GVEA purchases approximately 17.4% of its power annually from natural gas sources. GVEA has evaluated multiple proposals to look for ways to economically transport large quantities of natural gas to Interior Alaska. Currently, there are no affordable prospects that can be delivered locally to Interior Alaska in the quantities needed, after taking into consideration necessary transportation and storage costs. . Currently, none of GVEA’s owned generation units are set up to utilize natural gas fuel sources, however, GVEA could easily convert its North Pole Combined Cycle Unit to natural gas if it became available in the necessary quantities. GVEA currently has a contract with ENSTAR Natural gas to purchase 1 billion standard cubic feet of natural gas annually through January 2025. Chugach Electric Association burns the natural gas in one of their generating units and transports the electric energy up the Intertie to GVEA, but as of February 2024 there has been no excess natural gas-generated energy available for GVEA to purchase. GVEA is working collaboratively with other Railbelt utilities to explore gas supply alternatives that could provide system-wide benefits to the residents and businesses of the Alaska Railbelt. 

In the months following the adoption of the SGP, GVEA worked with an independent third-party to develop a request for proposal (RFP) for a 40–150-megawatt (MW) wind system. The RFP closed in August 2023 and GVEA is currently negotiating potential Purchase Power Agreements (PPA) with two final bidders.  However, the ability to bring wind onto GVEA’s system is conditioned upon GVEA obtaining adequate energy storage. The energy storage would provide regulation to variable generation such as wind or solar to ensure consistent power output at all times. Without appropriate energy storage, GVEA would have to provide this regulation of these variable resources from our existing fossil fuel generation sources, which would ultimately make the proposed projects uneconomic.  

A PPA is ideal for GVEA and its members, as we would not be required to provide the capital outlay to build the project, nor would we be responsible for any of its maintenance or operations. GVEA would simply purchase the system’s electric output for a set price, paying only for the power we receive.  

The Alaska Energy Authority (AEA) secured $206.5 million for Grid Resilience and Innovation Partnership (GRIP). The awarded Railbelt Innovation Resiliency (RIR) project will construct a High Voltage Direct Current (HVDC) submarine cable to serve as a parallel transmission route from the Kenai Peninsula to Anchorage, creating a much-needed redundant system in case of disruptive events. In addition, the RIR project will provide funding for multiple battery energy storage systems (BESS) within the respective serving areas of the Railbelt utilities, with a focus on the central and northern regions of the Railbelt electrical grid. The project is estimated to take eight years to complete. The AEA grant is subject to state or utility cost matching of $206.5 million, which GVEA and the Railbelt utilities are currently lobbying the State of Alaska to include the matching funds in the state budget to limit ratepayer impact. 

This is the first in a series of projects the AEA and Railbelt electric utilities are pursuing to significantly transform the Railbelt electric system. Concept papers under the second round of GRIP have been submitted to the Department of Energy. One addresses the transmission “backbone” of the system, which is in need of upgrades and additional redundancy. The other proposes the extension of the aforementioned HVDC line north to Healy, providing the Interior with access to low-cost power, driving down costs for members. We are seeking the state’s support to ensure future funding for this plan, which can benefit urban and rural Alaskans. 

GVEA is aggressively pursuing federal funding opportunities with the Infrastructure Investment and Jobs Act and the Inflation Reduction Act. These are once-in-a-lifetime opportunities that have opened possibilities for electric cooperatives like GVEA to transition to non-fossil fuel-based sources of power in a manner that lowers rates, maintains reliability, and reduces carbon emissions. If GVEA awarded funding, it would further reduce project costs and/or PPA pricing to members.  

One such opportunity is the Empowering Rural America (New ERA) program through the United States Department of Agriculture Rural Utilities Service (RUS), who is our primary financial lender. GVEA submitted a letter of interest under New ERA in September 2023 with a collection of projects totaling approximately $602M and is excited to move forward in the application process. The projects in the letter of interest include:  

• Developing a power purchase agreement for up to 150MW of wind generation  
• Adding additional storage to enable the integration of the variable wind generation in the form of a 150MW/300MWh Li-ion BESS  
• Building out the 138kV system and associated substations to interconnect the proposed wind   
• Refinancing the debt associated with Healy Unit 2 after its retirement and reinvesting the loan interest savings achieved   

Another federal funding opportunity under the RUS is the Powering Affordable Clean Energy (PACE) program. In July 2023, GVEA submitted a letter of interest and later received an invitation to submit a full application. Finance, engineering, regulatory, legal and power supply collaborated to prepare this package with the assistance of a variety of consultants and grant writers, ultimately submitting the application in November 2023, and submitting a revised Community Benefit Plan May 31, 2024. For more information on the Community Benefit Plan, click HERE. The final project application includes:  

• A 46MW/92MWh Li-ion battery energy storage system (BESS)  
• A power purchase agreement with a 16MW solar facility to be installed in Nenana  
• Upgrades to the Nenana Substation and infrastructure to interconnect the solar facility  

GVEA submitted for the maximum possible loan and loan forgiveness amount totaling $100M. The BESS submitted under PACE would be eligible for 60% loan forgiveness,  and would also be eligible for an additional 30% investment tax credit.  GVEA expects to learn whether or not we have been awarded a loan and loan forgiveness in Q3 2024.   

