HomeMy WebLinkAboutCordova Power Plan Findings and Recommendations 1986........ _-_._----_._-._-------------
Alaska Power Authority
Cordova Power Plan
FINDINGS AND
RECOMMENDATIONS
Brent Petrie
CORDOVA POWER PLAN
Findings and Recommendations
October 1986
Project Team
Gwen Obermiller, Project Leader
Research Analyst
Peter Hansen
Rural Systems Engineer
Don Shira
Director, Systems Planning Director, Program Development
4026/595/1
Robert D. Heath
Executive Director
c 1986 Alaska Power Authority
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Cordova Power Plan
Table of Contents
Page
Executive Summary...................................... 1
1.0 Background........................................ 3
2.0 Ongoing Studies and Activities.................... 6
3.0 Scope of Analysis................................. 8
4.0 Cordova Waste Heat................................ 9
5.0 CVEA Analysis
5.1 Base Case.................................... 12
5.2 Silver Lake Hydroelectric Project............ 12
5.3 Glennallen/Teeland Intertie.................. 14
6.0 Cordova Economic Analysis
6.1 Waste Heat................................... 15
7.0 CVEA Economic Analysis
7.1 Economic Analysis Parameters and Data........ 16
7.2 Present Worth Analysis of Alternatives
to Serve CVEA.............................. 18
8.0 Conclusion ....................... III................ 20
g.o References... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Tables:
Table 1 Present Worth Cost of Alternatives -Cordova
and CVEA................................ 5
Table 2 CVEA Present Worth Ratios.................... 18
Table 3 CVEA Present Worth Ratio Sensitivities....... 19
Figures:
Figure 1............................................... ;
Figure 2............................................... 11
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CORDOVA POWER PLAN ".
Valdez
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EXECUTIVE SUMMARY
An alternative energy generation source for the City of Cordova
served by Cordova Electric Cooperative (CEC) has been sought for
over 70 years. Potential small hydroelectric sites were identified
in the early 1900's by the United States Geological Survey (USGS).
The Cordova Power Pl an is the resul t of a study by Stone and
Webster Engineering Corporation (SWEC) under the direction of the
Power Authority to evaluate alternatives diesel, coal,
hydroelectric, and interties --and to formulate energy supply
plans.
In an interim feasibility assessment, SWEC recornmended a 15 MW
Sil ver Lake hydroe 1 ectri c project with an overhead transmi ss i on
intertie between Cordova and Solomon Gulch and a transmission tap
to Silver Lake. A second alternative of a phased series of small
hydro projects for Cordova was recommended. A Prel iminary Permit
application to the Federal Energy Regulatory Committee (FERC) for
the Silver Lake project was approved in March 1983 for three years.
Because a transmission line linking Cordova to the Silver Lake
project had a cost of approximately $30 million, APA had SWEC eval-
uate Silver Lake to serve Copper Valley Electric Association
(CVEA) only --primarily Glennallen and Valdez. This alternative
appeared to be more economically sound.
APA staff now has updated and reassessed the Si lver Lake to CVEA
alternative in addition to considering an expanded scenario of
Silver Lake to serve CVEA and an intertie from Glennallen to the
Teeland substation of the Anchorage-Fairbanks Intertie. This
configuration would allow the sale of potential excess power from
Silver Lake and Solomon Gulch to customers on the Anchorage-
Fairbanks Intertie. In addition during peak use, energy could be
purchased from the intertie instead of using diesel generation.
The Sil ver Lake project to serve CVEA wi thout an i ntert i e to the
Railbelt proves to be the most economically viable of all the
Silver Lake alternatives considered under the analysis assumptions
used.
The Power Authority has no plans at this time to pursue the Silver
Lake Hydroelectric project, and the FERC permit application was
allowed to lapse.
Lower power cost alternatives for Cordova appear to lie in smaller,
capital intensive projects (such as Humpback Creek currently being
pursued by CEC); optimizing diesel generation efficiency with waste
heat; and pl ans to reduce fue 1 pri ces through methods such as
4026/595/3 - 1 -
greater bulk fuel purchase. The population, energy demand, and
diesel fuel prices in Cordova are too low to economically justify a
capital project as large as intertying Cordova to Silver Lake or
Valdez would be.
