Vol. 15, No. 26 Week of June 27, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

Wind power takes off; GVEA gets on board

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Golden Valley Electric Association revisits large-scale project near Healy, prompted by federal incentive to reduce financing costs

Stefan Milkowski

For Petroleum News

Thanks to a strong wind resource, favorable economics, and government support, wind power has become a growth industry in Alaska. “More and more communities spread across the state are starting to install wind into their communities,” Alaska Center for Energy and Power wind-diesel coordinator Katherine Keith said at a June 22 talk in Fairbanks.

The first commercial-scale wind turbine was installed in Kotzebue in 1997, according to Keith. Now there are 19 wind systems across the state, and by next year, there will likely be 25 or 30. “It’s kind of astronomical,” she said.

Early users of wind turbines, such as Kotzebue Electrical Association, had to develop the equipment needed to keep turbines running in extreme cold. Now local utilities and groups like the University of Alaska Fairbanks’ ACEP are developing techniques to make the most of wind power on small electric grids.

The variability of wind and resulting fluctuations in power can be moderated with a diesel generator when wind makes up a small fraction of a utility’s overall power, Keith explained. But when wind makes up a large fraction of the power, specialized equipment is needed, such as battery banks, flywheels and advanced inverters.

ISER: Most installations meet expectations

A recent study done with the University of Alaska Anchorage’s Institute for Social and Economic Research found that most wind power installations in the state are meeting expectations, Keith said. In instances where they aren’t, problems with equipment were a major factor. Developers of a project in Nome, for instance, struggled to find replacement parts when their turbine manufacturer went bankrupt.

The cost of installing turbines in Alaska is high. Compared to $2,000 per kilowatt of installed capacity in the Lower 48, Keith estimated capital costs of $4,700 per kilowatt for large rural communities and $10,700 for small ones. Manufacturers of smaller turbines have courted the new Alaska market, attracted by the state’s investment in a renewable energy fund and grant program, she said. But makers of medium-size turbines that could improve economics have been reluctant to make a similar investment.

Despite the challenges, utilities are finding ways to make wind work. The Alaska Village Electric Cooperative, which serves 53 villages in Interior and western Alaska, has installed turbines in several villages, developed a method of storing excess energy from the wind and trained local technicians to work on the new technology, according to Keith. “They’re at the point now where they have a cookie-cutter approach,” she said.

GVEA eyes 24-megawatt farm

Golden Valley Electric Association is revisiting a large-scale wind power project near Healy after a new federal incentive has promised to dramatically reduce the cost of financing the project.

The utility has studied the wind resource at Eva Creek for seven years, said Kate Lamal, GVEA’s vice president for power supply. GVEA sought bids from private developers last fall, but the bids came in higher than expected and the utility board rejected the project, which would have increased power costs. “There are some people that would be willing to pay more for renewable energy, but there are also a lot of people that do not want to,” Lamal explained.

A big break came earlier this year in the form of a modification to the federal Clean Renewable Energy Bond program that would lower GVEA’s cost of borrowing to just 1.9 percent. Lamal said the project, which is expected to cost $93 million, would produce power for roughly 9 cents per kilowatt hour, more than a penny less than the utility’s current wholesale avoided cost of 10.6 cents per kilowatt hour.

The 24-megawatt project, which would use 1.5- or 2-megawatt turbines, would be several times larger than any existing wind farm in the state. (A subsidiary of the Native corporation CIRI is developing an even larger project — 54-megawatts — on Fire Island near Anchorage.)

Access sizeable challenge

Lamal described access as a sizeable challenge. An engineering firm hired by GVEA concluded that the industrial-scale turbines could be transported to the site using a railroad bridge over the Nenana River. But Lamal added that there is not a crane large enough in Alaska to erect the towers; one would have to be shipped up.

Installation costs are expected to be nearly $4,000 per kilowatt of rated capacity, but because the wind doesn’t blow all the time, the utility expects to get an average of just 9 megawatts from the project. “It’s a little bit daunting when you think of it that way,” Lamal said, “but that being said, the savings in wind is avoided fuel.”

GVEA has used grants from the state’s renewable energy fund for engineering work and to study how wind power can best be integrated into its grid.

Lamal said the utility will solicit bids this fall and could have a board vote by the end of the year. If the project proves viable, GVEA will continue engineering work over the winter, complete roads and foundation work next summer, and begin producing power in 2012.

Lamal said Healy residents generally support the project as long as it doesn’t restrict access. GVEA does not anticipate problems associated with nearby mining operations or with migrating birds, she added: “So far, no glaring problems.”

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