Legislature(2023 - 2024)BUTROVICH 205
01/19/2024 03:30 PM Senate RESOURCES
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| Presentation: Alaska Center for Energy and Power: Railbelt Decarbonization Project Results | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
January 19, 2024
3:30 p.m.
MEMBERS PRESENT
Senator Click Bishop, Co-Chair
Senator Cathy Giessel, Co-Chair
Senator Bill Wielechowski, Vice Chair (via teleconference)
Senator Scott Kawasaki
Senator James Kaufman
Senator Forrest Dunbar
Senator Matt Claman
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
PRESENTATION: ALASKA CENTER FOR ENERGY AND POWER: RAILBELT
DECARBONIZATION PROJECT RESULTS
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
JEREMY CASPER, Director
Alaska Center for Energy and Power (ACEP)
Fairbanks, Alaska
POSITION STATEMENT: Provided an overview of the Railbelt
Decarbonization Project.
PHYLICIA CICILIO, PhD, Research Assistant Professor
Power Systems Engineering
Alaska Center for Energy and Power (ACEP)
Fairbanks, Alaska
POSITION STATEMENT: Outlined Railbelt Decarbonization project
goals.
STEVE COLT, PhD, Research Professor
Alaska Center for Energy and Power (ACEP)
Fairbanks, Alaska
POSITION STATEMENT: Provided an economic analysis on required
capital investment.
MATT RICHWINE, Founding Partner
Telos Energy
Saratoga Springs, New York
POSITION STATEMENT: Provided an overview of the transmission
analysis conducted by engineers at Telos Energy.
DEREK STENCLIK, Founding Partner
Telos Energy
Saratoga Springs, New York
POSITION STATEMENT: Provided an overview of the generation
analysis.
JEREMY VANDERMEER, Research Assistant Professor
Alaska Center for Energy and Power (ACEP)
Fairbanks, Alaska
POSITION STATEMENT: Provided an outline of project results.
ACTION NARRATIVE
3:30:16 PM
CO-CHAIR GIESSEL called the Senate Resources Standing Committee
meeting to order at 3:30 p.m. Present at the call to order were
Senators Claman, Dunbar, Kaufman, Kawasaki, and Co-Chair
Giessel. Senator Wielechowski joined the meeting via
teleconference. Co-Chair Bishop arrived thereafter.
^Presentation: Alaska Center for Energy and Power: Railbelt
Decarbonization Project Results
PRESENTATION: ALASKA CENTER FOR ENERGY AND POWER: RAILBELT
DECARBONIZATION PROJECT RESULTS
3:30:16 PM - update
CO-CHAIR GIESSEL announced the consideration of a presentation
on Railbelt Decarbonization Project Results by the Alaska Center
for Energy and Power. Telos Energy will review the current
project of a pathway toward 100 percent decarbonization by 2050.
SENATOR WIELECHOWSKI joined the meeting via teleconference.
3:33:01 PM
JEREMY CASPER, Director, Alaska Center for Energy and Power
(ACEP), Fairbanks, Alaska, provided an overview of the Railbelt
Decarbonization Project. He stated that when he was first hired
at ACEP, Co-Chair Bishop recommended that he listen to experts
in the organization. When ACEP leaders, Dr. Phylicia Cicilio and
Ms. Gwen Holdmann advised him to move forward with the project,
he gave it the green light.
Resources were provided by the Office of Naval Research and the
State Capitol fund. A large project, it was the first time the
organization took on the Railbelt Energy system. Dr. Ciclio
mentored five undergraduate interns for the process, involved
Ms. Alexis Francisco, and invited Telos Energy, a top modeling
company in the country.
3:34:51 PM
PHYLICIA CICILIO, Research Assistant Professor, Power Systems
Engineering, Alaska Center for Energy and Power (ACEP),
Fairbanks, Alaska, outlined Railbelt Decarbonization project
goals. She explained that ACEP is an applied research institute
within the University of Alaska Fairbanks, meaning most projects
have a direct community partner.
The goals are to strive toward energy solutions in Alaska. The
aim of the Railbelt Decarbonization project is to explore energy
solutions in Alaska, reaching toward 100 percent Railbelt
decarbonization by 2050. She clarified that ACEP is focusing on
the electric grid rather than other energy sectors such as
heating and transportation.
