HomeMy WebLinkAboutSitka's Power Supply Plan 2008Major Goals
Welcome to the official website of the
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100 UnColn St .. Sltka AI( ~~SQ1:)747-3294 " ,/,",
Sitka's Power Supply Plan
January 2, 2008
Executive Summary
1. Provide adequate and reliable electric service.
2. Maintain financial integrity
3. Use energy resources efficiently
4. Maintain the lowest electric rates possible consistent with the above goals.
Power Requirements
Sitka's electric System energy requirements grew at less than 1 % per year in the decade
after the Pulp Mill closure in 1993. At that rate the existing hydroelectric systems would
have provided all necessary energy until about 2020. In 2006 we saw a 7% increase and
it looks like 2007 energy sales will represent another 5% increase in Sitka's power
requirements. About half the growth looks to be driven by increased use of electrical
energy for heating because of the tripling of fuel oil cost. The other half was driven by a
new fish processor at the Industrial Park and expansion of the other existing seafood
processors. More energy was required by supporting services such as freezer container
storage and worker housing. The forecast is for continued strong growth in power
requirements due to continued high oil prices.
The move to electric heating impacts the energy production capacity of the system,
lowering reservoir levels in the spring. The large increase in fish processor loads begins
in early summer, the lowest level of our lake reservoirs. At these levels generators
produce less power and exhibit frequency stability problems. Below certain lake levels
diesel generation is used to maintain stability and to make up for hydroelectric energy
shortfall.
Sitka has abundant renewable energy resources. The challenge is to manage the rising
demand for electric energy to displace oil while work continues to develop our renewable
energy resources (hydro, wind, geothermal) to meet that demand.
Conservation and Demand Side Management
Energy conservation and efficiency measures that can be taken begin at the power plants.
We have developed a computer model ofthehydroelectric system, using 50 years of
historical water records, to evaluate different operating scenarios. Using such techniques
we are managing the use of water for power generation to achieve the most efficient use
ofthat water. A water turbine's efficiency varies by as much as 50% depending on how
the turbine is loaded. In the past we have not paid too much attention to the efficient use
of water as we had more water than we could use; but, those days are over. Now we
must pay close attention to managing the use of water to maximize our hydroelectric
energy production.
The amount of water will vary seasonally. The maximum water is in the fall of the year
when the reservoirs are full. The minimum is in the spring and early summer when the
reservoirs are drawn down to their lowest level of the year. Our strategy is to further
develop dual-fuel and interruptible electric service for all classes of consumers to enable
us to shift loads on a seasonal basis. When the computer model predicts a high risk of
diesel generation (particularly in the early summer when the water level in the reservoirs
is lowest) then the interruptible loads will be shut-off.
The goal is to minimize the amount of supplemental diesel generated power required to
meet Sitka's power requirements. It is far more efficient to bum fuel oil in a 70% to
80% efficient furnace than it is to bum that same fuel in a 35% to 40% efficient diesel
generator. This demand-side management will entail promoting dual-fuel heating
systems and developing a control system where the interruptible electric heating loads
can be remotely switched on and off from the control room of the electric power system.
As Sitka's future power requirements grow to use up the existing hydroelectric energy
supply then the interruptible loads may be shut off year-round until new renewable
energy resources can be developed and brought on line. When a new renewable energy
resource is brought on line, such as the expansion of the Blue Lake Hydroelectric Project
to its maximum capacity, then that resource can be immediately utilized by restoring the
interruptible loads. This strategy serves the goal of keeping the cost of electric service
low as it minimizes the risk of underutilized energy resources that are very costly to
build.
At the consumer level, improved weather tightness of buildings, encouraging the use of
dual-fuel heating systems, heat pumps and lifestyle changes (smaller heated spaces, lower
thermostat settings, smaller cars, walk or bike not drive, etc.) that reduce the amount of
energy consumed all serve the goal of conserving energy and using our energy resources
efficiently in order to keep the community's total energy costs, as well as carbon
emissions, as low as possible.
