04/13/2021 10:15 AM House ENERGY

        HB 170-ENERGY INDEPENDENCE PROGRAM & FUND: AIDEA                                                                    
                                                                                                                                
10:18:33 AM                                                                                                                   
                                                                                                                                
CHAIR SCHRAGE  announced that the  first order of  business would                                                               
be HOUSE  BILL NO.  170, "An Act  establishing the  Alaska energy                                                               
independence program  and the Alaska energy  independence fund in                                                               
the  Alaska  Industrial  Development and  Export  Authority;  and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
10:18:45 AM                                                                                                                   
                                                                                                                                
ALAN WEITZNER, Executive  Director, Alaska Industrial Development                                                               
and  Export Authority,  presented HB  170 on  behalf of  the bill                                                               
sponsor, House  Rules by request  of the governor.   He explained                                                               
that HB 170 would facilitate  the financing of sustainable energy                                                               
development projects  through a  separately managed  fund created                                                               
within  the Alaska  Industrial Development  and Export  Authority                                                               
(AIDEA).  He  highlighted that AIDEA has  worked in collaboration                                                               
with  Chris Rose  with the  Renewable Energy  Alaska Project  and                                                               
Jeffrey Schub with  the Coalition for Green Capital.   He went on                                                               
to  explain that  according to  a  2018 statistic  from the  U.S.                                                               
Energy  Administration,  Alaska  energy  consumption  per  capita                                                               
ranks the highest  in the U.S., close to 2.5   times the national                                                               
average, a statistic  he attributed to Alaska's  need for heating                                                               
in the winter as well as energy intensive industries.                                                                           
                                                                                                                                
MR.  WEITZNER   pointed  to  Alaska's  potential   for  renewable                                                               
energies  and  opined  that  HB   170  would  help  develop  that                                                               
potential  to  address the  high  demand.   He  highlighted  that                                                               
Alaska's  energy cost  is ranked  eleventh in  the U.S.  but said                                                               
that  because of  the high  demand, Alaska  consumers spend  over                                                               
$8,000  per year  per  capita  on energy,  and  10.83 percent  of                                                               
Alaska's   gross   domestic   product  (GDP)   goes   to   energy                                                               
expenditures.   He explained that the  Alaska energy independence                                                               
fund (AEIF)  serves a  public purpose by  addressing the  cost of                                                               
power and overall  demand for energy in the state.   He explained                                                               
that often the reference for AEIF  is "green bank."  It functions                                                               
as a private/public  entity that uses "modest"  amounts of public                                                               
funding  to leverage  private  capital  to accelerate  investment                                                               
into clean energy projects.                                                                                                     
                                                                                                                                
10:23:00 AM                                                                                                                   
                                                                                                                                
MR.  WEITZNER  explained  that   green  banks  do  not  literally                                                               
function  as  banks, rather  they  are  dedicated public  finance                                                               
corporations   that  act   as  a   catalyst   for  clean   energy                                                               
development.  They build a  range of projects and programs tailor                                                               
made  to   communities  that  would   otherwise  not   have  been                                                               
developed,  mobilize private  capital by  reducing barriers,  and                                                               
aim to make  energy cleaner and cheaper.   Most importantly, AEIF                                                               
would  create  a  tangible  economic  impact  by  creating  jobs,                                                               
reducing  the  cost  of  power,   and  renewing  investment  into                                                               
communities.                                                                                                                    
                                                                                                                                
10:24:21 AM                                                                                                                   
                                                                                                                                
MR.  WEIZNER explained  that  statewide  implementation of  AEIF,                                                               
with an initial capitalization of  $5-10 million, benchmarks very                                                               
well with the  GDP per capita of similar green  banks in New York                                                               
and Maryland.   He explained  that through comparison  of sizing,                                                               
AIDEA came to  request $10 million for the fund.   He highlighted                                                               
that the  effectiveness of benchmarked entities  comes from their                                                               
capacity to  leverage capital.   New York and Maryland  were able                                                               
to achieve  7-8 times  the initial  capital investment  thanks to                                                               
private industry contribution.  He  stated his belief that Alaska                                                               
could achieve similar growth.                                                                                                   
                                                                                                                                
10:27:48 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE FIELDS  asked about  the relationship  between the                                                               
initial capitalization and the resulting capacity for projects.                                                                 
                                                                                                                                
MR. WEIZNER  explained that  the leverage they  can achieve  is a                                                               
multiple of 6 to 8 times the initial investment.                                                                                
                                                                                                                                
10:29:18 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  KAUFMAN asked  if initial  spending is  front end                                                               
loaded with private industry support coming in later.                                                                           
                                                                                                                                
MR. WEIZNER  answered that it is  front end loaded.   In response                                                               
to a follow-up question, he said  it takes three to five years to                                                               
reach six to eight times the returns.                                                                                           
                                                                                                                                
MR. WEIZNER  continued by reiterating  the benefits of  the fund.                                                               
He opined that Alaska has  the minerals needed to supply electric                                                               
vehicle  manufacturers a  "safe, clean,  and domestic"  supply of                                                               
batteries.  He  said if the state was able  to sustain 10 percent                                                               
reduction in the cost of power,  then the amount of capital being                                                               
provided back to consumers would range from $800 to $25,000.                                                                    
                                                                                                                                
10:33:39 AM                                                                                                                   
                                                                                                                                
CHAIR SCHRAGE  asked if AEIF  would facilitate the  production of                                                               
raw materials in any way.                                                                                                       
                                                                                                                                
MR. WEIZNER answered it would not.                                                                                              
                                                                                                                                
10:34:26 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE CLAMAN  asked how  the fund  fits in  with AIDEA's                                                               
work developing resources.                                                                                                      
                                                                                                                                
