Alaska Energy: A First Step Toward Energy Independence

ALASKA ENERGY
A first step toward energy independence.

A Guide for Alaskan Communities to Utilize Local Energy Resources

January 2009

Prepared by:

Alaska Energy Authority
Alaska Center for Energy and Power

1

Copyright Information:

This publication for a Statewide
Energy Plan was produced by the
Alaska Energy Authority per legislative
appropriation. The report was
printed at a cost of $12.00 per copy
2 in black and white, and $58.00 per
copy in color in Anchorage, Alaska by
Standard Register.

Table of Contents

6 Sustainable Energy for Alaskans

8 How this Document Should be Used

17 Railbelt Region
22 Energy in Alaska
33 History of Energy Policy in Alaska
38 Current Energy Policy and Planning in Alaska
44 Policies with Energy Implications
55 Permitting

57 Technology Chapters
58 Diesel Efficiency and Heat Recovery
74 Efficiency (End-Use)
84 Hydroelectric
101 Wind
120 Biomass
135 Geothermal
150 Heat Pumps
156 Solar
161 Coal
168 Natural Gas
175 Delivery
179 Energy Storage
190 Hydrokinetic/Tidal
204 Wave
211 Nuclear
217 Coal Bed Methane
223 Fuel Cells
224 Alternative Fuels

232 Explanation of Database Methodology
240 Glossary
242 Units of Measure
243 Acronyms - List of Organizations
244 Acknowledgements
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T he narrative and model in this report are designed
to provide information to engage Alaskans who have
a passion to provide energy solutions, stimulate the
Alaskan economy and provide leadership for the benefit
of all Alaskans.

Alaska has had many high-quality energy plans written
over the years, but none ever gained traction to come
to fruition. To increase the likelihood that energy
solutions will become a reality, the new approach will
engage Alaskans in the solution and invite their active
participation in the selection and ownership of their
alternative energy sources.

The safe approach to conducting this work would have
been to hire a consultant. With some risk but a large
increase in the service to Alaskans, the Alaska Energy
Authority chose to utilize the expertise of in-house
staff. This personal accountability by the professionals
at AEA will help ensure Alaskans have access to energy
information and a single location they can work with to
resolve their energy challenges and opportunities. As
more information becomes available, the information will
be placed in the energy model for use by decision makers
long into the future.

Steven Haagenson
Statewide Energy Coordinator
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Sustainable Energy for Alaskans

W e Alaskans live in a magnificent state that has
many blessings when it comes to energy, but also
dependence on petroleum. This effort must be
approached as a team effort, where each participant,
some curses. Alaskans live in a state with abundant private or public, can provide value for permitting,
energy resources, but are hampered by long distances construction, applied research and development,
and low usages. natural resource management, financing, workforce
development in management, design, business,
The Alaska Energy Authority (AEA) has developed construction, operations, economic development,
this document to act as a first step toward energy wealth retention, and leadership.
independence for Alaskans. The document contains
two main sections - a narrative which you are Alaska Energy - First Steps
reading now, and a technology screening tool we
have developed to allow each community to review
locally available resources and determine the least- The first step in creating this document was to
cost energy options based on the delivered cost of identify each community’s current energy needs
energy to residents. for electrical generation, space heating, and
transportation. It is important to know these values
Energy use in each community is composed of three
as they provide a reference or measuring stick
major components: electricity, space heating, and
against which we can measure alternatives. Electric
transportation. The relative level of use and cost for
power usage was obtained directly from current PCE
each of these components differs across Alaska. For
reports, while heating oil and transportation was
instance, Anchorage residents pay comparatively
estimated by the Institute of Social and Economic
less for electricity and space heating, but more for
Research (ISER) based on modeling.
transportation due to heavy dependence on vehicle
travel. Rural Alaskans see lower vehicle travel, AEA conducted 28 Town Hall Meetings across the
but have much higher costs for heating oil and state, engaging many Alaskans through the process
electricity. of seeking answers to three fundamental questions:
1) What resources near your community - where
All of America is struggling with the high cost of you live, work, play, fish, and hunt - could possibly
energy, but Alaskans have the resources, the ability, be developed to help lower energy costs? 2) What
and the motivation to create long-term solutions that resources should not be developed? 3) Why not?
will greatly benefit our children and grandchildren.
AEA’s goal in developing the Alaska Energy Plan is The information gathered from these Town Hall
to reduce the cost of energy to all Alaskans through Meetings was used to develop a resources matrix
deployment of energy technologies that are vertically for each community. Potential resources identified
integrated, economic, long-term stably priced, and included hydroelectric, in-river hydro, wind, solar,
sustainable. wave, tidal, biomass, geothermal, municipal waste,
natural gas, propane, coal, diesel, coal bed methane,
In order to achieve this goal, we will be engaging and nuclear. Also identified were opportunities
Alaskans throughout the state who have the expertise for gasification and production of Fischer-Tropsch
and passion to use local resources to reduce their liquids.

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Sustainable Energy for Alaskans

For each resource, AEA formed Technology Teams
made up of people with expertise and a passion
for energy solutions who were asked to identify
technologies options and limitations for each
identified resource. The Alaska Center for Energy
and Power (ACEP) at the University of Alaska was
brought in initially to help guide the technology
discussions, and ultimately went above and beyond
in their work on the narrative and the comparative
database.
Appropriate technologies for each fuel have been
identified. Capital and operations and maintenance
costs for each technology have been determined and
adjusted by region through use of factors developed
by HMS Construction Cost Consultants.
The net result is a focusing tool that will provide
each community with a high-level snapshot of the
least-cost options for electricity, space heating, and
transportation for their community. Prices will be
based on a delivered cost that includes capital cost
for infrastructure. The delivered cost number can
be used to quickly compare the alternative energy
options to diesel fuel based on a range ($50-$150) of
crude oil prices.
This first step in the ongoing Energy Plan is
intended to provide a high-level tool to focus each
community on its relative options for generating
electricity and heat through the use of locally
available resources. This is an important step in
developing a community, regional, and statewide
energy plan. This process is intended to occur in
stages, and it allows the state to provide assistance
with maximum support and buy-in from Alaskans.
Starting at the local level and using this plan as a
building block to develop regional and statewide
energy plans, the goal is to engage citizens directly
in developing energy solutions for Alaska.

