HomeMy WebLinkAboutMcGrath Wood Energy Program App
McGrath, Alaska
Wood Energy Program
McGrath Light and Power
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 1 of 21 9/2/2008
Application Forms and Instructions
The following forms and instructions are provided for preparing your application for a
Renewable Energy Fund Grant. An electronic version of the Request for Applications (RFA)
and the forms are available online at http://www.akenergyauthority.org/RE_Fund.html
The following application forms are required to be submitted for a grant recommendation:
Grant Application
Form
GrantApp.doc Application form in MS Word that includes an outline of
information required to submit a complete application.
Applicants should use the form to assure all information is
provided and attach additional information as required.
Application Cost
Worksheet
Costworksheet.doc Summary of Cost information that should be addressed
by applicants in preparing their application.
Grant Budget
Form
GrantBudget.xls A detailed grant budget that includes a breakdown of
costs by task and a summary of funds available and
requested to complete the work for which funds are being
requested.
Grant Budget
Form Instructions
GrantBudgetInstr.pdf Instructions for completing the above grant budget form.
• If you are applying for grants for more than one project, provide separate application
forms for each project.
• Multiple phases for the same project may be submitted as one application.
• If you are applying for grant funding for more than one phase of a project, provide a plan
and grant budget for completion of each phase.
• If some work has already been completed on your project and you are requesting
funding for an advanced phase, submit information sufficient to demonstrate that the
preceding phases are satisfied and funding for an advanced phase is warranted.
• If you have additional information or reports you would like the Authority to consider in
reviewing your application, either provide an electronic version of the document with
your submission or reference a web link where it can be downloaded or reviewed.
REMINDER:
• Alaska Energy Authority is subject to the Public Records Act, AS 40.25 and materials
submitted to the Authority may be subject to disclosure requirements under the act if no
statutory exemptions apply.
• All applications received will be posted on the Authority web site after final
recommendations are made to the legislature.
Renewable Energy Fund
Grant Application
AEA 09-004 Grant Application Page 2 of 21 9/3/2008
SECTION 1 – APPLICANT INFORMATION
Name (Name of utility, IPP, or government entity submitting proposal)
McGrath Power and Light
Type of Entity:
Certified Electric Utility
Mailing Address
McGrath Light & Power
P.O. Box 52
McGrath Alaska 99627
Physical Address
Innoko Building – Tonzona Ave.
McGrath, AK
Telephone
907-524-3009
Fax
907-524-3062
Email
"Ernie Baumgartner"
<ernie@raventechservices.com>
1.1 APPLICANT POINT OF CONTACT
Name
William A. Wall, PhD
Title
Consultant/Project manager
Mailing Address
PO Box 988
Seeley Lake, Mt 59868
Telephone
406-210-9984
Fax
Email
Williamwall11@gmail.com
1.2 APPLICANT MINIMUM REQUIREMENTS
Please check as appropriate. If you do not to meet the minimum applicant requirements, your
application will be rejected.
1.2.1 As an Applicant, we are: (put an X in the appropriate box)
x An electric utility holding a certificate of public convenience and necessity under AS
42.05, or
x An independent power producer, or
A local government, or
A governmental entity (which includes tribal councils and housing authorities);
Yes
1.2.2. Attached to this application is formal approval and endorsement for its project by
its board of directors, executive management, or other governing authority. If a
collaborative grouping, a formal approval from each participant’s governing
authority is necessary. (Indicate Yes or No in the box )
Yes
1.2.3. As an applicant, we have administrative and financial management systems and
follow procurement standards that comply with the standards set forth in the grant
agreement.
Yes
1.2.4. If awarded the grant, we can comply with all terms and conditions of the attached
grant form. (Any exceptions should be clearly noted and submitted with the
application.)
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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.
Wood Energy Program
Phase 3: Schematic & Final Design, Final Business Plan, Permitting,
Phase 4: Construction, Installation, and Commissioning District Wood Heating systems
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.
This application supports a wood heating project in McGrath, Alaska. Local partners include the
City of McGrath, Village Safe Water, MTNT Corporation, and McGrath Light & Power
(ML&P) (applicant). A wood energy supply analysis, and a Level 2 Feasibility (in writing
phase) and conceptual design analysis has been completed for a district heating loop for
downtown McGrath to include in addition to residences, larger consumers; , School District
Office Building (offices, Museum, Library), Captain Snow Center, (including Water Treatment
Plant, Southcentral Foundation offices and current Health Center, Alaska State Troopers,
Washeteria & Showers, District Court, city offices and meeting hall), Post Office, new Health
Center, (to be built), DNR Forestry & Wildfire Center, new Tribal Center (Village Council
offices and Community Hall), and KSKO Public Radio Station. This Level 2 study has not yet
been coordinated with an analysis for a heat recovery project being proposed by ML:&P and
AE&E. The biomass project will link and integrate with the heat recovery project in future
iterations of design and cost analysis in order to capture the synergies from both to create an
optimum design. A side by side analysis of both chip boilers (Köb) and stick fired boilers (Garn)
with estimated cost analysis and net simple payback for individual buildings was conducted in
the feasibility assessment (calculations attached). In most cases the chip boilers made more
economic sense in an integrated model with forest management and harvest operations. The chip
fired boilers will require approximately 2000 tons of chips annually modeled at 40% moisture
content to displace up to 125,000 gallons of fuel or 98% of oil used in these commercial
buildings at a cost of between $28.88 – $36.10/MMBTUs or between $4-$5 on a per gallon
equivalent compared to $50.54/MMBTU for fuel oil ($7.00/gal). This project is planned to be
conducted in concert with the Village Safe Water project to replace the entire water main system
in McGrath in 2009-2011. The integration of these two projects has the potential to produce
significant cost savings for installation of piping, the most expensive portion of the project. Both
projects have been developed through technical support from Alaska Village Initiatives, and
McGrath Light & Power and e-Four Engineering. Principle personnel to date include Bill Wall,
PhD, Peter Olsen, Ernie Baumgartner, and Greg Koontz, ME, George Wilson, ME of Village
Safe Water. Linkages are planned with Steven J. Stassel, P.E., president AE&E.
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.
A projected total project cost for Phase III and Phase IV is $4,500,000 for a district heating
system in McGrath. Soft costs are figured at 40% of construction approximately $1,286,000 are
soft costs including design, project manager, business plan development, construction
management, commissioning, general contractor markup of 15% (which will probably not apply)
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and a 10% contingency. ML&P has committed up to 25% of the total cost of the project by
securing additional funding, in-kind support and cash or borrowed match. This will be
determined after the Phase III describes a final budget and business plan. In addition, a $10
million grant through Village Safe Water for replacement of the entire water distribution system
in McGrath will support an undetermined amount of piping costs for installation of a District
Heating System.
The boiler project (Phase 3 and Phase 4-current application) will be implemented in tandem with
development of a wood energy utility and harvest group as part of the ML&P Utility.
Purchase of harvest equipment and development of the following key elements for management
of wood energy procurement will be developed under a concurrent project.
1. Create 5 year harvest and regeneration plan
2. Develop and install wood storage/wood yard in the village
3. Equipment storage
4. Training and technical support
a. Forest Technician training
b. Harvest training and technical support
c. Development of a harvest methods manual
d. 2 years of technical support to make sure chip harvest system is well established
Request for funding for the wood procurement group will follow in a different application.
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.
A wood energy project in McGrath will affect energy costs at 2 scales in the village. The first
are local households and the second, which is the key economic driver, are major commercial
buildings. A reliable source of firewood at a cost of approximately $300 per cord delivered to
households will help displace an unknown amount of fuel oil in the village and reduce heating
costs to households. A full cord of seasoned spruce burned at 80% efficiency will displace
approximately 100 gallons of heating fuel at $7.00/gallon. This benefit is not reflected in the
savings and cost analysis of the project in section 2.5 as it would be only an approximation. The
key to this household benefit is that wood delivery is reliable and split ready for use. A
household that burns 500 gallons of fuel will spend $3500 on fuel. If that is displaced by 80%
with wood, then there is a savings of $2800 per household. Reliable sources of wood in
combination with house heating education (a planned village workshop) will encourage
investment in cleaner wood burning appliances, thus yielding an environmental benefit as well.
A feasibility and side by side comparison of chip fired boilers and stick fired boilers is in
progress supported by McGrath Light & Power (see attachment tables) Expected optimum initial
installation would be a district heating loop in downtown in conjunction with the replacement of
the water mains and in conjunction with a waste heat project to capture the heat form the power
plant generators. The following are the potential savings:
Target Savings: displace 123,550 gallons with 2 boilers @ one plant @ $7.00/gallon =
$864,850 annual displacement of fuel oil importation
Wood cost: 2000 tons @ $175/ ton @ 40% moisture = $350,000 for wood
Total net savings: $514,850 per year or $7,722,750 net savings over 15 year life of project
A wood energy program can also reduce wildfire risk through forest thinning, enhance wildlife
habitat and most importantly create local jobs and economy through import substitution. Schools
are one of the most expensive buildings to heat in the village and a client that will help with
economies of scale for supporting development of a wood energy business model. Reducing
energy costs for schools and the clinic reduces public support costs for education and health care.
