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Chenega Bay Hydroelectric Business Plan - Sep 2013 - REF Grant 7030010
PREPARED FORPREPARED FOR:: FINAL BUSINESS PLAN FORFINAL BUSINESS PLAN FOR CHENEGA CHENEGA IRA IRA COUNCIL/COUNCIL/ CHENEGA BAY UTILITIESCHENEGA BAY UTILITIES Chenega Hydroelectric ProjectChenega Hydroelectric ProjectChenega Hydroelectric ProjectChenega Hydroelectric Project September 13, 2013September 13, 2013 Prepared By:Prepared By: Chenega IRA Council / Chenega Bay Utilities - Chenega Hydroelectric Project Final Business Plan 20130913-chenega final business plan.docx, Rev. 0 Page 1 © Hatch 2013 All rights reserved, including all rights relating to the use of this document or its contents. Project Report 9/13/2013 Chenega IRA Council / Chenega Bay Utilities Chenega Hydroelectric Project Distribution Jordan Keeler, Chenega IRA Brian Pillars, Chenega Corporation Final Business Plan Table of Contents 1. Acronyms .............................................................................................................................................. 3 2. Introduction ........................................................................................................................................... 4 3. Project Description ............................................................................................................................... 5 3.1 Purpose and Need ........................................................................................................................ 6 3.2 Project Alternatives ....................................................................................................................... 6 3.3 Proposed Alternative: Chenega Hydroelectric Project at Anderson Creek. ................................. 6 3.3.1 General Information ............................................................................................................ 6 3.3.2 Project Intake ...................................................................................................................... 7 3.3.3 Penstock ............................................................................................................................. 7 3.3.4 Powerhouse ........................................................................................................................ 7 3.3.5 Turbine and Generator ........................................................................................................ 7 3.3.6 Tailrace ............................................................................................................................... 8 4. Agency Involvement and Data Collection .......................................................................................... 9 5. Regulatory Discussion ....................................................................................................................... 10 5.1 Fish Habitat ................................................................................................................................. 10 5.2 Water Rights ............................................................................................................................... 11 5.3 FERC Jurisdictional Analysis ...................................................................................................... 12 6. Avoidance, Minimization, and Compensation. ................................................................................ 12 7. Data Analysis ...................................................................................................................................... 13 7.1 Water Use ................................................................................................................................... 13 7.2 Hydrology data collection ............................................................................................................ 13 7.3 Electric Demand .......................................................................................................................... 14 7.4 Fuel Prices .................................................................................................................................. 14 8. Developmental Analysis .................................................................................................................... 15 Chenega IRA Council / Chenega Bay Utilities - Chenega Hydroelectric Project Final Business Plan 20130913-chenega final business plan.docx, Rev. 0 Page 2 © Hatch 2013 All rights reserved, including all rights relating to the use of this document or its contents. 9. Project Cost ......................................................................................................................................... 16 10. Economics ........................................................................................................................................... 