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How this Document Should be Used

T he illustration on this page shows a sample
community energy meter. The energy meter is part
within the cost range for diesel equivalent with crude
oil between $50/bbl and $150/bbl. The $50-$150
of the technology screening tool and allows for a range is considered the Yellow Zone and can include
quick comparison between alternative energy options the entire range of energy alternatives.
based on a range of future crude oil prices for each Some communities have options that exceed
community in the state. As part of this screening the diesel equivalent of $150/bbl. This range is
analysis, current electric and space heating costs are considered the Red Zone and indicates resources
compared on a total cost basis with capital, operation that are probably not cost-effective to develop at
and maintenance (O&M), and fuel costs for various this time. If no other resources exist, a broader
technologies. The focus is on near-term, commercial, regional evaluation should be conducted to search
and proven for available options
technologies, in nearby communities
although an with Green or Yellow
assessment Zone resources. The
of some pre- high cost is likely a
commercial or function of the size of
potential future the community, or the
options are also distance to available
included. resources.
The options for In some communities,
each community the resource capability
are compared with is much larger than
the current cost of the current energy
energy as well as requirements of the
a diesel equivalent community. For
range of $50/bbl resources developed to
crude oil (low their full capacity but
projection) to $150/bbl (high projection). There only using a portion of the energy, the cost would
are many communities with access to alternative be high and could shift into the Red Zone. This is
resources that can potentially provide energy at a the case with some of the larger hydroelectric and
cost below the diesel equivalent of $50/bbl crude oil. geothermal resources. In this case, the community
A sub $50 resource is defined as the Green Zone and could look at ways to use excess capacity from the
can include wood (biomass) heat and wind/diesel resource to spur economic growth opportunities and
options in the short term, as well as hydroelectric or lower the cost of energy to residents.
geothermal options in the long term. The projection
indicates that a Green Zone option alternative could There are several communities that do not have any
reduce energy costs even when crude oil is at $150/ viable alternative energy resources. This finding
bbl. demonstrates the need to follow up with regional
evaluations to assess potential alternatives beyond
For most communities, the resource options fall the immediate area of the community. It is also

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likely that some communities are too small or too and engage these entities in developing long-
remote, and the most economic answer would be term energy solutions. Local buy-in will permit
to continue to use diesel fuel for the forseeable more focused regional feedback to the legislature,
future. However, this analysis indicates that most thus insuring that the best options are being
communities have at least one opportunity to reduce recommended for approval. The screening tool is
diesel use, even if solely through implementing also designed to be continually updated as more
efficiency measures. information is available. In this way it will serve
as a valuable tool for the legislature and governor
We believe that use of local resources will help when they consider energy requests in future capital
stabilize local economies by developing jobs to budgets.
build, operate, and maintain energy systems. Local
jobs will also be created where fuel collection, The focus of this work is on the non-Railbelt
processing, and transportation are required. In this portions of Alaska. That is where the need to
way, the dollars currently spent on diesel fuel could reduce energy costs is greatest. The Railbelt will
be recirculated within a community and used to be addressed through an Integrated Resource Plan
strengthen the economic base. (IRP), which will evaluate multiple energy sources
and delivery systems. It is likely that the solution
The next step is to engage Alaskans at the regional
for the Railbelt will be a combination of available
level to discuss results from this screening tool.
resources such as large hydroelectric projects,
These regional meetings will provide a forum for
natural gas supplies, pipelines, biomass, wind, and
additional community input. Meetings will also be
conducted with utilities, municipalities, and native geothermal systems.
corporations to develop public/private partnerships

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A laska has abundant resources and Alaskans have
enjoyed relatively low-cost diesel prior to the pricing
to shift from diesel as much as possible, even when
prices are low, if we are to avoid high costs in the
surge in 2007 that extended through the summer of future.
2008. When fuel prices are low and stable, interest
This document can provide insight into the energy
in the use of locally available alternative fuels is
opportunities that lie ahead for Alaskans. The
low. When prices spike, interest likewise becomes
technology screening database is based on data
high, but the opportunity to use lower-cost fuels
collected from numerous sources throughout the
may not exist without proper planning, research,
state. Where data has not been collected, models
and development. During oil price spikes in the
were developed to approximate the missing data.
1980s, there was much interest in alternative energy
For example, ISER developed a model to predict the
across the nation, including Alaska. Nevertheless,
amount of heating oil used for spacing heating and
projects such as the Susitna Hydroelectric Dam were
vehicular transportation by community.
canceled when crude oil dropped to $9.00 per barrel.
Data pertaining to population change and Power
We have recently seen the price of crude drop from
Cost Equalization has also been incorporated and is
$124/bbl to $28/bbl, and lower, in a reduction
felt to be reliable and accurate.
similar to the one in the 1980s. This drop in oil
prices hits Alaska doubly hard, as a reduction in
The cost estimates contained in this report were
state revenue limits funds available to develop the
conducted at the conceptual level with no site-
necessary infrastructure needed to switch to lower-
specific design or scope development. Cost
cost fuels when crude oil prices again rise. The
estimates were based on similar historical energy
general consensus is that oil prices will again rise,
projects constructed in Alaska, vendor estimates,
but there is on-going debate about the future price of
and historical studies and reports for specific
crude oil and the long-term volatility. Alaska is an
applications. These need to be recognized for
oil-producing and exporting state, but there are many
what they are: high level conceptual cost estimates.
external factors that will increase or decrease crude
The recommendations are based on the best data
oil pricing. In a global market with large consumers
currently available, but detailed site specific cost
like India and China, Alaskans will be riding the
estimates must be completed prior to project
market roller coaster with little influence on the final
selection to determine more accurate values.
price determination. What can be controlled in this
energy world?
Alaska has numerous energy resources and the
power to choose its fuel supplies. A method is
needed to place these choices in perspective. Public
awareness needs to increase. There may be energy
options that can provide lower-cost energy than
today’s $50/bbl oil. Resources that could be used to
power and heat Alaskan communities and provide
opportunities for local economic development should
not sit unused. Alaskans must make the commitment

