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The Growth of Renewable Energy in Alaska

Opportunities ‘waiting in the wings’


Key players in the Seward SeaLife Center’s success with renewable energy are, from left, Andy Baker, Darryl Schaefermeyer, and John Underwood.

Photo © Chip Arnold, Courtesy of Alaska SeaLife Center

Wind. Water. Geothermal. Air. Seawater. The sources of energy for Alaska communities seem to be growing each year. In some ways, Alaska has become a testing ground for new renewable energy projects. In Seward, the Alaska SeaLife Center uses seawater heat from Resurrection Bay and high-efficiency R134a heat pumps to send heat through pipes throughout the building, heating exhibit pavements, offices, conference rooms, and everything in the facility.

Four new transcritical carbon dioxide (CO2) heat pumps were integrated into its seawater-source heat pump system, which provides 98 percent of the heating for the 120,000-square foot aquarium and research center.

SeaLife Center Special Projects Director Darryl Schaefermeyer says the updated system means the center is now avoiding 1.2 million pounds of carbon emissions each year.

But the center didn’t start out with a plan to reduce its carbon footprint. Its goal was more economical—to cut what had become $15,000-per-month utility bills. For a nonprofit that runs on donations, grants, and gate fees, utility costs were overwhelming.

The first thing the center did was purchase an electric boiler, which bought them some time to figure out a longer-term solution.

In 2010, the SeaLife Center designed and installed a heat pump system that uses seawater from Resurrection Bay, heats it, and runs it through a heating loop through the building. Integrating the heat pumps helped the center cut out the expensive-to-run oil boilers, but the synthetic-refrigerant heat pumps were unable to heat the water hot enough to provide heat for the center’s offices and labs.

SeaLife Center consultant Andy Baker says the office and lab baseboard heating is designed to run on 160 degrees in the winter; most heat pumps can only heat up to 130 degrees. But at a convention in Vancouver, B.C., Baker learned about smaller, Japanese-made heat pumps that use carbon dioxide as a refrigerant and could heat water to 194 degrees. By incorporating four of the smaller heat pumps, Baker says, the SeaLife Center could offset 98 percent of the conventional oil and electric boiler heat load.

The SeaLife Center applied for and won an Alaska Energy Authority Emerging Energy Technology grant of $550,000 in 2014 and installed the four CO2 heat pump units in December 2015.

“They work really well—we have eliminated the electric boiler for most of the time,” Baker says. And the center, which bought about fifty-seven thousand gallons of heating oil a year, hasn’t bought any since 2012.

“This is the first known integration of these CO2 heat pumps in the United States to offset a large conventional boiler system,” Baker says. “There are only fifteen CO2 heat pump units like this in the United States and the Alaska SeaLife Center now has four of them.” The CO2 heat pumps are designed to heat smaller spaces and are popular in Japan and Europe, where energy prices are higher. Incorporating them was a challenge, he says.

“It wasn’t that you could just put them in there, plug and play. You had to figure out how to design these loops so that they would work properly,” Baker says.

In addition to higher heating, the CO2 heat pumps don’t use synthetic refrigerants, relying instead on twenty pounds of CO2 in each of the four units. The difference is important because, eventually, all synthetic refrigerants leak. “It goes into the atmosphere and persists for a really long time,” Baker says. Synthetic refrigerants are 1,400 times more potent as a greenhouse gas than CO2, he says. CO2 is comparatively minor, and is re-assimilated into the environment.

The system isn’t perfected yet. Schaefermeyer says his crew is re-working the heat loops to take heat from some rooms in the building, such as a freezer room and an IT room, that are unusually warm and redistributing the heat elsewhere.

“That will improve efficiencies, particularly in the summer months,” he says.

The effort to cut energy costs and use renewable energy has been a long seven-year journey, Schaefermeyer says. “This is a demonstration project for the state of Alaska. We’re being monitored very closely all the time—we’re collecting tremendous amounts of data. All of that data gets emailed at the end of each day to the University of Alaska Center for Energy and Power,” he says.

The SeaLife Center’s success has led to the City of Seward investigating using heat pumps to draw heat from ground loops in the tidal area and pipe it through a district heating system. Schaefermeyer says the city of Seward, where he was once a manager, designed a similar system to the SeaLife Center, using two-hundred-foot vertical ground loops in beach gravel instead, and using heat pumps to provide heat at the city library, library annex building, city hall, and fire hall. It’s about a $750,000 project, he says, and if successful could lead to a larger heating system running through downtown Seward’s commercial district.

