Legislature(2013 - 2014)BARNES 124
03/26/2014 08:00 AM House ENERGY
| Audio | Topic |
|---|---|
| Start | |
| Presentation: Alaska Center for Energy and Power | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
HOUSE SPECIAL COMMITTEE ON ENERGY
March 26, 2014
8:02 a.m.
MEMBERS PRESENT
Representative Doug Isaacson, Co-Chair
Representative Neal Foster
Representative Pete Higgins
Representative Shelley Hughes
Representative Benjamin Nageak
MEMBERS ABSENT
Representative Charisse Millett, Co-Chair
Representative Andy Josephson
COMMITTEE CALENDAR
PRESENTATION: ALASKA CENTER FOR ENERGY AND POWER
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
GWEN HOLDMANN, Director
Alaska Center for Energy and Power
University of Alaska Fairbanks
Fairbanks, Alaska
POSITION STATEMENT: Provided a presentation on the Alaska
Center for Energy and Power.
ANTONY SCOTT, Senior Economist and Energy Analyst
Alaska Center for Energy and Power - Anchorage Office
University of Alaska Fairbanks
Anchorage, Alaska
POSITION STATEMENT: Participated in the presentation on the
Alaska Center for Energy and Power.
ACTION NARRATIVE
8:02:59 AM
CO-CHAIR DOUG ISAACSON called the House Special Committee on
Energy meeting to order at 8:02 a.m. Representatives Hughes,
Nageak, and Isaacson were present at the call to order.
Representatives Foster and Higgins arrived as the meeting was in
progress.
^PRESENTATION: ALASKA CENTER FOR ENERGY AND POWER
PRESENTATION: ALASKA CENTER FOR ENERGY AND POWER
8:03:53 AM
CO-CHAIR ISAACSON announced that only order of business would be
a presentation by the Alaska Center for Energy and Power.
8:04:56 AM
GWEN HOLDMANN, Director, the Alaska Center for Energy and Power
(ACEP), University of Alaska Fairbanks (UAF), informed the
committee she would present an overview of ACEP's projects,
especially those that are relevant to policymakers, with the
assistance of the center's energy analysis group that studies
economics and policy-related topics. The ACEP program was
fundamentally designed as an interdisciplinary program and she
said the presentation would include descriptions of ongoing
working relationships with state agencies, industry, and within
the University of Alaska (UA); in fact, ACEP does not have one
project without external partners. Ms. Holdmann said she would
also address the importance of emerging energy technology and
energy research. She directed attention to a PowerPoint
presentation entitled, "ACEP - Alaska Center for Energy and
Power - Results-Driven Research for Alaska," and gave the
following brief history of ACEP: organized about five years ago
as a gateway to energy research at UAF; based at UAF with a
satellite office in Anchorage; 20 staff members; 35 affiliated
faculty members; and 50 students [slide 3]. When given a task,
ACEP gathers a variety of researchers, inside and outside the
state, for their expertise on a specific problem. At this time
researchers from Australia and Idaho are working in the lab at
UAF. Student research is also funded with the intent to attract
and keep Alaskans at the university and in the state. Given the
current constraints on state revenue, Ms. Holdmann stressed that
ACEP is a revenue-generating research program for UAF and for
the state; for example, during its short history, ACEP has
received $3.1 million in state funding through the UA operating
budget compared to $26 million in external grants and contracts
for applied energy research of immediate relevance to Alaska.
8:10:52 AM
REPRESENTATIVE HUGHES asked for the source of the grants.
MS. HOLDMANN answered that approximately one-quarter are through
the Alaska Energy Authority (AEA), Department of Commerce,
Community & Economic Development, and the remainder are from
industry.
CO-CHAIR ISAACSON surmised ACEP's ratio [of public to private
funding] is not quite 9:1.
MS. HOLDMANN added that some of the state grants are competitive
awards through AEA's Renewable Energy Fund program.
8:12:24 AM
CO-CHAIR ISAACSON concluded that a portion of the funds are
leveraged against industry funds.
8:12:58 AM
MS. HOLDMANN continued to explain that of its total funds, ACEP
leverages funds on a ratio of 9:1 and seeks to increase the
amount of partnerships within the state. In the past energy
research has been federally funded; however, in order to focus
the research on Alaska, ACEP prefers to attract private sector
partners from Alaskans and Alaska businesses. She pointed out
that 40 percent of the funding received goes to small businesses
in Alaska that work as subcontractors for ACEP in manufacturing
and field work. Further, approximately 20 percent is used for
base operating costs at UAF [slide 4]. The role of ACEP and UA
is to develop information to help homeowners, industry, and
governments make decisions through technology testing and
optimization, energy analysis, and data management. In
addition, ACEP prepares students to work in energy-related
disciplines and commercializes energy innovation to generate
wealth for the state and economic growth [slide 5].
