628 Neck Lake Hydro

628 Neck Lake Hydro

Benefit/Cost Ratio: Applicant self-reported: 2.9 Applicant calculated: 1.27

AEA calculated: 0.91

Project Description:

The Neck Lake hydro project is a small run-of-river hydro project located 1.5 miles southwest of Whale Pass, a community currently generating all electricity with diesel. This $2.4 million dollar project taps a resource with proposed installed capacity of 124kw and will include 350 feet of penstock, an intake structure, powerhouse with four 31kw generators, a tailrace channel, upgrade to 4 miles of existing transmission line and construction of an access road.

Whale Pass is a PCE eligible community so the benefits of reduced cost – estimated at $0.087/kwh - of electricity generation would go to the State of Alaska and power users in the community who are not eligible (about half) for PCE subsidies.

Applicant assumed 3.75 percent constant annual increase in fuel prices for 20 years and then flat pricing for the remainder of the project, the AEA fuel pricing was used in both Applicant calculated and AEA calculated analysis.

O&M for new system

• 
  Applicant reported $20,000 first year O&M costs for renewable generation in the budget worksheet; this figure is used with applicant reported 300,000kwh/year generation to calculate cents/kwh of $0.067.
  
  • 
    If an O&M cost is calculated using .8% of capital cost the B/C rate increases by .02
    
  • 
    It is worth noting that if a more standard O&M rate of $.02/kwh is applied to the AEA analysis for the renewable system the B/C ratio increases to 1.07
    

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  Applicant analysis uses “actual” figures to annual O&M and electricity production to calculate a per kwh figure of $0.078. The reported efficiency of 11.3kwh/gallon is used.
  
• 
  AEA analysis uses AEA standards of $0.02/kwh for O&M and 13kwh/gallon.
  

• 
  Applicant reported production of 300,000 kwh, this figure is used in all analysis
  

The energy market in Whale Pass is small and any decrease in population could easily lead to school closure and energy load decrease. The project is barely economical based on new system generation at 300,000kwh/year and while the applicant states demand of 306,000kwh/yr the 2009 PCE statistics report generation of 292,514kwh/yr.

The project has a lot of excess capacity that is not considered.

Possible Enhancements:

The project has the potential to generate an enormous amount of excess capacity, exploration of water and space heating potential would be beneficial. It may be unlikely however, that the $/kwh would be low enough to justify replacement of diesel as a method of space and water heating unless it is sold at a significantly reduced rate.