Legislature(2023 - 2024)BARNES 124
03/16/2023 10:15 AM House ENERGY
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: Renewable Energy Alaska Project | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
March 16, 2023
10:15 a.m.
DRAFT
MEMBERS PRESENT
Representative George Rauscher, Chair
Representative Tom McKay
Representative Josiah Patkotak
Representative Stanley Wright
Representative Mike Prax
Representative Calvin Schrage
Representative Ashley Carrick
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
PRESENTATION: RENEWABLE ENERGY ALASKA PROJECT
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
CHRIS ROSE, Founder and CEO
Renewable Energy Alaska Project
Juneau, Alaska
POSITION STATEMENT: Gave a presentation titled "Renewable
Energy Alaska Project."
ACTION NARRATIVE
10:15:15 AM
CHAIR GEORGE RAUSCHER called the House Special Committee on
Energy meeting to order at 10:15 a.m. Representatives Schrage,
McKay, Wright, and Rauscher were present at the call to order.
Representatives Carrick, Patkotak, and Prax arrived as the
meeting was in progress.
^PRESENTATION: RENEWABLE ENERGY ALASKA PROJECT
PRESENTATION: RENEWABLE ENERGY ALASKA PROJECT
10:16:26 AM
CHAIR RAUSCHER announced that the only order of business would
be a presentation titled "Renewable Energy Alaska Project."
10:17:03 AM
CHRIS ROSE, Founder and CEO, Renewable Energy Alaska Project,
(REAP), began the PowerPoint presentation, "Renewable Energy
Alaska Project" [hard copy included in the committee packet], on
slides 2 and 3 and stated that REAP is a non-profit coalition of
businesses, NGOs, electric utilities, and clean energy
developers across the state of Alaska. He said that REAP has
existed for 20 years and its mission is to increase renewable
energy development and energy efficiency in Alaska. The project
has several programs, including promoting energy literacy,
partnerships with federal agencies to bring technical assistance
to rural Alaska, and working to create clean energy careers
across the state. He said that REAP played an important role in
the creation of the Renewable Energy Grant Fund, as well as
establishing a "green bank" to provide loans to Alaskans for the
purpose of weatherizing their homes. He said that more people
are needed in Alaska that can provide maintenance for those
projects.
10:25:11 AM
CHAIR RAUSCHER asked whether a journeyman electrician has to
work on each of these projects.
MR. ROSE affirmed that is correct.
10:26:44 AM
MR. ROSE continued to slide 4 and gave a brief overview of the
presentation, focusing on how electricity rates in Alaska are
rising faster than those in the Lower 48. The cost of natural
gas is rising, and Hilcorp may not renew its contracts in Cook
Inlet. He said that importing natural gas would be an expensive
option, and that rising natural gas prices on the Railbelt
prevent rural Alaskans from benefiting from the power cost
equalization (PCE) program.
10:30:42 AM
REPRESENTATIVE WRIGHT asked about ease of access to using solar
panels.
MR. ROSE answered that the federal government has extended tax
credits for solar panel installation by 10 years. He added that
the credit is up to 30 percent, and it is possible for solar
panel users to sell excess power back to the utilities. In
response to a follow-up question, he said that building solar
panels is one of the biggest businesses in the world.
10:34:48 AM
REPRESENTATIVE PRAX asked whether Mr. Rose was aware of the
other companies working in Cook Inlet to produce natural gas,
and whether he believes that one of those companies would fill
the void if Hilcorp reduced production.
MR. ROSE answered that he hopes that one of those companies will
have the ability to produce natural gas at a greater volume and
an affordable price. In response to a follow-up question, he
said that renewable energy would be competitive even without tax
credits.
REPRESENTATIVE PRAX asked why Golden Valley Electric Association
is having to buy more fuel to power its plants.
MR. ROSE answered that battery technology would give Golden
Valley a greater chance to integrate power.
