HEA takes small steps to 18% renewable goal

By Ben Boettger

March 2 - As Homer Electric Association (HEA) lurches towards renewable energy in fits and starts, its individual members are connecting home renewables to its grid at an exploding rate.

At HEA's Dec. 17 board meeting, Manager of Fuel Supply and Renewable Energy Development Mike Salzetti updated directors on progress toward the renewable goal the cooperative set in March 2008: to make 18 percent of generation capacity renewable by the end of 2022. 

In 2018 – a typical year for HEA – the utility's generation was 10.7 percent renewable, thanks to a single source: the state-owned Bradley Lake hydroelectric plant on the south side of Kachemak Bay. The remaining power was all produced by natural gas-fired turbines. With an upgrade now underway at Bradley Lake, HEA is on track to become 14 percent renewable by its self-imposed 2022 deadline. Its two other renewable projects – a small hydroelectric plant on Grant Lake that would contribute 4.1 percentage points to the renewable side of its generation portfolio, and a landfill gas generator that would contribute 3.1 percent – will push it over the 18 percent goal if both succeed, but neither will be online by 2022.

The Alaska Energy Authority, which owns the Bradley Lake plant on behalf of the state, started construction in 2018 on a diversion dam and pipeline that will channel runoff from the nearby Battle Creek glacier into Bradley Lake. Additional water in the lake could boost the plant's output by 10 percent, according to the Energy Authority. The resulting increase to HEA's share of Bradley Lake power would add 1 percent toward the renewable goal. In addition, extra shares in the diversion project that HEA acquired from Anchorage utility Municipal Light and Power would give it another 4.1 percent. This 3.5 percent bump in renewables is "pretty much a sure thing by the end of 2021, because Battle Creek will be completed next summer," HEA Manager Brad Janorschke told the board in December.

If the Grant Lake and landfill gas projects also come to fruition, HEA will be 21.6 percent renewable. These two projects have a much longer and bumpier road to development, and may have a ways yet to go.

Grant Lake

In August 2019 the long-planned Grant Lake hydroelectric project reached a milestone when the Federal Energy Regulatory Agency licensed it to proceed. The permit comes a decade after FERC began the process by giving HEA a preliminary study permit in August 2009. Salzetti said HEA plans to create a final design in the next two years, start construction in spring 2022, and commission the plant at the end of 2023.

Grant Lake is a mountain lake near Moose Pass in the north-eastern Kenai Peninsula. HEA's plans call for a dam-less "lake tap" design that would draw Grant Lake water via a submerged pipeline through a pair of turbines before releasing it into Grant Creek, the lake's natural outlet. Its five megawatt capacity would make Grant Lake among the smallest Railbelt hydroelectric facilities – Bradley Lake is the largest in the state with 126 megawatts; others include Chugach's 27-megawatt Eklutna plant and Chugach's 19.2-megawatt Cooper Lake plant. The project has been controversial because of its potential impacts on Grant Creek's water level and fish, and because its powerhouse location would interfere with plans to reconstruct the historic Iditarod Trail.

Grant Lake's total cost was estimated at about $52 million in HEA's 2015 FERC license application, though Salzetti said inflation will have raised it since then. Salzetti said financing options include loans from the Alaska Industrial Development and Export Authority (AIDEA) and possible incentives created by the Reliable Investment in Vital Energy Reauthorization (RIVER) Act, currently under consideration in the U.S Senate as S.859. The bill includes incentives for rural hydroelectric plants under 10 megawatts that Salzetti said were "just scripted for this particular project – and for a reason."

"Senator Murkowski had her hands all over it," he said. "This isn't her bill, but that amendment was hers."

At their December meeting, HEA's board unanimously added $4 million to their budget to fund the next two years of engineering and surveying for the Grant Lake project.

Landfill Gas

HEA's other renewable project would use methane gas created by the decomposition of trash in the Kenai Peninsula's Central Peninsula Landfill. The landfill currently vents the gas, which is about a 50-50 mix of methane and carbon-dioxide. Instead, HEA wants to burn the methane in a 2 megawatt generation plant whose waste heat could also evaporate the leachate that drains from the landfil – a purpose for which the landfill burnt 21.95 million cubic feet of purchased gas in 2015. At first the generator would also require purchased supplemental gas, but as decomposition increases and more gas is produced, it could eventually power the landfill with generation left over for HEA.  Anchorage created a similar 7 megawatt landfill gas project in 2012.

