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Vol. 14, No. 51 Week of December 20, 2009
Providing coverage of Alaska and northern Canada's oil and gas industry

Planning for different power outcomes

In developing an integrated resource plan for power generation and transmission in the Alaska Railbelt, consultancy firm Black & Veatch evaluated four possible future power scenarios, Kevin Harper, Black & Veatch project manager, told a meeting organized by the Alaska Energy Authority to present a draft version of the plan. And for each of the scenarios, the Black & Veatch analysts plugged a shopping list of possible future power generation and transmission projects into a couple of computer models, to enable a determination of which projects would lead to the lowest cost of power for Railbelt consumers over the 50-year time period that the plan encompasses.

Base case

The simplest “base case” scenario assumed that the electricity load in the Railbelt region will continue to grow from its current peak of about 870 megawatts at a modest, steady rate, essentially as forecast currently by the region’s electricity utilities. A second “high growth case” arbitrarily factored onto the base case two large 500-megawatt jumps in load, one jump occurring in 2015 and the other jump occurring in 2040. Those jumps in load could represent factors such as new mines coming on line, the introduction of a state policy to encourage the use of electricity for heating buildings, or the widespread use of electric vehicles in the region.

“The ability to absorb large generation projects and the ability to afford transmission projects could be enhanced if you have a bigger load,” Harper said. “… The (current) load in the region is so low … that it is hard to justify the types of investments necessary to develop the type of transmission network that you see elsewhere.”

Factored onto these two distinct power demand scenarios, the analysts developed two other scenarios by constraining their models, to require at least 50 percent of the future Railbelt power generation to come from renewable energy sources by 2025, a renewables target proposed by former Gov. Palin.

The analysts also factored in 8 percent savings in energy requirements as a result of improved energy efficiency after the first few years of the plan.

“There are ways of developing these (energy efficiency) programs and delivering these programs which have been proven in numerous states,” Harper said.

Major hydropower

The results for the simple base case showed that electricity pricing could be optimized over the 50-year plan period if new major hydropower were to displace some of the use of natural gas, the resource that currently fuels the bulk of Railbelt power generation. The new hydropower would not go into operation until around 2025, presumably as a consequence of the lead time for hydropower system assessment, planning, design, permitting and construction.

Natural gas would remain an important component of the energy mix, but oil-fired generation in Fairbanks would phase out by around 2020. Wind power, municipal solid waste methane and geothermal energy would all play increasing but modest roles as energy sources.

The high growth scenario, with its big jumps in power demand, would drive a need for both more hydropower and more natural gas-fueled power generation, with a need also for some growth in coal-fired power generation. Interestingly, the economies of scale inherent in the high-growth scenario cause a power cost reduction of about 4 percent relative to the base case.

However, it turned out that, because the Black & Veatch modeling selected large-scale hydropower generation, together with some wind power and geothermal, in both the base case and the high-growth scenarios, 50 percent of Railbelt power would come from renewable energy sources by 2025. Thus, the forcing of a requirement for 50 percent renewable energy would make virtually no difference to the cost of upgrading the generation and transmission infrastructure.

Unless, that is, the development of large-scale hydropower plants proves impractical. In which case, forcing a need for 50 percent renewable energy would drive up the costs by 9 to 10 percent, Harper said.

The modeling assumed a future carbon emissions cost as a consequence of federal greenhouse gas cap-and-trade legislation. Removing the carbon cost makes coal generation, such as generation from the Healy Clean Coal Project, more competitive.

—Alan Bailey

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