The Big Beautiful Bill, passed in early July with the approval of all of Alaska’s federal congressional delegation, ends tax credits that could have paid for up to 40% of the cost of all wind and solar projects in Alaska until 2033. Now, projects will need to start construction by July 4, 2026 to qualify. The federal government has made it clear that it intends to use permitting and trade policy to put obstacles in the way of developers trying to sprint toward that deadline. Hydroelectric and geothermal power, however, will continue qualifying for the subsidy until 2033. This has led some to reconsider the long-dormant Susitna-Watana dam, a $7 billion plan to dam the Susitna River north of Talkeetna.
The Su Dam is not the answer to Alaska’s growing energy crisis. Today, solar power generation is the fastest type of energy infrastructure to build, and wind farms are expected to play a massive role in Alaska’s future energy grid. But with political winds shifting against renewables for now, Homer Electric Association (HEA) is pursuing ill-conceived hydro power projects, despite the damage they could cause to our home, our economy, and our salmon.
Chugach Electric Association is trying to make the July ’26 deadline for the 8 megawatt solar array it’s planning to install. The Homer Electric Association (HEA), on the other hand, has no such plans. At this moment, HEA is sitting on a $100 million federal loan, with 40-50% forgiveness, through the US Department of Agriculture’s Powering Affordable Clean Energy (PACE) program. Coupled with a 40% reimbursement from the tax credits, this would have been a substantial boost to HEA’s investment in diversifying its energy. Last August, HEA planned to put this money into the 45 megawatt Puppy Dog Lake solar farm, which was set to meet 12% of HEA’s annual needs at a cheaper price than the gas-fired electricity we are being charged for today. When Puppy Dog Lake’s developer was forced to withdraw, HEA shifted plans, directing the money toward an equivalent amount of solar. But HEA management, anticipating federal obstruction, recently decided that the $100 million would be best spent not on 45 megawatts of solar, but HEA’s 5 megawatt Grant Lake hydroelectric project in Moose Pass, an economically marginal project that the co-op has spent 11 years on and off planning and permitting.
Solar power is the quickest-to-deploy source that could be built in response to the gas crisis, and likely the cheapest in many areas in Alaska, even accounting for weather and seasonal sunlight. Longer term, research has shown that wind farms will have a big role in an economically optimal grid. But with these power sources becoming 40% costlier with the loss of a tax credit that hydropower maintains, the utilities may be more likely to turn to big hydro projects like the Su Dam.
In May, the Railbelt utility managers wrote to the legislature calling for the state to revive its stalled federal licensing process for the Susitna-Watana Dam. It remains to be seen if this gets any traction or if the utilities will stick with it. Some later backed away – Matanuska Electric Association manager Tony Izzo said in June that the dam “is not on our radar to solve any of our issues.” Even with a significant subsidy, the dam still has big economic question marks.
Subsidy or no subsidy, one attraction of the Su Dam for utility leaders is the possibility of renewable power that doesn’t require them to change how they operate. Running a grid on more renewables would require the status quo institutions and decision makers to make changes that a giant dam would not. But studies by the National Renewable Energy Laboratory — and even reports commissioned by the utilities themselves — show that transitioning to solar and wind is smarter, cheaper, and safer. This suggests the real reason for our continuing reliance on gas and hydro: using them is an excuse for HEA to avoid doing its job.
Salmon and rivers must not be sacrificed to protect the energy status quo. Inletkeeper will continue to oppose the Su Dam due to its potential to damage the hydrology of the Susitna River by impacting water flow regimes, ice patterns, fish habitat, and temperatures. With your help, we will continue to push for clean, viable energy alternatives — but the federal government isn’t making the hard decisions any easier, and our utility leaders are unlikely to make them unless their members insist. We need public pressure, from our readers and members, to ensure utilities and lawmakers choose the right path.