Wood energy business fits with subsistence lifestyles and creates a greater level of self
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sufficiency within the village. The process of developing and creating business, management
and planning capacity enhances opportunities for increasing long term opportunities for youth to
stay in the village with well paying resource based jobs. An integrated wood energy system is
one of the best energy and community economic develop projects available to villages with good
wood resources and high cost of heating fuels.
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.)
$4,005,000
2.5.2 Grant Funds Requested in this application. $3,052,000
2.5.3 Other Funds to be provided (Project match) $953,000
2.5.4 Total Grant Costs (sum of 2.5.2 and 2.5.3) $4,005,000
2.5.5 Estimated Benefit (Savings) $864,850 gross savings
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.)
$12,972,750 15 year gross
savings
Target Savings: displace 123,550 gallons HF#1 with 2 boilers @ one plant @ $7.00/gallon =
$864,850 annual displacement of fuel oil importation and $12,972,750 over life of project
Wood cost: 2000 tons @ $175/ ton @ 40% moisture = $350,000 for wood
Total net savings: $514,850 per year or $7,722,750 net savings over 15 year life of project
Community public benefit based on multiplier of new infusion of funds into the community is
just slightly over 1.0 in the potential creation of new jobs. Primarily because of the many
resources which are imported into rural Alaskan Villages. A wood energy utility is a new
sustainable business that is created out of local resources and acts as an energy import
substitution. The largest leakage of funds out of the village is for energy costs paid to outside
vendors. The specific multiplier on creation of direct jobs has not been calculated. The wood
energy utility will create 4-6 1/2 jobs and one full time at a rate of $15-25 per hour.
Public benefit was noted in two ways. First direct fuel cost savings to public commercial
buildings such as the school and clinic over a 15 year life of the project based on current fuel
prices and a stable cost of wood. Second, these savings are paid locally as salaries and profit to
the local wood energy utility, which then pays dividends to local share holders.
The importance of a wood energy utility and the jobs that it creates is demonstrated by the below
quotes form a report on rural community economic benefit multipliers. In the case of
commercial or public buildings such as the school, money being now being spent outside the
community for energy is being redirected into the community for wood energy and local jobs.
Report Quotes:
“A community can add new wage paying jobs in three ways:
· Goods or services produced locally, sold to non-residents, bring money into the community to
pay wages
· Money from outside the region can directly pay the wages of local jobs
· Money already in the region can be re-spent there, supporting local jobs”
“The economic multiplier in these small places has a value little more than 1.0. For a
larger market like Anchorage, the multiplier would be in the range from 1.3 to 1.6. An
important consequence of a small multiplier is that the only way to create jobs in a small
community is to bring more money into the economy from outside the community.
Almost none of the jobs in areas with low multipliers result from re-circulation of
purchasing power already within the community.”
Quotes from an interim report produced by UAA at website:
http://www.iser.uaa.alaska.edu/publications/client/afnjobs/ecmu
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Grant Application
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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.
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. The project manager will be Bill Wall, PhD. Dr. Wall will work cooperatively
with Ernie Baumgartner, Donne Fleagle, CEO of MTNT, Limited, and Natalie Baumgartner,
City Administrator as the primary local liaisons to manage the project. George Wilson, ME of
Village Safe Water is the state liaison/project manager for the water system replacement project.
Key responsibilities will be divided among a technical support team which will support key
components of both projects. The engineer is Greg Koontz, ME of eFour Engineering, who is
completing a Level-2 feasibility and conceptual design and will do a schematic design prior to
supporting contracting or working with AE&E for a final design. A construction manager will
be hired or secured through AEA to oversee specific aspects of boiler and piping
installation/construction. Labor for piping will be coordinated with Village Safe Water. Peter
Olsen will work with Bill Wall to implement key aspects of the forest management, wood
harvesting and delivery systems and training. Professional Growth Systems will be used for
Business Management Training and Dynamic Project Management Planning as needed.
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.)
A Table of Milestones, Decisions and Activities is attached. The project will be initiated
immediately after notification of a positive response to this application. The intent is to complete
this project over a two year period (2009-2010) with in concert with the installation of a new
water system. Timing of coordination has been discussed, but final decisions on installing water
system piping in downtown McGrath has not been finalized. The goal is to initiate Phase III
immediately and then coordinate with Village Safe Water on piping installations. A final
business plan and a detailed project implementation and construction plan will be developed first
quarter of 2009 in collaboration with MTNT staff and Board. This will serve as a business
capacity training exercise as well. A schematic and final design for boilers will be completed by
the end of April to assure time to order boilers and materials for the 2009 season. Permits, BTU
sales agreements, environmental analysis and landowner ownership agreements will all be
completed by June 2009. A decision on number and location of boilers to be installed in summer
of 2009 and 2010 will be made by March 2009. Permission to proceed to Phase IV will be
requested in April 2009 with completion of all AEA requirements. A dynamic planning session
will be held with all major participants in to develop a specific implementation plan for the
project. Order for boilers with specifications, design and materials will be made in April at the
latest if we decide to proceed with installation in 2009 construction season. Delivery can be
scheduled for a summer barge delivery or equipment maybe shipped by air freight. Construction
of boiler pads and wood storage capacity will begin in June with expected completion of
installation occurring in August to September and Commissioning occurring prior to the end of
September.
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3.3 Project Milestones
Define key tasks and decision points in your project and a schedule for achieving them.
A Table of Milestones, Decisions and Activities is attached.
Decisions:
• Analysis of stick fired and chip fired boilers has been made. However, a final decision
on specific boiler configurations is yet to be made pending the final feasibility report (in
progress) and development of final business plan Phase III. Feasibility study numbers
suggest that optimum configuration is one boiler plant servicing all the major commercial
buildings in downtown and the potential for houses in the loop to connect. Additional
tradeoff analysis will be conducted to finalize the configuration in first quarter of 2009.
• A decision of which boilers to install in 2009 construction season and which to install in
2010 season will also occur in first quarter of 2009.
• Current analysis has been conducted using Köb Boilers (chip) versus Garn (stick fed).
Additional review of chip boilers will occur prior to making a final decision on brand of
chip boiler.
Tasks: See Milestone Table – below are specific tasks in Phase III to be completed prior to
Phase IV
• Completion of schematic and final design for each of the boiler installations integrated
with wasted heat project
• Completion of business plan
• Development of the business structure
• Completion of BTU sales agreements to specific customers
• Completion of permitting
• Completion of landownership agreements
• Completion of environmental analysis
These tasks will be completed prior to seeking permission to continue to construction phase and
by the end of the first quarter. Responsibilities are listed in the table.
Tasks: See Milestone Table – Phase IV 2009
• Initiate construction on boiler sites for pads and storage
• Order boilers through selection process based on specs of design
• Deliver boilers to village via local barge
• Install boilers
• Commission boilers
• Train boiler operators
• Report operations and maintenance
These tasks will be completed in 2009 with repeat in 2010 with additional installation of
downtown district heating system.
3.4 Project Resources
Describe the personnel, contractors, equipment, and services you will use to accomplish the
project. Include any partnerships or commitments with other entities you have or anticipate will
be needed to complete your project. Describe any existing contracts and the selection process
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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.
Key personnel: (resumes attached)
Donne Fleagle –CEO of MTNT Corporation has significant business management experience
and has served on several non-profit boards. The business management capacity of MTNT is
high.
Ernie Baumgartner – Manager of McGrath Power and Light and Principle in Raven Tech
Services which operates eight power plants in the region. Ernie has experience in energy related
management and has long supported the development of alternative energy sources.
Bill Wall, PhD: Contractor and Project Manager coauthored the Forest Stewardship Plan for
MTNT and has worked to develop a sustainable wood energy model for interior villages. He has
coordinated a Rural Business Enterprise Grant to develop a business model and for a local
harvest company and transportation plan for delivery of wood into McGrath both summer and
winter. He has coordinated the development of a Level 2 feasibility study to determine optimum
boiler installation in Fort Yukon to maximize fuel oil displacement for heat.
Peter Olsen: Contractor and Forester coauthored the Forest Stewardship Plan for MTNT and has
developed a cost model for wood harvest. Peter will support the Forest Harvesting and
Management portion of the program.
Greg Koontz, ME: Engineer contractor conducting the feasibility analysis and side by side
comparison of stick and chip fired boilers. Has experience in biomass operations and energy
savings analysis. Greg will develop the optimal schematic design for the boiler installations.
Steven J. Stassel, P.E., AE&E president, engineer putting in heat recovery from power plant.
Coordination will occur between the engineers to optimize the system.
Doug Johnson: Professional Growth Systems will support the business develop, business plan
and board/employee training, dynamic planning process to increase business capacity for MTNT
and MPL boards and employees.
The McGrath City Council has passed a resolution in favor of the wood energy program and has
been kept up to date on progress of the program development. A city wide meeting was held at
the initiation of project development and was well received by the entire community. Meetings
with the tribe have met with strong support. Alaska Village Initiatives helped initiate the process
with funding to support the initial model. Funding has come through AVI, State and Private
Forestry and Rural Development to support development of the project to date.
3.5 Project Communications
Discuss how you plan to monitor the project and keep the Authority informed of the status.
