Legislature(2009 - 2010)FAHRENKAMP 203

01/29/2009 10:00 AM Senate ENERGY


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10:06:35 AM Start
10:07:29 AM Overview: Geothermal Energy in Alaska
10:09:44 AM Bob Swenson, Division of Geological and Geophysical Surveys
10:41:02 AM Gwen Holdmann, Alaska Center for Energy and Power
11:14:30 AM Chris Rose, Renewable Energy Alaska Project
11:46:21 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Overview: Geothermal Energy in Alaska TELECONFERENCED
Presenters:
Gwen Holdmann, Director of the Alaska
Center for Energy and Power
Chris Rose, Exec. Director of Renewable
Energy Alaska Project
Bob Swenson, Director of the Alaska
State Division of Geological &
Geophysical Surveys
                    ALASKA STATE LEGISLATURE                                                                                  
               SENATE SPECIAL COMMITTEE ON ENERGY                                                                             
                        January 29, 2009                                                                                        
                           10:06 a.m.                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Lesil McGuire, Chair                                                                                                    
Senator Albert Kookesh                                                                                                          
Senator Bert Stedman                                                                                                            
Senator Bill Wielechowski                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Lyman Hoffman                                                                                                           
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                                
Senator Charlie Huggins                                                                                                         
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                              
Overview: Geothermal Energy in Alaska                                                                                           
                                                                                                                                
     Bob Swenson, Director, Alaska Division of Geological and                                                                   
     Geophysical Surveys                                                                                                        
     Gwen Holdmann, Director, Alaska Center for Energy and Power                                                                
     Chris Rose, Executive Director, Renewable Energy Alaska                                                                    
     Project                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No action to report.                                                                                                            
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
BOB SWENSON, Director                                                                                                           
Division of Geological and Geophysical Surveys                                                                                  
Department of Natural Resources (DNR)                                                                                           
Fairbanks AK                                                                                                                    
POSITION STATEMENT: Provided an overview of geothermal resources                                                              
in Alaska.                                                                                                                      
                                                                                                                                
GWEN HOLDMANN, Director                                                                                                         
Alaska Center for Energy and Power (ACEP)                                                                                       
Fairbanks AK                                                                                                                    
POSITION  STATEMENT:   Provided  information  on  the   Chena  Hot                                                            
Springs geothermal project in Alaska.                                                                                           
                                                                                                                                
CHRIS ROSE, Executive Director                                                                                                  
Renewable Energy Alaska Project (REAP)                                                                                          
Anchorage AK                                                                                                                    
POSITION STATEMENT:  Provided information and made  suggestions on                                                            
geothermal and other renewable energy policies.                                                                                 
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
10:06:35 AM                                                                                                                   
CHAIR  LESIL  MCGUIRE  called  the  Senate  Special  Committee  on                                                            
Energy  to order  at  10:06. Present  at the  call  to order  were                                                              
Senators Stedman, Wielechowski, Kookesh, and McGuire.                                                                           
                                                                                                                                
^Overview: Geothermal Energy in Alaska                                                                                          
                                                                                                                                
CHAIR MCGUIRE  said the hearing  will cover how  geothermal energy                                                              
fits into renewal  energy as a whole, how other  jurisdictions are                                                              
looking  at it,  what  the state  is doing,  and  where the  state                                                              
needs improvements.                                                                                                             
                                                                                                                                
10:07:29 AM                                                                                                                   
^Bob Swenson, Division of Geological and Geophysical Surveys                                                                    
                                                                                                                                
BOB  SWENSON, Director,  Division  of Geological  and  Geophysical                                                              
Surveys, Department  of Natural  Resources (DNR), Fairbanks,  said                                                              
geothermal heat is  not new, but recently there has  been a better                                                              
understanding  of how  heat is  generated and  transmitted in  the                                                              
earth's  core. He presented  a slide  show to  the committee.  The                                                              
earth becomes incredibly  hot with depth. Working  with geothermal                                                              
in the United States has been a challenge.                                                                                      
                                                                                                                                
10:09:44 AM                                                                                                                   
MR.   SWENSON  said   geothermal  heat,   where  technically   and                                                              
economically  accessible,  is  an excellent  form  of  sustainable                                                              
energy. Hydrothermal  systems are the  most common form  of energy                                                              
extraction from  geothermal heat. It  is rare to have  the complex                                                              
geologic parameters  necessary for  a viable geothermal  resource.                                                              
Certain  settings  are  much more  conducive.  Alaska  contains  a                                                              
number  of  potential  sites,  but there  are  many  hurdles.  New                                                              
technologies are on the horizon but need extensive research.                                                                    
                                                                                                                                
10:10:55 AM                                                                                                                   
MR. SWENSON  said temperatures  in the  earth are incredibly  hot,                                                              
but one  can't just drill  deeper to get  it. The deepest  well on                                                              
the planet  is "essentially  touching the  surface of the  earth,"                                                              
and none  have reached  the really hot  regions. Knowing  the heat                                                              
is down  there conjures  up a  number of  different models  to get                                                              
it.  He  showed  possibilities  including  "the  motion  of  water                                                              
heated up by  this red, glowing source  at depth." It is  not that                                                              
simple, he stated.                                                                                                              
                                                                                                                                
10:12:31 AM                                                                                                                   
MR. SWENSON said  the four fundamental ingredients  for geothermal                                                              
energy include  a geothermal  gradient; porosity and  permeability                                                              
for the migration  of fluids (an incredibly important  part of the                                                              
system);  surface  access;  and  sufficiently  large  hydrothermal                                                              
systems. Alaska has  many volcanoes. He showed  an illustration of                                                              
all  volcanoes  that have  been  active  within the  last  100,000                                                              
years.  The  next  diagram showed  large  lineaments  through  the                                                              
center of  Alaska and a  smaller one. "This  is the  Denali fault;                                                              
this  is what  creates the  Alaska Range."   "...huge  strike-slip                                                              
faults that  come in through  the middle  of the state  and create                                                              
all the deformation  and a lot of  the geology that we  see -- big                                                              
strike-slip  systems where  this  rock is  moving to  the left  in                                                              
relationship  to that  rock. And  so those  are big  crustal-scale                                                              
faults. When  we take a look  at where the geothermal  sources are                                                              
in the  interior part of Alaska,  they're related to  this system,                                                              
because  we have  crustal-scale  faulting;  we actually  have  the                                                              
possibility  of allowing  meteoric  or surface  waters  to get  at                                                              
great depth  and be heated  up and [brought]  back to  the surface                                                              
because of its buoyancy."                                                                                                       
                                                                                                                                
