AEA director touts progress on renewables

Director Sara Fisher-Goad sees ongoing benefit in renewable energy grants, promise in program for emerging energy technologies

By Stefan Milkowski

For Petroleum News

In an effort to help communities save money by reducing fossil fuel consumption, Alaska lawmakers in 2008 created a renewable energy grant fund and program. Over 200 grants have so far been awarded in five separate rounds, and lawmakers this year stated their intent to fund the program at $50 million per year through 2023.

The Alaska Energy Authority, which administers the program, is now accepting applications for Round 6, and AEA Executive Director Sara Fisher-Goad says there’s still strong demand for the program, which covers electrical generation and heating projects. In fact, proposals may even be getting better, she says.

Petroleum News spoke with Fisher-Goad on July 30.

Petroleum News: AEA is now accepting applications for Round 6 of renewable energy grants. Are there still worthy projects that need funding?

Fisher-Goad: Yes. We know there are some projects that haven’t been submitted through the renewable energy fund program. We also have projects that we’ve seen before in earlier rounds — if they’ve met all the milestones (for design), then when they come and apply for money for construction, we know a bit about the project and the progress of it.

In addition, we’re really pushing on offering technical assistance and outreach to communities, planning regions, and organizations. We really want to make sure potential applicants know we can help them develop an application.

Petroleum News: Have you seen any general shift in the types of projects being proposed?

Fisher-Goad: I don’t think we’ve seen a general shift. It’s been very broad. We’ve received a lot of hydro and wind projects.

We would like to see more heating-type projects funded. There’s a misunderstanding sometimes that this program is just about electricity. It’s not. We fund heat and electrical projects.

Petroleum News: Has that always been the case, or was that a recommendation of the renewable energy fund advisory committee?

Fisher-Goad: The advisory committee asked us to make sure we emphasize heating projects. Through some of our outreach, we just have gotten the word out more. But we’ve always funded biomass heating projects. And we’ve held biomass workshops.

Petroleum News: I understand how an electrical project would have community-wide benefit, but how does it work with heating projects?

Fisher-Goad: Usually it’s waste-heat projects, and projects for a school, a washeteria, or community facilities. That’s typically what we’re looking for, is community benefit.

Fisher-Goad: I don’t think so. In fact, the more we know about the projects from the information from earlier rounds and refining some of the economic analysis, I think we’re seeing better projects.

Petroleum News: What impact have previous grants had in terms of energy and money saved?

Fisher-Goad: We’ve had over 60 projects that have reached the construction phase. Those projects, on an annual basis, are estimated to save 12.3 million gallons of diesel fuel or its equivalent in gallons per year. That equates to roughly $45 million per year savings.

Petroleum News: Who benefits from those savings?

Fisher-Goad: For electrical projects, the utilities are saving in not having to purchase diesel fuel. If it’s a PCE (Power Cost Equalization) community, some savings are provided back to the state because less is given out for PCE. But only about a third of the kilowatt-hours in a PCE community are eligible for PCE, and all the kilowatt-hours that save in the diesel savings benefit from that.

Petroleum News: Do you expect electric rates to go down, or is the goal more to stabilize rates?

Fisher-Goad: Diesel savings may allow (smaller utilities) to spend additional funds on O&M, or provide more reliable service. But there has been some shown rate reduction.

Petroleum News: Which projects have worked out the best?

Fisher-Goad: Kodiak is kind of the model community, because they have hydro resource available and wind. We’ve funded both the wind project at Pillar Mountain and additional capacity at their hydro project at Terror Lake. Kodiak is a community that has benefited tremendously from the program.

Petroleum News: And which have not worked so well?

Fisher-Goad: The ones we’re seeing a little more struggle to work as expected are the wind-diesel projects. We are working to improve system performance with some of those utilities — a lot of the time it’s really reducing the turbine downtime. We’ve been working with ACEP, the Alaska Center for Energy and Power, on those issues. And we co-sponsored an energy-storage conference with ACEP that could be very valuable in helping those projects work more efficiently and save more fuel.

Petroleum News: The program has a goal of 20 percent of grant money for feasibility studies and resource monitoring and 80 percent for final design and construction. How close has AEA come to that target?

Fisher-Goad: It’s actually been very close. Each round has been really close to having recommended funding at those levels.

Petroleum News: How has the evaluation process changed since the first round of grants?

Fisher-Goad: There have been adjustments each time. One of the more significant things we did is not multi-fund phases of projects. In earlier rounds, we were funding feasibility and design at the same time, and we really stopped doing that. We try to fund projects at the appropriate phases as they need the funding.

