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HomeMy WebLinkAboutREF Evaluation Process Summary (long version) 1 Alaska Renewable Energy Fund Evaluation Process Summary The Alaska Renewable Energy Fund (REF) is a competitive grant program that was established by the Alaska State Legislature in 2008 and is now in its twelfth annual funding cycle (Round). The program was established to help fund cost-effective renewable energy projects throughout the state. These projects are intended to help communities reduce their dependence on fossil fuels in order to reduce and stabilize their costs of both heat and electricity. The program also creates jobs, utilizes local energy resources, keeps money in local economies, and fosters economic development. The REF has funded $257 million worth of projects over the past eleven years. So far, these projects have displaced the equivalent of roughly 150 million gallons of diesel. The figure below shows the distribution of projects funded to date as well as the various types of renewable technologies. In this time, the Alaska Energy Authority (AEA), in consultation with a nine-member advisory committee (the Renewable Energy Fund Advisory Committee or REFAC), has developed a robust and effective evaluation process. AEA has also developed an expert staff that is able to provide analysis and assess the innovative technologies and high-penetration renewable hybrid systems being used in Alaska. The REF program provides a unique, hassle-free mechanism for foundations, corporations, federal funders, and others to invest in responsible renewable energy development in Alaska. This document is intended to give a high-level overview of the REF evaluation process, which includes four stages: 1) completeness, 2) feasibility and public benefit, 3) project ranking and 4) regional spreading. A more detailed explanation 2 of scoring is available here http://www.akenergyauthority.org/Programs/RenewableEnergyFund in the most recent REF Request for Applications document. Request for Applications Each round, AEA drafts a new Request for Applications (RFA) to reflect the current year’s deadlines, grant requirements, and changes to the evaluation process including guidance from the Renewable Energy Fund Advisory Committee. Beginning in 2019, the RFA will be issued every other year on March 1st with applications due end of May the same year. The solicitation typically draws an average of around one hundred applications each round. These applications come from a number of eligible entities including utilities, independent power producers, local governments, and other governmental entities, such as tribal councils and housing authorities. Stage 1 – Completeness and Eligibility Review Once the applications are received, AEA staff conduct the first stage of the evaluation to determine whether the project is eligible for REF funding and the application is sufficient for a complete review. If the application fails any of the criteria in the first stage, the application will not continue to the next stage of the evaluation process. Applicants may request reconsideration and be given an opportunity to submit missing information. Stage 1 is scored according to the following criteria: # Criterion Weight 1 Eligible applicant Pass/Fail 2 Eligible project Pass/Fail 3 Documented authorization Pass/Fail 4 Project description Pass/Fail 5 Complete application Pass/Fail 6 Site control Pass/Fail 7 Submission deadline Pass/Fail Eligible projects include: • a project that generates energy from or involves the direct use of: • wind, solar, geothermal, waste heat recovery, hydrothermal, wave, tidal, river in-stream, hydropower, or • low-emission nontoxic biomass based on solid or liquid organic fuels from wood, forest and field residues, or animal or fish products, or • dedicated energy crops available on a renewable basis, or • landfill gas and digester gas. • a facility that generates electricity from fuel cells that use hydrogen from renewable resources or natural gas. • a natural gas project (other than landfill or digester gas) that benefits a community that: • has a population of 10,000 or less, and • does not have economically viable renewable energy resources that it can develop. • a transmission or distribution infrastructure located in Alaska that links an eligible renewable energy project or eligible natural gas project to other transmission or distribution infrastructures. 3 Stage 2 – Feasibility and Public Benefits Scoring In the next stage, AEA evaluates the application to determine whether the project is technically and economically feasible. Stage 2 is scored according to the following criteria: # Criterion Weight 1 Project management, development, and operation 20% 2 Qualifications and experience of project team 20% 3 Technical feasibility 20% 4a Economic feasibility 25% 4b Financing plan 5% 4c Other public benefits 10% Projects with a benefit-cost ratio of less than 1.0 score low in the economic feasibility criterion but are not disqualified for grant funding. The reason for this is that many REF projects have been shown to produce a number of qualitative public benefits that cannot be captured in this metric. Examples include local commercial/economic development, valuable information on new technology applications, and new infrastructure that can also be used for other