Project communications will focus on three areas:
1. Support team and local implementation partners
2. McGrath Community
3. Funding Partners
A detailed implementation matrix of activities, responsibilities and due dates will be developed
using a dynamic planning process once full funding is secured. This will be developed as part of
a planned training and planning exercise with the MTNT and ML&P Boards. The planning
process will be integrated with the Village Safe Water schedule for replacing water mains in
Downtown. The matrix will be kept current by the project manager and shared monthly with key
members of the team. The City Council will be updated on a regular basis. Another community
meeting will be scheduled in Spring of 2009 at the prior to implementation to discuss any final
issues with the community. The schedule matrix will be used as the basis to for a quarterly
report to inform all granting agencies of implementation progress and any key issues. Thus
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AEA will receive a quarterly report and informal discussions and calls to the AEA project
manager.
3.6 Project Risk
Discuss potential problems and how you would address them.
There are two key types of risks associated with making this a sustainable project in rural
Alaska: Technical and Management Capacity / Fuel supply.
Technical: Technical risks for a chip fired boiler installation are making sure that reliable chip
storage and feed systems are developed for the climatic conditions in rural Interior Alaska. This
is being developed with close attention in the design phase and will design for the worst case
scenario wet chips at -50F. The project will utilize European boiler manufacturers with high
quality and proven reliability. Systems will be designed so that oil fired systems serve as a
redundant back up.
Management Capacity:
The most critical risk associated with installation of wood burning appliances in rural Alaska is
whether there is a sustainable and reliable supply of fuel being delivered to the boiler. Simply
stated someone has to get the fuel to the village and into the boiler. Chip fired systems create
more complexity than stick fired boilers for harvest and delivery of chips. Creating a system that
displaces a significant amount of fuel also creates a much greater need for harvest planning and
actual harvesting in both summer and winter. This key risk is being effectively dealt with by a
complimentary project (under a separate application) to set up a wood harvest and delivery
company owned by the MTNT Limited for delivery of wood to ML&P. A team has been formed
for technical support and training. A harvest planning system will be created within the MTNT
Resource Department with additional training for current GIS capacity and a forestry technician
to lay out harvest boundary areas. A five year harvest plan will be developed cooperatively to
develop local capacity. Employees will spend time outside of the village working on a
harvesting crew prior to full scale harvesting within the village. Board and business training will
be conducted for the MTNT and ML&P Boards and key employees. A final business plan will
be developed and used as a planning and training exercise as part of the implementation of the
harvest project as well as boiler operations. ML&P has experience in effectively and efficiently
operating the power plant as a utility which will have parallels in the operation of a wood energy
utility.
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.
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A forest stewardship plan is under developed for MTNT Corporation with expected completion of
fall 2008 by Peter Olsen and Bill Wall, PhD. An extensive forest resource review was conducted
at that time. An average of 18 tons/acre of harvestable woody biomass is available on fully
stocked stands of mixed hardwoods and white spruce. It was determined that MTNT lands could
easily sustain a harvest of up to 15-20,000 tons of wood per year in chips and round fire wood.
This is 4-5 times the projected needs for the proposed project. A 5-year harvest plan will be
developed in association with this project. A recent fire with standing fire killed black spruce is
on the road system just behind the town and will serve as an excellent starting point for harvesting
of dry chips. Moisture content of standing dead wood has been determined to be 15% in
McGrath.
Wood is the only alternative source of energy readily available to displace fuel oil on a village
scale in McGrath. The positive attributes of a wood energy program are that the program is both
an alternative energy program and an economic development program. Harvest and conversion
of wood for energy is import substitution and creates local jobs. The greatest local economic
benefit occurs when ownership and operations are kept local. A key limiting factor which must
be addressed with implementation is to develop the local capacity of business, planning and forest
management capacity for harvesting operations and feeding boilers.
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.
All commercial buildings in McGrath are heated with oil boilers at an efficiency of approximately 85%.
Age varies significantly form new to about 15 years old. Each building has a dual installation of Weil
McClain or Burnham Boilers. Sizes by BTU/ hour output has been inventoried and used for feasibility
analysis. These are in the AEA sponsored reconnaissance study conducted by the Alaska Wood Energy
Development Task Force as well as previous studies conducted on coal and woody biomass. It is the
intent of this project to continue to use the current oil boilers as a back up system to wood boilers and as a
turn down support if there is not enough of a load for the chip boiler to operate. Large chip boilers turn
down at a 3:1 ratio. The feasibility study is exploring options of installing on large one small boiler in the
downtown district heat system to displace a larger percentage of fuel oil during shoulder months.
4.2.2 Existing Energy Resources Used
Briefly discuss your understanding of the existing energy resources. Include a brief discussion of
any impact the project may have on existing energy infrastructure and resources.
The existing heat energy resources are locally harvested wood and fuel oil purchased at rack prices for
houses as well for most of the major commercial buildings. At the household level a wood energy program
as described in this project will create a consistent supply of fire wood for house holds and may positively
affect the willingness of households to invest in efficient and clean burning appliances. At the commercial
scale displacing approximately 130,000 gallons of fuel will reduce but not eliminate the need for bulk
deliveries of fuel into the village. This reduction in the amount of fuel may increase the costs or at least
reduce the frequency of deliveries into the village. McGrath last year was not able to get a barge up river
due to low flows, similar to two previous years. Fuel prices skyrocketed when fuel had to be flown in.
Prices went to as high as $9.00 per gallon. All current modeling is being done based on $7.00 per gallon.
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4.2.3 Existing Energy Market
Discuss existing energy use and its market. Discuss impacts your project may have on energy
customers.
There are two levels of market for each village, households and commercial buildings. The commercial
buildings will drive the actual economies of scale for a feasible project to include a harvesting group.
Current prices are over $7.00 rack price. This project will reduce the cost of heat and stabilize the
continuous increases being experienced to date. This project is proposing to create a consistent
inexpensive supply of fire wood for residences and to displace up to 90% of the heating fuel used by 6-11
commercial buildings. In a typical year, at least 2 barges of fuel are scheduled. However, last year no
barges were able to access McGrath due to low water until August. This year, low river levels prevented
the last barge from making it to McGrath, leaving the community significantly short on its fuel supply.
Based on recent trends, it is more difficult to count on barges annually.
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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
• A description of renewable energy technology specific to project location
A Level 1 feasibility analysis has been conducted but not written in report form as yet. A tradeoff
analysis between Garn 3200 boilers and various models of Köb chip fired boilers has been
conducted for individual buildings. A side by side analysis is attached. The second analysis
focuses on a District Heating system for Downtown. Paybacks are higher for the District heating
system due to long piping runs. However optimum installation configuration is still being
determined in the final boiler feasibility analysis. A final schematic design with costs will be
conducted prior to going to a full design for each installation.
• Optimum installed capacity
Optimum capacity is based on two factors. Creating an economy of scale for profitable
sustainable wood harvest which is approximately 2000 tons or more annually and displacing a
significant amount of fuel oil in commercial buildings. This will create an economically viable
program of harvest and sales of BTUs to buildings based on cost savings for each building
participating. Projected fuel to be displaced is up to approximately 135,000 gallons using up to
2000 tons of wood chips (actual amount depends on moisture). Optimum installed capacity and
configuration has yet to be decided upon regarding the downtown district heat system. Initial
conservative (meaning high) costs estimates have been determined for each building for both a
stand alone chip system and stick boiler as well as 6 scenarios for district system heating from 6-
11 buildings. A final optimum design is yet to be decided upon. This proposal will address the
maximum District Heat system and two stand alone chip fired boilers one at the clinic and one at
the Voc Ed.
• Anticipated capacity factor
The anticipated capacity factor displacement of current fuel consumption for a centralized plant
ranges from 75% to 98% using a chip fired system. Final capacity will be determined in final
feasibility and decision process in development of the final business plan in conjunction with
development of the water main replacement project.
• Anticipated annual generation
Total maximum annual generation is based on 210 days of heating and BTUs to displace up to
135,000 gallons of heating fuel.
• Anticipated barriers
There are two key barriers:
o a reliable supply of good quality reasonable low moisture chips delivered to the boiler
installation;
o a reliable automated storage and feeding system to the boiler;
Both of these issues can be dealt with in the design. The first on quality chips is a design of the
harvest, delivery and wood yard storage of the chips. This is being dealt with in the wood harvest
system project. The second will be dealt with in the final boiler design process which will include
on site chip storage and delivery systems.
• Basic integration concept
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Heat integration in each of the installation will be designed where the wood boiler is the primary
and the currently installed oil boilers are back up. Project integration will occur with the wasted
heat recovery project.
• Delivery methods
Two methods of wood chipping will be employed. Chipping in the woods with delivery to a
storage facility in the village or chipping of round material brought into the village. A front end
loader will be used to scoop chips into a dump truck. The chips will then be delivered to each of
the boilers. Specifics of chip bin design are still in design phase.
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.
There are three issues regarding land ownership for the two concurrent projects: a. biomass
ownership; b. wood yard; c. boiler installation sites. The only one concerned with this specific
proposal is boiler installation sites, but as the biomass harvest project is interconnected each will
be discussed here. MTNT Limited owns the forest land base surrounding McGrath where all of
the biomass will be harvested. As they will be a vertically integrated harvesting and wood energy
utility, they are in full support of the sustainable utilization of forest biomass from their lands.
Model contracts have been developed to support a legal basis for harvest. The second issue is
location of the wood yard for storage and conversion of biomass into usable forms. A primary
location has been identified on property owned by MTNT adjacent to the school and new clinic.
