By Nolan Kouda, CED Executive Director
For the last few months, the CED team has had energy on our minds. Between the excellent Rural Energy Conference last week, the release of the Renewable Energy Emerging Sector report, and the VOLT49 Showcase this week, it's a subject we can't avoid.
But it seems that Alaska as a whole can't avoid the topic either. We're among the top states for both production (thanks to North Slope oil) and consumption of energy. Alaska ranks third in per capita energy use and takes the dubious grand prize of first place in per capita energy spending (source). Our communities were also early adopters of renewable resources, which we have in abundance. If your focus is economic development, like it is for us, you quickly find that all roads lead to energy as both an obstacle to growth and an opportunity to innovate. Rural communities that pay $1.00 per kWh for power, against a national average closer to $.12, struggle with basic sustainability--let alone growing commercial enterprises. Winter heating bills the size of mortgage payments don’t help matters.
Meanwhile, the way humanity creates and uses energy might just be undergoing a revolution. Take solar power. In 2009, the US average cost to install solar panels was $7.50 per watt. By 2017, it was closer to $1.50--and projected to keep falling (although costs are higher in Alaska). The price of lithium-ion batteries, which “fuel” electric vehicles and make renewable power sources more viable, fell by 73% between 2010 and 2016, according to Bloomberg New Energy Finance. Car manufacturers are bullish on electric vehicles, prompting The Economist to proclaim the “death of the internal combustion engine” in the coming decades.
I’m not one to make bold, specific predictions. Still it’s hard to ignore the fact that the landscape is changing quickly. And that has me wondering about the implications for Alaska’s economy.
Based on what I saw at the Rural Energy Conference, there are exciting possibilities. What surprised me most is the surging interest in solar. Places as diverse as Kotzebue, Galena, Hughes, Kaltag, Northway, Anchorage, and Fairbanks (among others) are installing utility-scale solar arrays this year. Other communities from the North Slope to Cordova are actively planning for solar. Anchorage-based Arctic Solar Ventures is currently working on one megawatt worth of solar projects. Chris Pike from the Alaska Center for Energy and Power believes the state will double its installed solar capacity in 2018 alone.
Utilities around the state are also excited to take advantage of cheap batteries to install power storage systems. These solve a classic pain point in renewable energy, where surging production from, say, a wind turbine on a blustery day can be stored rather than going to waste. Paired with solar, wind, hydrokinetic, biomass, or any other source, batteries can help transform Alaska’s energy production by reducing costs and cutting dependence on diesel.
But there’s another side to energy innovation as well, one that’s just as important as reducing the cost burden. I’m talking about the opportunity to create and grow new businesses that bring dollars into the Alaskan economy, and keep them here. In our Emerging Sector report sponsored by the Division of Economic Development, we found over 100 businesses that specialize in some aspect of renewable energy or energy efficiency. Many of these businesses are built around expertise, offering specialized professional services. They are consultants, engineers, designers of systems, and performers of technical assessments. According to ACEP, Alaska is a global leader in managing systems integration for remote microgrids. Solutions developed here can potentially be exported to Russia, Sub-Saharan Africa, or even neighboring Canada. The Launch Alaska accelerator is helping to make the state a magnet for high-growth energy companies.
With VOLT49 and the Emerging Sector report, we hope we can help to spark (sorry!) even more dialog about economic opportunities related to energy. So please, read the report and join us on Friday evening!