July 2021
PREPARED FOR
PREPARED BY
Alaska’s
Renewable
Energy Economy
Alaska’s
Renewable
Energy Economy
Progress and Possibility
TABLE OF CONTENTS
Executive Summary ....................................................................................................... 1
Introduction ................................................................................................................... 3
Alaska’s Energy Landscape ........................................................................................... 4
Energy Infrastructure ................................................................................................................... 4
Electricity Production .................................................................................................................. 6
Renewable Energy Investment in Alaska .................................................................................. 7
Economic Impacts of Renewables in Alaska ............................................................................. 9
Case Studies ................................................................................................................ 12
Kodiak Microgrid ...................................................................................................................... 12
Willow Solar Farm and Renewable IPP ................................................................................... 13
Chaninik Wind Group and Kongiganak ................................................................................. 14
Opportunities for Future Investment .......................................................................... 15
LIST OF TABLES
Table 1. Weighted Average Electricity Rate in Alaska ....................................................................... 5
Table 2. Net Electricity Generation in Alaska by Energy Source ...................................................... 6
Table 3. Renewable Energy Investment in Alaska by Energy Source .............................................. 8
LIST OF FIGURES
Figure 1. Percentage of Total Electricity Generation in Alaska by Energy Source ......................... 7
Figure 2. Renewable Energy Project Funding in Alaska by Project Type....................................... 7
Figure 3. Renewable Energy Electricity Generation Jobs .............................................................. 10
Figure 4. Renewable IPP Solar Farm Projects .................................................................................. 13
MCKINLEY RESEARCH GROUP 1
Executive Summary
This briefing paper summarizes the opportunity in Alaska for investment in renewable energy
infrastructure. This issue is timely and especially important for Alaska for several compelling
reasons:
• Transition to renewables is imperative for Alaska. As the nation’s only arctic state, Alaska is
on the front lines of climate change. High northern latitudes are warming much faster than
more temperate zones. Alaska has warmed at more than twice the rate as the rest of the
nation and the cost of addressing damage in Alaska caused by climate change is expected
to cost hundreds of millions of dollars annually.
• Alaska’s energy needs are intensive. Alaska ranks fourth on a per-capita basis in energy use,
yet extremely high costs in rural Alaska require public subsidies (such as the Power Cost
Equalization program) to bring consumer costs down to manageable levels. Reducing the
cost of energy would increase community financial sustainability, particularly for the remote,
rural, and often majority Alaska Native villages which face the highest cost burdens.
• Timely, near-term investment in Alaska renewable energy infrastructure can spur economic
recovery from the COVID-19 pandemic. Alaska was hit harder, economically, than the rest
of the nation, losing 8.1% of wage and salary jobs in 2020, while employment in the United
States overall was down 6.2%.
Renewable Energy Adoption
Recent decades have seen a steady march of
renewable energy infrastructure installed across
Alaska’s more than 150 energy grids. In most cases
renewables components have been added to
existing diesel grids, and Alaska has become a
leader in hybrid systems that augment diesel fuel
generation with wind, solar, hydroelectric, and
other renewable resources.
More than $690 million in public and private
investments were made in renewable energy projects throughout the last decade across Alaska,
from small rural villages to Anchorage. Of all renewable energy investments between 2010 and
2020, more than 80% funded construction activities, with the remaining investment funding
feasibility, design, permitting, and planning work.
Investment in Alaska Renewable Energy
Projects, 2010-2020
$690 million Invested
260 Projects
160 Communities
448 million Pounds of CO2 Offset
Annually
15-20 Construction Jobs per million
Invested
MCKINLEY RESEARCH GROUP 2
Opportunities
Alaska has significant and varied renewable resources that present opportunity for further
development, including:
• Some of the highest hydroelectric power potential in the United States.
• An established wind energy sector, with potential for additional large-scale and micro-level
development.
• Increasing opportunities in solar generation as hardware costs decline and benefits of
Alaska’s climate, such as low ambient temperatures, are recognized.
• The nation’s greatest potential for seaweed production for biomass energy.
• 90% of U.S. tidal energy resources for use in hydrokinetic electricity production.
• Geothermal potential that has been the subject of several feasibility assessments and is now
being developed in Unalaska.
In addition, Alaska has several opportunities to further develop the state’s renewable energy
landscape:
• With abundant resources, Alaska may capitalize on the emerging global appetite for
renewable energy. Capturing excess renewable energy as hydrogen, which can be stored
and transported in fuel cells, is one way to meet this global demand.
• Upgrading the Railbelt Transmission System would unlock renewable electricity
generation potential. Current capacity constraints mean variable renewable energy
generation is near capacity along the Railbelt; system upgrades would increase the potential
market for new renewable generation.