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T he technology screening tool exists in two
sections. The first is the energy meter page for a fast
A community can select its fast scan sheet and look
for resources in the Green Zone. If resources exist
scan of local resources. The second is in a numeric in the Green Zone, this is an indication that local
results format for a more in-depth analysis of the resources might provide a less expensive stable-
data. priced energy source, even if the cost of crude
oil were to rise. Green Zone resources should be
The energy meter page has been prepared for every reviewed for projected construction costs and time,
community in Alaska located “outside” the Railbelt since the most economic projects, such as hydro or
region. The numbers are reported as specific values geothermal, tend to have a longer construction time.
for convenience, but in actuality contain a high If all Green Zone projects have long construction
degree of uncertainty as a result of incomplete times, look at the Yellow Zone for resource options
data, conceptual cost estimates and estimates with a shorter delivery schedule.
based on models. They are intended to provide an
approximate value for the delivered cost of energy The Yellow Zone is the range of possible crude
from a particular resource. Prior to finalization of pricing we have seen over the past few months.
an energy resource selection, a detailed site-specific Predicting crude oil prices can be risky if not
cost estimate must be done to determine actual impossible. The recent reduction in crude prices is
project costs for financing and benefits evaluation. believed to be temporary, but exactly when and how
much prices will rise is not known. If resources
The energy meter page has two meter faces, one for exist in the Yellow Zone, this indicates that the
the cost of electricity and one for the cost of space alternative resource may not be economic unless
heating. The meter dial has three colors, green, crude oil prices were to rise. This is also the zone
yellow, and red. They are linked to the cost of crude where the state could assist in paying down the
oil. In the past few months, crude oil prices have capital debt component to reduce the resultant cost
ranged between $150/bbl to $30/bbl. With the price of energy to the community. If $50/bbl is the target
volatility of crude oil, the meter face was developed point for state assistance, then, rather than paying
to show the locally available energy sources with the entire capital cost of the alternative project, the
respect to a variable pricing of crude oil. Rather state assistance should be limited to paying capital
than predict the future price of oil, the green, yellow, costs down to the Green Zone or the $50/bbl target
and red zones have been created. The Green Zone point. Using the target point concept will help
defines relative costs for crude oil pricing of $50/bbl produce alternative energy at a level that can be
or less. The Yellow Zone defines cost above $50/ sustained. For example, large hydroelectric projects
bbl, but below $150/bbl. The Red Zone represents are capital intensive but have low O&M cost on
crude oil costs above $150/bbl. the order of $0.01/kWh. Rather than assuming full
capital relief and yielding the low O&M cost only, a
The cost of electricity and space heating from diesel balance of loans and grants could be applied to bring
fuel shown on the meters are computed using the the resulting energy costs down to the pricing point
price of crude oil, delivered to the community and equivalent. The all or nothing approach to capital
used in the existing infrastructure. The electrical funding may result in the wrong pricing signal for
costs include non-fuel costs so the electrical cost energy, and over-expend funds in one area while
shown will relate to the cost per kilowatt-hour shown other areas will be paying much higher prices. Both
on the billing statement, prior to the applicable PCE short and long-term projects can exist in the Yellow
reduction.
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Zone. As the values of resources have a wide evaluation of the balancing of the risks and rewards.
range, several of the lower-cost options should be The community energy model can be used to analyze
reviewed for further investigation. As a general and compare different methods and levels of financing
rule, short term projects should be selected first, and grants.
with the addition of larger or longer term projects
Learning from history, we need to recognize past
that will further reduce the cost of energy to the
performance, to avoid the historical results of
community.
alternative energy plans described in the ‘History of
The Red Zone includes projects that are not cost Energy Policy in Alaska’ section of this document.
effective at this time and will not be so unless
Specific factors which impeded success of alternative
technology develops to reduce the resulting energy
energy initiatives as stated in the House Research
cost, or until crude oil is above the $150/bbl price.
Report 85-C published in 1985 include:
The numeric results sheet can be used for a more in-
• State agencies did not develop strong
depth analysis of the data. The first part identifies
management capabilities
the current energy needs and costs for electricity,
• State agencies lacked methods for assessing
space heating, and transportation.
the technical and financial feasibility of
Sample Community

The current use can be compared to the existing projects
capacity and energy usages to determine the • Coordination among state agencies was often
general resource size required for the community. lacking
If a selected resource is much larger than the • Features of an alternative technology were
community needs, an economic development poorly matched with a useful rural application
opportunity exists. For the community to achieve • Unrealistic expectations existed about what an
the lowest price, the resource will need to be used agency or technology could accomplish
to its maximum. In this case, additional loads • Too much responsibility was delegated to
must be developed to match the capacity of the contractors while the state often assumed the
energy resource. For example, if a geothermal risk in performance of the project
source exists that is larger than the community
needs, the community could develop a fish cannery Development of public/private partnerships is critical
and use an absorption chiller to make ice in the for successful implementation, with recognition of
summer or grow vegetables under grow-lights in a our respective strengths and weaknesses to ensure all
geothermally heated greenhouse in the winter. parties are providing quality service to the effort.
Financing of energy projects is expected to be Private sector development by electric utilities, native
a mix of bonds, loans, private equity, grants or corporations, municipalities and other qualified entities
financial guarantees. To ensure the financial will provide access to management, business and
success of energy projects, good business practices operations expertise. Detailed business planning at
would require the creation of a project scope, the local level will ensure the technical and financial
cost estimate, project business plan, management feasibility of the projects. The business plans will be
team, design team, financing plan, and permitting required in all applications for state assistance and be a
strategy. Business plan development will also be core part of the evaluations by state agencies, similar to
necessary for grant and loan approval, with an the Renewable Energy Fund - Request for Applications

12


evaluation and selection process. The local business from Alaskans on the initial results and to obtain
plans will provide a tool to help identify and evaluate additional input. These discussions are an important
the best application of an alternative resource. The step in creating a regional vision for energy
risks and rewards must be balanced and shared by the development that has local support and buy-in. The
private, public and construction sectors. AEA team will discuss specific local opportunities
and explain the use of the report in a large group
Engaging Alaskans setting.
In addition to the public meetings, the AEA team
T he AEA team will engage Alaskans through a
series of public meetings across the state. Regional
will meet with the local municipalities, utilities,
native corporations, and other groups with an
interest in resolving the Alaskan energy challenge.
meetings will be conducted in early 2009. The public
These discussions will be conducted in smaller
meetings will be used as an opportunity to explain
group settings and will help identify the people who
to local residents the use and the results of the
have passion, expertise, knowledge and a realistic
report. This is also an opportunity to obtain feedback
perspective for a specific resource and technology.

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Akutan
Energy Used

39%
Heat 46%
Tr a nsp or t a t i on
El e c t r i c

15%

Total: $964 Per capita

Heat $372 Per capita POPULATION: 859

Transportation $147 Per capita
Sample Community

Electricity: $444 Per capita

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Monday, January 12, 2009 Akutan Aleut Corporation Page 1 of 5


Regional Corporation

Akutan Aleut Corporation
House 37
Senate : S
POPULATION 859 LATITUDE: 54d 08m N LONGITUDE: 165d 46m Aleutians East Borough
LOCATION Akutan is located on Akutan Island in the eastern Aleutians, one of the Krenitzin Islands of the Fox Island
group. It is 35 miles east of Unalaska, and 766 air miles southwest of Anchorage.
ECONOMY Commercial fish processing dominates Akutan's cash-based economy, and many locals are seasonally
employed. Trident Seafoods operates a large processing plant west of the City for cod, crab, pollock and fish
meal. The population of Akutan can double during processing months. Seven residents hold commercial
fishing permits, primarily for halibut and other groundfish. Subsistence foods include seal, salmon, herring,
halibut, clams, wild cattle, and game birds.