Ms. Cicilio moved to slide 3. Efforts were made to quantify the
economic and reliability implications of the decarbonization
scenarios to create useful info for Alaskan stakeholders, as
well as build in-state capacity using industry-standard tools
and analysis to develop the modeling and research.
Ms. Cicilio moved to slide 4 and said that in addition to ACEP,
a large team consisting of Information Insights, the Alaska
Microgrid Group, and Telos Energy were involved in project
development.
3:36:48 PM
MS. CICILIO noted that Telos Energy is a leading expert in
island grid systems. Alaska is an electrical island, so Telos'
expertise is directly relevant to the energy problems that the
state is seeking to solve.
Furthermore, ACEP has a Technical Advisory group, involving
engineers and managers from each of the four electrical
cooperatives across the Railbelt, as well as the Alaska Energy
Authority and the Railbelt Regional Coordination group. ACEP met
with this group for approximately one hour every other week for
over two years. The group's input contributed to data
development and review, ensuring accuracy in the results. She
acknowledged that funding was from the Office of Naval Research
in the state of Alaska.
3:37:36 PM
MS. CICILIO moved to slide 7 and briefly highlighted six main
project components:
• Scenario Development
• Load Forecast
• Resource Selection and Sizing
• Generation Analysis
• Transmission Analysis
• Economic Analysis
3:38:27 PM
MS. CICILIO moved to slide 9. Four scenarios were developed in
2022 following a stakeholder:
• Business as Usual
• Wind/Solar/Hydro
• Wind/Solar/Tidal
• Wind/Solar/Nuclear
The Business as Usual (BAS) scenario is a reference case as the
base to the three low-carbon scenarios, which outline major
generation technologies. All scenarios involved the same load,
so demonstrate an "apples to apples" comparison.
3:39:32 PM
MS. CICILIO moved to slide 11 and spoke to the chart on monthly
electricity demand which represents the load forecast for 2050
compared to 2021 data. The data also includes the load from
electrification, primarily due to heat pump additions and
electric vehicles.
3:40:13 PM
SENATOR DUNBAR inquired about the study's population growth
projection considering Alaska's declining population. He
questioned if the results account for improvements in building
and product efficiencies and whether project results
overestimate the amount of energy needed.
3:40:57 PM
MS. CICILIO responded that the amount of load based on
population growth was about 12 percent, indicating a minimal
increase from heat pumps and electric vehicles. The load doubles
from 2021 to 2050.
3:41:34
Co-Chair Bishop arrived.
3:41:36 PM
SENATOR DUNBAR asked about the level of market penetration for
electric vehicles assumed in the model.
3:41:47 PM
MS. CICILIO said that electric vehicles depicted the greatest
growth at about 79%. This number was benchmarked against other
places in the country and globally and is lower as would be
expected in a Northern climate.
3:42:15 PM
MS. CICILIO moved to slide 12 regarding resource selection and
sizing. The process determined project size among several
Alaskan regions and resource type (hydro, wind, solar,
residential solar, tidal, or nuclear).
3:42:31 PM
JEREMY VANDERMEER, Research Assistant Professor, Alaska Center
for Energy and Power (ACEP), Fairbanks, Alaska, provided an
outline of project results. He spoke to slide 13 and pointed out
that the goal of resource selection and sizing was to identify
plausible projects for each of the resources of interest. The
method demonstrates sizing needs for each resource scenario. The
projects are either pre-existing or are currently in the
proposal or research stages. New projects were added for wind
and solar scenarios.
3:43:23 PM
MR. VANDERMEER moved to slide 14 and mentioned that a partial
optimization was to help solve sizing difficulties.
[Original punctuation provided.]
Resource sizing method
? What size to build each project?
? Predetermined project sizes for each scenario
? Hydro, tidal, and transmission
? Size remaining projects based on cost
? Wind, solar, battery, nuclear, and fossil fuel
? Iterate until converge on lowest cost portfolio
? Only partial optimizations ? Not all projects were
sized based on cost
? Stability costs were calculated at a later stage
Mr. Vandermeer said that scenarios were predetermined so these
are not total optimizations seeking the cheapest path, but an
attempt to build illustrative scenarios of various
infrastructure projects. Optimization iterated on system
portfolios until lowest cost systems were reached.
He provided an overview of results on slide 15.
[Original punctuation provided.]
