Gov. Mike Dunleavy

Gov. Mike Dunleavy

Gov. Mike Dunleavy is keen to expand renewable energy in the state.

Resuming work on the large Susitna hydroelectric project seems a good way to do it, promoters of Susitna are telling the governor. About $192 million has been spent by the state on the project since 2010. It was halted by former Gov. Bill Walker In 2014.

Dunleavy cited the state’s goal of having renewable power meeting 50 percent of the state’s electricity needs by 2025 in his State of the State speech in January. The policy was adopted in state law in 2010.

The governor is interested in what it would cost to complete the needed Federal Energy and Regulatory Commission license for the project.

About 27 percent of Alaska’s electrical generation now comes from hydro, and that’s up from 21 percent in 2011, the state’s Alaska Energy Authority, or AEA, told the Senate Community and Regional Affairs Committee Feb. 11. Building Susitna would bring the total over 50 percent.

The Legislature authorized work to begin again on a Susitna project in 2011 but Walker stopped the work in 2014 when oil prices collapsed.

However, two thirds of the work toward the has already been done, AEA told the House committee. Of 58 studies needed to support the Federal Energy and Regulatory Commission, 19 are completed and significant progress has been made on 39 others with the initial study reports filed with the federal commission.

A significant state investment has been made in the Susitna studies so far and costs to complete the work is estimated at about $50 million to $65 million.

Until recently the Susitna project was looked on as a major source of new power for the state’s Interior and Southcentral “railbelt” communities. The project can supply about 50 percent of the power requirements in Interior and Southcentral Alaska.

However, when a natural gas pipeline from the North Slope was planned, and which would make the large gas reserves on the slope available for power generation and space heating, there seemed to be less need for electricity from Susitna, which would be costly to build.

But the gas pipeline now seems unlikely, at least for a while, due to the glut of natural gas on the world market. Also, the long-term outlook for natural gas reserves in Cook Inlet, which now fuels most power generation for the railbelt, seems uncertain.

While its initial capital costs would be large, once it is built Susitna could be a large source of power at stable prices for a hundred years or more, its backers say.

About $11.2 billion in energy savings relative to natural gas are estimated over 50 years, AEA said in its presentation to the committee. Construction costs were estimated at $2.65 billion in 2014 with $627.3 million of this spent on labor.

Susitna hydro has a long history. The first studies of the region’s hydro potential were conducted by the U.S. Bureau of Reclamation in the 1950s.

A large project planned in the 1970s would have involved two dams, one at Watana and one at Devil’s Canyon, but was cancelled by former Gov. Bill Sheffield in 1982. The project appeared to be uneconomic because of large capital costs and the relatively small populations of the “railbelt” communities at the time.

Analysts told Sheffield then that the only was Susitna could be financed would be if the Alaska Permanent Fund were to underwrite the project, the governor said later. Sheffield was unwilling to do that.

The current Susitna project has been scaled back to one dam and with a lower construction cost. The regional population, and power demand, have also grown. It would still be a large project with a dam height of 705 feet and reservoir 42 miles long and 1.25 miles wide, the AEA told the House committees.

In other energy-related legislation in Juneau the House Energy Committee took up HB 232 last week, which would reauthorize an air quality property tax credit for municipalities, like Fairbanks, that fail to meet federal air quality standards. The tax credit authorization, which would be against municipal tax obligations, lapsed in 2015. The tax credits would help Fairbanks area property owners finance energy conversions, Fairbanks Borough Mayor Bryce Ward told the committee.

The bill would also establish a new construction energy credit which would be modeled on the Alaska Housing Finance Corp.’s energy compliance code. “This would help communities incentivize quality construction with a focus on energy efficiency, resulting in reduced community energy demand,” Ward told the committee in a letter.

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