HomeMy WebLinkAbout10MW Utility Grade Geothermal Development Cook Inlet Power App®L ALAS KA
Renewable Energy Fund
Grant Application
SECTION 1- APPLICANT INFORMATION
Name: Cook Inlet Power
Type of Entity: Geothermal Hydrogen & Power Producer
Mailing Address
Physical Address
P.O. Box 876
40440 Sterling Highway
Telephone
Fax
Email
907 262 7893
1.1 APPLICANT POINT OF CONTACT
Name
Title
Don Johnson
Executive Director
Mailing Address
P.O. Bog 876
Telephone
Fax
Email
907 262
ccpwowngci.net
7893
1.2 APPLICANT MINIMUM REQUIREMENTS
Please check as appropriate. If you do not to meet the minimum applicant requirements, your
application will be rejected.
1.2.1 As an Applicant, we are: (put an X in the appropriate box)
An electric utility holding a certificate of public convenience and necessity under AS 42.05,
or
X
An independent power producer, or
A local government; or
A governmental entity (which includes tribal councils and housing authorities);
Yes
or
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.
(No)
1.2.3. If a collaborative grouping, a formal approval from each participant's
1.2.4. governing authority is necessary. (Indicate Yes or No in the box)
OYes
1.2.3. As an applicant, we have administrative and financial management systems and
r
follow procurement standards that comply with the standards set forth in the
No
grant
agreement.
(Yes)
1.2.4. If awarded the grant, we can comply with all terms and conditions of the attached
or
grant form. (Any exceptions should be clearly noted and submitted with the
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F-- ENERGY AUTHORITY
Renewable Energy Fund
Grant Application
No application.)
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Page 4 of 56
9/3/2008
ALAS KA Renewable Energy Fund
®�) ENERGY AUTHORITY Grant Application
SECTION 2 — PROTECT 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?
It is the stated goal of Cook Inlet Power, CIP to demonstrate to the residences of Alaska that we do
not have to be totally dependant on expensive fossil fuels to heat our homes or run our cars. CIP is
attempting to access Alaska's significant geothermal energy potential and convert that energy into
electrical power & liquid hydrogen. CIP is a template company, which will demonstrate that it may
be used as a pro -type through out the state. CIP is requesting funds to develop the geothermal
energy potential of the west side of the upper Cook Inlet area. We are looking to initially construct
a 10 MW geothermal generator and eventually develop it into a 100 MW geothermal.
We anticipate placement of this power plant at the base of either Mount Redoubt or Mount Spur.
We are claiming that this area is capable of meeting a substantial part of Cook Inlet's future energy
needs by 2020.
We are proposing the first 10 MW Utility -Grade Geothermal Development in Alaska. This 10 MW
project would be able to extract geothermal power from the base of either Redoubt or Spur by
2015. The reference Project would begin with the remote construction and placement of a single 10
lYl<W geothermal electrical power plant at the base of either of these volcano's. Reconnaissance of
these volcanic resources shows that both are located on the west side of Cook Inlet and both
produce a significant heat source within the range of 165 —1000 degrees Fahrenheit.
We are requesting funding for a $950,000, Phase 1 geological study, to be completed by Oct. 1,
2009, which will determine the best location for this project to be constructed. The total scope of
this Project would include the following timetable and eventual funding.
5 PHASE DEVELOPMENTAL PLAN TM%IETADLE
Phase 1 - ($950,000), Oct 1, 2009,
Phase 2 - ($9,000,000), Oct 1, 2011
Phase 3 - ($13,200,000) Oct 1, 2012
Phase 4 - $40,000,000), Oct 1, 2015
Phase 5 - ($35,000,000), Oct 1, 2020
($98,150,000 total funding by Oct. 1, 2020)
($94.150,000 total funding for a 10 MW power plant by Oct 1, 2020) ALL DOLLAR AMOUNTS
ARE U.S. DOLLARS.
1.] The first Phase 1 Study would have a goal of confirming which volcanic location will give the
most accessible and highest heat source for the proposed geothermal power plant. The power plant
will require a total volcanic resource which is large enough and accessible enough to generate and
sustain at least 10MW's of power. 10 MW's of power is the generating capacity we believe to be
necessary to justify the costs of this project.
The above information would be best confirmed by test drilling temperature —gradient boreholes.
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Renewable Energy Fund
Grant Application
The Alaska Energy Authority, AEA, awarded the Chena Hot Springs power plant $246,288 for this
kind of an assessment study in 2003. The Chena study was for a much smaller project and land
area, thus requiring reduced test boreholes and less funding. Our Project could eventually result in
a geothermal power plant 100 times larger than the Chena Project. We are therefore requesting a
$500,000 assessment / feasibility study beginning May 1, 2009 and completed by Oct. 1, 2009; to
determine the best site location of a hot gas source between 165 —1000 degrees F.
2.1 The second Phase 1 Study would have the goal of determining the best specific locations for
drilling the final heat source and water well holes. This information would be revealed by studying
and confirming the information discovered within the first Phase 1 Study. We are requesting that a
second Phase 1, $200,000 drilling study be completed by Oct. 1, 2010.
3.] The third Phase 1 Study would have the goal of determine the feasibility & cost of placement of
an access road & right of way and a High Voltage, Direct Current (HVDC) cable, from either
Mount Redoubt or Mount Spur, to Anchorage and the city of Kenai, Alaska. We are requesting a
$250,000 access & transmission study be completed by, Oct. 1, 2010.
CIP is currently requesting $950,000 in funding for a 2 year Phase 1 study, which would begin
May 1, 2009 and be completed by Oct. 1, 2010.
Alaska contains about 80 percent of all the active volcanoes in the United States and about 8
percent of the active volcanoes in the world. The western shore of Cook Inlet contains five
volcanoes that have erupted within the last 10,000 years. These are, from north to south,
Mt. Spurr, Mt. Redoubt, Mt. Iliamna, Mt. Saint Augustine, and Mt. Douglas. Three of these
(Mt. Spurr, Mt. Redoubt, and Mt. Saint Augustine) have erupted more than once this century
and could well erupt again in the next few years or decades (Combellick et al., 1995:4). Of these
volcano's, we believe that both Mount Redoubt and Mount Spur meet the (geothermal potential
& major population proximity requirements) for this project.
Unfortunately Mount Redoubt is partly located within the U.S. Lake Clark National Park and
Preserve. This barrier would prevent the placement of a geothermal power plant within about 4
miles of its summit. There is a sufficient amount of BLM and private land available for sale on the
boarder of the Park for the placement of the power plant. Mount Spur has a large mount of BLM
and private land available on all of its slopes.
Both Redoubt and Spur Volcano's are stratovolvcano's and are located within 50 - 100 miles of
MORE THAN HALF OF THE POPULATION OF ALASKA. This is perhaps the most compelling
reason to investigate geothermal power at either location. CIP is estimating that either location has
sufficient geothermal energy potential to provide a large amount green power to the entire Cook
Inlet area. However, it is unlikely that the Cook Inlet area would have all its electical generation
needs depend on any single resource.
The Mount Redoubt & Spur Volcano's are two of the most active volcanoes of the Cook Inlet
region. Steam and volcanic gas is constantly rises above the summit of both volcano's ever since the
west side of Cook Inlet began having eruption back in 1989.
We are estimating the total renewable geothermal energy potential of the Mount Spur resource to
be at least 100 MW's and the potential available at the Mount Redoubt resource to be at least 150
MW's. Much of this energy estimate is generated from data acquired with regard to the 2008
placement of a 10 MW geothermal plant by Raser Technologies within their "Thermo" geothermal
power project near Beaver, Utah.
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/cEF—ORITY
AENELASHKA
Renewable Energy Fund
Grant Application
The Thermo power plant was designed to produce enough to power for approximately.9,000
homes, with zero emissions, using PureCycle® geothermal power systems from UTC Power. Raser
recently announced the results of an independent geological engineering report completed by
GeothermEx, Inc. which concluded that the Thermo resource and wells had sufficient heat
and flow to produce in excess of the planned 10 MW. The report also concluded that the
surrounding Thermo area resource could most likely produce more than 230 MW of geothermal
power. Republic Geothermal, Inc. (1977) contributed temperature -gradient, geophysical, and
geochemical data resulting from geothermal studies in this area. The data package included
temperature -gradient borehole data (27 boreholes), water analyses, and production -test and
temperature data from a deep (2221 m [7,288 ft]) exploratory drill hole (Escalante 57-29).
Geothermometers applied to three water analyses of the hot springs yielded equilibrium
temperatures ranging from 110' to 148°C, while fluid samples from Escalante 57-29 yielded
temperatures ranging from 1660 to 241°C.
The Thermo Project revealed temperatures within the (3200 f - 4221 f) range at (2,050 m, 6,725f
depth). CIT is currently estimating that the Thermo Project closely parallels the available heat
resources located beneath both Redoubt & Spur locations.
Once this project has been completed CIP would eventually desire to be able to sell this renewable
power at a price of about $78 per megawatt hour, with a 2% annual price increase, for a blended
average price of approximately $95 per megawatt hour over a 20 year term of the Project.
We are estimating that both Redoubt & Spur temperature -gradient borehole results from the
Phase 1 study, would produce potential energy data in the vicinity of the above Thermo project
data.
2.2 PROJECT DESCRIPTION
Provide a one paragraph description of your project. At a minimum include the project location,
communities to be served, and who will be involved in the grant project?
The design of the CIP, 10 MW power plant would include the placement of (10), 1 MW, Air -Air
Power Plant, Electrical Generators from UTC Power, to obtain the required 10 MW's of power.
These geothermal generators would also power (10 ), QuestAir's H-3300 PSA, hydrogen
generators, which are capable of producing 3,000 NCMH each, and therefore able to produce
150,000 NCMH of hydrogen together. "NCMH" - Normal Cubic Meters Per Hour.
A summary of Project costs would consist of funding $950,000 for initial studies, $9,000,000 for
equipment & helicopter, $13,200,000 for drilling one hole & road construction, $40,000,000 for power
plant electrical & hydrogen generators, $35,000,000 for High Voltage, Direct Current Cable to Anchorage
and Kenai, Alaska. 'Total budget - $98,150,000
The Projects initial goal would be to produce local electrical and hydrogen power on the west side
of Cook Inlet. Eventually the Project would also be capable of exporting excess power and liquid
hydrogen for retail sale all over Alaska. CIP's initial 2020 power production goal is to generation a
10 MW electrical capacity and a 150,000 NCMH hydrogen production capacity. CIP's long range
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®ALAS KA Renewable Energy Fund
�i ENERGY AUTHORITY Grant Application
2025 power production goal is to generation a 100 Mom' electrical capacity and a 300,000 NCMH
hydrogen production capacity. The initial 2020 goal would be developed through a 5 phase plan
resulting in the connecting of this power plant to both Kenai Peninsula and Anchorage power grids.
The Kenai Peninsula has approximately 40,000 residences with 10,000 homes. One megawatt of
electrical power is equivalent to 1 million watts, which can meet the power needs of about 1,000
people. This Projects goal is to meet the electrical power requirements of at least 30,000 residents
by 2020. http: //www.geo-energy.org/aboutGE/currentUse.asp#homes
Involved personal will be CIP personal, The Department of Energy, AIDE Power and The Alaska
Energy Authority.
5 PHASE DEVELOPMENTAL PLAN T M[ETABLE
Phase 1 - ($950,000), Oct 1, 2009,
Phase 2 - ($9,000,000), Oct 1, 2011
Phase 3 - ($13,200,000) Oct 1, 2012
Phase 4 - $40,000,000), Oct 1, 2015
Phase 5 - ($35,000,000), Oct 1, 2020
($98,150,000 total funding by Oct. 1, 2020)
Phase 1 = Studies, $950,000, completed by Oct. 1, 2009.
Phase 2 = Equipment & Helicopter, $9,000,000, completed by Oct 1, 2011.
Phase 3 = 7 - 12 mile road, $10,000,000, hot water source drilling to depth 10,000 feet,
$3,200,000 by Oct. 1, 2012.
Phase 4 - 10 Power Generators, 10 Hydrogen Generators, $40,000,000, completed by Oct. 1, 2015.
Phase 5 = Power Transmission Cable to Kenai, $35,000,000, by ABB Inc., completed by Oct.
1, 2020.
($98,150,000 total)
PROJECT BUDGET —
$500,000 Geological Survey Study by ? to determine the site of adduct waste hot gas source
between 165 —1000 degrees capable of producing at least 10NM of power generation
by 2009, Oct. 1.
$200,000 Study to determine the best plant & drilling locations by 2010, May. 1.
S250,000 Power Transmission Cable Study by 2009, Oct. 1, to determine feasibility of
placement of an ABB Land & Sea High Voltage, Direct Current (HVDC) Power Transmission
Cable, Across Cook Inlet To Kenai, Alaska & an access road from Cook Inlet, by 2009, Oct. 1
$1,400,000 Land Purchase and Power Plant Construction Completed by 2010, Oct. 1.
S5,000,000 Helicopter purchase for project development, (by 2009, May. 1) and sold on project
completion with funds used for electrical transmission lines and hydrogen export.
$1,200,000 Remote Site Development Completed by 2011, Oct. 1.
$1,500,000 Hydrogen Generation System Purchase & Installation of a 3000 NCMH, H-3200
hydrogen generation system from QuestAir Technologies Inc., completed by 2012, Oct. 1.
$2,500,000 Geothermal i AM, Air -Air Power Plant Generator Purchase & UTC Installed by UTC
Power by 2012, Oct. 1.
Power Transmission Cable by ABB Inc., 300 kVDC High Voltage, Direct Current (HVDC),
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ORITY
&ALASKAH
Renewable Energy Fund
Grant Application
across Cook Inlet by 2020, Oct. 1., Cable by ABB Inc..
$ 500,000 — Location of plant site study.
$ 200,000 — Drilling Location study.
$ 250,000 — Power Transmission Cable &Access study.
$3,200,000 Hot water source drilling to max. depth 10,000 feet, per hole.
$1,200,000 — Site Development & Access.
$1,400,000 — Land Purchase.
$5,000,000 — Helicopter
$10,000,000 — Road From Cook Inlet
$1,500,000 — Per Hydrogen Generation System.
$2,500,000 — Per Geothermal Electrical Generation Power Plant.
$25,750,000 Start -Up Budget BY 2012, OCT. 1.
The estimated costs of drilling and completing conventional oil production wells in the
National Petroleum Reserve Alaska (NPRA) are:
$2.5 million at depths to 5,000 feet.
