Alaska Webinar on Pumped Hydropower Storage

Givey Kochanowski: Hello and welcome everybody to the Office of Indian Energy’s pumped hydro storage discussion for this morning on November 12th. I’m Givey Kochanowski I am the senior advisor from the Office of Indian Energy. And today we’re going to do a comprehensive overview of what this technology can look like applied to Indian country. Although this is an Alaska focused set of examples, the technology and the principles applied here could cover the whole country from the east coast to the west coast in the lower 48 as well as the state of Alaska. Today we’ve taken a building block approach to look at this from many different facets. It will help you make better informed decisions as you learn about this interesting and exciting innovative technology Many of you are familiar with our office through our technical assistance program, through some of our outreach programs like STEM education or our interagency agreement that has brought technical assistance through Alaska through the Alaska native tribal health consortium And many of you also know us through all of our grant programs. We have a small grant program that goes back to the tribal energy program days before Indian energy and continues on in our office that offers 50 percent cost share grants for smaller projects around Indian country. What we’re discussing today is much larger than a grant program. Our grants are in maybe as big as 2 million in a very special case but generally million or less are most of the grants that we issue out through our office. The technology and the project that we’re going to discuss today in most cases are going to be much larger than that So we’re going to talk about some of the financing opportunities that we offer through the department later on in the presentation Our overview from the presentation today begins with the Office of Energy Efficiency and Renewable Energy with Sam talking about the technology itself. What is pumped hydro storage? What makes it unique? How does it fit in the spectrum of energy? And as I mentioned our office has historically done a lot of renewable energy Hydro is kind of in the in between space It certainly is in many cases something that we haven’t given much focus to in the office simply because we haven’t had a lot of demand for these kind of programs. But this summer I’ve had multiple questions about the specific technology and how it might be applied to the energy challenges space in Alaska We are an energy agnostic office so whether we’re talking conventional energy like oil and gas or renewables or in this case hydro specifically we’re here to help you navigate challenges and ultimately lead to the self determination and energy sovereignty that tribes in Alaska native corporations seek as they deal with the energy challenges in their respective locations. Our first look as I said will be on the technology itself, what it is, what it is not, how it differs from traditional technology. We’ll then look at a location in the state of Alaska that Ms. Smith will talk about with a lake that could be a primer location. The governor of the state of Alaska recently has focused some of his attention on that location and spoke about pump hydro. It’s very timely for our discussion today that there is state and federal interest in this technology Looking at what an ideal site would look like I think is really important to help shape the discussion to figure out where does this technology make sense and where is it maybe not the right choice. Like I said we offer a suite of technologies that we support. And some places this might be an exact perfect fit. And other cases this might not be the right fit. And it’s equally important in this webinar to know both sides of the coin If this is the right choice for your community, great. We’ll work with you on that. If it’s not the right choice we’ll try to help you find what is the right match for your energy situation and your self determination of where you want to go as a community And then from there we will transition into a symbiotic relationship that potentially could benefit the middle part of the state of Alaska where there is no large grid system and there is the potential for abundant wind technology to be married up with a system like this to give an idea of how renewable and hydro can be linked together to make this really a battery concept that could benefit the grid and where things are at with that We’ll have Suzanne Settle present the Fire Island wind project which could be married up with a larger pumped hydro storage project somewhere in the state and where they are with the historical work on the project and what potential build out they have moving forward and what kind of bandwidth they have to be engaged in a major project

Time permitting we will have some comments from the village, from the tribe up there from Adam Leggett. He made some remarks earlier in the week. We’re going to try to get him included in here if he’s available to join our panel at that point a little bit about the community and the human impact of these projects on communities. And then we’ll go to a developer to get a developer’s perspective Absaroka energy in Montana has been doing this successfully and has a great national reputation. They’ve got partnership with the Department of Energy already. And although there’s no federal endorsement intended of one company over another, we’re simply spotlighting the developer’s perspective in looking at a project and how they would engage in a scenario that we’re talking about here in the state of Alaska or in the lower 48 for our viewers that are down south And after we get through Carl’s presentation about the challenges and approaches that a developer would be looking at with a project like this and looking at the whole spectrum of size, from the smallest a system can be scaled down to to the mega project size we’ll go to John Lushetsky in our loan programs office at Department of Energy and talk about how to get some funding for the projects There are many ways to fund projects. Some developers come with their own capital. There are smaller grant programs. I mentioned we have a cost share where we look at federal and nonfederal funds. And then we also through the direction of congress had a loan program office at Department of Energy that has a couple technology loans, VRTs that might be applicable to this situation. And John is a great expert in that field and he’ll talk to us about that And then we wrap up with Brian Carey from Alaska Energy Authority providing us a state of Alaska perspective of what the state is doing in the realm of hydro. Brian is a subject matter expert for the Alaska Energy Authority and he is very knowledgeable of what’s happening at the state level. We’ve partnered quite frequently between the Office of Indian Energy and the Alaska Energy Authority on project potential, technical assistance needs and then even on the research side. A few years back we did a hydro study that Brian was part of along with the national labs and our office So the hope today is to give you a full spectrum view of what this technology is, how it’s going to be applied. Does it make sense for your community? Where does it work? Where doesn’t it work? And then how can you fund it? And beyond the Department of Energy what are your program partners to look at. And we don’t have enough time to go through every federal and state agency so we just are hitting Alaska Energy Authority. But that’s symbolic of the idea that there are many players in the Alaska energy space, the trade associations, the federal agencies, the state agencies, industry up here. And we want to make you aware of these capabilities so that you can make informed decisions as you look at the different options that might be able to support your community So we will hold questions until the end of the discussion. We’ve set aside time to answer those so please write them down. And we will go around and address them as best we can The final points to keep in mind is this webinar is being recorded. So if you miss something the first time around you’ll have a chance in a few days to go back and review it and also be able to share the link so that others who are in your organization or your community that you think could benefit from this information can share this at a time that works best for them after the webinar is concluded today So thank you for your participation. We’ve got over 40 people attending this webinar which is great. We were hoping to get a couple dozen based on the request that we had for this program so I’m glad to see such a robust turnout And you will also see as we wrap up the webinar, do your questions we are all available for your support. We will be able to share contact information and additional ways to get in touch with us at the end of the webinar and follow up with you on that with contact information so that you can continue this dialogue with all of us or with those on the panel that you see most applicable to your interests or your needs in your communities. So thank you again on behalf of our director Kevin R Frost for supporting the Office of Indian Energy and taking time today to look at what our program offers and how we can move ahead with that. So thank you and I will now turn it over to Sam with the Office of Energy Efficiency and Renewable Energy to speak to the theory and the principles of pumped hydro storage Samuel Bockenhauer: All right. Thank you Givey and thank you for the opportunity to speak Really looking forward to this discussion and to learning more about some of the use

cases that could make sense in your communities and kind of talking with you all about some of the work that we’re doing on pump storage as well as the general intro. I think this may be a slightly different deck than I had sent. But I think that I can just go through and maybe skip a few of the slides. So please go ahead. Yeah, this is good So pump storage hydropower as Givey said is a water battery that’s really the key component You have an upper reservoir and a lower reservoir where your pumping up to store energy in the upper reservoir and then you’re generating when you bring it back down to the lower through the tunnels and then you’re generating at the power house. So as you can see, you need this difference in elevation. That’s really the key point. One way or the other you have to have a difference in elevation that you’re using to store that energy. And that can come in a bunch of different configurations that I’ll talk about more. An example in the lower right is the Rocky Mountain and down in Georgia. So you can see really clearly the upper reservoir up on the mountaintop and the river is the lower reservoir. An important point that’s important for licensing and for the basically getting these projects built is that there’s some projects that are open loop meaning there’s a hydrologic connection to a body of water that’s continuous, that’s ongoing. More closed loop they’re not connected to an outside body of water. It’s really just a lower reservoir and an upper reservoir that are separate And so the key point is you can then reduce some of the environmental impacts that you might have with the open loop projects if you’re just doing a closed loop because you’re only refilling – you’re only filling it once and occasionally topping it up with water to counter evaporation. But usually you have less of the environmental concerns. A little background on pump storage As Givey said a lot of the plants are large that are currently existing. They were built in the lower 48 for daily swings in load and as a companion to large thermal generated nuclear and coal. So that was kind of the classic use case. But as I’ll talk about next they’re a flexible resource that supports reliability objectives as well. So you can do a lot of different things with them to integrate wind and solar So on this slide you’ve got just the map of the plants in the US kind of scattered around the lower 48 in different regions There are about 22 gigawatts existing. There have been no new large pump storage plants in the last 20 years so that speaks to some of the challenges, the value proposition over such a long asset life is a challenge. So you need to not just have the value proposition for adding a storage resource right now but because these plants are going to last 50 years you need to have some idea that the market potential is still going to be there in the future Next slide please. So even though we haven’t deployed a lot in the US, pump storage has been deployed internationally at larger scales There’s some data from the IEA in 2018 and projected capacity additions by region. And you’ve got different types of storage being deployed but pump storage is still the largest by a large margin. 95 percent or so of total energy storage worldwide is pump storage and batteries even though maybe are being deployed in coming years, the bulk is still this resource Next slide And a key point that we work on in the water power technologies office is understanding the changing power system. So we’re seeing a lot of changes that affect how hydropower and pump storage are operated and what the opportunity is for the future. So there’s huge deployment of variable renewables and these create opportunities. They’re very low cost but they also create challenges for reliability in market design. This is just an example in California that everyone is probably familiar with. A lot of solar generation in the middle of the day increasing even so you’re depressing the net load that you have in this familiar duck curve plot that you’re seeing in the lower right. So it means not only do you have excess solar sometimes in the middle of the day but you also have a large ramp when people are coming home from work and putting appliances on that you need to meet and that can strain the power system as well. So the – this has really progressed rapidly in recent years. So even from 2015, 2016, 2017 we see a big increasing dip in California where you’re getting more solar online and it’s really depressing the net