“Heating costs in Seward are huge. It’s one of the limiting drawbacks for commercial growth in Seward. Many downtown restaurants and businesses close in winter because they can’t afford the heating cost,” he says. “This would substantially reduce the cost and also demonstrate [the project] for other coastal communities.”


Energy Efficiency Plans

Another project, the Remote Alaskan Communities Energy Efficiency Competition, or RACEE, is nearing the end of a project-planning phase. The competition is a joint effort between the US Department of Energy’s (DOE) Office of Indian Energy and the Office of Energy Efficiency and Renewable Energy, with technical assistance from AEA (the Alaska Energy Authority). Thirteen communities are developing actionable plans that outline how the communities can improve their energy efficiency on a large scale and cut heating and power costs.

“All of the project managers in these thirteen communities are trying to put together projects that have real savings potential, whether that’s building retrofits or powerhouse improvements or residential weatherization,” says Katie Conway, assistant program manager for AEA’s energy efficiency program.

The RACEE competition was developed when President Barack Obama visited Alaska in 2015. He announced a commitment to spend $4 million in federal funding to improve energy efficiency in rural Alaska communities. AEA and the Renewable Energy Alaska Project, or REAP, along with many other Alaska organizations helped shape the competition, Conway says.

The first round of involvement was open to any community smaller than eight thousand residents. Sixty-four communities participated—essentially signing a pledge form committing to a 15 percent or greater improvement in energy efficiency by 2020.

Those sixty-four communities were then able to compete to receive technical assistance to develop an energy efficiency plan. Thirteen communities were selected, each paired with an AEA project manager and ultimately, three or four of those communities will be awarded a portion of the $3.4 million in DOE funding to put their plan into action.

The remaining $600,000 was delivered to AEA to provide technical assistance, Conway says.


Short Timeline

The timeline for developing the plans is short—DOE announced the thirteen communities at the Rural Energy conference at the end of April and the deadline for applications is the end of August. Conway says the three or four selected communities should be announced at the Alaska Federation of Natives Convention in Fairbanks in October.

Conway says about a third of the DOE funding earmarked for AEA’s technical assistance will pay for energy auditors. Another portion will go to energy allies, like Shaina Kilcoyne, energy efficiency director at REAP. Kilcoyne is the regional liaison working with the community of Klawock to help prepare an energy efficiency plan.

Kilcoyne says Klawock is a member of the Sustainable Southeast Partnership Program, a group focused on finding clean, reliable, sustainable, and renewable energy solutions, along with food sustainability and economic self-reliance comprised of the Klawock Cooperative Association, the Klawock Heenya Corporation, the City of Klawock, the Klawock City School District, and the Southeast Alaska Regional Health Consortium clinic in Klawock are all participating.

Kilcoyne says the community has performed several energy audits in the past. The goal for Klawock is to help the community identify the biggest cost savings and define how to implement those projects. The community is assessing the performance of the water and wastewater treatment plant, conducting an energy audit at the school, assessing the value of finishing an LED streetlight replacement project, and analyzing whether using an air-source heat pump might be an option for providing low-cost heat to residential and public buildings in the community of fewer than eight hundred residents.

“Every RACEE community will get a plan, with recommendations on the best way to meet that goal. If it turned out that, for example, heat pumps are a possible solution, then Klawock might decide to include a request for a more lengthy study … in their grant proposal to DOE,” Conway says. “One of the exciting things about Phase 2 and RACEE in general is, it’s giving us an opportunity to explore different ways to achieve energy efficiency.”

AEA hopes to use the competition to help more than just the three or four communities selected for the DOE funding.

“The goal is to have actionable plans—these are actually meaningful, actionable plans that can realize cost savings through reduced energy use,” AEA Energy Efficiency and Outreach Coordinator Emily Ford wrote by email in June.

Demonstrating the cost savings could be the key that helps each community, whether participating in the third round of the RACEE project or not, secure funding for its projects.

“Getting these projects to the bank is important in these times,” Conway says.

Conway says the Energy Efficiency Finance Seminar started this year included an Energy Project Deal Room where three projects were pitched to lenders: one hypothetical and two real projects. No deals were immediately made, but Conway says she hopes the Deal Room will expand next year and translate into real funding opportunities for communities like those participating in the RACEE project.


Wind, Salad, and the State’s Largest Distillery

In Delta Junction, Mike Craft is working on a renewable-energy driven retirement project. Craft, a longtime Fairbanks developer, switched gears nearly a decade ago and began building a wind farm, with the help of a couple business partners.