$3.2 million at depths of 5,000 to 10,000 feet.
$5.16 million at depths greater than 10,000 feet.
U.S. Geological Survey, Alaska
5 PHASE DEVELOPMENTAL PLAN THMETABLE
Phase 1 - ($950,000), Oct 1, 2009,
Phase 2 - ($9,000,000), Oct 1, 2011
Phase 3 - ($13,200,000) Oct 1, 2012
Phase 4 - $40,000,000), Oct 1, 2015
Phase 5 - ($35,000,000), Oct 1, 2020
($98,150,000 total funding by Oct. 1,.2020)
Phase 1= Studies, $950,000, completed by Oct. 1, 2009.
Phase 2 = Equipment & Helicopter, $9,000,000, completed by Oct 1, 2011.
Phase 3 =10 mile road, $10,000,000, hot water source drilling to depth 10,000 feet,
$3,200,000 by Oct. 1, 2012.
Phase 4 - 10 Power Generators, 10 Hydrogen Generators, $40,000,000, completed by Oct. 1, 2015.
Phase 5 = Power Transmission Cable to Kenai, $35,000,000, by ABB Inc., completed by Oct.
1, 2020.
----------------------------------------------
($98,150,000 total)
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Renewable Energy Fund
Grant Application
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?
Phase 1 would be to conduct 3 specific studies to determine the feasibility of:
1.1 Study Mount Redoubt & Spur to determine if 10 MW of geothermal energy is available
and locate a site.
2.1 Study the site for placement of hot & cold water wells.
3.] Study the site for road access & power transmission across Cook Inlet.
Phase 2 would implement "technology & hardware" from the commercially available
$2,500,000 per unit, Air -Air Power Plant from the United Technology Company, UTC Power.
Plant construction would be with Raser Technology with electric power plant installation by
UTC Power. This phase includes the installation of a $1,500,000, H-3200 hydrogen generation
system from QuestAir Technologies Inc. This phase would also require the purchase of a
$5,00,000,000 helicopter, which would be sold by May 1, 2012 with the funds being used to help
construct a land access road to Cook Inlet by Oct 1, 2012.
Phase 3 would result in the construction of approximately 7 miles access road, Cook Inlet to the
base of Redoubt. There would be approximately 12 miles of access road, Cook Inlet to the base of
Spur.
Phase 4 would implement 10, UTC, 1.0 MW class PureCycle® geothermal power generators,
commercially available by 2010. Installed by 2012, Oct. 1.
Projected development cost of proposed renewable energy system?
$25;000,000 (9) 1.0 MW, PureCycle® geothermal power generators Installed by 2015, Oct. 1.
+$15,000,000 (9) H-3200 QuestAir Technologies Inc. hydrogen generation systems operational
by 2015, Oct. 1
$40,000,000 by Oct. 1, 2012.
Phase 5 would result in a high voltage power transmission cable by ABBInc., to
Kenai, Alaska by Oct. 1, 2020. $35,000,000.
5 PHASE DEVELOPMENTAL PLAN THMETABLE
Phase 1 - ($9509000), Oct 1, 2009,
Phase 2 - ($9,000,000), Oct 1, 2011
Phase 3 ($13,200,000) Oct 1, 2012
Phase 4 - $40,000,000), Oct 1, 2015
Phase 5 - ($35,000,000), Oct 1, 2020
($98,150,000 total funding by Oct. 1, 2020)
Phase 1 = Studies, $950,000, completed by Oct. 1, 2009..
Phase 2 = Equipment & Helicopter, $9,000,000, completed by Oct 1, 2011.
Phase 3 = 7 - 12 mile road, $10,000,000, hot water source drilling to depth 10,000 feet, $3,200,000
by Oct. 1, 2012.
::AEA 09-004 Grant Application Page 10 of 56 9/3/2008
/E) ALASHKA
Renewable Energy Fund
Grant Application
Phase 4 - 10 Power Generators, 10 Hydrogen Generators, $40,000,000, completed by Oct. 1, 2015.
Phase 5 = Power Transmission Cable to Kenai, $35,000,000, by ABB Inc., completed by Oct.
1, 2020.
($98,150,000 total)
Ten - 10 MW geothermal electrical generators for $25,000,000,
Ten - 30,000 NCMH hydrogen production generators for $15,000,000
2.4 PROJECT BENEFIT
Briefly discuss the financial benefits that will result from this project, including an estimate of
economic benefits (such as reduced fuel costs) and a description of other benefits to the Alaskan
public?
Resulting financial benefits:
Project construction & operational jobs, cheaper power for the people on the west side
of Cook Inlet, Cook Inlet Oil Drilling Platforms, the city of Anchorage, the Kenai Peninsula and
(Tyonek, Villege, Chuitna Coal Mine, Chinitna Bay, Farewell Village.)
The 2020 power transmission cable crossing Cook Inlet would allow the displacement of up to
approximately 133,000,000 gallons auto gas annually from the Cook Inlet area.
(See Business Plan Attached For Calculations).
Also CIP generation of hydrogen could displacement approximately 111,500,000 gallons auto gas
annually within the Cook Inlet area, within 10 —15 years. This would mean the total displacement
of 244,500,000 gallons of automotive gas annually in the Cook Inlet area.
(See Business Plan Attached For Calculations).
RENEWABLE ENERGY — Zero fuel -input costs — powered by hot water.
Low life -cycle cost.
Low -temperature resource — operated on resource temperatures as low as 165 F.
Reliable power.
Not dependent on sunny or windy weather.
Remote monitoring and system control is standard ensuring maximum uptime.
Clean power.
Zero carbon footprint:
No Materials Of Concern like refrigerants.
Hermetically sealed.
SYSTEM FLEXIBILITY
Factory assembled and tested- no support staff required on -site
Mount. Redoubt & Spur Volcano's are part of a chain of volcanoes extending from south-central
Alaska to the far western end of the Aleutian Islands. This belt of volcanoes is called the
"Aleutian arc", and it is home to more than 40 active volcanoes. These volcano's are two of the
I AKA
ENERGY
Renewable Energy Fund'
Grant Application
three volcanoes in the Cook Inlet region that has erupted several times in the last 200 years. -
Mount Redoubt is located about 103 miles southwest of Anchorage and Mount Spur is about
57 miles southwest of Anchorage. These volcano's are located in relatively close proximity to
more than half of the population of Alaska!
Economic Benefits:
Increased geothermal energy production in Alaska will help attract tourist and that will help boost
local economies. The direct use of geothermal energy would allow resorts and manufacturers to
decrease their dependence on expensive fossil fuels and reduce their operating costs. This kind of
less expensive energy would also encourage and supports enterprises, which depend on inexpensive
heating such as commercial green housing. With cheap heating, residents may also build cheap
electric greenhouses, to produce crops year-round for local consumption or export. Furthermore,
upon installation of the Project geothermal power plant, power production costs can be reduced
down to a possible 7¢ - 100 per kilowatt-hour. This electric rate reduction would give current
"electric & gas utilities monopolies" much needed rate competition.
Because both Redoubt & Spur retain substantial underground volcanic heat resources of 100 - 150
energy, CIP will have the ability to expand its power production greatly in the future to help meet
energy needs.
The economic and social benefits would include:
Phase 1 - ($950,000), Oct 1, 2009.
Phase 2 - ($9,000,000), Oct 1, 2011.
Phase 3 - ($13,200,000) Oct 1, 2012.
Phase 4 - $40,000,000), Oct 1, 2015.
Phase 5 - ($35,000,000), Oct 1, 2020.
($98,150,000 total funding by Oct. 1, 2020)
Phase 1 = Studies, $950,000, completed by Oct. 1, 2009-.
Phase 2 = Equipment & Helicopter, $9,000,000, completed by Oct 1, 2011.
Phase 3 = 7 - 12 mile road, $10,000,000, hot water source drilling to depth 10,000 feet,
$3,200,000 by Oct. 1, 2012.
Phase 4 - 10 Power Generators, 10 Hydrogen Generators, $40,000,000, completed by Oct. 1, 2015.
Phase 5 = Power Transmission Cable to Kenai, $35,000,000, by ABB Inc., completed
by Oct. 1, 2020.
------------------------------------------------
($98,150,000 total)
/wE.' ALASORITY
HKA
Renewable Energy,Fimd
Grant Application
2.5 PROJECT COST AND BENEFIT SUMMARY FOR THE KENAI PENINSULA ONLY
Include a summary of your project's total costs and benefits below.
2.5.1 Total Project Cost
$98,150,000 total
(Including estimates through construction.
2.5.2 Grant Funds Requested in this application.
$950,000
2.5.3 Other Funds to be provided(Project match
$48,600,000 AEA, $48,600,000 DOE
2.5.4 Total Grant Costs sum of 2.5.2 and 2.5.3
$98,150,000 total
2.5.5 Estimated Benefit (Savings)
$503,500,000 saved annually, 111,720,00
auto gas displaced annually.
2.5.6 Public Benefit (If you can calculate the benefit in
$503,500,000 saved annually,.
terms of dollars please provide that number
( See Business Plan Calculations)
here and explain how you calculated that
number in your application.)
Electric: 1 kilowatt hour (1 kWh) = 3412 BTUs - cost approximately
.1-4 per kWh
Natural Gas: 100 cubic feet (CCF) = 103,000 BTUs - cost approximately
.90 per CCF
Oil: Gallons = 134,500 BTUs — cost approximately .85 per gallon
Liquid Petroleum: Gallons = 92,000 BTUs - cost approximately 1.00 per gallon
Diesel Fuel $4.50 per gallon
Automotive Gas $4.50 per gallon
Fuel Oil $1.00 per gallon
KENAI PENINSULA HYDROGEN FUEL / AUTO GAS DISPLACEMENT CALCULATONS:
40,000 Kenai Peninsula residents X average $5,000 per year each for auto gas = a
$200,000,000 purchase annually. (40,000 X $5,000 = $200,000,000)
Assuming that half of the KPB residents convert automobiles over to geothermic produced
hydrogen fuel. $100,000,000 / $4.50 per gallon = 22,220,000 gals. auto gas.
22,220,000 gals auto gas / 20,000 residents = 1,111 gallons per resident used annually.
(1,111 gallons of auto gas NOT purchased per resident annually) = $83,250,000 saved per year,
Displaces 18,500,000 gallons auto gas annually.
ANCHORAGE HYDROGEN FUEL / AUTO GAS DISPLACEMENT CALCULATONS:
200,000 Anchorage residents X average $5,000 per year each for auto gas = a $1,000,000,000-
purchase annually.
(200,000 X $5,000 = $1,000,000,000)
( Calculating 17 mpg on a vehicle, which equals about 18,000 miles per year)
Assuming, that half of the Anchorage residents convert automobiles over to geothermic produced
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Renewable Energy Fund
Grant Application
hydrogen fuel. $500,000,000 / $4.50 per gallon=111,000,000 gals. auto gas..
111,000,000 gals auto gas / 100,000 residents =1,111 gallons per resident used annually.
(111,000,000 gallons of auto gas NOT purchased per resident annually) = $24,000,000 saved per
year,
111,000,000 gallons X $4.50 per gallon = $450,000,000 saved per year
Displaces 133,000,000 gallons auto gas annually.
22,220,000 gallons Kenai + 111,000,000 gallons Anchorage = 133,000,000 gallons not used by Cook
Inlet annually. $450,000,000 will be saved annually by half of Cook Inlet residents purchasing and
using hydrogen fuel to perform the operations which were preformed previously with the use
of fossil fuels.
Displaces 133,000,000 gallons auto gas annually.
HYDROGEN CALCULATIONS:
Compressed hydrogen gas costs $2.50 per kilogram.
(A kilogram of hydrogen basically costs about half as much as a gallon of auto gas)
4 kilograms of hydrogen can power a vehicle for 270 miles. This would mean that the
vehicle would get 67.5 mpg equivalent.
Total price is $10 to drive 270 miles with compressed hydrogen.
At $4.50 per gallon and 17 MPG for auto gas, the same trip would cost 15.8 gallons of auto gas
15.8 gallons of auto gas X $4.50 per gallon auto gas= $71.40 cost for the trip.
($10 for 270 miles using hydrogen) ($71.40 for 270 miles using auto gas) = $61.40 savings.
Hydrogen car uses 84% less fuel weight, saving $61.40 and displacing 15.8 gallons of auto gas.
22,200,000 gallons of auto gas is used annually within the Kenai Peninsula Borough.
$100,000,000 X $4.50 per gallon auto gas = 22,200,000 gallons auto gas )
84% of 22,200,000 gallons of auto gas = 18,500,000 gallons auto gas displaced.
18,500,000 gallons auto gas X $4.50 per gallon auto gas = $83,250,000.
$83,250,000 saved annually by half of the Kenai Peninsula residents switching to hydrogen auto
fuel.
KENAI PENINSULA HYDROGEN FUEL / DIESEL FUEL DISPLACEMENT CALCULATONS:-
40,000 Kenai Peninsula residents using diesel home heat / 4 person family average=10,000 homes.
Average of $3,000 per year each home for fuel oil heating at $.85 per gallon.
10,000 homes X $3,000 fuel oil = $30,000,000 in fuel oil currently purchase annually.
$30,000,000 in fuel oil divided by $.85 per gallon fuel oil = 35,000,000 gallons
of fuel oil purchased annually.
If these 10,000 homes were able to convert over to geothermal electric heating
They could save the KPB from having to purchase 35,000,000 gallons fuel oil annually.
If electric heating were used instead of fuel oil the KPB would not have to purchase
35,000,000 gallons fuel oil annually. Displacement of 35,000,000 gallons of fuel oil.
ANCHORAGE HYDROGEN FUEL / DIESEL FUEL DISPLACEMENT CALCULATONS:
200,000 Anchorage residents using diesel home heat / 4 person family average = 50,000 homes.
Average of $3,000 per year each home for fuel oil heating at $1 per gallon.
50,000 homes X $3,000 fuel oil = $150,000,000 in fuel oil currently purchase annually.
$150,000,000 in fuel oil divided by $1 per gallon fuel oil = 150,000,000 gallons
of diesel purchased annually.
If these 50,000 homes were able to convert over to geothermal electric heating
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Renewable Energy Fund
Grant Application
They could save the city of Anchorage from having to purchase 150,000,000 gallons fuel oil
annually. If electric heating were used instead of fuel oil the city of Anchorage would not have to
purchase 150,000,000 gallons fuel oil annually. Displacement of 150,000,000 gallons of fuel oil.
