The Impact Of High Energy Costs In Rural Alaska Native Communities And Opportunities For Alternative And Conventional Energy Development

The impact of high energy costs in rural Alaska native communities and opportunities for alternative and conventional energy development : field hearing before the Committee on Indian Affairs, United States Senate, One Hundred Tenth Congress, second session, August 28, 2008.

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Most rural Alaska communities are not road connected and must cope with challenging arctic environmental conditions. Due to their remoteness and sparse populations, these villages depend on isolated non-grid connected electric generation systems that operate on fuel oil. In Alaska, the Power Cost Equalization program is a 25 year long energy subsidy that targets rural residents to provide energy costs relief. A more recent state incentive program, the Renewable Energy Fund, was developed to expand the use of renewable resources and lower the cost of energy. Some rural communities have benefited from this program and have integrated renewable energy to their systems, particularly installing Wind-Diesel systems. Both programs have congruent goals of alleviating dependence on high cost fossil fuels to generate electricity as means to foster development and higher quality of life in rural Alaska communities. However, their incentive structure may conflict. This paper provides a review of these two energy subsidy policies with a particular focus on the Power Cost Equalization program and offers potential changes to its structure such that social cost impacts to rural residents are minimized while removing incentive barriers against energy efficiency and integration of renewable energy in rural Alaska communities.

The territories that comprise the Arctic region are part of some of wealthiest and most advanced countries on the planet; yet, rural Alaska, northern Canada, the Russian Far East and Greenland—characterized by off-grid communities, regional grids, and higher degrees of energy insecurity—have more in common with the developing world than the southern regions of their own country. This thesis explains this paradox of energy development in the Circumpolar North and tackles the issue of developing renewable energy in remote areas where technical and socioeconomic barriers are significant. The primary research questions are two-fold: 1) Why did the Alaska electrical system develop as a non-integrated patchwork of regional and isolated grids? and 2) What are the major factors in Alaska that have resulted in a greater uptake of renewable energy systems for remote communities, compared to other similar places in the Arctic? This thesis demonstrates that state-building theory provides a cogent framework to understand the context of electrical build-out in the Circumpolar North. A major finding of this thesis is that the buildout of electric infrastructure in the non-Nordic countries, including Alaska, exemplifies a process of incomplete nation-building. Interconnected regional grids, where they exist, are largely due to the twin national priorities in infrastructure development in the north: extracting natural resources and enhancing national security. This thesis also draws on sociotechnical transition theory to explain why Alaska exhibits such high levels of energy innovation when compared to other similar regions across the Arctic. This research concludes that drivers such as extremely high energy costs, a highly deregulated utility market with dozens of certificated utilities, state investment in infrastructure, and modest subsidies that create a technological niche where renewable energy projects are cost-competitive at current market prices have spurred energy innovation throughout Alaska’s communities, remote or otherwise. Many of the evolving technical strategies and lessons learned from renewable integration projects in Alaska’s remote islanded microgrids are directly applicable to project development in other markets. Despite differences in climate and geography, lessons learned in Alaska could prove invaluable in increasing resiliency and driving down energy costs in remote communities world-wide.