In Interior Alaska, reinvestment in coal power runs counter to national trend

The University of Alaska Fairbanks recently held an event to celebrate the completion of their new coal fired power plant, the only coal plant to be built in the U.S. since 2015. August 29th, 2018. (University of Alaska Fairbanks).

An oft-cited trend in the Lower 48 is that coal plants are closing, in a large part due to the availability of cheaper natural gas.

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But in the Interior of Alaska, that picture looks different. Last year, almost 40 percent of the Interior’s electrical generation came from coal, according to a 2018 report by the McDowell Group, and the area is home to the only coal power plant built in the United States since 2015. So why has coal has hung on in the Interior? And are there challenges to it on the horizon?

On a sunny day at the end of August, University of Alaska Fairbanks chancellor Dan White stood on a dais at the edge of campus. He addressed a crowd of people who had shown up to celebrate the completion of UAF’s coal-fired power plant, expected to come online in November.

“This is the university where the world class research for all of the Arctic is done,” White said. “And we can’t do that without a reliable supply of heat and power.”

Instead of a ribbon cutting, there was a switch to flip, prompting light bulbs that spelled out “U.A.F.” to jump to life.

This power plant is a big deal to UAF, considering its old one was in danger of failing. But it also has a more symbolic significance. In a decade when hundreds of coal plants have been retired across the United States, UAF’s reinvestment in coal shows just how different things are in Alaska’s Interior.

Why is it different here?

One of the big factors is that even after decades of talk about getting affordable natural gas to the Interior, Fairbanks as of yet has only a limited supply of natural gas. And unlike many other places in the country, it’s not price-competitive with coal.

“There’s an ad at the Fairbanks Economic Development Corp. from the News Miner: ‘Gas is coming!’” said Brian Rogers, former chancellor at the University of Alaska Fairbanks. “It’s from the 1958 News Miner.”

Rogers was part of the team that explored fuel options for the new plant. He says they looked at a slew of them, including trying to get natural gas.

“I didn’t particularly want to go with nuclear; we looked at it,” Rogers said. “I would have loved to have gone with natural gas, we don’t have it. Oil would have been super expensive… There’s not enough solar to heat a university campus in the middle of winter.”

He says that coal wasn’t their first choice, mostly due to its higher C02 emissions. But when they narrowed the field down to the types of energy that were available, feasible and affordable coal won, hands down.

UAF’s is one of six power plants that rely on coal in the Interior. One is at Fort Wainwright, another at Eielson Air Force Base and three more generate electricity for the local electric utility, Golden Valley Electric Association.

All of that energy comes from the Usibelli Coal Mine, which is a two hour drive from Fairbanks and just 10 miles north of Denali National Park.

The Usibelli Coal Mine is located just outside Healy in Alaska’s Interior. It produces about a million tons of coal a year, and supplies 6 Interior power plants. October 1st, 2018. (Ravenna Koenig/ Alaska’s Energy Desk).

Usibelli is the only operating coal mine in the state of Alaska, and has been owned by the Healy-based Usibelli family for 75 years.

“Emil Usibelli came to Alaska in the ‘30s,” said Vice President of External Affairs Lorali Simon. “And he actually first started in the Matanuska coal fields and then he moved up here to the Interior, and in 1943 started Usibelli Coal Mine.”

Simon says Usibelli’s operation is pretty small when you compare it to most coal mines in the Lower 48. The company employs about 100 people, and produces around a million tons of coal a year. In 2011 its production was over twice that, but it’s dropped since, mostly due to a declining export market. It stopped exports altogether in 2016.

On the other hand, local demand recently went up. Just last month Golden Valley Electric Association (GVEA) brought a previously-built coal plant online, upping the percentage of their coal-generated electricity from about 30 percent to over 65 percent.

So, that’s the way things are. But what about the future?

When asked if he’s under pressure to move away from coal, Cory Borgeson, President and CEO of GVEA, answers in the affirmative.

“There is a drive to reduce CO2 emissions,” he said. “So how does that affect the future of coal in the Interior and at Golden Valley? I would say if you’re a futurist here and you’re looking at where things are going, you’re going to see a reduction in the production of power from coal.”

Borgeson thinks Golden Valley could move in that direction by expanding its renewables and battery technology, perhaps collaborating with other Railbelt utilities. He also thinks there’s a possibility that natural gas could become a more economical option as the Interior Gas Utility moves forward with its efforts to expand gas supply in Fairbanks.

Another thing that could play a role — at least in the future cost analysis for the Fairbanks-area power plants —  is the air quality issue. Coal and oil fired power plants aren’t the biggest contributors to the problem; the main source is wood smoke. Even so, if the issue isn’t fixed, the state and federal governments may have to place stringent requirements on those plants, which would likely make the energy produced by them more expensive than it is currently.

But, for the moment at least, the equation still doesn’t add up to an imminent challenge to coal.