4026/595/4 - 2 -
CORDOVA POWER PLAN
1.0 BACKGROUND
The City of Cordova iss ituated on the eastern boundary of
Prince William Sound and is accessible only by air and sea.
It is a community of approximately 2500 people with an economy
based primarily upon seasonal fishing and crabbing industries.
Diesel generation is the only present source of power
generation for Cordova and its energy intensive canning and
freezing activities. An alternative to expensive diesel
generation has been sought by the efforts of the Power
Authori ty (APA), Cordova El ectri c Cooperative (CEC), and the
City of Cordova since 1980. CEC has been particularly aggres-
sive in searching for a lower cost power alternative.
The cost of diesel is higher in Cordova in comparison to other
communities in the region. One of the primary reasons is the
lack of sufficient bulk fuel storage. Further development of
industry in Cordova is felt to be greatly dependent upon a
"reasonable" electrical power rate, especially when other
communities in the area can offer a more competitive rate due
to the development of hydroelectric power for generation. In
addition, the' future price of diesel fuel is felt to be too
unstable for the community to base any substantial amount of
commercial development requiring electrical energy.
The absence of road access to Cordova has 1 a rge ly i nfl uenced
the cost of diesel fuel as all fuel must be received by barge.
In the 1970' s a hi ghway route fo 11 owi ng the Tasnuna Ri ver to
link Cordova with Valdez was explored. The community of
Cordova rejected that scheme. On October 7, 1986, the voters
of Cordova endorsed a new highway route, the Wood Canyon
route, which would follow the Copper River to Chitina. No
federa 1 approva 1 has been received and there is no money
appropriated. The construction cost of a Wood Canyon highway
is estimated to be $180 million, which is three times the
annual federal grant amount to the region. Project completion
for the Wood Canyon route is estimated to be 12 years (by
Department of Transportation and Public Facilities, personal
communication).
Valdez is the city closest to Cordova of sufficient size and
substantial enough power supply system to be considered for a
"linkup" to provide a lower cost power by taking advantage of
economies of scale for cooperative power generation. The
distance from Cordova to Valdez is approximately 65 miles.
4026/595/5 - 3 -
Valdez's economy is based primarily on development that has
resulted from its position as terminus of the Trans Alaska
Pipeline. Copper Valley Electric Association (CVEA) is the
utility which produces and distributes power to the area
including the City of Glennallen. Sixty-three percent of
generation by CVEA is provided by Solomon Gulch Hydroelectric
Project --one of the Four Dam Pool Projects whi ch together
have long term power rate agreements for the communities which
utilize their power.
The Cordova Power Plan was one of the large scale power supply
plans envisioned by state leadership in the late 1970's and
early 1980's during the period of high state revenues arising
from its oi 1 resources. An" Interim Feas i bil ity Assessment
for Cordova Power Supply" was completed by Stone and Webster
Engineering Company (SWEC) in June 1982. Hydroelectric and
coal generation alternatives were pursued in addition to sce-
narios of continued diesel generation and several transmission
line alternatives. The hydroelectric sites investigated
included Silver Lake (15MW), Allison Lake (8MW) , Crater
Lake (1.2MW), Power Creek (2.5MW) and other sites with less
than 3 MW capacity. The coal generation alternatives consist-
ed of five scenarios of differing plant size and
configurations. Transmission line alternatives pursued were
Cordova to Solomon Gulch (three different routings); Solomon
Gulch with a tap to Silver Lake, Bering River Coal Field,
Usibelli Coal via Whittier; and a line from Palmer (Teeland
substation) to Glennallen (Copper Valley). SWEC's three
overland transmission line route from Cordova to Solomon Gulch
included two coastal routes of approximately 67.8 line miles
and one interior route of 132 line miles. The base case was
considered in two different scenarios: continuation of the
current diesel plant with modification to the plant; and im-
proving the efficiency with a waste heat recovery system
and/or the construction of a new diesel generation plant.