HISTORY Akutan began in 1878 as a fur storage and trading port for the Western Fur & Trading Company. The
company's agent established a commercial cod fishing and processing business that quickly attracted nearby
Unangan to the community. A Russian Orthodox church and a school were built in 1878. Alexander Nevsky
Chapel was built in 1918 to replace the original structure. The Pacific Whaling Company built a whale
processing station across the bay from Akutan in 1912. It was the only whaling station in the Aleutians, and
operated until 1939. After the Japanese attacked Unalaska in June 1942, the U.S. government evacuated
Akutan residents to the Ketchikan area. The village was re-established in 1944, although many villagers chose
not to return. This exposure to the outside world brought many changes to the traditional lifestyle and attitudes
of the community. The City was incorporated in 1979.

Sample Community
Current Energy Status PCE

Estimated Local Fuel cost @ $110/bbl $4.71
Electric (Estimates based on PCE)
/kw-hr
Current efficiency 11.81 kW-hr/gal Fuel COE $0.45 /kw-hr
Estimated Diesel OM $10,206
Consumption in 2007 48,913 gal Est OM $0.02 /kw-hr
Other Non-Fuel Costs: $98,502
Average Load 58 kW NF COE: $0.19 /kw-hr
Current Fuel Costs $230,488
Estimated peak load 116.51 kW Total $0.66 Total Electric
Average Sales 510,306 kW-hours $339,196
Space Heating (Estimated)
2000 Census Data 2008 Estimated Heating Fuel used: 56,012 gal
Fuel Oil: 100% Estimated heating fuel cost/gallon $5.71
Wood: 0% $/MMBtu delivered to user $51.81 Total Heating Oil
Electricity: Community heat needs in MMBtu 6,721
0.0% $319,950

Transportation (Estimated) Total Transportation
Estimated Diesel: 22,154 gal Estimated cost $5.71
$126,547

Energy Total $785,693

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Possible Upgrades to Current Power Plant
Power Plant - Performance Improvement to higher efficiency
Upgrade needed: Capital cost $7,500
Semiannual Circuit Rider Annual Capital cost $628 $0.00 /kw-hr

Status Completed Estimated Diesel OM $10,206 $0.02
New fuel cost $194,457 $0.38 Savings
Acheivable efficiency 14 kW-h
Avg Non-Fuel Costs: $108,708 $0.19
New Fuel use 41,267 $35,402
New cost of electricity $0.55
per kW-hr

Diesel Engine Heat Recovery
Heat Recovery System Installed? Capital cost $163,112
Is it working now? Annual ID $13,663
BLDGs connected and working:
Annual OM $3,262
Value
Total Annual costs $16,926 Savings
Sample Community

Water Jacket 7,337 gal $41,910
Stack Heat 0 gal $0 Heat cost $20.88 $/MMBtu $24,985

Alternative Energy Resources
Geothermal Capital cost $38,500,000 per kW-hr
Heat Cost
$/MMBtu :

Installed KW 5000 Annual Capital $2,587,805 $0.06 $18.22

kW-hr/year 41610000 Annual OM $1,155,000 $0.03 $8.13
Fuel cost: $0 $0.00
Site Name Akutan - Shallow
Total Annual Cost $3,742,805 $0.09 $26.36
Project Capatcity 200 MW
Non-Fuel Costs $0.21
Shallow Resource 0 Feet
Alternative COE: $0.30
Shallow Temp 99.00 C
% Community energy 8154% Savings
New Community COE $7.55 ($3,403,609)
(includes non-fuel and diesel costs)

Geothermal Capital cost $37,500,000 per kW-hr
Heat Cost
$/MMBtu :

Installed KW 6000 Annual Capital $2,520,589 $0.05 $14.79

kW-hr/year 49932000 Annual OM $1,125,000 $0.02 $6.60
Fuel cost: $0 $0.00
Site Name Akutan - Deep
Total Annual Cost $3,645,589 $0.07 $21.39
Project Capatcity 200 MW
Shallow Resource 0 Feet
Shallow Temp 99.00 C
New Community COE $7.36 ($3,306,393)

16


Hydro Capital cost $2,507,920 per kW-hr
Heat Cost
$/MMBtu :

Installed KW 197 Annual Capital $97,472 $0.17 $50.44

kW-hr/year 566166 Annual OM $55,200 $0.10 $28.57
Fuel cost: $0 $0.00
Site North Creek
Total Annual Cost $152,672 $0.27 $79.01
Study plan effort feasibilty
Plant Factor 69 %
Penetration 0.52
New Community COE $0.51 $186,524

Hydro Capital cost $2,509,760 per kW-hr
Heat Cost
$/MMBtu :

Sample Community

Fuel cost: $0 $0.00
Site Loud Creek
Study plan effort feasibility
Plant Factor 77 %
Penetration 0.54
New Community COE $0.51 $186,453

Wind Diesel Hybrid Capital cost $4,253,640 per kW-hr
Heat Cost
$/MMBtu :


Fuel cost: $0 $0.00
Met Tower? no
Homer Data? yes
Wind Class 7
Avg wind speed 8.50 m/s
New Community COE $0.89 ($3,900)