10:14:58 AM                                                                                                                   
MR. SWENSON  said he  will talk about  all the different  settings                                                              
that are  conducive to  geothermal energy and  which of  those are                                                              
in Alaska. He referred  to a red line on a map that  is related to                                                              
what  is  seen  along  the  Aleutian  chain.  The  center  of  the                                                              
Atlantic  Ocean is  a  spreading  center. That  is  where the  two                                                              
oceanic  plates are  pulling apart.  It is important  to note  the                                                              
Moho  (Mohorovicic discontinuity)  --  where rock  changes from  a                                                              
competent rock  to a mushy rock.  It's where the heat  changes the                                                              
phase of the  rock. The depth of  that is important -  "that tells                                                              
you how deep  the hot rock is  in any given area." In  a spreading                                                              
center,  the Moho  comes to  the  surface because  the plates  are                                                              
pulling apart  and the molten  rock is coming  to the  surface and                                                              
creating  new  crust.  Iceland  is  the only  place  that  has  an                                                              
oceanic   spreading    center   at   the   surface,    making   it                                                              
geothermically  conducive. "Anywhere  you drill,  you're going  to                                                              
be very, very close to a geothermal source."                                                                                    
                                                                                                                                
10:16:54 AM                                                                                                                   
SENATOR WIELECHOWSKI  asked  how deep a  geothermal facility  must                                                              
go in Iceland and how that compares to Alaska.                                                                                  
                                                                                                                                
MR. SWENSON said  in Iceland it is very shallow --  at the surface                                                              
even  or to  2,000 feet.  He will  discuss  Alaska's situation  in                                                              
great detail. Other  good areas are called "hot  spots." There are                                                              
a number of  them around the globe  and he noted the  Hawaiian hot                                                              
spots  that cause  volcanic  eruptions.  There are  also  "oceanic                                                              
arcs."  The  Philippines,  for example,  has  that,  and it  is  a                                                              
relatively thin  crust. Rift zones,  where continents  are getting                                                              
pulled  apart and  the crust  becomes  thin have  heat toward  the                                                              
surface.  Nevada  and Baja  have  rift zones.  "Unfortunately,  we                                                              
don't have  these in Alaska.  What we have  in Alaska is  what you                                                              
see  here,   and  it  doesn't   mean  we  don't   have  geothermal                                                              
resources." It has to be put into context of other areas.                                                                       
                                                                                                                                
10:19:13 AM                                                                                                                   
MR. SWENSON  showed a map  of heat flow  in Alaska. It  is related                                                              
to the geothermal  gradient and shows  how fast heat is  coming to                                                              
the  surface. The  map shows  slightly elevated  heat flow  across                                                              
all  of  the  state,  which is  good.  "That  makes  us  excited."                                                              
However, the devil's  in the details. He zoomed in  on the map and                                                              
looked at  actual data points "that  they're making this  map on."                                                              
He  said,  "That  triangle, right  there,  constrains  that  whole                                                              
area. There's  only one data point  in that whole area  that tells                                                              
you that.  The hot springs are  used in that, of  course, however,                                                              
again, I  told you those  big faults that  run through  the center                                                              
part of  the state,  those hot  springs are  localized because  of                                                              
those  big   faults;  that  doesn't   mean  you  have   heat  flow                                                              
associated  like  that  across  the entire  state  or  across  the                                                              
entire  area.  So,  again,  you have  to  put  these  things  into                                                              
context." He  showed a map  of the Aleutian  Peninsula and  of the                                                              
wells drilled  looking  for oil and  gas. The  wells provide  data                                                              
showing temperature  at depth, which will "help  us constrain what                                                              
our heat flow is, help us constrain what those gradients are."                                                                  
                                                                                                                                
10:20:27 AM                                                                                                                   
MR.  SWENSON  said  the gradients  show  a  tremendous  amount  of                                                              
variability. He  pointed to a  gradient of 3.56° C per  100 meters                                                              
and said  it is a very common  geothermal gradient. There  is also                                                              
a gradient of [2.2 ° C per 100 meters],  which is relatively cold.                                                              
Most  of  the  wells  in  that  area  show  a  normal  continental                                                              
gradient because  of the thick  crust and  the depth to  the Moho.                                                              
But  right in  a volcano,  one gradient  is 5.43° C,  and that  is                                                              
relatively  high.  "So you  can  assume  that these  are  actually                                                              
getting  closer  to  some  type  of  heat  source,  obviously  the                                                              
intrusions  that  come  up  through  the  crust  in  the  volcanic                                                              
areas." He  showed those gradients on  a plot. He added  Chena and                                                              
Makushin points on  the graph. Makushin is in  the Aleutian chain,                                                              
and it  is by  far the  best chance  for geothermal  power in  the                                                              
state.  The shallower  it  is the  less it  will  cost to  produce                                                              
electrical power.  Drilling costs are  in the packet.  The average                                                              
drilling cost  in the Prudhoe Bay  area is about $1,800  per foot.                                                              
A 10,000-foot  well  would cost  $18 million  at a  minimum. In  a                                                              
remote area,  costs rise  to $3,500  per foot. [Geothermal]  works                                                              
well in  Chena because  it is  shallow and  hot enough  to produce                                                              
kilowatts. But finding  heat near the surface is just  part of the                                                              
story. Porosity/permeability is another factor.                                                                                 
                                                                                                                                
10:24:02 AM                                                                                                                   
MR. SWENSON  showed a  slide of a  microscopic view of  sandstone,                                                              
and he  pointed out  the spaces between  the grains,  which define                                                              
the   porosity  and   is  where   the  fluid   will  reside.   The                                                              
interconnection  of the spaces  defines the permeability.  "That's                                                              
how you can flow  water through rock." It is very  important. Each                                                              
rock will have  different porosity and permeability,  so he showed                                                              
a  graph  of  Cook  Inlet  sandstones.   "Tight  sands"  have  low                                                              
porosity  and very  low  permeability,  and they  house  a lot  of                                                              
resource, but it  is incredibly hard to get at. He  pointed on the                                                              
graph where  the hot  rock will lie.  He said to  look at  a place                                                              
with  natural fractures  that will  allow fluids  to move  through                                                              
the rocks.  The big faults in the  state are very good.  The fluid                                                              
moves  through   and  picks  up   the  heat.  There   are  "direct                                                              
indicators" of  a resource, like  hydrocarbon. He showed  an image                                                              
of a  natural oil seep  in southern Alaska.  It was the  first oil                                                              
field  in the  state. Another  direct  indicator would  be a  flat                                                              
spot  that   denotes  contact   between  gas   and  water.   Those                                                              
indicators tell explorers  where to drill. He showed  a hot spring                                                              
that  has gas bubbling  out  of it in  the Port  Moller area.  The                                                              
water  coming  out is  about  160  degrees.  There  is a  pile  of                                                              
clamshells that Native Alaskans had cooked on the heat.                                                                         
                                                                                                                                
10:27:23 AM                                                                                                                   
MR. SWENSON  spoke of direct  geothermal indicators.  Geysers like                                                              
the one he  showed is one. The  geologic survey is taking  all the                                                              
subsurface  information  that it  can  find that  has  temperature                                                              
information  with  it.  It  is  making  geothermal  gradients  and                                                              
looking for  any anomalies - or  hot rocks closer to  the surface.                                                              
Most of  the North  Slope has relatively  constant gradients,  but                                                              
there are elevated temperatures that need to be analyzed.                                                                       
                                                                                                                                