SWEC's primary recommendation for a regional power supply
solution was to pursue optimization of a Silver Lake hydro-
electric project with an overhead transmission intertie be-
tween Cordova and Solomon Gulch and a transmission tap to
Si 1 ver Lake. The 15 MW project was proposed as a means of
economically meeting future generational requirements for the
region. A Preliminary Permit for Silver Lake project was
granted by the Federal Energy Regulatory Conunittee (FERC) in
March 1983 and expired in the spring of this year.
The secondary recommendation by SWEC was to pursue the
development of a series of small hydroelectric projects to
serve the City of Cordova alone.
4026/595/6 - 4 -
APA staff determined that the cost to construct a transmission
1 i ne the di stance from Valdez to Cordova is prohi bitively
high. APA staff reviewed the SWEC Interim Feasibility Assess-
ment and requested that a 15 MW Si 1 ver Lake Hydroe 1 ectri c
Project to serve only Copper·· Valley Electric (CVEA) be
analyzed. This scenario causes the construction cost to be
reduced 30% to $68.2 million for both generation and
transmission and the electrical load is reduced 25%, making
the project much more economically attractive.
Table 1
Present Worth Cost of Alternatives
1985
Cordova
Present
Worth Cost Present Worth
($000) Ratio
Humpback Creek Hydro (850 KW)
Project Plus Diesel 61,209 1. 09
Diesel Base Case 66,449 1.00
Sil ver Lake Hydro Project 77 , 976 0.85
Coal Fired Plant (8 MW) 79,199 0.84
CVEA
Base Case 106.389 1.0
Silver Lake Hydro Project 84,862 1. 25
4026/595/7 - 5 -
2.0 ONGOING STUDIES AND ACTIVITIES
With some pre 1 imi nary ass i stance from APA, Cordova El ectric
Cooperative (CEC) has completed a final feasibility study of
Humpback Creek Hydroelectric Project (January 1986). The
proposed 850 KW project is located three mil es from Cordova
and wou 1 d generate 3.5 mill i on KWH or 20% of the 1984 gen-
eration requirement. Project risk is expected to be within
narrow limits as it utilizes proven technology and
construction methods.
The construction cost, estimated at $3,250,000, was projected
to be met by a state grant of $1.3 million (this amount was in
the APA' s and the ori gina 1 governor's fi sca 1 1987 budget), 5%
state loan, and CEC contri buti on. Of the $1.3 mi 11 i on grant
amount, $613,600 was appropriated in FY87 and the balance of
$686,400 was included in APA's FY88 budget request. Of the
$613,600 FY87 funds appropriated, $377,000 is frozen due to
the FY87 budget shortfall. In addition, Cordova submitted an
application to the Power Project Loan Fund for $1,950,000 and
that amount was appropriated to the fund in SLA 1986, Ch. 129.
At varying levels of state contribution and loan interest
rates for the balance of the construction cost, Humpback Creek
appears to remain marginally more attractive than diesel
generation. As the project provides only about 20% of the
generational needs of Cordova, the cost of power is still
closely linked with the more volatile price of diesel fuel.
CEC is also investigating the installation of bulk fuel
storage tanks which would allow the utility to purchase
di rectly from the di stri butor and to take advantage of pri ce
breaks by buy"ing diesel fuel in much greater quantities than
is presently possible. This would aid in maximizing the cost
stabil ity for the diesel generation component of Cordova's
system, until the load grows to such a level as to justify
another alternative generational system.
In the four years since the SWEC study was completed, CEC has
constructed a new diesel plant --the Orca plant --near the
ocean dock area approx"imately 1.5 miles from the original Eyak
plant. Two 2500 KW generators were installed as part of a
plan to slowly retire the older generators at the Eyak plant.
Due to increasing problems over extending the economic life of
the Eyak generation plant, CEC determined to proceed with con-
structing the Orca plant without waiting for final results of
studies for alternative generation.
4026/595/8 - 6 -
Since 1983, CEC also has been investigating actively the pos-
sibility of utilizing the vast amounts of waste heat produced
in connection with power generation. To illustrate waste heat
potential, it can be assumed that for every gallon of oil
burned in the diesel generators, one half gallon equivalent of
heat can be utilized for heating and process purposes assuming
both jacket water and exhaust stack heat are utilized. This
number will vary somewhat depending on local factors; actual
amounts of useable heat may be slightly less. In 1984 CEC
burned approximately 1.2 million gallons of diesel fuel in its
generators; thus, initially it can be assumed that 0.6 million
gallons of fuel oil equivalent of heat can be utilized from
the power plant.