17 11. Recommendations ............................................................................................................................. 17 List of Tables Table 1 - Chenega Hydroelectric Project Configuration ............................................................................... 5 Table 2 - Summary of Regulatory Requirements ....................................................................................... 10 Table 3 - Annual Operational Analysis of Proposed Alternative ................................................................. 15 Table 4 - Proposed Alternative Cost Estimate ............................................................................................ 16 Table 5 - Proposed Alternative Economic Summary .................................................................................. 17 List of Figures Figure 1 - Barrier Falls 1 ............................................................................................................................. 11 Figure 2 - Anderson Creek Monthly Average Discharge ............................................................................ 13 Figure 3 - ISER 2013 Chenega Fuel Price Projection ................................................................................ 14 List of Appendices Appendix A - Project Overview Map Appendix B - Hydrology, Demand, and Hydroelectric Operational Charts Appendix C - 95% Design Drawings Chenega IRA Council / Chenega Bay Utilities - Chenega Hydroelectric Project Final Business Plan 20130913-chenega final business plan.docx, Rev. 0 Page 3 © Hatch 2013 All rights reserved, including all rights relating to the use of this document or its contents. 1. Acronyms ADF&G Alaska Department of Fish and Game ADNR DMLW Alaska Department of Natural Resources Division of Mining, Land and Water ANTHC Alaska Native Tribal Health Consortium AEA State of Alaska, Alaska Energy Authority CBU Chenega IRA Council / Chenega Bay Utilities cfs cubic feet per second DOE Department of Energy FERC Federal Energy Regulatory Commission gal gallon gpm gallons per minute HDPE High Density Polyethylene ISER Institute of Social and Economic Research k 1000 kW Kilo Watt kWhr Kilo Watt Hour OEM Original Equipment Manufacturer OD Outer diameter O&M Operations and Maintenance PCE State of Alaska, Power Cost Equalization Program PHS Public Health Service SDR Sidewall/diameter ratio USACE US Army Corps of Engineers USDA United States Department of Agriculture Chenega IRA Council / Chenega Bay Utilities - Chenega Hydroelectric Project Final Business Plan 20130913-chenega final business plan.docx, Rev. 0 Page 4 © Hatch 2013 All rights reserved, including all rights relating to the use of this document or its contents. 2. Introduction The Chenega IRA Council and its subsidiary, Chenega Bay Utilities, (CBU) owns and operates the electric utility in the community of Chenega. The power is generated exclusively with small diesel electric generators and there is a corresponding high cost and high risk in purchasing and storing the diesel fuel. In an effort to reduce the community’s energy costs and risk, CBU contracted with Hatch Associates Consultants Inc. (Hatch) to provide a hydroelectric project concept for the Anderson Creek site and accompanying Business Plan. The scope of work entailed: 1. Review of previous studies. 2. Collection of additional data, including ANTHC water project data. 3. Field reconnaissance of the proposed site. 4. Development of general arrangement details. 5. Preliminary layout and cost estimate of hydroelectric project features. 6. Economic evaluation of the proposed project. 7. Environmental review and estimate of permitting costs for the project. 8. Preparation of this Business Plan including the resulting conclusions and recommendations. A reconnaissance report was written in 1992 by Phukan Consulting Engineers and Associates and in March 2011 by HDR to analyze the viability of a small-scale hydroelectric project on Anderson Creek to serve the community of Chenega Bay. The HDR report analyzed the hydropower potential from both Anderson Creek and the South Lake drainage. The hydroelectric potential from Anderson Creek in Chenega was also evaluated by Hatch with a Draft Business Plan by Hatch issued on October 31, 2011. The reports by HDR and Hatch found that a small hydropower project is feasible on Anderson Creek. This Final Business Plan addresses comments from AEA and includes updated information based on the data collection effort and 95% project design. Chenega IRA Council / Chenega Bay Utilities - Chenega Hydroelectric Project Final Business Plan 20130913-chenega final business plan.docx, Rev. 0 Page 5 © Hatch 2013 All rights reserved, including all rights relating to the use of this document or its contents. 