HomeMy WebLinkAboutEklutna Solar Feasibility Study Report - Dec 2022 - PUBLIC copy - REF Grant 70140191
EKLUTNA SOLAR FEASIBILITY STUDY
December 16, 2022
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REPORT BACKGROUND
This study was prepared by Renewable IPP for Eklutna INC. Eklutna INC., the Native Village of Eklutna
and Renewable IPP collaborated to develop this report and Matanuska Electric Association (MEA)
provided input on grid interconnection. The study was funded by the Alaska Energy Authority,
Renewable Energy Fund (REF) grant program.
DISCLAIMER
This report contains “forward-looking statements” that represent our beliefs, projections, and
predictions about future events. These statements are necessarily subjective and involve known and
unknown risks, uncertainties and other important factors that could cause our actual results,
performance or achievements, or industry results to differ materially from any future results,
performance or achievement described in or implied by such statements, including statements relating
future revenue, expenses, margins, profitability, net income, taxes, tax credits, adjusted net income,
adjusted operating expenses and other measures of results of operations. Actual results may differ
materially from the expected results described in our forward-looking statements.
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TABLE OF CONTENTS
E XECUTIVE SUMMARY .................................................................................................................... 4
PROJECT DESCRIPTION .................................................................................................................. 7
SITE AND LAYOUTS ....................................................................................................................... 8
SYSTEM DESIGN CONSIDERATIONS & INTERCONNECTION ............................................. 13
Substructure & Racking ................................................................................................................. 13
Bi-facial Solar Panels & DC/AC Ratio ............................................................................................. 13
Substation & Grid Interconnection ................................................................................................ 14
SUMMARY OF KEY POLICIES AFFECTING PROJECT ECONOMICS ..................................... 28
TAX CREDITS ................................................................................................................................. 28
Investment Tax Credit (ITC) ........................................................................................................... 30
Production Tax Credit (PTC) .......................................................................................................... 30
GRANTS AND LOANS .................................................................................................................. 31
State ............................................................................................................................................. 31
Federal .......................................................................................................................................... 31
ADDITIONAL INCENTIVES .......................................................................................................... 32
PROJECT ROLES & OWNERSHIP OPTIONS .............................................................................. 33
PROJECT VIABILITY ........................................................................................................................ 34
COST ............................................................................................................................................... 34
ENERGY MARKET & PRICE IMPLICATIONS ............................................................................. 34
ECONOMIC ANALYSIS ................................................................................................................. 34
PROJECT SCHEDULE ...................................................................................................................... 35
PERMITS ............................................................................................................................................ 37
KEY UNCERTAINTIES AND RISKS............................................................................................... 39
REPORT ORIGINATORS ................................................................................................................. 39
APPENDIX A: SCHEDULE .............................................................................................................. 40
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E XECUTIVE SUMMARY
Renewable IPP completed a feasibility study of deploying a utility scale solar farm on Eklutna Inc.
owned lands. Initial study work evaluated feasibility of locating the farm on either the “Camp Mohawk”
site located North of the Alaska Railroad’s tracks and the Gravel Pit site located South of the Alaska
Railroad’s tracks. Evaluation of each site included determining a preliminary layout of a fixed tilt solar
farm system and a single axis tracking solar system. An adequately sized system fits on either site,
single axis tracking occupies more acres than a fixed tilt system as described further below.
Figure 1: Site map
Production models were built and optimized for each site and each system configuration to assess
generation given the location of Bear Mountain, local shading for nearby trees, and solar irradiance
data. The production modeling demonstrated that while Bear Mountain does impact production by 6 to
8%, the highest impact of the shading coincides with the lowest production months of December and
January which lessens mountain’s overall production impact.
For a fixed-tilt design the maximum system size that can be accommodated at Camp Mohawk and the
Gravel Pit are 7.4 MW-AC and 5.8 MW-AC, respectively. Single axis tracking occupies more space per
MW-AC than fixed tilt and the Gravel Pit and Camp Mohawk sites can accommodate 5.1 to 5.6 MW-AC,
respectively. A single axis tracking system is more efficient in material costs and construction costs,
which are the largest cost categories. The single axis tracking design is more economic to deploy but
has not been deployed on a utility scale in Alaska at this time. Tracking systems have been successfully
deployed in similar climates like New York, Maine, and Alberta, Canada. Renewable IPP has been
conducting due diligence with suppliers for deployment in Alaska for other projects and has confirmed
there are systems available which meet Alaska’s specifications for temperature, snow loads, and wind
loads.
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Renewable IPP researched the available tax incentives for utility scale solar developments. Given the
passing of the Inflation Reduction Act (IRA) by Congress in 2022, it is recommended to execute the
project as one or two 4.95 MW-AC developments. Under the IRA, system sizes below 5MW-AC are
eligible for an additional Investment Tax Credit (ITC) incentives (10% increase in ITC and
interconnection costs are ITC eligible). As the max system size (5.1 to 7.4 MW-AC) that can fit on either
site isn’t much larger than 5MW-AC, the tradeoff for a smaller system is outweighed by the additional
tax incentives. A 4.95 MW-AC single access tracking system would occupy 53 acres on either the Camp
Mohawk or Gravel Pit site. Below is layout drawing of (2) 4.95 MW-AC single access tracking systems on
the Camp Mohawk site (North) and Gravel Pit Site (South).