10:42:25 AM
REPRESENTATIVE PRAX asked whether it is correct that Golden
Valley is relying on an outside source to fund its battery.
MR. ROSE answered that "everyone" is bearing the cost of
batteries and added that it is ultimately less expensive than
the buying of more fuel. In response to a follow-up question,
he said that federal grants are being sought for upgrades to the
Bradley Lake hydroelectric project.
10:46:09 AM
MR. ROSE continued to slides 5 through 7 and gave a brief
comparison of electric rates and natural gas prices. He said
that he is covered by Matanuska Electric Association (MEA) and
his rates have increased by 50 percent. The average increase in
cost in the Lower 48 in the last 10 years has been 2 cents per
kilowatt-hour (kWh) compared to 7 cents per kWh on the Railbelt.
He said that costs for Cook Inlet natural gas have increased
from $1.50 to $7.50 in the last 10 years, an increase of more
than 3 times compared to the Henry Hub natural gas market. The
amount of natural gas being produced from Cook Inlet is expected
to fall below the demand starting in 2027.
10:50:46 AM
REPRESENTATIVE CARRICK asked how great the discrepancy will be
between supply and demand.
MR. ROSE answered that the gas is there, but it needs to be
developed. In response to a follow-up question, he reemphasized
that it is ultimately a matter of developing the natural gas.
REPRESENTATIVE CARRICK commented that even if that natural gas
is proven to be there, it may not be developed in the next two
to five years.
10:53:29 AM
REPRESENTATIVE MCKAY commented that proven undeveloped natural
gas means that there is already some infrastructure in place,
but additional wells are needed.
REPRESENTATIVE PRAX added that the inclusion of the data for the
proven natural gas means that development is likely, and he
compared it to the development of oil on the North Slope.
10:56:34 AM
REPRESENTATIVE SCHRAGE commented that the natural gas available
will only become more difficult and expensive to produce.
MR. ROSE replied that the current contracts for natural gas
begin to expire next year, meaning that further price increases
are likely to begin occurring in the near future.
10:59:27 AM
MR. ROSE continued to slides 8 through 10 and gave an overview
of liquefied natural gas (LNG) prices around the world. He
showed a chart including the Henry Hub price, as well as prices
in Japan, the Japan-Korea market, and Europe. The Henry Hub
price is a spot-market price that is currently the lowest. He
said that Alaska would likely have to buy LNG on the Asian
market and pay the same prices as those markets. The price of
Japan's spot LNG has been volatile and has reached as high as
$35 per thousand cubic feet (Mcf). He said that the Chugach
Electric Association is looking at scenarios involving gas with
prices as high as $12 or $18 per Mcf.
11:05:43 AM
REPRESENTATIVE PRAX asked what would happen if the Alaska LNG
project comes online.
MR. ROSE answered that demand in Japan, one of the most likely
investors, is decreasing. He added that Alaska would be
unlikely to receive a "hometown discount" based on the price of
other fuels in the state.
11:09:12 AM
MR. ROSE continued to slides 11 and 12 and showed the potential
impact of LNG import prices on individual households. He said
that those relying on PCE are being affected the most due to the
floor of the equalization increasing. He said that REAP
believes that moving to renewable energy and saving natural gas
for heating is the best path forward to avoid reliance on
volatile LNG imports.
MR. ROSE moved to slide 13 and showed a chart comparing the cost
of solar and wind power generation. He said that wind and solar
power are cheaper than natural gas, and the prices are
decreasing.
11:15:36 AM
CHAIR RAUSCHER asked if the cost of renewable energy projects in
Alaska are greater than in the Lower 48.
MR. ROSE answered that a wind project is approximately 1.7 times
more expensive in Alaska than the Lower 48. He added that even
with that additional cost, the cost of wind power still ends up
being a lower cost than natural gas. The price of wind power
produced on Fire Island has decreased since the project was
first built. In response to a follow-up question, he said that
parts for an offshore turbine would travel by ship.
