With the nation's second-highest statewide average cost of gasoline and electricity, Alaska is facing a debilitating problem emanating from what can best be described as energy-induced poverty. An increasing number of Alaskans, urban and rural alike, must allocate more of the resources they have to rising energy costs versus other critical needs. This economic hardship does not just impact one family, one community or one region; these impacts are felt by the entire state and our businesses.
The Alaska Energy Authority has a suite of efforts in process for both rural and urban regions that attempt to soften and even solve these hardships. It can be useful to think of these in terms of a chalkboard or whiteboard listing each program area with a subset of many potential project candidates. As time advances, some project candidates are crossed off while others are added for consideration. One of the larger and longest-surviving potential projects is Susitna-Watana Hydro.
Reducing the cost of energy is complex. Some have argued that natural gas will provide all of the energy needed for Alaska, thus making other energy projects like Susitna-Watana Hydro unnecessary. While natural gas is an essential component of our stateʼs energy mix, developing a long-term energy plan for 80 percent of the stateʼs population based solely on volatile-priced fossil fuels like natural gas and heating oil does nothing to incentivize economic growth or provide economic relief. Residents in rural Alaska and Fairbanks who depend on fuel oil to heat their homes know this is true. Changes in world markets have contributed to doubling the cost of fuel oil. Alaska needs a diversified energy portfolio to solve its energy challenges.
A key benefit of renewable projects such as Susitna-Watana Hydro is the inherent ability to dampen the effects of inflation and global economic forces over very long periods of time -- as much as 100 years. With hydro, the cost of power at start-up is almost identical to the cost of power decades down the road, so residents and consumers benefit from price stability. We only need to recall the ongoing success of dozens of hydro projects around the state, including Bradley Lake near Homer, for proof. At the time Bradley Lake entered service it was one of the costliest sources of power in Alaska. Now it is one of the least expensive because minimal additional capital expenditures have been incurred during the decades since the project was christened. With ʻdepleatablesʼ such as natural gas, wells exhaust, exploration and production costs inflate and regulatory layers mount, which result in higher costs.
Renewable energy sources are important to realizing long-term, affordable energy economics. Alaska has been blessed with incredible, abundant natural wonders like few other places on Earth. Water, wildlife, fish, minerals, oil, gas - form the foundation of our unique way of life. They provide us with both the sustenance to survive and the potent potential from which to solve our growing economic and related social difficulties. Susitna-Watana Hydro, in addition to other projects, may help us realize some of that potential.
With the addition of Eva Creek and Fire Island Wind projects, roughly 23 percent of our stateʼs power comes from renewable sources. Susitna-Watana Hydro will provide 22 times the power than both of those projects combined, supplying a little more than half of the Railbeltʼs current demand.
Susitna-Watana Hydro and other lesser-known renewable energy projects provide the potential to strike a balance between the need for power and environmental concerns. I am hopeful that we will continue to seek initiatives that will ensure future generations have the energy they need and at prices they can afford so Alaska can continue to grow and prosper.
AEAʼs mission to reduce the cost of energy in Alaska is a goal in which we can all become stakeholders. There is no one solution; rather Alaska needs to invest in projects that will provide short and long-term relief to those who are feeling the mounting pressure of escalating energy costs.
Robert Sheldon serves on several State of Alaska boards and commissions. He currently serves as a board member for the Alaska Energy Authority.
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