MR. SWENSON  showed  a map of  all the  surface manifestations  of                                                              
the   geothermal   resources   in  the   state,   color-coded   by                                                              
temperature.   Most   have   a   low   temperature.   The   higher                                                              
temperatures  tend  to  be  out   in  the  Aleutian  chain  or  in                                                              
Southeast  Alaska. How  is  this  going to  help  people in  rural                                                              
Alaska?  There   are  viable  opportunities  for   geothermal.  He                                                              
plotted all Alaska  villages with more than 100  people. "It's not                                                              
going  to impact  a tremendous  number of  communities in  Alaska,                                                              
but there are opportunities."                                                                                                   
                                                                                                                                
10:29:42 AM                                                                                                                   
MR. SWENSON said  the types of geothermal systems  are categorized                                                              
by temperature,  depth,  and steam  or fluid type  (steam has  the                                                              
best  BTU per  unit of  fluid). Most  of  what Alaska  has is  low                                                              
temperature;  however, there  are things like  Makushin, which  is                                                              
steam and  hot water  at relatively  shallow depths. There's  lots                                                              
of research going  on; a lot of the "frac technology"  is actually                                                              
being  developed  within  the oil  and  gas  industry.  Geothermal                                                              
surface  manifestations  are  very  odd; one  doesn't  always  see                                                              
geysers.   Such   things  get   put   in  national   parks,   like                                                              
Yellowstone,  where the  geothermal potential  is incredible.  The                                                              
same thing is going on in Alaska, like Katmai National Park.                                                                    
                                                                                                                                
10:32:54 AM                                                                                                                   
MR.  SWENSON  referred  to  geo-hazards,  and said  that  most  of                                                              
Alaska's  volcanoes   have  eruptive  histories  with   some  very                                                              
violent  eruptions, and  that is  a problem. He  noted three  that                                                              
erupted this last  summer, and Mt. Redoubt is on  watch right now.                                                              
He  showed photos  of Kasatochi  prior to  this summer's  eruption                                                              
and after  the eruption. "It  was a great  bird rookery; it  was a                                                              
beautiful little  island, but this is  what it looks like  now. So                                                              
we  have to  be very,  very careful  about  where we  do site  any                                                              
types  of  geothermal   facilities  because  of   the  geo-hazards                                                              
associated   with  that."   In   summary,   there  is   geothermal                                                              
potential,  but  there is  a  lot  of work  to  do  and a  lot  of                                                              
hurdles.  It should  make  up part  of Alaska's  energy  portfolio                                                              
over the next 15 to 20 years.                                                                                                   
                                                                                                                                
10:34:15 AM                                                                                                                   
SENATOR STEDMAN suggested  Mr. Swenson come back  to the committee                                                              
and discuss the regions in greater detail.                                                                                      
                                                                                                                                
CHAIR MCGUIRE agreed,  and she asked that he specify  the areas in                                                              
rural Alaska that could use geothermal energy.                                                                                  
                                                                                                                                
SENATOR WIELECHOWSKI asked about Mt. Redoubt.                                                                                   
                                                                                                                                
MR. SWENSON said  currently there is a sustained  group of tremors                                                              
below the  earth that  are related  to fluid  movement. The  fluid                                                              
movement could just  be hydrothermal fluid moving up  from a magma                                                              
source. But  experts say  that an  eruption is "pretty  imminent."                                                              
This  type  of fluid  movement  doesn't  occur  without  something                                                              
happening  at the  surface, and  it is  most likely  within a  few                                                              
days. "Even  from what  they're seeing,  they  can't tell you  how                                                              
big  of an  eruption  it's going  to be."  There  was very  little                                                              
seismic activity  prior to the Kasatochi  eruption, and "it  was a                                                              
huge eruption." It  could just blow out a bit of  ash or "it could                                                              
be something like 1982."                                                                                                        
                                                                                                                                
10:36:57 AM                                                                                                                   
SENATOR HUGGINS asked what the prevailing winds are.                                                                            
                                                                                                                                
MR.  SWENSON  recommended  the  website  for  the  Alaska  Volcano                                                              
Observatory (AVO). Real-time data is presented there.                                                                           
                                                                                                                                
10:38:02 AM                                                                                                                   
The committee took an at-ease.                                                                                                  
                                                                                                                                
10:38:45 AM                                                                                                                   
^Gwen Holdmann, Alaska Center for Energy and Power                                                                              
                                                                                                                                
GWEN  HOLDMANN,  Director,  Alaska  Center for  Energy  and  Power                                                              
(ACEP), Fairbanks,  said ACEP  is a program  of the University  of                                                              
Alaska. The first  geothermal power was produced in  Italy in 1904                                                              
from a  dry steam  field and is  similar to  the "the Geysers"  in                                                              
California.  Those are  the two  world-class geothermal  resources                                                              
and  are the  easiest  resources  for  power generation.  The  dry                                                              
steam coming  out is used directly  in a steam turbine  cycle. The                                                              
water-dominated   systems,  like   in  the   Imperial  Valley   of                                                              
California,  were not  brought on  line  until 1979.  That is  the                                                              
technology  used at  Chena Hot Springs.  She showed  a graphic  of                                                              
how geothermal power  is generated, "and the important  thing here                                                              
is to  note that there  is both  production and injection  wells."                                                              
The wells produce  a geothermal fluid  to be used in some  kind of                                                              
power-generation  schedule.   Most  of  the  time   the  fluid  is                                                              
reinjected in the  ground to make sure the reservoir  is developed                                                              
sustainably. "You're  mining heat out  of the earth, and  you want                                                              
to be careful to  do that in a sustainable way,  and the injection                                                              
part  of this  system is  actually  super, super  critical ...  in                                                              
terms of maintaining heat and not overdeveloping the system."                                                                   
                                                                                                                                
10:41:02 AM                                                                                                                   
MS.  HOLDMANN said  steam  power-plant  technology  is similar  to                                                              
plants  that use  things  like coal  or nuclear  power  as a  heat                                                              
source.  The  heat  develops  steam that  drives  the  turbine.  A                                                              
binary  power plant,  developed in  the  late 1970s,  is a  little                                                              
different,  and that is  the one  used at  Chena Hot Springs.  The                                                              
water is not  hot enough to boil,  so steam can't be  generated at                                                              
atmospheric  pressure.  Instead,  a  fluid with  a  lower  boiling                                                              
point than  water is  boiled into  a vapor to  drive a  turbine. A                                                              
hydrocarbon or refrigerant is used.                                                                                             
                                                                                                                                
10:42:11 AM                                                                                                                   
MS.  HOLDMANN said  geothermal energy  is definitely  on the  rise                                                              
world  wide -  "pretty  dramatically." The  United  States is  the                                                              
only country  where geothermal  energy use  has dropped,  and that                                                              
is  because of  problems  developing  the Geysers  in  California,                                                              
which  is the  largest developed  field  in the  world. There  are                                                              
problems. It  is now injecting waste  water from sewage  plants to                                                              
sustain the steam production.                                                                                                   
                                                                                                                                
