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AEA approves financing for Battle Creek Creek diversion project will increase the capacity of the Bradley Lake hydroelectric facility in the southern Kenai Peninsula Alan Bailey Petroleum News
The board of the Alaska Energy Authority has authorized the issue and sale of bonds for up to $47 million in financing for a project involving the diversion of some water from Battle Creek into Bradley Lake, to increase the power production capacity of the Bradley Lake powerhouse in the southern Kenai Peninsula by about 10 percent. In addition to being a significant source of renewable energy, the Bradley Lake facility is one of the cheapest sources of power on the Alaska Railbelt electricity grid. AEA owns the facility, which is operated under contract by Homer Electric Association and managed by a committee, the Bradley Project Management Committee, or BPMC, consisting of representatives of the Railbelt electricity utilities.
Prior to the AEA board’s Dec. 7 decision over the financing arrangements, the BPMC had approved the financing package.
“We moved this great project forward,” said AEA board Chair Russell Dick following the board decision. “The Battle Creek Diversion Project is a perfect example of efficient, practical development of local renewable energy resources that will reduce ratepayer energy costs.”
Low cost bonding AEA is able to reduce the bonding cost through its issuance of new Clean Renewable Energy Bonds, or CREBs, a form of bonding that qualifies for tax credits and is authorized by the Internal Revenue Service. In October the IRS allocated $40 million in CREBs to AEA. AEA says that it will also apply $1.2 million of a state allocation of qualified energy conservation bonds to the Battle Creek diversion project. The remainder of the financing will presumably come from the issuance of regular revenue bonds.
The modifications to the hydropower system will involve constructing a new diversion on the west fork of upper Battle Creek, and laying a 1.7-mile buried pipeline and 1,000-foot canal to carry the diverted water to Bradley Lake. A diversion management plan will ensure an adequate flow of water in Battle Creek below the Bradley Lake diversion, once the diversion is in operation. The Federal Energy Regulatory Commission approved the Battle Creek diversion design in September 2016.
The existing hydropower system has a 125-foot-high dam that raises the natural level of Bradley Lake by 100 feet, with water entering the lake coming from the upper Bradley River and a diversion on the upper Nuka River. A 18,610-foot-long tunnel carries water from Bradley Lake to a powerhouse with two 45-megawatt generating units, on the shore of Kachemak Bay, about 22.5 miles northeast of the town of Homer.
AEA says that it anticipates that construction of the Battle Creek diversion will begin in the coming spring and take three years to complete.
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