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Home My WebLink About13 UAMPS Kern River Waste heat project Agenda Item # 13 Ptiblic Utility District WORKSHOP To: Board of Directors From: Stephen Hollabaugh Date: March 19, 2014 Subject: Discussion of a Power Sales Contract for the UAMPS Kern River Waste Heat Project 1. WHY THIS MATTER IS BEFORE THE BOARD The project is now close to entering the power sales contract stage and a commitment by the Board will be required in April 2014. No decisions are required at this workshop. 2. HISTORY Truckee Donner PUD is in the resource project at UAMPS. The resource project is used to investigate possible generation resources prior to starting a study project. The UAMPS Kern River Heat Recovery Project moved into a study project in which Truckee is a participant. This generation fits well into the District's power portfolio. The District has a five-year market purchase from 2012 thru 2017. With the market purchase ending in April of 2017, the Kern River Waste Heat generation planned to start commercial operation in late 2016, the timing of these generation resources fit well into the District's portfolio. The Kern River Waste Heat project can replace of a small part of this within our portfolio. The Kern River Waste Heat project is a carbon free resource with an initial starting price of $55 per MWh and averaging $63 per MWh over 25 years. 3. NEW INFORMATION Project Status: The Kern River Waste River project is located at the Veyo compressor station site of the Kern River natural gas pipeline. This site consists of three compressors that give off waste heat. This generation will be sized at a capacity of 7800 KW. The project is entering its power sales contract stage. Waste Heat Technology: The proposed heat recovery system will use the waste heat from the exhaust gases of the gas turbine compressors to heat thermal oil that serves as the heat source for the energy converter. The heat recovery system will be composed of waste heat oil heater which is a thermal oil loop installed on the exhaust side of each of the gas turbines. The waste heat 1 oil heater is installed in a by-pass mode to the stack of the gas turbine sets. The waste heat oil heater is connected through a single thermal oil loop to the vaporizer/preheaters of the energy converter. The thermal oil is a fully enclosed loop with no discharge to the environment. By cooling the exhaust gases, the thermal oil is heated up in a counter flow design within the waste heat oil heater. The heat is transferred to the energy converter within the energy converter's vaporizer/preheaters and cooled down thermal oil re-enters the waste heat oil heaters thus closing the cycle. The EPC Contract (engineering procurement and construction) will be with ORMAT. Ormat is a pioneer in advancing Recovered Energy Generation (REG) Power Plants for a wide array of industrial applications. The Ormat REG power plants capture unused waste heat from industrial processes and convert it into electricity that can be sold to the grid or used on-site, without any additional fuel consumption and with zero emissions. ORMAT installation example: The Goodsprings Compressor Station is the last booster facility on the system before gas reaches the only compression station in California near Daggett. It was part of the original network and declared operational in early January 1992 with three Mars® 90 (Solar Turbines Inc, San Diego) natural-gas-fired simple-cycle compressor drivers rated at about 11,000 hp each (Fig 3). A 525-kW emergency gas engine/generator and a 3.85-million- Btu/hr gas-fired boiler support station operations. _Heat �axs r sc t r s V I Y 4 f.. m ' r 1. E,00dsprings Energy Recovery Station r r-ntly com pl4toJ its f t Ye r f mme vial operation, m ting expectatons 2 N O N 00 cl N M O O C'0 LO L0 CY) CO ti M C) 00 C) r� C7 r r� 0) Cp a) U) ,� -F-i bpi r c— r r�it f0 nw:uwc -,xu � e LIQ to VII CD .