Legislature(2023 - 2024)DAVIS 106

04/04/2024 10:15 AM House ENERGY

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Audio Topic
10:15:27 AM Start
10:16:12 AM Presentation(s): National Renewable Energy Lab: Achieving 80% Renewable Portfolio Standard in Alaska's Railbelt with Cost Analysis
11:37:50 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Please Note Location Change --
+ Presentation: Achieving an 80% Renewable TELECONFERENCED
Portfolio Standard in Alaska's Railbelt with
Cost Analysis by Dr. Paul Denholm, Senior
Research Fellow, National Renewable Energy Lab
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE SPECIAL COMMITTEE ON ENERGY                                                                              
                         April 4, 2024                                                                                          
                           10:15 a.m.                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative George Rauscher, Chair                                                                                           
Representative Tom McKay                                                                                                        
Representative Thomas Baker                                                                                                     
Representative Stanley Wright                                                                                                   
Representative Calvin Schrage                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Mike Prax                                                                                                        
Representative Jennie Armstrong                                                                                                 
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENTATION(S): NATIONAL RENEWABLE ENERGY LAB: ACHIEVING 80%                                                                   
RENEWABLE PORTFOLIO STANDARD IN ALASKA'S RAILBELT WITH COST                                                                     
ANALYSIS                                                                                                                        
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
PAUL DENHOLM, Senior Research Fellow                                                                                            
National Renewable Energy Lab                                                                                                   
Golden, Colorado                                                                                                                
POSITION STATEMENT:  Gave a PowerPoint presentation on                                                                        
developing renewables in Alaska.                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
10:15:27 AM                                                                                                                   
                                                                                                                                
CHAIR RAUSCHER called the House Special Committee on Energy                                                                     
meeting to order at 10:15 a.m.  Representatives Schrage, Wright,                                                                
Baker, McKay, and Rauscher were present at the call to order.                                                                   
                                                                                                                                
^PRESENTATION(S):   NATIONAL RENEWABLE ENERGY LAB:  ACHIEVING 80%                                                               
RENEWABLE  PORTFOLIO  STANDARD  IN ALASKA'S  RAILBELT  WITH  COST                                                               
ANALYSIS                                                                                                                        
 PRESENTATION(S):  NATIONAL RENEWABLE ENERGY LAB: ACHIEVING 80%                                                             
  RENEWABLE PORTFOLIO STANDARD IN ALASKA'S RAILBELT WITH COST                                                               
                            ANALYSIS                                                                                        
                                                                                                                                
10:16:12 AM                                                                                                                   
                                                                                                                                
CHAIR RAUSCHER  announced that the  only order of  business would                                                               
be  a  presentation,  titled   "National  Renewable  Energy  Lab:                                                               
Achieving 80%  Renewable Portfolio Standard in  Alaska's Railbelt                                                               
with Cost Analysis."                                                                                                            
                                                                                                                                
10:17:01 AM                                                                                                                   
                                                                                                                                
PAUL DENHOLM,  Senior Research Fellow, National  Renewable Energy                                                               
Lab (NREL), gave a PowerPoint  presentation [hardcopy included in                                                               
the committee  packet] on  developing renewables  in Alaska.   He                                                               
began on slide 1, which gave  background on what NREL is and what                                                               
its  focus is  regarding  energy standards  and  portfolios.   He                                                               
continued to slide  3 and 4, where he explained  the scope of the                                                               
study  on   Alaska's  Railbelt  electricity  grid,   as  well  as                                                               
explained the cost  and drawbacks of the looming  gas shortage in                                                               
the Cook Inlet  region.  He said that renewable  energy is a more                                                               
stable energy source  in comparison to the  natural gas currently                                                               
being used  in the Railbelt  system.   He said that  developing a                                                               
renewable energy  project is locking  in the cost  of electricity                                                               
for decades through a contractual agreement.                                                                                    
                                                                                                                                
10:21:59 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  SCHRAGE asked  where  the study  of the  Railbelt                                                               
grid came from, what the impetus of the study was.                                                                              
                                                                                                                                
MR. DENHOLM answered that the  study originated in the governor's                                                               
office and  was performed  by NREL using  the lab's  own dollars.                                                               
He said that  the study couldn't originally do  cost analysis, so                                                               
the new study aims to answer  the question:  "Can renewables save                                                               
money?"                                                                                                                         
                                                                                                                                
