The Scoop
Researchers found that creating a modern energy system in Southcentral Alaska—one that includes new jobs and uses local renewable energy resources—is more affordable than relying on imported natural gas.
Providing 75% of Alaska's electricity, the Railbelt power system is the largest in the state and consists of five utilities. Because of a looming natural gas shortage, the Alaska State Legislature is exploring the adoption of a renewable portfolio standard (RPS) to meet growing energy demand and minimize costs. An RPS requires that a specified percentage of the electricity utilities sell comes from renewable energy resources. This study incorporates input from Railbelt utilities to analyze the costs and grid reliability impacts of implementing an 80% RPS by 2040.
Why It's Important
This study is a great example of how utilities and state governments can work closely with the U.S. Department of Energy to get access to the resources and technical assistance they need to inform their energy transition planning. This report provides the Alaska State Legislature the data it needs to advocate for an 80% RPS to overcome regional challenges and achieve energy security. The report also demonstrates that building new clean energy capacity and infrastructure can be more cost-effective than relying solely on existing fossil fuel infrastructure, depending on the unique needs of a community or region.
Key Takeaways
- By 2040, Alaska's primary power grid could integrate up to 80% renewable energy sources, all while delivering significant cost savings.
- The cost impacts of addressing the variability of renewable generators are modest relative to savings that renewables provide. The incremental savings from renewables range up to $126M/year and total $1.3B cumulatively from 2024–2040.
- The cost of new renewables is cheaper than the cost of the alternative—using natural gas in existing gas plants. This is due to the anticipated high cost of imported liquified natural gas and technology improvements, along with the 40% tax credits for solar and wind in the Inflation Reduction Act.
- In the lowest-cost renewable deployment scenario, the net savings exceeds $100M/year by the early 2030s. This scenario would lead to about 76% renewable generation by 2040, with wind alone contributing up to 50% of annual generation.
Understanding the findings
The report evaluates three possible scenarios:
- The "RPS" scenario is where at least 80% of power generation in the Railbelt is derived from renewable resources by 2040.
- The "Reference" scenario represents the lowest-cost mix of renewable resources without an RPS requirement.
- The "No New RE" scenario does not allow for any new renewable capacity.
The analysis includes the following potential RPS technologies: wind, solar, geothermal, biomass, and small amounts of new hydropower. Apart from retiring one relatively small power plant, the model includes and maintains all existing hydropower and fossil generation resources that continue to provide important reliability services and includes the option to add new fossil fuel generators and energy storage.
The report captures the impact of existing federal tax credits, including the 40% investment tax for energy communities, but assumes no other changes to state or federal policies. Energy load growth resulting from population increases and electric vehicle adoption is also taken into account.
Download the full report: Achieving an 80% Renewable Portfolio in Alaska's Railbelt: Cost Analysis (nrel.gov)