In about a year there could be a few more wind turbines dotting the horizon west of Anchorage, thanks to a Fairbanks utility.
Golden Valley Electric Association and Cook Inlet Region Inc. jointly announced Wednesday that they have agreed to the framework of a deal that would double the number of wind turbines on Fire Island just off Anchorage in Cook Inlet.
About a $50 million project, Phase 2 of CIRI’s Fire Island Wind project would add another 11 large turbines to the group that was installed in 2012.
Golden Valley CEO Corey Borgeson said in an interview that his electric utility and CIRI have reached a term sheet but are still negotiating the finer points of what is ultimately an extremely complex purchase and sale agreement. He said he fully expects a contract to be finalized and added that he would “welcome the other utilities in joining” Golden Valley to purchase power from Phase 2 of the Fire Island project.
“(The agreement) is not done yet but we’re very optimistic and committed to bringing this independent power producer online,” Borgeson said.
CIRI, the Southcentral Alaska Native regional corporation, has been actively and publicly soliciting the Railbelt utilities to partner to expand its wind farm since the first 11 turbines came online in September 2012.
Chugach Electric Association agreed to a 25-year deal to purchase power from Phase 1 of Fire Island for 9.7 cents per kilowatt-hour.
The framework deal currently being discussed calls for a 25-year purchase agreement with an electricity price escalating from a base price potentially as low as 5.6 cents per kilowatt-hour, the joint release states.
A final agreement would require approval from the Regulatory Commission of Alaska.
CIRI’s push to get Phase 2 built is do in large part to its ability to capture a 30 percent federal Business Energy Investment Tax Credit for the capital cost of the project.
CIRI Senior Energy Development Director Suzanne Gibson described the rough deal CIRI is working on with Golden Valley as “sort of our last gasp at getting (the tax credit) while the getting is good.”
The Consolidated Appropriations Act signed last December, a federal spending bill, extended tax credits for numerous types and sizes of renewable energy projects, including Fire Island. Gibson said as long as it is completed by the end of 2017, CIRI expects to receive the incentive, as opposed to the original end of 2015 deadline.
Phase 1 of Fire Island was also spurred by a $25 million state grant to fund most of the cost for the underwater transmission line to connect the wind farm to Anchorage.
Gibson said the prospect of a significantly lower price for Phase 2 power is due in large part to infrastructure — operations and maintenance buildings, roads, transmission lines — and personnel that are already in place from Phase 1.
The 11 turbines on Fire Island today are 1.6-megawatt General Electric turbines. The new, more efficient turbines will be able to generate up to 1.85 megawatts each, if the project is seen to fruition, according to Gibson.
The 15 percent increase in generating capacity should allow Phase 2 to provide about 54,000 megawatt hours of power per year, enough to power about 7,500 homes, she said.
Borgeson and Gibson both said they believe CIRI and Golden Valley have gotten this far towards a deal now because several new gas-fired power plants in the Railbelt that have come online in the past couple years allow for better integration of highly variable renewable power.
They also concurred that a general move towards better cooperation between the area utilities — power from Fire Island would have to move through the networks of three utilities plus the state-owned northern intertie before reaching Golden Valley — will help make the project possible.
“We’ve created a (generating) system that’s robust and will allow for the expansion of renewable projects, which is great,” Gibson said.
The Railbelt utilities presented their efforts to maximize efficiencies and minimize costs to the RCA during a Wednesday morning meeting when the Fire Island announcement was made.
Elwood Brehmer can be reached at elwood.brehmer@alaskajournal.com.