It is a common misconception that waste heat can only be
utilized in the vicinity near the power plant due to heat
losses from insulated pipes over longer distances. The actual
heat losses in a system designed to convey hot water from the
Orca Power Plant to downtown Cordova would amount to less than
5% of the waste heat available. Based on the very extensive
experience gained with waste utilization and district heating
in similar climates in northern Europe and on recent
experience in Alaska, it can be concluded that no technical
problems would prevent the utilization of waste heat in
Cordova outside the immediate vicinity of the Orca
powerhouse.
4026/595/9 - 7 -
3.0 SCOPE OF ANALYSIS
Finding a cost effective way to tie Cordova into a power grid
or to develop a major alternative power project --which would
also meet the total present and projected electrical energy
needs of the community --has been futile thus far. Cordova's
geographic location far from any other load center of suffi-
cient size to allow economies of scale causes interconnection
costs to be prohibitive. SWEC estimated the cost of
intertying Valdez and Cordova to be approximately $36 million,
a cost whi ch wou 1 d have to be borne by a community with a
population of only 2500.
To fill Cordova's need for low cost electrical energy, APA
staff determined that the most economical approach might be
the development of a waste heat recovery system to improve the
efficiency of the current generation system and the develop-
ment of the smaller hydroelectric projects identified. SWEC
pointed out the advantage of phased expenditures possible for
the multiple hydro scenario; this phasing has even greater
appeal with the advent of falling oil prices and with expected
decrease instate government investment in projects due to
greatly decreased oil revenues.
Due to the encouraging results of SWEC's initial analysis of
Silver Lake to serve CVEA only, APA staff pursued analysis of
this option in addition to several variations. At present,
CVEA serves Valdez and Glennallen through a transmission
interconnection. The scenarios investigated include the 15 MW
Silver Lake Hydroelectric Project to serve CVEA alone; and
Silver Lake to serve CVEA, with the ability sell its potential
excess power generation to customers on the Anchorage-
Fairbanks Intertie through an intertie from Glennallen to
Tee1and substation. Solomon Gulch would also be able to
uti1'ize the intertie. There is no economic justification for
building the Glenna11en/Teeland transmission line without
buil di ng the Sil ver Lake Hydro Project. There is not a 1 arge
enough demand base in the Copper Valley region over which to
spread the costs. An exception to this situation would occur
only if large development took place along the Glenna11en/Tee-
land corridor, or if a proposed military backscatter radar in-
stallation requiring 10 MW were built in the Glennallen area.
4026/595/10 - 8 -
4.0 CORDOVA WASTE HEAT
The concept of district heating was common in the United
States at the beginning of the 20th century. Typically steam
was distributed through an underground system to all larger
buildings located downtown in city districts. The steam was
either generated in large boiler plants or it was low grade
steam from a coal-fired steam power plant located in the area.
Due to low fuel oil prices and to the continued use of
outdated steam technology, the benefits from centralized heat
generation seemed to decrease in magnitude and the concept of
district heating was slowly abandoned in many areas.
In Europe and especially in Scandinavian countries the idea
was kept alive, in part due to higher fuel prices. There,
water, rather than steam, based district heating systems
became the standard. Pre-insulated systems became common in
the 1960's and today such hot water, rather than steam, based
district heating systems supply up to 40% of the total heating
demand in some countries. Centralized generation of process
steam is common in many cities and such systems are often
based on waste heat from power plants.
The system concept envisioned for Cordova is designed to
deliver 100 PSIG steams to the St. Elias and North Pacific
Processors canneries. Also, hot water for heating purposes
would be delivered to basically any interested party within a
reasonable distance from a main line extending from the Orca
plant along North Ra i 1 road Avenue and Counci 1 Avenue to the
alley between Fi rs t Street and Second Street. Branch 1 i nes
would extend along Water Street to the swinming pool, in the
alley between First and Second Streets extending from Davis
Avenue to Lake Avenue, along Adams Avenue and Second Street
from the alley to the post office, and finally from the
hospital along Second Street to the high school. (See map in
fi gure 2).