MS. HOLDMANN noted  the Chena Hot Springs site.  Geothermal is one                                                              
of   the  few   sustainable   energy   sources  that   are   truly                                                              
dispatchable. It  is there when you need  it and can be  used as a                                                              
base  load, in  contrast to  wind,  solar, or  hydro power,  which                                                              
have   daily,    hourly,   or   seasonal   fluctuations.    United                                                              
Technologies built  and designed the  plant at Chena  Hot Springs.                                                              
It  is  the  only  [geothermal]  power  plant  in  Alaska.  United                                                              
Technologies is  a Fortune 500 company  and is very  interested in                                                              
Alaska,  "and   it's  been  interesting   to  see  how   they  fit                                                              
developing kind  of cutting-edge emerging technologies  into their                                                              
business  model." This  is their  number one product  that  it has                                                              
developed over the  past couple of years, and the  company if very                                                              
excited  to talk  about it  being "Alaska  tough" while  marketing                                                              
it.                                                                                                                             
                                                                                                                                
MS. HOLDMANN  said the University  of Alaska is a  big participant                                                              
in  the  geothermal   exploration  programs  and   the  greenhouse                                                              
project.  The  power plant  project  was  funded with  a  $250,000                                                              
grant  from the  Alaska Energy  Authority.  The Denali  Commission                                                              
was  involved. The  Department of  Energy  funded the  exploration                                                              
program at Chena.  The first well was drilled in  1998, and all of                                                              
the buildings  on the property  are heated with  geothermal water,                                                              
which  is 165°  F.  The temperature  is  low  on the  spectrum  of                                                              
geothermal  heat. Yearly  energy savings are  about $500,000  just                                                              
in heating.                                                                                                                     
                                                                                                                                
10:45:08 AM                                                                                                                   
MS.  HOLDMANN said  Chena  Hot Springs  also  has greenhouses  and                                                              
gardens with crops  grown year-round. The green  house project was                                                              
completed in  2006, and it  is 5,000 square  feet. It  requires 60                                                              
kilowatts  for   lighting.  Without  the  geothermal   plant,  the                                                              
project  would not  be possible,  even with  the geothermal  heat.                                                              
The  Aurora Ice  Museum  was her  favorite  project  that she  was                                                              
involved in. It  uses heat to drive a refrigeration  cycle instead                                                              
of  electric  power   to  drive  a  compressor.  It   is  not  new                                                              
technology  but  it  has  never   been  applied  to  such  a  low-                                                              
temperature  resource. It  is the  only place  in the world  using                                                              
geothermal heat  for absorption refrigeration. She  showed a photo                                                              
of  the equipment,  which  is only  four feet  wide  and six  feet                                                              
high. It is state  of the art. It can run off of  any kind of heat                                                              
source.  "Waste heat  at  165° F is  available  from every  single                                                              
diesel  generator in  rural Alaska,  and  we can  be doing  things                                                              
like that."  Kotzebue uses  a similar  kind of absorption  chiller                                                              
to make ice for the local fish industry.                                                                                        
                                                                                                                                
MS.  HOLDMANN said  resource exploration  is  very important.  The                                                              
original  reports  on  Chena  all   said  that  it  could  not  be                                                              
developed for  power generation  because of  not enough  heat. She                                                              
said  to keep that  in mind.  There may  be a  need to  reevaluate                                                              
existing resources in  light of newer technologies. A  big part of                                                              
the  Chena project  was  extensive  resource exploration  to  make                                                              
sure   that  the   injection  wells   were   sited  properly   and                                                              
sustainably.                                                                                                                    
                                                                                                                                
10:47:55 AM                                                                                                                   
MS. HOLDMANN  said the power  plant at Chena  is comprised  of two                                                              
200 kilowatt  units. A  third was  installed. They are  prototypes                                                              
and the first  ones in the  world ever built by  United Technology                                                              
for the  purpose of  power generation.  But several hundred  units                                                              
were sold "in the  meantime." The plant in Chena  was installed in                                                              
2006 using  about 900 gallons per  minute of the hot water.  It is                                                              
air and  water cooled.  Alaska has  good cold  water and  air. The                                                              
power  is  made from  the  difference  between  the hot  and  cold                                                              
temperatures,  or delta-T.  "If you  don't have  that much  on the                                                              
high side,  if you've got a  really low cold temperature  that you                                                              
can reject  heat to, then you  can actually still produce  quite a                                                              
bit  of  power.  And  that's  actually   something  that's  pretty                                                              
interesting  to  Alaska."  Even though  Chena  doesn't  have  high                                                              
temperatures,  the cold  can be used  to an  advantage. The  plant                                                              
has reduced the  cost of power from about $0.30  (using diesel) to                                                              
about  $0.05.  The  project  cost  about  $2.2  million,  and  the                                                              
savings are  about $500,000 per year.  So payback will  take about                                                              
six years. There  are additional revenue opportunities  because of                                                              
the draw to visitors to see the project.                                                                                        
                                                                                                                                
10:49:21 AM                                                                                                                   
MS. HOLDMANN  said a  binary power plant  is like a  refrigeration                                                              
cycle in  reverse. Hot water comes  in to the evaporator  side and                                                              
boils the  refrigerant, which  generates vapor.  The vapor  drives                                                              
the turbine.  The spent  vapor is recondensed  back into  a liquid                                                              
in a condenser. It could be with cold air or cold water.                                                                        
                                                                                                                                
10:49:56 AM                                                                                                                   
SENATOR WIELECHOWSKI said 160°F will not boil water.                                                                            
                                                                                                                                
MS. HOLDMANN  said the hot  water is not  boiling, so the  heat is                                                              
boiling a  refrigerant that  has a lower  boiling point.  It boils                                                              
at about 20°F. It is  a closed cycle, "so you would  hope that you                                                              
don't  ever lose  the refrigerant."  It is  simple technology.  It                                                              
will work off  of any low-grade heat source: waste  heat, biomass,                                                              
and a number of different options.                                                                                              
                                                                                                                                
10:50:31 AM                                                                                                                   
CHAIR MCGUIRE asked  if anyone has considered replication  of this                                                              
plant in rural Alaska.                                                                                                          
                                                                                                                                
MS. HOLDMANN said  there has been much discussion.  Her program is                                                              
assessing  smaller  units  for  waste   heat  recovery  on  diesel                                                              
generators in rural  Alaska. Chena Hot Springs  and the university                                                              
are  involved in  testing this  equipment using  biomass in  North                                                              
Pole as a demonstration project.                                                                                                
                                                                                                                                
10:52:14 AM                                                                                                                   
CHAIR MCGUIRE said  this committee will look at  biomass next. She                                                              
talked to  people from  Ocean Beauty Seafoods  about its  plant at                                                              
Naknek.  It is running  off of  diesel, and  there was  discussion                                                              
about using fish wastes.                                                                                                        
                                                                                                                                
MS.  HOLDMANN replied  that  that  is a  really  great topic.  Her                                                              
program has  done a lot of  research in using fish  byproducts for                                                              
power  generation  and  heating in  rural  communities.  Fish  oil                                                              
can't be thought  of as a fuel  the way that hydrocarbons  are; it                                                              
has a  shelf life so it  needs to be  thought of as food.  Once it                                                              
oxidizes  it   can  destroy  diesel   engines.  It  needs   to  be                                                              
stabilized as a fuel if it is not used "in the near term."                                                                      
                                                                                                                                