While the Grant Lake project may be heading to realization, landfill gas could remain in limbo for a while. HEA is collaborating on the project and splitting its costs with the landfill's owner and manager, the Kenai Peninsula Borough. HEA and the administration of previous borough mayor Mike Navarre committed $100,000 each to advancing the project – with the borough's share contingent on appropriation by the Kenai Peninsula Borough assembly. Under the lean financial conditions that state and local governments have seen in recent years, the project hasn't been a borough priority. After meeting the previous week with Kenai Peninsula Borough Solid Waste Manager Jack Maryott, Salzetti said Maryott had "indicated that without some kind of grant funding he doesn't see this moving forward."

Potential energy savings aside, the borough's incentive to pursue the project is distant – by 2035, Salzetti said, the landfill is projected to be full enough that Environmental Protection Agency Rules will require it to start flaring methane, wasting the gas’s energy. However, Salzetti said the borough solid waste department has started optimizing the distribution of trash for future gas wells.

To push the project forward, Salzetti said he's arranged to meet twice a month with Maryott to hash out how the project will be operated, how the costs and benefits would be distributed, and how to fund it. The borough's Community and Fiscal Projects Manager Brenda Ahlberg is also working on finding grants and incentives that could fund the borough's share of the project. HEA Director Erin McKittrick speculated that carbon credits could be a funding source.

Salzetti estimated the cost at about $10-$12 million."If we're actively seeking grants, I think the minute we get money we can actively put our foot on the gas on this thing," Salzetti said.

Net metering

As grid-scale renewables make slow progress, the number of individual HEA members building renewable energy at home is skyrocketing, as measured by participation in HEA's net-metering program. The program allows members who've installed home solar or wind power systems to buy electricity from HEA when the wind or sun isn't meeting their electrical use, and to sell electricity to the grid for credit on their next electrical bill when their renewable systems produce more power than their homes consume.

If home renewable users continue connecting to HEA's grid at current rates, the cooperative may have to raise its cap on net metering by spring 2020 – which would be the second time in two years.

HEA began net metering in June 2010 with 29 participants, mostly windmill owners. Wind installations initially made up most of the home renewables installed in the program, but by 2017 dramatically falling solar prices had driven a surge in rooftop solar, and net metering started to boom.

As in most states that allow net metering, Alaska's utility regulator – the Regulatory Commission of Alaska – puts a cap on the minimum amount of net metering utilities must allow. In Alaska's case, it's 1.5 percent of a utility's average retail demand.  

As net metering started to blow up in 2018, HEA approached the limit. By April 2019, the 1.5 percent cap left only 216 kilowatts of capacity available to prospective net metering customers – only a little more than the 210 kilowatts of home renewables that had been added during the previous year.

At their April 9th meeting the HEA board voted to double their cap from 1.5 percent to 3 percent. The change put the cap at 1,549 kilowatts, but the explosion of home renewables continues to push against it. During 2019, HEA’s net metering more than doubled in capacity (558.6 kilowatts to 1224.4 kilowatts) and nearly doubled in number of installations (139 to 243), according to the net metering report HEA sent the RCA in February 2020. 

"At this rate, we estimate that HEA will exceed the new 3 percent cap by spring of 2020," manager Brad Janorschke wrote in his December report to the board.

In spite of net metering's explosive growth, home renewables remain a tiny part of HEA's generation capacity and an insignificant contribution toward its renewable goal. It's important to remember that the cap is 3 percent of average retail demand. The 277 megawatt-hours that net metering produced in 2018 equal 0.06 percent of total generation, according to a calculation by HEA board member Erin McKittrick.

Lucking out in 2019

While 2018 was a typical year in terms of HEA's renewable use, 2019 was far from it. This past year, freak events pushed HEA's renewable generation way past the 18 percent it's been struggling towards.

In August the Swan Lake Fire damaged the only powerline connecting HEA to the rest of the Railbelt, shutting off the other utilities from the cheap, renewable power of the state-owned Bradly Lake plant. Being the only utility with a connection from Aug. 18 to Dec. 19, HEA took far more than its allotted 12 percent share of Bradley's output: while the normal share averages 52,644 megawatt-hours a year, the cooperative drew 164,608 megawatt-hours from the lake in 2019. With an overflowing Bradley Lake all to itself for at least four months, HEA was estimated to be 44.8 percent renewable in 2019.