MR.  WEIZNER explained  that  the  goal of  AIDEA  is to  promote                                                               
economic development, and that supporting  economic growth in the                                                               
clean energy  sector is another  way of fulfilling  that mission.                                                               
He pointed out that AIDEA has  several funds devoted to a variety                                                               
of projects.  In response to  a follow-up question, he said AIDEA                                                               
would  provide a  list and  description  of all  the funds  under                                                               
AIDEA to the committee.                                                                                                         
                                                                                                                                
10:37:10 AM                                                                                                                   
                                                                                                                                
MR.  WEIZNER continued  the presentation  on slide  8, explaining                                                               
that HB 170 has been worded  to match a federal bill that creates                                                               
funding to capitalize clean energy  projects nationwide; it would                                                               
create  the  fund to  make  capital  available to  borrowers  for                                                               
sustainable energy development projects.                                                                                        
                                                                                                                                
10:39:50 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE ZULKOSKY  asked Mr. Weizner to  describe the types                                                               
of projects that may qualify with respect to "microgrid."                                                                       
                                                                                                                                
MR. WEIZNER  explained that  in that case  the projects  would be                                                               
smaller scale and focus on local distribution.                                                                                  
                                                                                                                                
10:40:34 AM                                                                                                                   
                                                                                                                                
MR.  WEIZNER  continued  by explaining  that  the  financing  and                                                               
investments for  AEIF would be  leveraging capital  with Alaska's                                                               
financial  sector.    He  said   the  primary  targets  would  be                                                               
financing loans,  the returns of  which would be  reinvested into                                                               
sustainable energy  development within  the state.   He  said the                                                               
fund would  begin with appropriations from  the legislature, with                                                               
matching investment  from federal funds, and  ultimately leverage                                                               
cooperation  with Alaska's  financial  institutions.   He  talked                                                               
about  the expected  benefits of  the  fund, including  financial                                                               
innovation and the removal of perceived project risk.                                                                           
                                                                                                                                
10:44:42 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  ZULKOSKY  asked how  loans  would  be crafted  to                                                               
reduce barriers to borrowing for rural communities.                                                                             
                                                                                                                                
MR. WEIZNER  answered that  HB 170  would help  rural communities                                                               
through three  areas in  the structure of  the legislation.   The                                                               
first  is the  creation of  an advisory  board that  will provide                                                               
input  on the  programs,  underlying markets,  and issues  within                                                               
rural communities and  the programs that can be  applied to them.                                                               
He highlighted  a "best practices"  element.  The second  area he                                                               
highlighted  is   close  cooperation   with  the   Alaska  Energy                                                               
Authority (AEA) who address many  of those issues in rural areas.                                                               
The  third area  he highlighted  is the  purpose of  the AEIF  to                                                               
create programs that  are tailor made for  Alaska's unique energy                                                               
needs.                                                                                                                          
                                                                                                                                
REPRESENTATIVE ZULKOSKY  asked what  kind of engagement  would be                                                               
done  to  address  the  "tailor   made"  programs  to  ensure  an                                                               
equitable opportunity  for small and remote  communities that are                                                               
currently off the railbelt.                                                                                                     
                                                                                                                                
MR. WEIZNER  relied that the  programs would be  structured based                                                               
on the  input from the  advisory board.   He highlighted  that HB
 was written to be flexible to address those issues.                                                                         
                                                                                                                                
10:49:29 AM                                                                                                                   
                                                                                                                                
MR. WEIZNER next addressed workflow.   He explained that with the                                                               
establishment  of  the  initial   capital,  AEIF  would  start  a                                                               
conversation  on specific  tools  for the  implementation of  the                                                               
fund.  He then explained how AIDEA will work with AEA.                                                                          
                                                                                                                                
10:53:11 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE ZULKOSKY  asked if there are  any specifics within                                                               
the legislation regarding  who will be appointed  to the advisory                                                               
board.                                                                                                                          
                                                                                                                                
MR.  WEIZNER said  that is  included in  the sectional  analysis,                                                               
which he would address subsequently.                                                                                            
                                                                                                                                
10:53:39 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  KAUFMAN asked  what  metrics are  built into  the                                                               
program to measure the success of the fund to ensure efficacy.                                                                  
                                                                                                                                
MR.  WEIZNER explained  that  the structure  of  the fund  itself                                                               
means that  the cost  efficiencies within  AIDEA and  AEA benefit                                                               
the fund  directly, and  the fund  would be  self-sustaining with                                                               
the budget proposed.                                                                                                            
                                                                                                                                
10:55:38 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  FIELDS asked  how  the bill  positions Alaska  to                                                               
capitalize   on  federally   available   resources  should   they                                                               
materialize.  He asked specifically  what would happen to federal                                                               
funding should HB 170 not pass.                                                                                                 
                                                                                                                                
MR. WEIZNER  answered that HB  170 has been structured  to mirror                                                               
the  federal legislation.   He  said  he could  not address  what                                                               
would happen should HB 170 fail.                                                                                                
                                                                                                                                
10:57:41 AM                                                                                                                   
                                                                                                                                
MR. WEIZNER moved  on to talk about the statutes  that define the                                                               
reasons  AIDEA  should contain  the  AEIF.   He  highlighted  the                                                               
intent   in  the   creation  of   AIDEA  to   stimulate  economic                                                               
development through the  end use of resources.   He then provided                                                               
the  sectional  analysis [hard  copy  included  in the  committee                                                               
packet].                                                                                                                        
                                                                                                                                
11:06:25 AM                                                                                                                   
                                                                                                                                
CHAIR SCHRAGE announced that HB 170 was held over.