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HomeMy WebLinkAboutJune 6, 2011 DRAFT REFAC Meeting Minutes REFAC Draft Minutes Summary (VER3(KST)peter edits.doc Renewable Energy Fund Advisory Committee Meeting June 6, 2011 Page 1 of 5 Renewable Energy Fund Advisory Committee Meeting June 6, 2011 – AEA Boardroom 1:00 pm to 4:00 pm DRAFT MINUTES 1.Call to Order The Renewable Energy Fund Advisory Committee (REFAC) convened at 1:10 p.m. Chairman Vince Beltrami presided over the meeting. 2. Roll Call: Committee Members AEA Staff Other Participants Chair Vince Beltrami Sara Fisher-Goad Geoff Genzano, REAP Jim Posey Peter Crimp Jodi Fondy, Denali Commission Chris Rose Butch White Thomas Deerfield, Dawson Energy Inc. Jodi Mitchell Douglas Ott Kaci Schroeder-Hotch, Rep. Thomas' Office Brad Reeve Devany Plentovich Chantel Bennett, Denali Commission Representative Paul Seaton (Phone) Mike Nave, Dept. of Law Senator Lyman Hoffman (Juneau) James Strandberg Wyn Menefee Rich Stromberg Emily Binnian Shawn Calfa Audrey Alstrom Amber Converse David Lockard Shauna Howell May Clark Karin St. Clair 3. Public Comments Thomas Deerfield – Dawson Energy, Inc., had two suggestions to improve the REFAC application process: 1) Consider alternate deadline for Round V and subsequent rounds, as August-September is very busy for Alaskans; 2) the method of incorporating ideas be made replicable for many villages, i.e. Garn in box, as there could be many potential applicants in rural Alaska. Mr. White said we have tried to move the deadline from July 1 to the end of August. He introduced Shawn Calfa, AEA’s new Grants Assistant. 4. Agenda Comments Mr. Reeve suggested that some grantees and construction people should be invited to future meetings to discuss the process to help us streamline the process. Mr. Rose suggested a potential addition to Agenda item 8 might be how we could strategically grant projects, and also discuss how data requirements work long-term. Ms. Fisher-Goad suggested that strategic granting could be discussed under regional planning process, agenda item 7. She said she supports the suggestion that grantees attend a meeting and speak to REFAC about their program experiences. She also said she would also sit down and talk with the grantees about their concerns about the program administration if they didn’t want to wait for a formal meeting. REFAC Draft Minutes Summary (VER3(KST)peter edits.doc Renewable Energy Fund Advisory Committee Meeting June 6, 2011 Page 2 of 5 5. Approval of Meeting Minutes – March 1, 2011 MOTION: Ms. Mitchell moved to approve the minutes from the March 1, 2011 Renewable Energy Fund Advisory Committee meeting. Seconded by Mr. Rose. The minutes were unanimously approved. Chair Beltrami thanked staff for a commendable synopsis of the minutes. 6. RE Fund Status Update Mr. White said reallocation has occurred and we have $4.1 M designated and expect $1.9 M soon that has already been accounted for in the capital budget. The REF is capitalized at about $30 M and over $36 M in projects is allocated. 7. Regional Planning Progress Ms. Fisher-Goad said that the capital budget process as requested by the Governor has been well received for the past two years and would be surprised if it was vetoed; however, we have additional funds to continue the regional planning process. The Railbelt project was completed last year and Mr. Strandberg is now heading up the Southeast Regional Integrated Resource Plan (SEIRP). We started working with Alaska Center for Energy and Power and Denali Commission to coordinate planning in the Calista and Tanana Chiefs regions. Funding is available and we want to start incorporating the regional planning process into development projects. Strategically, it is important to start working through projects that are developed through a local planning process. AEA would offer technical assistance to facilitate the planning process and provide feedback to communities. Mr. Reeve said that NANA regional energy plan needs to be looked at further to find ways to make it easier for them to consolidate projects. The villages need the expertise to manage the utility themselves. Ms. Fisher-Goad said we are also emphasizing community relationships in our RPSU program, making our RPSU project managers involved in Round V evaluations to assess deficiencies in RPSU system, and to make sure a community is sustainable and that their diesel system is capable for integrating wind projects. Mr. Crimp said the St. George project is not being canceled, but we are keeping the dollars for the wind turbines. The approach we are taking for the wind projects is that solid diesel systems and controls are put in first. Ms. Fisher-Goad said Mr. Harper’s replacement, Sandra Moller, will be heading up the funding effort for other locations. AEA can better update the REFAC with our work plan after July (when FY12 funding is known). We have received requests to help with technical