17

Railbelt Region

o pportunities and challenges in the Railbelt
Region differ from those in other parts of Alaska.
The complete Request for Proposals on the Regional
Integrated Resource Plan for the Railbelt Region of
The Railbelt electrical grid is defined as the service Alaska can be found on the Alaska Energy Authority
areas of six regulated public utilities that extend website, www.akenergyauthority.org.
from Fairbanks to Anchorage and the Kenai
The current generation mix includes a number of
Peninsula. These utilities are Golden Valley Electric
existing hydroelectric power plants that are operating
Association (GVEA); Chugach Electric Association
in the southern portion of the Railbelt. Two coal-
(CEA); Matanuska Electric Association (MEA);
fired power stations (one operational) are positioned
Homer Electric Association (HEA); Anchorage
within GVEA’s service area at Healy River, near
Municipal Light & Power (ML&P); the City of
extensive sub-bituminous coal resources available
Seward Electric System (SES); and Aurora Energy,
from the Usibelli coal mine.
LLC as an independent power producing utility.
Sixty five percent of Alaskan population lies within The Cook Inlet gas basin still yields large quantities
the Railbelt region. of natural gas for power generation and space
heating, but known reserves are now falling and
The southern portion of the Railbelt: Mat-Su Valley, dropping field operating pressures are causing
Anchorage, and the Kenai Peninsula are highly concern that the region may not be able to depend
dependent on natural gas as a source of electricity on lower Cook Inlet for adequate gas supplies in
and heat. The northern portion of the Railbelt the future. There are several proposals to construct
including Fairbanks and other communities in the pipelines that could bring Alaskan North Slope
Interior relies on petroleum fuels in addition to natural gas into the Railbelt. Consideration of these
natural gas, coal and hydroelectric electrical imports potential fuel sources will be a part of the integrated
from the south. Petroleum fuels provide the majority resource plan for the Railbelt.
of energy used for transportation across the entire
state. A number of future generation projects have also
been proposed, among them wind power projects,
Nearly all of the thermal generating capacity in the large-scale and small-scale hydroelectric power
Railbelt is more than 20 years old, and much of projects, Fischer-Tropsch plants, coal-fired power
it is more than 30 years old. The majority of the stations, and turbines fired by fuel oil or natural gas
generation is predominately combustion turbine turbines.
generation. There are five utilities to the south of the Future fuel supplies for the Railbelt are diverse.
Alaska Range. GVEA is the sole utility to the north. Near-term fuel supplies include natural gas from the
Lower Cook Inlet Basin, petroleum fuel supplies
A Regional Integrated Resource Plan (RIRP) is from Fairbanks and Kenai Peninsula refineries, and
being developed to identify and evaluate the best coal resources near Healy and Chuitna. Significant
resource mix to insure that least-cost options for quantities of North Slope natural gas are also
electricity and heat are developed in the Railbelt available, although there is no pipeline currently
region. The RIRP will be completed in late 2009 available to bring this gas to the Alaska Railbelt.
and will consider multiple energy options and Trucking of LNG from the North Slope is being
make a recommendation on specific projects to be investigated as an interim opportunity to use North
developed. Slope natural gas to reduce the cost of energy to the

18

Railbelt Region

Fairbanks area. If the large-scale Alaska Natural Gas Regional Integrated Resource Plan
Pipeline is constructed, then significant quantities of (RIRP) for the Railbelt
natural gas will become available in Fairbanks. A
compendium of known reports, RCA orders, and The goal of the Regional Integrated Resource Plan
other data are available on the AEA website at www. for the Railbelt (RIRP) is to minimize future power
akenergyauthority.org/USOhomepage.html, via supply costs and maintain or improve current levels
the ‘Resource Documents’ link under the section, of power supply reliability through the development
**Existing Railbelt Electric Grid data. of a single, comprehensive resource integration plan.
The plan will identify and schedule a combination of
The Susitna Hydro Evaluation generation and transmission (G&T) capital projects
over a 50-year time horizon.
Project
The large-scale Susitna Hydro Project was proposed
in the 1980s to provide hydroelectric power for
the Railbelt. It was evaluated extensively by the
state, but tabled in 1985 when oil prices dropped
precipitously. AEA is currently engaged in the re-
evaluation of the feasibility of this project. Historical
information about the Susitna Hydro Project is
available at http://www.akenergyauthority.org/
SusitnaReports.html.

AEA intends to complete these studies on or before
June 1, 2009. The RIRP for the Railbelt will require
consideration of information from the Susitna Hydro
Evaluation Project.

The Railbelt Electrical Grid
Authority Project
AEA recently completed the Railbelt Electrical Grid
Authority (REGA) Project, which recommends
business structures that will own, operate, maintain,
and control generation and transmission assets
throughout the Railbelt.1 The project considered Healy Clean Coal Project
several different energy futures for the Alaska
Railbelt, and a regional plan for generation and
transmission was part of this study. The final report
and other resource documents are available online at
http://www.akenergyauthority.org/REGAHomePage.
html.
19

Railbelt Region

The plan is intended to provide:
• An assessment of loads and demands for the The RIRP will include consideration of the following
Railbelt Electrical Grid for a time horizon of energy sources:
50 years, including new potential industrial
demands; • Healy Clean Coal Project
• Projections for Railbelt electrical capacity • Susitna Hydroelectric Project (including
and energy growth, fuel prices, and resource phased development)
options; • Chakachamna Hydroelectric Project
• An analysis of the range of potential generation • Fire Island Wind Power Project
resources available, including costs, time for • Eva Creek Wind Project
construction, and long-term operating costs; • Fairbanks Fischer-Tropsch Project (energy
• A schedule for existing generation project source and fuel source)
retirement, new generation construction, • Chuitna Coal Project (energy source and fuel
and construction of backbone-redundant source)
transmission lines that will allow the future • Nenana Basin natural gas
Railbelt Electrical Grid to operate reliably • New gas reserves and exploration in Cook
under open access tariffs, with a postage stamp Inlet
rate for electricity and demand for the entire • North Slope natural gas Bullet Line
Railbelt as a whole; • LNG trucked from the North Slope to
• A long-term schedule for developing new fuel Fairbanks
supplies that will provide for reliable, stably-
priced electrical energy for a 50-year planning In order to integrate Susitna development with
horizon; Railbelt Electrical Grid capacity and energy needs
• A diverse portfolio of power supply that the RIRP will consider a number of options for
includes in appropriate portions renewable bringing generation sources online, including the
and alternative energy projects and fossil fuel phased development of the Susitna Hydro Electric
projects, some of which could be provided by Project. The RIRP will also consider input from the
independent power producers; Wind Integration Study currently being conducted
• A comprehensive list of current and future by AEA, and it will include an analysis of the role
generation, transmission, and electric power of demand side management rules and the ability to
infrastructure projects, each one including a reduce generation resource and energy requirements
project description, narrative, location, fuel if such programs are implemented.
source, estimated annual fuel consumption,
power output capacity, and energy output, both The RIRP will also consider potential contributions
annually and monthly. of a merchant power market, where energy needs
could be partially met by tenders from the Railbelt
For reasonable generation fuel supply configurations, G&T entity for a portion of the power supply needs.
the RIRP will develop and recommend up to three The RIRP process will analyze a range from 0% to
feasible resource plan scenarios, complete with 25% of power needs being supplied by merchant
assessment of costs and benefits, and collective and power suppliers (Independent Power Producers).
individual impacts on utility tariffs.

20

The RIRP will also consider a scenario where in
10 years all Railbelt G&T assets will be owned,
controlled, maintained, and operated by a single
business entity.

Transmission planning for the RIRP will begin with
the most recent Chugach and GVEA transmission
plans integrated into an overall interconnected grid
development. It will be assumed that transmission
projects will be accomplished cooperatively with the
serving distribution utility whose service area the
transmission line must traverse.

