Legislature(2013 - 2014)BARNES 124

02/13/2013 08:00 AM House ENERGY


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08:02:26 AM Start
08:03:27 AM Presentation: "emerging Energy Opportunities for Alaska"
08:52:36 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Presentation: "Emerging Energy Opportunities for TELECONFERENCED
Alaska" by Gwen Holdmann, Executive Director,
Alaska Center for Energy, University of Alaska
Fairbanks
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE SPECIAL COMMITTEE ON ENERGY                                                                              
                       February 13, 2013                                                                                        
                           8:02 a.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Doug Isaacson, Co-Chair                                                                                          
Representative Charisse Millett, Co-Chair                                                                                       
Representative Neal Foster                                                                                                      
Representative Pete Higgins                                                                                                     
Representative Shelley Hughes                                                                                                   
Representative Andy Josephson                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Benjamin Nageak                                                                                                  
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
PRESENTATION:  "EMERGING ENERGY OPPORTUNITIES FOR ALASKA"                                                                       
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
GWEN HOLDMANN, Director                                                                                                         
Alaska Center for Energy and Power (ACEP)                                                                                       
University of Alaska Fairbanks (UAF)                                                                                            
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:  Provided a presentation on the Alaska                                                                    
Center for Energy and Power, University of Alaska Fairbanks.                                                                    
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
8:02:26 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  DOUG ISAACSON  called  the House  Special Committee  on                                                             
Energy meeting  to order  at 8:02  a.m.   Representatives Hughes,                                                               
Millett,  and  Isaacson  were  present  at  the  call  to  order.                                                               
Representatives  Josephson, Foster,  and Higgins  arrived as  the                                                               
meeting was in progress.                                                                                                        
                                                                                                                                
^PRESENTATION:  "EMERGING ENERGY OPPORTUNITIES FOR ALASKA"                                                                      
   PRESENTATION:  "EMERGING ENERGY OPPORTUNITIES FOR ALASKA"                                                                
                           8:03:27 AM                                                                                         
                                                                                                                                
CO-CHAIR  ISAACSON  announced that  the  only  order of  business                                                               
would  be a  presentation by  the  Alaska Center  for Energy  and                                                               
Power (ACEP), University of Alaska Fairbanks (UAF).                                                                             
                                                                                                                                
8:03:48 AM                                                                                                                    
                                                                                                                                
GWEN  HOLDMANN, Director  of ACEP,  prefaced her  presentation by                                                               
commending the work  completed by the House  Special Committee on                                                               
Energy during previous legislative  sessions.  Ms. Holdmann urged                                                               
for a  holistic approach to  energy issues that connects  the use                                                               
of   the  state's   domestic  energy   resources  with   economic                                                               
opportunities  for its  residents.    If no  action  is taken  to                                                               
mitigate the cost of energy,  she estimated that about $5 billion                                                               
will  be spent  on diesel  fuel in  rural Alaska,  and about  $60                                                               
billion  will be  spent  on fossil  fuels  for Railbelt  electric                                                               
power  generation.     This  does   not  include  the   costs  of                                                               
generation,    operation   and    maintenance,   and    replacing                                                               
infrastructure.       Furthermore,   legislative   energy-related                                                               
appropriations  have  totaled  $2.3  billion  since  2008.    She                                                               
pointed out  if Alaska's long-term  goal is addressing  the price                                                               
of energy  it should  also be tied  to economic  opportunities so                                                               
there are jobs; that is the focus  of ACEP's program at UAF.  The                                                               
state's  energy challenges  are:   high energy  costs; fragmented                                                               
electric  grid; harsh  climate;  location at  the  end of  supply                                                               
lines;  stranded  resources; and  a  dispersed  population.   Ms.                                                               
Holdmann  informed  the  committee  ACEP  is  an  applied  energy                                                               
research  program   currently  working  on  a   range  of  energy                                                               
technologies  and options.   She  offered ACEP  as a  resource to                                                               
assist in  the decisions the  legislature must make, and  said it                                                               
can  also help  communities  and homeowners  make good  decisions                                                               
about  energy  use.    The center  also  connects  students  with                                                               
industry  to work  on real  energy challenges.   Another  part of                                                               
ACEP's  task is  to  commercialize the  production  of energy  by                                                               
working  with  industry to  break  down  barriers to  production.                                                               
Regarding partnerships,  she said ACEP has  30 affiliated faculty                                                               
members on all  UA campuses who work on specific  problems, or on                                                               
just one.   The center also  has many partners in  industry, thus                                                               
almost  every  project   involves  private  industry,  utilities,                                                               
communities,  and the  state.   As  an example,  she spoke  about                                                               
mapping  geothermal  finds  by forward  looking  infrared  (FLIR)                                                               
radiometry  at  Pilgrim  Hot Springs  near  Nome,  the  practical                                                               
application  of which  is to  keep  geothermal exploration  costs                                                               
down.  The  funding for this research was by  the U.S. Department                                                               
of Energy (USDOE).                                                                                                              
                                                                                                                                
