USDA advances $16M in rural energy development grants

Wednesday, June 29, 2016 - 14:26
  • A wind turbine is installed at Fire Island in this file photo. Among $16 million in USDA grants advancing for rural alaska energy projects, the largest share, or $3 million, is going toward wind projects. Star file photo

In an era of state cutbacks, every federal penny counts.

U.S. Department of Agriculture-Rural Development Alaska State Director Jim Nordlund announced on June 23 that nine grant applications from Alaska totaling $16 million are moving to a final review process.

The USDA’s High Energy Cost Grant program is intended to help families and individuals in areas with extremely high per household energy costs, which is federally classified as any community that pays 275 percent of the national average.

Alaska has some of the highest utilities costs in the nation at just less than 18 cents per kilowatt-hour, according to a March 2016 report from the U.S. Department of Energy. The national average is 10 cents per kilowatt-hour. In rural Alaska communities, this number grows even higher.

The grants fall under the USDA Rural Development program, which has granted more than $2 billion in housing, community facilities, businesses, energy, water and sewer and telecommunications projects in 226 rural Alaskan communities since 2009.

USDA specifies the funds may be used to acquire, construct, extend, upgrade or otherwise improve energy generation, transmission or distribution facilities.

The USDA received grant applications between $400,000 and $3 million from Alaska Power & Telephone Company, Alaska Village Electric Co-Op, City of Grayling, City of Pilot Point, Alaska Native Tribal Health Consortium, NANA Regional Corp., New Koliganek Village Council, Asa’carsarmiut Tribe and Naterkaq Light Plant.

Each project still has to pass an environmental review before approval. Nordlund said he was uncertain on how long the process takes, but staff estimated 60 days as typical for some previous projects.

“It really depends on the project,” said Nordlund.

USDA’s program picks up some of the slack from a drop in state funding geared toward the same purpose.

“Because of the state fiscal crisis, the money for things like that fund and other efficiency programs has dropped precipitously over the last two years,” said Chris Rose, executive director of the Renewable Energy Alaska Project, a coalition of over 70 business and power producers, conservation groups, and electric utility companies focused on energy efficiency development.

The Alaska Renewable Energy Fund passed in 2008 at the behest of REAP and others similarly focused groups. Since then, the state has appropriated over $250 million into the fund, which in turn produced another $200 million in federal and state matches for feasibility studies, designs, and construction. The 50 projects currently completed with these funds will displace 30 million gallons of diesel per year, according to the Alaska Export Authority estimates.

Nordlund said proposals are increasing for the federal program, both in quantity and in quality.

“I think we’re seeing a lot more interest,” said Nordlund. “I’m seeing a lot more creativity in the projects that come in. I think what you’re seeing is more sophistication in the proposals, because we’re starting to build a core of engineers and developers in this state who understands what works and what doesn’t work in the state of Alaska. They’re getting to be better prepared.”

Most of the nine awards foster development a few key technologies. The three largest grants of $3 million apiece to Alaska Village Electric Co-Op, Alaska Power and Telephone Company and Naterkaq Light Plant will go toward wind energy development projects.

 “If you were to collapse them into categories,” said Nordlund, “every one of them either has something to do with wind generation, waste heat recovery, solar, battery technologies, electric thermal stoves, or biomass, which in English is like heating with wood.”

Health organizations like the Alaska Native Tribal Health Consortium, granted $690,388, will use the money for water treatment, lowering one of the larger power costs in remote places.

“A good cornerstone of health is good water,” said Steve Weaver, director of the Division of Environmental Health and Engineering at ANTHC. “We’re looking at putting solar panels on eight water treatment plants in eight remote communities that use diesel fire generators to provide electricity. We expect solar to offset their power costs by 15 percent over time.”

Jason Custer, a business development representative from Alaska Power and Telephone, estimates the project will reduce cost to 15 cent per kilowatt-hour in the heavily diesel-dependent communities it services.

In Alaska Power and Telephone’s case, the $3 million makes the total $10 million project financially viable.

Cost reductions are key to the program, but Rose said the ebbs and flows of oil and gas pricing are enough concern on their own for utilities companies and their customers.

 “We don’t have any control over fossil fuels, even though we produce them here in the state,” said Rose. “We don’t have control over the price of diesel. We don’t have control of the price even of the natural gas we use here in the Anchorage area.”

With renewable sources, he said, even if the price doesn’t go down it will at least be more predictable.

“For a lot of these communities, the most important thing is that it’s stably priced. Once you put in a renewable energy project, you can much more predictably see what the cost of power is going to be in the future.”

As with oil and gas, Alaska’s renewable energy development can give direction for national and international projects of the same scope and purpose.

Navigant Consulting, an energy consulting firm, produces studies related to renewable energy. Alaska ranks top of the line in at least one category.

 “Their definition of microgrids includes islands that have renewables in them,” said Rose. “By that definition, Alaska has more small islands with renewables integrated into them than any other place in the world.”

Rose said his group is already working with Outside communities to help adapt Alaska-bred methods.

“We believe we can export these technologies,” said Rose. “There are people we’re working with in island communities in the Caribbean and the Pacific who we believe want the same technology.”

DJ Summers can be reached at [email protected].

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