HomeMy WebLinkAboutCity of Chignik Lagoon Packers Creek Hydroelectric Feasibility Report Jan 2002J UNE 26, 1995
CHIGNIK LAGOON HYDROELECTRIC
F EASIBILITY STUDY
FINAL REPORT
prepared for the
CHIGNIK LAGOON TRIBAL COUNCIL
CHIGNIK LAGOON, AK
prepared by
POLARCONSULT ALASKA
POLARCONSULT A LASKA, INC.CHIGNIKLAGOONHYDROELECTRIC
FEASIBILITY REPORT
JANUARY 18, 2002
TABLE OF CONTENTS
1. FINDINGS .....................................................................................................................................................................1
2. INTRODUCTION.........................................................................................................................................................2
3. CHIGNIK LAGOON ELECTRICAL REQUIREMENTS ........................................................................................2
4. HYDROLOGY AND POWER....................................................................................................................................3
4.1 PRECIPITATION AND STREAMFLOW ......................................................................................................................3
4.2 A MOUNT OF POWER GENERATED ..........................................................................................................................4
4.3 EXCESS ENERGY ...........................................................................................................................................................5
5. TYPICAL FEATURES .................................................................................................................................................6
5.1 INTAKE .........................................................................................................................................................................6
5.2 DE-SANDING AND SCREENS......................................................................................................................................6
5.3 PENSTOCK ....................................................................................................................................................................7
5.4 POWERHOUSE ..............................................................................................................................................................7
5.5 TURBINE .......................................................................................................................................................................7
5.6 GENERATOR.................................................................................................................................................................8
5.7 GOVERNOR ...................................................................................................................................................................8
5.8 SWITCH GEAR..............................................................................................................................................................9
5.9 TRANSMISSION.............................................................................................................................................................9
6. COSTS...........................................................................................................................................................................9
6.1 DIESEL...........................................................................................................................................................................9
6.1.1 Fuel Cost ............................................................................................................................................................9
6.1.2 Equipment and Labor Cost ..........................................................................................................................10
6.1.3 Fuel Required .................................................................................................................................................10
6.2 HYDRO ........................................................................................................................................................................10
6.2.1 Equipment and Labor Cost ..........................................................................................................................10
6.2.2 Construction ...................................................................................................................................................11
6.2.3 Force Account ................................................................................................................................................12
6.2.4 Title 36 .............................................................................................................................................................13
7. ECONOMICS ............................................................................................................................................................13
8. ENVIRONMENTAL..................................................................................................................................................14
8.1 FISH REQUIREMENTS...............................................................................................................................................14
8.2 FERC ...........................................................................................................................................................................14
9. PERMITS....................................................................................................................................................................15
9.1 PERMITS WILL BE REQUIRED AS FOLLOWS:.........................................................................................................15
10. CONCLUSIONS.....................................................................................................................................................15
11. RECOMMENDATIONS ........................................................................................................................................16
POLARCONSULT A LASKA, INC.CHIGNIKLAGOONHYDROELECTRIC
FEASIBILITY REPORT
JANUARY 18, 2002
LIST OF APPENDICES
APPENDIX A - HYDRO COST
APPENDIX B - ECONOMIC ASSUMPTIONS AND YEARLY DATA
APPENDIX C - SENSITIVITY ANALYSIS
APPENDIX D - FIELD REPORT
APPENDIX E - PHOTOS SHOWING PIPING LAYOUT AND INTAKE LOCATION
APPENDIX F - DRAWINGS
APPENDIX G - FIELD TRIP TWO AND STREAM GAUGE DATA
POLARCONSULT A LASKA, INC.CHIGNIKLAGOONHYDROELECTRIC
FEASIBILITY REPORT
JANUARY 18, 2002 PAGE 1
1. FINDINGS
A hydroelectric power plant constructed at Packers Creek is technically and economically
feasible as long as the construction costs are kept within reasonable limits. The recommended
plant will use a low height diversion, a de-sanding structure, 2,300 feet of High Density
Polyethylene (HDPE) pipe, 2,200 feet of Polyvinylchloride (PVC) pipe, and a 200 kW impulse
turbine. The system will be constructed mostly with local labor. The general layout of the
system as well as details of the intake and powerhouse are shown in the drawings in Appendix
F.
The following is a summary of the conclusions that were drawn from the feasibility analysis.
The cost to construct the plant will be $572,925.
The highest feasible capacity of the plant will be approximately 200 kW.
The plant will generate an average of 1,170,217 kWh per year.
The hydro energy will need to be augmented by 84,711 kWh of diesel energy
during low water periods (approximately January through April).
A FERC license will not be needed to build the recommended project.
Basic characteristics of the recommended plant are provided below:
General Data:
Installed Capacity 200 kW
Number of Units 1
Type of Turbine Impulse
Basin Area 1.14 square mi
Average Annual Energy Produced 1,170,217 kWh
City’s Annual Power Needs 650,000 kWh
Estimated Annual Usable Energy 565,289 kWh
Design Flow 8 cfs
Gross Head 390 feet
Net Head at Full Flow 357 feet
Penstock Diameter 16 & 14 inches
Penstock Length 4,500 feet
Diversion Structure Height 4 feet
Economic Data (0 to 30 yrs):
Project Construction Cost $572,925
Average Annual Project Cost $95,326
Annual Fuel Displaced 43,484 g allons
Average Savings per year $35,508
Total Savings, present worth $804,710
Excess Energy, present worth $1,194,825
2. INTRODUCTION
This report provides an analysis of the feasibility of hydroelectric power production from
Packers Creek at Chignik Lagoon, Alaska. Authorization for this study was given by the
Chignik Lagoon village council. Funding was provided by the Department of Energy.
POLARCONSULT A LASKA, INC.CHIGNIKLAGOONHYDROELECTRIC
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Chignik Lagoon is located on the Alaska Peninsula (See Figure 1 in Appendix F) within the
Lake & Peninsula Borough with a population of about 88 people during the winter months and
increasing during the summer.
