Alaska has enormous quantities of untapped or under-utilized
energy resources, including some of the highest concentrations of fossil and
renewable energy resources on earth. In addition to vast oil and natural gas
resources, primarily located on the North Slope and in Cook Inlet, the state has
proven coal reserves that rank as the fourth-largest fossil energy resource in
the world. Nature also bestowed significant undeveloped geothermal resources in
the volcanic art of the Aleutian Islands, abundant untapped hydropower, wind,
and biomass resources, and the majority of the tidal and wave power potential in
the United States.
Yet rural communities throughout Alaska are chronically burdened with
economy-stifling high energy costs. When oil prices spiked to $144 per barrel in
July 2008 before plummeting to under $50 per barrel by December 2008, many
Alaska villages where winter fuel must be purchased before fall freeze-up
suffered a severe shock and extraordinary economic hardship. For those
communities, there was no potential relief until the following spring.
While no year since has been as bad, Rex Wilhelm, president and CEO of Alaska
Commercial Co., said his company, which owns and operates grocery and general
merchandise stores in at 27 rural Alaska communities, keeps a close watch on oil
“We’re very conscious of the price of oil and the dependence on it in our
markets,” Wilhelm said. “We purchase fuel from the local vendor like everyone
Alaska Commercial Co. also pays fuel surcharge on the goods shipped to its
stores when oil prices are high. “We’ve had some relief in recent weeks, but
with oil at $90 per barrel, it’s still very high on the freight rates,” Wilhelm
said. High energy prices affect everything in rural Alaska, he added.
Investments in energy savings
In recent years, the Alaska Energy
Authority, the Denali Commission and the Alaska Center for Energy and Power have
spearheaded a mammoth investment of millions of dollars into everything from
upgrades of bulk fuel storage tanks to renewable and emerging energy research
projects. Alaska Gov. Sean Parnell signed into law a $2.8 billion capital budget
in June that includes $1 billion for energy projects.
Along with the efforts of a wide variety of private sector stakeholders and
even schoolchildren, these initiatives are paying off as rural communities
report energy cost savings, ranging up to 30 percent.
This is good news because the State of Alaska has a goal of deriving half its
power from renewable energy sources by 2025.
But it is the “low-hanging fruit” of energy efficiency programs such as
weatherization and heating system upgrades that is making the biggest strides in
cutting rural heating and fuel bills, said Denali Daniels, senior program
manager of the Denali Commission’s energy program. Parnell earmarked a total of
$101.5 million for weatherization and home energy rebates in the FY12 capital
“It’s a question of how do we get the biggest bang for our buck,” she said.
Thus the Commission focuses mainly on project planning and design rather than
“We’d rather spend $50,000 for a planning grant on a project that doesn’t
move forward than spend $5 million on construction of a plant that shouldn’t
have ever been built,” Daniels said.
Currently, the Energy Authority’s Alternative Energy and Energy Efficiency
program manages and funds more than 125 projects and initiatives totaling $188
million in state and federal funding. The projects seek to lower the cost of
power and heat to Alaska communities, while maintaining system safety and
Private initiatives pay off
NANA Regional Corporation, the Alaska
Native regional corporation for Northwest Alaska, is working to solve Alaska’s
rural energy puzzle through partnerships with regional, state and federal
entities on a variety of renewable energy projects, including hydropower, wind,
biomass and alternative fuels development.
“We are actively engaged with our regional partners as well, like the
Arctic Borough, Kotzebue Electric Authority and Alaska Village Electric
Cooperative on wind development in the communities of Deering, Buckland,
Noorvik, Kivalina, Kotzebue and the communities of the Upper Kobuk,” said NANA
spokeswoman Shelly Wozniak.
Beginning in August, NANA, in conjunction with RurAL CAP, is implementing the
highly regarded Energy Wise Program. The program engages rural Alaska
communities in behavior change practices resulting in energy efficiency and
In FY 2010, Energy Wise was responsible for reducing electrical and
home-heating costs for residents in 32 Alaska villages, and for training 160
rural Alaskans who were employed for 6-8 weeks. The program also conducted
energy fairs in 32 communities; provided energy use assessments, education and
low-cost, efficiency upgrades for 2,000 homes; and educated 7,500 rural Alaskans
on energy efficiency and energy conservation strategies.
NANA is the first private organization to fund a regional rollout of the
Energy Wise Program, committing $860,000 for six communities in the NANA region
in 2011. With the price of fuel climbing, NANA said the Energy Wise Program will
help the Northwest Alaska region conserve energy and save money as its
communities get ready for winter.
To offset its higher energy costs, Alaska Commercial Co. is investing
millions of dollars in lighting and refrigeration equipment upgrades during the
next five years, including spending one-third of its capital budget on new
In addition, the company is rerouting the heat by-product from equipment such
as compressors into its stores to reduce its consumption of heating oil. It also
recently entered a joint venture with the City of McGrath in which the heat
by-product of the community’s power plant is piped into the AC Store next door.