35,000,000 gallons fuel oil Kenai Peninsula+ 150,000,000 gallons fuel oil Anchorage = 185,000,000
gallons fuel oil displaced annually by hydrogen, in Cook Inlet.
Oil Compared To Electric Heating
Fuel Oil Is Currently 5 'Times Cheaper T® Heat With Than Electric Heat.
There are 134,500 BTUs in one gallon of fuel oil. One gallon of fuel oil divided by 3,412 BTUs
(1 kWh of electric) _
39.4 kilowatt-hours of electricity. 1 gallon of fuel oil delivers 134,500 BTUs
One gallon of fuel oil / 1 kWh of electric = 39.4 kilowatt-hours of electricity
134,500 BTUs x .85 per gallon + 40% waste =1.19 to Net 134,500 BTUs of heat.
1 gallon of fuel oil delivers 134,500 BTUs or 39.4 kilowatt-hours of electricity.
39.4 kilowatt-hours of electricity delivers 134,500 BTUs for (39.4 x .14 per kWh) or 5.51.
5.51 divided by 1.19 = 4.63
Based on these figures, at .85 per gallon for fuel oil , electricity in this area is approximately 463% times
more costly than fuel oil, for the same amount of net heat. Geothermal energy would reduce this
electrical cost to approximately 7 cents per kilowatt-hours of electricity.
That is a 500% reduction in the price of energy using geothermal energy.
Electric: 1 kilowatt hour (1 kWh) = 3412 BTUs - cost approximately .14 per kWh
Natural Gas: 100 cubic feet (CCF) = 103,000 BTUs - cost approximately .90 per CCF
Fuel Oil Ak: Gallons = 134,500 BTUs - cost approximately 1.00 per gallon
Liquid Petroleum Ak: Gallons = 92,000 BTUs - cost approximately 1.00 per gallon
With embedded Hydronic tubes, electric elements within a floor system you could
expect to use about 8 to 15 watts of electricity per square foot of floor area, depending
on your insulation. Calculating at a 15 watts of electricity per square foot, the total
would be around 45,000 watts needed to heat the home.
the 45
3.4 to get BTUs.) Thus, a 10,000 BTU kerosene heater
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ENERGY AUTHORITY
Renewable Energy Fund
Grant Application
45,000 watts X 3.4=153,000 BTUs to heat the home.
KENAI PENINSULA NATURAL GAS DISPLACEMENT CALCULATIONS
40,000 Kenai Peninsula residents / 4 person family average = 10,000 homes.
Average of $4,000 per year each home for natural gas heating at $1.00 per CCF of gas.
10,000 homes X $4,000 natural gas annually = $40,000,000 in natural gas used annually.
$40,000,000 X. $1.00 per CCF = Possible 40,000,000 CCF of natural gas displaced annually.
ANCHORAGE NATURAL GAS DISPLACEMENT CALCULATIONS
200,000 Anchorage residents / 4 person family average = 50,000 homes.
Average of $4,000 per year each home for natural gas heating at $1.00 per CCF of gas.
50,000 homes X $4,000 natural gas annually = $200,000,000 in natural gas used annually.
$200,000,000 X. $1.00 per CCF = Possible 200,000,000 CCF of natural gas displaced annually.
200,000,000 Anchorage natural gas + 40,000,000 Kenai Peninsula natural gas = 240,000,000. CCF
of natural gas displaced annually. $240,000,000 saved annually in the Cook Inlet area using
geothermal energy instead of natural gas.
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.
ALASHA K
Renewable Energy Fund
Grant Application
CIP GEOTHERMAL PROJECT MANAGEMENT
Visionary, results driven project leader and co -coordinator with an outstanding record of
delivering business projects on time and within budget. Proactive, works closely with business
clients and technology personnel during the design, configuration, application and training stages.
Strong ablity to locate, access, develop and market remote sites for geothermal energy applications.
Articulate, combine's a strong business sense with the ability to conceive profitable and efficient
solutions utilizing natural resources & technology. Industrious, troubleshooter, thrives on a
challenge, enjoys making the world a better place to live in. Works effectively with people at all
levels. Ethical and loyal, maintains a high degree of confidentiality.
COMPETENCIES INCLUDE:
Remote Flight Operations & Aircraft Safety -and Maintenance
Strategic Business Geothermal Energy Marketing & Planning
Interdepartmental Coordination
Management & Administration
Financial Planning & Management
Geothermal Project Site Management
Geothermal Natural Resource Management
Client Relations
Lots of energy, motivation and confidence. Decisive business leader who is able to merge
energy type personnel into a geothermal team. Demonstrated team, relationship and
communication builder.
PROFESSIONAL EXPERIENCE
Cook Inlet Power April 2008 - Present
CIP is new Alaskan Power Utility which is being developed to address Alaska's growing and
specific need to develop its geothermal energy potential. CIP is directly involved in locating and
identifying possible geothermal power production sites through out Alaska.
PROJECT MANAGER
Responsibilities:
Director of locating and identifying possible geothermal power production sites in Alaska.
In charge of site procurements, power plant construction, financing and general operations.
Director of flight operations / management of equipment and safety standards.
Alaska Dons, Soldotna, Alaska
MARKETING PROJECT MANAGER
April 2003 - 2008
Responsibilities:
Managing an Alaska sport fishing and flight -seeing, charter marketing campaign.
Contracts and consulting with companies and organizations on the above issues.
Managing construction of multiple new buildings, plumbing & electrical installations.
Director of flight operations / management of equipment and safety standards.
Johnson Brothers Guides & Outfitters
MARKETING PROJECT MANAGER
R,%QnAncihiliflaw.
June 1993 - January
® ALASHKA
Renewable Energy Fund
Grant Application
Manage National Marketing Program, Promotional Sport Show Management practices with
business and marketing groups for applications to charter sport fishing and Arial sightseeing
based out of Soldotna, Alaska.
Managing construction of multiple new buildings, plumbing & electrical installations.
Director of flight operations / management of equipment and safety standards.
D & D Aviation, Soldotna, Alaska
PILOT & MARIKETING MANAGER
Responsibilities:
Aug. 1987 - July 1992
Successfully managed and marketed a charter flight service out of Soldotna, Alaska.
Responsibilities: maintenance schedule coordination, Flight scheduling, Fish Spotting, Cook Inlet.
Managing Construction of Multiple New Buildings, Plumbing & Electrical Installations.
Director of flight operations / management of equipment and safety standards.
Western Michigan University
AREA OF STUDIES
Sept. 1982 - July 1986
BACHELORS OY SCIENCE DEGREE ( Flight Technology Major) Airframe Power Plant
Mechanic Minor, Pilot Licenses, 3200 Hours - Single Engine Aircraft, Commercial, Instrument,
Fixed Gear & Land & Sea.
CIP would be interested in AEA project management assistance.
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.)?
PROJECT BUDGET —
5 PHASE DEVELOPMENTAL PLAN THMETABLE
Phase 1 - ($950,000), Oct 1, 2009,
Phase 2 - ($9,000,000), Oct 1, 2011
Phase 3 - ($13,200,000) Oct 1, 2012
Phase 4 $40,000,000), Oct 1, 2015
Phase 5 - ($35,000,000), Oct 1, 2020
--------------------------------------------------------
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ALASHKA
Renewable Energy Fund
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($98,150,000 total funding by Oct. 1, 2020)
Phase 1 = Studies, $950,000, completed by Oct. 1, 2009.
Phase 2 = Equipment & Helicopter, $9,000,000, completed by Oct 1, 2011.
Phase 3 = 7 - 12 mile road, $10,000,000, hot water source drilling to depth 10,000 feet, $3,200,000
by Oct. 1, 2012.
Phase 4 - 10 Power Generators, 10 Hydrogen Generators, $40,000,000, completed by Oct. 1, 2015.
Phase 5 = Power Transmission Cable to Kenai, $35,000,000, by ABB Inc., completed by Oct.
1, 2020.
($98,150,000 total by 2020.)
$250,000 Phase 1 Study to determine the site of adduct waste hot gas source between 165 —1000
degrees capable of producing at least 10MW of power generation by 2009, Oct. 1.
$200,000 Phase 1 Study to determine the best plant & drilling locations by 2010, May. 1.
$500,000 Phase 1 Study to determine feasibility of road access and power transmission cable.
Placement by ABB Land & Sea High Voltage, Direct Current (HVDC) Power Transmission Cable,
Across Cook Inlet To Kenai, Alaska., by 2009, Oct. 1.
$3,200,000 Hot water source drilling to max. depth 10,000 feet, per hole.
$1,400,000 Land Purchase and Power Plant Construction by Raser Technology, completed
by 2010, Oct. 1.
$5,000,000 Helicopter purchase for project development, (by 2010, Oct. 1) and sold on project
completion with funds used for road construction to the project site.
$1,200,000 Remote Site Development Completed by 2011, Oct. 1.
$1,500,000 Hydrogen Generation System Purchase & Installation of a 3000 NCMH, H-3200
hydrogen generation system from QuestAir Technologies Inc., completed by 2012, Oct. 1.
$2,500,000 Geothermal 280, Air -Air Power Plant Generator Purchase & UTC Installed by
UTC Power by 2012, Oct. 1.
Power Transmission Cable by ABB Inc., 300 kVDC High Voltage, Direct Current (HVDC),
across Cook Inlet by 2020, Oct. 1.
-------------------------
$98,150,000
3.3 Project Milestones
Define key tasks and decision points in your project and a schedule for achieving them?
5 PHASE DEVELOPMENTAL PLAN THMETABLE
Phase 1 - ($950,000), Oct 1, 2009,
Phase 2 - ($9,000,000), Oct 1, 2011
Phase 3 - ($13,200,000) Oct 1, 2012
Phase-4 - $40,000,000), Oct 1, 2015
Phase 5-,($35,000,000), Oct 1, 2020
$98,156,000 total funding by Oct. 1, 2020
AEA 09-004 Grant Application Page 19 of 56 9/3/2008
ALASKA
Renewable Energy Fund
Grant Application
Phase 1 = Studies, $950,000, completed by Oct. 1, 2009.
Phase 2 = Equipment & Helicopter, $9,000,000, completed by Oct 1, 2011.
Phase 3 = 7 - 12 mile road, $10,000,000, hot water source drilling to depth 10,000 feet, $3,2 00,000
by Oct. 1, 2012.
Phase 4.-10 Power Generators, 10 Hydrogen Generators, $40,000,000, completed by Oct. 1, 2015.
Phase 5 = Power Transmission Cable to Kenai, $35,000,000, by ABB Inc., completed by Oct.
1, 2020.
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Renewable Energy Fund
Grant Application
2015, Oct. 1
$40,000,000, by 2015, Oct. 1
Phase 5 would result in a 55 mile, 230,000-volt transmission lines transmission cable by ABB Inc., to
Kenai, Alaska by Oct. 1, 2020. Cost $35,000,000
5 PHASE DEVELOPMENTAL PLAN THMETABLE
Phase 1 - ($950,000), Oct 1, 2009,
Phase 2 - ($9,000,000), Oct 1, 2011
Phase 3 - ($13,200,000) Oct 1, 2012
Phase 4 - $40,000,000), Oct 1, 2015
Phase 5 - ($35,000,000), Oct 1, 2020
($98,150,000 total funding by Oct. 1, 2020)
Phase 1= Studies, $950,000, completed by Oct. 1, 2009.
Phase 2 = Equipment & Helicopter, $9,000,000, completed by Oct 1, 2011.
Phase 3 = 7 -12 mile road, $10,000,000, hot water source drilling to depth 10,000 feet, $3,200,000
by Oct. 1, 2012.
Phase 4 -10 Power Generators, 10 Hydrogen Generators, $40,000,000, completed by Oct. 1, 2015.
Phase 5 = Power Transmission Cable to Kenai, $35,000,000, by ABB Inc., completed by Oct.
1, 2020.
($98,150,000 total)
$ 500,000 — Location of plant site study.
$ 200,000 — Drilling Location study.
$ 250,000 — Power Transmission Cable & Access study.
$3,200,000 Hot water source drilling to max. depth 10,000 feet, per hole.
$1,200,000 — Site Development & Access.
$1,400,000 — Land Purchase.
$5,000,000 — Helicopter.
$10,000,000 — Access Road From Cook Inlet to Plant Site.
$1,500,000 ea. — Hydrogen Generation System.
$2,500,000 ea. = Geothermal Electrical Generation Power Plant.
$25,750,000 Start -Up Budget by 2012, OCT. 1.
5 PHASE DEVELOPMENTAL PLAN TIIMETABLE
Phase 1- ($950,000), Oct 1, 2009,
Phase 2 - ($9,000,000), Oct 1, 2011
Phase 3 - ($13,200,000) Oct 1, 2012
Phase 4 - $40,000,000), Oct 1; 2015
Phase 5 - ($35,000,000), Oct 1, 2020, Power Transmission Cable.
($98,150,000 total funding by Oct. 1, 2020)
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®ALASKA Renewable Energy Fund
ENERGY AUTHORITY Grant Application
Phase 1 = Studies, $950,000, completed by Oct. 1, 2009.
Phase 2 = Equipment & Helicopter, $9,000,000, completed by Oct 1, 2011.
Phase 3 = 7 - 12 mile road, $10,000,000, hot water source drilling to depth 10,000 feet, $3,200,000
by Oct. 1, 2012.
Phase 4 - 10 Power Generators, 10 Hydrogen Generators, $40,000,000, completed by Oct. 1, 2015.
Phase 5 = Power Transmission Cable to Kenai, $35,000,000, by ABB Inc., completed by Oct.
1, 2020.
($98,150,000 total)
3.5 Project Communications?
Discuss how you plan to monitor the project and keep the Authority informed of the status?
We would monitor construction while on site and from our base of operations in Soldotna, Alaska
on the Kenai Peninsula. We would keep the AEA informed of our project progress with monthly
progress reports either faxed or land mailed to AEA the end of each month.
3.6 Project Risk?
Discuss potential problems and how you would address them?
Volcanic Hazards
A proximal hazard exists regarding the base area of both Mount Redoubt & Spur because of the
possibility of flooding generated by the rapid emplacement of large volumes of hot volcanic ejecta
onto snow and ice on the upper flanks of volcanoes. All the volcanoes in Cook Inlet except Mt. Saint
Augustine have permanent snow and ice stored in snowfields and glaciers on their upper flanks
(Combellick et al, 1995:5).