Currently, Chignik Lagoon is without a central power generating and distribution system. Each
individual in the community is responsible for providing their own power. This is likely to
change in the near future as the community recently received a design for a diesel power plant
and distribution system.
This study is based on the economic and practical comparison of the costs and benefits of
constructing a hydroelectric plant in addition to building the diesel plant. It is assumed in this
study that the costs for building the diesel plant are as estimated in the Electrical Distribution and
Generation Feasibility and Design report dated April 12, 1994.
The scope of this study includes the installation of a recorder to monitor stream flow near the
location of the proposed intake structure, a preliminary layout of the pipeline based on surveyed
elevation information and visual inspection of terrain, an analysis of streamflows with estimations
for optimum turbine size, a cost estimate for design and construction, and an economic
evaluation of the benefits of constructing the hydroplant. The initial site visit, performed on
January 19, 1995 is detailed in the field trip report, a copy of which is in Appendix E. A
second field trip was conducted on June 8, 1995 to download data from the stream gauge and
to get another stage discharge reading. This information is included in Appendix G.
3. CHIGNIK LAGOON ELECTRICAL REQUIREMENTS
Generally the amount of electricity used in a community is a function of population, cost of
electricity, cost of alternative energy and earnings of the population. Currently, Chignik Lagoon
does not have a central power generating system. Each user has their own generator and must
supply their own fuel.
In order to assess the feasibility of the hydro plant, an assumption needs to be made regarding
the city’s power usage. This is a significant factor that determines the economic feasibility of
installing a hydroelectric plant because the viability of the hydro plant is directly related to how
much diesel fuel it can displace.
The City’s needs were estimated by using known power usage from a similar sized community
in a similar location. This was done in the previous electrical design report. Given a population
of 88 people during the winter, the average power needs amount to 74 kW. During the
summer, the population increases but the assumed use of electricity remains constant. This is a
conservative assumption that favors the diesel option but without knowing the actual power
usage it is better to error on the conservative side.
A daily demand curve was also generated to show the daily fluctuations in power needs. This
fluctuation was taken into account for the amount of diesel makeup needed to substitute hydro
power. Using the daily multiplier, the peak power usage is 113 kW. The following is the daily
fluctuation curve that was used for Chignik Lagoon.
POLARCONSULT A LASKA, INC.CHIGNIKLAGOONHYDROELECTRIC
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% of Average Power Demand
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
0 5 10 15 20 25
HourPercent of Average Power4. HYDROLOGY AND POWER
4.1 PRECIPITATION AND S TREAMFLOW
One of the critical factors for a hydroelectric power plant is the availability of water. Packers
Creek is a stream without records. There are several methods of obtaining and/ or estimating
stream flow information when there isn’t a recorded history for the stream. But any estimate
should be checked with actual stream gauging. A stream gauge was recently installed by
Polarconsult. This gauge will remain in place for approximately one year.
Initially, the streamflows in Packers Creek were estimated without the benefit of stream gauging.
This was accomplished using rainfall records for the Alaska Peninsula and streamflow data from
Russell Creek and two creeks near Sand Point. The streamflows used consisted of
approximately 8 months of data from two streams in Sand Point and several years of data from
Russell Creek all scaled by basin size.
The streamflow data has been adjusted to more accurately match the recorded measurements
using the gauging information from January 19 through June 8.
Rainfall records from Sand Point and Cold Bay indicated a mean yearly rainfall of 35.8 inches
and 36 inches respectively. This is consistent with the streamflows in the above mentioned
creeks. The streamflows observed in Packers Creek suggest a rainfall of about 100 inches. It
could be that this year has an unusually high amount of snow which is skewing the streamflow
data. However, a hydropower feasibility report for Chignik done in July of 1984 by the US
POLARCONSULT A LASKA, INC.CHIGNIKLAGOONHYDROELECTRIC
FEASIBILITY REPORT
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Army Corps of Engineers gives a mean rainfall of 107.9 inches over a 12 year period
(Appendix G).
For estimating purposes, the streamflows used in this study correlate with approximately 100
inches of rainfall. The following chart shows the yearly streamflows - actual and estimated.
Chignik Lagoon Streamflows (est.)
0.0
5.0
10.0
15.0
20.0
25.0
30.0
11/30 1/14 2/28 4/14 5/29 7/13 8/27 10/11 11/25 1/9
DateStreamflow (cfs)Estimated Flows
Actual Flows
4.2 AMOUNT OF POWER GENERATED
The amount of power generated is dependent on the pressure and flow of the water along with
the efficiency of the turbine, generator, and electrical equipment. This analysis is based on a
water to wire efficiency of 0.77. The energy available in the water is converted to electrical
energy units and multiplied by this efficiency.
Based on the streamflow information, the cumulative power output of the plant can be
estimated. This represents the amount of time that the plant will produce power at a given
output level. The following cumulative distribution of hydro output shows how much of the time
the power is less than or equal to the city’s needs. As the chart shows, approximately 80% of
the time the hydro can provide all of the City’s needs on average. Where the hydro output is
less than the City’s demand (about 20% of the time on average), diesel makeup will be needed
to provide the City with all of the power it needs.
POLARCONSULT A LASKA, INC.CHIGNIKLAGOONHYDROELECTRIC
FEASIBILITY REPORT
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Chignik Lagoon Cumalitive Hydro Power Output (est.)
0
20
40
60
80
100
120
140
160
180
200
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Percent of ValuesHydro Output (kW)4.3 EXCESS ENERGY
Energy in excess of the community's traditional needs will be produced by the hydro plant. This
energy can be wasted but it also can be used. An inexpensive computer equipped module can
be used which will determine by the frequency whether there is surplus energy. If there is an
increase in frequency above sixty hertz, a relay is closed that sends the excess to an electric
heater. Such a heater can be used to heat hot water for the school, community center, and
provide heat to the buildings as well. It can also be used for greenhouses and adsorption
refrigeration. The equivalent amount of fuel displaced by the excess hydro power will be
dependent on water flows and the ways in which the excess power is used by Chignik Lagoon.