The steam pipe would run from the power plant along the road
and across the new industrial fill area to the canneries.
This line is envisioned to be a 10-12 inch pre-insulated steel
line, possibly with a smaller diameter condensate return. The
canneries are currently preparing to start reclaiming their
steam condensate; depending on the success of these efforts,
it may be prudent to return thi s condensate to the power
plant. In order to meet requirements for fish processing, the
steam pressure will have to be at least 90 PSIG. In order to
compensate for pressure drops in the line, steam must be
produced at 100 PSIG.
4026/595/11 - 9 -
The hot water lines would be standard pre-insulated district
heating pipe with a steel carrier pipe foamed in place with
urethane foam in a high density polyethylene jacket pipe. The
main lines from the power plant to Council Avenue are expected
to be 8 inch diameter lines with separate supply and return
pipes. Maximum temperature for the supply water would be
200 degrees Fahrenheit.
The installation in the power plant will require slight
modifications to the engine oil-cooling systems to allow for
engine coolant outlet temperatures of up to 200 degrees
Fahrenheit. After leaving the engine outlet, the coolant will
be fed through a large flat plate heat exchanger, which
transfers the heat to the water circulating in the district
heating system. If the engine coolant needs additional
cooling before returning to the engine, this will be
accomplished in the existing radiators. On each exhaust
system, the existing muffler will be replaced with an exhaust
gas boiler/muffler, which produces steam at 100 PSIG. As
mentioned earlier, this steam will be conveyed to the
canneries through a 10-12 inch diameter line. During periods
with low demands for steam, excess steam will be disposed of
in a condenser which is cooled by the water circulating in the
district heating system. Initially, no backup boiler is envi-
sioned in the power plant. However, as operating experience
is gained with the system, customers will get used to viewing
the district heat as "firm heat" and the need for keeping
individual boiler systems as back up boilers will decrease.
At that time it may be advisable to install a backup boiler to
secure the supply of heat during power plant shut downs.
In the individual user buildings, the hot district heating
water will be fed either directly into the boiler return or
into a heat exchanger, which transfers heat to the boiler
return water before it enters the boiler. It is not
envisioned that the boilers will need to provide additional
heat; the only reason for maintaining the existing boilers
would be the advantage of having an automatic backup system in
case of an interruption of service. Experience with Northern
European district heating systems has shown that district
systems generally are much more reliable than individual
boiler systems.
Invoicing of individual users could be based on heat meters
that measure the amount of heat extracted from the district
heating water in the user buildings heating system.
Computer simulations indicate that approximately 215,000 gal-
lons of heating fuel can be displaced as well as approximately
195,000 gallons of process fuel used in the canneries. Using
the above mentioned assumptions together with the Power
Authority's standard fuel escalation rate and a base fuel
price of $0.935/gallon, the proposed waste heat recapture sce-
nario in Cordova shows a 16 year pay back time or a 6.5% in-
ternal rate of return. A base fuel price of $0.75/gallon
4026/595/12 -10 -
yields a payback time of less than 19 years. Waste heat
projects for utilities the size of CEC is considered feasible
if the payback time is within 20 years, it should be noted
that these figures do not include an allowance for profit.
4026/595/12.1 -1JA -
Figure 2
Cordova District Heating Concept
LEbEHD:
1 Power Plant
2 Canneries
3 Fish' liallle
4 Hotel
5 "SA
6 Ci ty Hill
7 Pool
8 Apart.ents
9 Youth Center
10 Hotel
11 Bar oCJ 12 Utility Office
13 Post Office
14 School
15 Hospital
16 High School
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SCALE
-11 -
5.0 CVEA ANALYSIS
5.1 BASE CASE
CVEAls electrical energy needs presently are met through
energy from Solomon Gulch and diesel generation located at
Glennallen. In the summer Solomon Gulch provides all of
CVEAls needs and is estimated to have excess power available.
Because the yearly peak electrical energy usage in this area
is in the winters, the diesel generators must be used to fill
the seasonal gap. The proceeds from the sale of Solomon
Gulchls excess in the summer could in part lessen CVEAls
system costs of generation.
