Analysis: Renewable energy is a pocketbook, not political, issue for Mat-Su residents

Renewable energy may not be popular among political conservatives. Legislators in the Mat-Su delegation have been criticized for supporting renewable and energy legislation during the Legislature that ended May 15.

This stems from an association of renewable energy, like wind and solar, with efforts to replace traditional fossil fuels like natural gas and oil.

It’s basically a partisan argument linking fossil fuel replacement to climate change and policies of President Joe Biden, who is squared off against Donald Trump in the presidential election this fall.

But what renewable energy is really about for Mat-Su residents is their pocketbooks and utility bills. Added to this, it’s about keeping homes, schools and businesses warm through the winter. Natural gas production from Cook Inlet will be declining, the state Division of Oil and Gas says.

Gas now supplies fuel for space heating and power generation. Without more gas supply, electric utilities like Matanuska Electric Association, or MEA, as well as Enstar Natural Gas, will have to import liquefied natural gas, or LNG, at a cost about twice that of gas now produced from Cook Inlet. Utility bills will jump.

Enstar says it has enough natural gas under contract from gas producing companies in the Inlet for the coming winter, the 2024-2025 heating season. But it is short of contracted, or guaranteed, supply for the winter of 2025-2026, the company says.

The state oil and gas division says annual reduction of gas production will begin in 2027 and will deepen by 2030.Efforts are underway to develop more gas in the Inlet and unboubtably the gas is there. But developing it will take time. It will be more expensive, too.

In the meantime more hydro, wind and solar-generated power can help offset the gas shortages for the electric utilities. This will also help Enstar, which supplies fuel for space heating.

Unlike electric utilities Enstar has no alternative to gas. Utilities like MEA and Anchorage’s Chugach Electric, can meet some of their needs with renewable energy, which preserves gas supplies for Enstar.

This spring, legislators’ attention focused on ways to boost energy. A major bill that passed was House Bill 307, which will streamline movement of electricity through transmission lines along making tax changes to help independent power producers, mostly private developers working on renewable energy.

HB 307 is vital legislation. Without it new renewable energy projects along the Southcentral-Interior “railbelt” transmission system would likely not be economic. Independent power producers, or IPPs, need to be able to sell their renewable energy to customers all along the railbelt power grid, from Homer to Fairbanks and not be restricted to just the utility in the region where the IPP is located. At present they generally are, because the “pancaking” of different transmission fees, one piled atop another, makes selling power to customers elsewhere on the grid mostly uneconomic.

HB 307 will require the state’s Alaska Energy Authority to set a uniform set of transmission fees, which will give independent developers economic certainty and enable them to finance their projects.

In the near term, two large renewable energy projects planned in Southcentral Alaska may be expanded because of the passage of the bill. Both projects are in the Mat-Su region northwest of Anchorage. One is a wind project near Mount Susitna, and the other is a solar project now operating at Houston, north of Wasilla.

Chugach Electric Association is working with developers of the wind project near Mount Susitna, which is not yet approved. Matanuska Electric Association is looking to join Chugach Electric in purchasing the wind power, which will allow it to expand.

Meanwhile MEA now buys power from the Houston solar project and is looking at buying more, which could allow it to also expand. Houston solar has turned out to be a good deal for MEA because it now sells power to MEA for less than the utility’s “avoided cost,” or what it pays for natural gas.

Renewables LLC, the developer at the Houston and a smaller one near Willow, says solar alone could make a dent in Southcentral Alaska’s natural gas supply deficit. The company, which is Alaskan-owned, estimates that seven to 14 solar farms of 30 Megawatts each could replace 10 percent to 20 percent of Southcentral Alaska electricity generated with natural gas.

On another project, state’s Alaska Energy Authority, or AEA, is working with the U.S. Dept. of Energy on grants to upgrade the Southcentral-Interior “railbelt” transmission line, which is now aged and lacks the capacity to move power from new generation projects through the grid.

The AEA is now finalizing terms for a $213 million federal grant, matched equally by the state, for phase one of an upgrade of the railbelt system. AEA plans a submarine cable link from the Kenai Peninsula to the Beluga power station on the Inlet’s west side. This will create a new loop to move power to Mat-Su and Anchorage around the congested, and limited, existing transmission line on the Kenai Peninsula.

Chugach Electric Association and AEA are now also upgrading the Kenai Peninsula terrestrial line but the new sub-sea line across the Inlet to Beluga will add a backline, making the grid more reliable and efficient.

AEA’s application for federal funds for phase two of the railbelt grid upgrade, to expand capacity of the existing transmission line from the Mat-Su to Healy line, went to the Department of Energy in April. The state authority expects DOE’s response in August. The Mat-Su to Healy line was built decades ago and is aged.

At Healy the new line, when and if built, will connect with Golden Valley Electric Association’s existing and more modern transmission line to Fairbanks.

On the Bradley Lake hydro expansion, the AEA expects to hear in late August or early September on federal government approval of a separate $348 million grant to build the Dixon Diversion.

If the money comes through it could expand Bradley Lake’s hydro output by 50 percent and be operating by 2030, AEA says. According to the Division of Oil and Gas estimates Cook Inlet gas production will be falling fast by then. New hydro from Bradley Lake could reduce electric utilities’ requirements for natural gas by 1.5 billion cubic feet per year and offset 7.5 percent of gas supply deficit by 2030, the authority said.

The Dixon Diversion project could still move forward even if the federal grant is not approved. As an alternative AEA could fund construction with debt repaid by the railbelt utilities, similar to the way the original Bradley Lake project was financed. The AEA now has geotechnical work under way to support the project.