purposes. The application must receive a total weighted score of at least 40 out of 100 possible points to proceed to stage 3. Once again, applicants may request reconsideration if their application does not pass stage 2. If the application meets or exceeds a score of 40 in this stage, AEA staff will recommend the application for either full or partial funding. AEA may also recommend conditions on grant funding, such as waiting to award the grant until a particular project milestone is reached. Stage 3 – Ranking of Projects If an application is recommended, AEA evaluates the project’s merits according to criteria that reflect the intent and purpose of the REF grant program. The weighted score in this stage will determine the application’s funding priority in the current round. Stage 3 is scored according to the following criteria: # Criterion Weight 1 Cost of energy in community 35% 2 Matching funds 15% 3 Project feasibility (Levelized Stage 2 score) 20% 4 Project readiness 5% 5 Public benefits 15% 6 Sustainability 5% 7 Local support 5% 8 Regional balance Pass/Fail 9 Compliance Pass/Fail The cost of energy criterion is the most heavily weighted factor in an application’s ranking. The score is based on the energy cost being displaced by the proposed project - cost per kWh for electric generation projects and the cost of heating fuel for heat projects. There are two pass/fail criteria in this stage. Regional balance refers to a situation in which two applications are designed to meet the same need. In these cases, the project that scores higher will pass this stage (exceptions can be 4 made for non-construction projects). Compliance is also a pass/fail criteria and refers to an applicant’s compliance with prior grant agreements. Stage 4 – Regional Spreading and Final Ranking Once stage 3 has concluded, AEA staff compile a ranked list of all recommended projects as well as a ranked list sorted by AEA’s eleven energy regions. If certain regions are shown to have been historically overserved or underserved across all rounds of REF funding, the REFAC may recommend prioritizing certain projects in the funding recommendations in order to rebalance the regional allocations. This determination factors in each region’s population, cost of energy, and household income levels to ensure an equitable distribution of grant funds statewide. Recommendations to the Legislature The final recommendation to the legislature is delivered in the form of the legislative status report that is printed for delivery to the legislature and posted on the AEA website. The recommendations include an update on the program, information on the performance of all REF projects funded in past rounds, and the final funding priority list. This report is due to the legislature within 10 business days after the first day of the regular legislative session. Past status reports can be viewed on the AEA website’s REF pages http://www.akenergyauthority.org/Programs/RenewableEnergyFund. The final recommendation to the legislature may also contain specific information for each project as requested by the legislature and a summary of each project. Applicants and/or AEA reviewers may be required to provide additional information to the Legislature upon request. At this point, the legislature must add an appropriation to the state capital budget in order to fund the REF program. The legislature has broad discretion in how, or if, it funds the recommended projects presented by AEA. The legislature may choose to fund the projects in any order and in any amount. However, with few exceptions the legislature has taken the recommended list and funded in the order presented. Once a final capital budget is passed, AEA staff immediately begin the work of developing grant agreements with the awarded applicants. Role of Funding Partners The Renewable Energy Fund can accept funds from private and federal sources. The REF program has developed the only statewide evaluation of renewable energy opportunities in our state. The program is also the only well-developed process that evaluates the technical and economic benefits of each proposed project in comparison to a base case. The REF evaluation relies on: 1. the expertise of AEA in-house engineers, economists, mechanics and renewable resource specific technology experts, 2. the expertise of staff at the Department of Natural Resources to assess potential permitting and land-use issues, 3. the expertise of third party contractors, and 4. the guidance of the nine-member Renewable Energy Fund Advisory Committee which is comprised of: a. Five members appointed by the Governor including representatives from: one large utility, one small utility, one member of the business community, one Alaska Native organization and one Commissioner from the Denali Commission. b. Two State Representatives appointed by the Speaker of the House c. Two State Senators appointed by the President of the Senate The need for affordable, sustainable energy in Alaska is great. Rural communities in our state pay the highest energy costs in the nation and include some off the poorest places in the country. Remote locations, harsh climates and small populations all present challenges to generating affordable and clean energy. The Renewable Energy Fund evaluation process identifies those projects with the highest likelihood for success.