There was a volcanically generated flood this century, which was caused by the January 2, 1990,
eruption of Redoubt Volcano. The water / mud flood impacted the operation of the Drift River Oil
Terminal (Combellick et al., 1995:5, citing to Brantley, 1990). The state allowed normal loading
operations to resume once a protective dike was installed around the tank farm and support
facilities to provide protection from flooding. This work was accomplished by August 1990 and the
facility was fully operational. Another, and probably much smaller, flood came down the
Chakachatua River in response to the 1953 eruption of Mt. Spurr. Floods caused by eruptions can
impact any drainage on a volcano (Combellick et al., 1995:5).
The most common distal hazard is ashfall, where volcanic ash (finely ground volcanic rock) is lofted
into the atmosphere and stratosphere by explosive eruptions, drifts downwind, and falls to the
ground. There have been dozens of such events from Cook Inlet volcanoes in this century: In most
cases, volcano ashfalls have been a few millimeters or less in thickness. The primary hazard of such
ashfalls is damage to mechanical and electronic equipment such as engines, which ingest ash past
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ALASHKA
Renewable Energy Fund
Grant Application
the air filter, computers, and transformers, possibly causing electrical shorts. Ashfalls of a few
millimeters should be expected throughout the Cook Inlet and Susitna basins with a long-term
average frequency of a few every decade or two. Ashfalls thick enough to collapse buildings are
possible but rare (Combellick et al., 1995:5).
CIP will be closely monitoring all planning activities to make sure that all project planning &
construction is preformed with mud flows, ashfalls and even lava flows clearly in mind.
---------------------------------------------------------------------------------
PROJECT RISKS: Completing geothermal power plant placement study on time?
Install financial incentives within Phase 1 study contracts for on time completion.
---------------------------------------------------------------------------------
Completing hot and cold well placement study on time?
Install financial incentives within well placement contracts for on time completion.
Correctly& timely plant construction.
Install financial incentives within plant construction contract for on time completion
Correctly & timely placement of the high voltage, direct current (HVDC) power transmission cable
Install financial incentives within transmission cable contract for on time completion.
Timely securing all permits, geothermal leases and construction permits.
File all applications as soon as possible and closely monitor all permits and approvals as authorities
address them.
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?
4.2 Mount Spur Geothermal Energy ?
Describe the potential extent/amount of the energy resource that is available.
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ALAS KA Renewable Energy Fund
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) ENERGY AUTHORITY Grant Application
The Geothermal Energy of the Mount Redoubt Resource is 150 MWe.
The Geothermal Energy of the Mount Spur Resource is 100 MWe.
(megawatts of electrical power)
DOE -
CIP's existing estimates suggest evidence of the presence of a substantial geothermal reservoir
beneath the Redoubt & Spur resources, at a depth of less than 2500m. The evidenced reservoir's
have a high likelihood to be able to support production of at least 100 —150 megawatts of electricity,
at full-scale development.
By comparisons to similar geothermal sites in the western US (e.g Coso, California), the present
day cost of development would be between $1,500 to $2,500 per kilowatt installed (i.e. $150 to
$250,000,000 for 100 megawatts). We believe that a cash flow analysis, conducted for either site
would show that the resources can potentially produce electricity at a cost around 7 —10 cents per
kilowatt-hour. This includes all costs related to capital investment within drilling & power plant
installation, without a connection to a Power Grid or operating costs), amortized over 25 years.
CIP is estimating that Alaska's current market for electricity makes both of these resources a
commercially viable alternative to conventional power generation schemes (e.g. hydro and gas). A
Green bonus further adds to the value of these resources. A wholesale power price of C$70 per
megawatt -hour (equivalent to 7 cents per kWh) was a representative of a 2004 price of power being
offered by Canada's BC Hydro under the Renewables Certificate program. That power price was
projected to escalate at the rate of inflation (2.5% per annum). Once the Redoubt or Spur resource
is confirmed, a long-term power purchase agreement with the Homer Electric Association &
Chugach Electric will practically guarantee the financial return of the power project. Based on a
similar Canadian Project in 2003, (Pebble Creek Geothermal Prospect for the North Meager Greek
Reservoir Cash Flow Analysis), the net benefit of a plant at either location could produce revenues
as high as $15,000,000 to $35,000,000 USdn$ per year. http://www.gaeaenergy.com/projects.htm
CIP would need a total of $950,000 by May 1, 2009. in startup funds to begin the Phase 1 studies and
a total of $63,150,000 by 2015, to bring the plant online and producing power. CIP would eventually
need an additional $35,0 00,000 financing commitment for the completed transmission line project.
Discuss the pros and cons of your proposed energy resource vs. other alternatives that may
be available for the market to be served by your project?
THE CURRENT ENERGY ALTERNATIVES FOR PERSONS AND BUSINESSES IN AND
AROUND THE COOK INLET AREA ARE ONLY FOSSIAL FUEL RESOURCE'S. ALASKA
SHOULD BE DOING EVERYTHING IT CAN TO CHANGE ITS FOSSIAL FUEL
ADDICTION. GEOTHERMAL ENERGY IS ONE WAY THE STATE CAN DO THIS.
Economic Benefits:
Increased geothermal energy production in Alaska will help attract tourist and that will help boost
local economies. The direct use of geothermal energy can allow resorts and manufacturers to
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® ENERGYAUTHORITY Grant Application
decrease their operating costs and supports enterprises such as green housing. With cheap heating,
residents may also build either geothermal or cheap electric greenhouses, to produce crops year-
round for local consumption or export. Furthermore, upon installation of the proposed geothermal
power plant, power production costs can be reduced to around 7 - 10¢ per kilowatt-hour. This
electric rate reduction would give current electric & gas utilities monopolies much needed rate
competition.
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?
Petroleum based energy resource's are the only alternatives available to persons in and around the
Cook Inlet area. There are a few hydroelectric power plants but this kind of technology is
discouraged in Alaska because it can interfere with fisheries production within lakes and streams.
Alaska's fossil fuel addiction is extremely expensive because other nations set the price of petroleum.
This foreign control of our price of energy must be changed as soon as possible. Geothermal energy
is one of the best methods around to help change this dependency.
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 COOK INLET AREA IS ADDICTED TO EXPENSIVE FOSSIAL FUELS EXCLUSIVELY.
ALL FORMS OF HEATING, TRANSPORTATION OR RELATED OPERATIONS ARE
DEPENDANT ON EXPENSIVE PETROLEM BASED ENERGY. OUR NUMBER OF ENERGY
GENERATOR'S, THEIR SIZE, AGE, EFFICIENCY AND TYPES, HAVE EXTREMLY HIGH
MAINTANCE COSTS WITH EXPENSIVE PRICE TAGS AND THEY ARE NOT VERY
EFFICIENT. GEOTHERMAL ENERGY PRODUCTION IS RELATIVLY CHEAP AND HIGHLY
EFFICIENT.
The Cook Inlet area is currently only using fossil fuels for electric power production. The two main
electric providers are Homer Electric and Chugat Electric. It is very necessary that our region
explore geothermal power production in an effort to improve our ability to provide reliable and
affordable electricity.
We currently face an urgent need to identify sound alternatives to petroleum based electrical
generation due to the dramatically increasing and unpredictable costs of using fossil fuels. These
costs threaten Cook Inlet's economic health and the sustainability of Southwest, Alaska in general.
The recent diesel fuel surcharge increase to Cook Inlet consumers recently spiked the effective
electric rate by about 68%, or more than $73.00 per month for a typical residential customer.
Natural gas surcharges in the same area have jumped approximately 200%, or more than $195 per
month for the typical residential customer. New information is indicating that development of
geothermal power production will stabilize and even lower electric rates in the Cook Inlet region,
where approximately 300,000 Alaskans live.
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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 Cook Inlet area is currently 100% dependant on petroleum energy. A change to geothermal
energy can allow our residence to pay less for energy and use those funds to make Alaska more
productive. With cheap heating, residents may also build either geothermal or cheap electric
greenhouses, to produce crops year-round for local consumption or export. Furthermore, upon
installation of the proposed geothermal power plant; power production costs can be reduced to
around 7 - 100 per kilowatt-hour. This electric rate reduction would give current Cook Inlet electric
&i gas utilities monopolies, much needed rate competition.
4.2.3 Existing Energy Market?
Discuss existing energy use and its market?
Energy costs within the Cook Inlet area are outrageous.
The average price of gasoline and home heating fuel on the Kenai Peninsula is 20% higher than
fuel oil and gasoline down in the lower 48 states. There is currently zero geothermal energy being
produced around the Cook Inlet area.
Discuss impacts your project may have on energy customers?
Geothermal energy production would allow an electric rate reduction and would give current
Cook Inlet 66petroleum based" electric & gas utility monopolies, much needed rate competition.
Other Alaska Geothermal Projects:
In the Aleutians, the Mt. Makushin geothermal project has an estimated temperature of 390" F (200'
Q. The city of Unalaska is proposing placement of a 15 MW power plant which would be located
about 12 miles west-northwest of Unalaska, near the base of the Makushin Volcano. Electricity lines
and district -heat pipe would connect the plant to the city of Unalaska.
On the nearby Alaska Peninsula, geothermal energy potential is being explored by the Naknek
Electric Association, which serves the communities of Naknek and King Salmon near the volcanic
areas of Katmai National Park. This project was proposed in 1996, and had an estimated cost of $90
million, or $6,436 per kW of installed capacity. At the time, the capital cost of conventional diesel
generation was around $500 per kW.
The Naknek Electric Association, Inc. Has Also Proposing A Regional Geothermal Generation
Project — April, 2007.Naknek Electric Association, Inc. (NEA) is exploring geothermal power
production in an effort to improve its ability to provide reliable and affordable electricity. The
cooperative faces an urgent need to identify sound alternatives to diesel generation due to the
increasing and unpredictable costs of using fossil fuels. These costs threaten the economic health and
sustainability of the Bristol Bay and bake Region of western Alaska.
Bristol Bay is considered the sockeye salmon capital of the world. The sockeye salmon harvested in a
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ENERGY AUTHORITY Grant Application
single summer has topped 45 million fish. Since the area has a native economic base, lowering the
cost of electricity could radically improve the local economy. Several seafood processors have told
the NEA that they would be interested in extending their seasons to include secondary processing of
salmon locally if energy costs are reduced.
NEA's interest in geothermal power is not new. The cooperative began researching local geothermal
energy potential about 10 years ago and found considerable data to justify further exploration. That
research was within the Katmai National Park and Preserve. The park boundary lies just a few
miles from NEA's electric lines. During preliminary discussions with federal officials, it appeared
that gaining access to the identified potential resource through park and refuge lands would be
expensive and time consuming. NEA continued to watch for geothermal opportunities, and focused
on improving diesel production efficiency and other efforts to stabilize electric rates.
Recently, the co-op learned that drilling technology now supports development of geothermal
resources at deeper depths and believes it may. be possible to find this resource outside the national
park and close to existing road and electric distribution infrastructure. NEA is currently assessing
local geothermal resources, available geothermal power production technologies and options for a
transmission system that will extend the benefit of geothermal resource development to all
communities in the region.
Surface mineral testing shows the presence of minerals indicative of an underlying geothermal
resource. Additional surface mineral testing, shallow drill tests at one or two likely sites and a deep
drill test are scheduled this winter.
With resource identification, NEA proposes construction of a 25 NM geothermal plant serving 25
villages within the Bristol Bay and Lake Region. This project would be the first utility -grade
geothermal development in Alaska.
The initial cost estimate for the plant and approximately 450 miles of transmission line
interconnecting regional villages is $200 million. Over the past decade the NEA has invested
approximately $1,000,000 in initial research and exploration of renewable alternative energy with
$400,000 just in 2007, and is committed to being a financial partner as the project proceeds. NEA is
approaching both state and federal governments for matching assistance.
Proposed Project:
25 NM Geothermal Generation Facility.
i 450 miles of transmission lines to bring electric energy to 25 villages. Lines would extend
from Naknek/King Salmon, to Pilot Point; to Iliamna/Port Alsworth; and to Dillingham/New
Stuyahok/Togiak .
• Initial Load: 18 AM with full potential to use 25 AM within two years.
• Lines would extend from Naknek/King Salmon to Pilot Point; to Iliamna/Port Alswarth; and
to Dillingham/New Stuyahok/Togiak.
• Cost - $200 million for 25 villages, approximately 10,000 — 20,000 residents.
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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?
The geothermal thermal system design would be for a UTC Power. The PureCycle® power
system is a 24/7 renewable power source. Its closed -cycle process uses geothermal water to
generate 1 MW of electrical power (gross) with zero emissions. The Purecycle® power system
can operate on a wide range of geothermal resource temperatures starting as low as 195 degrees F.
A geothermal lease may be required with a plant site near the Mount Redoubt, U.S. Lake Clark
National Park and Preserve. The project site would have to remain at least 4 miles from the summit
of Redoubt and is on the west side of Cook Inlet. Much of the land surrounding Redoubt is
controlled by DLM, the Alaska Department of Natural Resources and other private land owners.
The projects hydrogen generation system design would be for an QuestAir's H-3200.
This system combines patented QuestAir rotary valve technology and conventional beaded
adsorbents with an optimized PSA cycle to deliver higher hydrogen recovery
performance than conventional PSA systems. The QuestAir H-3200 requires only
one -quarter of the space of conventional PSA and, with only two valves, is simpler
to operate. The QuestAir H-3200 offers a highly efficient, cost effective hydrogen
purification solution which works well with modern hydrogen fueling stations
that generate hydrogen from natural gas and other hydrocarbon fuels. This system also
works well with smaller on -site hydrogen generation systems. The H-3200 is currently
available in a range of capacities from 5 to 5000 NCMH (product hydrogen flow),
and comes skid -mounted, ready for fast and simple installation. Runtime: 10 to 15 years.
4.3.1 System Design
Provide the following information for the proposed renewable energy system?
0 A description of renewable energy technology specific to project location?
® Optimum installed capacity?
b 10 megawatts (MW) of electric production. 400,000,000 kWh of power each year.
® 3000 NCMH hydrogen production. -
Y
Anticipated capacity factor?
Y 10 megawatts (MW) of electricity.
300,000 NCMH of hydrogen.
e Redoubt's anticipated annual generation?
10 megawatt (MW) production, 400,000,000 kWh of power each year.
Spurs's anticipated annual generation?
10 megawatt (MW) production, 400,000,000 kWh of power each year.
barriers?