The wood yard, wood storage and the primary district heating plant will be located there. MTNT
has agreed to donate the land to the project. The third ownership issue is the location of satellite
boilers if they should be installed. Although all potential commercial customers are interested in
participating, the initial feasibility study numbers have just been completed and discussions have
not occurred as yet. No significant issues are expected.
4.3.3 Permits
Provide the following information is 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
List of permits –
• Permits for wood boilers are not required by the State of Alaska for the expected boiler
size. However, once a final design and boiler size is determined, the state will be
consulted to determine what, if any, regulations apply. A clearance from the Alaska State
DEC Division of Air Quality will be sought as soon as a final design is developed and
prior to construction on boilers.
• Forest harvesting – The provisions of the Alaska State Forest Practices Act will be
incorporated into harvest and delivery of biomass plans. Development of stream crossings,
ice roads and summer and winter harvest operations may require special permits. These
permits are granted annually based on harvest and transportation plans. The permitting
request process will begin at least one month prior to seasonal operations allowing for 30
days in which the plan can be adjusted based on State suggests.
• No major barriers are expected on permitting issues.
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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
This section will address both the current application for boilers and the project for biomass
harvesting:
• Threatened and Endangered Species – no listed species in the project area
• Habitat issues – a Forest Stewardship Plan is in preparation for the MTNT ownership and
a five year forest management and harvest plan will be completed as part of the biomass
harvesting project. Opportunities for enhancing moose habitat will be sought and
developed. No significant negative habitat impacts out side the natural range of variation
in this fire driven ecosystem are expected. Harvesting of over mature spruce and
hardwood stands are not expected to be a major portion of the target for biomass
production, but their use could have some small scale local impacts on Neotropical
migratory bird species. A major focus will be on use of recent fires and rehabilitation of
those fires into productive new stands for future biomass production.
• Wetlands and other protected areas – The Alaska State Forest Practices Act will be
followed in all harvest operations. Accessing or crossing wetlands will only be done
during winter when frozen. MTNT Lands Department has an excellent GIS system and
has done mapping on key sensitive areas for each of the villages in MTNT region. These
will be noted during forest harvest transportation planning. Classified SPOT imagery is
expected to be secured through DNR Forestry for use in planning.
• Land Development Constraints – none are anticipated at this time.
• Telecommunications Interference – none are anticipated at this time.
• Aviation Considerations – none are anticipated at this time,
• Visual and aesthetic impacts – Harvesting of biomass can create unaesthetic impacts on
the forest. FPA required buffers keep harvesting from banks and visibility corridors.
Forest planning can deal effectively with these issues. The wood yard will be fenced and
located in the edge of the village with forested buffers retained around the yard. Wood
chip deliveries to sites such where noise maybe an issue will be scheduled such that
minimum impact will occur.
• Potential Project Barriers – The approach that the project developers have taken in the
development of the McGrath program to date is that this will be a model project of
converting a village to substantial wood use for heating. We have tried to anticipate many
of the barriers and provide ways to bridge these barriers. However, some additional
barriers will emerge as the project moves forward. Key barriers identified:
o Organization cooperation: developing cooperation among the various key
organizations that are now acting as partners was critical. The City Council has
hosted several meetings to discuss the project. An MOU among the Tribe, City,
MTNT Limited, the School District and other major organizations in McGrath has
been developed to support coordination of multiple projects. As a final business
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plan is developed even more specific roles will be spelled out and agreed. This is
an ongoing process with good cooperation thus far.
o For Profit Model Simultaneous Development of Supply and Delivery/Demand
Creating a local structure for a for-profit model for harvesting and converting
biomass and a wood energy utility was key to being confidence that both the
biomass supply side and BTU demand side were installed in sync. Thus we have 2
projects: biomass harvest – supply; and boiler installation and operations –
demand. Appropriate economic incentives are being put in the correct places for
economic sustainability. A final business plan will be developed which develops
within MTNT Limited a vertically integrated biomass harvest conversion and
delivery and boiler Operations Company. This model fits in McGrath and the
same components must be developed in other villages but may not be vertically
integrated. The more local ownership in the overall process the more benefits
accrue to the community.
o Business Management Capacity: MTNT Limited owns ML&P which operates
the electrical utility in McGrath. Operations of wood fired boilers fits within their
current management capacity of operating the power plant and billing. New
personnel will be hired and trained for boiler operations. However, development
of a commercial level biomass harvest company is a new enterprise which will
require new expertise and management of a labor intensive and planning intensive
field operation. A 5 year forest harvest plan will be developed with an annual
implementation plan. Annual harvest plans will have to be managed based on
summer and winter operations and variation in annual weather patterns. Operation
timing will vary depending on ice thickness, temperature in winter and dry ground
patterns and river levels in summer. Management of transportation of equipment
and supplies back to the village are critical to final costs of the supply. These
capacities must be developed locally. Training is planned in business management
and structure, forest planning, and harvest management. McGrath has a good pool
of skilled machine operators.
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
Total Cost Phase III: $505,000
Total Cost Phase IV: $3,500,000
Total grant funding requested: $3,052,000
Matching Funds: MTNT and ML&P is proposing a $735,000 cash match or loans and $168,000 in-kind.
Other funding Sources: MTNT will also apply for a DOE Tribal Energy Program Grant to potentially
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reduce some of its contribution as well as some of the states contribution.
Capital Cost: $3,250,000
Development Costs: $755,000
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 primary cost of operation of chip boilers is fuel at $175 to $200 per ton and daily inspection of boiler
to check operations. Fuel delivery and bin loading occurs probably on a weekly basis and is part of the
cost of the fuel. Boilers will have an automatic de-asher which will need to be serviced approximately
weekly. Tubes need to be brushed once a month. Boilers will operate with automated computerized
controls and can be set to be read remotely. Staff of the powerhouse will be trained as boiler operators.
The boiler will operate from mid-September through mid-April. Current staff operating the powerhouse
will be able to operate the boiler as well. The boiler will need to be cleaned and inspected annually at shut
down. Primary area for potential maintenance issues is the feed delivery system. ML&P utility will
develop a maintenance, service, and equipment replacement fund for boiler operations which be derived
from BTU sales revenues. As this project is operated as a for profit business the size of the fund will be
determined in the final business plan and based on final design and maintenance history.
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
The three largest customers in town are the school district (40,000 gal), Captain Snow Center and Water
Treatment Plan (28,084 gal), and new clinic (20,000 gal). An RBEG from DOE has allowed the
development of a draft template BTU purchase agreement which is culturally relevant to rural Alaska as
well as a stumpage sale agreement. These templates will be used as the starting point for development of
final agreements.
The MPL Wood Utility, operators of the boilers, will develop a five year BTU agreement with the
commercial buildings to stabilize the heat equivalent price at from $4.00 – $5.00 per gallon of fuel or a
commercial price of a million BTUs will range from $28.88 - $36.10. At $6.50 per gallon of oil a million
BTUs is approximately $46.93
4.4.4 Cost Worksheet
Complete the cost worksheet form which provides summary information that will be considered
in evaluating the project.
Download the form, complete it, and submit it as an attachment. Document any conditions or
sources your numbers are based on here.
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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.
A final business plan will be completed at the initiation of phase 3 of the project. The basic
business model with financial modeling for all phases has been conducted (see attached Tables).
The model will be for ML&P Utility to be a for-profit vertically integrated wood heat utility
company. It will be composed of a harvest group that harvests and delivers both round wood and
chips into a wood yard in the village. Firewood will be for sale to residences and chips will be
delivered to boilers. Boilers will be maintained and operated by the wood utility company which
will sell BTUs to targeted commercial buildings. Income is generated through firewood sales and
BTU sales to buildings. Savings over fuel oil costs are shared with commercial end users, but at a
rate that keeps the wood utility profitable, Each business group (harvest and wood yard and
boiler operations) within the vertically integrated wood energy utility will be set up and run on a
for profit basis. Economic modeling has demonstrated that the wood harvest group can be
profitable at selling split round wood for $250/cord delivered and wood chips at $175-$200/ton.
Boiler operations can be profitable by stabilizing the heat equivalent price at from $4.00 – $5.00
per gallon of fuel or a commercial price of a million BTUs will range from$28.88 - $36.10. At
$7.00 per gallon of oil a million BTUs is approximately $50.54. Thus savings and stable prices
are achieved by commercial buildings at a price that maintains an economically viable wood
energy utility. Equipment configurations for the harvest, wood yard and boiler operations must
be integrated, thus linking the needed end product with forest harvest operations. The projected
typed of equipment planned for McGrath will require a heat load serviced with approximately
2000 tons of annual production. The equipment will easily produce twice-three that much for
future growth if electrical production with wood energy is ever reached.
Financial modeling to date includes an initial harvest cost analysis which includes cost of forest
harvesting equipment, labor, maintenance, insurance, and fuel costs. The models for wood
harvest and boiler performance are attached. A final business plan will be developed in
collaboration with the GZ Board as a business training exercise with the following major topics:
• Executive summary
• Community information
• Management infrastructure
• Financial data
• Key assumptions
• Capital replacement schedule
• Funding legal authority and issues
• Inter-agency and organization relationships.
