CIRI seeks customers for Fire Island phase two expansion
Cook Inlet Region Inc. wants to double the size of its Fire Island wind farm, but first it needs someone to buy the extra power.
Suzanne Gibson, vice president of the wholly owned CIRI subsidiary Fire Island Wind LLC, said the company must secure a power purchase agreement with a Railbelt utility “as soon as possible” in order to fit its construction window.
Phase two of the Fire Island project offshore from Anchorage is in line for a 30 percent federal energy tax credit on the $50 million of work if it’s completed by the end of 2015, Gibson explained during a Renewable Energy Alaska Project presentation April 10 in Anchorage.
Once a purchase agreement is reached it must go to the Regulatory Commission of Alaska, which has six months to approve the contract. If an agreement can be reached before May, that would give the RCA until October to rule; and it’s only after that approval that CIRI will be able to secure financing for the 11 wind turbines and associated work, Gibson said.
That timeline would have the turbines being commissioned in September 2015.
“We really need to be closing financing by the end of the year so we can be ready to construct in the spring of next year,” Gibson said.
CIRI will cover about 30 percent of the cost with equity and finance the remainder of the project, she said.
Gibson called the power purchase agreement the “anchor contract that gets everything going” and said that several utilities were showing significant interest in contracting with the project.
She said because essential infrastructure such as transmission lines, an operations and maintenance building, and spare turbine parts are in place from phase one, lower capital costs associated with phase two — and the $15 million tax credit — will allow Fire Island to sell its power about 20 percent cheaper than the 9.7 cents per kilowatt that Anchorage-based Chugach Electric Association is paying for phase one power as part of a 25-year purchase agreement.
“(Phase two) Fire Island winds will compete with the cost of natural gas now,” Gibson said.
The original 11-turbine phase of the wind farm went online September 2012.
CIRI has said it eventually hopes to have a 33-turbine wind farm on Fire Island.
“Whoever buys power from phase two will get all the benefits from what’s happened before it,” she said.
While a power purchase agreement is before the RCA, Gibson said Fire Island will move quickly to secure the wind turbines and a construction contracts.
The construction request for proposal, or RFP, will likely include design and engineering for roads and turbine foundations and procuring and mobilizing equipment to the island, including the turbines themselves.
During the first round of construction the large Pasadena, Calif.-based engineering firm Tetra Tech Inc. led work and used local subcontractors extensively, Gibson said, a model that worked well for Fire Island Wind.
In its first year, Fire Island Wind generated 51,800 megawatt hours of electrical power, just more than what was modeled before construction.
Phase two is projected to generate slightly less, about 48,000 megawatt hours per year, because of a less productive wind resource on the east side of the 4,300-acre island. The phase one turbines run from the spit on the southern tip of the island generally up the middle of the island.
At about 100,000 megawatts combined, Fire Island Wind should provide enough power to supply more than 12,000 Railbelt homes, according to Gibson.
The second round of 1.6-megawattt General Electric turbines should run at about 31 percent net capacity overall, she said. Wind farms rarely produce more than a third of the electricity the turbines are capable of generating over a lengthy period because of variances in wind resources.
Fire Island Wind began general work on phase two last fall in order to meet a December 2013 tax credit deadline for project initiation.
Gibson said fall 2013 work included clearing trees for access roads to the turbine pads, excavating and grading for of the pads and drilling three wells to supply future construction with water.
With other ventures in Wyoming, Texas and Nebraska, she said CIRI has an interest in 535 megawatts of wind capacity across the country.
Elwood Brehmer can be reached at [email protected].