• Implementing beneficial electrification using electricity to displace heating and
transportation energy use would increase the scale of projects in rural Alaska, which often
improves project financial feasibility. Consortiums such as the Chaninik Wind Group, with
excess wind generation used for home heating, illustrate the success of this design in remote
Alaska.
• Growing an Alaska resident renewable energy workforce will be key to harnessing
economic benefits of renewable energy projects. With no in-state training programs or
apprenticeships in emerging occupations such as wind technician, utilities must make
significant investment in training employees for these roles. Industry growth can be
supported by promotion of renewable energy courses currently offered through the
University of Alaska and Alaska Vocational Technical Center, along with development of new
course offerings.
With well proven technology and a track record of integrating renewable energy with existing
systems, the state is poised for investment in transmission capacity and energy projects to unlock
Alaska’s significant renewable resource potential.
MCKINLEY RESEARCH GROUP 3
Introduction
Alaska’s energy system is unique in the United States. The state stretches across a landmass of
665,000 square miles, with significant regional variation in geology, hydrology, and regional
energy resources such as water, wind, and solar. Outside the state’s Railbelt region, energy
infrastructure is characterized by islanded micro-grids that have been built on a backbone of
diesel power generation. This type of power is costly and resource-intensive, particularly in
remote communities that rely on long logistical supply chains and limited local resources. Most
of these communities are off the road system, rural, and predominantly Alaska Native
populations. In addition, diesel generation is carbon-intensive – not only in the fuel source itself,
but also along the supply chain that is required to bring fuel to remote communities. Even in the
state’s urban areas, power generation is relatively expensive and reliant on natural gas, with
limited transmission capacity.
Against this backdrop communities throughout Alaska have been looking to renewable energy
resources and mobilizing the concepts, partnerships, and funding needed to integrate
renewable energy sources into local power grids. While the primary driver for these efforts is the
high cost of diesel-based energy production, secondary benefits of energy security and reduced
greenhouse gas emissions also contribute to the trend. The availability of public and other funds,
either in the form of grants or credits, or through special financing programs, also supports the
transition.
This paper describes the investments made in renewable electricity generation across Alaska
over the past decade and presents opportunities for new renewable energy projects across the
state.
Special thanks to the following organizations, which participated in this research:
• Alaska Energy Authority
• Denali Commission
• Kodiak Electric Association
• Launch Alaska
• Puvurnaq Power Company
• Renewable Energy Alaska Project
• Renewable IPP
MCKINLEY RESEARCH GROUP 4
Alaska’s Energy Landscape
Alaska’s total energy demand is among the lowest in the country. Yet factors such as the state’s
harsh climate and energy-intensive industries contribute to Alaska’s place as the state with the
fourth highest per capita energy consumption in the nation.
1
On average, retail electricity consumers in Alaska pay nearly double the U.S. average price per
kilowatt hour (kWh) at 20.22 cents/kWh, the second highest average in the nation and following
only Hawaii.
2
Costs remain high due to the high cost of transporting fuel to remote communities
for use in diesel-generated power plants and limited interties, among other factors. High
electricity prices contribute to an overall high cost of living for residents and deter potential
industrial development in the state.
Energy Infrastructure
Alaska’s energy infrastructure is spread over a vast area: the state’s landmass represents more
than 17% of the U.S. total. Because of the great distances between communities, the state’s
energy infrastructure is characterized by only one major transmission system and more than 150
standalone microgrids.
The largest transmission grid in Alaska runs from Fairbanks in the north through Anchorage and
to the Kenai Peninsula. Known as the “Railbelt,” this electrical grid provides about 79% of the
state’s electrical energy.
3
While about 73% of Railbelt electricity is generated using natural gas,
hydroelectric resources are also tapped along the Railbelt, including the Bradley Lake plant near
Homer and the Eklutna plant near Anchorage. Wind farms, such as Golden Valley Electric
Association’s Healy wind farm (the largest in the state) and the Fire Island wind farm near
Anchorage, are also included in the Railbelt’s energy profile, as are solar resources in Willow.
Outside of the Railbelt, Alaska communities are generally served by standalone electrical grids.
Rural standalone grids often rely on diesel fuel for electricity generation. High transportation
costs contribute to high diesel fuel prices across Alaska. Lacking road access, these communities
rely on water or air transportation of fuel. Communities that can receive fuel by barge often have
fuel tank farms for winter storage. However, when demand is high and/or storage capacity low,
these communities too must rely on costly air transportation of fuel. Across rural Alaska, many
1
U.S. Energy Information Administration. State Energy Data System 1960-2018.
2
U.S. Energy Information Administration. State Electricity Profiles. 2019.
