Alaska Freezes Out Wind Energy

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The two largest private wind energy projects in Alaska were froze out in February, stalled through decisions made by the Regulatory Commission of Alaska. Proponents say the impact is more than loss of green jobs and clean air; in the case of the Delta Wind Farm (DWF), it is threatening residents’ lives.

The air quality in Fairbanks is significantly worse than Beijing. Bundled up for weather that’s been hovering around 30 degrees below zero, people are caught between freezing to death in the dark and dying prematurely from inhaling carcinogenic PM2.5.

Diesel fuel oil generators in nearby North Pole are a two-fold problem for Golden Valley Electric Association (GVEA). In addition to high costs, emissions from the generators help create the dense grey blanket of small particle pollution that covers Fairbanks during cold inversions.

Ironically, the Regulatory Commission of Alaska (RCA) had the opportunity to displace diesel fuel with renewables but chose not to do so. Instead, the RCA issued a final order Feb. 6 which sidesteps new regulations defining how utilities must calculate purchase rates when buying power from smaller renewable energy facilities and excuses GVEA from the requirement of filing a facility-specific tariff.

By doing so, it perpetuates a turf war between independent power producers and the entrenched associations that control the grids. GVEA maintains that adding additional independently generated wind energy doesn’t pencil out for ratepayers, citing a power cost avoidance calculation methodology that makes wind power unprofitable for any independent power producer. 

The pushback against expanding DWF’s clean wind energy stems from the development of the Healy 2 Coal Unit. RCA previously ordered GVEA to model without the coal-fired plant, which is not yet in commercial operation and has failed to come online several times.

The sans-Healy 2 modeling found that if DWF could afford to run in the red, after seven years they would start to make a modest profit. When including Healy 2, DWF would have to pay GVEA to take the electricity it generates.

It is unclear why the RCA elected to accept this dynamic. The RCA had already found that GVEA’s modeling was flawed, as it left out potentially relevant factors, wasn’t transparent, and presented only one scenario with unsatisfactory explanation as to why it was the correct scenario. The RCA determined “there is no way to determine whether GVEA’s model is optimized to maximize avoided cost and minimize integration costs,” which is the entire point of the exercise.

Relying on the results of admittedly flawed methodology, the RCA found that the DWF would be required to pay GVEA 16 cents per kWh to add its power to the grid. Should Healy 2 fire up successfully, the price DWF would have to pay would jump to $0.64. RCA noted in its final order that it didn’t expect DWF to proceed with its proposed expansion based on this arrangement.

GVEA’s decision making appears to be based on something other than hard data. The wind farm in Delta Junction has been in development since 2007. Mike Craft, President and CEO of Alaska Environmental Power, LLC (AEP), the private entity that owns DWF, says they took advantage of an anomaly in the typography of the land which creates predictable, reliable, steady wind events that a 1956 Army study described as a jet stream against the ground.

Delta wind doesn’t show up on wind charts because it isn’t created by atmospheric conditions normally associated with wind events. It is created by barometric pressure differentials starting at Northway, one of the coldest places in Alaska, where a bowl fills up with super cold dense air during inversions. It then flows down the Tanana River to Delta. Because of climate conditions, the largest Delta wind events occur in the winter, when energy demands are the highest.

By monitoring the differentials in barometric pressure, AEP is able to predict when the wind is going to start and stop an hour or so in advance of wind events that can blow 18 days at well over 70 percent capacity.

AEP secured private financing to create a 24-MW wind farm to bring power generation 100 miles closer to where it is being consumed. In 2010, after years of arm wrestling with GVEA, DWF phase one was scaled down to four turbines.

GVEA President and CEO Cory Borgeson says DWF has been delivering up to 2 MW to the system at a little over 8.5 cents per kWh. Craft says they have displaced over 1.6 million gallons of fuel oil at the North Pole facility, saving more than $2.6 million to ratepayers.

Instead of using the seven years of data collected from DWF to extrapolate what the effects would be to add additional capacity, GVEA generated data assuming conditions similar to its own 24-MW wind farm at Eva Creek. The $94 million wind farm is located where particularly feisty weather patterns create intermittent winds which gust often, knocking the facility offline regularly.

Craft says an impact analysis of the proposed DWF expansion includes a graph showing Gulf of Alaska storms rushing through the high mountain pass that fuels Eva Creek, swinging the grid and knocking generators offline over a dozen times, while winds blew in Delta consistently and steadily at 80-90 percent capacity during the same time period.

In an op-ed piece that ran in April 2017, GVEA Board of Directors chairman Rick Schikora referred to the Eva Creek experience before concluding that adding more capacity to DWF would “increase GVEA’s fuel costs by about 15 percent and would increase customer energy bills.” GVEA Board Secretary John Sloan added, “GVEA doesn’t want to go there — and you can’t afford to.”

Craft says that, by expanding DWF to 24 MW, GVEA ratepayers would benefit not only from additional clean energy but also will be relieved from maintenance and financing costs of $4 million a year, as his company would bear all the $54 million construction costs. The RCA disagreed, rejecting DWF so that GVEA’s ratepayers would not be “economically disadvantaged.”

Following the Railbelt grid down to Anchorage, Chugach Electric Cooperative (Chugach) produces natural gas-powered energy for closer to 5 cents per kWh and is paying CIRI Wind, LLC. (CIRI Wind)-owned Fire Island Wind a flat net price of $0.97 per kWh throughout the term of their 25-year agreement.

Fire Island Wind planned to set up a microgrid and expand wind generation capacity with an additional 20.35-MW. facility. In comments on Chugach’s proposed tariff, CIRI Wind claims that Chugach didn’t meet the requirements of RCA regulations because they only provided a tariff for one of the requested configurations and proposed terms of service subject to change and therefore not actionable.

CIRI Wind contends, “this means that even if the tariff is approved, the interconnection customer will not know what its final terms of interconnection will be. This defeats the whole purpose of filing a facility-specific tariff.” The RCA’s final order found that “incurring the cost of an investigation into CIRI Wind’s interpretation, Chugach’s Tariff Rule 10 is not in the public interest.”

The current dynamic makes it impossible for independent power producers to get on the grid at a level where economy of scale makes wind farming a profitable concern. As for now, the RCA has closed its docket on both Fire Island Wind and the Delta Wind Farm.

Lead image: Pond near Fairbanks, Alaska. Credit: UrbanYodasezeqeafezsezayssuaeae | Flickr

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