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Home My WebLink AboutEnergy Project Barrier AnalysisAlaska Rural Energy Project Barrier Analysis Goal: Understand the barriers to successful project completion at each developmental stage of energy projects. While the REF is a grant funded program, the aim is to use these results as a first approximation of barriers for non-grant financed projects. Rural Power System Upgrades will also be used for similar reasons. Grant financed projects will be taken as the best case scenario for project development where the barriers for completion will be at the lowest. This will help supplement the Barriers to Private Energy Investment study headed by the Alaska Center for Energy and Power under AEA’s Alaska Affordable Energy Strategy program. Method: Use the Renewable Energy Fund application scores and project outcomes to develop a qualitative method to describe project barriers and a quantitative estimate of the prevalence of those barriers. Proposals will be organized by technology type (hydro, wind, solar, geothermal, biomass, etc.) and project development stage (reconnaissance, feasibility, conceptual design, final design/permitting, construction). Description of Datasets 1. REF a. 9 rounds b. 2008-2016 c. RE projects d. 852 applications e. 250ish funded projects, some with multiple grants f. Make to construction: g. Operational projects: 2. Scoring process a. Stage 1 b. Stage 2 i. Numerical values ii. B/C 1. ISER, fuel price projections 2. Contracted economists 3. No/little sensitivity analysis (stress testing) iii. DGGS, DNR, Forestry iv. Summary notes c. Stage 3 3. Challenges interpreting data a. Multiple people b. Some changes in philosophy c. Learning curve Project as a Whole—Not Broken out by Project Phase Economic Viability 1. The application scores will be analyzed for: a. Cost effectiveness: Unlike the REF, non-grant financed projects must be cost-effective. The projects with a B/C<1 will be deemed as not cost effective. We will not second guess the analysis done at the time by rerunning the economics using current fuel price forecasts. Some amount of sensitivity analysis will be done to see how close to 1 the B/C ratios are. Figure 1 Applicants rosier picture of project. AEA generally has had optimistic modeling and scenarios. Economic assumptions changed by year, difficult to directly compare from one year to next—but no purpose in using hindsight to change base assumption at time. 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% <0.4 0.5 0.6 0.7 0.8 0.9 1 1.1 1.2 1.3 1.4 1.5 >1.5Axis TitleDistribution of REF Applications with Benefit-Cost ratios Rounds 0-9 AEA Applicants Uneconomic 42% Marginal 15% Economic 43% Figure 2 Plurality of project applications not economic. Even construction. Optimistic analysis—grant funds make sure there are project. Haven’t done sensitivity analysis, not sure what conditions lead to marginal projects. At B/C=1 the benefits just equal the costs. A bit above that, returns are not great, can be highly dependent on assumptions. 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% less than 1 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 greater than 1.9Axis TitleDistribution of applications by project phase with benefit-cost ratios within a certain range Recon Feasibility Design Construction Ability to Provide Match Figure 3 Less match, more likely to not continue (McMahon thesis). Plenty of projects provide sufficient match for loans. At various stages, very difficult to tell if they could provide for all project stages. Gamesmanship based on the evaluation process, how much match will improve chances of receiving grant versus the actual outlay if grant is received. Also doesn’t say much about creditworthiness of the entity—could they get a loan? 0% 10% 20% 30% 40% 50% 60% <10%<20%<30%<40%<50%<60%<70%<80%<90%<100%>100%Percent of ApplicationsPercent of Total Project Cost Provided as Cash Match Distribution of Cash Match For REF Applications Technical Review Figure 4 • PM • Qualifications • Technical Feasibility • Financing Plan 0% 10% 20% 30% 40% 50% 60% 6 8 10 12 14 16 18 20Axis TitleTechnical Review Scores Rounds 1-9 Percent of Applications PM Qualifications Tech Feas Financing Plan Figure 5 • Readiness: what had been done to date…. • Local Support: Not particularly useful • Sustainability: not useful 0% 5% 10% 15% 20% 25% 30% 35% 40% 1 2 3 4 5Percent of ApplicationsScore Distribution of Stage 3 Scores Project Readiness Local Support Sustainability Figure 6 Notes for why proposals are rejected. These also include funded projects. Obviously still risks with any project—benefits and ways deal with risks. Number of projects analyzed by type. Funded Projects Project Type Number of Funded Projects Biomass 33 Geothermal 9 Heat Pump 4 Heat Recovery 33 Hydro 55 Hydrokinetic 3 Other 5 Solar 6 Transmission 8 Wind 64 0%5%10%15%20%25%30%35%40%45% Pre-commercial tech Site Control Not Economic Incomplete Resource Assessment Poor Project Scoping Not Technically Feasible Lack of Business Plan Environmental Permitting Lack of Experience/Expertise No Agreements with Utilities Insufficient Resource Better Option(s) for communtiy Adverse Impact on Current System Incomplete Prior Phases Poor Cost Estimates Other Multiple Barriers Identified No Barriers Identified Percent of Proposed projects with identified risks (based on Round 1-9 of Renewable Energy Fund Stage 2 Comments) Project Outcomes 0%20%40%60%80%100% Biomass Geothermal HeatBiofuel HeatHydro HeatPump HeatRecovery HeatWind Hydro Hydrokinetic Other Solar Transmission Transmission, Other Wind Total Chart Title Number Operational Number Continuing to Operation Project will not continue to operation 0%10%20%30%40%50%60%70%80%90%100% Recon Feasibility Design Construction Percent of Operational, Expected or Not Expected to Reach Operational by Project Phase Operational Continuing to Operation Not Continuing to Operation Expect to Continue to Construction 0%10%20%30%40% Continuing to Operation? (1=Yes/ 0=No) Purely Feasibility Study No agreement with Utility Insufficient Resource Unspecified technical issues Other Upgrades needed Land Use Restrictions Insufficient demand Poor Design Challenged Economics Uncertain--low community priority Insufficient funding Went over budget Different option chosen/Competing Project No Community Champion Other Reasons Reasons why project is not expected to continue to operation Operations Figure 7 0%5%10%15%20%25% Biomass Geothermal HeatBiofuel HeatHydro HeatPump HeatRecovery HeatWind Hydro Hydrokinetic Other Solar Transmission Transmission, Other Wind Percent of Operational REF Projects by Type 0%100%200%300%400%500%600% Gulkana Wood Falls Creek Coffman Cove--Naukati Intertie Haines Wood Banner Peak Transmission Unalakleet Wind McGrath Heat Anchorage Landfill Gas Toksook Farm Expansion High Battery Pillar Mtn Wind Kwigillingok Wind Eva Creek Wind Juneau GSHP Thorne Bay Wood Akutan Hydro Tuntutuliak Wind Shaktoolik Excess Wind Sand Point Excess Wind Saint Paul Fuel City Biomass Snettisham Line Pelican Hydroelectric Chevak heat recovery Biomass Point Lay HR Reported vs. Expected Performance of REF projects 2014 2013 2012 2011 2010 2009 Figure 8 1. Key informant interviews with AVEC & TDX a. What barriers have been encountered, how have they been mitigated 2. Key informant interviews with RPSU personnel a. What barriers have been encountered, how have they been mitigated Walk through Process with a Banker Outcome: Hopefully an analysis of the present barriers will be able to provide insight into the risks of renewable energy development in Alaska, with an eye to how the state can appropriately mitigate those risks. 0%5%10%15%20%25%30%35% Performing as expected per the application? (1=No/ 0=Yes) Lower than expected load No business plan Maintenance issues Final Project Smaller than Initially Planned Other Energy Source Chosen Not Economic to operate Other environmental issues Technical Challenges Poor Design &/or Equipment Choice Turbine caught fire Percent of Operational Projects Citing The Barrier Barriers to Project Performing to Expectation