3
Alaska Energy Authority. Renewable Energy Atlas 2019.
MCKINLEY RESEARCH GROUP 5
communities have integrated renewable energy resources with traditional diesel generators to
reduce reliance on diesel.
While Southeast Alaska also has some electrical interties serving more than one community,
most communities in that region are served by standalone electrical grids.
Power Cost Equalization
Given the high cost of electricity generation in rural Alaska, the State of Alaska’s Power Cost
Equalization (PCE) program is vital to Alaska communities, specifically for those communities
that are rural, remote, and lack transportation access; many of these communities are also
traditional Alaska Native villages. The PCE program was established in 1985 to equalize rural
electricity rates with those of more urban areas that benefit from infrastructure such as the State-
funded Alaska Intertie. Under this program, ratepayers in eligible communities receive a per
kWh subsidy on electricity rates. PCE-eligible communities range in size from Lime Village
(population 15) to Bethel (population 6,200) and many have majority Alaska Native populations.
In state fiscal year (SFY) 2020, more than 30,000 ratepayers, representing nearly 82,000
Alaskans, received PCE credits on their electricity bills. Over the past decade, cumulative PCE
disbursements totaled nearly $360 million, including $29 million disbursed in SFY2020..
4
Table 1. Weighted Average Electricity Rate in Alaska, SFY2020
$/kWh
Residential rate before PCE credit $0.4630
Residential PCE rate $0.2226
Effective residential rate $0.2404
Source: Alaska Energy Authority
The Regulatory Commission of Alaska (RCA) determines utility program eligibility and calculates
the per kWh subsidy using a formula accounting for fuel expenses (including transportation) and
non-fuel expenses such as salaries, insurance, parts and supplies, interest, and other reasonable
costs.
Added costs paid by the utility to integrate renewable energy sources or purchase electricity
from an independent power producer are included in the non-fuel costs for eligible expense
categories. However, depreciation expenses for grant-funded equipment such as generators
are not included in eligible costs under this formula.
Decreases in total fuel expense, which may be the result of integrating renewable energy, affect
PCE rate calculations. Reduced fuel and nonfuel expenses and ineligible grant-funded costs can
result in PCE-eligible ratepayers experiencing no decrease or an increase in effective electricity
4
Alaska Energy Authority. Power Cost Equalization Program Statistical Report FY2020. March 2021.
MCKINLEY RESEARCH GROUP 6
rates following integration of renewable energy.
5
Commercial customers and state and federal
government customers, including schools, are not eligible to participate in the PCE program.
6
Electricity Production
In 2010, nonrenewable resources accounted for nearly 80% of electricity generated in Alaska.
More than half (55%) of generation was fueled by natural gas, followed by 21% from
conventional hydroelectric energy, and 14% from petroleum liquids. That year, the Alaska
Legislature enacted a non-binding goal of generating 50% of the state’s electricity from
renewable resources by 2025. By 2019, increases in electricity generated from renewable
resources and declines at nonrenewable-resource facilities contributed to renewables
composing 30% of net electricity generation.
Long a top source of electricity in the state, conventional hydroelectric facilities experienced the
largest increase with net generation up 13% over the decade. With significant projects such as
Eva Creek (Healy) and Fire Island (Anchorage) added to Alaska’s energy profile, electricity
generated from wind resources grew tenfold between 2010 and 2019.
Table 2. Net Electricity Generation in Alaska by Energy Source,
Thousand Megawatt hours
2010 2019
% Change
2010 – 2019
Thousand
MWh
% of Total
Thousand
MWh
% of Total
Non-renewable
Facilities
5,307 79% 4,271 70% -20%
Natural Gas 3,750 55% 2,687 44% -28%
Petroleum Liquids 937 14% 901 15% -4%
Coal 620 9% 683 11% 10%
Renewable Facilities 1,452 21% 1,808 30% 25%
Hydroelectric
(Conventional)
1,433 21% 1,623 27% 13%
Wind 13 0% 143 2% 1,000%
Biomass 6 <1% 38 1% 533%
Solar 0 - 4 <1% -
Total 6,759 100% 6,079 100% -10%
Source: U.S. Energy Information Administration, Electric Power Annual
Note: Net generation refers to electricity generation by utility-scale facilities for all resource types and utility and small-
scale facilities for solar photovoltaic plants.
5
University of Alaska Anchorage, Institute of Social and Economic Research. Power Cost Equalization Funding Formula
Review. March 2012. https://iseralaska.org/static/legacy_publication_links/2012_03_14-NREL_PCEfinal.pdf
6
Alaska Energy Authority. Power Cost Equalization Program Guide. September 2019.