10:53:24 AM                                                                                                                   
MS.  HOLDMANN said  in 22,000  hours  of operation  in two  years,                                                              
there has  been very little down  time. It operates 95  percent of                                                              
the time. Capacity  is lower: the average output  is 175 kilowatts                                                              
when the boiler  nameplate was 200 kilowatts, and  that is because                                                              
of an engineering  issue with getting  enough water to it.  But it                                                              
has still  offset well  over 200,000  gallons  of diesel fuel  and                                                              
CO2. The  Chena project has gotten  a lot of attention  because it                                                              
was previously thought  that binary power needed  a temperature of                                                              
at  least 230°  F. Chena  has "blown  that  out of  the water  and                                                              
literally rewritten the  textbooks to say that 165  is now the bar                                                              
for  that."  It's  gotten  recognition.  It  got  the  top  power-                                                              
generating  project of  the  year award  in  the renewable  energy                                                              
category  by  "PowerGen"  magazine.  It  got  an  award  from  the                                                              
Department  of Energy. It  is nice  to see Alaska  on the  map for                                                              
such a project.                                                                                                                 
                                                                                                                                
10:55:21 AM                                                                                                                   
MS. HOLDMANN said  there have been spinoff projects.  She has been                                                              
involved  in trying  to deploy  this on  oil and  gas wells  using                                                              
heat that  is also  extracted. The  wells on  the North  Slope are                                                              
about 10,000  feet deep  where it  is about  165 degrees.  That is                                                              
enough  to   generate  power.  The   oil  and  gas   industry  was                                                              
approached   about  demonstrating   this  technology.   There  was                                                              
hesitancy, so a  private developer in Florida is going  to do that                                                              
as  a pilot  project.  Regarding a  proposed  bill, she  suggested                                                              
thinking  about  this idea.  She  noted  the biomass  power  plant                                                              
being built  in North  Pole, and she  said United Technologies  is                                                              
also building a 1-megawatt unit to test in Alaska and a 5-                                                                      
kilowatt unit for waste heat applications for rural Alaska.                                                                     
                                                                                                                                
10:56:48 AM                                                                                                                   
Wielechowski asked  how many houses  could use 1 megawatt,  and if                                                              
it is electricity and heat.                                                                                                     
                                                                                                                                
MS.  HOLDMANN  said  a  megawatt  could  serve  a  "hub"  village.                                                              
Kotzebue  or Nome  would  have about  5 megawatts  of  generation.                                                              
"We're   not  talking   about  heat   here,   and  that's   really                                                              
unfortunate."  Heat   is  a  big  issue  and  there   is  so  much                                                              
potential, but  ground-source heat pumps  need a hole  drilled. In                                                              
rural  Alaska  it  is  difficult  to be  cost  effective.  But  in                                                              
Juneau, there  are two  ground-source heat  projects going  in now                                                              
using  heat from  the  first couple  hundred  feet  of the  earth,                                                              
"which  is  almost  more  stored   in  solar  radiation  from  the                                                              
summer." It  is popular in  the Lower 48  and applicable to  a lot                                                              
of Alaska, but not all of it.                                                                                                   
                                                                                                                                
10:58:06 AM                                                                                                                   
SENATOR  WIELECHOWSKI  asked  how  many more  megawatts  would  be                                                              
needed to provide electric heat to a hub village.                                                                               
                                                                                                                                
MS. HOLDMANN guessed that it would triple the need.                                                                             
                                                                                                                                
10:59:11 AM                                                                                                                   
MS. HOLDMANN  said Disneyland  is getting most  of its  power from                                                              
the same plant  that Chena Hot Springs  is using - from  a project                                                              
in Utah.                                                                                                                        
                                                                                                                                
MS.  HOLDMANN said  enhanced  [or engineered]  geothermal  systems                                                              
(EGS) create  artificial geothermal  systems. The U.S.  Department                                                              
of Energy  is betting  heavily on  it. Almost  all of the  funding                                                              
for geothermal  is going into  it. It involves waters  percolating                                                              
through  rock  toward heat  and  coming  back  up to  the  surface                                                              
somehow. In  several places  in the  world artificial systems  are                                                              
being  created.  "So  you're  creating  production  and  injection                                                              
wells  and you're  actually  fracturing  rock or  finding  natural                                                              
areas of  high permeability and  porosity ... and  you're actually                                                              
pumping  water  into  a reservoir  and  then  reproducing  it  and                                                              
mining  this heat  from the  reservoir for  power generation."  It                                                              
suddenly  opens  up  a  much  broader  area  where  geothermal  is                                                              
possible.  "Right  now  we're depending  on  natural  hydrothermal                                                              
systems  to  basically mine  this  heat  and  bring water  to  the                                                              
surface that  we can use  and power generation  cycles; if  we can                                                              
create these  kind of artificial  cycles in different  places, now                                                              
we're   looking  at   areas  that   have   just  higher   elevated                                                              
temperature gradients  that we could be using  for geothermal. And                                                              
that  suddenly  opens up  a  much bigger  part  of  the state  for                                                              
possible geothermal  development." She  calls it a  "game changer"                                                              
and a pretty big deal.                                                                                                          
                                                                                                                                
11:01:12 AM                                                                                                                   
SENATOR HUGGINS  asked about  subterranean  combustion of  coal in                                                              
coalfield sites. "Injecting water on top of it."                                                                                
                                                                                                                                
MS. HOLDMANN  said that  has been  discussed, especially  with un-                                                              
minable coal seams.  The coal gets combusted in situ,  and the gas                                                              
is used  for power  generation. It  is being done  in a  couple of                                                              
pilot projects around the world.                                                                                                
                                                                                                                                
MS.  HOLDMANN said  EGS  increases  the potential  for  geothermal                                                              
energy "by  an order  of magnitude."  MIT has done  a lot  of work                                                              
estimating  the economics,  and it  predicts a  cost of 3.5  cents                                                              
per kilowatt  in the  long term.  It is  not accurate for  current                                                              
projects.  There  are  no  commercially  viable  projects  in  the                                                              
United States.  There have been  demonstration projects  only. The                                                              
ones done  elsewhere are  based on  incentive programs  that don't                                                              
exist  in this  country. Alaska  should look  for potential  areas                                                              
where an  EGS project could be  done and evaluate a  pilot project                                                              
in a controlled  setting with high  resource potential. An  EGS is                                                              
being developed  in the  Cooper Basin in  Australia, and  there is                                                              
the  potential  for 5  to  10 megawatts.  That  is  like  5 to  10                                                              
nuclear  power plants.  There are  six small ones  in Europe  that                                                              
are operating and  are connected to the grid. The  reason why they                                                              
work  is based  on policy  and feed-in  tariffs that  give a  good                                                              
price for  that power.  Those settings  in Europe  are similar  to                                                              
places  in Interior  Alaska;  they  are associated  with  granitic                                                              
formations and elevated  heat flow like at Chena,  "but there's no                                                              
surface expression  - they're creating this  artificial geothermal                                                              
system."                                                                                                                        
                                                                                                                                