� i - i all CD U) O (U �t lain Ctf �— Lmm Cc d: C6 Q CB cn cn trait �' � � � O >' E � � x a V_ E >' � t 5` , µI c> t(LJJ �� U CD (n 4 1 4 l 4 ^ ` G 1—' L 'o � (n im i �t� ° d im kill L U � 1 Q O O U) o N O (�6 2E O CND �£ viz \ �A s 8s � ax � � � i m s . O10) , } '�" k ? 7s l££fr� it�fru��' £ � 1 £ t t £ 2 z r £1 1 r £ { £ + • N N 0 � U) Q� (U C) l 1 CD ffl' ^IYR , D > L (D . � � a O LM X�/ -'~/1 V) /O� V 11 f. V' V 06 p k LO O Q) 7 VJ (� uJ - � � t t 1 N �• U) � F +Irl rtt �t � PA t F l 'L lV 4 }jy4x ; i t( l 4 t k} f��ly 0 Q Q C" Q L O �� I', � Z� " ' L C� L ' i s a ,� r e Q. _ ( 5 E L Q V ++ n„ a XII � � i V CS5 �C �+ �,. . ., p ([5 Q Q N S O Lo N LJ . f— N Kernfiver Recovery Project Pricing (MWh) Yearly Cost(MWh) Average Cost(MWh) $75.00 $70.00 - -- - ------- - ----- . -_-__ _ .. $65.00 __.. . $60.00 $55.00 $50.00 ` ca ca ca ca ca m co cafuyv y } } } a) a) r r 7T ?(V a a) w w w au ai aU aU Project Team: • Financial Advisor: Alan Kestenskow - Zions Bank Public Finance • Bond Counsel: Jim Burr/ Christi Jacobsen - Chapman and Cutler • Outside Counsel (contracts): Steve Tumblin, - Bennett, Tueller, Johnson & Deere • Outside Counsel (Environmental, Air): Mike Keller - Van Cott • Consulting Engineer: John Sevey - Sunrise Engineering • Environmental Consultant: Ben Gaddis, SWCA Completed Activities: • Kern River Host Agreement Executed • Transmission Interconnection Request Submitted to Pacific Corp. • Draft Power Sales Contract Distributed to participants Schedule of Activities for Bonding and Power Sales Contract (2014) • 2/12 - Distribute Draft Power Sales Contract (PSC) • 2/19 - Project Management Committee (PMC) UAMPS -PSC formal approval • 2/26 - Schedule conference with participant attorneys • 3/19 - Project Management Committee meeting (UAMPS) • 3/19 to 4/16 - Participant approvals of PSC • 4/8 - Distribute to participants, "Option" of Capital Contribution • 4/16 - UAMPS Board of Directors meetings: PSC final approval, Approve Bond Resolution, Terms and Conditions of Bond Sale, and Approve POS • 4/30 -Tax Questionnaire to Participants • 4/30 - Ratings Presentations • 5/7 - Ratings Due • 5/9 - Participants making capital contributions deliver funds to Escrow • 5/20 - UAMPS Meeting, Bond Sale, Delivery to Participant Certificates and Opinions • 6/3 - EPC (Engineering, Procurement and Construction) Contract Executed, Final Closing 4 Power Sales Contract: The power sales contract was reviewed in a meeting with participant , with Steve Gross in attendance for Truckee Donner PUD. The Power Sales Contract, authorizing resolution, certificate, legal opinion, and executive summary will be part of the action item in the April Board package. District Time Line: ® 2/28 - Power Sales Contract review with participant attorneys — Steve Gross attended ® 3/19 - District Board meeting — workshop to discuss Kern River Waste Heat Project (tonight) ® 4/16 - District Board meeting - action Item, proposed approval of Power Sales Contract ® 4/30 - District staff fills out Tax Questionnaire ® 5/20 - District counsel completes legal opinion and forwards to Bond Counsel 4. FISCAL IMPACT The Kern River Waste Heat Project will represent a portion of the Electric Supply Procurement budget that might otherwise be purchased at from the market. This project has a projected load factor 85%. Therefore the 1,772 kW subscription will yield and average of 1,506 kWh of energy per hour. The estimated is approximately $63/MWh. This generation is carbon free and therefore will reduce the carbon in our portfolio and enable us to sell more allocations in the Cap and Trade auction. 5. RECOMMENDATION This is a workshop item, therefore no action is required. An action item for possible approval of the Power Sales Contract will come before the Board in April. Stephen Hollabaugh Michael D. Holley Assistant General Manager General Manager