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Home My WebLink AboutREFAC August 2018 Meeting PPTREDUCING THE COST OF ENERGY IN ALASKA Renewable Energy Fund Advisory Committee (REFAC) August 21, 2018 REDUCING THE COST OF ENERGY IN ALASKA SAFE, RELIABLE, & AFFORDABLE ENERGY SOLUTIONS Cady Lister AEA Chief Economist REDUCING THE COST OF ENERGY IN ALASKA 2 AEA’s mission is to reduce the cost of energy in Alaska SAFE, RELIABLE, & AFFORDABLE ENERGY SOLUTIONS REDUCING THE COST OF ENERGY IN ALASKA Agenda 9:00am-9:15am Welcome and Introductions 9:15am-9:45am REF projects update 9:45am-10:00am PCE earnings/Projects funded in FY19 10:00am-10:30am Project development and finance 10:30am-10:45am Break 10:45am-11:45am Potential changes to REF program 11:45am-12:00pm Member comments 12:00pm Adjourn 3 REDUCING THE COST OF ENERGY IN ALASKA •$257 million granted in Rounds I to VIII •851 applications received •287 applications funded •More than 30 million diesel equivalent gallons displaced •No new appropriations Rounds IX and X Operating REF projects 5 REDUCING THE COST OF ENERGY IN ALASKA 5 •73 project complete •56 grants underway Renewable Energy Fund Projects Completed & Under Development REDUCING THE COST OF ENERGY IN ALASKA Projects funded through construction •56 grants underway •7 recon/feasibility •12 design/permitting •37 funded through construction 6 REDUCING THE COST OF ENERGY IN ALASKA These projects selected through four stage REF evaluation process 1.Completeness/eligibility (AEA staff) 2.Feasibility and public benefit (AEA, DNR, Contractors) A.Technical and economic evaluation B.Qualifications and experience of team C.Project management/dev/operation 3.Ranking projects (AEA/REFAC) A.Cost of energy single biggest criterion (35%) B.Levelized feasibility score from stage II (20%) C.Other criteria include public benefits, readiness, local support and match 4.Regional spreading (AEA/REFAC) 7 REDUCING THE COST OF ENERGY IN ALASKA PCE earnings as a funding source If/when this happens, how should the REFAC recommend projects to the legislature? •SB 196 –how it works •July 1 DOR calculates: 1.The monthly average market value of fund for previous three fiscal years, AND 2.The earnings of the fund for the previous closed fiscal year. •5% of the amount calculated using #1 above is available to appropriate for PCE program/admin •If the amount calculated using #2 above is greater than the amount appropriated to the program, then 70% of the difference is available to appropriate to: 1. First $30 million to Community Revenue Sharing or Community Assistance 2. Up to $25 million to REF, Bulk Fuel Revolving Loan Fund, Rural Power System Upgrades •Calendar considerations –July DOR calculates PCE earnings, January legislature in session (inadequate time for new solicitation/evaluation) 8 REDUCING THE COST OF ENERGY IN ALASKA Projects in Governor’s budget Project name Location Resource type Phase Request Fivemile Creek Chitina Hydro Construction $3,400,000 Wales heat recovery Wales Heat Recovery Design/Construct $650,047 Adak Hydro Adak Hydro Feasibility $19,600 Water system heat recovery Koyuk Heat Recovery Design $90,922 Shishmaref wind Shishmaref Wind Feasibility/ concept. design $152,000 City Heat Pump Seward Seawater heat pump Design/Construct $725,000 Gunnuk Creek Kake Hydro Construction $3,920,000 Mt. Village –St. Mary’s Intertie Mountain Village Transmission, Wind Design/Construct $2,506,731 9 REDUCING THE COST OF ENERGY IN ALASKA Gunnuk Creek Hydro Project •500 kW hydro addition to water supply dam serving Kake •Displace estimated 1,620 MWh of diesel generation •Estimated total project cost: $5.7 million •Grant request: $3.92 million •Project phase: Construction •Calculated B/C: 2.23 •Impacted population: 1,913 (563 in Kake) •Applicant: Inside Passage Electric Cooperative •Region: Southeast 10 REDUCING THE COST OF ENERGY IN ALASKA Project Financing: working with fewer State grants •Helping communities make the grants-to-loans transition •Providing technical assistance and ongoing community support •Maintaining collaborative partnerships & fostering innovation •Boots on the ground building safe, stable, reliable, and affordable community energy systems •Researching and coordinating development of new state energy policy 11 Allison Creek Hydro Project in Valdez REDUCING THE COST OF ENERGY IN ALASKA 12 Need remains constant Yet availability of public funding to help meet that need is decreasing 2017 the future The future points to more dynamic funding REDUCING THE COST OF ENERGY IN ALASKA The Power Project Fund Loan Program •Flexible loan program •Covers all aspects of supply side system •Available for all project dev. phases •Technical, economic and finance viability •Increased interest and activity recently •Anticipate activity will continue to grow Waterfall Creek ConstructionHealy, AK 14 REDUCING THE COST OF ENERGY IN ALASKA 14 •Total Cost –$712,000 •REF grant $420,000 •PPF loan $117,000 •Local match $175,000 •Biomass operator training •Three operators trained •22,000 gal. heating oil displaced annually •184 Cords of wood supplied locally, keeping money spent on fuel local Tanacross Cordwood Boilers: Grant, Loan and Training Providing heat to water treatment plant and multi- use facility (health clinic, youth center, and community social services) REDUCING THE COST OF ENERGY IN ALASKA BREAK 15 REDUCING THE COST OF ENERGY IN ALASKA Potential changes to REF: Responding to the new funding mechanism Excess earnings could be: 1) appropriated in spring for AEA to hold; 2) AEA would solicit and evaluate applications; 3) AEA would work with REFAC to make recommendations for project funding to legislature; or 4) legislature would make line item appropriation funding decision. Should AEA set a funding level trigger for releasing a new RFP? 16 REDUCING THE COST OF ENERGY IN ALASKA Potential changes to the REF: Responding to the new fiscal climate 1.Should REF funds be targeted to de-risk projects and increase ability to leverage non-state funds by focusing investment in early stage development? 2.Should REF projects have a minimum match requirement? 3.Other potential modifications? 17 REDUCING THE COST OF ENERGY IN ALASKA Member comments 18 REDUCING THE COST OF ENERGY IN ALASKA 19 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 888-300-8534