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 tremendous amount of effort and learning has gone into the development of this project on the
part of the project developers and MTNT Corporation and MPL. The purpose of the Wood
Energy Program in McGrath is not only to establish a local wood energy utility and displace
a significant amount of fuel oil, but to develop, demonstrate, and perfect by doing an
integrated sustainable approach to converting a village from primarily fuel oil for heat to
primarily wood.
There are two primary economic models that have been developed: A wood harvest and delivery
model for chips and round wood and multiple boiler installation models including a side by side
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comparison of chip versus stick fired boilers for individual buildings and eight scenarios for a
district heating plant in downtown McGrath. These models were developed using very
conservative numbers such as 40% moisture for wood chips actual production goal is 15-30%,
$175-200/ton for a delivered chip cost actual production goal is $150. These models in
combination demonstrate that installations of boilers and development of an integrated wood
harvest company are absolutely economically feasible. Potential Net Simple Payback analysis for
both stick fired boilers, stand alone chip fired boilers and district heating range from as short as
4.1 to 12 years with nothing over 12 years considered. Pricing for piping and installations has
been set very high. No consideration has been given to the integration of the water replacement
project and the pipe installation for boilers as yet. A final business plan developed in conjunction
with MTNT and ML&P Corporation staff and board will finalize business structure and economic
projections. During the development of the business plan a decision on the specific boiler
installations will be made. An implementation tracking system will be devised to determine
actual costs versus projected to help streamline and improve the overall village based model for
future installations.
Boiler cost projections are a level 2 analysis. In Phase 3 a schematic design and a final design
with final cost projections will be developed.
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
Project Benefit:
• Fuel Displacement: Annual fuel displacement is up to 135,539 gallons @ current price
of $7.00 per gallon is $948,773. At a project life of 15 years total maximum gallons
displaced are 2,033,085 with a total gross savings of $14,231,595.
• Anticipate Revenues: At a delivered wood fuel price of $200/ton for 30% moisture
wood chips and total demand of 2200 tons the wood harvest and delivery company will
derive an annuls gross income of $440,000 which is equal to $21.76 per million BTUs.
At $7.00 per gallon for fuel oil, a million BTUs of heat costs $50.54. The wood utility
operators of the boilers will develop a long term BTU agreement with the commercial
buildings to stabilize the heat equivalent price at a range of $4.00-$5.00 per gallon of fuel
or thus the commercial price of a million BTUs will be $28.88 - $36.10. An annual gross
savings of $509,773 will be divided by the Wood Energy Utility and major commercial
customers based on agreed upon rate and escalator. Final determination of how
displacement savings will be derived and dispersed as savings to customers will be
developed in the final business plan. The intent of the program is to be both an
economically viable wood utility and a service to the community.
• Annual Incentives: Tax credits or other annual incentives have not been explored as yet.
• Green Credits: Until the scope of the project and the need for additional incentives has
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been fully understood within the context of the partners, Green Credits have not been
explored as yet.
Non-economic benefits: These two projects, woody biomass harvest and boiler installations, in
combination create the significant non-economic benefits. In multiple discussions and
presentations, community members have commented on how wood energy will create local jobs
that are consistent with their subsistence lifestyles. Community leaders have commented on how
utilizing local resources helps create a culture of sustainability and self sufficiency, and reduce
dependence on outside energy sources. A wood energy program can also reduce wildfire risk
through forest thinning, enhance wildlife habitat and most importantly create local jobs and
economy through import substitution. Schools are one of the most expensive buildings to heat in
the village and a client that will help with economies of scale for supporting development of a
wood energy business model. Reducing energy costs for schools and clinic reduces public
support costs for education and health care. Wood energy business fits with subsistence lifestyles
and creates a greater level of self sufficiency within the village. The process of developing and
creating business, management and planning capacity enhances opportunities for increasing long
term opportunities for youth to stay in the village with well paying resource based jobs. An
integrated wood energy system is one of the best energy and community economic develop
projects available to villages with a sustainable source of wood.
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
Below is a narrative summary regarding funding sources and our financial commitment to the project.
Phase III: Project Development
Task One: Project Initiation and Dynamic Planning – A major facilitated planning meeting will be held at
the outset of the project to develop a specific dynamic planning outline among all the major partners to
coordinate work, responsibilities, and timing of activities.
• Total costs = $18,000
Requested Funds = $0
Federal Funds = $
Cash Match = $15,000 MPL
In-Kind = $3,000
Task Two: Schematic Design & oversight – Use of biomass energy engineer to detail conceptual design
expectations, refine cost estimation for a final design engineer and oversight of engineering process and
commissioning.
• Total Costs = $85,000
• Requested funds = $75,000
• Federal Funds =
• In-kind support = $10,000
Task Three: Final Design – Based on schematics produce a final design, drawings, and cost estimates for
three boiler installations. Two stand alone plants and a downtown District Heating Plant.
Total Cost = $160,000
Requested Funds = $150,000
Federal Funds =
In-kind = $10,000
Task Four: Permitting Process – Secure all permits for installation of boilers and develop a template for
securing permits for wood harvesting.
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Total Cost $18,000
Requested funds = $13,000 includes $3000 for travel
Federal funds =
In-kind support = $5000
Task Five: Land ownership agreements and land donation –
Total costs = $133,000
Requested funds = $13,000 includes $3000 for travel
Federal funds =
In-kind Donation = $120,000 land six acres donated by MTNT for wood yard establishment
and location for centralized District Heating Plant
Task Six: Environmental analysis finalizes determinations of any environmental issues regarding
installation of 3 boiler plants.
Total cost $18,000
Requested funds = $13,000 includes $3000 for travel
Federal Funds =
In-kind = $5000
Task seven: Power sales agreements – develops final agreements for BTU sales from each of the plants.
This will be up to 16 different agreements with commercial buildings. Includes negotiations and
development of a final template.
Total costs: $18,000
Requested funds: $13,000
Federal Funds:
In-kind: $5,000 use of MTNT attorney for review and approval
Task eight: Final Business Plan, project management, reporting, communications and facilitation
Total cost $55,000
Requested funds: $45,000
Federal Funds:
In-kind funds: $10,000 MPL & MTNT support for business plan development and project
management
Phase IV Purchase and Installation of Boilers 2009-2010
Task one: Project Management, Communications, Reporting and Facilitation
Total cost: $130,000
Requested funds: $65,000 includes $5,000 for travel
Federal Funds:
Cash Match: $35,000 includes $5000 for travel
Task two: Construction management and oversight – two construction seasons 2009-2010
Total cost: $120,000
Requested funds: $65,000 includes $10,000 for travel
Cash Match: $35,000 includes $10,000 for travel
Task Three: Purchase and install two chip fed boilers in an integrated District Heating System
Total cost: $$3,250,000
Requested funds: $2,600,000
Matching Cash: $650,000 or loans or additional grant funding from DOE Tribal Energy
Program
NTNT will support this program through their Resource department and GIS capacity. A project
implementation committee made up of MTNT, ML&P and City Staff will meet monthly to discuss
project issues and serve as a support structure for the Project Manager during all phases and task of the
project.
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SECTION 7 – ADDITIONAL DOCUMENTATION AND CERTIFICATION
SUBMIT THE FOLLOWING DOCUMENTS WITH YOUR APPLICATION:
A. Resumes of Applicant’s Project Manager, key staff, partners, consultants, and
suppliers per application form Section 3.1 and 3.4
B. Cost Worksheet per application form Section 4.4.4
C. Grant Budget Form per application form Section 6.
D. An electronic version of the entire application per RFA Section 1.6
E. Governing Body Resolution per RFA Section 1.4
Enclose a copy of the resolution or other formal action taken by the applicant’s
governing body or management that:
- authorizes this application for project funding at the match amounts indicated in
the application
- authorizes the individual named as point of contact to represent the applicant for
purposes of this application
- states the applicant is in compliance with all federal state, and local, laws
including existing credit and federal tax obligations.
F. CERTIFICATION
The undersigned certifies that this application for a renewable energy grant is truthful
and correct, and that the applicant is in compliance with, and will continue to comply
with, all federal and state laws including existing credit and federal tax obligations.
Print Name William A. Wall, PhD
Signature
Title Consultant/Project Manager/ approved signatory
Date 10/07/08
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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 – Wood for Heat
The Applicant should demonstrate that the renewable energy resource is available on a
sustainable basis.