Educating the consumer on energy use and conservation is an on-going effort. In
partnership with the Sitka Conservation Society a series of six brochures were produced
in 2007 to help educate consumers on issues such as home heating, water heating, energy
consumption of electronics and appliances, personal transportation, energy audits and
weatherization as well as Sitka's greenhouse gas emissions.
Historical review of energy use shows that individuals change their use patterns during
perceived crisis and then fall back to original patterns within a year or two. Few
individuals relate their actions to national or global concerns. Real conservation is
effected primarily by a substantial increase in price or by taxation. An example is the
effect of the oil crisis of the mid 1970's and how rapidly the US consumer went back to
large vehicles. Improvements in efficiency and pollution reduction were used by the
consumer to buy larger vehicles, offsetting much of the gain.
Hydroelectric
The hydroelectric energy available in a given year is dependent on rainfall. Our
generation requirements for 2006 were 112,000 MWH (megawatt-hours). Our
requirements for 2007 will be about 118,000 MWH. The existing hydroelectric system in
a low rainfall year will produce 100,000 MWH, an average rainfall year 123,500 MWH,
and a high rainfall year 134,000 MWH. Current cost of diesel generation is about 33
cents per kWH (kilowatt-hours) or $333 per MWH. A shortfall of 10,000 MWH would
add about $3.3 million to operating costs causing an electric rate increase of 30%.
Development of lower cost alternatives to diesel is imperative to maintain low cost
electric power in Sitka.
Many alternatives to expanding power generation alternatives have been explored and are
outlined in detail later in the report. Hydroelectric energy is the best alternative. It has a
relatively low and predictable cost, has a predictable and well developed regulatory
environment, uses very reliable equipment provided and supported by well established
large scale industry. The least cost and fastest hydroelectric project is to expand the
existing Blue Lake Hydroelectric Project to its maximum capacity. This will entail
constructing a new powerhouse containing a third turbine and dam raise at Blue Lake,
optimizing the energy producing potential of that reservoir.
The only diesel generation is located at Jarvis Street. The plant contains one new
Caterpillar unit rated at 4840 kW (kilowatts) and three old modular generators made by
Fairbanks Morse rated at 2,000,2,750 kW, and 2,750 kW. The Fairbanks Morse units
are of a 1950 design, prone to failure, and very expensive and difficult to repair. The
department will not run them at full rated load since this causes failure. Overall, with all
four units operating, the plant can produce 11,400 kW. This rating will not provide full
power for the City at any time of the year. Winter daily peaks are 22,500 kW and
summer daily peaks run 16,000 kW. Any sustained operation of the plant would lead in
short order to failures of the Fairbanks Morse Units. This outdated equipment has been
acceptable for very limited hours per year in emergency mode, but in the period between
now and new hydro coming on line, we need more reliable diesel capacity for continuous
generation requirements and for emergency.
The driving event which could cause a major problem for the City would be loss of the
transmission line between Blue Lake and the City in the Heart Lake area, isolating all
hydro generation for perhaps 30 days. A full 22,500 kW of Diesel would be needed to
cover this problem, costing in the order of 11 million dollars to add 11,000 kW of new
diesel capacity to the existing 11,400 kW. A better, more cost effective solution would
be adding a 69 kV transmission tie line along the highway from Blue Lake Hydro tying to
the transmission line near Thimbleberry Park. This redundant transmission line would
reduce the need for diesel at Jarvis to about 12,000 kW. See the section in this report on
system reliability.
Wind Energy
We intend to explore the feasibility of wind generated energy for Sitka. Unlike large and
expensive hydroelectric projects, wind is scalable. Wind turbines can be added
incrementally as needed. The concept for Sitka is that intermittent energy from the wind
can be stored in our hydroelectric reservoirs and add to Sitka's fInn renewable energy
supplies.
Wind is fairly well developed as a technology and equipment is now manufactured and
supported by major manufacturers such as General Electric and Siemens. We are
beginning studies to better identify sites which would almost certainly be on offshore
islands, such as Biorka Island or Legma Island. These sites would require undersea
transmission lines of up to 15 miles, adding substantial cost.
The fIrst step in evaluating the potential of wind energy is to install anemometer towers
to measure the wind speed and direction over a period oftime of not less than one year.