3. Project Description Chenega Bay Utilities proposes to construct a small-scale hydroelectric project at Anderson Creek1 to serve the village of Chenega Bay on Evans Island in Prince William Sound, Alaska (Appendix A- Project Overview Map). Anderson Creek flows through the village of Chenega Bay and drains into Sawmill Bay on the east side of the island. The project intake and powerhouse are accessible by an existing road. Chenega Bay Alaska (population 76) is accessible by air and water. The village is located 42 miles southeast of Whittier, 50 miles east of Seward, and 104 miles southeast of Anchorage. The project is located above the village at approximately 60.0723 North Latitude and 148.0182 West Longitude. The Anderson Creek watershed drains steep terrain from the ridgeline of Evans Island, contains no lakes, and has no major tributaries. There is an existing water supply dam and intake at 248 feet elevation, approximately 0.6 river miles upstream of the mouth of the creek at sea level. There is existing road access to this intake site. The water system is owned by the community of Chenega Bay, and was constructed in 1984 by the U.S. Public Health Service (PHS). The water treatment plant and raw water supply line was recently replaced by the Alaska Native Tribal Health Consortium (ANTHC). The drainage area at the intake is 0.37 square miles in area. Between the mouth of the creek and the village of Chenega there is a waterfall that prevents salmon from passing upstream. Between the village and the city water supply intake there is a waterfall and three abandoned timber dams constructed atop smaller natural falls that prevent fish passage to the intake2. Table 1 - Chenega Hydroelectric Project Configuration Anderson Creek Drainage Basin Area 0.37 sq miles Average Annual Stream Flow 5.4 cfs Hydroelectric Design Flow 7 cfs Static Head 183.5 feet Net Hydro Capacity (kW) 64 kW Penstock Diameter 14 inches Penstock Length 1585 feet Displaced Diesel Energy, 2012 123,000 kWh Hydro penetration 39% % of 2012 Demand Displaced Annual Energy Potential (kWh) 173,000 kWh Construction Cost $1,464,000 1 Other reports and memorandums may use different names for Anderson Creek including the name Evans Creek. 2 HDR Alaska, Inc. 2009. Chenega Bay Hydroelectric Feasibility Study Reconnaissance Report. Prepared for Chenega Corporation 3000 C Street, Suite 301 Anchorage, Alaska 99503 and ADF&G. 2012. Will Frost, Habitat Biologist. August 30, 2012 Memorandum: Trip Report – Anderson Creek Chenega Hydro Electric Project Trip Report. Chenega IRA Council / Chenega Bay Utilities - Chenega Hydroelectric Project Final Business Plan 20130913-chenega final business plan.docx, Rev. 0 Page 6 © Hatch 2013 All rights reserved, including all rights relating to the use of this document or its contents. 3.1 Purpose and Need Currently the power in Chenega is generated exclusively with small diesel electric generators, and there is a corresponding high cost and high risk in purchasing and storing the diesel fuel. This project is needed to reduce the community’s energy costs, risk, and reliance on fossil fuels. The approximate average community electricity demand in the community of Chenega Bay is 37 kilowatt (kW) and the peak demand is 73 kW. The utility generated 310,768 kilowatt hours (kWh) hours in 2012 using 26,348 gallons of imported diesel fuel3 mostly paid for by the State of Alaska through the Power Cost Equalization Program (PCE). 3.2 Project Alternatives The proposed project at Anderson Creek and a no action alternative were considered for this analysis. A reconnaissance report written in March 2011 by HDR included evaluation of hydropower potential from both Anderson Creek and the South Lake drainage. The hydroelectric potential from Anderson Creek in Chenega was also evaluated by Hatch in October 2011. The reports by HDR and Hatch found that a small hydropower project is feasible on Anderson Creek. The hydroelectric potential at South Lake (Section 22 Lake) was evaluated by the U.S. Army Corps of Engineers in 1982, and this site was also addressed in HDR’s 2011 report. The South Lake drainage is located on the west side of Evans Island and empties into Prince of Wales Passage. This investigation estimated that a project on South Lake would generate power at a unit cost of $0.72 per kWh (1982 dollars). South Lake is at an elevation of approximately 600 feet above sea level and has a 0.54-square mile drainage area. The outlet creek that drains South Lake flows through steep terrain, primarily across bedrock, before reaching sea level roughly one mile from the lake. A steep waterfall is located approximately 0.3 miles upstream from the mouth. A wetland complex is located on the east side of the stream near the mouth. The South Lake watershed has no major tributaries. The 2011 HDR report found that a hydroelectric project at South Lake would not be feasible due to economics of transmission and access issues. 