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Alaska’s Appetite for Clean Energy

Setting Economic Standards for the Arctic

January 20, 2016

By Erica Dingman

“Necessity is the mother of invention,” says Chris Rose, CEO of Renewable Energy Alaska Program (REAP), which he founded in 2004. “We have to continue to innovate.” Indeed innovation in renewables may be critical for meeting Alaska’s future economic, environmental, and energy needs. For his part, Rose has championed the benefits of renewable energies, particularly for rural communities cut off from a central grid. REAP helped craft Alaska’s House Bill 306 and Bill 152, which respectively resulted in the Emerging Energy Technical Fund and Renewable Energy Grant Fund (REF). Progress since is notable, but a sense of the past is helpful here.

In the 1970s and 80s Alaska’s power and heating challenges led to a statewide pursuit of alternative renewable energy sources. Concurrently, by 1977, the largest oil field in North America, Prudhoe Bay Oil Field on Alaska’s North Slope, began feeding the Trans-Alaska Pipeline with rich crude. Optimism flowed alongside as a stream of tax revenues fed state coffers. President Jimmy Carter’s installation of solar panels on the White House in 1979, amid concern about the Arab oil embargo, instilled a national sense of possibility. Conditions were right for solving domestic energy challenges.

With a presumed endless supply of future oil revenues, Alaska invested heavily in data collection of statewide energy resource.  The data suggested the presence of viable quantities of alternative energy sources including, among others, biomass, solar, wind, tidal, and geothermal. By 1982 Alaska’s then-Division of Energy, together with the Alaska Power Authority, had invested an estimated $1.7 billion in energy programs, which included $720 million in urban hydropower and $27 million in the search for alternative sources of energy. Innovation was clearly underway through research, development, and demonstration projects. There was a pressing need; numerous rural communities, many with fewer than 200 residents, did not yet have access to a power supply.

Yet skepticism crept in. A 1983 report by Arthur D. Little, Inc., a management consultancy firm, said “generally it is either technically difficult or uneconomic to alter the dependence of Bush [rural] communities on oil. Many alternatives, while attractive on the drawing board, experience operation and maintenance problems which quickly negate any cost savings. Reliability and simple technology are therefore essential.”

By the mid-1980s the state all but abandoned plans. Reports of poor financial planning, lack of infrastructure and technical knowledge, and poor management on the part of government led to the demise of renewables. Concurrently, oil prices plummeted, sending Alaska into recession and making renewables all but forgotten. It was easier to fall back on diesel, the predominant source of power and heating both then and now. Yet, diesel is not sustainable particularly for rural communities where reliable cost-effective energy and fuel may make the difference between subsistence living and economic growth.

It was not until 2004, however, when the Alaska Rural Energy Plan made recommendations for energy efficiencies and placed special emphasis on the nascent success with wind projects that the state showed a resurgent interest in renewables.

On average Alaskans pay 16.3 cents per kilowatt-hour for power, a considerably higher rate than the U.S. average of 9.8 cents per kwh. Hidden in this number are rates that vary greatly from place to place, with some rural communities paying upward of 50 cents per kwh. Although the cost of diesel fluctuates with the world market, Rose underscores that it’s “unsustainable to run communities off of diesel forever. It’s not the kind of economics you want to have for a community to prosper. It’s very hard to do anything but just survive in a community with that kind of electric rate. You can’t build a business easily.”

In collaboration with numerous agencies including the National Renewable Energy Laboratory (NREL), REAP addresses policy, technical, and financial hurdles. Alaska’s renewable energy program is legislated as state energy policy, and this status drives the scope of its funding. With a state goal of 50 percent renewable power by 2025, an autonomous renewable energy policy would provide greater predictability and avoid the possibility of conflict between state energy and environmental goals.

Fortunately Alaska is endowed with significant renewable energy resources including geothermal, wind, hydroelectric, and ocean tidal and wave, all of which are theoretically exportable or of commercial scale. Most of these resources, however, are “stranded,” located in remote and isolated areas far from existing power grids and from centers of Alaskan and global demand. Stranded resources present technical, logistic, and economic challenges. Coupled with extreme weather conditions, regulatory requirements, and environmental concerns, the barriers to initial test projects and commercialization are vast.

Kodiak Island, population 15,000, could be considered the poster child of Alaska’s renewable energy potential. Powered primarily (80 percent) by the island’s Terror Lake hydro facility, but still plagued by the high cost of diesel to make up the difference, Kodiak Electric (KEA) set the goal of 100 percent renewable by 2020. Ahead of schedule, in 2014 Kodiak proudly announced that they had reached 99.7 percent renewable power with the installation of wind turbines. Funded by REF and clean renewable energy bonds to cover the costly startup, three General Electric wind turbines were installed in 2009. Installation was not without hiccups and each phase created a new set of technical challenges, but knowledge gained in storage, stability, and microgrids is invaluable to future projects elsewhere. Since the first turbines were installed, KEA has saved an estimated $22 million in avoided diesel costs.

With similar goals, the smaller city of Kotzebue began installing wind turbines in 1997. Without the benefit of hydro, wind now provides 60 to 65 percent of the community’s residential power, displacing the burden and cost of diesel. Because extreme weather conditions require design specifications, wind towers are designed to withstand heavy ice loads and breaking mechanisms slow or stop turbine blades in high winds. And Alaska is not lacking for wind, hosting the largest area of the highest intensity wind power in the U.S.

Desire drives innovation, not only in locations with populations of 15,000 but also in small communities scattered across Alaska. In Igiugig this past summer, the tiny community of 69 residents successfully operated a river hydrokinetics program to provide 30 percent of community energy needs. The project was funded by EETF for its potential for commercialization in 5 years. “I think these innovations we are seeing in smaller communities are going to be applicable around the world,” says Rose. With each project, whether large or small, REAP and NREL get a better handle on the balance between sophistication and ease of use. Technology lacks longevity without the capacity for maintenance. Alaska is “one of the best laboratories in the world to pilot technology. We are in a developed country. We just have developing world conditions in many communities.” Alaska has much to offer in the way of experience learned through harsh weather conditions, islanded communities accessible only by air or by sea, and the requisite experience with microgrids.

This past summer, Rose and Gwen Holdmann from the Alaska Center for Energy and Power attended a renewable energy conference in Yatusk, the capital of Sakha Republic, Russia. The geography is vast, covering a landmass three times the size of Alaska and equal to that of India. A third of the population of 959,000 live in Yatusk and the rest live in remote communities. “Those folks are interested in the work we are doing with the Islanded Grid Resource Center and also the tidal arena program.” Islanded Grid Resource Center is a collaborative effort of REAP and the Island Institute.

But now we come full circle. As before, the state of Alaska has slid into precarious financial times. Brent crude now hovers at $30 a barrel, down from a high of $115 in 2014; Shell abandoned exploratory operations for the foreseeable future; and the economic dependency on oil has resulted in a state deficit of $3.6 billion. Funding has dropped off because of the state deficit. I wonder what will compel policymakers to learn from past experience.



Erica Dingman is a senior research fellow at World Policy Institute and directs the Arctic in Context initiative.

[Photo courtesy of Wikimedia Commons]

This article first appeared on the World Policy Institute website.