Resource sizing results
? Generation from wind and solar was cheapest
? Curtailment costs limited their installed
capacity
? Additional stability costs were identified in
the Transmission Analysis
? Firm sources of power were needed
? Hydro, nuclear, fossil fuel, and batteries
? Nuclear was not competitive with LNG
? W/S/Nuclear scenario assumed no LNG imports
? Hydro and tidal competitiveness was not
investigated
? Cost projections are uncertain
? Especially for nuclear and tidal
? Sensitivity analyses were run
Mr. Vandermeer said that a portfolio was generated for each
scenario, which demonstrated that wind and solar were
consistently cheapest, with a caveat that these sources could
only supply a limited amount of load. Firm sources of power were
determined as necessary.
3:47:17 PM
SENATOR CLAMAN asked for clarification on the cost of the
nuclear scenario compared to LNG.
3:47:44 PM
MR. VANDERMEER responded that after removing the liquefied
natural gas (LNG) option when sizing scenarios based on cost
assumptions, nuclear proved as a lower cost option compared to
other scenarios.
3:48:20 PM
CO-CHAIR GIESSEL asked about the exclusion of hydrogen in the
study.
3:48:34 PM
MR. VANDERMEER confirmed that hydrogen was left out and said it
would be a good follow-up study.
3:48:44 PM
DEREK STENCLIK, Founding Partner, Telos Energy, Saratoga
Springs, New York, provided an overview of the generation
analysis. He spoke to slide 17:
[Original punctuation provided.]
Generation Analysis
Simulate grid operations across the Railbelt across
all hours of the year, considering changing load, wind
and solar availability, reliability needs, and
operating constraints.
? How are resources scheduled (dispatched) to
meet load in a least cost manner?
? How can grid operators manage variability and
uncertainty of wind and solar generation?
? How should batteries be scheduled to charge,
discharge, and provide reliability reserves?
? How do transmission flows change across
different weather conditions and load levels?
? Which generators are displaced by new
renewables and what are are the fuel cost
savings?
Mr. Stenclik said that much of the data was provided by
Railbelt Utilities. ACEP wanted to ensure that their models
accurately reflected grid operations.
Mr. Stenclik moved to slide 18.
[Original punctuation provided.]
Power system operations methods
Detailed plant and system details
? Load profiles
? Wind and solar profiles
? Hydro water budgets
? Gas, coal, and oil plant characteristics
(efficiency, cycling constraints, etc.)
? Operating reserve requirements
? Transmission constraints
Production cost simulation
Least cost, security-constrained, unit commitment,
dispatch, and resource scheduling across all 8760
hours of the year
Utilizes third-party, industry recognized optimization
software
Operations and Economics
? Plant operations and starts
- Stability analysis
? Fuel consumption and cost
- Economic analysis step
? Emissions
Mr. Stenclik noted that a central focal point of the study was
for capacity building by using global industry tools within ACEP
and the university.
3:51:57 PM
CO-CHAIR GIESSEL asked Mr. Stenclik to clarify his role as a
consultant to ACEP.
3:52:10 PM
MR. STENCLIK said that Telos Energy provides analytics and
engineering consulting services and grid modeling across the
country around renewable integration studies. Telos Energy works
with utilities, research organizations such as ACEP, and its
counterpart in Hawaii. The Hawaii National Energy Institute
involves different systems than the Alaska Railbelt but is
similar to Alaska as a remote grid reliant on imported oil.
3:52:57 PM
MR. STENCLIK spoke to the bar chart on slide 19 and said that
most emissions come from hydro resources. Wind and solar are the
energy backbone, providing over 50 percent of the output,
proving as the "least regrets," and lowest cost options. The
uncertainty is with technology and costs.
3:54:15 PM
MR. STENCLIK said there is concern with balancing hourly
generation, especially on a typical winter day. He moved to
slide 20 and said there is more variability in wind and solar
scenarios. The goal is to ensure effective management of system
operations.
3:55:21 PM
CO-CHAIR GIESSEL acknowledged a baseload of gas alongside
renewable energy scenarios.
3:55:39 PM
MR. STENCLIK relayed that in annual production, gas remains a
large component, but grid capacity will require substantially
less gas. On cold winter days, gas is still a useful resource.