assistance, but realize planning is needed. Mr. Crimp said Mr. Strandberg is heading up the Southeast Integrated Resource Plan (SEIRP) in partnership with the Southeast Conference. In other regions, however, AEA will be significantly involved in the planning process, but will not actually manage it. Mr. Menefee asked how AEA’s planning process incorporates the ideas of other agencies, as there are land use planning issues to consider. Mr. Crimp said he assumed so, and perhaps DNR should plan a more formal role in the process. Chair Beltrami said the Denali Commission approved $300,000 for technical assistance. Mr. Rose said the plans should all be the same with the same goals and uniform structure. Mr. Crimp added that AEA will have a significant role in reviewing regional plans and processes such that plans prepared by a regional entity are considered valid. 8. Discussion of potential REF program modifications 8A. Project consistency with regional plan and EE policy Mr. Rose suggested we might provide incentives for regions that meet their EE goals first, based on a per capita advancement, i.e. the region that makes the most EE advances in a year would receive more money. They will need to link generation and efficiency with EE as the first step. We need to make sure they are implementing energy efficiency. The same standards would apply to the Railbelt. Mr. Posey said he would prefer the Legislature come up with a reward system to not interfere with or add to our process. Mr. Rose said if we had regional planning the legislature might decide that they want to link REF to the regions with a separate pot of money to benefit those that do the best. Mr. Posey said REFAC Draft Minutes Summary (VER3(KST)peter edits.doc Renewable Energy Fund Advisory Committee Meeting June 6, 2011 Page 3 of 5 this is consistent with his conversation with Senator Hoffman regarding the concept of trying to use the Cold Climate Housing Research Center concept and getting some of those built in every community. If it’s a separate pot of money and doesn’t affect our process of scoring then he agrees with the concept. Mr. Rose said we are talking about potential program modifications so we can think them over and share our ideas with the legislature. Ms. Fisher-Goad said she thought Round V would be the last one under the current law. Senator Hoffman commented that Round V might not be the last one because we haven’t yet reached the $250 M allocation. We previously noted that we saved in excess of $2 billion this year surplus with the price of oil and we need to show adequate documentation on the success of the funded projects. There is going to be a renewed interest in what we as a State are going to do regarding energy costs and the legislature may look at the REFAC for recommendations. A short discussion followed regarding the termination dates for Round V. Ms. Fisher-Goad pointed out that this is a grant recommendation program and there are a variety of things that we could do with respect to having a similar RFA for solicitation for a program, and we could start talking about what this program could look like over the next five years at the next session. 8B. Changing Funding Level Caps on Grants Mr. Crimp said we will discuss details on changing the level of caps. Cutoffs on benefit to cost ratios for the upcoming session would need input from the REFAC. Ms. Fisher-Goad said the Garn boilers and heat recovery are two of the programs eligible for renewable energy and AEA managed projects should be considered. There’s an option through the RFA process for us to manage some of the projects on behalf of the grantee similar to the Denali Commission model. We could provide a single grant to a number of communities through one recommendation. Mr. Crimp said that the AEA biomass program has allocated approximately $300,000 to move projects forward for design and construction. Mr. Rose said REFAC needs to provide AEA guidance, as caps are hurting rural projects. Mr. Posey said he supported removing the caps and that we spend a lot of money in this State on energy and if we can impact that by 20-30% through this program, then we should be doing it. Mr. Reeve said he agreed with taking the caps off, but was concerned that the funds may not be disbursed fairly. Mr. Rose said taking the caps off would not limit the advisory committee or AEA from granting less than requested and stated the legislature needs to fund the Power Project Loan Fund (PPF) and AEA needs to support this legislation. Mr. Posey pointed out that he supported separate appropriations done outside our process for projects that we had partially funded that run up against the caps, that were vetted through the REF process. He said he has heard projects that get money from the State should go through a process like REF – a feather in our cap, that shows how well we have done in the views of the legislature and administration. Senator Hoffman