Renewable energy advocates will try again at next year’s legislative session to win approval for extending the life of the state’s Renewable Energy Fund and creating a “green bank” to help finance clean-energy projects.
The Renewable Energy Fund (REF) provides grants for renewable energy projects via a competitive process. The fund was established in 2008 with an initial investment of $100 million, plus additional deposits over the years.
The program ends in 2023, unless extended by lawmakers. Legislators convene in Juneau on Jan. 17.
Over 100 REF-funded projects are currently in operation and 44 are in development, according to Alaska Energy Authority documents. Past projects include a wind system in Kwigillingok, a coastal community west of Bethel; hydro power in Chignik Lagoon, about 250 miles west of Kodiak; and a biomass boiler in Thorne Bay.
However, uncertainty about the fund’s future have jeopardized its ability to continue underwriting such projects. In 2015, the state’s yearly contribution dropped from $25 million to $10 million, and in the spring of 2016 the fund received nothing due to budget cuts. In 2012, the Legislature extended the Renewable Energy Fund to 2023.
“For a lot of reasons, from climate change to the rising cost of diesel, now is a really bad time for the Renewable Energy Fund to expire,” said Matt Jackson, climate program manager at the Southeast Alaska Conservation Council (SEACC). His organization is advocating to “extend and expand” the Renewable Energy Fund, giving it a $50 million annual budget for the next 10 years.
“The cost of diesel has been exorbitant the last year and it can be really crippling for the economies of (small communities),” said Jackson. “Investments in REF would help save the state money in the long-term.”
The program’s state funding has fluctuated over the years. In 2022, the state’s contribution to the REF was $4.75 million. This level of funding “does not go very far in rural Alaska,” Jackson said. He estimated that $1 million could implement “maybe a smallish wind turbine.”
“There’s a backlog of projects that need this funding,” Jackson said. SEACC hopes to avoid even “a single year gap” in grant opportunities for renewable energy projects.
However, as the state budget tightens and grant programs become less feasible, lawmakers are exploring loan financing options to fund renewable energy projects, like a green bank, which could be up for legislative discussion next year. Green banks help secure capital for clean-energy projects to “maximize clean energy adoption,” according to the Coalition for Green Capital. A green bank in Alaska would “de-risk clean energy projects and get those private partners involved in energy financing,” Donovan Russoniello, Renewable Energy Alaska Project outreach director, said at SEACC’s Climate and Energy Community Forum Nov. 15.
He shared an anecdote that REAP Executive Director Chris Rose often uses to explain the functions of green banks. If Rose goes to the bank with great credit, Russoniello explained, he can only get an 8% interest loan for solar panels to be paid off over five years. With the help of a green bank, he could get a 5% interest loan to be paid off over 10 years, since the green bank would “(reduce) the risks and (get) banks involved.”
As of 2021, the 21 green banks in the United States had collectively generated $7 billion in investments since 2011, according to a Green Bank Industry Report.
In Alaska, the proposed institution could “scale out what we could do in terms of residential energy and rooftop solar,” Russoniello said.
In 2021, Gov. Mike Dunleavy introduced legislation that would have established an Alaska green bank called the Alaska Energy Independence Fund. The proposal failed to win legislative approval, but the issue likely will come back next year.
Environmental advocacy groups, like the Fairbanks Climate Action Coalition, took issue with Dunleavy’s plan to house the green bank within the Alaska Industrial Development and Export Authority (AIDEA), which has been criticized for poor investment decisions and lack of transparency. AIDEA officials deny the claims.
AIDEA has been heavily involved in financing resource extraction projects, such as oil and mining. “We don’t see them (AIDEA) being a driver of the real change we need … toward renewable energy and regenerative economies,” said Arleigh Hitchcock of the Fairbanks Climate Action Coalition.
The state finance agency has a history of frequent executive sessions on spending decisions. “There are laws that need to be followed,” Alyssa Sappenfield, of the Fairbanks group, said of AIDEA’s inadequate public process.
A green bank proposal for the upcoming legislative session has not been finalized, but SEACC has released a petition urging lawmakers to “do the green bank right.” The petition suggests housing the institution within the Alaska Housing Finance Corp. instead of AIDEA, funding projects that will reduce greenhouse gas emissions, subjecting the bank to legislative oversight, establishing an independent board that would include rural, Alaska Native, and green energy sector representatives, and allocating at least 35% of funds to rural communities.
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