat, such as biomass and wood. If available diesel engine heat is not put to beneficial use, it is "wasted" to the atmosphere via radiators. This proposed project will result in a combined diesel fuel savings of 60,000 gallons per year. Effective use of recovered waste heat is imperative to the efficient operation of a utility, and may be the deciding factor whether small rural electric utilities are viable in the future. ML&P and the IASD also evaluated a biomass project using locally available wood fuel. Use of wood heat can be an economically viable substitute to diesel -fueled space heat, especially in areas of rural Alaska where wood is plentiful and diesel is expensive. However, the use of waste heat from a product already consumed reduces the utility's carbon footprint and emissions of NOx and Particulate Matters -- to a much greater extent than by introducing wood burning into the heating equation. Should the City of McGrath pursue a wood biomass project for space heating in the community of McGrath, ML&P will support their effort and work cooperatively to maximize the benefit to McGrath. 4.2 'Existing Energy System 4.2.1 Basic configuration of Existing Energy System Briefly discuss the basic configuration of the existing energy;' system. Include information about the number, size, age, efficiency, and type of generation. The ML&P power plant generation equipment consists of five diesel generator sets (gensets) with a total generation capacity of 2,280 kW. The generation system is a 2400-volt ungrounded delta three-phase AEA 09-004 Grant Application Page 8 of 15 9/3/2008 /'E,ALASKA ENERGY AUTHORITY Renewable Energy Fund Grant Application system. All generators operate at 1200 RPM. • Gen -sets 43 and #4 are CAT 353's rated at 250 kW and 200 kW, respectively. • Gen -set 45 is a CAT 398 rated at 600 kW. • Gen -set 46 is a CAT 3512 rated at 670 kW. • Gen -set #7 is a CAT 3508 rated at 560 kW. The 3508 is the primary genset. The 3512 operates when the electric load exceeds the 3508 capacity, and when the 3508 is down for maintenance. The 398 is used occasionally during oil changes and when the 3512 is down for maintenance. The two 353 gensets are rarely used. The 398 and 353 gensets are antiquated and past their useful life. The power plant has two separate cooling systems both with heat recovery capability. The two 353's, 398 and 3508 are on one common cooling loop, and the 3512 is on a separate cooling loop. Both cooling loops are 6-inch diameter welded steel piping with a combination of flanged and grooved -end butterfly valves and flanged and threaded -end gate valves, and each loop is equipped with an AMOT valve, plate heat exchanger and a single radiator. Fuel is delivered to McGrath via barge during the summer and stored in bulk at the Crowley and ML&P tank farms. Fuel is delivered by truck to the IASD complex, businesses and residents. Occasionally, McGrath has run out of fuel prior to breakup, which has necessitated flying fuel into the community at a substantially higher price than barge -delivered fuel. With a heat recovery capability installed, McGrath may never have the need to fly in emergency fuel again. A major investment was made to upgrade the 3508 in the 1990s to boost performance from 425 kW to 560 kW, and a marine manifold was installed to increase recovered heat capacity. At the time, the McGrath FAA complex received recovered heat from the ML&P power plant. However, the FAA complex was demolished at the turn of the century, and the FAA heat recovery loop was abandoned in 2005. Since that time, all available jacket water heat has been rejected to the atmosphere via the cooling radiators. The 3508 is near the end of its useful life and is in need of replacement. Current EPA air quality regulations mandate that new stationary diesel engines meet strict air quality requirements, which precludes the use of a marine manifold on a new diesel genset. In addition, to comply with current EPA emissions requirements, new diesel engines are equipped with separately cooled aftercoolers, which operate at a Lower temperature than the jacket water. Because of this, a new separately cooled aftercooler (SCAC) diesel engine with a dry manifold provides less than half the jacket water heat as the existing marine manifold 3508. The IASD Complex uses approximately 36,500 gallons/year of diesel heating fuel. The McGrath Hotel uses 2,000 gallons/year. The AC Store uses 1,500 gallons/year, and the Innoko Building uses 2,000 gallons/year. ML&P currently consumes about 214,000-gallons of diesel fuel annually to generate 2,700,000 kWh/year. A CAT 3456 will use approximately 184,700 gallons of diesel fuel to generate the 2,700,000 kWh/year. Using combined jacket water and exhaust heat recovery, the 3456 has the capacity to provide the AEA 09-004 Grant Application Page 9 of 15 9/3/2008 /441EF-, ALASM WE-', ENERGY AUTHORITY Renewable Energy Fund Grant Application equivalent of about 32,000-gallons of recovered heat annually for use as space heat to the above facilities. This equates to roughly 75% of the space heating needs of these facilities. The combined fuel savings due to the improved fuel efficiency of the 3456 and recovered heat is more than 60,000 gallons of diesel fuel annually. 