Discuss your plan for operating the completed project so that it will be sustainable. Include at a minimum proposed business structure(s) and concepts that may be considered.
We expect that the wind resource will continue to be available in the area for the foreseeable future and at little to no change in cost. Minor variations in wind may occur over the long term, and those can be anticipated in long-term pricing models for our power sales agreements.
Village Wind Power LLC and Alaska Wind Power LLC will operate this project as independent power producers on the APC’s grid, selling wholesale power to APC for distribution to their customers. Our power purchase agreement will allow for adjustments to prices based on inflation and other market conditions, allowing us to continue operations for the long term. Alaska Power & Telephone Company and APC have been very aggressive in attempting to move the communities they serve off diesel fuel and onto renewable energy resources to enable these communities to continue to grow instead of being held hostage to the uncertainties of fossil fuel pricing.
4.4.6 Analysis and Recommendations
Provide information about the economic analysis and the proposed project. Discuss your recommendation for additional project development work.
The economics of wind generation is driven by three factors:
Cost of Development, Financing, Construction and Operations
We have analyzed the cost of the project and the wind resource, and have determined that with the facility of this grant for project development and infrastructure costs, and a power sales agreement that is competitive with what APC pays for its other generation, we can develop, build and operate a economically viable wind generation project.
Further project development work includes refining turbine and turbine location selections based on the measured wind resource, geotechnical, avian, and wildlife studies, and completing the APC grid integration and facilities studies. A key development effort will be the negotiation of the Power Purchase Agreement with APC. Other necessary components to complete include geotechnical, engineering, meteorological, financial, construction, and operations.
Wind energy companies operate in many areas of the USA and in some of those areas, operating conditions are similar to the Tok region. Wind energy companies, with rare exceptions, are able to make sustainable operations in areas with much lower power costs than Tok, with or without the current federal renewable energy generation tax credit. The next Federal Administration and Congress are likely to provide additional incentives that would further bolster wind power economics, potentially reducing costs to rate payers.
SECTION 5– PROJECT BENEFIT
Explain the economic and public benefits of your project. Include direct cost savings, and how the people of Alaska will benefit from the project. The benefits information should include the following:
Potential annual fuel displacement (gal and $) over the lifetime of the evaluated renewable energy project
Anticipated annual revenue (based on i.e. a Proposed Power Purchase Agreementprice, RCA tariff, or avoided cost of ownership)
Potential additional annual revenue streams (i.e. green tag sales or other renewable energy subsidies or programs that might be available)
Discuss the non-economic public benefits to Alaskans over the lifetime of the project
The annual fuel displacement is about 375,000 gallons, based on a 14 kWh per gallon efficiency of diesel generation. If we save the consumer just one cent on the cost of power produced from diesel fuel, we will save APC’s customers more than $52,000 per year in direct costs, or more than $1.05 million over the 20 year life of the wind turbines (they would be replaced by newer more efficient models at that time). Another way to look at the project is that it will save Tok area consumers more than $1 million (over 20 years) for each cent the price of one kWh can be reduced.
Our power purchase agreement will specify the price for our power so we can’t tell what the annual revenue is at this time, but it will be sufficient to operate the wind farm over the long term, or we will not build it.
Federal Tax Credits for wind include the two cent per kWh Production Tax Credit (PTC) that was recently renewed by Congress for a further year. Our project will proceed even if this tax credit fails to be extended next year, although it helps the project economics to have it.
Renewable attributes for our project will be sold, hopefully to the highest and best bidder, to further assist with project economics. The value of these will increase substantially if carbon taxes are imposed.
The State will receive electric production royalties over the life of the project.
Part of the 12-mile long transmission line will eventually serve a part of the electric transmission link between Mentasta and the Tok electric grid.
Non-economic public benefits:
The project will improve access to state lands in the region of the wind farm.
We believe the Tok Wind Project will be an asset to the communities of Tok, Tetlin, Tanacross, and Dot Lake, and the Interior generally, and we expect that tourists, locals, and school children will want to visit the wind farm and understand its operation.
Another public benefit is the jobs created by the construction and operation of the wind farm. This stable, long-term project will create local employment for a few people and many temporary jobs during the construction phase. This employment will be good for the town of Tok. Some of the money that used to flow out of Tok to buy diesel fuel will now circulate in Tok to create a healthier local economy.
The Tok Wind Project will displace about 375,000 gallons of diesel per year that are currently being burned in combustion turbines in Tok to generate power. This will allow more crude to be exported through the Trans Alaska Pipeline system to the Lower-48 to reduce their need to import oil from foreign countries in distant, unstable parts of the world. We think that American energy self-sufficiency is a worthy goal, and the Tok Wind Project is another step toward attainment of that goal.
SECTION 6 – GRANT BUDGET
Tell us how much your total project costs. Include any investments to date and funding sources, how much is requested in grant funds, and additional investments you will make as an applicant. Include an estimate of budget costs by tasks using the form - GrantBudget.xls
The Tok Wind Project will consist of a two MW wind farm and a 12 mile long transmission line to the end of the APC distribution system near Tok. The project budget is $8.10 million, comprising $ 7.79 million for capital construction, and about $0.3 million for development studies, engineering, and permitting.
Earlier this year on February 12 we applied for and were granted an AEA grant for $100,000 in “pre-construction funding”, but the grant agreement is not in place and those funds are not yet available. We will work with AEA to decide which portions of the project to apply those funds to. This grant request will also cover the work contemplated under that grant request as well, so if both grants are awarded, this grant request will be reduced by the amount of the February 12, 2008 grant.
SECTION 7 – ADDITIONAL DOCUMENTATION AND CERTIFICATION
SUBMIT THE FOLLOWING DOCUMENTS WITH YOUR APPLICATION:
A. Resumes of Applicant’s Project Manager, key staff, partners, consultants, and suppliers per application form Section 3.1 and 3.4 B. Cost Worksheet per application form Section 4.4.4 C. Grant Budget Form per application form Section 6. D. An electronic version of the entire application per RFA Section 1.6
Governing Body Resolution per RFA Section 1.4
Enclose a copy of the resolution or other formal action taken by the applicant’s governing body or management that:
authorizes this application for project funding at the match amounts indicated in the application
authorizes the individual named as point of contact to represent the applicant for purposes of this application
states the applicant is in compliance with all federal state, and local, laws including existing credit and federal tax obligations.
F. CERTIFICATION
The undersigned certifies that this application for a renewable energy grant is truthful and correct, and that the applicant is in compliance with, and will continue to comply with, all federal and state laws including existing credit and federal tax obligations.
