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Susitna-Watana Hydroelectric Project Document
ARLIS Uniform Cover Page
Title:
[ Susitna-Watana presentation, Jan. 10, 2013 Board Meeting ]
(Title from AEA's homepage link when viewed September 23, 2013.)
SuWa 214
Author(s) – Personal:
Wayne Dyok, Nick Szymoniak, and Jim Strandberg
(Authors from AEA's Board Meeting minutes for January 10, 2013.)
Author(s) – Corporate:
AEA-identified category, if specified:
AEA-identified series, if specified:
Series (ARLIS-assigned report number):
Susitna-Watana Hydroelectric Project document number 214
Existing numbers on document:
Published by:
[Anchorage, Alaska : Alaska Energy Authority, 2013]
Date published:
January 10, 2013
Published for:
Presented to Alaska Energy Authority Board Meeting
Date or date range of report:
Volume and/or Part numbers:
Final or Draft status, as indicated:
Document type:
Slide presentation. No commentary.
Pagination:
29 p.
Related work(s):
Pages added/changed by ARLIS:
Notes:
Downloaded from the Alaska Energy Authority's homepage on September 27, 2013; no longer
posted as of June 19, 2014.
All reports in the Susitna-Watana Hydroelectric Project Document series include an ARLIS-
produced cover page and an ARLIS-assigned number for uniformity and citability. All reports
are posted online at http://www.arlis.org/resources/susitna-watana/
11/10/2013
AEA Board of Directors
January 10, 2013
1.Introduction
2.Licensing Update
3.Engineering
4.Economics
1/10/2013 2
Project
Highlights
•Susitna-River, Mile 184
•87 River Miles from
Talkeetna
•22-32 River Miles
upstream from Devils
Canyon
•~50 percent of Railbelt’s
Energy Demand
1/10/2013 3
Why Susitna-Watana Hydro
1/10/2013 4
* Preliminary model estimates
•Long-term diversification
•Clean, reliable, and stable energy source
•Promotes integration of variable power sources
•Will serve nearly 80 percent of state’s population
•Will annually displace an estimated 1.3 million tons of
CO2*
•1,000 jobs during peak construction
•Stable electricity rates for businesses and consumers
100+ years
Licensing Update
•Revised Study Plan
–Filed with FERC: Dec. 14, 2012
–Proposed 58 studies
•FERC Study Plan Determination
–45 studies: Feb. 1, 2013
–13 remaining studies in flux (April 1 versus May 14)
1/10/2013 5
2013 Field Studies
•Begin winter field studies
•Gearing up to conduct environmental summer
field effort
–Field work includes agreements with Alaska
Department of Fish & Game
–Contracting and procurement
–Logistical support including helicopters and field
camps
–Obtaining permits from land owners
1/10/2013 6
2012 Engineering Highlights
Selection of maximum normal reservoir level -
2050’ (~735’ dam)
Drilled 8 boreholes to confirm design criteria
Installed of 4 micro-seismic stations; repeater
Studied utility generation & transmission
Continued design feasibility and optimization
Updated Cost Estimate
1/10/2013 7
2012 Geotechnical & Seismic
•Work to confirm suitable quarry source
•Geologic mapping and borehole information
used to adjust dam arrangement
•Measuring groundwater and temperatures
•Continued characterization of seismic sources
•Collection of local seismic event data
1/10/2013 8
2013 Engineering Goals
•Resources and Procurement Plan
•Geotechnical Exploration at Dam Site
•Utility Precedence Agreement
•Design Feasibility Report
1/10/2013 9
Project Site Plan
1/10/2013 10
Independent Construction Cost Estimate
•AECOM produced estimate
–Extensive hydro experience, including Arctic climates
–Ranked as best hydroelectric developer
•Estimate based on
–January 2012 conceptual design (dam, access,
transmission, facilities)
–AEA’s line item list and quantities
•Tasks and deliverables
−Unit price estimate by line
−Independent construction schedule
Independent Construction Cost Estimate:
Results
•Estimates within 9%
•Accuracy of the most probable estimate: -11% to
+26%
•AECOM confirms
–Feasible timeline
–Roller-Compacted Concrete (RCC) dams constructible in
cold climates
•AECOM recommends
–Year-round construction (James Bay Project example)
–Consideration of early reservoir filling for early power
generation
1/10/2013 12
Probabilistic Range of Total Project
Costs
1/10/2013 13
Capital Cost Takeaway
•Slight increase in cost estimate since last
year, yet the range of probable costs
reduced.
•AEA remains committed to providing the
most accurate cost information possible.