10:23:48 AM                                                                                                                   
                                                                                                                                
MR. DENHOLM resumed his presentation  on slide 6, which posed the                                                               
question  of renewable  energy offsetting  current  fuel use  and                                                               
expense.  He said  about  7 to  8  cents of  cost  of energy  per                                                               
kilowatt hour (KwH) in the  Cook Inlet Region comes directly from                                                               
gas expenses.   He said  the expectation  is that the  cost would                                                               
rise  to 10  cents per  KwH.   He explained  how cost  impacts of                                                               
renewable energy  can be understood and  integrated through their                                                               
uncertainty.  He moved to  slide 7, which explained how renewable                                                               
energy ("renewables") can reduce  costs in Alaska, the challenges                                                               
associated with  developing renewables in Alaska,  and how Alaska                                                               
could  implement renewables  today.   He  continued  to slide  8,                                                               
which  explained  the  difference  in cost  between  all  of  the                                                               
expenses  associated  with renewables  and  the  current cost  of                                                               
using natural gas.                                                                                                              
                                                                                                                                
10:29:46 AM                                                                                                                   
                                                                                                                                
MR. DENHOLM continued his presentation  on slide 9, which gave an                                                               
example  of   a  "modelling  approach"  to   equally  divide  and                                                               
distribute energy resources.  He  moved to slide 10, which showed                                                               
a map of the Railbelt grid  and described a future plan of action                                                               
and  decisions in  its management.    He continued  to slide  11,                                                               
which  described hypothetical  scenarios of  mixed renewable  and                                                               
natural  gas resource  management.   He said  one of  the biggest                                                               
deficiencies  of  the  analysis  was   a  lack  of  data  on  new                                                               
hydroelectric plants.   He skipped  to slide 13,  which described                                                               
"load  growth," a  way to  describe the  phenomenon of  a growing                                                               
population increasing  energy demand  in the  associated region's                                                               
grid.                                                                                                                           
                                                                                                                                
10:33:13 AM                                                                                                                   
                                                                                                                                
CHAIR RAUSCHER  asked whether Alaska  is comparable to  the Lower                                                               
48 in terms of its electrical grid management.                                                                                  
                                                                                                                                
MR. DENHOLM  answered that  in the Lower  48, every  single state                                                               
except for Nebraska is  invested in private-for-profit utilities.                                                               
He  said  that  Alaska  is  unique  because  the  main  utilities                                                               
providers are public entities.                                                                                                  
                                                                                                                                
10:34:59 AM                                                                                                                   
                                                                                                                                
MR.  DENHOLM   resumed  his  presentation  on   slide  14,  which                                                               
described  transmission and  interconnection  upgrades that  have                                                               
been made  to improve  the infrastructure  in certain  regions of                                                               
the Railbelt.                                                                                                                   
                                                                                                                                
10:36:49 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE MCKAY asked what the terms "PV" and "ITC" mean.                                                                  
                                                                                                                                
MR. DENHOLM said that PV  stands for solar photovotality, and ITC                                                               
is the investment tax credit.                                                                                                   
                                                                                                                                
10:37:23 AM                                                                                                                   
                                                                                                                                
MR. DENHOLM skipped  to slide 16, which  explained the importance                                                               
of  capturing the  cost-benefit of  using renewable  energy.   He                                                               
said  that  historically,  power  is acquired  through  a  power-                                                               
purchasing  agreement, which  ensures  the payment  on an  agreed                                                               
price established  in the agreement.   He continued to  slide 17,                                                               
which described  the previously mentioned investment  tax credits                                                               
that could be used towards new renewable energy projects.                                                                       
                                                                                                                                
10:40:51 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE SCHRAGE  asked how long the  investment tax credit                                                               
is available.                                                                                                                   
                                                                                                                                
MR. DENHOLM answered  that right now it is unclear,  but there is                                                               
a "safe harbor"  provision that ensures that the  credits will be                                                               
awarded  if a  project  is  started by  a  certain  date, and  he                                                               
offered  his understanding  that  that date  is  the late  2030s,                                                               
maybe 2040.                                                                                                                     
                                                                                                                                
REPRESENTATIVE SCHRAGE  observed that  there is a  limited window                                                               
of opportunity.                                                                                                                 
                                                                                                                                
MR. DENHOLM confirmed that is correct.   He told the committee he                                                               
would provide more definitive data at a future time.                                                                            
                                                                                                                                
10:42:28 AM                                                                                                                   
                                                                                                                                
MR.  DENHOLM   resumed  his  presentation  on   slide  18,  which                                                               
explained the  cost multiplier that Alaska  poses when developing                                                               
new renewable energy projects in Alaska.                                                                                        
                                                                                                                                
10:44:37 AM                                                                                                                   
                                                                                                                                
CHAIR RAUSCHER asked  whether [solar] energy is  less valuable in                                                               
Alaska, with the inconsistent daylight hours and cold.                                                                          
                                                                                                                                
