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HomeMy WebLinkAbout2025.01.01 REF Round 17 Status Report (Final)REDUCING THE COST OF ENERGY IN ALASKA Renewable Energy Fund Round 17 Status Report Alaska Energy Authority — Renewable Energy Fund –Round XVII REDUCING THE COST OF ENERGY IN ALASKA SAFE, RELIABLE, & AFFORDABLE ENERGY SOLUTIONS Alaska State Legislature January 2025 REDUCING THE COST OF ENERGY IN ALASKA 2 SAFE, RELIABLE, & AFFORDABLE ENERGY SOLUTIONS Table of Contents REF Overview Page 3 REF Statutory Guidance Page 4 REF Evaluation Process Summary Page 5 REF Funding Limits Page 9 Proposed REF Capitalization for Round 17 (FY2026)Page 10 Recommended Applications Summary Page 11 Applications Forwarded for Legislature’s Decision on Funding Page 13 Partial Funding Recommendations Page 15 REDUCING THE COST OF ENERGY IN ALASKA Renewable Energy Fund (REF) Overview Established in 2008, the REF is a unique and robust competitive grant program, which provides critical financial assistance for statewide renewable energy projects. The REF’s sunset date provision was repealed with House Bill 62, signed into law by Governor Dunleavy on May 25, 2023. $327 million in REF appropriations by the State. 100+ operational projects, 53 in development, and 5 projects funded in FY25. The 33rd Alaska State Legislature appropriated $10.5 million for 5 projects recommended by AEA and approved by the REF Advisory Committee. The REF funds projects across all development phases, serving as a catalyst for the continued pursuit of integrating proven and nascent technologies within Alaska’s energy portfolio. 03 REDUCING THE COST OF ENERGY IN ALASKA REF Statutory Guidance (AS 42.45.045) ELIGIBLE PROJECTS MUST: ▪Be a new project not in operation in 2008, and -be a hydroelectric facility; -direct use of renewable energy resources; -a facility that generates electricity from fuel cells that use hydrogen from renewable energy sources or natural gas (subject to additional conditions); -or be a facility that generates electricity using renewable energy. -natural gas applications must also benefit a community that: o Has a population of 10,000 or less, and o does not have economically viable renewable energy resources it can develop. ELIGIBLE APPLICANTS INCLUDE: ▪electric utility holding a certificate of public convenience and necessity (CPCN); ▪independent power producer; ▪local government; ▪or, or other governmental utility, including a tribal council and housing authority. 04 REDUCING THE COST OF ENERGY IN ALASKA REF Evaluation Process: Stage 1 Eligibility and Completeness The REF evaluation process is comprised of four stages. Stage 1 is an evaluation of the applicant, project eligibility and, completeness of the application, as per 3 AAC 107.635. This portion of the evaluation process is conducted by AEA staff. •Applicant eligibility is defined as per AS 42.45.045 (l). •“electric utility holding a certificate of public convenience and necessity under AS 42.05, independent power producer, local government, or other governmental utility, including a tribal council and housing authority;” •Project eligibility is defined as per AS 42.45.045 (f)-(h) and is provided on the preceding page. •Project completeness: •An application is complete in that the information provided is sufficiently responsive to the RFA to allow AEA to consider the application in the next stage (Stage 2) of the evaluation. •The application must provide a detailed description of the phase(s) of project proposed. Applications that fail to meet the requirements of Stage 1 are rejected by the Authority. Each applicant whose application is rejected is notified of the Authority’s decision. 