MCKINLEY RESEARCH GROUP 7
Figure 1. Percentage of Total Electricity Generation in Alaska by Energy Source,
2010 and 2019
Source: U.S. Energy Information Administration, Electric Power Annual
Renewable Energy Investment in Alaska
Over the last decade, more than $690 million in public and private investment was made in
renewable energy projects throughout Alaska. More than 260 projects were studied or
developed across 160 communities ranging in size from villages with 100 residents up to the
state’s largest city, Anchorage. Of investments between 2010 and 2020, more than 80% funded
construction activities, with the remaining investment funding feasibility, design, permitting, and
planning work.
Figure 2. Renewable Energy Project Funding
in Alaska by Project Type, 2010-2020
Source: McKinley Research Group
Construction
83%
Feasibility/
Permitting/
Design
17%
MCKINLEY RESEARCH GROUP 8
Resource Adoption
While many energy projects developed in Alaska over the last decade integrate renewable
resources with diesel generation, the following sections describe investments by primary
renewable energy type.
Table 3. Renewable Energy Investment in Alaska by Energy Source, 2010-2020
Primary Energy Source
Investment
($millions)
% of Total
Hydroelectric $330 48%
Wind $240 35%
Biomass $30 5%
Geothermal (Testing and Assessment) $30 4%
Solar $10 2%
Other Renewables $50 7%
Total $690 100%
Source: McKinley Research Group
HYDROELECTRIC
Between 2010 and 2020, hydroelectric projects represented nearly half of renewable energy
project investment in Alaska. Hydroelectric projects such as Blue Lake in Sitka, Allison Creek in
Valdez, and expansion of AEA-owned Bradley Lake in Homer were among the largest projects
in Alaska in terms of construction cost and generation capacity. “Lake tap” infrastructure
requiring no dam and “run-of-river” hydroelectric projects were implemented in the state over
this time period.
WIND
Over the past decade, wind projects represented 35% of investment in renewables. Large wind
projects developed between 2010 and 2020 include Eva Creek in Healy, Fire Island in
Anchorage, Phase II of Kodiak’s Pillar Mountain development, and the Snake River project in
Nome. Many wind projects developed over the past decade contributed to Alaska’s role as a
leader in implementing wind-diesel hybrid systems.
7
Investments in wind-diesel hybrid systems
in rural communities included efforts such as Chaninik Wind Group’s project, which
incorporated thermal stoves for residential heating using excess wind generation.
Enhancements in energy storage also provided opportunity for further investment between
2010 and 2020.
7
Renewable Energy Alaska Program. https://alaskarenewableenergy.org/initiatives/alaska-wind-working-group/ Alaska
Wind Working Group. Accessed June 2021.
MCKINLEY RESEARCH GROUP 9
BIOMASS
Biomass facilities across Alaska use renewable resources like wood, sawmill waste, fish
byproducts, and municipal waste to generate heat and electricity. Projects such as installation of
a chip-fired boiler at the Tok School, the landfill waste project in Anchorage, and the ongoing
sawdust and waste wood project in Hoonah represent the range of Alaska regions in which
biomass projects were developed over the last decade.
GEOTHERMAL TESTING
While no community-scale geothermal projects are yet operating in Alaska, testing and
assessment of various geothermal resources are among the renewable energy investments in
Alaska between 2010 and 2020. The most expensive of these projects was the U.S. Department
of Energy (DOE)-funded Southwest Alaska Regional Geothermal Energy Project, which explored
geothermal resources around Naknek.
SOLAR
Solar projects accounted for 2% of investment in Alaska in renewable energy between 2010 and
2020, including the state’s first utility-scale solar farms constructed in Healy and Willow.
Economic Impacts of Renewables in Alaska
While reducing carbon emissions is an important goal of renewable energy development, these
projects come with added economic benefits. New lower-cost diesel technology charts a path
toward savings for utilities and ratepayers. Further economic impacts are described below.
Development and Construction Phase Impacts
Renewable energy feasibility studies, design work, permitting, and especially construction
activity all support short-term employment in Alaska. This includes high-wage construction and
professional and business services jobs. Based on average annual spending on renewable
energy projects between 2010 and 2020, renewable energy investment directly supported
about 350 jobs in Alaska each year, resulting in an estimated $30 million in annual labor income
(wages, salaries, and employer-paid benefits). Additional spending from construction
companies and developers purchasing services and materials in Alaska and employees
spending their wages locally supported an additional 200 jobs annually, resulting in an
additional $10 million in labor income.
Renewable energy-related construction creates jobs at a rate of 15 to 20 jobs per million dollars
invested, typical for construction projects in Alaska, but particularly important when jobs are
created in rural areas where employment opportunities are scarce.