MR. DENHOLM responded that yes,  solar energy is less valuable in                                                               
Alaska compared  to a place  like California.   In response  to a                                                               
follow-up question, he confirmed that  the long days of summer in                                                               
Alaska have an  effect on the efficiency of solar  and noted that                                                               
the  angle [of  solar panels]  must be  changed to  get the  most                                                               
amount of sunlight at any time.                                                                                                 
                                                                                                                                
10:48:10 AM                                                                                                                   
                                                                                                                                
MR. DENHOLM continued his presentation  on slide 19, which showed                                                               
a graph  of the total capital  cost of renewable energy  per Kwh.                                                               
In  response  to  Representative  McKay, he  explained  that  GFM                                                               
stands for grid forming inverter  or grid following inverter; the                                                               
smaller the  grid, the more difficult  it is to keep  stable.  In                                                               
response to  questions from  Chair Rauscher,  he said  he thought                                                               
the Houston  solar project was  included in  the study.   He said                                                               
small projects  usually mean  100Mw and the  number of  panels it                                                               
would take  to power  a 100Mw project  is comparable  to multiple                                                               
football fields.                                                                                                                
                                                                                                                                
10:53:29 AM                                                                                                                   
                                                                                                                                
MR. DENHOLM resumed his presentation  on slide 21, which showed a                                                               
map of wind development sites along the Railbelt.                                                                               
                                                                                                                                
CHAIR RAUSCHER asked what the  difference between developers' and                                                               
NREL data would be.                                                                                                             
                                                                                                                                
MR.  DENHOLM  answered that  NREL  uses  data from  the  National                                                               
Aeronautics  and Space  Administration (NASA)  that gives  a good                                                               
general idea of information in  a place, but local developers get                                                               
more information pertinent to the area they are studying.                                                                       
                                                                                                                                
10:55:32 AM                                                                                                                   
                                                                                                                                
MR.  DENHOLM resumed  his presentation  on slide  22, which  gave                                                               
explanation on  how renewables  could be  developed at  a cheaper                                                               
price  than  natural gas.    He  gave  multiple examples  of  how                                                               
additional costs  could be incurred  by use practices.   He moved                                                               
to slide 24,  which raised the question  of reliability benefits,                                                               
of which he  said there is only  a small potential.   He said all                                                               
that renewables  would do is offset  the use of natural  gas.  He                                                               
skipped to slide 26, which  explained the process for finding the                                                               
least expensive option  for developing renewables in  Alaska.  He                                                               
continued  to slide  27, which  showed  a graph  of cost  savings                                                               
between different hypothetical energy use scenarios.                                                                            
                                                                                                                                
11:01:42 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE MCKAY  asked about taxes and  royalties that would                                                               
be lost from less natural gas extraction in state.                                                                              
                                                                                                                                
MR. DENHOLM  responded that  the working  assumption is  that the                                                               
state uses imported  LNG, not drilling for new gas.   In response                                                               
to a  follow-up question,  he clarified that  NREL is  looking at                                                               
the marginal resource, which is likely to be LNG.                                                                               
                                                                                                                                
11:05:02 AM                                                                                                                   
                                                                                                                                
CHAIR RAUSCHER asked what percentage  of battery cost and storage                                                               
is accounted for in the study.                                                                                                  
                                                                                                                                
MR. DENHOLM answered  that NREL used a minimal  assumption of the                                                               
value of energy storage.                                                                                                        
                                                                                                                                
11:06:41 AM                                                                                                                   
                                                                                                                                
MR. DENHOLM  moved to  slide 28,  which explained  the cumulative                                                               
savings of a  certain scenario proposed in a previous  slide.  He                                                               
moved to  slide 29,  which explained  the methodology  to finding                                                               
the scenario with the greatest cost-benefit.                                                                                    
                                                                                                                                
11:08:15 AM                                                                                                                   
                                                                                                                                
CHAIR RAUSCHER  asked Mr. Denholm  to explain how the  height and                                                               
elevation of a wind project affects its effectiveness.                                                                          
                                                                                                                                
MR. DENHOLM explained the basic design  of a wind turbine and how                                                               
the height/elevation of the machine affects its effectiveness.                                                                  
                                                                                                                                
11:10:30 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE MCKAY asked how these  projects could be developed                                                               
in the  harsh climate  of Alaska.   He  also asked  how vandalism                                                               
would affect the hypothetical solar panels.                                                                                     
                                                                                                                                
11:13:41 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE SCHRAGE  drew attention  to a February  25 article                                                               
written by  the Anchorage Daily  News and explained  the benefits                                                             
that could come from these projects.                                                                                            
                                                                                                                                