load So what you see from pump storage in response to this is a pretty dramatic change even from 2013, 2014, 2015. The blue bars are showing Helm’s pump storage plant in California pumping at night. And then the orange bars are showing the pumping energy during the day. So even in the span of a few years you’re seeing shift from pumping mostly at night when prices are low up the upper reservoir and generating during the day to really pumping during the day as well because you have all of this excess solar in the middle of the day that’s depressing the prices. So the key is pump storage is kind of using this opportunity to generate revenue but it’s also of course providing a service to the power system and you’re balancing, you’re using some of the solar that you may not otherwise be able to use and you’re insuring that the system can meet needs for load. Next slide And you’re seeing this internationally as well. This is a pretty common thing. This is a plant in Japan where you’re seeing the exact same trend. You’re seeing starts and stops basically changing from happening at night even in the span of a few years to happening much more frequently during the day. And this is highly coordinated with the deployment of solar with other renewable sources Next slide. And then this is an example from other hydropower as well even beyond pump storage. You see hydropower changing in response to joining new markets to basically changing its operations frequently even within one day because there’s more variable wind and solar online so it’s providing a service to the system and balancing out those resources Next slide And then this is just making the point that there can be implications for the machinery when you’re doing this with a plant, when you’re starting and stopping much more frequently Not all of the plants were designed to do that. Some of these pump storage plants and hydropower plants were built 40 – 50 years ago and so you can see increasing damage to components occasionally and that’s something we’re trying to quantify. But major manufacturers like GE and others are already seeing changes in the specifications the customers are asking for from their turbines. Next slide Just a final point about, this is about hydropower generally, not about pump storage but it’s true of pump storage as well that there are a lot of different values that these resources can provide to the system. This is an example of the heat waves in California that were recently experienced. And the blue curve is just showing that during Saturday and Sundays, these peak days when the system reliability constraints were kind of threatened because of low wind and increased load. You have hydropower really providing a lot more energy because it has that flexibility. So this is an example of hydropower stepping up to meeting the need for the grid that you’re seeing in these challenging conditions. So this is something that we’re studying and trying to quantify because the value question is really important for pump storage as well as for other hydropower. Next slide We can skip through this slide and go to the next one. Thank you. And so this is basically the motivation for the hydro wires initiative that I lead in the water power technologies office. This is our new integration program The focus is understanding, enabling and improving hydropower’s contributions through reliability _____ and integration as the system is undergoing these rapid changes. More wind and solar, changing markets, changing load profiles, all of these changes that have happened pretty recently even in the last few years in some cases. Next slide So there’s four big areas that we focus on The first really understanding the rapidly changing grid and how changes create value for hydropower storage. So that’s some of the examples I just showed associated with California and other areas. The second area, capabilities and constraints. This is getting a clear sense of what hydropower can and can’t do, what – how quicky can it ramp? How rapidly can it change its output? How often can you start and stop it? What can it do during these challenging events like heatwaves, all big questions for us. The third area kind of bringing the first two together, operations and planning So how do we operate? How do we optimize what hydropower and pump storage can do? You can

get some services from a battery. You can get some services from other thermal generators But where is hydropower best positioned to meet the needs of the grid? And the fourth area, technology integration. How do we invest in the innovative technologies to improve hydropower flexibility? We’re seeing changes in what customers are asking for so how do we at DOE kind of get ahead of the curve in R&D and make sure that we’re meeting those needs or we’re encouraging those needs to be _____. Next So I’ll highlight just two projects that could be of interest. So the first is the valuation guidance for pump storage hydropower. So the idea here is that we’re developing a comprehensive way to value all of the services that pump storage can provide. So this is energy storage and capacity as well as ancillary services, black start, transmission deferral, transmission congestion relief, really the whole set of things that you can do with pump storage plants We’re also testing this valuation methodology by applying it to two selected pump storage projects The one developed by Absaroka Energy, the Banner Mountain Project and another developed by National Grid and Rye Development, the Goldendale Project Yeah. That’s right. These are these two projects, one located in Wyoming and another near the Oregon Washington border. So the idea here is that we want to apply this valuation guidance and understand all of the value streams that we can provide from pump storage, use it for these two proposed sites and then use what we learn as well to disseminate to the broader industry to create a set of guidelines for how you would do this valuation but developers could use for projects that they want to build Next slide And this is a little more detail about the guidance. The key thing is that the valuation question that you want to answer is the first step So are you looking to build or not build a project? Are you looking to update or not? And we can skip the details and go to the next one. And this is an example of a study that we’ve done on the environmental impacts of close loop pump storage versus open loop pump storage. As I referred to a reason to do close loop is to try to avoid some of these impacts. But there’s really a gap in the science of how much impact you might have to different features of bio, geology or other impacts that we could have. So this is one report we’ve got to map that out and show at least where the gaps are and what we know. Next slide And finally we are doing some R&D for smaller scale systems as well. So these are trying to overcome some of the barriers that are unique to pump storage. We’re looking at augmenting pump storage with compressed air at a very small scale or at saving costs by building an upper reservoir with corrugated steel And even new concepts such as _____ is developing using geo mechanical pump storage so basically storing water underground at a higher pressure and storage energy in the elastic deformation of the rock so that it’s kind of an inverted way that you’re storing energy. But could avoid some of the siting constraints getting an upper and a lower reservoir. Next slide And in hydro wires we work with a lot of different industry groups as well as internal groups, even international collaborators. We’ve just launched a pump storage forum that is trying to look at these develop issues and challenges around the world with them. So we’re really looking forward to international lessons as well as supporting US industry in these challenges Next slide. And that’s it. Happy to answer any other questions during the Q&A or to follow up afterward. Thanks a lot Givey Kochanowski: Thank you Sam. I appreciate the overview of what the technology is and the status of its development right now. we’re going to transition now to Ms. Smith and the ALICE organization which is the climate and energy folks here in Alaska and do a benchmark We have a chance to do a case study of an optimal location for this technology. And we’ll transition to a short presentation on Eklutna Lake and the work that’s been done up to this point. Again this is reflective of what projects might look like. It’s not

100 percent going to fit every scenario but it’s a chance to start seeing what optimal looks like and then we can continue during the Q&A time to look at specific scenarios and situations down south and also here in Alaska that our team could probably help you with. And with that, I’ll turn it over to Ms. Smith Monica: She’s been having some audio issues so we may not be able to hear her Givey Kochanowski: Monica. Why don’t we just go through the slides slowly and Brian I know has worked with this. We’ve got a few other folks that have been tied in. I see Tom Wolf is on the call with the ______ commission. They’re doing work with this technology as well. I don’t want us to get off time because we’re on a pretty tight time constraint. Ms. Smith can join us on the phone as soon as possible. Or Monica can you queue up Suzanne Settle’s slide and we’ll try get this once we have Ms. Smith’s phone back working? Monica: Yeah. I can pull up her slides Givey Kochanowski: Yeah. We’ll put Eklutna at the very end and hopefully by then we can have worked out the audio issue Monica: And Adam is on the line if he did want to speak Givey Kochanowski: Why don’t we do that? Adam, would you like to make some remarks about Eklutna in general and the socioeconomic impacts and the cultural impacts of hydro on your community? Adam Leggett: Certainly. Can everybody hear me? Givey, give me a thumbs up if you can hear me Monica: Yeah. We can hear you Adam Leggett: Ok. Just want to welcome everybody So I am on the river restoration committee for the native village of Eklutna. In 1926 a dam was erected about three miles up from the mouth of our river where our village is located. And all five species of salmon traditionally ran up the river, the eight mile river or so up to the Eklutna Lake. And with the erection of that dam it pretty much killed the salmon runs for our village. Fast forward about 30 years later, there was an upper level dam that was erected and it actually forged through the mountain there four miles from the lake down to the Eklutna. And it’s a still active hydropower dam that supplies about three to six percent of the electricity for the municipality of Anchorage So fast forward like I said about 30 years or so. The lower level dam was taken out of operation and effectively became a deadbeat dam and over the last five years or so we were able to get private funding to remove the lower level dam and did that successfully about two years ago. Our issue at the moment is that most of the water is being diverted to the hydropower dam, the upper level dam And effectively no water is coming down the Eklutna River to help support salmon habitat So we would love to see the salmon be restored up the river. We’re working with the rail belt utilities and the rail belt utilities

