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AEA seeks third round of grant proposals Program aimed at reducing dependence on fossil fuel-based power generation; $125 million awarded to 107 projects earlier this year Stefan Milkowski For Petroleum News
The Alaska Energy Authority is once again seeking proposals for renewable energy projects under an ambitious grant program aimed at reducing communities’ dependence on costly fossil- fuel-based power generation.
The renewable energy grant program was established in 2008, and $125 million in state funds was awarded to 107 projects earlier this year. Legislative intent called for $50 million in grants each year for five years, although funding for the program is subject to legislative appropriation each year.
In an effort to award grants quickly, the first and second solicitations were done without regulations in place. The current solicitation will be covered by new regulations relating to project proposals, ranking, and monitoring that go into effect Oct. 16.
Clearer rules for IPPs The new regulations clarify requirements for independent power producers seeking grants. Specifically, they require that IPPs receiving grants sell all of the power produced at the state-funded projects to the public, and that they sell power at cost-based rates, according to Peter Crimp, AEA’s alternative energy and energy efficiency program manager.
“When you give public funds to a private outfit, you really need to look very closely at it,” Crimp said in an interview Oct. 14.
Crimp said AEA received several proposals from IPPs wanting to generate power for their own use — at a remote lodge, for instance — or sell directly to a major user. In cases where grants were awarded to IPPs, AEA required through grant conditions that all the power be sold publicly and at cost-based rates.
Crimp said he expects $50 million will be available for grants, but added that AEA’s evaluation process — which includes input from an advisory committee — will prioritize projects recommended for funding. The Legislature is ultimately responsible for approving and funding individual grants.
Applications for the third round of grants are due by Nov. 10. AEA plans to complete its review of proposals by Dec. 22 and submit recommendations to the Legislature on Jan. 29, 2010.
Funded projects already under way AEA has released money for projects funded in the first round of grants and is just starting to release money for those funded in the second, according to Crimp, who noted that some funds were not available until the governor had signed the fiscal year 2010 budget.
The slow receipt of grant money has in many cases forced utilities to pay for projects out of their own pockets and wait for reimbursement. “We were able to proceed, but we had to do it with our own funds,” said Brent Petrie, manager of community development at the Alaska Village Electric Cooperative, which serves 53 communities across the state.
Petrie said AVEC will likely seek funding for four or five projects this time, including some that were previously recommended for funding but not funded due to insufficient grant money.
Other projects receiving state grants have stalled. According to Crimp, funding caps of $2 million in low energy cost areas and $4 million in high energy cost areas have been a “major sticking point” for a number of projects. “Since there was not the level of project financing the entities had hoped and planned for, they needed to go to plan B in order to move the projects forward,” he said.
Crimp said AEA will give grantees in that situation another year to figure out how to develop their projects.
Some lawmakers have expressed concern with the grant-making process in general, and the House Energy Committee has introduced legislation that would modify it.
Continued need for state support Despite the $125 million already awarded, AEA officials and electric utilities say there’s still a need for the grants and strong demand.
Crimp noted the high number of applications already received — covering more than 230 projects at a cost of roughly $760 million — and said the state’s energy plan shows there are many opportunities to save money through renewable energy and heat recovery projects.
Petrie, of AVEC, said renewable energy systems like wind and hydro are by nature long-lived projects with significant upfront capital risks. “Having the renewable energy fund provides some of that financing, helps reduce that risk, and helps us move forward,” he said.
Glen Martin, project manager for Alaska Power and Telephone, which serves 24 Alaska communities, described the grants as critical. “It’s the only way that a utility like ourselves can bring renewables to isolated communities,” he said.
Earlier this year, then-Gov. Sarah Palin set a goal of generating 50 percent of the state’s power from renewable sources by 2025.
In an interview Oct. 13, Joe Balash, a special assistant to Gov. Sean Parnell, said he isn’t aware of any change in policy under Parnell.
Balash added that the administration will likely request the full $50 million in renewable energy grant money for fiscal year 2011.
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