8:13:34 AM                                                                                                                    
                                                                                                                                
MS.  HOLDMANN continued,  noting  that FLIR  radiometry can  also                                                               
apply to new energy challenges in  the state; in fact, the device                                                               
can be  flown over  a community  and assess the  heat loss  of an                                                               
entire   community  at   one  time,   which  would   benefit  the                                                               
weatherization  programs funded  by the  state.   In response  to                                                               
Representative  Higgins,  she noted  the  photo  provided was  an                                                               
image  from  Canada  as  ACEP operates  on  external  grants  and                                                               
contracts and does  not have funding to pursue  this technique in                                                               
Alaska.                                                                                                                         
                                                                                                                                
CO-CHAIR  ISAACSON further  explained  that the  FLIR images  are                                                               
taken  from  unmanned  aerial  vehicles  (UAVs)  which  are  less                                                               
expensive  to  operate  and  a survey  in  partnership  with  the                                                               
military may be possible.                                                                                                       
                                                                                                                                
8:16:15 AM                                                                                                                    
                                                                                                                                
MS.  HOLDMANN  recalled  that  the  legislature  funded  research                                                               
conducted by  UAVs at  UAF and  ACEP will fly  a UAV  survey over                                                               
Pilgrim  Hot Springs  next summer.   She  further explained  that                                                               
ACEP  is   organized  around  three  areas:     community  energy                                                               
solutions;  powering the  economy; and  the energy  field of  the                                                               
future.  Although  communities need lower cost  energy, ACEP must                                                               
focus  on  powering  the   economy  through  long-range  economic                                                               
development.    In  addition, besides  extracting  and  exporting                                                               
resources  today,  future resources  -  such  as onshore  methane                                                               
hydrates  - are  critical and  Alaska can  be a  pioneer in  this                                                               
field.   She returned  attention to  ACEP's funding  sources, and                                                               
pointed  out that  the center  received about  $18 million  in 20                                                               
active  projects; in  fact, ACEP  is  a revenue  source for  UAF,                                                               
bringing  in  a significant  amount  of  funding beyond  what  is                                                               
received from the  state.  She provided a  chart that illustrated                                                               
the economic  benefits of  the energy  research at  UAF, benefits                                                               
that come  from a wide range  of sources.  For  example, ACEP and                                                               
the  Institute  for  Social  and  Economic  Research  (ISER),  UA                                                               
Anchorage  (UAA), have  jointly  submitted a  proposal to  USDOE.                                                               
Ms.  Holdmann  said ACEP  has  sixteen  staff members  housed  in                                                               
Anchorage and Fairbanks, and the  program is five years old, with                                                               
projects throughout the state ranging  from small modular nuclear                                                               
reactors  to  fossil  and renewable  resources.    Although  ACEP                                                               
cannot  do  everything, Ms.  Holdmann  said  it  has a  focus  on                                                               
advanced battery  storage technology; in fact,  Fairbanks has the                                                               
largest battery  storage system in  the world.  Although  the new                                                               
technology will not be built  here, Alaska has the opportunity to                                                               
test the technology.                                                                                                            
                                                                                                                                
CO-CHAIR  ISAACSON   asked  why   Alaska  would  not   build  new                                                               
technology in the future if its energy programs are successful.                                                                 
                                                                                                                                
8:23:01 AM                                                                                                                    
                                                                                                                                
MS. HOLDMANN stated that other  entities are spending millions of                                                               
dollars  to  develop new  source  technologies  in the  U.S.  and                                                               
elsewhere;  however, Alaska  can focus  first on  areas where  it                                                               
does have an advantage.                                                                                                         
                                                                                                                                
