The Missed Milestone for Homer Electric Association
— Ben Boettger
2025 would have been a milestone for Homer Electric Association. Under the renewable energy goal that HEA’s directors set four years ago, it aimed to be 50% renewable by this December. Meeting this ambitious goal would have been hard and frankly unlikely. HEA was (and is still today) about 86% powered by natural gas, with its only significant renewable power coming from the state-owned Bradley Lake hydroelectric plant. The HEA board that set this goal recognized that it was a hard target — but also that the co-op needed to aim high. With a gas price crisis on the horizon, the times demanded it.
Seven of HEA’s nine elected directors approved the renewable goal in January 2021. Five of those seven have since been replaced by leaders who are heavily skeptical or ideologically opposed to wind and solar energy. The change had consequences: the renewable goal stalled out, and the board canceled it with a 6-3 vote in Dec. 2023. HEA switched to a policy of “encouraging future development of Cook Inlet gas resources wherever feasible.”
So, what about that Inlet gas? Well, here are some more 2025 milestones: It’s been seven years since the Alaska Dept. of Natural Resources estimated that within a decade, further Cook Inlet gas development could require up to a 50% price increase. That projection started hitting reality three years ago when Hilcorp told utilities not to rely on future supplies of its gas. April 2025 will mark one year since HEA swapped its expired Hilcorp contract for a year’s worth of secondhand gas from ENSTAR. Two years ago, consultants for the utilities estimated that Cook Inlet gas won’t meet our needs past 2033 even if we get some of it at triple today’s price. Reality may be ahead of their curve. Under a contract filed this month, the small Inlet driller Furie would supply gas to ENSTAR at about a 30%-37% increase from today’s prevailing price.
What exactly is HEA planning to do? Here’s a little good news: HEA expects a 21% reduction in its gas demand by 2030 as a result of three projects:
- The Puppy Dog Lake solar farm in Nikiski, planned by the private developer Renewable Independent Power Producer (RIPP). This 30 MW solar farm, Alaska’s largest, is expected to come online in 2028 and meet about 12% of HEA’s annual need at a price that beats the co-op’s cost of gas-fired power today. It will take HEA’s renewable use from 12% to 24%. Unfortunately, state regulators are delaying their decision on the contract with RIPP until this July, due to questions about whether it needs approval under a Railbelt-wide energy plan.
- Replacing the old gas turbine in HEA’s Nikiski power plant with a newer, more efficient model. This is expected to cut gas consumption by about 7% when the replacement is complete around 2028.
- The state’s plans to capture more glacial melt water in the Bradley Lake reservoir with the “Dixon Diversion” drainage tunnel. If the Alaska Energy Authority pulls it off, the project is expected around 2030. HEA’s share would add about 4.3% to its renewable power.
If these renewable projects, as well as the small Grant Lake hydro plant planned near Moose Pass, all come off as planned, the co-op could be about 32.28% renewable by 2030.
Since late 2022 HEA has also had a $833 million state grant to study four prospective wind farm sites. The goal is to evaluate the potential locations with at least a year’s worth of data from each. HEA didn’t begin collecting data until the second half of 2024. It presently has 5 months worth from one site (its own power plant in Nikiski’s windy Forelands region) and 8 months from another (Hilcorp’s decommissioned Dillon platform in Cook Inlet). The wind farm’s target capacity of 30 megawatts would likely push HEA to the 50% renewable mark.HEA probably couldn’t have hit that point this year. But the situation calls for urgency, and the goal provided it.
As things are, 2025 may be a different kind of historical milestone: the year we’re forced to rely on an interruptible gas supply. At the end of March, the one-year ENSTAR contract that’s currently meeting HEA’s needs will expire. Under the follow-up ENSTAR contract that’s now in front of state regulators, ENSTAR would not face contractual penalties if it fails to deliver the gas HEA needs in 2025.
It’s a real question whether ENSTAR will be able to keep HEA’s turbines fueled for the entire year ahead. While Hilcorp is under contract to supply 85% of ENSTAR’s gas until 2033, and ENSTAR is counting on Furie to ramp up production to fill the gap by 2027, its contracted volumes leave ENSTAR with a HEA-sized gap in its supply for 2025, and it’s missing about three-quarters of HEA’s need in 2026. At this point, nobody seems certain of where this gas would actually come from.
Where ENSTAR plans to get its gas as of Dec. 2024, including the gas that HEA will be relying on ENSTAR to supply. HEA consumes about 4.2 billion cubic feet (BCF) of gas per year. Note ENSTAR’s “undetermined supply” of 4.7 BCF in 2025 and 3 BCF in 2026. By 2027, ENSTAR expects Furie to fill the gap with a surplus to put into storage in anticipation of its Hilcorp contract ending in 2033. Source (pg. 5)
Beyond this year, HEA hopes to extend the ENSTAR contract until 2031. The minimum gas HEA could purchase in 2029-2031 allows for a 37.5% reduction in gas consumption, even more than the gas that would be cut by the three projects mentioned above. So HEA is giving itself space to move in the right direction. If only it had started many years ago.
Our utilities can’t plead ignorance of where our dependence on Cook Inlet gas was heading. Their best excuse is that they made decisions to constrain costs in the short term — instead of taking on capital investments that would reduce our gas demand in the long run, they prioritized buying the gas needed to continue generating electricity with infrastructure already in place. We’ll see soon just how well that worked out. HEA’s renewable goal may not have saved us from the vulnerability and rising costs we face in the next few years. But with a board that chose to aim low and go slow, how can we be surprised that HEA has done too little, too late?