It is estimated that the equivalent of 43,105 gallons of oil is available on average each year if all
of the energy is usable. A realistic assumption is that one quarter of the energy can be put to
useful purpose.
This study ignores the value of the excess power when determining the feasibility of the
hydroplant. This is somewhat conservative but appropriate because excess power is essentially
“free” when using a hydroplant. When there is excess power, the community will likely find a
use for it but may also lower electrical rates at the same time so that the net income from power
sales remains the same.
POLARCONSULT A LASKA, INC.CHIGNIKLAGOONHYDROELECTRIC
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5. TYPICAL FEATURES
5.1 INTAKE
The intake for this project is a small diversion structure that simply raises the water high enough
to allow it to enter the piping that will carry the water to the desander. Figures 3 and 4 in
Appendix F are drawings of the proposed intake. The intake has to be built strong enough to
withstand spring floods and ice buildup. It also has to be deep enough in the ground to prevent
the flow of water under the intake so that as much water as possible enters the intake pipe.
It is proposed to use a reinforced concrete structure with removable stop logs for an intake.
The removable stop logs will enable the water to flush out accumulated rocks and allow
bypassing of the intake pipe for servicing of the desander. Stop logs also serve to control the
maximum height that the water must be at for operation. Installing more stop logs raises the
height of the water over the intake pipe.
On the downstream side of the diversion structure is a concrete pad that dissipates the energy of
excess water falling over the stop log portion of the structure (spillway). Without this concrete
pad the force of the water falling in the stream would eventually erode away the stream and
undermine the concrete.
Before the intake, there will be a trash rack that consists of steel bars spaced closely enough
together (about one pipe diameter) to prevent very large objects from entering the intake pipe
and blocking it.
5.2 DE-S ANDING AND SCREENS
The desander is one of the most important components for the operation of the turbine.
Without it, sand and rocks can flow down the pipe and into the turbine causing excessive wear
and shortened project life. It is very important that the de-sander be built and maintained
properly.
The desander has a primary settling area for removal of gravel and other large material. In this
portion is a flush gate that can be opened and closed manually or automatically. When the flush
gate opens, the water flows through the primary settling area rapidly, thereby washing out
accumulated gravel. When the gate is closed, water flows upward towards the screen. The
water passes up through the screen which catches leaves. The water then continues up until it
reaches the operating height in the desander and flows over the separating wall in the secondary
settling basin.
When the gate in the initial settling portion of the desander opens, water briefly flows down
through the screen. This water removes the buildup of leaves and other floatables and carries it
on out through the gate as the primary settler drains.
The secondary settling basin is much larger than the primary basin. This causes the water to
flow slowly through the basin. When the flow of water is slow, the sand and grit in the water
POLARCONSULT A LASKA, INC.CHIGNIKLAGOONHYDROELECTRIC
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are able to settle to the bottom. The water then flows through a backup screen and into the
penstock. The backup screen is used in case the first screen fails.
5.3 PENSTOCK
The water conveyance system, or penstock, is one of the single most expense parts of a project
such as this.
A combination of pipes will be used to convey the water to the turbine. High density
polyethylene, HDPE, pipe weighs about 11 pounds per foot. A single forty foot section weighs
about 440 pounds. The fusion machine for such a pipe weighs about 3,000 pounds.
Polyvinyl Chloride, PVC, pipe also will be used. It comes in 20 foot lengths and has a bell and
spigot joint. The weight would range from 32 to 40 pounds per foot depending on the wall
thickness selected. PVC pipe is less expensive and the material is stronger than HDPE.
However, when cold it is brittle and if shot with a bullet it will crack.
PVC pipe will have to be hauled in sections and connected together in the field. Rubber "O"
ringed joint pipe, if used, will need to be restrained so the joints cannot pull apart.
5.4 POWERHOUSE
The powerhouse will house the turbine, generator, load governor and switch gear. A
transformer will be located outside the powerhouse. The powerhouse will be located so the
generator floor is above flood stage. The base of the powerhouse will be concrete. The walls
and roof will be wood framing with T1-11 on the exterior and greenboard on the interior.
5.5 TURBINE
The turbine for this plant will be an
impulse turbine. The turbine consists
of one or more nozzles that shoot
water at buckets positioned around
the wheel. The water hits the buckets
causing the wheel to spin which is
connected to the generator. The
figure at left shows the configuration of
the buckets on an impulse turbine.
The water stream is directed to the
center of the bucket where the flow
divides. This impulse wheel is
connected directly to a generator.
The nozzles that directs the water at
the buckets has needles inside that can be extended or retracted to control the amount of water
1 Provided by Kvaerner Hydro Power, Inc.
1
POLARCONSULT A LASKA, INC.CHIGNIKLAGOONHYDROELECTRIC
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JANUARY 18, 2002 PAGE 8
that hits the turbine. These needles open and shut relatively slowly to prevent a water hammer
effect. Between the nozzle and the turbine buckets is a movable deflector plate. This plate can
be placed between the buckets and the nozzle to instantly prevent water from hitting the turbine.
This plate prevents the turbine and generator from overspeeding when the needles can’t close
fast enough because of a sudden drop in power output (breaker tripping for instance).
5.6 GENERATOR
The proposed generator will produce a minimum of 200 kW at a 0.9 power factor. Electrically,
it will be a three phase, 480 volt unit. It will have static excitation and will use a Basler or
equivalent voltage regulator.
The generator for the turbine will come from the U.S., and will operate at 1,200 rpm. It will
have ball bearings. The turbine may or may not be mounted on the generator shaft.
