Report: Alaska’s Railbelt can shift to renewables, but that would require big capital investment

Alaska’s most populous corridor can generate most of its electricity through renewable energy, but would require significant upfront capital investment, a University of Alaska Fairbanks team said in a new report.

The report, issued last week by UAF’s Alaska Center for Energy and Power, found that by 2050 non-fossil energy can supply anywhere from 70% to 96% of the power needed to produce electricity along the Railbelt. The region comprises communities from Fairbanks in the Interior to Seward on the Kenai Peninsula, the corridor along the Alaska Railroad line that hold the vast majority of the state’s population.

The report compared four scenarios for power generation, from a continuation of the current heavy reliance on natural gas to varying blends of solar, wind, hydro, tidal and nuclear energy.

Under the business-as-usual scenario, with continued use of existing power plants, some new fossil fuel units and continued use of wind and solar energy at current rates, renewables would supply 11% of energy to generate electricity, and required capital investment would be $2.3 billion.

The other scenarios would require much more investment: $7.7 billion for a mix integrating tidal power, wind and solar to achieve 70% renewable energy; $10.1 billion for a mix of wind, solar and small modular nuclear reactions to achieve 96% zero-carbon generation; and $11.8 billion for a mixture of large-scale hydro, wind and solar projects to achieve 88% renewable energy.

Findings were presented Friday during a meeting of the state Senate Resources Committee.

One takeaway from the report is that wind and solar are consistently the cheapest forms of energy, but that they have quantity limits, said Jeremy VanderMeer, a research assistant professor at ACEP and one of the report authors.

For that reason, there is a need to mix in hydropower, continued fossil fuel use, batteries or some combination of those, VanderMeer told the committee.

“You need firm sources or power. Firm just means you can rely on it to supply power whenever you need it,” he said.

Investment would target improvements in power transmission through the Railbelt communities, said Derek Stenclik, founding partner of Telos Energy, a company that specializes in isolated energy systems. Stenclik was a report coauthor.

“Transmission is really a key enabler for all of these portfolios,” Stenclik told the committee. Battery storage is another “key enabler,” and something that would prevent interruptions or blackouts, he said. 

While the need to invest $10 billion or so may seem daunting, that capital investment can be offset by future savings in annual operations costs, Steve Colt, an ACEP research professor and a report coauthor, told the committee.

“If we were able to make that kind of investment, we would have to pay a lot of money for capital, but we would potentially save three quarters of a billion dollars of fuel costs every year,” Colt told the senators. “So to me, that helps put in perspective the daunting challenge of investing maybe $10 billion, that you could save something approaching $1 billion every year for as long as the equipment operates.”

In the long term, costs of the four different scenarios evaluated in the report were largely equal, he said.

There is pending legislation that would address some of the needs described in the report.

In response to a question from Sen. Matt Claman, D-Anchorage, Stenclik said that legislation to establish a renewable energy portfolio standard, or RPS, would probably be helpful and could be important for the Railbelt.

He pointed to experience in the Lower 48, where plant development may be economically justified but where “having that RPS or having that policy backing provides the certainty to the investors and the certainty to the market to bring it to fruition,” he said, pointing to his experience in the Lower 48.

“I do think a lot of the projects would be economic in their own right today. But I think it does provide that certainty and the scaffolding that we can start using to build out a roadmap,” he said.

There are two pending versions of that legislation, House Bill 121 and Senate Bill 101, but neither made it to the House or Senate floor last year.

Additionally, said resources committee Co-Chair Cathy Giessel, R-Anchorage, legislation is in the works to help upgrade the transmission system.

Work on the report started in 2022. It was funded by the federal government through the Office of Naval Research and by the state, ACEP said. Railbelt utilities and the Alaska Energy Authority helped in the research, and Telos provided modeling and analysis support, ACEP said.

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