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Home My WebLink AboutGrant Lake-Creek Hydroelectric Project Alternative Energy Grant Proposal - Feb 2008 - REF Grant 2195333Homer Electric Association, Inc. Corporate Office PertiaaNtilat Service Center T i take 5tri�ct 280 .Air kWl la,':14 llwllcr. ,llssk a 9Q06-76811 Kunui, Ahskc;a 1)901 1- 1'80 FAX [91171 ? 55- ;13 E:AX (907) 28;-"i1?? PROJECT SPECIFIC INFORMATION In support of the ALTERNATIVE ENERGY GRANT PROPOSAL PRECONSTRUCTION GRANT APPLICATION For GRANT LAKE/CREEK PROJECT Prepared by: Homer Electric Association, Inc. February 11, 2008 2008-02-11 AEA Alt Energy Grant App - Grant Lance A Touchstone Energy" Cooperative 0. ALTERNATIVE ENERGY GRANT PROPOSAL PRECONSTRUCTION APPLICATION Homer Electric Association, Inc. — GRANT LAKE/CREEK PROJECT PROJECT DESCRIPTION HEA desires to construct a low -impact hydro facility utilizing the water resources provided by Grant Lake/Creek, located approximately 1.0 mi east of the Seward Highway near the town of Moose Pass in Kenai Peninsula Borough, Alaska. A map of the proposed project area is provided below. The proposed project would have a siphon (or gravity feed) intake in Grant Lake, near the point at which it flows into Grant Creek. As part of an initial assessment, information gathering would be undertaken to assess the feasibility of constructing a small dam or dike to raise the surface elevation of Grant Lake to increase storage for generation. Lessons learned from the design and implementation of the proposed siphon design could be employed on future small, low -impact hydro projects, including others being considered by HEA Grant Lake, which is located at an elevation of approximately 800 ft MSL, flows into Grant Creek. The Grant Lake watershed is about (including Grant Creek) 14 mi2, and the lake has an approximate surface area of 1,888 ac. Grant Creek, which discharges into Upper Trail Lake, has an estimated average annual flow of 193 cubic feet per second (cfs). The proposed project would generate power with approximately 171 ft of head and have an anticipated generation capacity of about 5.0 MW. February 11, 2008 Page 2 of 7 ALTERNATIVE ENERGY GRANT PROPOSAL PRECONSTRUCTION APPLICATION Homer Electric Association, Inc. — GRANT LAKE/CREEK PROJECT The powerhouse tailrace would be designed to carry the project flow to Grant Creek or Upper or Lower Trail Lake. The dimensions of the tailrace would be developed based on terrain and other pertinent information to be obtained during the study phase. The project would include 1 — 2 mi of new overhead transmission line employing one of two potential transmission options: 1) power generated at the powerhouse at low voltage would be transmitted to a remote transformer, where it would be converted to 115 kV and connected to the existing transmission grid or 2) power generated at the project would be transmitted directly to the grid from a step-up transformer near the powerhouse. The legal description and ownership of lands (ADNR 2006) within the proposed project boundary are provided in the table below. All land is referenced to the Seward Meridian. Un- shaded rows pertain to the Grant Lake outlet and Grant Creek. Shaded rows include Grant Lake in its entirety and potential transmission areas. Township Range Section Ownership .......... SNP 5. _JSDA Forest.Service IE = 29:: USDA Forest Seiyice. 30 =:State "" atented land _ MateZatenfed _:USDA forest Sery�ce 36 , _ .04 .3SbAF6restService 4N IE 5 USDA Forest Service 4N 1E 6 State patented land 4N I 7 State patented land 9N. 1WPilvate,._ 4N 1W 12 Private The project in its final form would likely consist of a dam, pipelinelpenstock, powerhouse, access road, and transmission lines. All improvements could potentially affect a combination of federal, state, and private lands. No portion of the potential project area has been designated as a Wilderness Area, recommended for designation as a Wilderness Area, or designated as Wilderness Study Area. No portion of the project area has been included in the Wild and Scenic River System. Power from the project would be available to customers of Homer Electric Association and other areas served by the existing transmission grid. Power from the proposed project would be important to the citizens of the Kenai Peninsula and would be environmentally beneficial and cost effective as an alternative source of energy to offset fossil fuel generation. The power from the proposed project would reduce consumption of non-renewable carbon -based energy sources, thereby helping to improve air quality in Kenai Peninsula Borough. February 11, 2009 Page 3 of 7 ALTERNATIVE ENERGY GRANT PROPOSAL PRECONSTRUCTION APPLICATION Homer Electric Association, Inc. — GRANT LAKE/CREEK PROJECT PROPOSED STUDY PROGRAM The study program, which HEA hopes will culminate in the filing of a License Application with FERC, would be conducted according to the Commission's licensing regulations. Potential Study Program Elements Engineering -and feasibility • Hydrology • Bathymetry • Stream gauging • Dam stability and soils tests and analysis (if needed) • Preliminary