said he supports appropriations for energy projects that reduce energy costs for all Alaskans, but how can we fairly appropriate funds to all. We should expand our expectations and request more funding in the future. Ms. Fisher-Goad said we see very little Railbelt use of the PPF, nor will we under its current statutory framework. The PPF is an important funding source, but it is not a Railbelt funding source. Mr. Posey said he supported Senator Hoffman $500 million to shoot for as the 80/20 rule setup by the legislature, as it has worked so far. Senator Hoffman said he thought the legislature will continue funding energy projects, but funding needs to be distributed fairly. Mr. Rose said it would help to know how much each region needs as demand is huge and we are trying to do a lot with a little. It would make a lot more sense if all of the projects were going through one funnel. Regarding allocation of funding to address the high cost of heating in rural Alaska, $100 million was suggested as a REF target. Mr. Crimp said we don’t have enough heating projects that are ready to address that $100 M, but it could be a long-term goal. Mr. Rose asked if the REFAC was going to ask AEA to look at requesting $200 M from the legislature for Round V. Mr. Posey said we should be realistic and ask for $80 M for Round V, and $80 M for Round VI and $100 M for Round VII, etc., and keep creeping it up and pushing the envelope for the program. Mr. Crimp said he would be surprised if we could fund $100 M worth of projects in Round V given current caps. Mr. Rose said we need emphasize heating projects in the Request for Applications. Mr. Reeve said affordability of water and sewer systems in general are other village concerns. We need to look at uniformity and ask the right questions when we look at the whole picture. Mr. Rose agreed we should try to mandate or offer incentives to get the job done. Mr. Strandberg pointed out that creating a regional plan is a capital improvement plan. For the SEIRP we hope to define how much capital is needed for heating projects, to address an emerging situation where we are seeing resistance to heating connections in many of the hydro communities. This plan has load forecasting for the electric utilities as a key element REFAC Draft Minutes Summary (VER3(KST)peter edits.doc Renewable Energy Fund Advisory Committee Meeting June 6, 2011 Page 4 of 5 and the draft report is due out in November. We hope to come up with a capital plan for a reasonable definition of where each of the regions need to go with their capital. The IRP considers transportation, heating and electricity in largely equal parts. We are partnering with the Southeast Conference and Sealaska Corporation on initiating Biomass projects. The IRP is an ordered list of capital projects and has a list of proposed transmission projects largely supported by the IRP. Mr. Rose said if there is not going to be a mandate to follow for regional planning, then we should create other incentives to make it happen. Ms. Fisher-Goad said when you start talking about mandating entities to follow an IRP, it’s difficult because part of it needs to be updated regularly, but there are also transmission projects in alignment with the IRP. For instance, a project important to the Railbelt is the Cook Inlet Gas System which isn’t in the IRP, but is an important project to develop. The Seward Project wasn’t part of the IRP because it was smaller, but was an important stability issue for the utility. The mandate sounds good if there is a desire for the State to help fund regional planning. That’s where we are looking for consistency. Mr. Rose said efficiency should be a huge part of planning. Mr. Crimp suggested doubling the cap and anything above the cap needs to be matched 50%. But Senator Hoffman noted that the problem is that some areas of the State cannot match. Ms. Fisher-Goad said we are not sure why we couldn’t have different match requirements. Mr. Posey pointed out that match was not previously required for rural projects. Mr. White agreed that they were not required, but that would leave 20 points on the table at the outset in scoring. Rural areas are naturally ahead because of the cost of energy and by statute it must be a significant criterion. 