3:56:07 PM
MR. STENCLIK moved to slide 21 and said that ACEP screened
through thousands of hours of operations to evaluate
transmission reliability and stability in more detail. The
analysis demonstrates a "dispatch condition" or the biggest
challenges within a year of operations.
3:56:29 PM
CO-CHAIR GIESSEL said slide 21 showcases battery as a huge
piece.
MR. STENCLIK reiterated the "lower regrets option" of wind and
solar energy and emphasized enabling technologies, including a
transmission network and battery storage, which is a key enabler
to reaching high penetrations and providing grid stability.
3:57:20 PM
MR. STENCLIK spoke to the graph on slide 23 demonstrating the
timing of resources and appearance on the grid.
[Original punctuation provided.]
Timing of wind and solar generation will vary
significantly across the year
• A portfolio with 50 percent wind and solar will
see periods exceeding 100 percent of total load
(due to battery charging)
• Inverter-based resources (IBRs) like wind, solar,
and batteries have different controls and
interactions with the grid
• Periods of high penetration (see chart) must be
evaluated in further detail for transmission
reliability.
3:58:50 PM
MR. STENCLIK moved to slide 24 showing an Alaska Intertie Flow
Duration Curve chart and Load Regions of Alaskan's Railbelt. He
reiterated that transmission is a key enabler for portfolios and
flows across the network from the Fairbanks region to the
Central Anchorage center. The central black line shows a
supplemental but underutilized transmission. The three
additional scenarios demonstrate much more flow. The grid needs
to be larger to transfer more power, as well as more
operationally flexible to manage load flows. In this case, the
load most often moves from the Kenai Peninsula to the Northern
load center in Anchorage.
3:59:58 PM
CO-CHAIR GIESSEL confirmed that (BAU) is the acronym for
"Business as Usual."
4:00:12 PM
SENATOR CLAMAN asked if the part of the model demonstrates a
significant increase in solar and wind capacities, while not in
their entirety, may substitute current Cook Inlet gas power. He
asked if increased solar and wind capacity could partially
replace the more expensive Cook Inlet Gas as a source of power.
4:00:48 PM
MR. STENCLIK concurred and said that while natural gas plants
remain vital, wind and solar can provide energy and reduce the
amount of natural gas used. Wind and solar energy sources are
considerably cheapest, especially when utilizing a 40-50 percent
federal tax credit.
4:01:20 PM
SENATOR CLAMAN asked if the scenario is dependent on battery
technology for capacity storage.
MR. STENCLIK responded yes, at a certain point. The Railbelt
system is a relatively small, low-inertia grid, so batteries
would increase reliability and help avoid a potential rolling
blackout. Battery storage is also helpful to shift energy from
one time period to another.
4:01:57 PM
SENATOR BISHOP asked if the 50 percent wind and solar subsidy
from the federal government is attached to Inflation Reduction
Act (IRA) funding with a ten-year cap. He questioned if the
state would require a renewal on the IRA.
4:02:33 PM
MR. STENCLIK confirmed that it is ten-year money. He explained
that there is an Investment Tax Credit (ITC) and Production Tax
Credit (PTC), so a plant must be built before the IRA expires to
realize federal tax benefits. Even if the plant operates for 20-
30 years, it will realize the benefit in the first year. The PTC
is a ten-year benefit based on production, so the developer can
choose whether money is obtained up front on the capital or the
ten-year production.
4:03:27 PM
MATTHEW RICHWINE, Founding Partner, Telos Energy, Saratoga
Springs, New York, provided an overview of the transmission
analysis conducted by engineers at Telos Energy.
[Original punctuation provided.]
What is Analyzed?
Steady State Analysis
Can the grid sustain operations in all credible grid
conditions?
• Thermal .notdef look for overloading of lines
• Voltage .notdef ensure enough voltage support
Dynamic Analysis
Can the grid recover from the "shock" of a sudden
disturbance?
• Frequency Stability
• Voltage Stability
Transmission analysis is performed on "snapshots" in
time Stability must be satisfied at every moment
Mr. Richwine said that engineers used a Steady-State analysis
for several unforeseen contingency events and Dynamic analysis,
which covers the ability for grid recovery, such as a lightning
strike on the transmission system. These analyses are performed
by all Railbelt and global utilities. The engineers involved are
specialized. Their work requires a unique skillset that is in
high demand across the industry. The team has successfully
applied lessons obtained across the nation. Evaluation of
reliability is based on planning criteria used by utilities as
provided in Grid Planning document.
