Utility funded for wind project

Construction cost estimate for system is $175 million

Posted: Monday, May 23, 2005

ANCHORAGE - The Denali Commission has awarded Chugach Electric Association an additional $471,000 for its Fire Island wind project.

The Denali Commission - a state and federal agency formed to provide infrastructure and economic support throughout Alaska - awarded the cooperative utility $750,000 last year to fund a study to evaluate the feasibility of the Fire Island project.

The study determined that it would be feasible to install 400-foot wind turbines on the island, located about three miles in Cook Inlet offshore from Anchorage. The 33 wind turbines would be able to generate up to an estimated 99 megawatt-hours, more than 12 percent of the about 800 megawatts used by the Railbelt during peak electric consumption.

Chugach Electric said this month that it will use the Denali Commission's additional funding to develop construction-ready specifications for the wind project, to complete the field work needed to prepare for the project's environmental assessment, and to complete the environmental assessment.

Steve Gilbert, manager of energy projects development for the utility, compared the wind project to the Bradley Lake hydroelectric project near Homer.

By offering an alternative to natural-gas-generated power, Bradley Lake has dampened the rising price of power. If the facility had not been built more than a decade ago, Chugach Electric would be using more expensive natural-gas-generated power, Gilbert said.

"It helps to buffer the price increases that naturally occur when you rely so heavily on one fuel," he said.

About 85 percent of Chugach Electric's power is generated by natural gas, with the other 15 percent from hydro.

Like Bradley Lake, a wind farm on Fire Island could one day offer an inexpensive alternative to the utility's main energy source.

"We are trying to think ahead," he said. "And just like Bradley Lake, it would benefit all of the rate payers along the Railbelt."

If the wind project is developed, Gilbert said it would replace about 7 percent of Chugach Electric's power generated by natural gas.

Other Railbelt utilities also would receive power from Fire Island. Anchorage's Municipal Light & Power, Golden Valley Electric and Homer Electric Association have signed a memorandum of understanding with Chugach Electric to use power generated from the wind farm and to jointly pursue funding for the project's development.

Chugach Electric, however, has not decided whether it will go ahead with the project.

The decision depends on the natural gas supply in Cook Inlet, the proposal to build a natural gas pipeline from the North Slope, and whether the utility can secure additional grant funding for the project, among other issues impacting the economic merit of the project, a company news release said.

The power that would be generated from the Fire Island wind project is currently not competitive with Chugach Electric's main source of power generated by the natural-gas-fired Beluga plant.

In the future, however, the prices of power generated from wind and natural gas could be comparable. Public funding for the development of Fire Island project could lower the cost of the power generated from the island's wind turbines, and the price of natural-gas-generated power could rise if the demand for natural gas exceeds Chugach Electric's access to inexpensive gas.

The U.S. Department of Energy's study of gas in Southcentral Alaska found there could be a gas shortage in the area as early as 2009 and developing a new gas supply to meet the demand would be more expensive than what consumers are currently paying.

The wind project is estimated to cost $175 million to construct - some $135 million for the wind turbines, $30 million for electrical infrastructure and $10 million for infrastructure necessary for the project's construction, such as roads and a barge landing, according to Phil Steyer, manager of government and external affairs for Chugach Electric.

Rep. Harry Crawford, D-Anchorage, has introduced a bill to appropriate $20 million to Chugach Electric for the project's construction. As of the regular session's end, HB 164 was still in the House Finance Committee.

Steyer said a $20 million grant is the minimum amount needed to make the Fire Island wind project economically viable.

If public funding is secured for the wind project's initial costs, Chugach Electric CEO Joe Griffith has said wind-generated power could be online in three years.

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