3.3 Proposed Alternative: Chenega Hydroelectric Project at Anderson Creek. The proposed project at Anderson Creek would meet the purpose and need by producing hydroelectric power for the village and is found to be economically feasible. 3.3.1 General Information The project would be a run-of-river hydroelectric project with an average inflow of 5.4 cubic feet per second (cfs) (the project does not include water storage). The project’s installed and ultimate capacity is expected to be 64 kW. Gross head is 183.5 feet; net head is 165 feet. This represents the total friction losses in the pipeline under full output. According to the Alaska Department of Natural Resources Division of Mining, Land, and Water, Anderson 3 RCA File PC68-0413, April 19, 2013 Chenega IRA Council / Chenega Bay Utilities - Chenega Hydroelectric Project Final Business Plan 20130913-chenega final business plan.docx, Rev. 0 Page 7 © Hatch 2013 All rights reserved, including all rights relating to the use of this document or its contents. Creek is not navigable4. The land within the project area has been conveyed from the Bureau of Land Management (BLM) to the Chenega Corporation under interim conveyances (ICs) 208-207 in Section 26 and ICs 1216/1215 in Section235. 3.3.2 Project Intake The hydro intake would be located above the village on Anderson Creek immediately downstream of the existing 9.8 foot high city water supply dam. The hydro intake will not modify the existing normal water surface elevation at approximately 245 feet above mean sea level and the existing domestic water supply will maintain first priority for water withdrawal. The hydro intake will consist of a screening box and new spillway constructed downstream of the existing spillway. Drawing H338906-C-020 in Appendix C shows the general arrangement of the intake. Secondary water withdrawal priority, if required by the State of Alaska, will go to an open flow environmental bypass constricted to 0.5 cfs for aquatic habitat preservation that is installed upstream of the hydro weir wall and screen. All remaining water in the creek, up to 7 cfs, will be routed through the screen and over the weir wall to the penstock inlet for subsequent power production. The intake arrangement utilizes gates to occasionally flush debris during high flows or when the screens become clogged. Future motor operators could be installed on the gates for automatic flushing. The design peak flow rate for the intake works is 13 cfs with an expected design flow rate of 7 cfs in operation. 3.3.3 Penstock A 14-inch high-density polyethylene (HDPE) pipe, with a total length of 1585 feet, will be buried a minimum of 3 feet deep under the existing roadway and will convey water from the intake to the powerhouse. Drawing H338906-C-001 in Appendix C shows the penstock location. The pipe will include a flange connection at each end and it will be fused on site for the entire length. A butterfly valve will be located in the powerhouse upstream of the turbine bifurcation. 3.3.4 Powerhouse The powerhouse would be located adjacent to the existing diesel powerhouse at an elevation of 62.75 feet above mean sea level. The powerhouse will be 16'x20', have a single garage door, single man door, one south facing window, and will not include a crane. Drawing H338906-C-040 in Appendix C shows the general arrangement of the powerhouse. 3.3.5 Turbine and Generator The turbine selected for this project is a standard design twin jet pelton turbine manufactured by Canyon Industries. The turbine is coupled to a standard synchronous generator using a 4 2010. Alaska Department of Natural Resources Division of Mining, Land, and Water. Navigability Program. Viewed on October 18, 2011 at: http://dnr.alaska.gov/mlw/nav/. 5 HDR. 2011. Chenega Hydroelectric Project Reconnaissance Report Final. March 2011. Chenega IRA Council / Chenega Bay Utilities - Chenega Hydroelectric Project Final Business Plan 20130913-chenega final business plan.docx, Rev. 0 Page 8 © Hatch 2013 All rights reserved, including all rights relating to the use of this document or its contents. speed increaser. The generator configuration will be a 480 volt 3 phase unit that outputs to the generation side of the existing diesel switchgear. Some modification of the switchgear and cabinet may be required to make the physical connections. 