MCKINLEY RESEARCH GROUP 10
Long-term Impacts
The long-term positions required to operate and maintain renewable energy infrastructure
depend largely on the type and scale of renewable energy deployed. Positions range from wind
turbine technicians, who monitor and maintain systems, to maintenance jobs for clearing snow
and vegetation from solar plants. Particularly in rural communities, where employment
opportunities are often very limited, the skilled positions needed to support renewable energy
projects can be a significant source of income.
By the end of 2019, about 600 people were employed in renewable electric power generation
in Alaska across industries such as utilities, construction, professional services, and others. Jobs
in renewable power generation represented about 40% of all electric power-generation industry
employment in the state.
8
Figure 3. Renewable Energy Electricity Generation Jobs, 2019
Source: National Association of State Energy Officials
Contractors specializing in renewable energy installation in Alaska illustrate the potential to
further develop the renewable energy industry in the state. Alaska Native Renewable Industries,
a solar-installation company based in Huslia, is one example of the type of business already
operating in Alaska and employing locals in project development.
Community Sustainability
Reducing reliance on expensive diesel-fueled electricity in favor of more cost-effective
renewable generation enhances community self-sufficiency and financial sustainability in rural
Alaska. While PCE subsidies are vital to rural Alaskans, the program faces the same fiscal
constraints impacting the overall state budget. Developing renewable resources to provide
more cost-effective electricity can provide a path forward in the face of these financial
constraints. In the case of community-owned renewable energy systems, the opportunity to sell
8
National Association of State Energy Officials. U.S. Energy and Employment Report 2020.
9
61
92
439
Nuclear Generation Wind Generation Solar Generation Traditional
Hydroelectric
Generation
MCKINLEY RESEARCH GROUP 11
electricity to the utility company can also provide a source of local revenue and keep residents’
money in the local economy.
Alaska communities whose fuel storage cannot meet annual demand often need to supplement
seasonal barge shipments with high-cost air-delivered fuel, driving up costs for all consumers.
Declines in overall fuel consumption can translate to better alignment of demand with
communities’ diesel fuel storage capacity, eliminating these airborne fuel deliveries and
reducing fuel costs.
Any success in reducing the cost of energy in rural Alaska would have the benefit of more
sustainable communities, particularly those most remote.
Social Cost of Carbon
The “Social Cost of Carbon” provides a tool to express in dollar terms the value of reduced
carbon dioxide (CO
2
) emissions. This cost is designed to account for the long-term, worldwide
damage from CO
2
emissions on agricultural productivity, human health, property damages from
increased flood risk and changes in energy system costs, and other factors.
9
Based on the additional electricity generated by renewable energy resources in Alaska in 2019
compared to 2010 and the state’s average CO
2
emissions per MWh generated, the renewable
energy capacity added over the decade offset an estimated 448 million pounds of CO
2
emissions.
10
Using a standard U.S. federal government social cost of carbon estimate of $51 per
metric ton of CO
2
emissions, the long-term value of the offset emissions from the additional
renewable energy generation in Alaska is $10.4 million.
11
9
Interagency Working Group on Social Cost of Greenhouse Gases, United States Government. Technical Support
Document: Social Cost of Carbon, Methane, and Nitrous Oxide Interim Estimates under Executive Order 13990.
February 2021.
10
U.S. Energy Information Administration. State Electricity Profile: Alaska 2019. November 2020. CO
2
emissions
generated per MWh of electricity produced vary by type of fuel and plant efficiency.
11
The $51 social cost of carbon estimate is based on an emissions year of 2020 and the average 3% discount rate.
MCKINLEY RESEARCH GROUP 12
Case Studies
The following are case studies that illustrate the diversity of Alaska’s renewable energy
opportunities.
Kodiak Microgrid
Kodiak has long used hydroelectric energy resources from its Terror Lake facility, but with
significant additions to its renewable energy portfolio, Kodiak Electric Association (KEA) has
largely gone “diesel off.” In 2009, KEA installed three wind turbines at Pillar Mountain, then
doubling capacity with another three in 2012. The utility leveraged AEA grants to fund the
combined $28.6 million in projects. The addition of battery storage to stabilize variable wind
generation was key in integrating wind turbines with the existing hydroelectric infrastructure.
Among KEA’s recent renewable energy projects is the 2013 Terror Lake expansion.
The utility now employs four full-time wind technicians. Nearly all the wind technicians hired
by KEA had no prior experience in the field, and the association has made a significant
investment in training employees for this role.
With cost-effective generation from renewable resources, KEA has enabled new industrial
electricity use. A 2015 partnership between KEA, Matson, and the City of Kodiak brought a
$10 million electric crane to Kodiak’s port, replacing a diesel-power crane used for loading
and unloading shipping containers.
Renewable generation is significantly more cost-effective for KEA than diesel generation.