4:05:41 PM
MR. RICHWINE moved to slide 29 and spoke to the challenges
around the Railbelt and the issues causing further stress on the
grid.
[Original punctuation provided.]
What are the Challenges?
Steady-State
• New resources + retirements = different flow
patterns
• Different flow patterns .notdef different
needs/locations for voltage support
Dynamics
• Sudden loss of a power plant .notdef loss of power and
voltage support must be quickly recovered
• Sudden loss of a tie line .notdef power and voltage
support must be quickly reallocated
• Successful recovery is a matter of sufficiency &
timeliness of response from the remaining
resource
This is true for all grids, but the Railbelt is
especially challenged because of the small size,
isolated nature, and grid separation that occurs
4:07:07 PM
MR. RICHWINE moved to slide 30. He said that engineers look at
the system as conventional synchronous machinery, rather than
inverter-based or computer code-driven technologies. Part of the
big shift in the transition utilizes different technologies
rooted in software:
[Original punctuation provided.]
Resource Technologies
Synchronous Machines (SM) (i.e., Fossil, Nuclear,
Hydro)
• Frequency Response: Inertia (fast/immediate) +
Governor Droop (slower, seconds)
• Voltage Support: Grid strength (fast/immediate) +
Voltage Regulation (slower, seconds) .notdef Behavior
dominated by physical geometries Inverter-Based
Resources (IBR) (i.e., Wind, Solar, Battery,
Tidal)
• Frequency Response: Droop (slower, seconds)
• Voltage Support: Voltage Regulation (slower, half
a second seconds) .notdef Behavior dominated by
firmware code
4:08:13 PM
MR. RICHWINE spoke to slide 31. The goal was to determine if the
grid would survive challenging scenarios based on two criteria:
1. Time periods with the most resources online
2. Time periods with a lot of flow on Alaska and Kenai
intertides, so intertie loss would cause a shock to the system.
4:09:25 PM
MR. RICHWINE moved to slide 34.
[Original punctuation provided.]
Potential Mitigation Approaches
Operational Mitigations
• Force more SM to remain online; not recommended for
long-term action; not pursued here
Capital Investment Mitigations
• Synchronous Condensers - a connected synchronous
machine that does not produce power or consume fuel
• Inverter Tuning for Performance adjusting the
configuration of IBR for more aggressive responses
Grid-Forming Inverters (GFM) an emerging,
commercially available inverter technology that can
stabilize the grid much as synchronous machines do
Other mitigation options were considered to reach stability and
reliability. The simulations demonstrated problems and
instability with run-of-the-mill technologies.
4:11:20 PM
MR. RICHWINE moved to slide 35. Even amidst challenging
conditions or mitigations, grid forming inverter technology
allows the system to remain reliable and is applied to resources
such as wind and solar, and battery energy storage systems in
particular.
4:12:32 PM
MR. RICHWINE moved to slide 36.
[Original punctuation provided.]
Emerging Technology: Grid-Forming Inverters
What is it?
Grid-forming (GFM) technology is largely a controls
technology
• BESS: no changes to hardware are needed
• Wind: likely to be controls-only
What does it do?
Attempts to capture the "best of both worlds" from SM
and IBR
• Immediate responses of SM (inertia, grid strength) +
resilience of synchronization from IBR
He said that the new technology is rooted in software-based
technology intended to combine the strengths of conventional
machinery with converter-based technology. The technology has
emerged over the past five years.
Mr. Richwine moved to slide 37 which listed the following
projects:
[Original punctuation provided.]
GFM Industry Experience
Recent Industry GFM Installations (Utility-Scale)
• 2017 St. Eustatius BESS (SMA)
• 2018 Dalrymple BESS, Australia (ABB/Hitachi)
• 2018 Kauai BESS projects (Telsa)
• 2019 Dersalloch Wind, Scottland (Siemens)
• 2019-2020 IID BESS for Blackstart, California (GE)
• 2022 Wallgrove BESS, Australia (Telsa)
• 2022 Hornsdale BESS, Australia (Tesla)
• Others I've likely missed
More on the Horizon: HECO Stage 2&3, Australia 8 BESS
GFM Projects, NationalGridESO, etc.