extend all the way down I believe from Homer all the way up to Fairbanks and it’s a big intertie of the communities along the highway and the rail belts here in Alaska And so we see hydro pump storage, hydropower as perhaps a solution to mitigating the loss of electricity that the rail belt utilities would face. And provide a solution that not only provides clean, renewable energy that we can use on the rail belt to help reduce utility costs but also to help make the case for allowing more water to be let down the river so that we can help restore the salmon runs. And it’s kind of an overview of I guess our position at Eklutna. We see this as an exciting technology and one that could help out and be a win for all parties involved So I just want to thank everybody for their interest in this and all of the work that Givey and the rest of the DOE and Alaska Renewable Energy Project, Alaska Energy Project and other parties have brought to the table. So thanks again Givey Kochanowski: Thank you Adam. We will go into more detail on the Eklutna potential project once we get audio working. We will like I said do that at the end of the presentation Right now we will shift gears to CIRI and Suzanne Settle looking at the energy that could be partnered with a major project with pumped hydro storage for the rail belt region So Suzanne the floor is yours Suzanne Settle: Hello. Good morning everyone This is Suzanne Settle. I just want to confirm that you can hear me Givey Kochanowski: Yes, we can Suzanne Settle: All right. Great. Well, thank you for joining us today. Again I’m Suzanne Settle. I’ve worked for one of the twelve Alaska regional corporation on energy. And I’m here to talk to you about a project that we have in Alaska called the Fire Island Wind Project. So next slide please. The Fire Island Wind Project is a wholly owned subsidiary of CIRI. It is Alaska’s first and largest IPP generation project. It is located on an island about three miles west of Anchorage on _____ land that CIRI owns. And we were able to put the project into commercial operations in September of 2012. We sell all of the energy that is generated by the project to Alaska’s largest electric utility, Chugach Electric And we do that pursuant to a power purchase agreement that is for 25 years. Next slide So when we were originally developing the project, we envisioned it being quite a bit larger than what it is today. The current project comprises 11 GE 1.6 wind turbines And we thought we would be able to develop 33 turbines instead of 11. And so the original design consists of three different strings And we are hopeful that some day in the future we’ll be able to build out the rest of the project. But the first phase again is 17.6 megawatts of capacity. We have the 33 percent net capacity factor which means on average we should generate about 51,000 megawatt hours per year. Again the project is located on an island and so part of the construction of that project included 12 mile transmission line that connects the island to Anchorage And that also spans three miles of submarine cables across the Cook Inlet. Next slide please So we’ve realized a lot of benefits since the projects began commercial operations in 2012. To date we’ve generated over 400,000 megawatt hours. That has enabled Chugach to

burn less natural gas and it’s actually saved them over 3 billion cubic feet of natural gas. And they’ve also been able to avoid almost 200,000 metric tons of CO2 since that time. And even though the project is located in an arctic climate and there were several people who were concerned about how well wind turbines would perform in an Alaskan environment, the project has performed exceedingly well We have very high availability percentages year after year. And those numbers include time that the turbines are down for planned maintenance. The Fire Island Wind Project is one of GE’s highest performing projects in terms of availability and mechanical reliability Next slide This is just a graphic that shows you how the project has performed year over year So again we estimate on an average basis that the project will put out 51,000 megawatt hours And you can see since the first full year in 2013 we’ve come very close to hitting that number year after year. And in 2016 were able, and ’18 were able to exceed those levels. So just really nice consistent year after year performance. Next slide please So CIRI does stand ready to expand the project if there was interest from rail belt utilities in purchasing the output. And that expansion could include one or both of the remaining streams on the island. But we’ve already built out some access roads to the B string We’ve also cleared the pads for 11 new turbines on the B string. And because of improvements in turbine technology even though the B string has a slightly lower capacity factor than the existing string we would be able to generate more power from those same improved turbines So it would take – let’s go to the next slide If we add one more string it would basically double the output from 51,000 megawatt hours per year to 105,000. And if we were to build out the third string that would get us up to 150,000. Right now we can provide about four percent of Chugach’s annual retail load. So obviously if we went up to include all three strings and sold all of that energy to Chugach Electric that would get them right at about 12 percent of their annual provided by Fire Island. Next slide please So this expansion could come about relatively quickly. Anyone who have been researching pumped hydro storage knows that there is a long lead time to building new generation projects. The first phase of Fire Island took about ten years to complete. But the second phase we believe that we could pull together in a year’s time. We have all the permits that we need and so we consider this project shovel ready as they say. Next slide please So some of the benefits for expanding a project like Fire Island is that you can utilize already existing infrastructure which makes subsequent development less expensive than the first phase. So for instance we can utilize the existing transmission capacity from Fire Island into Anchorage. We built out a double circuit transmission interconnection with the first phase that has 54 megawatts of capacity. Currently we’re only using about 17 megawatts. So there’s 7 megawatts of capacity, transmission capacity available. So we wouldn’t have

to do anything to that if we wanted to add on additional phases of the wind project We have something that we refer to as Spine Road, as the road that runs from the north end of the island all the way to the south end. That’s already completed and would be really easy to build an access road off of that road for subsequent phases. We have a switch gear and O&M facility on the island that are really already operational and ready to hook up additional wind turbines. And we have a long term contract with General Electric to provide wind tech for the project. There’s three GE technicians that work full time at the project plus one maintenance manager from CIRI. So that too is already in place and ready to go When we first built the project obviously we had to put together a power purchase agreement the likes of which had never been done in Alaska. And it took a long time to negotiate that agreement but I think it would provide a very good template going forward if Chugach were to be the off taker or any other rail belt utility. Same thing with the interconnection agreement. That took a long time but it’s in place and we could use that as a template Actually it could just be amended to expand So final takeaways from me is that an expansion of the wind project. You’re fine. You can keep going. An expansion of the wind project is shovel ready. We could build it out in less than a year. And I would just maybe close by saying that one of the reasons why we reduced the size of the project initially is to make sure that the rail built utilities were comfortable integrating an intermittent resource. It was new at that time. Fire Island was the first project. Then Golden Valley built a project so there are now two wind projects on the rail belt. The utilities are doing very well at integrating both of those projects with seven years under their belt. I do think though that as we look to include more intermittent resources through either wind or solar that they’ll be looking for ways to integrate and maybe pumped hydro is a tool that would enable higher penetration of renewables as we move forward And the next slide I’ll just say a couple more words about CIRI. We hold all of our energy and infrastructure investments in a company called CIRI Energy. And in addition to Fire Island we own six wind projects in the lower 48. Those projects are located in Texas, Wyoming, Nebraska and Washington. We are an equity investor in a natural gas storage facility and an equity investor in a brand new combined cycle gas fired power plant in Ohio. And we also have an investment in wood pellet manufacturing company that sells wood pellets in Europe and Asia as a substitute for fuel in coal fired power plants. And we continue to look for new energy infrastructure investments both inside Alaska and outside and would be excited to work on a major project in Alaska if it came to fruition Givey Kochanowski: Thank you Suzanne. That was a very good presentation. It’s a good example of Alaska Native Corporation’s playing in the energy space. There are a few of the corporations up here that do have energy subsidiaries and they’ve done quite well over the years And I think as we look over what we’ve heard so far is kind of the building block approach that there’s a solid technology here. There’s places like Eklutna, Bradley Lake, some of the villages around the state that have potential There certainly is the potential to build out Fire Island for more renewable power if we want to marry up battery storage or hydro storage facility to go with Fire Island And then now we’re going to shift gear just slightly and take it from a developer’s perspective. Given this information how would a company that develops projects go and partner with stakeholders in Alaska to bring systems like these online? And Carl will be giving

an overview of what his company can do. There, a little bit of their history and also how their technology is scalable and projects that they have done outside of Alaska with great benchmarks for our state as we consider ways to apply this innovative technology to the needs of Alaska. Carl, the floor is yours Carl Borgquist: Thank you everybody. Can you all hear me? Everybody got me? Givey Kochanowski: Yeah. We can hear you Carl Borgquist: Ok. Great. First let me say that it is an honor to be invited here to talk about pump storage and what we’re up to. And I will try to make this a lot about what we’re seeing in the world and how pump storage fits in that as opposed to what my company in particular is working on. I’m going to show you a few of our projects though just so we have a reference point to come back to so you can ask some questions. And without asking I am appropriately on slide number two And what you’re looking at here in the visual on the right is a mock up of the Gordon Butte Project in Montana which is a closed loop pump storage plant of about 403 megawatts with about eight and a half to nine hours of storage. If you see the wind turbines along the left side of that geologic feature, this is the Gordon Butte wind farm. This was my entry into energy development about 14 years ago. And so I sort of came at this pump storage development from a wind perspective as it were. And that informed a lot of the decisions that we made in terms of equipment and approach And then I’m going to walk you through those But we were looking at in this project interconnecting this pump storage into a twin 500 kb line that was connected to the coal strip plant which is one of the largest now existing coal plants in the country, about 2500 megawatts And the notion was when we started this that at some point that coal would be retired The plant was already when we started about 35 years old. So we knew that the capacity on this line was going to free up. We anticipated that it would be replaced with renewables and we started trying o figure out how we could be a part of the solution of integrating that wind into the grid. Next slide please Just a quick chart of the projects we’re working on and if you have any questions about those we can come back to that. Next slide please And one more. So we’ve got a picture here of Fire Island Project. And below that is a wind profile from eastern Montana. This is not Alaskan wind. This is Montana wind But what you’re looking at in this wind chart is the reality that while the wind is a clean and free generation resource, it’s Achilles heel is the fact that even when those turbines are moving they tend every few minutes to produce a different amount of energy. And in this chart what you’re looking at is the plant going from zero percent capacity to full name plate output and swinging back and forth. Well, the problem with that output as a generation resource as opposed to coal or gas that you turn on and get to the right setting and sort of park there and leave there is the utility that’s responsible for managing the grid with this as a generation resource has to fill in the gaps between when the wind farm is blowing and when it’s not and all of the inputs and outputs in its system. So next slide please. The grid is kind of – I think of it like a set of pipes and there are – there’s water coming into the pipes, water going out of the pipes. And that amount of water has to balance moment to moment Next slide please

