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Water Power Peer Review

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  1. Water Power Peer Review PI: Abe Schneider Natel Energy, Inc. 510-342-5269 November, 2011 FY 11 CH FOA Topic 4 Advanced Conventional Hydropower System Testing at Bureau of Reclamation Facilities SLH-100 Demonstration Project at Monroe Drop

  2. Purpose, Objectives, & Integration Project Purpose: • In partnership with the North Unit Irrigation District (NUID), develop a new, low-head hydropower project at a site, called Monroe Drop, on NUID’s Main Canal approximately 12.5 miles south of Madras, Oregon utilizing one of Natel’s SLH100 units. Relation to program objectives: • The installation will demonstrate: • commercial performance of the hydroEngine™, which has the potential to reduce the LCOE from low-head and constructed waterway projects to less than $0.07 per kWh. • process, challenges and feasibility for irrigation districts to develop similar projects within their canal systems, thus advancing the industry’s expertise in siting, engineering, design, installation, and performance evaluation of low-head projects in constructed waterways. • LCOE for a significant source of new, predictable renewable energy Monroe Drop Project Site

  3. Technical Approach • Complete full plant design utilizing one SLH100 unit rated at 400 kW • Motivation: Finalize project design and costs prior to commencing construction • Obtain necessary permits and licenses • Motivation: FERC exemption; lease of power privilege, land-use permits; and water right for hydropower generation are necessary prior to construction start • Obtain interconnection agreement with Pacificorp • Motivation: Necessary in order to deliver electricity generated to the grid • Negotiate power sales agreement • Motivation: Provide certainty to project returns • Construct powerhouse and install hydroEngine™ unit • Motivation: Complete the project • Monitor system operation and verify levelized cost of energy • Motivation: Gather 1 year of operational data to validate LCOE calculations and overall SLH project performance

  4. Risk Management • Licensing: • Natel has already conducted pre-consultation meetings with FERC on other drops substantially similar in nature to the Monroe Drop and is confident that the project meets the requirements for a FERC Conduit Exemption from licensing. • Due to the lack of residential, industrial or recreational use immediately adjacent to the Monroe Drop site, Natel and NUID do not anticipate major difficulties in the land-use permitting process. • Interconnection: • An interconnection agreement is required in order for the project generate revenue from electricity sales. • Natel and NUID have decided to contract with an experienced electrical engineer who is very familiar with Pacificorp’s interconnection process; he has also completed the interconnection process with Pacificorp for several nearby conventional hydropower projects. • Project Revenue and Returns: • The ROI to NUID and Natel currently modeled for the project is based on the currently published Pacificorp rate schedule. • There is a risk that Pacificorp will change the published rate schedule which they do approximately every 2-3 years. • If the change results in higher power prices, then the project ROI will improve; if the change is to lower power prices, then the ROI will decrease. NUID and Natel plan to mitigate this risk by proceeding with negotiation of the PPA with Pacificorp this summer.

  5. Plan, Schedule, & Budget Schedule: • Initiation date: Project awarded September, 2011 (project initiation will occur after contract negotiations are completed) • Planned completion date: Project completion expected in late 2013 (subject to final contract negotiations) 1. Pre-Construction Phase – 10 months: This phase will commence this summer and is expected to be complete at the end of May 2012. Also during this phase, the final design of the SLH100 unit will be made and the unit manufactured. 2. Construction Phase – 8 months: Certain basic construction activities including road-way and certain clearing required for maintenance of irrigation functions will take place between November 2011 and March 2012. Construction of the powerhouse will commence once the FERC Conduit Exemption from Licensing and Lease of Power Privilege have been issued and is expected to be complete in June 2012, at which point the SLH100 unit will be installed. 3. Operation and Monitoring Phase – 14 months: Once the SLH100 unit is installed, it will undergo approximately 1.5 months of commissioning tests and then will enter an approximately 1 year pilot operation phase. During this time, the unit will run and its output and performance monitored to track engine efficiency, availability, and any wear related issues. Once the pilot operation phase is complete, a final report will be written in approximately November/December 2013. Budget: • DOE anticipates awarding approximately $746k for this project, with an awardee cost share of approximately $746k (subject to final contract negotiations)