Anchorage Daily News

About three dozen proposals stood out as winners last month in a new competition for $5 million in seed money to kick-start alternative energy projects across Alaska.

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Nearly all envision medium- to small-scale projects: a wind farm on Kodiak Island (total cost: $24 million), a series of "low-impact hydro" projects in Kenai Peninsula streams ($19 million apiece), a geothermal plant at Manley Hot Springs ($880,000).

Towering over them all, however, was a giant from days gone by: an ambitious hydropower project at Chakachamna Lake, about 85 miles west of Anchorage. Total cost: $1.75 billion.

Driving such ideas, developers say, is the increasingly high cost of energy derived from fossil fuels in Alaska and the improving affordability of green alternatives. That and the sudden availability of state oil-windfall cash.

As a result, legislators recently appropriated $25 million to help build a Fire Island wind farm in one bill and authorized spending $250 million on future renewable energy projects in another.

Some want to go even further, drafting a bill last week to spend $21 billion over the next five years for "alternative energy" projects -- a term that would allow a massive state investment in a controversial coal-to-clean-fuel plant.

By that measure, Chakachamna appears almost modest. As now envisioned by Pribilof-based TDX Power -- a Native-owned firm that's backed other renewable energy projects in Alaska -- it no longer includes the dam featured in a 1980s version of the same project.

Think of it now as nothing more than a drain pipe in the neighboring Tordrillo Mountains. Or a very deep hole that engineers would drill into the bottom of 14-mile-long Chakachamna Lake to funnel water from the mountains down a 24-foot-wide tunnel 12 miles long.

After descending nearly 1,000 vertical feet, the water would enter a huge subterranean power plant built near sea level. There it would jet past four turbines, generating about 1.6 billion kilowatt-hours of power a year -- enough to electrify nearly a third of all the homes from Fairbanks to Anchorage to Homer.

The water would then re-enter the Chakachamna drainage system through an outlet at McArthur River, while the power would connect to the Railbelt energy grid through two parallel transmission lines stretching 42 miles to the big gas-fired power plant at Beluga. Over the long run, TDX officials say, the hydro project could provide less expensive electricity to all of the state's Railbelt communities.

All without interrupting the downstream flow from Chakachamna Lake, or forcing salmon to migrate their way up constrictive fish ladders. Or spending more each year to produce increasingly expensive gas-fired electricity. Or burning dirty coal.

It could, that is, if it's built.

DREAMS OF BIG DAMS

Big hydro ideas frequently falter in Alaska, as Chakachamna project manager Eric Yould can well attest. He once headed the Alaska Energy Authority and throughout the 1980s oversaw a plethora of state proposals to build big dams.

True, none of them were quite as breathtaking as the 1960s plan to build the mile-wide Rampart dam across the Yukon River, a project that would have flooded nearly all of the Yukon Flats while creating a 280-mile-long reservoir larger than Lake Erie.

(On the positive side, the Rampart dam would have generated about 50 times more electricity than Alaska required in 1960 and possibly would have attracted dozens of new industries to the state. On the downside, it would have submerged Fort Yukon and a half-dozen other villages under a hundred or so feet of water while drowning the habitat of 12,000 moose. The naysayers eventually prevailed.)

Consequently, a state proposal two decades later to build a series of four dams along the upper Susitna River, about halfway between Anchorage and Fairbanks, seemed level-headed by comparison. Susitna would have generated about 6.5 billion kilowatt-hours of electricity a year (about one-fifth the size of Rampart).

But even that was more than the 5 billion kilowatt hours all the communities along the Railbelt consume today.

Susitna was also expensive. It would have cost $5.3 billion back then, or about $11 billion today. When a top economist said the state would need to dip into its Permanent Fund savings account to make it affordable, the project was shelved as both economically and politically unfeasible.

LOWER LIGHT BILLS?

Mostly forgotten in the war over Susitna, Yould said, was a much more modest plan to build a 600-foot-wide dam with a tunnel at Chakachamna Lake. The state paid Bechtel Corp. $300,000 to study and engineer the project, but beyond that it never got much attention.

"Even then we concluded Chakachamna was an economically feasible project," Yould said last week. But Susitna was the favored son, and it didn't make sense to develop two projects in the same neighborhood.

Instead, in the late 1980s, the state developed the Bradley Lake dam -- with a power output about one-quarter of Chakachamna's -- in the mountains northeast of Homer. Now Bradley is the largest hydropower project in the state.

Alaska renewable energy activist Chris Rose loves Bradley Lake, which now provides some of the cleanest and cheapest power in Alaska -- costing a mere 4 cents per kilowatt hour to produce. Which might bode well for Chakachamna.

Not long ago, the cost to Anchorage utilities of purchasing gas-fired electricity was just as cheap. But no longer. With supplies of Cook Inlet natural gas running low and natural gas prices doubling in recent years, hydropower projects have become much more competitive. Rose finds the turnaround amazing.

"When Bradley Lake was being discussed as a project in the late '80s and early '90s, a lot of people were kind of ridiculing it back then, saying, 'Hey, we have natural gas-fired power so cheap, why would you ever want to build something that costs 4 cents a kilowatt hour?' Well, of course now it's some of the cheapest power we've got."