8C. Increasing Scoring Weight on Match and 8D. B/C Ratio Cutoffs Mr. Rose said he didn’t agree to require matches, but maybe we could increase the significance of a match in the scoring system. If we had regional plans it would be a lot easier as the plan would set allocation priorities for a region based on their priorities. Mr. Crimp suggested that we should stick with what we have for match and double the caps at this point. We should question if the project is economic or not. The REFAC intention is to make good projects better, supporting projects that are economic by their nature versus subsidizing marginal projects. Mr. Reeve said there are other risks involved in communities these days, such as how long will a community exist. Mr. Crimp said that AEA and ISER assess economics using the entire project cost—not the subsidized cost. Mr. Reeve questioned what the cost-benefit with the grant and what is the cost-benefit without the grant. We need to go beyond the normal cost benefit analysis to look at what risk there is to a community to not fund a project. Our thinking needs to be more open. Mr. Rose said if we do the cost benefit analysis with the amount of money that they would get in the grant using the cap, it takes into consideration some of the indirect benefits and risks to the community so he would prefer the analysis is done so once the money is disbursed the benefit is realized. He noted that life cycle assessment depends on assumptions about future fuel prices using energy information agency data. Mr. Crimp said that during review, however, we need to know where to draw the line on a project in the Stage 2 technical and economic review. He suggested delineating a minimum score that takes into account capability of the proponent, the resource availability, technical feasibility, and economics. Mr. White agreed that having a minimum score would allow us to fund better projects. Mr. Crimp said he would send REFAC members a spreadsheet of Round 4 stage 2 scores to help us delineate where that minimum might be drawn. The draft RFA will be out for committee comments on June 20 back and hopefully published by July 1. 8E. Technology Readiness: RE Fund vs. Emerging Energy Tech Fund Mr. Rose commented that the Emerging Energy Technology Fund (EETF) was funded at $2.4 M with a Denali Commission match for a total of $4.8 M. He asked what the linkage was between the EETF and REF, suggesting a joint meeting of the committees because he felt some (tidal) projects have already fallen through the cracks. Before the emergence of the EETF, the REF has funded tidal projects. Mr. Crimp said Brian Hirsch chairs the EETF Advisory Committee and they have established clear technology readiness levels that show what phase of readiness a project is in. Barbara Triplett, EETF Program Manager, is working with ACEP and others to look at a technology transfer chain. 9. Data requirements Mr. Crimp said AEA requires five years of data reporting for their projects. We will require additional data for wind diesel systems, specifically SCADA (Supervisory Control & Data Acquisition) data. Performance data was included in our legislative status report in terms of fuel savings, etc. Mr. Rose questioned whether the five-year requirement was long REFAC Draft Minutes Summary (VER3(KST)peter edits.doc Renewable Energy Fund Advisory Committee Meeting June 6, 2011 Page 5 of 5 enough to gather enough data to provide the legislature; we may need 10 or 15 years’ worth. Mr. Reeve said if you are looking for fuel displacement information we may want short-term information while long-term information can be provided through the Alaska statistical reports. Mr. Menefee cautioned that there is confidentiality clause of engineering data on state land. DNR must grant confidentiality if it’s requested. 10. Progress on Program Evaluation Mr. Crimp said he has been in contact with Clean Energy States Alliance. AEA will be publishing an RFP for a third-party program evaluation based on the USDOE Office of Energy Efficiency & Renewable Energy’s five different types of program evaluations: 1. Needs & Market Assessment Evaluations. 2. Process Evaluations. 3. Outcome Evaluations. 4. Impact Evaluations and 5. Cost-Benefit Evaluations. 11. Future of the REF Program Ms. Fisher-Goad said it’s frustrating not having the money before hand in this grant recommendation program. Since it goes through a legislative process, we have to wait until the budget is signed, causing us to lose a construction season. The legislature has accepted our recommendation list completely in the past. Perhaps there’s enough faith in the process that we could forward-fund it to issue grants after the evaluation period is completed and catch a construction season. In the EETF money is already available. Once AEA completes our review processes and the regulations are in place, we can evaluate projects and can start issuing grants. Unlike the REF there is no recommendation process. Review and grants can be done at different times of the year. Right now it’s an annual procedure. Mr. Rose agreed and said we should also think about getting ready to reauthorize the program. Mr. Nave pointed out repeal of the statute is June 30, 2013 if Round VI occurs in October 2012. Senator Hoffman agreed that we should request reauthorization next year, and will look into any helpful suggestions to begin. Ms. Fisher-Goad said we need a process to wind down existing projects if we don’t get reauthorized. 12. Next Meeting Date The next meeting date will be November 9, 2011. 13. Adjournment The meeting was adjourned at 4:00 p.m.