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Hit With Soaring Oil Prices, GVEA Moves to Renewable Power

July 14, 2008

By Tim Bradner, Alaska Journal of Commerce, Anchorage

Jul. 13–FAIRBANKS — Hit with soaring oil prices, Golden Valley Electric Association of Fairbanks is moving aggressively into alternative energy. More of the Interior utility’s members are generating their own power with wind and solar, too, initiatives Golden Valley is encouraging.

The cooperative itself has four renewable energy initiatives underway in the Interior, including a substantial wind project near Healy.

Golden Valley recently landed four out of 33 grants for renewable energy feasibility and engineering approved by the Denali Commission and the state’s Alaska Energy Authority. The grant awards, totaling $212,000 for Golden Valley, were announced in June.

“This is good news for our members because adding more renewable power decreases the Interior’s dependence on oil-refined fuel sources,” said Brian Newton, the cooperative’s president and CEO.

One of the grants will be used for engineering at a planned wind generation project at Eva Creek, near Healy on the Parks Highway, according to Kate Lamal, Golden Valley’s vice president for power supply.

The utility has evaluated the wind potential at the site for several years and has found a viable wind source. The Eva Creek site can support a large wind project but its actual size will be determined by how many of the Railbelt electric utilities participate, Lamal said.

Two of the new grants will be used to conduct feasibility studies of river hydro systems, one at Nenana River near Healy and a second at the Gerstle River near Delta.

A fourth grant will evaluate the feasibility of a solar thermal water heating system to be used by McKinley Village Lodge and the Denali Education Center near Denali National Park.

Lamal said Golden Valley may also join Southcentral electric utilities in buying power from a 50 megawatt wind power project planned for Fire Island, near Anchorage. Cook Inlet Region Inc. and enXco are the developers.

“We’re hoping to get all of the same parties involved at Eva Creek,” Lamal said.

The cooperative is also interested in the Alaska Energy Authority’s review of a possible hydroelectric project at Susitna, between Anchorage and Denali National Park. A large hydro project was planned at Susitna in the 1980s but shelved because of costs. The state is now taking a new look at Susitna with a focus on a smaller project.

Golden Valley also gets power generated with coal, which contributed 16 percent of its needs in 2006 and 15 percent in 2007, and it hopes to get more coal-fired power if the Healy Clean Coal Project, a mothballed 50-megawatt plant in Healy, can be restarted.

The utility also gets a small share of its electricity needs — 3 percent in 2006 and 5 percent in 2006 — from hydro power generated from the Bradley Lake hydro project near Homer that is operated by the Alaska Energy Authority.

Alternative energy can help soften the impact of rising oil and gas prices, but GVEA will remain dependent on costly oil for much of its power from the utility’s generation plant in North Pole.

Golden Valley is becoming more dependent on oil-fired power, in fact, because utilities Chugach Electric Association and Municipal Light and Power have had less surplus power to sell to the Interior utility due to declining production in gas fields in the Cook Inlet region.

In 2007 Golden Valley was only able to buy 10 megawatts of its supply from the Southcentral utilities, down from 50 megawatts purchased in previous years. The share of power generated with oil has increased from 100 megawatts in previous years to 140 megawatts in 2007, according to information provided by Golden Valley.

The effects of higher oil prices are being felt by Golden Valley’s members. An average residential bill of 750-kilowatt hours per month for a Golden Valley member was $167 in June 2008, up from $135 per month in January and $112 per month in January 2007.

The bulk of the increase is the fuel surcharge, although some goes to pay for new projects recently completed by the utility. In comparison, a Chugach Electric Association member in Anchorage paid $101.58 in June for an equal amount of power.

Rising prices are generating more interest in Golden Valley’s members in generating their own renewable energy and participating in the utility’s “SNAP” program, in which the Golden Valley purchases power from renewable energy projects installed by homeowners and businesses.

The utility now has 22 members generating power, mostly with solar, about three times the number in 2007. The amount of power generated is small, but growing. In the last 12 months, SNAP producers generated enough electricity to provide power to five average-sized homes for a year, according to Diane Porter, a spokeswoman for the utility.

Golden Valley is the only utility in Alaska that purchases power from its members’ own renewable energy projects, although the concept is now being looked at by other utilities in the state.

It is questionable whether the home or business renewable energy systems are really cost-effective.

The systems provide a way for Golden Valley’s members to make a contribution in generating green power and reducing emissions from burning fossil fuels, with part of the costs offset by the SNAP program.

Golden Valley buys the power generated from its members’ renewable energy systems at the utility’s “avoided cost” for power, or what Golden Valley would have paid to generate the same amount of power in its own system. This changes on a quarterly basis, Porter said, the most current rate being just over 10 cents a kilowatt-hour.

What Golden Valley pays for the power doesn’t really cover the members’ cost of installing the renewable energy systems, so the utility solicits voluntary contributions from its members committed to “green energy” to provide additional support. Last year Golden Valley raised $48,000 in contributions, which it distributed to SNAP producers.

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Copyright (c) 2008, Alaska Journal of Commerce, Anchorage

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