Fire Island Wind

Summary

The first phase of the Fire Island Wind project, which might start operating in 2012, would provide up to 17.6 MW of electricity to the Chugach Electric utility in Anchorage. The cost of this project is expected to be partially offset by state and federal grants, with the electricity generated sold to the utility for 9.7 cents/kWh.  The project has been embroiled in controversy over both project economics and proposed rate increases, but recently was given regulatory approval and construction began in Fall 2011.

Background

The Fire Island Wind project is a proposed wind farm, located just west of Anchorage. The project is being developed by Fire Island Wind LLC., a wholly owned subsidiary of the Cook Inlet Regional Corporation (CIRI).  In the first phase of construction, the farm would include 11 turbines, capable of generating a total of 17.6 MW of electricity.  On average, this would supply around 5.5 MW, or a total of 48,500 MW-hours of electricity annually to the Chugach Electric Association (CEA), enough to power around 6,000 homes.  This electricity would replace around 500 million cubic feet of natural gas consumption, which represents about 4% of Chugach's load.

Originally the project was designed to be three times as large, but was scaled down over concerns regarding integration with the existing Railbelt grid.  Expanding the project in the future would be relatively easy, once expensive transmission lines were completed.

Project economics

The first phase of the project is expected to cost around $65 million for the construction and installation of turbines and other infrastructure on the island.  A power transmission line to Anchorage is expected to cost an additional $25 million, and would be paid for by various state grants.  This transmission line has the potential to be used by other projects, such as a proposed tidal energy project nearby.

In addition to the state grants, CIRI hopes to receive almost $20 million in federal stimulus grants to offset the cost of construction.  However, these grants are dependent on construction beginning in 2011.  CIRI has already prepared several of the turbine sites on Fire Island, and in October 2011 received regulatory approval to move forward.

Under the current agreement, CIRI would sell power from the project to Chugach at 9.7 cents/kWh for 25 years. While this is more than Chugach currently pays for electricity generated by natural gas combustion, it's expected that as gas supplies dwindle and gas costs increase wind power will eventually prove to be less expensive.  This is also very comparable to the price that power from the Eva Creek wind project near Healy is expected to cost (9.8 cents/kWh).

Regulatory Approval

While CIRI and Chugach have reached an agreement on the purchase of power from the Fire Island Wind project, this filing still had to be approved by the Regulatory Commission of Alaska (RCA).  During the public comment period in summer 2011, the RCA received numerous comments from the public, the vast majority of which were in favor of the project.  Those opposed to the project primarily cited concerns about proposed rate increases and about the need to scramble for federal funding to make the project viable.  Other concerns were raised about the relative utility of this project versus hydropower and about the possible effects on bird and bat populations.

In addition the RCA received comments from Municipal Light and Power (ML&P), also located in Anchorage.  ML&P was concerned about the difficulty of integrating Fire Island Wind power into the exiting Railbelt infrastructure without creating rate increases for even non-Chugach customers. The Railbelt electrical grid follows the Alaska Railroad from Fairbanks through Anchorage to the Kenai Peninsula and provides 80% of the state’s electrical energy.

Chugach was given the opportunity to respond to all comments, and did so on August 4th, 2011.   However, on August 8th, 2011 the RCA suspended the filing by CIRI and Chugach, citing the ML&P concerns:

"Chugach’s rate impact projections are based upon assumptions that are not supported with sufficient detailed back-up either in TA335-8 or in Chugach’s supplemental filing. We required Chugach to specifically reply to the adverse comments filed by the public and ML&P.

Chugach responded in its supplemental filing but we do not believe the response adequately addressed the comments. We cannot approve the PPA based on the existing record. We suspend TA335-8 for an initial period of six months until Tuesday, February 8, 2012."

-from RCA suspension order, August 8th, 2011 (TA335-8 is the filing number of the power purchase agreement (PPA))

In October, the RCA decided to allow the project to proceed.

Current Status

One potential hurdle to the project, interference with FAA airline signals, has been removed by the approval of a new FAA beacon to be paid for by CIRI.

Construction on the tranmission lines began in Fall 2011 and work on the turbines themselves is planned for Spring 2012.

Date Created: Fri, 12 Aug 2011 08:32:06 -0800

Last Modified: Wed, 25 Apr 2012 09:13:17 -0800