The RIRP will consider future industrial loads
compared to a baseline load growth (demand and
energy requirements) scenario, that assumes Railbelt
development without new, heavy industrial high
power demand. An evaluation of potential future
industrial projects for the Railbelt and of incremental
costs identified for increasing G&T capabilities to
supply industrial loads will be completed. This
will include the Donlin Creek mining projects
and the Pebble Mining project as possible grid
interconnected loads, as well as a third, undefined
but similarly sized industrial project.

21

Energy in Alaska

Introduction
It is difficult to conceive many human activities that 43% of total energy end-use in Alaska, however a
do not in some way depend on affordable, reliable large portion is used for international flights and is
energy. Whether it is providing fuel for our vehicles, not actually consumed in-state. An additional 484
electricity and heat for our homes, or energy for the Mmbtu can be attributed to energy used for oil and
production and transportation of the products we use gas production in 2006, and while this was energy
daily, almost everything we do depends on a constant consumed in-state, a vast majority of the product
supply of energy. Inexpensive energy has helped was shipped out of state as crude oil exports.
our society create wealth and, as an energy exporting
state, is a cornerstone of our economy. Alaska is also home to tremendous untapped or
underutilized energy resources, including some of
The United States uses more energy per capita than the highest concentrations of fossil and renewable
any other country in the world, and Alaska as a state energy resources on earth. In addition to the well-
has the highest per capita energy use in the nation known oil and natural gas resources on the North
at 1112 Mmbtu per person. This is more than three Slope and in Cook Inlet, Alaska’s proven coal re-
times higher than the national average of 333 Mmb- serves represent the 4th largest fossil energy resource
tus, and is in part due to our climate, with long cold in the world. Alaska also has significant undevel-
winters throughout most of the state requiring more oped geothermal resources in the Aleutian Island
energy for heating homes. However, our geographic volcanic arc, abundant untapped hydropower, wind,
location and oil and gas industry also contribute and biomass resources, and the majority of the tidal
significantly. For example, almost 32 million bar- and wave power potential in the United States.
rels of jet fuel were used in 2006. Jet fuel constitutes

How Much Energy Does the
Average Alaskan Use?

A long distance sled dog puts out 5 kW,
or 17 Mmbtus, based on a 10,000 kcal/
day diet during a typical day on the
Yukon Quest or Iditarod. This means
that in order to generate the amount of
energy needed by each Alaskan every
day, we need the equivalent effort of 65
Iditarod sled dogs.

22

Total Annual Energy Consumption per Capita
Energy in Alaska

Data from the United States Energy Information Administration (EIA), based on 2006 values.

23

24
Energy in Alaska

Energy diagram produced by the Alaska Center for Energy and Power based
on data from ISER, the Alaska Department of Natural Resources, the U.S.
Army Corp of Engineers, and the U.S. Energy Information Administration

Energy in Alaska

Energy Flow in Alaska
In order to reduce the cost of energy for Alaskans, it tricity, where on average 66% of the energy used by
is important to understand how energy is produced our power plants is dissipated as waste heat.
and how it is used. The energy flow diagram on the
opposite page describes the inputs for Alaska energy It is also interesting to note that since 2001 (the last
consumption, as well as the amount used by the time ISER completed an energy flow diagram for the
residential, commercial, industrial, and transporta- state), residential energy use increased by 18% while
tion sectors. While the values used in this diagram the state population increased by only 7%. This
are based on 2006 data, the only recent significant shows that we are not doing a good job impelement-
change in major energy use patterns is the closing of ing energy efficiency measures at the level of the
the Agrium Fertilizer plant on the Kenai Peninsula, individual home owner, which should be the lowest
which has eliminated urea exports out of the state. cost and consequently the first area addressed when
seeking opportunities for reducing the cost of energy.
Energy flow diagrams are useful for visualizing
where energy comes from and where it goes. They Unfortunately, the picture of energy flow for the
also demonstrate the inefficiencies associated with entire state of Alaska does little to show what is hap-
various energy conversion technologies as energy is pening in any particular region, let alone in a single
‘lost’ between the developed resources (left side of community. For example, a large fraction of the
diagram = 2173 trillion btus), energy exports (top of hydropower is produced in southeast Alaska, while
the diagram = 1435 trillion btus), energy consumed natural gas is a large component of energy supply in
(right hand side = 363 trillion btus), and energy the Anchorage area and Kenai Peninsula, as well as a
imported (bottom of the diagram = 70 trillion btus). few communities on the North Slope. Coal is solely
This is particularly evident in the production of elec- used in Interior Alaska for both power generation
and heating.

What is 1 trillion btus?
The units used for the energy flow diagram are in trillion btus (British Thermal Units), where 1 btu
is the energy required to raise 1 pound of water 1 degree Fahrenheit. Another way to understand
what a trillion btus represents is that each Alaskan uses nearly 1 million BTUs per day; so 1 trillion
BTUs is about enough energy for a day and a half of energy use for all of Alaska.
Alaska’s total energy consumption in 2006 = 419 trillion btus divided into the following sectos:

• Residential 45 Trillion BTUs
• Commercial 45 Trillion BTUs
• Industrial 26 Trillion BTUs
• Transportation 263 Trillion BTUs

25

Energy in Alaska

Historical Trends in Energy Consumption
Using data on the consumption of energy from the the late 1960s, and by the early 1980s natural gas
U.S. Energy Information Administration (EIA), we was the predominant source of energy used in Alas-
can track the amount of energy used in Alaska since ka. When oil and gas production began on the North
statehood. These estimates of consumption from the Slope in the late 1970s, natural gas consumption by
EIA also include energy used during oil and gas ex- industrial users increased dramatically because it
traction processes, and jet fuel from international air was used to power North Slope operations. All other
travel. The graph below shows the gross consump- fuels, including diesel, motor gasoline, jet fuel, and
tion of energy in Alaska from 1960 through 2006. coal, have contributed relatively stable shares of total
Oil and gas production began in Cook Inlet during energy consumption per capita in the state.