Annual average resource availability. 15-20,000 tons Chips and cord wood 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 2/ building x up to 16 = 32 boilers
ii. Rated capacity of generators/boilers/other Range from 135KBTU/hr – 805KBTU/hr
iii. Generator/boilers/other type Oil fired
iv. Age of generators/boilers/other 1 year to 15 years
v. Efficiency of generators/boilers/other Oil boilers range between 80-85%
b) Annual O&M cost
i. Annual O&M cost for labor 16 different ownerships of boilers – not known
ii. Annual O&M cost for non-labor 16 different ownerships of boilers – not known
c) Annual electricity production and fuel usage (fill in as applicable)
i. Electricity [kWh] $.55/kwh commercial
ii. Fuel usage (if system is part of the Railbelt grid, leave this section blank
Diesel [gal] 212,000 gallons for power plant
Other
iii. Peak Load 500 Kwh
iv. Average Load 305 Kwh
v. Minimum Load 225 Kwh
vi. Efficiency 32%
vii. Future trends Electrical use has gone down in recent years
d) Annual heating fuel usage (fill in as applicable)
i. Diesel [gal or MMBtu] 125,000 gal. targeted for displacement at commercial
ii. Electricity [kWh]
iii. Propane [gal or MMBtu]
iv. Coal [tons or MMBtu]
v. Wood [cords, green tons, dry tons] current usage not known local use for firewood only
vi. Other
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RFA AEA 09-004 Application Cost Worksheet Page 2
3. Proposed System Design
a) Installed capacity Displace 125,000 gallons of fuel oil with district heat
b) Annual renewable electricity generation
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] 2500 tons @ 40% moisture projected for displacement
of oil
vi. Other
4. Project Cost
a) Total capital cost of new system $3,250,000
b) Development cost $755,000
c) Annual O&M cost of new system $50,000
d) Annual fuel cost $437,500 = 2500 tons x $175/ton delivered
5. Project Benefits
a) Amount of fuel displaced for
i. Electricity
ii. Heat 125,000 gallons
iii. Transportation
b) Price of displaced fuel $875,500 @ $7.00/gallon annually
c) Other economic benefits
d) Amount of Alaska public benefits Reduce costs of heating school, district office,
6. Power Purchase/Sales Price
a) Price for power purchase/sale Sell heat BTUs @ between $28.88 – $36.10/MMBTUs
7. Project Analysis
a) Basic Economic Analysis
Project benefit/cost ratio 2:1 over 15 year project life
Payback Max. District Heat Plant = 7.7yrs
Alaska Energy Authority ‐ Renewable Energy FundBUDGET INFORMATION Phase III McGrath Power and LightBUDGET SUMMARY:Milestone or TaskFederal Funds State FundsLocal Match Funds (Cash)Local Match Funds (In‐Kind)Other FundsTOTALS1 Project Initiation Dynamic Planning $15,000.00 $3,000.00 $18,000.002 Schematic Design & Oversight $75,000.00 $10,000.00 $85,000.003 Final Design $150,000.00 $10,000.00 $160,000.004 Permitting Process $13,000.00 $5,000.00 $18,000.005 Land ownership agreements and donations $13,000.00 $120,000.00 $133,000.006 Environmental Analsysis $13,000.00 $5,000.00 $18,000.007 Power Sales Agreements $13,000.00 $5,000.00 $18,000.008 Project management, reporting & communications $45,000.00 $10,000.00 $55,000.00Totals $322,000.00 $15,000.00 $168,000.00 $505,000.00Milestone # or Task #BUDGET CATAGORIES:1 2 3 4 5 6 7 8 TOTALSDirect Labor and Benefits $3,000.00 $10,000.00 $10,000.00 $5,000.00 $5,000.00 $5,000.00 $10,000.00 $48,000.00Travel, Meals, or Per Diem $3,000.00 $3,000.00 $3,000.00 $3,000.00 $5,000.00 $17,000.00Equipment$0.00Supplies$0.00Contractual Services $15,000.00 $75,000.00 $150,000.00 $10,000.00 $10,000.00 $10,000.00 $10,000.00 $40,000.00 $320,000.00Construction Services$0.00Other Direct Costs$120,000.00$120,000.00TOTAL DIRECT CHARGES $18,000.00 $85,000.00 $160,000.00 $18,000.00 $133,000.00 $18,000.00 $18,000.00 $55,000.00 $505,000.00RFA AEA09-004 Budget Form
Alaska Energy Authority ‐ Renewable Energy FundBUDGET INFORMATION: McGrath Power and Lig Phase IV 2009‐20010BUDGET SUMMARY:Milestone or Task Federal Funds State FundsLocal Match Funds (Cash)Local Match Funds (In‐Kind)Other FundsTOTALS1Project Management $65,000.00 $35,000.00 $30,000.00 $130,000.002Construction Management $65,000.00 $35,000.00 $20,000.00 $120,000.003Boiler purchase & installation $2,600,000.00 $650,000.00 $3,250,000.00Totals $2,730,000.00 $720,000.00 $50,000.00 $3,500,000.00Milestone # or Task #BUDGET CATAGORIES:1 2 3 4 5 6 TOTALSDirect Labor and Benefits $30,000.00 $20,000.00 $50,000.00Travel, Meals, or Per Diem $10,000.00 $10,000.00 $20,000.00Equipment$0.00Supplies$0.00Contractual Services $90,000.00 $90,000.00 $180,000.00Construction Services $3,250,000.00 $3,250,000.00Other Direct Costs$0.00TOTAL DIRECT CHARGES $130,000.00 $120,000.00 $3,250,000.00 $0.00 $0.00 $0.00 $3,500,000.00RFA AEA09-004 Budget Form
McGrath Wood Energy Program Milestone & Activity Table MILESTONES, DESCISIONS & ACTIVITIES WHO* START Month END Month EXPECTED OUTCOMES 1st Quarter (January – March 2009 ) Phase III Complete contract with AEA & MPL Decision-Optimize boiler capacity installation design Finalize project implementation plan – Dynamic planning Complete Schematic Design for boilers Final Engineer Design Final Business Plan Permitting process Land ownership agreements Environmental Analyses Power Sales Agreement Quarterly report due WW, EB, MPL WW, MPL, GK WW, MPL, PO, DJ WW, GK WW,GK, Cont WW, MPL DJ,PO WW, MPL WW, MPL WW, MPL, GK WW, MPL, BT WW,MPL 1 1 1 1 1 1 1 1 1 2 3 1 1 1 2 4 3 5 5 5 5 3 Initialize work on Alternative Energy Grant Finalize tradeoff analysis for optimum boiler installations Establish work completion timelines Schematic Design delivered to contract Engineers Select contractor - Final Design and Cost Analysis Facilitated collaborative development of final business plan All necessary applications made for permits as required All necessary land agreements are made with cooperators Final checks on any key environmental issues completed Power sales agreements negotiated and completed Quarterly Report due to AEA 2nd Quarter (April – June 2009) Phase IV Permission to proceed to Construction Decision – Which boiler installations & when Implement Wood Energy Utility Business Structure Order boilers and installation equipment Site prep and building re-fabrication initiated Quarterly report due WW, MPL, AEA WW, MPL, GK WW, MPL, DJ WW, MPL,GK,Cont WW, MPL, Cont WW,MPL 4 4 4 4 5 6 4 4 4 7 9 6 Provide enough info to AEA to move to construction phase 3 Boilers installed potentially over 2 constructions seasons Legal Development for wood energy utility Order and receive boilers and equipment for installation Boiler pad or wood storage construction Quarterly Report due to AEA 3rd Quarter (July- September 2009) Phase IV Boilers installation Boilers commissioned Boiler operation training Quarterly report due WW, MPL, Cont WW, Cont. MPL, boiler manufacturer WW,GZ 7 9 8 9 9 10 8 9 1st tier of boiler installed and commissioned Installed boilers ready for operation Training for boiler operator completed Quarterly Report due to AEA 4th Quarter (October – December 2009) Phase IV Track Project Costs Environmental Monitoring Permitting Final Annual Report WW, MPL WW, MPL WW,MPL WW,MPL 1 1 1 12 12 12 12 12 Actively track project costs and report any issues quarterly Monitor and report as needed Monitor and report as needed Final project report including as built specifications, final drawings, and drawings, final budget, schedule and recommendations
Decision on boiler installation timing will be made in forth month in second quarter and will based on timing of installation of the new water system. The major district heating installation may not occur in summer 2010. This will allow for lessons to be learned on smaller portable installation and time for the harvest business to ramp up to full capacity. Milestones for 2010 will follow the same outline as above. * WW William Wall – Project manager PO Peter Olsen – Forester GK Greg Koontz – Engineer MPL McGrath Power and Light EB Ernie Baumgartner Cont. Contractor – to be selected – Final Design Engineer and Construction Supervisor DJ Doug Johnson – Training and facilitation – Professional Growth Systems 5th-8th Quarters (January-December 2010) Phase IV
.
McGRATH, ALASKA
Level 2 Study, Biomass Heat
B x B Summary
C:\Documents and Settings\Bill Wall VWCS\My Documents\Alaska Documents\Funding\Alaska Energy Authority Grant Applications\McGrath MTNT Contract\application\McGrath_Calcs_3
Summary McGrath
>These buildings were looked at individually, and, the case of the IASD Bldgs, as a mini-plant. In each
case, a stick-fired option and a chip-fired option was studied. In general, the chip-fired options require a large building (or
DH plant) to have enough economy of scale to be cost effective.
>See the TAB "McG Inputs" for base assumptions for the model, including the cost of oil and wood chips.
>Estimated project costs include construction, as well as design, construction admin, commissioning, and contingency (soft.
costs). Only the major line items are shown here.
>Only the No. and Size of Boiler should be changed on this sheet -to change other parameters, go to McG Inputs TAB.
