The proposed Fire Island wind farm in Anchorage is moving closer to reality under a deal with Chugach Electric Association that would lock in the price of power for the next 25 years.
The Chugach board of directors is expected to approve a power purchase agreement at its meeting last Wednesday that would pay Cook Inlet Region Inc., an Alaska Native corporation, 9.7 cents a kilowatt hour for power generated from the project. That's about twice the cost of natural gas-generated power, but the cost of natural gas is going up, especially for Chugach, which relies heavily on Cook Inlet gas to supply electricity to its customers in Southcentral Alaska.
The board last week approved the terms and conditions for the deal, and was expected to approve the actual agreement this week.
CIRI's board of directors will meet next week and is also expected to back the agreement, said CIRI spokesman Jim Jager.
It would then go before the Regulatory Commission of Alaska for approval, which might be a bit harder sell since the cost of the power is higher than consumers pay now. But Chris Rose, executive director of the Renewable Energy Alaska Project, said the stability of the price over the long term is a strong selling point.
"Over the long term this is a good deal for consumers," he said.
CIRI has been trying for years to find a buyer for power from the wind farm, which has gone through a number of designs. With the Chugach deal in place, CIRI would build 11 turbines on the island across from Anchorage's international airport, a project that could generate enough power for about 6,000 households, Jager said.
The power would equal about 4 percent of Chugach's retail sales, the utility said in a press release.
Jager said RCA approval, anticipated by mid-September, would allow CIRI to line up financing for the wind farm. He did not have a cost estimate for the project because engineers are still working out the details of scaling it back. Full development is expected to be 33 turbines. Earlier this year, CIRI put the cost of a 22-turbine project at about $146 million.
Finalizing a deal with Chugach also will allow CIRI, the utility and consumers to take advantage of millions of dollars in federal stimulus money for renewable energy projects, a grant that is about to expire. The Alaska Legislature also approved $25 million in 2008 for construction of transmission lines connecting Fire Island to the Railbelt energy grid.
Jager called the Chugach deal "an incremental step" toward solving Railbelt energy needs. The Native corporation had hoped to sign on more Southcentral utilities, especially Anchorage Municipal Light and Power, but the municipal utility, which has gas contracts that are longer term and more favorable than Chugach's, has balked at buying wind power.
Jager said Chugach is getting a good deal by getting in on the ground floor. The cost of natural gas will only continue to rise in Anchorage, and Chugach has locked in a rate for 25 years, he said.
Rose and other renewable energy advocates applauded the deal, which they said is long overdue. "For those of us who have been advocating for a project at Fire Island for seven or eight years, it's exciting to see it finally coming together," Rose said.
He said he expects an "interesting debate" in front of the RCA and that he hopes the agency, which regulates the cost for consumers, will acknowledge that wind is an energy source that carries a flat price, unlike natural gas which has been climbing steadily in cost for years.
"We need to be able to start making some better guesses at what gas prices are going to do over the long term and compare that to the flat price scenario," he said. "We're hoping the RCA will see the wisdom in that."
Steve Cleary, a renewable energy advocate for the Alaska Public Interest Research Group, said the Railbelt will benefit from having an independent producer like CIRI on the grid. He anticipates it will crack the door open for other small energy producers -- tidal or geothermal projects, for instance -- to be able to sell power to the utilities, too.
"We see this as an investment in the future and an investment in a diversified energy mix," Cleary said.
Contact Patti Epler at patti(at)alaskadispatch.com.