GVEA selected to receive $206M in federal funding for renewable energy projects

Golden Valley Electric Association has been selected to receive $206 million in federal grants and zero-interest loans from the U.S. Department of Agriculture for two renewable energy projects and to assist with the future retirement of Unit 2 of the Healy Power Plant’s coal-fired power plant.

The cooperative announced a package of federal funds to help modernize its systems and, ultimately, expand its energy generation and transmission options.

“It’s a significant accomplishment for GVEA to receive this funding,” said Ashley Bradish, GVEA’s communications director. Bradish said the utility was notified days before the USDA’s announcement on Thursday.

GVEA is one of 16 utility cooperatives that have received funding from the USDA’s Empowering Rural America (ERA) program. The Biden administration has allocated $7.3 billion to the ERA program, which was created to help cooperatives finance renewable energy projects such as solar, wind, and battery energy storage systems (BESS).

Bradish said the $206 million would be used to fund three projects, including building a 46-megawatt BESS plant in Fairbanks and declaring Healy 2 a “locked-in unit.”

About $67 million of the financing could be counted as grants once the project is complete. The remaining $140 million would be considered zero-interest loans.

The third project involves the construction of 64 miles of transmission lines, the addition of two new substations and the upgrade of an existing GVEA substation in the North Pole Industrial Area.

Bradish said the award is preliminary and is based on final research and program requirements.

The new BESS system will have twice the capacity of the existing 20-year-old battery system.

When the original BESS was completed in 2004, it was considered the largest of its kind. However, nickel-cadmium battery technology cannot properly regulate the variable power distribution from renewable projects such as solar and wind.

Bradish noted that the utility will continue to use both systems.

Bradish said the new transmission lines and substations would facilitate the connection of a wind farm that could generate up to 150 megawatts into the cooperative’s grid. GVEA said that’s more than five times the wind it buys from the Delta Junction Wind Farm and generates from the Eva Creek Wind Farm near Healy.

Bradish said GVEA has the proposed Shovel Creek Wind Farm in mind for a power purchase agreement, but no decision has been made. Anchorage-based Alaska Renewables, the project’s owner, has proposed building up to 60 wind turbines near Murphy Dome.

GVEA said in its press release that all three projects are estimated to “create up to 300 new jobs during project implementation and provide long-term employment for electricians and linemen in communities served by GVEA.”

Bradish said all the details are still being negotiated with the USDA Rural Services, which oversees ERA grants.

“No decisions have been made yet and it’s still early in the process,” Bradish said.

He emphasizes that this was important in the case of the Healy 2 plant. GVEA bought the 26-year-old plant from the Alaska Industrial Development and Export Authority in 2013 as part of a lawsuit settlement. AIDEA built the plant in the late 1990s as a Clean Coal Technology Program demonstration plant.

However, it was decommissioned in 2000 after a failed demonstration test. After GVEA bought the plant in 2013, the utility spent nearly six years refurbishing it, including repairs following an explosion in the coal feed system.

Since it began commercial operations in 2019, the plant has either failed to meet expectations or faced several challenges that required it to be shut down. In 2022, GVEA’s board of directors voted to permanently close the plant — a decision that was later postponed indefinitely until the utility could find a replacement for its baseload power.

“This should not be considered a withdrawal of the Heal 2 plant,” Bradish said. “The scale has not yet been discussed with Rural Utility Services.”

In its press release, the utility said negotiations with the USDA will begin this year and establish a timeline for project implementation.

“The scope and scale of proposed projects may change as evaluations progress,” Bradish said.

If GVEA goes ahead with its plans for Healy 2, the federal funding would allow the utility to designate it as a non-performing asset and refinance it with a zero-interest loan.

“This would provide significant savings that could be invested in other projects,” Bradish said.

Bradish said no project would be implemented that would have a negative impact on taxpayers.

“Every decision we make is to make sure that all the projects we undertake benefit the members,” Bradish said. “If there’s something that’s holding us back, it’s not something we’re going to move forward with.”

In a statement, Travis Million, president and CEO of GVEA, acknowledged that projects must benefit the utility’s members.

“We are committed to ensuring that every project we undertake directly benefits our members and the broader community,” Million said. “Negotiations with USDA will focus on confirming that these projects are aligned with the best interests of our members.”