Figure 2: Two layouts of 4.95 MW-AC (each) single access tracking systems on the Camp Mohawk
site (North) and Gravel Pit Site (South).
Additionally, Renewable IPP worked with Matanuska Electric Association (MEA) to determine if solar
electricity generated at the Eklutna site could be interconnected and integrated into the grid. A full
interconnection and integration study is needed to fully detail the interconnection plan however MEA’s
preliminary assessment is there is capacity to bring up to 10 MW-AC into the grid from the Eklutna area
and interconnection could be accomplished by upgrading existing single-phase lines to 3-phase lines
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with a conductor suitable for the overall project’s size. The recommended two phases of 4.95 MW-AC
are reinforced by the 10 MW-AC integration constraint identified by MEA.
ADDITIONAL CONTENT IN CONFIDENTIAL ADDENDUM
Renewable IPP developed a project schedule for the Phase 1 project including the preliminary
assessment of permit and regulatory review requirements, procurement timelines, and natural pace of
project management and engineering. The development timeline from project development kickoff to
commercial operation is 3.5 years. More details on options to accelerate the timeline are noted in the
“Project Schedule” section of this document.
The zoning for the proposed Eklutna sites was evaluated during Renewable IPP’s research for solar farm
feasibility. The proposed sites are located within the Eklutna Overlay (CE-EVO). Solar Farms are
currently characterized by the Municipality of Anchorage as “Utility Facilities”. Utility Facilities are not
currently permitted in the CE-EVO. A code amendment to MOA’s Title 21 is needed to permit solar
installations in the CE-EVO to allow the project to move ahead. More discussion on this process is
detailed in the Permits section of this document. This is the most significant permitting activity within
the project.
The key next steps for Eklutna to take after digesting this report are to solidify the project framing. We
recommend:
1. Confirming community support of the project
2. Selecting the Phase 1 site (Camp Mohawk or Gravel Pit)
3. Finalize the site layout, size, and system type
4. Initiate the code amendment process for the CE-EVO
5. Further engage with MEA on interconnection and regulation requirements
6. Decide if the project will include battery storage
7. Select an ownership model
8. Updating the cost estimate and economic models with framed project details
9. Determining developer, engineering/procurement/construction contractor, and operations and
maintenance strategy (Eklutna or Contracted Out)
10. Decide Go/No-Go on development spend for studies (environmental and preliminary
engineering)
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PROJECT DESCRIPTION
Renewable IPP evaluated two solar farm sites on Eklutna Inc lands: the Gravel Pit and Camp Mohawk,
as depicted in Figure 3, below. Both sites are in the Municipality of Anchorage and would interconnect
to the Matanuska Electric Association (MEA) distribution system. At this time there are no utility scale
solar farms in the Municipality of Anchorage (MOA), and the proposed Eklutna solar farms would be the
first solar farms in the MOA.
Figure 3: Gravel Pit and “Camp Mohawk”, potential solar farm sites
In order to determine the recommended solar farm size, Renewable IPP, evaluated the available
acreage, electric grid infrastructure and tax incentives. The available acreage for the two sites is
approximately 55 acres for the Gravel Pit and 60 acres for Camp Mohawk. Eklutna Inc and Native
Village of Eklutna shared environmental and future use information about both parcels. The Gravel Pit
layouts were adjusted to leave access to the Southwestern area for alternative potential future
development. Based on PVSyst energy production simulations, solar farms with wider row spacing than
a typical L48 solar farm help improve Alaska solar farm production as the wider spacing minimizes
inter-row shading during low sun angle months. For a fixed-tilt design the maximum system size that
can be accommodated at Camp Mohawk and the Gravel Pit are 7.4 MW-AC and 5.8 MW-AC,
respectively. Single axis tracking occupies more space per MW-AC than fixed tilt and the Gravel Pit and
Camp Mohawk sites can accommodate 5.1 to 5.6 MW-AC, respectively. Projects under 5 MW-AC have
the benefit of qualifying for the additional bonus of 10% Investment Tax Credit (ITC) for small projects
located on tribal lands. Additionally, if the ITC is employed, interconnection costs are qualifying
expenses for projects less than 5 MW-AC. Finally, MEA’s grid can support up to 10 MW-AC of
generation capacity before requiring major improvements (substation transformer upgrade). Based on
all these factors, Renewable IPP is proposing two solar farms, each 4.95 MW-AC (~7.009 MW-DC), to be
built in two phases. The Gravel Pit site is recommended for the Phase 1 development with the Phase 2
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development occurring on the Camp Mohawk site. The Gravel Pit has the advantage of being closer to
the distribution lines, free of trees and vegetation, has existing road access, and the site is likely to be
improved during lead contamination clean up planned for 2024 and 2025. Layouts for single axis
tracking and fixed tilt designs are shown below in Figures 4 and 5.