11:04:36 AM                                                                                                                   
MS.  HOLDMANN  said ACEP  proposed  a  pilot  EGS project  to  the                                                              
Department  of Energy  in  January, 2008.  It  was in  partnership                                                              
with several  national labs that  had developed this  concept, and                                                              
the  plan was  to  use supercritical  CO2  instead  of water.  "So                                                              
essentially  liquefy CO2  and use  that as  the heat  transmission                                                              
fluid instead  of water."  CO2 has  a much  lower viscosity  so it                                                              
will move  through tight formations  more easily. It  doesn't gunk                                                              
up rock with  mineralization, and it  is more buoyant, so  as it's                                                              
heated up,  it wants to come back  up to the surface,  which takes                                                              
less energy to pump. This has never been done.                                                                                  
                                                                                                                                
11:06:02 AM                                                                                                                   
MS.  HOLDMANN said  there is  a high  likelihood  that the  Arctic                                                              
Ocean will  be seasonally  ice-free in  the next several  decades.                                                              
The  focus in  the Aleutians  has been  on surface  manifestations                                                              
and resources  that are close  to population centers.  Iceland has                                                              
taken  advantage  of  developing   mineral  processing  industries                                                              
around  stranded  and  renewable  energy resources,  and  this  is                                                              
something  we  should take  another  look  at, because  as  Arctic                                                              
shipping routes open  up, Alaska becomes part of  a major shipping                                                              
route.  There are  issues with  land  ownership, but  it is  worth                                                              
taking a look at.                                                                                                               
                                                                                                                                
11:06:27 AM                                                                                                                   
The committee took an at-ease.                                                                                                  
                                                                                                                                
11:11:19 AM                                                                                                                   
^Chris Rose, Renewable Energy Alaska Project                                                                                    
                                                                                                                                
CHRIS ROSE,  Executive Director,  Renewable Energy Alaska  Project                                                              
(REAP),  Anchorage, noted  that  the previous  speakers  discussed                                                              
the  resource  and  the  technology,  and he  will  give  a  broad                                                              
perspective  of geothermal  and policies  of renewable  resources.                                                              
Making  policy   needs  consensus,  so  REAP  has   been  bringing                                                              
stakeholders  together,  including   small  and  large  utilities,                                                              
environmental  consumer groups,  Native organizations,  government                                                              
agencies, and businesses  in support of increasing  the production                                                              
of renewable  energy. "We  really see  ourselves as a  development                                                              
group to develop  these resources." REAP has 21  board members and                                                              
many contributing  members. There  are 60 members  statewide. REAP                                                              
is advocating  for and  educating people about  six main  types of                                                              
renewable energy:  wind, geothermal,  biomass, tidal/wave,  hydro,                                                              
and  solar.  As  the  cost of  conventional  fuels  goes  up,  the                                                              
stability of a nonfuel resource is showing its importance.                                                                      
                                                                                                                                
11:14:30 AM                                                                                                                   
MR. ROSE said there  are upfront capital costs but  no fuel costs.                                                              
Once those capital  costs are in, there will be no  fuel costs and                                                              
business  can   calculate  the  cost   of  power.  That   is  very                                                              
attractive  to   businesses.  Iceland   has  been  successful   in                                                              
attracting industry.  Bauxite is  being shipped from  Australia to                                                              
Iceland  to make aluminum  because  they can get  a 20-year  fixed                                                              
contract. Renewables  are clean,  and that  plays into  the carbon                                                              
risk. There  will be prices on  carbon. Renewable fuel is  a local                                                              
resource, and it  is inexhaustible. "We have been  very blessed to                                                              
have all these  fossil resources that we've been  developing." But                                                              
looking  at Chevron's  data shows  that it  has used  half of  the                                                              
conventional  oil in  the last  150  years. The  extraction of  it                                                              
will  peak  and  will  drive  the   price  up  even  higher.  With                                                              
renewable  resources, "you  can  be assured  that  once you  start                                                              
investing  in them,  you're  not going  to run  out  of the  wind;                                                              
you're   not  going   to  run  out   of  the   water.  These   are                                                              
inexhaustible  resources."  With geothermal,  one  needs  to be  a                                                              
little more careful.                                                                                                            
                                                                                                                                
11:16:56 AM                                                                                                                   
MR.  ROSE   said,  "We  really   see  renewable  energy   as  risk                                                              
management."  There  are  many  risks,   including  price.  He  is                                                              
expecting a  huge increase in demand  for energy resources  on the                                                              
planet,  and he showed  a graph  of that  increase. Currently  the                                                              
planet  is using 400  quadrillion  BTUs, and that  is expected  to                                                              
double  by 2050  and quadruple  by 2100.  Emerging economies  like                                                              
India, China,  and Brazil  want to  use as much  energy as  we do,                                                              
and that will  cause a huge demand  curve for energy. Oil  is used                                                              
for transportation,  and  2/3 of the  world's proven  conventional                                                              
oil  reserves are  in five  countries  in the  Middle East.  Saudi                                                              
Arabia  has about  25 percent  of the  easy, cheap  oil. There  is                                                              
geopolitical  risk and there  is a finite  supply of  these proven                                                              
conventional reserves.                                                                                                          
                                                                                                                                
11:18:16 AM                                                                                                                   
MR. ROSE  said another part of  the risk involves  climate change,                                                              
and that  is why  there will  be a  price on  carbon. He finds  it                                                              
interesting  how  insurance  companies are  thinking  about  that.                                                              
Swiss Re  is the second  largest insurance  company in  the world,                                                              
and  it stated:  "For  Swiss Re,  climate change  is  more than  a                                                              
scientific  issue. It is  a financial  issue." Swiss  Re is  a re-                                                              
insurance  company  that insures  the  State  Farms and  the  All-                                                              
States of the world,  and it has to pay for  the erratic climactic                                                              
events around the  world that are being associated  with increased                                                              
emissions  of greenhouse  gases. Swiss  Re has  had a  greenhouse-                                                              
reduction mismanagement  unit for almost  a decade, because  it is                                                              
hitting its  pocket book. Big companies  all around the  world are                                                              
saying that people  have to do something. He showed  photos of the                                                              
melting polar ice cap.                                                                                                          
                                                                                                                                
11:19:42 AM                                                                                                                   
MR.   ROSE  said   the   U.S.  Supreme   Court   ruled  that   the                                                              
Environmental   Protection  Agency   could  regulate   CO2   as  a                                                              
pollutant under  the Clean Air Act.  EPA has acknowledged  that it                                                              
may  have to  start looking  at  CO2 as  a  pollutant, and  "we're                                                              
certainly going  to see  that in  this new administration."  There                                                              
are already  many proposals in Congress  - everything from  a cap-                                                              
and-trade  to  a  carbon  tax. Big  utility  companies  have  been                                                              
looking  at this for  awhile and  integrating  the risk of  carbon                                                              
into their  plans. The  price of carbon  under the Kyoto  Protocol                                                              
has been fluctuating over the past several years.                                                                               
                                                                                                                                
11:21:23 AM                                                                                                                   
MR. ROSE  said there  is a  voluntary market  for "green  tags" or                                                              
renewable  energy certificates  that has  put a  price on  carbon.                                                              
The renewable  energy industry has  been taking advantage  of this                                                              
for  some time  by acknowledging  that there  is an  environmental                                                              
benefit to  producing renewable energy  creating a market  for the                                                              
displacement of  emissions. REAP  helped small villages  get money                                                              
for their wind power. Those offsets are sold on the open market.                                                                
                                                                                                                                
