Alaska Journal of Commerce
Tok appears to be a couple steps closer to a long-term power solution.
The Alaska Energy Authority recently released its review of a feasibility study for Alaska Power & Telephone’s proposed wood biomass combined heat and power plant in Tok, and the results are promising.
The study found a 2 megawatt plant to be “technically, operationally, and financially feasible.” Energy Authority figures put the benefit-cost ratio of the plant at 1.49.
Thomas Deerfield owns Dalson Energy and has consulted closely with Alaska Power & Telephone, or AP&T, on the project. Deerfield said the plant offers incentives to the region beyond stabilizing the cost of electricity for residents.
“The most significant benefit might be — because it’s been an intractable problem for the state — is it would stimulate economic localization,” Deerfield said. “When you take $4 million that you spend on diesel in Tok and you convert any chunk of that to a million dollars worth of locally produced biomass fuel, all of a sudden there’s one or two or three million (dollars) that isn’t going directly out and away.”
The proposed combined heat and power, or CHP, plant would supply all of the town’s electric demand by burning wood chips from timber harvested from the surrounding area. Cost estimates for the plant have been in the $13 million range, according to Deerfield.
Harvesting timber near town would also reduce wildfire risk in an area where fires are common, he said.
Ben Beste of AP&T said the company’s current operation in Tok burns more than 750,000 gallons of diesel each year, which is trucked in from Fairbanks. Diesel prices hovering around $4 gallon have driven the cost of power to more than 50 cents per kilowatt.
Locally sourced biomass fuel is projected to cost AP&T about $55 per ton, or an annual fuel cost of about $1.8 million.
John Rusyniak, president of the Tok Chamber of Commerce, said some small businesses in the area are spending as much as $20,000 per month on electricity – a cost they are forced to pass on to their customers.
Residential power customers in Tok have reported power bills in excess of $400.
The economic analysis portion of the feasibility study was conducted by Northern Economics and examined power cost to consumers of a CHP plant in Tok. Its estimates ranged from 26 cents per kilowatt to a high of 31 cents per kilowatt for CHP with installed district heat infrastructure. The estimates are for a 50-year operational time frame and based current privately funded construction costs.
Deerfield said AP&T has investigated wind, hydro and liquefied natural gas as power alternatives, but found biomass to be the most cost-effective, reliable solution.
While the study put the cost of gas power at 19 cents per kilowatt, it cited the uncertainty of supply — a gas shortfall is predicted in Southcentral in coming years — as a primary deterrent to a gas-fired plant.
Hydropower is a viable option in summer, Deerfield said, but necessitates a second power source after freeze-up.
Installing district heating in the area surrounding a CHP plant to take advantage of residual steam could push capital costs to more than $30 million, the study found.
The next step, according to Deerfield, is the design and permitting phase of the project. The Energy Authority approved $400,000 for Tok CHP when it released its Round VI Alaska Renewable Energy Fund grant allocations in mid-January. AP&T’s request was for $1.9 million.
A “stumpage fee” to cover the State’s expenses would be added to AP&T’s estimated cost of $55 per ton for biomass, State forester for the Tok area Jeff Hermanns said. While final stumpage rate hasn’t been agreed upon, those cost estimates add about $1 per ton to the overall fuel cost.
“The stumpage that we would get from the sale would basically cover the cost of the sale,” he said.
Plans are to use GPS plotting to minimize on-the-ground work and related costs, Hermanns said, hopefully saving $500,000 over the life of the sale.
Sustainable fuel, safer community
In December the Alaska Department of Natural Resources made public a preliminary timber sale best interest finding for the area. The finding determined that the region’s forests could support the 25-year harvest sale AP&T needs to ensure fuel for its plant. The State of Alaska has historically agreed to timber sales of five years or less.
“You’re not going to get people to invest long-term in a facility unless you have a long-term, guaranteed supply (of timber),” Hermanns said.
Hermanns said the public comment period following the release of the best interest finding produced an unusually strong wave of support. Out of more than 30 responses there were “only a couple opposing” the timber sale, he said.
Supplying a 2MW CHP plant with the 35,000 tons of biomass fuel it would need means harvesting between 700 to 900 acres of forest annually, according to the DNR report.
Both Hermanns and Deerfield said the unique set of factors in Tok’s situation — high power cost, available land and wildfire risk — make it one of the best candidates in Alaska for biomass power.
Hermanns said he has heard concerns regarding the sustainability of an annual harvest of that size over the three years that this project has been in the works, and that the concerned parties need not worry. The nearby Tanana Valley State Forest offers nearly 1.5 million acres of forestland and Tok’s situation allows for cutting on State land designated for subdivision settlement – a designation the State has not harvested from previously.
About 7,800 acres of land immediately adjacent to the town is under the settlement classification.
In all, no more than 40 percent of land available for harvest will need to be cut, Hermanns said, even when using conservative 120-year re-growth rates for white spruce that currently dominate the landscape.
According to Hermanns, an overlooked aspect of what makes Tok so suitable is the substrate beneath the town and the surrounding is gravel, which drains well and won’t hold swamps common in Interior. This allows for harvest year-round.
The fish-holding streams and subsequent water quality issues that complicate forest harvest in other parts of Alaska don’t exist near Tok, Hermanns said.
Cutting development land first will also mitigate the risk of fire in those areas. Hermanns said the benefit of reducing the risk of wildfires to the area cannot be overstated. The dense spruce forests in the area make a devastating wildfire increasingly likely, he said, and almost inevitable without action.
“We really believe this is our plan to make Tok a much safer community from wildfires,” he said.
While the threat of fire can never be eliminated, he said Tok should be as safe as possible within five years of the first harvest. Much of the fire danger is eliminated when an area is cleared; and that risk is continually diminished by replacing fire-prone spruce with fire-resistant aspen, which naturally populate a freshly cut, or burned, area, Hermanns said.
He pointed to the 2010 fire on Tok’s southern edge known as the Eagle Trail fire as a prime example of why fire mitigation needs to happen, with or without power production. In that fire the Eagle Trail subdivision in Tok and the nearby village of Tanacross was evacuated.
“For about five days were on pins and needles because if there had been any shift in the wind, odds are we would have not been able to stop (the fire) from coming right through Tok. The consequences would have been tragic, there’s no doubt about that,” Hermanns said.
All money previously allocated for fire prevention has been federal money, he said. And because Alaska is competing with other western states for that money it often receives just several hundred thousand dollars a year, Hermanns said.
It’s estimated the State spent more than $14 million fighting the Eagle Trail fire.
By using the timber sale as a way to cut high-risk areas without spending additional money, the State will save between $1,100 and $1,400 on every one of the 700-plus acres harvested every year, Hermanns said.
Approximately 40 percent of cut areas will be left standing.
Read more: http://www.alaskajournal.com/Alaska-Journal-of-Commerce/February-Issue-4-2013/AEA-study-says-Tok-biomass-project-possible/#ixzz2Lex8cU2H