SITE AND LAYOUTS
The preliminary layouts of the 40-degree South facing fixed tilt system for both the Camp
Mohawk and the Gravel Pit sites are shown below. The Camp Mohawk fixed tilt layout uses 47
fenced acres while the Gravel Pit fixed tilt layout uses 40 fenced acres.
Figure 4: Fixed Tilt Layouts
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The preliminary layout of the N-S single axis tracking arrangement for both Camp Mohawk and
the Gravel Pit sites are below. Both the Camp Mohawk and the Gravel Pit layouts utilize 53
fenced acres.
Figure 5: Single Axis Tracking Layouts.
Renewable IPP completed production modeling using industry standard software, PVSyst and used the
AK Birchwood TMY3 irradiance data set from NREL. Production modeling determined that there is
negligible difference (<1%) in production opportunity between the two evaluated sites.
Preliminary system sizing confirms that both sites can accommodate 4.95 MW-AC in either a 40-deg
South facing fixed tilt design or a North to South (N-S) single axis tracking arrangement. The single axis
tracking arrangement generates 22% more production but uses approximately 10 more acres than the
fixed tilt design.
Production Modeling also assessed the impact of shading from the nearby Bear Mountain and
determined the effects of shading are less severe than expected. A 6 to 8% production loss due to
shading is predicted. Most of the impact of shading takes place during the least productive months,
December and January, helping to reduce the mountain’s overall production impact.
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The estimated, first year, annual production values per each 4.95MW-AC system are provided in Table 3
and Figures 6 and 7 illustrate monthly energy output (first year) for both fixed tilt and single axis
tracking designs. The yield is a metric of how much energy (kWh) is produced for every kW of installed
module capacity over the course of a year and the capacity factor compares the annual production to
the module capacity assuming it were able to produce at maximum output every hour of the year.
Finally, Figures 8 and 9, provides annual production for both systems over a 25-year operating life
assuming annual energy generation decreases by 0.5% per year.1
Table 1: First year annual production, yield and capacity factor for 4.95MW-AC solar farm
Design Annual Production
(MWh)
Yield
(kWh/kW)
Capacity
Factor
(%)
40-Degree Fixed Tilt 8,100 1,150 13.2%
N-S Single Axis Tracking 9,900 1,400 16%
1 This assumption is based on the 2011 NREL Report and is the industry standard assumption. Jordan,
D. C., and S. R. Kurtz. “Photovoltaic Degradation Rates-an Analytical Review.” Progress in
Photovoltaics: Research and Applications, vol. 21, no. 1, 13 Oct. 2011, pp. 12–29,
www.nrel.gov/docs/fy12osti/51664.pdf, 10.1002/pip.1182. Accessed 27 Nov. 2019.
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Figure 6: Monthly Electricity Production - Fixed Tilt System
Figure 7 : Monthly Electricity Production - Single Axis Tracking
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Figure 8: Annual Electricity Production - Fixed Tilt System
Figure 9: Annual Electricity Production - Single Axis Tracking
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SYSTEM DESIGN CONSIDERATIONS & INTERCONNECTION
Below is a summary of key design considerations which affect solar production and system cost. These
are informed by Renewable IPP’s Alaska experience to maximize production and project economics for
Alaska weather conditions. Also provided below is a summary of the high-level grid interconnection
scope.
SUBSTRUCTURE & RACKING
Based on the conceptual design of fixed tilt or single axis tracking, the foundation system will
be selected. For feasibility screening purposes, pile foundations are assumed for both design
types and final foundation selection (pile, ballast, etc.) will be based on detailed geotechnical
information. The fixed tilt case design assumes a fixed tilt array, facing South with a 40-degree
tilt. Renewable IPP’s previous design experience has found that a 40-degree tilt maximizes solar
production while keeping wind load structural design requirements feasible.
If single axis tracking is selected, there are several vendors available with systems that have
been evaluated for their efficacy in Southcentral, Alaska. The single axis tracking design will be
installed to allow each tracker to rotate from 60-degree tilt East to a 60-degree tilt West which
optimizes the solar radiance and supports snow clearing. Tracking has not been deployed at
scale yet in Alaska, so there is diligence required to vet vendors and equipment. Renewable IPP
has been conducting due diligence of various modern tracking technologies with vendors to
ensure the selected technology is suitable for Alaska’s cold temperature and snow/wind loads.