The Legislature was asking us first and foremost for accountability, making sure we funded good-quality projects. And I think we’ve succeeded in that.

There was also concern that we need to make sure these projects get built as fast as possible, and that was one of the biggest learning experiences for all of us. It takes time to make these projects work. Really, even though we’re in our sixth cycle of funding, we’ve only completed three construction seasons — this is our fourth.

What we’re really emphasizing this year is technical assistance. The Senate provided funds for us to provide technical assistance in communities and make sure we help develop good projects to move forward. We have subject-matter experts at AEA that are able to help develop a project.

Fisher-Goad: Correct. The statute says most weight should go to high-cost areas and significant weight for match and regional spreading. So even though a grantee may return for the same project at the next phase, they provide a better application if they are able to provide some match.

Petroleum News: AEA has an RFP out for an economist to help review projects. Will that change the evaluation process?

Fisher-Goad: That’s standard. We’ve been doing that through most rounds. We have coordinated with ISER (the Institute of Social and Economic Research) to help provide consistency, coordinate the economists, and provide quality assurance.

We hire several economists to work through the projects. My guess is we’ll have a lot of the same economists that have helped us in past years.

Petroleum News: State lawmakers passed legislation this year expanding the advisory committee and stating their intent to fund the program $50 million a year through fiscal year 2023. How much longer do you think there will be good projects that need funding?

Fisher-Goad: I think 10 years is a good horizon. I think we’ll continue to see good projects. We’ve talked with the advisory committee about whether we should be focusing on a specific technology — we can certainly target particular technologies if we think that’s appropriate. But right now we’re still seeing a good crop of projects.

In earlier rounds we had caps at $2 million in low-cost areas and $4 million in high-cost areas. In Round 5 and Round 6, we’ve doubled that.

This is a recommendation program, so the Legislature is able to provide their input on funding. This last year, we recommended — in a ranked list — $43 million worth of projects, and the list was funded through $25 million.

Petroleum News: Do you have a percentage in your head for how much villages can reduce their diesel fuel consumption?

Fisher-Goad: I don’t have a percentage. It really kind of depends on the technology. For wind penetration, typically 30 percent is kind of the highest percentage.

In Unalakleet, in 2011, they saved $211,000 in fuel, and that was a wind project.

Petroleum News: ACEP and a firm called Vermont Energy recently did an evaluation of the grant-making process. They recommended AEA reconsider how projects are ranked and make more effort to coordinate grants with regional and state plans. What do you think of those recommendations?

Fisher-Goad: I thought the process report was really good. It certainly gave us some things to think about.

As far as coordinating with regional energy plans, we are doing that. We have a project manager whose primary focus is working with the regions on energy planning. We’re hoping that the regional planning will be a good pathway for projects coming into the program.

Petroleum News: Lawmakers created a separate grant program for emerging energy technologies. What’s the goal of that program, and how does it differ from the renewable energy fund?

Fisher-Goad: The renewable energy fund program starts with projects that are commercialized technology. The emerging energy technology program takes that a step back. We’re really looking for demonstration projects — projects that may be demonstrated in other parts of the world and need to be demonstrated in Alaska, or projects that are within five years of being commercially operating.

Petroleum News: AEA solicited applications this winter, and has picked 27 finalists from 70 proposals. What’s the next step?

Fisher-Goad: We’re doing full-application review in mid-August, and that includes a presentation to the applicants that were invited to provide a full application.

I think there are really 31 finalists, and four have chosen not to submit full applications. We’ll be looking at 27, and that’s roughly 200 percent of the funding allowed. I’m expecting we’ll have about 10 projects offered grants.

Fisher-Goad: We had viable projects up to 200 percent of the funding available — it’s a good indication there are some good projects out there.

I’m going to reserve further comment until we see the final project list, but I think the advisory committee for the (emerging energy) program has done a very thorough job and given us some very good recommendations.

Petroleum News: Is that program a one-time deal?

Fisher-Goad: That was part of SB 220, and had a sunset date of (end) 2014. It’s not like the renewable energy fund. There was no set dollar amount.

Petroleum News: The Cold Climate Housing Research Center completed a report for AEA on energy efficiency. They recommended, among other things, the creation of an energy efficiency commission and the adoption of a statewide building code with an energy efficiency standard. What do you think?

Fisher-Goad: We’re evaluating the recommendations. And we are working with AHFC on a coordinated set of energy efficiency programs. It was nice to see there is support for existing energy efficiency programs — hopefully they’ll continue to receive funding support.

With respect to some of the other policy issues, those are things we’re going to have to dig into more thoroughly.