4:14:08 PM
SENATOR DUNBAR relayed that the municipality of Anchorage had a
large software update that was supposed to cost $9 million but
catastrophically ended up costing $85 million. He asked who
would be responsible for maintaining the software.
4:14:51 PM
MR. RICHWINE replied that the software is part of the plant and
inverter-based equipment, therefore it is the responsibility of
the generation owner. The generation owner submits a model that
captures all performance details of the plant to ensure it meets
expectations and proves stable on the interconnected system.
4:15:34 PM
SENATOR DUNBAR said that the municipality of Anchorage used
Systems, Applications, and Products (SAP). He asked if the
entire system would be required to use the same software company
or could each unit generation use software capable of
communications with the International Organization for
Standardization (ISO).
4:16:03 PM
MR. RICHWINE explained that while each plant has its own
software, they could update and coordinate when set up properly.
4:16:33 PM
SENATOR BISHOP compared the inverters proposal to Artificial
Intelligence (AI) technology with regard to development
requirements.
4:17:02 PM
MR. RICHWINE said the software behind this is advanced, but it
not necessarily characterizable as AI or reliant on AI. The
software was developed by engineering teams to ensure an
immediate and accurate equipment response of less than one
second.
4:17:54 PM
CO-CHAIR GIESSEL said the proposal sounds expensive.
4:18:00 PM
MR. RICHWINE replied that relative to what is being produced
today, the software upgrade is a research and development cost
that would be born by the equipment manufacturers. The cost to
implement the new technology, specifically for battery
resources, is incremental. Activating the technology does not
require changes to hardware on large step-changing costs.
4:18:40 PM
SENATOR DUNBAR added that he was scarred by the Anchorage
software fiasco. He continued with an example of a similar
software upgrade in San Diego, which experienced bankruptcy
following the faltering of software updates. He questioned how
producers could protect themselves from fines or non-working
technology.
4:19:26 PM
MR. RICHWINE said that having a quality and reputable equipment
manufacturer is an important factor to consider. If software
problems existed and were recognized mandating adjustments, the
system operator in Texas, for example, demonstrated a desire to
update software through field experiences. It is not always easy
to retroactively update some types of equipment. Much of the
current equipment available provides an opportunity to magnify,
mitigate, and resolve potential risks and challenges in advance.
He opined that the issue raised by Senator Dunbar remains
important and is something to keep on the radar in the event a
manufacturer goes out of business, for example.
4:22:01 PM
CO-CHAIR GIESSEL said that software development is being
implemented in other places including Texas.
4:22:08 PM
MR. RICHWINE responded yes. The current inverter technology is
widespread and is the basis of wind, solar, and battery energy
across the system. Grid-forming inverter technology can enable
renewables connected to the system, but is not subject to any
higher risk than conventional software-defined projects.
4:22:54 PM
SENATOR BISHOP proposed a hypothetical scenario of 100% hydro-
based operation and inquired about the need of inverters on the
grid.
4:23:09 PM
MR. RICHWINE replied that a 100 percent hydro-based operation
would not include any inverter-based resources.
4:23:31 PM
At ease.
4:23:47 PM
CO-CHAIR GIESSEL reconvened the meeting.
4:24:26 PM
MR. RICHWINE said the North American Electric Reliability
Corporation (NAERC) has actively assisted with providing
recommendations to addressing risks and moving inverter
technology to become more grid friendly, stable, and reliable.
NAERC released a recommendation in September 2023 promoting grid
performance technology.
4:25:23 PM
MR. RICHWINE spoke to slide 38.
[Original punctuation provided.]
A Note on Analysis Methods & Tools
• Commercially available software (Siemens PSSE)
• Same tools used by Railbelt utilities and
numerous others throughout the world
• Many thousands of inputs to the model
• Grid Lines, transformers, shunts
• Resources generators, DER, loads
• Engineering judgment and special care is needed
with inputs, runs, and interpretation of outputs
• It is critical to know and understand the limits
of the tools, and a what point different tools
are needed
4:25:50 PM
MR. RICHWINE moved to slide 39.
[Original punctuation provided.]
Compare installed capacity at each study phase
• Resource Sizing
o Initial estimates
• Generation Analysis
o Fossil fuel and battery capacity increased
for capacity reserve margin
• Transmission Analysis
o Battery, shunt capacitor, and synchronous
condensers added for stability
• Significant increase above initial estimates
Mr. Richwine said that a possible next step could include
rewinding and optimizing, as well as adjusting costs and sizing.