5.7 GOVERNOR
The generator rpm must be controlled to produce sixty cycles. In earlier hydroplants the speed
of the turbine was controlled with a governor that controlled the amount of water the machine
received, which in turn controlled the speed. There is another way to control the speed of the
machine, and that is to add and subtract electrical loads so the output remains at 60 cycles.
This can now be done electronically by a device called a "load governor". There are a number
of load governors operating in Alaska, such as at Burnett Inlet on Alaska Aquaculture's project,
Larsen Bay, Ouzinkie, Rainbow Creek, and more. An electronic load governor can be located
anywhere on the three phase electrical distribution system. It takes power in excess of that
being used and shunts it to resistance heaters. Resistance heater can be hot water heaters,
hydronic heating systems, and electric air heaters that are located wherever heat is required.
Loads are prioritized by the load governor. As an example, the governor can be programmed
to supply excess electricity first to the school heating system, secondly to the school hot water,
and then to the greenhouse or the city hall.
For a run of the river plant that has no storage, the amount of water that can be used at any
moment cannot exceed the amount in the stream. If there is more water in the stream than the
plant could use then that water is wasted energy. A stream fluctuates as does the demand for
electricity. A 200 kW machine will rarely be used near peak capacity at Chignik Lagoon.
Much of the time there will be excess water that can be used to operate the hydroplant at an
output above the community’s needs. The surplus electricity can produce heat that has value as
it can be used to displace fuel and its associated costs. This provides added value to the plant
and also is environmentally superior to burning carbon based fuels.
In addition to the load governor there is an electronic head level controller that opens or shuts
the turbine needles based on the quantity of water available at the beginning of the penstock. It
does this by reading the water pressure (depth) which in turn is converted to an electrical signal
that is provided to a computer which directs the operation of a hydraulic pump that drives a
cylinder controlling the flow of water to the turbine. If water is being used at a rate greater than
POLARCONSULT A LASKA, INC.CHIGNIKLAGOONHYDROELECTRIC
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its supply then the needles will close, if the rate is less than the supply the needles will open until
they reach their limits of opening.
5.8 SWITCH GEAR
The switch gear will consist of several elements. One item will be the circuit breaker that will
protect the plant if there is over-current. The electronic equipment can also be used to perform
relaying to shut the plant off if there is over or under voltage or frequency. In addition,
transducers can be provided, as was done at Larsen Bay, so it is possible to monitor the status
of the plant from town. In a small plant such as this, the switch gear and the electronic controls
for a load governor can be incorporated within a single enclosure thus saving space and costs.
5.9 TRANSMISSION
Different power line designs are possible. The most desirable one, considering aesthetics and
damages, is buried cable. A second design would be bare overhead wire.
For this study, it is assumed that the transmission line will be buried line. It will be enclosed in
conduit and buried beneath the road to the powerhouse.
6. COSTS
The value of hydropower is based on the alternative means of providing the same service. The
only feasible alternative to hydro at Chignik Lagoon is diesel generation.
Another significant difference between the ‘diesel only’ and the ‘hydro and diesel’ options is the
amount of maintenance that has to be done to equipment. The estimate for the diesel cost and
the assumptions about diesel are outlined in more detail below.
6.1 DIESEL
6.1.1 FUEL COST
Fuel is the single most expensive component of generating power with diesel generating units. It
is estimated that total plant expenditures are approximately $130,834. For a fuel cost of $1.25
per gallon, $62,500 dollars will be used to purchase the 50,000 gallons consumed. This
represents almost half of the yearly cost of operating the diesel electric plant and distribution
system.
The future cost of diesel fuel is uncertain because of the current international situation. There is
no physical shortage of oil in the world nor will there be for some time. A conservative estimate
of fuel costs for this analysis is that they will increase at 1.0% for the next 5 years and at 0.0%
thereafter. Sources for such analysis include the "World Energy Outlook", dated 1990,
produced by the Chevron Corporation. The sensitivity analysis in Appendix C shows the value
of the hydro plant for different fuel price increase scenarios.
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6.1.2 EQUIPMENT AND LABOR COST
The Electrical Distribution and Generation Feasibility and Design report done for Chignik
Lagoon in April 1994 outlines the costs for installing a centralized power system. The costs that
were used in that document have also been used for this analysis.
When considering the hydro plant the amount of time the diesel is used as a backup is a large
factor in determining the economic advantage of the hydro. For instance, because the diesels
won’t be running nearly as much when there is a hydro, the village can invest in lower cost 1800
rpm machines instead of the higher cost 1200 rpm machines. The 1200 rpm machine is
estimated to last about 30,000 hours before overhaul. The 1800 rpm machines should last
about 18,000 hours. This analysis assumes that when building the hydro the diesel generators
will be 1800 rpm engines instead of the 1200 rpm machines specified in the design. The cost
for the power distribution system will not change.
Analysis shows that using 1200 rpm engines with the hydroplant decreases the net present value
by about $35,000 which is equivalent to about $1,840 per year.
The maintenance costs for a diesel engine are also directly related to the hours of use. It is
assumed in the electrical distribution report that the maintenance costs for the diesel plant would
be $30,000 per year. This includes the overhaul costs which is why they are listed as $0 in the
Economic Assumptions table in Appendix A. When using a hydro, the diesel is used only about
20% percent of what it would be without the hydro. Therefore, the parts costs are assumed to
decrease by that same amount. However, salaries for workers will generally remain constant so
this portion of the maintenance costs are not lowered.
6.1.3 FUEL R EQUIRED
There will be times when there is not sufficient water to supply the demand or when the plant is
down for maintenance reasons. During these times generation will be done by the diesel plant.
As a result, an average of 6,516 gallons of diesel fuel will need to be purchased each year. This
can vary as water flows vary for different years. Some years may not require any makeup fuel
at all while others years will require more than the average.
