Alaska’s Renewable Energy Fund: A Critical Catalyst in Our Energy Transition

After a vigorous election season in which voters decided 59 out of 60 seats in the Alaska State Legislature, many eyes are on the legislative session that began Jan. 17 in Juneau. One of the public policy topics which we are following at Launch Alaska is the proposed renewal of the Alaska Renewable Energy Fund (REF). The competitive grant program was first established by the Legislature in 2008 and originally authorized for just five years, then extended in 2012 until June 2023. It will be considered for reauthorization for another 10 years this legislative session via Senate Bill 33.

At Launch Alaska, we strive to accelerate Alaska’s energy transition through deployment of projects across energy, transportation, and industry. Our team gets excited about technologies and policies that can advance and increase “steel-in-the-ground” projects, or in this case, turbines in the air, battery storage installed, or solar panels on racks. Launch Alaska strongly supports reauthorization of the Renewable Energy Fund as a crucial piece in moving forward deployment of renewable energy in Alaska and furthering the energy transition. 

Above: Wind turbines and solar panels in Kotzebue, Alaska. Photo credit Matt Nejati/Launch Alaska.

This competitive grant program has completed 14 funding cycles to support cost-effective renewable energy projects throughout the state and funded over 100 operational projects and 44 projects currently in development, appropriating $299 million to date. Wind and hydroelectric projects have received the majority of the funding. The program collectively saves the equivalent of more than 30 million gallons of diesel each year. Importantly, REF dollars are not the only source of funds to build these renewable energy projects; they have attracted $229 million in matching funds from other sources. The REF is funded from the State of Alaska capital budget and the Legislature decides each year how much to appropriate to the fund, if at all. 

At Launch Alaska, we know that public sector support of energy projects through programs like the REF can play a vital role in getting projects started and completed, and in bringing in private capital. We’ve seen it firsthand through our close relationships with utilities and infrastructure owners across the state. 

In the Northwest Arctic community of Kotzebue, Launch Alaska has a strong partnership with the local utility, Kotzebue Electric Association (KEA), which provides power to the community’s 3,200 residents. Matt Bergan, KEA project engineer, says the REF has been extremely beneficial for Kotzebue and rural Alaska overall. “Without the Renewable Energy Fund, I’m not sure where we’d be,” he notes. Bergan has been at KEA for almost 25 years, and in his time has seen tremendous growth of renewable energy to increase the electric grid’s reliability and resilience and reduce its carbon footprint. Over the years, KEA has benefited from three grants from the REF, largely to support wind generation for the community.

“The REF made megawatt scale wind a possibility for us,” Bergan explains. “The REF helps rural communities get more experience and knowledge in renewable energy, showing utilities - ‘hey, this works, let’s do more of it,’ or vice versa.” 

He also sees the fund as a catalyst for private investment. Early public dollars can help fill a need and prove out technologies where investment may be seen as risky by the private sector at first. 

“The REF broke the ice and was the catalyst for making further financing possible,” Bergan said. “It proved the economics showing that many of these projects could be privately financed in terms of their reliability, equipment, and payoff.” 

According to the State of Alaska’s Alaska Energy Authority (AEA), which administers the REF, projects supported with funding from the program are intended to help communities reduce their reliance on fossil fuels in order to stabilize the costs of both heat and electricity. For many Americans, the largest source of the carbon emissions they produce is their home, so helping utilities decarbonize supply is crucial to meet collective goals in the energy transition. The AEA points out that the REF also creates jobs, promotes renewable energy technology transfer in Alaska communities, utilizes local energy resources, keeps money in local economies, and fosters economic development. These benefits mirror Launch Alaska’s goals to see growth in clean energy development across our rural communities, increased economic development, and lower prices of energy with the deployment of innovative solutions. 

The annual REF grant process solicits applications from utilities, independent power producers, local governments or other governmental utilities, including tribal councils and housing authorities. These entities can seek funding support for all parts of the project lifecycle: reconnaissance, feasibility and conceptual design, final design and permitting, or actual project construction. 

Once applications are received, the AEA begins a thorough process of evaluation, measuring items like technical feasibility, financing plan, economic benefit, project management, and qualifications and experience. The nine-member Renewable Energy Fund Advisory Committee supports the evaluation of these applications, considering things like cost of energy, matching funds, public benefit, and sustainability. The program seeks to find a statewide geographic balance of grant money, taking cost of energy into account as recommendations are made. The AEA, with the Renewable Energy Fund Advisory Committee’s approval, then passes on to the Legislature a prioritized list of applications for full or partial funding consideration. The Legislature approves projects and chooses to appropriate funding.

In 2010, Alaska set a nonbinding goal of generating 50% of the state’s electricity from renewable and alternative energy sources by 2025. If a more ambitious and binding Renewable Portfolio Standard (RPS) or Clean Energy Standard were to be approved by the Legislature in the future, the public sector support provided to build renewable energy will become all the more important. (Alaska Gov. Mike Dunleavy introduced an RPS for consideration in 2022, and the Legislature will likely continue to debate the topic this year). 

We urge you to follow Senate Bill 33, the REF reauthorization bill sponsored by Sen. James Kaufman of Anchorage, in the current legislative session and to share your thoughts and questions with us on the fund and its impacts.