When last estimated, power from the combined hydroelectric and wind resources costs KEA
about 7.7 cents per kWh, compared to a previous diesel-generation cost of 28.9 cents/kWh.
With cost savings from increased renewable energy use, KEA has capitalized new projects
such as the $81.7 million Upper Hidden Basin project, which diverted water for use at Terror
Lake, without raising customer rates.
Combining generation from Terror Lake and Pillar Mountain, renewable energy use offset
899 million gallons of diesel fuel in 2020, avoiding over a million metric tons of CO
2
emissions.
“The economic benefits to our community from developing the Pillar Mountain wind
project when compared to diesel are high. By reducing the dependence on fossil fuels, we
are able to provide the community of Kodiak a lower cost of power, a cleaner source of
power, and maybe the most important is a stable source of power.”
– Kodiak Electric Association
MCKINLEY RESEARCH GROUP 13
Willow Solar Farm and Renewable IPP
In 2019, with the completion of the Willow Solar Farm (WSF) in the Matanuska-Susitna Valley,
Renewable Independent Power Producers (IPP) became one of Alaska’s first utility-scale solar
farm operators. The $1.5 million WSF installation was financed with an AEA Power Project
Fund loan and private capital.
WSF construction directly employed about 13 laborers hired by Renewable IPP and
supported additional short-term contractors in positions such as engineer, electrician,
lineman, and others. Laborers and subcontractors hired for the WSF installation were all
Alaska residents and companies. WSF’s ongoing economic impacts include new jobs created
to maintain the solar farm and new property tax revenue for the Matanuska-Susitna Borough.
With high solar panel asset value, Renewable IPP has a high assessed property value and paid
$16,400 in property tax to the Matanuska-Susitna Borough in 2020.
With the success of WSF, Renewable IPP is developing two additional projects – the Houston
Solar Farm (HSF) and Chugach Solar Farm (CSF) – whose capacity would dwarf that of the
WSF. Representing more than $20 million in combined investment, Renewable IPP expects
to fully fund the projects through private investment.
As interest grows in reducing carbon emissions, funding renewable energy developments
without increasing costs to ratepayers presents a challenge. In the case of Matanuska Electric
Association (MEA), which purchases electricity generated by WSF, a 2020 annual member
survey found more than 77% of members support the utility developing a carbon reduction
goal.
1
Independent power producers such as Renewable IPP assume responsibility of the
significant costs of integrating with the existing grid, thereby increasing renewable energy
use without burdening ratepayers with the cost of infrastructure development or additional
business risk. While electricity from WSF is currently sold to MEA for the same rate it costs the
utility to produce its own electricity, Renewable IPP hopes to sell generation from HSF and
CSF at a lower rate compared to the utilities’ current costs.
Figure 4. Renewable IPP Solar Farm Projects
Source: Renewable IPP
1.2 MW
Construction Jobs: 13
Operating Jobs: 3-5
8.9 MW
Construction Jobs: 30
Operating Jobs: 5-10
9.6 MW
Construction Jobs: 20-30
Operating Jobs: 5-10
Willow Houston Chugach
MCKINLEY RESEARCH GROUP 14
Chaninik Wind Group and Kongiganak
In 2005 Chaninik Wind Group (CWG), a consortium of stand-alone utilities in Southwestern
Alaska, was formed to combat the high electricity and home heating prices in many rural
communities unconnected to Alaska’s road system. Representing Kipnuk, Kongiganak,
Kwigillingok, and Tuntutuliak, CWG integrated wind resources into diesel-generation systems.
By forming this consortium, CWG demonstrated one model for increasing renewable energy
projects’ economies of scale, which often constrain developments in rural Alaska.
One method employed by CWG to increase the projects’ scale was embracing beneficial
electrification, designing wind systems with excess capacity diverted to electric thermal stoves
installed in village homes. Households with thermal stoves see significantly lower home
heating costs compared to the use of heating oil. In Kongiganak, Puvurnaq Power Company
(PPC), charges $0.10 per kWh for energy used by thermal stoves, equivalent to purchasing
heating fuel at about $3.00 per gallon, a significantly lower cost compared to current heating
fuel prices of $5.05/gallon.
1
For villages with a subsistence-based economy, home heating
and energy cost savings can positively impact residents’ ability to pay for necessary supplies
and fuel to continue traditional hunting, fishing, and gathering subsistence activities.
Even residents without thermal stoves see positive economic benefits from these wind/diesel
hybrid systems. Electricity sold for home heating represents an opportunity for utilities to
increase sales, spreading costs over more kilowatt hours and keeping residents’ money in the
local economy. For Kongiganak, reduced diesel demand has also allowed PPC to rely solely
on waterborne fuel deliveries and avoid high-cost air deliveries, reducing power costs
communitywide.
