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Home My WebLink AboutClinton White REF_Applicant_ExpansionSTG Incorporated 11710 South Gambell Street Anchorage, AK 99515 www.stgincorporated.com Increasing the Value of Renewable Energy Fund Investments through Expanded Applicant Eligibility Relationship with REF ProgramSTG Incorporated 11710 South Gambell Street Anchorage, AK 99515 www.stgincorporated.com •STG fully supports and appreciates the State of Alaska’s commitment to Renewable Energy Programs, the Renewable Energy Fund (REF) in particular•STG has more experience with the program than any other contractor (36% of all REF projects in operation were constructed by STG)•STG has been involved with the REF program since its inception and is Alaska’s leading constructor of wind energy projects•Wind power represents the smallest and least profitable segment of STG’s business, but is an area that the company is passionate about•STG’s work with energy cost reduction/renewable energy projects protects the long term sustainability of rural Alaska •Significant capital investment has already been made in Rural Alaska infrastructure and more is needed. Renewable Energy projects offer protection to the substantial level of capital investments made across our state. Federal and State Capital Project Spending in Select Communities: (1990‐2008)STG Incorporated 11710 South Gambell Street Anchorage, AK 99515 www.stgincorporated.com Source: Alaska Division of Community and Regional Affairs0%10%20%30%40%50%60%70%80%90%100%Kasigluk Toksook Bay Selawik Hooper Bay SavoongaOther DevelopmentEducationTransportationHealth/SanitationOther Energy InfrastructureWind Generation Typical Village InfrastructureSTG Incorporated 11710 South Gambell Street Anchorage, AK 99515 www.stgincorporated.com Power PlantPower PlantSchoolSchoolHealth ClinicHealth ClinicCommunicationsCommunicationsWater & SewerWater & SewerTransportation/AirportTransportation/AirportPost OfficePost OfficeREQUIRE AFFORDABLE ENERGY TO BE SUSTAINABLE! Program BackgroundSTG Incorporated 11710 South Gambell Street Anchorage, AK 99515 www.stgincorporated.com 2008: HB 152 passes to create the Renewable Energy Grant fund. Authorizes $300 MM in grants over a five year period to be managed by AEA and overseen by REFAC. Grant applicants include local utilities, IPPs, and local governmental entities.2012: HB 250 passes to extend the Renewable Energy Grant fund for an additional ten years (2023). No significant programmatic changes included with legislation. Today: Since inception, a significant amount of capital has been committed to the program by the State of Alaska ($202.5 MM appropriated), but progress has been slow. Program performance could be improved by creating a new “Investor Option” applicant class that would increase private investments, reduce program risks to AEA/State of Alaska, lower total project costs, and bring projects online sooner. Opportunities for Performance ImprovementSTG Incorporated 11710 South Gambell Street Anchorage, AK 99515 www.stgincorporated.com •Since the program’s inception, the REF has become increasingly difficult for grantees to gain access to funding through grant milestone process. This negatively impacts both grantee and the private firms (contractors and suppliers) involved with these projects through delayed grant disbursements, unreasonable reporting requirements and resource drains•Reimbursement process is not a good match for the practices followed to actually construct these projects•Total grantee match funds and other financial contributions outside of the program ($123 MM) have exceeded actual cash disbursements through the REF program ($115 MM) for awarded projects•AEA is actively implementing numerous REF projects internally which limits private competition, reduces transparency with the program, increases costs and generally prevents opportunities for innovation in solving Alaska’s energy challengesThese programmatic challenges could be minimized, and outside funding opportunities further leveraged, through the creation of a new applicant class with the REF. Overview of New Applicant ClassSTG Incorporated 11710 South Gambell Street Anchorage, AK 99515 www.stgincorporated.com •Application Submitted•Project Evaluated and Ranked•Project Recommended and Funded•Project Executed•Project Costs Reimbursed based on Milestones•Owner Reports Production•Application Submitted•Project Evaluated and Ranked•Project Recommended and Funded•Awarded Funds Held in Trust•Project Executed•Project Reports Production•Funds Released to Purchase Project after Flip PeriodUtilities, Govt. Entities, IPPsUtilities, Govt. Entities, IPPs, Investor OptionCurrent REF Process and Applicant EligibilityExpandedREF Process and Applicant Eligibility Investor Option Process:Pre‐ConstructionSTG Incorporated 11710 South Gambell Street Anchorage, AK 99515 www.stgincorporated.com •Determine project design•Establish sales agreement for wind generated energy supplies during pre‐flip period•Determine return requirements, estimate costs, production and project cash flows•Establish sales agreement for facility at flip point•Organize grant application•Application evaluated consistently with established procedures (Cost/Benefit and Fuel Savings)•If awarded, money is placed in guaranteed trust to provide assurances for investor•Grant agreement issued to stipulate design and production requirements to receive awarded funds at a pre‐determined dateUTILITYINVESTOR Investor Option Process:Construction and OperationSTG Incorporated 11710 South Gambell Street Anchorage, AK 99515 www.stgincorporated.com Investor Option Process:Ownership FlipSTG Incorporated 11710 South Gambell Street Anchorage, AK 99515 www.stgincorporated.com Did the project meet design, availability, and/or production targets? Stakeholder Benefits•Rural Communities–Projects brought on line sooner–Increased supply of renewable energy supplies across rural Alaska–Larger number of companies and individuals working to develop Alaska energy solutions•State of Alaska–Public/Private partnership created which will generate expanded capital to fund new energy projects–Project risks transferred to investors which will provide greater assurances of appropriately designed and maintained facilities–Faster progress towards AEA’s mission of “Reducing the Cost of Energy in Alaska”–Generation capacity added at reduced cost per installed kW–Greater contribution of non‐Susitna energy projects towards 50% renewable targets–Reduction in PCE program costs as projects are brought on line•Project Developers/Financers–Ability to capitalize on available federal tax credits and depreciation benefits to drive down costs–New investment options for Alaska Native Corporations searching for opportunities to support shareholders through local energy cost reduction projects–Reduction of bottlenecks associated with public funding–Economies of scale could be realized to further drive down costsSTG Incorporated 11710 South Gambell Street Anchorage, AK 99515 www.stgincorporated.com Requested Support•Feedback with any changes that could be considered to better support stakeholders or increase value for the State of Alaska•Direction in working to make formal changes in the REF program to have ideas further considered through:•Legislative Action•Statutory Action•Administrative Action•Continued support of Renewable Energy Programs and ProjectsSTG Incorporated 11710 South Gambell Street Anchorage, AK 99515 www.stgincorporated.com Clinton WhiteBusiness Development DirectorSTG Incorporatedclinton@stgincorporated.com(907) 644‐4664STG Incorporated 11710 South Gambell Street Anchorage, AK 99515 www.stgincorporated.com