So Dr. Samuel was talking a bit about the California duck curve. And this input and output issue is being felt less in Montana but definitely in California where their system, the California system is 3,000 to 5,000 megawatt swings in less than four minutes. So that system operator in California has to turn things off, store energy or shut things down or find energy to pump into the grid at 3,000 to 5,000 megawatts. And to give you some perspective that would be like a city of 3 to 5 million people. Montana has got about a million people and our average load is about 1,000 megawatts So as we start moving away from coal and nuclear and gas and we start interconnecting more renewables what’s happening is the grid operators are having trouble finding resources that can act like a shock absorber. And they need things that can move very, very quickly to fill in those gaps. And in a place like California where there’s a lot of solar in the afternoon when the solar drops off there’s a real sucking sound in the grid where the operator is trying to find things to shut down and electrons to push into the system to keep all of that in balance. Well, those issues, those problems really inform the way that we’ve started the Gordon Butte Project. It’s definitely informed in particular the work that we’ve done with the Department of Energy on coming up with equipment solutions that can move very quickly. Next slide please So the problem if you make a mistake is the grid shuts down and that is a catastrophic event. This is a picture of New York City in 2003 that tripped off because of a problem in a substation in Ohio. It also shut down Toronto. So grid operators are nervous sometimes about renewable energy because they wonder how they’re going to fill in those gaps Storage is how we do that. Most of what we’ve done in the world is to do this with pump storage although batteries and compressed air energy storage is another option as well Next slide please. And the next slide. And one more Here we go. So we started thinking about with Gordon Butte what kind of equipment are we going to put into this plant and design into this plant that’s going to deal with this variable generation problem. Old 40 year old and 50 year old pump storage that was put into the lower 48 and around the world was typically paired to either large nuclear or coal and was basically there particularly with nuclear because you can’t really shut that down at all to find a home for that energy at night when the load dropped and there was no place for it to go So you pushed water up, stored it in the upper reservoir at night. And then you brought it out during the day to sell it into the higher load and higher usage parts of a 24 hour period That equipment was fairly simplistic. And the number of mode changes that equipment would therefore go through would be essentially two a day. At night the equipment would be stopped, dewatered and switched to go from generating to pumping and that would take about 30 minutes. And then it would pump all night. Then in the morning it would be stopped and dewatered and switched and during the day it would generate When I started working on Gordon Butte what I did was I went to Europe which was obviously ahead of us in trying to integrate renewables And I started looking at the equipment that was being used in Europe. And one of the technologies and equipment setups that I was intrigued

by is something called a ternary setup where you have the turbine and the pump connected by a clutch that engages or disengages so that you can make these mode changes in seconds rather than 30 minutes to allow the grid operator to move back and forth from pumping to generating and create this shock absorber scenario So what you’re looking at here in this chart on the top is 24 hours of production at a facility in Austria using this ternary equipment And you can see this plant in particular is back stopping European wind. And the picture is worth 1,000 words. You can see that the behavior of the pump storage plant in Austria that’s backstopping the wind looks a lot like the mirror image of a wind profile. And there’s no accident to that. So when we proposed using this equipment we were graciously awarded an award by Department of Energy and National Renewable Energy Lab along with GE to look at ternary equipment and its ability to backstop renewables in the grid What happened with that is we – as things happen when you’re developing projects we ran into sort of a problem. If you think back to the picture If you think back to the picture of Gordon Butte there’s about 1,000 feet of head at Gordon Bute and that’s 1,000 to 2,000 feet of head for a big project is a real sweet spot in terms of the division between the upper and lower reservoir. Well, what we found at 1,000 feet when we started doing the engineering with GE was that the clutch for the Gordon Butte project was going to be so massive because the 1,000 feet of head meant that equipment was turning relatively slowly and thus the clutch had to be fairly large We pivoted and ended up coming up with kind of a new design called quaternary set up where we individually hooked the pumps to motors and the turbines to generators so that we could run the pumps and the turbine generators independently. They’re all hydraulically connected to the upper and lower reservoir. And this allows us to be pumping and generating at the same time and move seamlessly from one to the other. And again the purpose of that was to try to put the plant in a position so that grid operators could have this very flexible tool that would allow them to move seamlessly back and forth between the two I’m going to stop ’cause I felt like somebody was trying to jump in there. Could be that somebody is just not on mute. So the next slide please So this chart we concocted at Absaroka Energy It’s not tied to anything in particular but it sort of shows how we would imagine the Gordon Butte project is going to be operated And the cutout and overlay on the right there is the actual representation of a plant that’s used by utility at the gas plant to regulate with. And so every four seconds that utility is using gas, moving it up and down in order to backstop the wind. And again you’re getting this view of these very fast and very quick movements that are happening. What we think in the modern era with storage and particularly pump storage is we’ll be regulating all the time It’s just that we’ll be regulating on the pump side in the middle of the day down in the lower 48 because of what’s happening in California. We’ll be regulating on the gen side throughout the day and then go back to regulating on the pump side and storing energy at night. And next slide please This is just a representation of the fact that these new pump storage facilities are

being designed and the equipment that we’re putting in and what we’re trying to lead the industry with is the equipment being put in can do these multiple duties at the same time and it’s not this relatively simplistic approach that was had when we were just backstopping coal or nuclear and just trying to pump at night and generate during the day. Those machines only worked at one speed. They only did one thing at one amount. This equipment that we’re using it able to do multiple things at the same time and do it very quickly. Next slide So we basically have two sort of offerings We’re working on a bunch of large utility scale projects over 50 megawatts. Most of these we have done at closed loop facilities because we – it’s just easier to develop when the environmental impact is lower and Dr Samuel was talking about that, agree with that. When you’re not connected to an existing reservoir or stream or whatnot, the impacts are greatly reduced and it just makes the licensing and permitting go much faster. We’ve also developed our own modular system where we have the powerhouse and pen stock connected to tanks that we would bury in the ground And this kind of offering I think would be great for a microgrid or an island or situation where you’re concerned about any evaporative loss of the water. This creates a nice smaller scale power plant that can be essentially visually buried in the ground and hit not unlike the larger closed loop offerings. Next slide please So a little bit of overview. This slide I probably should have put this earlier in the presentation but you’re looking at the overview of Gordon Bute back to the coal strip 400 kv line at the bottom of the project or bottom of the visual there. Next slide. And here’s a sort of a cut away of a modular approach Some of its particulars. Next slide. Next slide. So we’ve been looking – we’ve gotten pretty good at looking at sites and trying to decide what we think is workable and feasible We’ve been looking at Alaska and are excited to try to be useful and helpful up there and bring our experience to bear with the work that you all are trying to do. Next slide Obviously the larger projects would probably be hooked into the rail belt and we also have these modular projects that could be used for smaller, microgrids or islands or more isolated parts of what’s happening in Alaska Next slide. One of the last things I wanted to say is part of the world that I’m working in also involves batteries. And there’s some pros and cons to pump storage versus batteries Pump storage particularly the larger projects are just they’re large billion dollar infrastructure projects, lots of things to do, lots of work to accomplish. Once they’re in the ground they’re a 50 to 100 year asset that doesn’t wear out. There’s no environmental impact Particularly the closed loop systems are very easy to maintain. And the hard part is getting them in the ground. A battery is easier to site. You pour a pad and bolt it down and away you go. But those lithium batteries that people are using tend to last somewhere in the 5 to 10 – 12 year range. They just like your cell phone they don’t like being charged

and discharged a lot. So the more you use them the more degradation is the term of art that they suffer. And so they tend to wear out quicker They tend to be better if they’re kept at a steady state of charge and are just used to backstop rather than doing this massive back and forth movement that we’ve designed this pump storage equipment to do. So again I think it’s a scenario where we’re going to need all of these things. But pump storage definitely have some benefits particularly once you get it in the ground in terms of its long term cost and its environmental footprint there are no nasty chemicals or recycling or some of the other things that you have to deal with with batteries. Next slide please Ok. I am going to beg – I’m going to go ahead and just beg for any of you to ask me questions I appreciate you listening to me and thank you for allowing me to talk a little bit about my company and what we’re up to Givey Kochanowski: Thank you Carl. We’re going to take questions at the end but we’re doing really well on time. So we’re going to transition a little bit here now to options potentially to fund projects like this. And our next presenter is John Lushetsky. And I want to take a moment now – this applies to all our presenters. Everybody on this webinar are people that I personally vouch for, that I have had the opportunity to work with over the years and I know that genuinely care about the energy situation in Alaska and have the resources to help you. John is the senior advisor with the loans programs office in DC. But he’s got a very deep background with the Army Energy program, with various offices at DOE. And currently he’s a senior advisor with LPO And one of the things I really liked about working with him is I know there’s a lot of fear in Alaska when you get DC involved That’s kind of a black hole and you never know where things are going to end up or if they’re going to materialize as something John is a great receiver for all the questions and support for his program in DC. He’s made multiple trips to Alaska. I’ve personally been able to join hm on a few of them at AFN meeting with native corporations, meeting with Alaska lenders and really getting the landscape down pact. John understands the nuances of Alaska native corporations and _____ to the point that he can have a very meaningful discussion with developers, with tribes, with native corporations up here Plus he’s got the tech savvy from his background to be able to have a very coherent and direct conversation and I loo forward to hearing what he has to say about LPO today as it relates to pumped hydro storage. The floor is yours John John Lushetsky: Great. Thank you Givey. If you can give me a thumbs up that you can see me or hear me, excuse me. Great great. And thank you for that great introduction and thank you for allowing LPO to participate in this webinar. I think as you said the LPO office has strong interest in energy innovation and advancing the energy situation in Alaska through Alaska native organizations, villages and corporations and has been lucky enough to meet with a number of the different groups involved and stakeholders involved following your leadership And great to be part of this event which obviously brings a lot of those vectors together. So great to be with you all and at least provide some information that we hope is helpful to the discussion of energy in Alaska, Alaskan native energy development and the development of pumped hydropower storage which we think is a great, could be a very, very good opportunity for using the DOE loan programs. So next slide please Great. So you heard from a couple of our colleagues here at the Department of Energy. You obviously heard from Givey and the office of Indian energy. We work very, very closely with them