3.3.6 Tailrace Water would be returned, though a culvert and constructed channel, to a tributary that flows to Anderson Creek. First water will exit the powerhouse onto a concrete collection or stilling pit below the hydro turbine. The water will then flow into a buried 24-inch diameter, smooth inside HDPE culvert that is approximately 40 feet in length. Upon exiting the culvert, the hydro tail water will discharge onto a rip rap lined splash pad and then be conveyed by a small, 4.5-foot wide by 1-foot deep stream channel, or ditch, excavated from the existing ground. The channel will be lined with well graded crushed gravel and follow the alignment of lowest elevation until it reaches the nearest tributary to Anderson Creek which is approximately 210 feet distant from the culvert at a downward slope of 2%. The volume of material excavated to form the channel is estimated to be 180 cubic yards. This material will be disposed of at the land fill, or another disposal site in Chenega. Drawing H338906-C-050 in Appendix C shows the tailrace design. Chenega IRA Council / Chenega Bay Utilities - Chenega Hydroelectric Project Final Business Plan 20130913-chenega final business plan.docx, Rev. 0 Page 9 © Hatch 2013 All rights reserved, including all rights relating to the use of this document or its contents. 4. Agency Involvement and Data Collection Project engineers and planners have worked with agencies to collect data and address questions about the project. On August 1, 2011 Hatch’s Dan Hertrich visited the project site to acquire additional information on the existing water intake dam and verify site conditions and other information reported in HDR’s March 2011 Final Reconnaissance Report. On October 25, 2011 Solstice’s Robin Reich and ADF&G’s Megan Marie discussed the project, fish presence in the creek, and mitigation opportunities. On November 11, 2011 Dan Hertrich visited the project site to install a stream gauge at the existing water intake dam, install a demand meter at the diesel powerhouse, and measure barrier falls 1. On November 18, 2011 project engineers and planners met with ADF&G staff to discuss the project. ADF&G recommend further investigation of Anderson Creek including: Full characterization of the waterfall (potential fish block) at 0.1 mile. Electro fishing the area upstream from the first potential fish blocking waterfall in late summer to look for adult salmon. Sampling Dolly Varden above the waterfall to determine anadromy. ADF&G said they would help conduct this investigation. On January 18, 2012 Dan Hertrich visited the project site to verify the operation of the stream gauge and demand meter and download data. On August 29, 2012 ADF&G habitat biologist Will Frost and Solstice Environmental Planner Kate Arduser; travelled to the project site to evaluate fish passage and Hatch engineer Dan Hertrich and Alaska Energy Authority’s Audrey Alstrom traveled the site for a site visit and to collect flow data . ADF&G evaluated the waterfall near tidewater and confirmed that it blocks salmon passage upstream. ADF&G also surveyed fish presence above that waterfall, finding that Dolly Varden are present up to barrier falls 2. On October 10, 2012 Alaska Department of Natural Resources resource specialist Drew Harrington, Dan Hertrich, and Kate Arduser met to discuss the application for water rights. On October 30, 2012 Dan Hertrich returned to the project site to perform flow measurements and take photos during a low flow event to compare habitat from sites visited by ADF&G on August 29, 2012 trip at 1 cfs to habitat on October 30, 2012 at 0.5 cfs (Figures 3 and 4). Chenega IRA Council / Chenega Bay Utilities - Chenega Hydroelectric Project Final Business Plan 20130913-chenega final business plan.docx, Rev. 0 Page 10 © Hatch 2013 All rights reserved, including all rights relating to the use of this document or its contents. 5. Regulatory Discussion Table 2 - Summary of Regulatory Requirements Regulatory Requirement Status Notes ADNR DMLW Dam Safety Program Statute: AS 46.17 and 11 AAC 93, Article 3 Hazard Potential Classification and Jurisdictional Review form prepared. Dam is currently not in ADNR DMLW Dam Safety Program inventory. Recommended Class III Hazard Potential (Low). ADF&G Fish Habitat Permit Statute: AS 16.05.841-871 (Fish and Game, Fish and Game Code) ADF&G anadromous map is updated and Permit application with supporting documentation prepared. Consultation established preliminary bypass flow recommendation by ADF&G of 0.5 cfs. Design and economics incorporates bypass flow provision. ADNR DMLW Water Rights Statute: Alaska Water Use Act (AS 46.15) Permit application with supporting documentation prepared. Flow would be maintained for the community drinking water system which has priority over the hydro. Federal Energy Regulatory Commission (FERC) Declaration of Intention Permit application with supporting documentation prepared. The Declaration of Intention explains why the project is not under FERC jurisdiction. Wetlands Permitting, Section 404 of the Clean Water Act (1977) Permit application with supporting documentation prepared. 