BI-FACIAL SOLAR PANELS & DC/AC RATIO
The preliminary design assumes bi-facial panels & a high DC/AC ratio to maximize production in
Alaska conditions. Bi-facial panels produce energy both from the front side, which receives
direct sun exposure, and from reflective light which hits the back side. Bi-facial panels are
ideally suited for Alaska solar farms which elevate arrays higher off the ground, place arrays
further apart and at steeper angles than Lower 48 designs. In our proposed design the low side
of the panel is 3.5 ft off ground level. These design parameters increase the reflective light
exposure for the back side of the panels. Finally, the ground is covered by snow 4-5 months of
the year, further increasing the reflective light production. A recent study completed by the
Alaska Center for Energy and Power (ACEP) estimated bifacial panel gain to be as high as 20%;
the project production modeling estimates a 10% bifacial gain on average. To further increase
solar production the design uses a high DC/AC ratio. A high DC/AC ratio means that there is
excess panel capacity compared to inverter rating. As Alaska has many overcast weather days
compared to sunnier locations such as AZ or CO, the high DC/AC ratio provides increased
production during these “non-peak” production conditions. As panels prices continue to fall,
the losses associated with clipped production is outweighed by the increased production during
non-peak conditions. The preliminary design assumes a 1.416 DC/AC ratio. This ratio may
change slightly based on the final panel selection.
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SUBSTATION & GRID INTERCONNECTION
The base case design assumes that the Eklutna Solar Farm will tie into MEA’s 3 phase
distribution lines across the Glenn Highway from the Eklutna Village. The existing distribution
lines by the Gravel Pit are single phase and will need to be upgraded to 3 Phase lines to carry 5
MW-AC. If Phase 2 is executed, a larger 3 Phase conductor would be required to carry 10 MW-
AC. The distance of required conductor upgrades is between ¼ mile and 1-1/2 mile depending
on the selected interconnection point and the selected site (Camp Mohawk or Gravel Pit). With
these assumptions, the interconnection cost is estimated to be between $750,000 and
$1,500,000. The range accounts for the varying tie in point distances and variation between
scope of a simple conductor upgrade for a 5MW-AC project to a higher rated conductor
upgrade that allows for both Phase 1 and Phase 2 interconnection of 10MW-AC on a larger
conductor. Figure 10 below shows the existing single phase distribution lines, potential routes
of conductors from each site to existing single phase lines and upgrades of single-phase lines to
3 phase lines.
The existing substation at MEA’s Eklutna Generation Station has sufficient transformer
capacity for 10 MVA. The only upgrades anticipated at the substation are upgrades to the
protective relays and control logic.
The Eklutna, MEA and Renewable IPP teams met on November 9th, 2022, to discuss the project
size and interconnection and integration scope. MEA provided the technical interconnection
information above (budgetary estimates are from Renewable IPP). MEA advised that future
renewable energy projects may require either battery support to “firm up” the intermittent
generation source or MEA will need to charge a “regulation fee” for using their equipment to
smooth the production profile. The significance of regulation on this project will be determined
by an integration study, conducted with the interconnection study.
An Interconnection Application is the first step to getting interconnection work kicked off with
MEA. This is followed by a detailed interconnection and integration study. The study feeds the
Power Purchase Agreement (PPA) and detailed interconnection engineering.
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Figure 10: Interconnection options and upgrade requirements.
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SUMMARY OF KEY POLICIES AFFECTING PROJECT ECONOMICS
TAX CREDITS
The Inflation Reduction Act (IRA) signed into law in 2022 offers tax credit incentives for solar
projects and provides stable incentive values for projects which commence construction prior
to 2033. Either an investment tax credit (ITC) or a production tax credit (PTC) can be selected
for a commercial solar project. These offer tiered incentives with bonus incentives for projects
which meet the bonus criteria. Up to 60% of the project costs could be eligible for an
investment tax credit or a production tax credit of up to $0.032/kWh could be claimed on the
production from the Eklutna Solar Project. Figure 11 provides a summary of the IRA tax
incentives.
Organizations that don’t pay federal taxes, like non-profits or local governments, can take
advantage of the tax credits. Tax-exempt entities are eligible to receive the ITC or the PTC
themselves in the form of a direct payment (a check for the value of the tax credit). This
includes Indian Tribal governments (as defined in Section 30D(g)(9)), any Alaska Native
Corporation (as defined in Section 3 of the Alaska Native Claims Settlement Act). To receive
direct payment for projects which start construction in 2024 and exceed 1 MW, they must meet
the domestic content requirements, or the value of the tax credit will be penalized to a lower
percentage. The tax credits may also be transferred by selling the tax credit for a given year to
an unrelated eligible taxpayer.
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Figure 11 Department of Energy, “Federal Solar Tax Credits for Businesses” Summary 2.
2 Department of Energy. “Federal Solar Tax Credits for Businesses” Solar Energy Technologies
Office, October 2022, https://www.energy.gov/eere/solar/federal-solar-tax-credits-
businesses#_ednref8. Accessed 8 Nov 2022.
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INVESTMENT TAX CREDIT (ITC)
The Investment Tax Credit or ITC is a tax credit that reduces the federal income tax liability for
a percentage of the cost of a solar system that is installed during the tax year. If projects meet
the labor requirements, the value is 30% until 2033. The ITC is an upfront tax credit that does
not vary by system performance.