design, i.e., unit type and size • Tunnel/pipeline alignment • Evaluation of transmission line route • Financial analysis Environmental Studies • Fish species composition • Fish habitat assessment • Rare, Threatened and Endangered (RTE) species inventory • Vegetation • Wildlife • Recreation • Cultural • Aesthetics • Project effects analysis Stakeholder Consultation HEA will consult with potential stakeholder entities (i.e., agencies, NGOs, Native Corporations, and communities) early in the study phase to ensure that all significant concerns are addressed and planned for in the studies in anticipation of the licensing process for the Grant Lake / Grant Creek project. MANAGEMENT & TECHNICAL CAPACITY Homer Electric Association is a well established railbelt electric cooperative that has been serving its members since 1945. The cooperative operates and maintains both fossil fuel and hydroelectric generation facilities, including the 120MW Bradley Lake Hydroelectric Plant. Its management and staff are well prepared to oversee the development of this small hydro facility February It, 2008 Page 4 of 7 ALTERNATIVE ENERGY GRANT PROPOSAL PRECONSTRUCTION APPLICATION Homer Electric Association, Inc. — GRANT LAKE/CREEK PROJECT from its conception through construction and operation. Where needed, HEA will contract with qualified firms and consultants to conduct the engineering, studies and detailed design associated with the project. PRECONSTRUCTION COST ESTIMATES & FINANCING It is generally recognized that initial capital costs for alternative energy projects are significantly higher than comparable fossil fuel generation assets, though the long-term benefits of alternative energy projects can be substantial. Denali Commission and AEA funding can help to offset some of these initial project screening and capital costs and contribute to the economic and social viability of an eventual project. HEA is strategically planning to expand its generation portfolio to include renewable energy sources. This application is one result of implementing this planning effort. The purpose of this long-term vision is to provide more consistently priced, environmentally responsible energy to balance the traditional generation resources currently available. One of the stated elements of the proposed study program is to develop a financial analysis or model for the project. This will be one of the first tasks undertaken by HEA along with further engineering feasibility study. The table below details the preconstruction costs that lead to a FERC license application. PRE CONSTRUCTION STUDY PROGRAM ELEMENTS Budget Feasibility Evaluation (Financial & Engineering Models) $ 100,000.00 Initiate Stakeholder Consultation $ 30,000.00 Prepare and file Pre -Application Document (PAD) $ 20,000.00 FERC Scoping $ 20,000.00 Proposed Study Plan (PSP) $ 20,000.00 Revised Study Plan (RSP) $ 20,000.00 Initiate Field Studies $ 200,000.00 Complete Field Studies $ 25,000.00 Additional/Supplementary Data Collection $ 25,000.00 Draft License Application. $ 20,000.00 File License Application $ 20,000.00 Total Proposed Study Program $ 500,000.00 The estimated cost of conducting studies, investigations, tests, surveys, mapping and developing plans and specifications for the proposed Grant take 1 Grant Creek Project is $500,000. AEA funding requested here will support the feasibility evaluation listed above. Preconstruction funds will initially be drawn from a combination of grant funding and internal financing. Other options may be explored depending on the results of the preconstruction assessments. February 11, 2008 Page 5 of 7 ALTERNATIVE ENERGY GRANT PROPOSAL PRECONSTRUCTION APPLICATION Homer Electric Association, Inc. -- GRANT LAKE/CREEK PROJECT PRELIMINARY COSTS & BENEFIT -COST ESTIMATE A preliminary benefit -cost estimate is provided in the spreadsheet on the next page. Assumptions pertaining to power production, construction, financing and avoided costs are noted at the top of the analysis. The costs and savings are brought to present worth in 2008 for comparison. The benefit -cost ratio for this project is estimated at 1.95. This paragraph will briefly describe the costs considered in the analysis. Once the project is past the preconstruction phase and has entered a FERC licensing process, an additional one million dollars is allocated for licensing, further studies and detailed design. Preliminary construction capital costs for this S.OMW project are estimated at $3,500/kW, or approximately $17,500,000. The cost of this construction capital is amortized over a thirty year period. Operations & Maintenance (O&M) costs are based on HEA experience and are escalated over the life of the project. All these costs are brought to a 2008 present worth value of $43,562,152. The project savings are estimated as HEA's avoided cost of purchasing power produced by natural gas at $8.29/MMBtu in 2007 dollars. The avoided cost of power is escalated by 5% per year over the project life and then brought to a present worth in 2008 equal to $84,735,652. 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