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HomeMy WebLinkAbout1223 Shishmaref Wind Energy Feasibility and Conceptual Design Project #1216 Shungnak Wind-Diesel Conceptual Design Proposer: Alaska Village Electric Cooperative, Inc. Benefit/Cost Ratio: 1.12 Applicant: 1.09 Recommended: Project Description: This proposal requests $152,000 and provides a match of $8,000 to conduct a wind power feasibility and conceptual design project for the community of Shishmaref. AVEC, with the cooperation of the community, proposes to assess the feasibility of wind resources suited to provide power to Shishmaref and to prepare a conceptual design of a wind facility. AVEC proposes to install one wind meteorological (met) tower and complete geotechnical work to determine the feasibility of installing wind turbines in Shishmaref. The work will involve obtaining a letter of non-objection from the landowner for the placement of the met tower and geotechnical fieldwork, permitting, transporting and installing a met tower at this location, studying the wind resource for one year, and conducting a reconnaissance-level geotechnical investigation to determine the soil conditions and needed engineering at the site. A conceptual design will be created based on the outcome of the met tower recordings and geotechnical investigation. Total project cost: $2,339,400 Funding Requested: $152,000 Contribution to Lower the Cost of Energy: At present, Shishmaref has a stand-alone, diesel power system with no intertie to other communities or utilities. The addition of a wind turbine to the electric generation system will reduce diesel fuel usage by the utility, thus reducing the number of gallons the community needs to import and store each year. If excess electricity is available, the project could also reduce the amount of fossil fuels used for space heating in the future. The electric utility is a non-profit, member-owned cooperative that will own and manage the project and will set its rates based on total cost of generation and distribution. As a community that receives Power Cost Equalization (PCE), some of the benefit of lower electric generation costs will go to the State of Alaska and some to local electric rate payers. The applicant assumes that 5 percent of the benefit will be passed onto PCE-eligible customers through their electric rates, with 95% accruing to the state of Alaska through reduced PCE credits to those customers. The full benefit of rate reductions will go to commercial customers of the utility, who are not eligible for PCE subsidies. These customers may in turn pass some of their energy cost savings onto Shishmaref residents through reduced prices for local goods and services. The development and growth of local businesses in rural communities like Shishmaref are hindered by the high energy costs. Any decrease in electricity costs makes small businesses in rural Alaska more viable and may contribute to subsequent growth in local jobs and entrepreneurial opportunities. Assumptions Modified: Displaced Heat: No displaced heat was included in the analysis since it is unclear whether there will be excess electricity available or how any excess would match with heat load demand in the existing heat recovery loop. Annual O&M Costs: The AEA model estimates annual O&M at $23,394, based on 1% of capital cost, which is slightly higher than the applicant estimate of $21,794 for the constructed project. Electric Capacity Factor: We use a maximum capacity factor of 32.4, assuming Class 6 wind regime based on high-resolution wind resource map developed in coordination with the NREL and True Wind Solutions. Diesel Efficiency: We use 12.51 kWh/gal from the FY2014 PCE report, which results in a higher B/C ratio than the higher 12.9 efficiency number from AVEC’s 2014 generation report which is used in the application. Concerns: Risk from Erosion or Relocation: The risks to the project from coastal erosion and potential future community relocation are not adequately addressed. Located on a barrier island in the Chukchi Sea, Shishmaref is highly susceptible to coastal erosion. Past erosion has caused the shoreline to recede at an average of 10 feet per year and as much as 20 to 30 feet in some years, resulting in the loss of more than a dozen homes. The applicant writes: Many years ago the village, as it was being eroded away, discussed and supported research to relocate the community. However, since that time a seawall has been constructed to help control the erosion, and the community no longer has any intention of moving away from its present location. The community is growing and improvements are planned, proving that the community is no longer interested in relocating. While the application cites several recent and planned infrastructure projects by local and state agencies as proof that the village is not moving, it does not provide corroborating information on the seawall’s mitigation of erosion