If a project does not meet the labor requirements, the ITC value is 6%. The labor requirements
to qualify for the higher values of the tax credits require employers to pay certain workers a
"prevailing wage" and employ a certain number of registered apprentices. The Department of
Labor and Internal Revenue Service are anticipated to issue guidelines on labor requirements in
Q1 2023 that further outline the wage and apprenticeship requirements to qualify for tax
incentive bonuses.
Expenses which are eligible costs for the ITC are project development and engineering costs,
solar PV panels, inverters, racking, balance of system equipment, installation costs,
transformers, circuit breakers, and surge arresters, and certain storage devices. Additionally,
for projects under 5 MWAC, the interconnection costs spent by the project owner are also
eligible expense for the ITC.
Beyond the base ITC incentive, additional bonus incentives are available for projects which
meet the qualifications. For the Eklutna project the bonuses available are:
1. Domestic Content Bonus of 10% (2% if labor requirements are not met). It’s recommended to
meet this criterion as it is a pre-requisite to receive the entire ITC value with direct pay. This is
not as critical for a for-profit entity with tax liability but is critical for a non-profit. The domestic
content requirements increase by year but will require 100% of the project’s steel/iron be
manufactured in the US and a percentage of the project’s other materials to be US
manufactured products. Further guidance on qualifying for the domestic content bonus is
expected in 2023.
2. Energy Community Bonus of 10% (2% if labor requirements are not met) for solar projects
sited in energy communities. Further clarification from the Department of Treasury on
qualifications is needed but Eklutna’s proposed sites likely meet the requirements due to the
percentage of local tax revenues related to the extraction, processing, transport, and storage of
coal, oil, or natural gas at any time beginning in 2010. Most of the State of Alaska is expected to
meet these criteria. Clarification is expected in early 2023.
3. Low- Income Bonus of 10% for projects under 5 MWAC which are located in a low-income
community (as defined in section 45D(e)) or on Indian land (as defined in section 2601(2) of the
Energy Policy Act of 1992 (25 U.S.C. 3501(2)). The Eklutna sites likely qualify to apply for the
additional low-income bonus due to their location on Indian land.
PRODUCTION TAX CREDIT (PTC)
The production tax credit is a per kilowatt-hour (kWh) tax credit for electricity generated by
solar systems for the first 10 years of the system’s operation. It reduces the federal income tax
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liability and is adjusted for inflation annually. The value of this is $0.026/kWh until 2033 for
projects that meet the labor requirements which are the same as for the ITC.
The additional bonus adders are available as additional $/kWh for projects that meet the
domestic content requirement and energy community criterion. The low-income bonus is not
available for PTCs. The total potential value of the PTC $0.032/kWh. The interconnection costs
spent by the owner are not eligible for PTC incentives.
GRANTS AND LOANS
STATE
The Alaska Energy Authority has grant and loan opportunities with application periods annually.
Renewable Energy Fund (REF) was established by the Alaska Legislature in 2008. REF issues grants for
renewable energy projects across Alaska through a competitive application process which is
administered by the Alaska Energy Authority (AEA). Grant monies can be applied for based on project
phase (reconnaissance, conceptual design, final design and permitting, and
construction/commissioning). Available funding for the REF varies from year to year and is largely
dependent on the fiscal health of the State of Alaska and the discretion of the Legislature. AEA
cautions that in some years, no grant money has been made available. It is important to note that the
REF is set to expire in 2023 without Legislative action.
Power Project Fund (PPF) is an AEA administered loan program which provides loans to local utilities,
local governments or independent power producers for the development, expansion, or upgrade of
electric power facilities including distribution, transmission, efficiency and conservation, bulk fuel
storage and waste energy. Loans up to $5 million are approved by the AEA Board and greater than $5
million require legislature approval. The PPF loan structure is attractive as it provides loan terms for the
life of the project, spreading out debt payments. The current PPF interest rate as of November, 2022
was 4.27%.
FEDERAL
1. Tribal Energy Loan Program and Tribal Energy Loan Guarantee Program
a. Department of Energy offers Tribal Entities access to low-cost debt capital for energy
projects. The direct loan program has been refunded through Inflation Reduction Act
allocated funds. Direct loans are extended by the US Treasury’s Federal Financing Bank
with all-in pricing comprised of a base interest rate (U.S. Treasury equivalent yield
curve) plus a spread, typically ranging from 37.5 to 200 basis points. The average loan
pricing available in November 2022 was ~5%. Loan guarantee program is also taking
applications with interest rates negotiated between lender(s) and borrower. The
funding opportunities are scheduled to close in August 2028.
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2. Tribal Energy Plan Grant
a. Bureau of Indian Affairs grants are intended to support tribal communities to quickly
and efficiently triage the known practical and impactful strategies to reduce
greenhouse gas, lower energy costs, and operate more sustainably. Grants for planning
are available for up to $25,000.
3. Energy and Mineral Development Program Grant
a. Available through Bureau of Indian Affairs. The application period for this year has
closed but is anticipated to reopen in subsequent years.
i. Solar is eligible for funding.
ii. Engineering studies, economic evaluation, and feasibilities studies are eligible
for funding.
iii. Grant values between $10,000 and $2.5 million are awarded.
