Alaska utility regulators are weighing a proposed contract between the state’s largest electric power company and a wind farm developer. The developer says a prompt decision is vital to allow construction to begin in time to qualify for key federal grants.
The wind farm is planned for Fire Island, in Cook Inlet near Anchorage’s international airport. The developer is Fire Island Wind LLC, a subsidiary of Cook Inlet Region Inc., the Southcentral Alaska Native corporation. The power buyer is Anchorage-based Chugach Electric Association.
Now the deal is before the Regulatory Commission of Alaska, which has been asked to approve an agreement between Chugach and Fire Island Wind.
The two firms are urging the commission to approve the agreement by Sept. 15 so construction can start right away and the project can secure federal funding.
“Failing to start construction in 2011 will disqualify the Project from receiving approximately $18.7 million in federal grants,” Suzanne Gibson, CIRI’s senior director of energy development, told the commission staff in a July 8 email.
The grant money would come through the American Recovery and Reinvestment Act of 2009, which allows the treasury secretary to provide grants to partially reimburse developers of wind, solar, geothermal and other energy projects.
Failure to capture the grant money will “make it impossible” to keep the power purchase price “reasonably close” to the level at which Chugach and CIRI have agreed, Gibson said.
A June 24 commission public notice says the price of the wind power under a 25-year contract is $107.85 per megawatt-hour.
Aside from the federal grants, Fire Island Wind also is relying on $25 million in state grants, the commission notice says.
In her email, Gibson acknowledged that utility regulators are being asked to act on the contract more quickly than normal, but emphasized the proposed Sept. 15 decision date “is in fact critical to the viability of the entire Fire Island Project.”
Judging from its craggy, wind-warped trees, Fire Island is a blustery place. Efforts to establish a wind farm on the island stretch back many years.
Alaska’s main population corridor depends heavily on Cook Inlet natural gas for heating and electric power generation. But deliverability of this resource is increasingly strained, leading Chugach Electric and other power companies to look at alternatives to local gas.
As proposed, the Fire Island wind project would include 11 General Electric wind turbines capable of producing a combined 17.6 megawatts of electricity, enough to power more than 6,000 homes, the developer says.
Total project cost, including transmission, is about $90 million.
The wind project would supply the annual equivalent of about 4 percent of Chugach Electric’s retail sales in 2010, and would offset half a billion cubic feet of gas used for power generation, Fire Island Wind says.
The wind power will be expensive at first compared with what Chugach pays now for gas, but wind “will almost invariably be cheaper in the long run as natural gas prices go up,” says the nonprofit Renewable Energy Alaska Project.
Wind turbines have sprouted around Alaska in recent years, though nowhere to the extent that they are now found in perennially windy areas of the Lower 48 or, for that matter, on scattered ridge tops, prairies and coastal areas the world over. The Fire Island wind farm would be the state’s largest, REAP says.
The RCA is taking public comments through July 24 on the power purchase agreement.
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