4.3 Proposed System Include information necessary to describe the system you are intending to develop and address potential system design, landownership, 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 1 An assessment was made of the capital, operating and maintenance costs, as well as fuel efficiency and available heat, for various sized gensets of different manufacturers and compared with the existing 3508. The evaluation revealed that a SCAC CAT 3456, rated at 476 kW prime, has the best fuel efficiency and provides the lowest overall lifecyele cost, when exhaust heat recovery is included. The exhaust heat recovery system will use a CAIN Industries HSRS exhaust heat recovery boiler. The boiler will be sized at 890MBh to recover the available heat from the 3456 engine. The average electric load of McGrath is 325 kW, so the expected capacity factor will be in excess of 70% utilization. Annual delivered heat from the jacket water and exhaust heat boiler is the equivalent of 32,000 gallons of diesel fuel. There are no anticipated barriers, other than available funding. The exhaust boiler will be interconnected into the existing power plant cooling system and will boost the supply temperature of the recovered jacket water heat by as much as 15F. The increased supply temperature and delta-T allows use of smaller diameter arctic piping at lower velocity and pumping energy. The heat will be distributed via underground preinsulated arctic pipe routed within road rights -of -ways and existing utility easements. Refer to Appendix F for Technical Data. 4.3.2 Land Ownership Identify potential land ownership issues, including whether site owners have agreed to the ro`ect or how you intend to approach land ownership and access issues. Site control issues for this project are relatively streamlined. The power plant is located on property owned by ML&P. The end -user properties are owned by the respective end -users. The arctic piping will be routed within existing road rights -of -ways and utility easements. All end -users have agreed to the project and requested delivery of recovered heat to beat their facilities. Each end -user will enter into a heat sales agreement with ML&P prior to construction. The heat sales agreement defines the terms and cost of service, as well as provides right -of -access for ML&P to construct and operate the heat recovery system. AEA 09-004 Grant Application Page 10 of 15 9/3/2008 /ALASKA Renewable Energy Fund WE- ) ENERGY AUTHORITY Grant Application The permitting requirements for this project are minimal. A NEPA project level environmental review will be performed to demonstrate and confirm the project will not have a negative impact to the human environment. There are no wetlands in the project area, the arctic piping will be routed within previously disturbed areas (roads and utility easements), there are no known archaeological or historic properties within the area of potential effect, and there are no birds or mammals listed as endangered or threatened that will be impacted by the project. It is anticipated the NEPA environmental review will be completed prior to the end of December of this year. AE&E has provided NEPA project level environmental permitting on over 40 energy related projects throughout Alaska during the past 10 years. Our understanding of the NEPA process and potential environmental impacts of our projects allows us to mitigate possible negative affects early in the design stage. As indicated in the above section, Environmental permitting is anticipated to be complete by the end of this year. 4.4 Propo The level c any previoi 4.4.1 Project Deve Provide detailed prof the project. Cost infi • Total anticipa • Requested gi • Applicant ma • IritzrItifinntinn levenues) ling requested and must reference the is estimates. ,nt Cost st information based on your current knowledge and understanding of Dn should include the following: oject cost, and cost for this phase nding funds — loans, capital contributions, in -kind Br funding sources • Projected capital cost of proposed renewable energy system • Projected development cost of proposed renewable energy system AEA 09-004 Grant Application Page 11 of 15 9/3/2008 lJ ALASKA ENERGY AUTHORITY Renewable Energy Fund Grant Application The cost information provided in this application is based on AE&E's 15-years of successfully designing and constructing energy related projects throughout Alaska. Our construction management experience keeps us current on ever increasing construction costs. Total anticipated project cost: $991,815 Cost for the design phase: $ 48,000 Cost for the construction phase: $943,815 Requested grant funding: $824,815 Applicant matching funds — loans, capital contributions, in -kind: $167,000 Identification of other funding sources: RUS HECG 2003 Projected capital cost of renewable energy system: $991,815 Projected development cost of renewable energy system: $0 (there is no development cost associated with heat recovery as it is a mature commercially available technology) 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 operating and maintenance costs for a heat recovery system are relatively minimal. The only moving parts associated with the district heating system is the circulating pump. The only moving parts on the exhaust heat recovery boiler is the compressed air fin tube cleaner. The heat recovery boiler circulating pump is a 1/3 HP pump, and the district heating pump is a 6 HP pump. Due to power plant cooling system improvements that will be implemented as part of this heat recovery project, there will be a decrease in power plant pumping energy, which will result in a net reduction in station service electric consumption. This Application does not include a request for funding for Operating and Maintenance Costs. 4.4.3 Power Purchase/Sale The 'power purchase/sale information should include the following: • Identification of potential power buyers)/customer(s) • Potential power'purchase/sales price - at a minimum indicate a price range • Proposed rate of return from grant -funded project The targeted recipients of the recovered heat include the Iditarod Area School District, McGrath Hotel, Innoko Building and the AC Store. Anticipated cost for recovered heat is between 50% and 70% of avoided fuel cost. 4.4.4 Cast Worksheet Complete the cost worksheet form which provides summary information that will be considered in evaluating the project. Download the form, complete it, and submit it as an attachment. Document any conditions or sources your numbers are based on here. AEA 09-004 Grant Application Page 12 of 15 9/3/2008 'ALAS Renewable Energy Fund ;i ; ENERGY AUTHORITY Grant Application Refer to attached Cost Worksheet and cost estimate in Appendix.B 4.4.5 Business Plan Discuss your plan for operating the completed project so that it will be sustainable. Include at a minimum proposed business structure(s) and concepts' that may be considered. McGrath Light & Power will be owner of the heat recovery system. ML&P is a sustainable electric utility that is economically regulated by the Regulatory Commission of Alaska. ML&P will use its utility staff and assets to maintain, operate, and sustain the heat recovery system. 4.4.6 Analysis and Recommendations Provide information about the economic analysis and the proposed ',project. Discuss your recommendation for additional project development work. A concept design and cost estimate for the heat recovery district heating system was prepared in 2001 and updated in 2003. The project included providing recovered heat to the IASD complex and facilities adjacent to the power plant. The project was economically viable when fuel prices were in the $2/gallon range. Now that retail diesel fuel costs have escalated to well over $5/gallon, the project continues to be a viable project. This proposed project differs from the earlier concept design in that exhaust heat recovery is now an essential component of the project. Due to the reduction in available jacket water heat from the new highly efficient diesel engines with separately cooled aftercoolers, exhaust heat recovery is necessary to recover sufficient available heat to support a district heating system The estimated annual fuel displacement from this project is 60,000 gallons/year. This equates to approximately 1,200,000 gallons over a twenty-year anticipated useful life of the project. The anticipated cost savings to the electric utility based on improved fuel efficiency is $123,000/year based on the current fuel cost of $4.25/gallon. The estimated revenue to ML&P based on 50% of the avoided fuel cost to the end -users, based on a retail fuel cost of $5.50/gallon is $88,000/year. The total estimated revenue benefit to ML&P is about $2 1 0,000/year. There are no known tax credits or other subsidies for a project of this type. Non -economic benefits to Alaskana include the reduction in diesel exhaust emissions realized by burning 1.2-million gallons less of diesel fuel over a twenty-year period, as well as the improved long term viability of ML&P. AEA 09-004 Grant Application Page 13 of 15 9/3/2008 j44 EL A L A S K A WE -,ENERGY AUTHORITY Renewable Energy Fund Grant Application SECTION — 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 - GrantBud et.xls Provide a narrative summary regarding funding sources and your financial commitment to the project. Total estimated project cost is $991,815. The grant request is for $824,815. ML&P will provide a match in the amount of $167,000. Refer to Grant Budget worksheet in Appendix C AEA 09-004 Grant Application Page 14 of 15 9/3/2008 ALASKA Renewable Energy Fund ENERGY AUTHORITY Grant Application 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 D. Governing Body