5.2 SILVER LAKE HYDROELECTRIC PROJECT
The proposed 15 MW Si 1 ver Lake project is located approx-
imately 15 miles southwest from Valdez. The lake flows into
the Duck River which then flows into Galena Bay or Prince
William Sound. There are no existing facilities at the
proposed site and all facility sizes, elevations, locations
and capacities described in the following are based on an
interim feasibility assessment. The detail studies to be
conducted during the period of a permit would finalize the
items and be defined in a FERC Application for License.
(1) PROJECT COMPONENTS
a. Dam and Sp illway -The concrete dam wou 1 d be a 100
to 150 ft. high located at the mouth of Silver Lake. The
existing water surface elevation at the site is approxi-
mately 306 ft. The lake elevation would be raised to a
maximum elevation of about 450 ft. The dam would include
outlet and intake facil ities complete with gates and
trashracks.
A spillway would be located either on the southwest
abutment or on the dam proper. It wou 1 d be a non-gated
overflow with a maximum crest at approximately elevation
440 ft.
b. Pressure Penstock -The water would be transported
by a 6,000 foot-long penstock approximately 8 feet in
diameter to the powerhouse. The penstock route from the
dam would be northwest along the south side of the Duck
River to the powerhouse site. The powerhouse site is
about 3,000 feet upstream of the river mouth at low tide
4026/595/14 -12 -
and located at the foot of the last downstream major
natural falls at elevation 65 ft.
c. Powerhouse -The powerhouse would be reinforced con-
crete, with approximate dimensions of 80 feet in length,
65 feet in width and 45 feet in height.
d. Ta i 1 race -The proposed ta i 1 race wou 1 d be an open
channel weir type constructed of concrete. It would be
approximately 40 feet wide and 16 feet long and would
discharge directly into the natural Duck River channel at
approximately 65 foot elevation.
e. Dock and Access Road - A dock wou 1 d be constructed
on Galena Bay on the south bank near the mouth of The
Lagoon. An access road would extend from the dock to the
powerhouse site and then to the dam area.
(2) The proposed RESERVOIR would utilize an existing perched
lake with water surface elevation at 306 feet above sea
level. The dam at the foot will raise the water surface
to a maximum of 450 feet elevation. The surface area
would be 1,792 acres, providing approximately 200,000
acre-feet of storage with the water surface at elevation
450 feet.
The normal operating maximum elevation of the reservoir
would be about 440 ft. increasing to elevation 450 to
pass the probable maximum flood. These are approx imate
elevations that would be better defined dur-il1g a fea-
sib il ity stu dy .
(3) PROJECT PRIMARY TRANSMISSION LINES - A three phase 138
kilovolt line would be constructed approximately 82.8
miles in length. This line would interconnect with the
existing distribution systems of Cordova Electric Cooper-
ative, in Cordova and Copper Valley Electric Assoc., Inc.
in Valdez. A 7200 volt single phase line approximately 9
miles long would be constructed to connect the project
with the village of Tatitlek.
(4) TURBINE AND GENERATORS -Three turbines are presently
proposed, each with a rated capacity of 7,600 h.p. and
direct connection to a synchronous generator with a rated
capacity of 5,000 KW. Estimated average annual energy
produced would be 56.4 million kilowatt hours. The aver-
age net hydraulic head is estimated to be 368 feet.
The maximum annual project energy production would be 46,700
MWH.
4026/595/15 -13 -
5.3 GLENNALLEN/TEELAND INTERTIE
This intertie consists of a 230 Kv transmission line from the
Teeland substation on the Anchorage/Fairbanks Intertie to
Glennallen (CVEA). The approximate length is 155 miles and it
follows the Glen Highway. The transmission line is designed
for a peak load of 31 MW at a 0.9 power factor.
This proposed scenario would be constructed in tandem with the
15 MW Silver Lake Hydroelectric Project and would allow excess
power from the Solomon Gulch and Silver Lake projects to be
ava i 1 ab 1 e for sa 1 e to customers on the Anchorage/Fai rbanks
Intertie. These revenues would partially alleviate the impact
of the large capital investment required for project con-
struction. In the seasons when additional power is required
for operations, instead of operating expensive diesels, power
could be purchased from intertie power producers.