especially on our Native American and Alaska native related program which I’ll talk a little bit more about. You heard from Sam Bockenhauer and from the Office of Energy Efficiency and Renewable Energy. And we work very closely with them in monitoring the progress of technology development that is sponsored through the DOE grant programs which we fund a significant amount of grant programs both directly with companies and through the national labs We are a separate office but again we work very, very closely with our sister offices throughout the department. The Department of Energy’s loan program office was set up about 12 years ago for the specific purpose of administering several different programs Those programs are targeted at accelerating the pace of new technologies and getting new technologies into the marketplace and addressing other parts of sort of the energy markets that maybe are underserved from traditional financing sources. So areas that traditional lending sources, traditional banks and other financing sources just aren’t quite comfortable in venturing. That’s really the gap that LPO was set up to address As is indicated there we have extensive authority to make loans and provide debt capital. Over $40 billion right now is still available to help in this area. We’ve made to date about $30 billion worth of loans toward energy projects Those projects I have it listed here for the sake of time but really, really span a really broad range of energy technologies. We’ve done work certainly in solar and wind. We’ve done work in geothermal. We’ve done work in nuclear. We’ve also done work in advanced transportation, sort of the next phase of electric and hybrid vehicles is another area that we’ve worked in. We have the ability to work in hydropower projects and advanced hydro storage technologies as well And through our tribal program we have even broader abilities to work in oil and gas and both transmission of oil and gas as well as mining and excavation. So we really, really have a broad number of tools and have an extensive amount of experience in the energy infrastructure space and I guess that’s really a point to emphasize. As emphasized there or as illustrated in the bottom of this slide too in addition to providing access to debt capital we can work in a number of different ways. We can work with other financing sources. We can structure financing different ways to really meet the needs of the particular requirement And then the last box there on the right, we like to think of ourselves as a committed partner. We know that these projects are difficult to bring to the market to get together. And we heard that from Carl and our previous presenter that trying to pull all of the different elements of a project together is not something that happens overnight. And understanding technology, understanding the market for energy, understanding the different regulatory environments, understanding basically what your resource is, all those things are things that will take some time to put together And then after the project is constructed and is online it can take – it will be there for 10, 20, 30, maybe 50 years depending on what technology that you’re talking about And again LPO likes to think of itself as a committed partner for the long term in terms of these types of projects. So a little bit of background on LPO, what we think our value proposition is, what we think – how we fit into everything maybe that you’ve heard here today that hopefully gives you a little bit better idea that if you wanted to kind of move a conversation forward, a little bit of context for that discussion. So next slide

please, slide three So again we said there was $40 billion available in debt capital. And we do that through really three different programs. And I’m going to really going to key on two here. The first one is our tribal energy loan guarantee program The acronym is TELP. And that is specifically for projects that are majority owned by either a Native American or Alaskan native corporation or village. So it really needs to be something where the tribe or the Alaskan native organization has an ownership stake. This was specifically set up by congress to again address a gap in the market where traditional lenders either because of familiarity or other issues just were not providing capital to these types of projects owned by tribes. And so this particular program was set up specifically to do that So the major criteria here is that there needs to be tribal involvement The Title 17 program more formally known as the innovative energy loan guarantee program is the one that we use to really advance new technologies into the marketplace. It has three different sort of sub programs. The one that I think it worth talking about here and I’ll talk about a little bit more is this renewable energy and efficient energy sub program and that has up to $4.5 billion still available. So again extensive resources for touching on advanced pump storage or any other type of technology that might be of interest hopefully to the audience here today We do administer another program really around vehicle technologies and advanced technology vehicle manufacturing and glad to talk about that maybe offline if anybody has any questions about that as well But with that I want to get into detail, a little bit more detail about the first two programs that I talked about. So the tribal energy loan guarantee program specifically around tribal projects, it really is sort of an all of the above oriented program. Going a little bit out of order here, if you look on the right hand side of this chart, it can be fossil energy so natural gas, coal, even oil all could be used for under this program Renewable energy, certainly wind and solar could also be used. And it could be used for transmission infrastructure, both electricity transmission, so both low voltage or high voltage transmission lines. It could also be used for energy storage. And then it can also be used for transportation of fuels both natural gas, petroleum, oil or oil based products can all be used under this particular program So of our different programs it gives us really an incredible amount of flexibility The eligibility criteria as I indicated the project needs to be owned by a tribe or an entity that is majority owned. So a tribe can be the 100 percent owner of a project Many tribes that we’ve talked to though want to bring in some sort of an equity partner for a number of different reasons, maybe just as equity into the project. And I’ll talk about that a little bit more here. But as long as the tribe is at least 51 percent owner of the project it potentially would qualify under this program. The project needs to be located in the US. Maybe that’s understood but we want to make sure people do understand that is one of the requirements One of the really I think strong benefits to tribes under this program is it doesn’t need to be on tribal reservation or other tribally owned property. In fact it can be on private property that is not owned by the tribe. It can be on public government land that is not tribally owned. Really the only requirement here is that the tribal ownership,

it really – and US location. But it really doesn’t not have a requirement that there’s any other tribal involvement other than that The third bullet there talks about financial viability. And Givey’s office, the Office of Indian Energy maintains a very, very robust grant program that many people may be aware of and maybe have utilized. Similarly the department of interior and the Bureau of Indian Affairs also maintains a very robust grant program. This is not a grant program I guess just to emphasize the point that there needs to be some sort of a business model or business proposition that provides repayment of the government’s loan or otherwise provides the government some sort of satisfaction that the money is going to be repaid Along with that, there needs to be an equity investor. So while we can loan to percentages on the order of about 80 percent of the project capital stack, the rest of that needs to come from some sort of an equity investors. And so that can be the tribe or as I indicated in talking about the ownership structure it can be another entity that is willing to put in equity into the project and sort of satisfy the financial liability requirement and other financial structuring requirements for the project. In contrast to the program that I’m going to talk about next, there’s no innovation requirement here. We believe that the pumped hydro storage technology probably would meet the innovation requirements But there really is no requirement to do that under the TELP program. And we’ve talked with several different entities that are looking at fairly generic type projects from a technology standpoint. And that’s just fine. So if you want to use a somewhat innovative technology, great. It could be used under this particular program. But certainly there is no requirement for any kind of innovation to be employed in terms of qualifying under this program Next slide please Here are some of the particulars of this This is a loan guarantee program so you would actually work through a private lender. And the private lender would be an applicant to the Department of Energy. But we’re fine talking with people up front. You don’t need to wait till you have a private lender to when you come and talk with us. We’re fine whatever way sort of the conversation gets started We have talked with a number of different private lenders in the past and certainly are familiar with them and have talked with them about different potential deals. But if you don’t have a private lender that shouldn’t be an impediment for coming and talk with us about what you’re thinking about But just for reference there if there any private lenders on the phone or if you are working with a private lender, the particular program here would guarantee 90 percent of whatever the private lender agreed to. So the private lender would still have sort of a ten percent interest, unguaranteed interest in the transaction. We look at sort of being competitive in the  marketplace. It’s not meant to be necessarily low cost debt. It’s meant to be debt where maybe there is no other debt available. But we certainly look at being competitive in the marketplace We can go long term and I think certainly in this case where some of the discussion is about the longevity of a hydropower or pumped hydro storage project can be maybe 30 to 50 years. We can go out 30 years and are quite comfortable talking about those sorts of durations. And certainly that separates us from probably other lenders in the space We talked about financial flexible deal structures It’s a project finance model but we can certainly adapt that in terms of different projects. And then some other terms and conditions on there that I won’t – well, I’ll just let you all read I guess the bottom line is that we are certainly open for business on this particular program It has been out there for about two or three

