Alaskans fear higher energy prices as Trump drills

Alaska's diminishing gas reserves increase electricity prices

Alaskan solar and wind projects on hold or canceled

Trump Administration cuts federal funding for Renewables

Zach Theiler

Alaskans spend nearly two times as much on electricity as the national average.

Matt Goodnow, financial counselor at a hospital located in Homer, Alaska, a fishing village on the Kenai Peninsula, said that higher energy costs would be detrimental to the community.

He said, "There are many people in need here."

The Trump administration is not only planning to eliminate federal funding for renewable energy projects and to remove tax breaks, it also proposes to lift the limits set by former president Joe Biden regarding oil and gas drilling in Alaska.

Renewable energy projects in Alaska have been halted or cancelled by leading companies.

Analysts expect that the cost of electricity for residents of Alaska's Railbelt, an electrical grid which includes 75% of its population, to increase in the coming years.

The price increase is due in large part to the shrinking supply of liquefied gas that can be extracted from Cook Inlet's watershed.

Ben Boettger is an energy policy analyst for the Inletkeeper in Homer, a nonprofit environmental organization.

He said that the natural gas reserves, which were mostly developed in the 1960s are now running out.

He said that the largest ones were nearing their end.

According to a report from BRG and Cornerstone, the current reserves of gas in Cook Inlet could meet energy needs until 2027.

Experts say that after this, the need for exploration of new gas could result in a doubled cost for electricity by mid-2030.

Boettger stated that as the readily available reserves diminish, it becomes more expensive for gas companies to access new reserves, which is then passed on to consumers.

The U.S. Government recently called for the selling of gas field development licenses in Cook Inlet in order to alleviate the shortage, as well as drilling on the remote wilderness of Alaska North Slope in order to tap into untapped natural gas reserves.

Gas from the North Slope cannot be used to generate electricity in the Railbelt.

Glenfarne Group LLC is leading the charge to connect the grid and the gas supply to the electricity grid, which, according to the company, will stabilize the price of electricity.

The project is expected to cost $66 billion, and could take many years to complete.

Glenfarne refused to comment. Hilcorp, the gas company which owns most of Cook Inlet's development leases, did not reply to any requests for comments.

Boettger said that there were plans to import liquefied gas to fill in the gaps. However, prices could fluctuate and increase electricity costs by up to 50%.

Boettger suggests adding solar and wind power to the Railbelt. These sources could be cheap and easily deployed, reducing the demand for natural gas, and stabilizing the price of electricity.

Boettger stated that "conserving the diminishing gas supply through deployment of renewables is a local priority."

CANCELLED PROJECTS

The 2022 Inflation Reduction Act, passed by the Biden administration, aimed to promote renewable energy development through grants and tax credit offers until the 2030s.

The Railbelt has attracted more than $450 millions in development plans for renewable energy sources, including plans to build the largest solar farm in the state.

Boettger said that for Alaska, where a relatively small market of 555,000 people lives on the Railbelt area, government support is crucial to make large-scale projects financially viable for investors.

The Trump administration, however, has cancelled grants and shortened drastically the timeframe for the development of wind and solar energy that benefits from tax credits.

When asked about the phase-out of support for renewables the Department of Energy highlighted their gas drilling efforts on Cook Inlet, and the North Slope.

The Department of Energy wrote an email that stated, "Unlike wind or solar subsidies, this provision will help deliver reliable, affordable, and secure American electricity for the entire nation, including Alaska. This is regardless of the weather conditions, whether it is sunny or windy."

The short timeline for tax credits is problematic for Alaska where harsh, long winters and remote, rugged terrain create a small window for construction. Jennifer Hyde, federal infrastructure coordinator for the Alaska Center in Anchorage, an Anchorage nonprofit that advocates clean energy, agreed.

Hyde said that for many people, the cancellation of projects will be a reality.

Ben May, the founder and CEO at Alaska Solar, which is the largest solar installer of the state, has said that eight of the nine solar projects in development are likely to be cancelled due to funding reductions.

May stated that it was "depressing and confusing" why the government would not want to offer cheaper electricity.

Renewables IPP (another energy developer) has withdrawn from plans to construct the largest solar farm of the state.

The project is scheduled to be operational in 2027 and would power about 9,000 homes on the Railbelt.

The company said that the uncertainty of tax credits was a major reason why its project had become unprofitable.

Hyde believes that the opportunity to increase solar energy was missed, given that during summer, there are almost 24 hours of daylight in the state.

(source: Reuters)