4026/595/16 -14 -
6.0 CORDOVA ECONOMIC ANALYSIS
6.1 WASTE HEAT FOR CORDOVA ELECTRIC COOPERATIVE
Based on actua 1 power production fi gures provi ded by CEC and
variation data compiled at the CEC power plant together with
specific data for the generators in use, the available waste
heat was calculated for each hour during the year.
Based on heating degree variations for Cordova together with
fuel consumption data and operational characteristics provided
by CEC, the actual heat demand for space heati ng was
calculated for each hour of the year. Based on information
provi ded for the study by the management of the affected
canneries, the hourly steam demand was estimated for each hour
over the year for the canneries combined.
A comparison was made between the available heat and steam and
the actual demand. Then the amount of waste heat actually
utilized was calculated. At this point, the estimated heat
loss for the district heating lines and the steam lines was
also taken into account. The waste heat utilized was added up
hour by hour for the entire year.
With a set of assumpti ons for load growth over the next 20
years, the same operati on was done for each of the next 20
years and the annual fuel savings were derived. Based on
current fuel cost and estimated fuel cost escalation together
with the cost estimates presented in this report, a cash flow
analysis and a pay back time was calculated.
The annua 1 operations and mai ntenance cost for each concept
has been estimated at 3% of the construction cost.
The estimated cost of waste heat recapture installation is
$2.5 million and the economic life of a district heating
system is 20 years.
4026/595/17 -15 -
7.0 CVEA ECONOMIC ANALYSIS
7.1 ECONOMIC ANALYSIS PARAMETERS & DATA
All of the intertie scenarios including the Silver Lake Hydro-
electric Project projected that the construction process would
commence in 1986 and take 4 years to complete. To take into
account the longest economic 1 ife of the alternatives (50
years for hydroelectric), the study encompasses the period
from 1986 to 2039.
Solomon Gulch energy sold to CVEA is approximately 35,000 MWH
per year. Additional energy of approximately 17,000 MWH is
estimated to be available in the summer months; CVEA's peak
demand is in the fall and winter, however, and this potential
energy is lost at present.
In analyzing the Cordova Power Plan alternatives the following
assumptions were used:
Load:
CVEA 1986 energy load -55141 MWH
CEC 1986 energy load -18201 MWH
Load growths for CVEA and CEC are estimated at 3% average
annual rate.
Capital Costs:
15 MW Silver Lake hydro project (with Cordova)
-$98.6 million
15 MW Silver Lake hydro project (without Cordova)
-$68.2 million
Teeland/Glennallen Intertie -$49.1 million
Economic life:
Transmission interties with steel towers -40 years
Hydroelectric projects -50 years.
Primary diesel generation -20 years.
Standby diesel generation -30 years.
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•
o & M Costs:
Interties -$1500/mile per year.
Silver Lake Hydroelectric Project -
$984,000 per year.
Diesel generation -2.48 cents/KWH for CVEA
1.75 cents/KWH for Cordova Electric Coop.
Diesel fuel:
86.8 cents per gallon at CVEA.
93.5 cents per gallon at CEC.
Fuel efficiency for CVEA and CEC is approximately 12 KWH per
gallon.
Fuel escalation rate is -4% for 1986
0% for 2 years
2% for 17 years
For sensitivity analysis:
-4% for 1986-88
0% for 17 years
Salvage value is done on a straight line depreciation basis .
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•
7.2 PRESENT WORTH ANALYSIS OF ALTERNATIVES TO SERVE CVEA
The following table ranks the two Silver Lake alternatives and
the Silver Lake project with the Glennallen/Teeland Intertie
according to their cost to cost ratios. The Base Case is the
scenario with corresponding costs against which all
alternatives and their costs are measured. If the present
worth of a scenario is less than 1.0, or costs more than the
Base Case, then it is not considered as a viable alternative.