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• Mount Redoubt is on the boarder of the Lake Clark National Park & Preserve. This Park
will cause substantial problems to geothermal exploration because it is not possible to
develop a power plant within 4 miles of its summit. All exploration would have to be
preformed at least 4 miles east of Redoubt's summit, on private and BLM lands.
• Also completing most of the project only from May — Oct., frost free periods could prove to
be difficult.
• Financing the project?
• If financing is not provided byway of a grant for this project, it would be completely
impossible to construct it. There are currently no banks willing to finance the first utility
grade geothermal power plant in Alaska.
•
• Location?
• Mt. Redoubt is located 35 miles west, southwest of Kenai, Alaska and 82 miles south west of
Anchorage, Alaska. Mt. Spur is located 80 miles west, northwest of Kenai, Alaska and 55
miles south west of Anchorage, Alaska. The general location of Mount Redoubt's site would
be a minimum of 4 miles east of its summit.Most of the land area around the Mt. Spur
volcano resource would be available for power plant construction.
• Delivery methods?
• High voltage electrical transmission lines to deliver power to major population centers.
• Air & Sea exporting bulk liquid hydrogen to Alaska's major population centers.
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?
Securing land or geothermal leases on Redoubt will be more difficult than Spur simply because of
the proximity to the Lake Clark National Park & Preserve. Redoubt geothermal exploration is not
possible within the Park therefore all activities would have to be conducted at least 4 miles east of
Redoubt's summit. There are private and BLM land parcels available in this area and these would
require investigation during the Phase 1 Study prior to development.
Most of these parcels of land are owned by either the Alaska Bureau of Land Management
or private individuals.
4.3.3 Permits
Provide the following information as it may relate to permitting and how you intend to
address outstanding permit issues?
• List of applicable permits?
• KENAI PENSISULA BOROUGH UTILITY PERMIT.
• KENAI PENSISULA BOROUGH SALES TAX PERMIT.
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• ALASKA BLM BUREAU OR LAND MANAGEMENT PERMIT OR GEOTHERMAL
LEASE.
• Anticipated permitting timeline?
• ANTICIPATING 1— 2 YEAR TIMELINE FOR APPLYING FOR GEOTHERMAL
LEASES AND PERMITS.
• Identify and discussion of potential barriers?
• Financing the project and as was state earlier Redoubt would present a Park problem
within 4 miles of the summit.
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:
The Project site would have to be specially located on the base of either Mount Redoubt or Spur
which is
extremely inaccessible and remote. There are no known telecommunication interference concerns.
There are no known aviation, visual or aesthetic concerns mainly because there are few persons
• residing, traveling near or visiting the base of either mountain.
• The Project may require a geothermal lease for plant placement and transmission line
placement.
• The only real known barrier would be that most of the summit of Mount Redoubt is covered
by the Lake Clark National Park & Preserve and would prevent geothermal development.
Being restricted to only sites located 4 miles east of Redoubt could cause a major problem
reaching necessary heat sources within a reasonable underground depth. Drilling pricing is
$3,200,000 per 10,000 feet and the 4 mile barrier from the summit
• could require unacceptable drilling costs.
White House Renewable Energy Report Published
he White House Report, "In Response to the National Energy Policy Recommendations to
Increase Renewable Energy Production on Federal Lands," is now available. The interagency
report, a collaboration of the Departments of the Interior, Energy, Agriculture, and Defense,
describes activities completed, underway, and planned for the future. Proposed actions relevant to
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geothermal energy included:
The US Geological Survey (USGS) will begin a new assessment of the geothermal potential
of the Great Basin in Fiscal Year 2003. The Great Basin covers Nevada, western Utah,
southeastern Oregon, California east of the Sierra, and southeastern Idaho. For more
information, contact Colin Williams of the USGS in Menlo Park, CA, Tel: (650) 329-4881,
Email:
• The Bureau of Land Management (BLM) is committed to processing all pending geothermal
lease applications by Fall 2003. BLM will begin processing all geothermal lease applications
within 90 days of filing an application. The objective is to complete processing within 6
months of filing. For more information, contact Paul Dunlevy, BLM-Washington, D.C., Tel:
(202) 452-7707, Email:
• The usefulness of drafting a new Executive Order on increasing renewable energy on
Federal lands will be considered.
http://www.geothermal-biz.com/newsletter/Oct-2002.htm
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?
Electrical generation equipment costs are estimated at $25,000,000 with zero input fuel costs.
Hydrogen generation equipment costs are estimated at $15,000,000 with zero input fuel costs.
Estimating customer electrical usage costs are from 7¢ - 100 per kilowatt hour.
A geothermal thermal electrical generator has a 35 year design life.
We would be requesting at total of approximately $98,150,000 in permanent financing for this
Project by 2020.
5 PHASE DEVELOPMENTAL PLAN 'TIMETABLE
Phase 1 - ($950,000), Oct 1, 2009,
Phase 2 - ($9,000,000), Oct 1, 2011
Phase 3 - ($13,200,000) Oct 1, 2012
Phase 4 - $40,000,000), Oct 1, 2015
Phase 5 - ($35,000,000), Oct 1, 2020
($98,150,000 total funding by Oct. 1, 2020)
CIP would desire to be able to sell this renewable power for
$78
hour
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with a 2% annual price increase, for a blended average price of approximately $95 per megawatt
hour over a 20 year term of the Project.
These calculations are referencing the 101V W Thermo project data. CIP is also estimating that
both Redoubt and Spur's contain a temperature gradient very close to that Seen in the Thermo
project. This gradient would be confirmed within the CIP Phase 1 study.
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?
Funding would be expected to come from at least the following sources:
Alaska Energy Authority, AEA.
The U.S. Department of Energy, DOE.
Power Project Loan Fund, AIDE.
The Kenai Peninsula Borough, KPB.
The Anchorage Borough.
• Projected capital cost of proposed renewable energy system?
Phase 1 would be to conduct 4 specific studies to determine the feasibility of:
1.1 Study Mount Spur's to determine if 10 MW of geothermal energy is available and locate a site.
2.1 Study the site for placement of hot & cold. water wells.
3.1 Study road access and power transmission across Cook Inlet.
Phase 2 would implement "technology & hardware" from the commercially available
$2,500,000, Air -Air Power Plant from the United Technology Company, UTC Power.
We would collect bids for plant construction with electric power plant installation by
UTC Power. This phase includes the installation of a $1,500,000, H-3200 hydrogen
generation system from QuestAir Technologies Inc.
This phase would also require the purchase of a $5,00,000,000 helicopter, which would be
sold by May 1, 2012 and the funds used to construct a land road to Cook inlet by Oct 1, 2012.
Phase 3 would result in the construction of a 10 mile land road from Cook Inlet to the
power plant site by Oct 1. 2012. Cost Unknown.
Phase 4 would implement six ( 49 ) additional UTC, 1.0 MW class PureCycle@ geothermal power
generators, commercially available by 2010. Installed by 2015, Oct. 1.
Projected development cost of proposed renewable energy system?
$25,000,000 (9) 1.0 MW, PureCycle® geothermal power generators Installed by 2015, Oct. 1.
$15,000,000 — (9) H-3200 QuestAir Technologies Inc. hydrogen generation systems
+ installed by 2015, Oct. 1
$40,000,000, by 2015, Oct. 1
Phase 5 would result in a power transmission cable by ABB Inc., to Anchorage & Kenai,
Alaska by Oct. 1, 2020. Cost $35,000,000
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5 PHASE DEVELOPMENTAL PLAN THMETABLE
Phase 1 - ($950,000), Oct 1, 2009,
Phase 2 - ($9,000,000), Oct 1, 2011
Phase 3 - ($13,200,000) Oct 1, 2012
Phase 4 - $40,000,000), Oct 1, 2015
Phase 5 - ($35,000,000), Oct 1, 2020
($98,150,000 total funding by Oct. 1, 2020)
Phase 1= Studies, $950,000, completed by Oct. 1, 2009.
Phase 2 = Equipment & Helicopter, $9,000,000, completed by Oct 1, 2011.
Phase 3 =10 mile road, $10,000,000, hot water source drilling to depth 10,000 feet, $3,200,000
by Oct. 1, 2012.
Combined $16,400,000 ($26,350,000 total)
Phase 4 - 10 Power Generators, 10 Hydrogen Generators, $40,000,000, completed by Oct. 1, 2015.
Phase 5 = Power Transmission Cable to Kenai, $35,000,000, by ABB Inc., completed by Oct.
1, 2020.
($98,150,000 total)
$ 500,000 — Location of plant site study.
$ 200,000 — Drilling Location study.
$ 250,000 — Power Transmission Cable & Access study.
$3,200,000 Hot water source drilling to max. depth 10,000 feet, per hole.
$1,200,000 — Site Development & Access.
$1,400,000 — Land Purchase.
$5,000,000 — Helicopter.
$10,000,000 — Access Road From Cook Inlet to Plant Site.
$1,500,000 ea. — Hydrogen Generation System.
$2,500,000 ea. — Geothermal Electrical Generation Power Plant.
----------- --------- ------------------------------------------
$25,750,000 Start -Up Budget BY 2012, OCT. 1.
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?
Zero O&M costs, Remote monitoring. 5 year maintenance contract
• $10,000 per unit, per 5 year contract.
• Requested maintenance contract grant funding?
• $10,000 per unit, per 5 year contract.
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4.4.3 Power Purchase/Sale
The power purchase/sale information should include the following:
• Identification of potential power buyer(s)/customer(s) ?
• Homer Electric Association, Chugach Electric Assocation, west side of Cook Inlet,
• Cook Inlet Oil Drilling Platforms and the Kenai Peninsula ( Anchorage, Tyonek Villege,
• Chuitna Coal Dine, Chinitna Bay, Farewell Village, Chevron Drift River Terminal.
• Potential power purchase/sales price - at a minimum indicate a price range?
5 - 7 cents per kilowatt hour.
• Proposed rate of return from grant -funded project?
7 —10 Cents Per Kilowatt Hour Sales
Bulk Liquid Hydrogen Sales $2/gge, retail sale priced at $2.50 per kilogram for liquid
hydrogen.
We are requesting $950,000 in studies by Oct 1, 2009 and a total of approximately $98,150,000
in permanent financing by 2020 for this Project.
CIP would desire to be able to sell this renewable power at a price of $78 per megawatt hour, with
a 2% annual price increase, for a blended average price of approximately $95 per megawatt hour
over a 20 year term of the Project. We are estimating that the temperature —gradient boreholes,
resulting from the Redoubt and Spur Phase 1 study, would produce potential geothermal electrical
energy data comparable to the referenced Thermo project data.
4.4.4 Cost Worksheet
Complete the cost worksheet form, which provides summary information that will be considered in
evaluating the project?
Existing estimates suggest evidence of the presence of a substantial geothermal reservoir at a depth
of less than 2500m. The evidenced reservoir has a high .likelihood to support production of at least
100 megawatts of electricity, at full-scale development. By comparisons to similar geothermal sites
in the western ITS (e.g Coso, California), the present day cost of development will be between $1,500
to $2,500 per kilowatt installed (i.e. $150 to $250,000,000 for 100 megawatts).
Cash flow analysis, conducted for a feasibility study, showed that the resource could potentially
produce electricity at a cost around 7 cents per kilowatt-hour. This includes all costs related to
capital investment (drilling, power plant without a connection to a Power Grid), amortized over 25
years, and operating costs.
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The present Alaska market for electricity makes would make Redoubt or Spur locations a
commercially viable alternative to conventional power generation schemes (e.g. hydro and gas). A
green bonus further adds to the value to the this area geothermic resource. A wholesale power
price of $70 per megawatt -hour (equivalent to 7 cents per kWh) was a representative of 2004's
price of power being offered by Canada's BC Hydro under the Renewables Certificate program.
That power price was projected to escalate at the rate of inflation (2.5% per annum). Once the best
Cook Inlet location is confirmed, a long-term power purchase agreement with the Homer Electric
Association or Chugach Electric will practically guarantee the financial return of the power
project. Based on a similar Canadian Projects like in 2003, (Pebble Creek Geothermal Prospect for
the North Meager Greek Reservoir Cash Flow Analysis), the net benefit of the Spur project is
approximately 100 MW. If completely developed by 2020 that amount of power would be able to
produce approximantly $15,000,000 to $35,000,000 USdn$ per year.
REF: http://www.gaeaenergy.com/projects.htm
CIP would need $12,550,000 in startup funds to begin this Project. CIP would eventually need an
additional $68,500,000 in financing to complete the 10 MW Project in 2020.
5 PHASE DEVELOPMENTAL PLAN THMETABLE
Phase 1 - ($950,000), Oct 1, 2009,
Phase 2 - (S9,000,000), Oct 1, 2011,
Phase 3 - ($3,200,000) Oct 1, 2012,
Phase 4 - $40,000,000), Oct 1, 2015,
Phase 5 - ($35,000,000), Oct 1, 2020,
($98,150,000 total funding by Oct. 1, 2020)
Phase 1 = Studies, $950,000, completed by Oct. 1, 2009.
Phase 2 = Equipment & Helicopter, $9,000,000, completed by Oct 1, 2011.
Phase 3 = 7 - 12 mile road, $10,000,000, hot water source drilling to depth 10,000 feet, $3,200,000
by Oct. 1, 2012.
Phase 4 - 10 Power Generators, 10 Hydrogen. Generators, $40,000,000, completed by Oct. 1, 2015.
Phase 5 = Power Transmission Cable to Kenai, $35,000,000, by ABB Inc., completed by Oct.
1, 2020.
($98,150,000 total)
$ 500,000 — Location of plant site study.
$ 200,000 — Drilling Location study.
$ 250,000 — Power Transmission Cable & Access study.
$3,200,000 Hot water source drilling to max. depth 10,000 feet, per hole.
$1,200,000 — Site Development & Access.
$1,400,000 — Land Purchase.
$5,000,000 — Helicopter.
$10,000,000 — Access Road From Cook Inlet to Plant Site.
$1,500,000 ea. — Hydrogen Generation System.
$2,500,000 ea. — Geothermal Electrical Generation Power Plant.
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$25,750,000 Start -Up Budget BY 2012, OCT. 1.
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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) ENERGYAUTHORITY Grant Application
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?