Wind technician jobs supported by these hybrid systems provide important employment
opportunities in communities with few other available positions. In each CWG community,
utilities now employ local wind turbine technicians who receive on-the-job training in town.
These technicians are trained to maintain and repair the system, avoiding the time and
expense which would otherwise be required to bring technicians to the community on an as-
needed basis.
“About 90% of residents rely on subsistence for food so more fuel savings for heating their
home goes to [pay for] fuel to practice subsistence.”
– Roderick Phillip, Plant Manager, Puvurnaq Power Company
MCKINLEY RESEARCH GROUP 15
Opportunities for Future Investment
Over the last decade, advances in renewable energy technology and declining hardware costs
have contributed to increased adoption of renewables throughout Alaska. Energy storage
technology has helped operators integrate renewables with existing infrastructure. While
hundreds of millions of dollars have already been invested statewide, further investment will be
required to meet or exceed Alaska’s informal goal of 50% renewable energy production.
Developed and Emerging Technologies
Alaska’s abundant natural resources make the state ripe for further renewable energy
development employing existing technology and new methods of generation.
SOLAR
Communities and companies in Alaska are continuing to recognize the state’s solar energy
generation potential. Even with considerable seasonal variation in sunlight, many parts of Alaska
have solar resources comparable to Germany, which is the world leader in installed solar
generation capacity.
12
Characteristics such as low ambient temperatures and ability to reflect
sunlight off snow cover enhance opportunities throughout the state. A 2016 analysis by the U.S.
DOE yielded promising results, showing that solar installations can be economically competitive
in rural Alaska even with relatively high hardware costs.
13
The state’s proven record of successful
solar installations in communities such as Ambler and Eagle indicate Alaska’s potential.
Reductions in hardware costs and energy storage to smooth variable generation will increase
the financial feasibility of solar projects. Maintaining federal tax incentives such as the Solar
Investment Tax Credit will continue to play an important role in developing Alaska’s solar
potential.
BIOFUELS
With thousands of miles of coastline, marine resources such as kelp present an opportunity to
implement new biomass energy systems. The University of Alaska Fairbanks is leading a project
to design and develop model kelp farms with the goal of reducing capital and operating costs
to produce this marine resource, which may be used in the production of new biofuels.
14
With
development of a cost-effective model, kelp biofuel has potential for increasing biomass
generation across coastal Alaska.
12
U.S. Department of Energy, Office of Indian Energy. Solar Energy Prospecting in Remote Alaska: An Economic Analysis
of Solar Photovoltaics in the Last Frontier State. February 2016.
13
Ibid.
14
University of Alaska Fairbanks. Could Kelp Be the New Energy Source? April 2021.
MCKINLEY RESEARCH GROUP 16
TIDAL
With 90% of all U.S. tidal energy resources, Alaska’s coastline also provides great potential for
further hydrokinetic energy production. Studies of tidal energy potential in Yakutat and
Turnagain Arm found sufficient wave energy for tidal generation. In 2021, developers were
moving forward with the Turnagain Arm Tidal Electric Generation project which would harness
tidal resources in Cook Inlet.
GEOTHERMAL
With 97 known thermal springs, Alaska is a geothermally active state and one of only eight in the
nation generating electricity from geothermal activities.
15
So far, the state’s geothermal
resources have only been used in small-scale projects such as the plant at Chena Hot Springs.
However, over the last decade several studies have been conducted to determine geothermal
feasibility in specific communities such as Nome and Tenakee Springs. The state’s significant
geothermal potential is starting to be realized in places such as Unalaska, where Ounalashka
Corporation and Chena Power LLC have formed a joint venture to develop a geothermal power
plant.
HYDROGEN
Alaska’s considerable renewable resources offer an opportunity to harness excess energy to
produce hydrogen, which can be stored and transported to markets outside of Alaska. Building
capacity to participate in this emerging export market could unlock potential from Alaska’s
stranded resources. This could shift some of the state’s renewable energy projects from fuel
import-substitution to an export industry.
15
Alaska Department of Natural Resources, Geological and Geophysical Surveys. Geothermal Energy.
https://dggs.alaska.gov/energy/geothermal.html
“We all want to know how to foster economic opportunity for Alaskans. Our economy wasn't
built on oil and gas alone - it was built on the backs of Alaskans willing to think big. The legacy
of oil and gas in Alaska is our ability to work together to accomplish the seemingly impossible
and to build big things. That's why our economic future should be built on clean energy the
same way we built our fossil fuel fortune - at scale and for sale. By leveraging our decades of
experience as an energy state, our incredible natural resources, and our unique location at
the geographic center of global commerce, the energy transition presents an economic
opportunity that will ensure prosperity for generations of Alaskans to come.”