5 STAGE 1 CRITERIA PASS/FAIL Applicant eligibility, including formal authorization and ownership, site control, and operation PASS/FAIL Project Eligibility PASS/FAIL Complete application,including Phase description(s) PASS/FAIL REDUCING THE COST OF ENERGY IN ALASKA REF Evaluation Process: Stage 2 Technical and Economic Feasibility Stage 2 is an evaluation concerning technical and economic feasibility. This portion of the evaluation process is conducted by AEA staff, Alaska Department of Natural Resources, and contracted third-party economists. The following items are evaluated as part of the Stage 2 evaluation, as required per 3 AAC 107.645: •Project management, development, and operations; •Qualifications and experience of project management team, including on-going maintenance and operation; •Technical feasibility –including but not limited to sustainable current and future availability of renewable resource, site availability and suitability, technical and environmental risks, and reasonableness of proposed energy system; and, •Economic feasibility and benefits –including but not limited to project benefit-cost ratio, project financing plan, and other public benefits owing to the project. All Stage 2 criteria are weighted as follows as part of the evaluation process. Applications that score below 40 points in this stage are automatically rejected by the Authority, however, those projects scoring above 40 may also be rejected as under 3 AAC 107.645(b) has the Authority to reject applications that it determines to be not technically and economically feasible, or do not provide sufficient public benefit. 6 CRITERIA CRITERIA DESCRIPTION WEIGHT 1 Project management, development, and operation 25% 2 Qualifications and experience 20% 3 Technical feasibility 20% 4.a Economic benefit-cost ratio 25% 4.b Financing plan 5% 4.c Other public benefit 5% REDUCING THE COST OF ENERGY IN ALASKA REF Evaluation Process: Stage 3 Project Ranking Stage 3 is an evaluation concerning the ranking of eligible projects. This portion of the evaluation process is conducted by AEA staff in conjunction with solicitation from the Renewable Energy Fund Advisory Committee (REFAC) . The following items are evaluated as part of the stage three evaluation, as required per 3 AAC 107.655-660: •Cost of energy •Applicant matching funds •Project feasibility (levelized score from stage 2) •Project readiness •Public benefits (evaluated through stage 2 benefits) •Sustainability •Local Support •Regional Balance •Compliance All Stage 3 criteria are weighted as follows as part of the evaluation process. The Stage 3 scoring is used to determine the ranking score. 7 CRITERIA CRITERIA DESCRIPTION WEIGHT 1 Cost of Energy 30% 2 Matching Funds 15% 3 Project Feasibility (levelized score from Stage 2) 25% 4 Project Readiness 5% 5 Public Benefits 10% 6 Sustainability 10% 7 Local Support 5% 8 Regional Balance Pass/Fail 9 Compliance Pass/Fail REDUCING THE COST OF ENERGY IN ALASKA REF Evaluation Process: Stage 4 Regional Spreading Stage 4 is a final ranking of eligible projects, as required per 3 AAC 107.660, which gives “significant weight to providing a statewide balance of grant money, taking into consideration the amount of money available, number and types of projects within each reg ion, regional rank, and statewide rank.” This portion of the evaluation process is conducted by AEA staff in conjunction with sol icitation of advice from the Renewable Energy Fund Advisory Committee (REFAC). As statutorily required per AS 42.45.045 and set forth i n 3AAC 107.660, the authority is to solicit advice from the REFAC concerning making a final list / ranking of eligible projects. The following items are evaluated as part of the stage four evaluation, as required per 3 AAC 107.660: •Cost of energy burden = [HH cost of electric + HH heat cost] ÷ [HH income] 8 Cumulative through Round 16 Total Round 1-16 Funding Cost of Power Allocation Population Even Split Energy Region Grant Funding % Total Cost burden (HH cost/HH income) Allocation cost of energy basis Additional funding needed to reach 50% % of target allocation % Total Allocation per capita basis Allocation per region basis Aleutians $18,424,940 6%13.50%$28,394,207 ($4,227,837)65%1%$3,348,662 $27,422,307 Bering Straits $23,486,724 8%16.18%$34,017,155 ($6,478,146)69%1%$4,088,861 $27,422,307 Bristol Bay $17,590,323 6%15.99%$33,620,027 ($780,310)52%1%$2,868,848 $27,422,307 Copper River/Chugach $28,047,612 9%10.23%$21,512,838 ($17,291,193)130%1%$3,319,823 $27,422,307 Kodiak $16,659,519 6%6.96%$14,632,449 ($9,343,294)114%2%$5,311,382 $27,422,307 Lower Yukon-Kuskokwim $39,888,116 13%21.01%$44,170,624 ($17,802,804)90%4%$10,825,473 $27,422,307 North Slope $1,251,859 0%2.56%$5,388,828 $1,442,555 23%1%$4,062,948 $27,422,307 Northwest Arctic $32,841,133 11%16.94%$35,621,898 ($15,030,184)92%1%$3,149,297 $27,422,307 Railbelt $35,226,299 12%5.72%$12,036,080 ($29,208,260)293%77%$233,081,400 $27,422,307 Southeast $66,251,014 