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Looking at the AK hydropower options High fuel costs and Cook Inlet natural gas supply issues have raised new interest in a couple of major hydropower possibilities Alan Bailey Petroleum News
Concerns about meeting the future energy needs of the Alaska Railbelt and a heightened interest in the use of renewable energy sources have caused people to brush the dust off some studies done in the 1970s and 1980s regarding a couple of major hydropower systems that could perhaps be built in the state. One of these systems would involve damming the upper Susitna River in remote territory east of the Parks Highway and south of the Alaska Range. The other system would involve an underground powerhouse drawing water from Lake Chakachamna, situated in a high mountain pass about 90 miles west of Anchorage.
On Feb. 23 the Senate Resources Committee listened to talks about both of these potential hydropower projects.
Susitna James Hemsath, deputy director for project development at the Alaska Energy Authority and Alaska Industrial Development and Export Authority, presented the interim results of a new evaluation of the capital cost and fundamental economics of the Susitna dam project. The idea at this stage is to assess the potential project cost and the consequent cost of power from the dam system, to determine whether the project is worth investigating further, Hemsath explained.
The concept for the Susitna project derives from an evaluation done by the U.S. Army Corps of Engineers in the 1970s. At that time people investigated a variety of dam options on the upper Susitna River, including schemes that involved as many as four dams, Hemsath said. However, the Corps of Engineers concluded that the optimum design would involve two dams: the Watana dam and the Devil Canyon dam.
And the current re-assessment of the project has assumed that this two-dam configuration remains the best option in terms of power generation capacity, project cost and environmental impact.
The Watana dam would lie upstream of Devil Canyon and would be the first dam constructed. It would consist of a massive 885-foot tall, 4,100-foot wide earthen structure that would hold back a 48-mile-long hydro reservoir, Hemsath explained. Diversion of the river during construction would entail the construction of two 30-foot diameter tunnels.
Construction at Devil Canyon would follow the construction of the Watana dam. The Devil Canyon dam would consist of a 646-foot-high thin-arch concrete structure that would look like a somewhat scaled-down version of the Hoover Dam and would support a narrow, 26-mile-long reservoir.
At full capacity, the hydropower system would involve six 200-megawatt generators capable of meeting almost the entire current Railbelt electricity load.
Massive project Construction of the complete hydro system would be a massive, world-class project involving, among other things, road construction, construction of a railroad spur line and the construction of a suspension bridge across Devil Canyon.
“This is a much bigger project than the (North Slope gas) pipeline project in terms of the effort involved, not so much in the capital cost … but in the sheer logistic effort in moving material and earth,” Hemsath said.
Using updated capital costs of about $12 billion and assuming 100 percent financing of the project at a rate of 5 percent over the 50-year life of an initial Federal Energy Regulatory Commission license, the estimated cost of generated power turns out to be about 16 cents per kilowatt hour. That’s not too far above current Anchorage electricity cost of 13 to 15 cents and suggests that the Susitna hydro project warrants further consideration, Hemsath said.
And the assumption of 100 percent debt financing represents a worst-case funding option. Other possibilities, such as a capital investment by a finance company interested in large, long-term projects, might turn out to be cheaper.
“As we refine just the capital costs we also want to refine the financing options, as well as look at what financing options exist … worldwide,” Hemsath said.
Integrated resource plan And people also need to figure out how a Susitna project might fit into the Railbelt integrated resource plan that the Alaska Energy Authority is developing — the integrated resource plan will recommend a future mix of energy sources for Railbelt power generation.
But reducing the scale of the Susitna project by, for example, just building one of the dams would increase the eventual power cost because each dam requires a broadly similar support infrastructure — building one dam rather than two would spread similar infrastructure costs across a lower power output.
In addition, the Devil Canyon dam would require the Watana dam as a means of balancing out seasonal changes in water flow in the Susitna River.
“What makes the combination of the Watana and the Devil Canyon dam the optimum solution is that the Watana dam can control the flow,” Hemsath said.
Chakachamna A hydropower system at Lake Chakachamna would not require a dam. Instead, the system would use the existing reservoir of water in the lake.
“Essentially all we’re doing is blowing a hole in the bottom of an existing lake and taking that water 12 miles to an underground powerhouse in the McArthur River drainage basin,” Eric Yould, TDX Power’s program manager for the Chakachamna hydropower project, told the committee. TDX Power, a subsidiary of the Tanadgusix Native Corp. and operator of a number of Alaska electric utilities, has taken an interest in the Chakachamna concept. The company has obtained a FERC license for an investigation and is in the process of conducting preliminary permitting work.
The Chakachamna system would likely cost about $1.7 billion dollars to complete and could supply about one-third of the electricity that the Alaska Railbelt currently consumes, Yould said. The cost of the power that the system would deliver would depend on how the project is financed, he said.
Yould said that the envisaged design at Chakachamna has been proven through the construction of similar hydro power systems elsewhere.
Essentially water passing down a 24-foot diameter inclined tunnel drilled through the mountains on the south side of the lake would drive turbines in a 260-foot-long underground powerhouse. The powerhouse would be located about 40 miles from the nearest point on the Railbelt power grid, at Beluga on the west side of the Cook Inlet.
First power 2018 TDX CEO Nick Goodman told the committee that current estimates of permitting and construction time frames would place first power from the plant in late 2017 or more likely in 2018. TDX has committed $30 million to bring the project to the start of construction, he said.
TDX had originally envisaged a project fully funded from the private sector that would ultimately sell power to utilities, Goodman said. However, the current problems in credit markets have increased potential financing costs and TDX wants to explore some form of partnership arrangement with the state — the state could perhaps underwrite some of the project risks, help with the project financing or even become a full partner in the project.
The private sector is currently seeking returns of 15 to 20 percent on equity, Goodman said.
“It is clear to us that the cost of power would be cheaper if there is state involvement in the project,” Goodman said. For example, with the state as a full project partner the power costs could fall as low as 7 to 8 cents per kilowatt hour, he said.
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