Resolution per RFA Section 1.4 Enclose a copy of the resolution or other formal action taken by the applicant's governing body or management that: - authorizes this application for project funding at the match amounts indicated in the application - authorizes the individual named as point of contact to represent the applicant for purposes of this application - states the applicant is in compliance with all federal state, and local, laws including existing credit and federal tax obligations. F. CERTIFICATION The undersigned certifies that this application for a renewable energy grant is truthful and correct, and that the applicant is in compliance with, and will continue to comply with, all federal and state laws including existing credit and federal tax obligations. Print Name Thomas Ernest Baumgartner Signature Title General Manager, Mc rath Light and Power, Inc. Date October 7, 2008 i AEA 09-004 Grant Application Page 14 of 14 9/3/2008 PROJECT RESUMES COST WORKSHEET / w"' -' ALASKA Renewable EnergyFund _' ENERGY AUTHORITY Application Cost Worksheet Please note that some fields might not be applicable for all technologies or all project phases. Level of information detail varies according to phase requirements. 1. Renewable Energy Source The Applicant should demonstrate that the renewable energy resource is available on a sustainable basis. Annual averageresource availability. Equivalent of 60,000 Gallons of Diesel Fuel Annually 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 grid, leave this section blank) i. Number of generators/boilers/other 5 Gensets ii. Rated capacity of generators/boilers/other 2280 kW iii. Generator/boilers/other type Diesel iv. Age of generators/boilers/other 1970's to 1990's v. Efficiency of generators/boilers/other 13 kWh / Gallon b) Annual O&M cost i. Annual O&M cost for labor $113,817 ii. Annual O&M cost for non -labor $365,592 c) Annual electricity production and fuel usage (fill in as applicable) i. Electricity [kWh] 2,770,000 ii. Fuel usage (if system is part of the Railbelt grid, leave this section blank Diesel [gal] 213,700 Other - iii. Peak Load 500 kW iv. Average Load 325 kW v. Minimum Load 225 kW +/- vi. Efficiency 13 kWh / Gallon vii. Future trends Improved Fuel Efficiency to 15 kWh / Gallon d) Annual heating fuel usage (fill in as applicable) i. Diesel [gal or MMBtu] 42,000 Gallons ii. Electricity [kWh] - iii. Propane [gal or MMBtu] - iv. Goal [tons or MMBtu] - v. Wood [cords, green tons, dry tons] - vi. Other - FIFA AEA 09-004 Application Cost Worksheet Page 1 " ALASKA 4111IF-1 � ENERGY AUTHORITY Renewable Energy Fund 3. Proposed System Design a) Installed capacity 2196 M b) Annual renewable electricity generation i. Diesel [gal or MMBtu] 60,000 / Gallon - Heat Recovery ii. Electricity [kWh] 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 b) Development cost c) Annual O&M cost of new system d) Annual fuel cost 5. Project Benefits $991,815 $0 - Commercially Available Equipment Net $ Reduction $0 a) Amount of fuel displaced for i. Electricity 29,000 ii. Heat 31,000 iii. Transportation b) Price of displaced fuel $4.90 / Gallon Weighted Average c) Other economic benefits Reduction in IASD Complex Fuel Storage Capacity d) Amount of Alaska public benefits Reduction in Exhaust Emissions a) Price for power purchase/sale 50% to 70% Avoided Fuel Cost 7. 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Lm EtD W p) N a) c W c 0 E aam ai W .emu a Z'0)cO cC7Z � U OOOC�C C�cAc�CUCUU= LL `L< V wCU a U� Q I\ O r O O 46 CO L � V _ O 0.4 a� J = _ O tL d _ W d ca d _ d cr d Q) N cr 0 M Q ELECTRONIC COPY OF APPLICATION (REFER TO ENCLOSED DISC) APPENDIX E RESOLUTION & SUPPORTING LETTERS PO. .~~.^5^_ _� J |— � � �- ���� � ' �� �� ��~� K�C(�/u�// +\|�]5ua�q�7� ��/��- ��� � �&/��Y~ ~ �^�_�, ���~�� �_.,�»K��' ��^ �-��°°��, '''---'--'/' ^`~~'~~// �� October 7.2OO8 Fax 007) 52+-5701 email| L | i- :rD|��6�Dl��r3�n8|@5��.net Renewable Energy Grant Fund Alaska Energy Authority 813VV8st Northern Lights Blvd. Anchorage, AKS95O3 Subject: McGrath Light & Power, Co. - Renewable Energy Fund Grant Application - Letter of Commitment Application Review Committee: This letter transmits the attached Renewable Energy Fund Grant AooiC8d0O for McGrath Light & Power for a Heat Recovery Project, an eligible project as described under HB 152. K8CGn@th Light & FzOvve[ is an eCOOonniC@Uy regulated 8|eCt[iC utility and is authorized to provide pOvv8r to the COnnnnUOity of McGrath by the Regulatory CorOnoiSsiOO of Alaska under Certificate Of Public Convenience and Necessity, CPC&N No. 44. The attached Application documents and describes the proposed heat recovery project. The total estimated COSt of design, permitting and construction is $891.815, The estimated fuel savings as @ [BSu|t of this project is 80.000 gallons per year. WqL&P COrDnnitS to this project a C8Sh Match Of up to $187.000. approximately 1796 of the total 88dnl@[8d CDSt of construction. This project is CUrneDUy in Phase ||| Design and Permitting. Subject to