22%8.23%$17,303,821 ($57,599,103)383%10%$29,575,387 $27,422,307 Yukon-Koyukuk/Upper Tanana $20,941,945 7%26.13%$54,947,446 $6,531,777 38%1%$2,013,293 $27,422,307 Statewide $1,035,888 0%0.00% TOTAL $301,645,374 100%$301,645,374 100%$301,645,374 $301,645,374 REDUCING THE COST OF ENERGY IN ALASKA REF Funding Limits REF Round XVII Grant Funding Limits Phase Low Energy Cost Areas*High Energy Cost Areas** Total Project Grant Limit $2 Million $4 Million Phase I:Reconnaissance Phase II:Feasibility and Conceptual Design The per project total of Phase I and II is limited to 20% of anticipated construction cost (Phase IV), not to exceed $2 Million. Phase III: Final Design and Permitting 20% of anticipated construction cost (Phase IV), and counting against the total construction grant limit below. Phase IV:Construction and Commissioning $2 Million per project, including final design and permitting (Phase III) costs, above. $4 Million per project, including final design and permitting (Phase III) costs, above. Exceptions Biofuel projects Biofuel projects where the applicant does not intend to generate electricity or heat for sale to the public are limited to reconnaissance and feasibility phases only at the limits expressed above. Biofuel is a solid, liquid or gaseous fuel produced from biomass, excluding fossil fuels. Geothermal projects The per-project total of Phase I and II for geothermal projects is limited to 20% of anticipated construction costs (Phase IV), not to exceed $2 million /$4 million (low/high cost areas). Any amount above the usual $2 million cap spent on these two phases combined shall reduce the total Phase III and IV grant limit by the same amount, thereby keeping the same total grant dollar cap as all other projects. This exception recognizes the typically increased cost of the feasibility stage due to test well drilling. REF Round XVII funding limits are governed by the requested phase(s) in the application and the technology type applied. Low vs High Cost Energy Areas: ▪*Low Energy Cost Areas are defined as communities connected to the Railbelt electrical grid or with a residential retail electric rate of below $0.20 per kWh, before Power Cost Equalization (PCE) reimbursement is applied. For heat projects, low energy cost areas are communities with natural gas available as a heating fuel to at least 50% of residences, or availability expected by the time the proposed project is constructed. ▪**High Energy Cost Areas are defined as communities with a residential retail electric rate of $0.20 per kWh or higher, before PCE funding is applied. For heat projects, high energy cost areas are communities that do not have natural gas available as a heating fuel. 9 REDUCING THE COST OF ENERGY IN ALASKA Proposed REF Capitalization for FY2026 / Round XVII The State of Alaska FY2026 proposed capital budget allocates $6.3 million for REF Round 17 grant funding of recommended projects, fully funding the top 6 projects. The current list of 18 recommended projects yields a total grant request of $21,214,676. With the proposed REF budget of $6.3 million, there would be insufficient funding to cover all current Round 17 projects as recommended. An additional appropriation of $14.9 million would need to be made to fund all of the current Round 17 recommendations. The table to the right provides historical REF program funding from program inception through FY2025. In the FY2025 capital budget, $10.5 was approved in support of the top five projects as recommended in REF Round 16, resulting in REF appropriations in excess of $10 million for the past three fiscal years. 10 Legislative Appropriation Fiscal Year 100,001,000$ FY2008 25,000,000$ FY2009 25,000,000$ FY2010 36,620,231$ FY2011 25,870,659$ FY2012 25,000,000$ FY2013 22,843,900$ FY2014 11,512,659$ FY2015 -$ FY2016 -$ FY2017 (3,156,000)$ FY2018 - RPSU Reappropriation 11,000,000$ FY2019 -$ FY2020 -$ FY2021 4,750,973$ FY2022 15,000,000$ FY2023 17,052,000$ FY2024 10,521,836$ FY2025 327,017,258$ TOTAL (excl. operating appropriation) REDUCING THE COST OF ENERGY IN ALASKA There are 18 recommended applications, totaling a request of $21.2 million. Round XVII –Recommended Applications Summary 11 Applications by Energy Region No.of Applications REF Funds Requested Bering Straits 1 $ 4,000,000 Bristol Bay 3 $ 4,420,860 Lower