5.1 Fish Habitat Refer to Appendix A, Project Overview Map, for locations of project and stream features. Anderson Creek (stream number 226-40-16670) was listed as anadromous for sockeye salmon to about river mile 0.6 which is the location an old wooden dam (noted as Barrier Falls 4 in HDR's report). Because of this listing, HDR performed a fisheries related reconnaissance survey that was part of their report on the hydroelectric project. HDR concluded that the small water fall located about 0.1 miles upstream from the mouth (Barrier Falls 1) marked the upper limit of anadromous fish use and that the dam at river mile 0.6 (Barrier Falls 2) marked the upper limit of resident fish habitat. ADF&G confirmed these findings in 2012 and subsequently made a nomination to revise the anadromous catalogue. Chenega IRA Council / Chenega Bay Utilities - Chenega Hydroelectric Project Final Business Plan 20130913-chenega final business plan.docx, Rev. 0 Page 11 © Hatch 2013 All rights reserved, including all rights relating to the use of this document or its contents. Figure 1 - Barrier Falls 1 Subsequent stream flow measurements and qualitative analysis of the wetted perimeter and fish passage potential was performed by ADF&G and Hatch to determine the minimum required flow at Barrier Falls 2 to provide adequate flow for the resident fish in the bypassed reach from Barrier Falls 2 to the tailrace. The work included performing flow measurements and photo surveys at two locations in the bypassed reach. ADF&G reviewed the data provided in the October 30, 2012 and via email provided a preliminary determination that a bypass flow of 0.5 cfs would be sufficient for protection purposes. Formal determination will follow submittal of the permit application to ADF&G. The recommendation must also be part of ADNR's evaluation and issuance of water rights. 5.2 Water Rights The community has not secured water rights from the Alaska Department of Natural Resources (ADNR) Division of Mining, Land and Water (DMLW) for the drinking water system. A temporary water rights application for Chenega has been prepared for the domestic water system along with the application for water rights for the hydroelectric project. Chenega IRA Council / Chenega Bay Utilities - Chenega Hydroelectric Project Final Business Plan 20130913-chenega final business plan.docx, Rev. 0 Page 12 © Hatch 2013 All rights reserved, including all rights relating to the use of this document or its contents. 5.3 FERC Jurisdictional Analysis 1. Navigability of the stream, including current and historical uses. According to the Alaska Department of Natural Resources Division of Mining, Land, and Water, Anderson Creek is not navigable.6 The community has a water supply dam and intake on Anderson Creek. 2. Land Status (private, State owned, Federally owned) The land occupied by the project includes Section 23 which was conveyed from the Bureau of Land Management (BLM) to the State of Alaska in accordance with ANSCA 14c requirements to hold lands in trust for incorporate cities or municipalities not yet established. Remaining lands occupied are public right of way and privately owned by the Chenega Corporation. 3. State whether the project will use Surplus Water or waterpower from a Government Dam: The project would not use surplus water or waterpower from a government dam. 4. Affects Interstate Commerce: Chenega Bay Utilities operates an islanded micro-grid that does not affect interstate commerce. 6. Avoidance, Minimization, and Compensation. This project has been designed to avoid and minimize impacts to wetlands. The hydro intake structure is located immediately downstream of the previously disturbed reach of creek where the existing water intake dam is located. The hydro intake uses the most compact design practicable. The penstock and powerhouse have been designed to avoid wetlands. The tailrace channel has been designed to follow the alignment of lowest elevation until it reaches the nearest tributary to Anderson Creek. By using this alignment the tailrace is over 100 feet shorter than if it were routed directly to Anderson Creek, minimizing wetland impacts. Because this project will not result in greater than 1/10 of an acre of wetland impacts, no mitigation is proposed. 6 2010. Alaska Department of Natural Resources Division of Mining, Land, and Water. Navigability Program. Viewed on October 18, 2011 at: http://dnr.alaska.gov/mlw/nav/. Chenega IRA Council / Chenega Bay Utilities - Chenega Hydroelectric Project Final Business Plan 20130913-chenega final business plan.docx, Rev. 0 Page 13 © Hatch 2013 All rights reserved, including all rights relating to the use of this document or its contents. 7. Data Analysis 7.1 Water Use The Alaska Native Tribal Health Consortium (ANTHC) and the Public Health Service (PHS) organizations recently completed upgrading the existing village water supply system with a new intake, straightened pipeline route, and a new water tank. ANTHC provided copies of their plans and as constructed survey points for the final grade. The design flow rate for the new water supply line is 50 gpm with a peak flow 70 gpm and an average daily flow rate of 35 gpm. This amount of water is required to be diverted from the intake works of the hydro project for community drinking water use. Because the stream flow collection occurred downstream of this water intake the withdrawal of water for domestic purposes is already accounted for in the hydrology data forming the basis for project analysis. The result of the ADF&G and Hatch aquatic investigation indicates that an in stream flow of 0.5 cfs will be required at Barrier Falls 2. The project analysis includes this water use as a requirement. 