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Sustainable Energy Solutions for Rural Alaska Disclaimer This document was prepared as an account of work sponsored by the United States Government. While this document is believed to contain correct information, neither the United States Government nor any agency thereof, nor The Regents of the University of California, nor any of their employees, makes any warranty, express or implied, or assumes any legal responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by its trade name, trademark, manufacturer, or otherwise, does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States Government or any agency thereof, or The Regents of the University of California. The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States Government or any agency thereof, or The Regents of the University of California. Ernest Orlando Lawrence Berkeley National Laboratory is an equal opportunity employer. LBNL-1005097LBNL-XXXXE Sustainable Energy Solutions for Rural Alaska Prepared for the U.S. Department of Energy Office of Indian Energy Policy and Programs Principal Authors Riley Allena, Donna Brutkoskia, David Farnswortha, and Peter Larsenb aRegulatory Assistance Project 50 State Street #3 Montpelier, VT 05602 bErnest Orlando Lawrence Berkeley National Laboratory 1 Cyclotron Road, MS 90R4000 Berkeley CA 94720 April 2016 The work described in this report was funded by the Office of Indian Energy Policy and Programs under Lawrence Berkeley National Laboratory Contract No. DE-AC02-05CH11231. 1 Sustainable Energy Solutions for Rural Alaska Acknowledgments Riley Allen, David Farnsworth, and Rich Sedano of the Regulatory Assistance Project (RAP) and Peter Larsen of Lawrence Berkeley National Laboratory (LBNL) were principal investigators in this report for LBNL and the U.S. Department of Energy (DOE) Office of Indian Energy. They were part of a research team that also included Givey Kochanowski of DOE and Jim Lazar of RAP. Peter Larsen of LBNL and Riley Allen, David Farnsworth, and Donna Brutkoski of RAP authored this report. The team is grateful for the assistance of the Alaska Energy Authority (AEA), especially Sara Fisher-Goad, Jed Drolet, Cady Lister, Neil McMahon, Katie Conway, Jessie Huff, and Emily Ford; Chairman T.W. Patch, Commissioner Robert Pickett, and staff of the Regulatory Commission of Alaska (RCA); Douglas MacCourt, Christopher Deschene, David Conrad, and Michael Rodrigue of DOE; Jared Temanson of the National Renewable Energy Laboratory (NREL); Jimmy Ord, Scott Waterman, and staff of the Alaska Housing Finance Corporation (AHFC); David Hill and Chris Badger of Vermont Energy Investment Corporation (VEIC); and Chris Rose of the Renewable Energy Alaska Project (REAP). Regional energy ambassadors also assisted the team in their travels throughout Alaska. The team would particularly like to thank ambassadors Sonny Adams, Dave Pelunis-Messier, Kord Christiansen, Connie Fredenberg, George Guy, Bryant Hammond, Jason Hoke, Tyler Kornelis, Brent Latham, Jackie Qatalina Schaeffer, Anahma Shannon, Fred Smith, Lawrence Sorensen, Robert Venables, Dean Westlake, and Tiffany Zulkosky. Others that provided guidance in the early stages of the process included Brent Sheets of the Alaska Center for Energy and Power (ACEP); Bruno C. Grunau and Jack Hebert of the Cold Climate Housing Research Center (CCHRC); Matt Berman, Steve Colt, and Ginny Fay of the University of Alaska’s Institute of Social and Economic Research (ISER); Dennis Meiners of Intelligent Energy Systems; Denali Daniels and staff of DDA, Inc.; and Brian Hirsch of Deerstone Consulting. The research team also thanks Meera Kohler and Anna Sattler of the Alaska Village Electricity Cooperative (AVEC); Anna traveled with and helped to guide the research team through early visits in the Bethel region. We are grateful to the staff of the Denali Commission, including Joel Neimeyer, Jodi Fondy, and Karen Johnson. Utility managers and staff, tribal leaders, and local officials provided invaluable insight into the challenges faced and innovations happening in the communities visited by the research team. A number of the people cited above offered useful peer review feedback on the draft report, as did Duff Mitchell of the Alaska Independent Power Producers Association (AIPPA); Bob Grimm and David Custer of Alaska Power & Telephone (APT); Fran Ulmer of the U.S. Arctic Research Commission; John Duhamel of the Copper Valley Electric Association (CVEA); and Andrew Mills of LBNL. Crystal Enkvist of the Alaska Power Association (APA) circulated an early draft to APA members for their input. Tim Newcomb designed