11:15:27 AM                                                                                                                   
                                                                                                                                
MR. DENHOLM resumed his presentation  on slide 30, which showed a                                                               
map  of  how  energy  capacity  would  increase  with  the  newly                                                               
installed renewables.  He continued  to slide 31, which explained                                                               
the volatility  of the costs  of renewables and natural  gas, and                                                               
how that influenced the study.                                                                                                  
                                                                                                                                
11:17:43 AM                                                                                                                   
                                                                                                                                
CHAIR RAUSCHER asked  whether it is possible to keep  up with new                                                               
technology when developing renewables.                                                                                          
                                                                                                                                
MR.  DENHOLM responded  that the  biggest question  in developing                                                               
renewables is whether  it is too soon, if the  next generation of                                                               
renewables would be tenfold better than the current.                                                                            
                                                                                                                                
CHAIR  RAUSCHER  asked   how  many  solar  panels   it  takes  to                                                               
accomplish what one wind turbine could accomplish.                                                                              
                                                                                                                                
MR. DENHOLM answered  that it would take  20,000 individual solar                                                               
panels to  produce the  same amount  of energy  as a  single wind                                                               
turbine.                                                                                                                        
                                                                                                                                
11:21:38 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE   WRIGHT   asked   how  often   renewable   energy                                                               
technology changes.                                                                                                             
                                                                                                                                
MR. DENHOLM  replied that technology is  incrementally improving,                                                               
with small changes throughout the years.                                                                                        
                                                                                                                                
11:23:28 AM                                                                                                                   
                                                                                                                                
MR.  DENHOLM   continued  to  slide   32,  which   explained  the                                                               
reliability  prospects  of  renewable energy  implementation.  He                                                               
moved  to slide  33, which  he  called "the  scary graph,"  which                                                               
displayed  the hourly  fraction  of generation  met  by wind  and                                                               
solar.  He skipped to slide  35, which explained the cost impacts                                                               
of  addressing   variability  and  reliability   associated  with                                                               
integrating renewables.                                                                                                         
                                                                                                                                
11:27:18 AM                                                                                                                   
                                                                                                                                
CHAIR RAUSCHER asked the difference between CES and RES.                                                                        
                                                                                                                                
MR. DENHOLM  said that  the acronyms  mean clean  energy standard                                                               
and renewable energy standard.                                                                                                  
                                                                                                                                
CHAIR RAUSCHER asked the advantage of CES versus RES.                                                                           
                                                                                                                                
MR. DENHOLM  advised that  the potential to  reduce costs  is the                                                               
benefit. He said  there hasn't been as much success  as was hoped                                                               
for with small modular reactors.                                                                                                
                                                                                                                                
11:29:51 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE  WRIGHT asked  about  the study's  words on  micro                                                               
reactors.                                                                                                                       
                                                                                                                                
MR. DENHOLM responded that it all comes down to cost.                                                                           
                                                                                                                                
REPRESENTATIVE  WRIGHT asked  whether the  state is  moving along                                                               
too early in terms of a reactor's lifespan.                                                                                     
                                                                                                                                
MR. DENHOLM acknowledged that that  is a possibility, but pointed                                                               
out that it is a gain due to cost and federal funding.                                                                          
                                                                                                                                
11:31:51 AM                                                                                                                   
                                                                                                                                
CHAIR  RAUSCHER asked  whether these  studies  are performed  for                                                               
each state.                                                                                                                     
                                                                                                                                
MR. DENHOLM  said that NREL  is primarily responding to  the U.S.                                                               
Department  of Energy's  need to  understand each  state's energy                                                               
needs.   He  said NREL  does individual  regional studies  on the                                                               
basis of funding.   In response to follow-up  questions, he noted                                                               
that  NREL  is a  not-for-profit  entity  funded by  the  federal                                                               
government.    In  terms  of  whether there  are  biases  in  the                                                               
studies,  he   responded  that   NREL  has   specific  scientific                                                               
integrities and policies that it follows no matter what.                                                                        
                                                                                                                                
11:36:09 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE SCHRAGE said he was  pleased that the committee is                                                               
receiving a nonpartisan study.                                                                                                  
                                                                                                                                
11:37:50 AM                                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Special Committee on Energy meeting was adjourned at 11:38 a.m.                                                                 

Document Name Date/Time Subjects
NREL 80% Cost Analysis.pdf HENE 4/4/2024 10:15:00 AM
NREL Cost Analysis
Alaska RPS study for HENE briefing 4_4.pdf HENE 4/4/2024 10:15:00 AM
NREL 80%