If the present worth of an alternative is greater than 1.0, it
is potentially a viable scenario and further evaluation is
justified. As one can see, the Silver Lake Hydroelectric
Project that serves only CVEA without the expanded scenario
including the Glennallen/Teeland Intertie appears to be the
most economic alternative for consideration. This hydro-
electric power alternative replaces the remainder of CVEAls
generation needs which would be otherwise met by costly diesel
generation. In other words, this scenario represents CVEA on
total hydroelectric generation, except for 2% that is met by
diesel during projected down time of the hydro projects.
Table 2
CVEA Present Worth Ratios
(1986-2039)
Silver Lake Hydro
Base Case
Teeland/Glennallen Intertie
(with Silver Lake Hydro)
Present
Worth Cost
($000)
106,825
124,927
169,960
Present
Worth
Ratio
1.17
1.00
.74
The Teeland/Glennallen Intertie does not prove to be economic
or feasible due to the large capital cost incurred, even when
selling the excess energy from Silver Lake and Solomon Gulch
through the Anchorage/Fairbanks Intertie. This might not be
the case if a military installation were built near Glennallen
and its projected demand of 10 MW became a reality.
Deve 1 opment along the corri dor mi ght a 1 so be accelerated by
the availability of electrical power from the transmission
line.
The sensitivity of the present worth ratios to variations in
selected input parameters to help in delineating particular
risk scenarios is summarized in the following table. The
amount of change in a ratio indicates the degree of
sensitivity.
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Table 3
CVEA Present Worth Ratio Sensitivity
(1986-2039 )
+20% Construction Cost
-20% Construction Cost
Low Fuel Escalation Rate
(4%/3 years, 0%/17 years)
0% Load Growth
6% Load Growth
4% Discount Rate
Base Case
1.0
Silver Lake
1.05
1.32
.96
.59
1.14
1.10
Glennallen/Teeland
Intertie &
Silver Lake
.64
.86
.59
.39
.85
.68
The sensitivity analyses illustrate that capital intensive alterna-
tives are less attractive in times of falling fuel prices and low
load growth. However, Silver Lake appears attractive even in light
of increased construction costs.
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8.0 CONCLUSION
At the current feasibility level of information, the proposed
15 MW Silver Lake hydro project remains favorable for further
evaluation as an alternative to CVEA's remaining diesel gen-
eration. This conclusion seems to hold through the range of
variation in sensitivity cases. At this time of falling and
uncertain fuel prices, however, the economic viability of
Silver Lake could change drastically. Due to current
government spending reductions, there are no further plans by
the Power Authority to pursue this project unless additional
entities request and support it.
In spite of the conservative forecasts utilized in this analy-
sis, a capital intensive, alternative generation source does
not appear to result in low cost Cordova electrical power.
Whi 1 e the geographi c 1 ocati on of Cordova may be advantageous
for the fishing industry, it does not make possible sharing
any economi es of scale by tyi ng in with any other s i zeab 1 e
load centers. The newly proposed Wood Canyon hi ghway, if
constructed, would influence the cost of building an intertie
linking Cordova to Glennallen. Right-of-way and clearing
costs would be considerably less than intertie construction
without a road. It is also unfortunate that no hydro sites of
potential to match existing demand exist within a reasonably
economic distance from Cordova. It appears, therefore, that
maximizing the efficiency of CEC's present diesel generation,
pursuing alternatives to minimize unstable diesel fuel costs,
and discovery and development of small hydro sites to provide
percentages of CEC's electrical needs should be supported.
Provided that the cost of fuel remains at or above the current
fuel price, installation of waste heat recovery is recommended
as an additional way of controlling power costs. An increased
population and energy load would enable the economic
justification of capital intensive projects in the Cordova
area. Short term solutions may well be able to provide the
community with a less expensive, more stable power generation
source and cost until long term affordable forms of energy
generation are attainable.
-20-
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9.0 REFERENCES
Humpback Creek Final Feasibility Report, Cordova Electric
Cooperative, Inc., Cordova, Alaska, 1986.
Cordova Power Supply Interim Feasibility Assessment, Stone and
Webster Engineering Corporation, Denver, Colorado, 1982.
Updated Economic Evaluation of Cordova Power Supply Plan, Stone and
Webster Engineering Corporation, Denver, Colorado, 1985.
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