Chart created by ISER based on data from the United
Stated Energy Information Administration

27

Energy in Alaska

Putting the Cost of Energy in Context
While energy and its cost to our communities are the is clear, what is less definitive is whether these rising
main focuses of this document, the context of energy costs directly correlate to out-migration from rural to
within the social framework of Alaskan communi- urban areas, and out of the state completely.
ties must also be considered. Energy is ultimately a
tool used to achieve a certain quality of life. Energy ISER recently completed a study that indicates
heats homes, runs appliances, provides light, fuels migration from rural to urban areas of the state is a
our vehicles, and powers communication equipment, long-term trend caused by a number of factors and
among other applications. With this fact in mind it that it has been occurring for generations in some
is clear that state energy planning must look at more parts of the state. There has also been a small net
than simply reducing the cost of energy in communi- migration out of the state since 2002. Many factors
ties throughout the state. The planning effort must contribute to this trend, including the overall high
also look at the much more complex goal of improv- cost of living in Alaska. In general, people migrate
ing and sustaining the quality of life across the state to improve their lives by increasing their access to
to retain a stable population base, and diversify the opportunities such as better paying jobs, education
economy. for themselves and their children, and a lower cost of
living. It is possible that the current spike in energy
The statement has often been made that many Alas- costs may serve as a tipping point, or final straw
kan rural communities are dying, and this is fre- stressing rural residents to the point where the deci-
quently attributed to the high cost of energy in those sion to leave is finally made. This decision is also
locations. It is easy to document the fact that resi- frequently influenced by other considerations: the
dents in most rural communities spend a dispropor- lack of adequate housing, lack of well paying jobs,
tionate percentage of their gross income on energy and deterioration of social networks due to prior out-
when compared to the more urban areas of the state. migrations and other social issues.
According to ISER, in 2006 rural residents spent
approximately 9.9% of their total income for energy- In fact, an attitudinal survey of 600 Alaska Natives
related expenses, an increase from 6.6% in 2000, and 302 non-Natives who had moved from rural to
and there has almost certainly been a further increase urban areas of Alaska was conducted by the First
since 2006. Alaskans Insitute in 2007. It indicated that for 65%
of survey participants, nothing would motivate them
While this trend is most apparent in rural Alaska, to return to rural Alaska. This is presumably due to
the rising cost of energy is affecting Alaskans in all a lack of real or perceived opportunities for them-
regions of the state. Southeast Alaska and Kodiak, selves and their families, which combined with the
which largely benefit from stable electric costs from high cost of living, reduced the overall attractiveness
hydropower, are still being effected by the high cost of their community of origin.
of space heating. The Fairbanks area has seen a dra-
matic increase in both space heating and electricity In the technology screening database developed as
costs. Even in the Anchorage area average residen- part of this document, the cost-to-benefit analyses of
tial natural gas prices increased 27% in one year, energy projects in each community are based solely
from 2006 to 2007. While the rising cost of energy on the potential for displacing diesel fuel. There is

28

Energy in Alaska

no consideration included for the impact of any single
project on the overall economic health of a commu-
nity, such as the potential for new jobs, businesses, or
industries. However, even though the database does
not quantify those impacts, they exist. Examples in-
clude jobs created by harvesting and processing wood
for a biomass energy project, the development of a
greenhouse business based on low-cost heat from a
geothermal development project and the stabilization
of energy prices through the use of local renewable
resources.

An energy project could also have a positive im-
pact on the social health of a community. Examples
include a more stable employment base, educational
opportunities for local students and the perception that
energy prices are becoming more stable. It is usu-
ally the communities that already have strong leader-
ship and cohesive social structures that will be most
successful in implementing new projects, and those
communities tend to be larger.

For more information:
Fuel Costs, Migration, and Community Viability Colt,
S. and Martin, S., University of Alaska Anchorage, In-
stitute of Social and Economic Research, May 2008.

Engaging community knowledge to measure progress:
Rural development performance measures progress
report Alaska Native Policy Center (September, 2007),
Prepared for the Denali Commission, available at http://
www.firstalaskans.org/documents_fai/A.%20RDPM%20
Report.pdf

29

Energy in Alaska

Current Energy Costs and Future Projections
Crude Oil and Fuel Products Crude Oil Price Forecast
Crude oil is a global commodity, and crude oil prices The U.S. Department of Energy’s Energy Informa-
are determined by global supply and demand. Apart tion Administration produces long-term price fore-
from an allowance for tanker transportation costs casts in its Annual Energy Outlook. The most recent
and quality differentials, it makes sense to speak of publication was June 2008. In the AEO2008 refer-
the world price of oil. Alaskans can do nothing to ence case, the world oil price path reaches a low of
impact this price. $57 per barrel in 2016 and then increases to about
$70 in 2030 (2006 dollars).
There is no price for Alaska crude oil on the New
York Mercantile Exchange (NYMEX) or other com- In the high-price case, with the price of imported
modity exchanges. The spot price of Alaska North crude oil rising to $119 per barrel (2006 dollars) in
Slope (ANS) crude oil is calculated by subtracting 2030, the average price of U.S. motor gasoline in-
a market differential from the price of West Texas creases rapidly to $3.06 per gallon in 2016 and $3.52
Intermediate (WTI) quoted on the NYMEX. Four per gallon in 2030. In the low-price case, gasoline
different assessment services estimate that market prices decline to a low of $1.74 per gallon in 2016,
differential and report a daily spot price for ANS. increase slowly through the early 2020s, and level
off at about $1.84 per gallon through 2030 (see Fig-
Fuel oil (also often called diesel) is one of several ure 1 on the following page).
products distilled from crude oil and used for heat-
ing fuel or engine fuel. Alaskans use a number of It is important to note that in the past, EIA forecasts
petroleum products, including motor gasoline, diesel have not proven to be overly accurate. This is in part
fuel #1, diesel fuel #2, aviation gasoline, and jet because a large number of factors, some unpredict-
fuel. Motor gasolines are used in automobiles, small able, can affect crude oil prices on the world market.
boats, and snowmachines; there are typically three
grades of gasoline available (mostly in larger com- Current Crude Oil Price Trends
munities in Alaska). Diesel fuel #1 is a kerosene The EIA also publishes the Short Term Energy
product used for heating fuel. Diesel fuel #2 is a Outlook. The next one will be published in January,
light gas-oil used for home and commercial heating 2009. According to the October 2008 report, strong
and as a motor fuel. Aviation gasoline and jet fuel global demand and low surplus production capacity
are used to fuel aircraft, but a type of jet fuel is also contributed to the run-up to record crude oil prices
often used for home heating. According to Crowley in July. The current slowdown in economic growth
Marine, one of Alaska’s largest fuel distributors, is contributing to the recent decline in oil demand
most of the diesel fuel in more populated areas like and the sharp decline in prices since July. According
Southcentral Alaska and Fairbanks is ultra low sulfur to the December 8 report, the current global eco-
diesel. Most villages in Western Alaska still use low nomic slowdown is now projected to be more severe
sulfur diesel because they are exempt from the ultra and longer than in last month’s Outlook, leading to
low sulfur diesel requirement until 2011. further reductions of global energy demand and addi-
tional declines in crude oil and other energy prices.