Cook Inlet Power (CIP)
P.O. Box 876
Soldotna, Alaska 99669
907 262 78943
Donald Johnson (owner)
P.O. Box 876
Soldotna, Alaska 99669
ccpowow@gci.net
10/01/08
Plan Prepared by: Donald Johnson
Cook Inlet Power (CIP) -10 MW Utility -Grade Geothermal Development
BUSINESS PLAN FOR A SUSTAINABLE GEOTHERMAL ENERGY POWER PLANT
STATEMENT OF PURPOSE:
It is the purpose of Cook Inlet Power, CIP to provide the residents of the Cook Inlet area of
Alaska with alternative and less expensive sources of power. CIP is proposing to accomplish this
purpose by installing and maintaining a geothermal power plant at the base of either Mount Redoubt or
Mount Spur Volcano's, which are located on the west side of Cook Inlet, in Alaska.
THE SUSTAINABLITY OF THIS PROJECT WOULD BE DEPENDANT ON THE SALE OF
ELECTRICITY AND HYDROGEN TO THE KENAI PENINSULA AND THE CITY OF
ANCHORAGE, ALASKA.
CIP'S BUSINESSES LEGAL STRUCTURE:
CIP would be an independent power producer, which is run by an Alaskan resident who resides in
Soldotna, Alaska.
Description of the Business:
CIP would be responsible for installing, maintaining, and repairing the 10 MW geothermal power
plant. CIP would concentrate on providing electric and hydrogen energy to homes and automobiles,
mainly within the Cook Inlet area. Executive Director Donald Johnson would manage CIP's main
office at 40440 Sterling Highway, Soldotna, Alaska.
The remotely located 10 MW, geothermal power plant project would start with three, Phase 1 assessment /
feasibility studies. The remoteness of the project site would need to be accounted for when scheduling all
study work. A specific budget would have to be calculated for helicopter access to these remote sites.
There would have to be a budget of at least $100,000 for transportation costs. This would provide
approximately 250 hours of helicopter access for all study activities.
This study data would then evaluate for heat resources within both Mount Redoubt and Mount Spur. Once
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the location of the highest useable heat source is located and a project site is decided on, then CIP
would secure funding for power plant purchase and when approved, advance order ten, 1 MW
electrical power generation plants from UTC Power, a United Technologies Corp. of South
Windsor, CT, (NYSE: UTX) company, and ten, 3000 NCMH, H-3200 Hydrogen Generation System
Purchase from QuestAir. Technologies Inc.. This early order would need to be place at least one year prior
to the general power plant being ready for generator installation. Once the power plant equipment is
ordered, a land access road would then be constructed from Cook Inlet to the project site. The land access
road construction timing would be scheduled to finish before the power generation equipment is shipped to
Alaska.
The general power plant contractor would be Raser Technologies of Provo, Utah (NYSE Arca: RZ). Raser
Technologies specializes in the construction of geothermic power plants of this nature and carries a long
track record of being capable of bring this kind of project into reality and within budget.
After installation, UTC, Raser Technologies and QuestAir Technologies Inc. will provide scheduled
maintenance and necessary repairs on the power plants systems. The Executive Director of CIP will
attempt to avoid being a crewmember because he will need to devote his time to overseeing the general
construction and operations of the power plant. It is estimated that it will take UTC installation crew's
approximately 1 - 2 weeks to install each 1 MW electrical generator. It is estimated that it will take
QuestAir Technologies Inc. crew's 1 - 2 days to install each hydrogen generation system. It is estimated
that it will take Raser approximately 6 months to construct general power plant systems.
These estimates assume that generator installation would take place between May 1 to Oct. 1 of 2015.
Power plant construction could take longer than expected if weather proves to slow installation.
Maintenance and repairs may take 1 - 2 days per system each month. The remoteness of the project
site would need to be accounted for when scheduling maintenance or repairs.
Services:
The services rendered by UTC & Raser Technologies will be their installation, maintenance, and repair
of the geothermal power plants & construction. CIP will act as a contractor when installing
and maintaining the power plant and its components.
The components of the power plant include 1 MW, Air -Air Power Plant Generator, installed by UTC
Power.
These (1 MW UTC power plants (convert geothermal heat energy into HVDC electrical current for
transmission) and then use a part of that current to generate liquid hydrogen for export sale. Electrical
transmission would be accomplished with HVDC land & sea transmission lines. Liquid hydrogen export
would be brought to market by any means available but land surface road, transmission lines or a pipeline
to Cook Inlet, would be expected'to carry most hydrogen power to market.
The resulting HVDC current transmission would need to be converted into AC power by the power utility
purchasing the power.
Alaska Geothermal Electrical and Hydrogen Production:
When searching for a manufacturer, which is willing to sell portable 1 MW, geothermal electrical
generators, which are under a 35,000 lbs. weight; we were directed to Ormat and Barber -Nichols. Both of
these companies are very experienced in geothermal development. Unfortunately the cost estimates were
higher than anticipated. Initial project cost estimates would have exceeded our anticipated power plant
costs for a 10 MW power plant. Eventually we contacted the United Technologies Research Center (a
division of United Technologies Corporation) on a recommendation by the U.S. Department of Energy
Geothermal Technologies Program and the case history of the 2004 installation of a single 400 kW
geothermal power plant for Chena. Hot Springs, Alaska.
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The objective of the Chena Hot Springs, Geothermal Power Plant Project was to install two 200kW
Organic Rankine Cycle (ORC) geothermal power plants at Chena Hot Springs, Alaska, for a total
generating capacity of 400 W. The Chena plant is the first geothermal power plant installed in the State of
Alaska, and serves as a demonstration of the technology for the rest of state. This geothermal power plant
has been operating with 95% availability since the installation of its first 200 kW unit in July, 2006. This
site also has relegated diesel power generation which acts as a supplemental backup for the site. The power
plant has operated for over 3000 hours in 2006, generating 578,550 kWhrs and displacing 44,500 gallons
in diesel fuel. In 2007, the project is expected to generate 3 million Mrs of clean geothermal power and
displace 224,000 gallons of diesel for an estimated savings of $550,000.
In October, 2004, Chena Hot Springs was approached by the United Technologies Corporation because
they had developed a modular Organic Rankine Cycle, ORC power generation system designed to use
waste heat from industrial applications. The product was called the PureCycle 200, and United
Technologies was interested in installing a unit to operate on heat from a geothermal resource as another
application of their technology. Chena was an excellent candidate for the project, so they decided to
proceed with the project through the United Technologies Corporation. The primary reason for using
the manufacturer of United Technologies (UTC) was because it represented an opportunity to further the
geothermal industry in Alaska as a whole.
UTC has developed a unique approach to reducing costs through the use of inexpensive, mass produced,
U.S. manufactured air conditioning and refrigeration equipment from Carrier Refhgeration4. UTC's
main goal was to reduce the cost of geothermal power generation equipment from $3000/kWhr installed to
$1300/kWhr installed. In contrast, Barber -Nichols had last manufactured a geothermal power plant in the
mid 1980's and did not intend to build additional units in any significant quantity.
Therefore, the opportunity for the Chena project to impact future geothermal development in Alaska. and
elsewhere would be limited. The Chena plant is the first geothermal power plant installed in the State of
Alaska, and serves as a demonstration of the technology for the rest of the state. The geothermal power
plant has been operating with.95% availability since the installation of the first 200 kW unit in July, 2006.
Instead of selecting a 400 kW power plant like Chena used, CIP is projecting the use of ten, new 1 MW
plants from UTC. This new expanded electric generation unit is a giant step forward in geothermal power
production and should be on the market by 2010.The components of the CIP power plant include (ten), 1
MW, UTC, Air -Air Power Plant Generators (to convert geothermal energy into electrical current). (ten),
3000 NCMH, H-3200, QuestAir Technologies Inc. hydrogen generators (to generate hydrogen).
CIP will mainly concentrate on contracting and supervising the installing of these power plant generators.
The daily output of this 10 AM power plant would be to provide for the energy needs of approximately
30,000 people or 10,000 homes. The CIP plant would also be expandable up to the expected 100 Nff total
production output. Each megawatt of electrical output would supply the energy needs of about 1,000
people. 100 MW of electrical output would then meet the needs of 100,000 people.
100 MW of power ( X ) 1,000 people = 100,000 persons covered.
The Project would consist of funding $950,000 for initial studies, $25,000,000 for 10 electrical generators
and $15,000,000 for 10 hydrogen production generators, $13,200,00 in power plant construction,
equipment and transportation. $3 5,000,000 for power transmission cable placement. The total cost of the
project is estimated to be approximately $98,150,000.
The Project would also require a structure to house equipment. The Projects initial goal would be to
produce local power and hydrogen for power demand on the west side of Cook Inlet. Eventually the
Project would also be capable of exporting excess electrical power and liquid hydrogen for wholesale &
retail sale all over Alaska. CIP's 2015 goal is 10, MW of power production with the possibility of
expanding to 100 MW of power by 2020 for $98,150,000.
The Kenai Peninsula has approximately 40,000 residents with 10,000 homes and the city of Anchorage has
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about 250,000 people, with 65,000 homes. 1 MW is equivalent to 1 million watts, which can meet the
power needs of about 1,000 people. This Projects short term goal is to meet the electrical power
requirements of at least 30,000 people by 2015 and then increasing its power production to 100 MW's by
2020. This long term goal of 100 MW s would meet the power needs of at least 100,000 persons.
Residential Off -Grid Systems:
In order to meet the needs of different customers, highly versatile stand alone Fuel Cell's may be used for
the remote the generation of electricity for individual houses through -out Alaska. A main feature of our CIP
geothermal power plant would be to generate and transmit electricity but there would be many other uses
for the liquid hydrogen product it would also produce.
Kenai Peninsula Natural Gas Displacement:
40,000 Kenai Peninsula residents / 4 person family average = 10,000 homes.
Average of $4,000 per year spent each home for natural gas heating at $1.00 per CCF of gas.
10,000 homes X $4,000 natural gas annually = $40,000,000 spent for natural gas on the
Kenai Peninsula annually.
$40,000,000 / $1.00 per CCF = Possible 40,000,000 CCF of natural gas displaced on the Kenai
Peninsula annually. If these 10,000 homes were able to convert from natural gas and use hydrogen fuel
instead, the Cook Inlet area would be able to displace at least 40,000,000 CCF of natural gas displaced
annually.
Anchorage Natural Gas Displacement:
200,000 Anchorage residents / 4 person family average = 50,000 homes.
Average of $4,000 per year spent each home for natural gas heating at $1.00 per CCF of gas.
50,000 homes X $4,000 natural gas annually = $200,000,000 spent for natural gas in Anchorage annually.
$200,000,000 /. $1.00 per CCF = Possible 200,000,000 CCF of natural gas displaced in Anchorage
annually. If these 10,000 homes were able to convert from natural gas and use hydrogen fuel instead, the
Cook Inlet area would be able to displace at least -200,000,000 CCF of natural gas displaced annually.
40,000,000 CCF of natural gas displaced + 200,000,000 CCF of natural gas displaced = 240,000,000 CCF
total natural gas displaced in the Cook Inlet area annually if half of the population switched from natural
gas heating to hydrogen Fuel Cell heating.
$40,000,000 spent for natural gas + 200,000,000 spent for natural gas = $240,000,000 spent on natural
gas in the Cook Inlet area annually. CIP currently lacks comparison data to determine the cost savings
involved by purchasing $240,000,000 worth of hydrogen instead of natural gas for home heating.
HYDROGEN FUEL / AUTO GAS DISPLACEMENT CALCULATIONS
40,000 Kenai Peninsula residents X average $5,000 per year each for auto gas = a $200,000,000 purchase
annually. (40,000 X $5,000 = $200,000,000)
( Calculating 17 mpg on.a vehicle, which equals about 18,000 miles per year)
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Renewable Energy Fund
Grant.Application
Assuming that half of the KPB residents convert automobiles over to geothermic produced
hydrogen fuel. $100,000,000 / $4.50 per gallon = 22,220,000 gals. auto gas used annually by KPB
residents. 22,220,000 gals auto gas / 20,000 residents = 1,111 gallons per resident used annually.
(22,220,000 gallons of auto gas NOT purchased per resident annually) = $100,000,000 saved per year,
Displaces 18,500,000 gallons auto gas annually.
200,000 Anchorage residents X average $5,000 per year each for auto gas = a $1,000,000,000 purchase
annually. (200,000 X $5,000 = $1,000,000,000)
( Calculating 17 mpg on a vehicle, which equals about 18,000 miles per year)
Assuming that half of the Anchorage residents convert automobiles over to geothermic produced
hydrogen fuel. $500,000,000 / $4.50 per gallon = 111,000,000 gals. auto gas.
111,000,000 gals auto gas / 100,000 residents = 1,111 gallons per resident used annually.
(111,000,000 gallons of auto gas NOT purchased per resident annually) = $24,000,000 saved per year,
111,000,000 gallons X $4.50 per gallon = $450,000,000 saved per year
Displaces 133,000,000 gallons auto gas annually.
22,220,000 gallons Kenai + 111,000,000 gallons Anchorage = 133,000,000 gallons not used by Cook Inlet
annually. $450,000,000 will be saved annually by half of Cook Inlet residents purchasing and using
hydrogen fuel to perform the operations which were preformed previously with the use of fossil fuels.
Hydrogen Savings Calculations:
Compressed hydrogen gas costs about $2.50 per kilogram.
(A kilogram of hydrogen basically costs a lot less than a gallon of auto gas but it will do the same work as
that gallon) 4 kilograms of hydrogen can power a vehicle for 270 miles. This would mean that your
average car or truck would get about a 67.5 mpg. The total price for this 270 mile trip is $10 for 4 kg.
of compressed hydrogen.
At $4.50 per gallon and 17 MPG for auto gas, the same trip would take 15.8 gallons of auto gas.
15.8 gallons of auto gas X $4.50 per gallon auto gas= $71.40 cost for the trip.
($10 for 270 miles using hydrogen) ($71.40 for 270 miles using auto gas) = $61.40 savings.
A hydrogen car uses 84% less fuel, saving $61.40 and displacing 15.8 gallons of auto gas.
133,000,000 gallons of auto gas is used annually within the Cook Inlet area.
( 133,000,000 gallons X $4.50 per gallon auto gas = $598,000,000 spent annually in the Cook Inlet area on
auto gas ) 84% of 133,000,000 gallons of auto gas = 111,500,000 gallons auto gas displaced within the
Cook Inlet area annually.111,500,000 gallons auto gas X $4.50 per gallon auto gas = $510,250,000 saved
annually by Cook Inlet.
Location:
CIP's business office would be located in Soldotna, Alaska. It would construct its geothermal power plant
remotely on the base of either Mount Spur or Redoubt, with transmission lines running to major cities.
