What Does Interior Alaska’s Renewables Game Mean for Southcentral Gas?

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July 2 – The energy history of interior Alaska, for many decades, was written in coal. Since the founding of the Fairbanks Golden Valley Electric Association Electric Cooperative, coal-fired power plants have been the backbone of the region’s power generation. There are good reasons for this: coal is plentiful, locally available and cheap – as early as the 1920s the Healy coal mines provided fuel to Fairbanks and, to a lesser extent, Anchorage, and helped to building Alaskan business tycoon Austin E. “Cap” Lathrop’s fortune – Lathrop’s influence can still be seen here; he built the 4th Avenue Theater, among other historic landmarks in Fairbanks and Anchorage.

But in the 21st century, the tides of power generation are turning: On Monday, GVEA made a historic decision choosing to shut down a beleaguered Healy coal-fired power station and replace its generating capacity with a mix of wind, storage batteries and natural gas. Importantly, the move wasn’t driven solely by environmental concerns either: the utility found that the wind/gas mix would actually be a cheaper option for inland ratepayers.

Healy Unit 2, the coal-fired power plant that GVEA is closing, has a checkered past. Originally conceived as a pilot “clean coal” program by the Alaska Industrial Development and Export Authority and the U.S. Department of Energy in the 1990s, the plant failed its test initial and was closed until 2012. GVEA worked to convert the plant into a conventional power plant. coal-fired power plant, but multiple accidents related to the coal feed system during its operation resulted in long periods of shutdown of the plant.

GVEA now plans to replace the power produced by Healy’s Unit 2 with a mix of new wind power generation – the co-op is seeking proposals for this project – and electricity produced by natural gas-fired Southcentral. Both offer opportunities for south-central power producers, but also underscore the challenges facing Alaska.

GVEA has previously pursued power from an expansion of the Fire Island wind farm as a potential source, but those attempts have already been scuttled by the cost of transmitting electricity over the Intertie, the power grid link between Anchorage and Fairbanks. The cooperative’s wind plans offer an opportunity to rekindle these discussions.

The issue of gas-generated electricity, some of which GVEA already purchases through sharing agreements on the Intertie, is a somewhat different matter. The sale of generating capacity is an asset to the Chugach Electric Association. But Southcentral is already looking at potential supply issues for its own heat and power generation, and GVEA’s decision to rely more on gas further underlines the importance of building a natural gas supply future. With increased demand from the Fairbanks area utility, the vast majority of Alaska’s population – approximately 550,000 people – will be highly dependent on a reliable, low-cost supply of natural gas for the production of heat and electricity.

The uncertain long-term future of Cook Inlet gas should already be of concern to Alaskans, particularly after Hilcorp signaled it had questions about its ability to supply enough gas from existing wells to supply new contracts to the over the next 2 to 11 years. State estimates argue that Cook Inlet still has plenty of undeveloped gas, and Hilcorp is exploring more – but that gas isn’t online yet, and we need to make sure the gas supply is mapped and developed. . And with more and more utilities turning to renewables for economic and climate reasons, gas will remain a crucial support for smoothing power generation and adapting to rapid changes in demand. It’s no exaggeration to say that Alaska’s next decades of power depend on it.

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