years right now. We see great potential in using this both in Alaska as well as the lower 48. And if there’s any interest in particular projects, certainly the next step would be to get in contact with us. My contact information is at the back of this slide deck So real, real quickly here just continuing on we also have what I refer to as our Title 17 or innovative energy loan guarantee program And that also has certain qualifications on it. It does need to employ an innovative technology We have a lot of leeway in terms of how we define innovative. Again certainly from the standpoint of pumped hydro storage since there hasn’t been a pumped hydro storage project, major one done in the United States for I don’t know what Sam said maybe it was 30 or 40 years. There’s been a lot of innovation in that timeframe. And so that I think is a good candidate for qualification under this program. But our definition of innovative technology is that it’s something that has not been deployed in the United States more than three times. So again if it was somehow deployed in some other configuration there’s a lot of leeway there for us to consider it under this program and consider it as innovative The other requirement is that it reduce or avoid or sequester greenhouse gas emissions Very much by the nature of pumped hydro, the ability to take electricity or other output for something like a wind farm from Fire Island has been suggested. That would certainly meet the requirements here under this program And again located in the US, similar to our other programs and provide reasonable prospect of repayment. Something where there is some amount of equity in the deal and that there is some sort of assurance that the power generated from these projects are finding a home and that there is some level of assurance that over the length of the period of financing that the government stands a reasonable prospect of being repaid back Number of different technologies. Again hydro and pumped hydro storage, the subject of this discussion and certainly I think would fit well in with the bullet points there that are presented. But if you have maybe other interests of some other different projects under this or some of the other Title 17 categories then certainly available to talk more about this. But again gives us a large amount of technology space to work under this particular heading. Next slide please Again some of the terms here, in contrast to the tribal program you do not need to be working with a lender. in fact you can come to us directly and we can make a loan directly into the project. We can also work with a bank with this program. And we can discuss maybe what the considerations are there in pursuing either options. Again we look at this as being a flexible financing project or product and one that we believe is competitive It is not though strictly speaking meant to be sort of low cost financing. It is meant to be financing or debt financing when really there is no other traditional source available Similar to the TELP program we can go long term. Again I think it fits very, very well into a pumped hydro or hydro project setting And I’ll just again let you all at your leisure look at the rest of the bullet points But we have the ability to structure this and price this in a number of different ways that we think especially for these types of projects located in Alaska or located in the lower 48 could make a lot of sense. Next slide please, slide eight There’s contact information. And again as Givey said we try to be very, very accessible We understand that these projects are difficult to address and pull together and they take frankly extended periods of time. And we look to working in a partnership mode for this

I think a couple points though I will leave you with. Certainly you’ve been given a lot of other good information on this webinar about some of the technical and business aspects and commercial aspects of pulling these projects together I was on a webinar a couple weeks ago and I was on it with a representative from one of the traditional banks that is very, very active in the Native American lending space And I’ll just pass on one of the words and the recommendations that he provided that audience. And he said that financing I know it’s a concern for people and it’s certainly of interest to people to talk about. But for well-done projects, for well thought out projects the financing is a relatively easy thing to do. And so while we certainly invite you to come talk with us certainly pay attention to some of the other things I think that were discussed on this webinar and some of the business and technology and regulatory pieces in understanding how the project comes together And I think I’m confident in saying that if you do that the financing when the time comes will be a much easier road to go down But again there’s my contact information Welcome you to reach out and have conversations and how the LPO can potentially be used for your project and certainly welcome your questions at the end of our time together today. So Givey, thanks very much again and I’ll turn it back to you Givey Kochanowski: Ok. Thank you John for the comprehensive overview of your program I think it’s definitely fitting for what we’re looking at. We’re going to transition to our partner which is the state energy office called Alaska Energy Authority. Look at the attendees we have a really nice blend of Alaskans and folks in the lower 48. So I’ll talk just briefly about our footprint in Alaska and how we partner with the state energy office DOE in Alaska has three different entities There’s the arctic energy office which just stood up which I’d encourage you to check out. George _____ my friend runs that up in Fairbanks. They did a lot of arctic policy and research in the macro level There is the energy technology lab representative here that looks at coal, oil and gas. And then there’s the Indian Energy Office. And currently we have an electrical engineer on staff and myself in the Indian Energy Office. we’ve got the depth of DOE with the national labs behind us in all the different program offices like Sam who presented at the beginning of this presentation. And we bring that to Alaska and it meshes very well with the scales of the state energy office. whereas we only have two people in state to do on site work, the state energy office is much more robust and has staff and specialists in a wide range of technology areas from power production to wind, solar, biomass, etcetera And Brian is the lead for hydropower in Alaska He’s been very helpful. We did a recent review with the Oakridge National Lab and he did fact checking and peer review for us from the state’s perspective on that. And he’s my go to guy in state when we have hydro questions on what’s viable in Alaska and what should we be pursuing. And with that I’ll kick it over to Brian and then after Brian we’ll wrap up with a presentation on Eklutna. Brian, the floor is yours Brian Carey: Ok. Thank you Givey. I guess I’ll just move froward on the slides. Ok So Alaska Energy Authority and ADEP were kind of corporations of the state and we have the same board of directors. And we are the state energy office. And so  from that standpoint we’re involved in many of the projects across the state through as kind of a conduit for funding from federal or private parties. And between the two of them ADA and ADEP we own two large dam projects, Bradley Lake and _____ which is about maybe 45 percent of the hydro capacity in the state and around 45 percent of the energy which actually is going to be increasing percentage wise. So it’s probably getting closer to 50 percent of the hydro capacity in the state. So let’s go to the next slide So we stayed involved through a lot of different means programs such as we’ve got our own grant program such as a lot of people are involved with the renewable energy fund program. We’ve

had power project loans which is some of the more recent projects such as the solar project up by Willow was using the ADA power project We’ve been involved a long time ago with the power of cost _____. And because we own Bradley on the rail belt, we own transmission on the rail belt, we tend to get involved on many of the rail belt type issues one way or another So go to the next one Ok. First off for the state perspective, we’re pretty much open to the energy storage technology We’ve not pushing one technology over another because there are many different technologies out there that have cost benefits on them So in many of the decisions will be made by the different utilities themselves. And so the utilities will tend to make the decisions And we will discuss with the utilities on terms of we can try and assist the utilities in terms of whatever they’re pursuing or not But at this point we are not pushing the utilities to do one technology over another technology So they know their systems better than we do and they can certainly push forward on them But as far as what system that the utilities might want to use, there are several different considerations that they really need to be looking at whether they’re on the rail belt or if they’re out in the rural type of area So certainly the cost and the capabilities of the different technologies are changing on a year by year basis. So I thought I’d talk a little bit about some of those considerations Next slide Ok. Certainly there’s the initial construction cost. Construction costs are definitely high in Alaska. There’s no way around it. To build – if you were to go build Bradley Lake project currently it’s probably going to be $600 million plus and that’s just to be – that’s a relatively small dam in the big scheme of things, power tunnel, power house. If you’re trying to build it as a pump storage and so perhaps you have a larger dam and you’ve got a much larger powerhouse. And then if you’ve got any type of impoundment down below you’re going to be getting up very quickly into closer to a billion dollars And so there’s no way – and not only that When you’re doing a consideration, a utility is going to be looking at licensing and permitting Most of the areas of Alaska along the rail belt that have higher elevation that you might want to think about doing pump storage is owned by the federal government which most likely means that you’re going to be dealing with the federal energy regulatory commissioning in terms of licensing. And agencies may have mandatory conditioning. So you want to be careful about are you going to be spending millions of dollars up front and not know what the end product is going to be. Will there be conditions on your license five or ten years down the road when you get to that point that are going to be unacceptable or reduce the amount of energy of what you’re going to get on it? From that standpoint the utilities will look upon it. The pumped hydro can produce a lot of energy but at least if they’re looking at a smaller amount of energy storage they may decide that they want to use a different energy storage technology. The other standpoint is on the operating cost is to pump water back up you are using a bunch of energy to pump it up. And if you’re using energy that comes from say wind turbines that’s located at 10 – 20 miles away you’re also losing energy going along the transmission lines to get it to the pump station to pump it back up So there’s definitely cost to being pumping the energy back up. I don’t know how those costs compare with operating a battery storage type of system. But it just has to be recognized that there’s high cost either way Perhaps some of the best way to proceed perhaps with increasing amount of renewables is actually just using hydro wind coordination such as Kodiak Electric is already doing with Pillar