11:21:58 AM
MR. ROSE moved to slide 14 and showed a chart with the
percentage of solar power generation by U.S. state. He said
that in California, a state with a population of 37 million, 25
percent of energy is generated by solar.
MR. ROSE continued to slides 15 and 16 and gave an overview of
net capacity additions by their source. He said that in the
last 10 years, more fossil fuel plants have been closed than
opened, and 80 percent of new power plants in the Lower 48 are
either wind or solar plants. He showed a chart detailing the
percentages of capacity generation by source.
11:25:31 AM
CHAIR RAUSCHER asked whether the numbers would be closer if each
individual wind turbine was considered to be its own plant.
MR. ROSE answered that a project's capacity is measured by the
megawatt hours (MWh) it has the ability to produce, even if it
does not always produce that amount. He added that fossil fuel
and geothermal plants have the ability to operate at times in
which other renewable energy sources cannot.
11:29:05 AM
REPRESENTATIVE PRAX asked if the capacity on the chart is
nameplate or the amount the project can actually produce.
MR. ROSE answered that it is nameplate capacity.
11:31:17 AM
MR. ROSE continued to slides 17 through 19 and gave a brief
overview of avoided cost. Avoided cost is a term that describes
the cost avoided when a utility company buys generated fuel from
a third party. He said that MEA's recent wind power project has
an avoided cost that already makes it cheaper than natural gas.
The Regulatory Commission of Alaska (RCA) requires a five-year
projection of costs relating to utilities, including the avoided
cost. He showed a chart detailing avoided cost scenarios with
potential LNG spot prices. He added that using renewable energy
projects would allow the private sector to be involved in
lowering energy prices. All risk of a project not working is
taken by the investors of those projects, and not the utilities.
11:38:10 AM
MR. ROSE moved to slides 20 and 21 and continued his discussion
of avoided cost. He showed a line graph with the same
information as the previous bar graph. He stated that the
avoided cost rises even if natural gas prices increase only to
$12 Mcf. There is a target to reach a renewable portfolio
standard (RPS) of 80 percent by the year 2040. He said that
utilities would face a fine for every MWh not produced with
renewable energy over the allotted amount. The estimated
capital cost to reach 80 percent renewable energy is $3.2
billion, although the estimate was made before it was known that
federal tax credits for renewable energy would be continued.
11:44:00 AM
REPRESENTATIVE PRAX asked if the analysis includes the capital
of independent power producers.
MR. ROSE answered that it is based on a recent wind project
built in Alaska. In response to a follow-up question, he stated
that it is possible that tax credits for natural gas have the
potential to help with the prices of natural gas. He added that
it does not remove the volatility of prices for natural gas,
while prices for renewable generation remain stable.
11:47:56 AM
REPRESENTATIVE SCHRAGE asked why the cost of battery storage is
not included in the analysis.
MR. ROSE answered that the Railbelt utilities plan to build
batteries regardless of the direction they take their power
generation.
11:52:11 AM
REPRESENTATIVE SCHRAGE asked if it is correct to say that less
battery storage would be necessary if there were more interties
between the utilities.
MR. ROSE answered that it is generally correct to say that more
transmission lines mean that less storage is necessary. He
added that some battery storage would still be necessary, as
batteries have other purposes, such as offering power during
gaps in generation. In response to a follow-up question, he
said that the status quo would result in the incurrence of
additional costs due to LNG imports.
11:57:09 AM
MR. ROSE continued to slides 22 and 23 and stated that an RPS:
diversifies Alaska's generation portfolio and protects
ratepayers from cost volatility; saves Cook Inlet natural gas
for heating; utilizes local resources; create jobs; and
increases Alaska's energy independence. He advised that Alaska
can see where it is going and must act accordingly.
12:00:02 PM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 12:00 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| House Energy 3-16-23.pdf |
HENE 3/16/2023 10:15:00 AM |
REAP |