The Fire Island wind project got a big boost from the Anchorage Assembly Tuesday night when it ordered the city's electric utility to formally pursue a contract for the power.
The wind farm is being built by Cook Inlet Region Inc. on the island, three miles west of Anchorage, but has been stalled because CIRI needs someone to agree to buy the power before it can obtain financing to finish building it. The current $146 million project is envisioned to have 22 turbines -- essentially those slender windmill-looking contraptions -- each standing about 375 feet tall. It was recently scaled back from a 33-turbine project.
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The unanimous Assembly action doesn't necessarily mean Anchorage Municipal Light & Power will buy electricity from the project. It simply directs ML&P to sit down and craft a contract with the Native corporation to see if the project would be an economically viable option for the city, said Assemblyman Bill Starr, who sponsored the resolution.
CIRI has been trying to interest local utilities in buying the wind power, but the utilities have been reluctant to negotiate because they believe the cost will be too great or the wind farm won't produce enough power to help offset declining natural gas generation.
"I've only heard that it doesn't make economic sense or that it doesn't pencil out," Starr said Wednesday, adding that he wants to see a formal written agreement with costs and other factors. "I want to see a power purchase agreement. If it doesn't pencil out, let us (the Assembly) decide that."
Starr said a wind farm makes sense because it takes the load off the current natural gas supply, which is going up in cost, and it could free up gas for heating and other uses. He noted that if ML&P is considering importing liquefied natural gas from foreign shippers to keep the lights on in Anchorage, then it should be looking at the CIRI wind project, too.
ML& P officials did not immediately return calls for comment for this story.
ML&P along with other Railbelt utilities are studying the cost and logistics of importing LNG on a short-term basis -- perhaps for several years -- because natural gas production in Cook Inlet is dropping and it's not likely a gas line from the North Slope or other Alaska gas supplies will be available by 2013, the year that utilities estimate there will be a shortfall in gas. The Alaska Natural Gas Development Authority also is helping the utilities study the issue and expects to have a report finished before the legislative session ends in April.
Lawmakers and Gov. Sean Parnell also are turning their attention to the proposed Susitna River hydroelectric project which could generate much of the Railbelt's power needs. But the estimated $4.5 billion dam wouldn't be producing electricity until at least 2022, lawmakers were told recently.
The resolution Starr presented to the Assembly notes that the municipality has already had to buy additional energy on the spot market as demand has peaked, and that costs are only going to go up. "The Fire Island Wind Project offers local economic stimulus through jobs and increase in municipal tax revenue," the resolution says. "Even more importantly for local government, the timing of the Fire Island Wind Project coincides with municipal needs to diversify local energy supply, improve energy price stability and enhance system reliability."
CIRI's Fire Island project could be operating by next year and the company needs to have it producing power by Dec. 31, 2012 in order to take advantage of about $44 million in federal tax credits, or cash in lieu of taxes, offered under the federal stimulus program for renewable energy projects.
CIRI spokesman Jim Jager said the money from the tax credits is passed on to the consumer, and that will help keep rates low.
The project also has gotten an assist from the Legislature, which in 2008 approved $25 million to pay for transmission lines connecting Fire Island to the Railbelt electric grid.
But it still needs customers in order to attract private financing, and that's been the hangup for CIRI.
"We're delighted," Jager said about the Assembly action. "We think this project has been a good deal for the ratepayers all along."
Jager thinks the project will most definitely "pencil out" as Starr wants to see. He said CIRI consultants have told the company that the project is very competitive with other wind-generation projects on the West Coast, even after higher Alaska costs are factored in.
Jager said some costs are coming down already, including the price of the turbines themselves. The economic downturn Outside has made the prices more attractive. And, he said, the economic downturn also has resulted in lower bids for construction costs generally in Alaska.
CIRI is hoping that negotiations with ML&P means the two biggest utilities in Alaska are at the table. That includes Chugach Electric Association, which first approached CIRI about developing a wind farm on Fire Island in 2000, according to the Fire Island wind farm website.
The project is anticipated to generate enough electricity to offset about 3 percent of Southcentral's electric needs, CIRI has said.
Proponents of renewable energy programs are also happy with the Assembly's move to possibly push ahead on Fire Island wind.
"Obviously we would love to see Fire Island happen," said Toby Smith, director of the Alaska Center for the Environment. "I definitely think this is a necessary and important step on the path to Alaska achieving a portfolio of diversified projects."
He called the Assembly's desire to get something in writing so the debate can move away from just arguing about it "a very reasonable approach."
"This would make the whole process very transparent, so it's very good news," he said.
Contact Patti Epler at patti(at)alaskadispatch.com.