6.2 HYDRO
6.2.1 EQUIPMENT AND LABOR COST
The hydro plant has a very high initial equipment cost. Given a high interest rate, this can make
the project unattainable for a project that has a marginal economic advantage. This analysis
assumes that the hydroplant can be funded by a loan with an interest of 3.5% above inflation.
The State’s revolving loan fund has money with interest of 0%. Any loan with interest below
inflation plus 3.5% will increase the benefits. Other interest rates are used in the sensitivity
analysis in Appendix C.
Once the plant is built no further equipment purchases need to be made. The hydroplant is
designed to last 50 years.
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Although a diesel electric power plant takes considerably more maintenance than a
hydroelectric plant, the hydro is not maintenance free. This is especially true during the first year
of operation when problems are most likely to occur.
Modern low cost electronic equipment can be installed to monitor the operation of a small
hydroplant. For example there is an inexpensive device that connects to the telephone system
that will call designated people if the temperature is too high or too low, or there is too much
noise. This device also has contacts where a fire detector or other off/on devices may be
connected. One can also call and listen to the sound level at the plant which is useful for
periodic monitoring. The cost for this device is about $400. In addition, transducers can be
installed in the switch gear that will enable the operator to determine what is happening
electrically. This type of system was installed at Larsen Bay. It may also be possible to install a
pair of the new video phones which will provide an inexpensive way of looking at the power
house, intake, or other plant features. Since the operator will be living in town and the weather
is not always conducive to inspecting the plant, these remote devices will be able to avoid field
inspections that will save considerable time and effort. After the operator gains experience
operating the plant, less observation will be needed. For example, the operator may find from
experience that after a heavy rain the screens require cleaning, so the operator will not bother
investigating the screens on a daily basis if the rains have been moderate. This means that the
amount of time spent at the plant will decrease with time.
6.2.2 CONSTRUCTION
Project costs are one of the most important derivatives of an analysis such as this. Their
accuracy, along with the demand, estimate of future alternative power generation costs, costs of
money, and quantity of production are the important values that provide the information to make
sound economic judgments.
It is important to assign values to each of these items that will result in a conservative realistic
result. Too many contingencies have a multiplying effect and can result in unrealistically high
costs. Many construction and operations costs can be predicted in a manner that will be
conservative. These include demand, alternative power generation costs, and costs of money.
The quantity of production is dependent on water flow and is not as easily predicted.
Project costs have received extra attention in the analysis. The extra attention has included
more detail than is typical in a study of this type in the sizing of equipment. In addition, costs
were analyzed on an item by item basis instead of a unit basis, such as dollars per square foot.
This attention to detail increases the estimate's accuracy but it takes more time and as a result is
more costly for the consultant.
Project costs are composed of two major elements. One element is material costs. These
costs, if based on accurate quantities, can be fairly accurate. The second element is labor cost.
This is the variable cost, and is hard to estimate accurately. As an example, heavy rain can
reduce productivity to as low as 36% of dry conditions. However, if the work is mostly done
during the months of June, July, and August and the weather is not unusually wet, productivity
can be good. Labor costs are based on an estimate of the time to do the work, assuming a
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crew and supervision such as was used on the McRobert's Creek project that Polarconsult
constructed.
Wages are based on information garnered from the City of Chignik Lagoon, force account
work in other communities, and our construction of McRobert's Creek Hydro. For wages the
following assumptions are made.
2 Skilled laborers @ $15.00 per hour
2 laborers @ $12.50 per hour
1 Foreman @ $17.50 per hour
Average @ $14.50 per hour
Use @ $15.00 per hour
Fringes estimated as follows:
Workers Compensation 8.5%
Alaska Unemployment 3.1%
Employer Social Security 7.65%
Total 19.25%
Average rate per hour calculated is $17.88. Twenty dollars per hour is used in the estimates.
This is more than rates paid on McRobert's Creek which averaged $10 per hour plus fringes.
The project cost estimate is arranged to present the costs of material and labor in a detailed
format so the City will be able to review costs and provide any bias or input to the figures based
on local knowledge.
Itemized material costs are not as variable as their costs are fixed by quotation. Frequently
quoted prices can be bettered when an order is placed. As a general rule, these quotations are
rounded to higher values.
Freight costs are based on a single barge hauling in the majority of the material during one trip
from Seattle. Because of scheduling, the turbine and generator are assumed to be shipped
separately.
6.2.3 FORCE ACCOUNT
Force account is the only practical and cost effective way to construct a project such as this.
Wage rates for Title 36, Little Davis Bacon, are high enough to make the project uneconomical.
Force account optimizes the situation for local employment and avoids all of the added costs
that contracting brings. Some of the added costs for contracting are the cost to bid, bonding
costs, tighter plans and specifications resulting in more expensive engineering, better record
keeping, greater overhead, and more detailed inspections. Additionally, higher worker’s
compensation insurance rates and higher wages are required, since Little Davis Bacon rules are
less flexible as they require overtime pay for working more than 8 hours per day. There is also
greater contractor risk and added legal fees, resulting in increased costs and bids.
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The major problem with community force account is management. In the best interests of the
project, the manager generally should not be from the community. Tough personnel decisions
are required during the execution of the project. If the project is brought in under budget then
money can be returned to the workers as a bonus or to the rate payer. Management in force
account can strike the balance between sensitivity for local feelings and needs, and the absolute
need to complete the project on or under budget.
To build a quality plant with low cost, the philosophy of construction must be different for small
hydro plants as compared to large ones. More of the decisions on routing and layout must be
made in the field during construction. The project must be compatible with the terrain and not
be required to move more rock and earth than is absolutely necessary, or pour added concrete
to match lines drawn on paper as is done on larger scale projects. This requires a flexible mind
and the ability to innovate in order to solve problems on the spot.