4. Tribal Energy Development Capacity Grant
a. Available through the Bureau of Indian Affairs. Annual application period gives Tribes
the opportunity to receive financial assistance for the following activities:
i. Developing the legal infrastructure to create any type of Tribal energy business.
ii. Establishing an energy-focused corporation under Tribal or state incorporation
codes.
iii. Establishing an energy-related Tribal business charter under federal law (IRA
Section 17 corporation.
iv. Grants of $10,000 to $1 million are awarded annually.
5. Rural Energy for America Program
a. Available through USDA. Opportunities for guaranteed loans and grants. Application
period is open annually to small businesses in rural areas.
b. Grants are available for up to 25% of the project cost or up to $500,000.
ADDITIONAL INCENTIVES
The solar farm development will likely qualify for environmental attributes and/or Renewable
Energy Credits (“RECs”) or Green House Gas reduction benefits (such as carbon credits).
Ownership of RECs can be negotiated in the Power Purchase Agreement. Alaska Utilities have
an increasing preference to receive 100% of RECs in order meet potential future Renewable
Portfolio Standard (RPS) requirements. If an RPS policy is passed in the State of Alaska, this
could increase the energy purchase price for renewable energy projects. Governor Dunleavy
introduced a RPS bill in 2022, but it did not pass the Legislature.
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PROJECT ROLES & OWNERSHIP OP TIONS
The typical solar farm project includes the following roles: (1) project owner, (2) landowner, (3)
developer, (4) engineering procurement and construction company (EPC), (5) operations and
maintenance company (O&M) and (6) the utility. Each role is listed below with details of the role’s core
responsibilities and potential parties who may perform each role.
• Project Owner (Eklutna, Third Party or Utility)
o Secures project financing (debt & equity)
o Completes due diligence for financing
o Completes tax incentive due diligence
o Receives tax incentives & grants
o Asset manager (accounting, tax filing, oversees O&M, performance management)
• Landowner (Eklutna)
o If Third Party Owner- develop & agree land lease
o If Owned by Eklutna- consider land use agreement for project
o Drive zoning/code changes for project
o Complete lot consolidation for project, as needed
o Negotiate property tax exemption or reduction with MOA.
• Developer (Eklutna or Contract Out):
o Shape project concept (scope, budget, schedule)
o Negotiate PPA for project
o Agree project contracts (land lease, EPC contract, O&M contract)
o Complete feasibility studies & early phase permitting work
o Coordinate and mediate project stakeholders
o Assists in grant and/or loan applications
o Project manage development activities
• EPC (Eklutna or Contract Out):
o Completes detailed design
o Procures materials
o Constructs & commissions solar farm
o Oversees interconnection scope with Utility
• O&M (Eklutna or Contract Out):
o Preventative & corrective maintenance (snow clearing, inverter maintenance, etc.)
o Performance monitoring
• Utility (MEA)
o Completes interconnection/integration study
o Drafts & agrees PPA with Board Approval
o Completes PPA Filling with RCA
o Purchases & receives generated energy
o Completes interconnection engineering, procurement, construction & commissioning
o Note: All costs for the above activities are paid for by the project
ADDITIONAL CONTENT IN CONFIDENTIAL ADDENDUM
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P ROJECT VIABILITY
C OST
ADDITIONAL CONTENT IN CONFIDENTIAL ADDENDUM
ENERGY MARKET & PRICE IMPLICATIONS
CONTENT IN CONFIDENTIAL ADDENDUM
E CONOMIC ANALYSIS
CONTENT IN CONFIDENTIAL ADDENDUM
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PROJECT SCHEDULE
Before the project development can be kicked off, project framing must be finalized. Project framing
will select the preferred site location and concept (single phase or two, inclusion of battery storage,
etc.), select the project ownership model and initiate the MOA code amendment to permit
development of solar farms within the Eklutna Overlay. These activities should be completed along
with confirming project interest with MEA and Eklutna prior to incurring significant development spend
(i.e. interconnection studies, engineering, etc.) to minimize potential regret cost or project recycle.
Once key stakeholder commitment is confirmed, the Utility will facilitate an interconnection and
integration study. Meanwhile, preliminary engineering of the solar farm itself is performed. These
efforts, which are at risk spend, inform the design engineering, procurement schedule and project costs
necessary to finalize the Power Purchase Agreement (PPA).
Once the pricing is landed and the final PPA is agreed, the PPA can be submitted to the Regulatory
Commission of Alaska (RCA) for approval. After this step, a third-party funding entity would release
funds for project development. Then procurement, detailed engineering, and permitting activities
commence. Currently, procurement lead times are around 52 to 60 weeks for specialized electrical
components. Therefore, the construction usually takes place in two stages: an initial phase of site
preparation and foundation installation followed by a secondary stage of installation of panels and AC
electrical equipment.
The engineering and construction of the interconnection is typically managed by the utility and occurs
in parallel with the AC electrical equipment installations. Following completion of construction, the
system is commissioned, a joint effort between the utility and the project group.