Alaska Commercial also worked hard at improving the flow of goods to its
stores, which factors into its energy costs. This included opening the large
warehouse at the Port of Tacoma in 2010 as a major distribution center which
allows it to buy certain items in bulk and leverage less-costly waterborne
transportation to ship larger quantities of shelf-stable items when rates are
low and pass the savings on to customers.
A number of transportation companies that serve the Alaska market, including
Bowhead Transport Co. and NorthStar Gas, also have invested in new equipment to
improve fleet efficiency and offset the high cost of fuel. NorthStar Gas, for
example, recently purchased a new barge, the “Cuaneq.”
Renewable energy that works
“The challenge for Alaska will be
developing renewable energy systems that can be successfully integrated with
existing diesel systems, because public perceptions aside, fossil fuels such as
natural gas and propane supplies from the North Slope, will remain an important
part of the energy equation for the foreseeable future,” Daniels said.
Among the possibilities, hydroelectric power is exceedingly attractive. It is
the least expensive form of power in Alaska by 15 percent and the least
expensive form of heat by a factor of 3.5 to 1, according to the Alaska Energy
Researchers say Southeast has adequate hydroelectric potential to serve all
of its needs for decades to come if an intertie system existed to transport
power to the region’s high-use areas. Without a regional electrical grid,
isolated load centers likely will continue to rely on high-cost diesel
generation to meet immediate needs.
Alaska’s FY12 capital budget provided $28.5 million for a project at Blue
Lake near Sitka and $8 million for one at Whitman Lake near Ketchikan.
Other regions of Alaska also have potential for hydroelectric generation.
A new major hydro project – a dam project on the upper Susitna River won
$65.7 million in state funds in this year’s capital budget, while a project on
Chikuminik Lake in the Yukon-Kuskokwim Region of western Alaska also secured $10
million in state funding.
Among other renewable energy sources, wind is proving to be a viable
opportunity for many small Alaska communities.
Building wind systems is costly, but once in place, the cost of wind is
stable, while diesel fuel prices are volatile, according to University of Alaska
Anchorage. In a preliminary analysis of wind-diesel systems in Alaska, produced
by the Institute for Social and Economic Research, they note that there are
already more than a dozen wind-diesel systems generating electricity in remote
areas of western Alaska, and only three wind systems, in Kotzebue, Wales, and
Saint Paul Island, have been operating for more than a few years. Some 10
projects were under construction in the spring of 2010, while another 23
projects were in feasibility studies or negotiating contracts to begin work.
Alaska Village Electric Cooperative, for example, has about 30 100-kilowatt
wind turbines currently in operation and six more 65-kilowatt units scheduled to
be operational by fall, serving a total13 villages in western Alaska. The cost
of recently built wind systems average about 14 cents per kilowatt-hour, or the
energy-equivalent of diesel priced at about $1.90 a gallon, according to ISER.
Diesel prices reported by many rural utilities in 2009 ranged from $4 to $5 a
The U.S. Department of Energy is introducing wind energy to the nation’s
small communities through its “Wind for Schools Program,” an effort that Lynden
Transport, Alaska Marine Lines, Alaska Hovercraft and Lynden Air Cargo is
supporting in Alaska with an offer to provide in-kind assistance to transport
wind turbines and towers to 14 communities in Alaska. For example, Alaska Marine
Lines recently transported the components of a wind turbine to Sitka’s Mt.
Emerging energy technologies
Researchers at the Alaska Center for
Energy and Power in Fairbanks estimated in 2010 that Alaska’s vast geography
also holds about 40 percent of the country’s potential river energy, and thus,
perfect settings for small-scale hydrokinetic technology – turbines designed to
harness kinetic energy from oceans, bays and rivers. Micro-hydropower systems
usually generate up to 100 kilowatts of electricity and are mostly used by
homeowners and small business owners. Run-of-the- river hydroelectricity is
ideal for streams or rivers with a minimum dry weather flow. Such systems also
could help trim rural Alaska’s dependence on heating oil and diesel fuel.
NANA is engaged in micro-hydro and run-of-river hydropower pre-engineering
development efforts that have potential in Shungnak, Kobuk and Ambler.
Federal regulators are reviewing plans for a submerged, in-river power
turbine near Nenana in a pilot project that energy researchers and the developer
think could help rural Alaska communities. Two other small in-river turbines are
being tested near the Interior communities of Ruby and Eagle.
Among other emerging energy technologies currently being studied in rural
Alaska include energy storage batteries and solar hot water systems by Kotzebue
Electric Association; a wood pellet-fired boiler by Sealaska Corp at its
headquarters in Juneau, Organic Rankine cycle waste heat recovery by the Tanana
Chiefs Conference; high penetration hybrid power system by the University of
Alaska Fairbanks; psychrophiles (cold-weather-loving microbes) for generating
heating gas by the Cordova Electric Cooperative; seawater heat pump system by
the Alaska SeaLife Center; wind-diesel hybrid power system (controls and
communication) in Wales, Alaska by Kotzebue Electric Association, and Nenana
hydrokinetic project by Ocean Renewable Power Co/UAF.