Governor introduces legislation to do residential, commercial and institutional building renewable energy and conservation projects

Gov. Mike Dunleavy has introduced legislation to create a new financing entity for smaller-scale energy conservation and renewable energy projects aimed mainly at the residential and commercial or institutional building level.

Senate Bill 125 and House Bill 154 would have the state housing corporation, the Alaska Housing Finance Corp., create a subsidiary to handle the new financing. If the legislation passes, home and building owners would be able to borrow at interest rates and loan terms more competitive than conventional commercial bank loans available today.

Nonprofit energy financing entities, sometimes called “Green Banks” exist in several states.

The governor introduced essentially the same bill last year which reached an advanced stage of consideration in the Legislature but ultimately failed to pass. Because of the familiarity of many legislators with last year’s legislation the new bills received only one referral in the Senate, to the Senate Finance Committee, and only two referrals in the state House, to the House Special Energy Committee and the House Finance Committee.

That’s a streamlined process compared with the two or more committees in each body that typically review bills.

The new energy finance entity would also be authorized to receive federal funds in either grants or loans. President Biden’s new Inflation Reduction Act, which deals mainly with stimulating energy transformation, has provisions that will match on the federal level what SB 125 and HB 154 are attempting on the state level.

The new federal energy initiative could channel funds to the new AHFC state entity.

In his announcement the governor called the new initiative the Alaska Energy Independence Fund, aimed at increasing Alaska’s energy independence and security.

The bills would allow the Alaska Housing Finance Corporation (AHFC) to create a nonprofit subsidiary that will provide financing for sustainable energy development.

Examples could include renewable energy generation, energy storage, energy efficiency improvements for commercial and residential buildings, electrical infrastructure projects, clean transportation, and other greenhouse gas emissions reduction, energy efficiency, and zero-emission technology projects, the governor said in the announcement.

It permits a new AHFC non-profit subsidiary to provide direct or indirect financing and technical assistance for sustainable energy projects. Direct financing would include loans or capital provided to individuals or companies for specific energy development.

The AHFC non-profit subsidiary would also indirectly invest by providing financial and technical assistance to new or existing public, quasi-public, or non-profit entities that finance sustainable energy development.

“Alaska has the resources, creativity and ability to achieve energy independence that will fuel a growing economy,” the governor said.

“This is a priority for my second term as your governor, and a priority for Alaskans across our state. I am ready to work with all legislators to secure its swift passage.”

One difference between last year’s bill and the legislation introduced April 5 is placing the new entity in AHFC. Last year the program was put into the Alaska Industrial Development and Export Authority, or AIDEA, the state development finance corporation.

It’s not unusual for a governor or Legislature to insert different and sometimes unusaul programs into state entities, and state corporations like AHFC and AIDEA are flexible enough to accommodate that in comparison with traditional state line agencies like the Department of Commerce, Community and Economic Development.

AHFC manages energy weatherization programs now and in the past has managed residential housing energy efficiency retrofits, so there is a fit with energy project financing.

The corporation also has handled very unusual programs in the past including managing planning, engineering and permitting for a 24-inch natural gas pipeline, the “bullet line” built from the North Slope.

That project was completed through the permitting stage and was then transferred to a new, separate organization, the Alaska Gasline Development Corp.