4:27:20 PM
STEVE COLT, PhD, Research Professor, Alaska Center for Energy
and Power (ACEP), Fairbanks, Alaska, provided an economic
analysis on required capital investment. He spoke to the base
capital expenditure (CAPEX) after Investment Tax Credit (ITC)
per billion in 2023.
Mr. Colt stated that capital investment for development ranges
from $2.2 billion for the BAU case to meet doubling of the load,
while the most capital-intensive is the hydro scenario at $9-10
billion. He noted that these amounts are before the application
of ITC and adjusting the latest AEA estimates for inflation.
After tax credit adjustments, hydro would cost $6-7 billion.
Similarly, nuclear and tidal scenarios require a large
investment.
Mr. Colt said that ACEP analyzed two types of batteries and
other equipment needed to support the grid. The orange bars
represent an hour-to-hour generational analysis. The reliability
team looked at what it would take to reach stability,
resilience, and reliability. One takeaway is that the yellow bar
represents a significant addition to the cost, but not
overwhelming addition to cost. Stability will be a challenge,
but not cost-prohibitive.
4:31:40 PM
CO-CHAIR BISHOP requested the number of megawatt (MW) units used
for dam number for CAPEX.
4:32:03 PM
MR. COLT replied that ACEP used 475 MW of addressable capacity,
but understands that the output of the project would vary
considering water conditions.
4:32:23 PM
MR. COLT moved to slide 42 and spoke to the consumer generation
and transmission cost of service under different scenarios. The
image indicates the location of this information on a utility
bill. The generation and transmission of cost is equivalent to
creating and getting to the distribution center. It can be
difficult tracing certain costs. The rule of thumb is that $10
more per MWh on the slide equates to one cent per kWh on a
consumer bill.
4:34:23 PM
SENATOR CLAMAN asked about the typical number of kWh units on a
consumer's utility bill.
4:34:44 PM
MR. COLT relayed that the shortest answer is about six thousand
kW per year, or 500 per month for a Railbelt household. An
additional six thousand would be added if a consumer uses an
electric vehicle (EV).
4:35:59 PM
MR. COLT moved to slide 43 and said that if Alaska moved from a
fossil-fuel-based scenario, it would trade a significant amount
of fuel costs for a roughly equally significant amount of paying
off capital investment.
He added the following details regarding the chart on slide 43:
The light beige bar represents the fixed costs of wine machine
operations. It is a major component of a low-carbon, low fuel
world. He said that if the state made the daunting capital
investment of $10 billion, it could potentially save $750
million in fuel costs every year for the life of the equipment.
The state could save $750 million in fuel costs every year for
as long as the equipment operates.
4:37:58 PM
MR. COLT moved to slide 50 and reminded the members that the
discussion is in the perspective of 2050. It is difficult to
predict how technology will evolve. He referenced telephones as
an example. With this perspective in mind, all four scenarios
are in the same ballpark. He concluded that after doing the
math, evaluating the equipment, and applying sensitive cases to
the basic analysis, the costs are in the same ballpark.
4:39:39 PM
SENATOR KAUFMAN conveyed that hydrocarbon generates a lot of
revenue for Alaska. He wondered if the economic models consider
revenue loss and suggested that solar and wind energy do not
demonstrate a royalty-based revenue model as does natural gas.
4:40:46 PM
MR. COLT said that there was no attempt to unpack the royalty or
production tax implications of the reduction in natural gas use.
He stated that even though almost all of the natural gas was
omitted from the proposed scenario, the focus was on the
Railbelt grid specifically. There would still be an abundance of
natural gas consumed for other uses.
4:41:27 PM
CO-CHAIR GIESSEL added that natural gas could potentially
replace diesel in rural areas.
4:41:36 PM
SENATOR KAUFMAN said that there is a broad spectrum of
possibilities. Buying and shipping gas is costly. He opined that
Alaska could enjoy a successful revenue model if it developed
and transmitted gas to the Railbelt. In considering all the
risks of transitioning to different power sources, it's
important to understand how hydrocarbons fit in with the current
revenue model in Alaska.
4:42:40 PM
SENATOR BISHOP asked if slide 42 showcased a real bill and if it
considers the three scenarios on slide 41.