Management:
Management would be organized by Don Johnson the owner and operator of CIP. I have been involved in
working within and managing businesses since I was a teenager. My first encounters in the business world
involved working within the automotive sales industry and the construction of custom homes. I progressed
from working for persons' who owned these businesses to running my own auto sale business and
construction company.
When I moved to Alaska in 1980 I opened a charter fishing and flight service. I am currently managing
these businesses in Soldotna, Alaska. I have a general background in contracting services for
general construction. I have not yet managed the construction of a power plant but I am sure that much of
my previous experience will be applicable to that project. The actual construction of this project would be
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Renewable Energy Fund
Grant Application
done by Raser Technologies of Provo, Utah (NYSE Arca: RZ) and I no doubt lack many necessary
specific management skills for this type of a project but if this project were funded I would
immediately begin taking sufficient business courses relate to the management of a geothermal project of
this magnitude and nature. I would also surround myself with people who would be able to assist me in
managing this kind of project.
Personnel:
As many as possible personnel from our Cook Inlet area would be involved in this project. We would hire
from our local ranks of construction, electricians, maintenance and repair journeymen but many of the
Raser Technology construction personal would be from out of state. This would be a required necessity
because Raser's personal carry expertise in geothermal power plant construction, which we do not have
here in Alaska. The job description of personnel would range from geothermal experts to plain
construction workers and a great many jobs in-between.. CIP would have a manager / owner, and as many
supporting staff personnel as is necessary. Most of the power plant personnel will be trained by Raser
Technology and power plant installation would be preformed by UTC Power and QuestAir Technologies
Inc.
Methods of Record Keeping:
CIP's record keeping methods will vary as it trains employees to keep its records and manage
its accounting. These methods would include the use of QuickBooks financial templates, which would be
customized to power plant operations.
Insurance:
CIP would be fully insured to cover all possible liabilities, which could result to impair general power
plant operations & construction. All subcontractor's would also be required to carry full coverage
(insurance and bonding) to cover their business operations.
Legal Aspects:
Since CIP would be operated in Alaska and owned by a resident of Alaska, it will be necessary to file
for many specific Alaska & Kenai Peninsula business licenses and permits. Also CIP would need to be
formed into a corporation to produce a free standing "insured & bonded" business entity.
MARKETING Summary of Marketing Plan:
Target Market:
CIP's target electrical market is to both the Homer Electric Association & Chugach Electric Association.
Wholesale power would be sold to these public utilities and also to other customers which are in the Cook
Inlet area. In the future there would also be a substantial Fuel Cell home heating market as many remote
homes would be able to use cheap hydrogen to heat their homes. Also many automobiles could be
converted to burn hydrogen in the future thus allowing Alaskan's an alternative to high priced auto
gasoline.
Growth Potential:
CIP would initially begin operations by selling liquid hydrogen and then branch out to transmit whole sale
power to the Cook Inlet area. It will also be necessary to operate maintenance and repair crews for power
plant operations using a quarterly maintenance schedule. Using the demand potential of almost 100,000
homes, CIP will no doubt take many years to break into the Cook inlet power utility market. This
very large potential for business growth can be accessed as CIP production is increased with time. As
CIP expands, its customer base should also grow with it.
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Current Electric Providers:
The main providers of electrical power in the. Cook Inlet area are the Homer Electric Association &
Chugach Electric Association. There are currently no liquid hydrogen providers in the Cook Inlet area. It is
necessary for someone to provide cheap hydrogen in the Cook Inlet area, in order to begin to get area
residences to convert their autos and homes to hydrogen Fuel Cell operation. The proposed 10 MW power
plant should eventually be able to produce up to 100 MW's of electricity power at a cost of approximately
$1,000,000 per MW. Maintenance costs should be extremely low as most of the plants systems and
operations can be remotely monitored thus requiring a relatively small maintenance crew presence.
Competition:
Currently, the only competition for this electrical power project is from established power companies like
Homer Electric or Chugach Electric. However, in remote locations where accessibility to the powergrid
is difficult, there competition diminishes where hydrogen Fuel Cells could be used in place of being forced
to connect up to the grid. The price of hooking up one of these remote locations can be completely
outrageous therefore Fuel Cell conversions would become a very attractive option.
Methods of Distribution:
CIP would be working primarily within the sale of wholesale electrical power and liquid hydrogen to Cook
Inlet utilities. A key component of the. power plant would be for the placement of transmitter power lines
to major population centers by ABB Inc., to both the city of Anchorage and Kenai,Alaska by Oct. 1, 2020.
Advertising:
During the start-up phase of CIP, little capital would be spent on advertising. The company would plan
to only advertise enough to let the owners of local utility companies know about their ablity to purchase
wholesale "green" electrical power or liquid hydrogen in the near future. This notice would be provided to
allow these utilities to adjust their equipment and personnel hiring for the future. The news media should
also be contacted to provide the public with general information regarding future available electrical and
liquid hydrogen products. These advertisements would be brief, but include information about CIP, what
it will be selling, how to contact it, and possibly a general expected price range of products. This will
effectively inform the target Cook Inlet market of CIP business purpose.
In the future, CIP may decide to expand its customer base and will need to increase advertising to do that.
This advertising would be conducted by way of newspapers or newsletters and on local radio stations, in
order to access a larger customer base in the Cook Inlet area. In the distant future CIP may also decide to
advertise in statewide newspapers, on television and over the radio in order to increase its customer base
throughout the state.
Pricing:
CIP would price its wholesale and retail electricity and hydrogen to include the cost of the system
components, labor and overhead. Long range estimates are targeting a 7 cent per kilowatt hour for
wholesale electricity and liquid hydrogen is estimated to retail at approximately $2.50 per kilogram and
wholesale at $2 per kilogram.
TRAINING:
Training would encompasses many aspects of the overall power production business. CIP's owner and
personnel would need to learn more about entrepreneurship, geothermic power plant production operations
and the use of business software. CIP record keepers would be trained on the use of an accounting
software systems or other computer systems.
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FINANCING METHODS
Start-up Costs:
The start-up costs associated with the construction of this geothermic power plant would be significant
because of the remote location of the construction site. Even as the start-up costs may be slightly higher
than traditional power production, those costs would eventually be off -set in the future because geothermal
power production requires much less maintenance than standard power production. Start-up costs would be
significantly reduced by construction managers properly planning work to take place after May and before
October. Current estimates indicate that the lead time to order major power generation units
& components, may require orders to be placed 1 - 2 year in advance with individual power generator unit
installation taking as much as 2 - 3 weeks. CIP should have enough cash on hand to pay for at least 12
months worth of operating expenses, while waiting for incoming funds from any source. This is essential
because being forced to shut down construction, mid -summer, would greatly increase the final cost of the
power plant and the price of its resulting power products.
Funding:
Funding would be expected to come from the following sources:
Alaska Energy Authority, AEA.
The U.S. Department of Energy, DOE.
Power Project Loan Fund, AIDE.
The Kenai Peninsula Borough, KPB.
The Anchorage Borough.
FINANCIAL DOCUMENTS
For the purposes of this plan, it is recommended that CIP obtain funding in the amount of:
5 PHASE DEVELOPMENTAL PLAN TIMETABLE
Phase 1 - ($950,000), Oct 1, 2009,
Phase 2 - ($9,000,000), Oct 1, 2011
Phase 3 - ($13,200,000) Oct 1, 2012
Phase 4 - $40,000,000), Oct 1, 2015
Phase 5 - ($35,000,000), Oct 1, 2020
($98,150,000 total funding by Oct. 1, 2020)
Phase 1 = Studies, S950,000, completed by Oct. 1, 2009.
Phase 2 = Equipment c& Helicopter, $9,000,000, completed by Oct 1, 2011.
Phase 3 = 7 - 12 mile road, $10,000,000, hot water source drilling to depth 10,000 feet $3,200,000,
Oct. 1, 2012.
Phase 4 - 10 Power Generators, 10 Hydrogen Generators, $40,000,000, completed by Oct. 1, 2015.
Phase 5 = Power Transmission Cable to Kenai, $35,000,000, by A 3B Inc., completed by Oct. 1, 2020.
----------------------------
($98,150,000 total)
This total package will cover the costs of construction of a 10 MW geothermal power plant along
with, wages, operating expenses, and office supplies. CIP cost recommendation is slightly inflated to
ensure that the business will have enough cash on hand to pay for expenses as they come due while
waiting for the power plant to go online and start producing revenues. The below sales statement shows
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Renewable Energy Fund
Grant Application
the revenues and expenses CIP would expect within the first 2 years of operations. The bottom line of the
sales statement tells how much total profit CIP should produced each year. Undoubtedly, CIP will incur
other expenses, which cannot be anticipated and are not included within the statement provided.
Sales:
The Homer Electric Association is located on the Kenai Peninsula and currently sells approximately
400,000,000 kWh's of electricity per year with a total capability of 55 MW's of power. Assuming that
there are 6 months available for construction work each year, given disruptions due to weather, demand,
and financial capabilities; the CIP, 10 MW power plant should be able to eventually sell at least
400,000,000 kWh of power each year along with at least 300,000 NCMH of hydrogen. If CIP prices its
electrical whole sale price at 7 cents pkM7k its revenue would be approximately $28,000,000 annually,
which would be generated by selling 200,000,000 kWWs of power to HEA and 200,000,000 kWWs to the
Chugah Electric Association annually.
Chugach Electric sells approximately 2,700,000,000 kWh's of electricity per year from a total capacity
of 560 MW's of power.This electrical sale generates approximately $250,000,000 US for Chugach
Electric. If CIP prices its electrical whole sale price at 7 cents pkVVk and sells 200,000,000 kWh's to the
CEA annually, it will earn approximately $14,000,000 annually from the CEA.
The revenue from HEA and CEA would be approximately 28,000,000 annually. $14,000,000 per year
from the Chugah sale and $14,000,000 per year from the HEA sale.
200,000,000 kWh's to CEA + 200,000,000 kWh's to HEA = 400,000,000 kWh X 7 cents per kwh =
$28,000,000 annual return for whole sale electricity. This revenue figure would be reported as sales on the
CIP income statement.
The sale of liquid hydrogen can only be vaguely estimated since there is currently zero hydrogen sales
within the Cook Inlet area. This market will have to be developed over time and advertising will play a
major part in convincing people and businesses to convert their automobiles and home heaters over to a
Fuel Cell technology. It is estimated that if hydrogen sales advertising is begun in 2009, that it will take at
least 5 years to convince a substantial part of the Cook Inlet area to convert over to the use of
hydrogen. CIP is estimating that the Cook Inlet area can SAVE at least half a billion dollars annually if
just half of it's area's residents switching over to hydrogen fuel for their vehicles.
( See calculations below }
This would be a savings of half a billion dollars annually for the Cook Inlet area, for a one time total
geothermal project cost of $98,150,000. This is just an auto gas savings and doe's not assume any savings
from other forms of energy savings like cheaper electricity or hydrogen powered home heating.
HYDROGEN FUEL / AUTO GAS DISPLACEMENT CALCULATIONS
40,000 Kenai Peninsula residents X average $5,000 per year spent for auto gas = a $200,000,000
purchase annually.
(40,000 people X $5,000 pp for gas = $200,000,000) ($4.50 per gallon for automotive gas)
$5,000 spent / $4.50 per gal. =1,111 gals. of gasoline use by each resident annually.
This assumes that each resident drive approximately 18,887 miles per year.
($5000 / $4.50 per gallon =1,111 gals. used annually) (1,111 gals. used annually X 17 mpg.=18,887
miles per year) Assuming that half of the KPB residents convert automobiles over to geothermic
produced hydrogen fuel. 20,000 residents convert to hydrogen and displace.22,220,000 gals auto gas
annually on the Kenai Peninsula.
1,111 gals. gas X 20,000 residents = 22,220,000 gals auto gas displaced annually on the Kenai
Peninsula.
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22,220,000 gals X 4.50 per gal. = $100,000,000 is spent on auto gas annually on the Kenai Peninsula.
$100,000,000 saved annually on the Kenai Peninsula if half of its residents switched to using
hydrogen fuel to perform the operations which were preformed previously with fossil fuels.
200,000 Anchorage residents X average $5,000 per year spent for auto gas = a $1,000,000,000 auto
gas purchase annually. (200,000 people X $5,000 pp for gas = $1,000,000,000) ($4.50 per gallon for
automotive gas) $5,000 spent / $4.50 per gal. = 1,111 gals. of gasoline use by each resident annually.
This assumes that each resident drive approximately 18,887 miles per year.
($5000 / S4.50 per gallon = 1,111 gals. used annually) ( 1,111 gals. used annually X 17 mpg.=18,887
miles per year)
Assuming that half of the Anchorage residents convert automobiles over to geothermic produced
hydrogen fuel. Ralf of residents switch to hydrogen fuel ($1,000,000,000 auto gas / 2 = $500,000,000
auto gas purchase annually) by 100,000 Anchorage residents.
S500,000,000 auto gas purchase / $4.50 per gallon=111,000,000 gals. auto gas.
100,000 residents convert to hydrogen and displace 111,000,000 gals of auto gas displaced annually
in Anchorage.
111,000,000 gals auto gas saved X $4.50 per gallon = $499,500,000 spent annually.
111,000,000 gals auto gas would be displaced annually in Anchorage.
S499,500,000 is spent on auto gas annually in Anchorage.
111,000,000 gals auto gas would be displaced annually in Anchorage.
22,220,000 gals auto gas displaced annually on the Kenai Peninsula.
111,000,000 gals + 22,220,000 gals = 133,220,000 total gals displaced in Cook Inlet annually.
$100,000,000 saved annually on the Kenai Peninsula if half of its residents.
$499,500,000 would be saved annually in Anchorage.
$100,000,000 + $499,500,000 = $599,500,000 is spent on auto gas by 120,000 persons in the Cook
Inlet area annually.
HYDROGEN COST CALCULATIONS:
Compressed hydrogen gas costs about $2.50 per kilogram.
(A kilogram of hydrogen basically costs A LOT LESS than a gallon of auto gas but it will do the
same work as that gallon of auto gas) 4 kilograms of hydrogen can power the average vehicle for
about 270 miles. A gallon of gasoline has about the same energy content as a kilo of hydrogen, but
vehicles using hydrogen get 2 - 3 times higher mileage. That kind of mileage means that your
average vehicle would get about a 67.5 mpg. using hydrogen.