Yukon-Kuskokwim 6 $ 3,226,092 Railbelt 5 $ 4,796,000 Southeast 3 $ 4,771,724 Total 18 $21,214,676 Applications by Technology No.of Applications REF Funds Requested Biomass 1 $1,223,000 Hydroelectric 7 $ 7,615,236 Solar 5 $ 7,938,634 Storage 3 $ 1,698,827 Wind 2 $ 2,738,979 Total 18 $21,214,676 REDUCING THE COST OF ENERGY IN ALASKA Round XVII Geographical Distribution of Recommended Applications 12 REDUCING THE COST OF ENERGY IN ALASKA Applications Forwarded to the Legislature for a Decision on Funding 13 *If appropriated by the Legislature and approved the Governor, this funding would become effective July 1, 2025 for inclusion in the Fiscal Year 2026 budget. Projects above orange line denote those currently funded in Fiscal Year 2026 Proposed Capital Budget. Please see related summary report for details concerning the evaluation and description of the individual applications. Application No.Applicant Project Title Phase Energy Region Election District Technology Community Grant Funds Requested Matching Funds Stage 3 Score Benefit / Cost Ratio HEC Region Rank State Rank Funding Level Rec. Funding Amount ($) 17006 City of Pelican, Pelican Utilities Pelican Hydro Relicensing Project, Restoration, Repair Final Design & Permitting, Construction Southeast 2-A Hydroelectric Pelican $ 650,474 $ 50,000 76 1.63 $6,374 1 1 Full Funding $ 650,474 17014 Naknek Electric Association, Inc. Naknek Solar PV on Cape Suwarof Construction Bristol Bay 37-S Solar Naknek $ 3,210,000 $ 900,000 74 0.57 $9,551 1 2 Partial Funding $ 3,137,848 17010 Goat Lake Hydro, Inc. Goat Lake Hydro Storage Expansion Study Reconnaissance Southeast 3-B Hydroelectric Skagway, Haines, Dyea, Klukwan $ 121,250 $ 52,250 71 0 $6,371 2 3 Full Funding $ 121,250 17002 Nuvista Light and Electric Cooperative Inc Nuvista Kwethluk Wind and Battery Project Completion Construction Lower Yukon- Kuskokwim 38-S Wind, Storage Kwethluk $ 738,979 $ - 71 0.67 $7,869 1 4 Full Funding w/ Special Provision $ 738,979 17005 Alaska Village Electric Cooperative, Inc. Quinhagak Battery Energy Storage System Project Construction Lower Yukon- Kuskokwim 38-S Storage Quinhagak $ 443,956 $ 707,625 70 0.88 $6,962 2 5 Full Funding $ 443,956 17012 City of Nenana Nenana Biomass District Heat System, Final Phase Construction Railbelt 36-R Biomass Nenana $ 1,223,000 $ 168,322 69 1.14 $6,864 1 6 Full Funding $ 1,223,000 17017 Puvurnaq Power Company Kongiganak 100 kW Solar Energy Project Final Design & Permitting, Construction Lower Yukon- Kuskokwim 38-S Solar Kongiganak $ 728,603 $ 674,330 69 0.6 $9,427 3 7 Partial Funding $ 720,453 17007 Alaska Renewables LLC Railbelt Wind Diversification Alaska Renewables Feasibility and Conceptual Design Railbelt Various Wind Various $ 2,000,000 $ 2,187,000 69 1.22 $5,458 2 8 Full Funding $ 2,000,000 17001 City of Homer Homer Energy Recovery Project Construction Railbelt 6-C Hydroelectric Homer $ 280,000 $ 90,000 68 0.01 $7,120 3 9 Full Funding $ 280,000 17018 Atmautluak Tribal Utilities Atmautluak ETS Installation, Integration and Commissioning Construction Lower Yukon- Kuskokwim 38-S Storage Atmautluak $ 286,227 $ 188,160 68 0.29 $8,538 4 10 Full Funding $ 286,227 17015 Southeast Alaska Power Agency (SEAPA) Southeast Alaska Grid Resiliency (SEAGR) Final Design & Permitting, Construction Southeast 1-A; 2-A Hydroelectric Petersburg, Ketchikan, Wrangell, Metlakatla $ 4,000,000 $18,592,510 68 0 $6,730 3 11 Full Funding $ 4,000,000 Round 17 Projects Summary REF Round 17 Recommended Funding REDUCING THE COST OF ENERGY IN ALASKA Applications Forwarded to the Legislature for a Decision on Funding 14 *If appropriated by the Legislature and approved the Governor, this funding would become effective July 1, 2025 for inclusion in the Fiscal Year 2026 budget. Projects above orange line denote those currently funded in Fiscal Year 2026 Proposed Capital Budget. Please see related summary report for details concerning the evaluation and description of the individual applications. Application No.Applicant Project Title Phase Energy Region Election District Technology Community Grant Funds Requested Matching Funds Stage 3 Score Benefit / Cost Ratio HEC Region Rank State Rank Funding Level Rec. Funding Amount ($) 17004 Alaska Village Electric Cooperative, Inc. Chevak Battery Energy Storage System Project Construction Lower