– Rob Roys, Chief Innovation Officer, Launch Alaska
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Rural Economies of Scale and Risk
In rural Alaska, communities face limited access to private capital due to the small scale of
renewable projects and perceived risk of private lending. Standalone systems in small
communities often mean projects cannot achieve economies of scale, making projects
financially infeasible and contributing to a perceived risk in private lending. The ability to
leverage public funding has been important to overcome barriers to project financing. Public
funding is also important in overcoming the inherent financial risk of commissioning feasibility
studies.
Pooling resources, as in the case of the Chaninik Wind Group, to increase project scale can help
counteract these inherent financial challenges. AEA’s Regional Energy Planning initiative
provides a template for further comprehensive energy planning which could identify these
opportunities to combine projects. Continued planning efforts should be supported.
Beneficial electrification initiatives combined with renewable energy projects present an
opportunity to increase project scale, which can improve project financial feasibility.
Electrification opportunities, ranging from heating rural homes to industrial equipment in
Kodiak, provide a record of success in Alaska.
The perceived risk of PCE rate reductions can be a significant barrier to community support for
renewable projects. Key to overcoming this barrier is continued consideration of how best to
use the PCE program to support energy equity in rural Alaska while incentivizing cost-effective,
financially sustainable energy projects. The formation of an Independent Power Producer (IPP)
to operate renewable energy projects and sell electricity to the community’s utility could provide
a model for further renewable energy deployment while preserving PCE subsidies.
Transmission System Upgrades
In urban Alaska, transmission bottlenecks along the Railbelt Transmission System are a barrier
to increased renewable energy generation. Current capacity along the transmission system
restricts the amount of energy transferred from the site of renewable energy projects to different
areas of the Railbelt system, and the current level of variable renewable energy generation is
close to reaching the available renewable resource penetration of the system. These capacity
constraints restrict the market for new generation from existing infrastructure, such as the
Bradley Lake Hydroelectric plant on the Kenai Peninsula, and new project development.
Implementing the projects outlined in AEA’s Railbelt Transmission Plan to achieve the Railbelt
Transmission System Planning Standard would unlock further renewable electricity generation
potential along the Railbelt.
16
In addition to expanding the potential market for increased
16
Alaska Energy Authority, Electric Power Systems Inc. Alaska Energy Authority Railbelt Transmission Plan. March 2017.
MCKINLEY RESEARCH GROUP 18
generation, the $885 million in proposed projects could support thousands of short-term jobs
and millions in wages associated with project development and construction.
Training Needs
While different renewable energy technologies require varying degrees of skilled work,
increasing investment in harnessing Alaska’s renewable energy could increase demand for local,
skilled employees. Wind farm operators are making significant investments in training a skilled
labor force in Alaska, “growing their own” by providing training for new wind technicians.
Training is provided either by contracting with a provider located in the Lower 48 or on-the-job
training by experienced technicians. Currently no specific in-state wind technician training or
apprenticeship programs exist outside of employer-provided training.
Operators regularly contract with firms to provide additional maintenance and support, with
some functions provided remotely and contracted employees brought in from out of state. As
individual operators gain experience with these systems and train staff, they can reduce reliance
on these outside firms. Still, as more wind resources are developed throughout the state, a ready
labor force and in-state training opportunities will help Alaska harness the economic benefits of
renewable energy.
Alaska’s public postsecondary institutions offer limited coursework in renewable energy and
could play a larger role in training to build a skilled energy labor force. At the University level,
the University of Alaska Anchorage (UAA) offers coursework in topics such as solar photovoltaic
systems and sustainable energy project development. The University of Alaska Fairbanks (UAF)
offers a Sustainable Energy Occupational Endorsement in which students may specialize in a
range of topics such as wind, biomass, or photovoltaic systems. The Alaska Vocational Technical
Center (AVTEC), located in Seward, provides renewable power generation coursework through
the Industrial Electricity and Plumbing & Heating programs. This network serves as a foundation
for workforce development, and increased course offerings and promotion of these institutions
will be important to further developing the state’s renewable energy economy.
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Conclusion
Advances in technology, including energy storage, have enabled renewable energy adoption
throughout Alaska. Yet significant capital investment will be needed to further transition the
state’s intensive energy needs. Investment in feasibility studies, project planning and
construction, along with workforce development, will all contribute to building Alaska’s
renewable energy economy. With well proven technology and a track record of integrating
renewable energy into existing systems, the state is poised for investment in transmission
capacity and energy projects to unlock Alaska’s significant renewable resource potential and
reduce high energy cost burdens, especially in rural Alaska.