Geothermal Energy
Geothermal would seem to hold great potential for Sitka since we lie in the midst of
many fault lines with geothermal springs and the Mount Edgecumbe volcano. The
problem is locating a suitable site which can provide long term heat from the earth to
meet the City's needs. This seems to be akin to wildcat drilling for oil. It is very
possible to spend millions of dollars exploring and drilling, even constructing a power
plant, only to discover that the heat source is inadequate in the long term. The
Department intends to retain a qualified consultant to conduct an initial survey to assess
the risk and evaluate the economics of the exploration and development of geothermal
power generation for Sitka. Our initial estimate is that the wholesale cost of geothermal
energy will likely be in the range of 12 to 15 cents per kWh to produce, compared to our
existing hydroelectric system's wholesale cost of 4 cents per kWh.
That being said, if an entrepreneur is willing to take the risk of exploration for geothermal
energy and development of a geothermal generating plant which could deliver energy to
our electric system at a cost competitive with other alternatives, we will be interested in
buying power from that entrepreneur.
Biomass Energy
The U.S. Forest Service is interested in developing wood as a fuel for space heating and
possibly electric power generation. Our assessment is that generating power with wood
fuel would be several times more expensive than our other alternatives and a large scale
wood fuel supply is not available. Thus we are not interested in pursuing a wood fired
generating plant. However, if an entrepreneur is willing to take the risk of developing a
wood fueled generating plant and can deliver energy to our electric system at a cost that
is competitive with our other alternatives, then we will be interested in buying power
from that entrepreneur.
If burning wood could be developed as a practical alternative to electric or oil space
heating on a large scale, this could reduce the rate of growth in Sitka's power
requirements and perhaps allow deferral of the investment in new renewable resources
such as wind turbines, or the Lake Diana hydroelectric project or geothermal.
Reliability
Another very critical area to consider is the overall reliability of the electric system to
provide power every moment. Generation equipment failures and failures of the
transmission system represent the primary risks to reliable delivery of power to the
customers. Considerable financial risk is implied because sustained power outages can
deeply affect the business of the City and because running of diesel generators during
such emergencies can be very expensive.
Hydroelectric generators are extremely reliable, but because of their unique nature,
custom fit to each project. Major repair can take a very long time, up to a year or more.
Without ample generation capacity the City could be forced to generate large amounts of
power with diesel, a very costly business, which could easily double rates.
On the transmission side, a line break between Blue Lake and the City would put the City
totally on diesel, possibly for several weeks until repairs could be made. The current City
load is about twice the diesel capacity at Jarvis requiring rolling blackouts and probably a
shut down of many businesses for the duration ofthe problem. The area with the highest
risk to the transmission line, meaning the most probable to induce a very long outage of
perhaps a month, would be along Heart Lake. It is proposed that a tie line be built
between Thimbleberry and the Blue Lake Hydro to substantially reduce this risk. To
further bolster reliability, a substation near Thimbleberry would allow much of the load
along Sawmill Creek Road to be carried in the case of a failure at the Jarvis Street
complex.
A more detailed discussion of reliability and Firm power is offered at the end ofthis
document.
Frequency Stability
The entire generation system was built with the idea that the Pulp Mill at Sawmill Cove
would provide frequency control with its steam fired turbines. When the mill closed in
1993 the hydroelectric system alone could just barely operate. Many very dedicated
engineers and technical people managed to fine tune the speed governors so that we have
just barely acceptable stability but it's a very delicate system to operate and relatively
minor events can cause loss of generators or even complete collapse of the system.
Although remarkable improvement has been made we are at about the theoretical limit of
control. At low reservoir levels the system cannot run stable without a diesel assisting.
Blue Lake hydro at this time can never run by itself and so a loss of a generator at Green
lake or the transmission line puts a diesel on the line to maintain frequency.
As the load grows and we draw the water levels down more each year, the early summer
becomes very frequency critical. Addition of a great deal of fish processing load at this
critical time may push the system to require running some diesel as soon as the summer
of 2008 for stability. This adds significant operating cost.
Addition of any new generation will attempt to improve this situation. The Blue Lake
third turbine design presently incorporates a large surge tank built into the mountain and
a more responsive and higher rotating mass turbine.