Yukon- Kuskokwim 38-S Solar, Storage Chevak $ 968,644 $ 170,937 66 0.62 $6,902 5 12 Full Funding $ 968,644 17016 Pedro Bay Village Council Knutson Creek Hydro Project Construction Construction Bristol Bay 37-S Hydroelectric Pedro Bay $ 400,000 $ 7,200,000 65 0.08 $9,390 2 13 Full Funding w/ Special Provision $ 400,000 17011 Akiachak, Ltd Akiachak Native Community 200 kW Solar Energy Project Final Design & Permitting, Construction Lower Yukon- Kuskokwim 38-S Solar Akiachak $ 1,443,257 $ 2,265,809 64 0.33 $8,870 6 14 Partial Funding w/ Special Provision $ 67,833 17013 Nome Joint Utility System NJUS Solar Nome Banner Ridge Solar Farm Construction Bering Straits 39-T Solar, Storage Nome $ 4,000,000 $ 50,000 60 0.57 $9,139 1 15 Full Funding $ 4,000,000 17009 Matanuska Electric Association Hunter Creek Hydroelectric Feasibility Study Project Feasibility and Conceptual Design Railbelt Various Hydroelectric MEA service area $ 1,280,500 $ 384,500 58 0.67 $5,920 4 16 Full Funding $ 1,280,500 17008 City of Chignik Chignik Hydroelectric Power System Final Design & Permitting Bristol Bay 37-S Hydroelectric Chignik $ 883,012 $ 44,346 57 1.06 $7,701 3 17 Full Funding $ 883,012 17003 Utopian Power LLC Sterling Solar Project Final Design & Permitting, Construction Railbelt Various Solar Sterling $ 2,000,000 $ 2,000,000 37 0.7 $7,120 5 18 Partial Funding w/ Special Provision $ 12,500 Round 17 Projects Summary REF Round 17 Recommended Funding REDUCING THE COST OF ENERGY IN ALASKA Round XVII –Partial Funding Reasoning 15 App. #Project Requested Funding Recommended Funding Partial Funding Reasoning 17014 Naknek Solar PV on Cape Suwarof $3,210,000 $3,137,848 Partial Funding adjustment is owing to exclusion of funding for final design cost of $71,152 which is currently ongoing and already funded. Only costs incurred after July 1, 2025, and which are within the scope of the grant agreement are eligible for funding under the REF program.Revised funding recommendation: $3,137,848 17017 Kongiganak 100 kW Solar Energy $728,603 $720,453 Costs associated with the applicant's administration of the REF grant are not eligible uses of REF funds. The line item for "AEA Grant and NTP" for $8,150 is therefore removed from the funding recommendation, yielding a revised funding recommendation of $720,453. 17011 Akiachak Native Community 200 kW Solar Energy $1,443,257 $67,833 Funding for final design only in Round 17 is recommended prior to recommendation for funding the construction phase,which will better inform the additional solar capacity integration.AEA requested a copy of the USDA award, solar resource study, and updated HOMER model from the applicant. Applicant provided the USDA grant agreement, but neither the solar resource study, or the updated HOMER model. The applicant may re-apply in a future REF round for the construction phase once the final design is completed. In addition, funding for grant administration is not allowable under the REF program. The $8,150 for the line item entitled "AEA award and NTP" under the final design budget is removed from the funding recommendation, for a recommendation of $67,833 in Round 17. 17003 Sterling Solar Project $2,000,000 $12,500 Funding for final design and permitting recommended prior to recommendation for funding the construction phase. Many aspects of the project at this juncture are unclear and need to be revised. The applicant may re-apply in a future REF round for the construction phase once the final design is completed. AEA staff identified several issues with the application including:lack of detail on proposed system design, no letters of support included,not specific in stating required permits,lack of discussion of model results and no technical analysis of proposed system was provided. As part of the evaluation process and pursuant to 3 AAC 170.655(b), 4 applications, as provided below, have been recommended for partial funding. Partial funding recommendations were made in full consideration of project phases applied for, application scoring, project scope eligibility, and household cost of energy. REDUCING THE COST OF ENERGY IN ALASKA 16 SAFE, RELIABLE, & AFFORDABLE ENERGY SOLUTIONS ALASKA ENERGY AUTHORITY 813 West Northern Lights Blvd. Anchorage, Alaska 99503 Phone: (907) 771-3000 Fax: (907) 771-3044 Toll Free (Alaska Only) 888-300-8534