MR.  ROSE  showed  a  photo  of  a  hydrogen  filling  station  in                                                              
Reykjavik,  and said,  "I think  this  is the  biggest risk  we've                                                              
got. This is an  exploding business. This is a $55  billion a year                                                              
market right  now, expected  to quadruple in  the next  six years.                                                              
This is a  very big business  opportunity, and because we  have so                                                              
many renewable  resources here in  Alaska, we have a  great chance                                                              
to  get in  on it."  He  showed a  list of  some  companies -  all                                                              
foreign companies -  that are really into the  clean energy market                                                              
and are  making "lots  and lots  of money  doing it."  Mid-America                                                              
Energy,  owned by  Warren  Buffet, is  investing  heavily in  wind                                                              
energy in  the Midwest.  Companies that  are in fossil  industries                                                              
are investing  heavily in wind. It  is the fastest  growing energy                                                              
sector  in the  world. Wind  was 35  percent of  all new  electric                                                              
generation in the United States last year.                                                                                      
                                                                                                                                
11:23:27 AM                                                                                                                   
MR. ROSE  showed a  photo of  the Geysers,  the largest  developed                                                              
geothermal  resource in  the world.  It has  been near  Calistoga,                                                              
California for the  past 30 years. It provides  1,000 megawatts of                                                              
power for  a million people.  Geothermal power is  being generated                                                              
at 22  different sites.  A lesson  was learned  because water  was                                                              
not  re-injected  and the  resource  became  depleted.  Production                                                              
declined, and  now treated  wastewater is  being pumped  back into                                                              
the  ground.  Especially  in  an   arid  climate,  water  must  be                                                              
reinjected after  it has been  used to generate power.  Geothermal                                                              
is available almost  100 percent of the time -  the most available                                                              
of any  resource. He  showed a  map of  tectonic plate  boundaries                                                              
around the world  and a map of where developed sites  are. Most of                                                              
the  geothermal activity  is  in the  west -  close  to the  plate                                                              
boundaries.  Sites  are found  in  the Philippines,  New  Zealand,                                                              
Iceland, South and Central America, and the American west.                                                                      
                                                                                                                                
11:25:53 AM                                                                                                                   
MR.  ROSE showed  a photo  from Iceland.  There is  a power  plant                                                              
called Nesjaviller,  about 20 miles  from Reykjavik, and  it makes                                                              
electricity and  then pumps  hot water in  a pipe above  ground to                                                              
Reykjavik.  It pumps  hot water  20 miles  in a  cold climate  and                                                              
loses  2 to  3° F over  that difference.  Half of  the water  that                                                              
heats a population  of 180,000 people goes to  Reykjavik this way.                                                              
The other  half comes from wells  that are drilled right  in town.                                                              
Alaska is not on  top of such a zone and can't do  that. He showed                                                              
a photo  of six  huge storage tanks  that store  the water.  It is                                                              
then gravity fed to  the rest of the city. There  are 808 miles of                                                              
distribution  in  the  city  and   50  bore  holes.  A  person  in                                                              
Reykjavik  will encounter  little  shacks with  steam coming  out,                                                              
perhaps  in  a bank  parking  lot.  That  is  the well  house  for                                                              
collecting warm water.  Mr. Rose noted that the  town is extremely                                                              
expensive, but  heating costs are  extremely cheap. Iceland  has a                                                              
"total well concept."                                                                                                           
                                                                                                                                
11:27:51 AM                                                                                                                   
MR.  ROSE said  that same  water will  be used  many, many  times.                                                              
When  the   water  is  the  hottest,   it  is  used   to  generate                                                              
electricity, then the  water is used to heat homes  and buildings,                                                              
then it is  used for outdoor swimming  pools, and then  it is used                                                              
in the  streets to melt  snow, and then the  water is dumped  at a                                                              
"beach" in the summer  for recreation. A lot of the  water is used                                                              
for fish  farming, industry,  and greenhouses.  Using the  heat of                                                              
the water  is called  "direct-use" of  geothermal. "There's  a guy                                                              
in  Idaho  who's   raising  alligators  and   there's  snow-capped                                                              
mountains in the background."                                                                                                   
                                                                                                                                
11:29:02 AM                                                                                                                   
MR. ROSE  said the  Federal Production  Tax Credit  is by  far the                                                              
most  important   federal  policy  to  support   renewable  energy                                                              
development in  the United States. It  was passed in the  1990s to                                                              
level  the playing  field  between the  subsidies  that have  been                                                              
given to  the oil,  gas, coal,  and nuclear  industries over  many                                                              
decades. It  is a production  credit similar to  the legislature's                                                              
bill.  It is  not an  upfront subsidy  or  grant, it  incentivizes                                                              
people  to go  out  and  produce the  power,  and then  for  every                                                              
kilowatt produced,  "you give  them something,  and in  this case,                                                              
you get a  tax credit. This is  very good for people  who have tax                                                              
appetites;  it doesn't really  help the  co-ops, for instance,  in                                                              
Alaska  because  they  don't  pay  taxes."  But  it  has  been  an                                                              
important policy.  It is 1.9 cents  per kilowatt and that  adds up                                                              
to millions of  dollars for big wind farms, for  example. Congress                                                              
has been authorizing  this only one to two years at  a time, so it                                                              
creates   a  "stop-start"   industry.   There   is  no   long-term                                                              
certainty.  A  company  building   a  $500  million  wind  turbine                                                              
factory would want some certainty in this policy.                                                                               
                                                                                                                                
11:30:46 AM                                                                                                                   
MR. ROSE  said Europe  has 20  years or  more of certainty,  which                                                              
gives investors a  lot more confidence. It is the  same thing when                                                              
dealing with  Alaska's gas line.  Congress supports a  longer term                                                              
tax  credit,  but  since  everyone  wants  it, it  is  used  as  a                                                              
"sweetener" in a  lot of deals made in Congress.  It is a ten-year                                                              
tax credit,  so the  Congress that  reauthorizes  is "on the  hook                                                              
for all the  payments to go out  for that next ten years.  So once                                                              
you're  in  the  ground  before  the  deadline,  it's  a  ten-year                                                              
credit."  It was  recently  reauthorized  again,  and it  included                                                              
wind for  one year and geothermal  for two years. "So  there's not                                                              
even consistency between technologies."                                                                                         
                                                                                                                                
11:31:49 AM                                                                                                                   
SENATOR HUGGINS asked what the annual price tag is.                                                                             
                                                                                                                                
MR. ROSE said  he could get that  data. As a result of  the start-                                                              
stop activity,  the states tend to  lead the way on  policy. There                                                              
are  two  kinds   of  policies.  One  is  a   renewable  portfolio                                                              
standard,  which is  a mandate. He  said 26  states have  mandates                                                              
and 4 more have  goals. Most of these were done  legislatively and                                                              
a  few  were  based  on  initiatives.   California  has  the  most                                                              
aggressive mandate: 20 percent [renewable energy] by 2010.                                                                      
                                                                                                                                
11:32:30 AM                                                                                                                   
CHAIR  MCGUIRE   asked  how  to  distinguish  between   goals  and                                                              
mandates.                                                                                                                       
                                                                                                                                
