Southcentral utilities wrestle with pricey power options 

By Tim Bradner | Alaska Journal of Commerce:Cook Inlet Region Inc. isn’t the only renewable energy provider knocking on Southcentral electric utilities’ doors these days.

Ormat Nevada Inc. is proposing to develop a 50-megawatt geothermal power project at Mount Spurr, 75 miles southwest of Anchorage. It would like an agreement with utilities to buy its power, according to Paul Thomsen, the company’s business development director.

CIRI is meanwhile working on its Fire Island wind project, which is ready for construction this summer if power sales contracts are signed. Fire Island was initially planned at 50 megawatts but is now scaled back to 32 megawatts as a first phase to make it easier for the utilities to incorporate variable wind power in the regional electric grid, CIRI spokesman Jim Jager said.

There’s wide agreement that Southcentral electric utilities need to diversify sources of energy away from natural gas, which is being depleted in producing fields in the region. Estimates are that shortages of natural gas supply could affect the region as early as 2014.

State Sen. Lesil McGuire, a strong advocate in the Legislature for renewable energy and diversified power supply, has said projects like Fire Island and Mount Spurr could help utilities bridge a gap between the depletion of natural gas and the development of long-term sources of new energy, such as a large hydro project at Watana on the upper Susitna River.

If the Legislature approves, the state will begin preliminary work on licensing a Watana hydro project this year, but it will take about a decade for power production to begin because of the long licensing period and several years of construction. Ormat did core test drilling at Mt. Spurr last year and will be back in the field to do follow-up work this summer, the company has told legislators in Juneau.

The company has invested about $3 million of its own funds, along with payments to the state for the geothermal leases, but has also been assisted with grants from the state’s Renewable Energy Resource Fund, which helped finance exploration in 2010 and will do so again this year. Read more

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