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Susitna hydro project moves on FERC approves 44 environmental studies as engineering and cost estimating continue ahead of license application in a couple of years Alan Bailey Petroleum News
The Federal Energy Regulatory Commission, or FERC, has now approved 44 of the 58 environmental studies planned as part of the process leading to a FERC license application for a proposed major hydropower project at Watana on the Susitna River, Wayne Dyok, the manager of the Susitna-Watana project, told the Alaska Senate In-state Energy Committee on Feb. 19. Dyok’s comments came as part of a presentation by Alaska Energy Authority staff on the status of the hydropower project. The Alaska Energy Authority, or AEA, anticipates FERC approval for the 14 other proposed studies on April 1, Dyok said.
Authorized in 2011
In 2011 the state Legislature authorized AEA to proceed with the 600-megwatt hydropower project, to assure long-term, stably priced electricity for the Alaska Railbelt and to help achieve a state policy objective of obtaining at least 50 percent of Alaska’s power from renewable energy sources.
As well as being an essential prerequisite to applying for a FERC license, the results of the environmental studies will feed into the preparation of an environmental impact statement, triggered by the license application.
Environmental studies Having filed a project pre-application with FERC at the end of 2011, the project team spent much of 2012 developing a robust study plan while also conducting some preliminary fieldwork, in part assessing any environmental changes since an original study of the project, conducted in the 1980s, Dyok said.
And, with FERC approval of many of the planned studies, the project team is now embarking on the project’s two-year study period — some 180 people should be working in the field this summer, Dyok said. About 385 people have been engaged on the project, mostly from Alaska, but supplemented by people with appropriate experience, particularly from the Pacific Northwest, he said.
2024 completion “The goal is to file the (FERC) license application … in September of 2015,” Dyok said. “We wouldn’t anticipate getting the license until the early part of 2017, and then there will be a seven-year construction period, and hopefully the project will be on line by 2024.”
Meantime, in addition to preparing the project’s study plan, in 2012 the project team reviewed the 3,000 reports prepared in the 1980s study of the hydro project, to evaluate how the findings in those reports fit into the current project. The information from the 1980s relating to rock and ground conditions at the project site is still valid, given that the rocks are still the same, although the project team spent time in 2012 filling in some gaps in that information, Dyok said. And the current project has been refining the design concepts for the project, incorporating new technologies such as the use of roller-compacted concrete and figuring out the optimum height of the dam.
“We’ve also brought on a panel of (world-renowned) experts,” Dyok said, commenting that the idea is to review the project to ensure at an early stage that the project, as conceived, is a good fit for Alaska.
Outreach efforts In 2013, in addition to working on the environmental studies, the project will continue its outreach efforts with project stakeholders, Dyok said. The key to filing a complete license application will be working with all stakeholders, to make sure that all issues relating to the project are identified and sufficiently fleshed out, he said.
The project team is also developing a plan to limit risks of cost overruns, as well as working on precedent agreements with Railbelt utilities, the future purchasers of power from the hydropower plant. The team also needs to carry out some further work, refining information about the project site and further optimizing the design of the facility.
Cost estimates Rather than rely on a single engineer’s estimate of the cost of the project, AEA commissioned professional services company AECOM to develop an independent cost estimate for comparison. AECOM, a company with a huge amount of hydropower and Arctic experience, confirmed the feasibility of the estimated timeline for the project and the applicability of the roller-compacted concrete design in Alaska, Dyok said. The company also suggested some ways of expediting the project by using techniques for winter construction and by starting to fill the reservoir before project completion, he said.
“Perhaps the most important finding, though, was the comparison between their cost estimate and that of our … engineer,” Dyok said. “They were within 9 percent.”
A cost probability distribution indicates a median likely cost of about $5.2 billion, with a 90 percent probability of the cost coming between $4.5 billion and $5.9 billion, Dyok said.
Cost of power Nick Szymoniak, project economist with AEA, reviewed the anticipated cost of power from the hydropower plant, based on those estimated project costs and using some reasonable economic assumptions while also assuming no direct state financing. At startup in 2024 the cost of power would likely be around 18 cents per kilowatt hour, he said.
Szymoniak emphasized that, with the cost of power from the plant almost entirely resulting from the up-front capital cost of the construction project, the electricity costs would remain virtually constant out into the future, once the plant goes on line in 2024.
But the real cost of the power, adjusted for inflation, would in effect drop as the years go by. Expressed as the real future value of 2013 dollars, the power cost in 2024 would actually start at about 14 cents per kilowatt hour, rather than 18 cents, and then fall to 11 cents after 25 years, eventually reaching to 6 cents in 30 years. After 30 years, when the project debt is assumed to have been fully paid off, the cost of hydropower from the Susitna-Watana facility would plummet, Szymoniak said.
AEA anticipates a life in excess of 100 years for the hydropower system.
Gas comparison A comparison with the possible future cost of power from natural-gas-fueled power generation suggests that the hydropower will initially be more expensive than power from natural gas; that the price differential will narrow; and that eventually the hydropower will become much less expensive. The time at which hydropower becomes less expensive than gas-fueled power depends on assumptions about future gas prices but could happen 12 years after startup of the hydropower plant, if middle-of-the-range gas prices are assumed, Szymoniak said.
And the use of hydropower would dramatically reduce future power cost uncertainty, when compared with a continuing high dependence on natural gas for power generation, Szymoniak said.
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