In 2022, Cook Inlet’s largest natural gas producer, Hilcorp, announced it could not guarantee a gas supply to the Railbelt beyond the next few years.
It’s not that Cook Inlet is out of natural gas, said Philip Wight, an energy historian at the University of Alaska Fairbanks. But it’s become too expensive to produce locally.
“We are a small market,” Wight said. “And it is not worth it for many oil and gas companies to come into the Cook Inlet, a mature basin where most of the gas has already been removed, to try to encourage more production.”
That’s a problem for communities on the Railbelt, the stretch of Alaska communities from Homer up to Fairbanks. Two-thirds of the region’s electricity is currently generated from Cook Inlet natural gas.
Electric utilities are scrambling to come up with new energy sources.
One option is to ship in liquefied natural gas on tankers from Canada. But importing natural gas is expensive and prices are unpredictable.
A recent study from the National Renewable Energy Laboratory said longer-term, the cheaper option is to aggressively build out renewable energy sources like solar and wind farms.
Paul Denholm is an NREL senior energy analyst and one of the study’s authors. He said Alaska will likely have to import some amount of natural gas no matter what, but renewables can lower the expense.
“By building quite a bit of wind and solar energy, we can dramatically reduce the amount of that costly natural gas burn, and we can reduce the price of electricity, or at least really keep it from rising as much,” Denholm said.
He said current federal tax credits can also lower renewables project costs up to 40%.
That would also be more in line with global climate targets, which require transitioning away from fossil fuels. Natural gas is a major contributor to climate change.
But how quickly could Alaska build out a lot of renewables?
Currently, about 15% of Railbelt electricity comes from renewable sources – mostly hydro power.
The study found in the most affordable scenario, renewables would need to provide 76% — or five times today’s output — of electricity generation by 2040.
Denholm said that would require building major new wind and solar farms, along with battery storage. In this scenario, for example, wind power would go from providing just 2% of Railbelt electricity today to 51% within 15 years.
That’s a lot of infrastructure to build in a short period of time.
“One challenge is that there’s relatively little historic development of wind and solar [in Alaska],” Denholm said. “So there would be a challenge of getting that infrastructure in place to avoid all of that natural gas.”
Chugach Electric Association is the largest of five electric utilities serving the Railbelt.
CEO Arthur Miller said he hasn’t reviewed the NREL study in detail.
He said the utility is pursuing major wind, solar and hydro projects – but renewables introduce their own complications.
“I think renewables and clean energy technologies in general are absolutely essential as we move forward,” Miller said. “A big challenge in the Railbelt is the integration of those renewables into the generation mix.”
Wind and solar are variable resources. That’s different from traditional options like natural gas or hydro power, which utilities can turn on and off as needed. Basically, the more wind or solar you have on the grid, the more flexible and connected the grid needs to be.
Wight, the UAF energy historian, said this transformation is possible but it will require major changes in how utilities do business.
The biggest hurdle, he said, is establishing better coordination between the five utilities, including increasing transmission capacity between each service area.
Utilities would also have to build a lot of big projects really quickly. And they’d likely have to cooperate with private wind and solar developers to reach targets in time.
“Utilities are not used to running the grid this way,” Wight said. “It’s going to take a cultural change, it’s going to take innovation in order to get there.”
Lawmakers are currently considering a proposal for a “renewable portfolio standard” that would require utilities to ramp up renewables more quickly. Advocates say a renewable portfolio standard would help drive a market for renewables investment and construction.
In the shorter term, Chugach is considering the expensive option of importing natural gas from Canada — and looking for ways to keep Cook Inlet natural gas flowing
Everyone agrees as utilities figure out the energy transition Alaskans are likely to be in for at least a few years of high electric bills.
But Wight said he remains hopeful that the state will figure it out.
“We have built big things in the past. I know we can do so again in the future. And it’s just really a question of social and political will and coming together to agree that we have big challenges to solve,” he said. “But we also have the tools and the solutions that we need to solve those problems.”
Kavitha George is Alaska Public Media’s climate change reporter. Reach her at kgeorge@alaskapublic.org. Read more about Kavitha here.