The total price for this 270 mile trip would be about S10 for 4 kg. of compressed hydrogen.
At $4.50 per gallon for auto gas and 17 mpg., the same trip would take about 15.8 gallons of auto
gas. 15.8 gallons of auto gas X $4.50 per gallon = $71.40 cost for the same 270 miles trip.
($10 for 270 miles using hydrogen) ($71.40 for 270 miles using auto gas) = a $61.40 savings.
A hydrogen vehicle uses 84% less fuel & dollars, saving $61.40 and displacing 15.8 gallons of auto
gas.
84% of 133,220,000 gals of auto gas used annually in Cook Inlet=111,720,000 gals auto gas
displaced annually. 84% of $599,500,000 spent on auto gas used annually in Cook Inlet =
$503,500,000 saved annually.
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ALASKA Renewable Energy Fund
® ) ENERGY AUTHORITY Grant Application
This comes down to half a billion dollars being saved annually by Cook Inlet area residents and
111,720,000 gals of auto gas displaced annually, just by half of the Cook Inlet residents switching to
hydrogen fuel for their vehicles.
Operating Expenses:
CIP's operating expenses would be very lower as are expected from any geothermal power plant.
The main expense would rest within operational service contracts which would be required to be
maintained between IUTC Power for electrical generator maintenance servicing, QuestAir
Technologies for hydrogen generation maintenance servicing, Raser Technologies power plant
construction maintenance servicing and ABB Inc. transmitting cable maintenance servicing.
CIP would be required to pay certain federal and state taxes and benefits associated with the payroll of its
employees but all business subcontractor working for CIP would be expected to account for their
own employees.
CIP would be responsible for paying an amount equal to 6.2% of its employee first $84,900 (for 2009) of
gross wages for Social Security, an additional 1.45% on all wages for Medicare, and 6.2% of the first
$7,000 of gross wages for federal unemployment. Consequently, the figure that appears on the income
statement is an estimate based on the assumptions already made.
Taxes:
CIP would be responsible for paying the taxes on (both its federal, state & borough business activity)
associated with its business operations. The amount of taxes to be paid will vary depending upon the
amount of income generated by CIP. Donald Johnson will also be paying his federal, state & borough
income taxes on his own personal tax returns. Given the conditions set forth above, CIP will most likely be
in the 39% marginal tax bracket according to the current federal tax rates. The federal tax amount shown
on the income statement includes the self-employment tax for social security, Medicare, and federal
unemployment.
Balance Sheet
The CIP balance sheet would shows the companies assets, liabilities, and owners equity account balances
at the end of each year. CIP account balances would be shown at historical cost for assets and future costs
for liabilities.
Assets:
We are recommending that CIP have at least enough cash on hand at any given time to pay for 1
years worth of operational expenses. Cash on hand is estimated to be as follows and would be required
to be available at least one year prior to the date below;
CIP assets would increase as funding for the below Phases is approved.
5 PHASE DEVELOPMENTAL PLAN TIMETABLE
Phase 1- ($950,000), Oct 1, 2009, in studies.
Phase 2 - ($9,000,000), Oct 1, 2011, in equipment purchased.
Phase 3 - ($13,200,000) Oct 1, 2012, in construction preformed
Phase 4 - $40,000,000), Oct 1, 2015, in power production equipment.
Phase 5 ($35,000,000), Oct 1, 2020, in power transmission cable.
$98,150,000 total funding by Oct. 1, 2020
A -A WO U4 Grant Apphcation Page 48 of 48 9/3/2008
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Renewable Energy Fund
Grant Application
Phase 1 = Studies, $950,000, completed by Oct. 1, 2009.
Phase 2 = Equipment & Helicopter, $9,000,000, completed by Oct 1, 2011.
Phase 3 = 7 - 12 mile road, $10,000,000, hot water source drilling to depth 10,000 feet $3,200,000,
Oct. 1, 2012.
Phase 4 - 10 Power Generators, 10 Hydrogen Generators, $40,000,000, completed by Oct. 1, 2015.
Phase 5 = Power Transmission Cable to Kenai, $35,000,000, by ABB Inc., completed by Oct. 1, 2020.
($98,150,000 total)
Liabilities:
CIP's liabilities account would consist of amounts that are to be paid by it in the future for goods or
services it has already received. If CIP funds this geothermal power plant with grants, its liabilities would
be "amounts payable" at the end of a year to pay for services and equipment received but not paid for and
therefore classified as standard liabilities. There would be liabilities involved in making payments to
subcontractor's for services rendered and equipment received but not paid for. CI P would also have
additional liabilities such as accounts payable and wages payable to subcontractor's and employees.
CIP would realize assets within the following time table:
Phase 1 - ($950,000), Oct 1, 2009, in studies.
Phase 2 - ($9,000,000), Oct 1, 2011, in equipment purchased.
Phase 3 - ($13,200,000) Oct 1, 2012, in construction preformed
Phase 4 - $40,000,000), Oct 1, 2015, in power production equipment.
Phase 5 - ($35,000,000), Oct 1, 2020, in power transmission cable.
($98,150,000 in total funding by Oct. 1, 2020, saving the Cook Inlet Area at least $503,500,000
annually)
4.4.6 Analysis and Recommendations
Provide information about the economic analysis and the proposed project?
Existing estimates suggest evidence of the presence of a substantial geothermal reservoir at a depth
of less than 2500m. The evidenced reservoir has a high likelihood to support production of at least
100 megawatts of electricity, at full-scale development.
By comparisons to similar geothermal sites in the western ITS (e.g Coso, California), the present
day cost of development will be between $1,500 to $2,500 per kilowatt installed (i.e. $150 to
$250,000,000 for 100 megawatts). Cash flow analysis, conducted for a feasibility study, show that the
resource can potentially produce electricity at a cost around 7 cents per kilowatt-hour. This includes
all costs related to capital investment (drilling, power plant without a connection to a Power Grid),
amortized over 25 years, and operating costs.
The present Alaska market for electricity makes the resource a commercially viable alternative to
conventional power generation schemes (e.g. hydro and gas). Green bonus further adds to the value
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Renewable Energy Fund
Grant Application
of the resource. A wholesale power price of C$70 per megawatt -hour (equivalent to 7 cents per
kWh) was a representative of 2004's price of power being offered by Canada's BC Hydro under the
Renewables Certificate program. That power price was projected to escalate at the rate of inflation
(2.5% per annum). Once the Redoubt resource is confirmed, a long-term power purchase agreement
with the Homer Electric Association or Chugach Electric will practically guarantee the financial
return of the power project. Based on a similar Canadian Project in 2003, (Pebble Creek
Geothermal Prospect for the North Meager Greek Reservoir Cash Flow Analysis), the net benefit of
the Redoubt 100 MW project development could be $15,000,000 to $35,000,000 USdn$ per year.
http://www.gaeaenergy.com/projects.htm
CIP would need $9,950,000 in startup funds to begin this Project and then 40,000,000 to purchase
generators, $13,200,000 for general power plant installation and 35,000,000 for power transmission
cable placement. $98,150,000 total budget.
Discuss your recommendation for additional project development work?
CIP recommends that after the 2015 development of 10 MW's of power, that it then expand another
90 MW's to a total of 100 MW's by 2020.
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?
Resulting financial benefits: Project construction & operational jobs, cheaper power on the people
on the west side of Cook Inlet, Cook Inlet Oil Drilling Platforms and the Kenai Peninsula (Tyonek
Village, Chuitna Coal Mine, Chinitna Bay, Farewell Village.) The 2020 Power transmission cable
crossing Cook Inlet will allow the displacement of 35,000,000 gals fuel oil annually. Also Cook Inlet
generation of hydrogen could displacement about 18,500,000 gals of automotive gasoline annually,
within 10 — 15 years.
RENEWABLE ENERGY — Zero fuel -input costs — powered by hot water, low life -cycle cost.
Low -temperature resource — operated on resource temperatures as low as 165 F.
RELIABLE POWER, Not dependent on sunny or windy weather. Remote monitoring and system
control is standard ensuring maximum uptime. CLEAN POWER, Zero carbon footprint.
No Materials Of Concern like refrigerants and hermetically sealed generator.
Economic Benefits?
Increased geothermal energy production in Alaska will help attract tourist and that will help boost
local economies. The direct use of geothermal energy can allow resorts and manufacturers to
decrease their operating costs and supports enterprises such as green housing. With cheap heating,
residents may also build either geothermal or cheap electric greenhouses, to produce crops year-
round for local consumption or export. Furthermore, upon installation of the Project geothermal
power plant, power production costs can be reduced from (120 per kilowatt-hour) to (70 -100 per
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CE= ENERGYAUTHORITY Grant Application
This electric rate reduction would give current electric & gas utilities monopolies much needed rate
competition. Because the target power plant sites potentially holds underground volcanic heat resource
between 100 —150 MW of renewable geothermal energy, CIP has the ability to expand the discribed 10
MW project into at least a 100 MW project and help meet the Cook Inlet area's emerging energy needs.
The benefits information should include the following?
Potential annual fuel displacement (gal and $) over the lifetime of the evaluated renewable
energy project:
35,000,000 gals fuel oil displaced annually.
40,000,000 CCF natural gas displaced annually.
18,500,000 gals auto gas displaced, $83,250,000 auto gas saved annually.
$40,000,000 natural gas saved annually.
$153,250,000 saved annually.
• Anticipated annual revenue (based on i.e. a Proposed Power Purchase Agreement price,
• RCA tariff, or avoided cost of ownership)?
The Homer Electric Association has 55 MW of generation capability. This capability results in
approximately 60 - $70 million revenue per year. Homer Electric concluded the year 2006 with total
consolidated revenues and non -operating income of $70.5 million. That, combined with total consolidated
costs of electric service of $67. 4 million resulted in a positive margin of $3.1 million.
cent%27s+per+kwh&d=RIZZJ ReRiew&icp=1&.intl=us
This revenue information agrees with CIP's anticipated annual revenue estimates of $15,000,000 —
$35,000,000 annually.
• Potential additional annual incentives (i.e. tax credits)?
Incentives
With the passage of the Energy Policy Act of 2005, the
national Production Tax Credit (PTC) was extended to
include geothermal facilities in operation by January 1, 2008.
It is expected that this program will be extended through
2012. The PTC is an incentive of 1.50 per kWh for electricity
produced from renewable sources during the first ten years of
a new facility's operation.
09-004 Grant Application Page 51 of 51 9/3/2008
ALASHORITY KA
Renewable Energy Fund
Grant Application
• Potential additional annual revenue streams (i.e. green tag sales or other renewable energy
subsidies or programs that might be available)?
• Discuss the non -economic public benefits to Alaskans over the lifetime of the project?
The 2020 power transmission cable crossing Cook Inlet will help allow the displacement of
35,000,000 gals. fuel oil annually, Also CIP's generation of hydrogen could displacement about
133,220,000 gals of auto gas displaced in Cook Inlet annually. ( See Business Plan )
GEOTHERMAL ENERGY IS RENEWABLE ENERGY — Zero fuel -input costs — powered by hot
water, low life -cycle cost, low -temperature resource — operated on resource temperatures as low as
165 F.
GEOTHERMAL ENERGY IS RELIABLE POWER, Not dependent on sunny or windy weather.
Remote monitoring and system control is standard ensuring maximum uptime. It produces clean
power, zero carbon footprint, no materials of concern like refrigerants and all the power plant units
are hermetically sealed.
Geothermal benefits include a dramatic drop in the cost of power production, estimated to
decrease from 12 cents per kWh to approximately ,7 cents per kWh.
Geothermal benefits, include a cleaner environment with the elimination of a large percentage
of Cook Inlet's diesel; auto gas and natural gas generate electricity.
• Geothermal energy would also benefits an energy base for long-term economic development
therefore sustaining our local Cook Inlet communities.
While CIP interests in the describe project focuses on production of electricity & liquid hydrogen;
the identification of this geothermal resource could bring many other benefits, including hot water
heating to nearby communities and development of spas, greenhouse projects and other related
businesses. The benefits of geothermal energy within the Cook Inlet area would allow the area to
save hundreds of millions of dollars annually, therefore justifying a substantial geothermal capital,
investment in the Cook Inlet area.
SECTION 6 — GRANT BUDGET
Tell us how much your total project costs?
Phase 1 would be to conduct 3 specific studies to determine the feasibility of:
1.1 Study Mount Redoubt & Mount Spur to determine if 10 MW of geothermal energy is available
and locate a site.
2.1 Study the site for placement of hot & cold water wells.
3.1 Study road access and power transmission to Anchorage and the Kenai Peninsula.
Phase 2 would implement "technology & hardware" from the commercially available
AEA 09-004 Grant Application Page 52 of 52 9/3/2008
I� ALASHKA
Renewable Energy Fund
Grant Application
$10,000,000 — Access Road From Cook Inlet to Plant Site.
$1,500,000 ea. — Hydrogen Generation System.
$2,500,000 ea. — Geothermal Electrical Generation Power Plant.
--------------------------------------------------------------
$25,750,000 Start -Up Budget BY 2012, OCT. 1.
Total grant project funding by Oct. 1, 2012 is $25,750,000.
Total grant project funding by Oct. 1, 2015 is $61,750,000.
$35,000,000 - Power Transmission Cable by 2020. not included in start-up budget.
Total grant project funding by Oct. 1, 2020 is $98,150,000, with ($35,000,000 - Power Transmission
Cable)
Total grant project funding by Oct. 1, 2012 is $25,750,000.
Total grant project funding by Oct. 19 2015 is $65,750,000.
• Total grant project funding by Oct. 1, 2020 is $98,150,000, ($35,000,000 - Power
Transmission Cable)
CIP would eventually need a financing commitment for the described 10 MW project of up to
$98,150,000 ,by 2020, in the form of grant funds.
Include any investments to date and funding sources, how much is requested in grant funds, and
additional investments you will make as an applicant?
Include an estimate of budget costs by tasks using the form - GrantBudget.xls
Provide a narrative summary regarding funding sources and your financial commitment to the
project?
AEA 09-004 Grant Application Page 54 of 54 9/3/2008
�W ) ALAS KA 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?
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
w 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. CERTTFICATTON
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
I 1-1 ct
Signature
Title
F, r,
Date
AEA 09-004 Grant Application Page 55 of 55 9/3/2008
® ALASHKA
Renewable Energy Fund
Grant Application
50 megawatts (MW) Geothermal Electrical Power Plant -
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AEA 09-004 Grant Application Page 56 of 56 9/3/2008