Future Loads and Generation Requirements
The attached chart shows projected energy requirements and the effect of various projects
on satisfying these needs. This chart is based on a power requirements study done in
2005. The growth has been much greater in the last two years and we feel may continue
growing faster than previously predicted.
This chart assumes that the Blue Lake Third Turbine and Dam Raise are added first. The
Lake Diana curve adds to the energy provided by the upgraded Blue Lake Project. The
Takatz curve adds to the upgraded Blue Lake Project, assuming Lake Diana is not built.
Wind and other alternative curves are added to the upgraded Blue Lake Project assuming
neither Lake Diana nor Takatz have been built.
250,000
240,000
230,000
220,000
210,000
200,000
190,000
180,000
170,000
160,000
III 150,000 ...
J: 140,000 , ::: 130,000 cu
==
120,000 cu
C> 110,000 Q)
:E 100,000
90,000
80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
Historical and Projected Total Energy Requirement (1973-2030) with Generation Capacity
Or + Takatz Lake Capacity
f---
0.5%
-
-I--~~ :-__ .~ _ ----~_-= ---------I~ ____ -~__ ---t---__ --__ --=+~-----
I i
1970 1980 1990 2000
Year
2010 2020 2030
Impact of Generation Choices on Electric Rates
On the following chart projected costs of several options are combined to predict impact
on electric rates until 2030. These costs are shown as if no inflation occurs, in present
value of money. The exception is the cost of fuel oil which is escalated at 5% per year.
The cost or even availability of fuel oil in future decades is impossible to determine but
increased global demand, inevitable global production decrease, and carbon taxes related
to decreasing greenhouse emissions would seem to indicate that fuel oil would be a poor
choice to supply future needs.
Existing System --If existing equipment is used and no major investment made in
additional generation then the cost of power is predicted to begin to rise sharply about
2015 when the existing hydro is totally utilized and all growth must be supported by
diesel. The abrupt dip in price is the year the Green Lake bonds are paid off, reducing
annual cost by about 4 million dollars. This cost drop is rapidly offset by increasing use
of diesel.
Add Blue Lake Third Turbine and Raise Blue Lake Dam -This project would add about
10 MW (megawatts) of capacity and as much as 34,000 MWH of energy to the system,
depending on the final height of the dam. This appears to be the best overall plan. The
cost is relatively low at about $50 million and it comes on line about the time that
generation with diesel would be rapidly escalating. By borrowing enough money to build
the improvements and payoff the remaining Green Lake Bond, there is virtually no bump
in rates and over time, in real terms, the rates go down. This option also greatly
improves the frequency stability and reliability ofthe system.
Add Lake Diana to the Existing System -Lake Diana would have about 6.5 MW of
capacity installed and provide 34,000 MWH. At this time Lake Diana looks to be a
difficult project to license taking a long tim~ to work around environmental and land use
issues. We have included an analysis to show the impact of the project if it were allowed
to proceed normally. In about 2014 the use of diesel begins to have a large impact on
rates until the Lake Diana Project comes on line in 2018. Beside the higher cost of Lake
Diana, $110 million, there are added costs of supporting an on site crew, road, dock,
building and housing, maintenance, as well as transportation costs. The Blue Lake
improvements look far better as a next step, but Lake Diana from an engineering
standpoint is the next logical project if the load continues to grow.
Add Takatz Lake to Existing System -This is a very large project with probably 25 MW
installed and producing 92,000 MWH. Current estimates are that final cost would be
about $318 million with $19 million per year added as debt service. There are very high
annual operating costs involved because the facility is on the opposite side of the island, a
full crew would need to live on site and aircraft as well as boat support would be needed.
Takatz is too large for the Sitka Power System in the foreseeable future. It has been
discussed bringing a tie line to Baranof Island and selling the surplus energy but even
with Takatz fully utilized the cost is still 22 cents per kWH. There are probably hydro
projects much larger and much less expensive closer to the energy export market loads.