The central north section of the gravel pit site is scheduled for lead contamination remediation in 2024
and 2025. The project construction could be timed to follow the lead contamination clean up and some
site grading could possibly be incorporated into the remediation efforts.
Table 11 below provides a high-level project schedule activities and Appendix A provides a complete
Gantt chart schedule. The base schedule assumes a natural pace which results in a commercial
operation date (COD) 3.5 years after Project Kickoff. The critical path for this schedule is dependent on
timely completion of interconnection/integration studies which inform the PPA.
If the project is funded by a third party, RCA approval of the PPA is the main pre-requisite for financial
closing which releases third party funds for detailed engineering and ultimately, procurement and
construction. If the project is funded by Eklutna, the schedule could be accelerated by completing key
engineering as at-risk spend to specify long lead procurement items ahead of financial close. The
distribution voltage transformer lead time is estimated to be one year, so completion of detailed
engineering for the interconnection sets the critical path for system startup.
36
Table 2: Eklutna Solar High Level Task and Duration Summary
Task Duration
Socialize Project with Key Eklutna Stakeholders 13w
Finalize Project Framing 130d
CE-EVO Code Amendment for Solar 26w
Decide Single Phase or 2 Phases & Finalize Project Size 4w
Select Project Site 2w
Decide if Solar or Solar + Storage 12w
Storage Sizing & Cost Estimate (optional)8w
Draft Electrical Single Line Drawing 8w
Select Ownership Model and Decide Land Arrangement (e.g. lease)6w
Update Cost Estimate and Production Estimate 6w
Update Economic Model to Inform Electricity Price 4w
Confirm Utility Interest in Project 4w
Decide Go/No-Go Development Spend (e.g. studies, environmental, prelim engr)
Development 354d
Project Management 60d
Validate project cost estimate 12w
Validate production estimate 12w
Update project schedule 12w
Land 80d
Develop & Agree Land Lease 16w
Complete Phase 1 ESA 8w
Complete SHPO Review 12w
Interconnection/Integration Studies 130d
Complete Interconnection Application 2w
Develop RFP for Studies 6w
Issue RFP and Select Firm 6w
Complete Interconnection Study 12w
Power Purchase Agreement 245d
Draft PPA 6w
PPA Review & Edits PPA 12w
Parties Agree PPA Terms 4w
Utility Board Approval of PPA 4w
Sign PPA and Prepare RCA Filing & File 8w
RCA Review & Approval 75d
Financially Close Project 354d
Review Grant and Debt Opportunities 20w
Finalize Cost Estimate and Production Modeling 8w
Financial Close 2w
Preliminary Engineering 80d
Geotechnical Site Assessment 16w
Preliminary Civil Engineering 16w
Preliminary Electrical Engineering 16w
Permitting 494d
FAA Study 4w
USACOE Wetland JD & Gravel Permit 12w
Bald Eagle Survey 4w
Bald Eagle Permit (USFWS, if required)12w
State Plan Review 4w
Construction General Permit & SWPPP 8w
Interconnection ROW 8w
EPC 100d
Engineering 100d
Civil Engineering 12w
Structural Engineering/Foundation Design 6w
Electrical, Automations, Controls, Communications Engr 12w
Interconnection Engineering 20w
Procurement 280d
Foundation & Racking 16w
Solar Panels 52w
Transformer and AC Electrical Long Leads 56w
Interconnection Long Leads 30w
Construction 516d
Lead Contamination Clean Up 60w
Site Preparation 4w
Install Foundation & Racking 10w
Panel Installation 12w
AC Electrical Installation 6w
DC Electrical Installation 3w
Interconnection Construction 8w
Commissioning 8w
Commercial Operation 1d
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PERMITS
Table 12 below identifies the required permits for the Eklutna Solar farm. They are displayed in the
order that they should be progressed.
Table 3: Eklutna Solar Farm Permit Summary
Eklutna Solar Farm Permitting Summary
Permit/Review Status & Permit Plan
State Plan
Review-
Alaska
Department of
Fire & Life
Safety
Submit after Engineering IFC & Prior to Construction: Alaska Department of Fire & Life
Safety will review solar farm fire hazards, mitigations, and fire response plan. The review of
civil, structural, electrical and fire response plans can be staged or executed in combination.
Approval required prior to starting construction. Note: the plan review does not need to be
completed prior to land clearing.
US Army Core
of Engineers-
General
Permit
Begin once Location Selected: The Camp Mohawk Site include wetlands. Pile driving does not
require gravel fill into wetlands. Fill on the property will be less than ½ acre; therefore, only a
general permit is required. In previous discussions with the US ACOE, it was advised that a
general permit take approximately 60 days to review & approve and does not require public
comment.
Construction
General
Permit
/SWPPP
Submit Prior to Construction: A SWPPP is required prior to starting construction as part of
the construction general permit. The construction general permit and SWPPP are submitted
through an automated system and are automatically issued. Needed prior to land clearing.