Mountain and Kodiak and _____ Lakes. Because from that standpoint if they can integrate them it is a form of energy storage because when the wind blows the hydro does not need to produce as much energy and so you’re storing water in the existing reservoir for be it a week later or month later. And so it is a way of storing energy and could be put in place relatively quickly instead of building a lower impoundment. Next slide So right now Alaska does not have any type of renewable requirement. And because of it, I guess I’ll going back to what type of energy storage technology utilities want to use or if they want to use an energy storage technology, the way the landscape is right now they will use it if they think that they can save on the lowest long term cost for their consumers And short term, long term, that’s their decisions to make on that. And let’s see. Yeah. I don’t have anything more on that. So this is – I mentioned earlier about Bradley Lake. I think you’re – go back one. Go back one slide Yeah. So this is Bradley Lake and actually that water going to the top of the spillway is actually lost energy. But this is – that’s that embankment that’s about 125 feet tall And that’s the largest dam in the state of Alaska. And I did mention that just because you really, anything larger than that you’re increasing your cost very quickly. And for that little dam right there that was already at a choke point just building the dam itself might be $200 million. It’s extremely expensive in a hurry Another thing about Alaska is of course was mentioned earlier is the pump storage was originally built more for the dealing with the coal or nuclear type industry. We tend to not have it up here. So the largest units on the rail belt tend to be the natural gas units which are about 60 megawatt size which for the most part are relatively flexible about being able to change with the loads as it goes through the day. And Bradley is used as a peaking plant so that during the middle of the day Bradley can increase substantially so they do not need to start up new turbines which is a large cost savings to the utilities But if you’re looking at from the standpoint of an energy storage system one thing you’re going to be looking at is how frequently you’re going to be using it. Is it a daily type method where you expect to build a pump and generate energy on a daily basis with say like wind or solar? Or in many cases if the wind is blowing hard it may not blow hard for five or ten days at a stretch. And so you need to have plenty of water that you can handle maybe a ten day time period. We the largest loads that we have up here tend to be during say January when it is at the coldest point and we may not have any wind at the same time period So it just gets into figuring out the size of what type of storage you need to be able to have for the water So and one of the other parts about our dams is we do have a lot of capacity just because Alaska’s hydro tend to be, the term would be that they’re capacity rich and energy poor So a lot of the dams were built to be really high so they could handle the snowmelt during the spring time or the storms during the fall But the overall year, during the winter time they’re not getting too much water. So you have to build them to handle high capacity but not much else. Next slide So from the standpoint of considerations when your location if you could put it near existing transmission roads – if you have to go very far by the time you’ve got the construct a road, construct a transmission

line to it and also during the construction the time period with people commuting back and forth. I think realistically if you’re more than ten miles away you better have a large project to be able to justify it. The high values when you’re talking about the 1,000 foot gain or 2,000 foot you’re much more looking at having some mountains. And certainly along the rail belt the mountains tend to be federal and so there are nice locations Say Tina Lake is a great location if you have an open system. There’s various high lakes around Tina Lake. But you do get into the issue of if you’re pumping back to those lakes how much, what fish effects that you might have because you would be pumping some fish back on up. Preferably for that high valley you would have – well, a bedrock choke point Because if you think of say a 300 foot tall dam you need to be going down to bedrock So even though it might be 300 feet by the time you add room at the top to have your _____ or protection and you need to go down to seek it into bedrock that base being 300 feet might be 350 feet or more by the time you build it Upstream of your dam or your pump you want to have a low gradient valley floor because most of the stream channels you have around the valleys, you’ve got probably a 400 foot elevation drop per mile. So if you want to be able to build a pump storage facility in a valley around here, there’s a good chance that to get – if you want to hold any type of water that’s very much quantity you’re going to need a reservoir that’s more than a mile long. And just to get it to be a mile long you’re going to have to build a dam that’s at least 400 feet tall. And a 400 foot tall dam is a pretty much about a world class size dam. You’re going to quickly get into a lot of issues and a lot of costs to make sure that it’s not going fail into any type of seismic event I think I mentioned also about the distance for the energy lost from transmission lines so that I think if I was looking at building it I would prefer that the generation renewable be located fairly close to where the pump storage is because you’ve got much less in the way of losses and they could be integrated I think much easier when they’re closer together And that would be pretty much about the last of my – some of the considerations. Givey, you can take over Givey Kochanowski: Thank you Brian for your comments and the state’s perspective on this. Very insightful. We’re going to transition to our final presentation. Ms. Smith is going to talk about the Eklutna potential project We should have worked out the audio issues from the beginning of the presentation and are now able to hear about this. And the purpose for showcasing this is this is kind of indicative of what might be seen elsewhere in Alaska, granted different topography and geography But where a starting point would be, what kind of initial research happens, what kind of analysis is being done on the front end What does a good resource potentially look like. And hopefully this is an insightful presentation for you to get a sense of what might be available in your area given what you’ve heard today. So with that Ms. Smith you have the floor Ceal Smith: Ok. Thank you. Can you all hear me? Ok. Good. Sorry about the technical glitches there. We haven’t used the Go To for some time now. Yeah. Well, thank you Givey. We’re really very happy to be part of this discussion today and been very impressed with all of the presentations so far. I guess we’re the last one. So I’m Ceal Smith and I’m with the Alaska Institute for Climate Energy People know us as Alice and we advance solutions to climate and energy issues in Alaska. And I want to emphasize that we are not project

developers. We are a think tank and we are looking at solutions to address some of the bigger climate energy challenges facing the state And we got interested in Eklutna originally because of the salmon restoration efforts Given some of the water constraints in that system. Carey Williams, one of our partners got to looking at that as a possible way to stabilize the water inputs and outputs for the system. And then we realized that I really had much bigger potential. So we had been working on this for several years and just recently I guess in the last year in particular as you mentioned the governor has gotten more interested in this project. Next slide Ok. So I’m just going to locate everybody here. Eklutna power plant is about 38 miles north of Anchorage. It’s on the rail belt right attached to all of the existing infrastructure It was originally built in ’55 I think was the latest upgrade after the – there was one subsequent one after the earthquake. So it really generates about between 30 and 40 megawatts. So yeah. It’s in particularly a good location being central to the rail belt and having access to all of the existing infrastructure. Next slide So it’s long been recognized that storage is a limitation for integrating renewable energy in Alaska. The state did set in 2006 I believe it was under Sarah Palin they did establish a 50 percent by 2025 goal for the state. It is not in the statute but it was put forth as an aspirational goal. And I think as CIRI and others would recognize the absence of affordable storage has been a real limitation to expanding some of the wind projects and also in some cases it’s been a constraint for adding solar. So that’s one of the reasons we got very interested in looking at storage because it was a major constraint for expanding renewable energy. So next slide So in January the governor asked us to produce a report for him on Eklutna. And that’s when he was asking us to compare it to _____ So we produced this report in February and it’s available on our website akclimateaction.org You can download the report there. And I think I saw one of our slides, one of our graphics in an earlier presentation. But if you look on the left side Eklutna is part of a rail belt wide system concept that we came up with And as you can see to the north we’re looking at PES at Eureka that would service Fairbanks and there’s also wind right close to that site. And then Eklutna as you can see there’s Fire Island wind which is not too far away And then to the south we looked at Light Mountain for a pump energy storage possibility, got really good head and that would provide more direct energy for or storage adding onto Bradley Lake for the southern peninsula And one of the reasons we thought it would be good to consider more smaller systems was to provide more resiliency. For example last year with the Swan Lake fires, Bradley Lake was cut off. And so there are some vulnerabilities that Alaska has with its rail belt system in terms of geography and potential increase in climate extreme weather events and wildfires and those kinds of things. So we’re looking at resiliency too. Ok. Next slide

So this is just a simple schematic but it shows the levels that we have at Eklutna As you can see Eklutna is in the middle and we would be adding or expanding the existing surge pond down below at Kmik and then adding one to two reservoirs up above in the Thunderbird system. Now this project could be phased up to three different phases. And the first phase would actually be quite low hanging fruit, just by adding turbines, bidirectional turbines and expanding the lower pond. We could actually get up to I think 40 megawatts of storage quite easily. And that would allow the almost immediate expansion of Fire Island wind for example as far as being able to balance the intermittency. Ok. Next slide So this gives you a bird’s eye view and I have prepared this for less technical audience than what I think we have so I apologize We can talk in the question and answer more technical. But this gives just a bird’s eye view. As you can see below is Beluga and _____ reservoirs and they both transitioned through Eklutna Lake up to the upper reservoirs. And they actually – I think the maximum head we would have from lower to up to Thunderbird, down to Beluga is about 4,000 feet. So there’s really good head for all of these systems Ok. So this is some of the cost estimates that we were able to – and as I said this is sort of tabletop analysis. We’re not project developers. So these numbers are undoubtably going to change but we think they’re in the ballpark for what we’re looking at in terms of cost, cost and benefits. So for Eklutna we’re estimating – let’s see. Oh the other thing I should reiterate too is we did look at wind and how much it would take and locating some potential wind capacity to feed into Eklutna So capital costs were estimated. They were going to be $855 million just for Eklutna That would give 426 megawatt capacity and total energy storage of 507 gigawatt hours annually So it is actually under a billion dollars for that system. We also costed out what the wind and the other two PES systems would be And for the total rail belt to convert the entire rail belt to 100 percent renewable using PES as the storage ability we’re looking at about $1.5 billion total cost. Next slide So these are, this costs out some of the specific Eklutna components a little bit more clearly So looking at just the phase one converging the existing system to pump energy storage would cost about $29 million. We’d get about 40 megawatts and 118 gigawatts storage capacity Adding the upper Thunderbird I’ll just let everybody read the chart. You can see $211 million. We get 143 megawatts and 147 additional storage capacity gigawatts hours. Lower Thunderbird $333 million, generation capacity 159 megawatts, storage potential is 242 gigawatt hours. And then the lower Beluga reservoir which would complete the entire system we’re looking at $282 million and 85 and respectively. And that  doesn’t add any additional storage So total we’re looking at capital costs of less than a billion dollars, generation capacity 436 and total storage 507 gigawatt hours Next slide

