Tensions in Renewable Policy Development in Alaska

In Alaska, state-subsidized diesel electricity and a lack of comprehensive renewable energy policy inhibits the development of clean energy.

Alaska’s railbelt, a 600-mile region running through South-Central Alaska up to Fairbanks, has an established electric grid that serves about two-thirds of the state’s population. However, there are many communities in remote Alaska that are isolated, often inaccessible by road, and certainly disconnected from the grid. The vast majority of these communities are dependent upon diesel for their electricity—a costly resource.

While plenty of oil and gas resources are drilled on the North Slope, they travel down the Alyeska Pipeline and away for refinement. Refined diesel is then delivered to isolated communities by some combination of truck, plane, and/or boat. Consequently, diesel-generated electricity in rural communities typically costs three to five times more than in communities along the railbelt.

The state offsets this energy burden with the Power Cost Equalization (PCE) program. The goal of the PCE program is to level-out the cost of electricity in rural communities to mirror that of railbelt residents. To achieve this, the Alaska Energy Authority provides funding to nearly 200 communities. This program is a necessity, but it effectively subsidizes diesel-based energy, potentially impacting the local economics of renewable microgrids.

In contrast, there is scant renewable energy policy in Alaska. The most remarkable policy to date is a non-binding goal to reach 50% renewables by 2025. In 2019, only 30% of Alaska’s energy was generated by renewables.

Despite the lack of policy, renewable energy is developing in Alaska. According to REAP, Alaska has more than 67 MW of installed wind capacity. Hydro projects account for 25% of generated electricity, and offset the need for diesel generators on Kodiak Island, which gets nearly 100% (99.7%) of its energy from renewables.

Solar is usually dismissed in Alaska due to the long, dark, and snowy winters. Yet, solar is developing. In 2019, there were nearly 8 MW of installed solar in Alaska, including a 1,200 kW farm, which is the largest yet in the state. Solarize Anchorage and Solarize Fairbanks are working to organize community members to install residential solar and take advantage of net metering benefits.

The solar industry in Alaska has much to overcome. Economies of scale are difficult to attain at this early stage and a lack of local expertise can increase the cost of development and operation for rural communities. As Alaska is lacking in precedent and focused renewable policy, developers, investors, utilities, and customers alike all struggle to have confidence in solar.

Developing solar in Alaska isn’t foolish. It is a plentiful resource in the state—studies have shown that Alaska’s annual solar resources match that of Germany. A 2015 economic study highlights that solar can be economically feasible in Alaska, depending on local diesel prices. The seasonality of Alaska’s solar resources can also be a boon to the tourism industry, which experiences peak energy demands in the summer.

Not all hope is lost in the winters—PV panels perform more efficiently in the cold, and the increased albedo from snow cover can help boost panel production. While the seasonality does mean that most places can’t rely on solar as their only energy source, solar should be utilized as one piece of Alaska’s renewable portfolio.

In a changing climate, infrastructure must develop and adapt. The state of Alaska should take advantage of this opportunity to support the development of all renewables, including solar. Solar is a sorely underutilized resource that, with clear support from lawmakers, could provide affordable, long lasting, and clean energy to residents across the state. Policies must be developed to support all Alaskans, particularly those in remote communities who are dependent upon costly, dirty, and subsidized diesel electricity.

This insight is a part of our Undergraduate Seminar Fellows’ Student Blog Series. Read work from other students and learn more about the Undergraduate Climate and Energy Seminar.

Evelyn Sorrell

Global Food Systems Initiative
Evie Sorrell is a third year undergraduate student studying environmental sustainability and management in the College of Arts and Sciences. Sorrell is also a 2021 Undergraduate Seminar Fellow.