6.2.4 TITLE 36
Title 36 is enforced when a contractor or subcontractor performs work on public construction
in Alaska. Title 36 requires that contractors be paid the prevailing wage in the locality. This
prevailing wage is set by the Labor Department's Labor Standards and Safety Division. For
Chignik Lagoon the wage plus the fringes will average near 30 dollars per hour. The overall
cost increase for wages alone would exceed $40,000. Additionally, contractors have other
costs that will further raise this amount.
7. ECONOMICS
The economics of the system are outlined below. A synopsis of the assumptions and results is
presented below. The sensitivity analysis in the appendix gives results for different economic
assumptions. Loan period and analysis period is for 30 years. The initial cost of the plant is
$572,925.
Other assumptions are that current labor costs will remain constant. Although it is likely these
costs can be reduced after the debugging period, this is a conservative approach that will retain
the needed skills within the community.
All of the monetary values in this analysis have been adjusted to present value using the discount
rate. This means that inflation is not taken into account. This gives clearer resolution of
variations in the dollar quantities.
An explanation of some of the selected values follows:
Interest rates: A system was selected that does not use standard interest rates
which include assumed factors for inflation. Everything is reduced to the
opportunity cost of interest which traditionally has been near 3.5%. This results in
costs that are in today's dollars throughout the analysis period. This helps in
achieving a more accurate understanding of the project costs.
Power demand: A conservative figure is 0.0% growth. More growth favors the
hydro over the diesel.
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Loan Period: The loan period is typical for a small hydroplant and again is
conservative as compared to 50 year periods used for governmental projects.
In addition there are other economic values for the project that have not been quantified. Some
of these values are as follows:
Retaining money within the community. When oil is purchased most of the money
leaves the community and goes to the transporters, refiners, producers, and
resource owners. The labor will result in employment for people in the community.
Income from their wages will add new money to the community. The savings from
lower costs for electricity will conserve dollars within the community for other uses.
People will receive training in construction by doing the work. This training is
valuable as it makes for salable skills, and fosters independence.
Freedom from rate shock created by increasing oil prices is obtained. Should there
be large excursions in oil prices then the communities electric costs will not be
significantly affected.
In addition to benefits there are also potential negative aspects of the project which follow:
The primary risk is from cost overruns during construction.
The second risk is that a flood or mechanical events will result in reduced revenues.
This risk can persist until the causes of the problems are corrected.
Another disadvantage is that a project such as this could be conceived as increasing
stress within the community because of the requirement to complete it on time and
on budget. Further, if the community is divided on the project there is always a
possibility of increased political disagreements between the anti's and the
progressives.
8. ENVIRONMENTAL
8.1 FISH REQUIREMENTS
The hydro plant would discharge water upstream of any potential spawning grounds. Because
of the significant number of flow contributions downstream of the intake, it is expected that there
won’t be any impact to fish in Packers Creek.
8.2 FERC
The Federal Energy Regulatory Commission (FERC) has jurisdiction over most of the hydro in
the US. FERC's jurisdiction is when a hydroplant is on Federal land, is involved with Interstate
Commerce, is on a Navigable River, or uses water from a Federal dam or Project.
The proposed project is not on Federal land, it is on Chignik Lagoon land. The project does
not send power beyond State boundaries therefore, it is not involved in interstate commerce.
Packers Creek is clearly not navigable where the project is located, and there is no federal dam
or project on the river. As a result the commission can be petitioned for a waiver from FERC
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licensing. The petition, when granted, will save time and money and makes the project much
easier to permit as the Federal agencies will not have jurisdiction.
9. PERMITS
9.1 PERMITS WILL BE REQUIRED AS FOLLOWS :
1. A water use permit will be required from the Alaska Department of Natural Resources
(DNR). DNR will ask for comments by the Alaska State Department of Fish and
Game (ADF&G), and Department of Environmental Conservation (DEC) in the review
of these permits. It is unlikely but ADF&G may ask for special conditions, such as
minimum stream flows.
2. Alaska Coastal Zone Management Consistency Review Compliance.
3. DEC Clean Water Certification (401) which is done in conjunction with DNR's review.
This permit is required only if a Federal permit is needed. A typical Federal permit
which will require a (401) is a (404) permit for action involving a wetland or fill in a
stream. Without fill, a (404) permit will not be needed, therefore, a (401) permit will
not be required either.
4. FERC confirmation of no jurisdiction.
With the possible exception of dealing with ADF&G, none of these permits will be difficult or
expensive to acquire. DNR is behind in permit processing so their permit will take the most
time, the agency cannot say how long, but perhaps 6 months.
10. CONCLUSIONS
Based on the analyses in this report, the conclusion is that a hydro plant is superior to the
current diesel generation under almost all reasonable scenarios.
Hydro is superior to diesel generation in a conventional economic sense as the base project
yields a present value of $804,710 for the difference between hydro and the diesel alternative.
In addition to being superior economically, the plant will be superior in an environmental sense
as it will not discharge carbon dioxide nor nitrous oxides into the atmosphere. The new design
of the plant in addition to reducing costs, fits into the terrain and requires the very minimum of
earthwork. The generation facility is outside the community and will considerably reduce air and
noise pollution in Chignik Lagoon, or anywhere for that matter.
There are a number of indications that the US, in an attempt to reduce payments to foreign
interests, will create an increase in the costs of diesel fuel. With the hydroplant the use of diesel
generation is reduced to about 20% of its current use so changes in the cost of diesel fuel will
have no appreciable impact on the cost of power.
The hydroplant will provide employment for the community for much of one year. The
community, instead of sending money out to pay for oil, will capture the labor portion of the
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project. This will have multiplier effects throughout the community, and should increase
prosperity. The diesel plant will not provide these benefits.
11. RECOMMENDATIONS
There are a number of advantages that can accrue to the people of Chignik Lagoon if a
hydroplant is constructed. If these advantages are to be acquired it is recommended that the
following steps be undertaken.
Ascertain whether the people believe it is in their best interest to build the plant. If
pursuing the project is favorable, then the following additional steps be taken.