Summary of Results School IASD Off School + Off MTNT Off Cap'n Snow Water Treat
Stick-fired Performnace
baseline oil consumption :31,947 7,987 39,934 13,069 16,467 11,617
proposed biomass, cords/yr :290 72 355 121 149 109
fraction of oil displaced :1.000 1.000 1.000 1.000 1.000 1.000
Garn model :WHS 3,200 WHS 3,200 WHS 3,200 WHS 3,200 WHS 3,200 WHS 3,200
No. of boilers :414222
Maximum wood loads per day req. :3.2 3.2 4.0 2.6 3.3 2.3
Stick-fired Cost and savings :
boilers, shipped and installed :$536,441 $134,110 $536,441 $268,221 $268,221 $268,221
Slab/Building for Boilers :$30,000 $15,000 $30,000 $20,000 $20,000 $20,000
direct buried piping :$32,800 $32,800 $131,200 $32,800 $32,800 $32,800
interconnection :$35,000 $35,000 $70,000 $35,000 $35,000 $35,000
other :$25,000 $25,000 $35,000 $25,000 $25,000 $25,000
subtotal :$659,241 $241,910 $802,641 $381,021 $381,021 $381,021
soft costs :$258,752 $94,950 $315,037 $149,551 $149,551 $149,551
total :$917,993 $336,860 $1,117,678 $530,571 $530,571 $530,571
baseline oil cost :$239,606 $59,901 $299,507 $98,020 $123,506 $87,129
final oil cost :
cord wood cost :$72,390 $18,097 $88,806 $30,225 $37,210 $27,240
total savings :$167,216 $41,804 $210,701 $67,795 $86,296 $59,889
Chip-fired Performnace :
baseline oil consumption :31,947 7,987 39,934 13,069 16,467 11,617
proposed biomass, tons/yr :351 76 428 137 186 131
fraction of oil displaced :0.743 0.643 0.725 0.712 0.763 0.763
Kob model :Pyrot 300 Pyrot 100 Pyrot 400 Pyrot 100 Pyrot 150 Pyrot 100
No. of boilers :111111
Chip-fired Cost and savings :
boilers, shipped and installed :$259,347 $202,537 $285,120 $202,537 $216,184 $202,537
Slab/Building for Boilers :$5,000 $5,000 $5,000 $5,000 $5,000 $5,000
direct buried piping :$32,800 $32,800 $131,200 $32,800 $32,800 $32,800
interconnection :$20,000 $20,000 $40,000 $20,000 $20,000 $20,000
other :$25,000 $25,000 $25,000 $25,000 $25,000 $25,000
subtotal :$342,147 $285,337 $486,320 $285,337 $298,984 $285,337
soft costs :$134,293 $111,995 $190,881 $111,995 $117,351 $111,995
total :$476,440 $397,332 $677,200 $397,332 $416,335 $397,332
baseline oil cost :$239,606 $59,901 $299,507 $98,020 $123,506 $87,129
final oil cost :$61,464 $21,384 $82,306 $28,252 $29,247 $20,678
chip cost :$61,410 $13,278 $74,874 $24,051 $32,493 $22,907
total savings :$116,732 $25,240 $142,327 $45,718 $61,765 $43,544
Net Simple Payback
stick-fired :5.5 yrs 8.1 yrs 5.3 yrs 7.8 yrs 6.1 yrs 8.9 yrs
chip-fired :4.1 yrs 15.7 yrs 4.8 yrs 8.7 yrs 6.7 yrs 9.1 yrs
efour, PLLC 1 of 2
McGRATH, ALASKA
Level 2 Study, Biomass Heat
B x B Summary
C:\Documents and Settings\Bill Wall VWCS\My Documents\Alaska Documents\Funding\Alaska Energy Authority Grant Applications\McGrath MTNT Contract\application\McGrath_Calcs_3
Summary (cont)McGrath
>These buildings were looked at individually, and, the case of the Cap'n Snow Bldgs, as a mini-plant. In each
case, a stick-fired option and a chip-fired option was studied. In general, the chip-fired options require a large building (or
DH plant) to have enough economy of scale to be cost effective. The Bldgs after Snow are the larger commerical bldgs
>See the TAB "McG Inputs" for base assumptions for the model, including the cost of oil and wood chips.
>Estimated project costs include construction, as well as design, construction admin, commissioning, and contingency (soft.
costs). Only the major line items are shown here.
>Only the No. and Size of Boiler should be changed on this sheet -to change other parameters, go to McG Inputs TAB.
Summary of Results Snow + WT Clinic AC Store Hotel McG Restaurant FAA Bldg
Stick-fired Performnace
baseline oil consumption :28,085 19,909 8,434 7,476 9,776 17,252
proposed biomass, cords/yr :251 177 76 68 87 155
fraction of oil displaced :1.000 1.000 1.000 1.000 1.000 1.000
Garn model :WHS 3,200 WHS 3,200 WHS 3,200 WHS 3,200 WHS 3,200 WHS 3,200
No. of boilers :321112
Maximum wood loads per day req. :3.8 4.0 3.4 3.0 3.9 3.5
Stick-fired Cost and savings :
boilers, shipped and installed :$402,331 $268,221 $134,110 $134,110 $134,110 $268,221
Slab/Building for Boilers :$25,000 $20,000 $15,000 $15,000 $15,000 $20,000
direct buried piping :$98,400 $32,800 $32,800 $32,800 $32,800 $32,800
interconnection :$70,000 $35,000 $35,000 $35,000 $35,000 $35,000
other :$35,000 $25,000 $25,000 $25,000 $25,000 $25,000
subtotal :$630,731 $381,021 $241,910 $241,910 $241,910 $381,021
soft costs :$247,562 $149,551 $94,950 $94,950 $94,950 $149,551
total :$878,293 $530,571 $336,860 $336,860 $336,860 $530,571
baseline oil cost :$210,635 $149,318 $63,256 $56,068 $73,319 $129,387
final oil cost :
cord wood cost :$62,769 $44,284 $19,017 $17,047 $21,775 $38,821
total savings :$147,866 $105,034 $44,239 $39,021 $51,545 $90,566
Chip-fired Performnace :
baseline oil consumption :28,085 19,909 8,434 7,476 9,776 17,252
proposed biomass, tons/yr :312 209 84 68 105 196
fraction of oil displaced :0.751 0.712 0.675 0.612 0.726 0.770
Kob model :Pyrot 220 Pyrot 150 Pyrot 100 Pyrot 100 Pyrot 100 Pyrot 150
No. of boilers :111111
Chip-fired Cost and savings :
boilers, shipped and installed :$228,898 $216,184 $202,537 $202,537 $202,537 $216,184
Slab/Building for Boilers :$5,000 $5,000 $5,000 $5,000 $5,000 $5,000
direct buried piping :$98,400 $32,800 $32,800 $32,800 $32,800 $32,800
interconnection :$40,000 $20,000 $20,000 $20,000 $20,000 $20,000
other :$35,000 $25,000 $25,000 $25,000 $25,000 $25,000
subtotal :$407,298 $298,984 $285,337 $285,337 $285,337 $298,984
soft costs :$159,864 $117,351 $111,995 $111,995 $111,995 $117,351
total :$567,162 $416,335 $397,332 $397,332 $397,332 $416,335
baseline oil cost :$210,635 $149,318 $63,256 $56,068 $73,319 $129,387
final oil cost :$52,462 $43,037 $20,566 $21,765 $20,056 $29,703
chip cost :$54,526 $36,638 $14,716 $11,825 $18,361 $34,363
total savings :$103,647 $69,644 $27,974 $22,478 $34,902 $65,320
Net Simple Payback
stick-fired :5.9 yrs 5.1 yrs 7.6 yrs 8.6 yrs 6.5 yrs 5.9 yrs
chip-fired :5.5 yrs 6.0 yrs 14.2 yrs 17.7 yrs 11.4 yrs 6.4 yrs
efour, PLLC 2 of 2
McGRATH, ALASKA
Level 2 Study, Biomass Heat
McG Summary
C:\Documents and Settings\Bill Wall VWCS\My Documents\Alaska Documents\Funding\Alaska Energy Authority Grant Applications\McGrath MTNT Contract\application\McGrath_Calcs_3
Summary of results for full District Heating Plants for Downtown McGrath
>four different plants were modeled, and each plant had two configurations, for a total of eight options. In all cases,
the "B" option for a given plant size was the addition of a second (smaller) boiler to pick up the low summer loads,
and to add capacity at the top end. The primary boiler was chosen to displace as much oil as possible.
>See Page 2 for a description of each plant
>The piping mains are oversized to allow future connections to the Plant, perhaps on a commercial basis
>See the TAB "Inputs" for base assumptions for the model, including the cost of oil and wood chips.