receiving the requested fUndiOQ, the estimated CODatrUCti0D completion date issummer 2OOQ. ML&P strives to keep electric costs as low a possible by maximizing operating efficiencies. This project will provide 8 significant improvement tOvv8nd meeting this continued gOBi and will greatly benefit the community ofMcGrath. McGrath Light & Power welcomes and fully gU000rta this OppOrtUDhv to work with the AJ8gk8 Energy Authority to irDp|enl8Ot this heat recovery project, and requests the Review Committee carefully review the merits of this application. If you have any questions p|88S8 C8U me at (907) 524-3890. or fax your comments to Sincerely, McGrath Light& Power Ernie Baumgartner General Manager P.0, 15ox 52 MCoal rat k Ligkt & Powcr MCC ratk, Ala-sLa 9�6'Z7 007) 52+-500� fax (.907) 52+-V01 email: mlp@mcgratkala56.nct RESOLUTION 09-04 A RESOLUTION OF THE BOARD OF DIRECTORS OF MCGRATH LIGHT & POWER, CO. (ML&P) CONFIRMING THE CRITICAL NEED TO IMPROVE THE UTIL)[TYS OPERATING EFFICIENCY, AUTHORIZING MCGRATH LIGHT & POWER CO. TO SUBMIT AN APPLICATION LUNDER THE ALASKA ENERGY AUTHORITY RENEWABLE ENERGY GRANT PROGRAM FOR FUNDING TO SUPPORT BENEFICIAL USE OF EXISTING AVAILABLE RECOVERED HEAT, AND AUTHORIZING THE GENERAL MANAGER OF ML&P TO EXECUTE ANY SUBSEQUENT DOCUMENTS NECESSARY TO SECURE GRANT FUNDING FOR THE PROJECT. WHEREAS, McGrath Light & Power Co. (ML&P) is incorporated and organized tinder the, laws of the State of Alaska, and WHEREAS, ML&P is economically regulated under AS 42.05, and is authorized to provide electric power to the community of McGrath under Certificate of Public Convenience and Necessity, CPC&N No.44, issued by the Regulatory Commission of Alaska, and WHEREAS, we find that the high cost of diesel in McGrath causes an economic hardship on the community, and WHEREAS, it is recognized that the residents and infrastructure in the community McGrath are dependent on the electric utility to operate in a cost effective and reliable manner, and WHEREAS, the Alaska Energy Authority has issued a request for applications for the Renewable Energy Grant Program authorized under RB 152 for Renewable Energy Projects. and WHEREAS, the ML&P has identified beneficial use of existing available recovered beat as a viable technology to improve the operational efficiency of the utility and to help reduce the community's reliance on diesel fuel, and WHEREAS. ML&P ranks this project as one of the high est priorities in the comprehensive development of the community; and ML&P is good standing with respect to its existing credit and Federal Tax Obligations. NOW THEREFORE BE IT RESOLVED, that it is the determination of this body to pursue a Renewable Energy Grant for a heat recovery s project in McGrath to help reduce the community's dependency on diesel fuel, to continue to upgrade our electrical system to a modern., safe, and more efficient standard in accordance with RA.,JS standards, and that the General Manager of ML&P, Ernie Baumgartner, is authorized and empowered to submit to AEA on behalf of ML&P an application for funding under the Renewable Energy Grant Program AEA-09-004, to act as the lead contact in this project, and to execute and submit any subsequent documents on behalf of Ml,&Pt(--) secure grant funding for the project. Adopted and Dated on this 8"' day of October 2008, by the action of the members of McGrath Light & Power Co. Betty , agnivr, President Date Cl RTIFICATE. The Undersigned. Betty Magnuson, President of McGrath Light & Power, Co., an Alaska Corporation, does hereby certify that at a poll vote of the Board of Directors of said Corporation duty called and held on the 8th day of October, 2008 at which a quorum was at all times present and voting, the foregoing resolution was duty adopted. Dated this 8th day of October. 2008, at McGrath, Alaska. by: its dent re e t Z�iITRROD Area School District P.O. Box 90 McGrath, Alaska 99627 Phone: (907) 524-3033 Fax: (907) 524-3217 McGrath Light & Power P.O. Box 52 McGrath, Alaska 99627 The Iditarod Area School District fully supports the efforts of The McGrath Light & Power company to seek funding to provide waste heat to the Iditarod Area School District office complex. This building also houses the McGrath Community Library and the University of Alaska - Fairbanks office and teaching center. A source of heat to the McGrath School and the district warehouse complex which also houses our school bus would be a major costs savings. The present day cost of heating fuel has reduced the amount of money we have for maintenance and smaller needed capital improvement projects. It also greatly affects the money available for hiring teaching staff and other educational needs. Saving money on fuel will go a long way to help us in McGrath as well as other schools in our district by overall cost savings. Thank you very much for pursing this opportunity to help our school district. Sincerely David Shelborne - Director of Buildings & Grounds. 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