MR.  ROSE said  it  varies from  state  to state.  A  goal has  no                                                              
teeth.  The states  with mandates  can have  weak enforcement  for                                                              
utilities  that   don't  meet  the   standards  of   the  mandate.                                                              
California is driving  a lot of technology development  because it                                                              
is the  sixth biggest economy  in the world,  and it  is requiring                                                              
that  20 percent  of  all  its electricity  comes  from  renewable                                                              
sources by next  year. The state laws have driven  a lot of policy                                                              
changes.  Some states  collect  surcharges  on electric  bills  to                                                              
fund energy efficiency and renewable energy projects.                                                                           
                                                                                                                                
MR.  ROSE  said  feed-in  tariffs have  been  very  successful  in                                                              
driving geothermal,  solar,  and wind development  in places  like                                                              
Europe. A feed-in  tariff is when a government  mandates a certain                                                              
above-market  price be  paid for  renewable  energy technology  or                                                              
resources. It will  be a different price for  different resources.                                                              
Most places  are incentivizing  solar energy the  most. It  is the                                                              
most expensive  to begin with. In  Germany, anyone who  puts solar                                                              
electricity  back into  the grids  gets about  $0.50 per  kilowatt                                                              
hour.  "So  everybody  and  their  brother  is  putting  up  solar                                                              
panels."  It has  resulted  in a  lot  of installations  that  are                                                              
distributing all  around, which is  important if there is  a power                                                              
outage.  It  has  driven  the manufacturing  of  solar  panels  in                                                              
Germany.  Half of the  solar panels  in the  world go to  Germany.                                                              
Germany  has  less  solar  insolation  than  Alaska.  The  utility                                                              
company has  to pay those rates to  people who put power  into the                                                              
system, and  it can spread  that excess  to all of the  consumers.                                                              
So even  though there is  a huge premium  being paid,  the average                                                              
extra amount that  the average German pays is about  0.5 cents per                                                              
kilowatt hour.  It raises their total  utility bill by  3 percent.                                                              
These  policies  work  well  because   they  are  usually  20-year                                                              
contracts. Sometimes  there is a  de-escalating tariff,  giving an                                                              
incentive for efficiency  in power generation. It  is very useful.                                                              
Denmark has 20 percent  of its energy coming from  wind because of                                                              
a  similar policy.  Germany has  5  percent of  its energy  coming                                                              
from solar. Spain  gets 9 percent from wind. Feed-in  tariff ideas                                                              
began in  the United States,  but it fizzled  in the  early 1980s.                                                              
Germany  picked  up  the  model and  refined  it.  There  is  $2.5                                                              
billion extra  in Germany  that goes out  to these resources,  and                                                              
the program  creates 170,000 jobs.  Ontario is the first  place in                                                              
North America to really get into feed-in tariffs.                                                                               
                                                                                                                                
11:38:36 AM                                                                                                                   
MR.  ROSE said  Ontario  instituted the  feed-in  program in  2006                                                              
with  a 20-year  contract  to  incentivize  smaller systems  -  10                                                              
megawatt  and smaller.  Generators  pay all  interconnections  and                                                              
licensing  fees, and  the price  paid  for wind,  small hydro  and                                                              
biomass begin  at 11 cents per kilowatt  hour, and it is  42 cents                                                              
for solar photovoltaic projects.                                                                                                
                                                                                                                                
MR. ROSE  said the  fastest and  the "biggest  bang for  our buck"                                                              
comes from  energy efficiency  and  just using  less. He noted  an                                                              
excellent report  with nine recommendations from  the Cold Climate                                                              
Housing  and Research  Center. The  cheapest energy  is not  using                                                              
energy at all.                                                                                                                  
                                                                                                                                
11:39:15 AM                                                                                                                   
MR. ROSE  said the  Renewable  Energy Fund  is not  set up to  put                                                              
money into  pilot or  demonstration projects.  "We really  need to                                                              
have some kind  of an emerging energy technology  development fund                                                              
for Alaska."  It could be for  fossil and renewable  projects. The                                                              
money could  be leveraged with federal  dollars to put  into pilot                                                              
projects. In  the Lower 48,  no one would  want to figure  out how                                                              
to make  electricity out  of wood, yet  Alaska villages  could use                                                              
that.  The same  goes  for battery  storage  for small  utilities.                                                              
Alaska has  90 percent of the  country's potential and  50 percent                                                              
of  the nation's  tidal  power potential.  Alaska  is  in a  great                                                              
position to  be a leader  in that. There  are 2 billion  people on                                                              
the  planet  with  no  electricity   at  all.  Bush  Alaska  is  a                                                              
laboratory where  we can perfect  these kinds of systems  that can                                                              
be  marketed around  the world.  Icelanders are  going around  the                                                              
world and  helping with  geothermal plants.  "We could  be helping                                                              
people do  these small distributed  generation systems  around the                                                              
world." Also,  Alaska has such high  costs for energy we  could be                                                              
saving people money.                                                                                                            
                                                                                                                                
CHAIR MCGUIRE said absolutely.                                                                                                  
                                                                                                                                
11:41:00 AM                                                                                                                   
MR.  ROSE said  the long-term  forecast  for  a barrel  of oil  is                                                              
$110. Alaska can't  have a vibrant economy without  energy. Alaska                                                              
has money  and resources,  and it  should become  a world  leader.                                                              
"These   are  20   to   100-year   decisions."  There   is   aging                                                              
infrastructure and  demand for energy, so these  decisions need to                                                              
be  made in  the  next  five years.  Iceland's  vision  is a  good                                                              
example.  Icelanders  are  excited  and  proud  of  being  on  the                                                              
cutting edge. They are attracting a lot of development.                                                                         
                                                                                                                                
CHAIR MCGUIRE said  Mr. Rose has been very patient  with people in                                                              
the legislature who  have taken a lot of time to  catch up to this                                                              
vision.  The   committee  looks   forward  to  working   with  the                                                              
witnesses, and it  should start crafting energy  policy this year.                                                              
She saw an  attitudinal commitment to innovation  and to exporting                                                              
ideas that  make the world a  better place. There are  four areas.                                                              
One is  research and  development and money  that could  have come                                                              
out  of the  Alaska Science  and Technology  fund. Secondly  there                                                              
are proven  technologies and ideas  that state funds  can support.                                                              
Thirdly is the  transmission aspect, and fourthly  is the consumer                                                              
role.  There  seem  to  be  arbitrary  numbers  given  to  certain                                                              
projects that may or may not make them feasible.                                                                                
                                                                                                                                
MR.  ROSE  said  he  is  looking   forward  to  working  with  the                                                              
committee.                                                                                                                      
                                                                                                                                
11:45:59 AM                                                                                                                   
SENATOR WIELECHOWSKI  said this  is an  opportunity for  the state                                                              
and this  committee to  really put together  a plan.  "I'm excited                                                              
about it."                                                                                                                      
                                                                                                                                
11:46:21 AM                                                                                                                   
There  being no  further business  to come  before the  committee,                                                              
the meeting was adjourned at 11:46 a.m.                                                                                         
                                                                                                                                

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