FAA Review An FAA Review is required: Once site is selected review should be completed through the
OE/AAA Portal. Initial review is a 2–4 week process. Subsequent review steps could be
identified in initial review.
https://oeaaa.faa.gov/oeaaa/external/userMgmt/permissionAction.jsp?action=showLoginForm
Alaska Dept.
of Fish &
Game
No permits required: Both the Gravel Pit and Camp Mohawk land locations and solar
construction and operation activities where shared with ADF&G. ADF&G, Wildlife Biologist,
Andrew Kastning advised, “At this point it doesn’t look like you be doing any work below
ordinary high water line so you will not need anything from our Habitat office to proceed. If I
am misunderstanding something or if plans change please let me know, otherwise I’m
confident we can determine there’s no permit required.”
US Fish &
Wildlife
Service
Migratory Bird Treaty Act: USFWS publishes “Timing Recommendations for Land
Disturbance & Vegetation Clearing” which recommends that land clearing activities be avoided
from May 1st through July 15th to minimize the incidental take of birds during the nesting
season. The project schedule currently shows land disturbance & clearing activities are outside
38 Confidential
(USFWS) this window. If these activities were to move within the window, a permit may be required. The
USFWS is anticipated to issue a new permitting rule in the winter of 2022/2023 which requires
a permit for land/vegetation clearing during the recommended avoidance period.
Bald and Golden Eagle Protection Act: Given the tall trees on the “Camp Mohawk” site, the
USFWS recommends completing an eagle nest survey. The USFWS recommends performing
eagle nest surveys between April 15th and May 15th. If eagle nests are identified a permit from
the USFWS will be required prior to starting construction and permits take approximately 90
days to issue.
ROW &
Driveway
Permits
Submit Prior to Construction: Once interconnection studies are complete, and the
interconnection route is determined in conjunction with Matanuska Electric to identify any
required ROW permits and will either assume full responsibility to acquire such permits or
assist Matanuska Electric where appropriate to acquire such permits. The identified sites are
close to the distribution lines and ROW permits may not be required. If needed, ROW permits
are planned to be worked during 2023. A driveway permit could be required for the selected
site which take about 2-weeks to process and will be submitted prior to construction.
Zoning Required prior to financial close: The Camp Mohawk site and part of the Gravel Pit site are in
the Municipality of Anchorage and are part of the Overlaying Zoning District, CE-EVO. MOA’s
(Municipality of Anchorage) Title 21 does not have a use type specifically for Solar Farms. They
currently characterize solar farms as Utility Facilities. A Utility Facility is not a permitted use in
CE-EVO zones.
Eklutna Inc will need to garner community support for a code amendment and reach out to
their local representatives to initiate a Title 21 code amendment to permit (either
unconditionally, conditionally, or administratively) solar farms or utility facilities within the
Eklutna Overlay.
This process does not require any application fees but would require time to engage with
stakeholders and support the assembly in progressing the code amendment. The timeline to
progress a code amendment is estimated to be 3 months for community engagement and 3
months for working with the MOA Assembly on the code amendment.
If the code amendment permits solar farms as a conditionally allowed or administratively
allowed, an additional 6 months should be allotted for the subsequent permitting process.
Land Use
Review
Within the Municipality of Anchorage commercial projects require a land use review through
the Planning Department’s Land Use Review office. Solar farms are currently characterized by
the MOA as Utility Facilities. The land use review would be applied for after the code
amendment is approved.
US ACOE
Ground
Disturbance
Risk
Assessment
Camp Mohawk and Gravel Pit parcels have trichloroethene (TCE) and 1,1,2-Trichloroethane
(1,1,2-TCA) contamination. TCE concentrations near the railroad tracks pose a risk to
construction workers during ground disturbance activities. 1,1,2-TCA contamination which is a
degradation product of TCE is collocated with the TCE contamination and poses an elevated
risk to construction workers during ground disturbance activities. The current preliminary solar
farm layouts overlap with zones which the US Army Corps of Engineer’s risk assessor
determined using standardized assumptions to pose slightly elevated risk over acceptable
thresholds to construction workers.
Renewable IPP recommend that a detailed risk assessment using assumptions consistent with
the planned solar farm foundation and trenching construction techniques be carried out in the
39 Confidential
development phase of the project. This detailed risk assessment should also consider the TCE
and 1,1,2-TCA contamination status following the lead contamination remediation. Such risk
assessment will inform final layouts of the Solar Farm developments and required adjustments
to construction techniques and worker protections to safely execute development onsite. The
US ACOE advised that If Eklutna Inc. can share details on specific locations and types of
activities being considered for the solar power facility, USACOE can further evaluate results
from all environmental media at those specific areas using customized exposure assumptions.
KEY UNCERTAINTIES AND RISKS
CONTENT IN CONFIDENTIAL ADDENDUM
REPORT ORIGINATORS
Jennifer Miller, CEO Renewable IPP
Chris Colbert, CFO Renewable IPP
Jaime Bronga, Project Manager Renewable IPP
40
APPENDIX A: SCHEDULE