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HomeMy WebLinkAboutREF R7 Changes Matrix 4.4.131 Alaska Energy Authority Recommended Changes to Renewable Energy Fund Round 7 Request for Applications April 4, 2013 REFAC Meeting # Recommended Change Reason/Problem Solved Notes 1 Heat RFA: Issue a separate RFA for heat projects. Set a target allocation of 30-40% (or $10M-$15M) of funding for heat projects. The application and scoring will be specific to heat projects. AEA will provide two recommendations lists to the legislature. Heating projects are different from electrical projects and should compete separately for funding. Heating represents 70-80% of non- transportation energy use in Alaska, yet represent only 8 percent of funding in Round 5, 10% in Round 6 if funded at $25M level. The RFA and scoring will be substantially the same, but adjustments can be made to better match the application type. Heat would include any project that produces heat as the primary energy output (biomass, heat recovery, geothermal for direct heat use, etc.). Two separate recommendation lists would be provided to the legislature, one for heat projects, one for all other projects. 2 Funding Limits: Better define project funding limits by phase. To provide more clarity to grant applicants. See note 1 below for proposed wording. 3 Funding Limits: Modify the list of locations with a $4M versus $8M construction funding limit. As cost of energy changes in parts of the state, the higher funding limits for higher cost areas should change as well. Heat projects should be based on heat costs. See note 1. For heat RFA, $8M limit for communities without natural gas for heat, $4M for those with natural gas. For electrical RFA, $8M limit for communities with higher than average electrical costs, $4M limit for communities with lower than average electrical costs. AEA will produce a community list with the RFA. 4 Geothermal Funding: Adjust funding limits on feasibility studies for geothermal projects. Unlike most resources where feasibility studies are relatively inexpensive as compared to final construction, the feasibility phase of geothermal projects typically involves drilling exploration wells to better understand the geology and hydrology. See note 1. Staff recommends allowing an additional $2M for the combined maximum expenditure for the reconnaissance and feasibility studies. The limit would still be 20% of anticipated construction cost, with a maximum of $4M. Any funding used over the typical $2M maximum would be deducted from the maximum funding available from the ensuing final design and construction phases so the maximum grant allowance remains the same for geothermal as other projects. 5 Heat Cost of Energy: When scoring heat projects for cost of energy, use the cost of heating fuels. Previously used cost of electricity only. Rate heat projects based on heat costs. The cost of energy is the single largest weighted factor in the Stage 3 review. Heat projects should be scored based on the cost of heating fuels instead of the cost of electricity, as is already performed in the economic analysis. 6 Biomass Matching Funds: Allow points for biomass projects that harvest the first year’s supply of biomass during the design phases. Encourage communities to harvest and season the first year’s wood fuel supply ahead of time by giving additional points in the match scoring. 2 # Recommended Change Reason/Problem Solved Notes 7 Heat District: In RFA, address whether heat districts are qualified to apply. Interested applicants have requested clarification regarding whether heating districts would be allowed to apply. Additional work needed to check that this change is within statutory and regulatory parameters. The applicant would have to demonstrate that they meet certain criteria, such as land access, energy sales agreements, technical and economic feasibility, etc. 8 Efficiency Requirement: Require that heat projects are applied to energy efficient buildings only. RE projects should not waste the energy generated. Applicant would prove efficiency either through evidence of low energy use intensity (kBTU/square foot/year) or evidence of a recent energy audit and implemented measures. 9 Data Collection: Better define operational data required post- construction. Some projects are not reporting or able to report the data needed for precise measurement of impact, including house energy and accurate O&M costs. Grant agreement will now include project-specific data required to be reported for five years after startup. Possibly offer “black box” data logging and uploading. 10 Non-Public Benefits: Better define how AEA will score the economic and public value of electrical sales to non- public markets, such as saw mills, cruise ships, mines, etc. Clarify and formalize the approach to be clearer with applicants and to gather the appropriate information for the economic evaluation. The application will request additional information from applicants with significant planned industrial energy sales so the economic value of the project can be better understood and calculated. The fund’s purpose is to provide a public benefit, therefore only direct and indirect (to the extent known) public benefits will count toward the economic score. Other benefits are captured in separate scoring criteria. 11 Transmission and Distribution: Better define eligible transmission and distribution projects. Provide greater clarity to applicants. 12 Design Review: Add language to the RFP requesting wind design and final design documents 30 days prior to application deadline. Receiving design reviews early allows time for adjustments and discussion with AEA program managers and time for a thorough review prior to scoring. The applications are now due a month later than in previous years, but the designs would maintain approximately the same due date as in previous years. 13 Matching Funds: Simplify the scoring of matching funds. Current system is overly complex. Simplify to score on percentage basis mostly, with some weight for type of match (previous non-state investment in project, state grant, federal grant, private investment, in ascending order of preference). 14 Scoring Local Support: Improve the method of measuring local support. The current system of counting letters of support may not correlate closely to the actual level of local support. New measurement method in discussion. 3 Note 1 Grant Funding Project Limits Table used in Round 6: Below is the revised table: Grant Limits by Location Phase Locations with natural gas (heat), or cost of electricity below state average, see list (electrical) Locations without natural gas (heat), or cost of energy above state average, see list (electrical) Phase I, Reconnaissance The per-project total of Phase I and II is limited to 20% of anticipated construction cost (Phase IV), not to exceed $2M. Phase II, Feasibility and Design 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 $4M per project, including final design and permitting (Phase III) costs, above. $8M per project, including final design and permitting (Phase III) costs, above. Exceptions 4 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. Geothermal projects The per-project total of Phase I and II for geothermal projects is limited to 20% of anticipated construction cost (Phase IV), not to exceed $4M. Any amount above the usual $2M spent on these two phases combined shall reduce the total Phase III and Phase IV grant limit by the same amount, thereby keeping the same total dollar cap as all other projects. This exception recognizes the typically increased cost of the feasibility stage due to test well drilling.