Better than that, Yould says, hydropower plants don't suffer hardly at all from rising costs. The fuel they run on is free and inexhaustible. And while gas-fired power plants might last 20 years, hydropower plants can last 200. Once they're paid for, they're money in the bank.

"If you build a hydropower project, it's sort of analogous to buying a home," Yould said. "You have a high up-front capital expense. But as time goes by, your mortgage stays the same -- as opposed to a person who rents a house and the rent continues to go up as inflation goes up. The rented house is analogous to natural-gas-fired generation."

At least that's the argument that TDX officials will make to the boards of the Railbelt's six local electric utilities fairly soon. They'll need some of them to agree to acquire Chakachamna power before the project can proceed, Yould said.

With such guarantees in hand, government licensing of the project could conclude in four years and construction could begin. The hydro plant could be running by 2015.

The private sector could develop Chakachamna on its own -- and TDX Power is looking for a major partner, Yould said. But the project would become substantially cheaper and instantly more attractive to power purchasers if the state chipped in a major share, just as it did with Bradley Lake, paying about half of that project's $328 million tab.

"I can tell you the utilities, in the back of their minds -- they would not be averse to that," Yould said.

WHAT ABOUT THE FISH?

Apart from the high front-end costs, however, dams and big hydro projects can also slam into opposition from environmentalists. Sometimes for good reasons. The 1930s construction of the Grand Coulee dam in Washington state devastated salmon runs on the Columbia River. The 1950s erection of the Glen Canyon dam in Arizona flooded a close cousin to the Grand Canyon.

In Alaska, a fledgling environmental movement in the 1960s decided to fight back, beginning with the Rampart dam -- then continued with over-my-dead-body opposition to Susitna, which would have dramatically tamed one of the state's premier white-water rivers.

At Chakachamna, the issue could well be fish -- though project engineers will also have to consider four adjacent glaciers, an active volcano (neighboring Mount Spurr) and the Castle Mountain earthquake fault that passes near the lake. But first, consider the fish.

All five species of salmon migrate up the McArthur and Chakachatna rivers. According to Bechtel's 25-year-old stream survey, about 40,000 sockeye salmon find their way to the lake.

So the engineers' original hydro proposal -- which would have raised the lake level by as much as 13 feet by plugging the outlet with a 49-foot-high dam -- called for building an intricate fish ladder so the salmon might reach their spawning grounds.

In a presentation to the Society of American Engineers last year, TDX Power CEO Nicholas Goodman noted that Chakachamna's success or failure at addressing fish issues "will likely drive the project."

Recently, those same concerns -- coupled with an equal desire to cut costs -- prompted the company to scrap the dam and fish ladder concept altogether. A new team of engineers determined that raising the lake level won't be necessary, Yould said. Nearly as much power can be harvested by allowing Chakachamna to remain at its natural level through most of the summer.

As the tributaries dry up in the fall, the lake level will drop dramatically -- perhaps as much as 60 feet -- as water leaves the Chakachamna through both the drain and the river, Yould said. But water for the river will continue to flow from the lake by passing through a new system of barrel gates installed near the outlet, and salmon will still be able to swim upstream.

"It eliminates the fish ladder altogether," he said.

Some of the 800 members of Cook Inletkeeper -- an environmental group that represents local commercial, sport and subsistence fishermen -- want to hear more about the project, according to executive director Bob Shavelson. Yould and Goodman have already addressed their group once.

"What does that diminished stream flow mean for the Chakachamna runs?" Shavelson asked rhetorically. "We're very concerned with fish impacts."

But his membership is much more wary about a proposal to develop a large coal mine near Beluga, which could discharge "millions of gallons of mine waste" into the salmon-rich Chuitna River, Shavelson said. And the group definitely prefers clean, renewable energy alternatives, like hydro, geothermal and wind projects.

"So we're looking at the energy picture in Cook Inlet where there is kind of a fork in the road," he said. "We can go backwards toward coal, or we can go forwards to what we see as world-class renewable energy."

Yould and Goldman hope that includes Chakachamna.

Find George Bryson online at adn.com/contact/gbryson or call 257-4318.

Project at a glance

DESCRIPTION: Hydroelectric development would divert water from Chakachamna Lake, with a surface elevation of about 1,142 feet, to a power house in the McArthur River basin about 200 feet above sea level.

LOCATION: East end of 14-mile-long Chakachamna Lake, about 85 miles west of Anchorage on the south flank of Mount Spurr.

TUNNEL: Unlined 12-mile, 24-foot-diameter tunnel from lake to power plant. A drop of 942 feet.

POWER PLANT: Water from tunnel will empty into four 10-foot, steel-lined penstocks that power four generating units with a combined maximum capacity of 330 megawatts. The plant will be built in an underground cavern about 250 feet long, 65 feet wide and 130 feet high, a space that is roughly the size of a football field 13 stories tall.

TRANSMISSION LINE: Two 230-kilovolt lines, each about 42 miles long, will connect to the existing power grid at the Beluga Power Station.

ESTIMATED COST: $1.75 billion

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