30

Energy in Alaska

$140.00

$120.00

$100.00
Dollars per Barrel
(2006 dollars)

$80.00

Figure 1. Energy Infor-
$60.00
mation Administration
Crude Oil Price Forecast
$40.00

$20.00

$0.00
1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

2016

2019

2022

2025

2028
Reference High price Low price

$160.00

$140.00

$120.00
Dollars per Barrel
(nominal dollars)

$100.00
Figure 2. Energy Infor-
$80.00 mation Administration
Short-Term Crude Oil
$60.00 Price Forecast
$40.00

$20.00

$0.00
Jan-04

Jan-05

Jan-06

Jan-07

Jan-08

Jan-09
Sep-04

Sep-05

Sep-06

Sep-07

Sep-08

Sep-09
May-04

May-05

May-06

May-07

May-08

May-09

31

Energy in Alaska

The monthly average price of West Texas Interme-
diate (WTI) crude oil has fallen by more than half
between July and November, reflecting the fallout
from the rapid decline in world petroleum demand.
The annual average WTI price is now projected to be
$100 per barrel in 2008 and $51 in 2009. The OPEC
oil cartel met on December 17, 2008 and agreed to
reduce production by 2.2 million barrels per day,
their largest decrease ever, to boost prices. Whether
all producers adhere to the reductions and whether
the reductions stem the price slide or raise prices are
yet to be seen. Figure 2 on the previous page shows
the EIA short-term price forecast.

32

History of Energy Policy in Alaska

A laska has a history of energy planning and poli-
cy development dating from statehood in 1959. That
in the 1960s. Demand for petroleum products has
continued to expand with the introduction of electric
history still holds some relevance today by demon- utilities and other infrastructure such as schools and
strating both successful and less successful energy water treatment plants.
program implementation. This section provides a
brief synopsis of past efforts in energy planning and Today most rural communities generate electricity
implementation of those plans, including some of the with centralized diesel systems. Petroleum fuels
lessons learned. provide the bulk of all energy for electricity, space
heating and transportation. Costs are high due to the
Overview of Rural Energy expense of moving fuel to rural Alaska and the small
scale of operations. The high costs have motivated
Although electricity first appeared in some rural residents to use less and mean rural energy consump-
Alaska villages as a result of military, cannery, min- tion is lower than in urban areas.
ing, or logging operations, its introduction into many
villages began only in the late 1950s as the BIA Rural Energy Policy 1979-1985
installed small generators for lighting its schools.1
This electricity was not available to households, and In 1979, under Governor Jay Hammond, the state
few villages had central power supplies before the articulated its first energy policy that included the
mid-1970s. The exceptions were larger rural com- following principles:
munities such as Bethel, Nome, Dillingham, and
Kotzebue. 1) Equitable distribution of Alaska’s energy wealth
2) Improved efficiency of production and delivery
Electrification began to spread more rapidly in 3) State planned and funded facility construction
the 1970s, but an estimated 85 rural communities, 4) Technical assistance in conservation and
most with less than 200 residents, were still without management
central power supply systems in 1975. Over the 5) Support for development of locally oriented
next 10 years the state provided local communities a energy technologies
large number of grants for electrification, and by the 6) Public participation and local input in energy
mid-1980s most remote communities had centralized planning decisions
diesel power facilities. Several conditions at the start of the 1980s heavily
influenced development of this energy policy. This
The demand for diesel and other petroleum products included the concept that developing cheap power,
in rural Alaska originated with the introduction of primarily through investment in hydropower projects
outboard motors in the 1940s and snowmobiles in such as Susitna and Bradley Lake as well as various
the 1960s. This demand expanded when the BIA and projects in Southeast Alaska, would stimulate eco-
Alaska State Housing Authority began constructing nomic development. It was also assumed that state
conventional western housing in rural communities revenues from the newly producing oil field at

1. This historic account through the 1990s is partially extracted from Scott Goldsmith, Short (and Informal) Review of Alaska
Rural Energy Policy, with Particular Reference to Alternative Technologies, prepared for the Denali Commission, May 24, 1999.
33

History of Energy Policy in Alaska

Prudhoe Bay could provide the money needed to (peat, biomass, solar, wind, geothermal, tidal, hydro-
bankroll these huge investments. The high price of gen, fuel cells, heat pumps, and waste heat recovery)
oil and the expectation that it would continue to rise that the division would be investigating in the hope
also led to the assumption that there would be no that some would be appropriate for rural Alaska.
shortage of money. (In 2008 dollars the 1981 price of
crude oil was close to $60 per barrel) By the time the 1982 plan was written, the Division
of Energy, together with the Alaska Power Authority,
Of particular importance to rural communities were had spent $12.6 million on geothermal, wind, wood,
the following considerations: peat, single-ground-wire transmission, waste heat,
• A way to spread the wealth from oil to all weatherization, organic rankine generators, and tidal
residents would be to make electricity available energy. The state departments of Transportation and
and cheap for all Alaska communities, including Public Facilities and Environmental Conservation
those in the bush. also conducted alternative energy studies. Hydro-
electric studies fell into their own category.
• The high price of crude oil meant that the price of
diesel fuel, the source of most of the energy for The progress of those investigations can be traced
rural Alaska, was oppressively expensive - through the early 1980s by reference to each suc-
particularly in relation to costs in urban areas. ceeding State Long Term Energy Plan. These docu-
Many urban places were somewhat insulated by ments reflect the evolution of policy over time,
existing hydro facilities or by availability of partially through changes in administrative structure,
natural gas, which was not tied to the price of oil. and tend to be forward looking. Consequently, they
• The fear of oil embargoes gave rise to the idea include only a limited amount of information about
of self sufficiency of energy supply, which meant the successes, failures, and lessons learned from
the use of locally available sources of energy money spent on existing projects, including invest-
rather than the use of imported diesel. ments in alternative energy.

• The national initiative to develop alternative
What Did The State Learn About Rural Energy?
energy and implement conservation measures
After gaining experience with renewable resource
meant that a lot of money from the federal gov-
exploration and development in the early 1980s, sev-
ernment was available to consider alternative
eral conclusions were reached. These included:
means of providing electricity in rural Alaska.
Resource Assessment:
In 1980 the state began spending large amounts of
• Geothermal resources are site specific and ex-
money collecting data on energy resource avail-
pensive to develop
ability and energy use, conducting studies of hydro
• Wood is an excellent substitute for fuel oil
potential and investigating the potential for alter-
• Alaska has vast resources of peat, but technical
native energy sources, particularly for the state’s
expertise and infrastructure for its economical
smaller communities. For example, the 1981 State
use are not in place
Long Term Energy Plan (the first of six such plans)
• Wind resources need more study
described the activities of the newly formed Divi-
• Seasonal fluctuations restrict the viability of
sion of Energy within the Department of Commerce.
solar power
Prominent was a list of the alternative energy sources
• Tidal power has limited applicability
34

Alaska Energy: A First Step Toward Energy Independence

Alaska Energy: A First Step Toward Energy Independence

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