Get a grant from the Legislature to design and construct a portion of the plant. King
Cove has a grant which funds a large amount of their hydro plant's cost. The
Railbelt has been granted money for Bradley Lake. The 4 dam pool has received
great amounts of largess from the state. It would seem that equity should result in
equal consideration for Chignik Lagoon. Governor Knowles likes to keep money
within Alaska and philosophically supports the concept of the plant.
Money can be borrowed from the revolving power loan fund at low interest from
Alaska Industrial Development and Export Authority, Farmers Home
Administration, Municipal Bond Bank or other sources.
Only consider doing the work with force account, i.e. City employees. Be very
careful with management of the project. Non-innovative construction people who
are accustomed to high cost state government projects can ruin a small project like
this. Paraphrasing Shumaker, think small. Give the project manager absolute
authority to fire people who are not performing. There is no money for feather
bedding.
Plan to and execute methods of taking advantage of the excess energy that is
available to reduce costs, decrease pollution, and improve the quality of life in the
community.
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APPENDIX A- HYDRO COST
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APPENDIX B- ECONOMIC ASSUMPTIONS AND YEARLY DATA
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CHIGNIK LAGOON ECONOMICS
Discount Rate (%)3.5%
Power demand growth (%)0.0%
Fuel cost increase in 1st X years (%) 1.0%
X years 5
Fuel cost increase thereafter 0.0%
Length of study (yrs) 30
Price of Fuel ($/gal)$1.25
diesel efficiency (kWh/gal) 13.0
Price per kWh ($/kWh)$0.096
DIESEL
Yearly Maintenance cost $30,000
Overhaul cost $0
Overhaul frequency (kwh) 2,220,000
Replacement cost $90,000
Replacement frequency (yrs) 10
payback period for replacement (yrs) 10
Debt payment for diesel purchase 10,822
power system payback period (yrs) 30
power system cost (grid)506,000
power system payments $27,512
Diesel parts cost per kwh $0.000
HYDRO
Initial hydro cost (loan amount)$572,925
Hydro loan payback time (yrs) 30
Hydro loan interest rate (%)3.5%
Hydro yearly payments ($31,151)
Hydro O & M $10,000
Diesel replacement cost when using hydro $50,000
Debt payment for diesel purchase $3,518
Diesel Overhaul Cost $0
Diesel Overhaul Frequency (kWh) 1,332,000
Diesel O&M with hydro $15,000
Diesel Replacement Freq with Hydro (yrs) 20
RESULTS
Net present cost of hydro $2,033,719
Net present cost without hydro $2,838,430
Net present value of excess power $1,194,825
Total savings, present value $804,710
6/26/95 APPENDIX B
POLARCONSULT ALASKA, INC.CHIGNIK LAGOON HYDROELECTRICFEASIBILITY REPORTYearly SummaryHYDRO NO HYDROYear Average City Hydro Hydro Hydro Total Hydro Diesel Fuel Total Diesel Total Present Excess Power Diesel Total Diesel PresentFlow Needs Output Debt Maintenance Cost Makeup Cost Cost Cost Value Present Value Usage Cost Valuecfs 1,000 kWh 1,000 kWh thousands thousands thousands1,000 kWh thousands thousands thousands thousands1,000 kWh thousands thousands19959.03 6501170$31.2 $10.0 $41.2 85$1.250$54.2 $95.3 $95.3 $53.9 650 $130.8 $130.819969.03 6501170$31.2 $10.0 $41.2 85$1.263$54.3 $95.4 $92.2 $52.6 650 $131.5 $127.019979.03 6501170$31.2 $10.0 $41.2 85$1.275$54.3 $95.5 $89.2 $51.4 650 $132.1 $123.419989.03 6501170$31.2 $10.0 $41.2 85$1.288$54.4 $95.6 $86.5 $50.2 650 $132.7 $120.119999.03 6501170$31.2 $10.0 $41.2 85$1.300$54.5 $95.7 $83.9 $49.2 650 $133.3 $117.020009.03 6501170$31.2 $10.0 $41.2 85$1.313$54.6 $95.7 $81.5 $48.1 650 $134.0 $114.020019.03 6501170$31.2 $10.0 $41.2 85$1.313$54.6 $95.7 $79.1 $46.8 650 $134.0 $110.720029.03 6501170$31.2 $10.0 $41.2 85$1.313$54.6 $95.7 $76.9 $45.4 650 $134.0 $107.620039.03 6501170$31.2 $10.0 $41.2 85$1.313$54.6 $95.7 $74.8 $44.2 650 $134.0 $104.720049.03 6501170$31.2 $10.0 $41.2 85$1.313$54.6 $95.7 $72.8 $43.0 650 $134.0 $101.920059.03 6501170$31.2 $10.0 $41.2 85$1.313$54.6 $95.7 $70.9 $41.9 650 $134.0 $99.220069.03 6501170$31.2 $10.0 $41.2 85$1.313$54.6 $95.7 $69.1 $40.8 650 $134.0 $96.720079.03 6501170$31.2 $10.0 $41.2 85$1.313$54.6 $95.7 $67.4 $39.8 650 $134.0 $94.320089.03 6501170$31.2 $10.0 $41.2 85$1.313$54.6 $95.7 $65.8 $38.9 650 $134.0 $92.120099.03 6501170$31.2 $10.0 $41.2 85$1.313$54.6 $95.7 $64.3 $38.0 650 $134.0 $89.920109.03 6501170$31.2 $10.0 $41.2 85$1.313$54.6 $95.7 $62.8 $37.1 650 $134.0 $87.820119.03 6501170$31.2 $10.0 $41.2 85$1.313$54.6 $95.7 $61.4 $36.3 650 $134.0 $85.920129.03 6501170$31.2 $10.0 $41.2 85$1.313$54.6 $95.7 $60.0 $35.5 650 $134.0 $84.020139.03 6501170$31.2 $10.0 $41.2 85$1.313$54.6 $95.7 $58.7 $34.7 650 $134.0 $82.220149.03 6501170$31.2 $10.0 $41.2 85$1.313$54.6 $95.7 $57.5 $34.0 650 $134.0 $80.520159.03 6501170$31.2 $10.0 $41.2 85$1.313$54.6 $95.7 $56.3 $33.3 650 $134.0 $78.820169.03 6501170$31.2 $10.0 $41.2 85$1.313$54.6 $95.7 $55.2 $32.6 650 $134.0 $77.220179.03 6501170$31.2 $10.0 $41.2 85$1.313$54.6 $95.7 $54.1 $32.0 650 $134.0 $75.720189.03 6501170$31.2 $10.0 $41.2 85$1.313$54.6 $95.7 $53.0 $31.3 650 $134.0 $74.220199.03 6501170$31.2 $10.0 $41.2 85$1.313$54.6 $95.7 $52.0 $30.7 650 $134.0 $72.820209.03 6501170$31.2 $10.0 $41.2 85$1.313$54.6 $95.7 $51.1 $30.2 650 $134.0 $71.420219.03 6501170$31.2 $10.0 $41.2 85$1.313$54.6 $95.7 $50.1 $29.6 650 $134.0 $70.120229.03 6501170$31.2 $10.0 $41.2 85$1.313$54.6 $95.7 $49.2 $29.1 650 $134.0 $68.920239.03 6501170$31.2 $10.0 $41.2 85$1.313$54.6 $95.7 $48.4 $28.6 650 $134.0 $67.720249.03 6501170$31.2 $10.0 $41.2 85$1.313$54.6 $95.7 $47.5 $28.1 650 $134.0 $66.520259.03 6501170$31.2 $10.0 $41.2 85$1.313$54.6 $95.7 $46.7 $27.6 650 $134.0 $65.36/26/95APPENDIX B
