AEA Bonding for Transmission and Battery Upgrades
The Alaska Energy Authority (AEA) is proceeding with a major upgrade of power transmission on the Kenai Peninsula, which includes the addition of battery storage.
The AEA board of directors unanimously approved an estimated $175 million in bond financing to pay for transmission line upgrades and battery energy storage systems. The upgrades are meant to reduce constraints on the Railbelt grid by improving the capacity to export power from the Bradley Lake Hydroelectric Project near Homer.
The transmission line upgrades are divided into three segments: between Bradley Lake and the Soldotna substation; between the Soldotna substation and the Sterling substation; and between the Sterling substation and the Quartz Creek substation in Cooper Landing.
The installation of battery energy storage systems is meant to aid with grid stabilization. AEA also sees potential for the integration of additional renewable energy, as batteries can store the fluctuating output of wind or solar generators. Homer Electric Association is already testing thirty-seven Tesla Megapacks in Soldotna.
The bonding by AEA, in partnership with the Railbelt utilities, will be at no additional cost to ratepayers and with no burden on the state treasury. The authority announced earlier this year that it had up to $200 million to invest in transmission upgrades thanks to the retirement in 2021 of all bonds that originally paid for the Bradley Lake Hydroelectric Project, which was completed in 1991. Railbelt utilities have budgeted annual payments until 2050, leaving a surplus available for upgrades related to the Bradley Lake project. The Alaska Department of Law determined that the proposed transmission upgrades qualify.
The Railbelt’s energy systems have undergone significant change since they went into service more than forty years ago. Over this period, loads have increased, transmission assets have aged, and greenhouse gas emissions have become an increasingly important factor. In addition, cost-saving power sales between utilities have increased, demanding more of the system, and soon, regional integrated resource planning will increase the benefits of sharing power throughout the region.
Owned by AEA, Bradley Lake is an important generating plant on the Railbelt and the largest hydroelectric plant in Alaska. Located approximately 27 miles northeast of Homer on the Kenai Peninsula, the 120-megawatt facility generates 10 percent of the total annual electrical energy used by Railbelt electric utilities: Chugach Electric Association, Golden Valley Electric Association, Homer Electric Association, Matanuska Electric Association, and the City of Seward. About 70 percent of Alaska’s population is served by the Railbelt electric system.
Closing of the bond transaction is expected to take place on or before December 2, 2022.