7.2 Hydrology data collection Both HDR and Hatch collected stream flow data in Anderson Creek as described in the HDR Reconnaissance Report and the Hatch Trip Reports. The chart below shows the comparison of monthly average flows obtained each data collection effort. Figure 2 - Anderson Creek Monthly Average Discharge A reasonable comparison stream for Anderson Creek is unavailable to evaluate long term hydrology. The Hatch 2012 data is more conservative in terms of energy output for hydro operation and will be used for the analysis in this report. 0 5 10 15 20 25 30 35 1 2 3 4 5 6 7 8 9 10 11 12 Month HDR 2009 2010Average Hatch 2012Average Chenega IRA Council / Chenega Bay Utilities - Chenega Hydroelectric Project Final Business Plan 20130913-chenega final business plan.docx, Rev. 0 Page 14 © Hatch 2013 All rights reserved, including all rights relating to the use of this document or its contents. 7.3 Electric Demand A power meter was installed to collect demand data with an averaging period of 15 minutes. This data has been scaled to match the total energy generated of 310,768 kWh as reported by CBU for calendar year 2012. Daily 15 minute peak demand has been scaled as well and is used for determining if the hydroelectric project will be able to carry the full community demand or whether a diesel is required to run. The average diesel efficiency of 11.79 kWh per gallon, as reported by CBU, is used to estimate diesel fuel use which totalled 26,348 gallons in calendar year 2012. 7.4 Fuel Prices The economic analysis uses the ISER 2013 Medium fuel price projection (2013_06- Fuel_price_projection_2013-2035_Final_06302013.xlsx) as shown in the chart below. Figure 3 - ISER 2013 Chenega Fuel Price Projection $4 $5 $6 $7 $8 $9 $10 $11 2013 2023 2033 2043 2053 2063 Year Chenega IRA Council / Chenega Bay Utilities - Chenega Hydroelectric Project Final Business Plan 20130913-chenega final business plan.docx, Rev. 0 Page 15 © Hatch 2013 All rights reserved, including all rights relating to the use of this document or its contents. 8. Developmental Analysis Displaced diesel generation is determined as follows: Water availability for power is determined from the average daily hydrology less in-stream environmental flows. If the available water is less than the minimum flow required by the turbine, estimated to be 0.7 cfs, then no power is produced by the hydro. Hydropower potential output is calculated using the dynamic head and turbine efficiency for the given flow and the fixed efficiencies for the generator and transmission. The required diesel fuel for diesel electric generation is calculated for each day based on the average energy need for each day and a diesel generation efficiency based on the average from the FY 2012 PCE report. Hydro output is compared with energy needs as follows to determine the required diesel generation, the hydro penetration into demand, and the available hydro energy for heat. o If the daily 15 minute peak demand exceeds 90% of the hydro output then a diesel is required to run at the minimum diesel loading (6.75 kW) for 12 hours. o If the daily average demand exceeds the hydro output then a diesel is required to provide the greater of at least 24 hours of energy at the minimum loading or the remainder of energy needs after subtracting the hydro output. o The hydropower for displacement of diesel energy is calculated after subtracting the required diesel energy. o Any remaining hydro energy is considered available for heating. All the outputs for each day of the year are summed to provide an expected average annual performance scenario for economic analysis. O&M is excluded for both the diesel and hydro since it is expected that diesel O&M will not change much due to the need to have a unit operational most of the year. The hydro project is expected to require very little maintenance. The small amount of extra maintenance is offset by the reduced maintenance for the water system and diesel fuelling operation. The intake design will improve flushing of sediments and gravel and reduce maintenance associated with the water system. Also, the hydro will reduce fuel handling at the diesel power plant. The result of the analysis is summarized in the table below. An operational chart is provided in Appendix B. Table 3 - Annual Operational Analysis of Proposed Alternative Chenega Electric Demand, FY 2012, kWh 310,768 Diesel Fuel Used, gallons 26,348 Potential Hydro Output, kWh 172,520 Potential Electric Demand Displaced by Hydro, kWh 122,739 Diesel Fuel Used with Hydro, gallons 15,942 Diesel Fuel Saved with Hydro, gallons 10,406 Hydro Energy for Heat, kWh 49,781 Diesel Fuel Equivalent of Hydro Heat Energy, gallons 1,419 Chenega IRA Council / Chenega Bay Utilities - Chenega Hydroelectric Project Final Business Plan 20130913-chenega final business plan.docx, Rev. 0 Page 16 © Hatch 2013 All rights reserved, including all rights relating to the use of this document or its contents. 