risk, nor does it locate the planned Met tower project in relation to the coastline and seawall. The community’s 2010 Hazard Mitigation Plan lists both the landing strip near the proposed site (Met Tower Site 2) as being at High risk from flood, erosion and severe weather. An updated Hazard Mitigation Plan is underway. Recent news stories (2014-2015) do not discount the ongoing risk from major flooding and winter storm surges that are more common following the reduction in coastal sea ice due to rising air and water temperatures, exacerbated by melting permafrost. News articles quote local elders and other residents saying they worry that a single large storm could overwhelm the community’s water and sanitation systems and wash away additional homes forcing them to relocate, despite the expense and lack of good options.1 While the Shishmaref Erosion and Relocation Coalition has disbanded, the environmental risk from severe weather events and coastal erosion should still be addressed in the Concept Design Report. There are a few omissions and inconsistencies in the application: • The Budget Overview in 3.2.1 contains a typo, listing the AEA grant request at $158,000, instead of $152,000 as elsewhere in the application. • The question on whether the project team has staffing, time and resources to successfully complete and operate the project (4.1.2) is not addressed. • Resumes were not available for review. We assume they were submitted with the application as listed. • No heating fuel invoice is included. Since the applicant is not claiming potential space heating benefits (through excess electrical generation) at this point, it is OK. Possible Enhancements: Diesel system upgrades. Identify any upgrades that will be needed in the powerhouse to integrate wind energy into the existing system without unacceptable reductions in diesel efficiency. Provide cost estimates and timeline for identified upgrades as well as potential funding sources if not including in project cost proposal. Wind-to-Heat system: Address how excess wind energy will be used to generate the project benefits mentioned in the application, and include the cost of any secondary load components needed to dispatch excess wind energy to the existing waste heat recovery loop. Provide detailed heat load data to compare against the electric load profile in order to see how much excess electricity can realistically be used on a month-by-month basis. Heating fuel prices: Provide recent heating fuel invoice. Long-term Sustainability: As a local utility that has been in operation since 1968, AVEC is completely able to finance, operate, and maintain this project for the design life. AVEC operates wind projects throughout the state and is very familiar with planning, constructing, operating, and maintaining wind systems. AVEC is current on all loans and required reporting to the state and federal agencies that it is involved with. The Shishmaref wind turbine would be incorporated into AVEC’s power plant operation. Local plant operators provide daily servicing. AVEC technicians provide periodic preventative or corrective maintenance and are supported by AVEC headquarters staff, purchasing, and warehousing. The costs of operations and maintenance will be funded through ongoing energy sales to the villages. 1 http://www.adn.com/article/20140116/eroding-alaska-village-urges-congress-address- climate-change; http://www.nbcnews.com/storyline/fight-for-the-arctic/obamas-arctic-trip-buoys-climate- refugees-n413726 Shishmaref is a thriving and growing community. The likelihood of sufficient market for energy over the life of the wind turbines is not expected to decrease but this question will be addressed in the final report. Potential public benefits: When this project is completely constructed and in operation, the primary financial benefit from construction of the wind turbine will be reduced fuel costs to the people of Shishmaref. Preliminary estimates of annual diesel fuel savings from electrical generation are over 42,000 gallons. There are no plans for power purchase sales to private industry at this point. In addition to the direct fuel reduction are the benefits of: • Reduced long-term dependence on outside sources of energy and reduced exposure to fuel price volatility. • Reduced fossil fuel emissions, which results in improved local air quality and decreased contribution to global climate change. • Reduced fuel consumption, which reduces the volume of fuel transported and the potential for fuel spills and environmental impacts. • Increased economic development and job growth opportunity through reduced business costs for local businesses. According to the applicant, the community is very committed to moving this project forward and fully supports the project. Letters of support are provided from the City of Shishmaref, the Native Village of Shishmaref, and Shishmaref Native Corporation. There is no known or anticipated opposition.