CO-CHAIR ISAACSON  pointed out  that Ucore  Rare Metals  Inc., is                                                               
developing heavy strategic metals  [near Ketchikan] for batteries                                                               
and other applications.  He  opined that Alaska has the resources                                                               
and knowledge  to do  everything here that  can be  done anywhere                                                               
else in the world.                                                                                                              
                                                                                                                                
MS.  HOLDMANN  agreed  that  Alaska has  a  huge  opportunity  to                                                               
provide raw  materials such  as rare earth  minerals (REE).   She                                                               
turned  attention  to  one of  Alaska's  comparative  advantages:                                                               
high   contribution   renewables   and  solving   the   technical                                                               
challenges thereof, such as integrating  diesel engines with wind                                                               
systems.  As  an aside, she described the lab  in Fairbanks which                                                               
is a unique recreation of a  village complete with a power system                                                               
and all  of its inherent  problems, enabling researchers  to test                                                               
new ideas  and find new  strategies and solutions.   Returning to                                                               
comparative  advantages,  she  said  industry  is  interested  in                                                               
working  in Alaska  because of  its  niche technical  challenges,                                                               
value-added processing,  and difficult  to extract  and transport                                                               
fossil  fuels.    Alaska  is   a  pioneer  in  high  contribution                                                               
renewables  and  "island"  energy  systems.    As  the  world  is                                                               
becoming  more electrified,  power generation  will be  more like                                                               
electrical generation in Alaska than that  of the Lower 48 due to                                                               
the  lack  of  electrical  grids.     Returning  to  the  lab  in                                                               
Fairbanks,  she said  the lab  is  a friendly  test facility  and                                                               
works with  industry to  fix programming  and other  problems and                                                               
test products  before installation in  the field.   Another niche                                                               
technology of  interest is hydrokinetics, of  the emerging energy                                                               
technology  grant  fund applications,  20  percent  for were  for                                                               
hydrokinetic  ocean and  river technologies.   She  stressed that                                                               
ACEP does not build turbines,  but devises devices that will make                                                               
it possible  for the turbines  to work  in Alaska; at  this time,                                                               
ACEP has installed  a hydrokinetic turbine in  Nenana for testing                                                               
the effects of debris and ice.                                                                                                  
                                                                                                                                
8:31:53 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  ISAACSON asked  how much  electricity the  test turbine                                                               
has generated, and during what time of the year.                                                                                
                                                                                                                                
MS. HOLDMANN advised that in the  winter there is not enough flow                                                               
to generate electricity, thus generators  must be removed.  There                                                               
is also  the need  to address  the issue  of the  outmigration of                                                               
smolt to  protect the fish populations.   The test unit  in Eagle                                                               
was  a 25  kilowatt  (kW)  unit which  produced  one-half of  the                                                               
town's energy  needs when  it was operating.   The  equipment was                                                               
turned  over  to ACEP  because  the  issues  of debris  and  fish                                                               
protection  made  the  project   uneconomic.    She  opined  this                                                               
industry is  very excited about the  work ACEP has done.   On the                                                               
other hand, low temperature geothermal  is an example of a missed                                                               
opportunity;  the first  system  in the  world  was installed  in                                                               
Manly and  geothermal is now  a giant industry worldwide.   Ormat                                                               
Technologies Inc., tested  its technology in Alaska  at Manly Hot                                                               
Springs,  and the  system  at  Chena Hot  Springs  is the  lowest                                                               
temperature commercial  geothermal system  in the world.   Alaska                                                               
has not  taken advantage  of this to  drive opportunities  in the                                                               
state.  At UAF the same technology is used.                                                                                     
                                                                                                                                
8:35:54 AM                                                                                                                    
                                                                                                                                
CO-CHAIR ISAACSON  asked how the legislature  could advance these                                                               
economic advantages.                                                                                                            
                                                                                                                                
MS. HOLDMANN  said a  challenge for geothermal  in this  state is                                                               
that the sites are not  located near population centers and there                                                               
are just  a handful of  potential sites, unlike the  situation in                                                               
Iceland.  An  aspect of Iceland's policy is that  they offer free                                                               
education for those  who will live there, go to  school, and then                                                               
market Iceland's  geothermal expertise back  at home.   She urged                                                               
the state  to do something  similar to establish  contacts around                                                               
the world.                                                                                                                      
                                                                                                                                
