Homer Alaska - Business

Story last updated at 5:05 PM on Wednesday, February 2, 2011

Fire Island in limbo



By Tim Bradner
Alaska Journal of Commerce

Cook Inlet Region Inc. has submitted a scaled-back plan for its Fire Island wind project to Southcentral electric utilities, its potential customers.

The project is still in limbo, however, and it's not clear that agreements will come together in time for pre-construction work on the island this summer, CIRI spokesman Jim Jager said.

If that doesn't happen, the project may not meet a summer 2012 construction schedule and a goal to be producing power in 2013 at a time when natural gas shortages will start to bite in Southcentral Alaska.

Negotiations are still continuing.

If the project is built, it would reduce the need for electric utilities to buy gas for power generation. Estimates are that Fire Island could offset the need for utilities to purchase more than 1 billion cubic feet of gas per year.

Fire Island is in Cook Inlet, three miles offshore from Ted Stevens Anchorage International Airport. CIRI owns 3,200 acres on the island, part of which could be used for the wind project.

"We made a modified proposal to the utilities right after Jan. 1. The managements and board members of the three utilities are looking at it," said Ethan Schutt, CIRI's senior vice president for land energy.

The project, at least in its first phase, would be reduced from 50 megawatts to 35 megawatts in the revised proposal, making it easier for the utilities to deal with variations in power output from the wind turbines planned for Fire Island, Schutt said.

This was done by eliminating one of three sets of wind turbines that were in the original plan. The effect of this will be to make the power a bit more expensive, Schutt said. That happens because the power output is one-third less, but the capital cost of the project would decline only 22 percent to 25 percent, because the cost of basic infrastructure remains whether there are two or three turbine sets, he said.

One option CIRI is exploring with the utilities on the power variation issue is a plan for equipment to ensure reliability in case there are variations in wind power from Fire Island.

"What we envision is some kind of battery," Schutt said.

Golden Valley Electric Association, based in Fairbanks, uses a large battery for emergency power supply backup in the event of disruptions.

In a related development, CIRI will have met requirements to qualify for an up-front federal stimulus grant toward capital costs of the wind project if the project can actually get under way this year, Schutt said. In any event, Congress has extended the program beyond the original Dec. 31, 2010, expiration date, which gives CIRI more time.

Receiving the funds will reduce the amount CIRI will have to borrow to pay construction costs, which will in turn reduce the cost of power to consumers in the long run. If there are significant delays, however, the grant could still be lost. CIRI has invested between $7 million and $10 million in the project so far, Jager said.

Tim Bradner is a reporter for the Alaska Journal of Commerce. He can be reached at tim.bradner@alaska journal.com.

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