Alternatives such as windpower and geothermal energy are not developed enough to
include in this analysis but first reviews would put wind roughly financially even in cost
per kWh generated with the proposed Blue Lake expansion and Geothennal much more
risky and expensive than wind or the Blue Lake expansion.
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$0.200
$0.150
,
-1--------
Sitka Electric System Cost per kWH
with Various Generation Options
_ ~ __ ~ IncreaS~ng diesel use
and increased fuel cost
$0.100 ____________ -'-- - -- - - - -
$0.050
$0.000
2000
End of Green Lake Debt
, ,
--~ -+-Existing System
---0-Existing + Blue Lake 3rd Turb & Dam Raise ,
-()-Existing System + Lake Diana
Existing System + Lake Takatz
2005 2010 2015
Year
2020
Costs are show in today's dollars with 5%
inflation added to fuel only.
2025 2030
J
2035
Generation Options in More Detail
Blue Lake Third Turbine
The Blue Lake Hydroelectric Project was built about 1960 with major participation by
the Sitka Pulp Mill. At the time the entire City load peaked at about 3,000 kW and it was
hard to justify building a project with more than 6,000 kW. The engineers and City
officials of the time did a very commendable job in designing and constructing the
project so that it could be expanded. Provision for a third turbine was provided in the
piping and the license included an ultimate raise of the dam another twenty ft. The dam
was constructed to support additional height.
The 1959 vintage Blue Lake Hydroelectric plant runs harder than originally designed,
7,000 kW, rather than 6,000 kW nameplate rating, and about 800 kW was added at the
campground and 600 kW at the mill filter plant. The facility including the two small
hydros can run virtually all the time and still not use all the water in an average or better
rain year. The third turbine will give us the ability to use water that would have spilled,
better manage the Blue Lake reservoir and the Green Lake reservoir, and improve overall
efficiency with more modern equipment and reduced loss in the penstock.
After much study and preliminary design work the third turbine for Blue Lake is
envisioned as a separate powerhouse containing a new 11 MW turbine designed to run
most efficiently at about 8 MW. This new unit will provide higher efficiency, making
better use of available water, providing more rotating mass to enhance frequency stability
of the system. Preliminary work indicates the need for a surge tank within the mountain
combined with a tunnel tap for the new powerhouse to take full advantage of power and
frequency capability. The extra 11 MW of capacity will allow the system to better
maintain system reliability in case of other generator or transmission line failures.
Blue Lake Dam Raise
The power we can extract from water is related directly to the head, or the vertical height
difference between the generator and the surface of the reservoir. Presently this net head
is about 327 ft. with the dam built to spill at elevation 342. We hope to be able to raise
the dam to a spill elevation of about 425 ft, which would increase the available head from
327 to 410. The higher dam does not provide more water but reduces the amount of
water spilled and each gallon of water can produce 25% more energy.
Our intent is to maximize the height of the dam to use the Blue Lake water to it's fullest
potential, which would be realized with an elevation 425' spill height.
From and engineering standpoint all the power plant equipment and pipeline must be
checked to assure it can stand the higher operating pressures. It is assume some
modifications will be necessary. The dam construction is being reviewed to determine
the actual structural and seismic height limits. The darn was originally designed and built
for future increases in height.
From an environmental standpoint, the area surrounding the lake must be evaluated for
impact of raising the lake. Most of the lake is almost vertical on the sides and raising the
water level would have little consequence. The primary inlet stream of the lake,
however, is critical trout habitat and this must be fully evaluated.
The dam raise provides much better generation capacity from the hydro units and
provides more capacity at what was the summer low water period.
Improvement of Blue Lake would not require increase in system operating staff, a
substantial cost advantage over other projects considered.
Lake Diana
This high lake, 1728 ft. elevation, has been considered as a potential hydroelectric site for
many decades. It appears to have a potential to produce about 34,000 MWH with
approximately a 6 MW turbine installed. The current plan is to tunnel beneath the lake
to draw the water, minimizing visual impact, and build the powerhouse near the head of
the Redoubt valley. The access road and underground transmission line would be run
from Salmon Creek near the Green Lake Hydroelectric plant, along Salmon Lake, and
then along the Redoubt drainage.