POLARCONSULT A LASKA, INC.CHIGNIKLAGOONHYDROELECTRIC
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JANUARY 18, 2002 A PPENDIX C
APPENDIX C- SENSITIVITY ANALYSIS
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The sensitivity analysis gives an indication as to what are the most critical factors affecting the
economic viability of the hydroplant project. This analysis focuses on the primary factors that
determine the cost and feasibility of the project. These are:
Project construction costs.
Hydroplant loan interest rate.
Chignik Lagoon’s electrical demand.
Estimate of future diesel fuel costs.
Quantity of hydro production based on variations in water flow.
The following charts and tables show the effect of each one of these variables on the economics.
Only the stated variable is changed at one time while all the other variables are as those listed in
Appendix B, Economic Assumptions.
Hydro Cost and Net Savings
$500,000
$550,000
$600,000
$650,000
$700,000
$750,000
$800,000
$850,000
$900,000
$500,000 $550,000 $600,000 $650,000 $700,000 $750,000 $800,000
Hydroplant CostHydroplant Net Savings as Present ValueAs can be seen from the chart, the project would still be economically feasible for a
considerable increase in the estimated construction cost. This only applies at the interest used
for the loan in the base case. As the next graph shows, the loan interest rate has a significant
affect on the feasibility of this project.
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Hydroplant Loan Interest Rate and Net Savings
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
0% 1% 2% 3% 4% 5% 6% 7% 8% 9%
Hydroplant Loan Interest RateHydroplant Savings as a Present ValueThe City’s power demand needs will affect the profitability of the hydroplant also. As the
following graph illustrates, increases in the City’s demand cause a significant increase in the net
present value difference between the hydro and non hydro power generation. Similarly,
decreases in the City’s power needs will reduce the economic feasibility of the hydro project.
When combined with estimations for water flow the city’s needs become even more important.
For instance, using the current estimate for water flow there are a large number of days during
the summer where the flow is less than 8 cfs and thus power output is less than 200 kW. If the
population increase in the summer is such that the city uses over 150 kW daily, the hydroplant
will have to be supplemented with diesel energy a significant amount of time.
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Power Demand Growth and Net Savings
$250,000
$450,000
$650,000
$850,000
$1,050,000
$1,250,000
$1,450,000
-3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0%
City's Power Demand Growth RateHydroplant Savings as a Present ValueFuel price increases, or even decreases, play a major part in the feasibility of the project. The
following chart shows the sensitivity of the project to fuel prices. Of concern would be a
decrease in the price of fuel. This is not a likely scenario, however.
Fuel Increases and Net Savings
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
$1,400,000
-2% -2% -1% -1% 0% 1% 1% 2% 2% 3% 3%
Fuel Increase RateHydroplant Savings as a Present Value
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One of the biggest factors in determining the output of the hydroplant, and thus it’s profitability,
is the amount of water available in the stream. As was mentioned in the report, there aren’t any
stream flow records for Packer’s Creek. Micro climates can be very significant around
mountains and inlets. For this reason, further stream gauging should be done along with input
from the community as to rainfall, snowfall, and general streamflow conditions in the creek over
the years.
The following graph illustrates the affect of streamflow on the feasibility of the project. As the
flow decreases, the value of the project decreases rapidly because the flow rate is reaching the
lower portions of the turbine efficiency curve. As the flow increases, there is a point of
diminishing returns as the community cannot put to use the increase in the amount of power.
Water Flow and Net Savings
$400,000
$450,000
$500,000
$550,000
$600,000
$650,000
$700,000
$750,000
$800,000
$850,000
$900,000
50% 60% 70% 80% 90% 100% 110% 120% 130% 140%
Percent of Average Water FlowHydroplant Savings as a Present Value
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APPENDIX D- FIELD REPORT
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APPENDIX E-PHOTOS SHOWING P IPING LAYOUT AND INTAKE
LOCATION
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APPENDIX F- DRAWINGS
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APPENDIX G- FIELD TRIP TWO , S TREAM GAUGE AND RAINFALL
DATA