8:17:36 AM
ANTONY SCOTT, Senior Economist and Energy Analyst, ACEP, listed
samples of ongoing projects undertaken by the energy analysis
group: diesel fuel price benchmarking to understand the variety
of fuel prices around the state and facilitate solutions to high
prices, such as alternative energy sources or conservation;
assessment of the economics of a Southeast Alaska-BC
Transmission Intertie; private investment models for renewable
energy infrastructure in Alaska, which may provide the lowest-
cost power due to federal tax credits and deductions; and
liquefied natural gas (LNG) economic assessment and screening
for coastal Alaska communities [slide 6]. To delve further into
the last topic, he explained that ACEP's ongoing work for AEA is
high level screening of the economics of very small scale LNG to
displace diesel-fueled powerhouses in coastal communities in
Alaska. The Westpac Company seeks to transport LNG in
international standard organization intermodal (ISO) shipping
containers from British Columbia to Alaska, or alternatively
from Cook Inlet to other areas of the state. This commercial
opportunity has emerged as oil prices rise and natural gas
prices do not, thus making the transportation and storage of LNG
in ISO containers economic in some cases [slide 7]. The
comparison sought by AEA was between ISO container transport and
storage of LNG, which is the most expensive method, and the bulk
transport of diesel fuel.
8:23:45 AM
REPRESENTATIVE NAGEAK cautioned that the use of LNG in villages
requires building infrastructure, and asked about the use of
propane as a source for fuel.
MR. SCOTT acknowledged that propane has potential, but the price
of propane is not as low as that of natural gas; further,
propane also requires infrastructure. He clarified that the AEA
study focused on displacing diesel for the generation of
electricity - not for home heating - because using LNG for power
generation requires the least amount of capital investment at
the village level and if that were successful, then subsequently
AEA would look at opportunities for home heating. The study is
further limited to the use of LNG as proposed by a private
investor.
CO-CHAIR ISAACSON asked whether Bush communities can approach
economies of scale of ten thousand 1,000 British thermal units
per day (MMBtu/d).
8:26:54 AM
MR. SCOTT advised that the electric load in coastal communities
in Alaska is small; in fact, aggregating all of the coastal
communities from Bethel to Southeast does not amount to 10,000
MMBtu/d, which is the threshold of economical generation [slides
8 and 9]. However, industrial loads such as fish processing and
mining hold the potential for approaching sufficient demand to
support a project using ISO containers for transport and storage
[slides 8 and 9]. The study found that particularly for ice-
free communities, if diesel costs are high and there is
sufficient load, LNG can displace diesel for power production,
no matter the size of the community. He directed attention to
slide 10, which illustrated the break-even costs and the risks
associated with transitioning to a new fuel. In response to Co-
Chair Isaacson, he explained that each black line on slide 10
represents a community and the range in which the cost of
natural gas is economic compared to the cost of diesel fuel -
shown on the Y axis - during the period between fiscal year 2010
(FY 10) and FY 12. The red line - the X axis - indicated that
during this period of time, natural gas could have been
purchased for less than diesel, thus there is a reasonable
expectation that LNG would be successful in ice-free communities
if there is an industrial load. For ice-bound communities, LNG
must be stored for the winter, which adds to capital
expenditures (CAPEX), and he concluded that the additional
storage costs undermine the economics of LNG use in those
communities [slide 11].
8:34:24 AM
CO-CHAIR ISAACSON surmised that the use of ISO tanks should
absolve storage tank issues, and questioned their purpose.
MR. SCOTT agreed that the ISO containers store the LNG for 60-90
days, but that is insufficient to supply an ice-bound community
through the winter, with the exception of Dillingham and Naknek,
which have sufficient electrical loads [slide 11]. Ice-free
communities need fewer containers. The study showed that
economies of scope and scale matter; for example, for the
proposal to work, larger industrial loads are necessary and LNG
is a potential option for ice-free communities. Also, a bulk
delivery project relying on the electrical demand from fish
processing is possible in Unalaska/Dutch Harbor, as is a
Southeast-based ISO project, with the demand of an industrial
load. Mr. Scott concluded that the state would not have to
participate in these projects given that there is interest from
private entities [slide 12].