From an engineering standpoint the project is practical, although fairly expensive, $95
million, and somewhat difficult to maintain. Lake Diana would require more
maintenance staff and perhaps operators residing on site. It adds road maintenance, a
dock, and support buildings at the end of Silver Bay. The third turbine and dam raise
project at Blue Lake is far easier and less expensive as a next step, about $50 million with
little additional operating costs.
From an environmental and permitting standpoint Lake Diana is very difficult. The Lake
itself lies just within the South Baranof Wilderness area and the project could probably
not be licensed unless the wilderness boundary was changed. This has been done for
other projects but is a difficult political process that could take decades.
Because of its high altitude the project uses very little water but preliminary engineering
indicates that the best economic and environmental choice is to build the powerhouse in
the Redoubt drainage, moving the water presently spilled from the lake into the Crawfish
Inlet, Lake Ekaterina drainage, into the Redoubt drainage. The impact on the very
successful salmon runs of Redoubt Lake would need extensive evaluation.
The routing through the Salmon Lake area would bring road access to the area and even
though much ofthe road follows a historic corduroy road, it still passes through old
growth forest and considerable study would need to be done to determine the best balance
of routing.
At this time we have completed enough field work to assure that this project is viable,
and we intend to collect stream flow information which is critical to final evaluation.
Every reasonable effort should be made to stream gauge the lake outlet and perhaps
stream gauge Redoubt creek and Lake Ekaterina to gather basic data for evaluating this
renewable energy resource in the future.
Takatz Lake
This potential hydroelectric project is located near Warm Springs on the Chatham side of
Baranof Island. It has been stream gauged and studied in considerable detail. We have
brought construction estimates up to date but have done no field work at this time. The
current estimate is $240 million to build the hydroelectric project and $60 million to
build a transmission line from Takatz Lake to Sitka. There is a long term Federal Power
land reservation already set up for the project and the City owns the property to build the
project. The major engineering problem would appear to be a viable transmission line
design and routing across the island. This has not been examined carefully in the past. A
road across the island, in which a transmission line could have been buried, seems now to
be unlikely.
Overall Takatz is too large project for Sitka to afford at this time, particularly when we
have better immediate options.
Firm Power and Impact of Generation Equipment Loss
Various equipment failures will have impacts on the ability for the electric system to
meet City load requirements. Some of those more serious scenarios are listed below:
System Conditions
Hydroelectric Capacity in kW
Before BL Unit #3 After BL Unit # 3
With All Generators Working 21,400 kW 25,400 kW
Failure of Green Lake Unit # 1 13,400 kW 17,300 kW
Failure of Blue Lake Unit # 1 18,050 kW 24,800
Failure of Transmission between 5,400 kW 9,400 kW
Green Lake and Blue Lake 16,800 kW w/diesel 20,800 kW w/diesel
Failure of Transmission between 11,400 kW diesel 11,400 kW diesel Blue Lake and Jarvis Substation
On the following page a graph shows the daily peak loads experienced by the system
from 1 November 2006 until October 31 2007 which includes the additional fish
processor loads added in 2007.
We have shown normal hydro capacity in kW before and after the proposed Blue Lake
Third Turbine and Dam Raise. We have also shown the effect of a failed Generator at
Green Lake Hydro.
The capability to carry load is dependent on the lake reservoir elevations which are
lowest in May and June. A failure of a Green Lake unit in early summer with fish
processor load operating would require a great deal of diesel to make up the difference.
Sitka Electric Dept. Total Generation
Peak Daily Loads -kW
Daily Peaks 11/01/06 to 10/31/07
26,000 ~;-~--;-= ;--~~~ .. -~;--~-=."~= ~-•• T {;Lc~} ~. ccc+.~~:~ •••.• co J.~ o:c V .?~.-' t •• '.-r ." ••
:::::: __ -_-_-. ----k---l-----·-~~·--: =-1----0--0------¥---
~8,000 .'
-------. -----------1-------
. I
___ 1_ - - -a~e~ 8~u.: La~e :r~ ~~~ ~ ~a~ raise.
20,000 +-----1
16,000
14,000
Green Lake #1 Fails-
12,000 Existing System
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