>Estimated project costs include construction, as well as design, construction admin, commissioning, and contingency
Summary of Results DT P A DT P B DT/FAA P A DT/FAA P B DT/McG Dr P A DT/McG Dr P B
Boilers 68 (284) 57
B-1 :Pyrtec 720 Pyrtec 720 Pyrtec 1,250 Pyrtec 950 Pyrtec 950 Pyrtec 950
B-2 :Pyrot 220 Pyrot 400 Pyrot 300
Financial :
marginal cost add to DT P A :$1,136,903 $1,478,192 $593,059 $954,200
estimated project cost :$2,916,416 $3,235,156 $4,053,319 $4,394,608 $3,509,475 $3,870,616
estimated annual savings :$300,587 $390,604 $482,659 $604,003 $362,775 $447,598
net simple payback, yrs :9.70 8.28 8.40 7.28 9.67 8.65
:
Performance :
No. buildings connected :6 6 11 11 9 9
peak load heating, kBTU/h :3,175.3 3,175.3 4,938.2 4,938.2 3,713.5 3,713.5
peak losses to heating fuel, kBTU/h :40.0 40.0 40.0 40.0 40.0 40.0
peak piping losses, KBTU/h :51.6 51.6 86.5 86.5 84.0 84.0
total peak losses, kBTU/h :91.6 91.6 126.5 126.5 124.0 124.0
total losses, as a fraction of load, winter :0.029 0.029 0.026 0.026 0.033 0.033
total losses, as a fraction of load, summer :0.145 0.145 0.155 0.155 0.199 0.199
current oil consumption, gal/yr :88,823 88,823 138,597 138,597 103,391 103,391
proposed consumption, gal/yr :22,123 882 31,818 3,057 22,523 1,473
estimated savings, gal/yr :66,700 87,940 106,779 135,539 80,867 101,917
fraction of oil displaced :0.751 0.990 0.770 0.978 0.782 0.986
:
estimated wood chips, tons/yr :1,027.7 1,360.8 1,640 2,096 1,256 1,597
:
pumping energy, kWh/yr :36,033 56,009 56,627 83,147 43,390 67,841
electrical energy cost :$19,818 $30,805 $31,145 $45,731 $23,864 $37,312
:
Fuel Properties and Cost :
heat content of No. 1 oil :134,000 BTU/gal
cost of oil used in study :$7.50 per gal
:
moisture content of wood chips :40.0%
heat content of wet chips :4,252 BTU/lb
cost of chips used in study :$175.00 per geen ton
:
cost of electrical energy :$0.550 per kWh
efour, PLLC 1 of 2
McGRATH, ALASKA
Level 2 Study, Biomass Heat
McG Summary
C:\Documents and Settings\Bill Wall VWCS\My Documents\Alaska Documents\Funding\Alaska Energy Authority Grant Applications\McGrath MTNT Contract\application\McGrath_Calcs_3
Summary McGrath
The Base Plant (downtown, or DT) would be located near the school. The mains would run along the water piping
route from the school to Chinana Ave, then SE to the intersection of Chinana and the North-South water main that
runs directly to the AC store.
The DT / FAA plant adds an additional main that runs from the School/Chinana pipe intersection NW to the street in front
of the FAA Bldg, then due north to McGuire Drive.
The DT / McG Dr plant is also an adder to the DT plant - it does not include the FAA mains, but does include the DT mains.
In this Plant, the end of the DT main (at the AC Store) would be extended due west along the entire length of McGuire Drive
Finally, the DT / Captain Snow Plant is also an adder to the DT Plant. At the piping intersection where the DT main heads
due north, the main would be extended to the intersection with Takotna Ave, then along Takotna to the Cap'n Snow Center
Summary of Results DT/CS P A DT/CS P B Plant Buildings
Boilers 57 DT School
B-1 :Pyrtec 1,250 Pyrtec 950 Clinic (future)
B-2 :Pyrot 300 IASD Offices
Financial : MTNT Offices
marginal cost add to DT P A :$984,724 $1,290,125 AC Store
estimated project cost :$3,901,140 $4,206,541 Hotel McGrath
estimated annual savings :$435,948 $546,074
net simple payback, yrs :8.95 7.70 DT / FAA all in DT, plus
: Community Center
Performance : Library (also called University)
No. buildings connected :99 FAA Building
peak load heating, kBTU/h :4,481.2 4,481.2 FAA Shop
peak losses to heating fuel, kBTU/h :40.0 40.0 FAA Flight Service
peak piping losses, KBTU/h :96.6 96.6
total peak losses, kBTU/h :136.6 136.6 DT / McG Dr all in DT, plus
total losses, as a fraction of load, winter :0.030 0.030 McGuires Tavern
total losses, as a fraction of load, summer :0.192 0.192 Restaurant
FAA Flight Service
current oil consumption, gal/yr :125,141 125,141
proposed consumption, gal/yr :28,329 1,591 DT / CS all in DT, plus
estimated savings, gal/yr :96,812 123,550 Post Office
fraction of oil displaced :0.774 0.987 Captain Snow
: Water Treatment
estimated wood chips, tons/yr :1,497.7 1,930.5
:
pumping energy, kWh/yr :50,991 77,648
electrical energy cost :$28,045 $42,706
:
Fuel Properties and Cost :
heat content of No. 1 oil :134,000 BTU/gal
cost of oil used in study :$7.50 per gal
:
moisture content of wood chips :40.0%
heat content of wet chips :4,252 BTU/lb
cost of chips used in study :$175.00 per geen ton
:
cost of electrical energy :$0.550 per kWh
efour, PLLC 2 of 2
McGrath Biomass Harvest Economics
The following spreadsheet Table 2 is a model based on production estimates using the
above equipment configuration. It is believed to be a reasonable estimate but it must be
recognized that it is untested. The yellow cells represent data input assumptions, and the
blue cells represent the resultant calculations of high interest. Maintenance and
Operation costs are listed and built into the production model.
For demonstration purposes, an assumed volume of 2,000 tons of seasoned wood is to be
produced annually for firewood and stick or chip boilers. This would take approximately
89 fully productive working days. Additional labor will be required to move equipment
from one community to another, as well as transportation expenses if done by barge. A
local contractor with a river freight boat will be use to move equipment and wood chips
during summer. The boat will handle a load of 20,000 pounds in it current configuration
and has been in business for three years.
Theoretically, the entire annual production could be done within 120 days (4 months) at
this production level. Under these and the other set of assumptions displayed in the
spreadsheet, approximately 2,000 tons or 1,657 cords of Spruce is produced. When
burned in wood boilers with an equal efficiency as the heating oil boilers, approximately
$500,000 of diesel at $3.50 per gallon can be displaced with a total savings of $244, 370.
These numbers are based on a calculated delivered wood cost of $155 per cord that has
been marked up 25% above actual production costs. The model displays production cost
estimates and includes an annual capital equipment cost of $132,000.
Table 2. Calculated Harvest Costs and Revenue Data in Tons and Cords
Wood Yard
The implementation project addresses the development of a wood yard in the village.
The wood yard will have a heated shop for maintenance of equipment, a wood storage
area, an equipment storage area, an automated firewood processor, and perhaps a small
sawmill for producing house logs and dimension lumber. A chipper for chip production
will be used in the wood yard. There are two potential sites located for the wood yard
and marked on the map (Figure 4)
Fire wood production in the village is currently by various individuals with a “village
cord” selling for approximately $150. This of course is far less than an actual cord. By
adding another $25-50 per cord for processing firewood could be sold for $200-250 per
full cord.
Economies of Scale
Generally speaking, the more volume that is produced using the same equipment, the less
expensive the wood per unit is to produce. See Figures 1 and 2 below. The inflection
point for reasonably priced wood produced with an automated system is around 2000
tons per year. Expected annual wood utilization for firewood and boilers at all major
buildings will be approximately 15-1800 cords or 1815-2178 tons per year.
Figures 1 and 2. Economies of scale for chips and cord wood production.
Annual Chip Production Effect on Cost $715.29 $392.79 $285.29 $231.54 $199.29 $177.79 $162.43 $150.91 $141.95 $134.79 $128.92 $124.04 $-
$100.00
$200.00
$300.00
$400.00
$500.00
$600.00
$700.00
$800.00
250 500 750 1000 1250 1500 1750 2000 2250 2500 2750 3000
Tons Produced Annually@23 Tons Daily Production
Cost/ton
Annual Cordwood Production Effect on Cost $863 $474 $344 $279 $241 $215 $196 $182 $171 $163 $150 $156 $-
$100.00
$200.00
$300.00
$400.00
$500.00
$600.00
$700.00
$800.00
$900.00
$1,000.00
250 500 750 1000 1250 1500 1750 2000 2250 2500 2750 3000
Tons Produced Annually @ 23 Tons Daily Production
Cost Per Cord
Species mix will shift with the need to produce large quantities of chips from Spruce to
various deciduous species. A 20-25 year willow rotation is quite possible for chips
producing approximately 15 tons per acre See page 40 in McGrath FS Plan. Willow
harvest and other deciduous species such as cotton wood, and aspen have the potential to
reduce the overall harvest of spruce.
Figure 3. Break Even Analysis for Cord Wood Production.
Total Cost/Revenue Breakeven Analysis $239,957 $256,784 $273,611 $290,438 $307,265 $324,092 $340,919 $357,746 $391,401 $408,228 $425,055 $41,425
$82,850
$124,275
$165,700
$207,125
$248,550
$289,975
$331,400
$372,825
$414,250
$455,675
$497,100 $374,574 $-
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
207 414 621 829 1036 1243 1450 1657 1864 2071 2278 2486Annual Cordwood ProductionTotal DollarsTotal Production Costs
Revenue At $200/Cord
Break even analysis Figure 3 above, also demonstrates that with the proposed harvest
equipment configuration, 2000 tons need to be sold annually at a price of $200 per ton.
There are two scenarios which make this level of production feasible. The first is to
move the harvest equipment to additional villages in the region as they convert to more
wood usage and the second which is the intent of this program is to build a biomass
diesel hybrid power plant. Displacing 50-70,000 gallons of fuel oil for heat in wood
boilers is a mid size economy of scale and could be achieved with some smaller
equipment and less capital costs but production is slower and operations costs remain
very similar. However, displacing an additional 200,000 gallons of diesel in a power
plant with a vertically integrated business model is the end target of this project.