and illustrated this report. Electronic copies of this paper and other RAP publications can be found on our website at www.raponline.org. To be added to our distribution list, please send relevant contact information to [email protected]. April 2016 ii Sustainable Energy Solutions for Rural Alaska Sustainable Energy Solutions for Rural Alaska Table of Contents Acronyms ..................................................................2 Executive Summary ..........................................................4 Introduction ...............................................................12 Why Is This Report Timely? ..................................................14 Who Is the Audience? ......................................................16 Key Questions Considered ...................................................16 Research Method ..........................................................17 Report Structure ...........................................................18 I. Energy and Electricity in Rural Alaska. 21 Factors Affecting the Utility Sector: Challenges of Distance and Size ...................21 Availability of Objective Information ...........................................24 System Reliability ..........................................................24 Workforce Development. .25 Capital Needs .............................................................25 Focusing on Rural Utility System Needs: Understanding the “Tier” System ..............26 II. Analysis and Options .....................................................31 A. Solutions to Achieve Scale .................................................31 B. Improving Long-Range Planning and Resource Decisions .........................33 C. Meeting Rural Utility Capital Requirements ....................................36 D. Developing Workforce Capacity and Utility Management ..........................37 E. Expanding End-Use Energy Efficiency and Conservation ..........................41 F. Improving Power System Efficiency ..........................................44 G. A More Effective Power Cost Equalization Program ..............................48 H. Fostering Measures and Standards of Performance. 50 I. Technology Solutions .....................................................51 J. Fostering Local Renewable Energy Solutions ...................................52 1 Sustainable Energy Solutions for Rural Alaska III. Recommendations .......................................................62 Regionalization .........................................................63 Operations/Planning .....................................................64 Accountability/Incentives ..................................................67 Fostering Innovation in Energy Delivery ......................................68 Glossary ..................................................................72 Appendix: Attributes of the Tier System ........................................93 2 Sustainable Energy Solutions for Rural Alaska Acronyms ACEP Alaska Center for Energy and Power JAA Joint action agency ADCCED Alaska Department of Commerce, KEA Kodiak Electric Association; Community and Economic Development Kotzebue Electric Association AHFC Alaska Housing Finance Corporation kW Kilowatt AIPPA Alaska Independent Power Producers kWh Kilowatt-hour Association LBNL Lawrence Berkeley National Laboratory ANCSA Alaska Native Claims Settlement Act MDMS Meter data management system ANTHC Alaska Native Tribal Health Consortium MW Megawatt APT Alaska Power & Telephone MWh Megawatt-hour ARRA American Recovery and Reinvestment Act NREL National Renewable Energy Laboratory ARMI Alaska Rural Manager Initiative PCE Power Cost Equalization AVEC Alaska Village Electric Cooperative PPESCO Public purpose energy service company BNEF Bloomberg New Energy Finance PV Photovoltaic CCHRC Cold Climate Housing Research Center RAMP Rural Alaska Maintenance Partnership CEC Cordova Electric Cooperative RCA Regulatory Commission of Alaska CEFIA Clean Energy Finance and REAP Renewable Energy Alaska Project Investment Authority (Connecticut) REF Renewable Energy Fund CVEA Copper Valley Electric Association RPSU Rural Power System Upgrade DOE Department of Energy RUBA Rural Utility Business Advisor EIA Energy Information Administration RUS Rural Utilities Service ESCO Energy service company SRF Simplified Rate Filing GHG Greenhouse gas START Strategic Technical Assistance Response Team GVEA Golden Valley Electric Association VEEP Village Energy Efficiency Program ISER Institute of Social and Economic Research (University of Alaska Anchorage) VEIC Vermont Energy Investment Corporation