Homer Alaska - Business

Story last updated at 3:24 PM on Wednesday, July 4, 2012

Fire Island wind farm nears completion



By Jonathan Grass
Morris News Service - Alaska


 

Photo courtesy of Cook Inlet Reg

Workers pour concrete tower foundations for CIRI's Fire Island Wind project earlier this month. The Fire Island wind farm will be Southcentral Alaska, first commercial-scale wind project.

After more than a decade of planning, the Cook Inlet Region Inc. wind project for Fire Island is close to powering up.

Fire Island Wind LLC, a CIRI subsidiary, has all but finished constructing foundations for 11 wind turbines for a commercial-scale wind farm. This will be the first of its kind in Southcentral. The next major step will be installing the towers, which are waiting to be barged from Anchorage to Fire Island.

CIRI, one of 12 Alaska Native regional corporations, was expecting to start barging tower and turbine components from the Port of Anchorage to Fire Island this week. The barge will travel at high tide and then offload at low tide.

Ethan Schutt, CIRI's senior vice president of land and energy development, gave a project update during a "Make it Monday" forum hosted by the Anchorage Chamber of Commerce on June 25.

"You will start to see some towers going up," he said.

Roads, turbine pads and electrical infrastructure are nearly complete. Shore-side and submarine transmission lines will be complete by the end of the month. Construction also is under way for connecting roadways as well as an underwater transmission line from Fire Island to the Railbelt electric grid. Once completed, CIRI is expected to begin producing commercial power before the end of the year.

More than two-thirds of the contractors working on the project are Alaska companies.

These turbines will produce a combined output of up to 17.6 megawatts of electricity. Chugach Electric Association, or CEA, has agreed to purchase up to the full amount produced here for the next 25 years starting Jan. 1, 2013. The utility will pay a flat net price of $97 per megawatt-hour.

CIRI is expected to supply the utility with 48,500 megawatt-hours annually, or enough to power 6,000 homes.

The farm is expected to be completed between August and September. Schutt said once the entire system is up, it will be transferred to CEA's control. CEA will own and operate the line after it's completed and commissioned. This means the transmission lines can be used to power a number of other entities besides the wind project.

The transmission line connecting the wind farm to the Railbelt electric grid cost about $27 million. A $25 million state grant paid for most of this. The total wind farm cost is about $65 million, with about $18 million from federal cash grants in lieu of tax credits under the American Recovery and Reinvestment Tax Act of 2009.

CIRI Corporate Communications Director Jim Jager said CIRI's involvement is what allows the federal grant because it is only available to private tax-paying entities. Because it's based on a tax credit, tax-exempt entities like public or co-op owned utilities cannot get it. This includes CEA.

Jager said the entire federal grant is being used to offset project costs to reduce customer rates rather than going to benefit CIRI.

This wind farm is expected to supply about 4 percent of CEA's load and offset 500 million cubic feet of natural gas consumption.

Schutt said that CEA rates will rise but the wind farm only accounts for a tiny percentage of that because of the small amount the wind power will contribute to the overall energy grid.

"Whatever change you see is not going to be largely caused by this project," Schutt said.

He said the rate increases customers can expect will mostly come from a new Southcentral power plant, debt servicing and fuel contract replacements.

The idea for the wind farm began in the mid to late-1990s when CEA decided to diversify its energy supply. Ninety percent of Southcentral's power comes from natural gas reserves.

CEA did a comprehensive review of the region for potential sites for wind power generation. Fire Island, which CIRI owns, was at the top of that list.

Various regulatory and other issues — from securing agreements with utilities to permitting — slowed down progress over the years.

One recent example was the Federal Aviation Administration's problem with the wind turbine's potential interference with the area's Very High Frequency Omni-Directional Range, or VOR, used for plane navigation.

The problem was solved when a new VOR was installed at Ted Stevens Anchorage International Airport last year. The Fire Island VOR was decommissioned this year.

Jager said aviation regulations can be among the hardest for wind generators.

Jonathan Grass is a reporter for the Alaska Journal of Commerce.

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