He later moved his wind farm to Delta, expanded it further and, two years ago, began work building a large, turbine-powered greenhouse. Now he’s in the process of setting up what will be the state’s largest distillery, turning potatoes into ethanol for use in making vodka. His primary customer would be Alaska Distillery, the company behind the notorious Smoked Salmon Vodka and several other Alaska-distilled spirits. The company was recently the subject of a reality television show, “Alaska Proof,” which aired on Animal Planet in January and February.

Craft says he plans to begin producing one thousand gallons of ethanol a month for Alaska Distillery sometime this year and hopes the order will increase over time, perhaps up to one hundred thousand gallons a year. He already has two one-thousand-gallon wood boilers, plus energy from the wind farm to distill the alcohol.

“The only thing missing now is a one-thousand-gallon mash tank now being built in Fairbanks,” Craft says. “It’s the potato cooker. We have to take it up to 150 degrees.”

The still would be the largest in Alaska, and Craft says although Alaska Distillery would be his company’s first and perhaps largest customer, it might not be the only one forever.

“There’s also an incredible resource in barley,” he says. Barley-based ethanol is used to make whiskey, vodka, gin, and rum, he says. He’s confident if he produced Alaska-grown barley ethanol, buyers would want it.

Craft has only been working on the distillery about three months. He and his team, made up mostly of family members, have manufactured their own wood boilers out of one-thousand-gallon oil tanks, with different pH changers built into them.

His other project, which he’s working on with Bill Johnson of Johnson Family Farms in Fairbanks, is a one-hundred-foot by one-hundred-foot greenhouse where lettuce and microgreens can be grown year-round. He hopes to harvest twenty-eight crops a year.

The first level of the greenhouse is built, Craft says, and he’s readying trays for growing the plants. Micro-greens and leaf lettuce were selected because that’s what local customers—Fred Meyer, area restaurants, schools and military cafeterias—said they want, Craft says.

Craft says he teamed with Johnson because he has run a hydroponic growing operation in Fairbanks for about ten years.

“He’s never been able to have a lot of success because the utility bills were killing him,” Craft says.

This greenhouse will use about 50 kilowatts in lighting—the first level of the greenhouse is underground; the ground level is not yet built and will include an area with a heavy-duty floor that will allow it to operate as a warehouse or perhaps a bottling plant, Craft says.

The wood boilers that will be used as part of the distillery will also help the greenhouse, he says. The warm compressed air will be run into the greenhouse, where it can be released to create positive air pressure, allowing the air to circulate more easily. Excess moisture is a common problem for greenhouses, he says. But heat exchangers operate inefficiently because they bring in outside air, which is too chilly for the greenhouse.

“If it’s twenty below outside and you’re bringing air in, it’s only going to be around fifty-five degrees [in the greenhouse],” he says.

The two projects are linked to Craft’s wind farm project, the first commercial wind farm on the Alaska energy grid, which he says provided 4 million kilowatt hours of renewable energy in the last year from his nine turbines. If he can find a way to finally make it turn a profit, he says he has the financing and permits and has dug five foundations to expand his wind farm—an opportunity waiting in the wings to add ten more 2.4-megawatt turbines, adding 24 megawatts to the Railbelt energy grid.


New Money Needed

The state has funded more than $250 million into renewable energy projects since 2008 through its Renewable Energy Fund, as well as investing in rural infrastructure projects. Private funding, community contributions, and federal Denali Commission funding has also gone toward helping Alaska communities reduce their dependence on diesel fuel and cut electrical and home heating costs.

The $5 million Governor Bill Walker initially included for the Round 9 Renewable Energy Fund project list was later removed by an amendment the governor made, and Ford says no new funding was appropriated so far this year. AEA is working with communities to find alternative funding and financing options for their renewable energy projects.

“Since the budget has been in a state of flux, I don’t believe any communities have successfully secured alternative funding yet. We are at the beginning stages of that process,” Ford says.

REAP Founder and Executive Director Chris Rose says Alaska has come a long way in the last ten years. Each year 30 million gallons of diesel fuel are being displaced through fifty projects funded in part by the state’s Renewable Energy Fund.

But without a new financing model that is not reliant on state grants, it will be tough to fund new projects.

“We’re definitely moving toward private financing; we believe these projects can pencil out and pay for themselves,” Rose says.



This article first appeared in the August 2016 print edition of Alaska Business Monthly.

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