For any costs not covered under grants or loan forgiveness, GVEA would seek loans for these facilities, which costs would ultimately be paid back over time by members through electric rates.  

Non-dispatchable generation such as wind and solar power cannot replace any form of dispatchable thermal generation. However, wind and solar power can diversify GVEA’s portfolio and provide some level replacement power when those variable resources are generating electricity and injecting into the system. It is imperative that GVEA maintains the ability to generate all of our members’ electrical demand at all times of the year. A combination of wind, solar, battery storage and other forms of thermal dispatchable generation can replace Healy Unit 2 and GVEA is pursuing a cost-effective way to make this happen.  

No. Healy Unit 1 is currently GVEA’s cheapest, most reliable plant – it provides power fueled by coal. As part of the SGP, the board of directors voted to install a $26 million selective catalytic reduction (SCR) system on the plant to ensure GVEA could continue to run it for years to come. While GVEA will continue to work toward its carbon reduction goal, the cooperative will do so prudently and in a way that does not negatively impact rates nor reliability.   

Currently, there is no set date when Healy Unit 2 will be retired. Healy Unit 2’s retirement is conditioned on GVEA obtaining alternative sources of reliable, low-cost energy. While there is currently no retirement date, system evaluations and plans have been developed to ensure Healy Unit 1’s shared systems with Healy Unit 2 can continue to operate once retirement occurs. Additionally, GVEA continues to explore opportunities to repurpose Healy Unit 2 that may be available upon unit retirement.  

The reliability of Healy Unit 2 has been volatile due to a wide variety of mechanical issues, despite incredible efforts by GVEA employees and contractors. The plant continues to have unplanned outages, forcing GVEA to generate electricity from alternative, more expensive sources which negatively impacts rates.  Despite these issues, in February 2024, GVEA’s Board of Directors adopted amendments to the SGP which removed the December 31, 2024, retirement date. GVEA made the decision to continue operating Healy Unit 2 because at this time, there are no alternative sources of reliable, low-cost energy to replace Healy Unit 2’s generation. Retiring the facility at this time without alternative power sources would negatively impact member rates. As such, GVEA will continue to operate Healy Unit 2 as safely and efficiently as possible until such time as alternative sources of reliable, lower cost energy become available.

The construction of the SCR to lower NOx emissions on Healy Unit 1 is going well and we anticipate having the SCR operational in June 2024, on budget and well ahead of the December 2024 deadline agreed upon with the Environmental Protection Agency. Healy Unit 1 continues to be one of GVEA’s most reliable and lowest cost units, and we are confident that Healy Unit 1 will continue to produce at a high capacity following the installation of the SCR.  

GVEA analyzed over 120 different generation scenarios with internal staff, consultants and the GVEA Board of Directors. The following technologies at various sizes were considered under the SGP: 

• Wind 
• Solar 
• Pumped Thermal Energy Storage 
• Combined Cycles 
• Natural Gas 
• Battery Energy Storage Systems 

The plan also considered the retirement or extension of various units on GVEA’s system including Healy Unit 1, Healy Unit 2 the Aurora Energy Power Purchase agreement, among others.    

Nuclear and hydroelectric such as Susitna were not included in the analysis due to the long lead time of the technologies.  

The Strategic Generation Plan (SGP) was adopted by GVEA board of directors in June 2022 and modified on February 27, 2024. The SGP is the result of months of extensive review of GVEA’s generation portfolio by the board, employees and supporting consultants. The plan initially began to address the EPA driven mandate to shut down Healy Unit 1 or install a selective catalytic reduction system on the plant. To ensure that decisions such as this remain consistent with our mission to provide safe, reliable and affordable electricity to our members, all options available at the time were considered. The plan was recently updated to address circumstances that have changed since the announcement of the initial plan such as the availability of significant federal grant funding opportunities and ongoing natural gas constraints in the Cook Inlet. The SGP is focused on ensuring generation diversity that reduces costs to members and improves reliability. The plan, as modified, includes the following five components: 

1. Install a selective catalytic reduction (SCR) system on Healy Unit 1 in 2024. 

1. Continue operating Healy Unit 2 until such time as alternative sources of reliable, lower cost energy becomes available. 

1. Finalize negotiations for Power Purchase Agreement(s) to integrate large-scale wind resources into GVEA’s system at a price that will lower the overall cost of power to GVEA’s members. 

1. Install energy storage of sufficient size(s) to assist GVEA in integrating large-scale renewable resources onto GVEA’s system. 

1. Continue efforts to secure 30-50 MW of reliable, lower cost energy to assist GVEA in serving its members.