8:39:04 AM                                                                                                                    
                                                                                                                                
MS.  HOLDMANN  restated the  first  priority  is to  address  the                                                               
energy  needs in  Alaska  and  then export  the  solutions.   She                                                               
returned attention  to the comparable advantages  of difficult to                                                               
extract fossil fuel resources:   heavy oil, methane hydrates, and                                                               
underground  coal  gasification.   None  of  the preceding  is  a                                                               
commercial technology today, but may  be in the future, providing                                                               
new opportunities for Alaska exports.   Taking a broader look for                                                               
the  state, Ms.  Holdmann displayed  a  map of  the Northern  Sea                                                               
Route  and said  that  in  2012, 46  ships  followed this  route.                                                               
Alaska should  capitalize on  this increase  because many  of the                                                               
mineral  discoveries  will be  made  in  the  Arctic and  in  the                                                               
Aleutians.  Alaska  is also a leader in  coil drilling techniques                                                               
that  are used  for exploration  worldwide, and  in thermosiphons                                                               
for extracting heat  that were developed at UAF.   She encouraged                                                               
the committee to use ACEP as  a resource to help answer questions                                                               
by  assessing technology  options  - as  it  did regarding  small                                                               
modular reactors; for  data collection and analysis  - asking how                                                               
investments  are performing;  for  energy analysis  - to  support                                                               
policy  energy analyses;  and for  projecting possible  options -                                                               
using  a decision-making  tool  developed by  UAF.   She  advised                                                               
there is  a funding request in  the UA capital budget  to support                                                               
these projects.                                                                                                                 
                                                                                                                                
8:44:34 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  FOSTER  posed  a   scenario  of  rural  community                                                               
residents who are  paying 40 cents per kW hour  before Power Cost                                                               
Equalization (PCE) and  20 cents per kW hour after  PCE.  In this                                                               
situation, residents  may not be  enthusiastic about  a renewable                                                               
energy project that reduces the cost  of energy to 21 cents, even                                                               
though savings to the  state will be much more.   He asked how to                                                               
create  an incentive  for renewable  energy projects  under these                                                               
circumstances.                                                                                                                  
                                                                                                                                
MS. HOLDMANN  observed PCE  takes the average  cost of  energy in                                                               
Fairbanks,  Juneau,  and Anchorage,  and  computes  a formula  to                                                               
subsidize  communities  that have  higher  costs.   In  addition,                                                               
there is  a fuel and  non-fuel component,  thus if the  amount of                                                               
fuel is  reduced the subsidy  is also reduced.   She acknowledged                                                               
disagreement  over   whether  this  is  a   disincentive  to  the                                                               
development  of  renewable  energy  projects,  but  there  is  no                                                               
disagreement that  often the  benefit of PCE  does not  reach the                                                               
residents.   Ms.  Holdmann cautioned  that  a new  wind farm  may                                                               
reduce the  PCE subsidy and benefit  the state, but may  not mean                                                               
that ratepayers  have a lower cost  on their utility bills.   She                                                               
encouraged the committee to pursue changes to the PCE program.                                                                  
                                                                                                                                
8:48:34 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  MILLETT recalled  that the  Emerging Energy  Technology                                                               
Fund resulted from work with Ms. Holdmann in Fairbanks.                                                                         
                                                                                                                                
CO-CHAIR ISAACSON  previewed some  of the  additional information                                                               
that will be presented to the  committee and urged new members to                                                               
review  existing  reports  and   a  history  of  the  committee's                                                               
actions.   He opined  the presentation showed  some ways  to have                                                               
energy attract private investment  and how to connect communities                                                               
to each  other, to economic  opportunities, and to  the resources                                                               
around them.   Co-Chair Isaacson  invited Ms. Holdmann  to submit                                                               
additional information.                                                                                                         
                                                                                                                                
MS. HOLDMANN  advised she would  forward to the  committee copies                                                               
of last year's ISER report on restructuring PCE.                                                                                
                                                                                                                                
8:52:36 AM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Special Committee on Energy meeting was adjourned at 8:52 a.m.                                                                  

Document Name Date/Time Subjects
Agenda Energy Committee 01232013.pdf HENE 2/13/2013 8:00:00 AM
House Special Committee on Energy 2-10-13 vr2.pdf HENE 2/13/2013 8:00:00 AM