Renewable energy funds face budget’s hatchet

By Margaret Kriz Hobson | 05/02/2016 06:56 AM EDT

FAIRBANKS, Alaska — The Native village of Igiugig, population 69, historically has been known for its bountiful sockeye salmon runs from Bristol Bay up the Kvichak River. So when residents heard about the village’s plans to harness the river’s hydropower energy, many were worried.

FAIRBANKS, Alaska — The Native village of Igiugig, population 69, historically has been known for its bountiful sockeye salmon runs from Bristol Bay up the Kvichak River. So when residents heard about the village’s plans to harness the river’s hydropower energy, many were worried.

"A lot of commercial fishermen in the bay were scared that our fish were going to get all chewed up," Village Council Vice President Randy Alvarez, himself a commercial fisherman, recalled at the Alaska Rural Energy Conference here last week.

Despite those concerns, village leaders allowed the Ocean Renewable Power Co. to test its RivGen submersible hydropower system in the southwestern Alaska river. The company’s 25-kilowatt unit consists of a 34-foot-wide machine with two turbines that spin in the current, supported by a system of pontoons.


Funded in part with seed money from two Alaska energy grant programs, the company spent years perfecting the technology. And for the last two summers, ORPC brought its hydropower unit to the village for in-river testing.

The results were impressive: The RivGen unit was able to provide one-third of the community’s electrical load, lessening the residents’ reliance on expensive diesel generators and lowering their power bills.

More important to the region’s commercial fishing industry, ORPC also proved that its hydropower unit had no impact on the 1.5 million adult sockeye salmon that migrated past the unit each summer.

Now Igiugig officials and the company have signed a letter of intent to move forward with a commercial electricity project. The community hopes to become the site of Alaska’s first commercial hydrokinetic facility.

The two Alaska grant programs that helped ORPC advance its hydropower technology face a far gloomier future, however.

In an effort to reduce Alaska’s perilous $4.1 billion budget deficit, the state Legislature is about to zero out funding for those programs — the Renewable Energy Fund and Emerging Energy Technology Fund.

With the flow of money drying up, the Alaska Energy Authority is "retooling right now, trying to figure out how we can keep this going with less state money," Sean Skaling, AEA’s policy and programs director, explained at the renewable energy conference. "There are some options, like helping [renewable energy projects] find other funding sources."

Chris Rose, executive director of the Renewable Energy Alaska Project, said the program supporters are casting a wide net for funding in hopes of continuing to attract cutting-edge clean energy projects to the Far North.

"There’s been some activity trying to get the federal government to partner, [as well as] industry partners, foundation partners that all might be interested in developing technologies that could also be applicable outside of Alaska," Rose noted.

In Igiugig, the hydropower company officials maintain that the state’s early grants were instrumental in kick-starting their technology development "when the risks were high."

"It was the state of Alaska that put the initial funding into this project and allowed us to match it with private funding," noted Monty Worthington, ORPC’s director of project development in Alaska. Without that early money, "we probably wouldn’t be on the timeline we’re on."

High-cost diesel drove renewable energy fund

The state Legislature created the Renewable Energy Fund and Emerging Energy Technology Fund almost a decade ago when oil prices were high and the state’s coffers swelled with energy industry revenues.

The Renewable Energy Fund, established in 2008, was designed to help communities lower their reliance on high-cost diesel fuel that must be barged or flown into hundreds of rural villages that are not on the state road system.

Under that program, the AEA has distributed $247 million in grants for renewable heat and electricity projects across Alaska’s vast landscape. The state estimates that those applicants were able to leverage the grant money to gain $200 million in private investment.

The state received almost 800 applications and awarded 133 grants for new renewable projects. Of those, 54 renewable operations are already producing energy. Those clean energy operations are projected to cut Alaska’s diesel fuel use by 30,000 barrels this year.

The vast majority of the state renewable energy funds have been used to build wind and hydropower projects, with smaller awards granted for biomass, heat recovery and solar projects.

"Many of these projects may not have gotten off the ground without the renewable energy fund," AEA’s Skaling told the conference. "It’s been a huge catalyst to getting them moving."

In January, the AEA recommended that an additional 39 projects be included in the program at a cost of $36 million. But Skaling said that money is not likely to be appropriated by the Legislature.

In 2010, the state created the Emerging Energy Technology Fund, a far more modest program focused on boosting clean energy projects that are at an earlier stage of development but have a reasonable expectation of becoming commercially viable within five years.

The AEA has offered two rounds of funding through that program, selecting 19 projects from the 100 applications it received. The winners included projects focused on battery and flywheel energy storage, river hydrokinetic devices, new heat pump systems, efficient diesel generation, and novel wind turbines.

The emerging technology program has awarded $28.5 million in grants, including $4.8 million from the state of Alaska and $16 million in funding from the federal Denali Commission, an independent federal agency designed to provide infrastructure support in Alaska.

Josh Craft, program manager for the Emerging Energy Technology Fund, said eight of those demonstration projects have been completed and the other 11 are still underway.

Craft is seeking applicants for a third round of grants. That $1 million solicitation will be launched in July and underwritten by $250,000 in Energy Department money, with the remaining funds left over from previous emerging technology grantees.