Oh oops. This looks to be the earlier version so we can skip that. We let me see if there’s anything new to add here from what we did before. Not really. Ok. You can skip that slide. And one thing that’s quite unique about Eklutna and probably all of the Alaska PES systems that we’re looking at is that relative to demand we’re able to design for long term storage. So next slide. Actually next slide Yeah. I actually took these two out. So this is the one that I wanted to talk about. Go back. There you go. Ok So this is a very simplified look at what the relative cost of lithium batteries, the short term storage which is more typical of the lower 48. I think the most we’ve seen in the other systems is about up to 20 hours but 6 to 8 is more typical is more typical for storage in the lower 48 and elsewhere Here in Alaska we actually have designed the systems for very long term storage and that as you can see brings the cost down substantially So we’re looking at under $25.00 per kilowatt hours with the systems we designed here. Next slide So to summarize. And this is also not the final slide I had intended. But this – I think I had added that seven major benefits and this lists four of them which is obviously the long term storage. We would get 30 days just from Eklutna would give us 30 days storage for average rail belt demand. And it allows rapid startup and operates as either a generator or a pump so that it fixes that variability issue that was talked about earlier. And it offsets seasonality much more than day to day variability. It’s our seasonality that is the most variable. And so the 30 day storage really provides a lot of backup for various weather and changes. Obviously we have very little solar in the winter. So I think it would provide Alaska a lot of flexibility and still be able to integrate fully with renewable energy And then the other points that I didn’t include here that are on my other slide are we would reduce our emissions to zero. And energy cost has been a big burden for Alaska. We had the highest, second highest energy cost in the country. And we think that integration of renewables would bring those costs substantially down. And I’m hoping my other slide is here Let’s go forward. Next slide. Ok. Yeah. These are kind of out of order from what I originally had. So yeah Here you can see by integrating we would get, we would be saving quite a bit. At this point the rail belt produces about 2.5 million metric tons of carbon. And that could go down to zero with Eklutna and the full system. Could take us to 100. So in comparison also would reduce emissions substantially. However it would still only get us to 75 percent renewables Now comparing capital costs for the whole rail belt system, all three PES and the wind, we estimated $4.7 billion as compared to Susitna-Wattana which has been estimated at around $6 billion Now the fuel price escalation cost is a big factor here in I think assessing the value of pumped energy and renewables. Alaska is looking at, has been facing increasing natural gas costs now for some time. And depending on what the escalation is we would save different amounts of money. But assuming that escalation is under three percent we would – the fuel

savings would be substantial. Next slide Ok. Here we go. This is the one I was looking at. This is a report or a chart from the Department of Revenue 2019 that shows what the escalation for natural gas costs have been. And at this point utilities are paying definitely a premium for natural gas. And those costs are estimated to just continue to increase. And depending on the rate of increase switching to renewables and pumped hydro would be offset substantially depending on what that escalation looks like Next slide So we recently got a Denali commission grant to take the pumped energy storage concept to rural Alaska and so this is a very preliminary map. But just a first kind of look at the state. I think it’s pretty clear that Alaska has enormous pump energy potential. We’ve got all the right variables. We’ve got mountains We’ve got water. Marine, sea water can be used for pumped hydro. I know that they’re using that in Australia. And so we’re just starting this work and we will be reaching out to rural communities. Our deliverable for Denali is to design sturdy microgrid systems using pump energy as an integration tool to get those communities once and for all off of very, very expensive diesel fuel So as we said we’ve just done this work And we invite any and all interested parties to contact us. And we would like to work with communities in codesigning these microgrid systems using pumped energy, small scale pumped energy storage. Kind of just shaped for the needs of the community. Next slide So we encourage – yeah, our partners in this project, the Denali commission and Eklutna the project as well. We’re working with Ground Truth Alaska and Kachemak Geospatial who have GIS and various utility and geological and environmental assessment expertise. We have one engineer on our team. And so we’re kind of a hodgepodge of various expertise that are doing this work at this point. So next slide. So we would really like to hear from anybody in rural Alaska, inside or outside that would be interested in working with us on this next phase of taking the PES concept to rural Alaska. So this our contact information and I hope that we hear from you. Next slide If you want to leave that up so people can note it. That’s it. Thank you very much Monica: Hey Givey. We’re not hearing you Oh there you are. Oh no. Sorry. You just muted There you are. I can hear noise. Try again Nope Givey Kochanowski: Can you hear me now? Monica: Yeah Givey Kochanowski: All right. Well, thank you for that presentation. That’s definitely spot on with the topic of the day. We are running against the clock a little bit. So

we will take questions but as you can see on the slide, all our contact information is available by email. I’d encourage you to reach out to presenters that you found interesting today or topics. We look to do a range of webinars over the next year on Alaska specific topics. So if you like this please give us feedback as well of what you found useful and what could be improved I have two things before we open up for questions First on the heels of Veteran’s Day I’d like to acknowledge all the veterans on the call. I know presenter wise Adam and Carl both are Navy veterans. Being in the native energy office its great to work with veterans and American Indians and Alaskan natives are the highest per capita population group in the military. So this definitely is fitting for our office and thank you to everybody that has served. Secondly, you may not know where to begin now. We definitely covered a ton of information And one of the best ways to move forward with the department of energy, office of Indian energy is through our technical assistance program. If you go to our website which is energy.gov/indianenergy we have a technical assistance page where we’ll meet you where you’re at. If you’re just in an exploratory stage and you want basic information we can help you with that. If you want some analysis help we can do that. We do full spectrum support so no matter what level of capacity your community is at or your native corporation we’ll work with you and help you find the right resources within our office, within our department in the national lab structure And then equally important with the interagency partners that we work with. You heard Denali commission mentioned here. We work with DEMB, within BIA quite a bit, Alaska Energy Authority, USDA rule development and there are many others that we partner with to make stuff happen here in Alaska. So I thank you for your time today. I appreciate you taking part of your Thursday to learn about our office and this interesting technology. And with that we’ll open it up for questions. So if you have a question I believe you can raise your hand on here. If not you can just start talking and hopefully we don’t cover up everybody talking at the same time Monica: So we have a question saying I was curious how the grid’s capacity to balance wind generation has affected your operations and/or plans for future expansion. I’m not too sure who that’s directed towards. I believe it’s for Suzanne. And Suzanne may have had to drop off. So I can direct that question to her Aaron. And then can you describe in more detail the pump turbine system you have modified your Gordon Butte PS project I think I understood that now you have separate pumps and turbines that could be operating at various levels of pumping or generating but independent from each other Carl Borgquist: Yeah. This is Carl. That is correct. We will have three generator turbine units and three motor pump units, all of which will be hydraulically connected and they all can be used and operated independently. It’s likely at this facility we’ll have more than one utility in so that gives a lot of flexibility to the several utilities that will be using this on a moment to moment basis. The other thing quickly I just wanted to say is if you look back on our slides the Gordon Butte project the actual reservoirs are about 60 acres on top, 80 acres of surface area below and they’re each about 60 to 80 feet deep. So we don’t need bedrock there, just swimming pools that are lined. Very easy to construct and can be constructed basically anywhere Monica: Thanks so much Carl. And then the last question we have is a question regarding micro power system or hydropower. What is the minimum or preferred elevation difference between the upper and lower reservoir? Carl Borgquist: I’m imagining that’s for me Monica Monica: Again it’s not really directed towards a specific person so I feel like either one of you could jump in Carl Borgquist: I’ll go ahead and if somebody else wants to add that’s fine. We usually look between 1,000 and 2,000 feet. There’s some cost benefit tradeoffs on the size and

the length of the pen stock. Also you’re configuring the amount of storage you’re trying to create versus the name plate generation output. So these are all things that get kind of tweaked based on the site and who the off taker is going to be and how we’re configuring the project to be used. But that’s a decent thumbnail sketch is you’re like for 1,000 to 2,000 feet generally as a sweet spot Ceal Smith: Now for this is Ceal. For our looking at potential systems in rural Alaska of course the higher the better. We’re looking at probably 800 to 1,000 minimum. So that’s anything over 1,000 is good. And I should have mentioned too that for the Eklutna project we were looking at a tram that would avoid the cost of putting a road in so that we could potentially do that in other sites too that would reduce the cost substantially Carl Borgquist: Monica can I just jump in for everybody, make one comment about this too? What you want to do – the pen stock is a very expensive piece of doing the pump storage and it’s from an engineering perspective it’s got some complexities and safety issues you want to pay attention to. You try to find a way that you can get the two reservoirs or tanks or whatever you’re going to be using are close enough in space that you’re not, again you’re not trying to construct miles and miles of pen stock to get from the upper to the lower reservoir. So in addition to elevation gain you’re looking for elevation gain in a very, that’s very steep and a very short throw is attractive just because it shortens the pen stock length Ceal Smith: Yeah. Right Monica: Perfect. Thank you both. And Givey that was actually it for the questions so if you want to close us out Givey Kochanowski: All right. Well, thank you everybody for taking time to join us today I hope you found this useful and productive Please feel free to give us feedback about the webinar. If you want more information you have all our contact information and Monica will be arranging this and making this available as a recorded webinar for future reference or for other folks that wish they could have made it today and just didn’t have the schedule availability but they could also learn from the expertise of our panelist. I thank all our panelists for their time today. I know it’s a lot to juggle with a busy schedule But this is a very useful conversation to start in the state of Alaska and we hope to be working with you moving forward. For the lower 48 folks on the phone please feel free to use the same information I provided for our office. We have staff in DC and in Colorado that predominantly handle the lower 48 energy needs. So collectively from Alaska or down south you will be able to get support from our office to consider this technology amongst your other portfolio options. Thank you and have a good day Monica: Thank you [End of Audio]