8:40:49 AM
MS. HOLDMANN informed the committee that ACEP conducts directed
research for rural energy issues and community solutions, and on
a larger scale, topics related to industry. The ACEP lab in
Fairbanks tests many products and testing is also done in the
field [slide 15]. She directed attention to slide 19 and noted
there is significant interest in Alaska in the installation of
ground and seawater source heat pumps; in fact, ACEP's work was
credited with facilitating their installations in Juneau. The
center has compiled economic data, and completed technical
evaluations on heat pump operating systems statewide, in
collaboration with the Denali Commission and others. In
response to a request from the legislature, ACEP studied small
modular nuclear reactors and issued a report in 2011, concluding
that the reactors are potentially a viable technology for Alaska
but will not be commercially available in the near-term.
However, ACEP will continue to monitor developments in this
industry [slide 20]. Slide 21 illustrated the locations of ACEP
projects all over the state. The study of geothermal energy for
Nome was highlighted as an example of ACEP's close work with a
community, and its goal to develop each region's local energy
options from coal to geothermal. The situation in Nome was
researched from a multi-disciplinary standpoint including an
economic assessment, a resource evaluation, the integration of
sources of energy, and finding a role for private financing and
industry in small and remote energy projects. Ms. Holdmann
opined that Nome has followed a proactive approach with
independent power producers, and is close to signing a power
purchase agreement to develop a geothermal power plant [slide
22]. She said attracting private industry to work in
partnership with the state is important to achieve
sustainability throughout the state.
8:47:43 AM
CO-CHAIR ISAACSON asked Ms. Holdmann to provide models for how
to leverage money to attract private investment with the use of
tax credits.
MS. HOLDMANN said one model is the renewable energy fund, which
approves grants to the most economic [project] first. These are
the projects most likely to be developed if private financing
was secured. Also, bundling projects together makes them more
attractive for private financing. She advised that ACEP is
directed towards projects with grant funding available, which is
constraining, and seeks to explore ways to attract private
funding into energy projects whenever possible. Slide 23
described two examples of private power projects and she
observed that private projects are managed by "a different
mentality." She closed with ACEP's vision for the state: Alaska
leading the way in innovative production, distribution, and
management of energy [slide 25]. This vision entails addressing
Alaska's challenges and moving into a leadership position
worldwide by maximizing the production of oil and gas resources,
developing local resources wherever practical, using innovative
financing mechanisms, facilitating diesel-off in rural
communities, and exporting the experience gained by solving
Alaska's energy challenges [slide 26]. Iceland was highlighted
as an example as an entity that exports its knowledge on
geothermal energy, thereby creating a financial boon for the
country, and Alaska can do the same on wind energy [slides 27
and 28]. Recently ACEP hosted an international wind integration
conference in Fairbanks, and in the summer of 2014, visitors
from Chile and Nigeria are coming to UAF to learn about the
energy sector. She urged for continued funding of the Emerging
Energy Technology Grant Fund and university-based research used
to support industry [slide 30].
8:56:05 AM
REPRESENTATIVE FOSTER asked whether the project in Nome includes
the transmission line.
MS. HOLDMANN said yes. Potelco Inc. has proposed investing $40
million for a transmission line and a two megawatt power
generation facility.
REPRESENTATIVE FOSTER lauded ACEP's work in Nome.
REPRESENTATIVE HUGHES asked whether ACEP tests the energy
efficiency of homes.
MS. HOLDMANN said ACEP partners with the Cold Climate Housing
Research Center (CCHRC) on residential testing and also studies
large-scale energy efficiency at the generation level.
REPRESENTATIVE HUGHES asked what percentage of CCHRC's attention
is focused on small communities - where the need is greatest -
and what percentage is focused on Southcentral - where 75
percent of the population resides.
MS. HOLDMANN stated CCHRC's focus is statewide. For example,
the report on ground and seawater heat pumps covered the Wasilla
and Palmer areas because of the activity there.
REPRESENTATIVE HIGGINS pointed out there are companies that are
currently marketing small nuclear power plants.
9:00:08 AM
MS. HOLDMANN agreed there is a company that is marketing a 45
megawatt power plant but it cannot be installed as an individual
unit as designed. Furthermore, only one has been built and it
uses natural gas as fuel. She advised the units are not
available to purchase at this time.
9:01:41 AM
ADJOURNMENT
There being no further business before the committee, the House
Special Committee on Energy meeting was adjourned at 9:01 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| ENE - PRESENTATION - House Energy Committee 3-24-14 vr2.pdf |
HENE 3/26/2014 8:00:00 AM |
|
| ENE - ACEP-Final-Project-Report - Alaska SeLife Center Seawater Heat Pump Demonstration.pdf |
HENE 3/26/2014 8:00:00 AM |
|
| ENE - AGENDA - Committee Meeting (03-26-14).pdf |
HENE 3/26/2014 8:00:00 AM |