141/10/2013
151/10/2013
Components of Cost Update
($millions)
Inflation
$143
Risk
Adjustment
$102
Construction
$73
Licensing
$25
Transmission
$87
$-
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$4,000
$4,500
$5,000
$5,500
August 2012 January 2013Millions of 2012 DollarsComparing Cost Estimates
161/10/2013
$0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000
January 2013
August 2012
$Thousands of Nominal Dollars
Best
Estimate
Low
Estimate*
High
Estimate*
Minimum
Cost
Maximum
Cost
August 2012 $4,760 $3,332 $7,140
January 2013 $5,190 $4,480 $5,890 $3,733 $6,484
*Low and High Estimates represent a 90% probability
Cost Update
17
-
0.50
1.00
1.50
2.00
2.50
3.00
201320152017201920212023202520272029203120332035203720392041204320452047204920512053Inflation Index (2013 = 1.00)Impacts of Inflation on Susitna-Watana Power Costs
Cost of Everything Else
(Gas, construction,
income, housing, new
hydro, etc.)
Cost of Susitna-
Watana Power2024: Susitna-
Watana in
Operation
1/10/2013
Susitna-Watana Hydro Power Cost
•The method for projecting Susitna-Watana
Hydro power costs same as last year
•Capital costs is the only variable to change
•Capital cost increase resulted in a small
increase in the power cost
•Assumes no direct State financing
181/10/2013
Base Case Economic Assumptions
19
Capital Costs ($mill) $5,190
Power Production (GWh) 2,800
Interest Rate 5.00%
Debt Term (years)30
Annual O&M Costs ($mill)$16
Operation Start Year 2024
1/10/2013
Susitna-Watana Power Costs
($/kWh)
201/10/2013
Year 1 Rate ($2024)$0.181
Year 1 Rate ($2013 Real)$0.138
10 Year Ave Rate ($2013 Real)$0.124
25 Year Ave Rate ($2013 Real)$0.106
50 Year Ave Rate ($2013 Real)$0.061
Real= Adjusted for Inflation
Assumes no Direct State Financing
211/10/2013
$-
$0.02
$0.04
$0.06
$0.08
$0.10
$0.12
$0.14
$0.16
$0.18
$0.20
2024202620282030203220342036203820402042204420462048205020522054205620582060206220642066206820702072$ per kWhSusitna-Watana Power Costs: Real vs. Nominal
(Assumes no Direct State Financing)
Nominal
Dollars
Real $2013
Dollars
(adjusted for
inflation)
Natural Gas Generation Comparison
•Competitive with natural gas in the early
years, much lower cost over long term
•Future natural gas prices are unknown
•Assume a constant efficiency and non-fuel
cost for natural gas generation
–Heat rate of 8,000 (Btu/kWh)
–Non-fuel cost of $0.03 per kWh
221/10/2013
Natural Gas Price Forecast
•A single forecast was needed for a “Base
Case” comparison
–$6.50 per Mcf in 2012
–Increases at 4% annually (1.5% greater than
inflation)
•Realistically, future natural gas prices are
better represented with a range
–Prices can range $6.00 to $12.00 per Mcf in
2013
–Range increase with inflation (2.5% annually)
231/10/2013
241/10/2013
$-
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
$16.00
$18.00
$20.00
$22.00
$24.00
$26.00
$28.00
$30.00
$32.00
$34.00
$36.00
201320152017201920212023202520272029203120332035203720392041204320452047204920512053Natural Gas Price (Nominal $ per Mcf)Natural Gas Price Forecast and Range
Range of Possilbe Natural Gas Prices
Base Case Natural Gas Price Forecast
251/10/2013
$-
$0.05
$0.10
$0.15
$0.20
$0.25
$0.30
$0.35
$0.40
2024202620282030203220342036203820402042204420462048205020522054Power Cost (Nominal $ per kWh)Susitna-Watana vs. Natural Gas Power Costs
Range of Natural Gas Power Costs
Base Case Natural Gas Power Cost
Susitna-Watana Power Cost
Hydro breaks even with
the Base Case Natural Gas
after 12 years
Susitna-Watana Hydro Reduces
Power Price Uncertainty
•Hydropower reduces electricity price uncertainty
and volatility
•Following chart compares the impact of the
range of natural gas prices on the average
power costs under two scenarios
–First scenario assumes 100% natural gas
generation
–Second scenario assumes 50% hydro and 50%
natural gas generation
1/10/2013 26
271/10/2013
$-
$0.05
$0.10
$0.15
$0.20
$0.25
$0.30
$0.35
$0.40
2024202620282030203220342036203820402042204420462048205020522054Power Costs (Nominal $ per kWh)Power Costs Under Range of Natural Gas Prices
Range of Power Costs without
Susitna-Watana
Range of Power Costs with
Susitna-Watana
Economic Takeaways
•Project cost estimate increase was largely a
result of inflation and risk adjustments
•Susitna-Watana power remains cost competitive
with natural gas in the early years, and will cost
much less over the project life
•Breaks even with natural gas after 12 years
without any direct State financing
•Susitna-Watana Hydro can significantly reduce
future power cost uncertainty
1/10/2013 28
Susitna-WatanaHydro.org
1/10/2013 29