4:43:09 PM
MR. RICHWINE responded yes. It is an actual current Golden
Valley electric bill.
4:43:17 PM
SENATOR DUNBAR asked about the two additional slides at the end.
4:43:51 PM
MS. CICILLIO moved to slide 51 and relayed that ACEP has
generated a lot of information and data, so she would like to
provide meaning and highlight key findings valuable to Alaska
stakeholders. Given the scenario is 27 years in the future and
considering uncertainty with costs, the hope is to focus on key
challenges, opportunities, and lessons learned for the future.
In any of the proposed scenarios, Railbelt operates will be
significantly different than today. These changes will not
happen overnight and will be incremental additions.
She moved to slide 53.
[Original punctuation provided.]
Focus on the Challenges and Opportunities
• A future low-carbon Railbelt will operate
significantly differently than today or the
Business-as-Usual Scenario.
• System stability is more difficult to achieve in
low-carbon scenarios. Improvements in the
inverter technology of batteries, and wind and
solar energy will be essential for future
Railbelt grid stability.
• There is great uncertainty in future costs. The
cost of service for the low-carbon scenarios
differs by -9% to 25% from the Business-as-Usual
scenario depending on varying fuel costs, capital
costs, and interest rates.
• This study did not evaluate the cost-
effectiveness of near-term renewable additions.
The cumulative cost of achieving high levels of
renewable penetration is non-linear, due to
increased transmission and storage requirements.
From now until at least 2030, low-carbon projects
will qualify for investment tax credits ranging
from 30-50 percent.
4:47:12 PM
SENATOR DUNBAR suggested that legislators are often pitched with
carbon capture and storage ideas. One idea is for a coal-fired
powerplant with carbon capture technology. He asked if this idea
has been analyzed by ACEP and whether it could provide any
measure of reliability.
4:47:58 PM
MR. STENCLIK proposed that the coal-fired idea is operationally
analogous to the nuclear scenario. It is a high capital cost but
low fuel cost, intended to run a very base load. It would
provide synchronous generation that could help mitigate some of
the grid constraints.
4:48:36 PM
MS. CICILLIO shared that there are other researchers at ACEP
specifically looking at carbon capture sequestration for coal-
powered plants.
4:48:57 PM
SENATOR KAWASAKI said that while he likes the idea of using
electrification to reduce carbon emissions, Fairbanks' concern
is space heat. Natural gas can be used for export, heat, and
turbines for electricity. He asked if consideration went beyond
the electric grid.
4:49:36 PM
MR. COLT appreciated the question. He replied that Alaska's
hurdle lays way beyond the electric grid. ACEP concluded that it
is too much of a lift to take on more than the electric grid. He
hopes the university, energy industry, and the policy community
will embrace new opportunities. It is necessary to look at the
whole picture.
4:50:51 PM
CO-CHAIR GIESSEL added that ENSTAR Energy is often left out of
the discussion.
4:51:00 PM
SENATOR CLAMAN acknowledged a natural gas shortage in the short
term amidst conversations about long-term investment decisions.
He asked how state policymakers could influence decisions or
make the appropriate choices to invest in solar or wind, for
example.
4:51:56 PM
MR. RICHWINE said that while the studies look forward into the
future, it does not exclude the opportunity to look at near-term
options. A couple outcomes of the study include looking toward
transmission reinforcements or the ability for plants to be
interconnected to the grid.
Wind and solar power could be established in the near-term. From
a policy perspective, having an RPS or clean energy standard
could provide certainty into the transition and break it down.
4:53:11 PM
SENATOR CLAMAN asked if it is important for the legislature to
address the renewable portfolio standards.
4:53:25 PM
MR. RICHWINE said that it would be helpful. In the lower 48
states, most projects are being financed in part with an RPS
backed by clean energy standards. To have a project that is
solely merchant is rare. Policy-backing provides certainty in
the market and brings development to fruition.
4:55:18 PM
There being no further business to come before the committee,
Co-Chair Giessel adjourned the meeting at 4:55 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| ACEP Railbelt Decarbonization Fact Sheet 01 19 2024.pdf |
SRES 1/19/2024 3:30:00 PM |
|
| ACEP Railbelt Decarbonization Results PowerPoint 01 19 2024.pdf |
SRES 1/19/2024 3:30:00 PM |