9. Project Cost The project cost estimate included in the Draft Business Plan has been updated to reflect the change from a coanda style intake to the proposed concrete intake. The summary table below shows the direct construction cost for the project. Table 4 - Proposed Alternative Cost Estimate Item Labor Hours Labor Cost Equipment Cost Materials Cost Shipping Cost Item Cost Preconstruction And Construction Support $138,480 Mobilization $182,860 Powerhouse $132,433 Intake $138,815 Pipeline $77,806 Turbine and Generator $226,920 Tailrace $18,990 Equipment $175,600 Subtotal, Contractor Direct Costs 4,172 $325,583 $126,600 $379,341 $260,380 $1,091,903 Weather delay (% of Labor and Equip) 5% $22,609 Contingency 15% $163,785 Contractor profit 15% $163,785 Bonding 2% $21,838 Total, Construction $1,463,921 Issue for Bid Package $70,000 Inspection $80,000 Total, Construction plus Development $1,613,921 Chenega IRA Council / Chenega Bay Utilities - Chenega Hydroelectric Project Final Business Plan 20130913-chenega final business plan.docx, Rev. 0 Page 17 © Hatch 2013 All rights reserved, including all rights relating to the use of this document or its contents. 10. Economics The economic analysis uses the ISER 2013 Medium fuel price projection with a projected project life of 50 years and a 3% discount rate. The Net Present Value of the fuel savings and heat savings is summarized below along the with benefit to cost ratio. Table 5 - Proposed Alternative Economic Summary Direct Construction Cost $1,463,921 Discount Rate 3.0% Term (project life) 50 years Net Present Value of Fuel Savings $1,631,430 Net Present Cost of Hydro (2014 construction) $1,421,283 Benefit to Cost Ratio 1.15 11. Recommendations The economic analysis shows that the Chenega Hydroelectric Project is a positive investment given the alternative of producing power solely with diesel generation. It is recommended that Chenega pursue grant funding for the hydro project from the State of Alaska's Renewable Energy Fund or direct appropriations. Chenega's business plan should focus on obtaining, at a minimum, a grant for the construction cost identified above plus remaining development costs. This will allow for construction of the project without an increase in rates for any of the ratepayers in Chenega. Once the project is online, Chenega should look for tax and other reimbursement opportunities based on energy production. By using all of the energy available from the project towards heating Chenega increases the value of any kWh based credits since all of the annual energy utilized is counted, not just the amount of energy that offsets diesel production. Chenega's next steps to advance project development include: Apply for construction and other funding in advance of the desired construction schedule. Submit permit applications and complete the project design and specifications for issuance to bid. Daniel Hertrich : Chenega IRA Council / Chenega Bay Utilities - Chenega Hydroelectric Project Final Business Plan 20130913-chenega final business plan.docx, Rev. 0 © Hatch 2013 All rights reserved, including all rights relating to the use of this document or its contents. Appendix A - Project Overview Map Chenega IRA Council / Chenega Bay Utilities - Chenega Hydroelectric Project Final Business Plan 20130913-chenega final business plan.docx, Rev. 0 © Hatch 2013 All rights reserved, including all rights relating to the use of this document or its contents. Appendix B - Hydrology, Demand, and Hydroelectric Operational Charts 68101214161820Stream Flow (cfs)AndersonCreek Average Daily Stream Flow (cfs)Average Stream Flow (cfs)Estimated Values024Date 7080Chenega Power Plant Generation, kW15 Minute Average Demand, kWDaily Average405060Demand,kW102030011/11/11 12/9/11 1/6/12 2/3/12 3/2/12 3/30/12 4/27/12 5/25/12 6/22/12 7/20/12 8/17/12 9/14/12 10/12/12Date 304050607080Power, kWProposedAlternative(Anderson Creek Hydro)OperationalChartHydro for heatHydro for electricityDiesel Generation with Hydro, kWAverage of 15 Minute Average Demand, kW01020Nov11 Dec11 Jan12 Feb12 Mar12 Apr12 May12 Jun12 Jul12 Aug12 Sep12 Oct12Date Chenega IRA Council / Chenega Bay Utilities - Chenega Hydroelectric Project Final Business Plan 20130913-chenega final business plan.docx, Rev. 0 © Hatch 2013 All rights reserved, including all rights relating to the use of this document or its contents. Appendix C - 95% Design Drawings